UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
November 30,
2010,
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to .
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Commission File
No. 1-14187
RPM International
Inc.
(Exact name of Registrant as
specified in its charter)
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DELAWARE
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02-0642224
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(State or other jurisdiction
of
incorporation or organization)
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(IRS Employer
Identification No.)
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P.O. BOX 777;
2628 PEARL ROAD;
MEDINA, OHIO
(Address of principal
executive offices)
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44258
(Zip
Code)
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(330) 273-5090
(Registrants telephone
number including area code)
Not Applicable
(Former name, former address and
former fiscal year, if changed since last report)
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 (or for such shorter period that the Registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes
þ
No
o
.
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes
þ
No
o
.
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large
accelerated
filer
þ
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Accelerated
filer
o
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Non-accelerated
filer
o
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Smaller
reporting
company
o
|
(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes
o
No
þ
.
As of January 3, 2011
130,031,065 Shares of RPM International Inc. Common Stock
were outstanding.
RPM
INTERNATIONAL INC. AND SUBSIDIARIES*
INDEX
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*
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As used herein, the terms RPM and the
Company refer to RPM International Inc. and its
subsidiaries, unless the context indicates otherwise.
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2
PART I.
FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL
STATEMENTS
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RPM
INTERNATIONAL INC. AND SUBSIDIARIES
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November 30, 2010
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May 31, 2010
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(Unaudited)
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(In thousands, except share and
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per share amounts)
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
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299,157
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$
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215,355
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Trade accounts receivable (less allowances of $21,198 and
$20,525, respectively)
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574,675
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633,910
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Inventories
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433,792
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386,982
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Deferred income taxes
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20,524
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19,788
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Prepaid expenses and other current assets
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194,218
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194,126
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Total current assets
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1,522,366
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1,450,161
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Property, Plant and Equipment, at Cost
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953,128
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924,086
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Allowance for depreciation and amortization
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(574,981
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)
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(541,559
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)
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Property, plant and equipment, net
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378,147
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382,527
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Other Assets
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Goodwill
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794,092
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768,244
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Other intangible assets, net of amortization
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309,466
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303,159
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Other
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114,484
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99,933
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Total other assets
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1,218,042
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1,171,336
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Total Assets
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$
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3,118,555
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$
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3,004,024
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current Liabilities
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Accounts payable
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$
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274,313
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$
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299,596
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Current portion of long-term debt
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2,674
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4,307
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Accrued compensation and benefits
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115,757
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136,908
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Accrued loss reserves
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63,751
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65,813
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Other accrued liabilities
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143,746
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124,870
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Total current liabilities
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600,241
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631,494
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Long-Term Liabilities
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Long-term debt, less current maturities
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922,463
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924,308
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Other long-term liabilities
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255,797
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243,829
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Deferred income taxes
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55,773
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43,152
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Total long-term liabilities
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1,234,033
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1,211,289
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Stockholders Equity
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Preferred stock, par value $0.01; authorized
50,000 shares; none issued
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Common stock, par value $0.01; authorized
300,000 shares;
issued 133,811 and outstanding 130,037 as of November 2010;
issued 132,219 and outstanding 129,918 as of May 2010
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1,300
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1,299
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Paid-in capital
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733,813
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724,089
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Treasury stock, at cost
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(61,586
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)
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(40,686
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)
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Accumulated other comprehensive (loss)
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(52,547
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)
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(107,791
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)
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Retained earnings
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566,438
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502,562
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Total RPM International Inc. stockholders equity
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1,187,418
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1,079,473
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Noncontrolling interest
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96,863
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81,768
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Total Equity
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1,284,281
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1,161,241
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Total Liabilities and Stockholders Equity
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$
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3,118,555
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$
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3,004,024
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The accompanying notes to consolidated financial statements are
an integral part of these statements.
3
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
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Three Months Ended
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Six Months Ended
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November 30,
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November 30,
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2010
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2009
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2010
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2009
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(Unaudited)
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(In thousands, except share and per share amounts)
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Net Sales
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$
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826,343
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$
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858,658
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$
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1,721,153
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$
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1,774,611
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Cost of Sales
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486,846
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495,447
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1,006,230
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1,017,570
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Gross Profit
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339,497
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363,211
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714,923
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757,041
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Selling, General and Administrative Expenses
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250,070
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269,853
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503,491
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542,999
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Interest Expense
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16,468
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14,672
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32,510
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27,469
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Investment Expense (Income), Net
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(4,309
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)
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(2,057
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)
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(6,286
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)
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(3,151
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)
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Income Before Income Taxes
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77,268
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80,743
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185,208
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189,724
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Provision for Income Taxes
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23,765
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24,351
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56,711
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60,254
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Net Income
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53,503
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56,392
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128,497
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129,470
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Less: Net Income Attributable to Noncontrolling Interests
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4,712
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499
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10,710
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552
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Net Income Attributable to RPM International Inc.
Stockholders
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$
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48,791
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$
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55,893
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$
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117,787
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$
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128,918
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Average Number of Shares of Common Stock Outstanding:
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Basic
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127,012
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127,373
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127,491
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126,868
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Diluted
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127,670
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129,164
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128,050
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127,378
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Earnings per Share of Common Stock Attributable to RPM
International Inc. Stockholders:
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Basic
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$
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0.38
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$
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0.44
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$
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0.91
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$
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1.00
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Diluted
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$
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0.38
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$
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0.43
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$
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0.91
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$
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1.00
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Cash Dividends Declared per Share of Common Stock
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$
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0.210
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$
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0.205
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$
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0.415
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$
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0.405
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The accompanying notes to consolidated financial statements are
an integral part of these statements.
4
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
|
|
|
|
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|
|
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Six Months Ended
|
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|
|
November 30,
|
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2010
|
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|
2009
|
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(Unaudited)
|
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(In thousands)
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Cash Flows From Operating Activities:
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Net income
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$
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128,497
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$
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129,470
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Adjustments to reconcile net income to net cash provided by
operating activities:
|
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Depreciation
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26,788
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31,107
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Amortization
|
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|
9,906
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|
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|
11,128
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Deferred income taxes
|
|
|
5,323
|
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|
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18,924
|
|
Stock-based compensation expense
|
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|
6,027
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|
5,156
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Other
|
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(64
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)
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(861
|
)
|
Changes in assets and liabilities, net of effect from
purchases and sales of businesses:
|
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Decrease in receivables
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66,393
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59,658
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(Increase) in inventory
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(44,880
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)
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(26,394
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)
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(Increase) in prepaid expenses and other current and
long-term assets
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|
|
(11,155
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)
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|
|
(723
|
)
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(Decrease) in accounts payable
|
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|
(27,969
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)
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|
|
(47,476
|
)
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(Decrease) in accrued compensation and benefits
|
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(21,700
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)
|
|
|
(8,697
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)
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(Decrease) in accrued loss reserves
|
|
|
(2,092
|
)
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|
|
(2,578
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)
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(Decrease) increase in other accrued liabilities
|
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|
45,067
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|
|
|
47,160
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Payments made for asbestos-related claims
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|
|
|
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(37,481
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)
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Other
|
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|
2,973
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|
|
|
6,301
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|
|
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|
|
|
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Cash From Operating Activities
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|
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183,114
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|
|
184,694
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|
|
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|
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|
Cash Flows From Investing Activities:
|
|
|
|
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|
|
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Capital expenditures
|
|
|
(15,333
|
)
|
|
|
(8,287
|
)
|
Acquisition of businesses, net of cash acquired
|
|
|
(20,669
|
)
|
|
|
(9,042
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)
|
Purchase of marketable securities
|
|
|
(37,282
|
)
|
|
|
(38,809
|
)
|
Proceeds from sales of marketable securities
|
|
|
38,828
|
|
|
|
36,658
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|
Other
|
|
|
(1,324
|
)
|
|
|
(322
|
)
|
|
|
|
|
|
|
|
|
|
Cash (Used For) Investing Activities
|
|
|
(35,780
|
)
|
|
|
(19,802
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Additions to long-term and short-term debt
|
|
|
24,913
|
|
|
|
304,203
|
|
Reductions of long-term and short-term debt
|
|
|
(28,391
|
)
|
|
|
(327,133
|
)
|
Cash dividends
|
|
|
(53,911
|
)
|
|
|
(52,237
|
)
|
Repurchase of stock
|
|
|
(20,916
|
)
|
|
|
|
|
Exercise of stock options
|
|
|
2,614
|
|
|
|
5,294
|
|
|
|
|
|
|
|
|
|
|
Cash (Used For) Financing Activities
|
|
|
(75,691
|
)
|
|
|
(69,873
|
)
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash
Equivalents
|
|
|
12,159
|
|
|
|
15,522
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
|
83,802
|
|
|
|
110,541
|
|
Cash and Cash Equivalents at Beginning of Period
|
|
|
215,355
|
|
|
|
253,387
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
299,157
|
|
|
$
|
363,928
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes to consolidated financial statements are
an integral part of these statements.
5
|
|
NOTE 1
|
CONSOLIDATION,
NONCONTROLLING INTERESTS AND BASIS OF PRESENTATION
|
Our financial statements include all of our majority-owned
subsidiaries, except for certain subsidiaries that were
deconsolidated on May 31, 2010 (please refer to
Note 2). We account for our investments in
less-than-majority-owned
joint ventures under the equity method. Effects of transactions
between related companies, except for certain subsidiaries that
were deconsolidated, are eliminated in consolidation.
Noncontrolling interests are presented in our Consolidated
Financial Statements as if parent company investors (controlling
interests) and other minority investors (noncontrolling
interests) in partially-owned subsidiaries have similar economic
interests in a single entity. As a result, investments in
noncontrolling interests are reported as equity in our
consolidated financial statements. Additionally, our
Consolidated Financial Statements include 100% of a controlled
subsidiarys earnings, rather than only our share.
Transactions between the parent company and noncontrolling
interests are reported in equity as transactions between
stockholders provided that these transactions do not create a
change in control.
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to
Form 10-Q
and do not include all of the information and notes required by
Generally Accepted Accounting Principles in the
U.S. (GAAP) for complete financial statements.
In our opinion, all adjustments (consisting of normal, recurring
accruals) considered necessary for a fair presentation have been
included for the three and six month periods ended
November 30, 2010 and 2009. For further information, refer
to the Consolidated Financial Statements and Notes included in
our Annual Report on
Form 10-K
for the year ended May 31, 2010.
Our business is dependent on external weather factors.
Historically, we have experienced strong sales and net income in
our first, second and fourth fiscal quarters comprising the
three month periods ending August 31, November 30 and
May 31, respectively, with weaker performance in our third
fiscal quarter (December through February).
Certain reclassifications have been made to prior year amounts
to conform to the current year presentation.
|
|
NOTE 2
|
DECONSOLIDATION
OF SPECIALTY PRODUCTS HOLDING CORP. (SPHC)
|
On May 31, 2010, Bondex International, Inc.
(Bondex) and its parent, SPHC, filed Chapter 11
reorganization proceedings in the United States Bankruptcy Court
for the District of Delaware. SPHC is our wholly owned
subsidiary. In accordance with Accounting Standards Codification
(ASC) 810, when a subsidiary becomes subject to the
control of a government, court, administrator, or regulator,
deconsolidation of that subsidiary is generally required. We
have therefore deconsolidated SPHC and its subsidiaries from our
balance sheet as of May 31, 2010, and have eliminated the
results of SPHCs operations from our results of operations
beginning on that date. We believe we have no responsibility for
liabilities of SPHC and Bondex. As a result of the
Chapter 11 reorganization proceedings, on a prospective
basis we will continue to account for our investment in SPHC
under the cost method.
We had a net receivable from SPHC at May 31, 2010, that we
expect will remain unchanged until the bankruptcy proceedings
have been finalized. Included in this net amount are receivables
and payables, which we concluded we have the right to report as
a net amount based on several factors, including the fact that
all amounts are determinable, the balances are due to and from
our subsidiaries, and we have been given reasonable assurance
that netting the applicable receivables and payables would
remain legally enforceable. We analyzed our net investment in
SPHC as of May 31, 2010, which included a review of our
advances to SPHC, an assessment of the collectibility of our net
receivables due from SPHC, and a computation of the gain to be
recorded upon deconsolidation based on the carrying amount of
our investment in SPHC. In accordance with GAAP, the gain on
deconsolidation related to
6
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
the carrying amount of net assets of SPHC at May 31, 2010,
was calculated in accordance with
ASC 810-10-40-5,
as follows:
a) the aggregate of (1) the fair value of
consideration received, (2) the fair value of any retained
noncontrolling investment in the former subsidiary at the date
the subsidiary is deconsolidated, and (3) the carrying
amount of any noncontrolling interest in the former subsidiary;
less
b) the carrying amount of the former subsidiarys
assets and liabilities.
In determining the carrying value of any retained noncontrolling
investment in SPHC at the date of deconsolidation we considered
several factors, including analyses of cash flows combined with
various assumptions relating to the future performance of this
entity and a discounted value of SPHCs recorded
asbestos-related contingent obligations based on information
available to us as of the date of deconsolidation. The
discounted cash flow approach relies primarily on Level 3
unobservable inputs, whereby expected future cash flows are
discounted using a rate that includes assumptions regarding an
entitys average cost of debt and equity, incorporates
expected future cash flows based on internal business plans, and
applies certain assumptions about risk and uncertainties due to
the bankruptcy filing. Our estimates are based upon assumptions
we believe to be reasonable, but which by nature are uncertain
and unpredictable. As a result of this analysis, we determined
that the carrying value of our retained interest in SPHC
approximated zero.
As a result of the combined analyses of each of the components
of our net investment in SPHC, we recorded a net loss of
approximately $7.9 million, which was reflected in Other
Expense, Net, during the fourth fiscal quarter of the year ended
May 31, 2010. No changes have been made to these amounts
through November 30, 2010.
Inventories were composed of the following major classes:
|
|
|
|
|
|
|
|
|
|
|
November 30,
|
|
|
May 31,
|
|
|
|
2010
|
|
|
2010
|
|
|
|
(In thousands)
|
|
|
Raw material and supplies
|
|
$
|
135,231
|
|
|
$
|
123,144
|
|
Finished goods
|
|
|
298,561
|
|
|
|
263,838
|
|
|
|
|
|
|
|
|
|
|
Total Inventory
|
|
$
|
433,792
|
|
|
$
|
386,982
|
|
|
|
|
|
|
|
|
|
|
7
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 4
|
MARKETABLE
SECURITIES
|
The following tables summarize marketable securities held at
November 30, 2010 and May 31, 2010 by asset type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale Securities
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
Fair Value
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
(Net Carrying
|
|
November 30, 2010
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Amount)
|
|
|
|
(In thousands)
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stocks
|
|
$
|
49,646
|
|
|
$
|
18,752
|
|
|
$
|
(631
|
)
|
|
$
|
67,767
|
|
Mutual funds
|
|
|
33,350
|
|
|
|
3,911
|
|
|
|
(13
|
)
|
|
|
37,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity securities
|
|
|
82,996
|
|
|
|
22,663
|
|
|
|
(644
|
)
|
|
|
105,015
|
|
Fixed maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and other government
|
|
|
17,121
|
|
|
|
345
|
|
|
|
(199
|
)
|
|
|
17,267
|
|
Corporate bonds
|
|
|
2,326
|
|
|
|
270
|
|
|
|
|
|
|
|
2,596
|
|
Mortgage-backed securities
|
|
|
307
|
|
|
|
107
|
|
|
|
|
|
|
|
414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed maturity securities
|
|
|
19,754
|
|
|
|
722
|
|
|
|
(199
|
)
|
|
|
20,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
102,750
|
|
|
$
|
23,385
|
|
|
$
|
(843
|
)
|
|
$
|
125,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale Securities
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
Fair Value
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
(Net Carrying
|
|
May 31, 2010
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Amount)
|
|
|
|
(In thousands)
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stocks
|
|
$
|
46,188
|
|
|
$
|
10,926
|
|
|
$
|
(1,181
|
)
|
|
$
|
55,933
|
|
Mutual funds
|
|
|
24,168
|
|
|
|
3,397
|
|
|
|
(470
|
)
|
|
|
27,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity securities
|
|
|
70,356
|
|
|
|
14,323
|
|
|
|
(1,651
|
)
|
|
|
83,028
|
|
Fixed maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury and other government
|
|
|
19,730
|
|
|
|
412
|
|
|
|
(62
|
)
|
|
|
20,080
|
|
Corporate bonds
|
|
|
7,921
|
|
|
|
507
|
|
|
|
(33
|
)
|
|
|
8,395
|
|
State and municipal bonds
|
|
|
387
|
|
|
|
4
|
|
|
|
(3
|
)
|
|
|
388
|
|
Foreign bonds
|
|
|
1,305
|
|
|
|
55
|
|
|
|
(8
|
)
|
|
|
1,352
|
|
Mortgage-backed securities
|
|
|
491
|
|
|
|
178
|
|
|
|
(2
|
)
|
|
|
667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed maturity securities
|
|
|
29,834
|
|
|
|
1,156
|
|
|
|
(108
|
)
|
|
|
30,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
100,190
|
|
|
$
|
15,479
|
|
|
$
|
(1,759
|
)
|
|
$
|
113,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities, included in other current and long-term
assets, totaling $92.1 million and $33.2 million at
November 30, 2010, respectively, and $91.7 million and
$22.2 million at May 31, 2010, respectively, are
composed of
available-for-sale
securities and are reported at fair value. Realized gains and
losses on sales of investments are recognized in net income on
the specific identification basis. Changes in the fair values of
securities that are considered temporary are recorded as
unrealized gains and losses, net of applicable taxes, in
accumulated other comprehensive income (loss) within
stockholders equity.
Other-than-temporary
declines in market value from original cost are reflected in
operating income in the period in which the unrealized losses
are deemed other than temporary. In order to determine whether
an
other-than-temporary
decline in market value has occurred, the
8
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
duration of the decline in value and our ability to hold the
investment are considered in conjunction with an evaluation of
the strength of the underlying collateral and the extent to
which the investments amortized cost or cost, as
appropriate, exceeds its related market value.
Gross gains and losses realized on sales of investments were
$3.5 million and $0.3 million, respectively, for the
quarter ended November 30, 2010. Gross gains and losses
realized on sales of investments were $1.4 million and
$0.5 million for the quarter ended November 30, 2009.
During the second quarter of fiscal 2011, we recognized losses
of $0.4 million for securities deemed to have
other-than-temporary
impairments. There were no losses recognized for securities with
other-than-temporary
impairments during the second quarter of fiscal 2010.
Gross gains and losses realized on sales of investments were
$5.9 million and $2.0 million, respectively, for the
six month period ended November 30, 2010. Gross gains and
losses realized on sales of investments were $1.4 million
and $0.5 million for the six month period ended
November 30, 2009. During the first six months of fiscal
2011 and fiscal 2010, we recognized losses of $0.5 million
and $0.1 million for securities deemed to have
other-than-temporary
impairments. These amounts are included in investment income,
net in the Consolidated Statements of Income.
Summarized below are the securities we held at November 30,
2010 and May 31, 2010 that were in an unrealized loss
position and that were included in accumulated other
comprehensive income, aggregated by the length of time the
investments had been in that position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2010
|
|
May 31, 2010
|
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
|
|
(In thousands)
|
|
Total investments with unrealized losses
|
|
$
|
19,102
|
|
|
$
|
(843
|
)
|
|
$
|
31,249
|
|
|
$
|
(1,759
|
)
|
Unrealized losses with a loss position for less than
12 months
|
|
|
17,403
|
|
|
|
(796
|
)
|
|
|
22,002
|
|
|
|
(1,385
|
)
|
Unrealized losses with a loss position for more than
12 months
|
|
|
1,699
|
|
|
|
(47
|
)
|
|
|
9,247
|
|
|
|
(374
|
)
|
We have reviewed all of the securities included in the table
above and have concluded that we have the ability and intent to
hold these investments until their cost can be recovered, based
upon the severity and duration of the decline. Therefore, we did
not recognize any
other-than-temporary
impairment losses on these investments. Unrealized losses at
November 30, 2010 were generally related to the volatility
in valuations over the last several months for a portion of our
portfolio of investments in marketable securities. The
unrealized losses generally relate to investments whose fair
values at November 30, 2010 were less than 15% below their
original cost or have been in a loss position for less than six
consecutive months. Although we have begun to see recovery in
general economic conditions over the past year, if we were to
experience continuing or significant unrealized losses within
our portfolio of investments in marketable securities in the
future, we may recognize additional
other-than-temporary
impairment losses. Such potential losses could have a material
impact on our results of operations in any given reporting
period. As such, we continue to closely evaluate the status of
our investments and our ability and intent to hold these
investments.
9
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The net carrying values of debt securities at November 30,
2010, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because the
issuers of the securities may have the right to prepay
obligations without prepayment penalties.
|
|
|
|
|
|
|
|
|
|
|
Amortized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Value
|
|
|
|
(In thousands)
|
|
|
Due:
|
|
|
|
|
|
|
|
|
Less than one year
|
|
$
|
2,457
|
|
|
$
|
2,415
|
|
One year through five years
|
|
|
8,759
|
|
|
|
8,823
|
|
Six years through ten years
|
|
|
4,769
|
|
|
|
4,925
|
|
After ten years
|
|
|
3,769
|
|
|
|
4,114
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,754
|
|
|
$
|
20,277
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 5
|
FAIR
VALUE MEASUREMENTS
|
Financial instruments recorded on the balance sheet include cash
and cash equivalents, trade accounts receivable, marketable
securities, notes and accounts payable, and debt.
An allowance for anticipated uncollectible trade receivable
amounts is established using a combination of specifically
identified accounts to be reserved, and a reserve covering
trends in collectibility. These estimates are based on an
analysis of trends in collectibility, past experience, and
individual account balances identified as doubtful based on
specific facts and conditions. Receivable losses are charged
against the allowance when we confirm uncollectibility.
All derivative instruments are recognized on our Consolidated
Balance Sheet and measured at fair value. Changes in the fair
values of derivative instruments that do not qualify as hedges
and/or
any
ineffective portion of hedges are recognized as a gain or (loss)
in our Consolidated Statement of Income in the current period.
Changes in the fair value of derivative instruments used
effectively as fair value hedges are recognized in earnings
(losses), along with the change in the value of the hedged item.
We do not hold or issue derivative instruments for speculative
purposes.
The valuation techniques utilized for establishing the fair
values of assets and liabilities are based on observable and
unobservable inputs. Observable inputs reflect readily
obtainable data from independent sources, while unobservable
inputs reflect managements market assumptions. The fair
value hierarchy has three levels based on the reliability of the
inputs used to determine fair value, as follows:
Level 1 Inputs
Quoted prices for
identical instruments in active markets.
Level 2 Inputs
Quoted prices for
similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active;
and model-derived valuations whose inputs are observable or
whose significant value drivers are observable.
Level 3 Inputs
Instruments with
primarily unobservable value drivers.
10
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table presents our assets and liabilities that are
measured at fair value on a recurring basis and are categorized
using the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
|
Fair Value at
|
|
|
|
Assets (Level 1)
|
|
|
Inputs (Level 2)
|
|
|
Inputs (Level 3)
|
|
|
November 30, 2010
|
|
|
|
(In thousands)
|
|
|
U.S. Treasury and other government
|
|
$
|
|
|
|
$
|
17,267
|
|
|
$
|
|
|
|
$
|
17,267
|
|
Mortgage-backed securities
|
|
|
|
|
|
|
414
|
|
|
|
|
|
|
|
414
|
|
Corporate bonds
|
|
|
|
|
|
|
2,596
|
|
|
|
|
|
|
|
2,596
|
|
Stocks
|
|
|
67,767
|
|
|
|
|
|
|
|
|
|
|
|
67,767
|
|
Mutual funds
|
|
|
|
|
|
|
37,248
|
|
|
|
|
|
|
|
37,248
|
|
Foreign currency forward contract
|
|
|
|
|
|
|
(2,480
|
)
|
|
|
|
|
|
|
(2,480
|
)
|
Cross-currency swap
|
|
|
|
|
|
|
(4,860
|
)
|
|
|
|
|
|
|
(4,860
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
67,767
|
|
|
$
|
50,185
|
|
|
$
|
|
|
|
$
|
117,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
|
Fair Value at
|
|
|
|
Assets (Level 1)
|
|
|
Inputs (Level 2)
|
|
|
Inputs (Level 3)
|
|
|
May 31, 2010
|
|
|
|
(In thousands)
|
|
|
U.S. Treasury and other government
|
|
$
|
|
|
|
$
|
20,080
|
|
|
$
|
|
|
|
$
|
20,080
|
|
State and municipal bonds
|
|
|
|
|
|
|
388
|
|
|
|
|
|
|
|
388
|
|
Foreign bonds
|
|
|
|
|
|
|
1,352
|
|
|
|
|
|
|
|
1,352
|
|
Mortgage-backed securities
|
|
|
|
|
|
|
667
|
|
|
|
|
|
|
|
667
|
|
Corporate bonds
|
|
|
|
|
|
|
8,395
|
|
|
|
|
|
|
|
8,395
|
|
Stocks
|
|
|
55,933
|
|
|
|
|
|
|
|
|
|
|
|
55,933
|
|
Mutual funds
|
|
|
|
|
|
|
27,095
|
|
|
|
|
|
|
|
27,095
|
|
Cross-currency swap
|
|
|
|
|
|
|
(1,412
|
)
|
|
|
|
|
|
|
(1,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
55,933
|
|
|
$
|
56,565
|
|
|
$
|
|
|
|
$
|
112,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our marketable securities are composed of mainly
available-for-sale
securities, and are valued using a market approach based on
quoted market prices for identical instruments. The availability
of inputs observable in the market varies from instrument to
instrument and depends on a variety of factors including the
type of instrument, whether the instrument is actively traded,
and other characteristics particular to the transaction. For
most of our financial instruments, pricing inputs are readily
observable in the market, the valuation methodology used is
widely accepted by market participants, and the valuation does
not require significant management discretion. For other
financial instruments, pricing inputs are less observable in the
market and may require management judgment.
Our cross-currency swap is a liability that has a fair value of
$4.9 million at November 30, 2010, that was originally
designed to fix our interest and principal payments in euros for
the life of our unsecured 6.70% senior notes due
November 1, 2015, which resulted in an effective euro
fixed-rate borrowing of 5.31%. The basis for determining the
rates for this swap included three legs at the inception of the
agreement: the USD fixed rate to a USD floating rate; the euro
floating to euro fixed rate; and the dollar to euro basis fixed
rate at inception. Therefore, we essentially exchanged fixed
payments denominated in USD for fixed payments denominated in
fixed euros, paying fixed euros at 5.31% and receiving fixed USD
at 6.70%. The ultimate payments are based on the notional
11
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
principal amounts of 150 million USD and approximately
125 million euros. There will be an exchange of the
notional amounts at maturity. The rates included in this swap
are based upon observable market data, but are not quoted market
prices, and therefore, the cross-currency swap is considered a
Level 2 liability on the fair value hierarchy.
Additionally, this cross-currency swap has been designated as a
hedging instrument, and is classified as other long-term
liabilities in our Consolidated Balance Sheets.
We have a foreign currency forward contract that is classified
as a liability in our Consolidated Balance Sheets with a fair
value of $2.5 million at November 30, 2010. This
foreign currency forward contract, which has not been designated
as a hedge, was designed to reduce our exposure to the changes
in the cash flows of intercompany foreign-currency-denominated
loans related to changes in foreign currency exchange rates by
fixing the functional currency cash flows. Upon inception of the
contract, we purchased USD $80.4 million and sold
approximately EUR 59.9 million. Changes in the
U.S. Dollar/Euro exchange rate will either increase or
decrease our USD functional currency earnings, and will be
reflected in Selling, General and Administrative Expenses on our
Consolidated Statements of Income. During the period ended
November 30, 2010, we recognized a loss of approximately
$2.5 million as a result of changes in the foreign exchange
rates of this foreign currency forward contract. However, these
losses were more than offset by the change in exchange rates
associated with the related intercompany foreign currency
denominated loans, for which we recognized a gain of
approximately $2.7 million during the period ended
November 30, 2010. The foreign currency forward contract
matures on November 23, 2011, one year from the date of
inception. There will be an exchange of the notional amounts at
maturity. The foreign exchange rates included in this forward
contract are based upon observable market data, but are not
quoted market prices, and therefore, the forward currency
forward contract is considered a Level 2 liability on the
fair value hierarchy.
The carrying value of our current financial instruments, which
include cash and cash equivalents, marketable securities, trade
accounts receivable, accounts payable, and short-term debt
approximates fair value because of the short-term maturity of
these financial instruments. At November 30, 2010 and
May 31, 2010, the fair value of our long-term debt was
estimated using active market quotes, based on our current
incremental borrowing rates for similar types of borrowing
arrangements, which are considered to be Level 2 inputs.
Based on the analysis performed, the fair value and the carrying
value of our financial instruments and long-term debt as of
November 30, 2010 and May 31, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
At November 30, 2010
|
|
|
Carrying Value
|
|
Fair Value
|
|
|
(In thousands)
|
|
Cash and cash equivalents
|
|
$
|
299,157
|
|
|
$
|
299,157
|
|
Marketable equity securities
|
|
|
105,015
|
|
|
|
105,015
|
|
Marketable debt securities
|
|
|
20,277
|
|
|
|
20,277
|
|
Long-term debt, including current portion
|
|
|
925,137
|
|
|
|
1,009,735
|
|
|
|
|
|
|
|
|
|
|
|
|
At May 31, 2010
|
|
|
Carrying Value
|
|
Fair Value
|
|
|
(In thousands)
|
|
Cash and cash equivalents
|
|
$
|
215,355
|
|
|
$
|
215,355
|
|
Marketable equity securities
|
|
|
83,028
|
|
|
|
83,028
|
|
Marketable debt securities
|
|
|
30,882
|
|
|
|
30,882
|
|
Long-term debt, including current portion
|
|
|
928,615
|
|
|
|
1,000,128
|
|
12
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 6
|
REORGANIZATION
PROCEEDINGS OF CERTAIN SUBSIDIARIES
|
General
Bondex and SPHC are defendants in
various asbestos-related bodily injury lawsuits filed in various
state courts. These cases generally seek unspecified damages for
asbestos-related diseases based on alleged exposures to
asbestos-containing products.
On May 31, 2010, Bondex and its parent, SPHC, filed
voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware. SPHC is the parent company of Bondex and
is also the parent company for various operating companies that
are not part of the reorganization filing, including Chemical
Specialties Manufacturing Corp., Day-Glo Color Corp., Dryvit
Holdings, Inc., Guardian Protection Products Inc., Kop-Coat
Inc., TCI, Inc. and RPM Wood Finishes Group, Inc. SPHC and
Bondex (the filing entities) took this action to
permanently and comprehensively resolve all pending and future
asbestos-related liability claims associated with Bondex and
SPHC-related products. As a result of the filing, all Bondex and
SPHC asbestos personal injury lawsuits have been stayed due to
the imposition of an automatic stay applicable in bankruptcy
cases. In addition, at the request of SPHC and Bondex, the
bankruptcy court has entered orders staying all claims against
RPM International Inc. and its affiliates that are derivative of
the asbestos claims against SPHC and Bondex. Through the
Chapter 11 proceedings, the filing entities intend
ultimately to establish a trust in accordance with
section 524(g) of the Bankruptcy Code and seek the
imposition of a channeling injunction that will direct all
future SPHC-related and Bondex-related claims to the trust. It
is anticipated that the trust will compensate claims at
appropriate values established by the trust documents and
approved by the bankruptcy court. At this time, it is not
possible to predict how long the proceedings will last, the form
of any ultimate resolution or when an ultimate resolution might
occur.
Prior to the bankruptcy filing, the filing entities had engaged
in a strategy of litigating asbestos-related products liability
claims brought against them. Claims paid during the year ended
May 31, 2010, prior to the bankruptcy filing, were
$92.6 million, which included defense-related payments
during the year of $42.6 million. No claims have been paid
since the bankruptcy filing and it is not contemplated that any
claims will be paid until a plan of reorganization is confirmed
and an asbestos trust is established and operating.
Prior to the Chapter 11 bankruptcy filing, we recorded
asbestos-related contingent liabilities that included
estimations of future costs, which by nature are subject to many
uncertainties that may change over time, including (i) the
ultimate number of claims filed; (ii) the amounts required
to resolve both currently known and future unknown claims;
(iii) the amount of insurance, if any, available to cover
such claims, including the outcome of coverage litigation
against the filing entities third-party insurers;
(iv) future earnings and cash flow of the filing entities;
(v) the impact of bankruptcies of other companies whose
share of liability may be imposed on the filing entities under
certain state liability laws; (vi) the unpredictable
aspects of the litigation process including a changing trial
docket and the jurisdictions in which trials are scheduled;
(vii) the outcome of any such trials including judgments or
jury verdicts, as a result of our more aggressive defense
posture, which included taking selective cases to verdict;
(viii) the lack of specific information in many cases
concerning exposure to products for which one of our
subsidiaries is responsible and the claimants diseases;
(ix) potential changes in applicable federal
and/or
state
law; and (x) the potential impact of various proposed
structured settlement transactions or subsidiary bankruptcies by
other companies, some of which are the subject of federal
appellate court review, the outcome of which could have
materially affected future asbestos-related liability estimates.
Historical Asbestos Liability Reserve
In
fiscal 2006, management retained Crawford & Winiarski
(C&W), an independent, third-party consulting
firm with expertise in the area of asbestos valuation work, to
assist it in calculating an estimate of Bondexs liability
for unasserted-potential-future-asbestos-related claims.
C&Ws methodology to project Bondexs liability
for unasserted-potential-future-asbestos-related claims included
an analysis of: (a) a widely accepted forecast of the
population likely to have been exposed to asbestos;
(b) epidemiological studies estimating the number of people
likely to develop asbestos-related diseases; (c) the
historical rate at which mesothelioma incidences resulted in the
payment of claims by Bondex; (d) the historical settlement
averages to value the projected number of future compensable
mesothelioma claims; (e) the historical
13
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
ratio of mesothelioma-related indemnity payments to
non-mesothelioma indemnity payments; and (f) the historical
defense costs and their relationship with total indemnity
payments. Based upon the results of this analysis, Bondex
recorded an accrued liability for asbestos claims through 2016
as of May 31, 2006 of $421.3 million. This amount was
calculated on a pre-tax basis and was not discounted for the
time value of money.
During the fiscal year ended May 31, 2008, the ten-year
asbestos liability established as of May 31, 2006 was
reviewed and evaluated. As part of that process, the credibility
of epidemiological studies of Bondexs mesothelioma claims,
first introduced to management by C&W some
two-and-one-half
years earlier, was validated. At the core of the evaluation
process, and the basis of C&Ws actuarial work on
behalf of Bondex, is the Nicholson Study. The Nicholson Study is
the most widely recognized reference in bankruptcy trust
valuations, global settlement negotiations and the Congressional
Budget Offices work done on the proposed FAIR Act in 2006.
Based on our ongoing comparison of the Nicholson Study
projections and Bondexs specific actual experience, which
at that time continued to bear an extremely close correlation to
the studys projections, the asbestos liability projection
was extended out to the year 2028. C&W assisted in
calculating an estimate of our liability for
unasserted-potential-future-asbestos-related claims out to 2028.
C&W projected that the cost of extending the asbestos
liability to 2028, coupled with an updated evaluation of
Bondexs current known claims to reflect its most recent
actual experience, would be $288.1 million. Therefore,
management added $288.1 million to the existing asbestos
liability, which brought Bondexs total asbestos-related
balance sheet liabilities at May 31, 2008 to
$559.7 million. On May 30, 2010, the day prior to the
bankruptcy filing, Bondex had recorded an asbestos related
product liability of $397.7 million.
The table below illustrates movements in the Bondex asbestos
liability for fiscal 2008, 2009 and 2010:
Asbestos
Liability Movement
(Current and Long-Term)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
Additions to
|
|
|
|
Impact of
|
|
|
|
|
Beginning
|
|
Asbestos
|
|
|
|
Deconsolidation
|
|
Balance at End
|
|
|
of Period
|
|
Charge
|
|
Deductions(1)
|
|
of SPHC(2)
|
|
of Period
|
|
|
(In thousands)
|
|
Year Ended May 31, 2010
|
|
$
|
490,328
|
|
|
|
|
|
|
$
|
92,621
|
|
|
$
|
(397,707
|
)
|
|
$
|
|
|
Year Ended May 31, 2009
|
|
|
559,745
|
|
|
|
|
|
|
|
69,417
|
|
|
|
|
|
|
|
490,328
|
|
Year Ended May 31, 2008
|
|
|
354,268
|
|
|
$
|
288,100
|
|
|
|
82,623
|
|
|
|
|
|
|
|
559,745
|
|
|
|
|
(1)
|
|
Deductions include payments for defense-related costs and
amounts paid to settle claims.
|
|
(2)
|
|
During the year ended May 31, 2010, SPHC and Bondex filed
Chapter 11 reorganization proceedings in the United States
Bankruptcy Court for the District of Delaware, and as a result,
were deconsolidated from our results, as required. Refer to
Note 2 for further information.
|
This liability, as a result of the accounting for the
deconsolidation of SPHC and its subsidiaries set forth in
Note 2, is no longer included in RPM International
Inc.s consolidated balance sheet, effective May 31,
2010.
Insurance Coverage Litigation
During calendar
year 2003, the filing entities third-party insurers
claimed exhaustion of coverage. On July 3, 2003, certain of
our subsidiaries, including the filing entities, filed the case
of Bondex International, Inc. et al. v. Hartford Accident
and Indemnity Company et al., Case
No. 1:03-cv-1322,
in the United States District Court for the Northern District of
Ohio, for declaratory judgment, breach of contract and bad faith
against the named third-party insurers, challenging their
assertion that their policies covering asbestos-related claims
had been exhausted. On December 1, 2008, the trial court
denied the plaintiffs motions for partial summary judgment
and granted the defendants motions for summary judgment
against plaintiffs, including the filing entities, and entered
judgment on all remaining claims and counterclaims, and
dismissed the action. Plaintiffs, including the filing entities,
appealed the trial courts decision to the United States
Court of Appeals for the Sixth Circuit, which appeal is
currently pending. The Sixth Circuit has stayed the appeal as a
result of the bankruptcy
14
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
filing, but an agreement in principle has been reached with the
insurers that may result in the appeal resuming. Bondex has not
included any potential benefits from the ongoing insurance
coverage litigation in calculating its asbestos liability. RPM
International Inc. is not a party to this insurance litigation.
Debtor-in-Possession
(DIP) Financing
In connection with
the bankruptcy filing, SPHC, Bondex and certain of SPHCs
subsidiaries entered into a three-year, $40.0 million DIP
Credit facility (the DIP Credit Facility) with
Wachovia Capital Finance Corporation (New England). The
Bankruptcy Court approved this facility, and granted Wachovia a
super priority administrative expense claim for all amounts owed
under the facility. The facility is secured by security
interests and liens in virtually all of the real and personal
property and assets of Bondex, SPHC and certain of SPHCs
subsidiaries. The DIP Credit Facility generally permits
borrowings for working capital, capital expenditures and other
general corporate purposes. The DIP Credit Facility also imposes
certain financial and non-financial covenants on SPHC and its
subsidiaries. RPM International Inc. is not a party to the DIP
Credit Facility and it has not guaranteed obligations under such
facility.
Financial Results and Reorganization Items
The SPHC condensed consolidated financial statements set forth
below have been prepared in conformity with ASC 852,
Reorganizations (ASC 852).
Specialty
Products Holding Corp.
