<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 7, 1997
---------------
THE SHERWIN-WILLIAMS COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 1-4851 34-0526850
- ------------------- ---------------- ---------------------------------
(State or other (Commission File (IRS Employer Identification No.)
jurisdiction of Number)
incorporation)
101 Prospect Avenue, N.W., Cleveland, Ohio 44115
------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (216) 566-2000
--------------
N/A
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(Former name or former address, if changed since last report)
<PAGE> 2
Item 2: Acquisition or Disposition of Assets.
-------------------------------------
On January 7, 1997, The Sherwin-Williams Company ("Sherwin-Williams"),
an Ohio corporation, through a wholly-owned subsidiary, completed its
acquisition of all of the outstanding shares ("Shares") of capital stock of
Thompson Minwax Holding Corp., a Delaware corporation ("Thompson Minwax"),
pursuant to the Stock Purchase Agreement ("Stock Purchase Agreement"), dated
November 22, 1996, among Sherwin-Williams, Silver Acquisition Corp., Forstmann
Little & Co. Subordinated Debt and Equity Management Buyout Partnership - V,
L.P., MTF Partners, L.P. and certain individual shareholders of Thompson Minwax
who are signatories thereto. The Stock Purchase Agreement is incorporated by
reference into this Current Report as Exhibit 2 to which reference is made for
the complete terms and conditions thereof.
The total amount of funds required to purchase the Shares and pay off
certain indebtedness of Thompson Minwax was $830 million, which amount is
subject to a purchase price adjustment based upon the closing date balance
sheet of Thompson Minwax. The amount of the purchase price was determined
through an arms'-length negotiation between Sherwin-Williams and Forstmann
Little. Sherwin-Williams obtained the funds from the proceeds of borrowings of
different maturities and interest rates under Sherwin-Williams' commercial
paper program, which is supported by (a) a Five Year Revolving Credit
Agreement, dated January 3, 1997, between Sherwin-Williams, Texas Commerce Bank
National Association, as Administrative Agent, The Chase Manhattan Bank, as
Competitive Advance Facility Agent, and the financial institutions which are
signatories thereto and (b) a 364-Day Revolving Credit Agreement, dated January
3, 1997, between Sherwin-Williams, Texas Commerce Bank National Association, as
Administrative Agent, The Chase Manhattan Bank, as Competitive Advance Facility
Agent, and the financial institutions which are signatories thereto.
Sherwin-Williams is currently evaluating various financial structures to
replace portions of such commercial paper. The foregoing Credit Agreements are
incorporated by reference into this Current Report as Exhibits 99.1 and 99.2 to
which reference is made for the complete terms and conditions thereof.
Included among the assets acquired by Sherwin-Williams (indirectly
through the acquisition of the Shares) and used in the manufacture and sale of
coatings and related products are: (1) certain plants, offices and other real
property; (2) machinery and equipment; (3) finished goods, raw materials, work
in process and other inventory; (4) certain trademarks, patents and other
intellectual property; (5) accounts receivable and contract rights; and (6)
other assets. Sherwin-Williams currently intends to use such assets in
substantially the same manner as they were used by Thompson Minwax prior to the
transaction. Generally, assets related to the Minwax(R), Red Devil(R),
Formby's(R), and Tri-Flow(R) product lines will become a part of
Sherwin-Williams' Diversified Brands Division and assets related to the
Thompson's(R) and Ronseal(R) brands will become a part of Sherwin-Williams'
Consumer Brands Division. The Olive Branch, Mississippi plant will become a part
of Sherwin-Williams' Coatings Division.
2
<PAGE> 3
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
(a) Financial Statements and Pro Forma Financial Information:
The following financial statements and pro forma financial
information are filed as a part of this report:
(1) Unaudited Consolidated Balance Sheet of Thompson Minwax as
of September 30, 1996 and Unaudited Consolidated Income
Statement and Consolidated Cash Flow Statement of Thompson
Minwax for the nine months ended September 30, 1996.
(2) Audited Consolidated Balance Sheet of Thompson Minwax as
of December 31, 1995 (As Restated) and Audited
Consolidated Statement of Operations and Accumulated
Deficit and Consolidated Statement of Cash Flows of
Thompson Minwax for the fiscal year ended December 31,
1995 (As Restated).
(3) Unaudited Pro Forma Combined Condensed Balance Sheet which
combines the Unaudited Consolidated Balance Sheet of
Thompson Minwax with the Unaudited Consolidated Balance
Sheet of Sherwin-Williams as of September 30, 1996, along
with a description of the pro forma adjustments.*
(4) Unaudited Pro Forma Combined Condensed Statements of
Income which combine the consolidated results of Thompson
Minwax with the consolidated results of Sherwin-Williams
for the year ended December 31, 1995 and for the nine
months ended September 30, 1996, along with a description
of the related pro forma adjustments.*
* The pro forma financial information appears on pages 23 - 26.
(b) Exhibits
2 Stock Purchase Agreement, dated November 22, 1996, among
Sherwin-Williams, Silver Acquisition Corp., Forstmann
Little & Co. Subordinated Debt and Equity Management
Buyout Partnership - V, L.P., MTF Partners, L.P. and
certain individual shareholders who are signatories
thereto. (Schedules and Exhibits to the Stock Purchase
Agreement have been omitted pursuant to Rule 601(b)(2) of
Regulation S-K. Sherwin-Williams agrees to furnish to the
Securities and Exchange Commission, upon its request, any
or all such omitted Schedules and Exhibits.) (filed
herewith).
3
<PAGE> 4
23 Consent of Deloitte & Touche LLP as independent auditors
dated January 20, 1997 (filed herewith).
99.1 Five Year Revolving Credit Agreement, dated January 3,
1997, between Sherwin-Williams, Texas Commerce Bank
National Association, as Administrative Agent, The Chase
Manhattan Bank, as Competitive Advance Facility Agent, and
the financial institutions which are signatories thereto
(filed herewith).
99.2 364-Day Revolving Credit Agreement, dated January 3, 1997,
between Sherwin-Williams, Texas Commerce Bank National
Association, as Administrative Agent, The Chase Manhattan
Bank, as Competitive Advance Facility Agent, and the
financial institutions which are signatories thereto
(filed herewith).
4
<PAGE> 5
THOMPSON MINWAX HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
------------------
(IN 000'S)
<TABLE>
<CAPTION>
9/30/96
---------
ASSETS
- ------
<S> <C>
CASH $ 14,675
ACCOUNTS RECEIVABLE 39,999
INVENTORY 31,251
PREPAID EXPENSE 4,956
---------
TOTAL CURRENT ASSETS 90,881
FIXED ASSETS, NET OF DEPRECIATION 45,814
INTANGIBLE ASSETS 620,129
OTHER ASSETS 10,854
---------
TOTAL ASSETS $ 767,678
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
LIABILITIES
- -----------
CURRENT PORTION OF LONG TERM DEBT $ 0
ACCOUNTS PAYABLE 15,499
ACCRUED EXPENSES 34,800
---------
TOTAL CURRENT LIABILITIES 50,299
LONG TERM DEBT:
SUBORDINATED NOTES 440,000
BANK DEBT 92,000
---------
TOTAL LONG TERM DEBT 532,000
OTHER NON-CURRENT LIABILITIES 26,218
---------
TOTAL LIABILITIES 608,517
STOCKHOLDERS' EQUITY
- --------------------
COMMON STOCK 2
ADDITIONAL PAID IN CAPITAL 176,692
ACCUMULATED DEFICIT, BEGINNING OF PERIOD (20,903)
ACCUMULATED DEFICIT, CURRENT PERIOD 3,370
---------
TOTAL STOCKHOLDERS' EQUITY 159,161
---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 767,678
=========
</TABLE>
5
<PAGE> 6
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN 000'S)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
9/30/96
--------
<S> <C>
NET SALES $288,370
COST OF GOODS 102,584
GROSS PROFIT 185,786
% OF SALES 64.4%
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 131,571
--------
EARNINGS FROM OPERATIONS $ 54,215
% OF SALES 18.8%
DEPRECIATION 5,172
--------
EBITDA 59,387
% OF SALES 20.6%
FOREIGN EXCHANGE (GAIN) LOSS (84)
DEPRECIATION 5,172
AMORTIZATION OF INTANGIBLE ASSETS 12,306
INTEREST EXPENSE, NET 37,929
OTHER NON-OPERATING EXPENSE, NET 191
--------
EARNINGS BEFORE TAXES 3,873
INCOME TAXES 503
--------
EARNINGS AFTER TAX $ 3,370
% OF SALES 1.2%
========
</TABLE>
6
<PAGE> 7
THOMPSON MINWAX HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
--------------------------------------------
(IN 000'S)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
9/30/96
-------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
<S> <C>
EARNINGS AFTER TAX $ 3,370
AMORTIZATION & DEPRECIATION 17,478
INCREASE IN WORKING CAPITIAL (5,572)
OTHER, NET 2,686
MANAGEMENT EQUITY PARTICIPATION 152
-------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES 18,114
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
-------
PURCHASES OF PROPERTY, PLANT AND EQUIPMENT (3,723)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
PROCEEDS (REPAYMENT) OF REVOLVING CREDIT FACILITY -------
AND/OR REPAYMENT OF TERM LOAN (6,000)
-------
NET CASH GENERATION 8,391
CASH AS OF BEGINING OF YEAR 6,284
-------
CASH AS OF SEPTEMBER 30 $14,675
=======
</TABLE>
7
<PAGE> 8
DELOITTE &
TOUCHE LLP
- --------------
[Company Logo]
THOMPSON MINWAX
HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 1995 (AS RESTATED) AND
INDEPENDENT AUDITORS' REPORT
- ----------------
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
- ----------------
8
<PAGE> 9
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Boards of Directors of
Thompson Minwax Holding Corp. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Thompson Minwax
Holding Corp. and Subsidiaries as of December 31, 1995, and the related
consolidated statements of operations and accumulated deficit and of cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1995,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
As discussed in Note 12, the accompanying consolidated financial statements have
been restated.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
March 26, 1996
(Except for Notes 11 and 12, as to which the dates
are November 22, 1996 and January 3, 1997, respectively)
- -----------------
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
- -----------------
9
<PAGE> 10
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995 (AS RESTATED - SEE NOTE 12)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,284
Accounts receivable, net of allowance for doubtful accounts of $91 43,033
Inventories (Note 3) 25,930
Prepaid expenses and other current assets 5,297
---------
Total current assets 80,544
PROPERTY, PLANT AND EQUIPMENT - Net (Note 4) 47,273
TRADEMARKS AND PATENTS - Net of accumulated amortization of $5,786 205,117
GOODWILL - Net of accumulated amortization of $12,248 427,308
OTHER NONCURRENT ASSETS 11,646
---------
TOTAL ASSETS $ 771,888
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 22,193
Current portion of long-term debt (Note 6) 2,000
Accrued advertising and promotions 15,593
Accrued interest payable 3,593
Accrued expenses and other current liabilities 12,721
---------
Total current liabilities 56,100
LONG-TERM DEBT (Note 6) 536,000
OTHER NONCURRENT LIABILITIES (Note 8) 24,324
---------
Total liabilities 616,424
---------
COMMITMENTS AND CONTINGENCIES (Notes 5 and 9)
STOCKHOLDERS' EQUITY (Notes 6 and 10):
Preferred stock - par value $0.01 per share;
10,000 shares authorized; none issued -
Common stock
Class A - par value $0.01 per share; 180,000 shares
authorized; 165,000 shares issued and outstanding 2
Class B - par value $0.01 per share; 15,000 shares
authorized; 14,626 shares issued and outstanding -
Additional paid-in capital 176,540
Accumulated deficit (20,903)
Cumulative foreign currency translation adjustment (175)
---------
Total stockholders' equity 155,464
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 771,888
=========
</TABLE>
See notes to consolidated financial statements.
10
<PAGE> 11
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
YEAR ENDED DECEMBER 31, 1995 (AS RESTATED - SEE NOTE 12)
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<S> <C>
NET SALES $ 367,710
COST OF GOODS SOLD 137,934
---------
Gross profit 229,776
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 170,212
---------
EARNINGS FROM OPERATIONS 59,564
INTEREST EXPENSE - Net (52,156)
AMORTIZATION OF INTANGIBLE ASSETS (17,310)
OTHER INCOME - Net 346
---------
LOSS BEFORE INCOME TAXES (9,556)
INCOME TAXES (Note 7) 298
---------
NET LOSS (9,854)
ACCUMULATED DEFICIT, BEGINNING OF YEAR (11,049)
---------
ACCUMULATED DEFICIT, END OF YEAR $ (20,903)
=========
</TABLE>
See notes to consolidated financial statements.
11
<PAGE> 12
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995 (AS RESTATED - SEE NOTE 12)
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,854)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 23,419
Net loss on the disposal of property, plant and equipment 33
Provisions for losses on inventory and accounts receivable 1,089
Increase in accounts receivable (11,833)
Increase in inventories (1,111)
Increase in prepaid expenses and other current assets (2,457)
Increase in other noncurrent assets (4,278)
Increase in accounts payable 9,879
Decrease in accrued expenses and other current and noncurrent liabilities (13,232)
--------
Net cash used in operating activities (8,345)
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (8,897)
Proceeds from sale and disposal of property, plant and equipment 426
Proceeds from purchase price reduction 17,500
--------
Net cash provided by investing activities 9,029
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 4,875
Repayment of long-term debt (2,000)
Net repayment of revolving credit loan (1,000)
--------
Net cash provided by financing activities 1,875
--------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (78)
--------
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,481
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,803
--------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 6,284
========
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 13
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995 (AS RESTATED - SEE NOTE 12)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
On November 30, 1994, The Thompson Minwax Company ("TMC"), an indirect
wholly-owned subsidiary of Thompson Minwax Holding Corp. ("TMHC"),
acquired certain assets and assumed certain liabilities of the
Do-It-Yourself Business (the "Acquisition") of L&F Products Inc., a
wholly-owned subsidiary of Eastman Kodak Company. The original aggregate
purchase price was $712,821 including acquisition and financing fees paid
of $12,821. The Acquisition was funded by the issuance to an investor
group led by Forstmann Little & Co. ("FL & Co.") of $171,666 of common
stock and $440,000 of subordinated debentures. The balance of the
Acquisition funding was borrowed from a consortium of banks. In connection
with the Acquisition, TMC paid $7,000 in fees to FL & Co.
The Acquisition was accounted for using the purchase method of accounting.
Accordingly, assets acquired and liabilities assumed were originally
recorded based upon management's judgment as to their fair values using
preliminary appraisals and other available information.
During 1995, the Company and Eastman Kodak Company finalized a $17,500
downward adjustment to the original purchase price due to the final
determination of the net assets acquired, and the Company completed its
final estimates of the fair value of assets acquired and liabilities
assumed. These adjustments had the net effect of reducing the value
initially allocated to goodwill by $17,787, to an amount of $439,556. The
net decrease in goodwill was principally due to the reduction in the
purchase price, as well as the finalization by management of estimates of
certain preacquisition loss contingencies and refinements to both
independent appraisals of the value initially assigned to property, plant
and equipment, as well as to actuarial valuations of pension and other
postretirement obligations.
TMC manufactures wood stains and clear finishes, surface protectants,
enamels and refinishing products. The Company predominately operates in
the United States, United Kingdom, Ireland and Canada.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of TMHC and its wholly-owned subsidiaries (the
"Company"). All significant intercompany accounts and transactions have
been eliminated.
CASH EQUIVALENTS - The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash equivalents.
Cash equivalents, which consist primarily of overnight repurchase
agreements convertible to a known amount of cash and which carry an
insignificant risk of change in value, are stated at an amount which
approximates market value.
INVENTORIES - Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is valued at
cost less accumulated depreciation and amortization. Depreciation is
computed primarily on the straight-line basis over the estimated remaining
useful lives of the related assets.
13
<PAGE> 14
TYPE USEFUL LIVES
Buildings and improvements 5-45
Machinery and equipment 3-11
Leasehold improvements are amortized over the shorter of their estimated
remaining useful lives or the terms of the related leases. The cost of
repairs, maintenance and replacements which do not significantly improve
or extend the life of the respective assets is charged to expense as
incurred.
INTANGIBLE ASSETS AND FINANCING COSTS - Goodwill represents the excess of
the purchase price, including certain fees and expenses, over the fair
value of the net assets of the Company at the acquisition date, and is
amortized on a straight-line basis over 40 years. Trademarks, patents, and
deferred financing costs, are stated at cost and are amortized on a
straight-line basis over their economic lives which range from 8 to 40
years. Accumulated amortization relating to deferred financing costs was
$1,039 at December 31, 1995.
The Company assesses whether its goodwill and other intangible assets are
impaired at each balance sheet date based on an evaluation of undiscounted
projected operating cash flows through the remaining amortization period.
INCOME TAXES - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes". Under the asset and liability approach of SFAS No. 109,
deferred income taxes are established for the tax effect of temporary
differences between the financial reporting bases and the tax bases of the
Company's assets and liabilities and operating loss carryforwards using
tax rates expected to be in effect when such amounts are realized or
settled. A valuation allowance, if any, is provided for deferred tax
assets when it is believed to be more likely than not that the full amount
of such assets may not be realized.
FOREIGN CURRENCY TRANSLATION - The financial statements of the Company's
foreign subsidiaries are measured using the local currency as the
functional currency. Assets and liabilities of these subsidiaries are
translated into U.S. dollars at exchange rates in effect at the balance
sheet date. Revenues and expenses are translated at weighted average
exchange rates for the reporting period. Translation adjustments are
accumulated and included as a separate component of stockholders' equity.
CONCENTRATIONS OF CREDIT RISK - The Company sells to customers primarily
throughout the United States, while a smaller amount of foreign sales are
made to customers primarily in the United Kingdom, Ireland and Canada. The
Company does not require collateral on its trade receivables and while it
believes its trade receivables will be collected, the Company anticipates
that in the event of default it would follow normal collection procedures.
Overall, the Company's credit risk related to its trade receivables is
limited due to the broad range of products and the large number of
customers, including both distributors and retailers, in differing
geographic areas.
USE OF ESTIMATES - The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions, based on available facts and
information, that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
RESEARCH AND DEVELOPMENT EXPENSES - Research and development costs are
expensed as incurred. During the year, the Company expensed $3,245 of such
costs.
14
<PAGE> 15
ADVERTISING AND PROMOTIONAL EXPENSES - Costs related to the purchase of
advertising media and promotional displays are deferred until the
advertising occurs or the display units are shipped to customers. Any
other advertising and promotional costs are expensed in the year incurred.
PENSIONS AND OTHER EMPLOYEE BENEFITS - The Company has several defined
benefit pension plans covering substantially all of its employees. The
pension liability is determined in accordance with SFAS No. 87,
"Employers' Accounting for Pensions." The Company also sponsors a defined
contribution plan covering substantially all employees. Company
contributions to these plans are based on a percentage of employee
contributions.
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for retired employees, the cost of
which is determined in accordance with SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."
The Company provides certain other postemployment benefits to qualified
former employees. The Company accounts for the cost of benefits to these
former employees in accordance with SFAS No. 112, "Employers' Accounting
for Postemployment Benefits."
3. INVENTORIES
Inventories, by major classification, consisted of the following as of
December 31, 1995:
<TABLE>
<S> <C>
Raw materials and supplies $ 8,676
Work-in-process 795
Finished goods 16,459
-------
Total $25,930
=======
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, by major classification, consisted of the
following as of December 31, 1995:
<TABLE>
<S> <C>
Land and improvements $ 2,614
Buildings and improvements 19,585
Machinery and equipment 30,214
Construction-in-progress 1,160
-------
Total 53,573
Accumulated depreciation and amortization (6,300)
-------
Total property, plant and equipment, net $47,273
=======
</TABLE>
5. LEASES
The Company leases certain facilities and equipment under operating lease
arrangements which expire at various dates through the year 2005.
15
<PAGE> 16
Future minimum rental commitments under non-cancelable operating leases
with an initial term of one year or more were as follows at December 31,
1995:
<TABLE>
<S> <C>
1996 $ 1,688
1997 1,408
1998 1,113
1999 1,096
2000 941
Thereafter 4,558
--------
Total minimum operating lease payments $ 10,804
========
</TABLE>
Total rental expense for the year ended December 31, 1995, amounted to
approximately $1,441.
6. LONG-TERM DEBT
The following is a summary of long-term debt as of December 31, 1995:
<TABLE>
<S> <C>
Revolving credit loan $ -
Term loan 98,000
Subordinated debentures 440,000
-----------
538,000
Less current maturities 2,000
-----------
Long-term debt $ 536,000
===========
</TABLE>
The subordinated debentures were purchased by an investor group led by FL
& Co. for $440,000. The subordinated debentures mature in three equal
installments on November 30, 2005, 2006 and 2007. Interest is payable at
9.25% on May 31 and November 30 of each year.
On November 30, 1994, TMHC and TMC entered into a credit agreement (the
"Credit Agreement") with a consortium of banks that provides for
borrowings by TMC of up to $200,000 which includes $100,000 in term loan
commitments and $100,000 in revolving credit and letter of credit
commitments.
The $100,000 term loan matures on November 30, 2002 and is due in
quarterly installments which commenced September 30, 1995.
The revolving credit commitments, which allow for the extension of
revolving credit loans and letters of credit up to an aggregate maximum of
$100,000, expire on November 30, 2000. The available revolving credit
commitments are reduced to $70,000 by December 31, 1999 by reductions of
$5,000 on December 31, 1996 and 1997 and by reductions of $10,000 on
December 31, 1998 and 1999. As of December 31, 1995, $1,850 in letters of
credit were issued and outstanding, thereby reducing the revolving credit
commitments available at December 31, 1995 to $98,150. As part of the
revolving credit commitments, the Credit Agreement provides for up to
$10,000 in swing line loans; however, at no time may the sum of the
aggregate outstanding principal amount of the swing line loans and the
aggregate extensions of revolving credit exceed $100,000.
Borrowings made under the term loan and revolving credit commitments bear
per annum interest at a rate based on: (i) the highest of three different
rates ("ABR") as defined in the Credit Agreement or (ii) the Eurodollar
rate, as defined in the Credit Agreement, in each case plus an applicable
margin. Interest rate alternatives for the term loan are ABR plus 2% or
the Eurodollar rate plus 3%. Interest rate alternatives
16
<PAGE> 17
for the revolving credit loan include a range of applicable margins
determined based on financial ratios. The alternatives are ABR plus
0.5% to 1.5% or the Eurodollar rate plus 1.5% to 2.5%. TMC is also
required to pay a quarterly commitment fee which ranges from 0.375% to
0.500% based on the applicable margin for Eurodollar rate loans per
annum on the average daily amount of unused revolving credit
commitments. The interest rate applicable to borrowings outstanding as
of December 31, 1995 was 8.69%.
TMC, at its option, may prepay the revolving credit or term loans without
penalty. Prepayments of the outstanding term loan principal, which may not
be reborrowed, shall be applied initially to the installments scheduled to
be paid during the subsequent twelve months, in the order that such
installments are scheduled to be paid, and thereafter to the remaining
installments on a pro rata basis. The Credit Agreement requires mandatory
prepayments in the event that TMC receives aggregate cash proceeds from
the issuance of debt obligations or certain asset sales in excess of
$5,000. Such mandatory prepayments shall be applied first to reduce the
outstanding term loan principal, in the order described above, and
subsequently, if any remaining proceeds exist, to reduce outstanding
revolving credit loans.
The capital stock of TMC and a portion of the stock of TMC's direct
subsidiaries are pledged as collateral for borrowings under the Credit
Agreement. TMHC has guaranteed the obligations of TMC under the Credit
Agreement.
The Credit Agreement places limitations on the amount of additional
indebtedness, extensions of credit, asset sales, dividends, capital
expenditures and lease obligations which the Company may incur. In
addition, the Credit Agreement specifies minimum levels of interest
coverage and net worth that the Company must achieve. It is the opinion of
management that these limitations or requirements will not significantly
restrict the operations of the Company.
The Company believes that it is not practicable to estimate the fair value
of the subordinated debentures because of 1) the fact that they were
issued in connection with the issuance of the original equity of the
Company at the date of acquisition as an investment unit, 2) the related
party nature of the securities, 3) the lack of comparable securities, and
4) the lack of a credit rating of the Company by an established rating
agency. The Company estimates that all other indebtedness, based on
current interest rates and terms, approximates fair value.
Interest and commitment fees of $51,234 were paid during the year ended
December 31, 1995.
Scheduled maturities of current and long-term debt during the next five
years and thereafter are as follows:
<TABLE>
<S> <C>
1996 $ 2,000
1997 2,000
1998 2,000
1999 2,000
2000 25,000
Thereafter 505,000
--------
Total $538,000
========
</TABLE>
7. INCOME TAXES
The Company files a consolidated U.S. Federal income tax return for its
domestic operations. State tax returns are filed on a consolidated,
combined or separate basis depending on the applicable laws relating to
the Company and its domestic subsidiaries.
17
<PAGE> 18
Taxes on income are based on earnings (loss) before taxes as follows:
<TABLE>
<S> <C>
Domestic $(10,733)
Foreign 1,177
--------
Total $ (9,556)
========
The components of the provision are as follows:
Current:
Federal $ -
State and other 16
Foreign 282
--------
298
Deferred -
--------
Total taxes on income $ 298
========
</TABLE>
The tax benefit calculated at the statutory Federal rate differs from the
actual expense primarily due to not recognizing the benefits of net
operating loss carryforwards, offset by the effect of state, local and
foreign income taxes.
In view of the short period of time during which the Company has been in
existence and the taxable loss generated during such period, a degree of
uncertainty exists regarding the Company's ability to generate taxable
income sufficient to realize the tax benefit associated with future
deductible temporary differences and net operating loss (NOL)
carryforwards prior to their expiration. Accordingly, a full valuation
allowance has been provided as an offset to the net deferred tax asset,
which includes the operating loss carryforward. However, if the Company
achieves sufficient profitability to utilize all or a portion of the
deferred tax asset, the valuation allowance will be reduced.
Deferred income taxes as of December 31, 1995 reflect the impact of
temporary differences between amounts of assets and liabilities for
financial reporting purposes and as measured by tax laws, differences
between the financial reporting and tax treatment of the Acquisition, and
the effect of operating loss carryforwards. Deferred tax assets
(liabilities) are as follows:
<TABLE>
<CAPTION>
Tax effects of:
<S> <C>
Depreciation and amortization $(13,442)
Net Federal, state and foreign tax operating loss carryforwards 13,524
Accruals not currently deductible for tax purposes 15,685
--------
Subtotal 15,767
Valuation allowance (15,767)
--------
Net deferred tax asset $ -
========
</TABLE>
The Company, through the purchase of assets, will be entitled to deduct
from its taxable income substantially all of the cost of the Acquisition,
including goodwill, over the remaining useful tax lives of the acquired
assets (15 years for intangible assets, including goodwill) for Federal
income tax purposes.
18
<PAGE> 19
At December 31, 1995, the Company has a Federal NOL carryforward of
$35,524 which will expire during the years 2009 through 2010.
Additionally, there are approximately $24,600 of NOL carryforwards in U.S.
state jurisdictions which will expire during the years 1997 through 2010.
Foreign earnings of $738 are considered permanently invested outside the
United States. Accordingly, U.S. income taxes have not been provided for
such earnings. It is not practicable to determine the amount of
unrecognized deferred taxes associated with such earnings.
Income taxes paid during the year ended December 31, 1995 totaled $161.
8. PENSION AND OTHER EMPLOYEE BENEFITS
PENSION AND DEFINED CONTRIBUTION BENEFITS - The Company has several
defined benefit pension plans covering substantially all of its employees.
Pension benefits are based primarily on participants' compensation and
years of credited service. The Company's policy is to fund its benefit
plans to at least meet the minimum funding requirements under the Employee
Retirement Income Security Act of 1974 (ERISA).
The Company also sponsors unfunded supplemental executive retirement plans
(SERP). These plans are nonqualified and provide certain key employees
defined pension benefits which supplement those provided by the Company's
other qualified retirement plans.
The net periodic pension cost of these plans for the year ended December
31, 1995 includes the following components:
<TABLE>
<S> <C>
Service cost $ 2,043
Interest 1,965
Return on plan assets (1,587)
Amortization of unrecognized net loss 3
--------
Net periodic pension cost $ 2,424
=======
</TABLE>
19
<PAGE> 20
The following schedule summarizes the funded status of the Company's
pension plans and the related amounts that are recorded in the
consolidated balance sheet:
<TABLE>
<CAPTION>
PLANS FOR WHICH PLANS FOR WHICH
ACCUMULATED ASSETS EXCEED
BENEFITS EXCEED ACCUMULATED
ASSETS BENEFITS TOTAL
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $ 9,305 $ 6,896 $ 16,201
Nonvested benefits 2,099 63 2,162
-------- -------- --------
Accumulated benefit obligation $ 11,404 $ 6,959 $ 18,363
======== ======== ========
Projected benefit obligation $ 16,408 $ 13,521 $ 29,929
Estimated plan assets at fair value 7,051 11,556 18,607
Unrecognized net loss 3,682 721 4,403
-------- -------- --------
Unfunded accrued pension cost reflected
in the consolidated balance sheet $ (5,675) $ (1,244) $ (6,919)
======== ======== ========
</TABLE>
The actuarial assumptions used in developing the projected benefit
obligation as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
U.K. AND
U.S. IRELAND CANADA
<S> <C> <C> <C>
Discount rate 7.25% 9.25% 9.25%
Rate of compensation increase 4.50 7.50 6.00
Expected rate of return on plan assets 9.50 9.50 9.50
</TABLE>
The Company also sponsors a defined contribution plan covering
substantially all U.S. employees. Company contributions to this plan are
based on a percentage of employee contributions. The expense associated
with this plan for the year ended December 31, 1995 totaled $481.
Pursuant to the terms of the Acquisition, the Company will receive plan
assets associated with its defined benefit and contribution plans from the
seller. The amount of such assets to be transferred were estimated by the
seller's and the Company's actuaries at the acquisition date and have been
assumed to increase during 1995 at the above expected rate of return on
plan assets in determining the Company's estimated accrued pension
liability as of December 31, 1995.
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS - In addition to
providing pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. In accordance with SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," the cost of such postretirement benefits is accrued during the
years an employee provides service. Substantially all of the Company's
U.S. employees become eligible for these benefits upon the attainment of
75 "points", defined as the sum of years of service and employee age, and
certain minimum years of participation in the Company's medical plans.
20
<PAGE> 21
The net periodic postretirement benefit cost for the year ended December
31, 1995 includes the following components:
<TABLE>
<S> <C>
Service cost $ 596
Interest cost 528
Amortization of unrecognized net gain (1)
------
Net periodic postretirement benefit cost $1,123
======
</TABLE>
The amounts recognized in the Company's consolidated balance sheet at
December 31, 1995 were as follows:
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees $1,123
Fully eligible plan participants 1,261
Other active plan participants 5,659
------
Accumulated postretirement benefit obligation 8,043
Plan assets at fair value -
Unrecognized net loss 762
------
Accrued postretirement benefit liability $7,281
======
</TABLE>
The significant assumptions used in determining postretirement benefit
cost and the accumulated postretirement benefit obligation were as
follows:
<TABLE>
<CAPTION>
U.K. AND
U.S. IRELAND CANADA
<S> <C> <C> <C>
Current year health care trend rate 9.75% 10.00% 11.00%
Ultimate health care trend rate 4.75 5.00 4.00
Discount rate 7.25 9.25 9.25
</TABLE>
A one percent increase in the annual health care trend rate would have
increased the accumulated postretirement benefit obligation at December
31, 1995 by $1,899 as well as increased the postretirement expense in 1995
by $287. The Company expects to achieve the ultimate health care trend
rate within six years.
POSTEMPLOYMENT BENEFITS - The Company also provides certain postemployment
benefits to former employees and their dependents during the time period
following employment but before retirement. In accordance with SFAS No.
112, "Employers' Accounting for Postemployment Benefits," the Company
accrues for certain benefits, including severance, medical and life
coverage and disability health care coverage over an employee's service
life. At December 31, 1995 the Company has accrued $167 for postemployment
benefit costs.
9. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is involved in a variety
of legal proceedings and claims, including product liability, personal
injury and environmental matters, and is also subject to numerous
national, state and local laws and regulations governing the manufacture,
use, discharge and disposal of materials used in the Company's products.
Although it is not possible to determine with certainty the ultimate
disposition of any such legal proceedings or claims, or the effect which
such current or future
21
<PAGE> 22
regulations could have on the Company's business, management does not
believe that these matters will have a materially adverse effect on
the Company's financial condition taken as a whole.
10. CAPITAL STOCK
At December 31, 1994, the capital stock of TMHC consisted of 185,000
authorized voting common shares, par value $0.01 per share, of which
165,000 shares were issued and outstanding. These outstanding shares were
issued in connection with the Acquisition described in Note 1, to an
investor group affiliated with FL & Co. for cash in the aggregate amount
of $171,666. The proceeds from the sale of the shares were used to fund
the Acquisition.
During 1995, TMHC revised its capital structure to increase the aggregate
authorized shares of capital stock to 205,000 shares, consisting of
180,000 shares of Class A Common Stock, par value $0.01 per share; 15,000
shares of Class B Common Stock, par value $0.01 per share; and 10,000
shares of Preferred Stock, par value $0.01 per share. The Class B Common
Stock is non-voting, except in limited circumstances required by law; is
subject to Class A share preference as to receipt of dividends and in
liquidation; and the outstanding shares of Class B Common Stock are
subject to subscription agreements which limit the transferability of the
Class B Common Stock.
In 1995, the Company's shareholders adopted a nonqualified stock option
plan, Thompson Minwax Holding Corp. Employee Stock Option Plan, for key
employees to purchase up to 1,750 shares of Class A Common Stock. During
1995, 1,120 options were granted to employees under this plan and remained
outstanding as of December 31, 1995. Also in 1995, options to purchase a
total of 700 shares of Class A Common Stock were granted to four outside
directors of the Company. As of December 31, 1995, nonqualified options to
purchase a total of 1,820 shares were outstanding, but not exercisable as
of December 31, 1995. The employee and director options were granted with
an exercise price of $1,040.40 per share, and such options expire in 2005.
Also in 1995, senior management of the Company was provided an opportunity
to purchase up to an aggregate of 15,000 shares of Class B Common Stock
pursuant to The Thompson Minwax Equity Participation Program. As of
December 31, 1995, 14,626 shares had been purchased under the program.
11. SUBSEQUENT EVENT
On November 22, 1996, the Company's shareholders entered into an agreement
to sell all of the Company's outstanding common shares to The
Sherwin-Williams Company for approximately $830,000, subject to agreed
upon adjustments, less amounts due at the closing date relating to the
Company's Credit Agreement, subordinated debentures, and option
agreements. The sale is expected to occur in January 1997.
12. RESTATEMENT
Subsequent to the original issuance of the consolidated financial
statements for the year ended December 31, 1995, the Company determined
that the accounts payable balance as of December 31, 1995 was understated
by $1,257. As a result, the accompanying financial statements have been
restated from the amounts previously reported to reflect the proper
recording of this liability. The effect of the restatement on the 1995
consolidated financial statements was to increase cost of goods sold and
accounts payable by $1,257.
* * * * * *
22
<PAGE> 23
PRO FORMA FINANCIAL INFORMATION
-------------------------------
THE SHERWIN-WILLIAMS COMPANY AND
THOMPSON MINWAX HOLDING CORP.
The following unaudited pro forma combined condensed balance sheet as
of September 30, 1996 combines the historical consolidated balance sheet
information of Sherwin-Williams and Thompson Minwax as if the acquisition were
consummated at September 30, 1996. The unaudited pro forma combined condensed
statements of income for the year ended December 31, 1995 and for the nine
months ended September 30, 1996 combine the historical consolidated income
statement information of Sherwin-Williams and Thompson Minwax as if the
acquisition had been consummated on January 1 of each respective period. The
unaudited pro forma combined condensed statement of income for the year ended
December 31, 1995 also gives effect to Sherwin-Williams' acquisition of Pratt &
Lambert United, Inc., which was consummated on January 8, 1996, as if the Pratt
& Lambert United, Inc. acquisition had been consummated on January 1, 1995. Both
transactions are being recorded under the purchase method of accounting after
giving effect to the pro forma adjustments and assumptions described in the
accompanying notes.
The pro forma financial statements have been prepared by management of
Sherwin-Williams based upon the historical information included herein and
other financial information. These pro forma statements do not purport to be
indicative of the results which would have occurred had the acquisition been
made as of September 30, 1996 or on January 1 of each respective period or
which may be expected to occur in the future. The pro forma statements should
be read in conjunction with the financial statements and notes thereto included
in the Annual Report on Form 10-K of Sherwin-Williams for the year ended
December 31, 1995, in the Quarterly Report on Form 10-Q of Sherwin-Williams
for the quarter ended September 30, 1996, and the consolidated financial
statements of Pratt & Lambert United, Inc. which are contained in
Sherwin-Williams' Current Reports on Form 8-K and 8-K/A dated January 8, 1996,
all of which are incorporated herein by reference.
23
<PAGE> 24
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
THE SHERWIN-WILLIAMS COMPANY AND
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
Thousands of dollars
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS (f)
SHERWIN- THOMPSON ------------------------------- PRO FORMA
WILLIAMS MINWAX DR CR COMBINED
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 6,194 $ 14,675 $ $ 14,675 (a) $ 6,194
Short-term investments 0 0
Accounts receivable, less allowance 584,023 39,999 624,022
Finished Goods 476,538 476,538
Work-in-Process 103,978 103,978
---------- ----------
Total Inventories 580,516 31,251 611,767
Other current assets 223,313 4,956 33 (a) 228,236
- --------------------------------------------------------------------------------------------------------------------------
Total current assets 1,394,046 90,881 0 14,708 1,470,219
Deferred pension assets 245,244 245,244
Investment in Thompson Minwax 830,000 (b) 830,058 (e) 0
58 (d)
Other assets, including goodwill and deferred taxes 749,561 630,983 565,400 (e) 419,410 (c) 1,520,559
5,976 (a)
Income tax receivable 0
Property, plant and equipment 1,154,790
Less allowances for depreciation and
amortization 601,577
- --------------------------------------------------------------------------------------------------------------------------
553,213 45,814 599,027
- --------------------------------------------------------------------------------------------------------------------------
Total assets $2,942,064 $767,678 $1,395,458 $1,270,151 $3,835,049
==========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 367,522 $ 15,499 $ $ $ 383,021
Short-term borrowings 221,321 830,000 (b) 1,051,321
Other current liabilities 537,790 34,800 13,590 (a) 58 (d) 559,058
- --------------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,126,633 50,299 13,590 830,058 1,993,400
Long-term debt 137,641 532,000 532,000 (a) 137,641
Other long-term liabilities 310,094 26,218 336,312
Shareholders' equity:
Common stock, at par 101,508 2 2 (e) 101,508
Other capital 193,247 176,692 176,692 (e) 193,247
Retained earnings 1,387,214 (17,533) 419,410 (c) 524,906 (a) 1,387,214
Cumulative foreign currency translation 87,963 (e)
adjustment (20,530) (20,530)
Treasury stock, at cost (293,743) (293,743)
- --------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 1,367,696 159,161 684,067 524,906 1,367,696
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $2,942,064 $767,678 $1,229,657 $1,354,964 $3,835,049
==========================================================================================================================
<FN>
(a) Remove net assets related to financing of Thompson Minwax.
(b) Establish investment and record debt incurred to finance the acquisition.
(c) Eliminate goodwill previously recorded by Thompson Minwax.
(d) Record direct costs of acquisition.
(e) Eliminate investment and record initial goodwill based upon purchase price
less net book value of assets acquired.
(f) All assets and liabilities are included at Thompson Minwax' historical
values. Sherwin-Williams will obtain fair market values for these assets
and liabilities to be used as the basis for establishing the opening
balance sheet values for the net assets. These fair market values will not
be available for several months.
</TABLE>
24
<PAGE> 25
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
THE SHERWIN-WILLIAMS COMPANY AND
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
Thousands of dollars, except per share data
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
-------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS (g)
SHERWIN- THOMPSON ------------------------- PRO FORMA
WILLIAMS MINWAX DR CR COMBINED
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $3,174,035 $288,370 $ $ $3,462,405
Costs and expenses:
Cost of goods sold 1,874,324 102,584 1,976,908
Selling, general and administrative expenses 968,354 143,877 10,601 (b) 8,242 (a) 1,114,591
Interest expense (income) 14,179 37,929 43,575 (d) 37,929 (c) 60,716
2,962 (e)
Other 5,629 107 5,736
- -----------------------------------------------------------------------------------------------------------------------
2,862,486 284,497 57,137 46,171 3,157,951
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes 311,549 3,873 304,454
Income taxes 121,504 503 3,013 (f) 118,994
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 190,045 $ 3,370 $ 185,460
=======================================================================================================================
Net income per share $ 2.20 $ 2.15
=======================================================================================================================
Average shares outstanding (in thousands) 86,359 86,359
<FN>
(a) Remove goodwill amortization of Thompson Minwax related to L&F Products,
Inc.
(b) Record amortization of excess of purchase price over acquired net assets,
based on an estimated life of 40 years. Such amortization expense is
subject to possible adjustment upon completion of Thompson Minwax
appraisal valuation.
(c) Remove interest expense of Thompson Minwax.
(d) Record additional estimated interest expense resulting from the use of debt
to finance the acquisition.
(e) Remove interest income earned on short-term investments.
(f) Record tax effect, using a 35% statutory federal rate, on the net pro forma
adjustments.
(g) Sherwin-Williams expects to achieve certain synergies in relation to the
business combination. Such synergies have not been directly identified, and
thus are not included in the above pro forma adjustments.
</TABLE>
25
<PAGE> 26
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
THE SHERWIN-WILLIAMS COMPANY AND
PRATT & LAMBERT UNITED, INC. AND
THOMPSON MINWAX HOLDING CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Thousands of dollars, except per share data FOR THE YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------------
PRO FORMA PRO FORMA ADJUSTMENTS (i)
SHERWIN- PRATT & THOMPSON ------------------------- PRO FORMA
WILLIAMS LAMBERT MINWAX DR CR COMBINED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $3,273,819 $396,362 $ 367,710 $ $ $4,037,891
Costs and expenses:
Cost of goods sold 1,877,083 291,891 137,934 2,306,908
Selling, general and administrative expenses 1,075,442 83,031 170,212 23,317 (b) 13,394 (a) 1,340,458
1,380 (f)
470 (g)
Interest expense (income) (8,986) 6,291 52,156 80,293 (d) 65,180 (c) 73,592
0 9,018 (e)
Other 11,782 (137) 16,964 28,609
- -----------------------------------------------------------------------------------------------------------------------------------
2,955,321 381,076 377,266 114,477 78,574 3,749,567
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 318,498 15,286 (9,556) 288,324
Income taxes 117,844 8,100 298 9,093 (h) 117,149
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 200,654 $ 7,186 $ (9,854) $ 171,175
===================================================================================================================================
Net income per share $ 2.34 $ 2.00
===================================================================================================================================
Average shares outstanding (in thousands) 85,743 85,743
<FN>
(a) Remove goodwill amortization of Pratt & Lambert related to United Coatings,
Inc. and goodwill amortization of Thompson Minwax related to L&F Products,
Inc.
(b) Record amortization of excess of purchase price over acquired net assets,
based on an estimated life of 40 years. Such amortization expense is
subject to possible adjustment upon completion of Thompson Minwax
appraisal valuation.
(c) Remove interest expense of Pratt & Lambert and Thompson Minwax.
(d) Record additional estimated interest expense resulting from the use of debt
to finance the acquisitions.
(e) Remove interest income earned on short-term investments.
(f) Record additional estimated depreciation expense due to write-up of Pratt &
Lambert fixed assets. Such depreciation expense is subject to possible
additional adjustment upon completion of Thompson Minwax appraisal
valuation.
(g) Record amortization expense of Pratt & Lambert identified trademarks. Such
amortization expense is subject to additional adjustment upon completion of
Thompson Minwax appraisal valuation.
(h) Record tax effect, using a 35% statutory federal rate, on the net pro forma
adjustments.
(i) Sherwin-Williams expects to achieve certain synergies in relation to the
business combination. Such synergies have not been directly identified, and
thus are not included in the above pro forma adjustments.
</TABLE>
26
<PAGE> 27
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE SHERWIN-WILLIAMS COMPANY
January 22, 1997 By: /s/ L.E. Stellato
-------------------------------------
L.E. Stellato
Vice President, General Counsel and
Secretary
27
<PAGE> 28
EXHIBIT INDEX
-------------
EXHIBIT NO. EXHIBIT DESCRIPTION
----------- -------------------
2 Stock Purchase Agreement, dated November 22, 1996, among Sherwin-
Williams, Silver Acquisition Corp., Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership - V, L.P.,
MTF Partners, L.P. and certain individual shareholders who are
signatories thereto. (Schedules and Exhibits to the Stock Purchase
Agreement have been omitted pursuant to Rule 601(b)(2) of Regulation
S-K. Sherwin-Williams agrees to furnish to the Securities and
Exchange Commission, upon its request, any or all such omitted
Schedules and Exhibits.) (filed herewith).
23 Consent of Deloitte & Touche LLP as independent auditors dated January
20, 1997 (filed herewith).
99.1 Five Year Revolving Credit Agreement, dated January 3, 1997, between
Sherwin-Williams, Texas Commerce Bank National Association, as
Administrative Agent, The Chase Manhattan Bank, as Competitive Advance
Facility Agent, and the financial institutions which are signatories
thereto (filed herewith).
99.2 364-Day Revolving Credit Agreement, dated January 3, 1997, between
Sherwin-Williams, Texas Commerce Bank National Association, as
Administrative Agent, The Chase Manhattan Bank, as Competitive Advance
Facility Agent, and the financial institutions which are signatories
thereto (filed herewith).
28
<PAGE> 1
EXHIBIT 2
STOCK PURCHASE AGREEMENT
by and among
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP-V, L.P.,
MTF PARTNERS, L.P.,
THE SHAREHOLDER INDIVIDUALS,
THE SHERWIN-WILLIAMS COMPANY
and
SILVER ACQUISITION CORP.
