<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from _____________________ to ____________________
Commission File No. 1-2917
THE STANDARD PRODUCTS COMPANY
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
Ohio 34-0549970
- ------------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
2130 West 110th Street, Cleveland, OH 44102
-----------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code (216) 281-8300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
------
Number of common shares outstanding as of February 8, 1994: 16,650,930
----------
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following consolidated financial statements are
submitted in accordance with the Securities and Exchange
Commission's rules and regulations for Form 10-Q.
These consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments,
which are, in the opinion of management, necessary to present
fairly the financial position and results of operations for
the interim periods presented.
-2-
<PAGE> 3
<TABLE>
THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets
(Unaudited)
(Thousands of Dollars)
<CAPTION>
Dec. 31, June 30,
1993 1993
--------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................................................... $ 13,391 $ 5,548
Receivables, less allowances of $2,550 at December 31 and
$2,293 at June 30........................................................... 139,514 162,758
Inventories.................................................................. 55,843 48,472
Prepaid insurance, taxes, etc................................................ 16,323 17,559
-------- --------
Total current assets........................................................ 225,071 234,337
-------- --------
Property, Plant and Equipment, at cost......................................... 390,757 377,564
Less - Accumulated depreciation.............................................. (168,180) (153,137)
-------- --------
222,577 224,427
Goodwill, net.................................................................. 58,447 61,286
Other Assets................................................................... 52,601 44,800
-------- --------
$558,696 $564,850
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term notes payable..................................................... $ 8,633 $ 7,834
Current maturities of long-term debt......................................... 5,154 5,856
Accounts payable............................................................. 63,887 75,693
Accrued payrolls............................................................. 16,895 21,400
Accrued expenses............................................................. 33,753 41,412
Dividend payable............................................................. 2,661 2,746
-------- ---------
Total current liabilities.................................................. 130,983 154,941
-------- --------
Long-term Debt, net of current maturities..................................... 135,805 115,607
-------- --------
Other Postretirement Benefits................................................. 25,683 25,627
--------- ---------
Deferred Income Taxes and Other Credits....................................... 42,830 44,239
--------- ---------
Commitments and Contingent Liabilities
Shareholders' Equity:
Serial preferred shares, without par value, authorized 6,000,000 voting
and 6,000,000 non-voting shares, none issued............................... - -
Common shares, par value $1 per share; authorized 50,000,000 shares,
issued and outstanding, 16,628,373 shares at December 31 and
16,551,974 at June 30...................................................... 16,628 16,552
Paid-in capital............................................................. 94,608 94,083
Retained earnings........................................................... 126,380 120,660
Foreign currency translation adjustments.................................... (14,022) (6,650)
Minimum pension liability................................................... (199) (209)
-------- --------
Total shareholders' equity................................................. 223,395 224,436
-------- --------
$558,696 $564,850
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-3-
<PAGE> 4
<TABLE>
THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
For the Periods Ended December 31, 1993 and January 3, 1993
(Unaudited)
(Thousands of Dollars Except Share Data)
<CAPTION>
Three Months Six Months
---------------------------- --------------------------
Dec. 31 Jan. 3 Dec. 31 Jan. 3
1993 1993 1993 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales...................................................... $198,335 $174,795 $400,026 $339,212
-------- -------- -------- --------
Cost of Goods Sold:
Materials, wages and other manufacturing costs.............. 167,466 146,313 335,643 288,071
Research, engineering and development expenses.............. 6,246 4,001 13,595 8,853
-------- -------- -------- --------
173,712 150,314 349,238 296,924
-------- -------- -------- --------
Gross Income................................................... 24,623 24,481 50,788 42,288
Selling, General and Administrative Expenses................... 13,123 11,170 27,599 21,774
-------- -------- -------- --------
11,500 13,311 23,189 20,514
Other Income (Deductions):
Royalty and dividend income................................. 97 293 219 507
Interest expense, net....................................... (2,379) (1,534) (5,131) (2,800)
Other, net.................................................. (26) (287) (985) 141
-------- --------- --------- --------
(2,308) (1,528) (5,897) (2,152)
-------- -------- -------- --------
Income before Taxes on Income and Cumulative Effect on
Prior Years of Change in Accounting Principle ............... 9,192 11,783 17,292 18,362
Provision for Taxes on Income.................................. 3,005 3,970 6,253 6,113
-------- -------- -------- --------
Income Before Cumulative Effect on Prior Years of Change in
Accounting Principle......................................... 6,187 7,813 11,039 12,249
Cumulative Effect on Prior Years of Change in Accounting
Principle, Less Applicable Income Tax of $5,088.............. - - - (8,301)
-------- -------- -------- --------
Net Income..................................................... $ 6,187 $ 7,813 $ 11,039 $ 3,948
======== ======== ======== ========
Earnings (Loss) Per Common Share:
Income Before Cumulative Effect on Prior Years of
Change in Accounting Principle............................ $.37 $.52 $.66 $ .81
Cumulative Effect on Prior Years of Change in
Accounting Principle, Net of Tax.......................... - - - (.55)
---- ---- ---- -----
Earnings Per Common Share...................................... $.37 $.52 $.66 $ .26
==== ==== ==== =====
Average Shares Outstanding..................................... 16,616 15,094 16,598 15,079
====== ====== ====== ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-4-
<PAGE> 5
<TABLE>
THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIODS ENDED DECEMBER 31, 1993 AND JANUARY 3, 1993
(Unaudited)
(Thousands of Dollars)
<CAPTION>
Foreign Total
Currency Minimum Share-
Common Paid-In Retained Translation Pension holders'
Shares Capital Earnings Adjustments Liability Equity
------- ------- -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993........................ $16,552 $94,083 $120,660 $ (6,650) $ (209) $224,436
Net income.................................... - - 11,039 - - 11,039
Cash dividends ($.32 per share)............... - - (5,319) - - (5,319)
Foreign currency translation adjustments - - - (7,372) - (7,372)
Restricted stock awards....................... - 178 - - - 178
Sale of 76,399 shares to option holders....... 76 347 - - - 423
Minimum pension liability..................... - - - - 10 10
------- ------- -------- --------- ------- --------
Balance, December 31, 1993.................... $16,628 $94,608 $126,380 $(14,022) $ (199) $223,395
======= ======= ======== ========= ======= ========
Balance, June 28, 1992........................ $12,035 $53,222 $106,547 $ 6,264 $ (315) $177,753
Net income.................................... - - 3,948 - - 3,948
Cash dividends ($.32 per share)............... - - (3,865) - - (3,865)
Foreign currency translation adjustments - - - (13,383) - (13,383)
Restricted stock awards....................... - 237 - - - 237
Sale of 43,480 shares to option holders.. 43 373 - - - 416
Minimum pension liability..................... - - - - 31 31
------- ------- -------- --------- ------- --------
Balance, January 3, 1993..................... $12,078 $53,832 $106,630 $ (7,119) $ (284) $165,137
======= ======= ======== ========= ======= ========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-5-
<PAGE> 6
<TABLE>
THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE PERIODS ENDED DECEMBER 31, 1993
AND JANUARY 3, 1993
(Unaudited)
(Thousands of Dollars)
<CAPTION>
Dec. 31, Jan. 3,
1993 1993
-------- --------
<S> <C> <C>
Net cash provided by (used for) operating activities:
Net income......................................................... $ 11,039 $ 3,948
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................. 21,026 12,522
Cumulative effect of change in accounting principle............ - 8,301
Deferred taxes and other credits............................... (2,840) (244)
Equity in loss of non-consolidated affiliate................... 788 298
Effect of changes in foreign currency.......................... 1,807 (5,021)
Other operating items.......................................... (5,495) (187)
-------- --------
Net cash provided by continuing operations.................. 26,325 19,617
-------- --------
Net cash provided by (used for) changes in operating assets and
liabilities:
Receivables.................................................... 23,102 20,223
Inventories.................................................... (7,334) 501
Accounts payable and accrued expenses.......................... (24,257) (20,002)
Other.......................................................... 1,534 (1,117)
-------- --------
Net cash used for changes in operating assets and liabilities (6,955) (395)
-------- --------
Net cash used for operating activities...................... 19,370 19,222
-------- --------
Net cash used for investments:
Purchase of property, plant and equipment, net..................... (26,182) (11,309)
Investments in affiliates.......................................... (1,500) (8,700)
Assets acquired by purchase of businesses.......................... - (5,517)
-------- --------
Net cash used for investments............................... (27,682) (25,526)
-------- --------
Net cash provided by (used for) financing:
Proceeds of long-term borrowings................................... 110,343 150
Net increase in short-term borrowings.............................. 507 4,400
Repayment of long-term borrowings.................................. (89,865) (1,554)
Cash dividends..................................................... (5,319) (3,865)
-------- --------
Net cash provided by (used for) financing................... 15,666 (869)
-------- --------
Effect of exchange rate changes on cash.............................. 489 31
-------- --------
Increase (decrease) in cash and cash equivalents..................... 7,843 (7,142)
Cash and cash equivalents at the beginning of the period............. 5,548 44,342
-------- -------
Cash and cash equivalents at the end of the period................... $ 13,391 $ 37,200
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-6-
<PAGE> 7
THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
1. ACCOUNTING POLICIES
A. Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. Major intercompany
items have been eliminated.
B. Inventories
Inventories are stated at the lower of cost or market. The majority
of domestic inventories are valued using the last-in, first-out (LIFO) method
and the remaining inventories are valued using the first-in, first-out (FIFO)
method. The major components of inventory at December 31, 1993 and June 30,
1993 are as follows:
<TABLE>
<CAPTION>
Dec. 31 June 30
-------- --------
(Thousands of Dollars)
<S> <C> <C>
Raw materials.............................. $17,685 $20,055
Work-in-process and finished goods......... 38,158 28,417
------- -------
Totals................................ $55,843 $48,472
======= =======
</TABLE>
2. ACQUISITIONS
In January 1993, the Company acquired all of the issued and
outstanding shares of capital stock of Standard Products Industriel (SPI), a
French Company. SPI designs, develops and manufactures window and glass
weatherstrips, vehicle body and door seals and glass encapsulation products for
French, other European and North American auto manufacturers.
The cost of the acquisition was approximately $125,500,000. The
acquisition has been accounted for under the purchase method of accounting, and
the financial statements of the Company include the acquired assets, assumed
liabilities and results of operations of SPI since the date of acquisition.
The first half of fiscal 1994 reflects the results of operation of SPI for the
six month period June 1, 1993 through December 31, 1993. A preliminary
estimate of the valuation of the assets acquired and liabilities assumed in
accordance with Accounting Principles Board Opinion No. 16 resulted in goodwill
and other assets of approximately $52,000,000. Further adjustments of the
purchase price allocation could result from additional analysis of the
transactions.
For the second quarter and first half of fiscal 1993, pro forma sales
would have been $211,700,000 and $408,800,000, respectively. Pro forma income
before extraordinary items and changes in accounting principles would have been
$7,600,000, or $.50 a share, for the second quarter, and $11,300,000, or $.75 a
share, for the first six months of fiscal 1993. All pro forma amounts are
unaudited.
3. DEBT
Long-term debt at December 31, 1993 and June 30, 1993 consisted of the
following:
<TABLE>
<CAPTION>
Dec. 31 June 30
-------- --------
(Thousands of Dollars)
<S> <C> <C>
Senior Notes................................ $100,000 $ -
Revolving credit agreement.................. 20,000 75,000
First mortgage industrial revenue bonds..... 12,308 13,144
Other debt.................................. 8,651 8,319
-------- --------
Total....................................... 140,959 121,463
Less - current maturities................... 5,154 5,856
--------- --------
$135,805 $115,607
======== ========
</TABLE>
-7-
<PAGE> 8
In connection with the acquisition of SPI, the Company entered into a
$175,000,000 Revolving Credit Agreement (Credit Agreement) with a group of
banks until January 19, 1996. The funds initially borrowed were used to
finance the acquisition of SPI.
In May 1993, the Company filed a shelf registration with the
Securities and Exchange Commission for the issuance of up to $100,000,000 in
debt securities and up to $50,000,000 of Company common shares. On June 30,
1993, the Company issued in a public offering 1,400,000 common shares for an
aggregate public offering price of $45,150,000. Proceeds of the offering were
used to repay a portion of the borrowings outstanding under the Credit
Agreement, and the available commitments under the Credit Agreement were
reduced from $175,000,000 to $125,000,000.
In December 1993, the Company negotiated a 6.55%, $75,000,000 Senior
Note term loan with an insurance company. Interest payments are payable
semi-annually, and principal payments of $12,500,000 begin December 1998
through December 2002, with the balance due on maturity in December 2003. The
Senior Note Agreement requires the Company to maintain certain financial
covenants for net worth, working capital, capitalization and interest coverage.
Proceeds of the Senior Note were used to reduce borrowings under the
Credit Agreement. After repayment, borrowings outstanding under the Credit
Agreement were $20,000,000 at December 31, 1993 at an interest rate of 3.95%.
The $25,000,000 Senior Notes outstanding at December 31, 1993
represent unsecured debt security placed directly with the holder. The
interest rate is 9.81%, and the notes are payable July 1, 1999. The
$25,000,000 Senior Note Agreement also requires the Company to maintain certain
financial ratios and provide for financial restrictions as to indebtedness and
net worth.
Under the most restrictive covenants of the Company's various loan
agreements, principally the Credit Agreement, $65,812,000 of retained earnings
were not restricted at December 31, 1993 for the payment of dividends, and the
ratio of current assets to current liabilities was 1.72 to 1, in excess of the
minimum requirement of 1.25 to 1.
4. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In the fourth quarter of fiscal 1993, the Company adopted SFAS No.
106, Employers' Accounting For Postretirement Benefits Other Than Pensions,
retroactive to the beginning of fiscal 1993. As a result, the previously
reported quarterly results of operations have been restated to reflect adoption
of the standard as of the beginning of fiscal 1993 and the recognition of the
expense of these plans on the accrual basis. The accumulated postretirement
benefit obligation, $13,389,000, $8,301,000 after tax, was recorded as a charge
to earnings in the restated first quarter of fiscal 1993. The accrual basis of
accounting for other postretirement benefits approximated the former cash basis
method and subsequent quarters of fiscal 1993 did not require restatement.
5. DISCONTINUED OPERATIONS
In 1991, the Company decided to discontinue its participation in the
military business. As a result, the Company significantly curtailed operations
at its Port Clinton Division and recorded a provision of $30,000,000 for
estimated ongoing losses and estimated costs associated with closure and/or
sale of the division. In 1993, the Company announced the complete closure of
the Port Clinton Division which had been involved in rubber mixing for other
Company facilities since it discontinued the military business.
The Company has completed or subcontracted its contractual
commitments, and losses incurred were charged to the reserve. Assets of the
division are being held pending sale, transfer to other Company facilities or
disposal. Their remaining net book value has been reserved. The accumulated
postretirement benefits of the Port Clinton employees had been recognized in
the provision for discontinued operations of $30,000,000 recorded in 1991 and
has been reclassified to accrued postretirement benefits. The remaining
balance of the reserve of $6,300,000, which is included in Accrued Expenses in
the accompanying consolidated balance sheet, is for building and site work and
closure costs.
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
For the second quarter of fiscal 1994, sales were $198,335,000
compared to $174,795,000 a year ago, an increase of 13%. Sales for this year's
second quarter include $31,637,000 of sales related to Standard Products
Industriel (SPI) and its affiliate, 5 Rubber, which were acquired in January
1993. Net income for the second quarter of fiscal 1994 was $6,187,000, or $.37
a share, compared to net income of $7,813,000, or $.52 a share, a year ago.
For the first six months of fiscal 1994, sales were $400,026,000
versus $339,212,000 for the first six months of fiscal 1993. The acquisition
of SPI resulted in incremental sales of $66,887,000. Net income for the first
six months of 1994 was $11,039,000, or $.66 a share. For the first six months
of 1993, income before nonrecurring items was $12,249,000, or $.81 a share.
Last year's first quarter and first half periods were restated to reflect the
adoption of Statement of Financial Accounting Standard (SFAS) No. 106,
Employers' Accounting for Postretirement Benefits Other than Pensions. The
cumulative effect of adopting SFAS No. 106 was to reduce pretax earnings by
$13,389,000, $8,301,000 after tax, resulting in restated first half of fiscal
1993 net income of $3,948,000, or $.26 a share.
Average shares outstanding have increased by approximately
1,500,000 shares in the fiscal 1994 periods compared to the fiscal 1993
periods. In June 1993, the Company issued 1,400,000 common shares in a public
offering resulting in the increase in average shares outstanding.
Sales of the Transportation Equipment Segment were $169,939,000 in
the second quarter of fiscal 1994 compared to $146,670,000 a year ago. The
fiscal 1994 sales include the aforementioned sales of SPI. In North America,
sales were $105,799,000, a 5% decrease from a year ago. The current year
period includes $4,195,000 of sales of 5 Rubber Corporation, acquired in
January 1993 in connection with the SPI acquisition. The increase related to 5
Rubber was offset by two factors. Sales volume declined due to parts supplied
to popular models whose production was concluded for new model changeover,
lower current year production from the prior year's levels and cessation of
production of certain parts. The volume declines reduced sales by
approximately $7,800,000. North American sales were further reduced by
approximately $1,800,000 related to a decline in the rate of exchange between
the Canadian and U.S. dollar. Sales of the Company's subsidiary in the United
Kingdom, Standard Products Limited (SPL), were ahead of last year's second
quarter period by $800,000. Volume gains were realized on steady shipments to
North America for the Crown Victoria/Grand Marquis production, while new
products were manufactured for United Kingdom original equipment sales.
Exchange rate declines offset the SPL's volume increases by approximately
$1,200,000. Sales of SPI of $27,442,000 were incremental over last year, and
sales of Holm Industries, Inc., the Company's subsidiary which supplies plastic
and magnetic door seals for the appliance industry, were ahead by approximately
$425,000.
For the first six months of fiscal 1994, Transportation Equipment
sales were $341,984,000, including $66,687,000 of incremental sales related to
the SPI acquisition. A year ago, Transportation Equipment sales were
$281,408,000. Sales were adversely affected by exchange rate variations
between years amounting to approximately $10,000,000, and sales of Holm
Industries were ahead of the prior year by approximately $4,100,000.
Sales of the Tread Rubber Segment were $28,396,000 for the second
quarter and $58,042,000 for the first six months of fiscal 1994, approximately
even with sales of fiscal 1993 second quarter and first half.
-9-
<PAGE> 10
For the second quarter of fiscal 1994, consolidated gross margin
was 12.4% compared to 14.0% a year ago. For the first half, the consolidated
gross margin was 12.7% for fiscal 1994 and 12.5% for fiscal 1993. Consolidated
gross margin for the second quarter of fiscal 1994 was adversely impacted by
the sales volume decline for the North American automotive market offset
slightly by volume gains at Holm Industries. The margin in the second quarter
was also reduced by sales of lower margin Tread Rubber Segment products.
Lastly, the Company's consolidated gross margin was lowered by excess costs
incurred at the Company's Winnsboro, South Carolina plant related to
manufacturing start-up difficulties and by manufacturing variances experienced
at two of the Company's Tread Rubber Segment plants. These negative factors
were offset by the incremental gross profit of the SPI acquisition.
For the six month period of fiscal 1994, margins were adversely
affected by increased sales of lower margin products in the Tread Rubber
Segment. This decline was offset by the effects of the SPI acquisition and by
reduced overhead spending related to the absence of new product launch costs
experienced in last year's first half period.
The effect of reduced sales volumes on consolidated gross margin is
expected to continue in the third and fourth quarters of fiscal 1994. A
customer of the Company has begun the conversion of its assembly plant
facilities to a new model, and production is expected to resume late in the
Company's third quarter period. Once production resumes, the return to normal
full production will be gradual until late in the Company's fourth quarter. In
addition to the Company's launch of new parts for this model, the Company is
also in the process of launching parts for two other models being introduced by
other customers.
Selling, general and administrative expenses were 6.6% of sales in
the second quarter of fiscal 1994 compared to 6.4% a year ago. For the first
half of fiscal 1994, selling, general and administrative expenses were 6.9% of
sales versus 6.4% a year ago. Expenditures have increased primarily due to the
SPI acquisition.
Net interest expense for the second quarter of fiscal 1994 was
$2,379,000 versus $1,534,000 a year ago. In 1994, the second quarter interest
expense was $2,524,000 and interest income was $145,000. Last year, interest
expense was $1,894,000 and interest income was $360,000. The increased
interest expense resulted from a higher level of borrowed funds related to the
SPI acquisition at an approximate average interest rate of 4%, offset by
savings realized from the early retirement of the Company's Senior Notes. The
Senior Notes, at an interest rate of 9.71%, were repaid in January 1993.
Interest income declined as the amount of invested funds were reduced and
interest rates were lowered.
For the first half of fiscal 1994, net interest expense was
$5,131,000 compared to $2,800,000 in the first half of fiscal 1993. Interest
expense for 1994 was $5,392,000 and interest income was $261,000. In 1993,
interest expense was $3,695,000 and interest income was $895,000. The expense
and income variations between the first half periods of fiscal 1994 and 1993
were caused by the same events described above.
Other income (expense), net was income of $71,000 for the second
quarter and expense of $766,000 for the first half of 1994. A year ago, the
Company recorded other income of $6,000 for the second quarter and $648,000 for
the first half. For the first half, the Company's other expense reflects the
Company's share of the results of its joint venture, Nishikawa Standard Company
(NISCO). NISCO's operations resulted in a large loss to the Company related to
new product launch efforts. Since the losses incurred during the first
quarter, NISCO has been profitable. A year ago, other income reflects foreign
currency transaction income recorded during last year's first half period as
foreign currencies were declining against the U.S. dollar.
The Company's effective tax rate for the second quarter of fiscal
1994 was 32.7%, and it has declined since the first quarter period of 1994.
The effective rate was comparable to the rate of last year. The operations of
SPL in the United Kingdom were profitable in the second quarter of fiscal 1994,
but not taxed due to tax loss carryforwards. SPL recorded a loss in the first
quarter without tax benefit. For the first half, the effective rate was 36.2%
compared to 33.3% a year ago.
-10-
<PAGE> 11
FINANCIAL CONDITION
Cash flow from operations through the second quarter of fiscal 1994
was $19,877,000. Investments in property and equipment were $26,182,000, and
the Company invested $1,500,000 in its joint venture NISCO. During the second
quarter of fiscal 1994, the Company negotiated a 6.55%, $75,000,000 Senior Note
term loan with an insurance company. Proceeds of the term loan and recurring
renewals of revolving debt resulted in proceeds of $110,343,000. The proceeds
were used to repay the revolving credit borrowings and this, plus normal debt
repayments, required funds of $89,865,000. Dividend payments amounted to
$5,319,000.
At December 31, 1993, the ratio of current assets to current
liabilities was 1.72 to 1. The Company's capitalization totaled $359,200,000,
and long-term debt was 38% of capitalization. The Company's various borrowing
arrangements enable the Company to borrow an additional $105,000,000 under its
Revolving Credit Agreement and an additional $50,200,000 under its short-term
borrowing arrangements, all of which are subject to borrowing limitations
imposed by the Company's lending agreements. The Company's projections
indicate that cash flow from operations plus funds available under its
borrowing arrangements will be sufficient to meet operating needs for the
remainder of fiscal 1994.
-11-
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit No.
Under Reg. S-K Form 10-Q
Item 601 Exhibit No. Description
-------------- ----------- ---------------------------------------------------------------------------------
<S> <C> <C>
(4) 4 Loan Agreement, dated December 16, 1993, by and among The Standard Products Company and
Metropolitan Life Insurance Company and certain of its Affiliates.
$75,000,000 6.55% Senior Notes due December 16, 2003, of The Standard Products Company,
made payable to Metropolitan Life Insurance Company and certain of its Affiliates.
</TABLE>
(b) REPORTS ON FORM 8-K: No reports on Form 8-K have been filed
during the quarter for which this report on Form 10-Q is
filed.
-12-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE STANDARD PRODUCTS COMPANY
-----------------------------
(REGISTRANT)
Dated: February 11, 1994 /s/ Aubrey E. Arndt
----------------- -----------------------------
Aubrey E. Arndt
Vice President-Finance
Principal Financial Officer
/s/ Thomas J. Stecz
-----------------------------
Thomas J. Stecz
Corporate Controller
Chief Accounting Officer
-13-
<PAGE> 1
EXHIBIT 4
THE STANDARD PRODUCTS COMPANY
6.55% Senior Note
Due December 16, 2003
Reg. No. R-1 Cleveland, Ohio
$60,000,000 December 16, 1993
THE STANDARD PRODUCTS COMPANY (herein called the "Company"), a
corporation duly organized and existing under the laws of the State of Ohio,
for value received, hereby promises to pay to METROPOLITAN LIFE INSURANCE
COMPANY, or registered assigns, on the sixteenth day of December, 2003, the
principal sum of Sixty Million Dollars ($60,000,000) in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for public and private debts, at the principal office of the Company in
Cleveland, Ohio, and to pay interest (computed on the basis of a 360-day year
of twelve 30-day months) on the unpaid balance of said principal sum from the
date hereof at said office, in like coin or currency, semi-annually on the
sixteenth day of June and December in each year, commencing June 16, 1994, at
the rate of six and fifty-five one hundredths percentum (6.55%) per annum until
the principal hereof shall have become due and payable. Any payment of
principal of or, to the extent lawful, interest on this Note which is not paid
when due shall bear interest at the greater (determined on a daily basis) of
the rate of eight and fifty-five one hundredths percentum (8.55%) per annum or
the rate per annum which The Chase Manhattan Bank, N.A. announces publicly from
time to time as its corporate base rate of interest (or such lesser rate, if
any, which is the maximum rate permitted by applicable law) (the "Overdue
Interest Rate") for the period that the same is overdue.
1. NOTES. This Note is one of the 6.55% promissory notes (the
"Notes") issued pursuant to a loan agreement dated December 16, 1993 between
the Company and the Purchasers listed on Schedule I thereto (the "Agreement"),
in the aggregate principal amount of $75,000,000, each in the denomination of
$1,000,000 or a multiple thereof, all the Notes maturing on December 16, 2003,
and bearing interest payable at the same rate and on the same semi-annual dates
as the interest on the principal sum of this Note.