Consolidated Statements of Income
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2009
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Net Sales
|
|
$
|
75,489
|
|
|
$
|
150,035
|
|
Net sales to RPM
|
|
|
2,850
|
|
|
|
9,565
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
78,339
|
|
|
|
159,600
|
|
Cost of sales
|
|
|
49,353
|
|
|
|
100,450
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
28,986
|
|
|
|
59,150
|
|
Selling, general & administrative expenses
|
|
|
22,511
|
|
|
|
44,898
|
|
Interest expense
|
|
|
4
|
|
|
|
11
|
|
Investment expense (income), net
|
|
|
(39
|
)
|
|
|
(169
|
)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
6,510
|
|
|
|
14,410
|
|
Provision for income taxes
|
|
|
2,391
|
|
|
|
5,263
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
4,119
|
|
|
$
|
9,147
|
|
|
|
|
|
|
|
|
|
|
SPHC and its subsidiaries routinely engage in intercompany
transactions with other entities within RPM in the ordinary
course of business, including services provided by RPM
International Inc. to SPHC and its subsidiaries under an
administrative services agreement. These services include risk
management and insurance services, benefits administration, IT
services, legal services, environmental, health and safety
compliance management, tax planning and compliance services,
treasury and cash management, various accounting services,
including preparation of accounting books and financial
statement preparation, internal audit services, benefits
associated with group purchasing of various supplies and
equipment, and consulting services associated with various
business development activities. The Bankruptcy Court has
approved this administrative services agreement.
As a result of their bankruptcy filing, SPHC and Bondex are
precluded from paying dividends to shareholders and from making
payments on any pre-bankruptcy filing accounts or notes payable
that are due and owing to any other entity within the RPM group
of companies (the Pre-Petition Intercompany
Payables) or other pre-petition
15
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
creditors during the pendency of the bankruptcy case, without
the Bankruptcy Courts approval. Moreover, no assurances
can be given that any of the Pre-Petition Intercompany Payables
will ever be paid or otherwise satisfied.
When SPHC emerges from the jurisdiction of the Bankruptcy Court,
the subsequent accounting will be determined based upon the
applicable circumstances and facts at such time, including the
terms of any plan of reorganization.
SPHC has assessed its liquidity position as a result of the
bankruptcy filing and believes that it can continue to fund its
and its subsidiaries operating activities and meet its
debt and capital requirements for the foreseeable future. The
SPHC condensed consolidated financial information set forth
above has been prepared on a going concern basis which
contemplates continuity of operations, realization of assets,
and liquidation of liabilities in the ordinary course of
business.
|
|
NOTE 7
|
CONTINGENCIES
AND OTHER ACCRUED LOSSES
|
We provide, through our wholly-owned insurance subsidiaries,
certain insurance coverage, primarily product liability
coverage, to our other subsidiaries. Excess coverage is provided
by third-party insurers. Our reserves provide for these
potential losses as well as other uninsured claims.
We also offer warranty programs at several of our industrial
businesses and have established a product warranty liability. We
review this liability for adequacy on a quarterly basis and
adjust it as necessary. The primary factors that could affect
this liability may include changes in the historical system
performance rate as well as the costs of replacement. Provision
for estimated warranty costs is recorded at the time of sale and
periodically adjusted, as required, to reflect actual
experience. It is probable that we will incur future losses
related to warranty claims we have received but that have not
been fully investigated and related to claims not yet received,
which are not currently estimable due to the significant number
of variables contributing to the extent of any necessary
remediation. While our warranty liability represents our best
estimate at November 30, 2010, we can provide no assurances
that we will not experience material claims in the future or
that we will not incur significant costs to resolve such claims
beyond the amounts accrued or beyond what we may recover from
our suppliers. Product warranty expense is recorded within
selling, general and administrative expense.
The following table includes the changes in our accrued warranty
balances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Beginning Balance
|
|
$
|
15,940
|
|
|
$
|
16,811
|
|
|
$
|
17,602
|
|
|
$
|
18,993
|
|
Deductions(1)
|
|
|
(5,471
|
)
|
|
|
(6,997
|
)
|
|
|
(11,283
|
)
|
|
|
(14,459
|
)
|
Provision charged to SG&A expense
|
|
|
5,462
|
|
|
|
5,283
|
|
|
|
9,612
|
|
|
|
10,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
15,931
|
|
|
$
|
15,097
|
|
|
$
|
15,931
|
|
|
$
|
15,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Primarily claims paid during the year.
|
In addition, like other companies participating in similar lines
of business, some of our subsidiaries are involved in several
proceedings relating to environmental matters. It is our policy
to accrue remediation costs when it is probable that such
efforts will be required and the related costs can be reasonably
estimated. These liabilities are undiscounted.
16
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 8
|
INVESTMENT
(INCOME) EXPENSE, NET
|
Investment (income) expense, net, consists of the following
components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Interest (income)
|
|
$
|
(1,258
|
)
|
|
$
|
(855
|
)
|
|
$
|
(2,281
|
)
|
|
$
|
(1,772
|
)
|
(Gain) loss on sale of marketable securities
|
|
|
(3,150
|
)
|
|
|
(884
|
)
|
|
|
(3,866
|
)
|
|
|
(929
|
)
|
Other-than-temporary
impairment on securities
|
|
|
429
|
|
|
|
|
|
|
|
485
|
|
|
|
146
|
|
Dividend (income)
|
|
|
(330
|
)
|
|
|
(318
|
)
|
|
|
(624
|
)
|
|
|
(596
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment (income) expense, net
|
|
$
|
(4,309
|
)
|
|
$
|
(2,057
|
)
|
|
$
|
(6,286
|
)
|
|
$
|
(3,151
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effective income tax rate was 30.8% for the three months
ended November 30, 2010 compared to an effective income tax
rate of 30.2% for the three months ended November 30, 2009.
The effective income tax rate was 30.6% for the six months ended
November 30, 2010 compared to an effective income tax rate
of 31.8% for the same period a year ago.
For the three and six months ended November 30, 2010 and
November 30, 2009, respectively, the effective tax rate
differed from the federal statutory rate principally due to
decreases in taxes as a result of the impact of certain foreign
operations on our U.S. taxes, the effect of lower income
tax rates in certain of our foreign jurisdictions and the
domestic manufacturing deduction. These decreases in taxes were
partially offset by state and local income taxes, non-deductible
business operating expenses and provisions for valuation
allowances associated with losses incurred by certain of our
foreign businesses and for foreign tax credit carryforwards.
As of November 30, 2010, we had unrecognized tax benefits
of approximately $3.4 million, of which approximately
$2.5 million would impact the effective tax rate, if
recognized. We recognize interest and penalties related to
unrecognized tax benefits in income tax expense. At
November 30, 2010, the accrual for interest and penalties
totaled approximately $1.5 million. We do not anticipate
any significant changes to the total unrecognized tax benefits
within the next 12 months that would impact the effective
tax rate.
We, or our subsidiaries, file income tax returns in the
U.S. and in various state, local and foreign jurisdictions.
As of November 30, 2010 we are subject to U.S. federal
income tax examinations for the fiscal years 2007 through 2010.
In addition, with limited exceptions, we, or our subsidiaries,
are subject to state and local or
non-U.S. income
tax examinations by tax authorities for the fiscal years 2003
through 2010. We are currently under examination in the
U.S. and in various
non-U.S. jurisdictions
including an ongoing audit by the Internal Revenue Service for
the fiscal 2007 and 2008 tax years. Although it is possible that
certain tax examinations could be resolved during the next
12 months, the timing and outcomes are uncertain.
As of November 30, 2010, we have determined, based on the
available evidence, that it is uncertain whether we will be able
to recognize certain deferred tax assets. Therefore, we intend
to maintain the tax valuation allowances recorded at
November 30, 2010 for those deferred tax assets until
sufficient positive evidence (for example, cumulative positive
foreign earnings or additional foreign source income) exists to
support their reversal. These valuation allowances relate to
U.S. foreign tax credit carryforwards, certain foreign net
operating losses and net foreign deferred tax assets. A portion
of the valuation allowance is associated with deferred tax
assets recorded in purchase accounting for prior year
acquisitions. In accordance with ASC 805, Business
Combinations, any reversal of the valuation allowance that was
recorded in purchase accounting reduces income tax expense.
We include SPHC and its domestic subsidiaries (collectively, the
SPHC Group) in our consolidated federal income tax
return. We entered into a tax-cooperation agreement (the
Agreement) with the SPHC Group, effective
17
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
from June 1, 2010. Generally, the Agreement provides,
amongst other items, that the federal income taxes of the SPHC
Group are to be computed on a stand-alone separate return basis.
The current portion of such income tax payable, if any, is due
from the SPHC Group to us. Conversely, subject to the terms of
the Agreement, income tax benefits associated with net operating
loss or tax credit carryovers generated by the SPHC Group, if
any, for the taxable year that benefits our consolidated income
tax return for that taxable year are payable by us to the SPHC
Group. Additionally, pursuant to the terms of the Agreement, a
similar approach is applied to consolidated, combined or unitary
state tax returns.
|
|
NOTE 10
|
PENSION
AND POSTRETIREMENT HEALTH CARE BENEFITS
|
We offer defined benefit pension plans, defined contribution
pension plans, as well as several unfunded health care benefit
plans primarily for certain of our retired employees. The
following tables provide the retirement-related benefit
plans impact on income before income taxes for the three
and six month periods ended November 30, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans
|
|
|
Non-U.S. Plans
|
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
Pension Benefits
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
4,240
|
|
|
$
|
3,337
|
|
|
$
|
831
|
|
|
$
|
486
|
|
Interest cost
|
|
|
3,435
|
|
|
|
3,523
|
|
|
|
1,783
|
|
|
|
1,822
|
|
Expected return on plan assets
|
|
|
(3,140
|
)
|
|
|
(2,448
|
)
|
|
|
(1,656
|
)
|
|
|
(1,502
|
)
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
89
|
|
|
|
88
|
|
|
|
2
|
|
|
|
2
|
|
Net actuarial losses recognized
|
|
|
1,979
|
|
|
|
1,850
|
|
|
|
585
|
|
|
|
236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
6,603
|
|
|
$
|
6,350
|
|
|
$
|
1,545
|
|
|
$
|
1,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans
|
|
|
Non-U.S. Plans
|
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
Postretirement Benefits
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
170
|
|
|
$
|
82
|
|
Interest cost
|
|
|
110
|
|
|
|
142
|
|
|
|
213
|
|
|
|
160
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
(22
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
Net actuarial (gains) losses recognized
|
|
|
(47
|
)
|
|
|
(35
|
)
|
|
|
20
|
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
42
|
|
|
$
|
101
|
|
|
$
|
403
|
|
|
$
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans
|
|
|
Non-U.S. Plans
|
|
|
|
Six Months Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
Pension Benefits
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
8,479
|
|
|
$
|
7,010
|
|
|
$
|
1,661
|
|
|
$
|
973
|
|
Interest cost
|
|
|
6,869
|
|
|
|
6,749
|
|
|
|
3,565
|
|
|
|
3,644
|
|
Expected return on plan assets
|
|
|
(6,279
|
)
|
|
|
(4,898
|
)
|
|
|
(3,311
|
)
|
|
|
(3,004
|
)
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
179
|
|
|
|
176
|
|
|
|
5
|
|
|
|
4
|
|
Net actuarial losses recognized
|
|
|
3,959
|
|
|
|
3,277
|
|
|
|
1,170
|
|
|
|
471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
13,207
|
|
|
$
|
12,314
|
|
|
$
|
3,090
|
|
|
$
|
2,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans
|
|
|
Non-U.S. Plans
|
|
|
|
Six Months Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
Postretirement Benefits
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
339
|
|
|
$
|
163
|
|
Interest cost
|
|
|
220
|
|
|
|
284
|
|
|
|
426
|
|
|
|
320
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
(43
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
Net actuarial (gains) losses recognized
|
|
|
(95
|
)
|
|
|
(69
|
)
|
|
|
41
|
|
|
|
(67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
84
|
|
|
$
|
203
|
|
|
$
|
806
|
|
|
$
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We previously disclosed in our financial statements for the
fiscal year ended May 31, 2010 that we expected to
contribute approximately $10.1 million to our retirement
plans in the U.S. and approximately $8.9 million to
plans outside the U.S. during the current fiscal year. As
of November 30, 2010, we do not anticipate any changes to
these contribution levels.
On May 31, 2010, we deconsolidated SPHC and its
subsidiaries from our balance sheet, and eliminated the results
of SPHCs operations beginning on that date. Therefore, the
information reflected above for the three and six month periods
ended November 30, 2010 for the U.S. Plans pension
benefits excludes amounts related to SPHCs pension plans.
19
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 11
|
EARNINGS
PER SHARE
|
The following table sets forth the reconciliation of the
numerator and denominator of basic and diluted earnings per
share, as calculated using the two-class method, for the three
and six month periods ended November 30, 2010 and the six
month period ended November 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Numerator for earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to RPM International Inc. stockholders
|
|
$
|
48,791
|
|
|
$
|
55,893
|
|
|
$
|
117,787
|
|
|
$
|
128,918
|
|
Less: Allocation of earnings and dividends to participating
securities
|
|
|
(830
|
)
|
|
|
(375
|
)
|
|
|
(1,712
|
)
|
|
|
(1,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders basic
|
|
|
47,961
|
|
|
|
55,518
|
|
|
|
116,075
|
|
|
|
127,303
|
|
Add: Undistributed earnings reallocated to unvested shareholders
|
|
|
2
|
|
|
|
375
|
|
|
|
4
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders diluted
|
|
$
|
47,963
|
|
|
$
|
55,893
|
|
|
$
|
116,079
|
|
|
$
|
127,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares
|
|
|
127,012
|
|
|
|
127,373
|
|
|
|
127,491
|
|
|
|
126,868
|
|
Average diluted options
|
|
|
658
|
|
|
|
700
|
|
|
|
559
|
|
|
|
510
|
|
Net issuable common share equivalents (1)
|
|
|
|
|
|
|
1,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares for diluted earnings per share (2), (3)
|
|
|
127,670
|
|
|
|
129,164
|
|
|
|
128,050
|
|
|
|
127,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share of Common Stock Attributable to RPM
International Inc. Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share of Common Stock
|
|
$
|
0.38
|
|
|
$
|
0.44
|
|
|
$
|
0.91
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share of Common Stock
|
|
$
|
0.38
|
|
|
$
|
0.43
|
|
|
$
|
0.91
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For the quarter ended November 30, 2009, the treasury stock
method was utilized for the purpose of computing diluted
earnings per share, as the result under the two-class method
would have been anti-dilutive.
|
|
(2)
|
|
For the quarter ended November 30, 2010 and 2009,
approximately 2,197,000 shares and 2,001,000 shares of
stock, respectively, granted under stock-based compensation
plans were excluded from the calculation of diluted EPS for
those periods, as the effect would have been anti-dilutive.
|
|
(3)
|
|
For the six month periods ended November 30, 2010 and 2009,
approximately 1,867,000 shares and 1,822,000 shares of
stock, respectively, granted under stock-based compensation
plans were excluded from the calculation of diluted EPS for
those periods, as the effect would have been anti-dilutive.
|
|
|
NOTE 12
|
SEGMENT
INFORMATION
|
We operate a portfolio of businesses and product lines that
manufacture and sell a variety of specialty paints, protective
coatings and roofing systems, sealants and adhesives. We manage
our portfolio by organizing our businesses and product lines
into two reportable segments: the industrial reportable segment
and the consumer reportable segment. Within each reportable
segment, we aggregate several operating segments that consist of
individual groups of companies and product lines, which
generally address common markets, share similar
20
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
economic characteristics, utilize similar technologies and can
share manufacturing or distribution capabilities. Our five
operating segments represent components of our business for
which separate financial information is available that is
utilized on a regular basis by our chief executive officer in
determining how to allocate the assets of the Company and
evaluate performance. These five operating segments are each
managed by an operating segment manager, who is responsible for
the
day-to-day
operating decisions and performance evaluation of the operating
segments underlying businesses.
Our industrial reportable segment products are sold throughout
North America and also account for the majority of our
international sales. Our industrial product lines are sold
directly to contractors, distributors and end-users, such as
industrial manufacturing facilities, public institutions and
other commercial customers. This reportable segment comprises
three separate operating segments our Building
Solutions Group, Performance Coatings Group, and RPM2 Group.
Products and services within this reportable segment include
construction chemicals; roofing systems; weatherproofing and
other sealants; polymer flooring; edible coatings and specialty
glazes for pharmaceutical, cosmetic and food industries; and
other specialty chemicals.
Our consumer reportable segment manufactures and markets
professional use and do-it-yourself (DIY) products
for a variety of mainly consumer applications, including home
improvement and personal leisure activities. Our consumer
segments major manufacturing and distribution operations
are located primarily in North America, along with a few
locations in Europe. Consumer segment products are sold directly
to mass merchandisers, home improvement centers, hardware
stores, paint stores, craft shops and to other smaller customers
through distributors. This reportable segment comprises two
operating segments our DAP Group and our Rust-Oleum
Group. Products within this reportable segment include
specialty, hobby and professional paints; caulks; adhesives;
silicone sealants; and wood stains.
In addition to our two reportable segments, there is a category
of certain business activities and expenses, referred to as
corporate/other, that does not constitute an operating segment.
This category includes our corporate headquarters and related
administrative expenses, results of our captive insurance
companies, gains or losses on the sales of certain assets and
other expenses not directly associated with either reportable
segment. Assets related to the corporate/other category consist
primarily of investments, prepaid expenses, deferred pension
assets, and headquarters property and equipment. These
corporate and other assets and expenses reconcile reportable
segment data to total consolidated income before income taxes
and identifiable assets. Our comparative three and six month
21
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
results for the periods ended November 30, 2010 and 2009,
and identifiable assets as of November 30, 2010 and
May 31, 2010 are presented in segment detail in the
following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Segment
|
|
$
|
582,508
|
|
|
$
|
613,496
|
|
|
$
|
1,184,822
|
|
|
$
|
1,237,523
|
|
Consumer Segment
|
|
|
243,835
|
|
|
|
245,162
|
|
|
|
536,331
|
|
|
|
537,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
826,343
|
|
|
$
|
858,658
|
|
|
$
|
1,721,153
|
|
|
$
|
1,774,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Segment
|
|
$
|
249,741
|
|
|
$
|
266,576
|
|
|
$
|
510,103
|
|
|
$
|
542,951
|
|
Consumer Segment
|
|
|
89,756
|
|
|
|
96,635
|
|
|
|
204,820
|
|
|
|
214,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
339,497
|
|
|
$
|
363,211
|
|
|
$
|
714,923
|
|
|
$
|
757,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Segment
|
|
$
|
67,672
|
|
|
$
|
74,421
|
|
|
$
|
150,151
|
|
|
$
|
159,300
|
|
Consumer Segment
|
|
|
27,352
|
|
|
|
31,784
|
|
|
|
76,379
|
|
|
|
81,980
|
|
Corporate/Other
|
|
|
(17,756
|
)
|
|
|
(25,462
|
)
|
|
|
(41,322
|
)
|
|
|
(51,556
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
77,268
|
|
|
$
|
80,743
|
|
|
$
|
185,208
|
|
|
$
|
189,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30,
|
|
|
May 31,
|
|
|
|
2010
|
|
|
2010
|
|
|
Identifiable Assets
|
|
|
|
|
|
|
|
|
Industrial Segment
|
|
$
|
1,824,793
|
|
|
$
|
1,666,005
|
|
Consumer Segment
|
|
|
1,099,768
|
|
|
|
1,135,211
|
|
Corporate/Other
|
|
|
193,994
|
|
|
|
202,808
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
3,118,555
|
|
|
$
|
3,004,024
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 13
|
STOCK
REPURCHASE PROGRAM
|
On January 8, 2008, we announced our authorization of a
stock repurchase program under which we may repurchase shares of
RPM International Inc. common stock at managements
discretion for general corporate purposes. Our current intent is
to limit our repurchases only to amounts required to offset
dilution created by stock issued in connection with our
equity-based compensation plans, or approximately one to two
million shares per year. As a result of this authorization, we
may repurchase shares from time to time in the open market or in
private transactions at various times and in amounts and for
prices that our management deems appropriate, subject to insider
trading rules and other securities law restrictions. The timing
of our purchases will depend upon prevailing market conditions,
alternative uses of capital and other factors. We may limit or
terminate the repurchase program at any time. During the six
months ended November 30, 2010, we repurchased
approximately 1.0 million shares of our common stock at a
cost of $17.9 million under this program.
22
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table illustrates the components of total equity
and comprehensive income for the quarter ended November 30,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RPM
|
|
|
|
|
|
|
|
|
|
International
|
|
|
Noncontrolling
|
|
|
|
|
|
|
Inc. Equity
|
|
|
Interest
|
|
|
Total Equity
|
|
|
|
(In thousands)
|
|
|
Total equity at August 31, 2010
|
|
$
|
1,141,637
|
|
|
$
|
95,242
|
|
|
$
|
1,236,879
|
|
Net income
|
|
|
48,791
|
|
|
|
4,712
|
|
|
|
53,503
|
|
Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
21,144
|
|
|
|
(1,098
|
)
|
|
|
20,046
|
|
Pension and other postretirement benefit liability adjustments,
net of tax
|
|
|
1,644
|
|
|
|
(130
|
)
|
|
|
1,514
|
|
Unrealized gain (loss) on securities, net of tax
|
|
|
4,616
|
|
|
|
(2,076
|
)
|
|
|
2,540
|
|
Unrealized gain on derivatives, net of tax
|
|
|
783
|
|
|
|
213
|
|
|
|
996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Comprehensive Income, net of tax
|
|
|
28,187
|
|
|
|
(3,091
|
)
|
|
|
25,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
76,978
|
|
|
|
1,621
|
|
|
|
78,599
|
|
Dividends paid
|
|
|
(27,282
|
)
|
|
|
|
|
|
|
(27,282
|
)
|
Other
|
|
|
2,076
|
|
|
|
|
|
|
|
2,076
|
|
Shares repurchased
|
|
|
(9,388
|
)
|
|
|
|
|
|
|
(9,388
|
)
|
Stock option exercises, net
|
|
|
2,184
|
|
|
|
|
|
|
|
2,184
|
|
Stock based compensation expense
|
|
|
540
|
|
|
|
|
|
|
|
540
|
|
Restricted awards, net
|
|
|
673
|
|
|
|
|
|
|
|
673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity at November 30, 2010
|
|
$
|
1,187,418
|
|
|
$
|
96,863
|
|
|
$
|
1,284,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table illustrates the components of total equity
and comprehensive income for the six months ended
November 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RPM
|
|
|
|
|
|
|
|
|
|
International
|
|
|
Noncontrolling
|
|
|
|
|
|
|
Inc. Equity
|
|
|
Interest
|
|
|
Total Equity
|
|
|
|
(In thousands)
|
|
|
Total equity at May 31, 2010
|
|
$
|
1,079,473
|
|
|
$
|
81,768
|
|
|
$
|
1,161,241
|
|
Net income
|
|
|
117,787
|
|
|
|
10,710
|
|
|
|
128,497
|
|
Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
40,417
|
|
|
|
4,985
|
|
|
|
45,402
|
|
Pension and other postretirement benefit liability adjustments,
net of tax
|
|
|
2,235
|
|
|
|
(85
|
)
|
|
|
2,150
|
|
Unrealized gain (loss) on securities, net of tax
|
|
|
9,571
|
|
|
|
(1,337
|
)
|
|
|
8,234
|
|
Unrealized gain on derivatives, net of tax
|
|
|
3,021
|
|
|
|
822
|
|
|
|
3,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Comprehensive Income, net of tax
|
|
|
55,244
|
|
|
|
4,385
|
|
|
|
59,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
173,031
|
|
|
|
15,095
|
|
|
|
188,126
|
|
Dividends paid
|
|
|
(53,911
|
)
|
|
|
|
|
|
|
(53,911
|
)
|
Other
|
|
|
1,088
|
|
|
|
|
|
|
|
1,088
|
|
Shares repurchased
|
|
|
(17,948
|
)
|
|
|
|
|
|
|
(17,948
|
)
|
Stock option exercises, net
|
|
|
2,612
|
|
|
|
|
|
|
|
2,612
|
|
Stock based compensation expense
|
|
|
1,012
|
|
|
|
|
|
|
|
1,012
|
|
Restricted awards, net
|
|
|
2,061
|
|
|
|
|
|
|
|
2,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity at November 30, 2010
|
|
$
|
1,187,418
|
|
|
$
|
96,863
|
|
|
$
|
1,284,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table illustrates the components of total
comprehensive income for the prior year periods:
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
November 30, 2009
|
|
|
November 30, 2009
|
|
|
|
(In thousands)
|
|
|
Net income
|
|
$
|
56,392
|
|
|
$
|
129,470
|
|
Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
30,540
|
|
|
|
40,463
|
|
Pension and other postretirement benefit liability adjustments,
net of tax
|
|
|
902
|
|
|
|
2,216
|
|
Unrealized gain on securities, net of tax
|
|
|
319
|
|
|
|
7,617
|
|
Unrealized gain on derivatives, net of tax
|
|
|
(8,899
|
)
|
|
|
701
|
|
|
|
|
|
|
|
|
|
|
Total Other Comprehensive Income, net of tax
|
|
|
22,862
|
|
|
|
50,997
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
79,254
|
|
|
|
180,467
|
|
Less: Net Income and Other Comprehensive Income Attributable to
Noncontrolling Interest
|
|
|
499
|
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income Attributable to
RPM International Inc. Stockholders
|
|
$
|
78,755
|
|
|
$
|
179,915
|
|
|
|
|
|
|
|
|
|
|
24
RPM
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
NOTE 15
|
SUBSEQUENT
EVENTS
|
We have evaluated events subsequent to November 30, 2010,
through the date the financial statements were issued, and have
determined no events have occurred that require adjustment of or
disclosure in the consolidated financial statements.
Subsequent to the end of our second quarter ended
November 30, 2010, on January 5, 2011, we established
a new $400.0 million senior unsecured multi-currency
revolving credit facility with a group of banks. The new credit
facility provides a $35.0 million
sub-limit
for swing loans (relatively short-term borrowings used for
working capital purposes) and a $100.0 million
sub-limit
for the issuance of letters of credit. Subsequent to the date of
the loan agreement, we have the option to increase the new
revolving credit facility by an aggregate principal amount not
to exceed $100.0 million. The purpose of this new credit
facility was to refinance our existing revolving credit
facility, and the proceeds of the new credit facility may be
used for working capital, capital expenditures and general
corporate purposes. This new revolving credit facility matures
four years from its closing date.
25
|
|
ITEM 2.
|
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements include the accounts of
RPM International Inc. and its majority-owned subsidiaries,
except for certain subsidiaries that were deconsolidated on
May 31, 2010 (please refer to Note 2 to the
Consolidated Financial Statements for further information).
Preparation of our financial statements requires the use of
estimates and assumptions that affect the reported amounts of
our assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. We continually evaluate these
estimates, including those related to our allowances for
doubtful accounts; inventories; allowances for recoverable
taxes; useful lives of property, plant and equipment; goodwill
and other intangible assets; environmental, warranties and other
contingent liabilities; income tax valuation allowances; pension
plans; and the fair value of financial instruments. We base our
estimates on historical experience, our most recent facts, and
other assumptions that we believe to be reasonable under the
circumstances. These estimates form the basis for making
judgments about the carrying values of our assets and
liabilities. Actual results, which are shaped by actual market
conditions, may differ materially from our estimates.
We have identified below the accounting policies and estimates
that are the most critical to our financial statements.
Revenue
Recognition
Revenues are recognized when realized or realizable, and when
earned. In general, this is when title and risk of loss pass to
the customer. Further, revenues are realizable when we have
persuasive evidence of a sales arrangement, the product has been
shipped or the services have been provided to the customer, the
sales price is fixed or determinable, and collectibility is
reasonably assured. We reduce our revenues for estimated
customer returns and allowances, certain rebates, sales
incentives and promotions in the same period the related sales
are recorded.
We also record revenues generated under long-term construction
contracts, mainly in connection with the installation of
specialized roofing and flooring systems, and related services.
In general, we account for long-term construction contracts
under the
percentage-of-completion
method, and therefore record contract revenues and related costs
as our contracts progress. This method recognizes the economic
results of contract performance on a timelier basis than does
the completed-contract method; however, application of this
method requires reasonably dependable estimates of progress
toward completion, as well as other dependable estimates. When
reasonably dependable estimates cannot be made, or if other
factors make estimates doubtful, the completed-contract method
is applied. Under the completed-contract method, billings and
costs are accumulated on the balance sheet as the contract
progresses, but no revenue is recognized until the contract is
complete or substantially complete.
Translation
of Foreign Currency Financial Statements and Foreign Currency
Transactions
Our reporting currency is the U.S. dollar. However, the
functional currency for each of our foreign subsidiaries is its
local currency. We translate the amounts included in our
Consolidated Statements of Income from our foreign subsidiaries
into U.S. dollars at weighted-average exchange rates, which
we believe are representative of the actual exchange rates on
the dates of the transactions. Our foreign subsidiaries
assets and liabilities are translated into U.S. dollars
from local currency at the actual exchange rates as of the end
of each reporting date, and we record the resulting foreign
exchange translation adjustments in our Consolidated Balance
Sheets as a component of accumulated other comprehensive income
(loss). If the U.S. dollar strengthens, we will reflect the
resulting losses as a component of accumulated other
comprehensive income (loss). Conversely, if the U.S. dollar
were to weaken, foreign exchange translation gains could result,
which would favorably impact accumulated other comprehensive
income. Translation adjustments will be included in net earnings
in the event of a sale or liquidation of any of our underlying
foreign investments, or in the event that we distribute the
accumulated earnings of consolidated foreign subsidiaries. If we
determine that the functional currency of any of our foreign
subsidiaries should be the U.S. dollar, our financial
statements will be affected. Should this occur, we will adjust
our reporting to appropriately account for any such changes.
26
As appropriate, we use permanently invested intercompany loans
as a source of capital to reduce exposure to foreign currency
fluctuations at our foreign subsidiaries. These loans, on a
consolidated basis, are treated as being analogous to equity for
accounting purposes. Therefore, foreign exchange gains or losses
on these intercompany loans are recorded in accumulated other
comprehensive income (loss). If we determine that the functional
currency of any of our subsidiaries should be the
U.S. dollar, we will no longer record foreign exchange
gains or losses on such intercompany loans.
Goodwill
We test our goodwill balances at least annually, or more
frequently as impairment indicators arise, using a fair-value
approach at the reporting unit level. Our reporting units have
been identified at the component level, which is the operating
segment level or one level below our operating segments. We
perform a two-step impairment test. In the first step, we
compare the fair value of each of our reporting units to its
carrying value. We have elected to perform our annual required
impairment tests, which involve the use of estimates related to
the fair market values of the reporting units with which
goodwill is associated, during our fourth fiscal quarter.
Calculating the fair market values of reporting units requires
our use of estimates and assumptions.
We use significant judgment in determining the most appropriate
method to establish the fair values of each of our reporting
units. We estimate the fair values of our reporting units by
employing various valuation techniques, depending on the
availability and reliability of comparable market value
indicators, and employ methods and assumptions which include the
application of third-party market value indicators and the
computation of discounted future cash flows for each of our
reporting units annual projected earnings before interest,
taxes, depreciation and amortization (EBITDA). For
each of our reporting units, we calculate a break-even multiple
based on its carrying value as of the testing date. We then
compare each reporting units break-even EBITDA market
multiple to guideline EBITDA market multiples applicable to our
industry and peer group, the data for which we develop
internally and through third-party sources. The result of this
analysis provides us with insight and sensitivity as to which
reporting units, if any, may have a higher risk for a potential
impairment.
We then supplement this analysis with an evaluation of
discounted future cash flows for each reporting units
projected EBITDA. Under this approach, we calculate the fair
value of each reporting unit based on the present value of
estimated future cash flows. If the fair value of the reporting
unit exceeds the carrying value of the net assets of the
reporting unit, goodwill is not impaired. An indication that
goodwill may be impaired results when the carrying value of the
net assets of a reporting unit exceeds the fair value of the
reporting unit. At that point, the second step of the impairment
test is performed, which requires a fair value estimate of each
tangible and intangible asset in order to determine the implied
fair value of the reporting units goodwill. If the
carrying value of a reporting units goodwill exceeds its
implied fair value, then we record an impairment loss equal to
the difference.
In applying the discounted cash flow methodology, we rely on a
number of factors, including future business plans, actual and
forecasted operating results, and market data. The significant
assumptions employed under this method include discount rates,
revenue growth rates, including assumed terminal growth rates,
and operating margins used to project future cash flows for each
reporting unit. The discount rates utilized reflect market-based
estimates of capital costs and discount rates adjusted for
managements assessment of a market participants view
with respect to other risks associated with the projected cash
flows of the individual reporting units. Our estimates are based
upon assumptions we believe to be reasonable, but which by
nature are uncertain and unpredictable. We believe we
incorporate ample sensitivity ranges into our analysis of
goodwill impairment testing for each reporting unit, such that
actual experience would need to be materially out of the range
of expected assumptions in order for an impairment to remain
undetected.
Our annual goodwill impairment analysis for fiscal 2010 did not
result in any impairment loss. The excess of fair value over
carrying value for reporting units as of March 1, 2010,
ranged from approximately $3.4 million (for a new reporting
unit acquired within the last 12 months) to
$647.1 million. In order to evaluate the sensitivity of the
fair value calculations of our goodwill impairment test, we
applied a hypothetical 5% decrease to the fair values of each
reporting unit. This hypothetical 5% decrease would result in
excess fair value over carrying value ranging from approximately
$0.3 million to $603.7 million for our reporting
units. Further, we compare the sum of the fair values of our
reporting units resulting from our discounted cash flow
calculations to our market capitalization as of
27
our valuation date. We use this comparison to further assess the
reasonableness of the assumptions employed in our valuation
calculations. As of the valuation date, the sum of the fair
values we calculated for our reporting units approximated our
market capitalization.
Should the future earnings and cash flows at our reporting units
decline
and/or
discount rates increase, future impairment charges to goodwill
and other intangible assets may be required.
Other
Long-Lived Assets
We assess identifiable, non-goodwill intangibles and other
long-lived assets for impairment whenever events or changes in
facts and circumstances indicate the possibility that the
carrying values of these assets may not be recoverable over
their estimated remaining useful lives. Factors considered
important in our assessment, which might trigger an impairment
evaluation, include the following:
|
|
|
|
|
significant under-performance relative to historical or
projected future operating results;
|
|
|
|
significant changes in the manner of our use of the acquired
assets;
|
|
|
|
significant changes in the strategy for our overall
business; and
|
|
|
|
significant negative industry or economic trends.
|
Additionally, we test all indefinite-lived intangible assets for
impairment at least annually during our fiscal fourth quarter.
Measuring a potential impairment of non-goodwill intangibles and
other long-lived assets requires the use of various estimates
and assumptions, including the determination of which cash flows
are directly related to the assets being evaluated, the
respective useful lives over which those cash flows will occur
and potential residual values, if any. If we determine that the
carrying values of these assets may not be recoverable based
upon the existence of one or more of the above-described
indicators or other factors, any impairment amounts would be
measured based on the projected net cash flows expected from
these assets, including any net cash flows related to eventual
disposition activities. The determination of any impairment
losses would be based on the best information available,
including internal estimates of discounted cash flows; quoted
market prices, when available; and independent appraisals, as
appropriate, to determine fair values. Cash flow estimates would
be based on our historical experience and our internal business
plans, with appropriate discount rates applied. Our fiscal 2010
annual impairment tests of each of our indefinite-lived
intangible assets did not result in any impairment loss.
Income
Taxes
Our provision for income taxes is calculated using the liability
method, which requires the recognition of deferred income taxes.
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes and certain changes in valuation
allowances. We provide valuation allowances against deferred tax
assets if, based on available evidence, it is more likely than
not that some portion or all of the deferred tax assets will not
be realized.
In determining the adequacy of valuation allowances, we consider
cumulative and anticipated amounts of domestic and international
earnings or losses, anticipated amounts of foreign source
income, as well as the anticipated taxable income resulting from
the reversal of future taxable temporary differences. We intend
to maintain any recorded valuation allowances until sufficient
positive evidence (for example, cumulative positive foreign
earnings or additional foreign source income) exists to support
a reversal of the tax valuation allowances.
Further, at each interim reporting period, we estimate an
effective income tax rate that is expected to be applicable for
the full year. Significant judgment is involved regarding the
application of global income tax laws and regulations and when
projecting the jurisdictional mix of income. Additionally,
interpretation of tax laws, court decisions or other guidance
provided by taxing authorities influences our estimate of the
effective income tax rates. As a result, our actual effective
income tax rates and related income tax liabilities may differ
materially from our estimated effective tax rates and related
income tax liabilities. Any resulting differences are recorded
in the period they become known.
28
Contingencies
We are party to claims and lawsuits arising in the normal course
of business. Although we cannot precisely predict the amount of
any liability that may ultimately arise with respect to any of
these matters, we record provisions when we consider the
liability probable and reasonably estimable. Our provisions are
based on historical experience and legal advice, reviewed
quarterly and adjusted according to developments. Estimating
probable losses requires the analysis of multiple forecasted
factors that often depend on judgments about potential actions
by third parties, such as regulators, courts, and state and
federal legislatures. Changes in the amounts of our loss
provisions, which can be material, affect our Consolidated
Statements of Income. Due to the inherent uncertainties in the
process undertaken to estimate potential losses, we are unable
to estimate an additional range of loss in excess of our
accruals. While it is reasonably possible that such excess
liabilities, if they were to occur, could be material to
operating results in any given quarter or year of their
recognition, we do not believe that it is reasonably possible
that such excess liabilities would have a material adverse
effect on our long-term results of operations, liquidity or
consolidated financial position.
Our environmental-related accruals are similarly established
and/or
adjusted as more information becomes available upon which costs
can be reasonably estimated. Here again, actual costs may vary
from these estimates because of the inherent uncertainties
involved, including the identification of new sites and the
development of new information about contamination. Certain
sites are still being investigated; therefore, we have been
unable to fully evaluate the ultimate costs for those sites. As
a result, accruals have not been estimated for certain of these
sites and costs may ultimately exceed existing estimated
accruals for other sites. We have received indemnities for
potential environmental issues from purchasers of certain of our
properties and businesses and from sellers of some of the
properties or businesses we have acquired. We also have
purchased insurance to cover potential environmental liabilities
at certain sites. If the indemnifying or insuring party fails
to, or becomes unable to, fulfill its obligations under those
agreements or policies, we may incur environmental costs in
addition to any amounts accrued, which may have a material
adverse effect on our financial condition, results of operations
or cash flows.
Several of our industrial businesses offer extended warranty
terms and related programs, and thus have established a
corresponding warranty liability. Warranty expense is impacted
by variations in local construction practices and installation
conditions, including geographic and climate differences.
Additionally, our operations are subject to various federal,
state, local and foreign tax laws and regulations which govern,
among other things, taxes on worldwide income. The calculation
of our income tax expense is based on the best information
available and involves our significant judgment. The actual
income tax liability for each jurisdiction in any year can be,
in some instances, determined ultimately several years after the
financial statements have been published.
We maintain accruals for estimated income tax exposures for many
different jurisdictions. Tax exposures are settled primarily
through the resolution of audits within each tax jurisdiction or
the closing of a statute of limitation. Tax exposures can also
be affected by changes in applicable tax laws or other factors,
which may cause us to believe a revision of past estimates is
appropriate. We believe that appropriate liabilities have been
recorded for income tax exposures; however, actual results may
differ materially from our estimates.
Allowance
for Doubtful Accounts Receivable
An allowance for anticipated uncollectible trade receivable
amounts is established using a combination of specifically
identified accounts to be reserved and a reserve covering trends
in collectibility. These estimates are based on an analysis of
trends in collectibility, past experience and individual account
balances identified as doubtful based on specific facts and
conditions. Receivable losses are charged against the allowance
when we confirm uncollectibility. Actual collections of trade
receivables could differ from our estimates due to changes in
future economic or industry conditions or specific
customers financial conditions.