Dated as of November 22, 1996
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
ARTICLE I
<S> <C>
TERMS OF PURCHASE AND SALE...........................................................................2
1.01. Purchase and Sale of Shares of the Company..............................................2
1.02. The Closing.............................................................................2
1.03. Purchase Price..........................................................................2
1.04. Cancellation of Options.................................................................4
1.05. Indebtedness Payment and Certain Closing Deliveries.....................................4
1.06. Partial Closing.........................................................................5
1.07. Closing Balance Sheet; Purchase Price Adjustment........................................5
1.08. Trust Agreement.........................................................................10
1.09. Manner of Payment to Sellers............................................................15
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS............................................................15
2.01. Title to Shares.........................................................................15
2.02. Capitalization..........................................................................16
2.03. Subsidiaries............................................................................16
2.04. Organization............................................................................17
2.05. Financial Statements....................................................................17
2.06. Absence of Certain Changes or Events....................................................18
2.07. Title to Assets.........................................................................18
2.08. Patents, Trademarks, Etc................................................................19
2.09. Power and Authority; Effect of Agreement................................................19
2.10. Commitments.............................................................................21
2.11. Litigation..............................................................................22
2.12. Compliance with Laws....................................................................22
2.13. Environmental Matters...................................................................23
2.14. Taxes...................................................................................25
2.15. Employee Benefit Plans..................................................................26
2.16. Consents................................................................................27
2.17. Insurance...............................................................................27
2.18. Labor Matters...........................................................................28
2.19. Undisclosed Liabilities.................................................................28
2.20. Fees....................................................................................29
2.21. Representations and Warranties of Sellers as of the Closing Date........................29
2.22. Disclaimer..............................................................................29
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE III
<S> <C>
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER...................................................30
3.01. Organization............................................................................30
3.02. Power and Authority; Effect of Agreement................................................30
3.03. Litigation..............................................................................31
3.04. Availability of Funds...................................................................32
3.05. Consents................................................................................32
3.06. Fees....................................................................................32
ARTICLE IV
COVENANTS OF SELLERS.................................................................................32
4.01. Cooperation by Sellers..................................................................32
4.02. Conduct of Business.....................................................................33
4.03. Access..................................................................................34
4.04. No Solicitation.........................................................................35
4.05. Disclosure Schedules....................................................................36
4.06. Resale Exemption Certificates...........................................................36
ARTICLE V
COVENANTS OF PARENT AND BUYER........................................................................37
5.01. Cooperation by Parent and Buyer.........................................................37
5.02. Disclosure Schedules....................................................................38
5.03. Indemnification; Insurance..............................................................38
5.04. Employee Benefits.......................................................................41
5.05. Parent Obligations......................................................................42
5.06. Resale Exemption Certificates...........................................................43
ARTICLE VI
CONDITIONS TO PARENT'S AND BUYER'S OBLIGATIONS.......................................................43
6.01. Material Adverse Effect.................................................................43
6.02. Covenants of Sellers....................................................................43
6.03. No Prohibition..........................................................................43
6.04. Consents................................................................................44
6.05. Delivery of Shares......................................................................44
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS...................................................................44
7.01. Representations, Warranties and Covenants of Parent and Buyer...........................44
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
7.02. No Prohibition..........................................................................45
7.03. Consents................................................................................45
ARTICLE VIII
TERMINATION..........................................................................................45
8.01. Termination.............................................................................45
8.02. Effect on Obligations...................................................................46
ARTICLE IX
INDEMNIFICATION......................................................................................46
9.01. Survival................................................................................46
9.02. Indemnification.........................................................................48
9.03. Procedures for Claims...................................................................49
9.04. Other Provisions........................................................................52
ARTICLE X
MISCELLANEOUS........................................................................................56
10.01. Interpretive Provisions................................................................56
10.02. Seller's Knowledge.....................................................................56
10.03. Entire Agreement.......................................................................56
10.04. Successors and Assigns.................................................................56
10.05. Parties in Interest....................................................................57
10.06. Headings...............................................................................57
10.07. Amendment..............................................................................57
10.08. Waivers................................................................................57
10.09. Expenses...............................................................................58
10.10. Notices................................................................................58
10.11. Governing Law, Etc.....................................................................59
10.12. Public Announcements...................................................................60
10.13. Sellers' Representatives...............................................................60
10.14. Counterparts...........................................................................60
</TABLE>
(iii)
<PAGE> 5
STOCK PURCHASE AGREEMENT
------------------------
This STOCK PURCHASE AGREEMENT, dated as of the 22nd day of
November, 1996, by and among Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-V, L.P., a Delaware limited partnership ("MBO-V"),
MTF Partners, L.P., a New York limited partnership ("MTF Partners"), the persons
listed on Exhibit A hereto (the "Shareholder Individuals") (MBO-V, MTF Partners
and the Shareholder Individuals are hereinafter collectively referred to as
"Sellers"), The Sherwin-Williams Company, an Ohio corporation ("Parent"), and
Silver Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Parent ("Buyer");
W I T N E S S E T H :
---------------------
WHEREAS, Sellers own of record and beneficially all of the
outstanding shares of capital stock of Thompson Minwax Holding Corp., a Delaware
corporation (the "Company"); and
WHEREAS, Sellers desire to sell to Buyer, and Parent and Buyer
desire that Buyer buy from Sellers, all of the issued and outstanding shares of
capital stock of the Company (the "Shares");
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements, and upon the terms and
subject to the conditions, hereinafter set forth, the parties do hereby agree as
follows:
<PAGE> 6
ARTICLE I
TERMS OF PURCHASE AND SALE
--------------------------
1.01. PURCHASE AND SALE OF SHARES OF THE COMPANY. On the
Closing Date (as defined in Section 1.02), Sellers shall sell to Buyer, and
Buyer shall purchase from Sellers, the Shares for the purchase price specified
herein. At the Closing (as defined in Section 1.02), Sellers shall deliver to
Buyer certificates representing the Shares being sold hereunder duly endorsed in
blank for transfer or accompanied by duly executed stock powers assigning such
Shares in blank, and Buyer shall deliver to Sellers the Purchase Price (as
defined in Section 1.03(a)) in accordance with Section 1.03. Buyer shall bear
the cost of any documentary, stamp, sales and excise or other taxes (other than
federal, state, local and foreign income taxes payable by Sellers) in respect of
the transfer of the Shares.
1.02. THE CLOSING. Upon the terms and subject to the
conditions of this Agreement, the closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Fried, Frank, Harris, Shriver
& Jacobson, One New York Plaza, New York, New York, at 9:00 a.m., local time, on
the fifth business day following the day on which any applicable waiting period
under the HSR Act (as defined in Section 2.16) shall have expired or been
terminated, or at such other time, date or place as Buyer and the
Representatives (as defined in Section 10.13) may agree. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
1.03. PURCHASE PRICE. (a) The purchase price to be paid by
Buyer to Sellers for the Shares (the "Purchase Price") shall be an amount in
cash equal to $830,000,000 less the sum of (i) the Indebtedness Payment plus
(ii) the Option Payments (each of the foregoing terms as defined in Section
1.03(b)). The Purchase Price shall be subject to adjustment as provided in
Section 1.07.
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<PAGE> 7
(b) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Indebtedness Payment" shall mean an amount equal
to, as of the Closing Date, the then outstanding principal of, accrued
and unpaid interest on, any prepayment penalties or premiums on, and
any other amounts payable with respect to, (A) all indebtedness of the
Company and the Subsidiaries under the Credit Agreement, dated as of
November 30, 1994, among the Company, The Thompson Minwax Company,
Chase Manhattan Bank ("Chase"), as agent, and the financial
institutions party thereto, as amended (the "Credit Agreement"), but
not including any undrawn amounts under outstanding letters of credit
(the "Bank Indebtedness Payment"), and (B) all indebtedness of the
Company and the Subsidiaries under the Subordinated Debentures (the
"Subordinated Debentures") issued by the Company and held by the
limited partners of MBO-V (the "Debenture Indebtedness Payment").
(ii) "Option Payments" shall mean the aggregate
amount payable as a result of the transactions contemplated hereby in
cancellation or termination of outstanding options to purchase shares
of capital stock of the Company (collectively, "Options") (including
the portion thereof which the Company is required to withhold under
applicable tax laws).
(c) At the Closing, Buyer shall (i) pay the amount of the
Purchase Price less $20,000,000 to an account or accounts designated by the
Representatives and (ii) deposit the sum of $20,000,000 in trust in accordance
with the terms set forth in Section 1.08. All payments pursuant to clauses (i)
and (ii) of this paragraph (c) shall be made by wire transfer of U.S. dollars in
immediately available funds.
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<PAGE> 8
(d) As soon as practicable but in any event no later than
seven days prior to the Closing Date, the Representatives shall deliver to Buyer
a good faith estimate of (i) the Purchase Price, (ii) the Indebtedness Payment
and (iii) the Option Payments. The Representatives shall deliver to Buyer no
later than the opening of business on the Closing Date a certificate setting
forth (i) the Purchase Price, (ii) the Indebtedness Payment and (iii) the Option
Payments.
1.04. CANCELLATION OF OPTIONS. At the Closing, Buyer shall
contribute to the Company, by wire transfer of immediately available funds, cash
in an amount equal to the Option Payments, and the Representatives shall cause
the Company to deliver such amount less the withholding tax payable in respect
thereof to the Representatives on behalf of the holders of Options entitled to
Option Payments as a result of the transactions contemplated hereby in
cancellation of such holders' Options. The Company shall be responsible for and
shall pay when due any withholding taxes payable in respect of the Option
Payments.
1.05. INDEBTEDNESS PAYMENT AND CERTAIN CLOSING DELIVERIES. (a)
At the Closing, Buyer shall contribute to the Company, by wire transfer of
immediately available funds, cash in an amount equal to the Indebtedness
Payment, and the Representatives shall cause the Company (or a Subsidiary) to
(i) pay to Chase (for the benefit of the financial institutions party to the
Credit Agreement), by wire transfer of immediately available funds, an amount in
cash equal to the Bank Indebtedness Payment, and (ii) pay to the Representatives
(for the benefit of the holders of the Subordinated Debentures), by wire
transfer of immediately available funds, an amount in cash equal to the
Debenture Indebtedness Payment. At the Closing, Sellers shall deliver to Buyer
written statements from Chase and the holders of the Subordinated Debentures (or
their representatives) stating the amount due, as of the Closing Date, for the
Bank Indebtedness Payment and the Debenture Indebtedness Payment, respectively.
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<PAGE> 9
(b) At the Closing, Buyer shall either (i) furnish to the
Company letters of credit in an aggregate principal amount and with terms
satisfactory to the Company to replace all then outstanding letters of credit
under the Credit Agreement (the "Letters of Credit") or (ii) provide the Company
such other forms of security as may be necessary to replace the Letters of
Credit.
1.06. PARTIAL CLOSING. If all of the terms and conditions to
the parties' respective obligations to consummate the transaction (including
that set forth in Section 6.05) are satisfied (or waived by the appropriate
party) but one or more of Sellers shall have failed to deliver an executed
counterpart of this Agreement as provided in Section 9.14 or to deliver the
certificates representing their Shares, then Buyer shall be entitled to hold
back from the Purchase Price an amount equal to the amount which otherwise would
have been payable in respect of such Shares. Buyer shall purchase and pay for
any Shares the certificates for which are delivered after the Closing within
three days of notice by the Representatives that they have the certificates
available, against delivery of such certificates duly endorsed or accompanied by
duly executed stock powers and a counterpart of this Agreement executed by the
holder of such Shares, if not previously delivered. Notwithstanding the
foregoing provisions of this Section 1.06 or the provisions of Section 6.05,
Sellers shall use their best efforts (which shall in no event require the
payment of any monies by Sellers) to deliver 100% of the total number of Shares.
1.07. CLOSING BALANCE SHEET; PURCHASE PRICE ADJUSTMENT. (a)
Within 45 days following the Closing Date, Sellers shall prepare, issue and
deliver to Buyer an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the close of business on the day immediately preceding the
Closing Date (the "Closing Balance Sheet"). There shall be attached to the
Closing Balance Sheet an annex setting forth in
-5-
<PAGE> 10
reasonable detail the computation of the Purchase Price Adjustment (as defined
in Section 1.07(d)).
(b) The Closing Balance Sheet shall be prepared using the same
accounting methods, policies, practices, principles and procedures
(collectively, "Methods"), with consistent classification, judgments and
estimation methodology (collectively, "Methodology"), that were used, and making
the same pro forma adjustments that were made, in the preparation of the
September 30 Balance Sheet (as defined in Section 2.05), except as set forth
below, shall be prepared on an interim basis (except as set forth in clause
(iii) below), even if the Closing Date is January 1, 1997, and shall not take
into account any information not known by the Company or any of the Subsidiaries
prior to the close of business on the day immediately preceding the Closing Date
or any changes in circumstances or events occurring after the close of business
on the day immediately preceding the Closing Date. In preparing the Closing
Balance Sheet, (i) there shall be included therein Cash on Hand (as defined in
Section 1.07(d)), notwithstanding that Cash on Hand was not included in the
September 30 Balance Sheet (provided that the Closing Balance Sheet shall not
include both the uncashed check representing payment of an account receivable
and the account receivable itself), (ii) the respective amounts included therein
for those reserves which are listed on Exhibit 1.07 shall be equal to the
respective amounts (including the absence of a reserve or zero) of such reserves
shown on Exhibit 1.07, and (iii) the amount included therein for inventories
shall be based upon a physical inventory of the Company and the Subsidiaries, to
be conducted jointly by the Company and Buyer as of a mutually agreed upon date
and completed prior to the Closing Date, and shall be adjusted to reflect
activity from such mutually agreed upon date to and including the day
immediately preceding the Closing Date and otherwise shall be determined in
accordance with the Methods and
-6-
<PAGE> 11
Methodology used in the preparation of the December 31 Balance Sheet (as defined
in Section 2.05).
(c) The Closing Balance Sheet delivered by Sellers to Buyer
and the computation of the Purchase Price Adjustment annexed thereto shall be
conclusive and binding upon the parties unless Buyer, within 30 days after the
delivery to Buyer of the Closing Balance Sheet, notifies the Representatives in
writing that Buyer disputes any of the amounts set forth therein, specifying the
nature of the dispute and the basis therefor. The parties shall in good faith
attempt to resolve any dispute, in which event the Closing Balance Sheet and the
computation of the Purchase Price Adjustment, as amended to the extent necessary
to reflect the resolution of the dispute, shall be conclusive and binding upon
the parties. If the parties do not reach agreement resolving the dispute within
10 days after notice is given by Buyer to the Representatives pursuant to the
second preceding sentence, the parties shall submit the dispute to a partner at
the accounting firm of Arthur Andersen LLP or if no partner of such firm will
act, to a partner at such other nationally recognized independent accounting
firm mutually agreeable to the parties, which firm shall not have had a material
relationship with either Buyer or the Representatives or their respective
affiliates within the two years preceding the appointment (the "Arbiter"), for
resolution. If the parties cannot agree on the selection of a partner at an
independent accounting firm to act as Arbiter, the parties shall request the
American Arbitration Association to appoint such a partner, and such appointment
shall be conclusive and binding upon the parties. Promptly, but no later than 20
days after its acceptance of his or her appointment as Arbiter, the Arbiter
shall determine, based solely on presentations by Buyer and the Representatives,
and not by independent review, only those issues in dispute and shall render a
report as to the dispute and the resulting computation of the Closing Balance
Sheet and the Purchase Price Adjustment, if any, which shall be conclusive and
binding upon the parties. All proceedings conducted by
-7-
<PAGE> 12
the Arbiter shall take place in the City of New York. In resolving any disputed
item, the Arbiter (x) shall be bound by the provisions of Section 1.07(b) and
(y) may not assign a value to any item greater than the greatest value for such
item claimed by either party or less than the smallest value for such item
claimed by either party. The fees, costs and expenses of the Arbiter (i) shall
be borne by Buyer in the proportion that the aggregate dollar amount of such
disputed items so submitted that are unsuccessfully disputed by Buyer (as
finally determined by the Arbiter) bears to the aggregate dollar amount of such
items so submitted and (ii) shall be borne by Sellers in the proportion that the
aggregate dollar amount of such disputed items so submitted that are
successfully disputed by Buyer (as finally determined by the Arbiter) bears to
the aggregate dollar amount of such items so submitted. Whether any dispute is
resolved by agreement among the parties or by the Arbiter, changes to the
Closing Balance Sheet shall be made hereunder only for items as to which Buyer
has taken exception as provided herein. Buyer and the Representatives each shall
make available to the other (upon the request of the other) their respective
work papers generated in connection with the preparation or review of the
Closing Balance Sheet. Such work papers of the Representatives shall be
destroyed by the Representatives within 90 days following the determination of
the Final Closing Balance Sheet, provided that the Representatives may deliver
one copy of such work papers to their outside counsel, Fried, Frank, Harris,
Shriver & Jacobson, and the Representatives shall cause such outside counsel to
keep such copy confidential.
(d) As used herein,
(i) the term "Final Closing Balance Sheet" shall mean
the Closing Balance Sheet which has become conclusive and binding upon
the parties pursuant to Section 1.07(c);
-8-
<PAGE> 13
(ii) the term "Closing Book Value" shall mean the
amount obtained by subtracting the total liabilities of the Company and
its Subsidiaries, as set forth in the Final Closing Balance Sheet, from
the total assets of the Company and its Subsidiaries, as set forth in
the Final Closing Balance Sheet; and
(iii) the term "Cash on Hand" shall mean the
aggregate amount of any cash and cash equivalents (including the amount
of any uncashed checks payable to the Company or any of the
Subsidiaries) on hand at or in bank accounts or lockboxes of the
Company or any of the Subsidiaries as of 11:59 p.m. New York City Time
on the day immediately preceding the Closing Date.
The difference, if any, between the Closing Book Value and
$685,916,000, whether a positive or negative number, is herein referred to as
the "Purchase Price Adjustment." If the Closing Book Value exceeds $685,916,000,
the dollar amount of the Purchase Price Adjustment shall be paid by Buyer to
Sellers in accordance with the provisions of Section 1.07(e). If the Closing
Book Value is less than $685,916,000, the dollar amount of the Purchase Price
Adjustment shall be paid by Sellers (who shall be jointly and severally liable
therefor) to Buyer in accordance with the provisions of Section 1.07(e).
(e) The amount of any Purchase Price Adjustment shall bear
interest at an annual rate equal to 5.5% from and including the Closing Date to,
but not including, the date of payment. Any amount payable as Purchase Price
Adjustment (plus interest determined pursuant to the immediately preceding
sentence) shall be paid by wire transfer of immediately available funds to an
account designated in writing by Buyer or Sellers, as the case may be. Such
payment shall be made on the third business day following (i) the last day on
which Buyer may, pursuant to the first sentence of Section 1.07(c), notify the
Representatives that it disputes any of the amounts set forth in the Closing
Balance Sheet,
-9-
<PAGE> 14
if Buyer shall not notify the Representatives of any dispute, or such earlier
date as Buyer shall advise the Representatives of the absence of any dispute, or
(ii) the date mutual agreement is reached as to the amount of the Purchase Price
Adjustment, if any, in the event of a dispute that is settled by the parties
without resort to the Arbiter, or (iii) the date of receipt of the report of the
Arbiter in the event of a dispute which is settled by the Arbiter, as applicable
(the third business day following the applicable date being referred to herein
as the "Payment Date"). Any amounts payable by Sellers to Buyer in respect of
this paragraph (e) shall first be payable out of the PPA Trust Funds (as defined
in Section 1.08(a)) in accordance with the Trust Agreement and the balance shall
be payable by Sellers (who shall be jointly and severally liable therefor).
(f) Buyer shall provide Sellers and their accountants full
access to all relevant books and records and to employees of the Company and its
Subsidiaries to the extent necessary for Sellers to prepare the Closing Balance
Sheet and in connection with any items in dispute with respect to the Closing
Balance Sheet. Such access shall be provided during regular business hours and
upon reasonable notice. Sellers shall endeavor to cause minimal disruption to
the business of the Company and its Subsidiaries. A reasonable number of
representatives of Sellers (including Sellers' accountants) shall participate in
the preparation of the Closing Balance Sheet at sites of the Company and its
Subsidiaries. All such access of Sellers shall be coordinated through designated
representatives of Buyer.
1.08. TRUST AGREEMENT. (a) Sellers and Buyer shall enter into
a trust agreement at the Closing in substantially the form attached as Exhibit
1.08 (the "Trust Agreement"). At the Closing, Buyer shall deposit $20,000,000 in
trust in accordance with the Trust Agreement, of which $5,000,000 shall be
designated for purposes of the Purchase Price Adjustment (the "PPA Trust Funds")
and $15,000,000 shall be designated for purposes of Sellers' indemnification
obligations set forth in Section 9.02(a)(i) (the
-10-
<PAGE> 15
"Indemnity Trust Funds"). The PPA Trust Funds and the Indemnity Trust Funds
shall earn interest in accordance with the Trust Agreement; all interest earned
on the PPA Trust Funds and the Indemnity Trust Funds shall belong to Sellers and
the Representatives shall have the sole right to direct the release of any such
interest.
(b) With respect to the PPA Trust Funds, the following
principles shall apply:
(i) If Buyer notifies the Representatives that it
disputes any of the amounts set forth in the Closing Balance Sheet
delivered by Sellers, but the amount of the Purchase Price Adjustment
payable by Sellers would be less than $5,000,000 or there would be no
Purchase Price Adjustment at all payable by Sellers, assuming for these
purposes that Buyer would prevail on every disputed item, then, within
one business day following such notice by Buyer, the Representatives
and Buyer shall instruct the Trustee to pay the PPA Trust Funds, less
the amount, if any, that would be owing to Buyer were Buyer to prevail
on every item disputed by it, to the Representatives. If on any
subsequent dates, either because of resolution of any disputed items by
mutual agreement of the parties, or because Buyer withdraws any of its
disputes, or otherwise, none, or not all, of the PPA Trust Funds would
be payable to Buyer, even were Buyer to prevail on every disputed item,
then Buyer and the Representatives shall instruct the Trustee in
writing to disburse all or the appropriate portion of the PPA Trust
Funds to the Representatives.
(ii) On the Payment Date, one of the following shall
occur:
(1) If the Purchase Price Adjustment is zero
or is payable to Sellers, the Representatives and Buyer shall
instruct the Trustee in writing to disburse the PPA Trust
Funds (or any remaining portions thereof,
-11-
<PAGE> 16
if disbursement of any portion thereof had previously been
made in accordance with Section 1.08(b)(i)) to the
Representatives.
(2) If the Purchase Price Adjustment is
payable to Buyer, the Representatives and Buyer shall instruct
the Trustee to disburse to Buyer an amount of the PPA Trust
Funds equal to the amount of the Purchase Price Adjustment
plus interest on such amount at the interest rate set forth in
Section 1.07(e) and, if the amount of the Purchase Price
Adjustment plus such interest is less than $5,000,000, to
disburse the remaining portion of the PPA Trust Funds, if any,
to the Representatives. If the amount of the Purchase Price
Adjustment plus such interest payable to Buyer exceeds the
amount of the PPA Trust Funds, Sellers shall jointly and
severally pay the amount of such excess to Buyer in accordance
with Section 1.07(e).
(c) With respect to the Indemnity Trust Funds, the
following principles shall apply:
(i) If Buyer and the Representatives shall agree (or,
failing such agreement, if a court of competent jurisdiction by final
non-appealable order shall determine) that Buyer has suffered any
Losses (as defined in Section 5.03) with respect to which Buyer is
entitled to indemnification pursuant to Section 9.02(a)(i), the
Representatives and Buyer shall instruct the Trustee in writing to
disburse to Buyer from the Indemnity Trust Funds an amount equal to the
amount of such Losses.
(ii) On the twelve month anniversary of the Closing
Date, Buyer and the Representatives shall instruct the Trustee in
writing to disburse the amount of the Indemnity Trust Funds then
remaining on deposit with the Trustee under the
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<PAGE> 17
Trust Agreement less the Sales and Use Tax Amount (as defined below) to
the Representatives; provided, however, that if, on or prior to that
date, Buyer has in good faith given Valid Claim Notices (as defined in
Section 9.01) with respect to any claims for indemnification pursuant
to Section 9.02(a)(i), which claims remain unresolved (collectively,
"Unresolved Claims") (other than claims for breaches of the Sales Tax
Representations (as defined in Section 9.04(h)) or the Use Tax
Representations (as defined in Section 9.04(h))), there shall remain on
deposit with the Trustee, and not disbursed to the Representatives, the
aggregate amount that would be payable to Buyer pursuant to Article IX
were Buyer to prevail in respect of all such claims until Buyer and the
Representatives shall instruct the Trustee to disburse such funds by
mutual agreement or pursuant to and in accordance with a final
non-appealable order of a court of competent jurisdiction. The term
"Sales and Use Tax Amount" at any time shall mean the sum of (i)
$1,000,000 less the aggregate amount disbursed prior to such time
pursuant to Section 1.08(c)(i) for indemnification for any breaches of
the Sales Tax Representations, plus (ii) $300,000 less the aggregate
amount disbursed prior thereto pursuant to Section 1.08(c)(i) for
indemnification for any breaches of the Use Tax Representations.
(iii) If at any time an Unresolved Claim in respect
of which funds are being held under the Trust Agreement shall be
resolved, either by mutual agreement of the parties or pursuant to a
final non-appealable order of a court of competent jurisdiction, Buyer
and the Representatives shall instruct the Trustee in writing to
disburse such funds in accordance with such agreement or court order,
provided that no funds shall be disbursed to Sellers unless there shall
remain on deposit until the twenty-four month anniversary of the
Closing Date the sum of (1) $1,000,000 less any amounts disbursed
pursuant to Section 1.08(c)(i) in respect
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<PAGE> 18
of claims for indemnification for any breaches of the Sales Tax
Representations plus (2) $300,000 less any amounts disbursed pursuant
to Section 1.08(c)(i) in respect of claims for indemnification for any
breaches of the Use Tax Representations.
(iv) On the 24-month anniversary of the Closing Date,
Buyer and the Representatives shall instruct the Trustee in writing to
disburse the Sales and Use Tax Amount then remaining on deposit with
the Trustee under the Trust Agreement to the Representatives; provided,
however, that if, on or prior to that date, Buyer has in good faith
given Valid Claim Notices with respect to any claims for
indemnification pursuant to Section 9.02(a)(i) for breaches of the
Sales Tax Representations and/or the Use Tax Representations, which
claims remain unresolved, there shall remain on deposit with the
Trustee, and not disbursed to the Representatives, the aggregate amount
that would be payable to Buyer pursuant to Article IX were Buyer to
prevail in respect of all such claims until Buyer and the
Representatives shall instruct the Trustee to disburse such funds by
mutual agreement or pursuant to and in accordance with a final
non-appealable order of a court of competent jurisdiction.
(v) On the 36-month anniversary of the Closing Date,
Buyer and the Representatives shall instruct the Trustee in writing to
disburse any Indemnity Trust Funds being held in respect of any
Unresolved Claim if the claimant of such Unresolved Claim shall not
have communicated (including by commencing a Litigation (as defined in
Section 2.11)) with the Company with regard to such Unresolved Claim
during the prior 24-month period. If there has been such communication
during the prior 24-month period with respect to any Unresolved Claim,
then the Indemnity Trust Funds being held in respect thereof shall be
released to the Representatives upon receipt of written instructions
from Buyer and
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<PAGE> 19
the Representatives (and Buyer agrees to join in written instructions
to the Trustee no later than the expiration of the statute of
limitations applicable to the Unresolved Claim so long as the claimant
has not commenced any legal proceeding prior to the expiration of the
statute of limitations) or pursuant to and in accordance with a final
nonappealable order of a court of competent jurisdiction.
(d) In the event that a party shall at any time have failed to
timely join in written instructions to the Trustee as required by this Section
1.08, the other party shall receive from such party its out-of-pocket costs and
expenses incurred in connection with any actions taken by the other party in
connection with such failure, including reasonable attorney's fees and expenses.
1.09. MANNER OF PAYMENT TO SELLERS. Any sums owed by Buyer to
Sellers pursuant to this Article I shall be paid by Buyer to the Representatives
and the Representatives shall allocate such sums among Sellers in proportion to
the percentage of the Shares owned by each Seller on the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers hereby severally represent and warrant to Parent and
Buyer as follows:
2.01. TITLE TO SHARES. The sale and delivery of the Shares to
Buyer pursuant to Article I hereof will vest in Buyer legal and valid title to
the Shares, free and clear of all liens, security interests or other
encumbrances ("Encumbrances") (other than Encumbrances created or suffered by
Buyer).
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<PAGE> 20
2.02. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of 10,000 shares of preferred stock, par
value $.01 per share, none of which are issued and outstanding, and 195,000
shares of common stock, divided into two classes consisting of (i) 180,000
shares of Class A Common Stock, par value $.01 per share (the "Class A Common
Stock"), of which 165,050 shares are issued and outstanding, and (ii) 15,000
shares of Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"), of which 14,926 shares are issued and outstanding. All of the issued
and outstanding Shares are validly issued, fully paid and non-assessable. As of
the date hereof, there are outstanding Options to acquire 2,740 shares of Class
A Common Stock. Except as set forth in Disclosure Schedule 2.02, there are
outstanding no securities convertible into, exchangeable for, or carrying the
right to acquire, or any voting agreements with respect to, any equity
securities of the Company, or subscriptions, warrants, options, rights or other
arrangements or commitments obligating the Company to issue or acquire any of
its equity securities or any ownership interest therein. Upon payment of the
Option Payments as provided in Section 1.04, all of the outstanding Options will
be terminated and the Company will have no further obligations to the holders
thereof with respect thereto except to remit the applicable withholding taxes
when due.
2.03. SUBSIDIARIES. Disclosure Schedule 2.03 sets forth a
list, as of the date hereof, of all direct or indirect subsidiaries of the
Company (the "Subsidiaries") together with its jurisdiction of organization and
its authorized and outstanding capital stock or other equity interests as of the
date hereof. Except as set forth in Disclosure Schedule 2.03, the Company owns,
either directly or indirectly through one or more Subsidiaries, all of the
capital stock of the Subsidiaries free and clear of any Encumbrance. All of the
issued and outstanding shares of capital stock of the Subsidiaries are validly
issued, fully paid and non-assessable. Except as set forth in
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Disclosure Schedule 2.03, there are outstanding no securities convertible into,
exchangeable for, or carrying the right to acquire, or any voting agreements
with respect to, any equity securities of any of the Subsidiaries, or
subscriptions, warrants, options, rights or other arrangements or commitments
obligating any Subsidiary to issue or acquire any of its equity securities or
any ownership interest therein.
2.04. ORGANIZATION. The Company and each of the Subsidiaries
are corporations duly organized and validly existing under the laws of their
respective jurisdictions of incorporation and have all requisite corporate power
and authority to carry on their businesses as they are now being conducted. The
Company and each of the Subsidiaries are duly qualified to do business and are
in good standing as foreign corporations in all jurisdictions where the nature
of the property owned or leased by them, or the nature of the business conducted
by them, makes such qualification necessary and the absence of such
qualification would, individually or in the aggregate, have a material adverse
effect on the business or financial condition of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"). True and complete
copies of the Certificates of Incorporation and By-Laws of the Company and each
of the Subsidiaries have previously been made available to Buyer.
2.05. FINANCIAL STATEMENTS. The Company has delivered to Buyer
(a) the audited consolidated balance sheet of the Company and the Subsidiaries
as of December 31, 1995 (the "December 31 Balance Sheet"), (b) the unaudited
consolidated balance sheet of the Company and the Subsidiaries as of September
30, 1996 (the "September 30 Balance Sheet"), (c) the audited consolidated
statements of operations of the Company and the Subsidiaries for the year ended
December 31, 1995 and (d) the unaudited consolidated statements of operations of
the Company and the Subsidiaries for the nine months ended September 30, 1996
(collectively, the "Financial Statements"), a copy of each of which is included
in Disclosure Schedule 2.05. The Financial Statements
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present fairly, in all material respects, the consolidated financial position
and the results of operations of the Company and the Subsidiaries as of their
respective dates and for the respective periods then ended in conformity with
generally accepted accounting principles except as set forth in the footnotes
thereto or in Disclosure Schedule 2.05, and except that the unaudited financial
statements were prepared on an interim basis, are subject to normal year-end
adjustments and do not contain all of the footnote disclosures required by
generally accepted accounting principles.
2.06. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Disclosure Schedule 2.06 or permitted or contemplated by this
Agreement, since September 30, 1996, neither the Company nor any of the
Subsidiaries has (a) suffered any damage, destruction or casualty loss to its
physical properties which individually exceeds $100,000 or which in the
aggregate exceed $500,000; (b) incurred or discharged any obligation or
liability or entered into any other transaction except in the ordinary course of
business; (c) suffered any changes which individually or in the aggregate have a
Material Adverse Effect; or (d) increased the rate or terms of compensation
payable or to become payable by the Company or any of its Subsidiaries to any of
their respective directors, officers or key employees, or increased the rate or
terms of any bonus, pension or other employee benefit plan covering any of their
respective directors, officers or key employees, except in each case increases
occurring in the ordinary course of business in accordance with their respective
customary practices (including normal periodic performance reviews and related
compensation and benefit increases) or as required by any pre-existing
Commitment (as defined in Section 2.10) which is listed on Disclosure Schedule
2.10 (or which is not required by the terms of Section 2.10 to be listed on such
Schedule).
2.07. TITLE TO ASSETS. The Company and the Subsidiaries have
good (and, in the case of real property, marketable) title to all of the assets
and properties which
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they purport to own, free and clear of Encumbrances, except (a) as set forth in
Disclosure Schedule 2.07, and (b) liens for taxes not yet due or being contested
in good faith by appropriate proceedings. Except as set forth in Disclosure
Schedule 2.07, no assets or properties of the Company or any Subsidiary other
than inventory in the ordinary course have been sold or otherwise transferred
since December 31, 1995. Except as set forth in Disclosure Schedule 2.07, to the
knowledge of Sellers, there are no existing structural defects in any of the
buildings or other structures located on the real property owned by the Company
or any of its Subsidiaries.
2.08. PATENTS, TRADEMARKS, ETC. Disclosure Schedule 2.08 sets
forth a list, as of the date hereof, of all registered United States and foreign
patents, trademarks, trade names, copyrights and applications therefor which are
used by the Company or any of the Subsidiaries in the conduct of the business of
the Company and the Subsidiaries (the "Patent and Trademark Rights"). Except as
set forth in Disclosure Schedule 2.08, (a) the Company and the Subsidiaries own
or possess adequate licenses or other valid rights to use all Patent and
Trademark Rights; (b) to Seller's knowledge, the conduct of the business of the
Company and the Subsidiaries as now being conducted does not conflict with any
valid patents, trademarks, trade names or copyrights of others; (c) to Seller's
knowledge, none of the Patent and Trademark Rights is being infringed upon by
others; (d) neither the Company nor any of the Subsidiaries has granted any
right to use the Patent and Trademark Rights to any third party; and (e) no
person or entity has alleged in writing the existence of any restrictions on use
of the Patent and Trademark Rights that would affect Buyer's right to use the
Patent and Trademark Rights in connection with the business of the Company and
the Subsidiaries following the Closing in the same manner as they are currently
being used.
2.09. POWER AND AUTHORITY; EFFECT OF AGREEMENT. (a) Each of
MTF Partners and MBO-V has all requisite power and authority to execute, deliver
and
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perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by MTF Partners and MBO-V of this
Agreement and the consummation by each of them of the transactions contemplated
hereby have been duly authorized by all necessary partnership action on each of
their part. This Agreement has been duly and validly executed and delivered by
MTF Partners and MBO-V and, assuming the due authorization, execution and
delivery thereof by Parent and Buyer, constitutes a valid and binding obligation
of each of MTF Partners and MBO-V, enforceable against each of them in
accordance with its terms, except to the extent that such enforceability (i) may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and (ii) is subject to
general principles of equity.
(b) Each Shareholder Individual has the right, power and
capacity to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each Shareholder Individual and constitutes his or her
valid and binding obligation, enforceable against him or her in accordance with
its terms, except to the extent that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally, and (ii) is subject to general
principles of equity.
(c) The execution, delivery and performance by MTF Partners
and MBO-V of this Agreement and the consummation by each of them of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both, subject to obtaining any required consents,
approvals, authorizations, exemptions or waivers referred to in Section 2.16,
(i) violate any provision of law, rule or regulation to which MTF Partners or
MBO-V is subject, (ii) violate any order, judgment or decree applicable to MTF
Partners or MBO-V, or (iii) conflict with or result in a breach of the
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provisions of, or constitute a default under, the partnership agreements for
each of MTF Partners and MBO-V or any agreement reflecting obligations of MTF
Partners or MBO-V for borrowed money, except in the case of clause (i), (ii) or
(iii) of this Section 2.09(c), for violations, conflicts, breaches or defaults
which individually or in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby.
2.10. COMMITMENTS. Disclosure Schedule 2.10 sets forth a list,
as of the date hereof, of each contract or agreement to which the Company or any
of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound (collectively, the "Commitments") (a) which provides for
future payments thereunder of more than $100,000 per year; (b) which are
Commitments for capital expenditures; (c) which are distribution, dealer or
sales agency Commitments; (d) which are guarantees of third party obligations;
(e) which are Commitments for the sale of any assets, but excluding purchase
orders or other Commitments for the purchase of raw materials, components or
supplies and sales orders or other Commitments for the sale of finished goods
entered into in the ordinary course of business; (f) which restricts the kinds
of businesses in which the Company or any of the Subsidiaries may engage or the
geographical area in which any of them may conduct their business; (g) which is
an indenture, mortgage, loan agreement or other Commitment for the borrowing of
money or a line of credit; (h) which is a collective bargaining agreement; (i)
which is a license (whether as licensor or licensee) or similar agreement
permitting the use of any Patent and Trademark Rights; (j) which is a brokerage
or finder's agreement; (k) which is a joint venture, partnership or similar
agreement; (l) which is a stock purchase agreement, asset purchase agreement or
other acquisition or divestiture agreement; or (m) which is not of the foregoing
type and is material to the business or financial condition of the Company and
the Subsidiaries taken as a whole ("Material"). Except as set forth in
Disclosure
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<PAGE> 26
Schedule 2.10, each of such Commitments is a valid and binding obligation of the
Company or a Subsidiary and is enforceable against the Company or a Subsidiary
in accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and is subject to general
principles of equity, and neither the Company nor any Subsidiary nor, to the
knowledge of Sellers, any other party is in default under any Commitment.
2.11. LITIGATION. Except as set forth in Disclosure Schedule
2.11, there is no action, suit, claim or proceeding in any court or before any
governmental authority ("Litigation") pending or, to Sellers' knowledge,
threatened against Sellers relating to the business of the Company and the
Subsidiaries, or against the Company or any of the Subsidiaries. Except as set
forth in Disclosure Schedule 2.11, neither the Company nor any of the
Subsidiaries is subject to any outstanding orders, rulings, judgments or
decrees. No proceedings, whether voluntary or involuntary, are pending or, to
Sellers' knowledge, threatened, against the Company or any of the Subsidiaries
under the bankruptcy laws and/or receivership or similar laws of the United
States of America or of any state or foreign country, nor is the Company or any
of the Subsidiaries contemplating such proceedings.
2.12. COMPLIANCE WITH LAWS. Except as set forth in Disclosure
Schedule 2.12, to Sellers' knowledge, the Company and the Subsidiaries are in
compliance with all applicable federal, state, local and foreign laws, rules and
regulations currently in effect, including, without limitation, equal employment
opportunity practices. Except as set forth in Disclosure Schedule 2.12, the
Company and the Subsidiaries have all governmental permits, licenses and
authorizations necessary for the conduct of their businesses as presently
conducted. To Seller's knowledge, there are no pending or
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threatened investigations by any governmental body or agency with regard to the
operations of the Company or any of the Subsidiaries.
2.13. ENVIRONMENTAL MATTERS. Except as set forth in Disclosure
Schedule 2.13, to Sellers' knowledge, the Company and the Subsidiaries are in
compliance with all Environmental Laws (as defined below) currently in effect.
Except as set forth in Disclosure Schedule 2.13, the Company and the
Subsidiaries have all governmental permits, licenses, authorizations and
approvals required for the conduct of their businesses as presently conducted
and as the businesses have been conducted since December 31, 1995 pursuant to
any Environmental Law. All such permits, licenses, authorizations and approvals
are in good standing and the Company or the Subsidiaries, as the case may be,
have made timely application for renewal of such permits where necessary. To
Sellers' knowledge, except as set forth in Disclosure Schedule 2.13, no
hazardous substance (as defined under applicable federal, state or local law)
has been treated, stored, disposed of, or discharged into the environment on or
from the premises of the Company or any of the Subsidiaries, which is currently
required by applicable law, rule or regulation to be remediated by or at the
expense of the Company or any of the Subsidiaries. Except as set forth in
Disclosure Schedule 2.13, the Company and the Subsidiaries have not received any
written notice of any violation or alleged violation of, or any liability under,
any Environmental Law in connection with their respective businesses since
November 30, 1994, other than violations which would not materially or adversely
affect Buyer's ability to conduct the businesses of the Company and the
Subsidiaries as heretofore conducted. Except as set forth in Disclosure Schedule
2.13, there are no writs, injunctions, decrees, orders or judgments outstanding,
or any actions, suits or proceedings pending or, to the knowledge of Sellers,
threatened, nor, to the knowledge of Sellers, is any investigation pending or
threatened, relating to compliance with or liability under any Environmental Law
affecting the businesses of the Company
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and the Subsidiaries. Buyer and Sellers agree that the only representations and
warranties of Sellers made herein as to any Environmental Matters are those
contained in this Section 2.13. As used herein, the term "Environmental Matter"
means any matter arising out of or relating to the environment, safety or health
or the production, storage, handling, use, emission, release, discharge or
disposal of any substance, product or waste which is hazardous or toxic or which
is regulated by law. "Environmental Laws" means any law or order of any federal,
state, local or foreign governmental body relating to protection or regulation
of the environment, laws, rules, regulations or orders regulating or relating to
the emission, discharge, disposal, treatment, transportation, storage, release
or threatened release of hazardous, toxic or other pollutants, contaminants,
chemicals, materials, substances, wastes or Hazardous Materials (as defined
below) into the environment, including ambient air, surface water, ground water,
ground water, land surface or subsurface strata, or otherwise regulating or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of hazardous, toxic or other pollutants,
contaminants, chemicals, materials, substances, wastes or Hazardous Materials,
and all regulations, rules, codes, plans, decrees, judgments, injunctions,
orders, notices and demand letters issued, entered, promulgated or approved
hereunder. "Hazardous Materials" means any toxic substance, hazardous substance,
hazardous material, hazardous chemical, hazardous waste, mineral, metal,
material or chemical substance defined, regulated, or qualifying as such in any
Environmental Law, or any pollutant or contaminant, and shall include, but not
be limited to, petroleum, including crude oil or any fraction thereof which is
liquid at standard conditions of temperature or pressure (60 degrees fahrenheit
and 14.7 pounds per square inch absolute), any radioactive material, including
but not limited to any source, special nuclear or by-product material as
defined at 42 U.S.C. Section 2011 et seq., as amended, polychlorinated biphenyls
and asbestos that is friable or otherwise required to be remediated.
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2.14. TAXES. (a) Except as set forth on Disclosure Schedule
2.14, the Company and the Subsidiaries (i) will have timely filed, on or prior
to the Closing Date, all Tax returns, reports, schedules, documents and
declarations required to be filed by the Company or the Subsidiaries prior to
such date; (ii) have timely paid in full all Taxes due; and (iii) will have made
timely withholdings and payments of any Taxes required to be deducted and
withheld by the Company or the Subsidiaries from the wages or other remuneration
paid to employees of the Company or the Subsidiaries or others prior to the
Closing Date. All Tax returns, schedules and declarations filed by the Company
or the Subsidiaries reflect in all material respects the matters required to be
reported therein including, where appropriate, income, expenses, deductions,
credits, loss carryovers and Taxes due of the Company and the Subsidiaries, and
such returns, schedules and declarations have not been amended except as set
forth in Disclosure Schedule 2.14(a). Except as set forth in Disclosure Schedule
2.14(a), Sellers have no knowledge that an audit of any Tax returns of the
Company or any of the Subsidiaries is in progress and have not been notified in
writing that any such audit is contemplated. No claims have been asserted in
writing against the Company or any of the Subsidiaries with respect to Taxes
which claims are currently pending. Sellers have previously made available to
Buyer copies of all Tax returns of the Company and the Subsidiaries that have
been filed since their inception (for the last three years with respect to
Ronseal (Ireland) Limited), all amended Tax returns for those years, if any, all
written audit reports and proposed adjustments with respect to the Tax returns
of the Company and the Subsidiaries for those years including any assessments,
all refund claims with respect to the Company or any of the Subsidiaries for
those years, any and all property tax bills with respect to property owned by
the Company or any of the Subsidiaries during those years and any existing
tax-sharing or similar agreements to which the Company or any of the
Subsidiaries is a party.
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(b) "Tax" and "Taxes" shall include income taxes (whether
federal, state, local or foreign, or other taxes on or measured by income, gross
receipts, profits or occupations), franchise taxes, excise taxes, employment
taxes, unemployment taxes, payroll taxes, employee taxes, employer taxes, sales
and use taxes, real property taxes, personal property taxes, transfer taxes, ad
valorem taxes, per capita taxes, head taxes, and any other tax or taxes imposed,
whether or not assessed, by any federal, state, municipal, local or other
governmental agency, foreign or domestic, including assessments in the nature of
taxes, including interest and penalties on any of the foregoing.
2.15. EMPLOYEE BENEFIT PLANS. Disclosure Schedule 2.15 lists
all employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which are
maintained or contributed to by the Company or any of the Subsidiaries (the
"Company Benefit Plans"). Sellers have provided to Buyer (i) true and complete
copies of all Company Benefit Plans; (ii) the most recent annual actuarial
evaluation, if any, prepared for each Company Benefit Plan; (iii) the most
recent annual report (series 5500), if any, required under ERISA with respect to
each Company Benefit Plan; (iv) the most recent determination letter received
from the Internal Revenue Service (the "IRS"), if any, for each Company Benefit
Plan; and (v) the most recent Summary Plan Description, if any, required under
ERISA with respect to each Company Benefit Plan. Except as set forth in
Disclosure Schedule 2.15, (i) with respect to each Company Benefit Plan that is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended and in effect during the relevant period (the "Code"), and is
maintained by the Company or any of the Subsidiaries for any of their employees,
(x) the Company or such Subsidiary has obtained a favorable determination letter
from the IRS, (y) such plan has been operated in compliance with the Code and
ERISA and in accordance with the provisions of, and the rules and regulations
covering, such plan, and (z) the Company and the Subsidiaries are
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not, and to Seller's knowledge no other person is, engaged in a transaction
prohibited by Section 4975 of the Code or Section 406 of ERISA which would
result in a liability to the Company and the Subsidiaries; (ii) each Company
Benefit Plan which is subject to Part III of Subtitle B of Title I or ERISA or
Section 412 of the Code has been maintained in compliance with the minimum
funding standards of ERISA and the Code; and (iii) no reportable event, within
the meaning of Section 4043 of ERISA, which is subject to Title IV of ERISA has
occurred with respect to any Company Benefit Plan, other than reportable events
with respect to which notice has been waived by the Pension Benefit Guaranty
Corporation. Disclosure Schedule 2.15 lists all multiemployer pension and/or
welfare benefit plans to which the Company and/or any of the Subsidiaries now
contribute, or since November 30, 1994 have contributed, and neither the Company
nor any of the Subsidiaries has received notice of an assessment of withdrawal
liability (whether full or partial) from any such multiemployer plan or has
knowledge of an event for which withdrawal liability may be incurred.
2.16. CONSENTS. Except as set forth in Disclosure Schedule
2.16, no consent, approval or authorization of, or exemption by, or filing with,
any governmental authority, other than pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), is required in connection with the
execution, delivery and performance by Sellers of this Agreement or the taking
by it of any other action contemplated hereby, excluding, however, consents,
approvals, authorizations, exemptions and filings, if any, which Buyer is
required to obtain or make.
2.17. INSURANCE. Disclosure Schedule 2.17 sets forth a list,
as of the date hereof, of all casualty, general liability and other insurance
maintained by the Company or any of the Subsidiaries (the "Insurance Policies").
Each of the Insurance Policies is in full force and effect and no written notice
has been received by the Company or any of
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the Subsidiaries from any insurance carrier purporting to cancel coverage under
any of the Insurance Policies. Except as set forth in Disclosure Schedule 2.17,
to Seller's knowledge, there are no pending claims against the Insurance
Policies by the Company or any of the Subsidiaries as to which the insurers have
denied liability. The Company and its Subsidiaries have timely filed all claims
of which they have knowledge under such Insurance Policies. The Company and the
Subsidiaries have made timely premium payments with respect to all of the
Insurance Policies. Sellers make no representation or warranty that the
Company's insurance coverage under the Insurance Policies will be continued or
is continuable after the Closing.