2. REGISTER. The Notes are issuable only as registered notes.
The Company shall keep at the office or agency maintained pursuant to Section
7.1 hereof a register or registers in which, subject to such reasonable
regulations as it may prescribe, the Company shall register the names and
addresses of the holders of the Notes and shall register the transfer of Notes
as provided herein. Any such register shall be in written form or in any other
form capable of being converted into written form within a reasonable time.
Upon due presentment for registration of transfer of any Note
at such office or agency, the Company will execute, register and deliver in
exchange therefor a new Note or Notes, each in a minimum denomination of
$500,000 principal amount, or any multiple of $100,000 in excess thereof, equal
in aggregate principal amount to the unpaid principal amount of the Note so
presented for registration of transfer, dated the date from which unpaid
interest has then accrued thereon and registered in the name or names of the
transferee or transferees. At any time at the request of the holder of any
Note and upon surrender of such Note for such purpose to the Company at such
office or agency, the Company will execute, register and deliver in exchange
therefor a new Note or Notes, each in a minimum denomination of $500,000
principal amount, or any multiple of $100,000 in excess thereof, equal in
aggregate principal amount to the unpaid principal amount of the Note so
surrendered, dated the date from which unpaid interest has then accrued thereon
and registered in such name or names as such holder may request. Each Note
presented or surrendered for registration of transfer, exchange, partial
payment or payment shall (if so required by the Company) be duly endorsed by,
or accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly executed by the holder thereof or his attorney
duly authorized in writing.
All exchanges and registrations of transfer of Notes shall be
at the expense of the Company (including, in the case of the original purchaser
of the Notes, the cost of delivery of any such Note to the Company and delivery
by it to such address in the continental United States as is requested and
payment of all stamp and other documentary taxes other than any taxes incurred
by reason of a transfer of title).
<PAGE> 2
The Company may deem and treat the registered holder hereof as
the absolute owner hereof (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon by anyone
other than the Company) for the purpose of receiving payment of or on account
of the principal of, premium, if any, or interest on this Note and for all
other purposes, and the Company shall not be affected by any notice to the
contrary. All payments made to the registered holder hereof shall be valid and
effectual to satisfy and discharge the liability upon this Note to the extent
of the sum or sums so paid.
3. PREPAYMENTS.
3.1. MANDATORY PREPAYMENTS. The Company covenants and agrees that
on each December 16 commencing on December 16, 1998 to and including December
16, 2002; it will prepay $12,500,000 aggregate principal amount of the
Outstanding Notes.
All such prepayments pursuant to this Section 3.1 shall be
applied on the respective payment dates thereof toward the prepayment of the
principal of the Notes, in each case plus accrued interest to such payment
date, but without premium, PROVIDED, HOWEVER, that upon any prepayment of part
of the Notes pursuant to Section 3.2 or a prepayment pursuant to Section 3.3.,
the principal amount of each mandatory prepayment of Notes becoming due under
this Section 3.1 on or after the date of such prepayment pursuant to Section
3.2 or Section 3.3 shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced (but only in units of $1,000)
as a result of such prepayment pursuant to Section 3.2 or Section 3.3. The
amount required to pay accrued interest on the principal amount of the Notes to
be prepaid shall be in addition to the payments above provided. The Company
shall designate the Notes or portions thereof to be prepaid pursuant to this
Section as in Section 4 hereof provided. No prepayment of less than all the
Notes pursuant to Section 3.2 hereof shall be credited to or relieve the
Company to any extent from its obligation to make any prepayment of the Notes
required by this Section 3.1.
3.2. OPTIONAL PREPAYMENTS. Upon notice given as provided in
Section 3.4 hereof, the Company at its option may prepay the Notes as a whole
at any time or in part from time to time (in multiples of $100,000 principal
amount) at the Yield Maintenance Price thereof. Each such notice shall specify
the date on which such prepayment is to be made (an "Optional Prepayment
Date"), the principal amount of the Notes of each holder so to be prepaid and
the interest accrued thereon to the Optional Prepayment Date.
On the Calculation Date, the Computing Holder shall give
written notice to the Company of the amount of the Yield Maintenance Price of
the principal amount of the Notes so to be prepaid, which notice shall set
forth in reasonable detail the computation thereof; PROVIDED, HOWEVER, that the
failure of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other holder of the Notes for its failure to
make such determination. The Yield maintenance Price set forth in such notice
shall be binding on the Company and all of the holders of the Notes, absent
manifest error. If the Computing Holder shall not have given the notice
contemplated by this Section 3.2 by the end of the third Business Day after the
Calculation Date, the Company shall be entitled to determine the Yield
Maintenance Price in accordance with the terms hereof and such calculation
shall be binding on the Computing Holder and all other holders, absent manifest
error.
Promptly after each such Calculation Date, the Company shall
deliver to each holder of the Notes so to be prepaid on or before such Optional
Prepayment Date a certificate signed by a senior financial officer of the
Company setting forth the Yield Maintenance Price of the principal amount of
the Notes held by such holder so to be prepaid, accompanied by a copy of the
written notice by the Computing Holder referred to above (which sets forth the
computation of the Yield Maintenance Price of the Notes held by the Computing
Holder).
Upon notice of any prepayment pursuant to this Section 3.2
being given as provided in Section 3.4 hereof, the Company covenants and agrees
that it will prepay on the date therein fixed for prepayment the principal
amount of this Note so to be prepaid as specified in such notice at the Yield
Maintenance Price hereof, together with interest accrued thereon to such date
fixed for prepayment.
<PAGE> 3
3.3. PREPAYMENT OF NOTES UPON CHANGE OF CONTROL. The Company
covenants and agrees to give written notice to each holder of Notes promptly
after the occurrence of a Change of Control, but in any event within 5 days
thereafter. Such notice shall (a) describe in reasonable detail the facts and
circumstances giving rise to such Change of Control and the effect thereof on
the Company, (b) offer to prepay, on a date (the "Change of Control Prepayment
Date") which shall be not less than 30 days nor more than 60 days after the
date of such notice, all, but not less than all, of the Notes held by such
holder, (c) request such holder to notify the Company in writing, not less than
10 days prior to the Change of Control Prepayment Date, of its acceptance or
rejection of such offer and (d) inform the holder that, upon its receipt of
such notice by the Company, failure to reject such offer in writing on or
before the 10th day prior to the Change of Control Prepayment Date shall be
deemed acceptance of such offer.
On the Calculation Date, the Computing Holder shall give
written notice to the Company of the amount of the Yield Maintenance Price of
the Notes held by such Computing Holder, which notice shall set forth in
reasonable detail the computation thereof; PROVIDED, HOWEVER, that the failure
of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes. The Yield Maintenance Price set forth
in such notice shall be binding on the Company, absent manifest error. If the
Computing Holder shall not have given the notice contemplated by this Section
3.3 by the end of the third Business Day after the Calculation Date, the
Company shall be entitled to determine the Yield Maintenance Price in
accordance with the terms hereof and such calculation shall be binding on the
Computing Holder and all other holders, absent manifest error.
Thereupon, the Company covenants and agrees that on the Change
of Control Prepayment Date it will prepay all the Notes held by each holder who
has accepted the prepayment offer in accordance with this Section 3.3 by
payment of the Yield Maintenance Price with respect to such Notes, together
with interest accrued on the unpaid principal amount of such Notes to the
Change of Control Prepayment Date, and the amount so to be paid shall become
due on the Change of Control Prepayment Date.
3.4. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Company shall
give notice of any prepayment of this Note or any portion hereof pursuant to
Section 3.2 hereof not less than 10 nor more than 30 days prior to the date
fixed for such prepayment in such notice, which notice shall specify the amount
so to be prepaid, together with the interest to be paid thereon and the date
fixed for such prepayment. Any notice of prepayment and all other notices to
be given to any holder of this Note shall be given by registered or certified
mail to such holder at its address designated on the date of such notice on the
register or other record maintained by the Company.
4. ALLOCATION OF PREPAYMENTS. If less than the entire principal
amount of all the time outstanding shall be called for prepayment at any time
pursuant to Section 3.1 or 3.2 hereof, the Company will allocate the principal
amount so called for prepayment (but only in units of $1,000) among the
registered holders of such Notes in proportion, as nearly as may be, to the
respective principal amount of such Notes, not theretofore called for
prepayment, of which they shall be registered holders.
5. SURRENDER OF NOTES; NOTATION THEREON. Upon any prepayment of
a portion of the principal amount of this Note, the registered holder hereof,
at its option, may require the Company to execute and deliver at the expense of
the Company a new Note dated the date from which unpaid interest has then
accrued thereon and payable to such Person or Persons as may be designated by
such holder for the aggregate principal amount of this Note then remaining
unpaid, upon surrender of this Note, or may present this Note to the Company
for notation hereon of the payment of the portion of the principal of this Note
so prepaid.
6. INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a
portion hereof is called for prepayment as herein provided, this Note or such
portion, as the case may be, shall cease to bear interest from and after the
date fixed for such prepayment; PROVIDED, HOWEVER, that if, upon presentation
for the purpose, the Company shall fail to pay this Note or such portion, as
the case may be, this Note or such portion, as the case may be, shall bear, so
far as may be lawful, interest at the Overdue Interest Rate until paid and, so
far as may be lawful, any overdue instalment of interest shall also bear
interest at such Overdue Interest Rate.
7. AFFIRMATIVE COVENANTS. The Company covenants and agrees that
so long as this Note shall be outstanding:
<PAGE> 4
7.1. COMPANY OFFICE. The Company will maintain an office or agency
in Cleveland, Ohio, where the Notes may be presented for payment, registration
of transfer, replacement or exchange as provided herein and where notices,
presentations and demands to or upon the Company in respect of the Notes may be
given or made. Unless another office or agency is designated (by notice in
writing to the holder hereof) by the Company, the office of the Company for the
purpose of this Section 7.1 shall be 2130 West 110th Street, Cleveland, Ohio
44102.
7.2. PAYMENT OF TAXES AND CLAIMS. The Company will promptly pay
and discharge, or cause to be paid and discharged, when due, all taxes,
assessments, and governmental charges or levies imposed upon the Company or any
Subsidiary or upon the income and profits of the Company or any Subsidiary, or
upon any property, real, personal or mixed, belonging to the Company or any
Subsidiary, or upon any part thereof, before the same shall become in default,
as well as all lawful claims for labor, materials and supplies which, if
unpaid, might become a Lien upon such properties or any part thereof; PROVIDED,
HOWEVER, that the Company shall not be required to pay and discharge, or to
cause to be paid and discharged, any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings and the Company or such Subsidiary, as the
case may be, shall set aside on its books appropriate reserves in accordance
with GAAP.
7.3. CORPORATE EXISTENCE. The Company will do, or cause to be
done, all things necessary to preserve and keep in full force and effect its
corporate existence, its rights and franchises and do, or cause to be done, all
things necessary to preserve and keep in full force and effect the corporate
existence, rights and franchises of each of its Subsidiaries, except where the
failure to do so could not have a material and adverse effect on the business,
operations, properties, assets or condition, financial or other, of the Company
and its Subsidiaries, taken as a whole; PROVIDED, HOWEVER, that nothing in this
Section 7.3 contained shall prevent a consolidation or merger of the Company or
any Subsidiary, or the liquidation or dissolution of, or sale, transfer or
disposition of all or substantially all the property and assets of the Company
or any Subsidiary not otherwise prohibited by the provisions of this Note.
7.4. MAINTENANCE. The Company will at all times maintain,
preserve, protect and keep, or cause to be maintained, preserved, protected and
kept, its property and the property of its Subsidiaries and every part thereof
used or useful in the conduct of the business of the Company and its
Subsidiaries in reasonably good repair, working order and condition, ordinary
wear and tear excepted, and from time to time make, or cause to be made, all
needful and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection therewith
and every portion thereof, in the reasonable opinion of the Company, may be
properly and advantageously conducted at all times.
7.5. INSURANCE. The Company will keep adequately insured, and
cause each of its Subsidiaries to keep adequately insured, by financially sound
and reputable insurers, all property of a character usually insured by
corporations engaged in the same or a similar business against loss or damage
of the kinds customarily insured against by such corporations, and carry, and
cause each of its Subsidiaries to carry, such other insurance as is usually
carried by corporations engaged in the same or a similar business; PROVIDED
that the Company may maintain one or more programs of self-insurance for so
long as such program is operated in accordance with sound financial practice.
7.6. BOOKS AND RECORDS. The Company will at all times keep, and
cause each of its Subsidiaries to keep, true and complete books of record and
accounts in accordance with GAAP.
8. NEGATIVE COVENANTS. The Company covenants and agrees that so
long as this Note shall be outstanding:
8.1. LEVERAGE. The Company will not suffer or permit its Leverage
to at any time exceed (i) 60% during the period commencing on the Closing Date
and ending on June 30, 1994, (ii) 55% during the period commencing on July 1,
1994 and ending June 30, 1995 and (iii) 50% commencing on July 1, 1995 and at
all times thereafter; PROVIDED, HOWEVER, if in any fiscal quarter Leverage
shall exceed 45%, then at the end of such fiscal quarter, the EBIT Ratio of the
Company and its Subsidiaries on a consolidated basis for the period consisting
of the immediately preceding four fiscal quarters shall be greater than 2.0 to
1.0.
<PAGE> 5
8.2. CONSOLIDATED NET WORTH. The Company will not suffer or permit
the sum of the Net Worth of the Company and its Subsidiaries, determined on a
consolidated basis at any time to be less than the then "Required Minimum" in
effect at the time in question. On the Closing Date, the "Required Minimum"
shall be Ninety Million Dollars ($90,000,000) plus an amount equal to fifty
percent (50%) of the Net Income of the Company and its Subsidiaries, determined
on a consolidated basis, if any (but not less than zero), since December 31,
1992. On (i) the first day of each fiscal quarter of the Company thereafter
(other than the first day of the Company's fiscal year), the Required Minimum
shall be increased by an amount equal to fifty percent (50%) of the Net Income
of the Company and its Subsidiaries, determined on a consolidated basis, if any
(but not less than zero), for the immediately preceding fiscal quarter; and
(ii) the first day of each fiscal year of the Company thereafter, the Required
Minimum shall be adjusted to equal the Required Minimum at the beginning of the
immediately preceding fiscal year increased by an amount equal to fifty percent
(50%) of the Net Income of the Company and its Subsidiaries, determined on a
consolidated basis, if any (but not less than zero), for such immediately
preceding fiscal year.
8.3. CURRENT RATIO. The Company will not suffer or permit the
Current Assets of the Company and its Subsidiaries at any time to fall below an
amount equal to one hundred twenty-five percent (125%) of the Current
Liabilities of the Company and its Subsidiaries, all as determined on a
consolidated basis.
8.4. PRIORITY INDEBTEDNESS. The Company will not itself, and will
not permit any of its Subsidiaries to, incur, create, assume or guaranty
(whether by discount or otherwise), or become or be contingently obligated to
purchase or be liable in respect of, any Priority Indebtedness, if the
aggregate principal amount of all such Priority Indebtedness (including
Priority Indebtedness existing on the Closing Date) at any time outstanding
would exceed 20% of Stockholders' Equity.
Any corporation which becomes a Subsidiary on or after the Closing
Date shall be deemed to have incurred, at the time it becomes a Subsidiary, any
Priority Indebtedness of such corporation existing immediately after it becomes
a Subsidiary.
8.5. RESTRICTED INVESTMENTS. The company will not, and will not
permit any subsidiary to, purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans
or advances to, or make any investment or acquire any interest whatsoever in,
any other person, except:
(A) investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America having a maturity of one year or less;
(B) commercial paper issued by U.S. corporations having a
rating of "P-2" or better from Moody's and "A-2" or better from S&P;
(C) certificates of deposit or bankers acceptances having a
maturity of one year or less issued by (i) commercial banks (x)
located in the United States of America, or any other jurisdiction
which permits the cash evidenced by such certificates of deposit or
bankers acceptances to be freely remitted to the United States of
America, and (y) whose long term debt obligations are at all times
accorded a rating of "A" or better by S&P, "A-2" or better by Moody's
or "A" or better by the International Bank Credit Agency (or an
equivalent rating by another recognized credit rating agency of
similar standing if none of such entities is then in the business of
rating long term debt obligations of commercial banks);
(D) investments by the Company in Nishikawa Standard Company
("NISCO") in an amount (including such investments existing on the
Closing Date and any such investments made subsequent to the Closing
Date) not to exceed $15,000,000 (without giving effect to the Net
Income of NISCO subsequent to the Closing Date);
(E) investments in the Holm Industries, Inc. joint venture in
Mexico (the "Mexican JV") in an amount (including such investments
existing on the Closing Date and any such investments mad subsequent
to the Closing Date) not to exceed $5,000,000 (without giving effect
to the Net Income of the Mexican JV subsequent to the Closing Date);
<PAGE> 6
(F) investments in a Subsidiary of the Company or in a
corporation which becomes a Subsidiary of the Company as a result of
such investment or an investment in the Company by a Wholly Owned
Subsidiary of the Company;
(G) loans and advances to employees made in the ordinary
course of business and consistent with past practice or to a director
or officer of the Company; PROVIDED, HOWEVER, that the aggregate of all
loans and advances to all directors and officers shall not exceed
$500,000 (or the equivalent thereof in any other currency) at any one
time outstanding;
(H) any endorsement of a check or other medium of payment for
deposit or collection or any similar transaction in the normal course
of business; and
(I) other investments not otherwise permitted in (A) through
(H) above in an aggregate amount not exceeding 10% of Stockholder's
Equity.
8.6 SALE AND LEASE OF ASSETS; MERGER. (A) The Company will not,
and will not permit any Subsidiary to, sell, lease, transfer or otherwise
dispose of all or any part of its properties and assets, except that the
Company and its Subsidiaries may sell or otherwise dispose of any assets (i) if
such sale or disposition is in the ordinary course of business or (ii) other
than in the ordinary course of business, unless (x) the aggregate book value of
all such sales or dispositions (on a consolidated basis) during the most recent
12-month accounting period would exceed 15% of Total Assets as computed at the
end of the most recent quarter preceding such sale or since the Closing Date
would exceed 25% of Total Assets as computed at the end of the most recent
fiscal year preceding such sale or (y) such assets in the aggregate contributed
more than 10% of Net Income of the Company and its Subsidiaries on a
consolidated basis in the most recent 12-month accounting period or 25% of Net
Income since the Closing Date.
(B) The Company will not consolidate with or merge into any other
corporation, or permit another corporation to merge into it, unless, at the
time of such transaction and immediately after giving effect thereto, (i) no
Event of Default or event which, with notice or lapse of time or both, would
constitute an Event of Default shall have occurred and be continuing, and (ii)
if the successor formed by or resulting from such consolidation or merger is
other than the Company, such successor
(x) shall be a corporation duly organized and existing under
the laws of the United States of America or any state thereof, and
(y) shall, by written instrument satisfactory to each holder
of the Notes, expressly assume the due and punctual performance and
observance of all the obligations, terms, covenants, agreements and
conditions of the Agreement and the Notes to be performed or observed
by the Company such that the Notes would be a direct senior obligation
of such successor ranking PARI PASSU with any outstanding senior
indebtedness of such successor.
8.7. INTERCOMPANY INDEBTEDNESS. The Company will not create,
incur, assume or guarantee, or otherwise become or be liable in respect of, any
Indebtedness owing to any Subsidiary or Affiliate unless such indebtedness is
unsecured and is subordinated and junior in right of payment to the Notes on
substantially the terms set forth in Exhibit 8.7 attached hereto.
8.8. RESTRICTIONS ON SUBSIDIARIES. The Company will not cause,
suffer or permit any Subsidiary to
(i) issue or dispose of any shares of its capital stock to
any Person other than the Company or a Wholly Owned Subsidiary, except
to the extent, if any, required to qualify directors under any
applicable law or required to be issued to (x) other stockholders of
such Subsidiary by virtue of their exercise of preemptive rights or
(y) other stockholders of such Subsidiary as their pro-rata share of
any stock dividend; or
(ii) sell, assign, transfer, dispose of or in any way part
with control of any share of capital stock of any other Subsidiary
owned by it, or any indebtedness owing to it from the company or
another Subsidiary, except in either case to the Company or a Wholly
Owned Subsidiary; or
<PAGE> 7
(iii) acquire, directly or indirectly, any stock of any other
corporation which immediately after such acquisition would become a
Subsidiary, unless immediately after giving effect to such acquisition
(A) the Company and/or one or more Wholly Owned Subsidiaries shall
own, directly or indirectly, all outstanding capital stock of such
corporation having any preference as to dividends or upon liquidation,
and all rights, options and warranties to acquire any such preference
stock, and (B) no Event of Default or event which, with notice or
lapse of time or both, would constitute an Event of Default shall have
occurred and be continuing.
8.9. TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any Subsidiary to, engage in any transaction with an Affiliate on
terms more favorable to the Affiliate than would have been obtainable in arm's
length dealing in the ordinary course of business with a Person not an
Affiliate.
9. WAIVER OF COMPLIANCE. Any of the acts which the Company or a
Subsidiary is prohibited from doing by any of the provisions of Section 8
hereof, or is required to do by any of the provisions of Section 7 hereof, may,
notwithstanding the provisions of said Sections or any other provision of this
Note, be done or omitted, as the case may be, by the Company or such
Subsidiary, and any of the provisions contained in Sections 7 and 8 hereof may
be amended, if the registered holders of not less than 66-2/3% in aggregate
principal amount of the Notes at the time outstanding consent thereto or waive
compliance with any such provision or provisions in writing. In determining
whether the holders of any specified percentage in principal amount of the
Notes have concurred in any consent or waiver pursuant to any of the provisions
of this Note, Notes at the time owned by the Company or by any Affiliate shall
be disregarded and the principal amount of the Notes (or the portion thereof)
theretofore prepaid, or called for prepayment, if the Company is ready and
willing to prepay, shall also be disregarded.
10. DEFINITIONS. For the purpose of this Note, unless otherwise
defined or the context otherwise requires:
"ACQUISITION" means the acquisition pursuant to the Stock Sale
Agreement of (i) the capital stock of Industriel and certain other corporate
entities by International and (ii) the acquisition of the capital stock of
Rubber Industrial Holding Company by the Company.
"AFFILIATE" means any Person which, directly or indirectly, controls
or is controlled by or is under common control with the Company or a Subsidiary
or which beneficially owns or holds or has the power to direct the voting power
of 5% or more of the Voting Stock of the Company or a Subsidiary or which has
5% or more of its Voting Stock (or, in the case of a Person which is not a
corporation, 5% or more of its equity interest) beneficially owned or held,
directly or indirectly, by the Company or a Subsidiary, and any director or
officer of the Company or its Subsidiaries. For purposes of this definition,
"control" means the power to direct the management and policies of a Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlled by" and "under common control
with" have meanings correlative to the foregoing.
"AGREEMENT" shall have the meaning specified in Section 1 hereof.
"BANKRUPTCY DEFAULT" shall have the meaning specified in the first
paragraph of Section 11 hereof.
"BUSINESS DAY" means and includes any day on which banks are required
to be open to carry on their normal business in the States of New York and
Ohio.
"CALCULATION DATE" means the date on which the Yield Maintenance Price
on the Notes being prepaid pursuant to Sections 3.2 or 3.3 hereof or
accelerated pursuant to Section 11 hereof, as the case may be, is to be
determined by the Computing Holder with respect to such Notes. If the Notes
are being prepaid pursuant to Sections 3.2 or 3.3 hereof, the Calculation Date
shall be the fifth Business Day prior to the Optional Prepayment Date
established pursuant to Section 3.2 hereof or the Change of Control Prepayment
Date established pursuant to Section 3.3 hereof, respectively. If the Notes
are being accelerated pursuant to Section 11 hereof, the Calculation Date shall
be the date of acceleration of such Notes.
"CAPITALIZED LEASE" means and includes at any time any lease personal,
which in accordance with GAAP would at such time be required to be capitalized
on a balance sheet of the lessee.
<PAGE> 8
"CAPITALIZED LEASE OBLIGATION" means at any time the capitalized
amount of the rental commitment under a Capitalized Lease which in accordance
with GAAP would at such time be required to be shown on a balance sheet of the
lessee.
"CHANGE OF CONTROL" means any acquisition by any Person or related
persons that would constitute a "group" for purposes of Section 13(d) and Rule
13d-5 under the Securities Exchange Act of 1934, as amended, (other than
Persons owning 4% or more of the issued and outstanding capital stock of the
Company on the Closing Date and members of their families, including siblings,
spouse, children and grandchildren of any of them or any trust whose principal
beneficiary is such Person, or one or more members of the family of any of
them) of (a) the power to elect, appoint or cause the election or appointment
of at least a majority of the members of the Board of Directors of the Company,
through beneficial ownership of the capital stock of the Company or otherwise,
or (b) all or substantially all of the properties and assets of the Company.
For the purposes of this definition, "acquisition" of the power or properties
and assets stated in the preceding sentence means the earlier of (i) the actual
possession thereof and (ii) the consummation of any transaction or series of
related transactions which, with the passage of time, will give such Person or
Persons the actual possession thereof.
"CHANGE OF CONTROL PREPAYMENT DATE" shall have the meaning specified
in Section 3.3 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPUTING HOLDER" means as of a Calculation Date with respect to (a)
the prepayment of Notes pursuant to Section 3.2 hereof or acceleration of the
Notes pursuant to clause (3) of the first paragraph of Section 11 hereof, as
the case may be, the holder at such date of the largest aggregate principal
amount of the outstanding Notes or (b) the prepayment of the Notes pursuant to
Section 3.3 hereof or acceleration pursuant to clause (2) of the first
paragraph of Section 11 hereof, as the case may be, the holder of the Notes at
such date so being prepaid or accelerated. For purposes of such determination,
the holder of any Note and any of its affiliates or subsidiaries that are
holders of any Notes shall be treated as one holder.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of January 19,
1993, among the Company, as Borrower, the Banks which are signatories thereto,
and National City Bank, as Agent.
"CURRENT ASSETS" means the net book value of all such assets (after
deducting applicable reserves, if any, and without giving consideration to any
reappraisal or write-up of assets after the date hereof other than any
Permitted Write-Up) as determined in accordance with GAAP.
"CURRENT LIABILITIES" means all such liabilities as determined in
accordance with GAAP and includes (without limitation) all accrued taxes and
all principal of any Funded Indebtedness maturing within twelve (12) months of
the date of determination.