Inventories
Inventories are stated at the lower of cost or market, cost
being determined on a
first-in,
first-out (FIFO) basis and market being determined on the basis
of replacement cost or net realizable value. Inventory costs
include raw
29
materials, labor and manufacturing overhead. We review the net
realizable value of our inventory in detail on an on-going
basis, with consideration given to various factors, which
include our estimated reserves for excess, obsolete, slow moving
or distressed inventories. If actual market conditions differ
from our projections, and our estimates prove to be inaccurate,
write-downs of inventory values and adjustments to cost of sales
may be required. Historically, our inventory reserves have
approximated actual experience.
Marketable
Securities
Marketable securities, included in other current and long-term
assets, are composed of
available-for-sale
securities and are reported at fair value. Realized gains and
losses on sales of investments are recognized in net income on
the specific identification basis. Changes in fair values of
securities that are considered temporary are recorded as
unrealized gains and losses, net of applicable taxes, in
accumulated other comprehensive income (loss) within
stockholders equity.
Other-than-temporary
declines in market value from original cost are reflected in
operating income in the period in which the unrealized losses
are deemed other than temporary. In order to determine whether
an
other-than-temporary
decline in market value has occurred, the duration of the
decline in value and our ability to hold the investment to
recovery are considered in conjunction with an evaluation of the
strength of the underlying collateral and the extent to which
the investments amortized cost or cost, as appropriate,
exceeds its related market value.
Pension
and Postretirement Plans
We sponsor qualified defined benefit pension plans and various
other nonqualified postretirement plans. The qualified defined
benefit pension plans are funded with trust assets invested in a
diversified portfolio of debt and equity securities and other
investments. Among other factors, changes in interest rates,
investment returns and the market value of plan assets can
(i) affect the level of plan funding; (ii) cause
volatility in the net periodic pension cost; and
(iii) increase our future contribution requirements. A
significant decrease in investment returns or the market value
of plan assets or a significant decrease in interest rates could
increase our net periodic pension costs and adversely affect our
results of operations. A significant increase in our
contribution requirements with respect to our qualified defined
benefit pension plans could have an adverse impact on our cash
flow.
Changes in our key plan assumptions would impact net periodic
benefit expense and the projected benefit obligation for our
defined benefit and various postretirement benefit plans. Based
upon May 31, 2010 information, the following tables reflect
the impact of a 1% change in the key assumptions applied to our
defined benefit pension plans in the U.S. and
internationally:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
International
|
|
|
1% Increase
|
|
1% Decrease
|
|
1% Increase
|
|
1% Decrease
|
|
|
|
|
(In millions)
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in expense in FY 2010
|
|
$
|
(2.6
|
)
|
|
$
|
3.0
|
|
|
$
|
(1.3
|
)
|
|
$
|
1.3
|
|
Increase (decrease) in obligation as of May 31, 2010
|
|
$
|
(27.1
|
)
|
|
$
|
30.1
|
|
|
$
|
(17.7
|
)
|
|
$
|
25.9
|
|
Expected Return on Plan Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in expense in FY 2010
|
|
$
|
(1.1
|
)
|
|
$
|
1.1
|
|
|
$
|
(1.0
|
)
|
|
$
|
1.0
|
|
Increase (decrease) in obligation as of May 31, 2010
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Compensation Increase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in expense in FY 2010
|
|
$
|
2.1
|
|
|
$
|
(1.9
|
)
|
|
$
|
0.9
|
|
|
$
|
(0.6
|
)
|
Increase (decrease) in obligation as of May 31, 2010
|
|
$
|
10.3
|
|
|
$
|
(9.4
|
)
|
|
$
|
5.3
|
|
|
$
|
(4.8
|
)
|
30
Based upon May 31, 2010 information, the following tables
reflect the impact of a 1% change in the key assumptions applied
to our various postretirement health care plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
International
|
|
|
1% Increase
|
|
1% Decrease
|
|
1% Increase
|
|
1% Decrease
|
|
|
|
|
(In millions)
|
|
|
|
Discount Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in expense in FY 2010
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.2
|
|
Increase (decrease) in obligation as of May 31, 2010
|
|
$
|
(0.6
|
)
|
|
$
|
0.7
|
|
|
$
|
(2.4
|
)
|
|
$
|
3.1
|
|
Healthcare Cost Trend Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in expense in FY 2010
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0.2
|
|
|
$
|
(0.2
|
)
|
Increase (decrease) in obligation as of May 31, 2010
|
|
$
|
0.4
|
|
|
$
|
(0.3
|
)
|
|
$
|
3.2
|
|
|
$
|
(2.5
|
)
|
BUSINESS
SEGMENT INFORMATION
Our business is divided into two reportable segments: the
industrial reportable segment and the consumer reportable
segment. Within each reportable segment, we aggregate several
operating segments that consist of individual groups of
companies and product lines, which generally address common
markets, share similar economic characteristics, utilize similar
technologies and can share manufacturing or distribution
capabilities. Our five operating segments represent components
of our business for which separate financial information is
available that is utilized on a regular basis by our chief
executive officer in determining how to allocate the assets of
the Company and evaluate performance. These five operating
segments are each managed by an operating segment manager, who
is responsible for the
day-to-day
operating decisions and performance evaluation of the operating
segments underlying businesses. We evaluate the profit
performance of our segments primarily based on gross profit,
and, to a lesser extent, income (loss) before income taxes, but
also look to earnings (loss) before interest and taxes
(EBIT) as a performance evaluation measure because
interest expense is essentially related to corporate
acquisitions, as opposed to segment operations.
Our industrial reportable segment products are sold throughout
North America and also account for the majority of our
international sales. Our industrial product lines are sold
directly to contractors, distributors and end-users, such as
industrial manufacturing facilities, public institutions and
other commercial customers. This reportable segment comprises
three separate operating segments our Building
Solutions Group, Performance Coatings Group, and RPM2 Group.
Products and services within this reportable segment include
construction chemicals; roofing systems; weatherproofing and
other sealants; polymer flooring; edible coatings and specialty
glazes for pharmaceutical, cosmetic and food industries; and
other specialty chemicals.
Our consumer reportable segment manufactures and markets
professional use and do-it-yourself (DIY) products
for a variety of mainly consumer applications, including home
improvement and personal leisure activities. Our consumer
segments major manufacturing and distribution operations
are located primarily in North America, along with a few
locations in Europe. Consumer segment products are sold
throughout North America directly to mass merchants, home
improvement centers, hardware stores, paint stores, craft shops
and to other smaller customers through distributors. This
reportable segment comprises two operating segments
our DAP Group and our Rust-Oleum Group. Products within this
reportable segment include specialty, hobby and professional
paints; caulks; adhesives; silicone sealants; and wood stains.
In addition to our two reportable segments, there is a category
of certain business activities and expenses, referred to as
corporate/ other, that does not constitute an operating segment.
This category includes our corporate headquarters and related
administrative expenses, results of our captive insurance
companies, gains or losses on the sales of certain assets and
other expenses not directly associated with either reportable
segment. Assets related to the corporate/other category consist
primarily of investments, prepaid expenses, deferred pension
assets, and headquarters property and equipment. These
corporate and other assets and expenses reconcile reportable
segment data to total consolidated income before income taxes,
interest expense and earnings before interest and taxes.
31
The following table reflects the results of our reportable
segments consistent with our management philosophy, and
represents the information we utilize, in conjunction with
various strategic, operational and other financial performance
criteria, in evaluating the performance of our portfolio of
product lines.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Segment
|
|
$
|
582,508
|
|
|
$
|
613,496
|
|
|
$
|
1,184,822
|
|
|
$
|
1,237,523
|
|
Consumer Segment
|
|
|
243,835
|
|
|
|
245,162
|
|
|
|
536,331
|
|
|
|
537,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
826,343
|
|
|
$
|
858,658
|
|
|
$
|
1,721,153
|
|
|
$
|
1,774,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Segment
|
|
$
|
249,741
|
|
|
$
|
266,576
|
|
|
$
|
510,103
|
|
|
$
|
542,951
|
|
Consumer Segment
|
|
|
89,756
|
|
|
|
96,635
|
|
|
|
204,820
|
|
|
|
214,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
339,497
|
|
|
$
|
363,211
|
|
|
$
|
714,923
|
|
|
$
|
757,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes(a)
|
|
$
|
67,672
|
|
|
$
|
74,421
|
|
|
$
|
150,151
|
|
|
$
|
159,300
|
|
Interest (Expense), Net
|
|
|
(1,008
|
)
|
|
|
(257
|
)
|
|
|
(1,869
|
)
|
|
|
(367
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT(b)
|
|
$
|
68,680
|
|
|
$
|
74,678
|
|
|
$
|
152,020
|
|
|
$
|
159,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes(a)
|
|
$
|
27,352
|
|
|
$
|
31,784
|
|
|
$
|
76,379
|
|
|
$
|
81,980
|
|
Interest (Expense), Net
|
|
|
20
|
|
|
|
(4
|
)
|
|
|
30
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT(b)
|
|
$
|
27,332
|
|
|
$
|
31,788
|
|
|
$
|
76,349
|
|
|
$
|
81,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate/Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expense) Before Income Taxes(a)
|
|
$
|
(17,756
|
)
|
|
$
|
(25,462
|
)
|
|
$
|
(41,322
|
)
|
|
$
|
(51,556
|
)
|
Interest (Expense), Net
|
|
|
(11,171
|
)
|
|
|
(12,354
|
)
|
|
|
(24,385
|
)
|
|
|
(23,941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT(b)
|
|
$
|
(6,585
|
)
|
|
$
|
(13,108
|
)
|
|
$
|
(16,937
|
)
|
|
$
|
(27,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes(a)
|
|
$
|
77,268
|
|
|
$
|
80,743
|
|
|
$
|
185,208
|
|
|
$
|
189,724
|
|
Interest (Expense), Net
|
|
|
(12,159
|
)
|
|
|
(12,615
|
)
|
|
|
(26,224
|
)
|
|
|
(24,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT(b)
|
|
$
|
89,427
|
|
|
$
|
93,358
|
|
|
$
|
211,432
|
|
|
$
|
214,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESULTS
OF OPERATIONS
Three
Months Ended November 30, 2010
Net
Sales
On a consolidated basis, net sales of $826.3 million for
the second quarter ended November 30, 2010 declined 3.8%,
or $32.4 million, from net sales of $858.7 million
during the same period last year. As outlined in Note 2 to
our Consolidated Financial Statements, at May 31, 2010, we
deconsolidated SPHC and its subsidiaries from our balance sheet,
and eliminated the results of SPHCs operations from our
results of operations beginning on that date. The combined
impact of removing net sales relating to SPHC and its
subsidiaries from the prior year second quarter and adding back
intercompany sales to the deconsolidated group that previously
would have been eliminated in consolidation, results in an
adjusted prior year second quarter net sales of
$784.4 million, a decrease of $74.3 million, or
approximately 8.7% of the prior years second quarter net
sales, as reported. Net sales for the
32
second quarter of fiscal 2011 increased 5.3% or
$41.9 million from adjusted net sales during last
years second quarter, reflecting organic growth of 2.5%,
or $20.1 million, versus adjusted net sales during the same
period a year ago. The organic improvement included
volume-related improvements approximating 2.4% or
$18.9 million, offset partially by the combined impact of
net unfavorable foreign exchange rates
year-over-year,
which amounted to 0.9%, or $6.7 million, and an overall
favorable change in pricing representing 1.0% of the prior
period adjusted sales, or $7.9 million. These favorable
pricing initiatives, including those across both of our
reportable segments, were instituted primarily during prior
periods in order to offset the escalated costs of many of our
raw materials. Foreign exchange losses resulted primarily from
the strong dollar against the euro, partially offset by the
dollars performance versus Canadian, Latin American and
Asia Pacific currencies. Finally, nine small acquisitions over
the past year provided 2.8% of sales growth over last
years adjusted second quarter net sales, or
$21.8 million.
Industrial segment net sales, which comprised 70.5% of the
current quarters consolidated net sales, totaled
$582.5 million, a decline of 5.1% from $613.5 million
during last years second quarter. As discussed above, our
current second quarter net sales reflect the impact of the
deconsolidation of SPHC and its subsidiaries. Net sales relating
to the deconsolidated group for the prior year second quarter
totaled $74.3 million, or 12.1% of last years
reported second quarter industrial segment net sales. Compared
with the prior year second quarter adjusted net sales of
$539.2 million, this segments current quarter net
sales increased by 8.0%, reflecting organic growth of 4.3% or
$23.5 million. The organic growth included volume-related
improvements approximating 4.1% and favorable pricing versus
adjusted industrial segment net sales for the same period a year
ago approximating 1.2%, offset partially by 1.0% from net
unfavorable foreign exchange differences versus the adjusted net
sales for the same period a year ago. Seven small acquisitions
provided 3.7% growth over the prior year adjusted second
quarter. The pure unit organic sales growth in the industrial
segment resulted from general improvement in the overall
economy, which impacted many of our industrial product lines,
including polymer flooring, particularly in Europe and Canada,
and corrosion control coatings. We continue to secure new
business through strong brand offerings, new product innovations
and international expansion.
Consumer segment net sales of $243.8 million comprised
29.5% of the current quarters consolidated net sales and
declined by 0.6% versus the segments prior year second
quarter net sales of $245.2 million. Two small acquisitions
contributed 0.8% to the current quarter net sales, while unit
volume declined by approximately 1.4%. Slight changes in pricing
versus the prior year period favorably impacted the
segments current quarter net sales by 0.6%, while the
impact of net unfavorable foreign exchange rates reduced the
segments current quarter net sales by approximately 0.6%
versus the prior year period. Our consumer segment continues to
increase market penetration at major retail accounts with
various new product launches and broader channel penetration,
while also maintaining a focus on our existing repair and
maintenance oriented products.
Gross
Profit Margin
Our consolidated gross profit declined to 41.1% of net sales
this quarter from 42.3% of net sales for the same period a year
ago, and from 42.6% of adjusted net sales for the same period a
year ago, despite our overall 2.4% improvement in organic sales
volume as described above. The
year-over-year
impact of higher raw material costs had an unfavorable impact on
the current quarters gross profit margin versus last
years adjusted gross profit margin, reflecting
year-over-year
higher demand for raw materials and an unusually high number of
both planned and unplanned raw material supplier plant outages,
in a number of instances further amplified by peak seasonal
demand. Other factors that had an unfavorable impact on our
current quarter gross profit margin were product mix and
overhead.
Our industrial segment gross profit for the second quarter of
fiscal 2011 decreased to 42.9% of net sales from last
years second quarter result of 43.5% of net sales, and
from last years second quarter adjusted result of 44.1% of
net sales. Contributing to this 120 bps decrease versus the
prior period adjusted gross profit margin was the combination of
higher raw material costs, higher overhead and an unfavorable
mix of sales during the current quarter.
Our consumer segment gross profit for the quarter declined to
36.8% of net sales from last years 39.4% of net sales.
Most of the decline in this margin resulted from the impact of
higher raw material costs during the current
33
fiscal quarter versus the same period a year ago, combined with
higher labor and overhead costs and an unfavorable mix of
product sales.
Selling,
General and Administrative Expenses
(SG&A)
Our consolidated SG&A improved to 30.3% of net sales for
the current quarter compared with 31.5% a year ago. SG&A as
a percent of adjusted prior period net sales was also 31.5%. The
120 bps decrease in SG&A as a percent of net sales
primarily reflects the overall favorable impact of the 2.4% unit
volume growth in net sales during the current quarter versus the
same period a year ago. Additionally, while there were
unfavorable increases in warranty expense, employee
compensation, benefits and commissions during the current
quarter versus last years second quarter, there were
favorable declines in bad debt expense, advertising and
insurance-related expense, along with a reduction in
acquisition-related costs incurred during this years
second quarter versus the same period a year ago. Finally,
during the current quarter we recognized a reimbursement from
SPHC for certain services provided to the deconsolidated
entities under a service agreement.
Our industrial segment SG&A improved to 31.1% of net sales
for the current quarter versus 31.4% of actual net sales and
31.4% of adjusted net sales for the same period last year. This
segments current quarter SG&A margin reflects the
impact of its 4.3% growth in organic sales, as discussed above,
combined with lower acquisition-related expense, favorable
foreign exchange-related gains and overall lower discretionary
spending during the current quarter versus the same period a
year ago. Partially offsetting those improvements was the impact
of higher compensation expense, including commissions on sales
resulting from the current quarter growth in organic sales and
product mix, and higher warranty expense during the current
quarter versus the same period a year ago.
Our consumer segment SG&A as a percentage of net sales for
the current quarter decreased to 25.6% of net sales compared
with 26.4% of actual net sales a year ago. Reflected in this
segments improved SG&A margin this quarter are
significant cost controls versus the same period last year,
including lower advertising and compensation-related expense.
Slightly offsetting those savings were slightly higher
distribution expenses and unfavorable foreign exchange
adjustments during the current quarter versus the same period a
year ago.
SG&A expenses in our corporate/other category decreased
during the current quarter to $6.6 million from
$13.1 million during the corresponding period last year.
This $6.5 million decrease reflects the combination of a
reimbursement received from an outside service provider in
connection with a correction to prior billings, along with lower
legal, environmental and acquisition-related expenses.
Additionally, there was lower employee-related compensation and
benefit expense. Finally, during the current quarter, we
incurred fewer corporate/other costs versus the same period a
year ago as a result of the May 31, 2010 deconsolidation of
SPHC and its subsidiaries.
License fee and joint venture income of approximately
$0.6 million and $0.5 million for each of the quarters
ended November 30, 2010 and 2009, respectively, are
reflected as reductions of consolidated SG&A expenses.
We recorded total net periodic pension and postretirement
benefit costs of $8.6 million and $7.7 million for the
quarters ended November 30, 2010 and 2009, respectively.
This increased pension expense of $0.9 million was
primarily the result of increased service cost of
$1.3 million, offset slightly by lower interest cost of
$0.1 million for the current quarter versus the same period
a year ago, combined with approximately $0.5 million of
additional net actuarial losses incurred this quarter versus the
same period a year ago. Partially offsetting those net higher
costs was an improvement in the expected return on plan assets,
which had a favorable impact on pension expense of approximately
$0.8 million. We expect that pension expense will fluctuate
on a
year-to-year
basis, depending primarily upon the investment performance of
plan assets and potential changes in interest rates, but such
changes are not expected to be material to our consolidated
financial results. See Note 10, Pension and
Postretirement Health Care Benefits, for additional
information regarding these benefits.
Interest
Expense
Interest expense was $16.4 million for the second quarter
of fiscal 2011 versus $14.7 million for the same period of
fiscal 2010. Additional borrowings for acquisitions incurred
during the current quarter versus the same period last year
increased interest expense this quarter by approximately
$1.0 million versus last years second quarter, while
higher average borrowings
year-over-year
increased interest expense by approximately $0.9 million.
34
Lower average interest rates, which averaged 6.10% overall for
the second quarter of fiscal 2011 compared with 6.34% for the
same period of fiscal 2010, reduced interest expense by
approximately $0.2 million during the current quarter
versus the same period a year ago.
Investment
Expense (Income), Net
Net investment income of $4.3 million during the second
quarter of fiscal 2011 compares to fiscal 2010 second quarter
net investment income of $2.1 million. Net realized gains
on the sales of investments resulted in a net gain of
$3.2 million for the quarter ended November 30, 2010
versus a net gain of approximately $0.9 million for the
same period during fiscal 2010, resulting from the timing of
sales of securities. Dividend and interest income totaling
$1.5 million during the current quarter compares with
$1.2 million of income during last years second
quarter. Impairments recognized on securities that management
has determined had
other-than-temporary
declines in value during the current fiscal quarter approximated
$0.4 million, while there were no impairments during the
same period last year.
Income
Before Income Taxes (IBT)
Our consolidated pretax income for this years second
quarter of $77.3 million compares with last years
second quarter pretax income of $80.7 million, for a profit
margin on net sales of 9.4% versus 9.3% a year ago. Excluding
SPHCs IBT from the prior years second quarter IBT,
our current quarter pretax income was $2.9 million higher
than last years adjusted pretax income of
$74.4 million, for a profit margin on adjusted net sales of
9.5% during last years second quarter.
Our industrial segment had IBT of $67.7 million, for a
profit margin on net sales of 11.6%, for this years second
quarter versus last years second quarter IBT of
$74.4 million, for a profit margin on net sales of 12.1%,
principally reflecting the impact on this segment of the
deconsolidation of SPHC on May 31, 2010, as previously
discussed. Excluding SPHCs results from last years
second quarter, our industrial segments IBT was
$67.9 million, for a profit margin on adjusted net sales of
12.6%. The industrial segments current quarter reduction
in the profit margin on net sales versus last years second
quarter adjusted margin primarily reflects the higher raw
material costs experienced during the current quarter versus the
same period a year ago, combined with an unfavorable mix of
sales during the current quarter versus the adjusted amount for
the same period a year ago. Our consumer segment IBT declined to
$27.4 million for the quarter, for a profit margin on net
sales of 11.2%, from $31.8 million during the second
quarter last year, for a profit margin on net sales of 13.0%,
primarily from this segments 1.4% decline in organic sales
(including unfavorable foreign exchange and reduced sales
volume) during the current quarter versus last years
second quarter, combined with the unfavorable impact of higher
raw material costs.
Income
Tax Rate
The effective income tax rate was 30.8% for the three months
ended November 30, 2010 compared to an effective income tax
rate of 30.2% for the three months ended November 30, 2009.
For the three months ended November 30, 2010 and, to a
greater extent for the three months ended November 30,
2009, the effective tax rate differed from the federal statutory
rate principally due to increases in taxes as a result of the
impact of non-deductible business operating expenses, state and
local income taxes and provisions for valuation allowances
associated with losses incurred by certain of our foreign
businesses and for foreign tax credit carryforwards. The
increases in the tax rates were offset by the impact of certain
foreign operations on our U.S. taxes, the effect of lower
tax rates in certain of our foreign jurisdictions and the
domestic manufacturing deduction.
As of November 30, 2010, we have determined, based on the
available evidence, that it is uncertain whether we will be able
to recognize certain deferred tax assets. Therefore, we intend
to maintain the tax valuation allowances recorded at
November 30, 2010 for those deferred tax assets until
sufficient positive evidence (for example, cumulative positive
foreign earnings or additional foreign source income) exists to
support their reversal. These valuation allowances relate to
U.S. foreign tax credit carryforwards, certain foreign net
operating losses and net foreign deferred tax assets. A portion
of the valuation allowance is associated with deferred tax
assets recorded in
35
purchase accounting for prior year acquisitions. Any reversal of
the valuation allowance that was recorded in purchase accounting
reduces income tax expense.
Net
Income
Net income of $53.5 million for the three months ended
November 30, 2010 compares to $56.4 million for the
same period last year, for a net margin on sales of 6.5% for the
current quarter compared to the prior year periods 6.6%
net margin on sales. Excluding the results of the deconsolidated
group from the prior period net income, the prior years
second quarter net income was $52.5 million on an adjusted
basis, for a prior period net margin on adjusted sales of 6.7%.
During the quarter ended November 30, 2010, we had net
income from noncontrolling interests of $4.7 million,
related to our recent deconsolidation of SPHC. If the
deconsolidation of SPHC had occurred prior to fiscal 2010, there
would have been approximately $4.8 million in net income
from noncontrolling interests during that quarter. Net income
attributable to RPM International Inc. Stockholders was
$48.8 million for the three months ended November 30,
2010, versus $55.9 million for the same period a year ago,
for a margin on net sales of 5.9% for the current quarter
compared to the prior periods 6.5% net margin on sales. On
an adjusted basis, the prior year second quarter net income
attributable to RPM International Inc. Stockholders was
$47.7 million, for an adjusted margin on net sales of 6.1%.
Diluted earnings per share of common stock for this years
second quarter of $0.38 compares with $0.43 a year ago and an
adjusted $0.37 for the same period last year.
Six
Months Ended November 30, 2010
Net
Sales
On a consolidated basis, net sales of $1.72 billion for the
six months ended November 30, 2010 declined 3.0%, or
$53.4 million, over net sales of $1.77 billion during
the same period last year. As previously discussed, at
May 31, 2010, we deconsolidated SPHC and its subsidiaries
from our balance sheet, and eliminated the results of
SPHCs operations from our results of operations beginning
on that date. The combined impact of removing net sales relating
to SPHC and its subsidiaries from the prior year first six
months and adding back intercompany sales to the deconsolidated
group that previously would have been eliminated in
consolidation, results in an adjusted prior year first six
months net sales of $1.63 billion, a decrease of
$147.2 million, or approximately 8.3% of the prior
years first six months net sales, as reported. As such,
net sales for the first six months of fiscal 2011 increased
5.8%, or $93.8 million from adjusted net sales for the same
period a year ago. The organic growth in sales amounted to 3.1%,
or $50.6 million, of the increase in the current period net
sales versus adjusted net sales for the same period a year ago,
which includes volume-related improvements approximating 3.7% or
$60.6 million, and the impact of favorable pricing
initiatives, approximating 0.4% of the prior period adjusted net
sales, or $5.8 million. These favorable pricing
initiatives, including those across both of our reportable
segments, were instituted primarily during prior periods in
order to offset the escalated costs of many of our raw
materials. Also reflected in the 3.1% growth in organic sales is
the impact of unfavorable foreign exchange rates
year-over-year,
which amounted to 1.0% of adjusted net sales for last
years first six months, or $15.8 million. These
losses resulted primarily from the strong dollar against the
euro, offset in part by favorable adjustments across nearly all
major foreign currencies. Nine small acquisitions over the past
year provided 2.7% of net sales growth over last years
adjusted first six months, or $43.2 million.
Industrial segment net sales, which comprised 68.8% of
consolidated net sales for this years first six months,
totaled $1.18 billion, a decline of 4.3% from
$1.24 billion during last years first six months. As
discussed above, net sales for the first six months of fiscal
2011 reflect the impact of the deconsolidation of SPHC and its
subsidiaries. Net sales relating to the deconsolidated group for
the prior year first six months totaled $147.2 million, or
11.9% of last years first six months net sales, as
reported. Compared with the prior years first six months
adjusted net sales of $1.1 billion, this segments
year-to-date
net sales increased by 8.7% or $94.5 million. This increase
in the industrial segments net sales reflects organic
growth of 5.1%, including unit volume growth of approximately
5.8% and favorable pricing of approximately 0.4% of the prior
period adjusted net sales, offset partially by unfavorable
foreign exchange, which approximated 1.1% of the prior period
adjusted net sales. Seven small acquisitions
36
provided 3.6% of this segments current period growth in
net sales versus adjusted net sales for the prior years
first six months.
Consumer segment net sales, which comprised 31.2% of
consolidated net sales for this years first six months,
totaled $536.4 million, a decrease of 0.1% from
$537.1 million during last years first six months.
The decline in this segment resulted from an organic decline in
sales of 0.8%, including a decline in unit volume approximating
0.4% of the prior period net sales, the impact of unfavorable
foreign exchange, approximating 0.6% of the prior period net
sales, offset partially by the impact of current period price
increases, which provided 0.2% of the prior period net sales.
Two small acquisitions provided approximately 0.7% of the net
change in this segments net sales during this years
first six months versus the same period a year ago.
Gross
Profit Margin
Our consolidated gross profit declined to 41.5% of net sales for
this years first half from 42.7% of net sales for the same
period a year ago, and from 42.9% of adjusted net sales for the
same period a year ago, despite our 3.7% growth in organic sales
volume versus the prior period adjusted results. The primary
source of this current period decline in gross profit margin
resulted from raw material costs, which were higher during this
years first six months versus the first six months of
fiscal 2010.
Our industrial segment gross profit for the first six months of
fiscal 2011 declined to 43.1% of net sales from last years
first six months result of 43.9% of net sales as reported and
versus last years first six months result of 44.4% of
adjusted net sales. Raw material costs were higher during this
years first six months versus the first six months of
fiscal 2010, which negatively impacted the current periods
gross profit margin versus the adjusted gross profit margin for
the same period a year ago.
Our consumer segment gross profit for the first six months of
fiscal 2011 declined by 170 bps to 38.2% of net sales from
39.9% of net sales for the same period last year, mainly as a
result of the impact of higher raw material costs incurred
during the current period versus the same period a year ago.
Additionally, during this years first six months, this
segment had unfavorable labor and overhead versus the same
period a year ago.
Selling,
General and Administrative Expenses
(SG&A)
Our consolidated SG&A improved to 29.2% of net sales for
the first six months of fiscal 2011 compared with 30.7% of net
sales as reported a year ago and compared with 30.6% of adjusted
net sales for the same period a year ago. The 140 bps
decrease in SG&A as a percent of net sales versus the prior
period adjusted SG&A margin primarily reflects the impact
of the 3.4% unit volume growth in net sales, combined with the
recognition during the current period of a reimbursement from
SPHC for certain services provided to the deconsolidated
entities under a service agreement. Additionally, we incurred
lower advertising and acquisition-related expenses during this
years first six months versus the same period a year ago,
along with a favorable reduction in insurance-related expenses.
Partially offsetting those gains during this years first
half was the combination of higher compensation expenses and
higher commissions relating to the current period growth in
sales, in addition to higher warranty and distribution expenses
versus the same period a year ago.
Our industrial segment SG&A improved to 30.2% of net sales
for this years first six months from 31.0% of net sales
for the same period last year, and versus 31.1% of adjusted net
sales for last years first half, primarily reflecting the
impact of the 5.8% growth in sales volume
year-over-year
in this segment, in addition to favorable foreign exchange
adjustments, lower acquisition-related expense and lower bad
debt expense. Partially offsetting those gains were higher
commissions on sales resulting from the current period growth in
organic sales, as well as higher compensation and employee
benefit expense.
Our consumer segment SG&A as a percentage of net sales for
this years first six months improved by 60 bps to
24.0% compared with 24.6% a year ago, primarily reflecting the
favorable margin impact of lower discretionary spending on
advertising expense, including promotional costs, lower
compensation expense and a reduction in commissions related to
the decline in the segments sales volume during this
years first six months versus the same period last year.
This segment experienced slightly higher distribution expense
and unfavorable foreign exchange
37
adjustments, which partially offset the improvement in the
SG&A margin resulting from the tighter cost controls
mentioned above.
SG&A expenses in our corporate/other category decreased
during this years first six months to $16.9 million
from $27.6 million during the corresponding period last
year. This $10.7 million decrease reflects the combination
of a reimbursement received from an outside service provider in
connection with a correction to prior billings, along with lower
legal, environmental and acquisition-related expenses. Also,
during the current six month period, we incurred fewer
corporate/other costs versus the same period a year ago as a
result of the May 31, 2010 deconsolidation of SPHC and its
subsidiaries. Finally, there was a favorable reduction in
insurance-related expense, along with lower acquisition-related
expenses and lower legal and environmental expense during this
years first six months versus the same period last year.
Partially offsetting those lower expenses was the combination of
unfavorable foreign exchange adjustments and higher
hospitalization expenses during the current period versus last
years first six months.
License fee and joint venture income of approximately
$1.2 million and $1.5 million for the first six months
of fiscal 2011 and fiscal 2010 are reflected as reductions of
consolidated SG&A expenses.
We recorded total net periodic pension and postretirement
benefit costs of $17.2 million and $15.0 million for
the first six months of fiscal 2011 and fiscal 2010,
respectively. This increased pension expense of
$2.2 million was primarily the result of a
$2.4 million increase in service and interest cost during
the first six months of the current year versus the same period
a year ago, combined with $1.5 million of additional net
actuarial losses incurred during this years first six
months versus the same period a year ago. A higher expected
return on plan assets had a favorable impact on pension expense
of approximately $1.7 million for the current period versus
the same period a year ago. We expect that pension expense will
fluctuate on a
year-to-year
basis, depending primarily upon the investment performance of
plan assets and potential changes in interest rates, but such
changes are not expected to be material to our consolidated
financial results.
Interest
Expense
Interest expense was $32.5 million for the first six months
of fiscal 2011 versus $27.5 million for the same period a
year ago. Higher average borrowings, combined with additional
borrowings for acquisitions, increased interest expense this
years first six months by approximately $3.0 million
versus last years first six months. Higher interest rates,
which averaged 6.04% overall for the first six months of fiscal
2011 compared with 5.75% for the same period of fiscal 2010,
increased interest expense by approximately $2.0 million
versus last years first six months.
Investment
Expense (Income), Net
Net investment income of $6.3 million during this
years first six months compares to net investment income
of $3.2 million for the same period a year ago. Dividend
and interest income totaled $2.9 million during this
years first six months versus $2.4 million of income
during the same period last year. Net realized gains on the
sales of investments resulted in a net gain of $3.9 million
for this years first six months versus a net gain of
$0.9 million for the same period during fiscal 2010.
Slightly offsetting those gains were impairments recognized on
securities that management has determined are
other-than-temporary
declines in value, which approximated $0.5 million for the
first six months of fiscal 2011, versus $0.1 million for
the same period a year ago.
IBT
Our consolidated pretax income for this years first six
months of $185.2 million compares with pretax income of
$189.8 million for the same period last year, and with
adjusted pretax income of $175.9 million for the same
period last year. This results in a profit margin on net sales
of 10.8% for the current period versus an adjusted profit margin
on net sales of 10.8% a year ago.
Our industrial segment had IBT of $150.2 million, for a
profit margin on net sales of 12.7%, for this years first
six months versus IBT of $159.3 million, for a profit
margin on net sales of 12.9%, for the same period last year,
principally reflecting the impact on this segment of the
deconsolidation of SPHC on May 31, 202, as previously
38
discussed. Excluding SPHCs results from last years
first half, our industrial segments IBT was
$145.2 million, for a profit margin on adjusted net sales
of 13.2%. Reflected in the decline is this segments gross
profit margin erosion, as previously discussed.. Our consumer
segment IBT declined to $76.4 million, or 14.2% of net
sales, for the period, from last years first half result
of $82.0 million, or 15.3% of net sales, primarily from the
0.4% organic sales volume decline during this years first
six months combined with the impact of increased raw material
costs during the current period versus the same period a year
ago.
Income
Tax Rate
The effective income tax rate was 30.6% for the first six months
of fiscal 2011 compared to an effective income tax rate of 31.8%
for the same period a year ago.
For the first six months of fiscal 2011 and fiscal 2010, the
effective tax rate differed from the federal statutory rate
principally due to decreases in taxes as a result of the impact
of certain foreign operations on our U.S. taxes, the effect
of lower tax rates in certain of our foreign jurisdictions and
the domestic manufacturing deduction. These decreases in taxes
were partially offset by state and local income taxes,
non-deductible business operating expenses and provisions for
valuation allowances associated with losses incurred by certain
of our foreign businesses and for foreign tax credit
carryforwards. Additionally, for the six months ended
November 30, 2010, a decrease in the effective income tax
rate resulted from a one-time benefit related to changes in tax
laws in the United Kingdom, including the effect of lower income
tax rates.
As described in this Managements Discussion and Analysis
of Financial Condition and Results of Operations for the three
month period ended November 30, 2010, there is uncertainty
as to whether we will be able to recognize certain deferred tax
assets. Refer to the section captioned, Three Months Ended
November 30, 2010 Income Tax Rate, for
further information.
Net
Income
Net income of $128.5 million for the first six months of
fiscal 2011 compares to $129.5 million for the same period
last year, and to adjusted net income of $120.9 million for
the same period last year. This results in a net margin on sales
of 7.5% for this years first six months compared to the
prior year periods adjusted 7.4% net margin on sales. The
slight improvement in this net margin on an adjusted basis
year-over-year
primarily resulted from the benefit of our overall 2.5% growth
in organic sales during the current period versus the same
period last year. During the six months ended November 30,
2010, we had net income from noncontrolling interests of
$10.7 million, related to our recent deconsolidation of
SPHC. If the deconsolidation of SPHC had occurred prior to
fiscal 2010, there would have been approximately
$9.4 million in net income from noncontrolling interests
during last years first half. Net income attributable to
RPM International Inc. Stockholders was $117.8 million for
the six months ended November 30, 2010, versus
$128.9 million for the same period a year ago, for a margin
on net sales of 6.8% for the current six month period compared
to the prior periods 7.3% net margin on sales. On an
adjusted basis, the prior year first half net income
attributable to RPM International Inc. Stockholders was
$111.5 million, for an adjusted margin on net sales of 6.9%.
Diluted earnings per share of common stock for this years
first six months of $0.91 compares with $1.00 a year ago and an
adjusted $0.86 for the same period last year.
LIQUIDITY
AND CAPITAL RESOURCES
Cash
Flows From:
Operating
Activities
Operating activities provided cash flow of $183.1 million
for the first six months of fiscal 2011 compared with
$184.7 million during the same period of fiscal 2010.
The net decline in cash from operations includes the change in
net income, adjusted for non-cash expenses and income, which
decreased cash flows by approximately $18.4 million during
the current period versus last years first six months, in
addition to changes in working capital accounts and other
accruals.
39
The current period decrease in accounts receivable since
May 31, 2010 provided cash of $66.4 million versus the
$59.7 million of cash provided by accounts receivable
during the same period last year, or approximately
$6.7 million more cash provided
year-over-year.
Days sales outstanding at November 30, 2010 increased
slightly to 58.7 days from 57.3 days at
November 30, 2009; however, overall net sales (and
therefore accounts receivable) declined during the current
fiscal year versus the prior period actual results due to the
deconsolidation of SPHC, as previously discussed.
Inventory balances required the use of $44.9 million of
cash during this years first six months, compared with a
use of cash of $26.4 million during the same period a year
ago, or $18.5 million more cash used
year-over-year.
Days of inventory outstanding at November 30, 2010
increased slightly to 80.2 days from 78.9 days at
November 30, 2009.
With regard to accounts payable, we used $19.5 million less
cash during this years first six months compared to the
same period a year ago, as a result of a change in the timing of
certain payments during the current period versus the same
period a year ago. Accrued compensation and benefits used
approximately $13.0 million more cash versus the prior year
period, due to higher bonus payments made during this
years first six months versus the same period a year ago,
while other accruals, including those for other short-term and
long-term items, used $1.6 million more in cash versus last
years first six months, due to changes in the timing of
such payments. Cash provided from operations, along with the use
of available credit lines, as required, remain our primary
sources of liquidity.
As outlined in Note 2 to our Consolidated Financial
Statements, as a result of SPHC and Bondexs bankruptcy
filing, all Bondex and SPHC asbestos personal injury lawsuits
have been stayed due to the imposition of an automatic stay
applicable in bankruptcy cases. In addition, at the request of
SPHC and Bondex, the Bankruptcy Court has entered orders staying
all claims against RPM International Inc. and its affiliates
that are derivative of the asbestos claims against SPHC and
Bondex. No claims have been paid since the bankruptcy filing and
it is not contemplated that any claims will be paid until a plan
of reorganization is confirmed and an asbestos trust is
established and operating. See Note 6 to our Consolidated
Financial Statements, Reorganization Proceedings of
Certain Subsidiaries, for additional information.
Investing
Activities
Capital expenditures, other than for ordinary repairs and
replacements, are made to accommodate our continued growth to
achieve production and distribution efficiencies, to expand
capacity and to enhance our administration capabilities. Capital
expenditures of $15.3 million during the current
years first six months compare with depreciation of
$26.8 million. We expect capital spending to continue to
trail depreciation expense at least through the end of fiscal
2011. Due to additional capacity, which we have brought on-line
over the last several years, we believe there is adequate
production capacity to meet our needs based on anticipated
growth rates. Any additional capital expenditures made over the
next few years likely will relate primarily to new products and
technology. Not reflected in our capital expenditures is the
capacity added through our recent acquisitions of product lines
and businesses, which totaled approximately $1.1 million
during the first half of fiscal 2011. We presently anticipate
that additional shifts at our production facilities, coupled
with the capacity added through acquisition activity, will
enable us to meet increased demand during the current fiscal
year even with these lower levels of capital spending this
fiscal year.