2.18. LABOR MATTERS. Except as set forth in Disclosure
Schedule 2.18, neither the Company nor any of the Subsidiaries is a party to any
collective bargaining agreement nor does any labor union or collective
bargaining agent represent any of the employees of the Company or any of the
Subsidiaries. Except as set forth in Disclosure Schedule 2.18, there is no labor
strike, slow-down or stoppage pending or, to Sellers' knowledge, threatened by
the employees of the Company or any of the Subsidiaries.
2.19. UNDISCLOSED LIABILITIES. To Sellers' knowledge, the
Company and its Subsidiaries do not have any liabilities of any nature that
would be required by generally accepted accounting principles to be reflected on
a balance sheet or in the notes thereto of the Company and its Subsidiaries,
other than (i) liabilities disclosed or referred to in any of the Disclosure
Schedules (including liabilities for present or future performance under any of
the documents listed in any of the Disclosure Schedules); (ii) liabilities as to
which no disclosure is required pursuant to this Article II (for example,
because of the making of the representation and warranty is disclaimed or
because the liability involves an amount which is less than the threshold above
which disclosure is required); (iii) liabilities that are reflected in the
Financial Statements; or (iv) liabilities that will be reflected on the Final
Closing Balance Sheet.
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2.20. FEES. Except for the fees payable to Merrill Lynch & Co.
and Smith Barney Inc., neither the Company nor any of the Subsidiaries has paid
or become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated hereby.
2.21. REPRESENTATIONS AND WARRANTIES OF SELLERS AS OF THE
CLOSING DATE. All of the representations and warranties of Sellers contained in
this Article II are true on the date hereof and will be true on and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except (a) as otherwise contemplated hereby, and (b) to the extent that such
representations and warranties were made as of a specified date and as to such
representations and warranties the same will continue on the Closing Date to be
true as of the specified date.
2.22. DISCLAIMER. SELLERS HAVE NOT MADE AND SHALL NOT BE
DEEMED TO HAVE MADE TO PARENT OR BUYER ANY REPRESENTATION OR WARRANTY OTHER THAN
THOSE EXPRESSLY MADE BY SELLERS IN SECTIONS 2.01 THROUGH 2.21 HEREOF. IN ANY
EVENT, SELLERS MAKE NO REPRESENTATION OR WARRANTY TO PARENT OR BUYER (1) AS TO
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY,
WITH RESPECT TO ANY OF THE TANGIBLE ASSETS BEING SO TRANSFERRED, OR AS TO THE
CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER
LATENT OR PATENT (OR ANY OTHER REPRESENTATION OR WARRANTY REFERRED TO IN SECTION
2-312 OF THE NEW YORK UNIFORM COMMERCIAL CODE OR THE UNIFORM COMMERCIAL CODE OF
ANY OTHER APPLICABLE JURISDICTION OR IN ANY STATUTE APPLICABLE TO REAL PROPERTY)
EXCEPT, IN THE CASE OF THIS CLAUSE (1) ONLY, AS EXPRESSLY COVERED BY THE
REPRESENTATION AND WARRANTY CONTAINED IN SECTION 2.07,
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(2) WITH RESPECT TO ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED
TO OR MADE AVAILABLE TO PARENT OR BUYER, OR (3) WITH RESPECT TO ANY OTHER
INFORMATION OR DOCUMENTS MADE AVAILABLE TO PARENT OR BUYER EXCEPT, IN THE CASE
OF THIS CLAUSE (3) ONLY, AS EXPRESSLY COVERED BY A REPRESENTATION OR WARRANTY
CONTAINED IN SECTIONS 2.01 THROUGH 2.21 HEREOF.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
--------------------------------------------------
Parent and Buyer hereby represent and warrant to Sellers as
follows:
3.01. ORGANIZATION. Parent and Buyer are corporations duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, and each has all requisite corporate
power and authority to carry on its business as it is now being conducted. Buyer
is a wholly owned subsidiary of Parent.
3.02. POWER AND AUTHORITY; EFFECT OF AGREEMENT. (a) Each of
Parent and Buyer has all requisite power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Buyer of this Agreement
and the consummation by Parent and Buyer of the transactions contemplated hereby
have been duly authorized by the Board of Directors of each of Parent and Buyer,
and no other corporate action on the part of Parent or Buyer or their
stockholders or affiliates is necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by each of Parent and Buyer and,
assuming the due authorization, execution and delivery thereof by Sellers,
constitutes a valid and binding obligation of each of Parent and Buyer,
enforceable against each of
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them in accordance with its terms, except to the extent that such enforceability
(i) may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and (ii) is subject
to general principles of equity.
(b) The execution, delivery and performance by each of Parent
and Buyer of this Agreement and the consummation by each of Parent and Buyer of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, subject to obtaining any required
consents, approvals, authorizations, exemptions or waivers referred to in
Section 3.05, (i) violate any provision of law, rule or regulation to which
Parent or Buyer is subject, (ii) violate any order, judgment or decree
applicable to Parent or any of its subsidiaries, including Buyer, or (iii)
conflict with or result in a breach of the provisions of, or constitute a
default under, (A) the Amended Articles or Code of Regulations of Parent or the
Certificate of Incorporation or By-Laws of Buyer, or (B) any agreement
reflecting obligations of Parent or any of its subsidiaries, including Buyer,
for borrowed money, except in the case of clause (i), (ii) or (iii) of this
Section 3.02(b), for violations, conflicts, breaches or defaults which
individually or in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby.
3.03. LITIGATION. There is no Litigation pending or threatened
against Parent or any of its subsidiaries, including Buyer, (i) with respect to
which there is a reasonable likelihood of a determination which would,
individually or in the aggregate, have a material adverse effect on the ability
of Parent or Buyer to perform its obligations under this Agreement, or (ii)
which seeks to enjoin or obtain damages in respect of the consummation of the
transactions contemplated hereby. Neither Parent nor any of its subsidiaries,
including Buyer, is subject to any outstanding orders, rulings, judgments or
decrees which, individually or in the aggregate, would have a material adverse
effect on the ability of Parent or Buyer to perform its obligations under this
Agreement.
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3.04. AVAILABILITY OF FUNDS. On the Closing Date, Parent shall
cause Buyer to have available sufficient funds to enable it to consummate the
transactions contemplated by this Agreement.
3.05. CONSENTS. Except as set forth in Exhibit 3.05, no
consent, approval or authorization of, or exemption by, or filing with, any
governmental authority, other than pursuant to the HSR Act, is required in
connection with the execution, delivery and performance by Parent and Buyer of
this Agreement, or the taking by either of them of any other action contemplated
hereby, excluding, however, consents, approvals, authorizations, exemptions and
filings, if any, which Sellers are required to obtain or make.
3.06. FEES. Neither Parent nor Buyer nor any of their
affiliates has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary in connection with the transactions contemplated
hereby.
ARTICLE IV
COVENANTS OF SELLERS
--------------------
Sellers hereby covenant and agree with Parent and Buyer as
follows:
4.01. COOPERATION BY SELLERS. (a) From the date hereof and
prior to the Closing, Sellers shall use their best efforts, and will cooperate
with Parent and Buyer, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Sellers to effect the transactions contemplated hereby, and
shall otherwise use their best efforts to cause the consummation of such
transactions in accordance with the terms and conditions hereof.
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(b) Without limiting the provisions set forth in paragraph (a)
of this Section 4.01, Sellers shall file with the Department of Justice ("DOJ")
and the Federal Trade Commission ("FTC") a Pre-Merger Notification and Report
Form pursuant to the HSR Act in respect of the transactions contemplated hereby
within five business days after the date of this Agreement, and Sellers shall
use, and cause each of their affiliates to use, their best efforts to take or
cause to be taken all actions necessary to promptly and fully comply with any
requests for information from regulatory authorities to obtain any authorization
relating to the HSR Act that is necessary to enable the parties to consummate
the transactions contemplated by this Agreement.
4.02. CONDUCT OF BUSINESS. Except as may be otherwise
contemplated by this Agreement or required by any of the documents listed in the
Disclosure Schedule or except as Buyer may otherwise consent to in writing
(which consent shall not be unreasonably withheld or delayed), from the date
hereof and prior to the Closing, Sellers shall cause the Company and each of the
Subsidiaries to, (i) conduct its business only in the ordinary course; (ii) use
its reasonable efforts to preserve intact its business organization; (iii)
maintain its properties, machinery and equipment in sufficient operating
condition and repair to enable it to conduct its business in the manner in which
its business is currently conducted, except for maintenance required by reason
of fire, flood, earthquake or other acts of God; (iv) continue all existing
insurance policies (or comparable insurance) in full force and effect; (v) not
increase the rate or terms of compensation payable or to become payable by the
Company or any of its Subsidiaries to any of their respective directors,
officers, or key employees, and not increase the rate or terms of any bonus,
pension or other employee benefit plan covering any of their respective
directors, officers or key employees, except in each case increases occurring in
the ordinary course of business in accordance with their respective customary
practices (including normal periodic performance reviews and related
compensation and benefit
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increases) or as required by any pre-existing Commitment; (vi) use its
reasonable efforts to preserve its relationships with its lenders, suppliers,
customers, licensors and licensees and others having business dealings with the
Company and the Subsidiaries such that its business will not be impaired; (vii)
not borrow any money or otherwise incur any financial debt other than under the
Credit Agreement; (viii) not declare or pay any dividend or declare or make any
other distribution to shareholders other than cash dividends of earnings
generated from the operation of the Company and the Subsidiaries; (ix) not
purchase or redeem any shares, notes or other securities; (x) not reclassify,
split or combine the Shares, or issue, sell, distribute or dispose of any
Shares, notes or other securities, or issue any options, warrants or rights, or
make any changes to any Options, or commit to do so, provided that the exercise
of any Options granted prior to the date hereof and the issuance of Class B
Common Stock upon exercise of the Options, and the issuance of shares of Class A
Common Stock of the Company in exchange for shares of Class B Common Stock of
the Company pursuant to the Company's Certificate of Incorporation shall not be
deemed to violate the provisions of this Section 4.02; (xi) not make any
material change in accounting methods; (xii) not guarantee any obligation or
liability except for endorsements for collections in the ordinary course of
business; (xiii) not acquire an equity interest in, or all or substantially all
of the assets of, any entity, nor acquire substantially all of the assets of any
division, business unit or product line of any entity; and (xiv) not enter into,
or commit to enter into, any arrangements concerning the factoring of accounts
receivable or any similar arrangements involving accounts receivable.
4.03. ACCESS. From the date hereof and prior to the Closing,
Sellers shall provide Parent and Buyer with such information as they may from
time to time reasonably request with respect to the Company and the Subsidiaries
and the transactions contemplated by this Agreement and provide Parent and Buyer
and their representatives
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reasonable access during regular business hours and upon reasonable notice to
the properties, books and records of the Company and the Subsidiaries as they
may from time to time reasonably request; PROVIDED that Sellers shall not be
obligated to provide Parent or Buyer with any information relating to
proprietary formulas or processes of the Company or its Subsidiaries or which
would violate any law, rule or regulation or term of any Commitment, or if the
provision thereof would adversely affect the ability of Sellers or the Company
or any of the Subsidiaries or any of their respective affiliates to assert
attorney-client, attorney work product or other similar privilege. Sellers shall
promptly make available to Parent and Buyer copies of documents or other items
identified in any Disclosure Schedule which have not been delivered or otherwise
made available to Buyer prior to the date hereof. Any disclosure whatsoever
during such investigation by Parent or Buyer shall not constitute an enlargement
of or additional representations or warranties of Sellers beyond those
specifically set forth in this Agreement. All such information and access shall
be subject to the terms and conditions of the letter agreement dated September
11, 1996 between Parent and the Company (the "Confidentiality Agreement").
4.04. NO SOLICITATION. From and after the date hereof and
prior to the Closing, Sellers (or any of Sellers' financial advisors, investment
bankers, attorneys or other advisors and representatives) shall not, and Sellers
shall cause the Company and its directors, officers, employees, advisors and
representatives to not, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) any Acquisition Proposal (as
defined below) from any person, or engage in or continue discussions or
negotiations relating to any Acquisition Proposal, and shall direct the
Company's directors, officers, financial advisors and other authorized
representatives to refrain from taking any such action. "Acquisition Proposal"
means, with respect to the Company, any proposal or offer for, or any written
statement of intention (by public announcement or otherwise) by any person or
group to effect, any merger or consolidation with, or
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acquisition of substantially all of the assets of, or other business combination
involving, the Company or any of the Subsidiaries. Sellers shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any persons conducted heretofore with respect to any of the
foregoing, and Sellers shall immediately demand that any such persons return to
Sellers any confidential information and/or materials such persons may have
received from Sellers or the Company during the course of such activities,
discussions or negotiations.
4.05. DISCLOSURE SCHEDULES. At any time and from time to time
prior to the Closing Date, Sellers may deliver to Parent and Buyer revised
Disclosure Schedules as may be necessary to make the representations and
warranties of Sellers contained herein or in any Ancillary Document true on the
date hereof and/or on and as of the Closing Date. Any delivery made by Sellers
pursuant to the preceding sentence shall not affect any right which Buyer may
have to elect not to close pursuant to Section 6.01 if any matter disclosed in
the revised Disclosure Schedules has a Material Adverse Effect, but if Buyer
consummates the Closing, then the accuracy of the representations and warranties
of Sellers, whether made on the date hereof or on and as of the Closing Date,
shall for all purposes of this Agreement be determined with reference to the
Disclosure Schedules as revised by Sellers pursuant to the first sentence of
this Section 4.05. Sellers shall provide Buyer with such additional information
in their possession as the Buyer may reasonably request relating to any
Disclosure Schedules revised pursuant to the provisions of this Section 4.05.
Sellers shall endeavor to provide any revised Disclosure Schedules to Buyer at
least seven days prior to the Closing Date but nothing herein shall preclude
Sellers from delivering revised Disclosure Schedules up to the Closing.
4.06. RESALE EXEMPTION CERTIFICATES. From the date hereof and
prior to the Closing, Sellers shall cause the Company and its Subsidiaries to
use their best efforts (which shall in no event require the payment of any
monies by Sellers) to obtain from
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their customers "Resale Exemption Certificates" in connection with the sale of
products of the Company and the Subsidiaries sold for purposes of resale in each
state where such products were sold.
ARTICLE V
COVENANTS OF PARENT AND BUYER
Parent and Buyer hereby covenant and agree with Sellers as
follows:
5.01. COOPERATION BY PARENT AND BUYER. (a) From the date
hereof and prior to the Closing, each of Parent and Buyer shall use its best
efforts, and shall cooperate with Sellers, to secure all necessary consents,
approvals, authorizations, exemptions and waivers from third parties as shall be
required in order to enable Parent and Buyer to effect the transactions
contemplated hereby, and will otherwise use its best efforts to cause the
consummation of such transactions in accordance with the terms and conditions
hereof.
(b) Without limiting the provisions set forth in paragraph (a)
of this Section 5.01, Parent and Buyer shall file with the DOJ and the FTC a
Pre-Merger Notification and Report Form pursuant to the HSR Act in respect of
the transactions contemplated hereby within five business days after the date of
this Agreement, and each of Parent and Buyer shall use, and shall cause each of
its affiliates to use, its best efforts to take or cause to be taken all actions
necessary to promptly and fully comply with any requests for information from
regulatory authorities to obtain any authorization relating to the HSR Act that
is necessary to enable the parties to consummate the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that such efforts shall not include any of
the following types of measures (or similar extraordinary measures): (i) the
proffer by Buyer of its willingness to accept an order providing for the
divestiture by Buyer of
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any of the assets or businesses of the Company, the Subsidiaries, Buyer or any
of its affiliates, or (ii) the divestiture or the holding separate by Buyer
following the Closing of any of the assets or businesses of the Company or any
of the Subsidiaries.
5.02. DISCLOSURE SCHEDULES. If at any time prior to the date
hereof or from the date hereof to the Closing Date, Parent or Buyer is or
becomes aware of any matter which should have been or should be disclosed by
Sellers in a Disclosure Schedule, Parent or Buyer, as applicable, shall promptly
provide notice to the Representatives of such matter.
5.03. INDEMNIFICATION; INSURANCE. (a) From and after the
Closing, Parent and Buyer shall jointly and severally indemnify and hold
harmless to the fullest extent permitted under Applicable Law (as defined below)
each person who is now, or has been at any time prior to the date hereof, an
officer, director or stockholder of the Company or any of its Subsidiaries or
any direct or indirect general partner of any stockholder that is a partnership
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties")(except that, with respect to Ronseal (Ireland) Limited, such
indemnification shall only apply to any person who has been any of the foregoing
from and after the effective time of the consummation of the transactions
pursuant to the Kodak Agreement (as defined in Section 9.04(g)) (a "New Ronseal
Party")), against all losses, claims, damages, liabilities, costs or expenses,
including attorneys' fees, judgments, fines, penalties and amounts paid in
settlement (collectively, "Losses") incurred by an Indemnified Party in
connection with any claim, action, suit, proceeding or investigation (an
"Action") in any way arising out of, pertaining to or incurred in connection
with acts or omissions, or alleged acts or omissions, by any of them in their
capacities as an officer, director or stockholder of the Company or any of its
Subsidiaries (or as a direct or indirect general partner of any stockholder that
is a partnership in respect of such partnership's capacity as a stockholder)
("Capacity"), whether commenced, asserted or claimed before
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or after the Closing and including, without limitation, any Losses incurred by
any Indemnified Party arising out of or relating in any way to (i) this
Agreement or any of the transactions contemplated hereby, or (ii) any liability
or obligation of or arising out of or relating to the Company or any of the
Subsidiaries (or any of their respective predecessors), including any attempt by
any third party (whether or not successful) to impose liability in respect
thereof on any of the Indemnified Parties, by reason of such Indemnified Party's
ownership of Shares or other Capacity. In the event of any such Action, (i)
Parent, Buyer or the Company shall pay on an as-incurred basis the reasonable
fees and expenses of counsel selected by the Indemnified Party in advance of the
final disposition of any such action to the full extent permitted by Applicable
Law, upon receipt of any undertaking contemplated by such Applicable Law, and
(ii) the Indemnified Party shall be entitled to control the defense of any such
Action with counsel of its own choosing, and Parent or Buyer shall, and shall
cause the Company to, cooperate with the Indemnified Party in the defense of any
such Action; PROVIDED, HOWEVER, that Buyer shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and PROVIDED, FURTHER, that the Indemnified
Parties as a group shall be permitted to retain only one law firm, to be
selected by the Representatives, at Parent and Buyer's expense (nothing herein,
however, shall preclude any Indemnified Party from retaining separate counsel at
such Indemnified Party's own expense), to represent them with respect to each
such Action unless there is, under applicable standards of professional conduct,
a conflict on any significant issue between the positions of any two or more
Indemnified Parties. For purposes of this Section 5.03, "Applicable Law" shall
mean, with respect to any stockholder of the Company or any direct or indirect
general partner of any such stockholder that is a partnership, any applicable
law, and, with respect to any other Indemnified Party, the General Corporation
Law of the State of Delaware (the "DGCL").
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(b) Parent and Buyer shall cause the Company to not amend the
provisions of the Certificate of Incorporation or the By-Laws of the Company or
any of its Subsidiaries in a way that would adversely affect the rights of the
Indemnified Parties under this Section 5.03.
(c) For a period of six years after the Closing Date, Parent
and Buyer shall cause to be maintained officers' and directors' liability
insurance covering the Indemnified Parties who are currently covered, in their
capacities as officers and directors, by the Company's or any Subsidiary's
existing officers' and directors' liability insurance policies on terms
substantially no less advantageous to the Indemnified Parties than such existing
insurance; PROVIDED, HOWEVER, that in order to maintain or procure such
coverage, Parent or Buyer shall not be required to pay an annual premium in
excess of 2.5 times the aggregate of the last annual premium paid by the Company
and the Subsidiaries prior to the date hereof for their existing coverage (the
"Cap"); and PROVIDED, FURTHER, that if equivalent coverage cannot be obtained,
or can be obtained only by paying an annual premium in excess of the Cap, Buyer
shall only be required to obtain as much coverage as can be obtained by paying
an annual premium equal to the Cap.
(d) Buyer shall pay all reasonable expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 5.03.
(e) The Company and each of its Subsidiaries hereby releases
and forever discharges each person who is now, or has been at any time prior to
the date hereof, an officer, director or stockholder of the Company or any of
its Subsidiaries and any direct or indirect general partner of any stockholder
that is a partnership (individually, a "Released Party" and collectively, the
"Released Parties") (except that, in the case of Ronseal (Ireland) Limited, such
release shall only apply to a New Ronseal Party) from
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any and all claims, rights, obligations, debts, liabilities, actions or causes
of action of every kind and nature, whether foreseen or unforeseen, contingent
or actual, and whether now known or hereafter discovered, which the Company or
any of its Subsidiaries had, now has or may have, in law or in equity, against
any Released Party in any way arising out of, pertaining to or incurred in
connection with acts or omissions or alleged acts or omissions by any of them
which acts or omissions existed or occurred at or prior to the Closing, other
than acts or omissions or alleged acts or omissions involving criminal activity
or willful misconduct by such Released Party. Each of Parent and Buyer hereby
acknowledges the release set forth in the preceding sentence and covenants and
agrees that it will not, and will cause the Company and its Subsidiaries not to,
take any action (including, without limitation, commencing an Action or
asserting a claim) inconsistent therewith.
(f) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
Certificate of Incorporation or By-Laws of the Company or any Subsidiary or
under Applicable Law. Notwithstanding anything to the contrary contained in this
Agreement or otherwise, the provisions of this Section 5.03 shall survive the
Closing and each Indemnified Party and Released Party shall, for all purposes,
be a third-party beneficiary of the covenants and agreements of Parent and Buyer
under this Section 5.03 and, accordingly, shall be treated as a party to this
Agreement for purposes of the rights and remedies relating to enforcement of
such covenants and agreements and shall be entitled to enforce any such rights
and exercise any such remedies directly.
5.04. EMPLOYEE BENEFITS. After the Closing Date, Buyer shall
cause the Company to grant to all individuals who are, as of the Closing Date,
employees of the Company or any of its Subsidiaries credit for all service with
the Company, any of its present and former subsidiaries, any other affiliate of
the Company and their respective
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predecessors (collectively, the "TM Affiliated Group") prior to the Closing Date
for all purposes for which service is recognized under each Company Benefit
Plan, but only to the extent that the terms of such Company Benefit Plan require
the crediting of such service as of the Closing Date. Benefit plans which
provide medical, dental or life insurance benefits after the Closing Date to any
individual who is an active or former employee of the TM Affiliated Group as of
the Closing Date (an "Employee") or a dependent of an Employee (a "Dependent")
shall, with respect to such individuals, waive any waiting periods and any
pre-existing conditions and actively-at-work exclusions to the extent so waived
under present policy and shall provide that any expenses incurred on or before
the Closing Date by such individuals shall be taken into account under such
plans for purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions to the extent taken into account under present policy.
Without limiting the generality of any other provision of this Agreement, after
the Closing Date Buyer shall cause the Company and the Subsidiaries to honor and
fully perform all the obligations under (i) all written Commitments with any
Employee; and (ii) all Company Benefit Plans. After the Closing Date, the
Company Benefit Plans shall not be terminated or amended in any manner that
would adversely affect the rights, benefits or protections provided thereunder
to any Employee or Dependent which have accrued or have been earned prior to the
Closing Date, provided that nothing herein shall prevent or restrict the Company
from terminating any Company Benefit Plan at any time or from amending or
otherwise modifying the terms of such Company Benefit Plan with respect to
benefits accrued or amounts earned after the Closing Date.
5.05. PARENT OBLIGATIONS. Parent hereby covenants and agrees
to cause Buyer to comply with all of the Buyer's covenants and agreements
hereunder and in any Ancillary Document, and further covenants and agrees that
in the event of any breach of
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such covenants and agreements of Buyer, Sellers shall have recourse for such
breach directly to Parent.
5.06. RESALE EXEMPTION CERTIFICATES. After the Closing Date,
Parent and Buyer shall cause the Company and its Subsidiaries to use their best
efforts (which shall in no event require the payment of any monies by Parent or
Buyer) to obtain from their customers "Resale Exemption Certificates" in
connection with the sale of products of the Company and the Subsidiaries sold
for purposes of resale in each state where such products were sold.
ARTICLE VI
CONDITIONS TO PARENT'S AND BUYER'S OBLIGATIONS
----------------------------------------------
The obligations of Parent and Buyer to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
(or waiver, where permissible) at or prior to the Closing of all of the
following conditions:
6.01. MATERIAL ADVERSE EFFECT. There shall not exist any
matter on the Closing Date which has a Material Adverse Effect and which was not
disclosed to Buyer in a Disclosure Schedule on the date hereof.
6.02. COVENANTS OF SELLERS. Sellers shall have complied in all
material respects with all of their agreements and covenants contained herein to
be performed on or prior to the Closing Date. Buyer shall have received a
certificate executed by or on behalf of each of Sellers, dated as of the Closing
Date, certifying as to the fulfillment of the condition set forth in this
Section 6.02.
6.03. NO PROHIBITION. No statute, rule or regulation shall be
in effect which prohibits Buyer from consummating the transactions contemplated
hereby, and no
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order of any court or administrative agency shall be in effect or threatened
which prohibits Buyer from consummating the transactions contemplated hereby.
6.04. CONSENTS. The applicable waiting period under the HSR
Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies set forth in
Exhibit 6.04 hereof that shall be required in order to enable Buyer to
consummate the transactions contemplated hereby shall have been obtained.
6.05. DELIVERY OF SHARES. Buyer shall have received executed
Agreements from the holders of, and certificates for, Shares representing in the
aggregate at least 98% of the total number of Shares outstanding.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
The obligation of Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver,
where permissible) at or prior to the Closing of all of the following
conditions:
7.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT AND
BUYER. Parent and Buyer each shall have complied in all material respects with
each of its agreements and covenants contained herein to be performed on or
prior to the Closing Date, and the representations and warranties of Parent and
Buyer contained herein shall be true in all material respects on and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except (a) as otherwise contemplated hereby, and (b) to the extent that such
representations and warranties were made as of a specified date and as to such
representations and warranties the same shall continue on the Closing Date to
have been true in all material respects as of the specified date. The
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Representatives shall have received a certificate executed by an executive
officer of Parent and Buyer, dated as of the Closing Date, certifying as to the
fulfillment of the conditions set forth in this Section 7.01.
7.02. NO PROHIBITION. No statute, rule or regulation shall be
in effect which prohibits Sellers from consummating the transactions
contemplated hereby, and no order of any court or administrative agency shall be
in effect or threatened which prohibits Sellers from consummating the
transactions contemplated hereby.
7.03. CONSENTS. The applicable waiting period under the HSR
Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies set forth in
Exhibit 7.03 that shall be required in order to enable Sellers to consummate the
transactions contemplated hereby shall have been obtained.
ARTICLE VIII
TERMINATION
-----------
8.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing,
(a) by the mutual written consent of Buyer and the
Representatives;
(b) by either Parent and Buyer, on the one hand, or
the Representatives, on the other hand, if the Closing shall not have
occurred on or before March 31, 1997; provided, that such date may be
extended for a limited period of time (not to exceed 60 days) by the
written agreement of Parent, Buyer and the Representatives if the
Closing has not been consummated because the
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applicable waiting period under the HSR Act has not expired or been
terminated and such parties determine in their reasonable judgment that
such extension will result in consummation of the transactions
contemplated hereby occurring prior to the final day of the extended
period; or
(c) by Parent and Buyer if any of the facilities
located at Flora, Illinois, Olive Branch, Mississippi or Chapeltown,
United Kingdom have been materially damaged or destroyed before the
Closing or if any of such real property has been taken, in whole or in
significant part, by eminent domain or by conveyance in lieu of eminent
domain.
8.02. EFFECT ON OBLIGATIONS. Termination of this Agreement
pursuant to this Article VIII shall terminate all rights and obligations of the
parties hereunder and none of the parties shall have any liability to the other
parties hereunder, except that Sections 10.09, 10.11, 10.12 and 10.13, the
Confidentiality Agreement, the last sentence of Section 4.03 and this Section
8.02 shall remain in effect, and provided that nothing herein shall relieve any
party from liability for any breach (in the case of Section 4.02, for any
material breach) of any covenant or agreement in this Agreement prior to such
termination.
ARTICLE IX
INDEMNIFICATION
---------------
9.01. SURVIVAL. The representations and warranties made in
this Agreement or in any agreement, certificate or other document executed at or
prior to the Closing in connection herewith (an "Ancillary Document") and the
covenants and agreements contained in Sections 4.02 and 5.02 ("Pre-Closing
Covenants") shall survive the Closing for twelve months from the Closing Date
(such twelve month period being
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the "Indemnification Period") and on the twelve month anniversary date of the
Closing shall expire, together with any right to indemnification for breach
thereof except to the extent a Valid Third Party Claim Notice (as defined in
Section 9.03(a)) or Valid Other Claim Notice (as defined in Section 9.03(b))
(each, a "Valid Claim Notice") shall have been given prior to such date in
accordance with Section 9.03 by the party seeking indemnification (the
"Indemnitee") to the party from which indemnification is being sought (the
"Indemnitor"), in which case the representation, warranty, covenant or agreement
alleged in the Valid Claim Notice to have been breached shall survive, to the
extent of the claim set forth in the Valid Claim Notice only, until such claim
is resolved, and except that if Buyer or any of its affiliates has given a Valid
Claim Notice prior to the end of the Indemnification Period, the covenants and
agreements contained in Section 5.02 shall not expire until the claim with
respect to which such Notice was given is resolved. The covenants and agreements
contained herein to be performed or complied with prior to the Closing other
than those contained in Sections 4.02 and 5.02 shall expire at the Closing along
with all rights and remedies with respect to the breach thereof. The covenants
and agreements contained herein to be performed or complied with at or after the
Closing (other than the covenant and agreement to indemnify against breaches of
representations and warranties and Pre-Closing Covenants, which shall expire as
set forth in the first sentence of this Section 9.01) ("Post-Closing Covenants")
shall survive the Closing until the expiration of the applicable statute of
limitations. Such Post-Closing Covenants shall include, without limitation, (i)
those relating to the payment to Sellers by the Representatives of their
allocable portion of the Purchase Price, (ii) those relating to the cancellation
of the Options (including, without limitation, payment of the Option Payments),
(iii) those relating to the payment in full of the Indebtedness Payment, and
(iv) those contained in Section 5.03.
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9.02. INDEMNIFICATION. (a) If the Closing shall occur, Sellers
shall jointly and severally indemnify Buyer and its affiliates and hold each of
them harmless from and against all Losses which are incurred or suffered by any
of them (i) by reason of the breach of any of the representations or warranties
made by Sellers herein or in any Ancillary Document or in any of their covenants
and agreements contained in Section 4.02, (ii) by reason of the failure by
Sellers to perform or comply with any of their Post-Closing Covenants, or (iii)
by reason of any dissenters' or appraisal rights, or any other rights, which a
Seller who does not deliver his Shares at the Closing may assert upon the
occurrence of any "second-step merger" with Buyer or a subsidiary thereof.
(b) Any recovery by Buyer and its affiliates for
indemnification shall be limited as follows: (1) Buyer and its affiliates shall
not be entitled to any recovery unless a claim for indemnification is made in
accordance with Section 9.03, so as to constitute a Valid Claim Notice, and
within the time period of survival set forth in Section 9.01; (2) Buyer and its
affiliates shall not be entitled to recover any amount for indemnification
claims under clause (i) of Section 9.02(a) unless and until the amount which
Buyer and its affiliates are entitled to recover in respect of such claims
exceeds, in the aggregate, $500,000 (the "Deductible"), in which event (subject
to clause (3) below) the entire amount which Buyer and its affiliates are
entitled to recover in respect of such claims less the Deductible shall be
payable; (3) the maximum amount recoverable by Buyer and its affiliates for
indemnification claims under clause (i) of Section 9.02(a) shall in the
aggregate be equal to $15,000,000 (e.g., if Buyer incurs an aggregate of
$15,500,000 of Losses in respect of such claims, it may recover an aggregate of
$15,000,000); and (4) any amounts recoverable by Buyer and its affiliates in
respect of indemnification claims under clause (i) of Section 9.02(a) shall be
payable solely from the Indemnity Trust Funds, in accordance with Section 1.08
and the Trust Agreement, and Buyer and its affiliates shall have no other
recourse to Sellers in respect of
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indemnification claims under clause (i) of Section 9.02(a). No Losses shall be
included in determining whether the Deductible has been reached unless a Valid
Claim Notice seeking indemnification for such Losses has been given by the
Indemnitee to the Indemnitor in accordance with Section 9.03.
(c) If the Closing shall occur, Parent and Buyer shall jointly
and severally indemnify Sellers and their affiliates and hold each of them
harmless from and against all Losses which are incurred or suffered by any of
them (i) by reason of the breach by Parent or Buyer of any of the
representations or warranties made by Parent or Buyer herein or in any Ancillary
Document or of any of their covenants and agreements contained in Section 5.02,
or (ii) by reason of the failure by Parent or Buyer to perform or comply with
any of their Post-Closing Covenants; PROVIDED, HOWEVER, that Sellers and their
affiliates shall not be entitled to any recovery unless a claim for
indemnification is made in accordance with Section 9.03, so as to constitute a
Valid Claim Notice, and within the time period of survival set forth in Section
9.01.
9.03. PROCEDURES FOR CLAIMS. (a)(i) In order for an Indemnitee
to be entitled to any indemnification provided for under this Article IX in
respect of, arising out of or involving a claim made by any third party against
the Indemnitee (a "Third Party Claim"), the Indemnitee must notify the
Indemnitor in writing of the Third Party Claim (a "Third Party Claim Notice")
promptly following receipt by such Indemnitee of written or oral notice of the
Third Party Claim, which notification, to be a valid Third Party Claim Notice,
with the effect set forth in Sections 9.01(a) and 9.02 (a "Valid Third Party
Claim Notice"), must be accompanied by a copy of the written notice, if any, of
the third party claimant to the Indemnitee asserting the Third Party Claim, or,
if such Third Party Claim shall not have been made in writing, the written
notice of Indemnitee certifying as to the receipt by Indemnitee of the oral
Third Party Claim, and, in each case, setting forth in reasonable detail, the
facts then known by Indemnitee with respect to such Third Party
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Claim; provided that the failure to provide such Notice promptly (so long as a
Valid Third Party Claim Notice is given before the expiration of the
Indemnification Period) shall not affect the obligations of the Indemnitor
hereunder except to the extent the Indemnitor is prejudiced thereby. The
Indemnitee shall deliver to the Indemnitor copies of all other notices and
documents (including court papers) received by the Indemnitee relating to the
Third Party Claim.
(ii) The Indemnitor shall have the right to defend
against any such Third Party Claim (including to conduct any proceedings or
settlement negotiations, provided that the Indemnitor shall not settle any Third
Party Claim without the Indemnitee's consent, which consent shall not be
unreasonably withheld) with counsel of its own choosing. The Indemnitee shall
have the right to participate in the defense of any Third Party Claim and to
employ its own counsel (it being understood that the Indemnitor shall control
such defense), at its own expense. Prior to the time the Indemnitee is notified
by the Indemnitor as to whether the Indemnitor will assume the defense of a
Third Party Claim, the Indemnitee shall take all actions reasonably necessary to
timely preserve the collective rights of the parties with respect to such Third
Party Claim, including responding timely to legal process. If the Indemnitor
shall decline to assume the defense of a Third Party Claim (or shall fail to
notify the Indemnitee of its election to defend such Third Party Claim) within
30 days after the giving by the Indemnitee to the Indemnitor of a Valid Third
Party Claim Notice with respect to the Third Party Claim, the Indemnitee shall
defend against the Third Party Claim and the Indemnitor shall be liable to the
Indemnitee for all reasonable fees and expenses incurred by the Indemnitee in
the defense of the Third Party Claim, including without limitation the
reasonable fees and expenses of counsel employed by the Indemnitee, if and to
the extent that the Indemnitor is responsible to indemnify for such Third Party
Claim. Regardless of which party assumes the defense of a Third Party Claim, the
parties agree to cooperate with one
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another in connection therewith. Such cooperation shall include providing of
records and information which are relevant to such Third Party Claim, and making
employees and officers available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder and to
act as a witness or respond to legal process. Whether or not the Indemnitor
assumes the defense of a Third Party Claim, the Indemnitee shall not admit any
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the Indemnitor's prior written consent (which consent shall not be
unreasonably withheld).
(b) In order for an Indemnitee to be entitled to any
indemnification provided for under this Article IX in respect of a claim that
does not involve a Third Party Claim being asserted against such Indemnitee (an
"Other Claim"), the Indemnitee must promptly notify the Indemnitor in writing of
such Other Claim (the "Other Claim Notice"), which notification, to be a valid
Other Claim Notice, with the effect set forth in Sections 9.01(a) and 9.02 (a
"Valid Other Claim Notice"), (i) must certify that the Indemnitee has in good
faith already sustained some (though not necessarily all) Losses with respect to
such claim and (ii) if the Other Claim Notice is asserting a claim for breach of
any of the representations and warranties contained in Section 2.13 (an
"Environmental Breach"), must be accompanied by a written report from a
reputable nationally or regionally recognized environmental consulting firm or
from employees of Parent with responsibility for Environmental Matters
confirming, in reasonable detail, the existence of the conditions as to which an
Environmental Breach is claimed. The failure by any Indemnitee to notify the
Indemnitor promptly (so long as a Valid Other Claim Notice is given before the
expiration of the Indemnification Period) shall not relieve the Indemnitor from
any liability that it may have to such Indemnitee under Section 9.02, except to
the extent that the Indemnitor has been prejudiced by such failure.
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9.04. OTHER PROVISIONS. (a) Notwithstanding anything herein to
the contrary, Buyer and its affiliates shall have no right to any
indemnification under clause (i) of Section 9.02(a) for any matter if (i) the
Closing Book Value was reduced for such matter and either Buyer did not dispute
the amount of such reduction in the Final Closing Balance Sheet or the dispute
as to the amount of such reduction was resolved pursuant to Section 1.07(c), or
(ii) the Closing Book Value was not reduced for such matter, Buyer disputed such
nonreduction, and the dispute was resolved in favor of Sellers pursuant to
Section 1.07(c).
(b) The indemnification provided in this Article IX shall be
the sole and exclusive remedy for any inaccuracy or breach of any representation
or warranty made by Sellers or Parent or Buyer and any breach of any Pre-Closing
Covenants in this Agreement or in any Ancillary Document. All amounts payable by
one party in indemnification of the other (whether paid from the Indemnification
Trust Funds or paid by Parent or Buyer) shall be considered an adjustment to the
Purchase Price.
(c) Upon making any payment to an Indemnitee for any
indemnification claim pursuant to this Article IX, the Indemnitor shall be
subrogated, to the extent of such payment, to any rights which the Indemnitee or
its affiliate may have against any other parties with respect to the subject
matter underlying such indemnification claim.
(d) The amount of any Losses shall be computed net of any
insurance proceeds recoverable by the Indemnitee in connection therewith.
(e) Notwithstanding anything in this Agreement to the
contrary, Sellers shall have no liability for any failure by Buyer or the
Company, or any of the Subsidiaries or any affiliates of the foregoing, to
comply with applicable law following the six month anniversary of the Closing
Date by reason of the business of the Company
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being operated following such six month anniversary of the Closing Date in the
manner operated prior to the Closing.
(f) Parent, Buyer, the Company and each of the Subsidiaries
each understands and agrees that the rights accorded it by Section 9.02(a) are
its sole and exclusive remedy against Sellers or any of their affiliates with
respect to any Environmental Matters whatsoever. Parent, Buyer, the Company and
each of the Subsidiaries (each on its own behalf and on behalf of its affiliates
and the successors and assigns of any of the foregoing) hereby waives any right
to seek contribution or other recovery from Sellers or any of their affiliates
that any of them may now or in the future ever have under any Environmental
Laws, including, without limitation, 42 U.S.C. ss.ss. 9607 and 9613(f) of the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9601 ET SEQ.), as amended ("CERCLA"), as such Laws were in the past or
are currently in effect, or may in the future be enacted or be in effect.
Parent, Buyer, the Company and each of the Subsidiaries (each on its own behalf
and on behalf of its affiliates and the successors and assigns of any of the
foregoing) hereby further unconditionally releases Sellers and their affiliates
from any and all claims, demands and causes of action that any of them may now
or in the future ever have against Sellers or any of their affiliates for
recovery under CERCLA or under any other Environmental Laws as such Laws were
in the past or are currently in effect, or may in the future be enacted or be
in effect. Nothing in this Section 9.04(f) shall affect any rights which Buyer
and its affiliates may have under Section 9.02 for indemnification for any
breach by Sellers of the representations and warranties contained in Section
2.13 subject to the limitations set forth in Sections 9.01 and 9.02.
(g) Notwithstanding anything herein to the contrary, if any
Losses incurred or suffered by Buyer or any of its affiliates are both Losses
for which indemnification may be sought under this Article IX and Losses for
which
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indemnification or any other remedy is available to the Company, any of the
Subsidiaries or Buyer under the Asset Purchase Agreement among Eastman Kodak
Company, L&F Products Inc., Sterling Winthrop Inc. and The Thompson Minwax
Company (formerly MTF Acquisition Corp.), dated as of October 13, 1994 (the
"Kodak Agreement"), then Buyer and its affiliates first shall, or shall cause
the Company or the Subsidiary (as applicable) to, pursue their remedies under
the Kodak Agreement, and any Losses for which indemnification may be sought
under this Article IX shall be reduced by the amount, if any, recoverable under
the Kodak Agreement; PROVIDED, HOWEVER, that Buyer and its affiliates shall be
permitted to deliver to Sellers a Valid Claim Notice with respect to any Losses
incurred or suffered by Buyer or its affiliates for which indemnification or any
other remedy is available under both this Article IX and the Kodak Agreement,
and to pursue their remedies against Sellers under this Article IX to the extent
Buyer or its affiliates shall have been unsuccessful in their claims under the
Kodak Agreement and all of their remedies in respect thereof have been
exhausted.
(h) For purposes of the indemnification provisions set forth
in this Article IX only, the disclosure set forth in Section 3 of Disclosure
Schedule 2.14 shall be deemed not to have been made as of the date hereof nor
shall Sellers have the right to revise Section 3 of Disclosure Schedule 2.14
pursuant to Section 4.05. Notwithstanding anything in this Article IX to the
contrary, with respect to any representations and warranties of Sellers relating
to whether the Company or any of its Subsidiaries collected and timely paid in
full any state sales taxes which shall have become due and payable prior to the
Closing Date (the "Sales Tax Representations") or timely paid in full any state
use taxes which shall have become due and payable prior to the Closing Date (the
"Use Tax Representations") only, (i) such representations and warranties shall
survive the Closing for 24 months from the Closing Date, the Indemnification
Period for such representations and warranties shall be 24 months from the
Closing Date, the provisions
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of Section 9.01 shall otherwise apply to such representations and warranties
other than for corresponding changes in accordance with the foregoing provisions
of this clause (i), and any references in this Article IX to the time period of
survival set forth in Section 9.01 shall be deemed to include the time period of
survival for the Sales Tax Representations and the Use Tax Representations set
forth in this clause (i); (ii) Buyer and its affiliates shall only be entitled
to be indemnified, if at all, against liability imposed by a state or local
taxing authority by reason of the Company's or a Subsidiary's failure to timely
pay in full any state sales or use taxes in respect of periods ending prior to
the Closing Date and must timely deliver a Valid Third Party Claim Notice (and
not a Valid Other Claim Notice) in order to perfect a claim for indemnification;
(iii) such notice shall constitute a Valid Third Party Claim Notice only if
there is attached thereto a notice of deficiency or similar notice issued by a
state taxing authority asserting a deficiency for failure to collect and remit
sales taxes or pay use taxes which, if such assertion were upheld, would result
in a breach of the Sales Tax Representations or the Use Tax Representations, as
applicable; (iv) in addition to any other limitations on recovery for
indemnification set forth in this Article IX, (x) the maximum amount recoverable
by Buyer and its affiliates for indemnification claims for Losses incurred by
reason of the breach of the Sales Tax Representations shall in the aggregate be
equal to $1,000,000, and (y) the maximum amount recoverable by Buyer and its
affiliates for indemnification claims for Losses incurred by reason of the
breach of the Use Tax Representations shall in the aggregate be equal to
$300,000, in each case subject to the provisions of Section 9.02(b) relating to
the $15,000,000 maximum amount referred to therein, the Deductible and the
provision that indemnification claims under clause (i) of Section 9.02(a) shall
be payable solely from the Indemnity Trust Funds, except that with respect to
the Use Tax Representations the Deductible shall not apply. Except as otherwise
set forth in this Section 9.04(h), any breach of the Sales Tax Representations
or the Use Tax Representations shall be treated
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in this Article IX in the same manner as the breach of any other representation
or warranty of Seller.
ARTICLE X
MISCELLANEOUS
-------------
10.01. INTERPRETIVE PROVISIONS. The inclusion of any dollar
amount in any of the representations or warranties made herein shall not be
construed as evidence of materiality for purposes of that or any other
representation or warranty made herein.
10.02. SELLER'S KNOWLEDGE. Whenever used in this Agreement,
"to Seller's knowledge" or "to the knowledge of Sellers" shall mean the actual
knowledge of Sellers.
10.03. ENTIRE AGREEMENT. This Agreement (including the
Disclosure Schedules and all Exhibits hereto), the Ancillary Documents and the
Confidentiality Agreement constitute the sole understanding of the parties with
respect to the subject matter hereof. The disclosure of any matter in any
schedule to this Agreement shall only be deemed to be a disclosure for purposes
of the section of the Agreement to which such schedule relates. Any such
disclosure shall expressly not be deemed to constitute an admission by Sellers
or Parent or Buyer or to otherwise imply that any such matter is material for
the purposes of this Agreement.
10.04. SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto; PROVIDED, HOWEVER, that this
Agreement may not be assigned by Parent or Buyer without the prior written
consent of the Representatives except that Buyer may, at its election, assign
this Agreement to a direct or indirect wholly-owned subsidiary so long as (a)
the representations and warranties of Buyer made herein are equally true of such
assignee and (b) such assignment does not have any adverse
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consequences to Sellers or any of their affiliates (including, without
limitation, any adverse tax consequences or any adverse effect on the ability of
Sellers to timely consummate the transactions contemplated hereby), but no such
assignment of this Agreement or any of the rights or obligations hereunder shall
relieve Buyer of any of its obligations under this Agreement. Such assignee
shall execute a counterpart of this Agreement agreeing to be bound by the
provisions hereof as "Buyer," and agreeing to be jointly and severally liable
with Buyer and any other assignee for all of the obligations of the assignor
hereunder.
10.05. PARTIES IN INTEREST. Notwithstanding anything contained
in this Agreement to the contrary, except for the provisions of Sections 5.03
and 9.02 (the "Third Party Provisions"), nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. The Third Party Provisions may be enforced directly by the
beneficiaries thereof.
10.06. HEADINGS. The headings of the articles, sections and
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
hereof.
10.07. AMENDMENT. This Agreement may not be amended except by
an instrument in writing signed by or on behalf of Buyer and the
Representatives.
10.08. WAIVERS. The waiver by any party hereto of a breach of
any provision hereunder shall not operate or be construed as a waiver of any
prior or subsequent breach of the same or any other provision hereunder. Any
waiver must be in writing and signed by Buyer and the Representatives.
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10.09. EXPENSES. Each of Sellers, on the one hand, and Parent
and Buyer, on the other hand, shall pay all costs and expenses incurred by such
party or on its behalf in connection with this Agreement and the transactions
contemplated hereby, including, without limiting the generality of the
foregoing, fees and expenses of its financial consultants, accountants and
counsel. At the Closing, Sellers shall pay all fees owing to Merrill Lynch & Co.
and Smith Barney Inc. in connection with the transactions contemplated hereby.