"EBIT RATIO" means the ratio of (a) the aggregate of the consolidated
(i) Net Income of the Company and its subsidiaries PLUS (ii) interest expense
thereof PLUS (iii) federal and state income taxes thereof PLUS (iv)
amortization charges for Permitted Write-Ups and goodwill resulting from the
Acquisition to (B) the consolidated interest expense of the Company and its
Subsidiaries.
"ELIGIBLE TRANSFEREE" means (i) any bank, savings bank, savings and
loan association or insurance company, (ii) any pension plan or portfolio or
investment fund managed or administered by any bank, savings bank, savings and
loan association or insurance company, (iii) any investment company owned by
any bank, savings bank, savings and loan association or insurance company, or
(iv) any investment banking company.
"ENVIRONMENTAL LAW" means any federal, state or local statute,
ordinance, rule, regulation, decree or law (common or otherwise) regulating or
relating to industrial hygiene or the condition of the environment (including
the effects upon human health arising out of the condition of the environment)
or imposing liability or standards of conduct with respect to the use,
generation, handling, storage, treatment, transport, or disposal, or otherwise
concerning, any hazardous, toxic, or dangerous waste, substance or material,
now or at any time hereafter in effect.
"EVENT OF DEFAULT" has the meaning specified in Section 11 hereof.
<PAGE> 9
"EXCESS MEXICAN JV AMOUNT" means the amount in excess of $5,000,000 by
which the investment in the Mexican JV permitted by Section 8.5(E) hereof is
required to be increased on the Company's balance sheet in accordance with GAAP
to take into account the Company's proportionate share of the Mexican JV's Net
Income.
"EXCESS NISCO AMOUNT" means the amount in excess of $15,000,000 by
which the investment in NISCO permitted by Section 8.5(D) hereof is required to
be increased on the Company's balance sheet in accordance with GAAP to take
into account the Company's proportionate share of NISCO's Net Income.
"FUNDED INDEBTEDNESS" means Indebtedness of the Person or entity in
question which matures or which (including each renewal or extension, if any,
in whole or in part) remains unpaid for more than twelve months after the date
originally incurred and includes, without limitation (a) any Indebtedness
(regardless of its maturity) if it is renewable or refundable in whole or in
part solely at the option of that Person or entity (in the absence of default)
to a date more than one year after the date of determination, (b) Capitalized
Lease Obligations, (c) any guaranty of Funded Indebtedness owing by another
person or entity and (d) any Funded Indebtedness secured by a security
interest, mortgage or other lien encumbering any property owned or being
acquired by the Person or entity in question even if the full faith and credit
of that Person or entity is not pledged to the payment thereof.
"GAAP" means generally accepted accounting principles as in effect at
the time of application to the provisions hereof.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(i) Indebtedness for Borrowed Money, (ii) obligations under contingent sales
contracts or obligations to pay the deferred purchase price of property or
services, (iii) Capitalized Lease Obligations, (iv) all obligations of such
Person as an account party in respect of letters of credit or banker's
acceptances, (v) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (v)
above, and (vi) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA.
"INDEBTEDNESS FOR BORROWED MONEY" means, with respect to any Person,
all obligations of such Person for money borrowed, including, without
limitation, all notes payable, and drafts accepted representing extensions of
credit and all obligations evidenced by bonds, debentures, notes or other
similar instruments or obligations upon which interest charges are customarily
paid or discounted.
"INDUSTRIEL" means Standard Products Industriel SA, a corporation
organized under the Laws of France.
"INTERNATIONAL" means a French corporation which is a Subsidiary of
Company (the capital stock of which is owned entirely by the Company, other
Subsidiaries of the Company and directors of International to the extent
required by the laws of France) which was formed and which was the assignee of
the rights of the Company under the Stock Sale Agreement to acquire the capital
stock of Industriel and certain other related entities of Industriel pursuant
to the Stock Sale Agreement.
"LEVERAGE" means the quotient (expressed as a percentage) of (a) the
sum of, without duplication, the principal of all of the indebtedness for
Borrowed Money of the Company and its Subsidiaries plus the principal of the
Funded Indebtedness of the Company and its Subsidiaries (for the purpose of
this definition, including the current portion, if any, of each item of such
Funded Indebtedness), divided by (b) the sum of such Funded Indebtedness and
such Indebtedness for Borrowed Money to the extent specified in clause (a)
above plus the Stockholder's Equity, all for Borrowed Money to the extent
specified in clause (a) above plus the Stockholder's Equity, all as determined
on a consolidated basis in accordance with GAAP.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind in respect of such
asset. For the purposes hereof, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capitalized Lease or
other title retention agreement relating to such asset.
<PAGE> 10
"MOODY'S" means Moody's Investors Service, Inc. and any successor
thereto which is a nationally recognized rating agency.
"NET INCOME" means net income as determined in accordance with GAAP,
after taxes and excluding extraordinary items, but without giving effect to any
gain from any re-appraisal or write-up of any asset.
"NET WORTH" means the excess (as determined on a consolidated basis
and in accordance with GAAP, but excluding from all such determinations any
"foreign currency translation adjustments" reflected in the consolidated
financial statements of the Company and its Subsidiaries under the heading
"Shareholders' Equity") of the net book value (after deducting (i) all
applicable valuation reserves, (ii) the Excess NISCO Amount and (iii) the
Excess Mexican JV Amount and without giving consideration to any reappraisal or
write-up of assets effected after the date hereof other than any Permitted
Write-Up) of the tangible assets (i.e., all assets other than intangibles such
as patents, costs of businesses over net assets acquired, goodwill and treasury
shares) of the Company and its Subsidiaries on a consolidated basis over the
Total Liabilities thereof.
"NOTES" shall have the meaning specified in Section 1 hereof.
"OPTIONAL PREPAYMENT DATE" shall have the meaning specified in Section
3.2 hereof.
"OVERDUE INTEREST RATE" shall have the meaning specified in the first
full paragraph of this Note.
"PERMITTED WRITE-UP" means any write-up of the assets of Industriel,
its Subsidiaries or any other corporation or entity acquired by the Company or
International in connection with the Acquisition to the extent made in
accordance with GAAP and made in connection with the Acquisition and to the
extent reflected in the consolidated financial statements of the Company and
its Subsidiaries.
"PERSON" means and includes an individual, a corporation, a
partnership, a firm, a joint venture, a trust, an unincorporated organization
or a government or an agency or political subdivision thereof.
"PERMITTED LIEN" means
(A) any security interest or other Lien arising by operation of law
and in the ordinary course of business (not including any security interest or
other Lien that secures any Indebtedness for Borrowed Money or any guaranty
thereof or any obligation that is in material default in any manner (other than
any default contested in good faith by timely and appropriate proceedings
effective to stay enforcement of the security interest or other Lien in
question)),
(B) zoning or deed restrictions, public utility easements, minor
title irregularities and similar matters having no adverse effect as a
practical matter on the ownership or use of any of the property in question,
(C) any Lien securing or given in lieu of surety, stay, appeal or
performance bonds, or securing performance of contracts or bids (other than
contracts for the payment of money borrowed), or deposits required by law or as
a condition to the transaction of business or the exercise of any right,
privilege or license,
(D) any mortgage, security interest or other Lien granted by a
Subsidiary to another Wholly owned Subsidiary or by a Subsidiary to the
Company,
(E) any Lien in respect of property acquired or constructed by the
Company or any Subsidiary after the Closing Date, which Lien is created at the
time or acquisition or completion of construction of such property, to secure
Indebtedness assumed or incurred to finance all or any part of the purchase
price or cost of construction of such property, PROVIDED, that (i) no such Lien
shall extend to or cover any other property of the Company or such Subsidiary,
as the case may be, (ii) the aggregate principal amount of the Indebtedness
secured by all such Liens in respect of any such property shall not exceed the
lesser of cost and fair market value of such property at the time of such
acquisition, and (iii) the aggregate principal amount of the indebtedness
secured by all such Liens in respect of any such property outstanding at any
one time shall not exceed an aggregate of $5,000,000 (or the equivalent thereof
in any other currency); or
<PAGE> 11
(F) any license or royalty agreement.
"PRIORITY INDEBTEDNESS" means Indebtedness of the Company which is
secured by any Lien (other than Permitted Liens) and all Indebtedness of
Subsidiaries.
"RESPONSIBLE OFFICER" means the Chief Executive Officer, Chief
Financial Officer, Treasurer, Chief Operating Officer of the Company or any
other officer performing substantially the same functions as any of them.
"S&P" means Standard & Poor's Corporation and any successor thereto
which is a nationally recognized rating agency.
"STOCK SALE AGREEMENT" means that certain Stock Sale Agreement,
entered into December 19, 1992, among Mr. Jean-Claude Smadja on behalf of
himself and on behalf of certain other individuals and entities pursuant to
powers of attorney, Mr. Rifat Kamhi acting pursuant to special power or
attorney granted by Panane Holding B.V. and the Company (certain of the rights
of the Company under the Stock Sale Agreement will be assigned to International
for the purposes of consummating the Acquisition).
"STOCKHOLDER'S EQUITY" means the excess (as determined on a
consolidated basis and in accordance with GAAP, but excluding from all such
determinations any "foreign currency translation adjustments" reflected in the
consolidated financial statements of the Company and its Subsidiaries under the
heading "Shareholders Equity") of the net book value (after deducting all
applicable valuation reserves and without consideration to any reappraisal or
write-up of assets after the date hereof other than any Permitted Write-up) of
all of the assets (i.e., including intangibles such as patents, costs of
businesses over net assets acquired and goodwill arising out of the
Acquisition) of the Company and its Subsidiaries on a consolidated basis over
the Total Liabilities thereof.
"SUBSIDIARY" means any corporation more than 50% of the outstanding
Voting Stock of which at this time is owned directly or indirectly by the
Company and/or by one or more Subsidiaries.
"TOTAL ASSETS" means the aggregate without duplication of all assets
of the Company and its Subsidiaries on a consolidated basis that appear or
ought to appear on their respective balance sheets in accordance with GAAP.
"TOTAL LIABILITIES" means the aggregate (without duplication) of all
liabilities of the Company and its Subsidiaries on a consolidated basis that
appear or ought to appear on their respective balance sheets as determined in
accordance with GAAP.
"VOTING STOCK" of a corporation means the capital stock of such
corporation of the class or classes, the holders of which are ordinarily, in
the absence of contingencies, entitled to elect a majority of the board of
directors (or Persons performing similar functions) of such corporation.
"WEIGHTED AVERAGE LIFE TO FINAL MATURITY" of any Indebtedness
(including the Notes) as of the time of determination thereof means the number
of years (rounded to the nearest one-twelfth) obtained by dividing the then
Remaining Dollar-Years of such Indebtedness by the then outstanding principal
amount of such Indebtedness. For the purposes of this definition, "REMAINING
DOLLAR-YEARS" means the sum of the amounts obtained by multiplying the amount
of each then remaining sinking fund, serial maturity or other required
repayment, including repayment at final maturity, by the number of years
(calculated to the nearest one-twelfth) which will elapse between the time of
such determination and the date such repayment is scheduled to be made.
"WHOLLY-OWNED SUBSIDIARY" means any 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 Subsidiaries.
<PAGE> 12
"YIELD MAINTENANCE PRICE" means with respect to any principal amount
of Notes being prepaid pursuant to Section 3.2 hereof or Section 3.3 hereof or
accelerated pursuant to Section 11 hereof, as the case may be, the greater of
(1) the sum of the respective Payment Values of each prospective interest
payment (excluding from the first prospective interest payment any amount of
interest accrued to the applicable date of prepayment or acceleration),
prospective mandatory principal prepayment and the principal payment at
maturity in respect of such Notes (the amount of each such payment being herein
referred to as a "PAYMENT"), or (2) the unpaid principal amount of such Notes.
The Payment Value of each Payment shall be determined by discounting such
Payment at the Reinvestment Rate for the period from the scheduled date of such
Payment (such scheduled date or dates of Payments of principal, in the case of
Notes being partially prepaid, to be the date or dates as of which the
principal amount being prepaid is to be applied against payment at maturity or
mandatory prepayments under the relevant provisions of the Notes) to the
applicable date of prepayment or acceleration, as the case may be. The
"REINVESTMENT RATE" is a rate per annum equal to the sum of (a) .50% and (b)
the yield which shall be imputed from the yields of those actively traded "On
The Run" United States Treasury securities having maturities as close as
practicable to the Weighted Average Life to Final Maturity of the principal
amount of the Notes so to be prepaid or accelerated, as the case may be. The
yields of such United States Treasury securities shall be determined as of 10
A.M. Eastern Time, on the Calculation Date.
11. DEFAULTS; EVENTS OF DEFAULT. This Note shall become and be
due and payable upon demand made by the registered holder hereof if one or more
of the following events, herein called "Events of Default," shall happen (for
any reason whatsoever and whether such happening shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and be
continuing at the time of such demand or at the time of a similar demand from
the holder of any other Note:
(A) default shall be made in payment of the principal of any
Note, with the premium thereon, if any, when and as the same shall
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise; or
(B) default shall be made in the payment of any instalment of
interest on any Note according to its tenor when and as the same shall
become due and payable and such default shall continue for a period of
five days; or
(C) default shall be made in the due observance or
performance of any covenant, condition or agreement on the part of the
Company contained in Sections 3 or 8 hereof; or
(D) default shall be made in the due observance or
performance of any other covenant, condition, or agreement on the part
of the Company to be observed or performed pursuant to the terms
hereof and such default shall continue for thirty days after the
earlier of (i) the Company's knowledge thereof and (ii) the receipt of
written notice thereof, specifying such default and requiring the same
to be remedied, from the registered holder of any Note; or
(E) the Company or any Subsidiary shall be adjudicated a
bankrupt or insolvent, or shall consent to the appointment of a
receiver, trustee or liquidator of itself or of any substantial part
of its property, or shall admit in writing its inability to pay its
debts generally as they come due, or shall make a general assignment
for the benefit of creditors, or shall file a voluntary petition in
bankruptcy, or a voluntary petition or an answer seeking
reorganization in a proceeding, under any bankruptcy law (as now or
hereafter in effect), or an answer admitting the material allegations
of a petition filed against the Company or any Subsidiary in any such
proceeding, or shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy
or other similar law providing for the reorganization or winding up of
corporations, or the Company or its directors or stockholders shall
take action looking to the dissolution or liquidation of the Company
(except in connection with a consolidation with, or a merger of the
Company with or into, another corporation pursuant to Section 8.6
hereof); or
<PAGE> 13
(F) an order, judgment or decree shall be entered by any
court of competent jurisdiction appointing, without the consent of the
Company or a Subsidiary, a receiver, trustee or liquidator of the
Company or such Subsidiary or of any of its or their property, and
such receiver, trustee or liquidator shall not have been removed or
discharged within ninety days thereafter, or any of the property of
the Company or a Subsidiary shall be sequestered and shall not be
returned to the possession of the Company or such Subsidiary within
sixty days thereafter; or
(G) a petition against the Company or any Subsidiary in a
proceeding under any bankruptcy law (as now or hereafter in effect)
shall be filed and shall not be dismissed within sixty days after such
filing, or, in case the approval of such petition by a court of
competent jurisdiction is required, shall be filed and approved by
such a court as properly filed and such approval shall not be
withdrawn or the proceeding dismissed within ninety days thereafter,
or if, under the provisions of any other similar law providing for
reorganization or winding up of corporations and which may apply to
the Company or any Subsidiary, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Company or such
Subsidiary or of any of its or their property and such jurisdiction,
custody or control shall not be relinquished or terminated within
ninety days thereafter; or
(H) any event shall occur or condition shall exist in respect
of any one or more issues of Indebtedness of the Company or any
Subsidiary (other than the Notes) that is outstanding in a principal
amount of at least $2,500,000 in the aggregate or the equivalent
thereof, as of any date of determination, in any other currency), or
under any agreement securing or relating to any such indebtedness, the
effect of which is to cause such Indebtedness to become due or capable
of being declared due before its stated maturity or before its
regularly scheduled dates of payment, or any such Indebtedness shall
not have been paid at the stated maturity thereof and any applicable
grace period shall have expired; or
(I) final judgment for the payment of money in excess of one
million dollars ($1,000,000) shall be rendered against the Company or
a Subsidiary and the same shall remain undischarged for a period of
thirty days during which execution shall not be effectively stayed;
then (1) upon the occurrence of any Event of Default described in Sections
11(e), (f) or (g) hereof with respect to the Company (each a "Bankruptcy
Default"), all of the Notes shall automatically become immediately due and
payable, (2) upon the occurrence of any Event of Default described in Sections
11(a) or (b) hereof, the holder of any Note may at any time during its
continuance, by written notice to the Company, declare such Note to be due and
payable, whereupon such Note shall forthwith mature and become due and payable
or (3) upon the occurrence of any Event of Default other than a Bankruptcy
Default, the holder or holders of at least a majority in principal amount of
the Notes then outstanding (exclusive of any Notes held by the Company or any
Affiliate) may at any time during its continuance, by written notice to the
Company, declare all of the Notes to be due and payable, whereupon in each case
all of the Notes shall forthwith mature and become due and payable.
The amount payable upon the occurrence of an Event of Default shall be
the Yield Maintenance Price of the Notes so accelerated, together with interest
accrued thereon, to the extent permitted by law, to the date of payment, and
such amount shall be payable without presentment, demand, protest or other
requirement of any kind, all of which are expressly waived by the Company.
On the Calculation Date, the Computing Holder shall give written
notice to the Company and all the holders of the Notes of the amount of the
Yield Maintenance Price of the Notes so accelerated, which notice shall set
forth in reasonable detail the computation thereof; PROVIDED, HOWEVER, that the
failure of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other holder of the Notes for its failure to
make such determination. The Yield Maintenance Price set forth in such notice
shall be binding on the Company and all the holders of the Notes, absent
manifest error.
<PAGE> 14
12. SUITS FOR ENFORCEMENT. In case an Event of Default shall
occur and be continuing, the registered holder of this Note may proceed to
protect and enforce his rights by suit in equity, action at law and/or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Note in aid of the exercise of any power granted in
this Note, or may proceed to enforce the payment of this Note or to enforce any
other legal or equitable right of the holder of this Note. If any registered
holder of a Note shall demand payment thereof or take any action in respect of
a default or an Event of Default that has occurred and is continuing, the
Company will forthwith give written notice, as provided in Section 3.4 hereof,
to the other registered holders of Notes, specifying such action and the nature
of such default or Event of Default. The notice to the Computing Holder shall
also set forth the respective names and addresses of, and principal amounts of
the Notes held by, the other holders of the Notes.
13. REMEDIES NOT WAIVED. No course of dealing between the holder
hereof and the Company or any delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of any rights of any
holder hereof.
14. REMEDIES CUMULATIVE. No remedy herein conferred upon the
holder hereof is intended to be exclusive of any other remedy and each and
every remedy shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise.
15. COSTS AND EXPENSES. If any Event of Default shall occur, the
Company shall pay to each registered holder hereof, to the extent permitted
under applicable law, all reasonable out-of-pocket expenses incurred by such
holder in connection with such Event of Default and such further amount as
shall be sufficient to cover the costs and expenses of collection, including
(without limitation) reasonable attorney's fees.
16. LAW GOVERNING. This Note shall be governed by the laws of the
State of Ohio.
17. SUCCESSORS AND ASSIGNS. All the covenants, stipulations,
promises and agreements in this Note contained by or on behalf of the Company
shall bind its successors and assigns, whether so expressed or not.
18. NO WAIVER. No course of dealing between the Company and the
holder hereof shall operate as a waiver of any right of any such holder hereof
and no delay on the part of the holder hereof in exercising any right hereunder
shall so operate.
19. HEADINGS. The headings of the Sections and subsections of
this Note are inserted for convenience only and do not constitutes part of this
Note.
IN WITNESS WHEREOF, The Standard Products Company has caused this Note
to be signed in its corporate name by its President or one of its
Vice-Presidents or its Treasurer and this Note to be dated as of the day and
year first above written.
THE STANDARD PRODUCTS COMPANY
By: /s/ Aubrey E. Arndt
------------------------
<PAGE> 15
THE STANDARD PRODUCTS COMPANY
6.55% Senior Note
Due December 16, 2003
Reg. No. R-2 Cleveland, Ohio
$10,000,000 December 16, 1993
THE STANDARD PRODUCTS COMPANY (herein called the "Company"), a
corporation duly organized and existing under the laws of the State of Ohio,
for value received, hereby promises to pay to METROPOLITAN INSURANCE AND
ANNUITY COMPANY, or registered assigns, on the sixteenth day of December, 2003,
the principal Sum of Ten Million Dollars ($10,000,000) in such coin or currency
of the United States Of America as at the time of payment shall be legal tender
for public and private debts, at the principal office of the Company in
Cleveland, Ohio, and to pay interest (computed on the basis of a 360-day year
of twelve 30-day months) on the unpaid balance of said principal sum from the
date hereof at said office, in like coin or currency, semi-annually on the
sixteenth day of June and December in each year, commencing June 16, 1994, at
the rate of six and fifty-five one hundredths percentum (6.55%) per annum until
the principal hereof shall have become due and payable. Any payment of
principal of or, to the extent lawful, interest on this Note which is not paid
when due shall bear interest at the greater (determined on a daily basis) of
the rate of eight and fifty-five one hundredths percentum (8.55%) per annum or
the rate per annum which The Chase Manhattan Bank, N.A. announces publicly from
time to time as its corporate base rate of interest (or such lesser rate, if
any, which is the maximum rate permitted by applicable law) (the "Overdue
Interest Rate") for the period that the same is overdue.
I. NOTES. This Note is one of the 6.55% promissory notes (the
"Notes") issued pursuant to a loan agreement dated December 16, 1993 between
the Company and the Purchasers listed on Schedule I thereto (the "Agreement"),
in the aggregate principal amount of $75,000,000, each in the denomination of
$1,000,000 or a multiple thereof, all the Notes maturing on December 16, 2003,
and bearing interest payable at the same rate and on the same semi-annual dates
as the interest on the principal sum of this Note.
II. REGISTER. The Notes are issuable only as registered notes.
The Company shall keep at the office or agency maintained pursuant to Section
7.1 hereof a register or registers in which, subject to such reasonable
regulations as it may prescribe, the Company shall register the names and
addresses of the holders of the Notes and shall register the transfer of Notes
as provided herein, Any such register shall be in written form or in any other
form capable of being converted into written form within a reasonable time.
Upon due presentment for registration of transfer of any Note at such
Office or agency, the Company will execute, register and deliver in exchange
therefor a new Note or Notes, each in a minimum denomination of $500,000
principal amount, or any multiple of $100,000 in excess thereof, equal in
aggregate principal amount to the unpaid principal amount of the Note so
presented for registration of transfer, dated the date from which unpaid
interest has then accrued thereon and registered in the name or names of the
transferee or transferees. At any time at the request of the holder of any
Note and upon surrender of such Note for such purpose to the Company at such
office or agency, the Company will execute, register and deliver in exchange
therefor a new Note or Notes, each in a minimum denomination of $500,000
principal amount, or any multiple of $100,000 in excess thereof, equal in
aggregate principal amount to the unpaid principal amount of the Note so
surrendered, dated the date from which unpaid interest had then accrued thereon
and registered in such name or names as such holder may request. Each Note
presented or surrendered for registration of transfer, exchange, partial
payment or payment shall (if so required by the Company) be duly endorsed by,
or accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly executed by the holder thereof or his attorney
duly authorized in writing.
All exchanges and registrations of transfer of Notes shall be at the
expense of the Company (including, in the case of the original Purchaser of the
Notes, the cost of delivery of any such Note to the Company and delivery by it
to such address in the continental United States as is requested and payment of
all stamp and other documentary taxes other than any taxes incurred by reason
of a transfer of title).
<PAGE> 16
The Company may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon by anyone
other than the Company) for the purpose of receiving payment of or on account
of the principal or premium, if any, or interest on this Note and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
All payments made to the registered holder hereof shall be valid and effectual
to satisfy and discharge the liability upon this Note to the extent of the sum
or sums so paid.
III. PREPAYMENTS.
3.1. MANDATORY PREPAYMENTS. The Company covenants and agrees that
on each December 16 commencing on December 16, 1998 to and including December
16, 2002; it will prepay $12,500,000 aggregate principal amount of the
outstanding Notes.
All such prepayments pursuant to this Section 3.1 shall be applied on
the respective payment dates thereof toward the prepayment of the principal of
the Notes, in each case plus accrued interest to such payment date, but without
premium, PROVIDED, HOWEVER, that upon any prepayment of part of the Notes
pursuant to Section 3.2 or a prepayment pursuant to Section 3.3, the principal
amount of each mandatory prepayment of Notes becoming due under this Section
3.1 on or after the date of such prepayment pursuant to Section 3.2 or Section
3.3 shall be reduced in the same proportion as the aggregate unpaid principal
amount of the Notes is reduced (but only in units of $1,000) as a result of
such prepayment pursuant to Section 3.2 or Section 3.3. The amount required to
pay accrued interest on the principal amount of the Notes to be prepaid shall
be in addition to the payments above provided. The Company shall designate the
Notes or portions thereof to be prepaid pursuant to this Section as in Section
4 hereof provided. No prepayment of less than all the Notes pursuant to
Section 3.2 hereof shall be credited to or relieve the Company to any extent
from its obligation to make any prepayment of the Notes required by this
Section 3.1.
3.2. OPTIONAL PREPAYMENTS. Upon notice given as provided in
Section 3.4 hereof, the Company at its option may prepay the Notes as a whole
at any time or in part from time to time (in multiples of $100,000 principal
amount) at the Yield Maintenance Price thereof. Each such notice shall specify
the date on which such prepayment is to be made (an "Optional Prepayment
Date"), the principal amount of the Notes of each holder so to be prepaid and
the interest accrued thereon to the Optional Prepayment Date.
On the Calculation Date, the Computing Holder shall give written
notice to the Company of the amount of the Yield Maintenance Price of the
principal amount of the Notes so to be prepaid, which notice shall set forth in
reasonable detail the computation thereof; PROVIDED, HOWEVER, that the failure
of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other holder of the Notes for its failure to
make such determination. The Yield Maintenance Price set forth in such notice
shall be binding on the Company and all of the holders of the Notes, absent
manifest error. If the Computing Holder shall not have given the notice
contemplated by this Section 3.2 by the end of the third Business Day after the
Calculation Date, the Company shall be entitled to determine the Yield
Maintenance Price in accordance with the terms hereof and such calculation
shall be binding on the Computing Holder and all other holders, absent manifest
error.