Our captive insurance companies invest their excess cash in
marketable securities in the ordinary course of conducting their
operations, and this activity will continue. Differences in the
amounts related to these activities on a
year-over-year
basis are primarily attributable to differences in the timing
and performance of their investments balanced against amounts
required to satisfy claims. At November 30, 2010, the fair
value of our investments in marketable securities totaled
$125.3 million, of which investments with a fair value of
$19.1 million were in an unrealized loss position. The fair
value of our portfolio of marketable securities is based on
quoted market prices for identical, or similar, instruments in
active or non-active markets or model-derived-valuations with
observable inputs. We have no marketable securities whose fair
value is subject to unobservable inputs. At May 31, 2010,
the fair value of our investments in marketable securities
totaled $113.9 million, of which investments with a fair
value of $31.2 million were in an unrealized loss position.
Total pre-tax unrealized losses recorded in accumulated other
comprehensive income at November 30, 2010 and May 31,
2010 were $0.8 million and $1.8 million, respectively.
40
We regularly review our marketable securities in unrealized loss
positions in order to determine whether or not we have the
ability and intent to hold these investments. That determination
is based upon the severity and duration of the decline, in
addition to our evaluation of the cash flow requirements of our
businesses. Unrealized losses at May 31, 2010 were
generally related to the volatility in valuations over the last
several months for a portion of our portfolio of investments in
marketable securities. The unrealized losses generally relate to
investments whose fair values at May 31, 2010 were less
than 15% below their original cost or that have been in a loss
position for less than six consecutive months. Although we have
begun to see recovery in general economic conditions over the
past year, if we were to experience continuing or significant
unrealized losses within our portfolio of investments in
marketable securities in the future, we may recognize additional
other-than-temporary
impairment losses. Such potential losses could have a material
impact on our results of operations in any given reporting
period. As such, we continue to closely evaluate the status of
our investments and our ability and intent to hold these
investments.
Financing
Activities
As a result of the SPHC bankruptcy filing, our access to the
cash flows of SPHC and its subsidiaries has been restricted.
However, the bankruptcy filing has not resulted in any
reductions in our credit ratings by Moodys Investor
Service, Standard & Poors or Fitch Ratings. Therefore,
we feel this has not adversely impacted our ability to gain
access to capital.
On October 9, 2009, we sold $300.0 million aggregate
principal amount of 6.125% Notes due 2019 (the
Notes). The net proceeds from the offering of the
Notes were used to repay $163.7 million in principal amount
of our unsecured notes due October 15, 2009, and
approximately $120.0 million in principal amount of
short-term borrowings outstanding under our accounts receivable
securitization program. The balance of the net proceeds was used
for general corporate purposes.
On April 7, 2009, we replaced our existing
$125.0 million accounts receivable securitization program,
which was set to expire on May 7, 2009, with a new,
three-year, $150.0 million accounts receivable
securitization program (the AR program). The AR
program, which was established with two banks for certain of our
subsidiaries (originating subsidiaries),
contemplates that the originating subsidiaries will sell certain
of their accounts receivable to RPM Funding Corporation, a
wholly-owned special purpose entity (SPE), which
will then transfer undivided interests in such receivables to
the participating banks. Once transferred to the SPE, such
receivables are owned in their entirety by the SPE and are not
available to satisfy claims of our creditors or creditors of the
originating subsidiaries until the obligations owing to the
participating banks have been paid in full. The transactions
contemplated by the AR program do not constitute a form of
off-balance sheet financing and are, and will be, fully
reflected in our financial statements. Entry into the AR program
increased our liquidity by $25.0 million, but also
increased our financing costs due to higher market rates. The
amounts available under the AR program are subject to changes in
the credit ratings of our customers, customer concentration
levels or certain characteristics of the underlying accounts
receivable, and therefore at certain times we may not be able to
fully access the $150.0 million of funding available under
the AR program. At November 30, 2010, approximately
$138.3 million was available under this AR program.
On February 20, 2008 we issued and sold $250.0 million
of 6.50% Notes due February 15, 2018. The proceeds
were used to repay our $100.0 million Senior Unsecured
Notes due March 1, 2008, the outstanding principal under
our $125.0 million accounts receivable securitization
program and $19.0 million in short-term borrowings under
our revolving credit facility. This financing strengthened our
credit profile and liquidity position, as well as lengthened the
average maturity of our outstanding debt obligations.
On December 29, 2006, we replaced our $330.0 million
revolving credit facility with a $400.0 million five-year
credit facility (the Credit Facility). The Credit
Facility was used for working capital needs and general
corporate purposes, including acquisitions. The Credit Facility
provided for borrowings in U.S. dollars and several foreign
currencies and provides sublimits for the issuance of letters of
credit in an aggregate amount of up to $35.0 million and a
swing-line of up to $20.0 million for short-term borrowings
of less than 15 days. In addition, the size of the Credit
Facility was able to be expanded, subject to lender approval,
upon our request by up to an additional $175.0 million,
thus potentially expanding the Credit Facility to
$575.0 million.
41
On May 29, 2009, we entered into an amendment to our Credit
Facility agreement with our lenders. The amendment required us
to comply with various customary affirmative and negative
covenants. These included financial covenants requiring us to
maintain certain leverage and interest coverage ratios. The
definition of EBITDA was amended to add back the sum of all
(i) non-cash charges relating to the write-down or
impairment of goodwill and other intangibles during the
applicable period, (ii) other non-cash charges up to an
aggregate of $25.0 million during such applicable period
and (iii) one-time cash charges incurred during the period
from June 1, 2008 through May 31, 2010, but only up to
an aggregate of not more than $25.0 million during such
applicable period. The interest coverage ratio is calculated at
the end of each fiscal quarter for the four fiscal quarters then
ended. The minimum required consolidated interest coverage
ratio, EBITDA to interest expense, remained 3.50 to 1 under the
amendment, but allowance of the add-backs referred to above had
the effect of making this covenant less restrictive. Under the
terms of the leverage covenant, we could not permit our
consolidated indebtedness at any date to exceed 55% of the sum
of such indebtedness and our consolidated shareholders
equity on such date, and could not permit the indebtedness of
our domestic subsidiaries (determined on a combined basis and
excluding indebtedness to us and indebtedness incurred pursuant
to permitted receivables securitizations) to exceed 15% of our
consolidated shareholders equity. This amendment also
added a fixed charge coverage covenant beginning with our fiscal
quarter ended August 31, 2009. Under the fixed charge
coverage covenant, the ratio of our consolidated EBITDA for any
four-fiscal-quarter-period to the sum of our consolidated
interest expense, income taxes paid in cash (other than taxes on
non-recurring gains), capital expenditures, scheduled principal
payments on our amortizing indebtedness (other than indebtedness
scheduled to be repaid at maturity) and dividends paid in cash
(or, for testing periods ending on or before May 31, 2010,
70% of dividends paid in cash), in each case for such
four-fiscal-quarter period, could not be less than 1.00 to 1.
This amendment also included a temporary, one-year restriction
on certain mergers, asset dispositions and acquisitions, and
contains customary representations and warranties.
On May 28, 2010, we entered into Amendment No. 2 to
our Credit Facility agreement with our lenders. Pursuant to
Amendment No. 2, Specialty Products Holding Corp., and Ohio
corporation, and its subsidiaries, including Bondex,
(collectively, the Excluded Subsidiaries), are to be
excluded from the defined term Subsidiary as used in
the Credit Agreement. Furthermore, the defined term
EBITDA as used in the Credit Agreement has been
revised to add back non-cash charges or losses and subtract
non-cash gains in each case related to or resulting from the
bankruptcy filing of any Excluded Subsidiary.
We are subject to the same leverage, interest coverage and fixed
charge coverage covenants under the AR program as those
contained in our Credit Facility (other than the
15% subsidiary debt leverage covenant contained in such
Credit Facility). On May 29, 2009, we also entered into an
amendment to our AR program. The AR program amendment included
the same amendments to the definition of EBITDA, an identical
reduction in the maximum consolidated leverage ratio and the
same fixed charge coverage covenants as were included in our
Credit Facility amendment, as outlined above.
In addition, on May 28, 2010 we entered into an amendment
to the AR Program whereby certain Excluded
Subsidiaries would be excluded from the defined term,
Subsidiary as used in the Receivables Agreement.
Furthermore, the defined term EBITDA as used in the
Receivables Agreement has been revised to add back non-cash
charges or losses and subtract non-cash gains in each case
related to or resulting from the bankruptcy filing of any
Excluded Subsidiary.
Our failure to comply with these and other covenants contained
in the Credit Facility could have resulted in an event of
default under that agreement, entitling the lenders to, among
other things, declare the entire amount outstanding under the
Credit Facility to be due and payable. The instruments governing
our other outstanding indebtedness generally include
cross-default provisions that provide that under certain
circumstances, an event of default that results in acceleration
of our indebtedness under the Credit Facility will entitle the
holders of such other indebtedness to declare amounts
outstanding immediately due and payable.
As of November 30, 2010, we were in compliance with all
covenants contained in our Credit Facility, including the
leverage, interest coverage ratio and fixed charge coverage
covenants. At that date, our leverage ratio was 44.1%, while our
interest coverage and fixed charge coverage ratios were 5.99:1
and 1.55:1, respectively. Additionally, in accordance with these
covenants, at November 30, 2010, our domestic subsidiaries
indebtedness did not exceed 15% of consolidated
shareholders equity as of that date.
42
Subsequent to the end of our second quarter ended
November 30, 2010, on January 5, 2011, we established
a new $400.0 million senior unsecured multi-currency
revolving Credit Facility with a group of banks. The New Credit
Facility provides a $35.0 million
sub-limit
for swing loans (relatively short-term borrowings used for
working capital purposes) and a $100.0 million
sub-limit
for the issuance of letters of credit. Subsequent to the date of
the loan agreement, we have the option to increase the New
Credit Facility by an aggregate principal amount not to exceed
$100.0 million. The purpose of this New Credit Facility was
to refinance our existing revolving Credit Facility, and the
proceeds of this New Credit Facility may also be used for
working capital, capital expenditures and general corporate
purposes. This New Credit Facility matures four years from its
closing date. The terms of the New Credit Facility revised our
leverage covenant such that our consolidated indebtedness as of
any fiscal quarter end must not exceed 60% of the sum of such
indebtedness and our consolidated shareholders equity on
such date, which is less restrictive than the leverage covenant
under our old Credit Facility. Also, the terms of the New Credit
Facility eliminated the old Credit Facilitys fixed charge
coverage ratio requirement and the leverage covenant applicable
to subsidiary indebtedness. Furthermore, the defined term
EBITDA as used in the old Credit Facility has been
revised to allow, among other things, an add back of up to
$10.0 million of acquisition related costs on an annual
basis. All other covenants were substantially unchanged from the
old Credit Facility.
Our access to funds under our New Credit Facility is dependent
on the ability of the financial institutions that are parties to
the New Credit Facility to meet their funding commitments. Those
financial institutions may not be able to meet their funding
commitments if they experience shortages of capital and
liquidity or if they experience excessive volumes of borrowing
requests within a short period of time. Moreover, the
obligations of the financial institutions under our New Credit
Facility are several and not joint and, as a result, a funding
default by one or more institutions does not need to be made up
by the others.
We are exposed to market risk associated with interest rates. We
do not use financial derivative instruments for trading
purposes, nor do we engage in foreign currency, commodity or
interest rate speculation. Concurrent with the issuance of our
6.7% Senior Unsecured Notes, RPM United Kingdom G.P.
entered into a cross currency swap, which fixed the interest and
principal payments in euros for the life of the 6.7% Senior
Unsecured Notes and resulted in an effective euro fixed rate
borrowing of 5.31%.
Our available liquidity, including our cash and cash equivalents
and amounts available under our committed credit facilities,
stood at $807.6 million at November 30, 2010. Our
debt-to-capital
ratio was 43.8% at November 30, 2010, compared with 46.2%
at May 31, 2010.
The following table summarizes our financial obligations and
their expected maturities at November 30, 2010 and the
effect such obligations are expected to have on our liquidity
and cash flow in the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual Obligations
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment
|
|
|
Payments Due In
|
|
|
|
Stream
|
|
|
2011
|
|
|
2012-13
|
|
|
2014-15
|
|
|
After 2015
|
|
|
|
(In thousands)
|
|
|
Long-term debt obligations
|
|
$
|
925,137
|
|
|
$
|
2,674
|
|
|
$
|
21,372
|
|
|
$
|
352,181
|
|
|
$
|
548,910
|
|
Capital lease obligations
|
|
|
1,894
|
|
|
|
429
|
|
|
|
759
|
|
|
|
550
|
|
|
|
156
|
|
Operating lease obligations
|
|
|
157,812
|
|
|
|
36,211
|
|
|
|
48,839
|
|
|
|
26,555
|
|
|
|
46,207
|
|
Other long-term liabilities(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest payments on long-term debt obligations
|
|
|
368,210
|
|
|
|
55,748
|
|
|
|
105,246
|
|
|
|
86,497
|
|
|
|
120,719
|
|
Contributions to pension and postretirement plans(2)
|
|
|
314,400
|
|
|
|
19,900
|
|
|
|
75,700
|
|
|
|
78,300
|
|
|
|
140,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,767,453
|
|
|
$
|
114,962
|
|
|
$
|
251,916
|
|
|
$
|
544,083
|
|
|
$
|
856,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excluded from other long-term liabilities is our liability for
unrecognized tax benefits, which totaled $5.2 million at
November 30, 2010. Currently, we cannot predict with
reasonable reliability the timing of cash settlements to the
respective taxing authorities.
|
43
|
|
|
(2)
|
|
These amounts represent our estimated cash contributions to be
made in the periods indicated for our pension and postretirement
plans, assuming no actuarial gains or losses, assumption changes
or plan changes occur in any period. The projection results
assume the required minimum contribution will be contributed.
|
Off-Balance
Sheet Arrangements
We do not have any off-balance sheet financings, other than the
minimum operating lease commitments included in the above
Contractual Obligations table. We do not have any interests in
or relationships with any special purpose entities that are not
reflected in our financial statements.
OTHER
MATTERS
Environmental
Matters
Environmental obligations continue to be appropriately addressed
and, based upon the latest available information, it is not
anticipated that the outcome of such matters will materially
affect our results of operations or financial condition. Our
critical accounting policies and estimates set forth above
describe our method of establishing and adjusting
environmental-related accruals and should be read in conjunction
with this disclosure. For additional information, refer to
Part II, Item 1. Legal Proceedings.
FORWARD-LOOKING
STATEMENTS
The foregoing discussion includes forward-looking statements
relating to our business. These forward-looking statements, or
other statements made by us, are made based on our expectations
and beliefs concerning future events impacting us and are
subject to uncertainties and factors (including those specified
below), which are difficult to predict and, in many instances,
are beyond our control. As a result, our actual results could
differ materially from those expressed in or implied by any such
forward-looking statements. These uncertainties and factors
include (a) global markets and general economic conditions,
including uncertainties surrounding the volatility in financial
markets, the availability of capital and the effect of changes
in interest rates, and the viability of banks and other
financial institutions; (b) the prices, supply and capacity
of raw materials, including assorted pigments, resins, solvents,
and other natural gas and oil based materials; packaging,
including plastic containers; and transportation services,
including fuel surcharges; (c) continued growth in demand
for our products; (d) legal, environmental and litigation
risks inherent in our construction and chemicals businesses and
risks related to the adequacy of our insurance coverage for such
matters; (e) the effect of changes in interest rates;
(f) the effect of fluctuations in currency exchange rates
upon our foreign operations; (g) the effect of non-currency
risks of investing in and conducting operations in foreign
countries, including those relating to domestic and
international political, social, economic and regulatory
factors; (h) risks and uncertainties associated with our
ongoing acquisition and divestiture activities; (i) risks
related to the adequacy of our contingent liability reserves;
(j) risks and uncertainties associated with the SPHC
bankruptcy proceedings; and (k) other risks detailed in our
filings with the Securities and Exchange Commission, including
the risk factors set forth in our Annual Report on
Form 10-K
for the year ended May 31, 2010, as the same may be updated
from time to time. We do not undertake any obligation to
publicly update or revise any forward-looking statements to
reflect future events, information or circumstances that arise
after the filing date of this document.
|
|
ITEM 3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
We are exposed to market risk from changes in raw materials
costs, interest rates and foreign exchange rates since we fund
our operations through long- and short-term borrowings and
conduct our business in a variety of foreign currencies. There
were no material potential changes in our exposure to these
market risks since May 31, 2010.
44
|
|
ITEM 4.
|
CONTROLS
AND PROCEDURES
|
(a) EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES.
Our Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act
Rule 13a-15(e))
as of November 30, 2010 (the Evaluation Date),
have concluded that as of the Evaluation Date, our disclosure
controls and procedures were effective in ensuring that
information required to be disclosed by us in the reports we
file or submit under the Exchange Act (1) is recorded,
processed, summarized and reported, within the time periods
specified in the Commissions rules and forms, and
(2) is accumulated and communicated to our management,
including the Chief Executive Officer and the Chief Financial
Officer, as appropriate to allow for timely decisions regarding
required disclosure.
(b) CHANGES
IN INTERNAL CONTROL.
There were no changes in our internal control over financial
reporting that occurred during the fiscal quarter ended
November 30, 2010 that have materially affected, or are
reasonably likely to materially affect, our internal control
over financial reporting.
PART II
OTHER INFORMATION
|
|
ITEM 1.
|
LEGAL
PROCEEDINGS
|
Asbestos
Litigation and the Bankruptcy Filings by SPHC and
Bondex
For information regarding asbestos litigation involving SPHC and
Bondex, see Note 2 to the Consolidated Financial
Statements. On May 31, 2010, Bondex and its parent, SPHC,
filed voluntary petitions in the United States Bankruptcy Court
for the District of Delaware to reorganize under Chapter 11
of the Bankruptcy Code.
Environmental
Proceedings
As previously reported, several of our subsidiaries are, from
time to time, identified as a potentially responsible
party under the federal Comprehensive Environmental
Response, Compensation and Liability Act and similar state
environmental statutes. In some cases, our subsidiaries are
participating in the cost of certain
clean-up
efforts or other remedial actions. Our share of such costs,
however, has not been material and we believe that these
environmental proceedings will not have a material adverse
effect on our consolidated financial condition or results of
operations. See Item 2. Managements Discussion
and Analysis of Financial Condition and Results of
Operations Other Matters, in Part I of
this Quarterly Report on
Form 10-Q.
In addition to the other information set forth in this report,
you should carefully consider the risk factors disclosed in
Item 1A of our Annual Report on
Form 10-K
for the fiscal year ended May 31, 2010.
45
|
|
ITEM 2.
|
UNREGISTERED
SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(c) The following table presents information about
repurchases of common stock we made during the second quarter of
fiscal 2011:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
|
|
|
|
|
Total Number
|
|
Number of
|
|
|
|
|
|
|
of Shares
|
|
Shares that
|
|
|
|
|
|
|
Purchased as
|
|
May Yet be
|
|
|
|
|
|
|
Part of Publicly
|
|
Purchased
|
|
|
Total Number
|
|
Average
|
|
Announced
|
|
Under the
|
|
|
of Shares
|
|
Price Paid
|
|
Plans or
|
|
Plans or
|
Period
|
|
Purchased(1)
|
|
per Share
|
|
Programs
|
|
Programs(2)
|
|
September 1, 2010 through September 30, 2010
|
|
|
500,100
|
|
|
$
|
17.77
|
|
|
|
|
|
|
|
|
|
October 1, 2010 through October 31, 2010
|
|
|
137,793
|
|
|
$
|
19.79
|
|
|
|
|
|
|
|
|
|
November 1, 2010 through November 30, 2010
|
|
|
8,642
|
|
|
$
|
21.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Second Quarter
|
|
|
646,535
|
|
|
$
|
18.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
A total of 112,720 shares of common stock reported as
purchased are attributable to shares of common stock that were
disposed of back to us in satisfaction of tax obligations
related to the vesting of restricted stock which was granted
under RPM International Inc.s Amended and Restated 2004
Omnibus Equity and Incentive Plan, the 2003 Restricted Plan for
Directors, the 1997 Restricted Stock Plan and the 2007
Restricted Stock Plan. The remaining 533,815 shares of
common stock reported as purchased are attributable to our stock
repurchase program.
|
|
(2)
|
|
Refer to Note 13 of the Notes to Consolidated Financial
Statements for further information regarding our stock
repurchase program.
|
PART II
OTHER INFORMATION
|
|
ITEM 5.
|
OTHER
INFORMATION
|
Termination
of a Material Definitive Agreement.
As of January 5, 2011, in connection with our entry into
the new credit agreement described hereinafter, we terminated
our $400.0 million five-year revolving credit agreement
with the lenders party thereto and PNC Bank, National
Association, successor by merger to National City Bank, as
administrative agent. The prior credit agreement would have
expired on December 29, 2011. The lenders under the prior
credit agreement and their affiliates have engaged and may
engage in commercial and investment banking transactions with us
in the ordinary course of business, and also provide or have
provided advisory and financial services to us.
Entry
into a Material Definitive Agreement; Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
On January 5, 2011, we and certain of our subsidiaries
entered into an unsecured syndicated revolving credit facility
(the New Credit Facility) with the lenders party
thereto and PNC Bank, National Association, as administrative
agent for the lenders. The New Credit Facility expires on
January 5, 2015. The New Credit Facility provides for a
four-year $400.0 million revolving credit facility, which
includes sublimits for the issuance of swingline loans, which
are comparatively short-term loans used for working capital
purposes, and letters of credit. The aggregate maximum principal
amount of the commitments under the New Credit Facility may be
expanded upon our request, subject to certain conditions, to
$500 million. The New Credit Facility allows for borrowings
in U.S. dollars or certain other foreign currencies in an
amount (on a U.S. dollar equivalent basis) of up to
$400.0 million. In addition to RPM International Inc., each
of RPM Lux Holdco S.ÀR.L., RPOW UK Limited, RPM Europe
Holdco B.V., RPM Canada, Tremco illbruck Coatings Limited, RPM
Canada Company and Tremco Asia Pacific PTY. Limited is also a
borrower under the New Credit Facility. Each such additional
borrower is our wholly-owned direct or indirect subsidiary
(except for directors qualifying shares or nominal equity
interests required to be held by someone other than us or our
subsidiary under applicable law). The New Credit Facility
46
contemplates that one or more of our other domestic or foreign
subsidiaries may become borrowers as well. RPM International
Inc. has agreed to guarantee all obligations of subsidiaries
that are or become borrowers under the New Credit Facility.
The New Credit Facility is available to refinance existing
indebtedness, to finance working capital and capital expenditure
needs, and for general corporate purposes .
At our election, loans under the New Credit Facility (other than
loans denominated in a currency other than U.S. Dollars)
will bear interest at one of the following options: (1) the
alternative base rate which is the greatest of (a) the
effective prime rate announced by PNC Bank, National
Association, (b) a rate per annum that is 0.5% in excess of
the effective federal funds rate and (c) a rate per annum
that is 1.0% in excess of the daily Eurodollar rate, plus a
margin of 0.05% to 1.50% (based on our debt rating); and
(2) the Eurodollar rate (or, in the case of swingline
loans, the daily LIBOR rate) plus a margin of 1.05% to 2.50% per
annum (based on our debt rating). Loans under the New Credit
Facility denominated in a currency other than U.S. Dollars
will bear interest at the Eurodollar rate plus a margin of 1.05%
to 2.50% per annum (based on our debt rating).
The New Credit Facility contains customary covenants, including
but not limited to, limitations on our ability, and in certain
instances, our subsidiaries ability, to incur liens, make
certain investments, or sell or transfer assets. Additionally,
we may not permit our consolidated leverage ratio to exceed 0.60
to 1.0 or our consolidated interest coverage ratio to be greater
than 3.5 to 1.0.
Upon the occurrence of certain events of default, our
obligations under the New Credit Facility may be accelerated.
Such events of default include payment defaults to lenders under
the New Credit Facility, covenant defaults, payment defaults
(other than under the New Credit Facility), certain ERISA
defaults, change of control and other customary defaults.
The lenders under the New Credit Facility and their affiliates
have engaged and may engage in commercial and investment banking
transactions with us in the ordinary course of business, and
also provide or have provided advisory and financial services to
us.
The description of the New Credit Facility set forth in this
Item 5 is not complete and is qualified in its entirety by
reference to the full text of the credit agreement filed as
Exhibit 10.2 to this
Form 10-Q.
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
Description
|
|
|
|
|
*10
|
.1
|
|
Form of Performance-Contingent Restricted Stock (PCRS) and
Escrow Agreement.(x)
|
|
|
|
10
|
.2
|
|
Credit Agreement among RPM International Inc., the Borrowers
party thereto, the Lenders party thereto and PNC Bank, National
Association, as Administrative Agent, dated January 5,
2011.(x)
|
|
|
|
31
|
.1
|
|
Rule 13a-14(a)
Certification of the Companys Chief Executive Officer.(x)
|
|
|
|
31
|
.2
|
|
Rule 13a-14(a)
Certification of the Companys Chief Financial Officer.(x)
|
|
|
|
32
|
.1
|
|
Section 1350 Certification of the Companys Chief
Executive Officer.(x)
|
|
|
|
32
|
.2
|
|
Section 1350 Certification of the Companys Chief
Financial Officer.(x)
|
|
|
|
101
|
.INS
|
|
XBRL Instance Document.
|
|
|
|
101
|
.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101
|
.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
101
|
.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101
|
.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
(x)
|
|
Filed herewith.
|
|
*
|
|
Management contract or compensatory plan or arrangement.
|
47
Exhibit 10.2
$400,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
RPM INTERNATIONAL INC.
RPM LUX HOLDCO S.ÀR.L.
RPOW UK LIMITED
RPM EUROPE HOLDCO B.V.
RPM CANADA
TREMCO ILLBRUCK COATINGS LIMITED
RPM CANADA COMPANY
TREMCO ASIA PACIFIC PTY. LIMITED
and
The Other Foreign Borrowers From Time to Time Party Hereto, as the Borrowers,
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent
and
BANK OF AMERICA, N.A. and WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Syndication Agents
and
THE BANK OF NOVA SCOTIA and
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
as Co-Documentation Agents
and
PNC CAPITAL MARKETS LLC,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, and
WELLS FARGO SECURITIES, LLC,
as Joint Lead Arrangers and Joint Bookrunners
Dated as of January 5, 2011
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page
|
|
1. CERTAIN DEFINITIONS
|
|
|
1
|
|
1.1 Certain Definitions
|
|
|
1
|
|
1.2 Construction
|
|
|
23
|
|
1.3 Accounting Principles
|
|
|
24
|
|
|
|
|
|
|
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
|
|
|
24
|
|
2.1 Revolving Credit Commitments
|
|
|
24
|
|
2.2 Nature of Lenders Obligations with Respect to Revolving Credit Loans
|
|
|
27
|
|
2.3 Facility Fee
|
|
|
28
|
|
2.4 Revolving Credit Loan Requests; Swing Loan Requests
|
|
|
28
|
|
2.5 Making Revolving Credit Loans and Swing Loans; Presumptions by the
Administrative Agent; Repayment of Revolving Credit Loans; Borrowings
to Repay Swing Loans
|
|
|
29
|
|
2.6 Notes
|
|
|
31
|
|
2.7 Use of Proceeds
|
|
|
31
|
|
2.8 Letter of Credit Subfacility
|
|
|
32
|
|
2.9 Utilization of Commitments in Optional Currencies
|
|
|
39
|
|
2.10 Provisions Applicable to All Loans
|
|
|
41
|
|
|
|
|
|
|
3. RESERVED
|
|
|
42
|
|
|
|
|
|
|
4. INTEREST RATES
|
|
|
42
|
|
4.1 Interest Rate Options
|
|
|
42
|
|
4.2 Interest Periods
|
|
|
43
|
|
4.3 Interest After Default
|
|
|
43
|
|
4.4 Euro-Rate Unascertainable; Illegality; Increased
Costs; Deposits Not Available
|
|
|
44
|
|
4.5 Selection of Interest Rate Options
|
|
|
45
|
|
4.6 Interest Act (Canada) Disclosure
|
|
|
45
|
|
4.7 Canadian Usury Provision
|
|
|
45
|
|
4.8 Minimum Interest Clause for Swiss Borrowers
|
|
|
46
|
|
|
|
|
|
|
5. PAYMENTS
|
|
|
46
|
|
5.1 Payments
|
|
|
46
|
|
5.2 Pro Rata Treatment of Lenders
|
|
|
47
|
|
5.3 Sharing of Payments by Lenders
|
|
|
47
|
|
5.4 Presumptions by Administrative Agent
|
|
|
48
|
|
5.5 Interest Payment Dates
|
|
|
49
|
|
5.6 Voluntary Prepayments
|
|
|
49
|
|
5.7 Mandatory Prepayments; Cash Collateralization
|
|
|
51
|
|
5.8 Increased Costs
|
|
|
52
|
|
|
|
|
|
|
|
|
Page
|
|
5.9 Taxes
|
|
|
53
|
|
5.10 Indemnity
|
|
|
57
|
|
5.11 Settlement Date Procedures
|
|
|
57
|
|
|
|
|
|
|
6. REPRESENTATIONS AND WARRANTIES
|
|
|
58
|
|
6.1 Representations and Warranties
|
|
|
58
|
|
|
|
|
|
|
7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
|
|
|
62
|
|
7.1 First Loans and Letters of Credit
|
|
|
62
|
|
7.2 Each Loan or Letter of Credit
|
|
|
63
|
|
|
|
|
|
|
8. COVENANTS
|
|
|
63
|
|
8.1 Affirmative Covenants
|
|
|
64
|
|
8.2 Negative Covenants
|
|
|
66
|
|
8.3 Reporting Requirements
|
|
|
68
|
|
|
|
|
|
|
9. DEFAULT
|
|
|
70
|
|
9.1 Events of Default
|
|
|
70
|
|
9.2 Consequences of Event of Default
|
|
|
72
|
|
|
|
|
|
|
10. THE ADMINISTRATIVE AGENT
|
|
|
74
|
|
10.1 Appointment and Authority
|
|
|
74
|
|
10.2 Rights as a Lender
|
|
|
74
|
|
10.3 Exculpatory Provisions
|
|
|
74
|
|
10.4 Reliance by Administrative Agent
|
|
|
75
|
|
10.5 Delegation of Duties
|
|
|
75
|
|
10.6 Resignation of Administrative Agent
|
|
|
76
|
|
10.7 Non-Reliance on Administrative Agent and Other Lenders
|
|
|
77
|
|
10.8 No Other Duties, etc.
|
|
|
77
|
|
10.9 Administrative Agents Fee
|
|
|
77
|
|
10.10 No Reliance on Administrative Agents Customer Identification Program
|
|
|
77
|
|
|
|
|
|
|
11. GUARANTY
|
|
|
77
|
|
11.1 Guaranty by the Company
|
|
|
77
|
|
11.2 Additional Undertaking
|
|
|
78
|
|
11.3 Guaranty Unconditional
|
|
|
78
|
|
11.4 Company Obligations to Remain in Effect; Restoration
|
|
|
79
|
|
11.5 Waiver of Acceptance, etc.
|
|
|
79
|
|
11.6 Subrogation
|
|
|
79
|
|
11.7 Effect of Stay
|
|
|
79
|
|
|
|
|
|
|
12. MISCELLANEOUS
|
|
|
79
|
|
12.1 Modifications, Amendments or Waivers
|
|
|
79
|
|
12.2 No Implied Waivers; Cumulative Remedies
|
|
|
80
|
|
iii
|
|
|
|
|
|
|
Page
|
|
12.3 Expenses; Indemnity; Damage Waiver
|
|
|
81
|
|
12.4 Holidays
|
|
|
82
|
|
12.5 Notices; Effectiveness; Electronic Communication
|
|
|
83
|
|
12.6 Severability
|
|
|
84
|
|
12.7 Duration; Survival
|
|
|
84
|
|
12.8 Successors and Assigns
|
|
|
84
|
|
12.9 Confidentiality
|
|
|
87
|
|
12.10 Counterparts; Integration; Effectiveness
|
|
|
88
|
|
12.11 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE;
SERVICE OF PROCESS; WAIVER OF JURY TRIAL
|
|
|
89
|
|
12.12 USA PATRIOT Act Notice
|
|
|
90
|
|
12.13 Borrower Agent
|
|
|
90
|
|
12.14 Foreign Borrowers
|
|
|
90
|
|
12.15 Joinder of Borrowers; Release of Foreign Borrowers
|
|
|
91
|
|
iv
LIST OF SCHEDULES AND EXHIBITS
|
|
|
|
|
SCHEDULES
|
|
|
|
|
|
|
|
|
|
SCHEDULE 1.1(A)
|
|
-
|
|
PRICING GRID
|
SCHEDULE 1.1(B)
|
|
-
|
|
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
|
SCHEDULE 2.8.1
|
|
-
|
|
LETTERS OF CREDIT
|
SCHEDULE 6.1.2
|
|
-
|
|
SUBSIDIARIES
|
SCHEDULE 8.2.4
|
|
-
|
|
AFFILIATE TRANSACTIONS
|
|
|
|
|
|
EXHIBITS
|
|
|
|
|
|
|
|
|
|
EXHIBIT 1.1(A)
|
|
-
|
|
ASSIGNMENT AND ASSUMPTION AGREEMENT
|
EXHIBIT 1.1(B)
|
|
-
|
|
BORROWER JOINDER
|
EXHIBIT 1.1(L)
|
|
-
|
|
LENDER JOINDER
|
EXHIBIT 1.1(N)(1)
|
|
-
|
|
REVOLVING CREDIT NOTE
|
EXHIBIT 1.1(N)(2)
|
|
-
|
|
SWING LOAN NOTE
|
EXHIBIT 2.4.1
|
|
-
|
|
LOAN REQUEST
|
EXHIBIT 2.4.2
|
|
-
|
|
SWING LOAN REQUEST
|
EXHIBIT 8.3.3
|
|
-
|
|
QUARTERLY COMPLIANCE CERTIFICATE
|
v
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (as hereafter amended, the
Agreement
) is dated as of January 5, 2011
and is made by and among RPM INTERNATIONAL INC., a Delaware corporation (together with its
successors and assigns, to the extent permitted under this Agreement, the
Company
), RPM LUX
HOLDCO S.ÀR.L., a limited liability company formed under the laws of Luxembourg (together with its
successors and assigns, to the extent permitted under this Agreement,
RPM Lux
), RPOW UK LIMITED,
a limited liability company formed under the laws of England and Wales (together with its
successors and assigns, to the extent permitted under this Agreement,
RPOW-UK
), RPM EUROPE HOLDCO
B.V., a private company with limited liability formed under the laws of The Netherlands (together
with its successors and assigns, to the extent permitted under this Agreement,
RPM-Europe
), RPM
CANADA, a general partnership registered under the laws of the Province of Ontario (together with
its successors and assigns, to the extent permitted under this Agreement,
RPM Canada
), TREMCO
ILLBRUCK COATINGS LIMITED, a limited company formed under the laws of England and Wales (together
with its successors and assigns, to the extent permitted under this Agreement,
Tremco illbruck
),
RPM CANADA COMPANY, an unlimited company formed under the laws of Nova Scotia (together with its
successors and assigns, to the extent permitted under this Agreement,
RPM Canada Company
), TREMCO
ASIA PACIFIC PTY. LIMITED, a corporation incorporated under the laws of the Commonwealth of
Australia (together with its successors and assigns, to the extent permitted under this Agreement,
Tremco
), and the other Foreign Borrowers from time to time a party hereto (each of the foregoing
referred to herein as a Borrower and collectively referred to as the
Borrowers
), the LENDERS
(as hereinafter defined) from time to time a party hereto, PNC BANK, NATIONAL ASSOCIATION, in its
capacity as administrative agent for the Lenders under this Agreement (hereinafter referred to in
such capacity as the
Administrative Agent
), PNC Capital Markets LLC, as a joint lead arranger and
a joint bookrunner, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as a joint lead arranger
and a joint bookrunner, and Wells Fargo Securities, LLC as a joint lead arranger and a joint
bookrunner, Bank of America, N.A., as a co-syndication agent, Wells Fargo Bank, National
Association, as a co-syndication agent, The Bank of Nova Scotia, as a co-documentation agent, and
The Bank of Tokyo-Mitsubishi UFJ, Ltd., as a co-documentation agent.
The Borrowers have requested the Lenders to provide a revolving credit facility to the
Borrowers in an aggregate principal amount not to exceed $400,000,000. In consideration of their
mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1.
CERTAIN DEFINITIONS
1.1
Certain Definitions.
In addition to words and terms defined elsewhere in this
Agreement, the following words and terms shall have the following meanings, respectively, unless
the context hereof clearly requires otherwise:
Acceptable Insurer
shall mean an insurance company that (i) is a Captive Insurance
Company, (ii) has an A.M. Best rating of A- or better and being in a financial size
category of X or larger (as such category is defined as of the date hereof) or (iii) is
otherwise acceptable to the Required Lenders.
Administrative Agent
shall mean PNC Bank, National Association, and its successors and
assigns.
Administrative Agents Fee
shall have the meaning specified in Section 10.9
[Administrative Agents Fee].
Administrative Agents Letter
shall have the meaning specified in Section 10.9
[Administrative Agents Fee].
Affiliate
as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such Person, (ii) which
beneficially owns or holds 5% or more of any class of the voting or other equity interests of such
Person, or (iii) 5% or more of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person.
Anti-Terrorism Laws
shall mean any Laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the
Bank Secrecy Act, and the Laws administered by the United States Treasury Departments Office of
Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed,
extended, or replaced).
Applicable Letter of Credit Fee Rate
shall mean the percentage rate per annum based on
the then in effect Debt Rating and corresponding Tier Level according to the pricing grid on
Schedule 1.1(A)
below the heading Standby Letter of Credit Fee or Commercial Letter of
Credit Fee, as applicable.
Applicable Margin
shall mean, as applicable:
(A) the percentage spread to be added to the Base Rate applicable to Revolving Credit Loans
under the Base Rate Option based on the Debt Rating then in effect according to the pricing grid on
Schedule 1.1(A)
below the heading Base Rate Spread, or
(B) the percentage spread to be added to the Euro-Rate applicable to Revolving Credit Loans
under the Euro-Rate Option based on the Debt Rating then in effect according to the pricing grid on
Schedule 1.1(A)
below the heading Revolving Credit Euro-Rate Spread.
Any change to the Debt Rating of the Company will immediately change the Applicable Margin as
set forth above, effective on the date of such change in the Debt Rating.
Approved Fund
shall mean any fund that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course of business and
that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or
an Affiliate of an entity that administers or manages a Lender.
2
Arrangers
shall collectively mean PNC Capital Markets LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Wells Fargo Securities, LLC
Assignment and Assumption Agreement
shall mean an assignment and assumption agreement
entered into by a Lender and an assignee permitted under Section 12.8 [Successors and Assigns], in
substantially the form of
Exhibit 1.1(A)
.
Authorized Officer
shall mean, with respect to any Borrower or the Company, as
applicable, the Chief Executive Officer, President, Chief Financial Officer, Treasurer or Assistant
Treasurer of such Borrower or such other individuals, designated by written notice to the
Administrative Agent from such Borrower, authorized to execute notices, reports and other documents
on behalf of such Borrower required hereunder. The Borrowers may amend such list of individuals
from time to time by giving written notice of such amendment to the Administrative Agent.
Base Rate
shall mean, for any day, a fluctuating per annum rate of interest equal to
the highest of (a) the Federal Funds Open Rate,
plus
fifty basis points (0.5%), and (b) the
Prime Rate, and (c) the Daily Euro-Rate,
plus
one hundred basis points (1.0%). Any change
in the Base Rate (or any component thereof) shall take effect at the opening of business on the day
such change occurs.
Base Rate Option
shall mean the option of the Borrowers to have Loans bear interest at
the rate and under the terms set forth in Section 4.1.1(i) [Revolving Credit Base Rate Option].
Benefited Creditors
shall mean, with respect to the Companys obligations pursuant to
Section 11, collectively, the Administrative Agent, the Arrangers, the Lenders, the Issuing Lender
and PNC, as the Swing Loan lender, and the respective successors and assigns of each of the
foregoing.
Borrower Joinder
shall mean a joinder by a Person as a Borrower under this Agreement
and the other Loan Documents in substantially the form of
Exhibit 1.1(B)
.