10.10. NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party shall be
in writing and shall be given (and will be deemed to have been duly given upon
receipt) by delivery in person, by electronic facsimile transmission, cable,
telegram, telex or other standard forms of written telecommunications, by
overnight courier or by registered or certified mail, postage prepaid:
If to Sellers, to:
MTF Partners, L.P.
Forstmann Little & Co.
Subordinated Debt and Equity
Management Buyout Partnership-V, L.P.
767 Fifth Avenue
New York, New York 10153
Attention: Steven B. Klinsky
Telecopy: (212) 759-9059
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Aviva Diamant
Telecopy: (212) 859-4000
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<PAGE> 63
If to Parent or Buyer, to:
The Sherwin-Williams Company
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Attention: Vice President - Corporate Planning and
Development
Telecopy: (216) 566-2947
with a copy to:
The Sherwin-Williams Company
101 Prospect Avenue, N.W.
Cleveland, Ohio 44115
Attention: Vice President, General Counsel and
Secretary
Telecopy: (216) 566-1708
or at such other address for a party as shall be specified by like notice.
10.11. GOVERNING LAW, ETC. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York applicable
to agreements made and to be performed wholly within such jurisdiction. Each of
the parties hereto hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of New York and of the
United States of America in each case located in the County of New York for any
Litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 10.10 shall be effective service of process for any Litigation
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of America in
each case located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead
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or claim in any such court that any such Litigation brought in any such court
has been brought in an inconvenient forum.
10.12. PUBLIC ANNOUNCEMENTS. The Representatives and Buyer
shall consult with each other before issuing any press release or otherwise
making any public statement relating to the transactions contemplated hereby,
and shall not issue any such press release or make any such public statement
without the consent of the other party (which consent shall not be unreasonably
withheld or delayed) except as may be required by law.
10.13. SELLERS' REPRESENTATIVES. Each Seller hereby authorizes
MTF Partners and MBO-V to act as its representative (the "Representatives") on
such Seller's behalf in connection with this Agreement and the transactions
contemplated hereby, including giving and receiving notices and executing
documents and agreements. Buyer shall be entitled to rely on any document signed
by the Representatives as a document signed by and binding on all Sellers.
10.14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
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<PAGE> 65
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
THE SHERWIN-WILLIAMS COMPANY
By: /s/ Conway G. Ivy
----------------------------------
Title: Vice President - Corporate Planning
and Development
SILVER ACQUISITION CORP.
By: /s/ Conway G. Ivy
---------------------------------
Title: Vice President
MTF PARTNERS, L.P.
By: FLC XXVII Partnership, L.P.,
its General Partner
By: /s/ Steven B. Klinsky
-----------------------------
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP-V, L.P.
By: FLC Partnership, L.P.,
its General Partner
By: /s/ Steven B. Klinsky
------------------------------
a general partner
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<PAGE> 66
INDIVIDUAL SELLERS:
Ann Allard
Paul Barrow
Peter Black
Patrick Draper
Paul Gaynor
Leonard S. Goodman
Michael Grey
Thomas Harris
Ridgely W. Harrison III
Lance Hemsarth
Henry R. Holtermann
Alan Mellor
Michael Miles
Frederick Miller
Steve Mower
Harvey Sass
Ged Sheilds
Bill Stewart
Kathleen J. Tousignant
Kenneth Yontz
By: MTF PARTNERS, L.P., By: Forstmann Little & Co. Subordinated
as attorney-in-fact Debt and Equity Management
Buyout Partnership-V, L.P.,
By: FLC XXVII Partnership, L.P., as attorney-in-fact
its general partner
By: FLC Partnership, L.P.,
its general partner
By: /s/ Steven B. Klinsky
-------------------------
a general partner
By: /s/ Steven B. Klinsky
-------------------------------
a general partner
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<PAGE> 67
The undersigned hereby
agree to be bound by the
provisions of Sections 5.03
and 9.04(f) of the
foregoing Agreement:
THOMPSON MINWAX HOLDING CORP.
By: /s/ Peter Black
---------------------------------------------------
Title: President and Chief Executive Officer
THE THOMPSON MINWAX COMPANY
By: /s/ Peter Black
---------------------------------------------------
Title: President and Chief Executive Officer
THOMPSON MINWAX MANAGEMENT CORP.
By: /s/ Peter Black
---------------------------------------------------
Title: President and Chief Executive Officer
THOMPSON MINWAX INTERNATIONAL CORP.
By: /s/ Peter Black
---------------------------------------------------
Title: President and Chief Executive Officer
RONSEAL LIMITED
By: /s/ Peter Black
---------------------------------------------------
Title: Director
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<PAGE> 68
RONSEAL (IRELAND) LIMITED
By: /s/ Peter Black
----------------------------------------------
Title: Director
WATCO HOLDING CORP.
By: /s/ Peter Black
----------------------------------------------
Title: President and Chief Executive Officer
THOMPSON MINWAX (CANADA) LTD.
By: /s/ Peter Black
----------------------------------------------
Title: Vice President
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<PAGE> 1
EXHIBIT 23
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the filings listed below of our
report dated March 26, 1996 (except for Notes 11 and 12, as to which the dates
are November 22, 1996 and January 3, 1997, respectively) with regard to the
consolidated financial statements of Thompson Minwax Holding Corp. and
Subsidiaries for the year ended December 31, 1995 (as restated), included in
the Current Report on Form 8-K of The Sherwin-Williams Company:
- - Registration Statement (Form S-3 No. 33-64543) of The Sherwin-Williams
Company;
- - Registration Statement (From S-8 No. 33-28585) pertaining to The
Sherwin-Williams Company 1984 Stock Plan;
- - Registration Statement (Form S-8 No. 33-52227) pertaining to The
Sherwin-Williams Company 1994 Stock Plan;
- - Registration Statement (Form S-8 No. 33-62229) and the Post Effective
Amendment Number 5 of the Registration Statement (Form S-8 No. 2-80510)
pertaining to The Sherwin-Williams Company Employee Stock Purchase and
Savings Plan;
- - Registration Statement (Form S-3 No. 33-22705) of The Sherwin-Williams
Company;
- - Registration Statement (Form S-4 No. 333-00725) of the Sherwin-Williams
Company; and
- - Registration Statement (Form S-3 No. 333-01093) of The Sherwin-Williams
Company.
/s/ Deloitte & Touche LLP
January 20, 1997
- ---------------------------
DELLOITE TOUCHE
TOHMATSU
INTERNATIONAL
- ---------------------------
<PAGE> 1
EXHIBIT 99.1
FIVE YEAR REVOLVING CREDIT AGREEMENT
This Agreement is made and entered into this 3rd day of January, 1997
by and among The Sherwin-Williams Company ("Company"), whose principal place of
business is located at 101 Prospect Avenue, N.W., Cleveland, Ohio 44115, Texas
Commerce Bank National Association ("TCB"), as Administrative Agent, The Chase
Manhattan Bank ("Chase"), as the Competitive Advance Facility Agent, and the
financial institutions listed on Schedule A hereto together with each of their
successors and assigns (collectively referred to as the "Lenders" and
individually a "Lender").
W I T N E S S E T H:
--------------------
WHEREAS, the Lenders have agreed, on the terms and subject to the
conditions contained herein, to make available to the Company the principal
amount of One Billion One Hundred Sixty Million Dollars ($1,160,000,000) to be
used by the Company for general corporate purposes including, but not limited
to, the acquisition of all or part of the business, assets or stock of Thompson
Minwax Holding Corp. (the "Acquisition"), commercial paper backup, general
working capital, other acquisitions of assets, stock or other ownership
interests and repurchases or redemptions of securities.
NOW, THEREFORE, in consideration of the mutual promises contained
herein the parties agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ACQUISITION TRANSACTION" shall mean the acquisition of at least ninety percent
(90%) of the issued and outstanding shares of capital stock of Thompson
Minwax Holding Corp.
"ADMINISTRATIVE AGENT" shall mean Texas Commerce Bank National Association or
any successor Lender appointed by the Company and approved by the
holders of fifty-one percent (51%) by amount of the Commitments.
"ALTERNATE BASE RATE" shall mean the higher of: (i) the rate of interest in
effect for any given day as publicly announced from time to time by the
Administrative Agent as its "prime rate" and (ii) the Federal Funds
Rate plus 50 basis points. Any change by the Administrative Agent of
its "prime rate" shall take effect at the opening of business on the
day specified in the public announcement of such change.
"ALTERNATE BASE RATE LOAN" shall mean a Loan bearing interest at the Alternate
Base Rate.
"BANKING DAY" shall mean a day, other than a Saturday or Sunday, on which New
York banks are open for the transaction of business.
"COMMITMENT" shall mean the obligation of each Lender to make Loans under
Sections 2.1A or 2.1C, up to the amount set opposite the name of such
Lender as set forth on such Lender's signature page hereto (or such
lesser amount as shall be determined pursuant to Section 2.5 hereof).
"COMMITMENT PERIOD" shall mean the period which commences on the Effective Date
and terminates on the Termination Date.
<PAGE> 2
"COMPETITIVE ADVANCE FACILITY AGENT" shall mean The Chase Manhattan Bank.
"COMPETITIVE BID" shall mean an offer by a Lender to make a Competitive Loan in
accordance with Section 2.1D.
"COMPETITIVE BID RATE" shall mean, with respect to any Competitive Bid, the
Competitive Libor Rate or the Fixed Rate, as applicable, offered by the
Lender making such Competitive Bid.
"COMPETITIVE BID REQUEST" shall mean a request by the Company for Competitive
Bids in accordance with Section 2.1D.
"COMPETITIVE BORROWING" shall mean a borrowing by the Company in response to a
Competitive Bid Request.
"COMPETITIVE LIBOR INTEREST PERIOD" shall mean a period of one, two, three, six
or, if available to all of the Lenders, twelve months (as selected by
the Company) commencing on the applicable borrowing date of each
Competitive Libor Loan hereunder; provided, however, that no
Competitive Libor Interest Period shall end after the Termination Date.
"COMPETITIVE LIBOR LOAN" shall mean a Competitive Loan bearing interest at a
rate based on LIBOR.
"COMPETITIVE LIBOR RATE" shall mean, with respect to a Competitive LIBOR Loan,
LIBOR plus the applicable margin specified by the Lender making such
Competitive Loan in its Competitive Bid.
"COMPETITIVE LOAN" shall mean a Loan made pursuant to Section 2.1D.
"COMPETITIVE NOTE" shall mean a Note or Notes executed and delivered pursuant to
Section 2.1D.
"CONSOLIDATED NET WORTH" shall mean the excess of the net book value of the
assets of the Company and its Consolidated Subsidiaries over all of
their liabilities (other than Subordinated Indebtedness), as determined
on a consolidated basis in accordance with generally accepted
accounting principles as applied by the Company in the calculation of
such amount in the Company's then most recent financial statements
furnished to its stockholders, plus the aggregate value of all treasury
stock purchased after the Effective Date (at cost) by the Company (to
the extent that the aggregate value of such treasury stock for purposes
of this calculation does not exceed Two Hundred Fifty Million Dollars
($250,000,000)). The calculation of Consolidated Net Worth shall
exclude any amounts which would otherwise be required to be included
therein as a result of the future adoption by the Financial Accounting
Standards Board of any policy, statement, rule or regulation requiring
the Company to record an accumulative liability on its Financial
Report(s).
"CONSOLIDATED SUBSIDIARY" shall mean, at any particular time, every Subsidiary
which is consolidated in the Company's financial statements contained
in its then most recent Financial Report.
"DEBT" shall mean, collectively, all indebtedness at any one time outstanding
hereunder and owed by the Company to the Lenders pursuant to this
Agreement and includes the principal of and interest on all Notes and
each conversion, extension, renewal or refinancing thereof in whole or
in part, the Facility Fees and any prepayment premium due under Section
2.1A(x).
2
<PAGE> 3
"DOLLARS" or "$" shall mean any lawful currency of the United States of America.
"EFFECTIVE DATE" shall mean January 3, 1997.
"EUROCURRENCY" shall mean any freely transferable and convertible currency on
deposit outside the country of issuance.
"EVENT OF DEFAULT" shall mean any of the events referred to in Article VII
hereof.
"FACILITY FEE" shall mean the sum to be paid by the Company to the
Administrative Agent on behalf of each Lender on the last Banking Day
of each calendar quarter prior to the termination of the Commitments
and the repayment of the outstanding Loans, calculated, for each day,
as the product of each Lender's Commitment (or, after the termination
of such Commitments, each Lender's outstanding Loans), on such day, and
the number of basis points set forth in the following table for the
highest of the then current ratings assigned to the Company's senior
unsecured non-credit enhanced long-term debt by Moodys Investors
Service, Inc. ("Moodys") or Standard & Poor's Ratings Group ("S&P") on
such day:
MOODYS OR S&P BASIS POINTS
- --------------------------------------------------------------------------------
AA-/Aa3 or above 6.0
- --------------------------------------------------------------------------------
A-/A3 or above but below AA-/Aa3 7.0
- --------------------------------------------------------------------------------
BBB/Baa2 or above but below A-/A3 10.0
- --------------------------------------------------------------------------------
BBB-/Baa3 or below 15.0
"FEDERAL FUNDS RATE" shall mean, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Banking
Day opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding
Banking Day, the rate for such day shall be the arithmetic mean, as
determined by the Administrative Agent, of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York time) on such day by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative
Agent.
"FINANCIAL REPORT" shall mean the annual or periodic report prepared in
accordance with generally accepted accounting principles, except as
otherwise indicated therein, filed by the Company with the Securities
and Exchange Commission (or any governmental body or agency succeeding
to the functions of such Commission) on Form 10-K or 10-Q pursuant to
the Securities Exchange Act of 1934 ("Exchange Act"), as then in effect
(or any comparable forms under similar Federal statutes then in force),
and the most recent financial statements furnished by the Company to
its stockholders (which annual financial statements shall be certified
by the Company's independent certified public accountants).
"FIXED RATE LOAN" shall mean a Competitive Loan bearing interest at a Fixed
Rate.
"FIXED RATE" shall mean, with respect to any Competitive Loan (other than a
Competitive Libor Loan), the fixed rate of interest per annum specified
by the Lender making such Competitive
3
<PAGE> 4
Loan in its related Competitive Bid.
"INTEREST ADJUSTMENT DATE" shall mean the last day of each LIBOR Interest
Period.
"LIBOR" shall mean the average (rounded upward to the nearest 1/16 of 1%) of
the per annum rates at which deposits in immediately available funds in
Dollars for the number of months in the relevant LIBOR Interest Period
and in the amount of the LIBOR Loan or Competitive Libor Loan to be
disbursed or to remain outstanding during such LIBOR Interest Period,
as the case may be, are offered to the Administrative Agent or the
Competitive Advance Facility Agent, as the case may be, by the
Reference Lender in the London Interbank Eurodollar market, determined
as of 11:00 a.m. London time, two (2) London Banking Days prior to the
beginning of the relevant LIBOR Interest Period pertaining to a LIBOR
Loan or Competitive Libor Loan hereunder, as appropriately adjusted by
dividing such average rate by 1.00 minus the applicable Reserve
Percentage then in effect.
"LIBOR INTEREST PERIOD" shall mean a period of one, two, three, six or, if
available to the Lenders, twelve months (as selected by the Company)
commencing on the applicable borrowing date of each LIBOR Loan or
Competitive Libor Loan hereunder; provided, however, that if any such
period would be affected by a reduction in Commitments as provided in
Section 2.5 , prepayment as provided in Section 3.5 or maturity of a
LIBOR Loan or Competitive Libor Loan as provided in Sections 2.1A or
2.1D , such period shall end on such date; and provided further that no
LIBOR Interest Period shall end after the Termination Date. With
respect only to that portion of LIBOR Loans (as described in Section
2.1C ) during the two (2) year Term Loan period which represents a
mandatory semi-annual installment of principal, the Company may not
select a LIBOR Interest Period the maturity of which would extend
beyond the due date of such installment payment without becoming
subject to the provisions of Section 2.1A(x).
"LIBOR LOAN" shall mean a Loan bearing interest at a rate based on LIBOR.
"LOAN" shall mean the indebtedness of the Company with respect to each advance
of funds by a Lender hereunder.
"LONDON BANKING DAY" shall mean a day, other than a Saturday or Sunday, on
which banks are open for business in London, England and New York, New
York, quoting deposit rates for Dollar deposits.
"MAJORITY LENDERS" shall mean Lenders with an aggregate of sixty-six and
two-thirds percent (66 2/3%) or more of the Commitments (or, if the
Commitments have been terminated, outstanding Loans) on the relevant
date.
"MARGIN" shall mean the number of basis points set forth in the following table
for the highest of the then current ratings assigned to the Company's
senior unsecured non-credit-enhanced long-term debt by Moodys or S&P:
MOODY'S OR S&P BASIS POINTS
- --------------------------------------------------------------------------------
AA-/Aa3 or above 12.75
- --------------------------------------------------------------------------------
4
<PAGE> 5
- --------------------------------------------------------------------------------
A-/A3 or above but below AA-/Aa3 15.5
- --------------------------------------------------------------------------------
BBB/Baa2 or above but below A-/A3 20.0
- --------------------------------------------------------------------------------
BBB-/Baa3 or below 25.0
"MATERIAL" shall mean the measure of a matter of significance which shall be
determined as being an amount equal to five percent (5%) or more of
Consolidated Net Worth.
"MONEY MARKET NOTE" shall mean a Note or Notes executed and delivered pursuant
to Section 2.1B.
"MONEY MARKET RATE" shall mean, with respect to any period of days selected by
the Company, commencing on the applicable borrowing date for a Money
Market Rate Loan, the rate of interest per annum quoted by any Lender
to the Company for such Money Market Rate Loan.
"MONEY MARKET RATE LOAN" shall mean a Loan with an interest rate equal to the
Money Market Rate and as otherwise defined in Section 2.1B.
"NOTE" or "NOTES" shall mean a note or notes executed and delivered pursuant
to Sections 2.1A, 2.1B, 2.1C or 2.1D.
"NOTICE" shall mean a notice given pursuant to Section 10.5.
"OTHER FEES" shall mean the annual administration fee to be paid by the
Company to TCB and the auction administration fee to be paid by the
Company to Chase pursuant to the Fee Letter ("Fee Letter") dated
November 12, 1996 by and among the Company, TCB, Chase and Chase
Securities, Inc.
"OUTSTANDING MAJORITY LENDERS" shall mean Lenders with an aggregate of sixty-six
and two-thirds percent (66 2/3%) or more of the principal amount of
Loans on the relevant date.
"PERCENTAGE" shall mean, as to any Lender (as set forth on such Lender's
signature page hereof), the percentage of such Lender's share of the
total Commitments of all Lenders; provided that if the Commitments are
terminated or reduced pursuant to this Agreement, then "Percentage"
shall mean the percentage of such Lender's share of the total
Commitments of all Lenders immediately prior to the termination or
after the reduction of Commitments (giving effect to any subsequent
assignments pursuant to Section 10.9).
"PLAN" shall mean any employee pension benefit plan within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended from time to time ("ERISA"), sponsored and maintained by the
Company, any Consolidated Subsidiary, or any member of a controlled
group of corporations, as the term "controlled group of corporations"
is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Company or any Consolidated Subsidiary is a part,
for employees thereof.
"POSSIBLE DEFAULT" shall mean an event, condition or thing known to the Company
which constitutes, or which with the lapse of any applicable grace
period or the giving of notice or both would constitute, any Event of
Default and which has not been appropriately waived by the Lenders in
writing or fully corrected prior to becoming an Event of Default.
5
<PAGE> 6
"REFERENCE LENDER" shall mean Chase or any successor Lender appointed by the
Company, and satisfactory to the holders of fifty-one percent (51%) by
amount of the Commitments or Loans, as the case may be, at any time,
upon thirty (30) days prior written notice to the Lenders, to act as
the Reference Lender pursuant to the terms of this Agreement.
"REGULATORY CHANGE" shall mean, as to any Lender, any change in United States
federal, state or foreign laws or regulations or the adoption or making
of any interpretations, directives, guidelines or requests of or under
any United States federal, state or foreign laws, treaties or
regulations, in each case, enacted after the Effective Date (whether or
not having the force of law) by any court or governmental authority
charged with the interpretation or administration thereof.
"RELATED WRITING" shall mean any assignment, mortgage, security agreement,
subordination agreement, financial statement, audit report or other
writing furnished by the Company or any of its officers to the Lenders
pursuant to or otherwise in connection with this Agreement.
"REPORTABLE EVENT" shall mean a reportable event as that term is defined in
Title IV of ERISA except actions of general applicability by the
Secretary of Labor under Section 110 of ERISA.
"RESERVE PERCENTAGE" shall mean, for any day, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirement (including, but not limited to, any
margin reserve requirement and taking into account any transitional
adjustments or other scheduled changes in reserve requirements) which
is imposed on (a) commercial time deposits having an original maturity
of one (1) year or less and which is applicable to the class of Lenders
of which the Administrative Agent is a member; or (b) a Lender with
respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits, as the case may be.
"REVOLVING CREDIT LOAN" shall mean a Loan evidenced by a Revolving Credit Note.
"REVOLVING CREDIT NOTE" shall mean a Note evidencing a Loan described in Section
2.1A.
"SUBORDINATED INDEBTEDNESS" shall mean indebtedness which has been subordinated
(by written terms or agreement being in form and substance reasonably
satisfactory to the holders of fifty-one percent (51%) by amount of the
Commitments) in favor of the prior payment in full of the Company's
Debt to the Lenders.
"SUBSIDIARY" shall mean an existing or future corporation(s), the majority of
the outstanding capital stock or voting power, or both, of which is (or
upon the exercise of all outstanding warrants, options and other rights
would be) owned at the time in question by the Company or by another
such corporation(s) or by any combination of the Company and such
corporation(s).
"TERM LOAN" shall mean a Loan evidenced by a Term Note.
"TERM NOTE" shall mean a Note executed and delivered pursuant to Section 2.1C.
"TERMINATION DATE" shall mean 12:01 a.m. New York time on the fifth (5th)
anniversary of the Effective Date; (except in the case of a Term Loan
in which case the Termination Date shall mean 12:01a.m. New York time
on the seventh (7th) anniversary of the Effective Date)
6
<PAGE> 7
provided, however, that commencing with the first (1st) anniversary of
the Effective Date, and each successive anniversary thereafter, the
Termination Date shall be extended automatically by one (1) year
periods with respect to any Lender which fails to respond to the
Company's notice notifying the Lenders, in writing, of the Company's
request for renewal not less than forty-five (45) days prior to such
anniversary date that it wishes to terminate its Commitment four (4)
years from the first anniversary date next following the date written
notice of termination was received.
"TRANSACTIONS" shall mean the execution, delivery and performance by the Company
of this Agreement, the borrowings contemplated hereunder and the
Acquisition Transaction.
"VOTING STOCK" shall mean stock of a corporation of a class or classes having
general voting power under ordinary circumstances to elect a majority
of the board of directors, managers or trustees of such corporation
(irrespective of whether or not the stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" shall mean each Consolidated Subsidiary
all of whose outstanding stock, other than directors' qualifying
shares, shall at the time be owned by the Company and/or by one or more
Wholly-Owned Consolidated Subsidiaries.
"364 - DAY FACILITY" shall mean the 364 Day Revolving Credit Agreement of even
date herewith by and among the Company as borrower, TCB as
Administrative Agent, Chase as the Competitive Advance Facility Agent
and certain or all of the Lenders.
Any accounting term not specifically defined in this Article shall have
the meaning ascribed thereto by generally accepted accounting principles in
effect as of the date of the Company's then most recent Financial Reports unless
otherwise indicated.
The foregoing definitions shall be applicable to the singular and
plural of such defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and conditions
of this Agreement each Lender will participate to the extent
hereinafter provided in making Loans to the Company in such aggregate
amounts as the Company shall request; provided, however, that in no
event shall the aggregate principal amount of all Loans outstanding
under this Agreement during the Commitment Period be in excess of the
Commitments which, on the date hereof, total One Billion One Hundred
Sixty Million Dollars ($1,160,000,000), and provided further that the
principal amount of such Loans, together with the principal amount of
Loans under the 364 Day Facility, shall not exceed Eight Hundred Thirty
Million Dollars ($830,000,000) for any Loans made in relation to the
Acquisition Transaction.
A. REVOLVING CREDIT LOANS
----------------------
(i) BORROWING RIGHTS AND RESTRICTIONS: Subject to the terms and
conditions of this Agreement, during the Commitment Period
each Lender will make a Loan or Loans to the Company, pursuant
to this Section 2.1A, in such amount or amounts as the Company
may request from time to time but not exceeding in aggregate
principal amount, at any one time outstanding hereunder, the
Commitment
7
<PAGE> 8
of such Lender. Subject to the provisions of this Agreement,
the Company shall be entitled under this Paragraph A to borrow
funds, repay the same in whole or in part, and reborrow
hereunder at any time and from time to time during the
Commitment Period. Each Loan made under this Paragraph A shall
be made pro-rata according to the Lenders' respective
Commitments.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1A up to the total of all the Commitments by
means of any combination of:
(a) Alternate Base Rate Loans which shall be payable on
their respective due dates and shall be drawn down in
aggregate amounts of not less than Five Million
Dollars ($5,000,000) or any greater amount evenly
divisible by One Million Dollars ($1,000,000); and
(b) LIBOR Loans which shall be payable on the last day of
the relevant LIBOR Interest Period and shall be drawn
down in aggregate amounts of not less than Five
Million Dollars ($5,000,000) or any greater amount
evenly divisible by One Million Dollars ($1,000,000).
(iii) PROCEDURE FOR BORROWING: The procedure for borrowing under
this Section 2.1A shall be as follows:
(a) Each such borrowing shall be made upon the Company's
written notice ("Notice") to the Administrative Agent
(which Notice must be received by the Administrative
Agent prior to 11:00 a.m. New York time three (3)
London Banking Days prior to the requested borrowing
date in the event of a LIBOR Loan and by 11:00 a.m.
New York time on the same Banking Day of the proposed
date of such borrowing in the event of an Alternate
Base Rate Loan). The Notice shall specify:
(1) the amount of such borrowing;
(2) the requested borrowing date which shall be
a Banking Day or a London Banking Day, as
the case may be;
(3) the type of Loan(s) comprising such
borrowing; and
(4) the duration of the LIBOR Interest Period
for any LIBOR Loan(s) and the maturity date
of any Alternate Base Rate Loan(s) (which in
either case shall not be later than the
Termination Date).
(b) The Administrative Agent shall promptly notify each
Lender of (i) its receipt of a Notice of borrowing,
(ii) the amount of each Lender's pro-rata share of
such borrowing; and (iii) the name of the Company's
bank, the Company's account number and American
Banking Association routing number of the bank at
which the Company's account is maintained and to
which such pro-rata shares shall be routed.
(c) Each Lender's pro-rata share of each Revolving Credit
Loan shall be delivered by each such Lender to the
Company not later than 3:00 p.m. New
8
<PAGE> 9
York time on the requested borrowing date, time being
of the essence, in immediately available Dollars by
wire transfer to an account of the Company designated
by the Company, from time to time in writing to the
Administrative Agent, with the account number and
American Banking Association routing number of the
bank at which such account is maintained.
(iv) INTEREST RATES: The Company shall pay interest on Revolving
Credit Loans:
(a) at the Alternate Base Rate on the unpaid principal
amount of Alternate Base Rate Loans outstanding from
time to time from the date of receipt of funds by the
Company until paid, payable on the last Banking Day
of each calendar quarter and on the maturity date,
computed on the basis of a 365 or 366 day year as the
case may be; and
(b) at LIBOR plus the applicable Margin (converted to
percentage points) on the unpaid principal amount of
LIBOR Loans outstanding from time to time from the
date on which funds are received by the Company until
paid (computed on the basis of a year having 360 days
calculated on the basis of the actual number of days
elapsed), payable (a) on the last day of the LIBOR
Interest Period or (b) every three (3) months in the
event any such LIBOR Interest Period exceeds three
(3) months.
(v) PAYMENTS ON REVOLVING CREDIT NOTES, ETC.: All payments of
principal and interest shall be made to the Administrative
Agent in immediately available funds for the account of the
Lenders by no later than 3:00 p.m. (New York time) on the
applicable payment date. The Administrative Agent shall
promptly distribute to each Lender its ratable share of the
principal and interest received by it for the account of such
Lender. Each Lender shall endorse each Revolving Credit Note
held by it or otherwise make appropriate book entries
evidencing each payment of principal made thereon, it being
understood, however, that any Lender's failure to record
appropriate information on the grid(s) attached to any such
Note shall in no way affect the obligation of the Company
under this Agreement or under any such Note. Whenever any
payment to be made hereunder, including without limitation,
any payment to be made on any Note, shall be stated to be due
on a day which is not a Banking Day, such payment may be made
on the next Banking Day (but in any event not later than its
maturity date) and such extension of time shall in each case
be included in the computation of the interest payable on such
Note. Notwithstanding the previous sentence, in the case of
any LIBOR Loan, if the next Banking Day is in a month other
than the month the payment was originally due, such payment
may be made on the immediately preceding Banking Day and such
reduction of time shall in each case be considered in the
computation of the interest payable on such Note.
(vi) REVOLVING CREDIT NOTES: The obligation of the Company to repay
the Alternate Base Rate Loans and the LIBOR Loans made by each
Lender and to pay interest thereon shall be evidenced by
non-negotiable Revolving Credit Notes of the Company
substantially in the form of Schedule B hereto, with
appropriate insertions, dated the date of execution thereof by
the Company and payable to the order of such Lender on the
maturity date of such Loan, in the principal amount indicated
thereon. The principal amount of the Alternate Base Rate Loans
and the LIBOR Loans made by each Lender under this Section
2.1A and all prepayments thereof and the
9
<PAGE> 10
applicable dates with respect thereto shall be recorded by
such Lender from time to time on the grid(s) attached to such
Note or by appropriate book entry. The aggregate unpaid amount
of Alternate Base Rate Loans and LIBOR Loans set forth on the
grid(s) attached to each Revolving Credit Note shall be
rebuttable presumptive evidence of the principal amount owing
and unpaid on such Note, it being understood, however, that
any Lender's failure to so record appropriate information on
the grid(s) attached to its respective Revolving Credit Note
shall in no way affect the obligations of the Company under
this Agreement or such Note.
(vii) INTEREST ON LATE PAYMENTS: If any Revolving Credit Note shall
not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision or
acceleration of maturity therein or herein contained, the
principal thereof and the accrued and unpaid interest thereon
shall bear interest, until paid, at a rate per annum which
shall be 1.1 times the Alternate Base Rate from time to time
in effect.
(viii) LOAN REFINANCINGS: If any Revolving Credit Loan is not repaid
when due, unless otherwise directed by the Company, and
provided no Event of Default exists, (and the Commitment
Period has not terminated), the Lenders shall refinance such
Loans with Alternate Base Rate Loans unless otherwise provided
in this Agreement. Such automatic Loans shall be deemed to
have repaid the principal in full of each prior Loan such that
no Event of Default would exist.
(ix) CONVERSION: At the Company's option, the Company may at any
time or from time to time, except if an Event of Default
exists, convert a LIBOR Loan or an Alternate Base Rate Loan to
any one of the other types of Loans; provided, however, in the
case of LIBOR Loans any such conversion may only be made on
the Interest Adjustment Date applicable thereto. Such
conversion shall not be deemed to be a prepayment. The
provisions of this subsection shall apply with respect to
voluntary conversions or conversions required hereunder. The
Company, through the Administrative Agent, shall give written
or telephonic notice to the Lenders of each conversion by
11:00 a.m., New York time (a) on the date of such conversion
if such conversion is to Alternate Base Rate Loans, and (b) at
least two (2) London Banking Days prior to the date of such
conversion if such conversion is to LIBOR Loans. Each such
notice shall be effective upon receipt by the relevant Lender
and shall specify the date and amount of such conversion, the
type of Loans to be converted and the type of Loans to be
converted into. Each conversion shall be in an aggregate
amount of not less than Five Million Dollars ($5,000,000) or
any greater amount evenly divisible by One Million Dollars
($1,000,000).
(x) PREPAYMENT.
(a) As to Alternate Base Rate Loans, the Company shall
have the right at any time or from time to time, upon
one (1) Banking Day's prior written notice to the
Administrative Agent, without the payment of any
premium or penalty to prepay on a pro-rata basis, all
or any part of the principal amount of the Revolving
Credit Notes then outstanding as designated by the
Company plus interest accrued on the amount so
prepaid to the date of such prepayment.
(b) As to LIBOR Loans, the Company shall have the right
at any time or from time to time, upon four (4)
London Banking Days' prior written notice to the
10
<PAGE> 11
Administrative Agent, to prepay on a pro-rata basis,
all or any part of the principal amount of the
Revolving Credit Notes then outstanding as designated
by the Company, plus interest accrued on the amount
so prepaid to the date of such prepayment. If LIBOR,
as determined as of 11:00 a.m. London time three (3)
London Banking Days prior to the date of prepayment
(hereinafter "Prepayment LIBOR"), shall be lower than
the last LIBOR previously determined for the LIBOR
Loan(s), with respect to which prepayment is intended
to be made (hereinafter "Last LIBOR"), then the
Company shall promptly pay each of the Lenders, in
immediately available funds, a prepayment premium
measured by a rate (the "Prepayment Premium Rate")
which shall be equal to the difference between the
Last LIBOR and the Prepayment LIBOR. In determining
the Prepayment LIBOR, the Company shall apply a rate
equal to LIBOR (for a deposit approximately equal to
the amount of such prepayment) which would be
applicable to a LIBOR Interest Period commencing on
the date of such prepayment and having a duration
equal to the LIBOR Interest Period described in
Article I hereof with a length closest to the
remaining duration of the actual LIBOR Interest
Period during which such prepayment is to be made.
The Prepayment Premium Rate shall be applied to all
or such part of the principal amount of the Revolving
Credit Notes as related to the LIBOR Loans to be
prepaid, and the prepayment premium shall be computed
for the period commencing with the date on which said
prepayment is to be made to that date which coincides
with the last day of the LIBOR Interest Period
previously established when the LIBOR Loans, which
are to be prepaid, were made. Each prepayment of a
LIBOR Loan shall be in the aggregate principal sum of
not less than One Million Dollars ($1,000,000).
Notwithstanding the above, no prepayment premium
shall be due and owing by the Company if the Company
makes such payment on the Interest Adjustment Date
applicable to the Loan being paid. In the event the
Company fails to borrow or convert into a proposed
LIBOR Loan subsequent to the delivery to the Lenders
of the notice of the proposed date, aggregate amount
and initial LIBOR Interest Period of such Loan, but
prior to the draw down of funds thereunder, such
failure to borrow or convert shall be treated as a
prepayment subject to such prepayment premium.
B. MONEY MARKET RATE LOANS
-----------------------
(i) BORROWING RESTRICTIONS: Subject to the terms and conditions of
this Agreement, during the Commitment Period each Lender may
make (but is not obligated to make) a Money Market Rate Loan
to the Company in such amount or amounts as the Company may
from time to time request, provided that the sum of the total
Loans outstanding under Sections 2.1A, 2.1B and 2.1C plus the
aggregate principal amount of outstanding Competitive Loans at
any time shall not exceed the Commitments which, on the date
hereof, total One Billion One Hundred Sixty Million Dollars
($1,160,000,000). Subject to the provisions of this Agreement,
the Company shall be entitled under this Paragraph B to borrow
funds, repay the same in whole or in part and reborrow
hereunder at any time and from time to time from any Lender
making Money Market Rate Loans to the Company. The
Administrative Agent shall not be involved, in its capacity as
such agent, in any borrowing(s) by the Company under this
Section 2.1B; provided, however, the Administrative Agent
shall be advised by the Company of each such borrowing
hereunder. The procedures
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for any such Loan shall be as agreed upon by the Company and
each Lender making a Loan under Paragraph B.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1B from any Lender, that agrees to make such
Loan, an amount not to exceed the total of all Commitments in
amounts of not less than Five Million Dollars ($5,000,000) or
any greater amount evenly divisible by One Million Dollars
($1,000,000).
(iii) INTEREST RATES: The Company shall pay interest on the unpaid
principal amount of any Money Market Rate Loan outstanding
from time to time from the date on which funds are received by
the Company until paid, at the Money Market Rate. Except as
may be otherwise agreed by the Company and the Lender making a
Money Market Rate Loan, interest shall be payable at the
maturity of such Loan and shall be computed on the basis of a
365 or 366 day year, as the case may be.
(iv) MONEY MARKET NOTES: The obligation of the Company to repay
Money Market Rate Loans and to pay interest thereon shall be
evidenced by a Money Market Note substantially in the form of
Schedule C hereto, dated the date of execution thereof by the
Company and payable to the order of the applicable Lender in
accordance with the terms and conditions of such Money Market
Note.
(v)
PAYMENT: All payments of principal and interest due on Money
Market Rate Loans shall be paid by the Company directly to any
Lender making a Money Market Rate Loan to the Company. Any
such Loans hereunder shall be paid on the date specified in
the applicable Money Market Note.
(vi) INTEREST ON LATE PAYMENTS: If any Money Market Note shall not
be paid at maturity, whether such maturity occurs by reason of
lapse of time or by operation of any provision of acceleration
of maturity therein or herein contained, the principal thereof
and the unpaid interest thereon shall bear interest, until
paid, at a rate per annum which shall be 1.1 times the
Alternate Base Rate from time to time in effect.
C. TERM LOAN
---------
(i) BORROWING RIGHTS AND RESTRICTIONS: Subject to the terms and
conditions of this Agreement, at any time prior to the end of
the Commitment Period, each Lender will make a two (2) year
Term Loan to the Company in such amount, if any, as the
Company may request, but not exceeding the Commitment of such
Lender then in effect. In the event the Company makes
borrowings under this Section 2.1C, no further borrowing shall
be made under Section 2.1A, notwithstanding anything in this
Agreement to the contrary. Any prepayment of the Notes
outstanding under this Section 2.1C shall be subject to
Section 2.1A(x) hereof. The proceeds of each Term Loan shall
be delivered to the Company not later than 3:00 p.m. New York
time on the last day of the notice period set forth in Section
2.1C(iii), time being of the essence, in immediately available
Dollars by wire transfer to an account of the Company
designated by the Company, from time to time in writing to the
Administrative Agent (who shall notify each Lender), with the
account number and American Banking Association routing number
of the bank at which
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such account is maintained.
(ii) LOAN AMOUNTS: Alternate Base Rate Loans and LIBOR Loans shall
be in aggregate amounts of not less than Five Million Dollars
($5,000,000) or any greater amount evenly divisible by One
Million Dollars ($1,000,000), but either may be in lesser
amounts with respect to mandatory semi-annual installments of
principal or as a result of such semi-annual installments of
principal having been made.
(iii) PROCEDURES FOR BORROWING: The procedures for borrowing under
this Section 2.1C shall be as follows:
(a) Any such borrowing prior to the scheduled Termination
Date shall be made pro-rata among the Lenders and
shall be made upon the Company's written notice to
the Administrative Agent (which notice must be
received by the Administrative Agent prior to 11:00
a.m. New York time three (3) London Banking Days
prior to the requested borrowing date in the event of
a LIBOR Loan and by 11:00 a.m. New York time on the
same Banking Day of the proposed date of such
borrowing in the event of an Alternate Base Rate
Loan. Such notice shall specify:
(1) the amount of such borrowing;
(2) the requested borrowing date which shall be
a Banking Day or a London Banking Day, as
the case may be;
(3) the type of Loan(s) comprising such
borrowing; and
(4) the duration of the LIBOR Interest Period
for any LIBOR Loan(s) and the maturity date
of any Alternate Base Rate Loan(s).
(b) The Administrative Agent shall promptly notify each
Lender of (i) its receipt of the Company's Notice of
borrowing, (ii) the amount of each Lender's pro-rata
share of such borrowing; and (iii) the name of the
Company's bank, the Company's account number and
American Banking Association routing number of the
bank at which the Company's account is maintained and
to which such pro-rata shares shall be routed.
(c) Each Lender's pro-rata share of each Term Loan shall
be delivered by each such Lender to the Company not
later than 3:00 p.m. New York time on the last day of
the notice period set forth herein, time being of the
essence, in immediately available Dollars by wire
transfer to an account of the Company designated by
the Company, from time to time in writing to the
Administrative Agent, with the account number and
American Banking Association routing number of the
bank at which such account is maintained.
(iv) INTEREST RATES:
(a) If the Term Loans are Alternate Base Rate Loans, the
Company shall pay interest (computed on the basis of
a year having 365 or 366 days, as the case may be) on
the unpaid principal amount thereof outstanding from
time to time from the date of such Loan until paid,
payable quarterly in arrears,
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<PAGE> 14
during the term of such Loan and upon prepayment and
if not paid at maturity thereof at the Alternate Base
Rate plus one-quarter of one percent (1/4%) per
annum. Any change in such rate resulting from a
change in the Alternate Base Rate shall be effective
immediately from and after such change in the
Alternate Base Rate.
(b) If the Term Loans are LIBOR Loans, the Company shall
pay interest (computed on the basis of a year having
360 days and calculated on the basis of the number of
days elapsed) at a fixed rate for each LIBOR Interest
Period on the unpaid principal amount of LIBOR Loans
outstanding from time to time from the date of such
Loan until paid, payable on each Interest Adjustment
Date with respect to a LIBOR Interest Period
(provided that if a LIBOR Interest Period exceeds
three (3) months, the interest must be paid every
three (3) months, commencing three (3) months from
the beginning of such LIBOR Interest Period), at
LIBOR plus one-quarter of one percent (1/4%) per
annum, fixed in advance of each LIBOR Interest Period
as herein provided for each LIBOR Interest Period.
(v) LOAN CONVERSIONS: All of the Term Loans outstanding at any
time must be either Alternate Base Rate Loans or LIBOR Loans,
but the Lenders, at the request of the Company, shall convert
Alternate Base Rate Loans to LIBOR Loans at any time, except
if an Event of Default exists, and shall convert LIBOR Loans
to Alternate Base Rate Loans permitted by this Paragraph C on
any Interest Adjustment Date, provided the conditions of
Section 2.2 are adhered to by the Company,, applicable to such
LIBOR Loan but each request for Loans under this Section 2.1C
must either be for Alternate Base Rate Loans or LIBOR Loans.
In the event of any conversion under this Section 2.1C, the
procedures set forth in Section 2.1A(ix) shall be followed by
the Company.
(vi) TERM LOAN NOTE: The obligation of the Company to repay the
Alternate Base Rate Loans and the LIBOR Loans made by each
Lender under this Section 2.1C and to pay interest thereon
shall be evidenced by a Term Note of the Company substantially
in the form of Schedule D, with appropriate insertions, dated
the date of execution thereof by the Company and payable to
the order of such Lender in the principal amount of its
Commitment, or if less, the aggregate unpaid principal amount
of Term Loans made hereunder by such Lender, in four (4)
semi-annual substantially equal installments, commencing six
(6) months from the date thereof. The principal amount of the
Alternate Base Rate Loans and LIBOR Loans made by each Lender
and all prepayments thereof and the applicable dates with
respect thereto shall be recorded by such Lender from time to
time on the grid(s) attached to such Note or by appropriate
book entry. The aggregate unpaid amount of Alternate Base Rate
Loans and LIBOR Loans set forth on the grid(s) attached to
each Term Note shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on such Note, it being
understood, however, that any Lender's failure to so record
appropriate information on the grid(s) attached to its
respective Note shall in no way affect the obligations of the
Company under this Agreement or such Note.
(vii) INTEREST ON LATE PAYMENTS: If any Term Note shall not be paid
at maturity, whether such maturity occurs by reason of lapse
of time or by operation of any provision of acceleration of
maturity therein contained, the principal thereof and the
unpaid interest thereon shall bear interest, until paid, at a
rate per annum which
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shall be 1.1 times the Alternate Base Rate from time to time
in effect.
D. COMPETITIVE BID LOANS
---------------------
(i) BORROWING RIGHTS AND RESTRICTIONS: Subject to the terms and
conditions of this Agreement, during the Commitment Period the
Company may request Competitive Bids and may (but shall not
have any obligation to) accept Competitive Bids and borrow
Competitive Loans provided that the sum of the total Loans
outstanding under Sections 2.1A, 2.1B and 2.1C plus the
aggregate principal amount of outstanding Competitive Loans at
any time shall not exceed the Commitments which, on the date
hereof, total One Billion One Hundred Sixty Million Dollars
($1,160,000,000) . Subject to the provisions of this
Agreement, the Company may, if a Competitive Bid is submitted
by a Lender, borrow funds under this Paragraph D, repay the
same in whole or in part, and reborrow hereunder at any time
and from time to time during the Commitment Period.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1D up to the principal amount of the
Commitments which, on the date hereof, total One Billion One
Hundred Sixty Million Dollars ($1,160,000,000) by means of any
combination of:
(a) Fixed Rate Loans which shall be payable on their
respective due dates and shall be drawn down in
aggregate amounts of not less than Five Million
Dollars ($5,000,000) or any greater amount evenly
divisible by One Million Dollars ($1,000,000); and
(b) Competitive Libor Loans which shall be payable on the
last date of their Competitive Libor Interest Period
and shall be drawn down in aggregate amounts of not
less than Five Million Dollars ($5,000,000) or any
greater amount evenly divisible by One Million
Dollars ($1,000,000).
(iii) PROCEDURE FOR BORROWING: The procedure for borrowing under
this Section 2.1D shall be as follows:
(a) Each such borrowing shall be made by Notice to the
Competitive Advance Facility Agent (which Notice must
be received by the Competitive Advance Facility Agent
prior to 11:00 a.m. New York time four (4) London
Banking Days prior to the requested borrowing date in
the event of a Competitive Libor Loan and by 11:00
a.m. New York time one Banking Day prior to the
proposed date of such borrowing in the event of a
Fixed Rate Loan). Such Notice shall specify:
(1) the amount of such borrowing;
(2) the requested borrowing date which shall be
a Banking Day or a London Banking Day, as
the case may be;
(3) the type of Loan(s) comprising such
borrowing; and
(4) the duration of the Competitive Libor
Interest Period for any Competitive Libor
Loan and the maturity date of any Fixed Rate
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Loan(s).
(b) The Competitive Advance Facility Agent shall promptly
notify each Lender of (i) its receipt of a request
for a Competitive Loan thereby inviting the Lenders
to submit Competitive Bids. Any such notice shall
identify the name of the Company's bank, the
Company's account number and American Banking
Association routing number of the bank at which the
Company's account is maintained and to which the
proceeds from any Competitive Loan shall be routed.
(c) Each Lender may (but shall not have any obligation
to) make one or more Competitive Bids to the Company
in response to a Competitive Bid Request. Each
Competitive Bid by a Lender must be in a form
approved by the Competitive Advance Facility Agent
and must be received by the Competitive Advance
Facility Agent by telecopy, in the case of a
Competitive Libor Loan, not later than 10:00 a.m.,
New York time, three (3) London Banking Days before
the proposed date of such Competitive Borrowing, and
in the case of a Fixed Rate Loan, not later than
10:00 a.m., New York time, on the proposed date of
such Competitive Borrowing. Competitive Bids that do
not conform substantially to the form approved by the
Competitive Advance Facility Agent may be rejected by
the Competitive Advance Facility Agent, and the
Competitive Advance Facility Agent shall notify the
applicable Lender as promptly as practicable. Each
Competitive Bid shall be in aggregate amounts of not
less than Five Million Dollars ($5,000,000) or any
greater amount evenly divisible by One Million
Dollars ($1,000,000) and may equal the entire
principal amount of the Competitive Borrowing
requested by the Company. Each Competitive Bid shall
specify (i) the Competitive Bid Rate(s) at which the
applicable Lender is prepared to make such Loan or
Loans (expressed as a percentage rate per annum in
the form of a decimal to no more than four decimal
places) as well as the basis of calculation and (ii)
in the case of a Competitive Libor Loan, the
Competitive Libor Interest Period applicable to each
such Loan and the last day thereof.