Promptly after each such Calculation Date, the Company shall deliver
to each holder of the Notes so to be prepaid on or before such Optional
Prepayment Date a certificate signed by a senior financial officer of the
Company setting forth the Yield Maintenance Price of the principal amount of
the Notes held by such holder so to be prepaid; accompanied by a copy of the
written notice by the Computing Holder referred to above (which sets forth the
computation of the Yield Maintenance Price of the Notes held by the Computing
Holder).
Upon notice of any prepayment pursuant to this Section 3.2 being given
as provided in Section 3.4 hereof, the Company covenants and agrees that it
will prepay on the date therein fixed for prepayment the principal amount of
this Note so to be prepaid as specified in such notice at the Yield Maintenance
Price hereof, together with interest accrued thereon to such date fixed for
prepayment.
<PAGE> 17
3.3. PREPAYMENT OF NOTES UPON CHANGE OF CONTROL. The Company
covenants and is to give written notice to each holder of Notes promptly after
the occurrence of a Change of Control, but in any event within 5 days
thereafter. Such notice shall (a) describe in reasonable detail the facts and
circumstances giving rise to such Change of Control and the effect thereof on
the Company, (b) offer to prepay, on a date (the "Change of Control Prepayment
Date") which shall be not less than 30 days nor more than 60 days after the
date of such notice, all, but not less than all, of the Notes held by such
holder, (c) request such holder to notify the Company in writing, not less than
10 days prior to the Change of Control Prepayment Date, of its acceptance or
rejection of such offer and (d) inform the holder that, upon its receipt of
such notice by the Company, failure to reject such offer in writing on or
before the 10th day prior to the Change of Control Prepayment Date shall be
deemed acceptance of such offer.
On the Calculation Date, the Computing Holder shall give written
notice to the Company of the amount of the Yield Maintenance Price of the Notes
held by such Computing Holder, which notice shall set forth in reasonable
detail the computation thereof; PROVIDED, HOWEVER, that the failure of the
Computing Holder to make such determination shall not affect the obligation of
the Company to pay such Yield Maintenance Price when due in accordance with the
terms of the Notes. The Yield Maintenance Price set forth in such notice shall
be binding on the Company, absent manifest error. If the Computing Molder
shall not have given the notice contemplated by this Section 3.3 by the end of
the third Business Day after the Calculation Date, the Company shall be
entitled to determine the Yield Maintenance Price in accordance with the terms
hereof and such calculation shall be binding on the Computing Holder and all
other holders, absent manifest error.
Thereupon, the Company covenants and agrees that on the Change of
Control Prepayment Date it will prepay all the Notes held by each holder who
has accepted the prepayment offer in accordance with this Section 3.3 by
payment of the Yield Maintenance Price with respect to such Notes, together
with interest accrued on the unpaid principal amount of such Notes to the
Change Of Control Prepayment Date, and the amount so to be paid shall become
due on the Change of Control Prepayment Date.
3.4. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Company shall
give written notice of any prepayment of this Note or any portion hereof
pursuant to Section 3.2 hereof not less than 10 nor more than 30 days prior to
the date fixed for such prepayment in such notice, which notice shall specify
the amount so to be prepaid, together with the interest to be paid thereon and
the date fixed for such prepayment. Any notice of prepayment and all other
notices to be given to any holder of this Note shall be given by registered or
certified mail to such holder at its address designated on the date of such
notice on the register or other record maintained by the Company.
IV. ALLOCATION OF PREPAYMENTS. If less than the entire principal
amount of all the Notes at the time outstanding shall be called for prepayment
at any time pursuant to Section 3.1 or 3.2 hereof, the Company will allocate
the principal amount so called for prepayment (but only in units of $1,000)
among the registered holders of such Notes in proportion, as nearly as may be,
to the respective principal amount of such Notes, not theretofore called for
prepayment, of which they shall be registered holders.
V. SURRENDER OF NOTES; NOTATION THEREON. Upon any prepayment or
a portion of the principal amount of this Note, the registered holder hereof,
at its option, may require the Company to execute and deliver at the expense of
the Company a new Note dated the date from which unpaid interest has then
accrued thereon and payable to such Person or Persons as may be designated by
such holder for the aggregate principal amount of this Note then remaining
unpaid, upon surrender of this Note, or may present this Note to the Company
for notation hereon of the payment of the portion of the principal of this Note
so prepaid.
VI. INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a
portion hereof is called prepayment as herein provided, this Note or such
portion, as the case may be, shall cease to bear interest from and after the
date fixed for such prepayment; PROVIDED, HOWEVER, that if, upon presentation
for the purpose, the Company shall fail to pay this Note or such portion, as
the case may be, this Note or such portion, as the case may be, shall bear, so
far as may be lawful, interest at the Overdue Interest Rate until paid and, so
far as may be lawful, any overdue instalment of interest shall also bear
interest at such overdue Interest Rate.
VII. AFFIRMATIVE COVENANTS. The Company covenants and agrees that
so long as this Note shall be outstanding:
<PAGE> 18
7.1. COMPANY OFFICE. The Company will maintain an office or agency
in Cleveland, Ohio, where the Notes may be presented for payment, registration
of transfer, replacement or exchange as provided herein and where notices,
presentations and demands to or upon the Company in respect of the Notes may be
given or made. Unless another office or agency is designated (by notice in
writing to the holder hereof) by the Company, the office of the Company for the
purpose of this Section 7.1 shall be 2130 West 110th Street, Cleveland, Ohio
44102.
7.2. PAYMENT OF TAXES AND CLAIMS. The Company will promptly pay
and discharge, or cause to be paid and discharged, when due, all taxes,
assessments, and governmental charges or levies imposed upon the Company or any
Subsidiary or upon the income and profits of the Company or any Subsidiary, or
upon any property, real, personal or mixed, belonging to the Company or any
Subsidiary or upon any part thereof, before the same shall become in default,
as well as all lawful claims for labor, materials and supplies which, if
unpaid, might become a Lien upon such properties or any part thereof; PROVIDED,
HOWEVER, that the Company shall not be required to pay and discharge, or to
cause to be paid and discharged, any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings and the Company or such Subsidiary, as the
case may be, shall set aside on its books appropriate reserves in accordance
with GAAP.
7.3. CORPORATE EXISTENCE. The Company will do, or cause to be
done, all things necessary to preserve and keep in full force and effect its
corporate existence, its rights and franchises and do, or cause to be done, all
things necessary to preserve and keep in full force and effect the corporate
existence, rights and franchises of each of its Subsidiaries, except where the
failure to do so could not have a material and adverse effect on the business,
operations, properties, assets or condition, financial or other, of the Company
and its Subsidiaries, taken as a whole; PROVIDED, HOWEVER, that nothing in this
Section 7.3 contained shall prevent a consolidation or merger of the Company or
any Subsidiary, or the liquidation or dissolution of, or sale, transfer or
disposition of all or substantially all the property and assets of the Company
or any Subsidiary not otherwise prohibited by the provisions of this Note.
7.4. MAINTENANCE. The Company will at all times maintain,
preserve, protect and keep, or cause to be maintained, preserved, protected and
kept, its property and the property of its Subsidiaries and every part thereof
used or useful in the conduct of the business of the Company and its
Subsidiaries in reasonably good repair, working order and condition, ordinary
wear and tear excepted, and from time to time make, or cause to be made, all
needful and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection therewith
and every portion thereof, in the reasonable opinion of the Company, may be
properly and advantageously conducted at all times.
7.5. INSURANCE. The Company will keep adequately insured, and
cause each of its Subsidiaries to keep adequately insured, by financially sound
and reputable insurers, all property of a character usually insured by
corporations engaged in the same or a similar business against loss or damage
of the kinds customarily insured against by such corporations, and carry, and
cause each of its Subsidiaries to carry, such other insurance as is usually
carried by corporations engaged in the same or a similar business; PROVIDED
that the Company may maintain one or more programs of self-insurance for so
long as such program is operated in accordance with sound financial practice.
7.6. BOOKS AND RECORDS. The Company will at all times keep, and
cause each of its Subsidiaries to keep, true and complete books of record and
accounts in accordance with GAAP.
VIII. NEGATIVE COVENANTS. The Company covenants and agrees that so
long as this Note shall be outstanding:
8.1. LEVERAGE. The Company will not suffer or permit its Leverage
to at any time exceed (i) 60% during the period commencing on the Closing Date
and ending on June 30, 1994, (ii) 55% during the period commencing on July 1,
1994 and ending June 30, 1995 and (iii) 50% commencing on July 1, 1995 and at
all times thereafter; PROVIDED, HOWEVER, if in any fiscal quarter Leverage
shall exceed 45%, then at the end of such fiscal quarter, the EBIT Ratio of the
Company and its Subsidiaries on a consolidated basis for the period consisting
of the immediately preceding four fiscal quarters shall be greater than 2.0 to
1.0.
<PAGE> 19
8.2. CONSOLIDATED NET WORTH. The Company will not suffer or permit
the sum of the Net Worth of the Company and its Subsidiaries, determined on a
consolidated basis at any time to be less than the then "Required Minimum" in
effect at the time in question. On the Closing Date, the "Required Minimum"
shall be Ninety Million Dollars ($90,000,000) plus an amount equal to fifty
percent (50%) of the Net Income of the Company and its Subsidiaries, determined
on a consolidated basis, if any (but not less than zero), since December 31,
1992. On (i) the first day of each fiscal quarter of the Company thereafter
(other than the first day of the Company's fiscal year), the Required Minimum
shall be increased by an amount equal to fifty percent (50%) of the Net Income
of the Company and its Subsidiaries, determined on a consolidated basis, if any
(but not less than zero), for the immediately preceding fiscal quarter; and
(ii) the first day of each fiscal year of the Company thereafter, the Required
Minimum shall be adjusted to equal the Required Minimum at the beginning of the
immediately preceding fiscal year increased by an amount equal to fifty percent
(50%) of the Net Income of the Company and its Subsidiaries, determined on a
consolidated basis if any (but not less than zero), for such immediately
preceding fiscal year.
8.3. CURRENT RATIO. The Company will not suffer or permit the
Current Assets of the Company and its Subsidiaries at any time to fall below an
amount equal to one hundred twenty-five percent (125%) of the Current
Liabilities of the Company and its Subsidiaries, all as determined on a
consolidated basis.
8.4 PRIORITY INDEBTEDNESS. The Company will not itself, and will
not permit any of its Subsidiaries to, incur, create, assume or guaranty
(whether by discount or otherwise), or become or be contingently obligated to
purchase or be liable in respect of, any Priority Indebtedness, if the
aggregate principal amount of all such Priority Indebtedness (including
Priority Indebtedness existing on the Closing Date) at any time outstanding
would exceed 20% of Stockholders' Equity.
Any corporation which becomes a Subsidiary on or after the Closing
Date shall be deemed to have incurred, at the time it becomes a Subsidiary, any
Priority Indebtedness of such corporation existing immediately after it becomes
a Subsidiary.
8.5. RESTRICTED INVESTMENTS. The Company will not, and will not
permit any Subsidiary to, purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans
or advances to, or make any investment or acquire any interest whatsoever in,
any other person, except:
(A) investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America having a maturity of one year or less;
(B) commercial Paper issued by U.S. corporations having a
rating of "P-2" or better from Moody's and "A-2" or better from S&P;
(C) certificates of deposit or bankers acceptances having a
maturity of one year or less issued by (i) commercial banks (x)
located in the United States of America, or any other jurisdiction
which permits the cash evidenced by such certificates of deposit or
bankers' acceptances to be freely remitted to the United States of
America, and (y) whose long term debt obligations are at all times
accorded a rating of "A" or better by S&P, "A2" or better by Moody's
or "A" or better by the International Bank Credit Agency (or an
equivalent rating by another recognized credit rating agency of
similar standing if none of such entities is then in the business of
rating long term debt obligations of commercial banks);
(D) investments by the Company in Nishikawa Standard Company
("NISCO") in an amount (including such investments existing on the
Closing Date and any such investments made subsequent to the Closing
Date) not to exceed $15,000,000 (without giving effect to the Net
Income of NISCO subsequent to the Closing Date);
(E) investments in the Holm Industries, Inc. joint venture in
Mexico (the "Mexican JV") in an amount (including such investments
existing on the Closing Date and any such investments made subsequent
to the Closing Date) not to exceed $5,000,000 (without giving effect
to the Net Income of the Mexican JV subsequent to the Closing Date);
<PAGE> 20
(F) investments in a Subsidiary of the Company or in a
corporation which becomes a Subsidiary of the Company as a result of
such investment or an investment in the Company by a Wholly Owned
Subsidiary of the Company;
(G) loans and advances to employees made in the ordinary
course of business and consistent with past practice or to a director
or officer of the Company; PROVIDED, HOWEVER, that the aggregate of all
loans and advancer to all directors and officers shall not exceed
$500,000 (or the equivalent thereof in any other currency) at any one
time outstanding;
(H) any endorsement of a check or other medium of payment or
deposit or collection, or any similar transaction in the normal course
of business; and
(I) other investments not otherwise permitted in (A) through
(H) above in an aggregate amount not exceeding 10% of Stockholder's
Equity.
8.6. SALE AND LEASE OF ASSETS; MERGER. (A) the Company will not,
and will not permit any Subsidiary to sell, lease, transfer or otherwise
dispose of all or any part of its properties and assets, except that the
Company and its Subsidiaries may sell or otherwise dispose of any assets (i) if
such sale or disposition is in the ordinary course of business or (ii) other
than in the ordinary course of business, unless (x) the aggregate book value of
all such sales or dispositions (on a consolidated basis) during the most recent
12-month accounting period would exceed 15% of Total Assets as computed at the
end of the most recent quarter preceding such sale or since the Closing Date
would exceed 25% of Total Assets as computed at the end of the most recent
fiscal year preceding such sale or (y) such assets in the aggregate contributed
more than 10% of Net Income of the Company and its Subsidiaries on a
consolidated basis in the most recent 12-month accounting period or 25% of Net
Income since the Closing Date.
(B) The Company will not consolidate with or merge into any other
corporation, or permit another corporation to merge into it, unless, at the
time of such transaction and immediately after giving effect thereto, (i) no
Event of Default or event which, with notice or lapse of time or both, would
constitute an Event of Default shall have occurred and be continuing, and (ii)
if the successor formed by or resulting from such consolidation or merger is
other than the Company, such successor
(x) shall be a corporation duly organized and existing under
the laws of the United States of America or any state thereof, and
(y) shall, by written instrument satisfactory to each holder
of the Notes, expressly assume the due and punctual performance and
observance of all the obligations, terms, covenants, agreements and
conditions of the Agreement and the Notes to be performed or observed
by the Company such that the Notes would be a direct senior obligation
of such successor ranking PARI PASSU with any outstanding senior
indebtedness of such successor.
8.7. INTERCOMPANY INDEBTEDNESS. The Company will not create,
incur, assume or guarantee, or otherwise become or be liable in respect of, any
Indebtedness owing to any Subsidiary or Affiliate unless such indebtedness is
unsecured and is subordinated and junior in right of payment to the Notes on
substantially the terms set forth in Exhibit 8.7 attached hereto.
8.8. RESTRICTIONS ON SUBSIDIARIES. The Company will not cause,
suffer or permit any Subsidiary to
(i) issue or dispose of any shares of its capital stock to
any Person other than the Company or a Wholly Owned Subsidiary, except
to the extent, if any, required to qualify directors under any
applicable law or required to be issued to (x) other stockholders of
such Subsidiary by virtue of their exercise of preemptive rights or
(y) other stockholders of such Subsidiary as their pro-rata share of
any stock dividend; or
(ii) sell, assign, transfer, dispose of or in any way part
with control of any share of capital stock of any other Subsidiary
owned by it, or any Indebtedness owing to it from the Company or
another Subsidiary, except in either case to the Company or a Wholly
Owned Subsidiary; or
<PAGE> 21
(iii) acquire, directly or indirectly, any stock of any other
corporation which immediately after such acquisition would become a
Subsidiary, unless immediately after giving effect to such acquisition
(A) the Company and/or one or more Wholly Owned Subsidiaries shall
own, directly or indirectly, all outstanding capital stock of such
corporation having any preference as to dividends or upon liquidation,
and all rights, options and warranties to acquire any such preference
stock, and (B) no Event of Default or event which, with notice or
lapse of time or both, would constitute an Event of Default shall have
occurred and be continuing.
8.9. TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any Subsidiary to, engage in any transaction with an Affiliate on
terms more favorable to the Affiliate than would have been obtainable in arm's
length dealing in the ordinary course of business with a Person not an
Affiliate.
IX. WAIVER OF COMPLIANCE. Any of the acts which the Company or a
Subsidiary is prohibited from doing by any of the provisions of Section 8
hereof, or is required to do by any of the provisions of Section 7 hereof, may,
notwithstanding the provisions of said Sections or any other provision of this
Note, be done or omitted, as the case may be, by the Company or such
Subsidiary, and any of the provisions contained in Sections 7 and 8 hereof may
be amended, if the registered holders of not less than 66-2/3% in aggregate
principal amount of the Notes at the time outstanding consent thereto or waive
compliance with any such provision or provisions in writing. In determining
whether the holders of any specified percentage in principal amount of the
Notes have concurred in any consent or waiver pursuant to any of the provisions
of this Note, Notes at the time owned by the Company or by any Affiliate shall
be disregarded and the principal amount of the Notes (or the portion thereof)
theretofore prepaid, or called for prepayment, if the Company is ready and
willing to prepay, shall also be disregarded.
X. DEFINITIONS. For the purpose of this Note, unless otherwise
defined or the context otherwise requires:
"ACQUISITION" means the acquisition pursuant to the Stock Sale
Agreement of (i) the capital stock of Industrial and certain other corporate
entities by International and (ii) the acquisition of the capital stock of
Rubber Industrial Holding Company by the Company.
"AFFILIATE" means any Person which, directly or indirectly, controls
or is controlled by or is under common control with the Company or a Subsidiary
or which beneficially owns or holds or has the power to direct the voting power
of 5% or more of the Voting Stock of the Company or a Subsidiary or which has
5% or more of its Voting stock (or, in the case of a Person which is not a
corporation, 5% or more of its equity interest) beneficially owned or held,
directly or indirectly, by the Company or a Subsidiary, and any director or
officer of the Company or its Subsidiaries. For purposes of this definition,
"control" means the power to direct the management and policies of a Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlled by" and "under common control
with" have meanings correlative to the foregoing.
"AGREEMENT" shall have the meaning specified in Section 1 hereof.
"BANKRUPTCY DEFAULT" shall have the meaning specified in the first
paragraph of Section 11 hereof.
"BUSINESS DAY" means and includes any day on which banks are required
to be open to carry on their normal business in the States of New York and
Ohio.
"CALCULATION DATE" means the date on which the Yield Maintenance Price
on the Notes being prepaid pursuant to Sections 3.2 or 3.3 hereof or
accelerated pursuant to Section 11 hereof, as the case may be, is to be
determined by the Computing Holder with respect to such Notes. If the Notes
are being prepaid pursuant to Sections 3.2 or 3.3 hereof, the Calculation Date
shall be the fifth Business Day prior to the Optional Prepayment Date
established pursuant to Section 3.2 hereof or the Change of Control Prepayment
Date established pursuant to Section 3.3 hereof, respectively. If the Notes
are being accelerated pursuant to Section 11 hereof, the Calculation Date shall
be the date of acceleration of such Notes.
"CAPITALIZED LEASE" means and includes at any time any lease of
property, real or personal, which in accordance with GAAP would at such time be
required to be capitalized on a balance sheet of the lessee.
<PAGE> 22
"CAPITALIZED LEASE OBLIGATION" means at any time the capitalized
amount of the rental commitment under a Capitalized Lease which in accordance
with GAAP would at such time be required to be shown on a balance sheet of the
lessee.
"CHANGE OF CONTROL" means any acquisition by any Person or related
Persons that would constitute a "group" for purposes of Section 13(d) and Rule
13d-5 under the Securities Exchange Act of 1934, as amended, (other than
Persons owning 4% or more of the issued and outstanding capital stock of the
Company on the Closing Date and members of their families, including siblings,
spouse, children and grandchildren of any of them or any trust whose principal
beneficiary is such Person, or one or more members of the family of any of
them) of (a) the power to elect, appoint or cause the election or appointment
of at least a majority of the members of the Board of Directors of the Company,
through beneficial ownership of the capital stock of the Company or otherwise,
or (b) all or substantially all of the properties and assets of the Company.
For the purposes of this definition, "acquisition" of the power or properties
and assets stated in the preceding sentence means the earlier of (i) the actual
possession thereof and (ii) the consummation of any transaction or series of
related transactions which, with the passage of time, will give such Person or
Persons the actual possession thereof.
"CHANGE OF CONTROL PREPAYMENT DATE" shall have the meaning specified
in Section 3.3 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPUTING HOLDER" means as of a Calculation Date with respect to (a)
the prepayment of Notes pursuant to Section 3.2 hereof or acceleration of the
Notes pursuant to clause (3) of the first paragraph of Section 11 hereof, as
the case may be, the holder at such date of the largest aggregate principal
amount of the outstanding Notes or (b) the prepayment of the Notes pursuant to
Section 3.3 hereof or acceleration pursuant to clause (2) of the first
paragraph of Section 11 hereof, as the case may be, the holder of the Notes at
such date so being prepaid or accelerated. For purposes of such determination,
the holder of any Note and any of its affiliates or subsidiaries that are
holders of any Notes shall be treated as one holder.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of January 19,
1993, among the Company, as Borrower, the Banks which are signatories thereto,
and National City bank, as Agent.
"CURRENT ASSETS" means the net book value of all such assets (after
deducting applicable reserves, if any, and without giving consideration to any
reappraisal or write-up of assets after the date hereof other than any
Permitted Write-Up) as determined in accordance with GAAP.
"CURRENT LIABILITIES" means all such liabilities as determined in
accordance with GAAP and includes (without limitation) all accrued taxes and
all principal of any Funded Indebtedness maturing within twelve (12) months of
the date of determination.
"EBIT RATIO" means the ratio of (a) the aggregate of the consolidated
(i) Net Income of the Company and its Subsidiaries PLUS (ii) interest expense
thereof PLUS (iii) federal and state income taxes thereof PLUS (iv)
amortization charges for Permitted Write-Ups and goodwill resulting from the
Acquisition to (B) the consolidated interest expense of the Company and its
Subsidiaries.
"ELIGIBLE TRANSFEREE" means (i) any bank, savings bank, savings and
loan association or insurance company, (ii) any pension plan or portfolio or
investment fund managed or administered by any bank, savings bank, savings and
loan association or insurance company, (iii) any investment company owned by
any bank, savings bank, savings and loan association or insurance company, or
(iv) any investment banking company.
"ENVIRONMENTAL LAW" means any federal, state or local statute,
ordinance, rule, regulation, decree or law (common or otherwise) regulating or
relating to industrial hygiene or the condition of the environment (including
the effects upon human health arising out of the condition of the environment)
or imposing liability or standards of conduct with respect to the use,
generation, handling, storage, treatment, transport, or disposal, or otherwise
concerning, any hazardous, toxic, or dangerous waste, substance or material,
now or at any time hereafter in effect.
"EVENT OF DEFAULT" has the meaning specified in Section 11 hereof.
<PAGE> 23
"EXCESS MEXICAN JV AMOUNT" means the amount in excess of $5,000,000 by
which the investment in the Mexican JV permitted by Section 8.5(E) hereof is
required to be increased on the Company's balance sheet in accordance with GAAP
to take into account the Company's proportionate share of the Mexican JV's Net
Income.
"EXCESS NISCO AMOUNT" means the amount in excess of $15,000,000 by
which the investment in NISCO permitted by Section 8.5(D) hereof is required to
be increased on the Company's balance sheet in accordance with GAAP to take
into account the Company's proportionate share of NISCO's Net Income.
"FUNDED INDEBTEDNESS" means Indebtedness of the Person or entity in
question which matures or which (including each renewal or extension, if any,
in whole or in part) remains unpaid for more than twelve months after the date
originally incurred and includes, without limitation (a) any Indebtedness
(regardless of its maturity) if it is renewable or refundable in whole or in
part solely at the option of that Person or entity (in the absence of default)
to a date more than one year after the date of determination, (b) Capitalized
Lease Obligations, (c) any guaranty of Funded Indebtedness owing by another
person or entity and (d) any Funded Indebtedness secured by a security
interest, mortgage or other lien encumbering any property owned or being
acquired by the Person or entity in question even if the full faith and credit
of that Person or entity is not pledged to the payment thereof.
"GAAP" means generally accepted accounting principles as in effect at
the time of application to the provisions hereof.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(i) Indebtedness for Borrowed Money, (ii) obligations under contingent sales
contracts or obligations to pay the deferred purchase price of property or
services, (iii) Capitalized Lease Obligations, (iv) all obligations of such
Person as an account party in respect of letters of credit or banker's
acceptances, (v) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (v)
above, and (vi) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA.
"INDEBTEDNESS FOR BORROWED MONEY" means, with respect to any person,
all obligations of such Person for money borrowed, including, without
limitation, all notes payable, and drafts accepted representing extensions of
credit and all obligations evidenced by bonds, debentures, notes or other
similar instruments or obligations upon which interest charges are customarily
paid or discounted.
"INDUSTRIEL" means Standard Products Industriel SA, a corporation
organized under the Laws of France.
"INTERNATIONAL" means a French corporation which is a Subsidiary of
Company (the capital stock of which is owned entirely by the Company, other
Subsidiaries of the Company and directors of international to the extent
required by the laws of France) which was formed and which was the assignee of
the rights of the Company under the Stock Sale Agreement to acquire the capital
stock of Industriel and certain other related entities of Industrial pursuant
to the Stock Sale Agreement.
"LEVERAGE" means the quotient (expressed as a percentage) of (a) the
sum of, without duplication, the principal of all of the Indebtedness for
Borrowed Money of the Company and its Subsidiaries plus the principal of the
Funded Indebtedness of the Company and its Subsidiaries (for the purpose of
this definition, including the current portion, if any, of each item of such
Funded Indebtedness), divided by (b) the sum of such Funded Indebtedness and
such Indebtedness for Borrowed Money to the extent specified in clause (a)
above plus the Stockholder's Equity, all for Borrowed Money to the extent
specified in clause (a) above plus the Stockholder's Equity, all as determined
on a consolidated basis in accordance with GAAP.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind in respect of such
asset. For the purposes hereof, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capitalized Lease or
other title retention agreement relating to such asset.