Borrowers
shall mean the Company, RPM Lux, RPOW-UK, RPM-Europe, RPM Canada, Tremco
illbruck, RPM Canada Company, Tremco, and the other Foreign Borrowers and any other Domestic
Borrowers (and the successors and assigns of each of the foregoing to the extent permitted under
this Agreement).
Borrowing Date
shall mean, with respect to any Loan, the date for the making thereof
or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which
shall be a Business Day.
Borrowing Tranche
shall mean specified portions of Loans outstanding as follows: (i)
any Loans to which a Euro-Rate Option applies which become subject to the same Interest Rate Option
under the same Loan Request by the Borrowers and which have the same Interest Period shall
constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall
constitute one Borrowing Tranche.
3
Business Day
shall mean any day other than a Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required to be closed for business in Pittsburgh,
Pennsylvania and if the applicable Business Day relates to any Loan to which the Euro-Rate Option
applies, such day must also be a day on which dealings are carried on in the London interbank
market.
Canadian Borrower
shall mean any Borrower incorporated or otherwise organized under
the laws of Canada or any province or territory thereof.
Capital Lease Obligations
shall mean, as to any Person, the obligations of such Person
to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real
and/or personal property to the extent such obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under GAAP (including Statement of
Financial Accounting Standards No. 13 of the Financing Accounting Standards Board) and, for
purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP (including such Statement No. 13).
Captive Insurance Company
shall mean any of First Continental Services Company or RSIF
International Limited, each of which are wholly-owned (directly or indirectly) Subsidiaries of the
Company, or any other captive insurance company that is a wholly-owned (directly or indirectly)
Subsidiary of the Company.
Cash Collateralize
shall mean to pledge and deposit with or deliver to Administrative
Agent, for the benefit of each Issuing Lender and the Lenders, as collateral for the Letter of
Credit Obligations, cash or deposit account balances pursuant to documentation satisfactory to
Administrative Agent and each Issuing Lender (which documents are hereby consented to by the
Lenders). Such cash collateral shall be maintained in blocked, non-interest bearing deposit
accounts at the Administrative Agent
Cash Management Agreements
shall have the meaning specified in Section 2.5.6 [Swing
Loans under Cash Management Agreements].
CERCLA
shall mean the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and regulations promulgated thereunder.
Change in Law
shall mean the occurrence, after the date of this Agreement, of any of
the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the
administration, interpretation or application thereof by any Official Body or (c) the making or
issuance of any request, guideline or directive (whether or not having the force of Law) by any
Official Body.
Closing Date
shall mean January 5, 2011.
Co-Documentation Agents
shall collectively mean The Bank of Nova Scotia and The Bank
of Tokyo-Mitsubishi UFJ, Ltd.
4
Co-Syndication Agents
shall collectively mean Bank of America, N.A. and Wells Fargo
Bank, National Association.
Code
shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.
Commercial Letter of Credit
shall mean a commercial letter of credit issued in respect
of the purchase of goods or services in the ordinary course of business.
Commitment
shall mean as to any Lender the aggregate of its Revolving Credit
Commitment and, in the case of PNC, its Swing Loan Commitment, and
Commitments
shall mean
the aggregate of the Revolving Credit Commitments and Swing Loan Commitment of all of the Lenders.
Compliance Certificate
shall have the meaning specified in Section 8.3.3 [Certificate
of the Company].
Computation Date
shall have the meaning specified in Section 2.9.1 [Periodic
Computations of Dollar Equivalent amounts of Revolving Credit Loans and Letters of Credit
Outstanding; Repayment in Same Currency].
Consolidated Subsidiaries
shall mean the Subsidiaries of the Company other than the
Excluded Subsidiaries.
Daily Euro-Rate
shall mean, for any day, the rate per annum determined by the
Administrative Agent by dividing (x) the Published Rate by (y) a number equal to 1.00
minus
the
Euro-Rate Reserve Percentage on such day.
Debt Rating
shall mean the Companys debt ratings accorded to the Companys senior
unsecured long-term debt by Standard & Poors, Moodys and Fitch, which ratings shall be used to
determine the margin set forth on the pricing grid on
Schedule 1.1(A)
. If the Company is
split-rated by the rating agencies, then Debt Rating shall mean the highest rating assigned by the
aforementioned rating agencies; provided that, in the case that the ratings assigned by the rating
agencies differ by two or more rating tiers, then the pricing set forth on
Schedule 1.1(A)
shall be based upon the tier which is one level below the tier corresponding to the highest rating
assigned by the rating agencies.
Defaulting Lender
shall mean any Lender that, as determined by the Administrative
Agent in its reasonable discretion, (a) has failed to fund any portion of the Loans, participations
with respect to Letters of Credit, or participations in Swing Line Loans required to be funded by
it hereunder within two (2) Business Days of the date required to be funded by it hereunder unless
such failure has been cured and all interest accruing as a result of such failure has been fully
paid in accordance with the terms hereof, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by it hereunder
within two (2) Business Days of the date when due, unless the subject of a good faith dispute or
unless such failure has been cured and all interest accruing as a result of such failure has been
fully paid in accordance with the terms hereof, (c) has failed at any time to comply with
5
the provisions of Section 5.3 [Sharing of Payments by Lenders] with respect to purchasing
participations from the other Lenders, whereby such Lenders share of any payment received, whether
by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all
of the Lenders, (d) has since the date of this Agreement been deemed insolvent by an Official Body
or become the subject of a bankruptcy, receivership, conservatorship or insolvency proceeding, or
has a parent company that since the date of this Agreement been deemed insolvent by an Official
Body or become the subject of a bankruptcy, receivership, conservatorship or insolvency proceeding,
(e) has notified the Administrative Agent in writing that it does not intend to comply with any of
its funding obligations under this Agreement or (f) has failed within three (3) Business Days after
request by the Administrative Agent to confirm that it will comply with the terms of this Agreement
relating to its obligations to fund prospective Loans and participations in Letters of Credit and
Swing Line Loans; provided that a Lender shall no longer be a Defaulting Lender if it no longer
meets the requirements of a Defaulting Lender pursuant to this definition, as determined by the
Administrative Agent in its reasonable discretion.
Disclosure Documents
shall mean the Companys annual report on Form 10-K for the
fiscal year ended May 31, 2010 and quarterly report on Form 10-Q for the quarterly period ended
August 31, 2010, in each case as filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
Dollar, Dollars, U.S. Dollars
and the symbol
$
shall mean lawful money of the
United States of America.
Dollar Equivalent
shall mean, with respect to any amount of any currency, as of any
Computation Date, the Equivalent Amount of such currency expressed in Dollars.
Domestic Borrowers
shall mean the Borrowers which are organized under the laws of the
United States of America, any State thereof or the District of Columbia.
Drawing Date
shall have the meaning specified in Section 2.8.3 [Disbursements,
Reimbursement].
EBITDA
shall mean for any period of four consecutive fiscal quarters, determined on a
consolidated basis for the Company and its Consolidated Subsidiaries, (i) the sum of (A) net income
of the Company and its Consolidated Subsidiaries (calculated before provision for income taxes,
Interest Expense, extraordinary items, non-recurring gains or losses in connection with asset
dispositions, income attributable to equity in affiliates, all amounts attributable to depreciation
and amortization and non-cash charges associated with asbestos liabilities) for such period, (B)
all non-cash charges related to the writedown or impairment of goodwill and other intangibles for
such period, (C) non-cash charges related to or resulting from the bankruptcy filing of any
Excluded Subsidiary for such period, (D) non-recurring expenses related to the acquisition of all
or substantially all of the assets or capital stock (including by merger or amalgamation) of
another Person (or, in the case of assets, of a business unit of a Person), not to exceed
$10,000,000 in the aggregate for such period of four consecutive
fiscal quarters,
plus
(E)
non-cash charges in addition to those provided for in clauses (B) and (C) above, up to an aggregate
amount of not more than $25,000,000 incurred in such period,
minus
(ii) the sum of
6
(A) cash payments made by the Company or any of its Consolidated Subsidiaries in respect of
asbestos liabilities, for those payments which have not already been expensed in cash in the
ordinary course of business (which liabilities include, without limitation, defense costs and
indemnification liabilities incurred in connection with asbestos liabilities) during such period,
and (B) non-cash gains for such period.
Environmental Laws
shall mean all applicable federal, state, local, tribal,
territorial and foreign Laws (including common law), constitutions, statutes, treaties,
regulations, rules, ordinances and codes and any consent decrees, settlement agreements, judgments,
orders, directives, policies or programs issued by or entered into with an Official Body pertaining
or relating to: (i) pollution or pollution control; (ii) protection of human health from exposure
to regulated substances; (iii) protection of the environment and/or natural resources; (iv)
employee safety in the workplace; (v) the presence, use, management, generation, manufacture,
processing, extraction, treatment, recycling, refining, reclamation, labeling, packaging, sale,
transport, storage, collection, distribution, disposal or release or threat of release of regulated
substances; (vi) the presence of contamination; (vii) the protection of endangered or threatened
species; and (viii) the protection of environmentally sensitive areas.
Environmental Liabilities
shall mean all liabilities in connection with or relating to
the business, assets, presently or previously owned or leased property, activities (including,
without limitation, off-site disposal) or operations of the Company and each Consolidated
Subsidiary, whether vested or unvested, contingent or fixed, actual or potential, known or unknown,
which arise under or relate to matters covered by Environmental Laws.
Equivalent Amount
shall mean, at any time, as determined by Administrative Agent
(which determination shall be conclusive absent manifest error), with respect to an amount of any
currency (the
Reference Currency
) which is to be computed as an equivalent amount of another
currency (the
Equivalent Currency
), the amount of such Equivalent Currency converted from such
Reference Currency at Administrative Agents spot selling rate (based on the market rates then
prevailing and available to Administrative Agent) for the sale of such Equivalent Currency for such
Reference Currency at a time determined by Administrative Agent on the second Business Day
immediately preceding the event for which such calculation is made.
Equivalent Currency
shall have the meaning specified in the definition of Equivalent
Amount.
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended or supplemented from time to time, and any successor statute of similar import, and the
rules and regulations thereunder, as from time to time in effect.
ERISA Affiliate
shall mean, at any time, any trade or business (whether or not
incorporated) under common control with the Borrowers and are treated as a single employer under
Section 414 of the Code.
ERISA Event
shall mean (a) a reportable event (under Section 4043 of ERISA and
regulations thereunder) with respect to a Pension Plan; (b) a withdrawal by Borrowers or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in
7
which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete
or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer
Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon Borrowers or any ERISA Affiliate.
ERISA Group
shall mean, at any time, the Borrowers and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated) under common
control and all other entities which, together with the Borrowers, are treated as a single employer
under Section 414 of the Internal Revenue Code.
Euro
shall refer to the lawful currency of the Participating Member States.
European Interbank Market
shall mean the European interbank market for Euro operating
in Participating Member States.
Euro-Rate
shall mean the following:
(a) with respect to Dollar Loans comprising any Borrowing Tranche to which the Euro-Rate
Option applies for any Interest Period, the interest rate per annum determined by the
Administrative Agent by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which Dollar deposits are offered by leading
banks in the London interbank deposit market), or the rate which is quoted by another source
selected by the Administrative Agent which has been approved by the British Bankers Association as
an authorized information vendor for the purpose of displaying rates at which US Dollar deposits
are offered by leading banks in the London interbank deposit market (for purposes hereof, an
Alternate Source
), at approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for Dollars for an amount
comparable to the principal amount of such Borrowing Tranche and having a borrowing date and a
maturity comparable to such Interest Period (or if there shall at any time, for any reason, no
longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable
replacement rate determined by the Administrative Agent at such time (which determination shall be
conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate with respect to Dollar Loans may also be expressed by the following
formula:
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Euro-Rate =
|
|
London interbank offered rate quoted by
Bloomberg or appropriate successor as shown on
Bloomberg Page BBAM1
|
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|
|
|
|
1.00 Euro-Rate Reserve Percentage
|
|
|
8
The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate Option applies
that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Administrative Agent shall give prompt notice to the Company on behalf of
the Borrowers of the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
(b) with respect to Optional Currency Loans in currency other than Euro comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period, the interest rate
per annum determined by Administrative Agent by dividing (i) the rate which appears on the
Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which
deposits in the relevant Optional Currency are offered by leading banks in the Relevant Interbank
Market), or the rate which is quoted by an Alternate Source, at approximately 11:00 a.m., London
time, two (2) Business Days prior to the commencement of such Interest Period as the Relevant
Interbank Market offered rate for deposits in the relevant Optional Currency for an amount
comparable to the principal amount of such Borrowing Tranche and having a borrowing date and a
maturity comparable to such Interest Period (or if there shall at any time, for any reason, no
longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable
replacement rate determined by the Administrative Agent at such time (which determination shall be
conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. Such Euro-Rate may also be expressed by the following formula:
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Euro-Rate =
|
|
Relevant Interbank Market offered rate quoted by
Bloomberg or appropriate successor as shown on
Bloomberg Page BBAM1
|
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|
|
|
|
|
1.00 Euro-Rate Reserve Percentage
|
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The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate Option applies
that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Administrative Agent shall give prompt notice to the Company on behalf of
the Borrowers of the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error. The Euro-Rate for any Loans shall be
based upon the Euro-Rate for the currency in which such Loans are requested.
(c) with respect to Optional Currency Loans denominated in Euro comprising any Borrowing
Tranche to which the Euro-Rate Option applies for any Interest Period, the interest rate per annum
determined by Administrative Agent by dividing (i) the rate which appears on the Bloomberg Page
BBAM1 (or on such other substitute Bloomberg page that displays rates at which deposits in Euro are
offered by leading banks in the Relevant Interbank Market) or the rate which is quoted by an
Alternate Source, at approximately 11:00 a.m., Brussels time, two (2) Business Days prior to the
commencement of such Interest Period as the Relevant Interbank Market offered rate for deposits in
Euro for an amount comparable to the principal amount of such Borrowing Tranche and having a
borrowing date and a maturity comparable to such Interest Period (or if there shall at any time,
for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate
Source, a comparable replacement rate determined by the Administrative Agent at such time (which
determination
9
shall be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the
Euro-Rate Reserve Percentage. Such Euro-Rate may also be expressed by the following formula:
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|
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|
Euro-Rate =
|
|
London interbank offered rate quoted by
Bloomberg or appropriate successor as shown on
Bloomberg Page BBAM1
|
|
|
|
|
|
|
1.00 Euro-Rate Reserve Percentage
|
|
|
The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate Option applies
that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Administrative Agent shall give prompt notice to the Company on behalf of
the Borrowers of the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error. The Euro-Rate for any Loans shall be
based upon the Euro-Rate for the currency in which such Loans are requested.
Euro-Rate Option
shall mean the option of the Borrowers to have Loans bear interest at
the rate and under the terms and conditions set forth in Section 4.1.1(ii).
Euro-Rate Reserve Percentage
shall mean as of any day the maximum percentage in effect
on such day, (i) as prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental, marginal and emergency
reserve requirements) with respect to eurocurrency funding (currently referred to as
Eurocurrency
Liabilities
); and (ii) to be maintained by a Lender as required for reserve liquidity, special
deposit, or similar purpose by any governmental or monetary authority of any country or political
subdivision thereof (including any central bank), against (A) any category of liabilities that
includes deposits by reference to which a Euro-Rate is to be determined, or (B) any category of
extension of credit or other assets that includes Loans or Borrowing Tranches to which a Euro-Rate
applies.
Event of Default
shall mean any of the events described in Section 9.1 [Events of
Default] and referred to therein as an Event of Default.
Excluded Subsidiaries
shall mean Specialty Products Holding Corp. and Bondex
International, Inc. and each of their respective Subsidiaries so long in each case as such entities
are deconsolidated from results of the Company.
Excluded Taxes
shall mean, with respect to the Administrative Agent, any Lender, the
Issuing Lender or any other recipient of any payment to be made by or on account of any obligation
of any Borrower hereunder, (a) Taxes imposed on or measured by its overall net income (however
denominated), franchise Taxes imposed on it (in lieu of net income taxes) or capital Taxes imposed
on (or measured by) its taxable capital, in each case by the jurisdiction (or any political
subdivision thereof) under the Laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending office is located,
(b) any branch profits Taxes imposed by the United States of America or any similar tax imposed by
any other jurisdiction in which any Borrower is located (c) in the case of a Foreign Lender, any
withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending
10
office) or is attributable to such Foreign Lenders failure or inability (other than as a
result of a Change in Law) to comply with Section 5.9.5 [Status of Lenders], except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the Borrowers with respect
to such withholding tax pursuant to Section 5.9.1 [Payments Free of Taxes], and (d) in the case of
a Foreign Lender (other than an Assignee pursuant to a request by the Company under Section 5.6.2
[Replacement of a Lender]), any United States federal withholding Taxes resulting from FATCA (other
than as a result of a Change in Law), except to the extent imposed as a result of the Company not
providing to the IRS the required documentation, certifications, or information prescribed by
applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) or to the
Administrative Agent such documentation, certifications, or information reasonably requested by the
Administrative Agent.
Executive Order No. 13224
shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
Expiration Date
shall mean, with respect to the Revolving Credit Commitments, the
earlier of January 5, 2015, or the date the Revolving Credit Commitments are terminated or
accelerated hereunder.
Facility Fee
shall mean the fees referred to in Sections 2.3 [Facility Fee].
FATCA
shall mean Sections 1471 through 1474 of the Code or any amendment or
successor to any such Section, or any regulation or official interpretation thereof issued with
respect thereto, so long as such amendment, successor, regulation, or interpretation is
substantially similar to, the reporting or withholding obligations of Sections 1471 through 1474 of
the Code as of the date of this Agreement with respect to payments to foreign entities that have
dealings with United States Person or that are significantly owned by United States Persons.
Federal Funds Effective Rate
for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced
by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by federal funds brokers on
the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor)
in substantially the same manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the Federal Funds Effective Rate as of the date of this Agreement;
provided
, if such Federal Reserve Bank (or its successor) does not announce such rate on
any day, the Federal Funds Effective Rate for such day shall be the Federal Funds Effective Rate
for the last day on which such rate was announced.
Federal Funds Open Rate
for any day shall mean the rate per annum (based on a year of
360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP
North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day
opposite the caption OPEN (or on such other substitute Bloomberg Screen that displays such rate),
or as set forth on such other recognized electronic source used for the purpose of displaying such
rate as selected by the Administrative Agent (for purposes of this
11
definition, an
Alternate Source
) (or if such rate for such day does not appear on the
Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at
any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any
Alternate Source, a comparable replacement rate determined by the Administrative Agent at such time
(which determination shall be conclusive absent manifest error); provided however, that if such day
is not a Business Day, the Federal Funds Open Rate for such day shall be the open rate on the
immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of
interest with respect to any advance to which the Federal Funds Open Rate applies will change
automatically without notice to the Borrowers, effective on the date of any such change.
Fitch
shall mean Fitch Investors Service Inc. and its successors.
Foreign Borrowers
shall mean the Borrowers organized under the laws of a jurisdiction
outside the United States of America, any State thereof or the District of Columbia.
Foreign Lender
shall mean any Lender that is organized under the Laws of a
jurisdiction other than that in which any Borrower is resident for tax purposes. For purposes of
this definition, the United States of America, each State thereof and the District of Columbia
shall be deemed to constitute a single jurisdiction.
GAAP
shall mean generally accepted accounting principles as are in effect from time to
time, subject to the provisions of Section 1.3 [Accounting Principles], and applied on a consistent
basis both as to classification of items and amounts.
Guaranty
of any Person shall mean any obligation of such Person guaranteeing or in
effect guaranteeing any liability or obligation of any other Person in any manner, whether directly
or indirectly, including any agreement to indemnify or hold harmless any other Person, any
performance bond or other suretyship arrangement and any other form of assurance against loss,
except endorsement of negotiable or other instruments for deposit or collection in the ordinary
course of business.
Guidelines
shall mean, together, (i) Guideline S-02.123 in relation to interbank loans
of September 22, 1986 (
Merkblatt Verrechnungssteuer auf Zinsen von Bankguthaben, deren Gläubiger
Banken sind (Interbankguthaben) vom 22. September 1986
), (ii) Guideline S-02.122.1 in relation to
bonds of April 1999 (
Merkblatt Obligationen vom April 1999
), (iii) Guideline S-02.128 in relation
to syndicated credit facilities of January 2000 (
Merkblatt Steuerliche Behandlung von
Konsortialdarlehen, Schuldscheindarlehen, Wechseln und Unterbeteiligungen vom Januar 2000
) and
(iv) Guideline S-02.122.2 in relation to deposits of April 1999 (
Merkblatt Kundenguthaben von
April 1999
) in each case as issued, amended or substituted from time to time by the Swiss Federal
Tax Administration.
Hazardous Substances
shall mean any toxic, radioactive, caustic or otherwise hazardous
substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any
substance having constituted elements displaying any of the foregoing characteristics, regulated
under Environmental Laws.
HMRC
means HM Revenue & Customs.
12
HMRC DT Treaty Passport
scheme means the Double Taxation Treaty Passport scheme
launched by HMRC for overseas corporate lenders.
Increasing Lender
shall have the meaning assigned to such term in Section 2.1.2(i)
hereof.
Indebtedness
shall mean, as to any Person at any time (determined without
duplication): (i) indebtedness of such Person for borrowed money (whether by loan or the issuance
and sale of debt securities) or for the deferred purchase or acquisition price of property or
services, other than accounts payable incurred in the ordinary course of business; (ii) obligations
of such Person in respect of letters of credit or similar instruments issued or accepted by banks
and other financial institutions for the account of such Person (whether or not such obligations
are contingent); (iii) Capital Lease Obligations of such Person; (iv) obligations of such Person to
redeem or otherwise retire shares of capital stock of such Person; (v) indebtedness of others of
the type described in clause (i), (ii), (iii) or (iv) above secured by a Lien on the property of
such Person, whether or not the respective obligation so secured has been assumed by such Person;
and (vi) Guaranties of such Person of indebtedness of others of the type described in clause (i),
(ii), (iii) or (iv) above.
Indemnified Taxes
shall mean Taxes other than Excluded Taxes.
Indemnitee
shall have the meaning specified in Section 12.3.2 [Indemnification by the
Borrowers].
Information
shall mean all information received from the Company or any of its
Consolidated Subsidiaries relating to the Borrowers or any of such Consolidated Subsidiaries or any
of their respective businesses, other than any such information that is available to the
Administrative Agent, any Lender or the Issuing Lender on a non-confidential basis prior to
disclosure by the Company or any of its Consolidated Subsidiaries,
provided
that, in the
case of information received from the Company or any of its Consolidated Subsidiaries after the
date of this Agreement, such information is clearly identified at the time of delivery as
confidential.
Insolvency Proceeding
shall mean, with respect to any Person, (a) a case, action or
proceeding with respect to such Person (i) before any court or any other Official Body under any
bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for
the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Borrower or otherwise relating to the liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement in respect of such
Persons creditors generally or any substantial portion of its creditors; undertaken under any Law.
Interest Expense
shall mean, for any period, the sum (determined without duplication)
of the aggregate amount of interest accruing during such period on Indebtedness of the Company and
its Consolidated Subsidiaries (on a consolidated basis), including the interest portion of payments
under Capital Lease Obligations and any capitalized interest, and excluding
13
amortization of debt discount and expense and any non-cash interest expense associated with
accretive type debt instruments.
Interest Period
shall mean the period of time selected by the Borrowers in connection
with (and to apply to) any election permitted hereunder by the Borrowers to have Revolving Credit
Loans bear interest under the Euro-Rate Option. Subject to the last sentence of this definition,
such period shall be one (1), two (2), three (3) or six (6) Months. Such Interest Period shall
commence on the effective date of such Interest Rate Option, which shall be (i) the Borrowing Date
if the Borrowers are requesting new Loans, or (ii) the date of renewal of or conversion to the
Euro-Rate Option if the Borrowers are renewing or converting to the Euro-Rate Option applicable to
outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which would
otherwise end on a date which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (B) the Borrowers shall not select,
convert to or renew an Interest Period for any portion of the Loans that would end after the
Expiration Date.
Interest Rate Option
shall mean any Euro-Rate Option or Base Rate Option.
Investments
shall have the meaning assigned to it in Section 8.2.2 [Loans and
Investments].
IRS
shall mean the Internal Revenue Service.
Issuing Lender
shall mean PNC, in its individual capacity as issuer of Letters of
Credit hereunder, and any other Lender that Borrowers, Administrative Agent and such other Lender
may agree may from time to time issue Letters of Credit hereunder.
Law
shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree, bond,
judgment, authorization or approval, lien or award by or settlement agreement with any Official
Body.
Lender Joinder
shall mean a joinder by a lender under this Agreement and the other
Loan Documents in substantially the form of
Exhibit 1.1(L)
.
Lenders
shall mean the financial institutions named on
Schedule 1.1(B)
and
their respective successors and assigns as permitted hereunder, each of which is referred to herein
as a Lender. For the purpose of any Loan Document which provides for the granting of a security
interest or other Lien to the Lenders or to the Administrative Agent for the benefit of the Lenders
as security for the Obligations, Lenders shall include any Affiliate of a Lender to which such
Obligation is owed.
Letter of Credit
shall have the meaning specified in Section 2.8.1 [Issuance of
Letters of Credit].
Letter of Credit Borrowing
shall have the meaning specified in Section 2.8.3.3
[Disbursements, Reimbursement].
14
Letter of Credit Fee
shall have the meaning specified in Section 2.8.2 [Letter of
Credit Fees].
Letter of Credit Obligation
shall mean, as of any date of determination, the aggregate
amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of
Credit shall increase in amount automatically in the future, such aggregate amount available to be
drawn shall currently give effect to any such future increase)
plus
the aggregate
Reimbursement Obligations and Letter of Credit Borrowings on such date.
Letter of Credit Sublimit
shall have the meaning specified in Section 2.8.1 [Issuance
of Letters of Credit].
Lien
shall mean any mortgage, deed of trust, pledge, lien, security interest, charge
or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or
involuntarily given, including any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or not a lien or other
encumbrance is created or exists at the time of the filing).
Liquid Investments
shall mean (i) certificates of deposit maturing within 90 days of
the acquisition thereof denominated in Dollars and issued by (A) a Lender (or its parent) or (B) a
bank or trust company having combined capital and surplus of at least $500,000,000 and which has
(or which is a Subsidiary of a bank holding company which has) publicly traded debt securities
rated A- or higher by Standard & Poors or A3 or higher by Moodys; (ii) obligations issued or
guaranteed by the United States of America, with maturities not more than one year after the date
of issue; (iii) commercial paper with maturities of not more than 90 days and a published rating of
not less than A-1 from Standard & Poors or P-1 from Moodys; and (iv) municipal and/or corporate
bonds rated A or higher from Standard & Poors or higher from Moodys.
Loan Documents
shall mean this Agreement, the Administrative Agents Letter, the
Notes, any Borrower Joinder, any Cash Management Agreements, any documents entered into with
respect to a Letter of Credit and any other instruments, certificates or documents delivered in
connection herewith or therewith.
Loan Request
shall have the meaning specified in Section 2.4 [Revolving Credit Loan
Requests; Swing Loan Requests].
Loans
shall mean collectively and
Loan
shall mean separately all Revolving
Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.
Material Adverse Effect
shall mean (i) a material adverse effect on the condition
(financial or otherwise), results of operations, properties, assets, liabilities (including,
without limitation, tax and ERISA liabilities and Environmental Liabilities), business, operations,
capitalization, shareholders equity, or franchises of the Company and its Consolidated
Subsidiaries, taken as a whole; or (ii) a material adverse effect on the ability of the Company to
perform its obligations under this Agreement.
15
Moodys
shall mean Moodys Investors Service, Inc. and its successors.
Month
, with respect to an Interest Period under the Euro-Rate Option, shall mean the
interval between the days in consecutive calendar months numerically corresponding to the first day
of such Interest Period. If any Euro-Rate Interest Period begins on a day of a calendar month for
which there is no numerically corresponding day in the month in which such Interest Period is to
end, the final month of such Interest Period shall be deemed to end on the last Business Day of
such final month.
Multiemployer Plan
shall mean any employee benefit plan which is a multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA and to which the Borrowers or any member of
the ERISA Group is then making or accruing an obligation to make contributions or, within the
preceding five Plan years, has made or had an obligation to make such contributions.
Netherlands Borrower
shall mean any Borrower incorporated or otherwise organized under
the laws of the Netherlands.
New Lender
shall have the meaning assigned to such term in Section 2.1.2(i) hereof.
Non-Consenting Lender
shall have the meaning specified in Section 12.1 [Modifications,
Amendments or Waivers].
Notes
shall mean, collectively, the promissory notes in the form of
Exhibit
1.1(N)(1)
evidencing the Revolving Credit Loans, in the form of
Exhibit 1.1(N)(2)
evidencing the Swing Loan.
Obligation
shall mean any obligation or liability of any of the Borrowers, howsoever
created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, under or in connection with this Agreement, the Notes, the
Letters of Credit, the Administrative Agents Letter or any other Loan Document whether to the
Administrative Agent, any of the Lenders or their Affiliates or other persons provided for under
such Loan Documents.
Official Body
shall mean the government of the United States of America or any other
nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or the European Central
Bank).
Optional Currency
shall mean the following lawful currencies: Canadian dollars,
British pounds sterling, the Euro, Australian dollars, New Zealand dollars, Japanese yen, Swiss
francs, and any other currency approved by Administrative Agent and all of the Lenders pursuant to
Section 2.9.5 [Requests for Additional Optional Currencies]. Subject to Section 2.9.4 [European
Monetary Union], each Optional Currency must be the lawful currency of the specified country.
16
Other Taxes
shall mean all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.
Overnight Rate
shall mean for any day with respect to any Loans in an Optional
Currency, the rate of interest per annum as determined by the Administrative Agent at which
overnight deposits in such currency, in an amount approximately equal to the amount with respect to
which such rate is being determined, would be offered for such day in the Relevant Interbank
Market.
Participant
has the meaning specified in Section 12.8.4 [Participations].
Participating Member State
shall mean any member State of the European Communities
that adopts or has adopted the euro as its lawful currency in accordance with legislation of the
European Community relating to Economic and Monetary Union.
Participation Advance
shall have the meaning specified in Section 2.8.3
[Disbursements, Reimbursement].
Payment Date
shall mean the first day of each calendar quarter after the date hereof
and on the Expiration Date or upon acceleration of the Notes.
Payment In Full
shall mean the indefeasible payment in full in cash of the Loans and
other Obligations hereunder, termination of the Commitments and expiration or termination of all
Letters of Credit or cash collateralization of all Letters of Credit.
PBGC
shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.
Pension Plan
shall mean any employee pension benefit plan (as such term is defined
in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA
and is sponsored or maintained by any Borrower or any ERISA Affiliate or to which any Borrower or
any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made contributions at any times
during the immediately preceding five plan years.
Permitted Liens
shall mean:
(i) Liens existing on the Closing Date and securing Indebtedness in an aggregate principal
amount not exceeding $15,000,000;
(ii) Liens existing on other assets at the date of acquisition thereof or which attach to such
assets concurrently with or within 90 days after the acquisition thereof, securing Indebtedness
incurred to finance the acquisition thereof in an aggregate principal amount at any time
outstanding not exceeding $35,000,000;
17
(iii) any Lien existing on any asset of any corporation at the time such corporation becomes a
Consolidated Subsidiary of the Company or is merged or consolidated with or into the Company or one
of its Consolidated Subsidiaries and not created in contemplation of such event;
(iv) any Lien arising out of the refinancing, extension, renewal or refunding of any
Indebtedness secured by any Lien permitted by any of the foregoing clauses of this definition,
provided that such Indebtedness is not increased and is not secured by any additional assets;
(v) other Liens arising in the ordinary course of the business of the Company or such
Consolidated Subsidiary which are not incurred in connection with the borrowing of money or the
obtaining of advances or credit, do not secure any obligation in an amount exceeding $25,000,000 in
the aggregate and do not materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business;
(vi) Liens not otherwise permitted by the foregoing clauses of this definition securing
Indebtedness in an aggregate principal or face amount at any date not to exceed $40,000,000;
(vii) Liens incurred pursuant to receivables securitizations and related assignments and sales
of any income or revenues (including Receivables), including Liens on the assets of any Receivables
Subsidiary created pursuant to any receivables securitization and Liens granted by the Company and
its other Consolidated Subsidiaries on Receivables in connection with the transfer thereof, or to
secure obligations owing by them, in respect of any such receivables securitization; provided that
the aggregate principal amount of the investments and claims held at any time by all purchasers,
assignees or other transferees of (or of interests in) Receivables from any Receivables Subsidiary,
and other rights to payment held by such Persons, in all receivables securitizations shall not
exceed $250,000,000;
(ix) Liens imposed by any Official Body for Taxes (a) not yet due and delinquent or (b) which
are being contested in good faith and by appropriate proceedings and, during such period during
which amounts are being so contested, such Liens shall not be executed on or enforced against any
of the assets of any Borrower, provided that such Borrower shall have set aside on its books
reserves deemed adequate therefor and not resulting in qualification by auditors;
(x) carriers, warehousemens, mechanics, materialmens, repairmens, construction and other
like Liens arising by operation of applicable Law, arising in the ordinary course of business and
securing amounts: (a) which are not overdue for a period of more than 30 days, or (b) which are
being contested in good faith and by appropriate proceedings and, during such period during which
amounts are being so contested, such Liens shall not be executed on or enforced against any of the
assets of any Borrower, provided that such Borrower shall have set aside on its books reserves
deemed adequate therefor and not resulting in qualification by auditors;
18
(xi) statutory Liens incurred, or pledges or deposits made, under workers compensation,
employment insurance and other social security legislation; and
(xii) undetermined or inchoate Liens and charges arising or potentially arising under
statutory provisions which have not at the time been filed or registered in accordance with
applicable Law or of which written notice has not been duly given in accordance with applicable Law
or which although filed or registered, relate to obligations not due or delinquent.
Permitted Non-Qualifying Lender
shall mean, as determined with respect to Swiss
Borrowers, any bank, financial institution, trust, fund or other entity that is regularly engaged
in or established for the purpose of making, purchasing or investing in loans, securities or other
financial assets, that:
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(a)
|
|
is not a Qualifying Bank; and
|
|
|
(b)
|
|
by its accession to this Agreement as an additional Lender does
not increase the number of Lenders that are not Qualifying Banks under this
Agreement to a number that is greater than 10;
|
and which has not ceased to be a Lender or ceased to have any interest in any rights of a Lender
hereunder, e.g. through a participation and/or a subparticipation.
Person
shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, joint venture, government or
political subdivision or agency thereof, or any other entity.
Plan
shall mean at any time an employee pension benefit plan (including a Multiple
Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to
the minimum funding standards under Section 412 of the Code and either (i) is maintained by any
member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time
within the preceding five years been maintained by any entity which was at such time a member of
the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.
PNC
shall mean PNC Bank, National Association, its successors and assigns.
Post-Default Rate
shall mean a rate per annum equal to the sum of 2% per annum from
the time such Obligation becomes due and payable and until it is paid in full,
plus
the higher of
(i) the rate of interest applicable under the Revolving Credit Base Rate Option and (ii) the rate
of interest (if any) otherwise applicable to such Loan.
Potential Default
shall mean any event or condition which with notice or passage of
time, or both, would constitute an Event of Default.
Prime Rate
shall mean the interest rate per annum announced from time to time by the
Administrative Agent at its Principal Office as its then prime rate, which rate may not be the
lowest or most favorable rate then being charged commercial borrowers or others by the
19
Administrative Agent. Any change in the Prime Rate shall take effect at the opening of
business on the day such change is announced.
Principal Office
shall mean the main banking office of the Administrative Agent in
Pittsburgh, Pennsylvania.
Professional Market Party
shall mean a professional market party (professionele
marktpartij) within the meaning of the Dutch Act on Financial Supervision (Wet op het financieel
toezicht) and any regulations promulgated thereunder as amended or replaced from time to time.
Published Rate
shall mean the rate of interest published each Business Day in
The Wall
Street Journal
Money Rates
listing under the caption London Interbank Offered Rates for
a one month period (or, if no such rate is published therein for any reason, then the Published
Rate shall be the rate at which U.S. dollar deposits are offered by leading banks in the London
interbank deposit market for a one month period as published in another publication selected by the
Administrative Agent).
Qualifying Bank
shall mean, with respect to Swiss Borrowers, any Person which is
recognized as a bank by the banking laws in force in its country of incorporation, or if acting
through a branch by the banking laws in force in the country of that branch, and which exercises as
its main purpose a true banking activity, having bank personnel, premises, communication devices of
its own and the authority of decision-making and has a genuine banking activity, in each case as
per the Guidelines.
Ratable Share
shall mean the proportion that a Lenders Commitment (excluding the
Swing Loan Commitment) bears to the Commitments (excluding the Swing Loan Commitment) of all of the
Lenders. If the Commitments have terminated or expired, the Ratable Shares shall be determined
based upon the Commitments (excluding the Swing Loan Commitment) most recently in effect, giving
effect to any assignments.
Receivables
shall mean all accounts receivable of the Company or any of its
Consolidated Subsidiaries (including any thereof constituting or evidenced by accounts, chattel
paper, instruments or general intangibles), and rights (contractual and other) and collateral
related thereto and all proceeds thereof.
Receivables Subsidiary
shall mean any special purpose, bankruptcy remote Consolidated
Subsidiary of the Company that acquires, on a revolving or evergreen basis, Receivables generated
by the Company or any of its Consolidated Subsidiaries and that engages in no operations or
activities other than those related to receivables securitizations.
Reference Currency
shall have the meaning specified in the definition of Equivalent
Amount.
Reimbursement Obligation
shall have the meaning specified in Section 2.8.3.1
[Disbursements, Reimbursement].
20
Related Parties
shall mean, with respect to any Person, such Persons Affiliates and
the partners, directors, officers, employees, agents and advisors of such Person and of such
Persons Affiliates.
Release
shall mean any discharge, emission or release, including a RELEASE as
defined in CERCLA at 42 U.S.C. Section 9601(22). The term Released shall have a corresponding
meaning.
Relevant Interbank Market
shall mean in relation to Euro, the European Interbank
Market, and, in relation to any other currency, the London interbank market.
Relief
Proceeding
shall mean, with respect to any Person, any proceeding seeking a
decree or order for relief in respect of such Person in a voluntary or involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect,
or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator,
conservator (or similar official) of such Person for any substantial part of its property, or for
the winding-up or liquidation of its affairs, or an assignment for the benefit of its creditors.
Required Lenders
shall mean Lenders (other than any Defaulting Lender) having more
than 50% of the sum of the aggregate amount of the Revolving Credit Commitments of the Lenders
(excluding any Defaulting Lender) or, after the termination of the Revolving Credit Commitments,
the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the
Lenders (excluding any Defaulting Lender).
Required Share
shall have the meaning assigned to such term in Section 5.11
[Settlement Date Procedures].
Revolving Credit Commitment
shall mean, as to any Lender at any time, the amount
initially set forth opposite its name on
Schedule 1.1(B)
in the column labeled Amount of
Commitment for Revolving Credit Loans, as such Commitment is thereafter assigned or modified and
Revolving Credit Commitments
shall mean the aggregate Revolving Credit Commitments of all
of the Lenders.
Revolving Credit Loans
shall mean collectively and
Revolving Credit Loan
shall
mean separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one
of the Lenders to the Borrowers pursuant to Section 2.1 [Revolving Credit Commitments] or 2.8.3
[Disbursements, Reimbursement].
Revolving Facility Usage
shall mean at any time the sum of the outstanding Revolving
Credit Loans, the outstanding Swing Loans, and the Letter of Credit Obligations.
Senior Officer
shall mean the chief executive officer, president, chief financial
officer, chief operating officer or treasurer of the Company.
Settlement Date
shall mean the Business Day on which the Administrative Agent elects
to effect settlement pursuant Section 5.11 [Settlement Date Procedures].