(d) The Competitive Advance Facility Agent shall promptly
notify the Company by telecopy of the Competitive Bid
Rate and the principal amount specified in each
Competitive Bid and the identity of the Lender that
made such Competitive Bid.
(e) Subject only to the provisions of this paragraph, the
Company may accept or reject any Competitive Bid. The
Company shall notify the Competitive Advance Facility
Agent by telephone, confirmed by telecopy in a form
approved by the Competitive Advance Facility Agent,
whether and to what extent it has decided to accept
or reject each Competitive Bid, in the case of a
Competitive Libor Loan, not later than 11:00 a.m.,
New York time, three (3) London Banking Days before
the date of the proposed Competitive Borrowing, and
in the case of a Fixed Rate Loan, not later than
11:00 a.m., New York time, on the proposed date of
the Competitive Borrowing; provided that (i) the
failure of the Company to give such notice shall be
deemed to be a rejection of each Competitive Bid,
(ii) the Company shall not accept a Competitive Bid
made at a particular Competitive Bid Rate if the
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<PAGE> 17
Company rejects a Competitive Bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of
the Competitive Bids accepted by the Company shall
not exceed the aggregate amount of the requested
Competitive Borrowing specified in the related
Competitive Bid Request, (iv) to the extent necessary
to comply with clause (iii) above, the Company may
accept Competitive Bids at the same Competitive Bid
Rate in part, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid
Rate, shall be made pro-rata in accordance with the
amount of each such Competitive Bid, and (v) except
as otherwise provided in clause (iv) above, no
Competitive Bid shall be accepted for a Competitive
Loan unless such Competitive Loan is in a minimum
principal amount of Five Million Dollars ($5,000,000)
or any greater amount evenly divisible by One Million
Dollars ($1,000,000); provided further that if a
Competitive Loan must be in an amount less than Five
Million Dollars ($5,000,000) because of the
provisions of clause (iv) above, such Competitive
Loan may be for a minimum of One Million Dollars
($1,000,000) or any integral multiple thereof, and in
calculating the pro-rata allocation of acceptances of
portions of multiple Competitive Bids at a particular
Competitive Bid Rate pursuant to clause (iv) the
amounts shall be rounded to integral multiples of One
Million Dollars ($1,000,000) in a manner determined
by the Company.
(f) The Competitive Advance Facility Agent shall promptly
notify each bidding Lender by telecopy whether or not
its Competitive Bid has been accepted (and, if so,
the amount and Competitive Bid Rate so accepted), and
each successful bidder will thereupon become bound,
subject to the terms and conditions hereof, to make
the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(g) If the Competitive Advance Facility Agent shall elect
to submit a Competitive Bid in its capacity as a
Lender, it shall submit such Competitive Bid directly
to the Company at least one quarter of an hour
earlier than the time by which the other Lenders are
required to submit their Competitive Bids to the
Competitive Advance Facility Agent pursuant to
paragraph (b) of this Section.
(iv) INTEREST RATES: Interest shall accrue at the Competitive Bid
Rate specified in the applicable Competitive Bid, unless
otherwise agreed by the Lender submitting such Competitive Bid
and the Company.
(v) PAYMENTS ON COMPETITIVE NOTES: All payments of principal and
interest shall be made to the Competitive Advance Facility
Agent in immediately available funds for the account of the
Lenders by no later than 3:00 p.m. (New York time) on the
applicable payment date which date shall be specified on the
applicable Competitive Note. The Competitive Advance Facility
Agent shall promptly distribute to each Lender the principal
and interest received by it for the account of such Lender.
Each Lender having made a Competitive Loan hereunder shall
endorse each Competitive Note held by it or otherwise make
appropriate book entries evidencing each payment of principal
made thereon, it being understood, however, that any Lender's
failure to record appropriate information on the grid(s)
attached to any such Note shall in no way affect the
obligation of the Company under this Agreement or under any
such Note. Whenever any payment to be made hereunder,
including
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without limitation, any payment to be made on any Note, shall
be stated to be due on a day which is not a Banking Day, or a
London Banking day as the case may be, such payment shall be
made on the next Banking Day (but in any event not later than
its maturity date) and such extension of time shall in each
case be included in the computation of the interest payable on
such Note. Notwithstanding the previous sentence, in the case
of any Competitive Libor Loan, if the next London Banking Day
is in a month other than the month the payment was originally
due, such payment may be made on the immediately preceding
London Banking Day and such reduction of time shall in each
case be considered in the computation of the interest payable
on such Note.
(vi) COMPETITIVE NOTES: The obligation of the Company to repay the
Fixed Rate Loans and the Competitive Libor Loans made by any
Lender and to pay interest thereon shall be evidenced by
non-negotiable Competitive Notes of the Company substantially
in the form of Schedule E hereto, with appropriate insertions,
dated the date of execution thereof by the Company and payable
to the order of such Lender on the maturity date of such Loan,
in the principal amount indicated thereon. The principal
amount of the Fixed Rate Loans and the Competitive Libor Loans
made by each Lender under this Section 2.1D and all
prepayments thereof and the applicable dates with respect
thereto shall be recorded by such Lender from time to time on
the grid(s) attached to such Note or by appropriate book
entry. The aggregate unpaid amount of Fixed Rate Loans and
Competitive Libor Loans set forth on the grid(s) attached to
each Competitive Note shall be rebuttable presumptive evidence
of the principal amount owing and unpaid on such Note, it
being understood, however, that any Lender's failure to so
record appropriate information on the grid(s) attached to its
respective Competitive Note shall in no way affect the
obligations of the Company under this Agreement or such Note.
(vii) PREPAYMENT. The Company shall not have any right to prepay any
Competitive Loan without the prior consent of the Lender
having made such Loan.
SECTION 2.2. CONDITIONS TO CERTAIN LOANS OR CONVERSIONS. The obligation or right
of each Lender to make any of the Loans or to convert any of the Loans
described in Sections 2.1A, 2.1B, 2.1C or 2.1D hereunder is conditioned, in
the case of each borrowing or conversion hereunder, upon:
(i) the fact that no Possible Default or Event of Default shall
then exist or immediately after such Loan would exist; and
(ii) the fact that the representations and warranties contained in
Article IV hereof shall be true and correct in all material
respects with the same force and effect as if made on and as
of the date of such borrowing or conversion.
Each borrowing or conversion by the Company hereunder shall be deemed
to be a representation and warranty by the Company as of the date of such
borrowing or conversion as to the facts specified in Sections 2.2 (i) and (ii)
above.
SECTION 2.3. FACILITY FEE. The Company agrees to pay to each Lender a Facility
Fee, for the period from and including the date of this Agreement until the
Commitments have terminated and the outstanding Loans have been repaid. The
first payment of the Facility Fee shall be made no later than March 31,
1997 for the period January 3, 1997 to March 31, 1997. All payments of the
Facility
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Fee shall be made to the Administrative Agent in immediately available
funds for the account of the Lenders by no later than 3:00 p.m. (New York
time) on the applicable payment date. The Administrative Agent shall
promptly distribute to each Lender its ratable share of the Facility Fee
received by it for the account of such Lender.
SECTION 2.4. COMPUTATION OF FACILITY FEES. Facility Fees shall be computed for
the actual number of days elapsed on the basis of a 360-day year.
SECTION 2.5. TERMINATION OF COMMITMENTS AND RIGHT OF SUBSTITUTION.
(i) The Company may at any time or from time to time terminate in
whole or ratably in part the Commitments of all of the Lenders
to an amount not less than the aggregate principal amount of
the Loans then outstanding under this Agreement, by giving the
Lenders and the Administrative Agent not less than two (2)
Banking Days' notice of the aggregate amount of such
termination (which shall not be less than Five Million Dollars
($5,000,000) or any greater amount evenly divisible by One
Million Dollars ($1,000,000)) and such Lender's proportionate
amount of such termination. If the Company terminates in whole
the Commitments of the Lenders, on the effective date of such
termination (provided the Company has prepaid in full the
unpaid principal balance, if any, of the Notes outstanding
together with all accrued and unpaid interest, if any,
Facility Fees accrued and unpaid, and any applicable
prepayment premiums) all of the Notes outstanding shall be
delivered to the Company marked "Cancelled". Any termination
of the Commitments shall be irrevocable during the remainder
of the Commitment Period.
(ii) The Company may at any time or from time to time terminate or
reduce the Commitment of any Lender hereunder to an amount not
less than the aggregate principal amount of the Loans then
outstanding held by such Lender under this Agreement:
(a) immediately if such Lender satisfies any of the
criteria for insolvency described in Section 7.5
hereof; or
(b) upon not less than two (2) Banking Days' notice to
such Lender and the Administrative Agent if the
Company, in its sole discretion, elects to terminate
the Commitment of such Lender for any reason
including, but not limited to, the default of such
Lender under the terms of this Agreement.
(iii) In the event the Commitment of any Lender is terminated by the
Company, the Company shall replace such Lender with a
successor Lender or Lenders (including any Lender or Lenders
which are a party to this Agreement with the consent of such
Lender or Lenders) with a Commitment not to exceed the
Commitment of the terminated Lender(s); provided that such
successor Lender shall, pursuant to a written instrument in
form and substance satisfactory to the Company, effectively
agree to become a party hereto and a "Lender" hereunder and be
bound by the terms hereof.
(iv) In the event of a default of any Lender under the terms of
this Agreement, the Company's election to terminate the
Commitment of such Lender shall not act as a waiver of any
other remedies which the Company may have for such default.
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(v) The termination of the Commitment of any Lender pursuant to
Section 2.5(ii) shall not affect the Commitments or the
obligations of all remaining Lenders under this Agreement.
(vi) After any termination or reduction of the Commitments as
described in this Section 2.5, the Facility Fees payable
hereunder shall be calculated upon the Commitments of the
Lenders as so reduced.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS
AND FIXED RATE LOANS
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time after the
Effective Date any Regulatory Change shall impose, modify or deem
applicable any reserve and/or special deposit requirement (other than
reserves: (a) included in the Reserve Percentage, the effect of which is
reflected in the interest rate(s) of the LIBOR Loan(s) or Competitive Libor
Loan(s) in question or (b) attributable to requirements imposed by the
Board of Governors of the Federal Reserve System on any Lender as a result
of the failure of any such Lender to maintain necessary current
capitalization or financial conditions imposed thereby) against assets held
by, or deposits in or for the account of any Loans, by any Lender, and the
result of the foregoing is to increase the cost to such Lender of making or
maintaining LIBOR Loans or Competitive Libor Loans, as the case may be, or
reduce the amount of principal or interest received by such Lender with
respect to LIBOR Loans or Competitive Libor Loans, then upon demand by such
Lender the Company shall pay to such Lender from time to time on Interest
Adjustment Dates with respect to such Loans, as additional consideration
hereunder, additional amounts sufficient to fully compensate and indemnify
such Lender for such increased cost or reduced amount, provided that such
additional cost or reduced amount were allocable to such LIBOR Loans or
Competitive Libor Loans.
A certificate as to the increased cost or reduced amount (hereinafter
in this Section 3.1 collectively called "Increased Costs") as a result of
any event mentioned in this Section 3.1, setting forth the calculations
therefor, shall be promptly submitted by such Lender to the Company for
its review. The Company shall pay such Increased Costs for such period of
time prior to the date such certificate is received by the Company during
which such Regulatory Change, by its terms, applies retroactively to any
period of time prior to the date such Regulatory Change became effective.
In addition, the Company shall pay such Increased Costs incurred by a
Lender on and after the date such certificate is received by the Company
unless, and until, the Company, notwithstanding any other provision of
this Agreement,
(i) upon at least three (3) Banking Days' prior written notice to
such Lender, prepays the affected LIBOR Loans in full or
converts all LIBOR Loans to Alternate Base Rate Loans
regardless of the LIBOR Interest Period thereof, or
(ii) terminates the Commitment of such Lender pursuant to Section
2.5 (provided that the Company shall pay such Increased Costs
on any LIBOR Loans from such Lender which remain outstanding).
Each Lender will notify the Company as promptly as practicable of the
existence of any event which will likely require the payment by the Company
of any such additional amount under this Section.
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SECTION 3.2. CHANGES IN TAX LAWS. In the event that by reason of any Regulatory
Change of the jurisdiction where the office of the Lender making a Loan is
located, (i) any Lender shall, with respect to this Agreement or any
transaction under this Agreement, be subject to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other
than any tax imposed upon the total net income of such Lender or imposed on
or calculated with respect to the value of the assets of such Lender) or
(ii) any change shall occur in the taxation of any Lender with respect to
any Loan and the interest payable thereon (other than any change which
affects, and to the extent that it affects, the taxation of the total net
income of such Lender or imposed on or calculated with respect to the value
of the assets of such Lender), and if any such measures or any other
similar measure shall result in an increase in the cost to such Lender of
making or maintaining any Loan or in a reduction in the amount of
principal, interest or Facility Fee receivable by such Lender in respect
thereof, then such Lender shall promptly notify the Company stating the
reasons therefor.
A certificate as to any such increased cost or reduced amount
(hereinafter in this Section 3.2 collectively called "Increased Taxes") as
a result of any event mentioned in this Section 3.2, setting forth the
calculations therefor, shall be submitted by such Lender to the Company for
its review. The Company shall pay such Increased Taxes for such period of
time prior to the date such certificate is received by the Company during
which such Regulatory Change, by its terms, applies retroactively to any
period of time prior to the date such Regulatory Change became effective.
In addition, the Company shall pay such Increased Taxes incurred by such
Lender on and after the date such certificate is received by the Company
unless, and until, the Company, notwithstanding any other provision of this
Agreement,
(i) upon at least three (3) Banking Days' prior written notice to
such Lender and the Administrative Agent, prepays the affected
Loans in full, or
(ii) terminates the Commitment of such Lender pursuant to Section
2.5 hereof (provided that the Company shall pay such Increased
Costs on any Loans from such Lender which remain outstanding).
If any Lender receives such additional consideration from the Company
pursuant to this Section 3.2 and thereafter obtains the benefits of any
refund, deduction or credit for any taxes or other amounts on account of
which such additional consideration has been paid, such Lender shall pay to
the Company its allocable share thereof and shall reimburse the Company to
the extent, but only to the extent, that such Lender shall have actually
received a refund of such taxes or other amounts together with any interest
thereon or an effective net reduction in taxes or other governmental
charges (including any taxes imposed on or measured by the total net income
of such Lender) of the United States or any state or subdivision thereof by
virtue of any such deduction or credit, after first giving effect to all
other deductions and credits otherwise available to such Lender. If, at the
time any audit of such Lender's income tax return by any taxing agency is
completed, such Lender determines, based on such audit, that it was not
entitled to the full amount of any refund reimbursed to the Company as
aforesaid or that its net income taxes are not reduced by a credit or
deduction for the full amount of taxes reimbursed to the Company as
aforesaid, the Company, upon demand of such Lender, will promptly pay to
such Lender the amount so refunded to which such Lender was not so
entitled, or the amount by which the net income taxes of such Lender were
not so reduced, as the case may be. The provisions of this Section 3.2 and
Section 3.1 shall survive the termination of this Agreement.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE.
In the event the Majority Lenders shall have determined, in good faith
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and reasonably, that Dollar deposits of the relevant amount for the
relevant LIBOR Interest Period for LIBOR Loans are not available to the
Lenders in the London Interbank Eurodollar market or that, by reason of
circumstances affecting such market, adequate and reasonable means do not
exist for ascertaining LIBOR then (i) any notice of new LIBOR Loans (or
conversion of Revolving Credit Loans to LIBOR Loans) previously given by
the Company and not yet borrowed (or converted, as the case may be) shall
be deemed a notice to make Alternate Base Rate Loans unless the Company
notifies the Administrative Agent to the contrary, and (ii) the Company
shall be obligated either to prepay or to convert any outstanding LIBOR
Loans on the last day of the then current LIBOR Interest Period or Periods
with respect thereto.
SECTION 3.4. INDEMNITY. Without limitation of any other provisions of this
Article III, the Company hereby agrees to indemnify and hold harmless each
of TCB, Chase and CSI and each Lender from and against all costs, expenses
(including fees, charges and disbursements of counsel) and liabilities
resulting from any litigation or other proceedings (regardless of whether
TCB, Chase, CSI or any Lender is a party thereto), related to or arising
out of the Transactions contemplated hereby, except to the extent such
costs, expenses and liabilities result from the wilful misconduct or gross
negligence of the party seeking indemnification as determined by a court of
competent jurisdiction, excluding consequential, incidental or special
damages. A certificate as to any such loss or expense shall be promptly
submitted by TCB, Chase or CSI and any such Lender to the Company for its
review and shall be paid by the Company in the absence of manifest error.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time any
Regulatory Change shall make it unlawful for any Lender to fund, refinance,
continue or convert into any LIBOR Loans which it is committed to make
hereunder with moneys obtained in the London Interbank Eurodollar market,
the Commitment of such Lender to fund, refinance, continue or convert into
LIBOR Loans shall, upon the happening of such event, be suspended for the
duration of such illegality and such Lender shall by written notice to the
Company and the Administrative Agent declare that its Commitment with
respect to such Loans has been so suspended and, if and when such
illegality ceases to exist, such suspension shall cease and such Lender
shall similarly notify the Company and the Administrative Agent. If any
such change shall make it unlawful for any Lender to continue in effect the
funding in the London Interbank Eurodollar market of any LIBOR Loan
previously made by it hereunder, such Lender shall, upon the happening of
such event, notify the Company and the other Lenders thereof in writing
stating the reasons therefor and the Company shall, on the earlier of (i)
the last day of the then current LIBOR Interest Period or (ii) if required
by such law, regulation or interpretation, on such date as shall be
specified in such notice, either convert all LIBOR Loans to Alternate Base
Rate Loans or prepay all LIBOR Loans to the Lenders in full. Any such
prepayment or conversion shall not be subject to the prepayment premiums
prescribed in Section 2.1A(x) hereof. Any requests for a LIBOR Loan not
funded pursuant to this Section shall be deemed to have been a request for
an Alternate Base Rate Loan.
SECTION 3.6. FUNDING. Each Lender may, but shall not be required to, make LIBOR
Loans and Competitive Libor Loans with funds obtained outside the United
States.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lenders that:
SECTION 4.1. CORPORATE EXISTENCE. The Company is a corporation duly organized
and in good standing under the laws of the State of Ohio.
SECTION 4.2. AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance
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by the Company of this Agreement, the Notes and Related Writings are within
the Company's corporate powers, have been duly authorized by all necessary
corporate action, and do not and will not contravene or conflict with any
provision of applicable law or any applicable final judgement in effect or
of the Amended Articles of Incorporation or Regulations of the Company or
of any agreement for borrowed money or other material agreement binding
upon the Company. The Company has duly executed and delivered this
Agreement.
SECTION 4.3. VALIDITY AND BINDING NATURE. This Agreement is, and the Notes when
duly executed and delivered will be, legal, valid and binding obligations
of the Company enforceable against the Company in accordance with their
respective terms.
SECTION 4.4. LITIGATION AND LIENS. To the best of the Company's knowledge, no
litigation or proceeding is pending which would, if successful, have a
Material adverse impact on the financial condition of the Company and the
Consolidated Subsidiaries taken as a whole, which is not already reflected
in the Company's Financial Reports delivered to the Lenders prior to the
date of this Agreement. The Internal Revenue Service has not alleged any
Material default by the Company in the payment of any tax or threatened to
make any Material assessment in respect thereof which would have or
reasonably could have a Material adverse impact on the financial condition
of the Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 4.5. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary has incurred any Material accumulated funding deficiency within
the meaning of ERISA and the regulations thereunder. No Reportable Event
has occurred with respect to any Plan which would have a Material adverse
financial impact on the Company or any of its Consolidated Subsidiaries,
taken as a whole. The Pension Benefit Guaranty Corporation, established
under ERISA, has not asserted that the Company or any Consolidated
Subsidiary has incurred any Material liability in connection with any Plan.
No Material lien has been attached and no person has threatened to attach
such a lien on any property of the Company and any Consolidated Subsidiary
as a result of the Company's or any Consolidated Subsidiary's failure to
comply with ERISA.
SECTION 4.6. ENVIRONMENTAL MATTERS. To the best of the Company's knowledge, the
Company and each Subsidiary is in substantial compliance with all
applicable existing laws and regulations (other than laws and regulations
the validity or applicability of which are being contested by the Company
or a Subsidiary, as the case may be, in good faith by appropriate
proceedings diligently prosecuted) relating to environmental control in all
jurisdictions where the Company or any Subsidiary is presently doing
business and the Company and each Subsidiary (to the extent applicable to
its operations) is in substantial compliance with the Occupational Safety
and Health Act of 1970 and all rules, regulations and applicable orders
thereunder (other than rules, regulations and orders the validity or
applicability of which are being contested by the Company or a Subsidiary,
as the case may be, in good faith by appropriate proceedings diligently
prosecuted).
SECTION 4.7. FINANCIAL REPORTS. The Financial Reports of the Company and the
Consolidated Subsidiaries, furnished to each Lender prior to the date of
this Agreement or from time to time pursuant to this Agreement shall be
true and complete, prepared in accordance with generally accepted
accounting principles, except as stated therein, and fairly present the
Company's and its Consolidated Subsidiaries' financial condition and the
results of their operations, as of the date, and for the period encompassed
by such Financial Reports. Since the dates of the Company's most recent
Financial Reports until the date of this Agreement there has been no
material adverse change in the consolidated financial condition of the
Company and the Consolidated Subsidiaries taken as a whole.
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SECTION 4.8. REGULATION U. Neither the Company nor any of its Consolidated
Subsidiaries is generally engaged in the business of purchasing or selling
margin stock or extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System). Each of the Lenders represents
and warrants to the Company that it is not relying on and will not rely on
any margin stock (as described above) in determining whether to extend or
maintain credit under this Agreement.
SECTION 4.9. GOVERNMENT REGULATION. Neither the Company nor any of its
Consolidated Subsidiaries is registered or is required to be registered as
a public utility under the Public Utility Holding Company Act of 1935 or as
an investment company under the Investment Company Act of 1940.
SECTION 4.10. TAXES. The Company and its Consolidated Subsidiaries have filed
all United States federal income tax returns and all other material tax
returns which are required to have been filed by them (subject to any
available extensions) and have paid all taxes indicated as due on such
returns except for any such taxes being contested by the Company or a
Subsidiary, as the case may be, in good faith by appropriate proceedings
diligently prosecuted (the Company having made adequate and reasonable
provision for all material taxes not yet due and payable), if any, and all
material assessments, if any.
SECTION 4.11. DEFAULTS. No Possible Default or Event of Default exists which
would have or reasonably could have a Material adverse impact on the
financial condition of the Company and the Consolidated Subsidiaries, taken
as a whole.
ARTICLE V. OPENING COVENANTS
Prior to or concurrently with the execution and delivery of this
Agreement, the Company shall furnish to each Lender, and, with regard to
Section 5.6, the Administrative Agent, copies of the following:
SECTION 5.1. RESOLUTIONS. Certified copies of the resolutions of the Board of
Directors of the Company evidencing approval of the execution of this
Agreement.
SECTION 5.2. LEGAL OPINION. A favorable opinion of counsel for the Company as to
the matters referred to in Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.8 and 4.9 of
this Agreement and such other matters as the Lenders may reasonably
request.
SECTION 5.3. CERTIFICATE OF INCUMBENCY. A certificate of the secretary or
assistant secretary of the Company certifying the names of the officers of
the Company authorized to sign this Agreement, and the Notes, together with
the true signatures of such officers.
SECTION 5.4. FINANCIAL REPORTS. The Financial Reports of the Company and the
Consolidated Subsidiaries, dated December 31, 1995, previously furnished to
each Lender, are true and complete, have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
those used by the Company and the Consolidated Subsidiaries during the
Company's 1995 fiscal year, except as stated therein, and fairly present
the Company's and the Consolidated Subsidiaries' financial condition as of
that date and the results of their operations for the period then ended.
Since that date there has been no material adverse change in the Company's
and the Consolidated Subsidiaries' financial condition, properties or
business taken as a whole.
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SECTION 5.5. GOVERNMENTAL APPROVALS. In connection with the Acquisition
Transaction, the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder, shall have expired or been terminated,
all requisite governmental and material third parties' consents, approvals
and/or filings pursuant to applicable laws shall be obtained and/or filed
including, but not limited to, any such approvals and/or filings pursuant
to the Illinois Responsible Property Transfer Act, 745 I.C.L.S sections
90/1 et seq. and the New Jersey Industrial Site Recovery Act, N.J.S.A.
13:12K-6 et seq. and any rules or regulations promulgated under either of
them. In addition, no statute, rule or regulation shall be in effect which
prohibits the consummation of the Acquisition Transaction and no order of
any competent court shall be in effect or threatened which prohibits the
consummation of the Acquisition Transaction.
SECTION 5.6. GOOD STANDING. Such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Company, the authorization
of the Acquisition Transaction and any other legal matters relating to the
Company and this Agreement, all in form and substance satisfactory to the
Administrative Agent and its counsel.
ARTICLE VI. COVENANTS
Until the later of (i) the expiration of the Commitments or (ii) all
obligations of the Company hereunder and under the Notes are satisfied and
paid in full, the Company agrees that, unless at any time the Majority
Lenders shall otherwise expressly agree in writing:
SECTION 6.1. INSURANCE. The Company will (a) maintain insurance to such extent
and against such hazards and liabilities as is commonly maintained by
companies similarly situated, and (b) upon any Lender's written request,
furnish to such Lender such information about the Company's and its
Consolidated Subsidiaries' insurance as such Lender may from time to time
reasonably request, which information shall be prepared in form and detail
reasonably satisfactory to such Lender.
SECTION 6.2. FINANCIAL REPORTS. The Company will furnish to the Administrative
Agent and each Lender:
(i) within sixty (60) days after the end of each of the first
three quarter-annual periods of each of its fiscal years (and,
in any event, in each case as soon as available), the
quarterly Financial Report of the Company and the Consolidated
Subsidiaries as at the end of that period, prepared on a
consolidated basis;
(ii) within ninety (90) days after the end of each of its fiscal
years (and, in any event, in each case as soon as available),
the annual Financial Report of the Company and the
Consolidated Subsidiaries for that year prepared on a
consolidated basis;
(iii) within sixty (60) days after the end of each of its quarterly
accounting periods and within ninety (90) days after the end
of its annual accounting period, a statement signed by a
financial officer of the Company reflecting compliance with
Section 6.3 hereof and to the effect that no Event of Default
has occurred and is continuing or, if there is any such event,
describing it and the steps being taken, if any, to cure such
event;
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(iv) promptly after filing with the Securities and Exchange
Commission, any Form 8-K or Schedule 13D filings applicable to
the Company (or any successor forms or schedules promulgated
by the Securities and Exchange Commission from time to time
which encompass the matters currently addressed in Form 8-K
and Schedule 13D);
(v) written notice of any change in the rating assigned to the
Company's senior unsecured long-term debt by Moodys or S&P
within thirty (30) days of such change; and
(vi) such other financial information regarding the Company as any
Lender may reasonably request.
SECTION 6.3. NET WORTH. The Company will not permit Consolidated Net Worth at
any time to fall below Eight Hundred Million Dollars ($800,000,000).
SECTION 6.4. REGULATIONS U AND X. The Company will not nor will it permit any
Subsidiary to take any action that would result in any non-compliance of
the Loans with Regulations U and X of the Board of Governors of the Federal
Reserve System. The Company's use of proceeds of any borrowings under this
Agreement will not cause a violation of Regulations U or X.
SECTION 6.5. MERGER AND SALE OF ASSETS. The Company will not merge or
consolidate with or permit any Consolidated Subsidiary to merge or
consolidate with any other corporation or sell, lease or transfer or
otherwise dispose of all or, during any twelve (12) month period, a
substantial part of its assets to any person or entity (except as otherwise
provided herein); provided, however, if no Possible Default, Event of
Default or Change of Control (as such term is hereinafter defined) shall
then exist or immediately thereafter will begin to exist:
(i) Any Consolidated Subsidiary may merge with (a) the Company
(provided that the Company shall be the continuing or
surviving corporation) or (b) any one or more other
Consolidated Subsidiaries provided that either the continuing
or surviving corporation shall be a Wholly-Owned Consolidated
Subsidiary, or after giving effect to any merger pursuant to
this sub-clause (b), the Company and/or one or more
Wholly-Owned Consolidated Subsidiaries shall own not less than
the same percentage of the outstanding Voting Stock of the
continuing or surviving corporation as the Company and/or one
or more Wholly-Owned Consolidated Subsidiaries owned of the
merged Consolidated Subsidiary immediately prior to such
merger,
(ii) Any Consolidated Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to (a) the Company, (b)
any Wholly-Owned Consolidated Subsidiary or (c) any
Consolidated Subsidiary of which the Company and/or one or
more Wholly- Owned Consolidated Subsidiaries shall own not
less than the same percentage of Voting Stock as the Company
and/or one or more Wholly-Owned Consolidated Subsidiaries then
own of the Consolidated Subsidiary making such sale, lease,
transfer or other disposition,
(iii) The Company may sell the stock or assets of any Consolidated
Subsidiary if such sale or other disposition is determined by
the board of directors of the Company to be in the best
interests of the Company and such sale is for a consideration
which represents the fair value (as determined in good faith
by the board of directors of the
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Company) thereof at the time of such sale of such stock or
assets,
(iv) The Company may merge with any other corporation, provided
that the Company shall be the surviving corporation,
(v) The Company or any Consolidated Subsidiary may sell all or any
part of the assets of any of its divisions or operations if
such sale or other disposition is determined by the board of
directors of the Company and/or such Consolidated Subsidiary,
as the case may be, to be in the best interests of the Company
and/or such Consolidated Subsidiary, as the case may be, and
such sale is for a consideration which represents the fair
value (as determined in good faith by the board of directors
of the Company) thereof at the time of such sale or other
disposition of such assets, and
(vi) The Company or any Subsidiary may sell or transfer all or any
part of the assets of any of its divisions or operations to
any Subsidiary.
In the event there occurs a Change in Control of the Company, the
Commitments of the Lenders will immediately terminate and the outstanding
Loans will become due and payable. For purposes of this paragraph, a
"Change of Control" shall occur if:
(a) there shall be consummated (i) any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the
Company's common stock would be converted into cash,
securities or other property, other than a merger of the
Company in which the holders of the Company's common stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) any sale,
lease, exchange or transfer (in one transaction or a series of
related transactions) of fifty percent (50%) or more of the
assets or earning power of the Company;
(b) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act, as amended, other than the
Company or any employee benefit or stock ownership plan
sponsored by the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such Plan, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing [twenty percent (20%])
or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases
or otherwise; or
(c) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted
the Board of Directors of the Company and any new director
whose election by such Board of Directors or nomination for
election by the Company's shareholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of such
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof.
Notwithstanding subparagraph (a) through (c) above,
with respect to the transactions set forth in subparagraphs
(a) and (b) above, a Change of Control shall
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not be deemed to have occurred if any such transaction (i) is
approved by a vote of at least two-thirds (2/3) of the
directors and (ii) at the time of such vote, at least
two-thirds (2/3) of the directors then in office were members
of the Board of Directors of the Company immediately prior to
such transaction.
SECTION 6.6. NOTICE. Until the Termination Date, the Company will cause its
treasurer, or in his absence another representative of the Company
designated by the treasurer, to promptly notify the Lenders and the
Administrative Agent whenever any Material Possible Default may occur or
any warranty made in Article IV hereof or elsewhere in this Agreement or in
any Related Writing may for any reason cease in any Material respect to be
true and complete.
SECTION 6.7. LIENS. The Company will not and will not permit any Consolidated
Subsidiary to create, assume or suffer to exist any lien upon any of its
property or assets (hereinafter "Properties") whether now owned or
hereafter acquired without effectively providing that any borrowings under
this Agreement shall be secured equally and ratably with all other
indebtedness thereby secured, provided that this Section shall not apply to
the following:
(i) liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings diligently
prosecuted,
(ii) other liens incidental to the conduct of its business or the
ownership of its Properties which were not incurred in
connection with the borrowing of money or the obtaining of
advances or credit, and which do not in the aggregate
materially detract from the value of its Properties or
materially impair the use thereof in the operation of its
business,
(iii) liens on Properties of a Consolidated Subsidiary to secure
obligations of such Consolidated Subsidiary to the Company or
another Consolidated Subsidiary,
(iv) liens on Properties of the Company and/or its Consolidated
Subsidiaries existing on the date hereof,
(v) any lien existing on any Properties of any corporation at the
time it becomes a Consolidated Subsidiary, existing prior to
the time of acquisition upon any Properties acquired by the
Company or any Consolidated Subsidiary through purchase,
merger, consolidation or otherwise, whether or not assumed by
the Company or such Consolidated Subsidiary,
(vi) any lien placed upon any asset other than real property
(hereinafter in this subparagraph (vi) "Asset") at the time of
acquisition by the Company or any Consolidated Subsidiary to
secure all or a portion of or to secure indebtedness incurred
prior to, at the time of, or (in the case of any Asset
acquired with the intent to obtain subsequent financing
thereof secured by a lien) within one (1) year after the
acquisition of such Asset for the purpose of financing all or
a portion of the purchase price thereof, provided that any
such lien shall not encumber any other Properties of the
Company or such Consolidated Subsidiary,
(vii) any lien placed upon any real property now owned or hereafter
acquired by the Company or any of its Subsidiaries securing
indebtedness in an amount up to eighty percent (80%) of the
fair market value of such real property,
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(viii) liens in favor of the United States of America or any
department or agency thereof, or in favor of any state
government or political subdivision thereof, or in favor of a
prime contractor under a government contract of the United
States, or of any state government or any political
subdivision thereof, and, in each case, resulting from
acceptance of partial, progress, advance or other payments in
the ordinary course of business under government contracts of
the United States, or of any state government or any political
subdivision thereof, or subcontracts thereunder,
(ix) liens created, assumed or existing in connection with a
tax-free financing,
(x) any lien renewing, extending or refunding any lien permitted
by clauses (iv), (v), (vi), (vii), (viii) and (ix) above,
provided that the principal amount secured is not materially
increased, and such lien is not extended to other Properties,
and
(xi) liens other than those permitted by clauses (i) through (x)
above, provided that the aggregate amount of all indebtedness
secured by liens permitted by this clause (xi) shall not at
any time exceed fifteen percent (15%) of Consolidated Net
Worth.
SECTION 6.8. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary will incur any Material accumulated funding deficiency within
the meaning of the ERISA and the regulations thereunder, or any Material
liability to the Pension Benefit Guaranty Corporation or any successor
thereto in connection with any Plan. The Company will furnish to the
Lenders as soon as possible and in any event within thirty (30) days after
the Company or such Consolidated Subsidiary knows or has reason to know
that any Material Reportable Event with respect to any Plan has occurred a
statement of the chief financial officer of the Company or such
Consolidated Subsidiary setting forth details as to such Reportable Event
and the action which the Company or such Consolidated Subsidiary proposes
to take with respect thereto, together with a copy of the notice of such
Reportable Event given to the Pension Benefit Guaranty Corporation (or any
successor thereto) if a copy of such notice is available to the Company or
such Consolidated Subsidiary.
SECTION 6.9. NOTICE OF DEFAULT. The Company will, and will cause each
Consolidated Subsidiary to, give prompt notice in writing to each Lender,
the Administrative Agent and the Competitive Advance Facility Agent of the
occurrence of any Possible Default, Event of Default or Change of Control
and of any other development, financial or otherwise, with respect to which
there is a significant probability of a Material adverse impact on
Consolidated Net Worth or on the Company's ability to repay the Notes.
SECTION 6.10. CONDUCT OF BUSINESS. The Company will, and will cause each
Consolidated Subsidiary to, carry on and conduct its business in
substantially the same manner as it is presently conducted and to do all
things necessary to remain duly incorporated, validly existing and in good
standing as a corporation in its jurisdiction of incorporation and maintain
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
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SECTION 6.11. TAXES. The Company will, and will cause each Consolidated
Subsidiary to, pay when due all taxes, assessments and governmental charges
and levies upon it or its income, profits or property, except those which
are being contested in good faith by appropriate proceedings.
SECTION 6.12. COMPLIANCE WITH LAWS. The Company will use its best good faith
efforts to comply and to cause each Subsidiary to comply with all such laws
and regulations (other than laws and regulations the validity or
applicability of which are being contested by the Company or a Subsidiary,
as the case may be, in good faith by appropriate proceedings diligently
prosecuted) which may be legally imposed in the future in jurisdictions in
which the Company or any Subsidiary may then be doing business.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default:
SECTION 7.1. NON-PAYMENT OF NOTES, INTEREST, FACILITY FEE OR OTHER FEES. If the
principal on any Note shall not be paid in full when due and payable and
shall remain unpaid for a period of three (3) consecutive Banking Days, or
London Banking Days, as the case may be and/or any interest due on any Note
or any Facility Fee or Other Fee shall not be paid within five (5) Banking
Days after written notice thereof to the Company from the Lender (or the
Administrative Agent or the Competitive Advance Facility Agent, as the case
may be) to whom such amount(s) are owed.
SECTION 7.2. COVENANTS. If the Company shall fail or omit to perform and observe
any agreement or other provision (other than those referenced in Section
7.1 hereof) contained or referred to in this Agreement or in any Related
Writing that is on the Company's part to be complied with, and such failure
or omission, is not fully corrected within thirty (30) days after the
giving of written notice thereof to the Company by no less than fifty-one
percent (51%) of the Lenders acting as a whole.
SECTION 7.3. WARRANTIES. If any representation, warranty or statement made in or
pursuant to this Agreement or any Related Writing or any other information
furnished by the Company to the Lenders or any other holder of any Note,
shall be false or erroneous in any respect which would have or reasonably
could have a Material adverse impact on the financial condition of the
Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 7.4. CROSS DEFAULT. If the Company or any of its Consolidated
Subsidiaries (i) defaults in the payment of principal or interest due and
owing upon any other Material obligation for borrowed money beyond any
period of grace provided with respect thereto or (ii) defaults in the
performance of any other agreement, term or condition contained in any
agreement under which such obligation is created, and any such default is
not waived by the holders of such agreement or instrument, and if the
effect of such unwaived default would (a) accelerate the maturity of such
indebtedness or permit the holder thereof to cause such indebtedness to
become due prior to its stated maturity and (b) have or reasonably could
have a Material adverse impact on the Company and the Consolidated
Subsidiaries, taken as a whole.
SECTION 7.5. TERMINATION OF OPERATIONS, BANKRUPTCY OR INSOLVENCY. If the Company
or a Consolidated Subsidiary representing in excess of ten percent (10%) of
total consolidated assets of the Company and the Consolidated Subsidiaries
shall (i) discontinue business (except as permitted under Section 6.5
hereof) or (ii) generally not pay (or admit in writing its inability to
pay) its debts as such debts become due, or (iii) make a general assignment
for the benefit
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<PAGE> 31
of creditors, or (iv) apply for or consent to the appointment of a
receiver, a custodian, a trustee, an interim trustee or a liquidator of all
or a substantial part of its assets, or (v) be adjudicated an insolvent
debtor or have entered against it an order for relief under Title 11 of the
United States Code, as the same may be amended from to time to time, or
(vi) file a voluntary petition in bankruptcy or file a petition or an
answer seeking reorganization or an arrangement with creditors or seeking
to take advantage of any other law (whether federal or state) relating to
relief of debtors, or admit (by answer, by default or otherwise) the
substantive allegations of a petition filed against it in any bankruptcy,
reorganization, insolvency or other comparable proceeding (whether federal
or state) relating to relief of debtors, or (vii) suffer or permit to
continue unstayed and in effect for sixty (60) consecutive days any
judgment, decree or order entered by a court of competent jurisdiction,
which approves a petition seeking its reorganization or appoints a
receiver, custodian, trustee, interim trustee or liquidator of all or a
substantial part of its assets.
ARTICLE VIII. EFFECT OF DEFAULT
SECTION 8. EFFECT OF EVENT OF DEFAULT. If any Event of Default described in
Section 7.5 hereof shall occur, the Commitments (if they have not already
been terminated) shall immediately terminate and all Notes shall
automatically become immediately due and payable, without notice. If any
other Event of Default shall occur and shall not have been remedied within
an allowable time period referred to in this Agreement, then the Majority
Lenders may terminate the Commitments (if they have not already been
terminated) and the Outstanding Majority Lenders may declare that all Notes
shall become immediately due and payable. The Majority Lenders and the
Outstanding Majority Lenders shall promptly notify the Company in writing
of any such declaration. The effect as an Event of Default of any event
described in Section 7.1 or 7.5 hereof may be waived only by the written
concurrence of the holders of one hundred percent (100%) of the aggregate
unpaid principal amount of the Notes. The effect as an Event of Default of
any other event described in Sections 7.2, 7.3 or 7.4 may be waived by the
holders of fifty-one percent (51%) by amount of the Commitments.
ARTICLE IX. THE ADMINISTRATIVE AGENT AND COMPETITIVE ADVANCE
FACILITY AGENT
The Lenders hereby authorize (a) Texas Commerce Bank National
Association and TCB hereby agrees to act as Administrative Agent, and (b)
The Chase Manhattan Bank and Chase hereby agrees to act as the Competitive
Advance Facility Agent, for the Lenders in respect of this Agreement upon
the terms and conditions set forth elsewhere in this Agreement, and upon
the following terms and conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints and authorizes the Administrative Agent and the Competitive
Advance Facility Agent to exercise such powers hereunder as are delegated
to the Administrative Agent and the Competitive Advance Facility Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. Notwithstanding anything in this Agreement to the contrary, or in
a Related Writing, neither the Administrative Agent nor the Competitive
Advance Facility Agent shall have any duties or responsibilities, except
those expressly set forth herein, nor shall the Administrative Agent or the
Competitive Advance Facility Agent have or be deemed to have any fiduciary
relationship with any Lender. Neither the Administrative Agent, the
Competitive Advance Facility Agent nor any of its or their directors,
officers, attorneys or employees shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct.
31
<PAGE> 32
SECTION 9.2. NOTE HOLDERS. The Administrative Agent and the Competitive Advance
Facility Agent, as the case may be, may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with
it signed by such payee and in form satisfactory to the Administrative
Agent or the Competitive Advance Facility Agent, as the case may be.
SECTION 9.3. CONSULTATION WITH COUNSEL. Each of the Competitive Advance Facility
Agent and the Administrative Agent may consult with legal counsel selected
by it (including in-house counsel) and shall not be liable for any
reasonable action taken or suffered in good faith by it in accordance with
the written opinion of external counsel, issued before such action is taken
or suffered.
SECTION 9.4. DOCUMENTS. Neither the Competitive Advance Facility Agent nor the
Administrative Agent shall be under a duty to examine into or pass upon the
validity, effectiveness, genuineness or value of this Agreement, the Notes,
any Related Writing furnished pursuant hereto or in connection herewith or
the value of any collateral obtained hereunder, and each of the Competitive
Advance Facility Agent and the Administrative Agent shall be entitled to
assume that the same are valid, effective and genuine and what they purport
to be.
SECTION 9.5. ADMINISTRATIVE AGENT, COMPETITIVE ADVANCE FACILITY AGENT AND THEIR
AFFILIATES. With respect to the Loans made hereunder, each of the
Competitive Advance Facility Agent and the Administrative Agent shall have
the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not the Administrative Agent or the Competitive
Advance Facility Agent, and the Administrative Agent and the Competitive
Advance Facility Agent and their affiliates may accept deposits from, lend
money to and generally engage in any kind of business with the Company or
any Subsidiary or affiliate of the Company.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and agreed that
each of the Administrative Agent and the Competitive Advance Facility Agent
shall be entitled to assume that no Possible Default or Event of Default
has occurred and is continuing, unless the Administrative Agent or the
Competitive Advance Facility Agent, as the case may be, has actual
knowledge of such fact or has been notified by a Lender that such Lender
considers that a Possible Default or Event of Default has occurred and is
continuing and specifying the nature thereof.
SECTION 9.7. ACTION BY ADMINISTRATIVE AGENT, COMPETITIVE ADVANCE FACILITY AGENT.
So long as the Administrative Agent or the Competitive Advance Facility
Agent, as the case may be, shall be entitled, pursuant to Section 9.6
hereof, to assume that no Possible Default or Event of Default shall have
occurred and be continuing, each of the Competitive Advance Facility Agent
and the Administrative Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any
action or actions which it may be able to take under or in respect of, this
Agreement. Neither the Competitive Advance Facility Agent nor the
Administrative Agent shall incur any liability under or in respect of this
Agreement by action upon any notice, certificate, warranty or other paper
or instrument reasonably believed by it to be genuine or authentic or to be
signed by the proper party or parties, or with respect to anything which it
may do or refrain from doing in the reasonable exercise of its judgment, or
which the Administrative Agent or the Competitive Advance Facility Agent
reasonably believes to be necessary or desirable in the premises.
SECTION 9.8. INDEMNIFICATION. The Lenders agree to indemnify each of the
Competitive Advance Facility Agent and the Administrative Agent (to the
extent not reimbursed by the
32
<PAGE> 33
Company), ratably according to the respective principal amounts of their
Commitments from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, reasonable out of pocket
costs and expenses (including reasonable external counsel costs), expenses
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against either the Competitive Advance Facility
Agent or the Administrative Agent in any action taken or omitted by the
Administrative Agent or the Competitive Advance Facility Agent with respect
to this Agreement, provided that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or the Competitive Advance Facility Agent's gross
negligence or willful misconduct or from any action taken or omitted by the
Administrative Agent or the Competitive Advance Facility Agent in any
capacity other than as agent under this Agreement.
SECTION 9.9. SUCCESSOR. The Company may select a successor or alternate
Administrative Agent and/or Competitive Advance Facility Agent with the
approval of the holders of fifty-one percent (51%) by amount of the
Commitments or Loans, as the case may be.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. LENDERS' INDEPENDENT INVESTIGATION. Each Lender, by its signature
to this Agreement, acknowledges and agrees that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Company and any Subsidiary in
connection with the extension of credit hereunder, and agrees that no other
Lender, the Administrative Agent or the Competitive Advance Facility Agent
has any duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect
thereto whether coming into its possession before the making of the first
Loans or at any time or times thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of dealing
on the part of any Lender or the holder of any Note in exercising any
right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are
cumulative and in addition to any other rights, powers or privileges held
by operation of law, by contract or otherwise.
SECTION 10.3. AMENDMENTS. Except as otherwise specifically provided herein no
amendment, modification, termination, or waiver of any provision of this
Agreement or of the Notes (except in the event of a Money Market Note
and/or Competitive Note), nor consent to any variance therefrom, shall be
effective unless the same shall be in writing and signed by the Company and
the Majority Lenders and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
The unanimous consent of the Lenders shall be required with respect to
(i) the change of maturity of any Term Note or Revolving Credit Note, or
the payment date of interest thereunder, (ii) any change in the rate of
interest on such Notes, or in the rate at which the Facility Fee referred
to in Section 2.3 hereof shall be calculated or in any amount of principal
or interest due on any Term Note or Revolving Credit Note, or in the manner
of pro-rata application of any payments made by the Company to the Lenders
hereunder, (iii) any change in any percentage voting requirement in this
Agreement, (iv) any change in any date specified in this Agreement for the
payment of principal or interest on any Term Note or Revolving Credit Note
or for the payment of any Facility Fee hereunder, (v) any increase in any
Lender's Commitment or Percentage, except pursuant to Section 2.5(iii)
hereof, or any increase in the aggregate of all of the Lenders' Commitments
hereunder or (vi)
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<PAGE> 34
any change to this Section 10.3. No amendments to the duties or
responsibilities of the Administrative Agent or Competitive Advance
Facility Agent may be made without the prior written consent of the
Administrative Agent or the Competitive Advance Facility Agent, as the case
may be, except as provided in Section 9.9 hereof.