<PAGE> 24
"MOODY'S" means Moody's Investors Service, Inc. and any successor
thereto which is a nationally recognized rating agency.
"NET INCOME" means net income as determined in accordance with GAAP,
after taxes and excluding extraordinary items, but without giving effect to any
gain from any re-appraisal or write-up of any asset.
"NET WORTH" means the excess (as determined on a consolidated basis
and in accordance with GAAP, but excluding from all such determinations any
"foreign currency translation adjustments" reflected in the consolidated
financial statements of the Company and its Subsidiaries under the heading
"Shareholders Equity") of the net book value (after deducting (i) all
applicable valuation reserves, (ii) the Excess NISCO Amount and (iii) the
Excess Mexican JV Amount and without giving consideration to any reappraisal or
write-up of assets effected after the date hereof other than any Permitted
Write-Up) of the tangible assets (i.e., all assets other than intangibles such
as patents, costs of businesses over net assets acquired, goodwill and treasury
shares) of the Company and its Subsidiaries on a consolidated basis over the
Total Liabilities thereof.
"NOTES" shall have the meaning specified in Section 1 hereof.
"OPTIONAL PREPAYMENT DATE" shall have the meaning specified in Section
3.2 hereof.
"OVERDUE INTEREST RATE" shall have the meaning specified in the first
full paragraph of this Note.
"PERMITTED WRITE-UP" means any write-up of the assets of Industriel,
its Subsidiaries or any other corporation or entity acquired by the Company or
International in connection with the Acquisition to the extent made in
accordance with GAAP and made in connection with the Acquisition and to the
extent reflected in the consolidated financial statements of the Company and
its Subsidiaries.
"PERSON" means and includes an individual, a corporation, a
partnership, a firm, a joint venture, a trust, an unincorporated organization
or a government or an agency or political subdivision thereof.
"PERMITTED LIEN" means
(1) any security interest or other Lien arising by operation of law
and in the ordinary course of business (not including any security interest or
other Lien that secures any Indebtedness for Borrowed Money or any guaranty
thereof or any obligation that is in material default in any manner (other than
any default contested in good faith by timely and appropriate proceedings
effective to stay enforcement of the security interest or other Lien in
question)),
(2) zoning or deed restrictions, public utility easements, minor
title irregularities and similar matters having no adverse effect as a
practical matter on the ownership or use of any of the property in question,
(3) any Lien securing or given in lieu of surety, stay, appeal or
performance bonds, or securing performance of contracts or bids (other than
contracts for the payment of money borrowed), or deposits required by law or as
a condition to the transaction of business or the exercise of any right,
privilege or license,
(4) any mortgage, security interest or other Lien granted by a
Subsidiary to another Wholly Owned Subsidiary or by a Subsidiary to the
Company,
(5) any Lien in respect of property acquired or constructed by the
Company or any Subsidiary after the Closing Date, which Lien is created at the
time or acquisition or completion of construction of such property, to secure
Indebtedness assumed or incurred to finance all or any part of the purchase
price or cost of construction of such property, PROVIDED, that (i) no such Lien
shall extend to or cover any other property of the Company or such Subsidiary,
as the case may be, (ii) the aggregate principal amount of the Indebtedness
secured by all such Liens in respect of any such property shall not exceed the
lesser of cost and fair market value of such property at the time of such
acquisition, and (iii) the aggregate principal amount of the Indebtedness
secured by all such Liens in respect of any such property outstanding at any
one time shall not exceed an aggregate of $5,000,000 (or the equivalent thereof
in any other currency); or
<PAGE> 25
(6) any license or royalty agreement.
"PRIORITY INDEBTEDNESS" means Indebtedness of the Company which is
secured by any Lien (other than Permitted Liens) and all Indebtedness of
Subsidiaries.
"RESPONSIBLE OFFICER" means the Chief Executive Officer, Chief
Financial Officer, Treasurer, Chief Operating Officer of the Company or any
other officer performing substantially the same functions as any of them.
"S&P" means Standard & Poor's Corporation and any successor thereto
which is a nationally recognized rating agency.
"STOCK SALE AGREEMENT" means that certain Stock Sale Agreement,
December 19, 1992, among Mr. Jean-Claude Smadja on behalf of himself and on
behalf of certain other individuals and entities pursuant to powers of
attorney, Mr. Rifat Kamhi acting pursuant to special power or attorney granted
by Panane Holding B.V. and the Company (certain of the rights of the Company
under the Stock Sale Agreement will be assigned to International for the
purposes of consummating the Acquisition).
"STOCKHOLDER'S EQUITY" means the excess (as determined on a
consolidated basis and in accordance with GAAP, but excluding from all such
determinations any "foreign currency translation adjustments" reflected in the
consolidated financial statements of the Company and its Subsidiaries under the
heading "Shareholders' Equity") of the net book value (after deducting all
applicable valuation reserves and without consideration to any reappraisal or
write-up of assets after the date hereof other than any Permitted Write-up) of
all of the assets (i.e., including intangibles such as patents, costs of
businesses over net assets acquired and goodwill arising out of the
Acquisition) of the Company and its Subsidiaries on a consolidated basis over
the Total Liabilities thereof.
"SUBSIDIARY" means any corporation more than 50% of the outstanding
Voting Stock of which at the time is owned directly or indirectly by the
Company and/or by one or more Subsidiaries.
"TOTAL ASSETS" means the aggregate without duplication of all assets
of the Company and its Subsidiaries on a consolidated basis that appear or
ought to appear on their respective balance sheets in accordance with GAAP.
"TOTAL LIABILITIES" means the aggregate (without duplication) of all
liabilities of the Company and its Subsidiaries on a consolidated basis that
appear or ought to appear on their respective balance sheets as determined in
accordance with GAAP.
"VOTING STOCK" of a corporation means the capital stock of such
corporation of the class or classes, the holders of which are ordinarily, in
the absence of contingencies, entitled to elect a majority of the board of
directors (or Persons performing similar functions) of such corporation.
"WEIGHTED AVERAGE LIFE TO FINAL MATURITY" of any Indebtedness
(including the Notes) as of the time of determination thereof means the number
of years (rounded to the nearest one-twelfth) obtained by dividing the then
Remaining Dollar-Years of such Indebtedness by the then outstanding principal
amount of such Indebtedness. For the purposes of this definition, "REMAINING
DOLLAR-YEARS" means the sum of the amounts obtained by multiplying the amount
of each then remaining sinking fund, serial maturity or other required
repayment, including repayment at final maturity, by the number of years
(calculated to the nearest one-twelfth) which will elapse between the time of
such determination and the date such repayment is scheduled to be made.
"WHOLLY OWNED SUBSIDIARY" means any 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 Subsidiaries.
<PAGE> 26
"YIELD MAINTENANCE PRICE" means, with respect to any principal amount
of Notes being prepaid pursuant to Section 3.2 hereof or Section 3.3 hereof or
accelerated pursuant to Section 11 hereof, as the case may be, the greater of
(1) the sum of the respective Payment Values of each prospective interest
payment (excluding from the first prospective interest payment any amount of
interest accrued to the applicable date of prepayment or acceleration),
prospective mandatory principal prepayment and the principal payment at
maturity in respect of such Notes (the amount of each such payment being herein
referred to as a "PAYMENT"), or (2) the unpaid principal amount of such Notes.
The Payment Value of each Payment shall be determined by discounting such
Payment at the Reinvestment Rate for the period from the scheduled date of such
Payment (such scheduled date or dates of Payments of principal, in the case of
Notes being partially prepaid, to be applied against payment at maturity or
mandatory prepayments under the relevant provisions of the Notes) to the
applicable date of prepayment or acceleration, as the case may be. The
"REINVESTMENT RATE" is a rate per annum equal to the sum of (a) .50% and (b)
the yield which shall be imputed from the yields of those actively traded "On
The Run" United States Treasury securities having maturities as close as
practicable to the Weighed Average Life to Final Maturity of the principal
amount of the Notes so to be prepaid or accelerated, as the case may be. The
yields of such United States Treasury securities shall be determined as of 10
A.M. Eastern Time, on the Calculation Date.
XI. DEFAULTS; EVENTS OF DEFAULT. This Note shall become and be
due and payable upon demand made by the registered holder hereof if one or more
of the following events, herein called "Events of Default," shall happen (for
any reason whatsoever and whether such happening shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and be
continuing at the time of such demand or at the time of a similar demand from
the holder of any other Note:
A. default shall be made in payment of the principal of any
Note, with the premium thereon, if any, when and as the same shall
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise; or
B. default shall be made in the payment of any instalment of
interest on any Note according to its tenor when and as the same shall
become due and payable and such default shall continue for a period of
five days; or
C. default shall be made in the due observance or performance
of any covenant, condition or agreement on the part of the Company
contained in Sections 3 or 8 hereof; or
D. default shall be made in the due observance or performance
of any other covenant, condition, or agreement on the part of the
Company to be observed or performed pursuant to the terms hereof and
such default shall continue for thirty days after the earlier of (i)
the Company's knowledge thereof and (ii) the receipt of written notice
thereof, specifying such default and requiring the same to be
remedied, from the registered holder of any Note; or
E. the Company or any Subsidiary shall be adjudicated a
bankrupt or insolvent, or shall consent to the appointment of a
receiver, trustee or liquidator of itself or of any substantial part
of its property or shall admit in writing its inability to pay its
debts generally as they come due, or shall make a general assignment
for the benefit of creditors, or shall file a voluntary petition in
bankruptcy, or a voluntary petition or an answer seeking
reorganization in a proceeding, under any bankruptcy law (as now or
hereafter in effect), or an answer admitting the material allegations
of a petition filed against the Company or any Subsidiary in any such
proceeding, or shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy
or other similar law providing for the reorganization or winding up of
corporations, or the Company or its directors or stockholders shall
take action looking to the dissolution or liquidation of the Company
(except in connection with a consolidation with, or a merger of the
Company with or into, another corporation pursuant to Section 8.6
hereof); or
<PAGE> 27
F. an order, judgment or decree shall be entered by any court
of competent jurisdiction appointing, without the consent of the
Company or a Subsidiary, a receiver, trustee or liquidator of the
Company or such Subsidiary or of any of its or their property, and
such receiver, trustee or liquidator shall not have been removed or
discharged within ninety days thereafter, or any of the property of
the Company or a Subsidiary shall be sequestered and shall not be
returned to the possession of the Company or such Subsidiary within
sixty days thereafter; or
G. a petition against the Company or any Subsidiary in a
proceeding under any bankruptcy law (as now or hereafter in effect)
shall be filed and shall not be dismissed within sixty days after such
filing, or, in case the approval of such petition by a court of
competent jurisdiction is required, shall be filed and approved by
such a court as properly filed and such approval shall not be
withdrawn or the proceeding dismissed within ninety days thereafter,
or if, under the provisions of any other similar law providing for
reorganization or winding up of corporations and which may apply to
the Company or any Subsidiary, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Company or such
Subsidiary or of any of its or their property and such jurisdiction,
custody or control shall not be relinquished or terminated within
ninety days thereafter; or
H. any event shall occur or condition shall exist in respect
of any one or more issues of Indebtedness of the Company or any
Subsidiary (other than the Notes) that is outstanding in a principal
amount of at least $2,500,090 in the aggregate or the equivalent
thereof, as of any date of determination, in any other currency), or
under any agreement securing or relating to any such Indebtedness, the
effect of which is to cause such Indebtedness to become due or capable
of being declared due before its stated maturity or before its
regularly scheduled dates of payment, or any such Indebtedness shall
no have been paid at the stated maturity thereof and any applicable
grace period shall have expired; or
I. final judgment for the payment of money in excess of one
million dollars ($1,000,000) shall be rendered against the Company or
a Subsidiary and the same shall remain undischarged for a period of
thirty days during which execution shall not be effectively stayed;
then (1) upon the occurrence of any Event of Default described in Sections
11(e), (f) or (g) hereof with respect to the Company (each a "Bankruptcy
Default"), all of the Notes shall automatically become immediately due and
payable, (2) upon the occurrence of any Event of Default described in Sections
11(a) or (b) hereof, the holder of any Note may at any time during its
continuance, by written notice to the Company, declare such Note to be due and
payable, whereupon such Note shall forthwith mature and become due and payable
or (3) upon the occurrence of an Event of Default other than a Bankruptcy
Default, the holder or holders of at least a majority in principal amount of
the Notes then outstanding (exclusive of any Notes held by the Company or any
Affiliate) may at any time during its continuance, by written notice to the
Company, declare all of the Notes to be due and payable, whereupon in each case
all of the Notes shall forthwith mature and become due and payable.
The amount payable upon the occurrence of an Event of Default shall be
the Yield Maintenance Price of the Notes so accelerated, together with interest
accrued thereon, to the extent permitted by law, to the date of payment, and
such amount shall be payable without presentment, demand, protest or other
requirement of any kind, all of which are expressly waived by the Company.
On the Calculation Date, the Computing Holder shall give written
notice to the Company and all the holders of the Notes of the amount of the
Yield Maintenance Price of the Notes so accelerated, which notice shall set
forth in reasonable detail the computation thereof; PROVIDED, HOWEVER, that the
failure of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other holder of the Notes for its failure to
make such determination. The Yield Maintenance Price set forth in such notice
shall be binding on the Company and all the holders of the Notes, absent
manifest error.
<PAGE> 28
XII. SUITS FOR ENFORCEMENT. In case an Event of Default shall
occur and be continuing, the registered holder of this Note may proceed to
protect and enforce his rights by suit in equity, action at law/or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Note in aid of the exercise of any power granted in
this Note or may proceed to enforce the payment of this Note or to enforce any
other legal or equitable right of the holder of this Note. If any registered
holder of a Note shall demand payment thereof or take any action in respect of
a default or an Event of Default that has occurred and is continuing, the
Company will forthwith give written notice, as provided in Section 3.4 hereof,
to the other registered holders of Notes, specifying such action and the nature
of such default or Event of Default. The notice to the Computing Holder shall
also set forth the respective names and addresses of, and principal amounts of
the Notes held by, the other holders of the Notes.
XIII. REMEDIES NOT WAIVED. No course of dealing between the holder
hereof and the Company or any delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of any rights of any
holder hereof.
XIV. REMEDIES CUMULATIVE. No remedy herein conferred upon the
holder hereof is intended to be exclusive of any other remedy and each and
every remedy shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise.
XV. COSTS AND EXPENSES. If any Event of Default shall occur, the
Company shall pay to each registered holder hereof, to the extent permitted
under applicable law, all reasonable out-of-pocket expenses incurred by such
holder in connection with such Event of Default and such further amount as
shall be sufficient to cover the costs and expenses of collection, including
(without limitation) reasonable attorney's fees.
XVI. LAW GOVERNING. This Note shall be governed by the laws of the
State of Ohio.
XVII. SUCCESSORS AND ASSIGNS. All the covenants, stipulations,
promises and agreements in this Note contained by or on behalf of the Company
shall bind its successors and assigns, whether so expressed or not.
XVIII. NO WAIVER. No course of dealing between the Company and the
holder hereof shall operate as a waiver of any right of any such holder hereof
and no delay on the part of the holder hereof in exercising any right hereunder
shall so operate.
XIX. HEADINGS. The headings of the Sections and subsections of
this Note are inserted for convenience only and do not constitute a part of
this Note.
IN WITNESS WHEREOF, The Standard Products Company has caused this Note
to be signed in its corporate name by its President or one of its
Vice-Presidents or its Treasurer and this Note to be dated as of the day and
year first above written.
THE STANDARD PRODUCTS COMPANY
By: /s/ Aubrey E. Arndt
------------------------
<PAGE> 29
THE STANDARD PRODUCTS COMPANY
6.55% Senior Note
Due December 16, 2003
Reg. No. R-3 Cleveland, Ohio
$5,000,000 December 16, 1993
THE STANDARD PRODUCTS COMPANY (herein called the "Company"), a
corporation duly organized and existing under the laws of the State of Ohio,
for value received, hereby promises to pay to METROPOLITAN PROPERTY AND
CASUALTY INSURANCE COMPANY, or registered assigns, on the sixteenth day of
December, 2003, the principal sum of Five Million Dollars ($60,000,000) in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for public and private debts, at the principal office of
the Company in Cleveland, Ohio, and to pay interest (computed on the basis of a
360-day year of twelve 30-day months) on the unpaid balance of said principal
sum from the date hereof at said office, in like coin or currency,
semi-annually on the sixteenth day of June and December in each year,
commencing June 16, 1994, at the rate of six and fifty-five one hundredths
percentum (6.55%) per annum until the principal hereof shall have become due
and payable. Any payment of principal of or, to the extent lawful, interest on
this Note which is not paid when due shall beat interest at the greater
(determined on a daily basis) of the rate of eight and fifty-five one
hundredths percentum (8.55%) per annum or the rate per annum which The Chase
Manhattan Bank, N.A. announces publicly from time to time as its corporate base
rate of interest (or such lesser rate, if any, which is the maximum rate
permitted by applicable law) (the "Overdue Interest Rate") for the period that
the same is overdue.
1. NOTES. This Note is one of the 6.55% promissory notes (the
"Notes") issued pursuant to a loan agreement dated December 16, 1993 between
the Company and the Purchasers listed on Schedule I thereto (the "Agreement"),
in the aggregate principal amount of $75,000,000, each in the denomination of
$1,000,000 or a multiple thereof, all the Notes maturing on December 16, 2003,
and bearing interest payable at the same rate and on the same semi-annual dates
as the interest on the principal sum of this Note.
2. REGISTER. The Notes are issuable only as registered notes.
The Company shall keep at the office or agency maintained pursuant to Section
7.1 hereof a register or registers in which, subject to such reasonable
regulations as it may prescribe, the Company shall register the names and
addresses of the holders of the Notes and shall register the transfer of Notes
as provided herein. Any such register shall be in written form or in any other
form capable of being converted into written form within a reasonable time.
Upon due presentment for registration of transfer of any Note at such
office or agency, the Company will execute, register and deliver in exchange
therefor a new Note or Notes, each in a minimum denomination of $500,000
principal amount, or any multiple of $100,000 in excess thereof, equal in
aggregate principal amount to the unpaid principal amount of the Note so
presented for registration of transfer, dated the date from which unpaid
interest has then accrued thereon and registered in the name or names of the
transferee or transferees. At any time at the request of the holder of any
Note and upon surrender of such Note for such purpose to the Company at such
office or agency, the Company will execute, register and deliver in exchange
therefor a new Note or Notes, each in a minimum denomination of $500,000
principal amount, or any multiple of $100,000 in excess thereof, equal in
aggregate principal amount to the unpaid principal amount of the Note so
surrendered, dated the date from which unpaid interest has then accrued thereon
and registered in such name or names as such holder may request. Each Note
presented or surrendered for registration of transfer, exchange, partial
payment or payment shall (if so required by the Company) be duly endorsed by,
or accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly executed by the holder thereof or his attorney
duly authorized in writing.
All exchanges and registrations of transfer of Notes shall be at the
expense of the Company (including, in the case of the original purchaser of the
Notes, the cost of delivery of any such Note to the Company and delivery by it
to such address in the continental United States as is requested and payment of
all stamp and other documentary taxes other than any taxes incurred by reason
of a transfer of title).
<PAGE> 30
The Company may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon by anyone
other than the Company) for the purpose of receiving payment of or on account
of t he principal of, premium, if any, or interest on this Note and for all
other purposes, and the Company shall not be affected by any notice to the
contrary. All payments made to the registered holder hereof shall be valid and
effectual to satisfy and discharge the liability upon this Note to the extent
of the sum or sums so paid.
3. PREPAYMENTS.
3.1. MANDATORY PREPAYMENTS. The Company covenants and agrees that
on each December 16 commencing on December 16, 1998 to and including December
16, 2002; it will prepay $12,500,000 aggregate principal amount of the
outstanding Notes.
All such prepayments pursuant to this Section 3.1 shall be applied on
the respective payment dates thereof toward the prepayment of the principal of
the Notes, in each case plus accrued interest to such payment date, but without
premium, PROVIDED, HOWEVER, that upon any prepayment of part of the Notes
pursuant to Section 3.2 or a prepayment pursuant to Section 3.3., the principal
amount of each mandatory prepayment of Notes becoming due under this Section
3.1 on or after the date of such prepayment pursuant to Section 3.2 or Section
3.3 shall be reduced in the same proportion as the aggregate unpaid principal
amount of the Notes is reduced (but only in units of $1,000) as a result of
such prepayment pursuant to Section 3.2 or Section 3.3. The amount required to
pay accrued interest on the principal amount of the Notes to be prepaid shall
be in addition to the payments above provided. The Company shall designate the
Notes or portions thereof to be prepaid pursuant to this Section as in Section
4 hereof provided. No prepayment of less than all the Notes pursuant to
Section 3.2 hereof shall be credited to or relieve the Company to any extent
from its obligation to make any prepayment of the Notes required by this
Section 3.1.
3.2. OPTIONAL PREPAYMENTS. Upon notice given as provided in
Section 3.4 hereof, the Company at its option may prepay the Notes as a whole
at any time or in part from time to time (in multiples of $100,000 principal
amount) at the Yield Maintenance Price thereof. Each such notice shall specify
the date on which such prepayment is to be made (an "Optional Prepayment
Date"), the principal amount of the Notes of each holder so to be prepaid and
the interest accrued thereon to the Optional Prepayment Date.
On the Calculation Date, the Computing Holder shall give written
notice to the Company of the amount of the Yield Maintenance Price of the
principal amount of the Notes so to be prepaid, which notice shall set forth in
reasonable detail the computation thereof; PROVIDED, HOWEVER, that the failure
of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other holder of the Notes for its failure to
make such determination. The Yield Maintenance Price set forth in such notice
shall be binding on the Company and all of the holders of the Notes, absent
manifest error. If the Computing Holder shall not have given the notice
contemplated by this Section 3.2 by the end of the third Business Day after the
Calculation Date, the Company shall be entitled to determine the Yield
Maintenance Price in accordance with the terms hereof and such calculation
shall be binding on the Computing Holder and all other holders, absent manifest
error.
Promptly after each such Calculation Date, the Company shall deliver
to each holder of the Notes so to be prepaid on or before such Optional
Prepayment Date a certificate signed by a senior financial officer of the
Company setting forth the Yield Maintenance Price of the principal amount of
the Notes held by such holder so to be prepaid, accompanied by a copy of the
written notice by the Computing Holder referred to above (which sets forth the
computation of the Yield Maintenance Price of the Notes held by the Computing
Holder).
Upon notice of any prepayment pursuant to this Section 3.2 being given
as provided in Section 3.4 hereof, the Company covenants and agrees that it
will prepay on the date therein fixed for prepayment the principal amount of
this Note so to be prepaid as specified in such notice at the Yield Maintenance
Price hereof, together with interest accrued thereon to such date fixed for
prepayment.
<PAGE> 31
3.3. PREPAYMENT OF NOTES UPON CHANGE OF CONTROL. The Company
covenants and agrees to give written notice to each holder of Notes promptly
after the occurrence of a Change of Control, but in any event within 5 days
thereafter. Such notice shall (a) describe in reasonable detail the facts and
circumstances giving rise to such Change of Control and the effect thereof on
the Company, (b) offer to prepay, on a date (the "Change of Control Prepayment
Date") which shall be not less than 30 days nor more than 60 days after the
date of such notice, all, but not less than all, of the Notes held by such
holder, (c) request such holder to notify the Company in writing, not less than
10 days prior to the Change of Control Prepayment Date, of its acceptance or
rejection of such offer and (d) inform the holder that, upon its receipt of
such notice by the Company, failure to reject such offer in writing on or
before the 10th day prior to the Change of Control Prepayment Date shall be
deemed acceptance of such offer.
On the Calculation Date, the Computing Holder shall give written
notice to the Company of the amount of the Yield Maintenance Price of the Notes
held by such Computing Holder, which notice shall set forth in reasonable
detail the computation thereof; PROVIDED, HOWEVER, that the failure of the
Computing Holder to make such determination shall not affect the obligation of
the Company to pay such Yield Maintenance Price when due in accordance with the
terms of the Notes. The Yield Maintenance Price set forth in such notice shall
be binding on the Company, absent manifest error. If the Computing Holder
shall not have given the notice contemplated by this Section 3.3 by the end of
the third Business Day after the Calculation Date, the Company shall be
entitled to determine the Yield Maintenance Price in accordance with the terms
hereof and such calculation shall be binding on the Computing Holder and all
other holders, absent manifest error.
Thereupon, the Company covenants and agrees that on the Change of
Control Prepayment Date it will prepay all the Notes held by each holder who
has accepted the prepayment offer in accordance with this Section 3.3 by
payment of the Yield Maintenance Price with respect to such Notes, together
with interest accrued on the unpaid principal amount of such Notes to the
Change of Control Prepayment Date, and the amount so to be paid shall become
due on the Change of Control Prepayment Date.
3.4. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Company shall
give written notice of any prepayment of this Note or any portion hereof
pursuant to Section 3.2 hereof not less than 10 nor more than 30 days prior to
the date fixed for such prepayment in such notice, which notice shall specify
the amount so to be prepaid, together with the interest to be paid thereon and
the date fixed for such prepayment. Any notice of prepayment and all other
notices to be given to any holder of this Note shall be given by registered or
certified mail to such holder at its address designated on the date of such
notice on the register or other record maintained by the Company.
4. ALLOCATION OF PREPAYMENTS. If less than the entire principal
amount of all the Notes at the time outstanding shall be called for prepayment
at any time pursuant to Section 3.1 or 3.2 hereof, the Company will allocate
the principal amount so called for prepayment (but only in units of $1,000)
among the registered holders of such Notes in proportion, as nearly as may be,
to the respective principal amount of such Notes, not theretofore called for
prepayment, of which they shall be registered holders.
5. SURRENDER OF NOTES; NOTATION THEREOF. Upon any prepayment of
a portion of principal amount of this Note, the registered holder hereof, at
its option, may require the Company to execute and deliver at the expense of
the Company a new Note dated the date from which unpaid interest has then
accrued thereon and payable to such Person or Persons as may be designated by
such holder for the aggregate principal amount of this Note then remaining
unpaid, upon surrender of this Note, or may present this Note to the Company
for notation hereon of the payment of the portion of the principal of this Note
so prepaid.
6. INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a
portion hereof is called for prepayment as herein provided, this Note or such
portion, as the case may be, shall cease to bear interest from and after the
date fixed for such prepayment; PROVIDED, HOWEVER, that if, upon presentation
for the purpose, the Company shall fail to pay this Note or such portion, as
the case may be, this Note or such portion, as the case may be, shall bear, so
far as may be lawful, interest at the Overdue Interest Rate until paid and, so
far as may be lawful, any overdue instalment of interest shall also bear
interest at such Overdue Interest Rate.
7. The Company covenants and agrees that so long as this Note
shall be outstanding:
<PAGE> 32
7.1. COMPANY OFFICE. The Company will maintain an office or agency
in Cleveland, Ohio, where the Notes may be presented for payment, registration
of transfer, replacement or exchange as provided herein and where notices,
presentations and demands to or upon the Company in respect of the Notes may be
given or made. Unless another office or agency is designated (by notice in
writing to the holder hereof) by the Company, the office of the Company for the
purpose of this Section 7.1 shall be 2130 West 110th Street, Cleveland, Ohio
44102.
7.2. PAYMENT OF TAXES AND CLAIMS. The Company will promptly pay
and discharge, or cause to be paid and discharged, when due, all taxes,
assessments, and governmental charges or levies imposed upon the Company or any
Subsidiary or upon the income and profits of the Company or any Subsidiary, or
upon any property, real, personal or mixed, belonging to the Company or any
Subsidiary, or upon any part thereof, before the same shall become in default,
as well as all lawful claims for labor, materials and supplies which, if
unpaid, might become a Lien upon such properties or any part thereof, PROVIDED,
HOWEVER, that the Company shall not be required to pay and discharge, or to
cause to he paid and discharged, any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings and the Company or such Subsidiary, as the
case may be, shall set aside on its books appropriate reserves in accordance
with GAAP.
7.3. CORPORATE EXISTENCE. The Company will do, or cause to be
done, all things necessary to preserve and keep in full force and effect its
corporate existence, its rights and franchises and do, or cause to be done, all
things necessary to preserve and keep in full force and effect the corporate
existence, rights and franchises of each of its Subsidiaries, except where the
failure to do so could not have a material and adverse effect on the business,
operations, properties, assets or condition, financial or other, of the Company
and its Subsidiaries, taken as a whole; PROVIDED, HOWEVER, that nothing in this
Section 7.3 contained shall prevent a consolidation or merger of the Company or
any Subsidiary, or the liquidation or dissolution of, or sale, transfer or
disposition of all or substantially all the property and assets of the Company
or any Subsidiary not otherwise prohibited by the provisions of this Note.
7.4. MAINTENANCE. The Company will at all times maintain,
preserve, protect and keep, or cause to be maintained, preserved, protected and
kept, its property and the property of its Subsidiaries and every part thereof
used or useful in the conduct of the business of the Company and its
Subsidiaries in reasonably good repair, working order and condition, ordinary
wear and tear excepted, and from time to time make, or cause to be made, all
needful and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection therewith
and every portion thereof, in the reasonable opinion of the Company, may be
properly and advantageously conducted at all times.
7.5. INSURANCE. The Company will keep adequately insured, and
cause each of its Subsidiaries to keep adequately insured, by financially sound
and reputable insurers, all property of a character usually insured by
corporations engaged in the same or a similar business against loss or damage
of the kinds customarily insured against by such corporations, and carry, and
cause each of its Subsidiaries to carry, such other insurance as is usually
carried by corporations engaged in the same or a similar business; PROVIDED
that the Company may maintain one or more programs of self-insurance for so
long as such program is operated in accordance with sound financial practice.
7.6. BOOKS AND RECORDS. The Company will at all times keep, and
cause each of its Subsidiaries to keep, true and complete books of record and
accounts in accordance with GAAP.
8. NEGATIVE COVENANTS. The Company covenants and agrees that so
long as this Note shall be outstanding:
8.1. LEVERAGE. The Company will not suffer or permit its Leverage
to at any time exceed (i) 60% during the period commencing on the Closing Date
and ending on June 30, 1994, (ii) 55% during the period commencing on July 1,
1994 and ending June 30, 1995 and (iii) 50% commencing on July 1, 1995 and at
all times thereafter; PROVIDED, HOWEVER, if in any fiscal quarter Leverage
shall exceed 45%, then at the end of such fiscal quarter, the EBIT Ratio of the
Company and its Subsidiaries on a consolidated basis for the period consisting
of the immediately preceding four fiscal quarters shall be greater than 2.0 to
1.0.
<PAGE> 33
8.2. CONSOLIDATED NET WORTH. The Company will not suffer or permit
the sum of the Net Worth of the Company and its Subsidiaries, determined on a
consolidated basis at any time to be less than the then "Required Minimum" in
effect at the time in question. On the Closing Date, the "Required Minimum"
shall be Ninety Million Dollars ($90,000,000) plus an amount equal to fifty
percent (50%) of the Net Income of the Company and its Subsidiaries, determined
on a consolidated basis, if any (but not less than zero), since December 31,
1992. On (i) the first day of each fiscal quarter of the Company thereafter
(other than the first day of the Company's fiscal year), the Required Minimum
shall be increased by an amount equal to fifty percent (50%) of the Net Income
of the Company and its Subsidiaries, determined on a consolidated basis, if any
(but not less than zero), for the immediately preceding fiscal quarter; and
(ii) the first day of each fiscal year of the Company thereafter, the Required
Minimum shall be adjusted to equal the Required Minimum at the beginning of the
immediately preceding fiscal year increased by an amount equal to fifty percent
(50%) of the Net Income of the Company and its Subsidiaries, determined on a
consolidated basis, if any (but not less than zero), for such immediately
preceding fiscal year.
8.3. CURRENT RATIO. The Company will not suffer or permit the
Current Assets of the Company and its Subsidiaries at any time to fall below an
amount equal to one hundred twenty-five percent (125%) of the Current
Liabilities of the Company and its Subsidiaries, all as determined on a
consolidated basis.
8.4. PRIORITY INDEBTEDNESS. The Company will not itself, and will
not permit any of its Subsidiaries to, incur, create, assume or guaranty
(whether by discount or otherwise), or become or be contingently obligated to
purchase or be liable in respect of, any Priority Indebtedness, if the
aggregate principal amount of all such Priority Indebtedness (including
Priority Indebtedness existing on the Closing Date) at any time outstanding
would exceed 20% of Stockholders' Equity.
Any corporation which becomes a Subsidiary on or after the Closing
Date shall be deemed to have incurred, at the time it becomes a Subsidiary, any
Priority Indebtedness of such corporation existing immediately after it becomes
a Subsidiary.
8.5. RESTRICTED INVESTMENTS. The Company will not, and will not
permit any Subsidiary to, purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans
or advances to, or make any investment or acquire any interest whatsoever in,
any other person, except:
(A) investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America having a maturity of one year or less;
(B) commercial paper issued by U.S. corporations having a
rating of "P-2" or better from Moody's and "A-2" or better from S&P;
(C) certificates of deposit or bankers' acceptances having a
maturity of one year or less issued by (i) commercial banks (x)
located in the United States of America, or any other jurisdiction
which permits the cash evidenced by such certificates of deposit or
bankers' acceptances to be freely remitted to the United States of
America, and (y) whose long term debt obligations are at all times
accorded a rating of "A" or better by S&P, "A2" or better by Moody's
or "A" or better by the International Bank Credit Agency (or an
equivalent rating by another recognized credit rating agency of
similar standing if none of such entities is then in the business of
rating long term debt obligations of commercial banks);
(D) investments by the Company in Nishikawa Standard Company
("NISCO") in an amount (including such investments existing on the
Closing Date and any such investments made subsequent to the Closing
Date) not to exceed $15,000,000 (without giving effect to the Net
Income of NISCO subsequent to the Closing Date);
(E) investments in the Holm Industries, Inc. joint venture in
Mexico (the "Mexican JV") in an amount (including such investments
existing on the Closing Date and any such investments made subsequent
to the Closing Date) not to exceed $5,000,000 (without giving effect
to the Net Income of the Mexican JV subsequent to the Closing Date);
<PAGE> 34
(F) investments in a Subsidiary of the Company or in a
corporation which becomes a Subsidiary of the Company as a result of
such investment or an investment in the Company by a Wholly Owned
Subsidiary of the Company;
(G) loans and advances to employees made in the ordinary
course of business and consistent with past practice or to a director
or officer of the Company; PROVIDED, HOWEVER, that the aggregate of all
loans and advances to all directors and officers shall not exceed
$500,000 (or the equivalent thereof in any other currency) at any one
time outstanding;
(H) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal course
of business; and
(I) other investments not otherwise permitted in (A) through
(H) above in an aggregate amount not exceeding 10% of Stockholder's
Equity.
8.6. SALE AND LEASE OF ASSETS; MERGER. (A) The Company will not,
and will not permit any Subsidiary to, sell, lease, transfer or otherwise
dispose of all or any part of its properties and assets, except that the
Company and its Subsidiaries may sell an otherwise dispose of any assets (i) if
such sale or disposition is in the ordinary course of business or (ii) other
than in the ordinary course of business, unless (x) the aggregate book value of
all such sales or dispositions (on a consolidated basis) during the most recent
12-month accounting period would exceed 15% of Total Assets as computed at the
end of the most recent quarter preceding such sale or since the Closing Date
would exceed 25% of Total Assets as computed at the end of the most recent
fiscal year preceding such sale or (y) such assets in the aggregate contributed
more than 10% of Net Income of the Company and its Subsidiaries on a
consolidated basis in the most recent 12-month accounting period or 25% of Net
Income since the Closing Date.
(B) The Company will not consolidate with or merge into any other
corporation, or permit another corporation to merge into it, unless, at the
time of such transaction and immediately after giving effect thereto, (i) no
Event of Default or event which, with notice or lapse of time or both, would
constitute an Event of Default shall have occurred and be continuing, and (ii)
if the successor formed by or resulting from such consolidation or merger is
other than the Company, such successor
(x) shall be a corporation duly organized and existing under
the laws of the United States of America or any state thereof, and
(y) shall, by written instrument satisfactory to each holder
of the Notes, expressly assume the due and punctual performance and
observance of all the obligations terms, covenants, agreements and
conditions of the Agreement and the Notes to be performed or observed
by the Company such that the Notes would be a direct senior obligation
of such successor ranking pari passu with any outstanding senior
indebtedness of such successor.
8.7. INTERCOMPANY INDEBTEDNESS. The Company will not create,
incur, assume or guarantee, or otherwise become or be liable in respect of, any
Indebtedness owing to any Subsidiary or Affiliate unless such Indebtedness is
unsecured and is subordinated and junior in right of payment to the Notes on
substantially the terms set forth in Exhibit 8.7 attached hereto.
8.8. RESTRICTIONS ON SUBSIDIARIES. The company will not cause,
suffer or permit any Subsidiary to
(i) issue or dispose of any shares of its capital stock to
any Person other than the Company or a Wholly Owned Subsidiary, except
to the extent, if any, required to qualify directors under any
applicable law or required to be issued to (x) other stockholders of
such Subsidiary by virtue of their exercise of preemptive rights or
(y) other stockholders of such Subsidiary as their pro-rata share of
any stock dividend; or
(ii) sell, assign, transfer, dispose of or in any way part
with control of any share of capital stock of any other Subsidiary
owned by it, or any indebtedness owing to it from the Company or
another Subsidiary, except in either case to the Company or a
Wholly-Owned Subsidiary; or
<PAGE> 35
(iii) acquire, directly or indirectly, any stock of any other
corporation which immediately after such acquisition would become a
Subsidiary, unless immediately after giving effect to such acquisition
(A) the Company and/or one or more Wholly Owned Subsidiaries shall
own, directly or indirectly, all outstanding capital stock of such
corporation having any preference as to dividends or upon liquidation,
and all rights, options and warranties to acquire any such preference
stock, and (B) no Event of Default or event which, with notice or
lapse of time or both, would constitute an Event of Default shall have
occurred and be continuing.
8.9. TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any Subsidiary to, engage in any transaction with an Affiliate on
terms more favorable to the Affiliate than would have been obtainable in arm's
length dealing in the ordinary course of business with a Person not an
Affiliate.
9. WAIVER OF COMPLIANCE. Any of the acts which the Company or a
Subsidiary is prohibited from doing by any of the provisions of Section 8
hereof, or is required to do by any of the provisions of Section 7 hereof, may,
notwithstanding the provisions of said Sections or any other provision of this
Note, be done or omitted, as the case may be, by the Company or such
Subsidiary, and any of the provisions contained in Sections 7 and 8 hereof may
be amended, if the registered holders of not less than 66-2/3% in aggregate
principal amount of the Notes at the time outstanding consent thereto or waive
compliance with any such provision or provisions in writing. In determining
whether the holders of any specified percentage in principal amount of the
Notes have concurred in any consent or waiver pursuant to any of the provisions
of this Note, Notes at the time owned by the Company or by any Affiliate shall
be disregarded and the principal amount of the Notes (or the portion thereof)
theretofore prepaid, or called for prepayment, if the Company is ready and
willing to prepay, shall also be disregarded.
10. DEFINITIONS. For the purpose of this Note, unless otherwise
defined or the context otherwise requires:
"ACQUISITION" means the acquisition pursuant to the Stock Sale
Agreement of (i) the capital stock of Industriel and certain other corporate
entities by International and (ii) the acquisition of the capital stock of
Rubber Industrial Holding Company by the Company.
"AFFILIATE" means any Person which, directly or indirectly, controls
or is controlled by or is under common control with the Company or a Subsidiary
or which beneficially owns or holds or has the power to direct the voting power
of 5% or more of the Voting Stock of the Company or a Subsidiary or which has
5% or more of its Voting stock (or, in the case of a Person which is not a
corporation, 5% or more of its equity interest) beneficially owned or held,
directly or indirectly, by the Company or a Subsidiary, and any director or
officer of the Company or its Subsidiaries. For purposes of this definition,
"control" means the power to direct the management and policies of a Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlled by" and "under common control
with" have meanings correlative to the foregoing.
"AGREEMENT" shall have the meaning specified in Section 1 hereof.
"BANKRUPTCY DEFAULT" shall have the meaning specified in the first
paragraph of Section 11 hereof.
"BUSINESS DAY" means and includes any day on which banks are required
to be open to carry on their normal business in the States of New York and
Ohio.
"CALCULATION DATE" means the date on which the Yield Maintenance Price
on the Notes being prepaid pursuant to Sections 3.2 or 3.3 hereof or
accelerated pursuant to Section 11 hereof, as the case may be, is to be
determined by the Computing Holder with respect to such Notes. If the Notes
are being prepaid pursuant to Sections 3.2 or 3.3 hereof, the Calculation Date
shall be the fifth Business Day prior to the Optional Prepayment Date
established pursuant to Section 3.2 hereof or the Change of Control Prepayment
Date established pursuant to Section 3.3 hereof, respectively. If the Notes
are being accelerated pursuant to Section 11 hereof, the Calculation Date shall
be the date of acceleration of such Notes.
"CAPITALIZED LEASE" means and includes at any time any lease of
property, real or personal, which in accordance with GAAP would at such time be
required to be capitalized on a balance sheet of the lessee.
<PAGE> 36
"CAPITALIZED LEASE OBLIGATION" means at any time the capitalized
amount of the rental commitment under a Capitalized Lease which in accordance
with GAAP would at such time be required to be shown on a balance sheet of the
lessee.
"CHANGE OF CONTROL" means any acquisition by any Person or related
Persons that would constitute a "group" for purposes of Section 13(d) and Rule
13d-5 under the Securities Exchange Act of 1934, as amended (other than Persons
owning 4% or more of the issued and outstanding capital stock of the Company on
the Closing Date and members of their families, including siblings, spouse,
children and grandchildren of any of them or any trust whose principal
beneficiary is such Person, or one or more members of the family of any of
them) of (a) the power to elect, appoint or cause the election or appointment
of at least a majority of the members of the Board of Directors of the Company,
through beneficial ownership of the capital stock of the Company or otherwise,
or (b) all or substantially all of the properties and assets of the Company.
For the purposes of this definition, "acquisition" of the power or properties
and assets stated in the preceding sentence means the earlier of (i) the actual
possession thereof and (ii) the consummation of any transaction or series of
related transactions which, with the passage of time, will give such Person or
Persons the actual possession thereof.
"CHANGE OF CONTROL PREPAYMENT DATE" shall have the meaning specified
in Section 3.3 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPUTING HOLDER" means as of a Calculation Date with respect to (a)
the prepayment of Notes pursuant to Section 3.2 hereof or acceleration of the
Notes pursuant to clause (3) of the first paragraph of Section 11 hereof, as
the case may be, the holder at such date of the largest aggregate principal
amount of the outstanding Notes or (b) the prepayment of the Notes pursuant to
Section 3.3 hereof or acceleration pursuant to clause (2) of the first
paragraph of Section 11 hereof, as the case may be, the holder of the Notes at
such date so being prepaid or accelerated. For purposes of such determination,
the holder of any Note and any of its affiliates or subsidiaries that are
holders of any Notes shall be treated as one holder.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of January 19,
1993, among the Company, as Borrower, the Banks which are signatories thereto,
and National City Bank, as Agent.
"CURRENT ASSETS" means the net book value of all such assets (after
deducting applicable reserves, if any, and without giving consideration to any
reappraisal or write-up of assets after the date hereof other than any
Permitted Write-Up) as determined in accordance with GAAP.
"CURRENT LIABILITIES" means all such liabilities as determined in
accordance with GAAP and includes (without limitation) all accrued taxes and
all principal of any Funded Indebtedness maturing within twelve (12) months of
the date of determination.
"EBIT RATIO" means the ratio of (a) the aggregate of the consolidated
(i) Net Income of the Company and its Subsidiaries PLUS (ii) interest expense
thereof PLUS (iii) federal and state income taxes thereof PLUS (iv)
amortization charges for Permitted Write-Ups and goodwill resulting from the
Acquisition to (B) the consolidated interest expense of the Company and its
Subsidiaries.
"ELIGIBLE TRANSFEREE" means (i) any bank, savings bank, savings and
loan association or insurance company, (ii) any Pension plan or portfolio or
investment fund managed or administered by any bank, savings bank, savings and
loan association or insurance company, (iii) any investment company owned by
any bank, savings bank, savings and loan association or insurance company, or
(iv) any investment banking company.
"ENVIRONMENTAL LAW" means any federal, state or local statute,
ordinance, rule, regulation, decree or law (common or otherwise) regulating or
relating to industrial hygiene or the condition of the environment (including
the effects upon human health arising out of the condition of the environment)
or imposing liability or standards of conduct with respect to the use,
generation, handling, storage, treatment, transport, or disposal, or otherwise
concerning, any hazardous, toxic, or dangerous waste, substance or material,
now or at any time hereafter in effect.
"EVENT OF DEFAULT" has the meaning specified in Section 11 hereof.
<PAGE> 37
"EXCESS MEXICAN JV AMOUNT" means the amount in excess of $5,000,000 by
which the investment in the Mexican JV permitted by Section 8.5(E) hereof is
required to be increased on the Company's balance sheet in accordance with GAAP
to take into account the Company's proportionate share of the Mexican JV's Net
Income.
"EXCESS NISCO AMOUNT" means the amount in excess of $15,000,000 by
which the investment in NISCO permitted by Section 8.5(D) hereof is required to
be increased on the Company's balance sheet in accordance with GAAP to take
into account the Company's proportionate share of NISCO's Net Income.
"FUNDED INDEBTEDNESS" means Indebtedness of the Person or entity in
question which matures or which (including each renewal or extension, if any,
in whole or in part) remains unpaid for more than twelve months after the date
originally incurred and includes, without limitation (a) any Indebtedness
(regardless of its maturity) if it is renewable or refundable in whole or in
part solely at the option of that Person or entity (in the absence of default)
to a date more than one year after the date of determination, (b) Capitalized
Lease Obligations, (c) any guaranty of Funded Indebtedness owing by another
person or entity and (d) any Funded Indebtedness secured by a security
interest, mortgage or other lien encumbering any property owned or being
acquired by the Person or entity in question even if the full faith and credit
of that Person or entity is not pledged to the payment thereof.
"GAAP" means generally accepted accounting principles as in effect at
the time of application to the provisions hereof.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(i) Indebtedness for Borrowed Money, (ii) Obligations under contingent sales
contracts or obligations to pay the deferred purchase price of property or
services, (iii) Capitalized Lease obligations, (iv) all obligations of such
Person as an account party in respect of letters of credit or banker's
acceptances, (v) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (v)
above, and (vi) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA.
"INDEBTEDNESS FOR BORROWED MONEY" means, with respect to any person,
all obligations of such Person for money borrowed, including, without
limitation, all notes payable, and drafts accepted representing extensions of
credit and all obligations evidenced by bonds, debentures, notes or other
similar instruments or obligations upon which interest charges are customarily
paid or discounted.
"INDUSTRIEL" means Standard Products Industriel SA, a corporation
organized under the Laws of France.
"INTERNATIONAL" means a French corporation which is a Subsidiary of
Company (the capital stock of which is owned entirely by the Company, other
Subsidiaries of the Company and directors of International to the extent
required by the laws of France) which was formed and which was the assignee of
the rights of the Company under the Stock Sale Agreement to acquire the capital
stock of Industriel and certain other related entities of Industrial pursuant
to the Stock Sale Agreement.
"LEVERAGE" means the quotient (expressed as a percentage) of (a) the
sum of, without duplication, the principal of all of the Indebtedness for
Borrowed Money of the Company and its Subsidiaries plus the principal of the
Funded Indebtedness of the Company and its Subsidiaries (for the purpose of
this definition, including the current portion, if any, of each item of such
Funded Indebtedness), divided by (b) the sum of such Funded Indebtedness and
such Indebtedness for Borrowed Money to the extent specified in clause (a)
above plus the Stockholder's Equity, all for Borrowed Money to the extent
specified in clause (a) above plus the Stockholder's Equity, all as determined
on a consolidated basis in accordance with GAAP.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind in respect of such
asset. For the purposes hereof, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capitalized Lease or
other title retention agreement relating to such asset.
<PAGE> 38
"MOODY'S" means Moody's Investors Service, Inc. and any successor
thereto which is a nationally recognized rating agency.
"NET INCOME" means net income as determined in accordance with GAAP,
after taxes and excluding extraordinary items, but without giving effect to any
gain from any re-appraisal or write-up of any asset.
"NET WORTH" means the excess (as determined on a consolidated basis
and in accordance with GAAP, but excluding from all such determinations any
"foreign currency translation adjustments" reflected in the consolidated
financial statements of the Company and its Subsidiaries under the heading
"Shareholders' Equity") of the net book value (after deducting (i) all
applicable valuation reserves, (ii) the Excess NISCO Amount and (iii) the
Excess Mexican JV Amount and without giving consideration to any reappraisal or
write-up of assets effected after the date hereof other than any Permitted
Write-Up) of the tangible assets (i.e., all assets other than intangibles such
as patents, costs of businesses over net assets acquired, goodwill and treasury
shares) of the Company and its Subsidiaries on a consolidated basis over the
Total Liabilities thereof.
"NOTES" shall have the meaning specified in Section 1 hereof.
"OPTIONAL PREPAYMENT DATE" shall have the meaning specified in Section
3.2 hereof.
"OVERDUE INTEREST RATE" shall have the meaning specified in the first
full paragraph of this Note.
"PERMITTED WRITE-UP" means any Write-Up of the assets of Industriel,
its Subsidiaries or any other corporation or entity acquired by the Company or
International in connection with the Acquisition to the extent made in
accordance with GAAP and made in connection with the Acquisition and to the
extent reflected in the consolidated financial statements of the Company and
its Subsidiaries.
"PERSON" means and includes an individual, a corporation, a
partnership, a firm, a joint venture, a trust, an unincorporated organization
or a government or an agency or political subdivision thereof.
"PERMITTED LIEN" means
(1) any security interest or other Lien arising by operation of law
and in the ordinary course of business (not including any security interest or
other Lien that secures any Indebtedness for Borrowed Money or any guaranty
thereof or any obligation that is in material default in any manner (other than
any default contested in good faith by timely and appropriate proceedings
effective to stay enforcement of the security interest or other Lien in
question)),
(2) zoning or deed restrictions, public utility easements, minor
title irregularities and similar matters having no adverse effect as a
practical matter on the ownership or use of any of the property in question,
(3) any Lien securing or given in lieu of surety, stay, appeal or
performance bonds, or securing performance of contracts or bids (other than
contracts for the payment of money borrowed), or deposits required by law or as
a condition to the transaction of business or the exercise of any right,
privilege or license,
(4) any mortgage, security interest or other Lien granted by a
Subsidiary to another Wholly-Owned Subsidiary or by a Subsidiary to the
Company,
(5) any Lien in respect of property acquired or constructed by the
Company or any Subsidiary after the Closing Date, which Lien is created at the
time or acquisition or completion of construction of such property, to secure
Indebtedness assumed or incurred to finance all or any part of the purchase
price or cost of construction of such property, PROVIDED, that (i) no such Lien
shall extend to or cover any other property of the Company or such Subsidiary,
as the case may be, (ii) the aggregate principal amount of the Indebtedness
secured by all such Liens in respect of any such property shall not exceed the
lesser of cost and fair market value of such property at the time of such
acquisition, and (iii) the aggregate principal amount of the Indebtedness
secured by all such Liens in respect of any such property outstanding at any
one time shall not exceed an aggregate of $5,000,000 (or the equivalent thereof
in any other currency); or
<PAGE> 39
(6) any license or royalty agreement.
"PRIORITY INDEBTEDNESS" means Indebtedness of the Company which Lien
(other than Permitted Liens) and all Indebtedness of Subsidiaries.
"RESPONSIBLE OFFICER" means the Chief Executive Officer, Chief
Financial Officer, Treasurer, Chief Operating Officer of the Company or any
other officer performing substantially the same functions as any of them.
"S&P" means Standard & Poor's Corporation and any successor thereto
which is a nationally recognized rating agency.
"STOCK-SALE AGREEMENT" means that certain Stock Sale Agreement,
entered into December 19, 1992, among Mr. Jean-Claude Smadja on behalf of
himself and on behalf of certain other individuals and entities pursuant to
powers of attorney, Mr. Rifat Kamhi acting pursuant to special power or
attorney granted by Panane Holding B.V. and the Company (certain of the rights
of the Company under the Stock Sale Agreement will be assigned to International
for the purposes of consummating the Acquisition).