21
Significant Subsidiary
shall mean at any time any Subsidiary of the Company, except
Subsidiaries of the Company which, if aggregated and considered as a single Subsidiary at the time
of occurrence with respect to such Subsidiaries of any event or condition of the kind described in
Section 9.1.11 [Relief Proceedings] or Section 9.1.7 [Inability to Pay Debts] would not meet the
definition of a significant subsidiary contained as of the date hereof in Regulation S-X of the
Securities and Exchange Commission; provided that for purposes of Section 8.1.1 [Preservation of
Existence, Etc.] only, Significant Subsidiary shall mean at any time any Subsidiary which would
meet the definition of a significant subsidiary contained as of the date hereof in Regulation S-X
of the Securities and Exchange Commission; provided however Significant Subsidiary shall
specifically exclude Excluded Subsidiaries.
Standard & Poors
shall mean Standard & Poors Ratings Services, a division of The
McGraw-Hill Companies, Inc. and its successors.
Statements
shall have the meaning specified in Section 6.1.8(b)(i)
[
Information
].
Subsidiary
of any Person at any time shall mean any corporation, trust, partnership,
any limited liability company or other business entity (i) of which more than 50% of the
outstanding voting securities or other interests normally entitled to vote for the election of one
or more directors or trustees (regardless of any contingency which does or may suspend or dilute
the voting rights) is at such time owned directly or indirectly by such Person or one or more of
such Persons Subsidiaries, or (ii) which is controlled or capable of being controlled by such
Person or one or more of such Persons Subsidiaries.
Swing Loan Commitment
shall mean PNCs commitment to make Swing Loans to the Borrowers
pursuant to Section 2.1.4 [Swing Loan Commitment] hereof in an aggregate principal amount up to
$35,000,000.
Swing Loan Lender
shall mean PNC, in its capacity as Lender of Swing Loans pursuant to
the Swing Loan Commitment.
Swing Loan Note
shall mean the Swing Loan Note of the Borrowers in the form of
Exhibit 1.1(N)(2)
evidencing the Swing Loans, together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in part.
Swing Loan Request
shall mean a request for Swing Loans made in accordance with
Section 2.4.2 [Swing Loan Requests] hereof.
Swing Loan Sublimit
shall have the meaning assigned to such term in Section 2.1.4.1
[Swing Loans Generally].
Swing Loans
shall mean collectively and
Swing Loan
shall mean separately all
Swing Loans or any Swing Loan made by PNC to the Borrowers pursuant to Section 2.1.4 [Swing Loan
Commitment] hereof.
Swiss Bank Rules
shall mean together the Swiss Ten Non-Bank Rule and the Swiss Twenty
Non-Bank Rule.
22
Swiss Borrowers
shall mean all Borrowers incorporated or otherwise organized under the
laws of Switzerland, each of which shall be individually referred to herein as a Swiss Borrower.
Swiss Federal Tax Administration
means the Swiss federal tax administration referred
to in Article 34 of the Swiss Withholding Tax Act.
Swiss Ten Non-Bank Rule
shall mean the rule that the aggregate number of Lenders and
Participants in respect of Loans to any Swiss Borrower pursuant to this Agreement that are not
Qualifying Banks must not at any time exceed ten, all in accordance with the Guidelines.
Swiss Tranche
shall mean that portion of a Loan which can be used by a Swiss Borrower
under this Agreement.
Swiss Twenty Non-Bank Rule
shall mean the rule that the aggregate number of lenders
(including the Lenders), other than Qualifying Banks, of any Swiss Borrower under all its
outstanding debts relevant for classification as debenture (Kassenobligation) (including debt
arising under this Agreement, facilities or private placements and intragroup loans, if and to the
extent intragroup loans are not exempt in accordance with the ordinance of the Swiss Federal
Council of June 18, 2010 amending the Swiss Federal Ordinance on withholding tax and the Swiss
Federal Ordinance on stamp duties with effect as of August 1, 2010) must not at any time exceed
twenty, all in accordance with the Guidelines.
Swiss Withholding Tax
shall mean the withholding tax (
Verrechnungssteuer
) imposed by
the Swiss federal government on certain payments by Swiss residents to non-Swiss residents under
Article 4 of the Swiss Withholding Tax Act.
Swiss Withholding Tax Act
shall mean the
Bundesgesetz über die Verrechnungssteuer
enacted into Swiss federal law.
Taxes
shall mean all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Official Body, including any
interest, additions to tax or penalties applicable thereto.
Unpaid Drawing
shall mean, with respect to any Letter of Credit, the aggregate Dollar
Equivalent Amount of the draws made on such Letter of Credit that have not been reimbursed by the
Borrowers.
USA Patriot Act
shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or replaced.
1.2
Construction
. Unless the context of this Agreement otherwise clearly requires,
the following rules of construction shall apply to this Agreement and each of the other Loan
Documents: (i) references to the plural include the singular, the plural, the part and the whole
and the words include, includes and including shall be deemed to be followed by the phrase
without limitation; (ii) the words hereof, herein, hereunder, hereto and similar terms in
23
this Agreement or any other Loan Document refer to this Agreement or such other Loan Document
as a whole; (iii) article, Section, subSection, clause, schedule and exhibit references are to this
Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to
any Person includes such Persons successors and assigns; (v) reference to any agreement, including
this Agreement and any other Loan Document together with the schedules and exhibits hereto or
thereto, document or instrument means such agreement, document or instrument as amended, modified,
replaced, substituted for, superseded or restated; (vi) relative to the determination of any period
of time, from means from and including, to means to but excluding, and through means
through and including; (vii) the words asset and property shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights, (viii) Section headings herein and in
each other Loan Document are included for convenience and shall not affect the interpretation of
this Agreement or such Loan Document, and (ix) unless otherwise specified, all references herein to
times of day shall be references to
Eastern Time
.
1.3
Accounting Principles
. Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all financial statements
to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation where appropriate), and all accounting or financial terms
shall have the meanings ascribed to such terms by GAAP;
provided
,
however
, that all
accounting terms used in Section 8.2 [Negative Covenants] (and all defined terms used in the
definition of any accounting term used in Section 8.2 [Negative Covenants] shall have the meaning
given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a
basis consistent with those used in preparing Statements referred to in Section 6.1.8
[Information]. In the event of any change after the date hereof in GAAP, and if such change would
affect the computation of any of the financial covenants set forth in Section 8.2 [Negative
Covenants], then the parties hereto agree to endeavor, in good faith, to agree upon an amendment to
this Agreement that would adjust such financial covenants in a manner that would preserve the
original intent thereof, but would allow compliance therewith to be determined in accordance with
the Companys financial statements at that time,
provided
that
, until so amended
such financial covenants shall continue to be computed in accordance with GAAP prior to such change
therein.
2.
REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1
Revolving Credit Commitments
.
2.1.1
Revolving Credit Loans
. Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, each Lender holding any Revolving Credit
Commitment severally agrees to make Revolving Credit Loans in either Dollars or one or more
Optional Currencies to the Borrowers at any time or from time to time on or after the date hereof
to the Expiration Date;
provided
that after giving effect to each such Loan (i) the
aggregate Dollar Equivalent amount of Revolving Credit Loans from such Lender shall not exceed such
Lenders Revolving Credit Commitment minus such Lenders Ratable Share of the Dollar Equivalent
amount of Letter of Credit Obligations, (ii) the aggregate Dollar Equivalent amount of Revolving
Facility Usage shall not exceed the aggregate Revolving Credit
24
Commitments of the Lenders and (iii) no Revolving Credit Loan to which the Base Rate Option
applies shall be made in an Optional Currency. Within such limits of time and amount and subject
to the other provisions of this Agreement, the Borrowers may borrow, repay and reborrow pursuant to
this Section 2.1.
2.1.2
Discretionary Increase in Revolving Credit Commitments
.
(i)
Increasing Lenders and New Lenders
. The Borrowers may, at any time, prior to the
Expiration Date, request that (1) the current Lenders increase their Revolving Credit Commitments
(any current Lender which elects to increase its Revolving Credit Commitment shall be referred to
as an
Increasing Lender
) or (2) one or more new lenders (each a
New Lender
) join this Agreement
and provide a Revolving Credit Commitment hereunder, subject to the following terms and conditions:
(a)
No Obligation to Increase
. No current Lender shall be obligated to increase its
Revolving Credit Commitment and any increase in the Revolving Credit Commitment by any current
Lender shall be in the sole discretion of such current Lender;
(b)
Defaults
. There shall exist no Event of Default or, unless consented to by the
Required Lenders, Potential Default on the date of such request and/or the effective date of such
increase, either before or after giving effect to such increase;
(c)
Aggregate Revolving Credit Commitments
. After giving effect to such increase, the
total Revolving Credit Commitments shall not exceed the lesser of (i) $500,000,000 or (ii) the sum
of (A) the total Revolving Credit Commitments as in effect on the date of such request prior to
giving effect to any requested increase, plus (B) $100,000,000
minus
the amount of any
prior increase to the Revolving Credit Commitments under this Section 2.1.2;
(d)
Resolutions; Opinion
. The Borrowers shall deliver to the Administrative Agent on
or before the effective date of such increase the following documents in a form reasonably
acceptable to the Administrative Agent: (1) certifications of their corporate secretaries (or
foreign jurisdiction equivalent) with attached resolutions certifying that the increase in the
Revolving Credit Commitment has been approved by the Borrowers, and (2) opinions of domestic and
foreign counsel (as applicable) in form satisfactory to the Administrative Agent, addressed to the
Administrative Agent and the Lenders addressing the authorization and execution of the Loan
Documents by, and enforceability of the Loan Documents against, the Borrowers;
(e)
Notes
. The Borrowers shall execute and deliver (1) to each Increasing Lender that
shall so request a replacement revolving credit Note reflecting the new amount of such Increasing
Lenders Revolving Credit Commitment after giving effect to the increase (and the prior Note issued
to such Increasing Lender shall be deemed to be terminated) and (2) to each New Lender a revolving
credit Note reflecting the amount of such New Lenders Revolving Credit Commitment; provided that
such replacement Note shall not be intended to constitute and shall not constitute a novation or
satisfaction of the obligations represented by the prior Note.
25
(f)
Approval of New Lenders
. Any New Lender shall be subject to the approval of the
Administrative Agent (not to be unreasonably withheld or conditioned) and the Company and shall not
be (1) a Borrower or any Subsidiary or Affiliate of any Borrower or (2) a natural person. The
Revolving Credit Commitments of any New Lenders and the increasing Revolving Credit Commitments of
any Increasing Lenders, collectively, shall not be less than $25,000,000. The share of each New
Lender located in or organized under the laws of the Netherlands in the Loans and the share of each
New Lender hereunder in the Loans to a Netherlands Borrower shall initially be at least the Dollar
Equivalent of EUR 50,000 (or such higher amount as may be required [at the time of new Lender
becoming a party to this Agreement] in order for the New Lender to qualify as a Professional Market
Party) or such New Lender shall otherwise qualify as a Professional Market Party, and each such New
Lender shall confirm the foregoing on the date on which it becomes a New Lender hereunder by
execution and delivery of its Lender Joinder and Assumption Agreement in which the New Lender
confirms that it is a Professional Market Party.
(g)
Increasing Lenders
. Each Increasing Lender shall confirm its agreement to
increase its Revolving Credit Commitment pursuant to an acknowledgement in a form acceptable to the
Administrative Agent, signed by it and the Borrowers and delivered to the Administrative Agent at
least three (3) days before the effective date of such increase.
(h)
New LendersJoinder
. Each New Lender shall execute a Lender Joinder in
substantially the form of
Exhibit 1.1(L)
pursuant to which such New Lender shall join and
become a party to this Agreement and the other Loan Documents with a Revolving Credit Commitment in
the amount set forth in such Lender Joinder.
(ii)
Treatment of Outstanding Loans and Letters of Credit
.
(a)
Repayment of Outstanding Revolving Credit Loans; Borrowing of New Revolving Credit
Loans
. On the effective date of such increase, at the request of the Administrative Agent, the
Borrowers shall repay all Revolving Credit Loans then outstanding, subject to the Borrowers
indemnity obligations hereunder, or at the option of the Administrative Agent, the Lenders shall
assign their Revolving Credit Loans to the Increasing Lenders in accordance with their Ratable
Shares after giving effect to the increase in the Revolving Credit Commitments contemplated by this
Section 2.1.2;
provided
that the Borrowers may borrow new Revolving Credit Loans with a
Borrowing Date on such date. Each of the Lenders shall participate in any new Revolving Credit
Loans made on or after such date in accordance with their respective Ratable Shares after giving
effect to the increase in Revolving Credit Commitments contemplated by this Section 2.1.2.
(b)
Outstanding Letters of Credit
. On the effective date of such increase, each
Increasing Lender and each New Lender (i) will be deemed to have purchased a participation in each
then outstanding Letter of Credit equal to its Ratable Share of such Letter of Credit and the
participation of each other Lender in such Letter of Credit shall be adjusted accordingly and (ii)
will acquire (and will pay to the Administrative Agent, for the account of each Lender, in
immediately available funds, an amount equal to) its Ratable Share of all outstanding Participation
Advances.
26
2.1.3
Optional Reductions
. The Company shall have the right to terminate or reduce the
Commitments at any time or from time to time, provided that: (i) the Company shall give notice of
each such termination or reduction to the Administrative Agent at least three (3) Business Days
prior to the relevant termination or reduction (which notice of termination or reduction shall
specify the amount of the Commitments to be terminated or reduced); (ii) each partial reduction
shall be in an aggregate amount equal to $10,000,000 or any greater multiple of $5,000,000 and
(iii) no such reduction shall be permitted unless and until, in connection therewith, any mandatory
prepayments required under Section 5.7 [Mandatory Prepayments] have been made. Notwithstanding the
foregoing, such a notice of a complete reduction (non-partial) reduction of and termination of
Commitments (and any corresponding notice of prepayment under Section 5.6) may state that it is
conditioned upon the effectiveness of other credit facilities, in which case such notice may be
revoked by the Company by written notice to the Administrative Agent on or prior to the specified
effective date stating that such condition has not been satisfied, subject, however, to the
Companys payment of any breakage compensation or other costs associated with such revoked notice.
Once terminated or, subject to Section 2.1.2, reduced, the Commitments may not be reinstated.
2.1.4
Swing Loan Commitment
.
2.1.4.1
Swing Loans Generally
. Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, and in order to facilitate loans and
repayments between Settlement Dates, PNC may, at its option, cancelable at any time for any reason
whatsoever, make swing loans in Dollars (the
Swing Loans
) to the Borrowers at any time or from
time to time after the date hereof to, but not including, the Expiration Date, in an aggregate
principal amount up to but not in excess of $35,000,000 (the
Swing Loan Sublimit
), provided that
after giving effect to each such Loan, the Revolving Facility Usage shall not exceed the Revolving
Credit Commitments; and provided further that a Swing Loan shall not be made if the proceeds
thereof would be used to repay, in whole or in part, any outstanding Swing Loan. Within such
limits of time and amount and subject to the other provisions of this Agreement, the Borrower may
borrow, repay and reborrow pursuant to this Section 2.1.4.
2.1.4.2 Notwithstanding any other provision hereof, as a condition to the making of any Swing
Loan, if any Lender is at such time a Defaulting Lender hereunder, PNC may require that
satisfactory arrangements with the Borrowers or such Defaulting Lender be entered into to eliminate
PNCs risk with respect to such Defaulting Lender (it being understood that PNC would consider the
Borrowers or the Defaulting Lender providing cash collateral to secure the Defaulting Lenders
Ratable Share of the Swing Loans a satisfactory arrangement).
2.2
Nature of Lenders Obligations with Respect to Revolving Credit Loans
. Each
Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to
Section 2.4 [Revolving Credit Loan Requests; Swing Loan Requests] in accordance with its Ratable
Share. The aggregate Dollar Equivalent of each Lenders Revolving Credit Loans outstanding
hereunder to the Borrowers at any time shall never exceed its Revolving Credit Commitment minus its
Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations. The obligations of
each Lender hereunder are several. The failure of any Lender to
27
perform its obligations hereunder shall not affect the Obligations of the Borrowers to any
other party nor shall any other party be liable for the failure of such Lender to perform its
obligations hereunder. The Lenders shall have no obligation to make Revolving Credit Loans
hereunder on or after the Expiration Date.
2.3
Facility Fee
. The Borrowers agree to pay to the Administrative Agent for
the account of each Lender, as consideration for such Lenders Revolving Credit Commitments, a
nonrefundable facility fee (the
Facility Fee
) on the aggregate Revolving Credit Commitments,
whether used or unused, for the period from the Closing Date until (but excluding) the Expiration
Date; provided that, if such Lender continues to have any Revolving Credit Loans outstanding after
its Revolving Credit Commitment terminates or expires, then such Facility Fee shall continue to
accrue on the daily outstanding principal amount of such Lenders Revolving Credit Loans from and
including the date on which its Revolving Credit Commitment terminates or expires until the date on
which such Lender ceases to have any Revolving Credit Loans outstanding. The accrued Facility Fees
pursuant to this Section 2.3 shall be payable quarterly and on the date the Revolving Credit
Commitments are terminated (and, if later, on the date the Revolving Credit Loans shall be repaid
in their entirety); provided that any Facility Fees accruing after the date on which the
Commitments terminate shall be payable on demand. The Facility Fee for a particular quarter shall
be set forth on
Schedule 1.1(A)
under the column entitled Facility Fee and shall be based
upon the Debt Rating of the Company as set forth thereon. The foregoing notwithstanding, any
Facility Fee accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during
the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall
not be payable by the Borrowers so long as such Lender shall be a Defaulting Lender except to the
extent that such Facility Fee shall otherwise have been due and payable by the Borrowers prior to
such time; and
provided further
that no Facility Fee shall accrue with respect to the Revolving
Credit Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
2.4
Revolving Credit Loan Requests; Swing Loan Requests.
2.4.1
Revolving Credit Loan Requests
. Except as otherwise provided herein, the
Borrowers may from time to time prior to the Expiration Date request the Lenders to make Revolving
Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit
Loans pursuant to Section 4.2 [Interest Periods], by delivering to the Administrative Agent, not
later than 12:00 p.m., (i) three (3) Business Days prior to the proposed Borrowing Date with
respect to the making of Revolving Credit Loans in Dollars to which the Euro-Rate Option applies or
the conversion to or the renewal of the Euro-Rate Option for any Loans in Dollars; (ii) three (3)
Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit
Loans denominated in Canadian dollars or Euro or the date of conversion to or renewal of the
Euro-Rate Option for Revolving Credit Loans denominated in Canadian dollars or Euro; (iii) four (4)
Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit
Loans in an Optional Currency (other than Revolving Credit Loans denominated in Canadian dollars or
Euro) or the date of conversion to or renewal of the Euro-Rate Option for Revolving Credit Loans in
an Optional Currency; and (iv) the same Business Day of the proposed Borrowing Date with respect to
the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the
preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a
duly completed request
28
therefor substantially in the form of
Exhibit 2.4.1
or a request by telephone
immediately confirmed in writing by letter, facsimile or telex in such form (each, a
Loan
Request
), it being understood that the Administrative Agent may rely on the authority of any
individual making such a telephonic request without the necessity of receipt of such written
confirmation. Each Loan Request shall be irrevocable and shall specify (i) the aggregate amount of
the proposed Loans (expressed in the currency in which such Loans shall be funded) comprising each
Borrowing Tranche, and, if applicable, the Interest Period, which amount shall be in (x) integral
multiples of $1,000,000 (or the Dollar Equivalent thereof) and not less than $5,000,000 (or the
Dollar Equivalent thereof) for each Borrowing Tranche under the Euro-Rate Option, and (y) integral
multiples of $500,000 and not less than $1,000,000 for each Borrowing Tranche under the Base Rate
Option; (ii) whether the Euro-Rate Option or Base Rate Option shall apply to the proposed Revolving
Credit Loans comprising the applicable Borrowing Tranche; (iii) the currency in which such Loans
shall be funded if the Borrowers are electing the Euro-Rate Option; (iv) in the case of a Borrowing
Tranche to which the Euro-Rate Option applies, an appropriate Interest Period for the Loans
comprising such Borrowing Tranche; and (v) which Borrower is requesting the Revolving Credit Loan.
No Loan made in an Optional Currency may be converted into a Base Rate Loan, a Euro-Rate Loan or a
Loan denominated in a different Optional Currency.
2.4.2
Swing Loan Requests
. Except as otherwise provided herein, the Borrowers may from
time to time prior to the Expiration Date request PNC to make Swing Loans in Dollars by delivery to
PNC not later than 12:00 noon on the proposed Borrowing Date of a duly completed request therefor
substantially in the form of
Exhibit 2.4.2
hereto or a request by telephone immediately
confirmed in writing by letter, facsimile or telex (each, a
Swing Loan Request
), it being
understood that PNC may rely on the authority of any individual making such a telephonic request
without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be
irrevocable and shall specify the proposed Borrowing Date and the principal amount of such Swing
Loan, which shall be not less than $500,000 with minimum increments thereafter of $250,000.
2.5
Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative
Agent; Repayment of Revolving Credit Loans; Borrowings to Repay Swing Loans.
2.5.1
Making Revolving Credit Loans
. The Administrative Agent shall, promptly after
receipt by it of a Loan Request pursuant to Section 2.4 [Revolving Credit Loan Requests; Swing Loan
Requests], notify the Lenders of its receipt of such Loan Request specifying the information
provided by the Borrowers, including the currency in which the Revolving Credit Loan is requested,
and the apportionment among the Lenders of the requested Revolving Credit Loans as determined by
the Administrative Agent in accordance with Section 2.2 [Nature of Lenders Obligations with
Respect to Revolving Credit Loans]. Each Lender shall remit the principal amount of each Revolving
Credit Loan in the requested Optional Currency (or in Dollars if so requested by the Administrative
Agent) to the Administrative Agent such that the Administrative Agent is able to, and the
Administrative Agent shall, to the extent the Lenders have made funds available to it for such
purpose and subject to Section 7.2 [Each Loan or Letter of Credit], fund such Revolving Credit
Loans to the Borrowers in immediately available funds in Dollars or the requested Optional Currency
(as applicable) at the Principal
29
Office prior to 2:00 p.m., on the applicable Borrowing Date;
provided
that if any Lender fails to remit
such funds to the Administrative Agent (or fails to remit such funds in the applicable Optional
Currency) in a timely manner, the Administrative Agent may elect in its sole discretion to fund
with its own funds, including funds in the requested Optional Currency, the Revolving Credit Loans
of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation
in Section 2.5.2 [Presumptions by the Administrative Agent].
2.5.2
Presumptions by the Administrative Agent
. Unless the Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Loan that such Lender will not
make available to the Administrative Agent such Lenders share of such Loan, the Administrative
Agent may assume that such Lender has made such share available on such date in accordance with
Section 2.5.1 [Making Revolving Credit Loans] and may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Loan available to the Administrative Agent, then the applicable Lender
and the Borrowers severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the date such amount is
made available to the Borrowers to but excluding the date of payment to the Administrative Agent,
at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation and (ii) in the case of a payment to be made by the
Borrowers, the interest rate applicable to Loans under the Base Rate Option. If such Lender pays
its share of the applicable Loan to the Administrative Agent, then the amount so paid shall
constitute such Lenders Loan. Any payment by the Borrowers shall be without prejudice to any
claim the Borrowers may have against a Lender that shall have failed to make such payment to the
Administrative Agent.
2.5.3
Making Swing Loans
. So long as PNC elects to make Swing Loans, PNC shall, after
receipt by it of a Swing Loan Request pursuant to Section 2.4.2, [Swing Loan Requests] fund such
Swing Loan to the Borrowers in U.S. Dollars in immediately available funds at the Principal Office
prior to 4:00 oclock p.m. on the Borrowing Date.
2.5.4
Repayment of Revolving Credit Loans
. Subject to the limitations set forth in
Section 12.14.2, the Borrowers, jointly and severally, shall repay in full the outstanding
principal amount of the Revolving Credit Loans together with all outstanding interest thereon and
all fees and other amounts owing under any of the Loan Documents relating thereto on the Expiration
Date or upon the earlier termination of the Revolving Credit Commitments in connection with the
terms of this Agreement.
2.5.5
Borrowings to Repay Swing Loans
. PNC may, at its option, exercisable at any time
for any reason whatsoever, demand repayment of the Swing Loans, and each Lender shall make a
Revolving Credit Loan in an amount equal to such Lenders Ratable Share of the aggregate principal
amount of the outstanding Swing Loans, plus, if PNC so requests, accrued interest thereon,
provided
that no Lender shall be obligated in any event to make Revolving Credit Loans in
excess of its Revolving Credit Commitment minus its Ratable Share of Letter of Credit Obligations
(to the extent applicable, calculated in Dollar Equivalents). Revolving Credit Loans made pursuant
to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have
been properly requested in accordance with Section 2.4.1 [Revolving Credit Loan Requests] without
regard to any of the requirements of that provision. PNC shall
30
provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile
or telex) that such Revolving Credit Loans are to be made under this Section 2.5.5 and of the
apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such
Revolving Credit Loans (whether or not the conditions specified in Section 2.4.1 [Revolving Credit
Loan Requests] are then satisfied) by the time PNC so requests, which shall not be earlier than
3:00 p.m. on the Business Day next after the date the Lenders receive such notice from PNC.
2.5.6
Swing Loans Under Cash Management Agreements
. In addition to making Swing Loans
pursuant to the foregoing provisions of Section 2.5.3 [Making Swing Loans], without the requirement
for a specific request from the Borrowers pursuant to Section 2.4.2 [Swing Loan Requests], PNC, as
a Swing Loan Lender, may make Swing Loans to the Borrowers in accordance with the provisions of the
agreements between the Company and such Swing Loan Lender relating to the Companys deposit, sweep
and other accounts at such Swing Loan Lender and related arrangements and agreements regarding the
management and investment of the Companys cash assets as in effect from time to time (the
Cash
Management Agreements
) to the extent of the daily aggregate net negative balance in the Companys
accounts which are subject to the provisions of the Cash Management Agreements. Swing Loans made
pursuant to this Section 2.5.6 in accordance with the provisions of the Cash Management Agreements
shall (i) be subject to the limitations as to aggregate amount set forth in Section 2.1.4 [Swing
Loan Commitment], (ii) not be subject to the limitations as to individual amount set forth in
Section 2.4.2 [Swing Loan Requests], (iii) be payable by the Borrowers, both as to principal and
interest, at the rates and times set forth in the Cash Management Agreements (but in no event later
than the Expiration Date), (iv) not be made at any time after such Swing Loan Lender has received
written notice of the occurrence of an Event of Default and so long as such shall continue to
exist, or, unless consented to by the Required Lenders, a Potential Default and so long as such
shall continue to exist, (v) if not repaid by the Borrowers in accordance with the provisions of
the Cash Management Agreements, be subject to each Lenders obligation pursuant to Section 2.5.5
[Borrowings to Repay Swing Loans], and (vi) except as provided in the foregoing subsections (i)
through (v), be subject to all of the terms and conditions of this Section 2. The Borrowers
acknowledge and agree that each Borrower materially benefits from the arrangements made pursuant to
Section 2.5.6 and the Cash Management Agreements, and each Borrower shall be jointly and severally
liable, subject to Section 12.14 [Foreign Borrowers], for all Obligations, including without
limitation, those arising from the operation of this Section.
2.6
Notes
.
The Obligation of the Borrowers to repay the aggregate unpaid principal
amount of the Revolving Credit Loans and Swing Loans made to it by each Lender, together with
interest thereon, shall be evidenced by a revolving credit Note and a Swing Loan Note, dated the
Closing Date payable to the order of such Lender in a face amount equal to the Revolving Credit
Commitment and the Swing Loan Commitment, as applicable, of such Lender.
2.7
Use of Proceeds
. The proceeds of the Loans shall be used (i) to refinance
existing indebtedness for borrowed money, (ii) to finance working capital and capital expenditures;
and (iii) for general corporate purposes (including the payment of fees and expenses related to the
foregoing permitted purposes).
31
2.8
Letter of Credit Subfacility.
2.8.1
Issuance of Letters of Credit
. Each of the Borrowers may at any time prior to
the Expiration Date request the issuance of a standby letter of credit (a
Standby Letter of
Credit
) or Commercial Letter of Credit (each a
Letter of Credit
) which may be denominated in
either Dollars or an Optional Currency on behalf of itself or a Consolidated Subsidiary of the
Company, or the amendment or extension of an existing Letter of Credit, by delivering or having
such other Borrower deliver to the Issuing Lender (with a copy to the Administrative Agent) a
completed application and agreement for letters of credit, or request for such amendment or
extension, as applicable, in such form as the Issuing Lender may specify from time to time by no
later than 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to
by the Issuing Lender, in advance of the proposed date of issuance. Promptly after receipt of any
letter of credit application, the Issuing Lender shall confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit
application and if not, such Issuing Lender will provide Administrative Agent with a copy thereof.
Unless the Issuing Lender has received notice from any Lender, Administrative Agent or any
Borrower, at least one day prior to the requested date of issuance, amendment or extension of the
applicable Letter of Credit, that one or more applicable conditions in Section 7 [Conditions of
Lending and Issuance of Letters of Credit] is not satisfied, then, subject to the terms and
conditions hereof and in reliance on the agreements of the other Lenders set forth in this Section
2.8, the Issuing Lender or any of the Issuing Lenders Affiliates will issue a Letter of Credit or
agree to such amendment or extension, provided that each Letter of Credit shall (A) have a maximum
maturity of twelve (12) months from the date of issuance, and (B) in no event expire later than 364
days after the Expiration Date and provided further that in no event shall (i) the Dollar
Equivalent of the Letter of Credit Obligations exceed, at any one time, $100,000,000.00 (the
Letter of Credit Sublimit
) or (ii) the Revolving Facility Usage exceed, at any one time, the
Revolving Credit Commitments. Each request by the Borrowers for the issuance, amendment or
extension of a Letter of Credit shall be deemed to be a representation by the Borrowers that they
shall be in compliance with the preceding sentence and with Section 7 [Conditions of Lending and
Issuance of Letters of Credit] after giving effect to the requested issuance, amendment or
extension of such Letter of Credit. Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to the beneficiary thereof, the applicable Issuing Lender will also
deliver to Borrowers and Administrative Agent a true and complete copy of such Letter of Credit or
amendment. All letters of credit which are identified on
Schedule 2.8.1
hereto, which
shall consist of all letters of credit outstanding on the Closing Date, shall be deemed to have
been issued under this Agreement, regardless of which Person is the applicant thereunder.
If, three (3) days prior to the Expiration Date, any Letter of Credit Obligation for any
reason remains outstanding, Borrowers shall immediately Cash Collateralize the then outstanding
amount of all Letter of Credit Obligations. Each Borrower hereby grants to Administrative Agent,
for the benefit of the Issuing Lender and the Lenders, a security interest in all cash collateral
pledged pursuant to this Section or otherwise under this Agreement.
Notwithstanding any other provision hereof, no Issuing Lender shall be required to issue any
Letter of Credit, if any Lender is at such time a Defaulting Lender hereunder, unless such Issuing
Lender has entered into satisfactory arrangements with the Borrowers or such Defaulting
32
Lender to eliminate the Issuing Lenders risk with respect to such Defaulting Lender (it being
understood that the Issuing Lender would consider the Borrowers or the Defaulting Lender providing
cash collateral to the Administrative Agent, for the benefit of the Issuing Lender, to secure the
Defaulting Lenders Ratable Share of the Letter of Credit, a satisfactory arrangement).
Notwithstanding any other provision hereof, the Issuing Lender shall not be under any
obligation to issue any Letter of Credit if (A) any order, judgment or decree of any governmental
authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender from
issuing the Letter of Credit, or any Law applicable to the Issuing Lender or any request or
directive (whether or not having the force of law) from any governmental authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing Lender refrain
from, the issuance of letters of credit generally or the Letter of Credit in particular or shall
impose upon the Issuing Lender with respect to the Letter of Credit any restriction, reserve or
capital requirement (for which the Issuing Lender is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Issuing Lender any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the Issuing Lender in good faith
deems material to it; or (B) the issuance of the Letter of Credit would violate one or more
policies of the Issuing Lender applicable to letters of credit generally.
2.8.2
Letter of Credit Fees
. The Borrowers shall pay (i) to the Administrative Agent
for the ratable account of the Lenders (except for Defaulting Lenders) a fee (the
Letter of Credit
Fee
) equal to the Applicable Letter of Credit Fee Rate, and (ii) to the Issuing Lender for its own
account a fronting fee equal to ⅛% per annum (in each case computed on the basis of a year of 360
days and actual days elapsed), which fees shall be computed on the Dollar Equivalent daily average
Letter of Credit Obligations and shall be payable quarterly in arrears on each Payment Date
following issuance of each Letter of Credit. The Borrowers shall also pay to the Issuing Lender
for the Issuing Lenders sole account the Issuing Lenders then in effect customary fees and
administrative expenses payable with respect to the Letters of Credit as the Issuing Lender may
generally charge or incur from time to time in connection with the issuance, maintenance, amendment
(if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.
2.8.3
Disbursements, Reimbursement
. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Lender a participation in such Letter of Credit and each drawing
thereunder in a Dollar Equivalent amount equal to such Lenders Ratable Share of the maximum amount
available to be drawn under such Letter of Credit and the amount of such drawing, respectively.
2.8.3.1 In the event of any request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, the Issuing Lender will promptly notify the Borrowers and the Administrative
Agent thereof. Provided that it shall have received such notice, the Borrowers shall reimburse
(such obligation to reimburse the Issuing Lender shall sometimes be referred to as a
Reimbursement
Obligation
) the Issuing Lender prior to 12:00 noon on each date that an amount is paid by the
Issuing Lender under any Letter of Credit (each such date, a
Drawing Date
) by paying to the
Administrative Agent for the account of the Issuing Lender an amount equal to the amount so paid by
the Issuing Lender, in the same
33
currency as paid, unless otherwise required by the Administrative Agent or the Issuing Lender.
In the event the Borrowers fail to reimburse the Issuing Lender (through the Administrative Agent)
for the full amount of any drawing under any Letter of Credit by 12:00 noon on the Drawing Date,
the Administrative Agent will promptly notify each Lender thereof, and the Borrowers shall be
deemed to have requested that Revolving Credit Loans be made in a Dollar Equivalent amount of such
Reimbursement Obligations by the Lenders under the Base Rate Option to be disbursed on the Drawing
Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving
Credit Commitment and subject to the conditions set forth in Section 7.2 [Each Loan or Letter of
Credit] other than any notice requirements. Any notice given by the Administrative Agent or
Issuing Lender pursuant to this Section 2.8.3.1 may be oral if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
2.8.3.2 Each Lender shall upon any notice pursuant to Section 2.8.3.1 make available to the
Administrative Agent for the account of the Issuing Lender an amount in Dollars in immediately
available funds equal to its Ratable Share of the Dollar Equivalent amount of the drawing,
whereupon the Lenders shall (subject to Section 2.8.3 [Disbursements, Reimbursement]) each be
deemed to have made a Revolving Credit Loan in Dollars under the Base Rate Option to the Borrowers
in that amount. If any Lender so notified fails to make available to the Administrative Agent for
the account of the Issuing Lender the amount of such Lenders Ratable Share of such amount by no
later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Lenders obligation to
make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at
a rate per annum equal to the Federal Funds Effective Rate during the first three (3) days
following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Loans under
the Revolving Credit Base Rate Option on and after the fourth day following the Drawing Date. The
failure of any Lender to make available to the Administrative Agent for the account of the Issuing
Lender its Ratable Share of the Dollar Equivalent amount of the drawing shall not relieve any other
Lender of its obligation hereunder to make available to the Administrative Agent for the account of
the Issuing Lender its Ratable Share of the Dollar Equivalent amount of the drawing; provided that
no Lender shall be responsible for the failure of any other Lender to make available to the
Administrative Agent its Ratable Share of the Dollar Equivalent amount of the drawing. The
Administrative Agent and the Issuing Lender will promptly give notice (as described in Section
2.8.3.1 above) of the occurrence of the Drawing Date, but failure of the Administrative Agent or
the Issuing Lender to give any such notice on the Drawing Date or in sufficient time to enable any
Lender to effect such payment on such Drawing Date shall not relieve such Lender from its
obligation under this Section 2.8.3.2.
2.8.3.3 With respect to any unreimbursed drawing that is not converted into Revolving Credit
Loans in Dollars under the Base Rate Option to the Borrowers in whole or in part as contemplated by
Section 2.8.3.1, because of the Borrowers failure to satisfy the conditions set forth in Section
7.2 [Each Loan or Letter of Credit] other than any notice requirements, or for any other reason,
the Borrowers shall be deemed to have incurred from the Issuing Lender a borrowing (each a
Letter
of Credit Borrowing
) in Dollars in the amount of such drawing. Such Letter of Credit Borrowing
shall be due and payable on demand (together with interest) and shall bear interest at the rate per
annum applicable to the Revolving Credit Loans under the Base Rate Option. Each Lenders payment
to the Administrative Agent for the
34
account of the Issuing Lender pursuant to Section 2.8.3 [Disbursements, Reimbursement] shall
be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing (each
a
Participation Advance
) from such Lender in satisfaction of its participation obligation under
this Section 2.8.3.
2.8.4
Repayment of Participation Advances
.
2.8.4.1 Upon (and only upon) receipt by the Administrative Agent for the account of the
Issuing Lender of immediately available funds from the Borrowers (i) in reimbursement of any
payment made by the Issuing Lender under the Letter of Credit with respect to which any Lender has
made a Participation Advance to the Administrative Agent, or (ii) in payment of interest on such a
payment made by the Issuing Lender under such a Letter of Credit, the Administrative Agent on
behalf of the Issuing Lender will pay to each Lender, in the same funds as those received by the
Administrative Agent, the amount of such Lenders Ratable Share of such funds, except the
Administrative Agent shall retain for the account of the Issuing Lender the amount of the Ratable
Share of such funds of any Lender that did not make a Participation Advance in respect of such
payment by the Issuing Lender.
2.8.4.2 If the Administrative Agent is required at any time to return to any Borrower, or to a
trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion
of any payment made by any Borrower to the Administrative Agent for the account of the Issuing
Lender pursuant to this Section in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Lender shall, on demand of the Administrative Agent, forthwith return
to the Administrative Agent for the account of the Issuing Lender the amount of its Ratable Share
of any amounts so returned by the Administrative Agent plus interest thereon from the date such
demand is made to the date such amounts are returned by such Lender to the Administrative Agent, at
a rate per annum equal to the Federal Funds Effective Rate (or, for any payment in an Optional
Currency, the Overnight Rate) in effect from time to time.
2.8.5
Documentation
. Each Borrower agrees to be bound by the terms of the Issuing
Lenders application and agreement for letters of credit and the Issuing Lenders written
regulations and customary practices relating to letters of credit, though such interpretation may
be different from such Borrowers own. In the event of a conflict between such application or
agreement and this Agreement, this Agreement shall govern. It is understood and agreed that,
except in the case of gross negligence or willful misconduct, the Issuing Lender shall not be
liable for any error, negligence and/or mistakes, whether of omission or commission, in following
any Borrowers instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto.
2.8.6
Determinations to Honor Drawing Requests
. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall
be responsible only to determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face with the requirements
of such Letter of Credit.