Notice of amendments or consents ratified by the Lenders hereunder
shall immediately be forwarded by the Company to all Lenders. Each Lender
or other holder of a Note shall be bound by any amendment, waiver or
consent obtained as authorized by this Section, regardless of its failure
to agree thereto.
SECTION 10.4. CONFIDENTIALITY. Unless the Company otherwise agrees in writing,
each Lender hereby agrees to keep all Proprietary Information (as defined
below) confidential and not to disclose or reveal any Proprietary
Information to any person or entity other than such Lender's directors,
officers, employees, affiliates, and agents, and then only on a
confidential need-to-know basis; provided, however that a Lender may
disclose Proprietary Information (a) as required by law, rule, regulation,
or judicial process, (b) to its attorneys and accountants, (c) as requested
or required by a state, federal, or foreign authority or examiner
regulating Lenders or banking, or (d) to actual or potential assignees or
participants as permitted by Section 10.9 hereof who agree to be bound by
the provisions of this Section. For purposes of this Agreement, the term
"Proprietary Information" shall include all information about the Company,
any Subsidiary, or any of their respective affiliates which has been
furnished by the Company, any Subsidiary, or any of their respective
affiliates, whether furnished before or after the date hereof, and
regardless of the manner furnished; provided, however, that Proprietary
Information shall not include information which (x) is or becomes generally
available to the public other than as a result of a disclosure by a Lender
not permitted by this Agreement, (y) was available to a Lender on a
nonconfidential basis prior to its disclosure to such Lender by the
Company, any Subsidiary, or any of their respective affiliates, or (z)
becomes available to a Lender on a nonconfidential basis from a person
and/or entity other than the Company, any Subsidiary, or any of their
respective affiliates who, to the best knowledge of such Lender, is not
otherwise bound by a confidentiality agreement with the Company, any
Subsidiary, or any of their respective affiliates, or, to the best
knowledge of such Lender, is not otherwise prohibited from transmitting the
information to such Lender.
SECTION 10.5. NOTICES. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to the Company or a
Subsidiary, mailed or delivered to it, addressed to it at the address of
the Company herein or hereinafter specified, and if to a Lender, mailed or
delivered to it, addressed to the address (as may be amended from time to
time) of such Lender specified on its signature page to this Agreement. All
notices, statements, requests, demands and other communications provided
for hereunder shall be deemed to be given or made when received.
SECTION 10.6. COSTS AND EXPENSES. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses (including reasonable legal
fees for outside counsel) of the Lenders incurred directly as a result of
the enforcement of this Agreement, the Notes and the other instruments and
documents in connection herewith.
SECTION 10.7. OBLIGATIONS SEVERAL. The obligations of the Lenders hereunder are
several and not joint. Nothing contained in this Agreement and no action
taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders as a partnership, association, joint venture or other entity. No
default by any Lender hereunder shall excuse the other Lenders from any
obligation under this Agreement; but no Lender shall have or acquire any
additional obligation of any kind by reason of such default.
34
<PAGE> 35
SECTION 10.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
to be an original and when taken together shall constitute one and the same
agreement.
SECTION 10.9. ASSIGNMENTS AND PARTICIPATIONS.
A. ASSIGNMENTS. Unless the Company otherwise consents in writing, which
consent shall not be unreasonably withheld, no payee or other party in
possession of any Note (including any Lender) shall assign or transfer
any Note or any interest therein to any other person or entity, except
as otherwise permitted under this Section, or negotiate any Note, as
such term is defined in Ohio Revised Code Chapter 1303; provided,
however, no consent from the Company shall be required in the event a
Lender makes any such assignment to an affiliate of such Lender or to
another Lender. Except as otherwise expressly agreed in writing by the
Company, no Lender shall, by reason of the assignment or transfer of
any Note or otherwise, be relieved of any of its obligations hereunder.
Each transferee of any Note shall take such Note subject to the
provisions of this Agreement and to any request made, waiver or consent
given, or other action taken hereunder, prior to such transfer, by each
previous holder of such Note; and the Company shall be entitled to
conclusively assume that the transferee shall thereafter be vested with
all rights and powers under this Agreement of the Lender named as the
payee of the Note which is the subject of such transfer. Nothing herein
shall prohibit any Lender from pledging or assigning any Note to any
Federal Reserve Bank of the United States pursuant to applicable law.
No party in possession of a Note shall be a "Holder" as such term is
defined in Ohio Revised Code Chapter 1303. Notwithstanding any
provision of this Section 10.9 to the contrary, the Company may not
assign or transfer any of its rights or obligations hereunder without
the consent of the holders of one hundred percent (100%) by amount of
the Commitments or Loans, as the case may be.
B. PARTICIPATIONS. Any Lender may grant participations in or to all or any
part of any Loan or Loans held by such Lender and Commitment of such
Lender and the Notes held by such Lender without the consent of the
Company. Except as otherwise expressly agreed in writing by the
Company, no grant of a participation shall relieve any Lender of its
obligations hereunder. The Company shall be entitled to deal solely
with the Lenders (and their respective assignees) for all purposes of
this Agreement and the Notes, and no holder of a participation in all
or any part of the Loans, Notes or Commitments shall have any rights
under this Agreement and shall not be a Holder of any Note, as such
term is defined in Ohio Revised Code Chapter 1303.
C. DISCLOSURE OF INFORMATION. The Company hereby consents to the
disclosure of any information obtained in connection herewith by any
Lender to any entity which is an assignee or potential assignee or a
participant or potential participant pursuant to Section 10.9A or 10.9B
hereof, it being understood that such Lender shall advise any such
actual or potential assignee or participant of its obligation to keep
confidential any nonpublic information disclosed to it pursuant to this
Section 10.9 and, prior to the disclosure of such information, shall
cause each such actual or potential assignee or participant to execute
a confidentiality agreement containing the confidentiality provisions
set forth in Section 10.4 hereof.
D. SECURITIES LAWS. Each Lender represents that it is the present
intention of such Lender to acquire each Note drawn to its order for
its own account and not with a view to the distribution or sale
thereof.
35
<PAGE> 36
SECTION 10.10. TAX FORMS. With respect to each Lender which is organized under
the laws of a jurisdiction outside the United States (which claims
exemption from, or reduction of, United States withholding tax under
Sections 1441 or 1442 of the Internal Revenue Code of 1986, as amended), on
the date of any borrowing, and from time to time thereafter if requested by
the Company or the Administrative Agent, each such Lender shall provide the
Administrative Agent and the Company with the forms prescribed by the
Internal Revenue Service of the United States certifying as to such
Lender's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Lender
hereunder or other documents satisfactory to the Company and the
Administrative Agent indicating that all payments to be made to such Lender
hereunder are subject to such tax at a rate reduced by an applicable tax
treaty. Unless the Company and the Administrative Agent have received such
forms and such other documents reasonably requested by the Administrative
Agent or the Company indicating that payments hereunder are not subject to
United States withholding tax or are subject to such tax at a rate reduced
by an applicable tax treaty, the Company or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the
case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.
SECTION 10.11. ENTIRE AGREEMENT. This Agreement supersedes any prior agreement
or understanding of the parties hereto, and contains the entire agreement
of the parties hereto, with respect to the matters covered hereby; provided
that the indemnification and expense reimbursement provisions of the
Commitment Letter dated November 12, 1996 by and among the Company, TCB,
Chase and Chase Securities, Inc. and the provisions relating to the
administration fees and the auction administration fees in the Fee Letter
referred to therein shall continue in effect notwithstanding the execution
and delivery of this Agreement.
SECTION 10.12. GOVERNING LAW. This Agreement, each of the Notes and any Related
Writing shall be governed by and construed in accordance with the laws of
the State of Ohio and the respective rights and obligations of the Company
and the Lenders shall be governed by Ohio law.
SECTION 10.13. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
SECTION 10.14. PRESS RELEASES. Neither the Administrative Agent nor any Lender
or the Competitive Advance Facility Agent shall issue any press release
regarding this Agreement without the prior written consent of the Company.
SECTION 10.15. CONSENT TO JURISDICTION. The Company hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New
York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement, 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 such New York
State 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 the Administrative Agent, the
Competitive Advance Facility
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<PAGE> 37
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement against the Company or its properties in the
courts of any jurisdiction.
The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which 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 in any court
referred to in this Section. 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.
Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 10.5. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date indicated above.
THE SHERWIN-WILLIAMS COMPANY
By: /s/
----------------------------------------
LARRY J. PITORAK
Title: SENIOR VICE PRESIDENT-
FINANCE, TREASURER AND
CHIEF FINANCIAL OFFICER
By: /s/
--------------------------------------
CYNTHIA D. BROGAN
Title: VICE PRESIDENT AND ASSISTANT
TREASURER
<PAGE> 38
Amount of Percentage of
Commitment Commitments Morgan Guaranty Trust Company of New York
- ---------- -----------
$40,000,000 3.45%
By: /s/
-------------------------------------
Name:
Title:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Telephone:
-------------------------------
Facsimile:
-------------------------------
<PAGE> 39
Amount of Percentage of
Commitment Commitments ABN AMRO Bank N.V.
- ---------- ----------- by: ABN AMRO North America, Inc. as agent
$40,000,000 3.45%
By: /s/
-------------------------------------
Name:
Title:
ABN Amro Bank N.V.
by: ABN AMRO North America, Inc. as agent
One PPG Place, Suite 2950
Pittsburgh, PA l5222-5400
Telephone:
-------------------------
Facsimile:
-------------------------
<PAGE> 40
Amount of Percentage of
Commitment Commitments Caisse Nationale de Credit Agricole
- ---------- -----------
$24,000,000 2.07%
By: /s/
---------------------------------
Name:
Title:
Caisse Nationale de Credit Agricole
55 East Monroe St., Suite 4700
Chicago, Ill. 60603-5702
Telephone:
--------------------------
Facsimile:
--------------------------
<PAGE> 41
Amount of Percentage of
Commitment Commitments The Dai Ichi Kangyo Bank, Ltd.
- ---------- ----------- Chicago Branch
$24,000,000 2.07%
By: /s/
-------------------------------
Name:
Title:
The Dai Ichi Kangyo Bank, Ltd.
Chicago Branch
10 South Wacker Drive - 26th Floor
Chicago, Ill. 60606
Telephone:
------------------------
Facsimile:
------------------------
<PAGE> 42
Amount of Percentage of
Commitment Commitments Bank of Montreal
- ---------- -----------
$24,000,000 2.07%
By: /s/
-------------------------------
Name:
Title:
Bank of Montreal
430 Park Avenue
New York, NY 10022
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 43
Amount of Percentage of
Commitment Commitments Den Danske Bank
- ---------- -----------
$24,000,000 2.07%
By: /s/
--------------------------------
Name:
Title:
Den Danske Bank
280 Park Avenue
New York, New York 10017-1216
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 44
Amount of Percentage of
Commitment Commitments First National Bank of Boston
- ---------- -----------
$24,000,000 2.07%
By: /s/
----------------------------
Name:
Title:
First National Bank of Boston
100 Federal Street, 01-09-05
Boston, MA 02110
Telephone:
---------------------
Facsimile:
---------------------
<PAGE> 45
Amount of Percentage of
Commitment Commitments United States National Bank of Oregon
- ---------- -----------
$24,000,000 2.07%
By: /s/
------------------------------------
Name:
Title:
United States National Bank of Oregon
555 SW Oak Street, Suite 400
Portland, OR 97204
Telephone:
-------------------------------
Facsimile:
-------------------------------
<PAGE> 46
Amount of Percentage of
Commitment Commitments The Sumitomo Bank, Limited
- ---------- ----------- Chicago Branch
$24,000,000 2.07%
By: /s/
--------------------------------
Name:
Title:
The Sumitomo Bank, Limited
Chicago Branch
233 South Wacker Drive, Suite 4800
Chicago, IL 60606
Telephone:
-------------------------
Facsimile:
-------------------------
<PAGE> 47
Amount of Percentage of
Commitment Commitments National City Bank
- ---------- -----------
$40,000,000 3.45%
By: /s/
-------------------------------
Name:
Title:
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114-3484
Telephone:
------------------------
Facsimile:
------------------------
<PAGE> 48
Amount of Percentage of
Commitment Commitments Wells Fargo Bank, N.A.
- ---------- -----------
$40,000,000 3.45%
By: /s/
------------------------------
Name:
Title:
Wells Fargo Bank, N.A.
707 Wilshire Blvd. - MAC 2818-165
Los Angeles, Calif. 90017
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 49
Amount of Percentage of
Commitment Commitments PNC Bank, National Association
- ---------- -----------
$52,000,000 4.48%
By: /s/
---------------------------
Name:
Title:
PNC Bank, National Association
249 Fifth Ave., 2nd Floor
Pittsburgh, PA 15222
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 50
Amount of Percentage of
Commitment Commitments Wachovia Bank of Georgia, N.A.
- ---------- -----------
$40,000,000 3.45%
By: /s/
-----------------------------
Name:
Title:
Wachovia Bank of Georgia, N.A.
191 Peachtree St., N.E.
Atlanta, GA 30303
Telephone:
---------------------
Facsimile:
---------------------
<PAGE> 51
Amount of Percentage of
Commitment Commitments SunTrust Bank, Atlanta
- ---------- -----------
$52,000,000 4.48%
By: /s/
-----------------------
Name:
Title:
SunTrust Bank, Atlanta
25 Park Place
Atlanta, GA 30302
Telephone:
---------------------
Facsimile:
---------------------
<PAGE> 52
Amount of Percentage of
Commitment Commitments Comerica Bank
- ---------- -----------
$24,000,000 2.07%
By: /s/
----------------------------------------
Name:
Title:
Comerica Bank
One Detroit Center, 500 Woodward Ave. MC3280
Detroit, MI 48226
Telephone:
--------------------------------
Facsimile:
--------------------------------
<PAGE> 53
Amount of Percentage of
Commitment Commitments Norddeutsche Landesbank Girozentrale
- ---------- -----------
$24,000,000 2.07% New York Branch and Cayman Islands Branch
By: /s/
------------------------------------
Name:
Title:
Norddeutsche Landesbank Girozentrale
New York Branch and Cayman Islands Branch
1270 Avenue of the Americas
New York, New York 10020
Telephone:
------------------------------
Facsimile:
------------------------------
<PAGE> 54
Amount of Percentage of
Commitment Commitments Banca Commerciale Italiana
- ---------- ----------- Chicago Branch
$24,000,000 2.07%
By: /s/
-------------------------------------
Name:
Title:
Banca Commerciale Italiana
Chicago Branch
150 North Michigan Avenue, Suite 1500
Chicago, Ill. 60601
Telephone:
----------------------------
Facsimile:
----------------------------
<PAGE> 55
Amount of Percentage of
Commitment Commitments The Bank of New York
- ---------- -----------
$52,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
The Bank of New York
One Wall Street
New York, New York 10286
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 56
Amount of Percentage of
Commitment Commitments The First National Bank of Chicago
- ---------- -----------
$52,000,000 4.48%
By: /s/
------------------------------
Name:
Title:
The First National Bank of Chicago
611 Woodward Avenue
Detroit, MI 48226
Telephone:
------------------------
Facsimile:
------------------------
<PAGE> 57
Amount of Percentage of
Commitment Commitments The Fuji Bank, Limited
- ---------- -----------
$52,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
The Fuji Bank, Limited
225 West Wacker Drive, Suite 2000
Chicago, IL. 60606
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 58
Amount of Percentage of
Commitment Commitments The Bank of Tokyo-Mitsubishi, Ltd.
- ---------- ----------- Chicago Branch
$52,000,000 4.48%
By: /s/
--------------------------------
Name:
Title:
The Bank of Tokyo-Mitsubishi, Ltd.
Chicago Branch
227 W. Monroe St., Suite 2300
Chicago, IL. 60606
Telephone:
--------------------------
Facsimile:
--------------------------
<PAGE> 59
Amount of Percentage of
Commitment Commitments The Bank of Nova Scotia
- ---------- ----------- Atlanta Agency
$52,000,000 4.48%
By: /s/
----------------------------
Name:
Title:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree St., N.E., Suite 2700
Atlanta, GA 30308
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 60
Amount of Percentage of
Commitment Commitments CIBC , Inc.
- ---------- -----------
$52,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
CIBC, Inc.
425 Lexington Ave., 6th Floor
New York, New York 10017
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 61
Amount of Percentage of
Commitment Commitments Nationsbank, N.A.
- ---------- -----------
$52,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
Nationsbank, N.A.
100 N. Tryon Street
Charlotte, N.C. 28255
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 62
Amount of Percentage of
Commitment Commitments KeyBank National Association
- ---------- -----------
$52,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
KeyBank National Association
127 Public Square/Mail Code:OH 01-27-0606
Cleveland, Ohio 44114-1306
Telephone:
--------------------------------
Facsimile:
--------------------------------
<PAGE> 63
Amount of Percentage of
Commitment Commitments The Long-Term Credit Bank of Japan, Ltd.
- ---------- ----------- Chicago Branch
$24,000,000 2.07%
By: /s/
----------------------------------
Name:
Title:
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
190 South LaSalle St., Suite 800
Chicago, Ill. 60603
Telephone:
------------------------------
Facsimile:
------------------------------
<PAGE> 64
Amount of Percentage of
Commitment Commitments First Union National Bank of North Carolina
- ---------- -----------
$52,000,000 4.48%
By: /s/
--------------------------------------
Name:
Title:
First Union National Bank of North Carolina
301 South College St.
Charlotte, NC 28288
Telephone:
--------------------------------
Facsimile:
--------------------------------
<PAGE> 65
Amount of Percentage of
Commitment Commitments Mellon Bank, N.A.
- ---------- -----------
$24,000,000 2.07%
By: /s/
--------------------------------
Name:
Title:
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258-0001
Telephone:
-------------------------
Facsimile:
-------------------------
<PAGE> 66
Amount of Percentage of
Commitment Commitments Royal Bank of Canada
- ---------- -----------
$40,000,000 3.45%
By: /s/
-----------------------------
Name:
Title:
Royal Bank of Canada
Financial Square
New York, New York 10005
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 67
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$60,000,000 5.17% Texas Commerce Bank National Association
By: /s/
------------------------------------
Name:
Title:
Texas Commerce Bank National Association
707 Travis Street
Houston, Texas 77002
Telephone:
-------------------------------
Facsimile:
-------------------------------
<PAGE> 68
The Chase Manhattan Bank,
as the Competitive Advance Facility Agent
By: /s/
------------------------------------
Name:
Title:
The Chase Manhattan Bank
270 Park Avenue, 4th Floor
New York, NY 10017
Telephone:
-----------------------------
Facsimile:
-----------------------------
<PAGE> 69
Schedule A
<TABLE>
<CAPTION>
<S> <C>
The Bank of New York CIBC, Inc.
One Wall Street 425 Lexington Avenue, 6th Floor
New York, NY 10286 New York, NY 10017
Nationsbank, N.A. First Union National Bank of North Carolina
100 N. Tryon Street 301 South College Street
Charlotte, NC 28255 Charlotte, NC 28288
Morgan Guaranty Trust Company The Bank of Nova Scotia
of New York 600 Peachtree Street N.E., Suite 2700
60 Wall Street Atlanta, GA 30308
New York, NY 10260
The First National Bank of Chicago The Fuji Bank, Limited
611 Woodward Avenue 225 West Wacker Drive, Suite 2000
Detroit, MI 48226 Chicago, IL 60606
The Bank of Tokyo-Mitsubishi, Ltd. Wachovia Bank of Georgia, N.A.
227 W. Monroe Street, Suite 2300 191 Peachtree Street N.E.
Chicago, IL 60606 Atlanta, GA 30303
Key Bank National Association PNC Bank, National Association
127 Public Square 249 Fifth Avenue, 2nd Floor
Mail Code: OH-01-27-0606 Pittsburgh, PA 15222
Cleveland, OH 44114-1306
Royal Bank of Canada SunTrust Bank, Atlanta
Financial Square 25 Park Place
New York, NY 10005 Atlanta GA 30302
The Dai Ichi Kangyo Bank, Ltd. The Sumitomo Bank, Limited
10 South Wacker Drive, 26th Floor 223 South Wacker Drive, Suite 4800
Chicago, IL 60606 Chicago, IL 60606
</TABLE>
<PAGE> 70
<TABLE>
<CAPTION>
<S> <C>
National City Bank Caisse Nationale de Credit Agricole
1900 East Ninth Street 55 East Monroe Street, Suite 4700
Cleveland, OH 44114-3484 Chicago, IL 60603-5702
The Long-Term Credit Bank of Japan, Ltd. Mellon Bank, N.A.
190 South La Salle Street, Suite 800 One Mellon Bank Center
Chicago, IL 60603 Pittsburgh, PA 15258-0001
Wells Fargo Bank, N.A. Comerica Bank
707 Wilshire Blvd., MAC 2818-165 One Detroit Center
Los Angeles, CA 90017 500 Woodward Avenue, MC3280
Detroit, MI 48226
ABN AMRO Bank N.V. The First National Bank of Boston
One PPG Place, Suite 2950 100 Federal Street, 01-09-05
Pittsburgh, PA 15222-5400 Boston, MA 02110
Den Danske Bank Banca Commerciale Italiana
280 Park Avenue 150 North Michigan Avenue, Suite 1500
New York, NY 10017-1216 Chicago, IL 60601
United States National Bank Norddeutsche Landesbank Girozentrale
of Oregon 1270 Avenue of the Americas
555 SW Oak Street, Suite 400 New York, NY 10020
Portland, OR 97204
Bank of Montreal
430 Park Avenue
New York, NY 10022
</TABLE>
<PAGE> 71
Schedule B
NON-NEGOTIABLE REVOLVING CREDIT NOTE
$________________________ Cleveland, Ohio
Due Date: _______________, 19__
FOR VALUE RECEIVED, the undersigned, THE SHERWIN-WILLIAMS COMPANY
("Borrower") promises to pay to the order of _____________________________
("Lender"), the principal sum of _______________________________ Dollars
($__________) or the aggregate unpaid principal amount of all Loans evidenced by
this Note made by Lender to Borrower pursuant to Paragraph A of Section 2.1 of
the Credit Agreement, whichever is less, in legal tender of the United States of
America on the Due Date indicated above pursuant to that certain Credit
Agreement ("Credit Agreement") dated January 3, 1997 by and among Borrower,
Texas Commerce Bank National Association, as Administrative Agent, The Chase
Manhattan Bank and the Lenders identified on the signature pages to such
Agreement. Capitalized terms used, but not otherwise defined herein, shall have
the meanings ascribed to them in said Credit Agreement.
Borrower promises to pay interest on the unpaid principal amount from
time to time outstanding from the date of such Loan until the payment in full
thereof at the rates per annum which shall be determined in accordance with the
provisions of Paragraph A of Section 2.1 of the Credit Agreement. Said interest
shall be payable on each date provided for in Paragraph A of said Section 2.1;
provided, however, that interest on any principal portion which is not paid when
due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Alternate Base Rate Loans and LIBOR Loans, and payments of principal of any
thereof, will be recorded on the grid(s) attached hereto and made a part hereof
or by appropriate book entry. All Revolving Credit Loans to Borrower pursuant to
the Credit Agreement and all payments on account of principal hereof shall be
recorded by Lender prior to transfer hereof on such grid(s) or by appropriate
book entries, it being understood, however, that Lender's failure to record
appropriate information in the grid(s) attached to this Note shall in no way
affect the obligation of Borrower under the Credit Agreement or this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement , or any Event of
Default under the Credit Agreement the principal hereof and the unpaid interest
thereon shall bear interest, until paid, at a rate per annum which shall be 1.1
times the Alternate Base Rate. All payments of principal of and interest on this
Note shall be made in immediately available funds.
This Note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to such Credit Agreement for a description
of other terms and conditions upon which this Note is issued.
THE SHERWIN-WILLIAMS COMPANY
("Borrower")
By:
---------------------------------------------
Title:
--------------------------------------------
<PAGE> 72
REVOLVING CREDIT NOTE
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
=================================================================================================================================
Date Amount of Alternate Amount of Amount of Unpaid Principal Balance Name of Person
Base Rate Loan LIBOR Loan Principal Prepaid of Revolving Credit Note Making Notification
========== =========================== ============ =================== ============================ =========================
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
<PAGE> 73
Schedule C
NON-NEGOTIABLE MONEY MARKET NOTE
$________________________ Cleveland, Ohio
______________________, 19__
Due Date: ___________________
FOR VALUE RECEIVED, the undersigned, THE SHERWIN-WILLIAMS COMPANY
("Borrower") promises to pay to the order of __________________________________
("Lender") , the principal sum of __________________________ Dollars
($__________) pursuant to Paragraph B of Section 2.1 of the Credit Agreement, in
legal tender of the United States of America on the Due Date indicated above
pursuant to that certain Credit Agreement (as may be amended from time to time,
"Credit Agreement") dated January __, 1997 by and among Borrower, Texas Commerce
Bank National Association, as Administrative Agent, The Chase Manhattan Bank and
the Lenders identified on the signature pages to such Agreement in lawful money
of the United States of America. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the credit agreement
referred to herein.
Borrower promises to pay interest on the unpaid principal amount from
time to time outstanding from the date of such Loan until the payment in full
thereof at the rate of __________ percent (____%) per annum. Said interest shall
be payable on each date provided for in Paragraph B of Section 2.1 of the Credit
Agreement; provided, however, that interest on any principal portion which is
not paid when due shall be payable on demand.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the credit agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be 1.1 times the Alternate Base Rate from time to time in
effect. All payments of principal of and interest on this Note shall be made in
immediately available funds.
This Note is one of the Money Market Notes referred to in the Credit
Agreement Reference is made to such Credit Agreement for a description of other
terms and conditions upon which this Note is issued.
THE SHERWIN-WILLIAMS COMPANY
("Borrower")
By:
------------------------------------
Title
<PAGE> 74
MONEY MARKET NOTE
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
=================================================================================================================
Date Amount of Loan Amount of Principal Unpaid Principal Balance Name of Person Making
Prepaid of Money Market Loan Notation
============== ====================== ======================= ======================= ========================
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
=================================================================================================================
</TABLE>
<PAGE> 75
Schedule D
TERM LOAN NOTE
$_____________________________ Cleveland, Ohio
______________________, 19__
FOR VALUE RECEIVED, the undersigned THE SHERWIN-WILLIAMS COMPANY
("Borrower") promises to pay to the order of
______________________________________ ("Lender"), the principal sum of
_______________________________________ Dollars ($_____________) or the
aggregate unpaid principal amount of all loans evidenced by this Note made by
the Lender to the Borrower pursuant to Paragraph C of Section 2.1 of the Credit
Agreement hereinafter referred to, whichever is less, in lawful money of the
United States of America in four (4) equal consecutive semi-annual installments
commencing six (6) months from the date hereof
Capitalized terms used herein shall have the meanings ascribed to them in said
Credit Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount of each Term Loan from time to time outstanding from the date of such
Loan until the payment in full thereof at the rates per annum which shall be
determined in accordance with the provisions of Paragraph C of Section 2.1 of
the Credit Agreement. Said interest shall be payable on each date provided for
in Paragraph C of said Section 2.1; provided, however, that interest on any
principal portion which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Alternate Base Rate Loans and LIBOR Loans, and payments of principal of either
thereof, will be recorded on the grid(s) attached hereto and made a part hereof
or by appropriate book entries and all payments on account of principal hereof
shall be recorded by the Lender prior to then transfer hereof on such grid(s) or
by appropriate book entries, it being understood, however, that Lender's failure
to record appropriate information on the grid(s) attached to this Note shall in
no way affect the obligation of the Borrower under the Credit Agreement or this
Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement hereinafter referred
to, the principal hereof and the unpaid interest thereon shall bear interest,
until paid, at a rate per annum which shall be 1.1 times the Alternate Base Rate
from time to time in effect. All payments of principal of and interest on this
Note shall be made in immediately available funds.
This Note is one of the Term Loan Notes referred to in the Credit
Agreement dated January 3, 1997 among the Borrower, Texas Commerce Bank National
Association as Administrative Agent, The Chase Manhattan Bank and the Lenders
named therein. Reference is made to such Credit Agreement for description of
other terms and conditions upon which this Note is issued.
THE SHERWIN-WILLIAMS COMPANY
("Borrower")
By:
---------------------------------
<PAGE> 76
TERM LOAN NOTE
LOANS AND PAYMENTS OF PRINCIPAL
-------------------------------
<TABLE>
<CAPTION>
==================================================================================================================================
Date Amount of Alternate Amount of LIBOR Loan Amount of Principal Unpaid Principal Balance Name of Person Making
Base Rate Loan Prepaid of Term Loan Note Notation
======== ====================== ======================= ======================= ======================== ======================
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
<PAGE> 77
Schedule E
NON-NEGOTIABLE COMPETITIVE BID NOTE
$___________________ Cleveland, Ohio
Due Date: _______________, 19__
FOR VALUE RECEIVED, the undersigned, THE SHERWIN-WILLIAMS COMPANY
("Borrower") promises to pay on the last day of the relevant interest period as
referred to in that certain Credit Agreement ("Credit Agreement") dated January
__, 1997 by and among Borrower, Texas Commerce Bank National Association, Chase
Securities, Inc., The Chase Manhattan Bank and the Lenders identified on the
signature pages to such Agreement, to the order of _____________________________
("Lender"), the principal sum of _______________________________ Dollars
($__________) or the aggregate unpaid principal amount of all Loans evidenced by
this note made by Lender to Borrower pursuant to Paragraph D of Section 2.1 of
the Credit Agreement, whichever is less, in legal tender of the United States of
America pursuant to that certain Credit Agreement (as may be amended from time
to time, "Credit Agreement") dated January __, 1997 by and among Borrower, Texas
Commerce Bank National Association, as Administrative Agent, The Chase Manhattan
Bank and the Lenders identified on the signature pages to such Agreement.
Capitalized terms used, but not otherwise defined herein, shall have the
meanings ascribed to them in said Credit Agreement.
Borrower promises to pay interest on the unpaid principal amount from
time to time outstanding from the date of such Loan until the payment in full
thereof at the rates per annum which shall be determined in accordance with the
provisions of Paragraph D of Section 2.1 of the Credit Agreement. Said interest
shall be payable as provided in the relevant Competitive Bid accepted by the
Company provided, however, that interest on any principal portion which is not
paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Fixed Rate Loans and Competitive Libor Loans, and payments of principal of any
thereof, will be recorded on the grid(s) attached hereto and made a part hereof
or by appropriate book entry. All Competitive Loans to Borrower pursuant to the
Credit Agreement and all payments on account of principal hereof shall be
recorded by Lender prior to transfer hereof on such grid(s) or by appropriate
book entries, it being understood, however, that Lender's failure to record
appropriate information in the grid(s) attached to this Note shall in no way
affect the obligation of Borrower under the Credit Agreement or this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement hereinafter referred
to, or in any Event of Default under the Credit Agreement the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be _________________
This Note is one of the Competitive Notes referred to in the Credit
Agreement. Reference is made to such Credit Agreement for a description of other
terms and conditions upon which this Note is issued.
THE SHERWIN-WILLIAMS COMPANY
("Borrower")
By:
---------------------------------------------
Title:
--------------------------------------------
<PAGE> 78
COMPETITIVE NOTE
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
==================================================================================================================================
Amount of Fixed Amount of Amount of Unpaid Principal Balance Name of Person
Date Rate Loan Competitive Principal Prepaid (if of Competitive Note Making Notification
Libor Loan consent obtained)
========== ================== ================ ========================= ============================ =========================
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 99.2
364-DAY REVOLVING CREDIT AGREEMENT
This Agreement is made and entered into this 3rd day of January, 1997
by and among The Sherwin-Williams Company ("Company") whose principal place of
business is located at 101 Prospect Avenue, N.W., Cleveland, Ohio 44115, Texas
Commerce Bank National Association ("TCB"), as Administrative Agent, The Chase
Manhattan Bank ("Chase"), as the Competitive Advance Facility Agent, and the
financial institutions listed on Schedule A hereto together with each of their
successors and assigns (collectively referred to as the "Lenders" and
individually a "Lender").
W I T N E S S E T H:
--------------------
WHEREAS, the Lenders have agreed, on the terms and subject to the
conditions contained herein, to make available to the Company the principal
amount of Two Hundred Ninety Million Dollars ($290,000,000) to be used by the
Company for general corporate purposes including, but not limited to, the
acquisition of a portion of the business, assets or stock of Thompson Minwax
Holding Corp. (the "Acquisition"), commercial paper backup, general working
capital, other acquisitions of assets, stock or other ownership interests and
repurchases or redemptions of securities.
NOW, THEREFORE, in consideration of the mutual promises contained
herein the parties agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ACQUISITION TRANSACTION" shall mean the acquisition of at least ninety percent
(90%) of the issued and outstanding shares of capital stock of Thompson
Minwax Holding Corp.
"ADMINISTRATIVE AGENT" shall mean Texas Commerce Bank National Association or
any successor Lender appointed by the Company and approved by the
holders of fifty-one percent (51%) by amount of the Commitments.
"ALTERNATE BASE RATE" shall mean the higher of: (i) the rate of interest in
effect for any given day as publicly announced from time to time by the
Administrative Agent as its "prime rate" and (ii) the Federal Funds
Rate plus 50 basis points. Any change by the Administrative Agent of
its "prime rate" shall take effect at the opening of business on the
day specified in the public announcement of such change.
"ALTERNATE BASE RATE LOAN" shall mean a Loans bearing interest at the Alternate
Base Rate.
"BANKING DAY" shall mean a day, other than a Saturday or Sunday, on which New
York banks are open for the transaction of business.
"COMMITMENT" shall mean the obligation of each Lender to make Loans, under
Section 2.1A up to the amount set opposite the name of such Lender as
set forth on such Lender's signature page hereto (or such lesser amount
as shall be determined pursuant to Section 2.5 hereof).
"COMMITMENT PERIOD" shall mean the period which commences on the Effective Date
and terminates on the Termination Date.
"COMPETITIVE ADVANCE FACILITY AGENT" shall mean The Chase Manhattan Bank.
<PAGE> 2
"COMPETITIVE BID" shall mean an offer by a Lender to make a Competitive Loan in
accordance with Section 2.1C.
"COMPETITIVE BID RATE" shall mean, with respect to any Competitive Bid, the
Competitive Libor Rate or the Fixed Rate, as applicable, offered by the
Lender making such Competitive Bid.
"COMPETITIVE BID REQUEST" shall mean a request by the Company for Competitive
Bids in accordance with Section 2.1C.
"COMPETITIVE BORROWING" shall mean a borrowing by the Company in response to a
Competitive Bid Request.
"COMPETITIVE LIBOR INTEREST PERIOD" shall mean a period of one, two, three, six
or, if available to all of the Lenders, twelve months (as selected by
the Company) commencing on the applicable borrowing date of each
Competitive Libor Loan hereunder; provided, however, that no
Competitive Libor Interest Period shall end after the Termination Date.
"COMPETITIVE LIBOR LOAN" shall mean a Competitive Loan bearing interest at a
rate based on LIBOR.
"COMPETITIVE LIBOR RATE" shall mean, with respect to a Competitive LIBOR Loan,
LIBOR plus the applicable margin specified by the Lender making such
Competitive Loan in its Competitive Bid.
"COMPETITIVE LOAN" shall mean a Loan made pursuant to Section 2.1C.
"COMPETITIVE NOTE" shall mean a Note or Notes executed and delivered pursuant to
Section 2.1C.
"CONSOLIDATED NET WORTH" shall mean the excess of the net book value of the
assets of the Company and its Consolidated Subsidiaries over all of
their liabilities (other than Subordinated Indebtedness), as determined
on a consolidated basis in accordance with generally accepted
accounting principles as applied by the Company in the calculation of
such amount in the Company's then most recent financial statements
furnished to its stockholders, plus the aggregate value of all treasury
stock purchased after the Effective Date (at cost) by the Company (to
the extent that the aggregate value of such treasury stock for purposes
of this calculation does not exceed Two Hundred Fifty Million Dollars
($250,000,000)). The calculation of Consolidated Net Worth shall
exclude any amounts which would otherwise be required to be included
therein as a result of the future adoption by the Financial Accounting
Standards Board of any policy, statement, rule or regulation requiring
the Company to record an accumulative liability on its Financial
Report(s).
"CONSOLIDATED SUBSIDIARY" shall mean, at any particular time, every Subsidiary
which is consolidated in the Company's financial statements contained
in its then most recent Financial Report.
"DEBT" shall mean, collectively, all indebtedness at any one time outstanding
hereunder and owed by the Company to the Lenders pursuant to this
Agreement and includes the principal of and interest on all Notes and
each conversion, extension, renewal or refinancing thereof in whole or
in part, the Facility Fees and any prepayment premium due under Section
2.1A(x).
2
<PAGE> 3
"DOLLARS" or "$" shall mean any lawful currency of the United States of America.
"EFFECTIVE DATE" shall mean January 3, 1997.
"EUROCURRENCY" shall mean any freely transferrable and convertible currency on
deposit outside the country of issuance.
"EVENT OF DEFAULT" shall mean any of the events referred to in Article VII
hereof.
"FACILITY FEE" shall mean the sum to be paid by the Company to the
Administrative Agent on behalf of each Lender on the last Banking Day
of each calendar quarter prior to the termination of the Commitments
and the repayment of the outstanding Loans, calculated, for each day,
as the product of each Lender's Commitment (or, after the termination
of such Commitments, each Lender's outstanding Loans), on such day, and
during the Commitment Period, and upon the termination of the
Commitments, calculated, for each day, as the product of each Lender's
Commitment, on such day and five (5) basis points.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Banking
Day opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding
Banking Day, the rate for such day shall be the arithmetic mean, as
determined by the Administrative Agent, of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York time) on such day by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative
Agent.
"FINANCIAL REPORT" shall mean the annual or periodic report prepared in
accordance with generally accepted accounting principles, except as
otherwise indicated therein, filed by the Company with the Securities
and Exchange Commission (or any governmental body or agency succeeding
to the functions of such Commission) on Form 10-K or 10-Q pursuant to
the Securities Exchange Act of 1934 ("Exchange Act"), as then in effect
(or any comparable forms under similar Federal statutes then in force),
and the most recent financial statements furnished by the Company to
its stockholders (which annual financial statements shall be certified
by the Company's independent certified public accountants).
"FIXED RATE LOANS" shall mean a Competitive Loan bearing interest at a Fixed
Rate.
"FIXED RATE" shall mean, with respect to any Competitive Loan (other than a
Competitive Libor Loan), the fixed rate of interest per annum specified
by the Lender making such Competitive Loan in its related Competitive
Bid.
"INTEREST ADJUSTMENT DATE" shall mean the last day of each LIBOR Interest
Period.
"LIBOR" shall mean the average (rounded upward to the nearest 1/16 of 1%) of
the per annum rates at which deposits in immediately available funds in
Dollars for the number of months in the relevant LIBOR Interest Period
and in the amount of the LIBOR Loan or Competitive Libor Loan to be
disbursed or to remain outstanding during such LIBOR Interest Period,
as the case may be, are offered to the Administrative Agent or the
Competitive Advance Facility Agent, as the case may be, by the
Reference Lenders in the London Interbank Eurodollar market, determined
as of 11:00 a.m. London time, two (2)
3
<PAGE> 4
London Banking Days prior to the beginning of the relevant LIBOR
Interest Period pertaining to a LIBOR Loan or Competitive Libor Loan
hereunder, as appropriately adjusted by dividing such average rate by
1.00 minus the applicable Reserve Percentage then in effect.
"LIBOR INTEREST PERIOD" shall mean a period of one, two, three, six or, if
available to the Lenders, twelve months (as selected by the Company)
commencing on the applicable borrowing date of each LIBOR Loan or
Competitive Libor Loan hereunder; provided, however, that if any such
period would be affected by a reduction in Commitments as provided in
Section 2.5, prepayment as provided in Section 3.5 or maturity of a
LIBOR Loan or Competitive Libor Loan as provided in Sections 2.1A or
2.1C, such period shall end on such date; and provided further that no
such LIBOR Interest Period shall end after the Termination Date.
"LIBOR LOAN" shall mean a Loan bearing interest at a rate based on LIBOR.
"LOAN" shall mean the indebtedness of the Company with respect to each advance
of funds by a Lender hereunder.
"LONDON BANKING DAY" shall mean a day, other than a Saturday or Sunday, on
which banks are open for business in London, England and New York, New
York quoting deposit rates for Dollar deposits.
"MAJORITY LENDERS" shall mean Lenders with an aggregate of sixty-six and
two-thirds percent (66 2/3%) or more of the Commitments (or, if the
Commitments have been terminated, outstanding Loans) on the relevant
date.
"MARGIN" shall mean seventeen and one-half (17 1/2) basis points.
"MATERIAL" shall mean the measure of a matter of significance which shall be
determined as being an amount equal to five percent (5%) or more of
Consolidated Net Worth.
"MONEY MARKET NOTE" shall mean a Note or Notes executed and delivered pursuant
to Section 2.1B.
"MONEY MARKET RATE" shall mean, with respect to any period of days selected by
the Company commencing on the applicable borrowing date for a Money
Market Rate Loan, the rate of interest per annum quoted by any Lender
to the Company for such Money Market Rate Loan.
"MONEY MARKET RATE LOAN" shall mean a Loan with an interest rate equal to the
Money Market Rate and as otherwise defined in Section 2.1B.
"NOTE" or "NOTES" shall mean a note or notes executed and delivered pursuant
to Sections 2.1A, 2.1B or 2.1C.
"NOTICE" shall mean a notice given pursuant to Section 10.5.
"OTHER FEES" shall mean the annual administration fee to be paid by the
Company to TCB and the auction administration fee to be paid by the
Company to Chase pursuant to the Fee Letter ("Fee Letter") dated
November 12, 1996 by and among the Company, TCB, Chase
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<PAGE> 5
and Chase Securities, Inc.
"OUTSTANDING MAJORITY LENDERS" shall mean Lenders with an aggregate of sixty-six
and two-thirds percent (66 2/3%) or more of the principal amount of
Loans on the relevant date.
"PERCENTAGE" shall mean, as to any Lender (as set forth on such Lender's
signature page hereof), the percentage of such Lender's share of the
total Commitments of all Lenders; provided that if the Commitments are
terminated or reduced pursuant to this Agreement, then "Percentage"
shall mean the percentage of such Lender's share of the total
Commitments of all Lenders immediately prior to the termination or
after the reduction of Commitments (giving effect to any subsequent
assignments pursuant to Section 10.9).
"PLAN" shall mean any employee pension benefit plan within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended from time to time ("ERISA"), sponsored and maintained by the
Company, any Consolidated Subsidiary, or any member of a controlled
group of corporations, as the term "controlled group of corporations"
is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Company or any Consolidated Subsidiary is a part,
for employees thereof.
"POSSIBLE DEFAULT" shall mean an event, condition or thing known to the Company
which constitutes, or which with the lapse of any applicable grace
period or the giving of notice or both would constitute, any Event of
Default and which has not been appropriately waived by the Lenders in
writing or fully corrected prior to becoming an Event of Default.
"REFERENCE LENDER" shall mean Chase or any successor Lender appointed by the
Company, and satisfactory to the holders of fifty-one percent (51%) by
amount of the Commitments or Loans, as the case may be, at any time,
upon thirty (30) days prior written notice to the Lenders, to act as
the Reference Lender pursuant to the terms of this Agreement.
"REGULATORY CHANGE" shall mean, as to any Lender, any change in United States
federal, state or foreign laws or regulations or the adoption or making
of any interpretations, directives, guidelines or requests of or under
any United States federal, state or foreign laws, treaties or
regulations, in each case, enacted after the Effective Date (whether or
not having the force of law) by any court or governmental authority
charged with the interpretation or administration thereof.
"RELATED WRITING" shall mean any assignment, mortgage, security agreement,
subordination agreement, financial statement, audit report or other
writing furnished by the Company or any of its officers to the Lenders
pursuant to or otherwise in connection with this Agreement.
"REPORTABLE EVENT" shall mean a reportable event as that term is defined in
Title IV of ERISA except actions of general applicability by the
Secretary of Labor under Section 110 of ERISA.
"RESERVE PERCENTAGE" shall mean, for any day, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirement (including, but not limited to, any
margin reserve requirement and taking into account any transitional
adjustments or other scheduled changes in reserve requirements) which
is imposed on (a)
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<PAGE> 6
commercial time deposits having an original maturity of one (1) year or
less and which is applicable to the class of banks of which the
Administrative Agent is a member; or (b) a Lender with respect to
liabilities or assets consisting of or including Eurocurrency funds or
deposits, as the case may be.
"REVOLVING CREDIT LOAN" shall mean a Loan evidenced by a Revolving Credit Note.
"REVOLVING CREDIT NOTE" shall mean a Note evidencing a Loan described in Section
2.1A.
"SUBORDINATED INDEBTEDNESS" shall mean an indebtedness which has been
subordinated (by written terms or agreement being in form and substance
reasonably satisfactory to the holders of fifty-one percent (51%) by
amount of the Commitments) in favor of the prior payment in full of the
Company's Debt to the Lenders.
"SUBSIDIARY" shall mean an existing or future corporation(s), the majority of
the outstanding capital stock or voting power, or both, of which is (or
upon the exercise of all outstanding warrants, options and other rights
would be) owned at the time in question by the Company or by another
such corporation(s) or by any combination of the Company and such
corporation(s).
"TERMINATION DATE" shall mean 12:01 a.m. New York time on such date which is
three hundred sixty-four (364) days from the Effective Date; provided,
however, the Company may within ninety (90) days prior to the
Termination Date, by notice to the Administrative Agent, make written
requests to the Lenders to extend the scheduled Termination Date for an
additional period of three hundred sixty-four (364) days. The
Administrative Agent shall give prompt written notice to each Lender of
the receipt of such request. Each Lender shall make a determination not
more than sixty (60) nor less than fifty-five (55) days prior to the
Termination Date whether it will extend the Termination Date as
requested; provided, however, the failure by any Lender to make a
timely response to the Company's request for an extension shall be
deemed to constitute a refusal by such Lender to extend the Termination
Date. If, in response to a request for an extension of the Termination
Date one or more Lenders fail to agree to the requested extension
("Disapproving Lenders"), then the Company may elect to either (a)
continue this Agreement at the same level of Commitments by replacing
each of the Disapproving Lenders in accordance with Section 2.5, or (b)
provided the requested extension is approved by at least fifty-one
percent (51%) of the Lenders with Commitments hereunder (including for
purposes hereof any replacement Lender(s) which may replace a
Disapproving Lender ("Approving Lenders")), extend and continue this
Agreement at a lower aggregate amount equal to the Commitments held by
the Approving Lenders. In any such case, (i) the Termination Date
relating to the Commitments held by the Disapproving Lenders shall
remain as then in effect with repayment of any Notes held by such
Disapproving Lenders being due on their due date and the termination of
their respective Commitments on the Termination Date, and (ii) the
Termination Date relating to the Commitments held by the Approving
Lenders shall be extended by an additional period of three hundred
sixty-four (364) days.
"TRANSACTIONS" shall mean the execution, delivery and performance by the Company
of this Agreement, the borrowings contemplated hereunder and the
Acquisition Transaction.
"VOTING STOCK" shall mean stock of a corporation of a class or classes having
general voting power under ordinary circumstances to elect a majority
of the board of directors, managers
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<PAGE> 7
or trustees of such corporation (irrespective of whether or not the
stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" shall mean each Consolidated Subsidiary
all of whose outstanding stock, other than directors' qualifying
shares, shall at the time be owned by the Company and/or by one or more
Wholly-Owned Consolidated Subsidiaries.