"STOCKHOLDER'S EQUITY" means the excess (as determined on a
consolidated basis and in accordance with GAAP, but excluding from all such
determinations any "foreign currency translation adjustments" reflected in the
consolidated financial statements of the Company and its Subsidiaries under the
heading "Shareholders' Equity") of the net book value (after deducting all
applicable valuation reserves and without consideration to any reappraisal or
write-up of assets after the date hereof other than any Permitted Write-up) of
all of the assets (i.e., including intangibles such as patents, costs of
businesses over net assets acquired and goodwill arising out of the
Acquisition) of the Company and its Subsidiaries on a consolidated basis over
the Total Liabilities thereof.
"SUBSIDIARY" means any corporation more than 50% of the outstanding
Voting Stock of which at the time is owned directly or indirectly by the
Company and/or by one or more Subsidiaries.
"TOTAL ASSETS" means the aggregate without duplication of all assets
of the Company and its Subsidiaries on a consolidated basis that appear or
ought to appear on their respective balance sheets in accordance with GAAP.
"TOTAL LIABILITIES" means the aggregate (without duplication) of all
liabilities of the Company and its Subsidiaries on a consolidated basis that
appear or ought to appear on their respective balance sheets as determined in
accordance with GAAP.
"VOTING STOCK" of a corporation means the capital stock of such
corporation of the class or classes, the holders of which are ordinarily, in
the absence of contingencies, entitled to elect a majority of the board of
directors (or Persons performing similar functions) of such corporation.
"WEIGHTED AVERAGE LIFE TO FINAL MATURITY" of any Indebtedness
Including the Notes) as of the time of determination thereof means the number
of years (rounded to the nearest one-twelfth) obtained by dividing the then
Remaining Dollar-Years of such Indebtedness by the then outstanding principal
amount of such Indebtedness. For the purposes of this definition, "REMAINING
DOLLAR-YEARS" means the sum of the amounts obtained by multiplying the amount
of each then remaining sinking fund, serial maturity or other required
repayment, including repayment at final maturity, by the number of years
(calculated to the nearest one-twelfth) which will elapse between the time of
such determination and the date such repayment is scheduled to be made.
"WHOLLY-OWNED SUBSIDIARY" means any 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 Subsidiaries.
<PAGE> 40
"YIELD MAINTENANCE PRICE" means, with respect to any principal amount
Of Notes being prepaid pursuant to Section 3.2 hereof or Section 3.3 hereof or
accelerated pursuant to Section 11 hereof, as the case may be, the greater of
(1) the sum of the respective Payment Values of each prospective interest
payment (excluding from the first prospective interest payment any amount of
interest accrued to the applicable date of prepayment or acceleration),
prospective mandatory principal prepayment and the principal payment at
maturity in respect of such Notes (the amount of each such payment being herein
referred to as a "PAYMENT"), or (2) the unpaid principal amount of such Notes.
The Payment Value of each Payment shall be determined by discounting such
Payment at the Reinvestment Rate for the period from the scheduled date of such
Payment (such scheduled date or dates of Payments of principal, in the case of
Notes being partially prepaid, to be the date or dates as of which the
principal amount being prepaid is to be applied against payment at maturity or
mandatory prepayments under the relevant provisions of the Notes) to the
applicable date of prepayment or acceleration, as the case may be. The
"REINVESTMENT RATE" is a rate per annum equal to the sum of (a) .50% and (b)
the yield which shall be imputed from the yields of those activity traded "On
The Run" United States Treasury securities having maturities as close as
practicable to the Weighted Average Life to Final Maturity of the principal
amount of the Notes so to be prepaid or accelerated, as the case may be. The
yields of such United States Treasury securities shall be determined as of 10
A.M. Eastern Time, on the Calculation Date.
11. DEFAULTS; EVENTS OF DEFAULT. This Note shall become and be
due and payable upon demand made by the registered holder hereof if one or more
of the following events, herein called "Events of Default," shall happen (for
any reason whatsoever and whether such happening shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) and be
continuing at the time of such demand or at the time of a similar demand from
the holder of any other Note:
a. default shall be made in payment of the principal of any
Note, with the premium thereon, if any, when and as the same shall
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise; or
b. default shall be made in the payment of any instalment of
interest on any Note according to its tenor when and as the same shall
become due and payable and such default shall continue for a period of
five days; or
c. default shall be made in the due observance or performance
of any covenant, condition or agreement on the part of the Company
contained in Sections 3 or 8 hereof; or
d. default shall be made in the due observance or performance
of any other covenant, condition, or agreement on the part of the
Company to be observed or performed pursuant to the terms hereof and
such default shall continue for thirty days after the earlier of (i)
the Company's knowledge thereof and (ii) the receipt of written notice
thereof, specifying such default and requiring the same to be
remedied, from the registered holder of any Note; or
e. the Company or any Subsidiary shall be adjudicated a
bankrupt or insolvent, or shall consent to the appointment of a
receiver, trustee or liquidator of itself or of any substantial part
of its property or shall admit in writing its inability to pay its
debts generally as they come due, or shall make a general assignment
for the benefit of creditors, or shall file a voluntary petition in
bankruptcy, or a voluntary petition or an answer seeking
reorganization in a proceeding, under any bankruptcy law (as now or
hereafter in effect), or an answer admitting the material allegations
of a petition filed against the Company or any Subsidiary in any such
proceeding, or shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy
or other similar law providing for the reorganization or winding up of
corporations, or the Company or its directors or stockholders shall
take action looking to the dissolution or liquidation of the Company
(except in connection with a consolidation with, or a merger of the
Company with or into, another corporation pursuant to Section 8.6
hereof); or
<PAGE> 41
f. an order, judgment or decree shall be entered by any court
of competent jurisdiction appointing, without the consent of the
Company or a Subsidiary, a receiver, trustee or liquidator of the
Company or such Subsidiary or of any of its or their property, and
such receiver, trustee or liquidator shall not have been removed or
discharged within ninety days thereafter, or any of the property of
the Company or a Subsidiary shall be sequestered and shall not be
returned to the possession of the Company or such Subsidiary within
sixty days thereafter; or
g. a petition against the Company or any Subsidiary in a
proceeding under any bankruptcy law (as now or hereafter in effect)
shall be filed and shall not be dismissed within sixty days after such
filing, or, in case the approval of such petition by a court of
competent jurisdiction is required, shall be filed and approved by
such a court as properly filed and such approval shall not be
withdrawn or the proceeding dismissed within ninety days thereafter,
or if, under the provisions of any other similar law providing for
reorganization or winding up of corporations and which may apply to
the Company or any Subsidiary, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Company or such
Subsidiary or of any of its or their property and such jurisdiction,
custody or control shall not be relinquished or terminated within
ninety days thereafter; or
h. any event shall occur or condition shall exist in respect
of any one or more issues of Indebtedness of the Company or any
Subsidiary (other than the Notes) that Is outstanding in a principal
amount of at least $2,500,000 in the aggregate or the equivalent
thereof, as of any date of determination, in any other currency), or
under any agreement securing or relating to any such Indebtedness, the
effect of which is to cause such Indebtedness to become due or capable
of being declared due before its stated maturity or before its
regularly scheduled dates of payment, or any such Indebtedness shall
no have been paid at the stated maturity thereof and any applicable
grace period shall have expired; or
i. final judgment for the payment of money in excess of one
million dollars ($1,000,000) shall be rendered against the Company or
a Subsidiary and the same shall remain undischarged for a period of
thirty days during which execution shall not be effectively stayed;
then (1) upon the occurrence of any Event of Default described in Sections
11(e), (f) or (g) hereof with respect to the Company (each a "Bankruptcy
Default"), all of the Notes shall automatically become immediately due and
payable, (2) upon the occurrence of any Event of Default described in Sections
11(a) or (b) hereof, the holder of any Note may at any time during its
continuance, by written notice to the Company, declare such Note to be due and
payable, whereupon such Note shall forthwith mature and become due and payable
or (3) upon the occurrence of an Event of Default other than a Bankruptcy
Default, the holder or holders of at least a majority in principal amount of
the Notes then outstanding (exclusive of any Notes held by the Company or any
Affiliate) may at any time during its continuance, by written notice to the
Company, declare all of the Notes to be due and payable, whereupon in each case
all of the Notes shall forthwith mature and become due and payable.
The amount payable upon the occurrence of an Event of Default shall be
the Yield Maintenance Price of the Notes so accelerated, together with interest
accrued thereon, to the extent permitted by law, to the date of payment, and
such amount shall be payable without presentment, demand, protest or other
requirement of any kind, all of which are expressly waived by the Company.
On the Calculation Date, the Computing Holder shall give written
notice to the Company and all the holders of the Notes of the amount of the
Yield Maintenance Price of the Notes so accelerated, which notice shall set
forth in reasonable detail the computation thereof; PROVIDED, HOWEVER, that the
failure of the Computing Holder to make such determination shall not affect the
obligation of the Company to pay such Yield Maintenance Price when due in
accordance with the terms of the Notes and the Computing Holder shall have no
liability to the Company or any other holder of the Notes for its failure to
make such determination. The Yield Maintenance Price set forth in such notice
shall be binding on the Company and all the holders of the Notes, absent
manifest error.
<PAGE> 42
12. SUITS FOR ENFORCEMENT. In case an Event of Default shall
occur and be continuing, the registered holder of this Note may proceed to
protect and enforce his rights by suit in equity, action at law/or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Note in aid of the exercise of any power granted in
this Note, or may proceed to enforce the payment of this Note or to enforce any
other legal or equitable right of the holder of this Note. If any registered
holder of a Note shall demand payment thereof or take any action in respect of
a default or an Event of Default that has occurred and is continuing, the
Company will forthwith give written notice, as provided in Section 3.4 hereof,
to the other registered holders of Notes, specifying such action and the nature
of such default or Event of Default. The notice to the Computing Holder shall
also set forth the respective names and addresses of, and principal amounts of
the Notes held by, the other holders of the Notes.
13. REMEDIES NOT WAIVED. No course of dealing between the holder
hereof and the Company or any delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of any rights of any
holder hereof.
14. REMEDIES CUMULATIVE. No remedy herein conferred upon the
holder hereof is intended to be exclusive of any other remedy and each and
every remedy shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise.
15. COSTS AND EXPENSES. If any Event of Default shall occur, the
Company shall pay to each registered holder hereof, to the extent permitted
under applicable law, all reasonable out-of-pocket expenses incurred by such
holder in connection with such Event of Default and such further amount as
shall be sufficient to cover the costs and expenses of collection, including
(without limitation) reasonable attorney's fees.
16. LAW GOVERNING. This Note shall be governed by the laws of the
State of Ohio.
17. SUCCESSORS AND ASSIGNS. All the covenants, stipulations,
promises and agreements in this Note contained by or on behalf of the Company
shall bind its successors and assigns, whether so expressed or not.
18. NO WAIVER. No course of dealing between the Company and the
holder hereof shall operate as a waiver of any right of any such holder hereof
and no delay on the part of the holder hereof in exercising any right hereunder
shall so operate.
19. HEADINGS. The headings of the Sections and subsections of
this Note are inserted for convenience only and do not constitute a part of
this Note.
IN WITNESS WHEREOF, The Standard Products Company has caused this Note
to be signed in its corporate name by its President or one of its
Vice-Presidents or its Treasurer and this Note to be dated as of the day and
year first above written.
THE STANDARD PRODUCTS COMPANY
By: /s/ Aubrey E. Arndt
-------------------------
<PAGE> 43
THE STANDARD PRODUCTS COMPANY
December 16, 1993
To: The Purchasers listed on Schedule I
attached hereto
Dear Sirs:
The Standard Products Company (herein called the "Company") agrees
with you as follows:
1. THE LOAN. Subject to the terms and conditions hereof, you
will lend to the Company, and the Company will borrow from you, on December 16,
1993 (herein called the "Closing Date"), the amount set forth below your name
on Schedule I attached hereto. Said loan shall be evidenced by and be made
against delivery to you on the Closing Date at your Home Office, One Madison
Avenue, New York, New York, of the Company's promissory note, substantially in
the form of Exhibit A hereto, made in the principal amount set forth below your
name on Schedule I attached hereto, dated the Closing Date, registered in your
name and duly executed by us. Delivery of said promissory note shall be made
against the advance by you to the Company of immediately available funds in
such amount.
2. THE NOTES. The term "Notes" as used herein shall include each
of the Notes delivered to you pursuant to any provision hereof and any
promissory note delivered in substitution or exchange therefor or in lieu
thereof, and, where applicable, shall include the singular number as well as
the plural. The term "Note" shall mean one of the Notes. Each Note shall be
substantially in the form of Exhibit A hereto.
3. REPLACEMENT OF NOTES. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any Note and,
in the case of any such loss, theft or destruction, upon delivery of indemnity,
reasonably satisfactory to the Company (except that if you or your nominee is
the holder of such Note, your own agreement of indemnity shall be deemed to be
satisfactory), or, in the case of any such mutilation, upon the surrender of
such Note to the Company at the office or agency maintained pursuant to Section
7.1 of the Notes for cancellation of such Note, and, in any such case, upon
reimbursement to the Company of any reasonable expense incident thereto, the
Company will make and deliver a new Note, of like tenor, dated the date from
which unpaid interest has then accrued, in lieu of such lost, stolen, destroyed
or mutilated Note.
4. FINANCIAL STATEMENTS, COMPLIANCE CERTIFICATES AND OTHER
DOCUMENTS AND INFORMATION. So long as any Note shall be outstanding:
(a) The Company will deliver to you, in duplicate, so
long as you shall hold any Note, and the Company will make available
at its office in Cleveland, Ohio, for inspection by any other holder
of a Note
(i) as soon as practicable, and in any event
within 45 days after the end of each of the first three
quarterly periods in each fiscal year of the Company, the
unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of that period and the related
unaudited consolidated statements of income and cash flows of
the Company and its Subsidiaries for such period and for that
part of the fiscal year ended with such quarterly period,
setting forth in each case in comparative form the
corresponding figures for the corresponding period or periods
of the preceding fiscal year, all in reasonable detail and
certified (subject to year-end audit adjustments) by the chief
financial officer of the Company as presenting fairly in all
material respects the financial condition and results of
operations of the Company and its Subsidiaries as of the end
of and for the fiscal periods to which they relate in
accordance with GAAP applied on a consistent basis (except as
otherwise stated in said statements or notes), subject to the
Company's year-end adjustments (which requirements may be
satisfied by delivery of copies of the Company's Quarterly
Report on Form 10-Q (the "10-Q") for such period in accordance
with Section 4(a)(v) hereof, to the extent that such 10-Q
satisfies each of the foregoing requirements);
<PAGE> 44
(ii) as soon as practicable, and in any event
within 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such year and the related
consolidated statements of income, cash flows and
shareholders' equity of the Company and its Subsidiaries as of
the end of and for such year, setting forth in each case in
comparative form the corresponding figures for the previous
fiscal year, all in reasonable detail, prepared in conformity
with GAAP applied on a basis consistent with that of the prior
year (except as otherwise stated therein) and accompanied by a
report or opinion of independent public accountants of
recognized national standing selected by the Company stating
that such financial statements fairly present in all material
respects the consolidated financial condition and results of
operations of the Company and its Subsidiaries in accordance
with GAAP applied on a consistent basis (except for changes
with which such accountants concur) and that the examination
of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards (which requirements may be satisfied by
delivery of the Company's Annual Report on Form 10-K (the
"10-K") and Annual Report to Stockholders (if any) for such
fiscal year in accordance with Section 4(a)(v) hereof to the
extent that such Annual Reports satisfy each of the foregoing
requirements);
(iii) concurrently with the financial statements
delivered pursuant to Section 4(a)(ii), the written statement
of said accountants that in making the examination necessary
for their report or opinion on said financial statements they
have obtained no knowledge of any Event of Default or of any
event which, with notice or lapse of time or both, would
constitute such an Event of Default, or, if such accountants
shall have obtained knowledge of any such Event of Default or
event, they shall disclose in such statement the Event of
Default or event and the nature and status thereof;
(iv) concurrently with the financial statements
delivered pursuant to Sections 4(a)(i) and 4(a)(ii), a
certificate signed by the chief financial officer of the
Company (1) stating that a review of the activities of the
Company and its Subsidiaries during such period has been made
under his supervision with a view to determining whether the
Company has kept, observed, performed and fulfilled all its
obligations under this Agreement and the Notes, (2) stating
that no default or Event of Default has occurred, or, if any
such default or Event of Default shall have occurred,
specifying all such defaults and Events of Default and the
nature thereof, and (3) setting forth figures and computations
demonstrating that the Company was in compliance, as of the
end of the preceding fiscal period, with the requirements of
Sections 8.1, 8.2, 8.3, 8.4 and 8.5 of the Notes;
(v) promptly upon their becoming available,
(1) copies of all financial statements,
proxy statements and reports which the Company or its
Subsidiaries shall send to holders of any of its
securities; and
(2) copies of all regular and periodic
financial reports, if any, which the Company or any
of its Subsidiaries shall file with the Securities
and Exchange Commission, or any governmental agency
or agencies substituted therefor, or with any
national securities exchange;
(vi) immediately upon a Responsible Officer of the
Company's becoming aware of the occurrence of any (1)
"reportable event," as defined in Section 4043 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
for which no regulatory waiver is available under Department
of Labor Regulations Sections 2615.3 through 2615.31,
inclusive, or (2) nonexempted "prohibited transaction,"
as defined in Sections 406 and 408 of ERISA and Section
4975 of the Code, in connection with any "employee pension
benefit plan," as defined in Section 3 of ERISA established
or maintained by the Company or any of its Subsidiaries
for the benefit of its employees (a "Plan"), or any trust
created thereunder, a written notice specifying the nature
thereof, what action the Company is taking or proposes to
take with respect thereto and, when known, any action taken
by the Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect thereto;
<PAGE> 45
(vii) immediately upon the Company's becoming aware
of the existence of any Event of Default or any event which,
with notice or lapse of time, or both, would become such an
Event of Default, a written notice specifying the nature and
status thereof and what action the Company is taking with
respect thereto; and
(viii) immediately upon the Company's becoming aware
that the holder of any Note or of any other evidence of
Indebtedness of the Company or any Subsidiary of the Company
has demanded payment, given notice or taken any other action
with respect to a claimed Event of Default or a claimed
default in respect of or under such other evidence of
Indebtedness, a written notice specifying the demand made,
notice given or action taken by such holder and the nature and
status of the claimed Event of Default or default and what
action the Company is taking with respect thereto.
(b) The Company will furnish to you such other
information as you may, from time to time, reasonably request
(including, without limitation, such additional information as is
required to be delivered by the Company to a holder of the Notes
and/or any prospective purchasers thereof in accordance with Rule 144A
under the Securities Act of 1933, as amended, or any successor rule or
regulation, except at such times as the Company is subject to the
reporting requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) and at your
reasonable request make available for examination copies of any
special or extraordinary reports or statements which the Company or
any of its Subsidiaries may make to or file with any governmental
department, commission, board, bureau or agency, Federal or state,
which might be helpful to you in evaluating your investment in the
Notes.
5. INSPECTION; CONFIDENTIALITY. A. So long as you shall hold
any Note, you (or a nominee designated by you) may visit and inspect any of the
properties of the Company or its Subsidiaries, examine its or their books of
account, make copies and extracts therefrom, and discuss the affairs, finances,
accounts and condition of the Company and its Subsidiaries with its and their
officers, employees and independent accountants, all at such reasonable times,
upon reasonable notice and as often as you may desire. All expenses incurred
by you or any other holder of Notes pursuant to the foregoing shall be borne by
you or such other holder, PROVIDED, HOWEVER, that the Company agrees to pay all
reasonable out-of-pocket expenses incurred by you and each such other holder of
Notes in connection with your and such other holder's exercise of rights
pursuant to this Section 5 at any time when an Event of Default or an event
which, with notice or lapse of time or both, would constitute an Event of
Default has occurred and is continuing.
(b) You agree that you will use your commercially reasonable
efforts not to disclose without the prior consent of the Company (other than to
your officers, directors, trustees, partners, employees, agents, auditors or
counsel or to another holder of Notes) any information with respect to the
Company or any Subsidiary which is furnished pursuant to this Agreement or in
connection contemplated hereby and by the Notes and which is clearly identified
as confidential, provide that you may disclose any such information (i) as has
become generally available to the public without violation of this subsection,
(ii) as may be required or appropriate in any report, statement or testimony
submitted to any governmental body or authority having or claiming to have
jurisdiction over you or to the National Association of Insurance Commissioners
or similar organizations or their successors, (iii) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation, (iv) to the extent that you reasonably believe it appropriate in
order to comply with any law, order, regulation or ruling applicable to you, or
(v) to an Eligible Transferee in connection with any contemplated transfer of
any of the Notes by you.
6. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants that:
(a) FINANCIAL STATEMENTS. The Company has delivered to
you copies of:
(i) consolidated balance sheets of the Company
and its Subsidiaries on or about June 30 in the years 1988 to
1993, inclusive, and the related consolidated statements of
income, shareholders' equity and cash flows for the fiscal
periods ended on said dates, including in each case the
related schedules and notes, if any, all certified by Arthur
Andersen & Co.; and
<PAGE> 46
(ii) unaudited consolidated balance sheet of the
Company and its Subsidiaries as of September 30, 1993 and the
related unaudited consolidated statements of income and cash
flows of the Company and its Subsidiaries for the three months
then ended.
All of the above-mentioned financial statements fairly present, in all
material respects, (i) the financial condition of the Company and its
Subsidiaries as of the respective dates of said balance sheets and (ii) the
results of the operations of the Company and its Subsidiaries for such fiscal
periods. Except as otherwise stated therein or in the notes thereto, all such
financial statements have been prepared in accordance with GAAP applied on a
basis consistent with that of the prior year by the Company throughout the
periods involved, subject, in the case of the financial statements as of
September 30, 1993, to normal year-end adjustments.
(b) NO MATERIAL CHANGES. There has been no material
adverse change in the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole since June 30, 1993.
(c) BUSINESS AND SUBSIDIARIES. The Form 10-K for the
fiscal year ended June 30, 1993, and the Form 10-Q for the quarterly
period ended September 30, 1993, each as filed with the Securities and
Exchange Commission and a copy of each of which has heretofore been
furnished to you, correctly describe the general nature of the
business conducted during the fiscal year ended June 30, 1993, and the
business presently conducted and presently proposed to be conducted,
by the Company and its Subsidiaries, and correctly sets forth the
principal properties then owned or leased by the company and its
Subsidiaries. Since June 30, 1993, there has been no material change
in the general nature of the business conducted and presently proposed
to be conducted, or in the principal properties owned or leased, by
the Company and its Subsidiaries.
(d) ORGANIZATION, AUTHORITY AND GOOD STANDING;
SUBSIDIARIES. Exhibit B hereto correctly sets forth (i) the name and
jurisdiction of incorporation of each Subsidiary of the Company and
(ii) a statement of the capitalization of each Subsidiary and the
ownership of its stock. The shares of stock listed in Exhibit B as
owned by the Company or any of the Subsidiaries are so owned as of the
date of this Agreement, free and clear of all Liens, and all such
shares of stock have been duly issued and are fully paid and
nonassessable. The Company and each of its Subsidiaries is a
corporation duly organized and validly existing and in good standing
under the laws of its respective jurisdiction of incorporation and has
full corporate power and authority to own the properties and assets
and to carry on the business which it now owns and carries on. Each
of the Company and its Subsidiaries is duly qualified and in good
standing as a foreign corporation in every jurisdiction wherein the
nature of the property owned or leased by it makes such qualification
necessary, except where the failure to so qualify would not have a
material and adverse effect on the business, properties, assets or
condition, financial or other, of the Company and its Subsidiaries
taken as a whole.
(e) TITLE TO PROPERTIES. The Company and its
Subsidiaries have good and marketable fee title to all the real
properties and good and marketable title to all other property and
assets reflected in the balance sheet as of June 30, 1993 referred to
in subparagraph (a) above, or purported to have been acquired after
said date, excepting, however, property subject to Capitalized Leases
or property and assets sold or otherwise disposed of in the ordinary
course of business subsequent to said date.
(f) LEASES AND LIENS. None of the properties or assets
reflected in the balance sheet of the Company and its Subsidiaries as
of June 30, 1993 referred to in subparagraph (a) above, or acquired by
the Company or any of its Subsidiaries after said date, excepting,
however, property sold or otherwise disposed of subsequent to said
date in the ordinary course of business, is subject to any Lien except
Liens permitted by Section 8.4 of the Notes and described in Exhibit C
hereto. The Company and its Subsidiaries enjoy peaceful and
undisturbed possession under all of the material leases under which
they are operating and all such leases are valid and subsisting and in
full force and effect.
<PAGE> 47
(g) TRADEMARKS, PATENTS, ETC. Except as described in
Schedule 6(g) hereto, the Company and its Subsidiaries possess all
trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights, governmental licenses, franchises,
certificates, consents, permits and approvals necessary to enable them
to conduct their respective businesses as now conducted and to own and
operate the properties material to their business as now owned and
operated, without known conflict with the rights of others. All such
trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights, governmental licenses, franchises,
certificates, consents, permits and approvals are valid and
subsisting.
(h) LITIGATION. There are no actions, suits or
proceedings (whether or not purportedly on behalf of the Company or
any of its Subsidiaries) pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its
Subsidiaries, at law or in equity or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before an
arbitrator of any kind, which involve any of the transactions herein
contemplated or the likelihood of any material and adverse change in
the business, operations, properties, assets or condition, financial
or other, of the Company and its Subsidiaries taken as a whole; and
neither the Company nor any of its Subsidiaries is in default with
respect to any judgment, order, writ, injunction, decree, award,
statute, rule or regulation of any court, arbitrator or federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign which default
would have a material and adverse effect on the business, properties,
assets or condition, financial or other, of the Company and its
Subsidiaries, taken as a whole.
(i) ENVIRONMENTAL AND OTHER REGULATIONS. To the best of
the Company's knowledge, and with the exception of the items set forth
on Schedule 6(i) hereto, the Company and its Subsidiaries are in
compliance with all Environmental Laws and all other federal, state
and local statutes, laws, ordinances and regulations applicable to the
operation of its business, including without limitation such statutes,
laws, ordinances and regulations relating to equal employment
opportunity and employee safety, in all jurisdictions in which it is
presently doing business, such that it will not incur or be subject to
any liability or penalty thereunder which would have a material
adverse effect on the business, properties, assets or condition,
financial or other, of the Company and its Subsidiaries, taken as a
whole. The Company does not conduct its business in violation of any
Environmental Law. Except as set forth on Schedule 6(i), the Company
is not aware of any conditions, circumstances or activities associated
with current or previously owned or leased property (during the time
period the Company or its Subsidiaries has owned or leased such
current or previous property) or any operations of the Company or any
of its Subsidiaries which may give rise to any liabilities or
expenditures under or to comply with Environmental Laws that would
have a material adverse effect on the business, properties, assets or
condition, financial or other, of the Company and its Subsidiaries,
taken as a whole.