35
2.8.7
Nature of Participation and Reimbursement Obligations
. Each Lenders obligation
in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as
contemplated by Section 2.8.3 [Disbursements, Reimbursement], as a result of a drawing under a
Letter of Credit issued in accordance with the terms of this Agreement, and the Obligations of the
Borrowers to reimburse the Issuing Lender upon a draw under such Letter of Credit, shall be
absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the
terms of this Section 2.8 under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have
against the Issuing Lender or any of its Affiliates, the Borrowers or any other Person for any
reason whatsoever, or which any Borrower may have against the Issuing Lender or any of its
Affiliates, any Lender or any other Person for any reason whatsoever;
(ii) the failure of any Borrower or any other Person to comply, in connection with a Letter of
Credit Borrowing, with the conditions set forth in Sections 2.1 [Revolving Credit Commitments], 2.4
[Revolving Credit Loan Requests; Swing Loan Requests], 2.5 [Making Revolving Credit Loans and Swing
Loans; Etc.] or 7.2 [Each Loan or Letter of Credit] or as otherwise set forth in this Agreement for
the making of a Revolving Credit Loan, it being acknowledged that such conditions are not required
for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make
Participation Advances under Section 2.8.3 [Disbursements, Reimbursement];
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by any Borrower or any Lender against
any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment,
counterclaim, crossclaim, defense or other right which any Borrower or any Lender may have at any
time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of
Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the
Issuing Lender or its Affiliates or any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Borrower or Consolidated Subsidiaries of a Borrower and the
beneficiary for which any Letter of Credit was procured);
(v) the lack of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy,
enforceability or genuineness of any draft, demand, instrument, certificate or other document
presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or provision of services
relating to a Letter of Credit, in each case even if the Issuing Lender or any of its Affiliates
has been notified thereof;
(vi) payment by the Issuing Lender or any of its Affiliates under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not comply with the
terms of such Letter of Credit;
36
(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit,
or any other Person having a role in any transaction or obligation relating to a Letter of Credit,
or the existence, nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;
(viii) any failure by the Issuing Lender or any of its Affiliates to issue any Letter of
Credit in the form requested by any Borrower, unless the Issuing Lender has received written notice
from such Borrower of such failure within three Business Days after the Issuing Lender shall have
furnished such Borrower and the Administrative Agent a copy of such Letter of Credit and such error
is material and no drawing has been made thereon prior to receipt of such notice;
(ix) any adverse change in the business, operations, properties, assets, condition (financial
or otherwise) or prospects of any Borrower or Subsidiaries of a Borrower;
(x) any breach of this Agreement or any other Loan Document by any party thereto;
(xi) the occurrence or continuance of an Insolvency Proceeding with respect to any Borrower;
(xii) the fact that an Event of Default or a Potential Default shall have occurred and be
continuing;
(xiii) the fact that the Expiration Date shall have passed or this Agreement or the
Commitments hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.
2.8.8
Indemnity
. Each Borrower hereby agrees to protect, indemnify, pay and save
harmless the Issuing Lender and any of its Affiliates that has issued a Letter of Credit from and
against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments,
losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of
counsel and allocated costs of internal counsel) which the Issuing Lender or any of its Affiliates
may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of
Credit, other than as a result of (A) the gross negligence or willful misconduct of the Issuing
Lender as determined by a final non-appealable judgment of a court of competent jurisdiction or (B)
the wrongful dishonor by the Issuing Lender or any of Issuing Lenders Affiliates of a proper
demand for payment made under any Letter of Credit, except if such dishonor resulted from any act
or omission, whether rightful or wrongful, of any present or future de jure or de facto government
or Official Body. To the extent the Issuing Lender is not indemnified by the Borrowers, the
Lenders will reimburse and indemnify the Issuing Lender, in proportion to their respective Ratable
Shares, for and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or nature that may be
imposed on, asserted against, or incurred by the Issuing Lender in performing its respective duties
in any way related to or arising out of the Letter(s) of Credit issued by the Issuing Lender;
provided, however, that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, claims, actions, judgments,
37
costs, expenses or disbursements resulting from the gross negligence or willful misconduct of
the Issuing Lender or an Affiliate of the Issuing Lender.
2.8.9
Liability for Acts and Omissions
. As between any Borrower and the Issuing
Lender, or the Issuing Lenders Affiliates, such Borrower assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lender shall not be
responsible for any of the following, including any losses or damages to any Borrower or other
Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged (even if the Issuing Lender or its
Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of
Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with
any conditions required in order to draw upon such Letter of Credit or any other claim of any
Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among any Borrower and any beneficiary of any Letter of Credit or any such transferee;
(iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond
the control of the Issuing Lender or its Affiliates, as applicable, including any act or omission
of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any
of the Issuing Lenders or its Affiliates rights or powers hereunder. Nothing in the preceding
sentence shall relieve the Issuing Lender from liability for the Issuing Lenders gross negligence
or willful misconduct in connection with actions or omissions described in such clauses (i) through
(viii) of such sentence. In no event shall the Issuing Lender or its Affiliates be liable to any
Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or
expenses (including without limitation attorneys fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, the Issuing Lender and each of its
Affiliates (i) may rely on any oral or other communication believed in good faith by the Issuing
Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a
Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face
substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may
honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise,
and shall be entitled to reimbursement to the same extent as if such presentation had initially
been honored, together with any interest paid by the Issuing Lender or its Affiliate; (iv) may
honor any drawing that is payable upon presentation of a statement advising negotiation or payment,
upon receipt of such statement (even if such statement indicates that a draft or other
38
document is being delivered separately), and shall not be liable for any failure of any such
draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v)
may pay any paying or negotiating bank claiming that it rightfully honored under the laws or
practices of the place where such bank is located; and (vi) may settle or adjust any claim or
demand made on the Issuing Lender or its Affiliate in any way related to any order issued at the
applicants request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or
any similar document (each an
Order
) and honor any drawing in connection with any Letter of
Credit that is the subject of such Order, notwithstanding that any drafts or other documents
presented in connection with such Letter of Credit fail to conform in any way with such Letter of
Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above,
any action taken or omitted by the Issuing Lender or its Affiliates under or in connection with the
Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put the Issuing Lender or its Affiliates under any resulting
liability to the Borrowers or any Lender.
2.8.10
Issuing Lender Reporting Requirements
. Any Issuing Lender other than PNC
shall, on the first Business Day of each month, provide to Administrative Agent and Borrowers a
schedule of the Letters of Credit issued by it, in form and substance satisfactory to
Administrative Agent, showing the date of issuance of each Letter of Credit, the account party (if
applicable), the original face amount (if any), and the expiration date of any Letter of Credit of
such Lender outstanding at any time during the preceding month, and any other information relating
to such Letters of Credit that the Administrative Agent may request.
2.9
Utilization of Commitments in Optional Currencies.
2.9.1
Periodic Computations of Dollar Equivalent Amounts of Revolving Credit Loans and Letters
of Credit Outstanding; Repayment in Same Currency
. For purposes of determining utilization of
the Revolving Credit Commitments, the Administrative Agent will determine the Dollar Equivalent
amount of (i) the proposed Revolving Credit Loans and Letters of Credit to be denominated in an
Optional Currency as of the requested Borrowing Date or date of issuance, as the case may be, (ii)
the outstanding Letter of Credit Obligations denominated in an Optional Currency as of the last
Business Day of each month, and (iii) the outstanding Revolving Credit Loans denominated in an
Optional Currency as of the end of each Interest Period (each such date under clauses (i) through
(iii), and any other date on which the Administrative Agent determines it is necessary or advisable
to make such computation, in its sole discretion, is referred to as a
Computation Date
). Unless
otherwise provided in this Agreement or agreed to by the Administrative Agent and the Company, each
Loan and Reimbursement Obligation shall be repaid or prepaid in the same currency in which the Loan
or Reimbursement Obligation was made.
2.9.2
Notices From Lenders That Optional Currencies Are Unavailable to Fund New Loans
. The
Lenders shall be under no obligation to make the Revolving Credit Loans requested by the Borrowers
which are denominated in an Optional Currency if any Lender notifies the Administrative Agent by
5:00 p.m. four (4) Business Days prior to the Borrowing Date for such Revolving Credit Loans that
such Lender cannot provide its Revolving Credit Ratable Share of such Revolving Credit Loans in
such Optional Currency. In the event the
39
Administrative Agent timely receives a notice from a Lender pursuant to the preceding sentence, the
Administrative Agent will notify the Borrowers no later than 12:00 noon three (3) Business Days
prior to the Borrowing Date for such Revolving Credit Loans that the Optional Currency is not then
available for such Revolving Credit Loans, and the Administrative Agent shall promptly thereafter
notify the Lenders of the same and the Lenders shall not make such Revolving Credit Loans requested
by the Borrowers under their Loan Request.
2.9.3
Notices From Lenders That Optional Currencies Are Unavailable to Fund Renewals of the
Euro-Rate Option
. If the Borrowers deliver a Loan Request requesting that the Lenders renew
the Euro-Rate Option with respect to an outstanding Borrowing Tranche of Revolving Credit Loans
denominated in an Optional Currency, the Lenders shall be under no obligation to renew such
Euro-Rate Option if any Lender delivers to the Administrative Agent a notice by 5:00 p.m. four (4)
Business Days prior to the effective date of such renewal that such Lender cannot continue to
provide Revolving Credit Loans in such Optional Currency. In the event the Administrative Agent
timely receives a notice from a Lender pursuant to the preceding sentence, the Administrative Agent
will notify the Borrowers no later than 12:00 noon three (3) Business Days prior to the renewal
date that the renewal of such Revolving Credit Loans in such Optional Currency is not then
available, and the Administrative Agent shall promptly thereafter notify the Lenders of the same.
If the Administrative Agent shall have so notified the Borrowers that any such continuation of such
Revolving Credit Loans in such Optional Currency is not then available, any notice of renewal with
respect thereto shall be deemed withdrawn, and such Loans shall be redenominated into Loans in
Dollars at the Base Rate Option or Euro-Rate Option, at the Companys option on behalf of the
Borrowers (subject, in the case of the Euro-Rate Option, to compliance with Section 2.5 [Making
Revolving Credit Loans, Etc.] and Section 4.1 [Interest Rate Options]), with effect from the last
day of the Interest Period with respect to any such Loans. The Administrative Agent will promptly
notify the Borrowers and the Lenders of any such redenomination, and in such notice, the
Administrative Agent will state the aggregate Dollar Equivalent amount of the redenominated
Revolving Credit Loans in an Optional Currency as of the applicable Computation Date with respect
thereto and such Lenders Revolving Credit Ratable Share thereof. Notwithstanding anything to the
contrary herein, each of the Lenders party to this Agreement as of the Closing Date acknowledge and
agree that, as of the Closing Date, such Lender can make Revolving Credit Loans denominated in
Canadian Dollars, Euro and British Pounds Sterling. However, the Borrowers acknowledge and
agree that the foregoing acknowledgement does not constitute a covenant, representation or
warranty that such Lenders will be able to lend in such currencies on any particular date in the
future.
2.9.4
European Monetary Union
.
2.9.4.1
Payments In Euros Under Certain Circumstances
. If (i) any Optional Currency
ceases to be lawful currency of the nation issuing the same and is replaced by the Euro or (ii) any
Optional Currency and the Euro are at the same time recognized by any governmental authority of the
nation issuing such currency as lawful currency of such nation and the Administrative Agent or the
Required Lenders shall so request in a notice delivered to the Borrowers, then any amount payable
hereunder by any party hereto in such Optional Currency shall instead by payable in the Euro and
the amount so payable shall be determined by translating the amount payable in such Optional
Currency to the Euro at the exchange rate established by that nation for the purpose of
implementing the replacement of the relevant Optional Currency
40
by the Euro (and the provisions governing payments in Optional Currencies in this Agreement
shall apply to such payment in the Euro as if such payment in the Euro were a payment in an
Optional Currency). Prior to the occurrence of the event or events described in clause (i) or (ii)
of the preceding sentence, each amount payable hereunder in any Optional Currency will, except as
otherwise provided herein, continue to be payable only in that currency.
2.9.4.2
Additional Compensation Under Certain Circumstances
. The Borrowers agree, at
the request of any Lender, to compensate such Lender for any loss, cost, expense or reduction in
return that such Lender shall reasonably determine shall be incurred or sustained by such Lender as
a result of the replacement of any Optional Currency by the Euro and that would not have been
incurred or sustained but for the transactions provided for herein. A certificate of any Lender
setting forth such Lenders determination of the amount or amounts necessary to compensate such
Lender shall be delivered to the Borrowers and shall be conclusive absent manifest error so long as
such determination is made on a reasonable basis. The Borrowers shall pay such Lender the amount
shown as due on any such certificate within ten (10) days after receipt thereof.
2.9.5
Requests for Additional Optional Currencies
. The Borrowers may deliver to the
Administrative Agent a written request that Revolving Credit Loans hereunder also be permitted to
be made in any other lawful currency (other than Dollars), in addition to the currencies specified
in the definition of Optional Currency herein,
provided
that such currency must be freely
traded in the offshore interbank foreign exchange markets, freely transferable, freely convertible
into Dollars and available to the Lenders in the Relevant Interbank Market. The Administrative
Agent will promptly notify the Lenders of any such request promptly after the Administrative Agent
receives such request. The Administrative Agent will promptly notify the Borrowers of the
acceptance or rejection by the Administrative Agent and each of the Lenders of the Borrowers
request. The requested currency shall be approved as an Optional Currency hereunder only if the
Administrative Agent and all of the Lenders approve of the Borrowers request.
2.10
Provisions Applicable to All Loans.
2.10.1
Notes
. The Obligation of the Borrowers to repay the aggregate unpaid principal
amount of the Revolving Credit Loans made to them by each Lender and Swing Loans made to them by
PNC, together with interest thereon, shall be evidenced by a revolving credit Note or Swing Loan
Note, as applicable, dated as of the Closing Date (or, if later, the date such Lender becomes a
Lender hereunder in accordance with this Agreement), payable to the order of such Lender in a face
amount equal to such Lenders Revolving Credit Commitment and payable to the order of PNC in the
face amount equal to the Swing Loan Commitment. Upon request to the Administrative Agent made
prior to the Closing Date (or, if later, the date such Lender becomes a Lender hereunder in
accordance with this Agreement), any Lender may elect to evidence the aggregate unpaid principal
amount of all Revolving Credit Loans made by it, and PNC may elect to evidence the aggregate unpaid
principal amount of all Swing Loans made by it, through the maintenance in the ordinary course of
business of accounts or records, which accounts or records shall be available to the Administrative
Agent to review promptly upon request, in lieu of receipt of original Notes. In the event of any
conflict between the accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent
41
with respect to such matters, the accounts and records of the Administrative Agent shall control
absent manifest error.
2.10.2
Joint and Several Obligations
. Subject to any limitations expressly set forth in
Section 12.14 [Foreign Borrowers] with respect to Foreign Borrowers, all Obligations of the
Borrowers are joint and several.
3.
RESERVED
4.
INTEREST RATES
4.1
Interest Rate Options
. The Borrowers shall pay interest in respect of the
outstanding unpaid principal amount of the Loans as selected by them from the Base Rate Option or
Euro-Rate Option set forth below applicable to the Loans, it being understood that, subject to the
provisions of this Agreement, all Revolving Credit Loans made as part of the same Borrowing Tranche
shall be made to the same Borrower and shall consist of the same Interest Rate Option, and the same
Interest Period shall apply to such Loans that are part of the same Borrowing Tranche;
provided
that
the Borrowers may select different Interest Rate Options and different Interest Periods to
apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or
renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising
any Borrowing Tranche;
provided further
that there shall not be at any one time outstanding
more than twelve (12) Borrowing Tranches in the aggregate among all of the Loans and
provided
further
that if an Event of Default or Potential Default exists and is continuing, the
Borrowers may not request, convert to, or renew the Euro-Rate Option for any Loans and the Required
Lenders may demand that all existing Borrowing Tranches bearing interest under the Euro-Rate Option
shall be converted immediately to the Base Rate Option, subject to the obligation of the Borrowers
to pay any indemnity under Section 5.10 [Indemnity] in connection with such conversion. If at any
time the designated rate applicable to any Loan made by any Lender exceeds such Lenders highest
lawful rate, the rate of interest on such Lenders Loan shall be limited to such Lenders highest
lawful rate. Interest on the principal amount of each Loan made in an Optional Currency shall be
paid by the Borrowers in such Optional Currency.
4.1.1
Revolving Credit Interest Rate Options; Swing Line Interest Rate
. Subject to
Section 4.3 [Interest After Default], the Borrowers shall have the right to select from the
following Interest Rate Options applicable to the Revolving Credit Loans, provided that any Loan
made in an Optional Currency shall bear interest at the Euro-Rate:
(i)
Revolving Credit Base Rate Option
: A fluctuating rate per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base
Rate plus the Applicable Margin, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Base Rate; or
(ii)
Revolving Credit Euro-Rate Option
: A rate per annum (computed on the basis of a
year of 360 days and actual days elapsed) equal to the Euro-Rate plus the Applicable Margin;
provided, however, that in the case of a Revolving Credit Loan which is denominated in Canadian
dollars, such rate per annum shall be calculated on the basis of a 365-day year.
42
(iii)
Swing Loans
. Subject to Section 4.3 [Interest After Default], at the
Borrowers option, Swing Loans shall bear interest (A) at the Base Rate Option applicable to
Revolving Credit Loans or, (B) at a rate per annum (computed on the basis of a year of 360 days
and actual days elapsed) equal to the Daily Euro-Rate plus the Applicable Margin applicable to
Revolving Credit Loans under the Euro-Rate Option.
4.1.2
Rate Quotations
. The Borrowers may call the Administrative Agent on or before
the date on which a Loan Request is to be delivered to receive an indication of the rates then in
effect, but it is acknowledged that such projection shall not be binding on the Administrative
Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when
the election is made.
4.2
Interest Periods
. At any time when the Borrowers shall select, convert to or
renew a Euro-Rate Option, the Borrowers shall notify the Administrative Agent thereof at least
three (3) Business Days prior to the effective date of such Interest Rate Option with respect to a
Loan in an Optional Currency denominated in Canadian dollars or Euro, four (4) Business Days prior
to the effective date of such Interest Rate Option with respect to a Loan in any other Optional
Currency, and in all other cases, three (3) Business Days prior to the effective date of such
Euro-Rate Option by delivering a Loan Request. The notice shall specify an Interest Period during
which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following
provisions shall apply to any selection of, renewal of, or conversion to a Euro-Rate Option:
4.2.1
Amount of Borrowing Tranche
. Each Borrowing Tranche of Loans under the Euro-Rate
Option shall be in integral multiples of $1,000,000 and not less than $5,000,000; and
4.2.2
Renewals
. In the case of the renewal of a Euro-Rate Option at the end of an
Interest Period, the first day of the new Interest Period shall be the last day of the preceding
Interest Period, without duplication in payment of interest for such day, or such other day as
agreed to by the Administrative Agent and the Company.
4.3
Interest After Default
. If an Event of Default has occurred which has not been
cured or waived in writing in accordance with this Agreement, upon written notice by the
Administrative Agent (which notice the Administrative Agent shall give at the direction of the
Required Lenders), (i) all outstanding amounts of principal and, to the extent permitted by law,
all overdue interest, in respect of each Loan shall bear interest, payable on demand, at a rate per
annum equal to the Post-Default Rate, and (ii) the fees applicable to the Letter of Credit
Obligations shall be increased by an additional 2% per annum in excess of the fees otherwise
applicable thereto. In addition, if any Unpaid Drawing or any amount (other than amounts as to
which the foregoing subparts (i) and (ii) are applicable) payable by any Borrower under the Loan
Documents is not paid when due, upon written notice by the Administrative Agent (which notice the
Administrative Agent shall give at the direction of the Required Lenders), such amount shall bear
interest, payable on demand, at the Post-Default Rate.
4.3.1
Acknowledgment
. The Borrowers acknowledge that the increase in rates
referred to in this Section 4.3 reflects, among other things, the fact that such Loans or other
43
amounts have become a substantially greater risk given their default status and
that the Lenders are entitled to additional compensation for such risk; and all such interest shall
be payable by Borrowers upon demand by Administrative Agent.
4.4
Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.
4.4.1
Unascertainable
. If on any date on which a Euro-Rate would otherwise be
determined, the Administrative Agent shall have determined that:
(i) adequate and reasonable means do not exist for ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially and adversely affects the London interbank
eurodollar market, the Administrative Agent shall have the rights specified in Section 4.4.3
[Administrative Agents and Lenders Rights].
4.4.2
Illegality; Increased Costs; Deposits Not Available
. If at any time any Lender
shall have determined that:
(i) the making, maintenance or funding of any Loan to which a Euro-Rate Option applies has
been made impracticable or unlawful by compliance by such Lender in good faith with any Law or any
interpretation or application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately and fairly reflect the cost to such Lender of
the establishment or maintenance of any such Loan, or
(iii) after making all reasonable efforts, deposits of the relevant amount in Dollars or in
the Optional Currency (as applicable) for the relevant Interest Period for a Loan, or to banks
generally, to which a Euro-Rate Option applies, respectively, are not available to such Lender with
respect to such Loan, or to banks generally, in the interbank
eurodollar market, then the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative
Agents and Lenders Rights].
4.4.3
Administrative Agents and Lenders Rights
. In the case of any event specified
in Section 4.4.1 [Unascertainable] above, the Administrative Agent shall promptly so notify the
Lenders and the Borrowers thereof, and in the case of an event specified in Section 4.4.2
[Illegality; Increased Costs; Deposits Not Available] above, such Lender shall promptly so notify
the Administrative Agent and endorse a certificate to such notice as to the specific circumstances
of such notice, and the Administrative Agent shall promptly send copies of such notice and
certificate to the other Lenders and the Borrowers. Upon such date as shall be specified in such
notice (which shall not be earlier than the date such notice is given), the obligation of (A) the
Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender, in the
case of such notice given by such Lender, to allow the Borrowers to select, convert to or renew a
Euro-Rate Option or select an Optional Currency (as applicable) shall be suspended until the
Administrative Agent shall have later notified the Borrowers, or such Lender shall have later
notified the Administrative Agent, of the Administrative Agents or
44
such Lenders, as the case may be, determination that the circumstances giving rise to such
previous determination no longer exist. If at any time the Administrative Agent makes a
determination under Section 4.4.1 [Unascertainable] and the Borrowers have previously notified the
Administrative Agent of their selection of, conversion to or renewal of a Euro-Rate Option and such
Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to
such Loans. If any Lender notifies the Administrative Agent of a determination under Section 4.4.2
[Illegality; Increased Costs; Deposits Not Available], the Borrowers shall, subject to the
Borrowers indemnification Obligations under Section 5.10 [Indemnity], as to any Loan of the Lender
to which a Euro-Rate Option applies, on the date specified in such notice either (i) as applicable,
convert such Loan to the Base Rate Option otherwise available with respect to such Loan or select
a different Optional Currency or Dollars, or (ii) prepay such Loan in accordance with Section 5.6
[Voluntary Prepayments]. Absent due notice from the Borrowers of conversion or prepayment, such
Loan shall automatically be converted to the Base Rate Option otherwise available with respect to
such Loan upon such specified date.
4.5
Selection of Interest Rate Options
. If the Borrowers fail to select a new
Interest Period to apply to any Borrowing Tranche of Loans under the Euro-Rate Option at the
expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with
the provisions of Section 4.2 [Interest Periods], the Borrowers shall be deemed to have converted
such Borrowing Tranche to the Revolving Credit Base Rate Option, commencing upon the last day of
the existing Interest Period.
4.6
Interest Act (Canada) Disclosure
. For the purposes of the Interest Act (Canada) and
disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection
herewith is to be calculated on the basis of a 360-day year or any other period less than a full
year, the yearly rate of interest to which the rate used in such calculation is equivalent is the
rate so used multiplied by the actual number of days in the calendar year in which the same is to
be ascertained and divided by 360 or the number of days in such other period, as applicable. The
rates of interest under this Agreement are nominal rates, and not effective rates or yields. The
principle of deemed reinvestment of interest does not apply to any interest calculation under this
Agreement.
4.7
Canadian Usury Provision
. If any provision of this Agreement would oblige a Canadian
Borrower to make any payment of interest or other amount payable to any Lender in an amount or
calculated at a rate which would be prohibited by law or would result in a receipt by that Lender
of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)),
then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted
with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not
be so prohibited by applicable law or so result in a receipt by that Lender of interest at a
criminal rate, such adjustment to be effected, to the extent necessary (but only to the extent
necessary), as follows:
(i) first, by reducing the amount or rate of interest; and
45
(ii) thereafter, by reducing any fees, commissions, costs, expenses, premiums and other
amounts required to be paid which would constitute interest for purposes of Section 347 of the
Criminal Code
(Canada).
4.8
Minimum Interest Clause for Swiss Borrowers
. The rates of interest provided for in
this Agreement, insofar as they relate to the Swiss Tranche, are minimum interest rates. When
entering into this Agreement, the parties have assumed that the interest payable by Swiss Borrowers
at the rates set out in this Section or in other Sections of this Agreement is not and will not
become subject to Swiss Withholding Tax.
Notwithstanding that the parties hereto do not anticipate that any payment of interest will be
subject to Swiss Withholding Tax, such parties agree that, in the event that (a) Swiss Withholding
Tax is imposed on interest payments by any Swiss Borrower and (b) such Swiss Borrower is unable,
solely by reason of the Swiss Withholding Tax Act, to comply with Section 5.9.1 [Payments Free of
Taxes], then
(i) the applicable interest rate in relation to that interest payment shall be (A) the
interest rate which would have applied to that interest payment as provided for in Section 4.1
[Interest Rate Options] divided by (B) 1 minus the rate at which the relevant Tax deduction is
required to be made under Swiss domestic tax law and/or applicable double taxation treaties (where
the rate at which the relevant Tax deduction is required to be made is for this purpose expressed
as a fraction of 1); and
(ii) the Swiss Borrower shall (A) pay the relevant interest at the adjusted rate in accordance
with paragraph (i) above, (B) make the Tax deduction on the interest so recalculated and (C) all
references to a rate of interest under the Agreement shall be construed accordingly.
To the extent that interest payable by a Swiss Borrower under this Agreement becomes subject
to Swiss Withholding Tax, at the Borrowers expense, the Parties shall promptly cooperate in
completing any procedural formalities (including submitting forms and documents required by the
appropriate Tax authority) to the extent possible and necessary for the specific Swiss Borrower to
obtain the tax ruling from Swiss Federal Tax Administration.
All the other provisions of Section 5.9 [Taxes] shall otherwise apply except for the gross-up
requirement provided for under Section 5.9.1 [Payments Free of Taxes].
5.
PAYMENTS
5.1
Payments.
All payments and prepayments to be made in respect of principal,
interest, Facility Fees, Letter of Credit Fees, Administrative Agents Fee or other fees or amounts
due from the Borrowers hereunder shall be payable prior to 11:00 a.m. on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the
Borrowers, and without set-off, counterclaim or other deduction of any nature, and an action
therefor shall immediately accrue. Such payments shall be made to the Administrative Agent at the
Principal Office for the account of PNC with respect to the Swing Loans and for the ratable
accounts of the Lenders with respect to the Revolving Credit Loans in U.S. Dollars (unless
specified otherwise herein) and in immediately available funds, and the Administrative
46
Agent shall promptly distribute such amounts to the Lenders in immediately available funds;
provided
that in the event payments are received by 11:00 a.m. by the Administrative Agent
with respect to the Loans and such payments are not distributed to the Lenders on the same day
received by the Administrative Agent, the Administrative Agent shall pay the Lenders the Federal
Funds Effective Rate in the case of Loans or other amounts due in Dollars, or the Overnight Rate in
case of Loans or other amounts due in Optional Currency, with respect to the amount of such
payments for each day held by the Administrative Agent and not distributed to the Lenders. The
Administrative Agents and each Lenders statement of account, ledger or other relevant record
shall, in the absence of manifest error, be conclusive as the statement of the amount of principal
of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an
account stated. All payments of principal and interest made in respect of the Loans must be
repaid in the same currency (whether Dollars or the applicable Optional Currency) in which such
Loan was made and all Unpaid Drawings with respect to each Letter of Credit shall be made in the
same currency (whether Dollars or the applicable Optional Currency) in which such Letter of Credit
was issued. The Administrative Agent may (but shall not be obligated to) debit the amount of any
such payment which is not made by such time to any ordinary deposit account of the applicable
Borrower with the Administrative Agent.
5.2
Pro Rata Treatment of Lenders.
Each borrowing of Revolving Credit Loans shall be
allocated to each Lender according to its Ratable Share, and each selection of, conversion to or
renewal of any Interest Rate Option and each payment or prepayment by the Borrowers with respect to
principal, interest, Facility Fees, Letter of Credit Fees, or other fees (except for the
Administrative Agents Fee and the Issuing Lenders fronting fee) or amounts due from the Borrowers
hereunder to the Lenders with respect to the Commitments and Loans, shall (except as otherwise may
be provided with respect to a Defaulting Lender and except as provided in Section 4.4.3
[Administrative Agents and Lenders Rights] in the case of an event specified in Section 4.4
[Euro-Rate Unascertainable; Etc.], 5.6.2 [Replacement of a Lender] or 5.8 [Increased Costs]) be
payable ratably among the Lenders entitled to such payment in accordance with the amount of
principal, interest, Facility Fees, Letter of Credit Fees, and other fees or amounts then due or
payable such Lenders as set forth in this Agreement. Notwithstanding any of the foregoing, each
borrowing or payment or prepayment by the Borrowers of principal, interest, fees or other amounts
from the Borrowers solely with respect to Swing Loans shall be made by or to PNC according to
Section 2.5.5 [Borrowings to Repay Swing Loans].
5.3
Sharing of Payments by Lenders.
If any Lender shall, by exercising any right of
setoff, counterclaim or bankers lien, by receipt of voluntary payment, by realization upon
security, or by any other non-pro rata source, obtain payment in respect of any principal of or
interest on any of its Loans or other obligations hereunder resulting in such Lenders receiving
payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other
such obligations greater than the pro-rata share of the amount such Lender is entitled thereto,
then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such
fact, and (b) purchase (for cash at face value) participations in the Loans and such other
obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans and other amounts
owing them,
provided
that:
47
(i) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the
extent of such recovery, together with interest or other amounts, if any, required by Law
(including court order) to be paid by the Lender or the holder making such purchase; and
(ii) the provisions of this Section 5.3 shall not be construed to apply to (x) any payment
made by the Borrowers pursuant to and in accordance with the express terms of the Loan Documents or
(y) any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or Participation Advances to any assignee or participant, other
than to the Borrowers or any Consolidated Subsidiary thereof (as to which the provisions of this
Section 5.3 shall apply).
Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under
applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against each Borrower rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of each Borrower in the amount of
such participation.
Any Lender that fails at any time to comply with the provisions of this Section 5.3 shall be
deemed a Defaulting Lender until such time as it performs its obligations hereunder and is not
otherwise a Defaulting Lender for any other reason. A Defaulting Lender shall, for the purposes of
effecting the participations required by this Section 5.3, be deemed to have assigned any and all
payments due to it from the Borrowers, whether on account of or relating to outstanding Loans,
Letters of Credit, interest, fees or otherwise, to the remaining non-defaulting Lenders for
application to, and reduction of, their respective Ratable Share of all outstanding Loans and other
unpaid Obligations of any of the Borrowers. The Defaulting Lender hereby authorizes the
Administrative Agent to distribute such payments to the non-defaulting Lenders in proportion to
their respective Ratable Share of all outstanding Loans and other unpaid Obligations of any of the
Borrowers to which such Lenders are entitled. A Defaulting Lender shall be deemed to have
satisfied the provisions of this Section 5.3 when and if, as a result of application of the
assigned payments to all outstanding Loans and other unpaid Obligations of any of the Borrowers to
the non-defaulting Lenders, the Lenders respective Ratable Share of all outstanding Loans and
unpaid Obligations have returned to those in effect immediately prior to such violation of this
Section 5.3.
5.4
Presumptions by Administrative Agent.
Unless the Administrative Agent shall have
received notice from the Borrowers prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the
Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have
made such payment on such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such
event, if the Borrowers have not in fact made such payment, then each of the Lenders or the Issuing
Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or the Issuing Lender, with interest thereon, for
each day from and including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater
48
of the Federal Funds Effective Rate (or, for payments in an Optional Currency, the Overnight
Rate) and a rate determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation.
5.5
Interest Payment Dates.
Interest on Loans to which the Base Rate Option applies
shall be due and payable in arrears on each Payment Date. Interest on Loans to which the Euro-Rate
Option applies shall be due and payable on the last day of each Interest Period for those Loans
and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest
Period. Interest on mandatory prepayments of principal under Section 5.7 [Mandatory Prepayments;
Cash Collateralization] shall be due on the date such mandatory prepayment is due. Interest on the
principal amount of each Loan or other monetary Obligation shall be due and payable on demand after
such principal amount or other monetary Obligation becomes due and payable (whether on the stated
Expiration Date, upon acceleration or otherwise).
5.6
Voluntary Prepayments.
5.6.1
Right to Prepay
. Each Borrower shall have the right at their option from time
to time to prepay the Loans in whole or part without premium or penalty (except as provided in
Section 5.6.2 [Replacement of a Lender] below, in Section 5.8 [Increased Costs] and Section 5.10
[Indemnity]). Whenever any Borrower desires to prepay any part of the Loans, such Borrower shall
provide a prepayment notice to the Administrative Agent by 1:00 p.m. at least one (1) Business Day
prior to the date of prepayment of the Revolving Credit Loans and at least four (4) Business Days
prior to the date of prepayment of any Loans in an Optional Currency, or no later than 1:00 p.m. on
the date of prepayment of Swing Loans, setting forth the following information:
(w) the date, which shall be a Business Day, on which the proposed prepayment
is to be made;
(x) a statement indicating the application of the prepayment between the
Revolving Credit Loans and Swing Loans;
(y) a statement indicating the application of the prepayment between Loans to
which the Base Rate Option applies and Loans to which the Euro-Rate Option applies;
and
(z) the total principal amount of such prepayment, which shall be equal to (i)
in the case of any Base Rate Loan, $1,000,000 (or Dollar Equivalent thereof), with
minimum increments thereafter of $500,000 (or Dollar Equivalent thereof), (ii) in
the case of any Euro-Rate Loan, $5,000,000 (or Dollar Equivalent thereof), with
minimum increments thereafter of $1,000,000 (or Dollar Equivalent thereof), and
(iii) in the case of any Swing Loan, $500,000, with minimum increments thereafter of
$250,000 (prepayments of Loans with different Interest Rates or Interest Periods
shall be deemed separate prepayments for the purposes of the foregoing).
Except as set forth in Section 2.1.3 [Optional Reductions], all prepayment notices shall be
irrevocable. Unless the prepayment notice is revoked in accordance with Section 2.1.3, the
principal amount of the Loans for which a prepayment notice is given, together
49
with interest on such principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment notice as the date on
which the proposed prepayment is to be made. Except as provided in Section 4.4.3 [Administrative
Agents and Lenders Rights], if the Borrowers prepay a Loan but fails to specify the applicable
Borrowing Tranche which the Borrowers are prepaying, the prepayment shall be applied first to Loans
to which the Base Rate Option applies, and then to Loans to which the Euro-Rate Option applies
which are not in Optional Currencies, and then to Loans in Optional Currencies. Any prepayment
hereunder shall be subject to the Borrowers Obligation to indemnify the Lenders under Section 5.10
[Indemnity]. Prepayments shall be made in the currency in which such Loan was made, unless
otherwise directed by the Administrative Agent. Revolving Credit Loan prepayments shall not result
in a reduction of the Revolving Credit Commitments unless the Borrower have so elected pursuant to
Section 2.1.3 [Optional Reductions], or as may otherwise be provided in this Agreement.
5.6.2
Replacement of a Lender
. In the event any Lender (a) gives notice under Section
4.4 [Euro-Rate Unascertainable, Etc.], (b) requests compensation under Section 5.8 [Increased
Costs], or requires the Borrowers to pay any additional amount to any Lender or any Official Body
for the account of any Lender pursuant to Section 5.9 [Taxes], (c) is a Defaulting Lender, (d)
becomes subject to the control of an Official Body (other than normal and customary supervision),
or (e) is a Non-Consenting Lender referred to in Section 12.1 [Modifications, Amendments or
Waivers], then in any such event the Borrowers may, at their sole expense, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and consents required by, Section
12.8 [Successors and Assigns]), all of its interests, rights and obligations under this Agreement
and the related Loan Documents to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment),
provided
that:
(i) the Borrowers shall have paid to the Administrative Agent the assignment fee specified in
Section 12.8 [Successors and Assigns];
(ii) such Lender shall have received payment of an amount equal to the outstanding principal
of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents including any amounts under
Section 5.10 [Indemnity]) from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrowers (in the case of all other amounts);
(iii) in the case of any such assignment resulting from a claim for compensation under Section
5.8 [Increased Costs] or payments required to be made pursuant to Section 5.9 [Taxes], such
assignment will result in a reduction in such compensation or payments thereafter; and
(iv) such assignment does not conflict with applicable Law.
Solely with respect to circumstances described in Sections 5.6.2(a) through 5.6.2(c), a Lender
shall not be required to make any such assignment or delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, such circumstances entitling the Borrowers to require such
50
assignment and delegation cease to apply. Nothing in this Section 5.6 or in any other provision of
this Agreement shall be deemed to prejudice any rights that the Borrowers may have against any
Defaulting Lender.
5.7
Mandatory Prepayments; Cash Collateralization
.
5.7.1
Mandatory Prepayments of Loans
. If on any date (after giving effect to any
other payments on such date)(A) the aggregate Dollar Equivalent amount of Revolving Facility Usage
exceeds the aggregate Revolving Credit Commitments, (B) the Dollar Equivalent amount of Revolving
Credit Loans from a Lender exceeds such Lenders Revolving Credit Commitment minus such Lenders
Ratable Share of the Dollar Equivalent amount of Letter of Credit Obligations, or (C) the Swing
Loans outstanding exceed the Swing Loan Sublimit; then, in the case of each of the foregoing, the
applicable Borrower or the Company shall prepay on such date the principal amount of Loans and,
after Loans have been paid in full, any Unpaid Drawings, in an aggregate amount at least equal to
such excess and conforming in the case of partial prepayments of Loans to the requirements as to
the amounts of partial prepayments of Loans that are contained in Section 5.6 [Voluntary
Prepayments]; provided, however, that if such excess results solely from fluctuations in the
exchange rates related to any Optional Currencies applicable to any of the Loans or unpaid
drawings, then neither the applicable Borrower nor the Company shall be obligated to make a
prepayment pursuant to this Section 5.7.1 unless and/or until (1) the aggregate Dollar Equivalent
amount of Revolving Facility Usage exceeds 105% of the aggregate of the Revolving Credit
Commitments, or (2) the Dollar Equivalent amount of Revolving Credit Loans from a Lender exceeds
105% of such Lenders Revolving Credit Commitment minus such Lenders Ratable Share of the Dollar
Equivalent amount of Letter of Credit Obligations.
5.7.2
Application Among Interest Rate Options
. All prepayments required pursuant to this
Section 5.7 shall first be applied among the Interest Rate Options to the principal amount of the
Loans subject to the Base Rate Option, then to Loans denominated in Dollars and subject to a
Euro-Rate Option, then to Loan of Optional Currencies subject to the Euro-Rate Option, and the
Borrowers will be subject to the indemnity obligations set forth in Section 5.8 [Increased Costs]
and Section 5.9 [Taxes]. In accordance with Section 5.10 [Indemnity], the Borrower shall indemnify
the Lenders for any loss or expense, including loss of margin, incurred with respect to any such
prepayments applied against Loans subject to a Euro-Rate Option on any day other than the last day
of the applicable Interest Period.
5.7.3
Cash Collateralization
. If on any date the Dollar Equivalent of Letter of Credit
Obligations exceeds the Letter of Credit Sublimit, then the Issuing Lender shall pay to the
Administrative Agent an amount in cash equal to such excess and the Administrative Agent shall hold
such payment as security for the Reimbursement Obligations of the Issuing Lender hereunder in
respect of Letters of Credit; provided, however, that if such excess results solely from
fluctuations in the exchange rates related to any Optional Currencies applicable to any of the
Letter of Credit Obligations, then the Issuing Lender shall not be obligated to make a cash payment
to the Administrative Agent pursuant to this Section 5.7.3 unless and/or until such Letter of
Credit Obligations equal or exceed 105% of the Letter of Credit Sublimit.