"FIVE YEAR FACILITY" shall mean the Five Year Revolving Credit Agreement of
even date herewith by and among the Company as borrower, TCB as
Administrative Agent, Chase as the Competitive Advance Facility Agent
and certain or all of the Lenders.
Any accounting term not specifically defined in this Article shall have
the meaning ascribed thereto by generally accepted accounting principles in
effect as of the date of the Company's then most recent Financial Reports unless
otherwise indicated.
The foregoing definitions shall be applicable to the singular and
plural of such defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and conditions of
this Agreement each Lender will participate to the extent hereinafter
provided in making Loans to the Company in such aggregate amounts as the
Company shall request; provided, however, that in no event shall the
aggregate principal amount of all Loans outstanding under this Agreement
during the Commitment Period be in excess of the Commitments which, on the
date hereof, total Two Hundred Ninety Million Dollars ($290,000,000), and
provided further that the principal amount of such Loans, together with the
principal amount of Loans under the Five Year Facility, shall not exceed
Eight Hundred Thirty Million Dollars ($830,000,000) for any Loans made in
relation to the Acquisition Transaction.
A. REVOLVING CREDIT LOANS
----------------------
(i) BORROWING RIGHTS AND RESTRICTIONS: Subject to the terms and
conditions of this Agreement, during the Commitment Period
each Lender will make a Loan or Loans to the Company, pursuant
to this Section 2.1A, in such amount or amounts as the Company
may request from time to time but not exceeding in aggregate
principal amount, at any one time outstanding hereunder, the
Commitment of such Lender. Subject to the provisions of this
Agreement, the Company shall be entitled under this Paragraph
A to borrow funds, repay the same in whole or in part, and
reborrow hereunder at any time and from time to time during
the Commitment Period. Each Loan made under this Paragraph A
shall be made pro-rata according to the Lenders' respective
Commitments.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1A up to the total of all the Commitments by
means of any combination of:
(a) Alternate Base Rate Loans which shall be payable on
their respective due dates and shall be drawn down in
aggregate amounts of not less than Five Million
Dollars ($5,000,000) or any greater amount evenly
divisible by
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<PAGE> 8
One Million Dollars ($1,000,000); and
(b) LIBOR Loans, which shall be payable on the last day
of the relevant LIBOR Interest Period and shall be
drawn down in aggregate amounts of not less than Five
Million Dollars ($5,000,000) or any greater amount
evenly divisible by One Million Dollars ($1,000,000).
(iii) PROCEDURE FOR BORROWING: The procedure for borrowing under
this Section 2.1A shall be as follows:
(a) Each such borrowing shall be made upon the Company's
written notice ("Notice") to the Administrative Agent
(which Notice must be received by the Administrative
Agent prior to 11:00 a.m. New York time three (3)
London Banking Days prior to the requested borrowing
date in the event of a LIBOR Loan and by 11:00 a.m.
New York time on the same Banking Day of the proposed
date of such borrowing in the event of an Alternate
Base Rate Loan). The Notice shall specify:
(1) the amount of such borrowing;
(2) the requested borrowing date which shall be
a Banking Day or a London Banking Day, as
the case may be;
(3) the type of Loan(s) comprising such
borrowing; and
(4) the duration of the LIBOR Interest Period
for any LIBOR Loan(s) and the maturity date
of any Alternate Base Rate Loan(s) (which in
either case shall not be later than the
Termination Date).
(b) The Administrative Agent shall promptly notify each
Lender of (i) its receipt of a Notice of borrowing,
(ii) the amount of each Lender's pro-rata share of
such borrowing; and (iii) the name of the Company's
bank, the Company's account number and American
Banking Association routing number of the bank at
which the Company's account is maintained and to
which such pro-rata shares shall be routed.
(c) Each Lender's pro-rata share of each Revolving Credit
Loan shall be delivered by each such Lender to the
Company not later than 3:00 p.m. New York time on the
requested borrowing date, time being of the essence,
in immediately available Dollars by wire transfer to
an account of the Company designated by the Company,
from time to time in writing to the Administrative
Agent, with the account number and American Banking
Association routing number of the bank at which such
account is maintained.
(iv) INTEREST RATES: The Company shall pay interest on Revolving
Credit Loans:
(a) at the Alternate Base Rate on the unpaid principal
amount of Alternate Base Rate Loans outstanding from
time to time from the date of receipt of funds by the
Company until paid, payable on the last Banking Day
of each calendar quarter and on the maturity date,
computed on the basis of a 365
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<PAGE> 9
or 366 day year as the case may be; and
(b) at LIBOR plus the applicable Margin (converted to
percentage points) on the unpaid principal amount of
LIBOR Loans outstanding from time to time from the
date on which funds are received by the Company until
paid (computed on the basis of a year having 360 days
calculated on the basis of the actual number of days
elapsed), payable (a) on the last day of the LIBOR
Interest Period or (b) every three (3) months in the
event any such LIBOR Interest Period exceeds three
(3) months.
(v) PAYMENTS ON REVOLVING CREDIT NOTES, ETC.: All payments of
principal and interest shall be made to the Administrative
Agent in immediately available funds for the account of the
Lenders by no later than 3:00 p.m. (New York time) on the
applicable payment date. The Administrative Agent shall
promptly distribute to each Lender its ratable share of the
principal and interest received by it for the account of such
Lender. Each Lender shall endorse each Revolving Credit Note
held by it or otherwise make appropriate book entries
evidencing each payment of principal made thereon, it being
understood, however, that any Lender's failure to record
appropriate information on the grid(s) attached to any such
Note shall in no way affect the obligation of the Company
under this Agreement or under any such Note. Whenever any
payment to be made hereunder, including without limitation,
any payment to be made on any Note, shall be stated to be due
on a day which is not a Banking Day, such payment may be made
on the next Banking Day (but in any event not later than its
maturity date) and such extension of time shall in each case
be included in the computation of the interest payable on such
Note. Notwithstanding the previous sentence, in the case of
any LIBOR Loan, if the next Banking Day is in a month other
than the month the payment was originally due, such payment
may be made on the immediately preceding Banking Day and such
reduction of time shall in each case be considered in the
computation of the interest payable on such Note.
(vi) REVOLVING CREDIT NOTES: The obligation of the Company to repay
the Alternate Base Rate Loans and the LIBOR Loans made by each
Lender and to pay interest thereon shall be evidenced by
non-negotiable Revolving Credit Notes of the Company
substantially in the form of Schedule B hereto, with
appropriate insertions, dated the date of execution thereof by
the Company and payable to the order of such Lender on the
maturity date of such Loan, in the principal amount indicated
thereon. The principal amount of the Alternate Base Rate Loans
and the LIBOR Loans made by each Lender under this Section
2.1A and all prepayments thereof and the applicable dates with
respect thereto shall be recorded by such Lender from time to
time on the grid(s) attached to such Note or by appropriate
book entry. The aggregate unpaid amount of Alternate Base Rate
Loans and LIBOR Loans set forth on the grid(s) attached to
each Revolving Credit Note shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on such
Note, it being understood, however, that any Lender's failure
to so record appropriate information on the grid(s) attached
to its respective Revolving Credit Note shall in no way affect
the obligations of the Company under this Agreement or such
Note.
(vii) INTEREST ON LATE PAYMENTS: If any Revolving Credit Note shall
not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by
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<PAGE> 10
operation of any provision or acceleration of maturity therein
or herein contained, the principal thereof and the accrued and
unpaid interest thereon shall bear interest, until paid, at a
rate per annum which shall be 1.1 times the Alternate Base
Rate from time to time in effect.
(viii) LOAN REFINANCINGS: If any Revolving Credit Loan is not repaid
when due, unless otherwise directed by the Company, and
provided no Event of Default exists, (and the Commitment
Period has not terminated), the Lenders shall refinance such
Loans with Alternate Base Rate Loans unless otherwise provided
in this Agreement. Such automatic Loans shall be deemed to
have repaid the principal in full of each prior Loan such that
no Event of Default would exist.
(ix) CONVERSION: At the Company's option, the Company may at any
time or from time to time, except if an Event of Default
exists, convert a LIBOR Loan or an Alternate Base Rate Loan to
any one of the other types of Loans; provided, however, in the
case of LIBOR Loans any such conversion may only be made on
the Interest Adjustment Date applicable thereto. Such
conversion shall not be deemed to be a prepayment. The
provisions of this subsection shall apply with respect to
voluntary conversions or conversions required hereunder. The
Company, through the Administrative Agent, shall give written
or telephonic notice to the Banks of each conversion by 11:00
a.m., New York time (a) on the date of such conversion if such
conversion is to Alternate Base Rate Loans, and (b) at least
two (2) London Banking Days prior to the date of such
conversion if such conversion is to LIBOR Loans. Each such
notice shall be effective upon receipt by the relevant Lender
and shall specify the date and amount of such conversion, the
type of Loans to be converted and the type of Loans to be
converted into. Each conversion shall be in an aggregate
amount of not less than Five Million Dollars ($5,000,000) or
any greater amount evenly divisible by One Million Dollars
($1,000,000).
(x) PREPAYMENT.
(a) As to Alternate Base Rate Loans, the Company shall
have the right at any time or from time to time, upon
one (1) Banking Days' prior written notice to the
Administrative Agent, without the payment of any
premium or penalty to prepay on a pro-rata basis, all
or any part of the principal amount of the Revolving
Credit Notes then outstanding as designated by the
Company plus interest accrued on the amount so
prepaid to the date of such prepayment.
(b) As to LIBOR Loans, the Company shall have the right
at any time or from time to time, upon four (4)
London Banking Days' prior written notice to the
Administrative Agent, to prepay on a pro-rata basis,
all or any part of the principal amount of the
Revolving Credit Notes then outstanding as designated
by the Company, plus interest accrued on the amount
so prepaid to the date of such prepayment. If LIBOR,
as determined as of 11:00 a.m. London time three (3)
London Banking Days prior to the date of prepayment
(hereinafter "Prepayment LIBOR"), shall be lower than
the last LIBOR previously determined for the LIBOR
Loan(s), with respect to which prepayment is intended
to be made (hereinafter "Last LIBOR"), then the
Company shall promptly pay each of the Lenders, in
immediately available funds, a prepayment premium
measured by a rate (the
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<PAGE> 11
"Prepayment Premium Rate") which shall be equal to
the difference between the Last LIBOR and the
Prepayment LIBOR. In determining the Prepayment
LIBOR, the Company shall apply a rate equal to LIBOR
(for a deposit approximately equal to the amount of
such prepayment) which would be applicable to a LIBOR
Interest Period commencing on the date of such
prepayment and having a duration equal to the LIBOR
Interest Period described in Article I hereof with a
length closest to the remaining duration of the
actual LIBOR Interest Period during which such
prepayment is to be made. The Prepayment Premium Rate
shall be applied to all or such part of the principal
amount of the Revolving Credit Notes as related to
the LIBOR Loans to be prepaid, and the prepayment
premium shall be computed for the period commencing
with the date on which said prepayment is to be made
to that date which coincides with the last day of the
LIBOR Interest Period previously established when the
LIBOR Loans, which are to be prepaid, were made. Each
prepayment of a LIBOR Loan shall be in the aggregate
principal sum of not less than One Million Dollars
($1,000,000). Notwithstanding the above, no
prepayment premium shall be due and owing by the
Company if the Company makes such payment on the
Interest Adjustment Date applicable to the Loan being
paid. In the event the Company fails to borrow or
convert into a proposed LIBOR Loan subsequent to the
delivery to the Lenders of the notice of the proposed
date, aggregate amount and initial LIBOR Interest
Period of such Loan, but prior to the draw down of
funds thereunder, such failure to borrow or convert
shall be treated as a prepayment subject to such
prepayment premium.
B. MONEY MARKET RATE LOANS
-----------------------
(i) BORROWING RESTRICTIONS: Subject to the terms and conditions of
this Agreement, during the Commitment Period each Lender may
make (but is not obligated to make) a Money Market Rate Loan
to the Company in such amount or amounts as the Company may
from time to time request, provided that the sum of the total
Loans outstanding under Sections 2.1A and 2.1B plus the
aggregate principal amount of outstanding Competitive Loans at
any time shall not exceed the Commitments which, as of the
date hereof, total Two Hundred Ninety Million Dollars
($290,000,000) Subject to the provisions of this Agreement,
the Company shall be entitled under this Paragraph B to borrow
funds, repay the same in whole or in part and reborrow
hereunder at any time and from time to time from any Lender
making Money Market Rate Loans to the Company. The
Administrative Agent shall not be involved, in its capacity as
such agent, in any borrowing(s) by the Company under this
Section 2.1B; provided, however, the Administrative Agent
shall be advised by the Company of each such borrowing
hereunder. The procedures for any such Loan shall be as agreed
upon by the Company and each Lender making a Loan under this
Paragraph B.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1B from any Lender that agrees to make such a
Loan, an amount not to exceed the total of all Commitments in
amounts of not less than Five Million Dollars ($5,000,000) or
any greater amount evenly divisible by One Million Dollars
($1,000,000).
(iii) INTEREST RATES: The Company shall pay interest on the unpaid
principal
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<PAGE> 12
amount of any Money Market Rate Loan outstanding from time to
time from the date on which funds are received by the Company
until paid, at the Money Market Rate. Except as may be
otherwise agreed by the Company and the Lender making a Money
Market Rate Loan, interest shall be payable at the maturity of
such Loan and shall be computed on the basis of a 365 or 366
day year, as the case may be.
(iv) MONEY MARKET NOTES: The obligation of the Company to repay
Money Market Rate Loans and to pay interest thereon, shall be
evidenced by a Money Market Note substantially in the form of
Schedule C hereto, dated the date of execution thereof by the
Company and payable to the order of the applicable Lender in
accordance with the terms and conditions of such Money Market
Note.
(v) PAYMENT: All payments of principal and interest due on Money
Market Rate Loans shall be paid by the Company directly to any
Lender making a Money Market Rate Loan to the Company. Any
such Loans hereunder shall be paid on the date specified in
the applicable Money Market Note.
(vi) INTEREST ON LATE PAYMENTS: If any Money Market Note shall not
be paid at maturity, whether such maturity occurs by reason of
lapse of time or by operation of any provision of acceleration
of maturity therein contained, the principal thereof and the
unpaid interest thereon shall bear interest, until paid, at a
rate per annum which shall be 1.1 times the Alternate Base
Rate from time to time in effect.
C. COMPETITIVE BID LOANS
(i) BORROWING RIGHTS AND RESTRICTIONS: Subject to the terms and
conditions of this Agreement, during the Commitment Period the
Company may request Competitive Bids and may (but shall not
have any obligation to) accept Competitive Bids and borrow
Competitive Loans provided that the sum of the total Loans
outstanding under Sections 2.1A and 2.1B plus the aggregate
principal amount of outstanding Competitive Loans at any time
shall not exceed the Commitments which, on the date hereof,
total Two Hundred Ninety Million Dollars ($290,000,000).
Subject to the provisions of this Agreement, the Company may,
if a Competitive Bid is submitted by a Lender, borrow funds
under this Paragraph C, repay the same in whole or in part,
and reborrow hereunder at any time and from time to time
during the Commitment Period.
(ii) LOAN AMOUNTS: The Company shall have the option, subject to
the terms and conditions set forth herein, to borrow under
this Section 2.1C up to the principal amount of the
Commitments which, on the date hereof, total Two Hundred
Ninety Million Dollars ($290,000,000) by means of any
combination of:
(a) Fixed Rate Loans which shall be payable on their
respective due dates and shall be drawn down in
aggregate amounts of not less than Five Million
Dollars ($5,000,000) or any greater amount evenly
divisible by One Million Dollars ($1,000,000); and
(b) Competitive Libor Loans which shall be payable on the
last date of their Competitive Libor Interest Period
and shall be drawn down in aggregate amounts of not
less than Five Million Dollars ($5,000,000) or any
greater
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amount evenly divisible by One Million Dollars
($1,000,000).
(iii) PROCEDURE FOR BORROWING: The procedure for borrowing under
this Section 2.1C shall be as follows:
(a) Each such borrowing shall be made by Notice to the
Competitive Advance Facility Agent (which Notice must
be received by the Competitive Advance Facility Agent
prior to 11:00 a.m. New York time four (4) London
Banking Days prior to the requested borrowing date in
the event of a Competitive Libor Loan and by 11:00
a.m. New York time one Banking Day prior to the
proposed date of such borrowing in the event of a
Fixed Rate Loan). Such Notice shall specify:
(1) the amount of such borrowing;
(2) the requested borrowing date which shall be
a Banking Day or a London Banking Day, as
the case may be;
(3) the type of Loan(s) comprising such
borrowing; and
(4) the duration of the Competitive Libor
Interest Period for any Competitive Libor
Loan and the maturity date of any Fixed Rate
Loan(s).
(b) The Competitive Advance Facility Agent shall promptly
notify each Lender of (i) its receipt of a request
for a Competitive Loan thereby inviting the Lenders
to submit Competitive Bids. Any such notice shall
identify the name of the Company's bank, the
Company's account number and American Banking
Association routing number of the bank at which the
Company's account is maintained and to which the
proceeds from any Competitive Loan shall be routed.
(c) Each Lender may (but shall not have any obligation
to) make one or more Competitive Bids to the Company
in response to a Competitive Bid Request. Each
Competitive Bid by a Lender must be in a form
approved by the Competitive Advance Facility Agent
and must be received by the Competitive Advance
Facility Agent by telecopy, in the case of a
Competitive Libor Loan, not later than 10:00 a.m.,
New York time, three (3) London Banking Days before
the proposed date of such Competitive Borrowing, and
in the case of an Fixed Rate Loan, not later than
10:00 a.m., New York time, on the proposed date of
such Competitive Borrowing. Competitive Bids that do
not conform substantially to the form approved by the
Competitive Advance Facility Agent may be rejected by
the Competitive Advance Facility Agent, and the
Competitive Advance Facility Agent shall notify the
applicable Lender as promptly as practicable. Each
Competitive Bid shall be in aggregate amounts of not
less than Five Million Dollars ($5,000,000) or any
greater amount evenly divisible by One Million
Dollars ($1,000,000) and may equal the entire
principal amount of the Competitive Borrowing
requested by the Company. Each Competitive Bid shall
specify (i) the Competitive Bid Rate(s) at which the
Lender is prepared to make such Loan or Loans
(expressed as a percentage rate per annum in the form
of a
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decimal to no more than four decimal places) and (ii)
in the case of a Competitive Libor Loan, the
Competitive Libor Interest Period applicable to
each such Loan and the last day thereof.
(d) The Competitive Advance Facility Agent shall promptly
notify the Company by telecopy of the Competitive Bid
Rate and the principal amount specified in each
Competitive Bid and the identity of the Lender that
made such Competitive Bid.
(e) Subject only to the provisions of this paragraph, the
Company may accept or reject any Competitive Bid. The
Company shall notify the Competitive Advance Facility
Agent by telephone, confirmed by telecopy in a form
approved by the Competitive Advance Facility Agent,
whether and to what extent it has decided to accept
or reject each Competitive Bid, in the case of a
Competitive Libor Loan, not later than 11:00 a.m.,
New York time, three (3) London Banking Days before
the date of the proposed Competitive Borrowing, and
in the case of a Fixed Rate Loan, not later than
11:00 a.m., New York time, on the proposed date of
the Competitive Borrowing; provided that (i) the
failure of the Company to give such notice shall be
deemed to be a rejection of each Competitive Bid,
(ii) the Company shall not accept a Competitive Bid
made at a particular Competitive Bid Rate if the
Company rejects a Competitive Bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of
the Competitive Bids accepted by the Company shall
not exceed the aggregate amount of the requested
Competitive Borrowing specified in the related
Competitive Bid Request, (iv) to the extent necessary
to comply with clause (iii) above, the Company may
accept Competitive Bids at the same Competitive Bid
Rate in part, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid
Rate, shall be made pro-rata in accordance with the
amount of each such Competitive Bid, and (v) except
as otherwise provided in clause (iv) above, no
Competitive Bid shall be accepted for a Competitive
Loan unless such Competitive Loan is in a minimum
principal amount of Five Million Dollars ($5,000,000)
or any greater amount evenly divisible by One Million
Dollars ($1,000,000); provided further that if a
Competitive Loan must be in an amount less than Five
Million Dollars ($5,000,000) because of the
provisions of clause (iv) above, such Competitive
Loan may be for a minimum of One Million Dollars
($1,000,000) or any integral multiple thereof, and in
calculating the pro-rata allocation of acceptances of
portions of multiple Competitive Bids at a particular
Competitive Bid Rate pursuant to clause (iv) the
amounts shall be rounded to integral multiples of One
Million Dollars ($1,000,000) in a manner determined
by the Company.
(f) The Competitive Advance Facility Agent shall promptly
notify each bidding Lender by telecopy whether or not
its Competitive Bid has been accepted (and, if so,
the amount and Competitive Bid Rate so accepted), and
each successful bidder will thereupon become bound,
subject to the terms and conditions hereof, to make
the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(g) If the Competitive Advance Facility Agent shall elect
to submit a Competitive Bid in its capacity as a
Lender, it shall submit such Competitive
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Bid directly to the Company at least one quarter of
an hour earlier than the time by which the other
Lenders are required to submit their Competitive Bids
to the Competitive Advance Facility Agent pursuant to
paragraph (b) of this Section.
(iv) INTEREST RATES: Interest shall accrue at the Competitive Bid
Rate specified in the applicable Competitive Bid, unless
otherwise agreed by the Lender submitting such Competitive Bid
and the Company.
(v) PAYMENTS ON COMPETITIVE NOTES: All payments of principal and
interest shall be made to the Competitive Advance Facility
Agent in immediately available funds for the account of the
Lenders by no later than 3:00 p.m. (New York time) on the
applicable payment date which date shall be specified on the
applicable Competitive Note. The Competitive Advance Facility
Agent shall promptly distribute to each Lender the principal
and interest received by it for the account of such Lender.
Each Lender having made a Competitive Loan hereunder shall
endorse each Competitive Note held by it or otherwise make
appropriate book entries evidencing each payment of principal
made thereon, it being understood, however, that any Lender's
failure to record appropriate information on the grid(s)
attached to any such Note shall in no way affect the
obligation of the Company under this Agreement or under any
such Note. Whenever any payment to be made hereunder,
including without limitation, any payment to be made on any
Note, shall be stated to be due on a day which is not a
Banking Day, or a London Banking Day as the case may be, such
payment shall be made on the next Banking Day (but in any
event not later than its maturity date) and such extension of
time shall in each case be included in the computation of the
interest payable on such Note. Notwithstanding the previous
sentence, in the case of any Competitive Libor Loan, if the
next London Banking Day is in a month other than the month the
payment was originally due, such payment may be made on the
immediately preceding London Banking Day and such reduction of
time shall in each case be considered in the computation of
the interest payable on such Note.
(vi) COMPETITIVE NOTES: The obligation of the Company to repay the
Fixed Rate Loans and the Competitive Libor Loans made by any
Lender and to pay interest thereon shall be evidenced by
non-negotiable Competitive Notes of the Company substantially
in the form of Schedule D hereto, with appropriate insertions,
dated the date of execution thereof by the Company and payable
to the order of such Lender on the maturity date of such Loan,
in the principal amount indicated thereon. The principal
amount of the Fixed Rate Loans and the Competitive Libor Loans
made by each Lender under this Section 2.1C and all
prepayments thereof and the applicable dates with respect
thereto shall be recorded by such Lender from time to time on
the grid(s) attached to such Note or by appropriate book
entry. The aggregate unpaid amount of Fixed Rate Loans and
Competitive Libor Loans set forth on the grid(s) attached to
each Competitive Note shall be rebuttable presumptive evidence
of the principal amount owing and unpaid on such Note, it
being understood, however, that any Lender's failure to so
record appropriate information on the grid(s) attached to its
respective Competitive Note shall in no way affect the
obligations of the Company under this Agreement or such Note.
(vii) PREPAYMENT: The Company shall not have any right to prepay any
Competitive Loan without the prior consent of the Lender
having made such Loan.
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SECTION 2.2. CONDITIONS TO CERTAIN LOANS OR CONVERSIONS. The obligation or
right of each Lender to make any of the Loans or to convert any of the Loans
described in Sections 2.1A, 2.1B or 2.1C hereunder is conditioned, in the
case of each borrowing or conversion hereunder, upon:
(i) the fact that no Possible Default or Event of Default shall
then exist or immediately after such Loan is made would exist;
and
(ii) the fact that the representations and warranties contained in
Article IV hereof shall be true and correct in all material
respects with the same force and effect as if made on and as
of the date of such borrowing or conversion.
Each borrowing or conversion by the Company hereunder shall be deemed
to be a representation and warranty by the Company as of the date of such
borrowing or conversion as to the facts specified in Sections 2.2 (i) and
(ii) above.
SECTION 2.3. FACILITY FEE. The Company agrees to pay to each Lender a Facility
Fee, for the period from and including the date of this Agreement until the
Commitments have terminated and the outstanding Loans have been repaid. The
first payment of the Facility Fee shall be made no later than March 31, 1997
for the period January 3, 1997 to March 31, 1997. All payments of the
Facility Fee shall be made to the Administrative Agent in immediately
available funds for the account of the Lenders by no later than 3:00 p.m.
(New York time) on the applicable payment date. The Administrative Agent
shall promptly distribute to each Lender its ratable share of the Facility
Fee received by it for the account of such Lender.
SECTION 2.4. COMPUTATION OF FACILITY FEES. Facility Fees shall be computed for
the actual number of days elapsed on the basis of a 360 day year.
SECTION 2.5. TERMINATION OF COMMITMENTS AND RIGHT OF SUBSTITUTION.
(i) The Company may at any time or from time to time terminate in
whole or ratably in part the Commitments of all of the Lenders
to an amount not less than the aggregate principal amount of
the Loans then outstanding under this Agreement, by giving the
Lenders and the Administrative Agent not less than two (2)
Banking Days' notice of the aggregate amount of such
termination (which shall not be less than Five Million Dollars
($5,000,000) or any greater amount evenly divisible by One
Million Dollars ($1,000,000)) and such Lender's proportionate
amount of such termination. If the Company terminates in whole
the Commitments of the Lenders, on the effective date of such
termination (provided the Company has prepaid in full the
unpaid principal balance, if any, of the Notes outstanding
together with all accrued and unpaid interest, if any,
Facility Fees accrued and unpaid, and any applicable
prepayment premiums) all of the Notes outstanding shall be
delivered to the Company marked "Cancelled". Any termination
of the Commitments shall be irrevocable during the remainder
of the Commitment Period.
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<PAGE> 17
(ii) The Company may at any time or from time to time terminate or
reduce the Commitment of any Lender hereunder to an amount not
less than the aggregate principal amount of the Loans then
outstanding held by such Lender under this Agreement:
(a) immediately if such Lender satisfies any of the
criteria for insolvency described in Section 7.5
hereof; or
(b) upon not less than two (2) Banking Days' notice to
such Lender and the Administrative Agent if the
Company, in its sole discretion, elects to terminate
the Commitment of such Lender for any reason
including, but not limited to, the default of such
Lender under the terms of this Agreement.
(iii) In the event the Commitment of any Lender is terminated by the
Company, the Company shall replace such Lender with a
successor Lender or banks (including any Lender or Lenders
which is a party to this Agreement with the consent of such
Lender or Lenders) with a Commitment not to exceed the
Commitment of the terminated Lender(s); provided that such
successor Lender shall, pursuant to a written instrument in
form and substance satisfactory to the Company, effectively
agree to become a party hereto and a "Lender" hereunder and be
bound by the terms hereof.
(iv) In the event of a default of any Lender under the terms of
this Agreement, the Company's election to terminate the
Commitment of such Lender shall not act as a waiver of any
other remedies which the Company may have for such default.
(v) The termination of the Commitment of any Lender pursuant to
Section 2.5(ii) shall not affect the Commitments or the
obligations of all remaining Lenders under this Agreement.
(vi) After any termination or reduction of the Commitments as
described in this Section 2.5, the Facility Fees payable
hereunder shall be calculated upon the Commitments of the
Lenders as so reduced.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS AND
FIXED RATE LOANS
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time after the
Effective Date any Regulatory Change shall impose, modify or deem applicable
any reserve and/or special deposit requirement (other than reserves: (a)
included in the Reserve Percentage, the effect of which is reflected in the
interest rate(s) of the LIBOR Loan(s) or Competitive Libor Loan(s) in
question or (b) attributable to requirements imposed by the Board of
Governors of the Federal Reserve System on any Lender as a result of the
failure of any such Lender to maintain necessary current capitalization or
financial conditions imposed thereby) against assets held by, or deposits
in or for the account of any Loans by any Lender, and the result of the
foregoing is to increase the cost to such Lender of making or maintaining
LIBOR Loans or Competitive Libor Loans, as the case may be, or reduce the
amount of principal or interest received by such Lender with respect to
LIBOR Loans or Competitive Libor Loans, then upon demand by such Lender the
Company shall pay to such Lender from time to time on Interest Adjustment
Dates with respect to such Loans, as additional consideration hereunder,
additional amounts sufficient to fully
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<PAGE> 18
compensate and indemnify such Lender for such increased cost or reduced
amount, provided that such additional cost or reduced amount were allocable
to such LIBOR Loans or Competitive Libor Loans.
A certificate as to the increased cost or reduced amount (hereinafter
in this Section 3.1 collectively called "Increased Costs") as a result of any
event mentioned in this Section 3.1, setting forth the calculations therefor,
shall be promptly submitted by such Lender to the Company for its review. The
Company shall pay such Increased Costs for such period of time prior to the
date such certificate is received by the Company during which such
Regulatory Change, by its terms, applies retroactively to any period of time
prior to the date such Regulatory Change became effective. In addition, the
Company shall pay such Increased Costs incurred by a Lender on and after the
date such certificate is received by the Company unless, and until, the
Company, notwithstanding any other provision of this Agreement,
(i) upon at least three (3) Banking Days' prior written notice to
such Lender, prepays the affected LIBOR Loans in full or
converts all LIBOR Loans to Alternate Base Rate Loans
regardless of the LIBOR Interest Period thereof, or
(ii) terminates the Commitment of such Lender pursuant to Section
2.5 (provided that the Company shall pay such Increased Costs
on any LIBOR Loans from such Lender which remain outstanding).
Each Lender will notify the Company as promptly as practicable of the
existence of any event which will likely require the payment by the Company
of any such additional amount under this Section.
SECTION 3.2. CHANGES IN TAX LAWS. In the event that by reason of any Regulatory
Change of the jurisdiction where the office of the Lender making a Loan is
located, (i) any Lender shall, with respect to this Agreement or any
transaction under this Agreement, be subject to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other
than any tax imposed upon the total net income of such Lender or imposed on
or calculated with respect to the value of the assets of such Lender) or
(ii) any change shall occur in the taxation of any Lender with respect to
any Loan and the interest payable thereon (other than any change which
affects, and to the extent that it affects, the taxation of the total net
income of such Lender or imposed on or calculated with respect to the value
of the assets of such Lender), and if any such measures or any other similar
measure shall result in an increase in the cost to such Lender of making or
maintaining any Loan or in a reduction in the amount of principal, interest
or Facility Fee receivable by such Lender in respect thereof, then such
Lender shall promptly notify the Company stating the reasons therefor.
A certificate as to any such increased cost or reduced amount
(hereinafter in this Section 3.2 collectively called "Increased Taxes") as a
result of any event mentioned in this Section 3.2, setting forth the
calculations therefor, shall be submitted by such Lender to the Company for
its review. The Company shall pay such Increased Taxes for such period of
time prior to the date such certificate is received by the Company during
which such Regulatory Change, by its terms, applies retroactively to any
period of time prior to the date such Regulatory Change became effective.
In addition, the Company shall pay such Increased Taxes incurred by such
Lender on and after the date such certificate is received by the Company
unless and until the Company, notwithstanding any other provision of this
Agreement,
(i) upon at least three (3) Banking Days' prior written notice to
such Lender and the
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Administrative Agent, prepays the affected Loans in full, or
(ii) terminates the Commitment of such Lender pursuant to Section
2.5 hereof (provided that the Company shall pay such Increased
Costs on any Loans from such Lender which remain outstanding).
If any Lender receives such additional consideration from the Company
pursuant to this Section 3.2 and thereafter obtains the benefits of any
refund, deduction or credit for any taxes or other amounts on account of
which such additional consideration has been paid, such Lender shall pay to
the Company its allocable share thereof and shall reimburse the Company to
the extent, but only to the extent, that such Lender shall have actually
received a refund of such taxes or other amounts together with any interest
thereon or an effective net reduction in taxes or other governmental
charges (including any taxes imposed on or measured by the total net income
of such Lender) of the United States or any state or subdivision thereof by
virtue of any such deduction or credit, after first giving effect to all
other deductions and credits otherwise available to such Lender. If, at the
time any audit of such Lender's income tax return by any taxing agency is
completed, such Lender determines, based on such audit, that it was not
entitled to the full amount of any refund reimbursed to the Company as
aforesaid or that its net income taxes are not reduced by a credit or
deduction for the full amount of taxes reimbursed to the Company as
aforesaid, the Company, upon demand of such Lender, will promptly pay to
such Lender the amount so refunded to which such Lender was not so
entitled, or the amount by which the net income taxes of such Lender were
not so reduced, as the case may be. The provisions of this Section 3.2 and
Section 3.1 shall survive the termination of this Agreement.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE.
In the event the Majority Lenders shall have determined, in good faith and
reasonably, that Dollar deposits of the relevant amount for the relevant
LIBOR Interest Period for LIBOR Loans are not available to the Lenders in
the London Interbank Eurodollar market or that, by reason of circumstances
affecting such market, adequate and reasonable means do not exist for
ascertaining LIBOR then (i) any notice of new LIBOR Loans (or conversion of
Revolving Credit Loans to LIBOR Loans) previously given by the Company and
not yet borrowed (or converted, as the case may be) shall be deemed a
notice to make Alternate Base Rate Loans unless the Company notifies the
Administrative Agent to the contrary, and (ii) the Company shall be
obligated either to prepay or to convert any outstanding LIBOR Loans on the
last day of the then current LIBOR Interest Period or Periods with respect
thereto.
SECTION 3.4. INDEMNITY. Without limitation of any other provisions of this
Article III, the Company hereby agrees to indemnify and hold harmless each
of TCB, Chase and CSI and each Lender from and against all costs, expenses
(including fees, charges and disbursements of counsel) and liabilities
resulting from any litigation or other proceedings (regardless of whether
TCB, Chase, CSI or any Lender is a party thereto), related to or arising
out of the Transactions contemplated hereby, except to the extent such
costs, expenses and liabilities result from the wilful misconduct or gross
negligence of the party seeking indemnification as determined by a court of
competent jurisdiction, excluding consequential, incidental or special
damages. A certificate as to any such loss or expense shall be promptly
submitted by TCB, Chase or CSI and any such Lender to the Company for its
review and shall be paid by the Company in the absence of manifest error.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time any
Regulatory Change shall make it unlawful for any Lender to fund, refinance,
continue or convert into any LIBOR Loans which it is committed to make
hereunder with moneys obtained
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in the London Interbank Eurodollar market, the Commitment of such Lender to
fund, refinance, continue or convert into LIBOR Loans shall, upon the
happening of such event, be suspended for the duration of such illegality
and such Lender shall by written notice to the Company and the
Administrative Agent declare that its Commitment with respect to such Loans
has been so suspended and, if and when such illegality ceases to exist,
such suspension shall cease and such Lender shall similarly notify the
Company and the Administrative Agent. If any such change shall make it
unlawful for any Lender to continue in effect the funding in the London
Interbank Eurodollar market of any LIBOR Loan previously made by it
hereunder, such Lender shall, upon the happening of such event, notify the
Company and the other Lenders thereof in writing stating the reasons
therefor and the Company shall, on the earlier of (i) the last day of the
then current LIBOR Interest Period or (ii) if required by such law,
regulation or interpretation, on such date as shall be specified in such
notice, either convert all LIBOR Loans to Alternate Base Rate Loans or
prepay all LIBOR Loans to the Lenders in full. Any such prepayment or
conversion shall not be subject to the prepayment premiums prescribed in
Section 2.1A(x) hereof. Any requests for a LIBOR Loan not funded pursuant
to this Section shall be deemed to have been a request for an Alternate
Base Rate Loan.
SECTION 3.6. FUNDING. Each Lender may, but shall not be required to, make LIBOR
Loans and Competitive Libor Loans with funds obtained outside the United
States.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lenders that:
SECTION 4.1. CORPORATE EXISTENCE. The Company is a corporation duly organized
and in good standing under the laws of the State of Ohio.
SECTION 4.2. AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance by the Company of this Agreement, the Notes and Related
Writings are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not and will not
contravene or conflict with any provision of applicable law or any
applicable final judgement in effect or of the Amended Articles of
Incorporation or Regulations of the Company or of any agreement for
borrowed money or other material agreement binding upon the Company. The
Company has duly executed and delivered this Agreement.
SECTION 4.3. VALIDITY AND BINDING NATURE. This Agreement is, and the Notes when
duly executed and delivered will be, legal, valid and binding obligations
of the Company enforceable against the Company in accordance with their
respective terms.
SECTION 4.4. LITIGATION AND LIENS. To the best of the Company's knowledge, no
litigation or proceeding is pending which would, if successful, have a
Material adverse impact on the financial condition of the Company and the
Consolidated Subsidiaries taken as a whole, which is not already reflected
in the Company's Financial Reports delivered to the Lenders prior to the
date of this Agreement. The Internal Revenue Service has not alleged any
Material default by the Company in the payment of any tax or threatened to
make any Material assessment in respect thereof which would have or
reasonably could have a Material adverse impact on the financial condition
of the Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 4.5. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary has incurred any Material accumulated funding deficiency within
the meaning of ERISA and the regulations thereunder. No Reportable Event
has occurred with respect to any Plan which would
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have a Material adverse financial impact on the Company or any of its
Consolidated Subsidiaries, taken as a whole. The Pension Benefit Guaranty
Corporation, established under ERISA, has not asserted that the Company or
any Consolidated Subsidiary has incurred any Material liability in
connection with any Plan. No Material lien has been attached and no person
has threatened to attach such a lien on any property of the Company and any
Consolidated Subsidiary as a result of the Company's or any Consolidated
Subsidiary's failure to comply with ERISA.
SECTION 4.6. ENVIRONMENTAL MATTERS. To the best of the Company's knowledge, the
Company and each Subsidiary is in substantial compliance with all
applicable existing laws and regulations (other than laws and regulations
the validity or applicability of which are being contested by the Company
or a Subsidiary, as the case may be, in good faith by appropriate
proceedings diligently prosecuted) relating to environmental control in all
jurisdictions where the Company or any Subsidiary is presently doing
business and the Company and each Subsidiary (to the extent applicable to
its operations) is in substantial compliance with the Occupational Safety
and Health Act of 1970 and all rules, regulations and applicable orders
thereunder (other than rules, regulations and orders the validity or
applicability of which are being contested by the Company or a Subsidiary,
as the case may be, in good faith by appropriate proceedings diligently
prosecuted).
SECTION 4.7. FINANCIAL REPORTS. The Financial Reports of the Company and the
Consolidated Subsidiaries, furnished to each Lender prior to the date of
this Agreement or from time to time pursuant to this Agreement shall be
true and complete, prepared in accordance with generally accepted
accounting principles, except as stated therein, and fairly present the
Company's and its Consolidated Subsidiaries' financial condition and the
results of their operations, as of the date, and for the period encompassed
by such Financial Reports. Since the dates of the Company's most recent
Financial Reports until the date of this Agreement there has been no
material adverse change in the consolidated financial condition of the
Company and the Consolidated Subsidiaries taken as a whole.
SECTION 4.8. REGULATION U. Neither the Company nor any of its Consolidated
Subsidiaries is generally engaged in the business of purchasing or selling
margin stock or extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System). Each of the Lenders represents
and warrants to the Company that it is not relying on and will not rely on
any margin stock (as described above) in determining whether to extend or
maintain credit under this Agreement.
SECTION 4.9. GOVERNMENT REGULATION. Neither the Company nor any of its
Consolidated Subsidiaries is registered or is required to be registered as
a public utility under the Public Utility Holding Company Act of 1935 or as
an investment company under the Investment Company Act of 1940.
SECTION 4.10. TAXES. The Company and its Consolidated Subsidiaries have filed
all United States federal income tax returns and all other material tax
returns which are required to have been filed by them (subject to any
available extensions) and have paid all taxes indicated as due on such
returns except for any such taxes being contested by the Company or a
Subsidiary, as the case may be, in good faith by appropriate proceedings
diligently prosecuted (the Company having made adequate and reasonable
provision for all material taxes not yet due and payable), if any, and all
material assessments, if any.
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SECTION 4.11. DEFAULTS. No Possible Default or Event of Default exists which
would have or reasonably could have a Material adverse impact on the
financial condition of the Company and the Consolidated Subsidiaries, taken
as a whole.
ARTICLE V. OPENING COVENANTS
Prior to or concurrently with the execution and delivery of this
Agreement, the Company shall furnish to each Lender, and with regard to
Section 5.6, the Administrative Agent, copies of the following:
SECTION 5.1. RESOLUTIONS. Certified copies of the resolutions of the Board of
Directors of the Company evidencing approval of the execution of this
Agreement.
SECTION 5.2. LEGAL OPINION. A favorable opinion of counsel for the Company as to
the matters referred to in Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.8 and 4.9 of
this Agreement and such other matters as the Lenders may reasonably
request.
SECTION 5.3. CERTIFICATE OF INCUMBENCY. A certificate of the secretary or
assistant secretary of the Company certifying the names of the officers of
the Company authorized to sign this Agreement, and the Notes, together with
the true signatures of such officers.
SECTION 5.4. FINANCIAL REPORTS. The Financial Reports of the Company and the
Consolidated Subsidiaries, dated December 31, 1995, previously furnished to
each Lender, are true and complete, have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
those used by the Company and the Consolidated Subsidiaries during the
Company's 1995 fiscal year, except as stated therein, and fairly present
the Company's and the Consolidated Subsidiaries' financial condition as of
that date and the results of their operations for the period then ended.
Since that date there has been no material adverse change in the Company's
and the Consolidated Subsidiaries' financial condition, properties or
business taken as a whole.
SECTION 5.5. GOVERNMENTAL APPROVALS. In connection with the Acquisition
Transaction, the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder, shall have expired or been terminated,
all requisite governmental and material third parties' consents, approvals
and/or filings pursuant to applicable laws shall be obtained and/or filed
including, but not limited to, any such approvals and/or filings pursuant
to the Illinois Responsible Property Transfer Act, 745 I.C.L.S sections
90/1 et seq. and the New Jersey Industrial Site Recovery Act, N.J.S.A.
13:12K-6 et seq. and any rules or regulations promulgated under either of
them. In addition, no statute, rule or regulation shall be in effect which
prohibits the consummation of the Acquisition Transaction and no order of
any competent court shall be in effect or threatened which prohibits the
consummation of the Acquisition Transaction.
SECTION 5.6. GOOD STANDING. Such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Company, the authorization
of the Acquisition Transaction and any other legal matters relating to the
Company and this Agreement, all in form and substance satisfactory to the
Administrative Agent and its counsel.
ARTICLE VI. COVENANTS
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Until the later of (i) the expiration of the Commitments or (ii) all
obligations of the Company hereunder and under the Notes are satisfied and
paid in full, the Company agrees that, unless at any time the Majority
Lenders shall otherwise expressly agree in writing:
SECTION 6.1. INSURANCE. The Company will (a) maintain insurance to such extent
and against such hazards and liabilities as is commonly maintained by
companies similarly situated, and (b) upon any Lender's written request,
furnish to such Lender such information about the Company's and its
Consolidated Subsidiaries' insurance as such Lender may from time to time
reasonably request, which information shall be prepared in form and detail
reasonably satisfactory to such Lender.
SECTION 6.2. FINANCIAL REPORTS. The Company will furnish to the Administrative
Agent and each Lender:
(i) within sixty (60) days after the end of each of the first
three quarter-annual periods of each of its fiscal years (and,
in any event, in each case as soon as available), the
quarterly Financial Report of the Company and the Consolidated
Subsidiaries as at the end of that period, prepared on a
consolidated basis;
(ii) within ninety (90) days after the end of each of its fiscal
years (and, in any event, in each case as soon as available),
the annual Financial Report of the Company and the
Consolidated Subsidiaries for that year prepared on a
consolidated basis;
(iii) within sixty (60) days after the end of each of its quarterly
accounting periods and within ninety (90) days after the end
of its annual accounting period, a statement signed by a
financial officer of the Company reflecting compliance with
Section 6.3 hereof and to the effect that no Event of Default
has occurred and is continuing or, if there is any such event,
describing it and the steps being taken, if any, to cure such
event;
(iv) promptly after filing with the Securities and Exchange
Commission, any Form 8-K or Schedule 13D filings applicable to
the Company (or any successor forms or schedules promulgated
by the Securities and Exchange Commission from time to time
which encompass the matters currently addressed in Form 8-K
and Schedule 13D);
(v) written notice of any change in the rating assigned to the
Company's senior unsecured long-term debt by Moodys or S&P
within thirty (30) days of such change; and
(vi) such other financial information regarding the Company as any
Lender may reasonably request.
SECTION 6.3. NET WORTH. The Company will not permit Consolidated Net Worth at
any time to fall below Eight Hundred Million Dollars ($800,000,000).
SECTION 6.4. REGULATIONS U AND X. The Company will not nor will it permit any
Subsidiary to take any action that would result in any non-compliance of
the Loans with Regulations U and X of the Board of Governors of the Federal
Reserve System. The Company's use of proceeds of any borrowings under this
Agreement will not cause a violation of Regulations U or X.
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SECTION 6.5. MERGER AND SALE OF ASSETS. The Company will not merge or
consolidate with nor permit any Consolidated Subsidiary to merge or
consolidate with any other corporation or sell, lease or transfer or
otherwise dispose of all or, during any twelve (12) month period, a
substantial part of its assets to any person or entity (except as otherwise
provided herein); provided, however, if no Possible Default, Event of
Default or Change of Control (as such term is hereinafter defined) shall
then exist or immediately thereafter will begin to exist:
(i) Any Consolidated Subsidiary may merge with (a) the Company
(provided that the Company shall be the continuing or
surviving corporation) or (b) any one or more other
Consolidated Subsidiaries provided that either the continuing
or surviving corporation shall be a Wholly-Owned Consolidated
Subsidiary, or after giving effect to any merger pursuant to
this sub-clause (b), the Company and/or one or more
Wholly-Owned Consolidated Subsidiaries shall own not less than
the same percentage of the outstanding Voting Stock of the
continuing or surviving corporation as the Company and/or one
or more Wholly-Owned Consolidated Subsidiaries owned of the
merged Consolidated Subsidiary immediately prior to such
merger,
(ii) Any Consolidated Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to (a) the Company, (b)
any Wholly-Owned Consolidated Subsidiary or (c) any
Consolidated Subsidiary of which the Company and/or one or
more Wholly-Owned Consolidated Subsidiaries shall own not less
than the same percentage of Voting Stock as the Company and/or
one or more Wholly-Owned Consolidated Subsidiaries then own of
the Consolidated Subsidiary making such sale, lease, transfer
or other disposition,
(iii) The Company may sell the stock or assets of any Consolidated
Subsidiary if such sale or other disposition is determined by
the board of directors of the Company to be in the best
interests of the Company and such sale is for a consideration
which represents the fair value (as determined in good faith
by the board of directors of the Company) thereof at the time
of such sale of such stock or assets,
(iv) The Company may merge with any other corporation, provided
that the Company shall be the surviving corporation,
(v) The Company or any Consolidated Subsidiary may sell all or any
part of the assets of any of its divisions or operations if
such sale or other disposition is determined by the board of
directors of the Company and/or such Consolidated Subsidiary,
as the case may be, to be in the best interests of the Company
and/or such Consolidated Subsidiary, as the case may be, and
such sale is for a consideration which represents the fair
value (as determined in good faith by the board of directors
of the Company) thereof at the time of such sale or other
disposition of such assets, and
(vi) The Company or any Subsidiary may sell or transfer all or any
part of the assets of any of its divisions or operations to
any Subsidiary.