(j) BURDENSOME PROVISIONS. Neither the Company nor any of
its Subsidiaries is a party to any agreement or instrument or subject
to any charter or other corporate or legislative restriction or any
judgment, order, writ, injunction, decree, award, rule or regulation
not of general application which materially and adversely affects or
in the future may (so far as the Company can now reasonably foresee)
materially and adversely affect the business, operations, properties,
assets or condition, financial or otherwise of the Company and its
Subsidiaries, taken as a whole.
(k) COMPLIANCE WITH OTHER INSTRUMENTS. Neither the
Company nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any bond, debenture, note or other evidence of
Indebtedness of the Company or any of its Subsidiaries or contained in
any instrument under or pursuant to which any thereof has been issued
or made and delivered. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the terms and provisions hereof or
the Notes will violate any provision of law or rule or regulation
thereunder or any order, injunction or decree of any court or other
governmental body to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary is bound, or conflict with or
result in a breach of any of the terms, conditions or provisions of
<PAGE> 48
the Company's certificate of incorporation or by-laws or of any
agreement or instrument to which the Company or any of its
Subsidiaries is now a party, or constitute a default thereunder, or
result in the creation or imposition of any Lien upon any of the
property or assets of the Company or any of its Subsidiaries.
(l) FORCE MAJEURE. Since June 30, 1993, the business,
properties and assets of the Company and its Subsidiaries have not
been materially and adversely affected in any way as the result of any
fire, explosion, earthquake, accident, strike, labor disturbance,
requisition or taking of property by governmental authority, flood,
drought, embargo, riot, activity of armed forces, or act of God or the
public enemy.
(m) FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the
execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated
hereby will violate the Trading with the Enemy Act, as amended, the
International Emergency Economic Powers Act or the Executive Orders of
the President of the United States issued pursuant to such Acts, or
any regulations or orders issued under such Acts or Executive Orders.
(n) TAX LIABILITY. The Company and its Subsidiaries have
filed all Federal and state tax returns which are required to be filed
and have paid all taxes which have become due and payable pursuant to
such returns or pursuant to any assessment received by the Company or
any Subsidiary other than those wherein the amount, applicability or
validity are being contested by appropriate proceedings and in good
faith by the Company or such Subsidiary and in respect of which
adequate reserves have been established. The Federal income tax
liability of the Company has been finally determined by the Internal
Revenue Service and satisfied for all taxable years up to and
including the taxable year ended June 30, 1989. In the opinion of the
Company, all tax liabilities were, as of June 30, 1993, and are now,
adequately provided for on the books of the Company and its
Subsidiaries. No material tax liability has been asserted by the
Internal Revenue Service for taxes in excess of those already paid.
(o) USE OF PROCEEDS. The proceeds of the loan to be made
by you hereunder will be used by the Company to refinance existing
indebtedness. None of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation G (12 C.F.R., Chapter II, Part 207) of
the Board of Governors of the Federal Reserve System (herein called
"margin stock") or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry margin
stock of for any other purpose which might constitute this transaction
a "purpose credit" within the meaning of said Regulation G. Neither
the Company nor any agent acting on its behalf has taken or will take
any action which might cause the transaction contemplated herein to
violate Regulation G, Regulation T, Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities Exchange Act of 1934, in each case as now in
effect or as the same may hereafter be in effect.
(p) DISCLOSURE. Neither this Agreement, nor the Exhibits
hereto, nor any certificate or other data furnished to you in writing
by or on behalf of the Company in connection with the transactions
contemplated by this Agreement contains any untrue statement of a
material fact or omits a material fact necessary to make the
statements contained herein or therein not misleading. To the best
knowledge of the Company, there is no fact which materially and
adversely affects or in the future may (so far as the Company can now
foresee) materially and adversely affect the business, operations,
properties, assets or condition, financial or other, of the Company
and its Subsidiaries, taken as a whole, which is not publicly known or
has not been disclosed to you in writing.
(q) ERISA. No accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any Plan. No liability to the Pension
Benefit Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan by the
Company, any Subsidiary or any ERISA Affiliate which is or would be
material and adverse to the business, property or assets,
<PAGE> 49
operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole. Neither the Company, any
Subsidiary nor any ERISA Affiliate has incurred or presently expects
to incur any withdrawal liability under Title IV of ERISA which is or
would be material and adverse to the business, property or assets,
operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole. The execution and delivery of this
Agreement and the making of the loan by you contemplated hereby will
be exempt from, or will not involve any transaction which is subject
to, the prohibitions of Section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed under
Section 502(i) of ERISA or a tax could be imposed pursuant to Section
4975 of the Code. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the
accuracy of your representation in Section 7 hereof. For the purpose
of this subclause (o), the term "ERISA Affiliate" means each "person"
(as defined in Section 3(9) of ERISA) which together with the Company
or a Subsidiary would be deemed to be a "single employer" within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
(r) GOVERNMENTAL ACTION. Except for the filing of this
Agreement as an exhibit to the Company's filings pursuant to the
requirements of the Exchange Act, no action of, or filing with, any
governmental or public body or authority is required to authorize, or
is otherwise required in connection with, the execution, delivery and
performance of this Agreement or the Notes by the Company.
(s) INVESTMENT COMPANY ACT. Neither the Company nor any
Subsidiary is an "investment company," or a Person "controlled" by an
"investment company," within the meaning of the Investment Company Act
of 1940, as amended.
7. ACQUISITIONS FOR INVESTMENT; PRIVATE OFFERING; ERISA.
(a) You represent that (i) you are an institutional
investor that qualifies as an "accredited investor" (as defined in
Rule 501(a) under the Securities Act of 1933, as amended) and (ii) you
are acquiring the Note specified in Schedule I hereto for your own
account for investment and not with a view to, or for sale in
connection with, the distribution of such Note, nor with any present
intention of distributing or selling such Note; PROVIDED, HOWEVER,
that the disposition of your property shall at all times be within
your control.
(b) The Company represents that it has not, either
directly or through any agent, offered any of the Notes or other
substantially similar securities to, or solicited any offers to
acquire any such Notes or other substantially similar securities from,
or otherwise approached or negotiated or communicated in respect of
any of the Notes or other substantially similar securities with, any
Person or Persons other than you and not more than 2 other Persons,
all of whom are institutional investors. Neither the Company nor any
agent on its behalf will offer any of the Notes or other substantially
similar securities to, or solicit any offers to acquire any of the
Notes or other substantially similar securities from, or otherwise
approach or negotiate in respect thereof with, any Person or Persons
so as thereby to bring the making and delivery of the Notes within the
provisions of Section 5 of the Securities Act of 1933, as amended.
(c) You also represent that no employee benefit plan,
other than employee benefit plans identified in writing by you and
furnished by you to the Company, accounts for 10% or more of the
assets allocated to any separate account (as defined in Section 3(17)
of ERISA) maintained by you which is a source of funds being used by
you to pay the purchase price of any of the Notes.
8. CONDITIONS OF LOAN. Your obligation to advance the loan on
the Closing Date, as provided in Section 1 hereof, shall be subject to the
performance by the Company of all its agreements theretofore to be performed
hereunder and to the accuracy of its representations and warranties herein
contained and to the satisfaction, prior to or concurrently with the making of
said loan, of the following further conditions:
<PAGE> 50
(a) OPINION OF COMPANY'S OUTSIDE COUNSEL. You shall have
received at the Company's expense from (x) Baker & Hostetler, outside
Ohio counsel for the Company, and the Company hereby instructs such
counsel to deliver to you, an opinion dated the Closing Date, in form
and substance satisfactory to you,
(i) to the effect that the Company and each of
its Subsidiaries is a duly organized and validly existing
corporation in good standing under the laws of its
jurisdiction of incorporation and each of them has the
corporate power and authority to own its properties and to
carry on its business as now conducted;
(ii) to the effect that this Agreement has been
duly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the
Company in accordance with its terms;
(iii) to the effect that the Note delivered to you
on the Closing Date has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and
binding obligation of the Company in accordance with its
terms;
(iv) to the effect that it is not necessary in
connection with the making and delivery of the Notes delivered
to you on the Closing Date under the circumstances
contemplated by this Agreement, to register such Note under
the Securities Act of 1933, as amended and as then in effect,
or to qualify an indenture in respect thereof under the Trust
Indenture Act of 1939, as amended and as then in effect;
(v) to the effect that no authorization, consent,
approval or exemption of any governmental or public body is
required in connection with the execution and delivery of this
Agreement and such Note; and
(vi) as to such other matters incident to the
transactions contemplated by this Agreement as you may
reasonably request.
(y) Mills & Reeve, special United Kingdom counsel to the Company,
substantially in the form attached hereto as Exhibit D, (z) Clifford
Chance, special French counsel to the Company, substantially in the
form attached hereto as Exhibit E, and (xx) Tory Tory DesLauriers &
Binnington, special Canadian counsel to the Company, substantially in
the form attached hereto as Exhibit F.
(b) NO DEFAULT. The Company shall not have taken or
suffered to be taken any action which it would have been prohibited
from taking or suffering to be taken, and shall not have omitted, or
permitted the omission of, any action which it would have been
required to take or cause to be taken, if the Note in the form
contemplated by this Agreement had at all times since the date hereof
been a binding and effective instrument; and the Company shall have
delivered to you at the Closing a certificate signed by an authorized
officer of the Company to such effect.
(c) CORRECTNESS OF REPRESENTATIONS, ETC. The
representations and warranties by the Company in Section 6 hereof and
in Section 7 hereof shall be true in all material respects on and as
of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing
Date; and the Company shall have delivered to you on the Closing Date
a certificate signed by an authorized officer of the Company to such
effect.
(d) LEGALITY. The Notes being purchased by you on the
Closing Date shall qualify on the Closing Date as a legal investment
for you under the laws of each jurisdiction to which you may be
subject (without resort to any so-called basket or leeway provision of
such laws, such as Section 1405(a)(8) of the Insurance Law of the
State of New York) and such purchase shall not subject you to any
penalty or other onerous condition under or pursuant to any applicable
law or governmental regulation; and you shall have received such
certificates or other evidence as you may reasonably request to
establish compliance with this condition.
(e) RECEIPT OF REQUIRED WAIVERS. The Company shall have
received a waiver under Section 5.04(c) of the Credit Agreement.
<PAGE> 51
(f) PROCEEDINGS, DOCUMENTS, ETC. All proceedings to be
taken in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, shall be satisfactory
in form and substance to you; and you shall have received copies of
all documents which you may reasonably request in connection with said
transaction and copies of the records of all corporate proceedings in
connection therewith in form and substance satisfactory to you.
9. PAYMENT OF INTEREST; HOME OFFICE PAYMENT. Notwithstanding any
provision to the contrary in the Notes contained, the Company will promptly and
punctually pay to you by wire transfer of immediately available funds, not
later than 10:00 a.m., New York time, on the date payment is due, to you at the
address set forth in Schedule I, or at such other address as may be designated
in writing by you, all amounts payable in respect of the principal of, premium,
if any, and interest on, any Notes then held by you or your nominee, without
any presentment thereof and without any notation of such payment being made
thereon.
In the event you shall sell any Note you will promptly notify the
Company of such sale and of the name and address of the transferee of such Note
and you will, prior to the delivery of the Note, make a notation on such Note
of the date to which interest has been paid on such Note and, if not
theretofore made, a notation on such Note of the extent to which any payment
has been made on account of the principal thereof.
10. EXPENSES. Whether or not the loan herein contemplated shall
be consummated, the Company shall pay you $15,000 as a processing fee to cover
your expenses in preparing for and documenting the transaction contemplated by
this Agreement. You agree that, upon payment of said processing fee, the
Company will not otherwise be liable, except as provided in Section 12 of the
Notes, for the payment of any expenses incurred by you in connection with the
transaction contemplated by this Agreement, including, without limitation, any
legal fees and expenses, travel expenses and costs of printing or other
reproduction of this Agreement and the Note; and the Company will save you
harmless against any and all liability with respect to, or resulting from any
delay in paying, stamp or other documentary taxes, if any, which may be payable
or determined to be payable in connection with the execution and delivery of
the Notes or of any modification of any thereof. The Company's obligations
under this Section 10 shall survive the payment or prepayment of the Notes.
11. DEFINITIONS. Any terms used herein shall have, unless
otherwise herein defined or the context otherwise requires, the respective
meanings assigned to them in the form of Note annexed as Exhibit A hereto.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SUCCESSORS AND
ASSIGNS; ELIGIBLE TRANSFEREES. All covenants, agreements, representations and
warranties made herein and in certificates delivered pursuant hereto shall
survive the making by you of the loan herein contemplated and the execution and
delivery to you of the Notes evidencing such loan and shall continue in full
force and effect so long as any Note is outstanding and unpaid and as provided
in Section 10 hereof. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements in this
Agreement contained by or on behalf of the Company, or by or on behalf of you,
shall bind and inure to the benefit of the respective successors and assigns of
such party hereto.
Notwithstanding any provision herein or in the Note to the contrary,
no holder of any Note shall sell, transfer or assign such Note or any interest
therein to any Person other than an Eligible Transferee.
13. NOTICES. All communications provided for hereunder or under
the Notes (other than payments in respect thereof which shall be made in
accordance with Section 9 hereof) shall be in writing and, if to you, mailed or
delivered to Metropolitan Life Insurance Company, One Madison Avenue, New York,
New York 10010, Attention: Treasurer, with a copy to: Metropolitan Life
Insurance Company, Capital Markets Group-Central Territory, One Lincoln Centre,
Suite 800, Oakbrook Terrace, Illinois 60181, Attention: Vice-President, or, if
to the Company, mailed or delivered to the Company's office at 2130 west 110th
Street, Cleveland, Ohio 44102, Attention: Treasurer, or at any other office
that the Company or you may hereafter designate by written notice to the other.
<PAGE> 52
14. LAW GOVERNING; WAIVERS. This Agreement shall be construed in
accordance with the laws of the State of Ohio and cannot be changed orally but
only by an agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
15. HEADINGS. The headings of the paragraphs and subparagraphs of
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Upon your signing the form of acceptance on the enclosed counterpart
of this Agreement and returning such counterpart to the Company, this Agreement
shall become a binding agreement between you and the Company.
Very truly yours,
THE STANDARD PRODUCTS COMPANY
By: /s/ Aubrey E. Arndt
------------------------
Title: Vice President-Finance
The foregoing agreement is hereby accepted.
METROPOLITAN LIFE INSURANCE COMPANY
By: ______________________________
By: ______________________________
<PAGE> 53
Upon your signing the form of acceptance on the enclosed counterpart
of this Agreement and returning such counterpart to the Company, this Agreement
shall become a binding agreement between you and the Company.
Very truly yours,
THE STANDARD PRODUCTS COMPANY
By: _________________________
The foregoing agreement is hereby accepted.
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ William G. Takacs
---------------------------
Title: Vice President
By: /s/ Marcus N. Lamb
---------------------------
Title: Associate General Counsel
<PAGE> 54
Upon your signing the form of acceptance on the enclosed counterpart
of this Agreement and returning such counterpart to the Company, this Agreement
shall become a binding agreement between you and the Company.
Very truly yours,
THE STANDARD PRODUCTS COMPANY
By: /s/ Aubrey E. Arndt
------------------------------
Title: Vice President-Finance
The foregoing agreement is hereby accepted.
METROPOLITAN INSURANCE AND ANNUITY COMPANY
By: _____________________________
<PAGE> 55
Upon your signing the form of acceptance on the enclosed counterpart
of this Agreement and returning such counterpart to the Company, this Agreement
shall become a binding agreement between you and the Company.
Very truly yours,
THE STANDARD PRODUCTS COMPANY
By: _________________________
The foregoing agreement is hereby accepted.
METROPOLITAN INSURANCE AND ANNUITY COMPANY
By: /s/ Thomas E. Lenihan
------------------------------
<PAGE> 56
Upon your signing the form of acceptance on the enclosed counterpart
of this Agreement and returning such counterpart to the Company, this Agreement
shall become a binding agreement between you and the Company.
Very truly yours,
THE STANDARD PRODUCTS COMPANY
By: /s/ Aubrey E. Arndt
-------------------------
Title: Vice President-Finance
The foregoing agreement is hereby accepted.
METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY
By: _____________________________
<PAGE> 57
Upon your signing the form of acceptance on the enclosed counterpart
of this Agreement and returning such counterpart to the Company, this Agreement
shall become a binding agreement between you and the Company.
Very truly yours,
THE STANDARD PRODUCTS COMPANY
By: __________________________
The foregoing agreement is hereby accepted.
METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY
By: /s/ Timothy Schmidt
-----------------------------
<PAGE> 58
SCHEDULE 1
PURCHASER SCHEDULE
<TABLE>
<CAPTION>
NAME OF PURCHASER METROPOLITAN LIFE INSURANCE COMPANY
<S> <C>
Notices and Communications Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Attention: Treasurer
With a copy to:
Metropolitan Life Insurance Company
Corporate Investments
One Lincoln Centre, Suite 800
Oakbrook Terrace, Illinois 60181
Attention: Vice President
Telecopy #: (708) 916-2575
Funds Transfer Instructions The Chase Manhattan Bank, N.A.
33 East 23rd Street
New York, NY 10010
ABA # 021000021
Acct # 002-2-410591
With reference to PPN #: 853836B4
Delivery of Securities after Closing Lisa Glass, Esq.
Metropolitan Life Insurance Company One Madison Avenue
Area 7H
New York, NY 10010
Principal Amount ($) Notes Being $60,000,000
Purchased
Name or Nominee Name in which Notes Metropolitan Life Insurance Company
should be registered
Taxpayer ID Number of Registered 13-5581829
Holder
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
NAME OF PURCHASER METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY
<S> <C>
Notices and Communications Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Attention: Treasurer
With a copy to:
Metropolitan Life Insurance Company
Corporate Investments
One Lincoln Centre, Suite 800
Oakbrook Terrace, Illinois 60181
Attention: Vice President
Telecopy #: (708) 916-2575
Funds Transfer Instructions The Chase Manhattan Bank, N.A.
33 East 23rd Street
New York, NY 10010
ABA # 021000021
Acct # 002-1-025432
With reference to PPN #: 853836B4
Delivery of Securities after Closing Lisa Glass, Esq.
Metropolitan Life Insurance Company One Madison Avenue
Area 7H
New York, NY 10010
Principal Amount ($) of Notes Being $5,000,000
Purchased
Name or Nominee Name in which Notes Metropolitan Property and Casualty Insurance Company
should be registered
Taxpayer ID Number of Registered 13-2725441
Holder
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
NAME OF PURCHASER METROPOLITAN INSURANCE AND ANNUITY COMPANY
<S> <C>
Notices and Communications Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Attention: Treasurer
With a copy to:
Metropolitan Life Insurance Company
Corporate Investments
One Lincoln Centre, Suite 800
Oakbrook Terrace, Illinois 60181
Attention: Vice President
Telecopy #: (708) 916-2575
Funds Transfer Instructions The Chase Manhattan Bank, N.A.
33 East 23rd Street
New York, NY 10010
ABA # 021000021
Acct # 002-1-072301
With reference to PPN #: 853836B4
Delivery of Securities after Closing Lisa Glass, Esq.
Metropolitan Life Insurance Company One Madison Avenue
Area 7H
New York, NY 10010
Principal Amount ($) of Notes Being $10,000,000
Purchased
Name or Nominee Name in which Notes Metropolitan Insurance and Annuity Company
should be registered
Taxpayer ID Number of Registered 13-2876440
Holder
</TABLE>
<PAGE> 61
<TABLE>
Denomination: STANDARD PRODUCTS INTERNATIONAL TABLEAU NO. 2
Siege Social: 3, RUE DU COLONEL MOLL - 7017 PARIS 26/01/93
Capital: FF. 250.000.00 DIVISE EN 250.000.000 ACTIONS DE FF. 1 CHACUNE
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C>
THE STANDARD PRODUCTS COMPANY 202.500.000 1 202.500.000
2130 West 110th Street
Cleveland, Ohio 44102
USA
STANDARD PRODUCTS (CANADA) LTD 47.499.995 2 47.499.995
Erie, Stratford,
Ontario N5A 6V7
Canada
WESTERN SERVICE CENTER INC 1 3 1
2401 South Gulley Reed
Dearborn, Michigan 48124
USA
Theodore K. ZAMPETIS 1 4 1 Administrateur
4525 Strandwyck Road
W. Bloomfield, Michigan 48322
USA
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C> <C>
Aubrey E. ARNDT 1 23 1 Administrateur
32290 County Club Drive
Avon Lake, Ohio 44102 - USA
Thomas STECZ 1 24 1
843 Meadow Wood Lane - Copley, Ohio 44321
Monsieur John MILLER 1 25 1 Administrateur
13356 Sprague Road
Middleburg Hts, Ohio - USA
TOTAL DES ACTIONS COMPOSANT LE CAPITAL SOCIAL 126.825
</TABLE>
<PAGE> 63
<TABLE>
DENOMINATION: SOCIETE LILLEBONNAISE DE CAOUTCHOUCS TABLEAU NO. 2
SIEGE SOCIAL: 105, BOULEVARD DE VERDUN - 92400 COURBEVOIE A JOUR AU 4/06/93
CAPITAL SOCIAL: FF. 9.000.000 DIVISE EN 90.000 ACTIONS DE FF. 100 CHACUNE
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C>
STANDARD PRODUCTS INDUSTRIEL 61.024 1 61.024
9, rue Louis Rameau
95870 BEZONS
STANDARD PRODUCTS INTERNATIONAL 28.969 15 28.969
3 rue du Colonel Moll
75017 PARIS
Pierre OPMAN 1 16 1 Administrateur
74, rue de Chezy
92200 NEUILLY
Jean-Claude SMADJA 1 17 1 Administrateur
74, rue de Chezy
92200 NEUILLY
Theodore ZAMPETIS 1 18 1 Administrateur
4525 Strandwyck Road,
W. Bloomfield, Michigan 48322 USA
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C> <C>
James S. REID 1 19 1 Administrateur
2625 N. Park Boulevard,
Cleveland, Ohio 44106 - USA
Aubrey E. ARNDT 1 20 1 Administrateur
32290 Country Club Drive
Avon Lake, Ohio 44012 - USA
Thomas STECZ 1 21 1
843 Meadow Wood Lane
Copley, Ohio 44321
Monsieur John MILLER 1 22 1 Administrateur
13356 Sprague Road
Middleburg Hts, Ohio - USA
TOTAL DES ACTIONS COMPOSANT LE CAPITAL SOCIAL 90.000
</TABLE>
<PAGE> 65
<TABLE>
DENOMINATION: STANDARD PRODUCTS ATLANTIC TABLEAU NO. 2
SIEGE SOCIAL: 105, BOULEVARD DE VERDUN - 92400 COURBEVOIE A JOUR AU 4/06/93
CAPITAL SOCIAL: FF. 10.000.000 DIVISE EN 100.000 ACTIONS DE FF. 100 CHACUNE
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C>
STANDARD PRODUCTS INDUSTRIEL 66.792 1 66.792 Administrateur
9, rue Louis Rameau
95870 BEZONS
STANDARD PRODUCTS INTERNATIONAL 33.152 100 33.152
3, rue du Colonel Moll
75017 PARIS
Jean-Claude SMADJA 1 101 1 Administrateur
74, rue de Chezy
92200 NEUILLY
Pierre OPMAN 1 102 1 Administrateur
74, rue de Chezy
92200 NEUILLY
Theodore ZAMPETIS 1 103 1
4525 Strandwyck Road,
W. Bloomfield, Michigan 48322 USA
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C> <C>
James S. REID, Jr. 1 104 1 Administrateur
2625 N. Park Boulevard,
Cleveland, Ohio 44106 - USA
Aubrey E. ARNDT 1 105 1 Administrateur
32290 Country Club Drive
Avon Lake, Ohio 44012 - USA
Ahmed OUFKIR 1 12 1
19, boulevard Voltaire
92600 ASNIERES
Monsieur John MILLER 1 106 1 Administrateur
13356 Sprague Road
Middleburg Hts, Ohio - USA
TOTAL DES ACTIONS COMPOSANT LE CAPITAL SOCIAL 100.000
</TABLE>
<PAGE> 67
<TABLE>
DENOMINATION: STANDARD PRODUCTS INDUSTRIEL TABLEAU NO. 2
SIEGE SOCIAL: 9, RUE LOUIS RAMEAU - 95871 BEZONS A JOUR AU 4/06/93
CAPITAL SOCIAL: FF. 12.682.500 DIVISE EN 126.825 ACTIONS DE FF. 100 CHACUNE
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C>
STANDARD PRODUCTS INTERNATIONAL 126.818 17 126.818
3, rue du Colonel Moll
75017 PARIS
Jean-Claude SMADJA 1 19 1 Administrateur
74, rue de Chezy
92200 NEUILLY
Pierre OPMAN 1 20 1 Administrateur
74, rue de Chezy
92200 NEUILLY
Theodore ZAMPETIS 1 21 1 Administrateur
4525, Strandwyck Road
W. Bloomfield, Michigan 48322 USA
James S. REID, Jr. 1 22 1 Administrateur
2625 N. Park Boulevard
Cleveland, Ohio 44106 - USA
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
NOM ET ADRESSE NOMBRE D'ACTIONS NUMERO DE COMPTE NOMBRE D'ACTIONS OBSERVATIONS
PAR COMPTE PAR TITULAIR
<S> <C> <C> <C> <C> <C>
James S. REID, Jr. 1 5 1 Administrateur
2625 N. Park Boulevard
Cleveland, Ohio 44106 - USA
Aubrey E. ARNDT 1 6 1 Administrateur
32290 Country Club Drive
Avon Lake, Ohio 44012 - USA
Thomas J. STECZ 1 7 1 Administrateur
843 Meadow Wood Lane,
Copley, Ohio 44321 - USA
TOTAL DES ACTIONS COMPOSANT LE CAPITAL SOCIAL 250.000.000
</TABLE>