In the event there occurs a Change of Control of the Company, the
Commitments of the Lenders will immediately terminate and the outstanding
Loans will become immediately due and payable. For purposes of this
paragraph, a "Change of Control" shall occur if:
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(a) there shall be consummated (i) any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the
Company's common stock would be converted into cash,
securities or other property, other than a merger of the
Company in which the holders of the Company's common stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) any sale,
lease, exchange or transfer (in one transaction or a series of
related transactions) of fifty percent (50%) or more of the
assets or earning power of the Company;
(b) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act, as amended, other than the
Company or any employee benefit or stock ownership plan
sponsored by the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such Plan, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing [twenty percent (20%)
or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases
or otherwise; or
(c) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted
the Board of Directors of the Company and any new director
whose election by such Board of Directors or nomination for
election by the Company's shareholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of such
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof.
Notwithstanding subparagraph (a) through (c) above,
with respect to the transactions set forth in subparagraphs
(a) and (b) above, a Change of Control shall not be deemed to
have occurred if any such transaction (i) is approved by a
vote of at least two-thirds (2/3) of the directors and (ii) at
the time of such vote, at least two-thirds (2/3) of the
directors then in office were members of the Board of
Directors of the Company immediately prior to such
transaction.
SECTION 6.6. NOTICE. Until the Termination Date, the Company will cause its
treasurer, or in his absence another representative of the Company
designated by the treasurer, to promptly notify the Lenders and the
Administrative Agent whenever any Material Possible Default may occur or
any warranty made in Article IV hereof or elsewhere in this Agreement or in
any Related Writing may for any reason cease in any Material respect to be
true and complete.
SECTION 6.7. LIENS. The Company will not and will not permit any Consolidated
Subsidiary to create, assume or suffer to exist any lien upon any of its
property or assets (hereinafter "Properties") whether now owned or
hereafter acquired without effectively providing that any borrowings under
this Agreement shall be secured equally and ratably with all other
indebtedness thereby secured; provided that this Section shall not apply to
the following:
(i) liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings diligently
prosecuted,
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(ii) other liens incidental to the conduct of its business or the
ownership of its Properties which were not incurred in
connection with the borrowing of money or the obtaining of
advances or credit, and which do not in the aggregate
materially detract from the value of its Properties or
materially impair the use thereof in the operation of its
business,
(iii) liens on Properties of a Consolidated Subsidiary to secure
obligations of such Consolidated Subsidiary to the Company or
another Consolidated Subsidiary,
(iv) liens on Properties of the Company and/or its Consolidated
Subsidiaries existing on the date hereof,
(v) any lien existing on any Properties of any corporation at the
time it becomes a Consolidated Subsidiary, existing prior to
the time of acquisition upon any Properties acquired by the
Company or any Consolidated Subsidiary through purchase,
merger, consolidation or otherwise, whether or not assumed by
the Company or such Consolidated Subsidiary,
(vi) any lien placed upon any asset other than real property
(hereinafter in this subparagraph (vi) "Asset") at the time of
acquisition by the Company or any Consolidated Subsidiary to
secure all or a portion of or to secure indebtedness incurred
prior to, at the time of, or (in the case of any Asset
acquired with the intent to obtain subsequent financing
thereof secured by a lien) within one (1) year after the
acquisition of such Asset for the purpose of financing all or
a portion of the purchase price thereof, provided that any
such lien shall not encumber any other Properties of the
Company or such Consolidated Subsidiary,
(vii) any lien placed upon any real property now owned or hereafter
acquired by the Company or any of its Subsidiaries securing
indebtedness in an amount up to eighty percent (80%) of the
fair market value of such real property,
(viii) liens in favor of the United States of America or any
department or agency thereof, or in favor of any state
government or political subdivision thereof, or in favor of a
prime contractor under a government contract of the United
States, or of any state government or any political
subdivision thereof, and, in each case, resulting from
acceptance of partial, progress, advance or other payments in
the ordinary course of business under government contracts of
the United States, or of any state government or any political
subdivision thereof, or subcontracts thereunder,
(ix) liens created, assumed or existing in connection with a
tax-free financing,
(x) any lien renewing, extending or refunding any lien permitted
by clauses (iv), (v), (vi), (vii), (viii) and (ix) above,
provided that the principal amount secured is not materially
increased, and such lien is not extended to other Properties,
and
(xi) liens other than those permitted by clauses (i) through (x)
above, provided that the aggregate amount of all indebtedness
secured by liens permitted by this clause (xi) shall not at
any time exceed fifteen percent (15%) of Consolidated Net
Worth.
SECTION 6.8. ERISA COMPLIANCE. Neither the Company nor any Consolidated
Subsidiary will incur any Material accumulated funding deficiency within
the meaning of ERISA and the
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regulations thereunder, or any Material liability to the Pension Benefit
Guaranty Corporation or any successor thereto in connection with any Plan.
The Company will furnish to the Lenders as soon as possible and in any
event within thirty (30) days after the Company or such Consolidated
Subsidiary knows or has reason to know that any Material Reportable Event
with respect to any Plan has occurred a statement of the chief financial
officer of the Company or such Consolidated Subsidiary setting forth
details as to such Reportable Event and the action which the Company or
such Consolidated Subsidiary proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the
Pension Benefit Guaranty Corporation (or any successor thereto) if a copy
of such notice is available to the Company or such Consolidated Subsidiary.
SECTION 6.9. NOTICE OF DEFAULT. The Company will, and will cause each
Consolidated Subsidiary to, give prompt notice in writing to each Lender,
the Administrative Agent and the Competitive Advance Facility Agent of the
occurrence of any Possible Default, Event of Default or Change of Control
and of any other development, financial or otherwise, with respect to which
there is a significant probability of a Material adverse impact on
Consolidated Net Worth or on the Company's ability to repay the Notes.
SECTION 6.10. CONDUCT OF BUSINESS. The Company will, and will cause each
Consolidated Subsidiary to, carry on and conduct its business in
substantially the same manner as it is presently conducted and to do all
things necessary to remain duly incorporated, validly existing and in good
standing as a corporation in its jurisdiction of incorporation and maintain
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
SECTION 6.11. TAXES. The Company will, and will cause each Consolidated
Subsidiary to, pay when due all taxes, assessments and governmental charges
and levies upon it or its income, profits or property, except those which
are being contested in good faith by appropriate proceedings.
SECTION 6.12. COMPLIANCE WITH LAWS. The Company will use its best good faith
efforts to comply and to cause each Subsidiary to comply with all such laws
and regulations (other than laws and regulations the validity or
applicability of which are being contested by the Company or a Subsidiary,
as the case may be, in good faith by appropriate proceedings diligently
prosecuted) which may be legally imposed in the future in jurisdictions in
which the Company or any Subsidiary may then be doing business.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default":
SECTION 7.1. NON-PAYMENT OF NOTES, INTEREST, FACILITY FEE OR OTHER FEES. If the
principal on any Note shall not be paid in full when due and payable and
shall remain unpaid for a period of three (3) consecutive Banking Days, or
London Banking Days, as the case may be and/or any interest due on any Note
or any Facility Fee or Other Fee shall not be paid within five (5) Banking
Days after written notice thereof to the Company from the Lender (or the
Administrative Agent or Competitive Advance Facility Agent, as the case may
be) to whom such amount(s) are owed.
SECTION 7.2. COVENANTS. If the Company shall fail or omit to perform and observe
any agreement or other provision (other than those referenced in Section
7.1 hereof) contained or referred to in this Agreement or in any Related
Writing that is on the Company's part to be complied with, and such failure
or omission, is not fully corrected within thirty (30) days after
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the giving of written notice thereof to the Company by no less than
fifty-one percent (51%) of the Lenders acting as a whole.
SECTION 7.3. WARRANTIES. If any representation, warranty or statement made in or
pursuant to this Agreement or any Related Writing or any other information
furnished by the Company to the Lenders or any other holder of any Note,
shall be false or erroneous in any respect which would have or reasonably
could have a Material adverse impact on the financial condition of the
Company and the Consolidated Subsidiaries, taken as a whole.
SECTION 7.4. CROSS DEFAULT. If the Company or any of its Consolidated
Subsidiaries (i) defaults in the payment of principal or interest due and
owing upon any other Material obligation for borrowed money beyond any
period of grace provided with respect thereto or (ii) defaults in the
performance of any other agreement, term or condition contained in any
agreement under which such obligation is created, and any such default is
not waived by the holders of such agreement or instrument, and if the
effect of such unwaived default would (a) accelerate the maturity of such
indebtedness or permit the holder thereof to cause such indebtedness to
become due prior to its stated maturity and (b) have or reasonably could
have a Material adverse impact on the Company and the Consolidated
Subsidiaries, taken as a whole.
SECTION 7.5. TERMINATION OF OPERATIONS, BANKRUPTCY OR INSOLVENCY. If the Company
or a Consolidated Subsidiary representing in excess of ten percent (10%) of
total consolidated assets of the Company and the Consolidated Subsidiaries
shall (i) discontinue business (except as permitted under Section 6.5
hereof) or (ii) generally not pay (or admit in writing its inability to
pay) its debts as such debts become due, or (iii) make a general assignment
for the benefit of creditors, or (iv) apply for or consent to the
appointment of a receiver, a custodian, a trustee, an interim trustee or a
liquidator of all or a substantial part of its assets, or (v) be
adjudicated an insolvent debtor or have entered against it an order for
relief under Title 11 of the United States Code, as the same may be amended
from to time to time, or (vi) file a voluntary petition in bankruptcy or
file a petition or an answer seeking reorganization or an arrangement with
creditors or seeking to take advantage of any other law (whether federal or
state) relating to relief of debtors, or admit (by answer, by default or
otherwise) the substantive allegations of a petition filed against it in
any bankruptcy, reorganization, insolvency or other comparable proceeding
(whether federal or state) relating to relief of debtors, or (vii) suffer
or permit to continue unstayed and in effect for sixty (60) consecutive
days any judgment, decree or order entered by a court of competent
jurisdiction, which approves a petition seeking its reorganization or
appoints a receiver, custodian, trustee, interim trustee or liquidator of
all or a substantial part of its assets.
ARTICLE VIII. EFFECT OF DEFAULT
SECTION 8. EFFECT OF EVENT OF DEFAULT. If any Event of Default described in
Section 7.5 hereof shall occur, the Commitments (if they have not already
been terminated) shall immediately terminate and all Notes shall
automatically become immediately due and payable, without notice. If any
other Event of Default shall occur and shall not have been remedied within
an allowable time period referred to in this Agreement, then the Majority
Lenders may terminate the Commitments (if they have not already been
terminated) and the Outstanding Majority Lenders may declare that all Notes
shall become immediately due and payable. The Majority Lenders and the
Outstanding Majority Lenders shall promptly notify the Company in writing
of any such declaration. The effect as an Event of Default of any event
described in Section 7.1 or 7.5 hereof may be waived only by the written
concurrence of the holders of one hundred percent (100%) of the
Commitments, or in the event there are no Commitments, by one hundred
percent (100%) of
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the holders of outstanding Notes. The effect as an Event of Default of any
other event described in Sections 7.2, 7.3 or 7.4 may be waived by the
holders of fifty-one percent (51%) by amount of the Commitments.
ARTICLE IX. THE ADMINISTRATIVE AGENT AND COMPETITIVE ADVANCE
FACILITY AGENT
The Lenders hereby authorize (a) Texas Commerce Bank National
Association and TCB hereby agrees to act as Administrative Agent, and (b)
The Chase Manhattan Bank and Chase hereby agrees to act as the Competitive
Advance Facility Agent, for the Lenders in respect of this Agreement upon
the terms and conditions set forth elsewhere in this Agreement, and upon
the following terms and conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints and authorizes the Administrative Agent and the Competitive
Advance Facility Agent to exercise such powers hereunder as are delegated
to the Administrative Agent and the Competitive Advance Facility Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. Notwithstanding anything in this Agreement to the contrary, or in
a Related Writing, neither the Administrative Agent nor the Competitive
Advance Facility Agent shall have any duties or responsibilities, except
those expressly set forth herein, nor shall the Administrative Agent or the
Competitive Advance Facility Agent have or be deemed to have any fiduciary
relationship with any Lender. Neither the Administrative Agent, the
Competitive Advance Facility Agent nor any of its or their directors,
officers, attorneys or employees shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct.
SECTION 9.2. NOTE HOLDERS. The Administrative Agent and the Competitive Advance
Facility Agent, as the case may be, may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with
it signed by such payee and in form satisfactory to the Administrative
Agent or the Competitive Advance Facility Agent, as the case may be.
SECTION 9.3. CONSULTATION WITH COUNSEL. Each of the Competitive Advance Facility
Agent and the Administrative Agent may consult with legal counsel selected
by it (including in-house counsel) and shall not be liable for any
reasonable action taken or suffered in good faith by it in accordance with
the written opinion of external counsel, issued before such action is taken
or suffered.
SECTION 9.4. DOCUMENTS. Neither the Competitive Advance Facility Agent nor the
Administrative Agent shall be under a duty to examine into or pass upon the
validity, effectiveness, genuineness or value of this Agreement, the Notes,
any Related Writing furnished pursuant hereto or in connection herewith or
the value of any collateral obtained hereunder, and each of the Competitive
Advance Facility Agent and the Administrative Agent shall be entitled to
assume that the same are valid, effective and genuine and what they purport
to be.
SECTION 9.5. ADMINISTRATIVE AGENT, COMPETITIVE ADVANCE FACILITY AGENT AND THEIR
AFFILIATES. With respect to the Loans made hereunder, each of the
Competitive Advance Facility Agent and the Administrative Agent shall have
the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not the Administrative Agent or the Competitive
Advance Facility Agent, and the Administrative Agent and the Competitive
Advance Facility Agent and their affiliates may accept deposits from, lend
money to and generally engage in any kind of business with the Company or
any Subsidiary or affiliate of
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the Company.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and agreed that
each of the Administrative Agent and the Competitive Advance Facility Agent
shall be entitled to assume that no Possible Default or Event of Default
has occurred and is continuing, unless the Administrative Agent or the
Competitive Advance Facility Agent, as the case may be, has actual
knowledge of such fact or has been notified by a Lender that such Lender
considers that a Possible Default or Event of Default has occurred and is
continuing and specifying the nature thereof.
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SECTION 9.7. ACTION BY ADMINISTRATIVE AGENT, COMPETITIVE ADVANCE FACILITY AGENT.
So long as the Administrative Agent or the Competitive Advance Facility
Agent, as the case may be, shall be entitled, pursuant to Section 9.6
hereof, to assume that no Possible Default or Event of Default shall have
occurred and be continuing, each of the Competitive Advance Facility Agent
and the Administrative Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any
action or actions which it may be able to take under or in respect of, this
Agreement. Neither the Competitive Advance Facility Agent nor the
Administrative Agent shall incur any liability under or in respect of this
Agreement by action upon any notice, certificate, warranty or other paper
or instrument reasonably believed by it to be genuine or authentic or to be
signed by the proper party or parties, or with respect to anything which it
may do or refrain from doing in the reasonable exercise of its judgment, or
which the Administrative Agent or the Competitive Advance Facility Agent
reasonably believes to be necessary or desirable in the premises.
SECTION 9.8. INDEMNIFICATION. The Lenders agree to indemnify each of the
Competitive Advance Facility Agent and the Administrative Agent (to the
extent not reimbursed by the Company), ratably according to the respective
principal amounts of their Commitments from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, reasonable out of pocket costs and expenses (including reasonable
external counsel costs), expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against either
the Competitive Advance Facility Agent or the Administrative Agent in any
action taken or omitted by the Administrative Agent or the Competitive
Advance Facility Agent with respect to this Agreement, provided that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent's or the Competitive
Advance Facility Agent's gross negligence or willful misconduct or from any
action taken or omitted by the Administrative Agent or the Competitive
Advance Facility Agent in any capacity other than as agent under this
Agreement.
SECTION 9.9. SUCCESSOR. The Company may select a successor or alternate
Administrative Agent and/or Competitive Advance Facility Agent with the
approval of the holders of fifty-one percent (51%) by amount of the
Commitments or Loans, as the case may be.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. LENDERS' INDEPENDENT INVESTIGATION. Each Lender, by its signature
to this Agreement, acknowledges and agrees that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Company and any Subsidiary in
connection with the extension of credit hereunder, and agrees that no other
Lender, the Administrative Agent or the Competitive Advance Facility Agent
has any duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect
thereto whether coming into its possession before the making of the first
Loans or at any time or times thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of dealing
on the part of any Lender or the holder of any Note in exercising any
right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are
cumulative and in addition to any other rights, powers or privileges held
by operation of law, by contract or otherwise.
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SECTION 10.3. AMENDMENTS. Except as otherwise specifically provided herein, no
amendment, modification, termination, or waiver of any provision of this
Agreement or of the Notes (except in the event of a Money Market Note
and/or Competitive Note), nor consent to any variance therefrom, shall be
effective unless the same shall be in writing and signed by the Company and
the Majority Lenders and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
The unanimous consent of the Lenders, shall be required with respect to
(i) the change of maturity of the Notes under Section 2.1A hereto, or the
payment date of interest on Notes pursuant to Section 2.1A, (ii) any change
in the rate of interest on such Notes, or in the rate at which the Facility
Fee referred to in Section 2.3 hereof shall be calculated or in any amount
of principal or interest due on any such Note, or in the manner of pro-rata
application of any payments made by the Company to the Lenders hereunder,
(iii) any change in any percentage voting requirement in this Agreement,
(iv) any change in any date specified in this Agreement for the payment of
principal or interest on any Note under Section 2.1A hereto or for the
payment of any Facility Fee hereunder, (v) any increase in any Lender's
Commitment or Percentage, except pursuant to Section 2.5(iii) hereof, or
any increase in the aggregate of all of the Lenders' Commitments hereunder
or (vi) any change to this Section 10.3. No amendments to the duties or
responsibilities of the Administrative Agent or Competitive Advance
Facility Agent may be made without the prior written consent of the
Administrative Agent or the Competitive Advance Facility Agent, as the case
may be, except as provided in Section 9.9 hereof.
Notice of amendments or consents ratified by the Lenders hereunder
shall immediately be forwarded by the Company to all Lenders. Each Lender
or other holder of a Note shall be bound by any amendment, waiver or
consent obtained as authorized by this Section, regardless of its failure
to agree thereto.
SECTION 10.4. CONFIDENTIALITY. Unless the Company otherwise agrees in writing,
each Lender hereby agrees to keep all Proprietary Information (as defined
below) confidential and not to disclose or reveal any Proprietary
Information to any person or entity other than such Lender's directors,
officers, employees, affiliates, and agents, and then only on a
confidential need-to-know basis; provided, however that a Lender may
disclose Proprietary Information (a) as required by law, rule, regulation,
or judicial process, (b) to its attorneys and accountants, (c) as requested
or required by a state, federal, or foreign authority or examiner
regulating banks or banking, or (d) to actual or potential assignees or
participants as permitted by Section 10.9 hereof who agree to be bound by
the provisions of this Section. For purposes of this Agreement, the term
"Proprietary Information" shall include all information about the Company,
any Subsidiary, or any of their respective affiliates which has been
furnished by the Company, any Subsidiary, or any of their respective
affiliates, whether furnished before or after the date hereof, and
regardless of the manner furnished; provided, however, that Proprietary
Information shall not include information which (x) is or becomes generally
available to the public other than as a result of a disclosure by a Lender
not permitted by this Agreement, (y) was available to a Lender on a
nonconfidential basis prior to its disclosure to such Lender by the
Company, any Subsidiary, or any of their respective affiliates, or (z)
becomes available to a Lender on a nonconfidential basis from a person
and/or entity other than the Company, any Subsidiary, or any of their
respective affiliates who, to the best knowledge of such Lender, is not
otherwise bound by a confidentiality agreement with the Company, any
Subsidiary, or any of their respective affiliates, or, to the best
knowledge of such Lender, is not otherwise prohibited from transmitting the
information to such Lender.
SECTION 10.5. NOTICES. All notices, requests, demands and other communications
provided
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for hereunder shall be in writing and, if to the Company or a Subsidiary,
mailed or delivered to it, addressed to it at the address of the Company
herein or hereinafter specified, and if to a Lender, mailed or delivered to
it, addressed to the address (as may be amended from time to time) of such
Lender specified on its signature page to this Agreement. All notices,
statements, requests, demands and other communications provided for
hereunder shall be deemed to be given or made when received.
SECTION 10.6. COSTS AND EXPENSES. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses (including reasonable legal
fees for outside counsel) of the Lenders incurred directly as a result of
the enforcement of this Agreement, the Notes and the other instruments and
documents in connection herewith.
SECTION 10.7. OBLIGATIONS SEVERAL. The obligations of the Lenders hereunder are
several and not joint. Nothing contained in this Agreement and no action
taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders as a partnership, association, joint venture or other entity. No
default by any Lender hereunder shall excuse the other Lenders from any
obligation under this Agreement; but no Lender shall have or acquire any
additional obligation of any kind by reason of such default.
SECTION 10.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
to be an original and when taken together shall constitute one and the same
agreement.
SECTION 10.9. ASSIGNMENTS AND PARTICIPATIONS.
A. ASSIGNMENTS. Unless the Company otherwise consents in writing, which
consent shall not be unreasonably withheld, no payee or other party in
possession of any Note (including any Lender) shall assign or transfer
any Note or any interest therein to any other person or entity, except
as otherwise permitted under this Section, or negotiate any Note, as
such term is defined in Ohio Revised Code Chapter 1303; provided,
however, no consent from the Company shall be required in the event a
Lender makes any such assignment to an affiliate of such Lender or to
another Lender. Except as otherwise expressly agreed in writing by the
Company, no Lender shall, by reason of the assignment or transfer of
any Note or otherwise, be relieved of any of its obligations hereunder.
Each transferee of any Note shall take such Note subject to the
provisions of this Agreement and to any request made, waiver or consent
given, or other action taken hereunder, prior to such transfer, by each
previous holder of such Note; and the Company shall be entitled to
conclusively assume that the transferee shall thereafter be vested with
all rights and powers under this Agreement of the Lender named as the
payee of the Note which is the subject of such transfer. Nothing herein
shall prohibit any Lender from pledging or assigning any Note to any
Federal Reserve Bank of the United States pursuant to applicable law.
No party in possession of a Note shall be a "Holder" as such term is
defined in Ohio Revised Code Chapter 1303. Notwithstanding any
provision of this Section 10.9 to the contrary, the Company may not
assign or transfer any of its rights or obligations hereunder without
the consent of the holders of one hundred percent (100%) by amount of
the Commitments or Loans, as the case may be.
B. PARTICIPATIONS. Any Lender may grant participations in or to all or any
part of any Loan or Loans held by such Lender and Commitment of such
Lender and the Notes held by such Lender without the consent of the
Company. Except as otherwise expressly agreed in
33
<PAGE> 34
writing by the Company, no grant of a participation shall relieve any
Lender of its obligations hereunder. The Company shall be entitled to
deal solely with the Lenders (and their respective assignees) for all
purposes of this Agreement and the Notes, and no holder of a
participation in all or any part of the Loans, Notes or Commitments
shall have any rights under this Agreement and shall not be a Holder of
any Note, as such term is defined in Ohio Revised Code Chapter 1303.
C. DISCLOSURE OF INFORMATION. The Company hereby consents to the
disclosure of any information obtained in connection herewith by any
Lender to any entity which is an assignee or potential assignee or a
participant or potential participant pursuant to Section 10.9A or 10.9B
hereof, it being understood that such Lender shall advise any such
actual or potential assignee or participant of its obligation to keep
confidential any nonpublic information disclosed to it pursuant to this
Section 10.9 and, prior to the disclosure of such information, shall
cause each such actual or potential assignee or participant to execute
a confidentiality agreement containing the confidentiality provisions
set forth in Section 10.4 hereof.
D. SECURITIES LAWS. Each Lender represents that it is the present
intention of such Lender to acquire each Note drawn to its order for
its own account and not with a view to the distribution or sale
thereof.
SECTION 10.10. TAX FORMS. With respect to each Lender which is organized under
the laws of a jurisdiction outside the United States (which claims,
exemption from, or reduction of, United States withholding tax under
Sections 1441 or 1442 of the Internal Revenue Code of 1986, as amended), on
the date of any borrowing, and from time to time thereafter if requested by
the Company or the Administrative Agent, each such Lender shall provide the
Administrative Agent and the Company with the forms prescribed by the
Internal Revenue Service of the United States certifying as to such
Lender's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Lender
hereunder or other documents satisfactory to the Company and the
Administrative Agent indicating that all payments to be made to such Lender
hereunder are subject to such tax at a rate reduced by an applicable tax
treaty. Unless the Company and the Administrative Agent have received such
forms and such other documents reasonably requested by the Administrative
Agent or the Company indicating that payments hereunder are not subject to
United States withholding tax or are subject to such tax at a rate reduced
by an applicable tax treaty, the Company or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the
case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.
SECTION 10.11. ENTIRE AGREEMENT. This Agreement supersedes any prior agreement
or understanding of the parties hereto, and contains the entire agreement
of the parties hereto, with respect to the matters covered hereby; provided
that the indemnification and expense reimbursement provisions of the
Commitment Letter dated November 12, 1996 by and among the Company, TCB,
Chase and Chase Securities, Inc. and the provisions relating to the
administration fees and the auction administration fees in the Fee Letter
referred to therein shall continue in effect notwithstanding the execution
and delivery of this Agreement.
SECTION 10.12. GOVERNING LAW. This Agreement, each of the Notes and any Related
Writing shall be governed by and construed in accordance with the laws of
the State of Ohio and the respective rights and obligations of the Company
and the Lenders shall be governed by Ohio law.
SECTION 10.13. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of this
34
<PAGE> 35
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
SECTION 10.14. PRESS RELEASES. Neither the Administrative Agent nor the
Competitive Advance Facility Agent or any Lender shall issue any press
release regarding this Agreement without the prior written consent of the
Company.
SECTION 10.15. CONSENT TO JURISDICTION. The Company hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New
York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement, 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 such New York
State 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 the Administrative Agent, the
Competitive Advance Facility Agent or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement against the
Company or its properties in the courts of any jurisdiction.
The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which 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 in any court
referred to in this Section. 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.
Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 10.5. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date indicated above.
THE SHERWIN-WILLIAMS COMPANY
By: /s/
---------------------------------
LARRY J. PITORAK
Title: SENIOR VICE PRESIDENT-
FINANCE, TREASURER AND
CHIEF FINANCIAL OFFICER
By: /s/
---------------------------------
CYNTHIA D. BROGAN
Title: VICE PRESIDENT AND ASSISTANT
TREASURER
<PAGE> 36
Amount of Percentage of
Commitment Commitments Morgan Guaranty Trust Company of New York
- ---------- -----------
$10,000,000 3.45%
By: /s/
-------------------------------------
Name:
Title:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Telephone:
------------------------------
Facsimile:
------------------------------
<PAGE> 37
Amount of Percentage of
Commitment Commitments ABN AMRO Bank N.V.
- ---------- ----------- by: ABN AMRO North America, Inc. as agent
$10,000,000 3.45%
By: /s/
-------------------------------------
Name:
Title:
ABN Amro Bank N.V.
by: ABN AMRO North America, Inc. as agent
One PPG Place, Suite 2950
Pittsburgh, PA l5222-5400
Telephone:
-------------------------
Facsimile:
-------------------------
<PAGE> 38
Amount of Percentage of
Commitment Commitments Caisse Nationale de Credit Agricole
- ---------- -----------
$6,000,000 2.07%
By: /s/
---------------------------------
Name:
Title:
Caisse Nationale de Credit Agricole
55 East Monroe St., Suite 4700
Chicago, Ill. 60603-5702
Telephone:
--------------------------
Facsimile:
--------------------------
<PAGE> 39
Amount of Percentage of
Commitment Commitments The Dai Ichi Kangyo Bank, Ltd.
- ---------- ----------- Chicago Branch
$6,000,000 2.07%
By: /s/
-------------------------------
Name:
Title:
The Dai Ichi Kangyo Bank, Ltd.
Chicago Branch
10 South Wacker Drive - 26th Floor
Chicago, Ill. 60606
Telephone:
------------------------
Facsimile:
------------------------
<PAGE> 40
Amount of Percentage of
Commitment Commitments Bank of Montreal
- ---------- -----------
$6,000,000 2.07%
By: /s/
-------------------------------
Name:
Title:
Bank of Montreal
430 Park Avenue
New York, NY 10022
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 41
Amount of Percentage of
Commitment Commitments Den Danske Bank
- ---------- -----------
$6,000,000 2.07%
By: /s/
--------------------------------
Name:
Title:
Den Danske Bank
280 Park Avenue
New York, New York 10017-1216
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 42
Amount of Percentage of
Commitment Commitments First National Bank of Boston
- ---------- -----------
$6,000,000 2.07%
By: /s/
----------------------------
Name:
Title:
First National Bank of Boston
100 Federal Street, 01-09-05
Boston, MA 02110
Telephone:
---------------------
Facsimile:
---------------------
<PAGE> 43
Amount of Percentage of
Commitment Commitments United States National Bank of Oregon
- ---------- -----------
$6,000,000 2.07%
By: /s/
------------------------------------
Name:
Title:
United States National Bank of Oregon
555 SW Oak Street, Suite 400
Portland, OR 97204
Telephone:
------------------------------
Facsimile:
------------------------------
<PAGE> 44
Amount of Percentage of
Commitment Commitments The Sumitomo Bank, Limited
- ---------- ----------- Chicago Branch
$6,000,000 2.07%
By: /s/
--------------------------------
Name:
Title:
The Sumitomo Bank, Limited
Chicago Branch
233 South Wacker Drive, Suite 4800
Chicago, IL 60606
Telephone:
-------------------------
Facsimile:
-------------------------
<PAGE> 45
Amount of Percentage of
Commitment Commitments National City Bank
- ---------- -----------
$10,000,000 3.45%
By: /s/
-------------------------------
Name:
Title:
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114-3484
Telephone:
------------------------
Facsimile:
------------------------
<PAGE> 46
Amount of Percentage of
Commitment Commitments Wells Fargo Bank, N.A.
- ---------- -----------
$10,000,000 3.45%
By: /s/
------------------------------
Name:
Title:
Wells Fargo Bank, N.A.
707 Wilshire Blvd. - MAC 2818-165
Los Angeles, Calif. 90017
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 47
Amount of Percentage of
Commitment Commitments PNC Bank, National Association
- ---------- -----------
$13,000,000 4.48%
By: /s/
---------------------------
Name:
Title:
PNC Bank, National Association
249 Fifth Ave., 2nd Floor
Pittsburgh, PA 15222
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 48
Amount of Percentage of
Commitment Commitments Wachovia Bank of Georgia, N.A.
- ---------- -----------
$10,000,000 3.45%
By: /s/
-----------------------------
Name:
Title:
Wachovia Bank of Georgia, N.A.
191 Peachtree St., N.E.
Atlanta, GA 30303
Telephone:
---------------------
Facsimile:
---------------------
<PAGE> 49
Amount of Percentage of
Commitment Commitments SunTrust Bank, Atlanta
- ---------- -----------
$13,000,000 4.48%
By: /s/
-----------------------
Name:
Title:
SunTrust Bank, Atlanta
25 Park Place
Atlanta, GA 30302
Telephone:
---------------------
Facsimile:
---------------------
<PAGE> 50
Amount of Percentage of
Commitment Commitments Comerica Bank
- ---------- -----------
$6,000,000 2.07%
By: /s/
----------------------------------------
Name:
Title:
Comerica Bank
One Detroit Center, 500 Woodward Ave. MC3280
Detroit, MI 48226
Telephone:
--------------------------------
Facsimile:
--------------------------------
<PAGE> 51
Amount of Percentage of
Commitment Commitments Norddeutsche Landesbank Girozentrale
- ---------- ----------- New York Branch and Cayman Islands Branch
$6,000,000 2.07%
By: /s/
------------------------------------
Name:
Title:
Norddeutsche Landesbank Girozentrale
New York Branch and Cayman Islands Branch
1270 Avenue of the Americas
New York, New York 10020
Telephone:
------------------------------
Facsimile:
------------------------------
<PAGE> 52
Amount of Percentage of
Commitment Commitments Banca Commerciale Italiana
- ---------- ----------- Chicago Branch
$6,000,000 2.07%
By: /s/
-------------------------------------
Name:
Title:
Banca Commerciale Italiana
Chicago Branch
150 North Michigan Avenue, Suite 1500
Chicago, Ill. 60601
Telephone:
----------------------------
Facsimile:
----------------------------
<PAGE> 53
Amount of Percentage of
Commitment Commitments The Bank of New York
- ---------- -----------
$13,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
The Bank of New York
One Wall Street
New York, New York 10286
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 54
Amount of Percentage of
Commitment Commitments The First National Bank of Chicago
- ---------- -----------
$13,000,000 4.48%
By: /s/
------------------------------
Name:
Title:
The First National Bank of Chicago
611 Woodward Avenue
Detroit, MI 48226
Telephone:
------------------------
Facsimile:
------------------------
<PAGE> 55
Amount of Percentage of
Commitment Commitments The Fuji Bank, Limited
- ---------- -----------
$13,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
The Fuji Bank, Limited
225 West Wacker Drive, Suite 2000
Chicago, IL. 60606
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 56
Amount of Percentage of
Commitment Commitments The Bank of Tokyo-Mitsubishi, Ltd.
- ---------- ----------- Chicago Branch
$13,000,000 4.48%
By: /s/
--------------------------------
Name:
Title:
The Bank of Tokyo-Mitsubishi, Ltd.
Chicago Branch
227 W. Monroe St., Suite 2300
Chicago, IL. 60606
Telephone:
--------------------------
Facsimile:
--------------------------
<PAGE> 57
Amount of Percentage of
Commitment Commitments The Bank of Nova Scotia
- ---------- ----------- Atlanta Agency
$13,000,000 4.48%
By: /s/
----------------------------
Name:
Title:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree St., N.E., Suite 2700
Atlanta, GA 30308
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 58
Amount of Percentage of
Commitment Commitments CIBC, Inc.
- ---------- -----------
$13,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
CIBC, Inc.
425 Lexington Ave., 6th Floor
New York, New York 10017
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 59
Amount of Percentage of
Commitment Commitments Nationsbank, N.A.
- ---------- -----------
$13,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
Nationsbank, N.A.
100 N. Tryon Street
Charlotte, N.C. 28255
Telephone:
----------------------
Facsimile:
----------------------
<PAGE> 60
Amount of Percentage of
Commitment Commitments KeyBank National Association
- ---------- -----------
$13,000,000 4.48%
By: /s/
-----------------------------
Name:
Title:
KeyBank National Association
127 Public Square/Mail Code:OH 01-27-0606
Cleveland, Ohio 44114-1306
Telephone:
--------------------------------
Facsimile:
--------------------------------
<PAGE> 61
Amount of Percentage of
Commitment Commitments The Long-Term Credit Bank of Japan, Ltd.
- ---------- ----------- Chicago Branch
$6,000,000 2.07%
By: /s/
----------------------------------
Name:
Title:
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
190 South LaSalle St., Suite 800
Chicago, Ill. 60603
Telephone:
------------------------------
Facsimile:
------------------------------
<PAGE> 62
Amount of Percentage of
Commitment Commitments First Union National Bank of North Carolina
- ---------- -----------
$13,000,000 4.48%
By: /s/
--------------------------------------
Name:
Title:
First Union National Bank of North Carolina
301 South College St.
Charlotte, NC 28288
Telephone:
--------------------------------
Facsimile:
--------------------------------
<PAGE> 63
Amount of Percentage of
Commitment Commitments Mellon Bank, N.A.
- ---------- -----------
$6,000,000 2.07%
By: /s/
--------------------------------
Name:
Title:
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258-0001
Telephone:
-------------------------
Facsimile:
-------------------------
<PAGE> 64
Amount of Percentage of
Commitment Commitments Royal Bank of Canada
- ---------- -----------
$10,000,000 3.45%
By: /s/
-----------------------------
Name:
Title:
Royal Bank of Canada
Financial Square
New York, New York 10005
Telephone:
-----------------------
Facsimile:
-----------------------
<PAGE> 65
Amount of Percentage of
Commitment Commitments
- ---------- -----------
$15,000,000 5.17% Texas Commerce Bank National Association
By: /s/
------------------------------------
Name:
Title:
Texas Commerce Bank National Association
707 Travis Street
Houston, Texas 77002
Telephone:
-------------------------------
Facsimile:
-------------------------------
<PAGE> 66
The Chase Manhattan Bank,
as the Competitive Advance Facility Agent
By: /s/
------------------------------------
Name:
Title:
The Chase Manhattan Bank
270 Park Avenue, 4th Floor
New York, NY 10017
Telephone:
-----------------------------
Facsimile:
-----------------------------
<PAGE> 67
Schedule A
<TABLE>
<CAPTION>
<S> <C>
The Bank of New York CIBC, Inc.
One Wall Street 425 Lexington Avenue, 6th Floor
New York, NY 10286 New York, NY 10017
Nationsbank, N.A. First Union National Bank of North Carolina
100 N. Tryon Street 301 South College Street
Charlotte, NC 28255 Charlotte, NC 28288
Morgan Guaranty Trust Company The Bank of Nova Scotia
of New York 600 Peachtree Street N.E., Suite 2700
60 Wall Street Atlanta, GA 30308
New York, NY 10260
The First National Bank of Chicago The Fuji Bank, Limited
611 Woodward Avenue 225 West Wacker Drive, Suite 2000
Detroit, MI 48226 Chicago, IL 60606
The Bank of Tokyo-Mitsubishi, Ltd. Wachovia Bank of Georgia, N.A.
227 W. Monroe Street, Suite 2300 191 Peachtree Street N.E.
Chicago, IL 60606 Atlanta, GA 30303
Key Bank National Association PNC Bank, National Association
127 Public Square 249 Fifth Avenue, 2nd Floor
Mail Code: OH-01-27-0606 Pittsburgh, PA 15222
Cleveland, OH 44114-1306
Royal Bank of Canada SunTrust Bank, Atlanta
Financial Square 25 Park Place
New York, NY 10005 Atlanta GA 30302
The Dai Ichi Kangyo Bank, Ltd. The Sumitomo Bank, Limited
10 South Wacker Drive, 26th Floor 223 South Wacker Drive, Suite 4800
Chicago, IL 60606 Chicago, IL 60606
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
<S> <C>
National City Bank Caisse Nationale de Credit Agricole
1900 East Ninth Street 55 East Monroe Street, Suite 4700
Cleveland, OH 44114-3484 Chicago, IL 60603-5702
The Long-Term Credit Bank of Japan, Ltd. Mellon Bank, N.A.
190 South La Salle Street, Suite 800 One Mellon Bank Center
Chicago, IL 60603 Pittsburgh, PA 15258-0001
Wells Fargo Bank, N.A. Comerica Bank
707 Wilshire Blvd., MAC 2818-165 One Detroit Center
Los Angeles, CA 90017 500 Woodward Avenue, MC3280
Detroit, MI 48226
ABN AMRO Bank N.V. The First National Bank of Boston
One PPG Place, Suite 2950 100 Federal Street, 01-09-05
Pittsburgh, PA 15222-5400 Boston, MA 02110
Den Danske Bank Banca Commerciale Italiana
280 Park Avenue 150 North Michigan Avenue, Suite 1500
New York, NY 10017-1216 Chicago, IL 60601
United States National Bank Norddeutsche Landesbank Girozentrale
of Oregon 1270 Avenue of the Americas
555 SW Oak Street, Suite 400 New York, NY 10020
Portland, OR 97204
Bank of Montreal
430 Park Avenue
New York, NY 10022
</TABLE>
<PAGE> 69
Schedule B
NON-NEGOTIABLE REVOLVING CREDIT NOTE
$________________________ Cleveland, Ohio
Due Date: _______________, 19__
FOR VALUE RECEIVED, the undersigned, THE SHERWIN-WILLIAMS COMPANY
("Borrower") promises to pay to the order of _____________________________
("Lender"), the principal sum of _______________________________ Dollars
($__________) or the aggregate unpaid principal amount of all Loans evidenced by
this Note made by Lender to Borrower pursuant to Paragraph A of Section 2.1 of
the Credit Agreement, whichever is less, in legal tender of the United States of
America on the Due Date indicated above pursuant to that certain Credit
Agreement ("Credit Agreement") dated January 3, 1997 by and among Borrower,
Texas Commerce Bank National Association, as Administrative Agent, The Chase
Manhattan Bank and the Lenders identified on the signature pages to such
Agreement. Capitalized terms used, but not otherwise defined herein, shall have
the meanings ascribed to them in said Credit Agreement.
Borrower promises to pay interest on the unpaid principal amount from
time to time outstanding from the date of such Loan until the payment in full
thereof at the rates per annum which shall be determined in accordance with the
provisions of Paragraph A of Section 2.1 of the Credit Agreement. Said interest
shall be payable on each date provided for in Paragraph A of said Section 2.1;
provided, however, that interest on any principal portion which is not paid when
due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Alternate Base Rate Loans and LIBOR Loans, and payments of principal of any
thereof, will be recorded on the grid(s) attached hereto and made a part hereof
or by appropriate book entry. All Revolving Credit Loans to Borrower pursuant to
the Credit Agreement and all payments on account of principal hereof shall be
recorded by Lender prior to transfer hereof on such grid(s) or by appropriate
book entries, it being understood, however, that Lender's failure to record
appropriate information in the grid(s) attached to this Note shall in no way
affect the obligation of Borrower under the Credit Agreement or this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, or any Event of
Default under the Credit Agreement the principal hereof and the unpaid interest
thereon shall bear interest, until paid, at a rate per annum which shall be 1.1
times the Alternate Base Rate. All payments of principal of and interest on this
Note shall be made in immediately available funds.
This Note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to such Credit Agreement for a description
of other terms and conditions upon which this Note is issued.
THE SHERWIN-WILLIAMS COMPANY
("Borrower")
By:
---------------------------------------------
Title:
--------------------------------------------
<PAGE> 70
REVOLVING CREDIT NOTE
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
Date Amount of Alternate Amount of Amount of Unpaid Principal Balance Name of Person
Base Rate Loan LIBOR Loan Principal Prepaid of Revolving Credit Note Making Notification
========== =========================== ============ =================== ============================ =========================
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
<PAGE> 71
Schedule C
NON-NEGOTIABLE MONEY MARKET NOTE
$________________________ Cleveland, Ohio
______________________, 19__
Due Date: ___________________
FOR VALUE RECEIVED, the undersigned, THE SHERWIN-WILLIAMS
COMPANY ("Borrower") promises to pay to the order of ___________________
("Lender"), the principal sum of __________________________ Dollars
($__________) pursuant to Paragraph B of Section 2.1 of the Credit Agreement, in
legal tender of the United States of America on the Due Date indicated above
pursuant to that certain Credit Agreement (as may be amended from time to time,
"Credit Agreement") dated January __, 1997 by and among Borrower, Texas Commerce
Bank National Association, as Administrative Agent, The Chase Manhattan Bank and
the Lenders identified on the signature pages to such Agreement in lawful money
of the United States of America. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the credit agreement
referred to herein.
Borrower promises to pay interest on the unpaid principal amount from
time to time outstanding from the date of such Loan until the payment in full
thereof at the rate of __________ percent (____%) per annum. Said interest shall
be payable on each date provided for in Paragraph B of Section 2.1 of the Credit
Agreement; provided, however, that interest on any principal portion which is
not paid when due shall be payable on demand.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the credit agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be 1.1 times the Alternate Base Rate from time to time in
effect. All payments of principal of and interest on this Note shall be made in
immediately available funds.
This Note is one of the Money Market Notes referred to in the Credit
Agreement. Reference is made to such Credit Agreement for a description of other
terms and conditions upon which this Note is issued.
THE SHERWIN-WILLIAMS COMPANY
("Borrower")
By:
------------------------------------
<PAGE> 72
MONEY MARKET NOTE
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
Date Amount of Loan Amount of Principal Unpaid Principal Balance Name of Person Making
Prepaid of Money Market Loan Notation
============== ====================== ======================= ======================= ========================
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
=================================================================================================================
</TABLE>
<PAGE> 73
Schedule D
NON-NEGOTIABLE COMPETITIVE BID NOTE
$___________________ Cleveland, Ohio
Due Date: _______________, 19__
FOR VALUE RECEIVED, the undersigned, THE SHERWIN-WILLIAMS COMPANY
("Borrower") promises to pay on the last day of the relevant interest period as
referred to in that certain Credit Agreement ("Credit Agreement") dated January
__, 1997 by and among Borrower, Texas Commerce Bank National Association, Chase
Securities, Inc., The Chase Manhattan Bank and the Lenders identified on the
signature pages to such Agreement, to the order of _____________________________
("Lender"), the principal sum of _______________________________ Dollars
($__________) or the aggregate unpaid principal amount of all Loans evidenced by
this note made by Lender to Borrower pursuant to Paragraph D of Section 2.1 of
the Credit Agreement, whichever is less, in legal tender of the United States of
America pursuant to that certain Credit Agreement (as may be amended from time
to time, "Credit Agreement") dated January __, 1997 by and among Borrower, Texas
Commerce Bank National Association, as Administrative Agent, The Chase Manhattan
Bank and the Lenders identified on the signature pages to such Agreement.
Capitalized terms used, but not otherwise defined herein, shall have the
meanings ascribed to them in said Credit Agreement.
Borrower promises to pay interest on the unpaid principal amount from
time to time outstanding from the date of such Loan until the payment in full
thereof at the rates per annum which shall be determined in accordance with the
provisions of Paragraph C of Section 2.1 of the Credit Agreement. Said interest
shall be payable as provided in the Competitive Bid accepted by the Company
provided, however, that interest on any principal portion which is not paid when
due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Fixed Rate Loans and Competitive Libor Loans, and payments of principal of any
thereof, will be recorded on the grid(s) attached hereto and made a part hereof
or by appropriate book entry. All Competitive Loans to Borrower pursuant to the
Credit Agreement and all payments on account of principal hereof shall be
recorded by Lender prior to transfer hereof on such grid(s) or by appropriate
book entries, it being understood, however, that Lender's failure to record
appropriate information in the grid(s) attached to this Note shall in no way
affect the obligation of Borrower under the Credit Agreement or this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement hereinafter referred
to, or in any Event of Default under the Credit Agreement the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be _________________
This Note is one of the Competitive Notes referred to in the Credit
Agreement. Reference is made to such Credit Agreement for a description of other
terms and conditions upon which this Note is issued.
THE SHERWIN-WILLIAMS COMPANY
("Borrower")
By:
---------------------------------------------
Title:
------------------------------------------
<PAGE> 74
COMPETITIVE NOTE
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
Amount of Fixed Amount of Amount of Unpaid Principal Balance Name of Person
Date Rate Loan Competitive Principal Prepaid (if of Competitive Note Making Notification
Libor Loan consent obtained)
========== =================== ============== ========================= ============================ =========================
<S> <C> <C> <C> <C> <C>
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</TABLE>
<PAGE> 75
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
Date Amount of Loan Amount of Principal Unpaid Principal Balance Name of Person Making
Prepaid of Money Market Loan Notation
============== ====================== ======================= ======================= ========================
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
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- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
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=================================================================================================================
</TABLE>