51
5.7.4
Application of Prepayments
. All prepayments pursuant to this Section 5.7 shall be
applied to reduce the Revolving Credit Loans (without a permanent corresponding Revolving Credit
Commitment reduction unless otherwise provided in this Agreement).
5.7.5
No Deemed Cure
. The payment of any mandatory prepayment as required by this Section
5.7 shall not be deemed to cure any Event of Default caused under another provision of this
Agreement by the same occurrence which gave rise to the mandatory prepayment obligation under this
Section.
5.8
Increased Costs.
5.8.1
Increased Costs Generally
. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement reflected in the
Euro-Rate) or the Issuing Lender;
(ii) subject any Lender or the Issuing Lender to any tax of any kind whatsoever with respect
to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan under
the Euro-Rate Option made by it, or change the basis of taxation of payments to such Lender or the
Issuing Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
5.9 [Taxes] and the imposition of, or any change in the rate of, any Excluded Tax payable by such
Lender or the Issuing Lender); or
(iii) impose on any Lender, the Issuing Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or any Loan under the Euro-Rate Option made by
such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan under the Euro-Rate Option (or of maintaining its obligation to make any such
Loan), or to increase the cost to such Lender or the Issuing Lender of participating in, issuing or
maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue
any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or
the Issuing Lender hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or the Issuing Lender, the Borrowers will pay to such Lender or the Issuing
Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the
Issuing Lender, as the case may be, for such additional costs incurred or reduction suffered.
5.8.2
Capital Requirements
. If any Lender or the Issuing Lender determines that any
Change in Law affecting such Lender or the Issuing Lender or any lending office of such Lender or
such Lenders or the Issuing Lenders holding company, if any, regarding capital requirements has
or would have the effect of reducing the rate of return on such Lenders or the Issuing Lenders
capital or on the capital of such Lenders or the Issuing Lenders holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
52
Credit issued by the
Issuing Lender, to a level below that which such Lender or the Issuing
Lender or such Lenders or the Issuing Lenders holding company could have achieved but for
such Change in Law (taking into consideration such Lenders or the Issuing Lenders policies and
the policies of such Lenders or the Issuing Lenders holding company with respect to capital
adequacy), then from time to time the Borrowers will pay to such Lender or the Issuing Lender, as
the case may be, such additional amount or amounts as will compensate such Lender or the Issuing
Lender or such Lenders or the Issuing Lenders holding company for any such reduction suffered.
5.8.3 C
ertificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New
Loans
. A certificate of a Lender or the Issuing Lender setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may
be, as specified in Sections 5.8.1 [Increased Costs Generally] or 5.8.2 [Capital Requirements] and
setting forth in reasonable detail the calculations necessary to determine such amount or amounts,
and delivered to the Borrowers shall be conclusive absent manifest error. The Borrowers shall pay
such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such
certificate within ten (10) days after receipt thereof.
5.8.4
Delay in Requests
. Each Lender agrees to promptly give the Borrowers notice of
any demand for compensation pursuant to this Section. Failure or delay on the part of any Lender
or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver
of such Lenders or the Issuing Lenders right to demand such compensation,
provided
that
the Borrowers shall not be required to compensate a Lender or the Issuing Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than six (6) months prior to
the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrowers of the
Change in Law giving rise to such increased costs or reductions and of such Lenders or the Issuing
Lenders intention to claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the six (6) month period referred to above
shall be extended to include the period of retroactive effect thereof).
5.8.5
Designation of Alternate Lending Office
. If any Lender requests compensation
under this Section 5.8, or if any Borrower is required to pay any additional amount to any Lender
or any Official Body for the account of any Lender pursuant to Section 5.9, then such Lender shall
use reasonable efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 5.8 or 5.9, as applicable, in the future,
and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender in any respect. The Company hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such designation or assignment.
5.9
Taxes
.
5.9.1
Payments Free of Taxes
. Any and all payments by or on account of any obligation
of the Borrowers hereunder or under any other Loan Document shall be made free and
53
clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes;
provided
that if the Borrowers shall be required by applicable Law to deduct or
withhold any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional sums payable under
this Section) the Administrative Agent, Lender or Issuing Lender, as the case may be, receives a
net payment equal to the amount it would have received had no such deductions or withholdings been
made, (ii) the Borrowers shall make such deductions and withholdings and (iii) the Borrowers shall
timely pay the full amount deducted to the relevant Official Body in accordance with applicable
Law. For the avoidance of doubt, Borrowers obligations hereunder shall apply regardless of
whether the Indemnified Taxes or other Taxes are an obligation of any Borrower or of any Lender.
Each Foreign Borrower undertakes to provide the Administrative Agent, promptly upon request, with
such documents as may be reasonably necessary under any Law or treaty for the availability of any
relief from a foreign jurisdiction withholding or other applicable tax.
Each Lender participating in any Loan to a Swiss Borrower represents and warrants as of the
date of this Agreement that it is a Qualifying Bank or, if participating in any Loan as a Permitted
Non-Qualifying Lender, that any information given by it to all Swiss Borrowers to determine whether
they would constitute one (1) person only for the purposes of the Swiss Bank Rules is accurate in
all material respects and each Lender becoming a Lender by assignment or transfer under Section
12.8.2 [Assignments by Lenders] shall represent and warrant as of the effective date of such
assignment or transfer that it is a Qualifying Bank by delivery of its Assignment and Assumption
Agreement or, if it is a Permitted Non-Qualifying Lender, that any information given by it to the
Swiss Borrowers to determine compliance with the Swiss Bank Rules is accurate in all material
respects.
5.9.2
Payment of Other Taxes by the Borrowers
. Without limiting the provisions of
Section 5.9.1 [Payments Free of Taxes] above, the Borrowers shall timely pay any Other Taxes to the
relevant Official Body in accordance with applicable Law.
5.9.3
Indemnification by the Borrowers
. The Borrowers shall indemnify the
Administrative Agent, each Lender and the Issuing Lender, within thirty (30) days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid
by the Administrative Agent, such Lender or the Issuing Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Official Body. A certificate as to the amount of such payment or liability delivered to
the Borrowers by a Lender or the Issuing Lender (with a copy to the Administrative Agent), or by
the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Lender, shall be
conclusive absent manifest error.
5.9.4
Evidence of Payments
. Within thirty (30) days after any payment of Indemnified
Taxes or Other Taxes by the Borrowers to an Official Body, the Borrowers shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Official Body
evidencing such payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Administrative Agent.
54
5.9.5
Status of Lenders
. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Law of the jurisdiction in which any Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrowers (with a copy to the
Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by
the Borrowers or the Administrative Agent, such properly completed and executed documentation
prescribed by applicable Law as will permit such payments to be made without withholding or at a
reduced rate of withholding. Notwithstanding the submission of such documentation claiming a
reduced rate of or exemption from U.S. withholding tax, the Administrative Agent shall be entitled
to withhold United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements imposed upon a
withholding agent under § 1.1441-7(b) of the United States Income Tax Regulations. Further, the
Administrative Agent is indemnified under § 1.1461-1(e) of the United States Income Tax Regulations
against any claims and demands of any Lender or assignee or participant of a Lender for the amount
of any tax it deducts and withholds in accordance with regulations under § 1441 of the Internal
Revenue Code. In addition, any Lender, if requested by the Borrowers or the Administrative Agent,
shall deliver such other documentation prescribed by applicable Law or reasonably requested by the
Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or information reporting
requirements. If any Foreign Lender fails to comply with the provisions in this Section 5.9, then
the Company shall not have any obligation to increase the sum payable to such Lender pursuant to
Section 5.9 [Taxes] or to indemnify such Lender pursuant to this Section 5.9 for Taxes (included
related penalties, interest and expenses) imposed by the United States or any political subdivision
thereof.
If the Administrative Agent, any Lender or the Issuing Lender, determines in its sole
discretion, that it has received a refund of any taxes in respect of or calculated with reference
to Indemnified Taxes or Other Taxes as to which it has been indemnified by a Borrower or with
respect to which a Borrower has paid additional amounts pursuant to this Section 5.9, it shall pay
over such refund to such Borrower within thirty (30) days after receipt of such refund (but only to
the extent of indemnity payments made, or additional amounts paid, by such Borrower under this
Section 5.9 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net
of all out-of-pocket expenses of the Administrative Agent, such Lender or the Issuing Lender
(including any Taxes imposed with respect to such refund) as is determined by the Administrative
Agent, such Lender or the Issuing Lender in good faith and in its sole discretion, and without
interest (other than any interest paid by the relevant Governmental Authority with respect to such
refund);
provided
that such Borrower, upon the request of the Administrative Agent, such
Lender or the Issuing Lender, agrees to repay as soon as reasonably practicable the amount paid
over to such Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent, such Lender or the Issuing Lender in the event
the Administrative Agent, such Lender or the Issuing Lender is required to repay such refund to
such Governmental Authority. Notwithstanding the foregoing, none of the Lenders or the
Administrative Agent shall be obligated to pursue such refund, if in its sole good faith judgment,
such action would be disadvantageous to it. This Section shall not be construed to require the
Administrative Agent,
55
any Lender or the Issuing Lender to make available its tax returns (or any other information
relating to its Taxes which it deems confidential) to the Borrowers or any other Person.
Without limiting the generality of the foregoing, in the event that any Borrower is resident
for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrowers
and the Administrative Agent (in such number of copies as shall be requested by the recipient) on
or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the request of the Borrowers or the Administrative Agent, but only if
such Foreign Lender is legally entitled to do so), whichever of the following is applicable:
(i) two (2) duly completed valid originals of IRS Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States of America is a party,
(ii) two (2) duly completed valid originals of IRS Form W-8ECI,
(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender
is not (A) a bank within the meaning of Section 881(c)(3)(A) of the Code, (B) a 10 percent
shareholder of any Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a
controlled foreign corporation described in Section 881(c)(3)(C) of the Code and (y) two (2) duly
completed valid originals of IRS Form W-8BEN,
(iv) any other form prescribed by applicable Law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with such supplementary
documentation as may be prescribed by applicable Law to permit the Borrowers to determine the
withholding or deduction required to be made, or
(v) to the extent that any Lender is not a Foreign Lender, such Lender shall submit to the
Administrative Agent two (2) originals of an IRS Form W-9 or any other form prescribed by
applicable Law demonstrating that such Lender is not a Foreign Lender.
If a payment made to a Lender under this Agreement would not be subject (in whole or in part)
to U.S. federal withholding tax imposed by FATCA if such Lender were to comply with the applicable
reporting or disclosure requirements of FATCA (including, but not limited to, those contained in
Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Company
and Administrative Agent, at the time or times prescribed by Law and at such time or times
reasonably requested by the Company or Administrative Agent, such documentation or certifications
prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and
such additional documentation or certifications reasonably requested by the Company or
Administrative Agent as may be necessary for the Company or Administrative Agent to comply with its
obligations to withhold or report under FATCA, to determine that such Lender has complied with such
Lenders obligations under FATCA, or to determine the amount (if any) to deduct and withhold from
such payment.
5.9.6
Lenders Cooperation in Tax Matters
. Promptly upon request by the
Administrative Agent, at the Borrowers expense, each of the Lenders agrees to cooperate in
completing any procedural formalities necessary for any Borrower to obtain authorization to
56
make any payments under this Agreement without any deduction or withholding for or on account
of taxes from a payment under a Loan Document. Each of the Lenders further agrees to provide such
information as any Swiss Borrower may reasonably request from time to time to determine such Swiss
Borrowers compliance with Swiss Bank Rules.
Within thirty (30) days after request by any Lender that holds a passport under the HMRC DT
Treaty Passport scheme and which wishes that scheme to apply to this Agreement, the Company shall
file a duly completed form DTTP-2 [Notification of a loan from a Double Taxation Treaty Passport
Holder] in respect of such Lender, with HM Revenue and Customs and shall promptly provide Lender
with a copy of that filing.
5.10
Indemnity.
In addition to the compensation or payments required by Section 5.8
[Increased Costs] or Section 5.9 [Taxes], the Borrowers shall indemnify each Lender against all
liabilities, losses or expenses (including loss of anticipated profits, any foreign exchange losses
and any loss or expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained
or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a
consequence of any:
(i) payment, prepayment, conversion or renewal of any Loan to which a Euro-Rate Option applies
on a day other than the last day of the corresponding Interest Period (whether or not such payment
or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is
then due),
(ii) attempt by any Borrower to revoke (expressly, by later inconsistent notices or otherwise)
in whole or part any Loan Requests under Section 2.4 [Revolving Credit Loan Requests; Swing Loan
Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.6
[Voluntary Prepayments], or
(iii) default by any Borrower in the performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document, including any failure of the Borrowers to
pay when due (by acceleration or otherwise) any principal, interest or any other amount due
hereunder.
If any Lender sustains or incurs any such loss or expense, it shall from time to time notify
the Borrowers of the amount determined in good faith by such Lender (which determination may
include such assumptions, allocations of costs and expenses and averaging or attribution methods as
such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or
expense. Such notice shall set forth in reasonable detail the basis for such determination. Such
amount shall be due and payable by the Borrowers to such Lender ten (10) Business Days after such
notice is given.
5.11
Settlement Date Procedures
. In order to minimize the transfer of funds between
the Lenders and the Administrative Agent, the Borrowers may borrow, repay and reborrow Swing Loans
and PNC may make Swing Loans as provided in Section 2.1.4 [Swing Loan Commitment] hereof during the
period between Settlement Dates. The Administrative Agent shall notify each Lender of its Ratable
Share of the total of the Revolving Credit Loans and the
57
Swing Loans (each a
Required Share
). On such Settlement Date, each Lender shall pay to the
Administrative Agent the amount equal to the difference between its Required Share and its
Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of
all payments made by the Borrowers to the Administrative Agent with respect to the Revolving Credit
Loans. The Administrative Agent shall also effect settlement in accordance with the foregoing
sentence on the proposed Borrowing Dates for Revolving Credit Loans and on the dates in which any
optional or mandatory prepayments are made hereunder and may at its option effect settlement on any
other Business Day. These settlement procedures are established solely as a matter of
administrative convenience, and nothing contained in this Section 5.11 shall relieve the Lenders of
their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to
Section 2.1.4 [Swing Loan Commitment]. The Administrative Agent may at any time at its option for
any reason whatsoever require each Lender to pay immediately to the Administrative Agent such
Lenders Ratable Share of the outstanding Revolving Credit Loans and each Lender may at any time
require the Administrative Agent to pay immediately to such Lender its Ratable Share of all
payments made by the Borrowers to the Administrative Agent with respect to the Revolving Credit
Loans.
6.
REPRESENTATIONS AND WARRANTIES
6.1
Representations and Warranties.
The Borrowers, jointly and severally, represent
and warrant to the Administrative Agent and each of the Lenders as follows:
6.1.1
Organization and Qualification; Power and Authority; Compliance With Laws; Title to
Properties; Event of Default
. Each of the Company and its Consolidated Subsidiaries (i) is a
corporation, partnership or limited liability company (or foreign jurisdictional equivalent) duly
organized or formed, as applicable, validly existing and in good standing under the laws of its
jurisdiction of organization or formation, as applicable, (ii) has all requisite corporate,
partnership or limited liability company (or foreign equivalent) power, and has all governmental
licenses, authorizations, consents and approvals necessary to own its assets and carry on its
business as now being or as proposed to be conducted, except in the case of such licenses,
authorizations, consents and approvals, where the failure to obtain them would not have a Material
Adverse Effect; and (iii) is duly licensed or qualified and in good standing (or foreign
jurisdictional equivalent) in each jurisdiction where such licensing or qualification is required,
except where the failure to be licensed, qualified or in good standing will not result in a
Material Adverse Effect. No Event of Default or Potential Default exists or is continuing.
6.1.2
Consolidated Subsidiaries and Owners; Investment Companies
.
Schedule
6.1.2
is a complete and correct list, as of the date of this Agreement, of all Consolidated
Subsidiaries of the Company and of all Investments held by the Company or any of its Consolidated
Subsidiaries in any material joint venture or other similar Person. The Company owns, free and
clear of Liens, all outstanding shares of its Consolidated Subsidiaries and all such shares are
validly issued, fully paid and non-assessable (except in the case of RPM Canada Company) and the
Company (or the respective Consolidated Subsidiary of the Company) also owns, free and clear of
Liens, all such Investments.
6.1.3
Corporate Action
. Each Borrower has all necessary corporate, partnership or
limited liability company (or foreign equivalent) power, as applicable, and
58
authority to execute, deliver and perform its obligations under the Loan Documents to which it
is a party; the execution, delivery and performance by each Borrower of the Loan Documents to which
it is a party have been duly authorized by all necessary corporate, partnership or limited
liability company (or foreign equivalent) action, as applicable; and this Agreement has been duly
and validly executed and delivered by each Borrower and constitutes the legal, valid and binding
obligation of such Borrower and, on the Closing Date, each of the other Loan Documents to which the
Borrowers are to be a party will constitute their legal, valid and binding obligation, in each case
enforceable in accordance with their terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or moratorium or other similar laws relating to the
enforcement or creditors rights generally and by general equitable principles.
6.1.4
No Breach
. Neither the execution and delivery of this Agreement or the other
Loan Documents by any Borrower nor the consummation of the transactions herein or therein
contemplated or compliance with the terms and provisions hereof or thereof by any of them will
conflict with, constitute a breach of, or require any consent under, the Organizational Documents
of the Company or any of its Consolidated Subsidiaries, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or agency, or any Loan
Document or other material agreement or instrument to which the Company or any of its Consolidated
Subsidiaries is a party or by which it is bound or to which it is subject, or constitute a default
under any such material agreement or instrument, or result in the creation or imposition of any
Lien upon any of the revenues or assets of the Company or any of its Consolidated Subsidiaries
pursuant to the terms of any such agreement or instrument.
6.1.5
Litigation
. Except as disclosed in the Disclosure Documents, there are no legal
or arbitral proceedings or any proceedings by or before any governmental or regulatory authority or
agency, now pending or, to the knowledge of the Company, threatened against or affecting the
Company or any Consolidated Subsidiary of such the Company which could reasonably be expected to
have a Material Adverse Effect or which in any manner draws into question the validity of any
material provision of any Loan Document. The disclosure of litigation to the Lenders pursuant to
this Section does not necessarily mean that such litigation is of the type described in this
Section or that the Company believes that such litigation has any merit whatsoever.
6.1.6
Approvals
. Each of the Company and its Consolidated Subsidiaries has obtained all
material authorizations, approvals and consents of, and has made all filings and registrations
with, any governmental or regulatory authority or agency and any third party necessary for the
execution, delivery or performance by it of any Loan Document to which it is a party, or for the
validity or enforceability thereof.
6.1.7
Margin Stock
. None of the Company or any Consolidated Subsidiaries of the
Company engages or intends to engage principally, or as one of its important activities, in the
business of extending credit for the purpose, immediately, incidentally or ultimately, of
purchasing or carrying margin stock (within the meaning of Regulation U, T or X as promulgated by
the Board of Governors of the Federal Reserve System). No part of the proceeds of any Loan has
been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or
which is inconsistent with the provisions of the regulations of the Board of
59
Governors of the Federal Reserve System. None of the Borrowers or any Consolidated Subsidiary
of any Borrower holds or intends to hold margin stock in such amounts that more than 25% of the
reasonable value of the assets of any Borrower or any Consolidated Subsidiary of any Borrower are
or will be represented by margin stock.
6.1.8
Information
.
(a) Neither this Agreement nor any other Loan Document, nor any certificate, statement,
agreement or other documents furnished to the Administrative Agent or any Lender in connection
herewith or therewith, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and therein, in light of
the circumstances under which they were made, not misleading.
(b) Without limiting the generality of paragraph (a):
(i) The audited consolidated balance sheet of the Company and its Consolidated Subsidiaries as
of May 31, 2010 and the audited consolidated statements of income, shareholders equity and cash
flows for the fiscal year ended May 31, 2010 (collectively, the Statements) have been prepared in
accordance with GAAP consistently applied. The Statements fairly present the financial position of
the Company and its Consolidated Subsidiaries as of May 31, 2010 and the results of their operation
and their cash flows for the fiscal year ended May 31, 2010 in conformity with GAAP.
(ii) The unaudited balance sheet of the Company and its Consolidated Subsidiaries as of August
31, 2010 and the unaudited consolidated statements of income, shareholders equity and cash flows
for the three months then ended have been prepared in accordance with GAAP consistently applied,
and fairly present the financial position of the Company and its Consolidated Subsidiaries as of
August 31, 2010 and the results of their operations and their cash flows for the three months then
ended in conformity with GAAP (subject to normal year-end adjustments).
(iii) The Company and its Consolidated Subsidiaries did not on the date of the balance sheet
referred to in clause (i) above, and will not on the Closing Date, have any material contingent
liabilities, material liabilities for taxes, unusual and material forward or long-term commitments
or material unrealized or anticipated losses from any unfavorable commitments, except as referred
to or reflected or provided for in said balance sheet.
(c) The Company has disclosed to the Lenders in writing any and all facts (other than general
economic or industry conditions) which have or may have a Material Adverse Effect.
(d) Since May 31, 2010, no event has occurred and no condition has come into existence which
has had, or is reasonably likely to have, a Material Adverse Effect.
6.1.9
Taxes
. All federal, state, provincial, local and other material tax returns
required to have been filed with respect to the Company and each Consolidated Subsidiary of the
Company have been filed, and payment or adequate provision has been made for the payment of all
taxes, fees, assessments and other governmental charges which have or may become due pursuant to
said returns or to assessments received, except to the extent that such taxes, fees,
60
assessments and other charges may be contested as permitted by Section 8.1.2 [Payment of
Liabilities, Including Taxes, Etc.]. There are no material tax disputes or contests pending as of
the Closing Date. The charges, accruals and reserves on the books of the Company and its
Consolidated Subsidiaries in respect of taxes and other governmental charges are, in the opinion of
the Company, adequate.
6.1.10
Ownership and Use of Properties
. Each of the Company and each Consolidated
Subsidiary of the Company will have on the Closing Date and at all times thereafter, legal title or
ownership of, or the right to use pursuant to enforceable and valid agreements or arrangements, all
tangible property, both real and personal, and all franchises, licenses, copyrights, patents and
know-how which is material to the operation of its business to be conducted.
6.1.11
Anti-Terrorism Law Compliance
. Neither the Company nor any of its Consolidated
Subsidiaries is subject to or in violation of any law, regulation, or list of any government agency
(including, without limitation, the U.S. Office of Foreign Asset Control list, Executive Order No.
13224 or the USA PATRIOT Act) that prohibits or limits the conduct of business with or the
receiving of funds, goods or services to or for the benefit of certain Persons specified therein or
that prohibits or limits any Lender or the Issuing Lender from making any advance or extension of
credit to any Borrower or from otherwise conducting business with the Company or any of its
Consolidated Subsidiaries.
6.1.12
Investment Company Act
. Neither the Company nor any of its Consolidated
Subsidiaries is an investment company within the meaning of the Investment Company Act of 1940, as
amended, or directly or indirectly, controlled by or acting on behalf of any Person which is an
investment company within the meaning of said Act.
6.1.13
ERISA Compliance
. (i) The Company and each member of the ERISA Group have
fulfilled their obligations under the minimum funding standards of ERISA and the Code with respect
to each Plan and each Plan is in compliance in all material respects with the applicable provisions
of ERISA, the Code and other federal or state Laws. Neither the Company nor any member of the
ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Code
in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan, or made any amendment to any Plan, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or the Code or (iii)
incurred any liability under Title IV of ERISA (other than a liability to the PBGC for premiums
under Section 4007 of ERISA).
6.1.14
Environmental Matters
. Except as disclosed in the Disclosure Documents,
neither the Company nor any of its Consolidated Subsidiaries has (i) failed to obtain any permits,
certificates, licenses, approvals, registrations and other authorizations which are required under
any applicable Environmental Law where failure to have any such permit, certificate, license,
approval, registration or authorization would have a Material Adverse Effect; (ii) failed to comply
with the terms and conditions of all such permits, certificates, licenses, approvals, registrations
and authorizations, and are also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained
in any applicable Environmental Law or in any notice or demand letter
61
from any regulatory authority issued, entered, promulgated or approved thereunder where
failure to comply would have a Material Adverse Effect; or (iii) failed to conduct its business so
as to comply in all respects with applicable Environmental Laws where failure to so comply would
have a Material Adverse Effect. The disclosure of any failure or alleged failure to the Lenders
pursuant to this Section does not necessarily mean that such failure is of the type described in
this Section or that any such allegations has any merit whatsoever.
7.
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to make Loans and of the Issuing Lender to issue Letters of
Credit hereunder is subject to the performance by each of the Borrowers of their Obligations to be
performed hereunder at or prior to the making of any such Loans or issuance of such Letters of
Credit and to the satisfaction of the following further conditions:
7.1
First Loans and Letters of Credit.
7.1.1
Deliveries
. On the Closing Date, the Administrative Agent shall have received
each of the following in form and substance satisfactory to the Administrative Agent:
(i) A certificate of the Company signed by an Authorized Officer of the Company, dated the
Closing Date stating that (A) all representations and warranties of the Borrowers set forth in this
Agreement are true and correct in all material respects, (B) the Borrowers are in compliance with
each of the covenants and conditions hereunder, (C) no Event of Default or Potential Default exists
and (D) there is no litigation or proceedings of which it is aware before any courts, arbitrators
or governmental or regulatory agencies affecting the Company or any of its Consolidated
Subsidiaries which could reasonably be expected to have a Material Adverse Effect;
(ii) A certificate dated the Closing Date and signed by the Secretary or an Assistant
Secretary or Director of each of the Borrowers, certifying as appropriate as to: (a) all action
taken by each Borrower in connection with this Agreement and the other Loan Documents; (b) the
names of the Authorized Officers authorized to sign the Loan Documents and their true signatures;
and (c) copies of its organizational documents as in effect on the Closing Date certified by the
appropriate state official where such documents are filed in a state office together with
certificates from the appropriate state officials as to the continued existence and good standing
(or foreign jurisdictional equivalent in each jurisdiction where such certification is required) of
each Borrower in each state where organized or qualified to do business;
(iii) This Agreement and each of the other Loan Documents signed by an Authorized Officer;
(iv) Opinions of counsel for each of the Borrowers, dated the Closing Date, each in form and
substance acceptable to the Administrative Agent and the Lenders;
(v) A duly completed Compliance Certificate as of the last day of the fiscal quarter of
Company most recently ended prior to the Closing Date, signed by an Authorized Officer of the
Company;
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(vi) Evidence that the Credit Agreement dated as of December 29, 2006 among the Borrowers, the
other foreign borrowers a party thereto, the lenders a party thereto and PNC, as successor in
interest to National City Bank, as administrative agent, has been terminated, and all outstanding
obligations thereunder have been paid and all Liens securing such obligations have been released;
(vii) a completed and executed Loan Request from the Borrowers in substantially the form of
Exhibit 2.5.1
[and Swing Loan Request from the Borrowers in substantially the form of
Exhibit 2.5.2
]; and
(viii) Such other documents in connection with such transactions as the Administrative Agent
or said counsel may reasonably request, including all information required under applicable
Know-Your-Customer and anti-money laundering rules and regulations, including the U.S. PATRIOT
Act.
7.1.2
Payment of Fees
. The Borrowers shall have paid all fees payable on or before
the Closing Date as required by this Agreement, the Administrative Agents Letter or any other Loan
Document.
7.1.3
Due Diligence
. All legal details and proceedings in connection with the
transactions contemplated by this Agreement, the Notes and all other Loan Documents, including, but
not limited to, the business, legal, accounting and financial due diligence with respect to the
Borrowers, shall be in form and scope satisfactory to the Administrative Agent and the Lenders.
7.2
Each Loan or Letter of Credit.
At the time of making any Loans or issuing,
extending or increasing any Letters of Credit and after giving effect to the proposed extensions of
credit: (i) all representations, warranties of the Loan Parties under Article 6, other than the
representation and warranty in Section 6.1.8(d), shall then be true and correct in any respect (in
the case of any representation or warranty containing a materiality qualification) or in any
material respect (in the case of any representation of warranty without any materiality
qualifications) (except representations and warranties which expressly relate to an earlier date or
time, which representations or warranties shall be true and correct on and as of the specific dates
or times referred to therein), (ii) no Event of Default or Potential Default shall have occurred
and be continuing, (iii) the making of the Loans or issuance, extension or increase of such Letter
of Credit shall not contravene any Law applicable to any Borrower or Consolidated Subsidiary of any
Borrower or any of the Lenders, and (iv) the Borrowers shall have delivered to the Administrative
Agent a duly executed and completed Loan Request or to the Issuing Lender an application for a
Letter of Credit, as the case may be or telephonic notice of such request pursuant to Section 2.4.1
[Revolving Credit Loan Requests].
8.
COVENANTS
The Borrowers, jointly and severally, covenant and agree that until Payment In Full, the
Borrowers shall comply at all times with the following covenants:
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8.1
Affirmative Covenants.
8.1.1
Preservation of Existence, Etc
. Each Borrower shall, and shall cause each of
its Consolidated Subsidiaries to, maintain its legal existence as a corporation, limited
partnership or limited liability company (or foreign equivalent) and its license or qualification
and good standing in each jurisdiction in which its ownership or lease of property or the nature of
its business makes such license or qualification necessary,
provided
that nothing herein
shall prevent (i) the consolidation or merger (and resulting dissolution) of any Consolidated
Subsidiary of the Company into the Company so long as the Company is the surviving corporation,
(ii) the consolidation or merger of any Consolidated Subsidiary of the Company into any other
Consolidated Subsidiary of the Company so long as, in the case of such mergers or consolidations
involving one or more Foreign Borrowers, either (A) a Foreign Borrower is the surviving entity, or
(B) to the extent a Foreign Borrower is not the surviving corporation, such Foreign Borrower has
been released in accordance with Section 12.15.2 [Release of Foreign Borrowers], (iii) the sale of
any Consolidated Subsidiary of the Company which is not a Significant Subsidiary so long as, in the
case of any Foreign Borrower, such Foreign Borrower has been released in accordance with Section
12.15.2 [Release of Foreign Borrowers], (iv) the sale of any Consolidated Subsidiary of the Company
as long as such Consolidated Subsidiary remains a Consolidated Subsidiary of the Company, (v) the
termination of corporate, partnership or limited liability company (or foreign equivalent)
existence, dissolution or abandonment by the Company of any Consolidated Subsidiary which is a not
a Significant Subsidiary so long as, in the case of any Foreign Borrower, such Foreign Borrower has
been released in accordance with Section 12.15.2 [Release of Foreign Borrowers], (vi) the
termination of partnership or limited liability company (or foreign equivalent) existence or
dissolution by the Company or any Consolidated Subsidiary so long as such termination of
partnership or limited liability company (or foreign equivalent) or dissolution is effectuated
between Consolidated Subsidiaries of the Company and, in the case of any Foreign Borrower, such
Foreign Borrower has been released in accordance with Section 12.15.2 [Release of Foreign
Borrowers], and (vii) any sale, lease or transfer of assets not prohibited by Section 8.2.3
[Liquidations, Mergers, Consolidations, Acquisitions].
8.1.2
Payment of Liabilities, Including Taxes, Etc.
Each Borrower shall, and the
Company shall cause each of its Consolidated Subsidiaries to, duly pay and discharge all material
liabilities to which it is subject or which are asserted against it, promptly as and when the same
shall become due and payable, including all material taxes, assessments and governmental charges
upon it or any of its properties, assets, income or profits, prior to the date on which penalties
attach thereto, and all material lawful claims which, if unpaid, might become a Lien upon the
property of such Borrower or such Consolidated Subsidiary, provided that neither the Borrowers nor
the Companys Consolidated Subsidiaries shall be required to pay any such taxes, assessments or
charges, levy or claim the payment of which is being contested in good faith and by proper
proceedings if it maintains adequate reserves with respect thereto and if such contest, proceedings
and reserves have been described in a certificate of a Senior Officer delivered to the Lenders.
8.1.3
Maintenance of Insurance
. The Company shall, and shall cause each of its
Consolidated Subsidiaries to, maintain insurance with responsible companies in such amounts and
against such risks as is usually carried by companies of established repute engaged in the
64
same or similar businesses, owning similar properties and located in the same general areas as
the Company and its Consolidated Subsidiaries.
8.1.4
Maintenance of Properties and Leases
. Each Borrower shall, and shall cause each
of its Consolidated Subsidiaries to, maintain in good repair, working order and condition (ordinary
wear and tear excepted and having regard to the condition of such properties at the time such
properties were acquired by such Borrowers) in accordance with the general practice of other
businesses of similar character and size, all of those properties useful or necessary to its
business, and from time to time, such Borrower will make or cause to be made all appropriate
repairs, renewals or replacements thereof.
8.1.5
Visitation Rights
. Each Borrower shall, and shall cause each of its
Consolidated Subsidiaries to, permit any of the officers or authorized employees or representatives
of the Administrative Agent or any of the Lenders to visit and inspect any of its properties and to
examine and make excerpts from its books and records and discuss its business affairs, finances and
accounts with its officers, all in such detail and at such times and as often as any of the Lenders
may reasonably request,
provided
that each Lender shall provide the Borrowers and the
Administrative Agent with reasonable notice prior to any visit or inspection. In the event any
Lender desires to conduct an audit of any Borrower, such Lender shall make a reasonable effort to
conduct such audit contemporaneously with any audit to be performed by the Administrative Agent.
Absent an Event of Default, such visits and inspections shall be limited to one time per year. Any
Lender may accompany the Administrative Agent on such visitation or inspection. All such
inspections shall be on a Business Day during normal business hours.
8.1.6
Keeping of Records and Books of Account
. The Borrowers shall, and shall cause
each Consolidated Subsidiary of the Borrowers to, maintain and keep proper books of record and
account which enable the Company and its Consolidated Subsidiaries to issue financial statements in
accordance with GAAP and as otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrowers or any Consolidated Subsidiary of the Borrowers, and in which full,
true and correct entries shall be made in all material respects of all its dealings and business
and financial affairs.
8.1.7
Compliance with Laws
. The Company shall, and shall cause each of its
Consolidated Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in
all respects;
provided
that it shall not be deemed to be a violation of this Section 8.1.7
if any failure to comply with any Law would not result in fines, penalties, remediation costs,
other similar liabilities or injunctive relief which in the aggregate would constitute a Material
Adverse Effect except where contested in good faith and by proper proceedings if it maintains
adequate reserves with respect thereto and if such contest, proceedings and reserves have been
described in a certificate of a Senior Officer delivered to the Lenders.
8.1.8
Litigation
. The Company will promptly give to the Administrative Agent (which
shall promptly notify each Lender) notice in writing of all litigation and of all legal or arbitral
proceedings of which it is aware before any courts, arbitrators or governmental or regulatory
agencies affecting the Company or any of its Consolidated Subsidiaries which could reasonably be
expected to have a Material Adverse Effect.
65
8.1.9
Environmental Matters
. The Company will promptly give to the Lenders notice in
writing of any complaint, order citation, notice or other written communication from any Person
with respect to, or if the Company becomes aware after due inquiry of, (i) the existence or alleged
existence of a violation of any applicable Environmental Law or Environmental Liability at, upon,
under or within any property now or previously owned, leased, operated or used by the Company or
any of its Consolidated Subsidiaries or any part thereof, or due to the operations or activities of
the Company, any Consolidated Subsidiary on or in connection with such property or any part thereof
(including receipt by the Company or any Consolidated Subsidiary of any notice of the happening of
any event involving the Release of a reportable quantity under any applicable Environmental Law or
cleanup of any Hazardous Substance), (ii) any Release on such property or any part thereof in a
quantity that is reportable under any applicable Environmental Law, (iii) the commencement of any
cleanup pursuant to or in accordance with any applicable Environmental Law or any Hazardous
Substances on or about such property or any part thereof and (iv) any pending or threatened
proceeding for the termination, suspension or non-renewal of any permit required under any
applicable Environmental Law, in each case which individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect.
8.2
Negative Covenants.
8.2.1
Negative Pledge
. The Company will not, and will not permit any of its
Consolidated Subsidiaries to, create or suffer to exist any Lien upon any property or assets, now
owned or hereafter acquired, securing any Indebtedness or other obligation, except Permitted Liens.
8.2.2
Loans and Investments
. The Company shall not, and shall not permit any of its
Consolidated Subsidiaries to, at any time make or suffer to remain outstanding any advances, loans
or other extensions of credit or capital contributions (other than prepaid expenses in the ordinary
course of business) to (by means of transfers of property or assets or otherwise), or purchase or
own any stocks, bonds, notes, debentures or other securities of, any Person (all such transactions
being herein referred to as
Investments
), except:
(i) operating deposit accounts;
(ii) investments made under Cash Management Agreements;
(iii) Liquid Investments;
(iv) subject to Section 8.2.4 [Affiliate Transactions], Investments in accounts and notes
receivable acquired in the ordinary course of business as presently conducted;
(v) Investments existing on the Closing Date in Consolidated Subsidiaries or joint ventures,
and Investments after the Closing Date by the Captive Insurance Companies in the ordinary course of
its business;
(vi) Investments not otherwise permitted by the foregoing clauses of this Section 8.2.2 in
Consolidated Subsidiaries (other than Receivables Subsidiaries) of the Company
66
and in Persons which become Consolidated Subsidiaries of the Company as the result of such
Investments;
(vii) Investments not otherwise permitted by the foregoing clauses of this Section 8.2.2 in
joint ventures in an aggregate amount not to exceed $125,000,000;
(viii) Investments comprised of capital contributions, loans or deferred purchase price
(whether in the form of cash, a note or other assets) to any Receivables Subsidiary or of residual
interests in any trust formed to facilitate any related receivables securitization; and
(ix) Investments not otherwise permitted by the foregoing clauses of this Section 8.2.2 in an
aggregate amount not to exceed $20,000,000.
8.2.3
Liquidations, Mergers, Consolidations, Acquisitions
. No Borrower shall:
(i) consolidate or merge with or into another Person, except that, subject to clause (iii)
below, any Borrower may consolidate or merge with another Person if (A) such Borrower is the entity
surviving such merger and (B) immediately after giving effect to such consolidation or merger, no
Event of Default or Potential Default shall have occurred and be continuing,
(ii) sell, lease or otherwise transfer, directly or indirectly, in one transaction or a series
of related transactions, all or substantially all of its business or assets; provided that any
Borrower other than the Company may sell, lease or transfer all or substantially all of its
business or assets to the Company, any other Borrower or any wholly-owned Consolidated Subsidiary
of the Company, or
(iii) nothing herein shall prevent any of the transactions or events permitted under clauses
(i) (vii) of Section 8.1.1 [Preservation of Existence, Etc.]
8.2.4
Affiliate Transactions
. Except as set forth on
Schedule 8.2.4
or as
otherwise expressly permitted by this Agreement, the Company will not, and will not permit any of
its Consolidated Subsidiaries to, directly or indirectly,: (i) make any Investment in an Affiliate
of the Company (other than a Consolidated Subsidiary of the Company); (ii) transfer, sell, lease,
assign or otherwise dispose of any assets to an Affiliate of the Company (other than a Consolidated
Subsidiary of the Company); (iii) merge into or consolidate with or purchase or acquire assets from
an Affiliate of the Company (other than a Consolidated Subsidiary of the Company); or (iv) enter
into any other transaction directly or indirectly with or for the benefit of an Affiliate of the
Company (other than a Consolidated Subsidiary of the Company) (including without limitation,
Guaranties and assumptions of obligations of an Affiliate of the Company (other than a Consolidated
Subsidiary of the Company)); provided that (a) any Affiliate of the Company who is an individual
may serve as a director, officer or employee of the Company and receive reasonable compensation or
indemnification in connection with his or her services in such capacity; and (b) any transaction
entered into by the Company or a Consolidated Subsidiary of the Company with an Affiliate of the
Company which is not a Consolidated Subsidiary of the Company providing for the leasing of
property, the rendering or receipt of services or the purchase or sale inventory and other assets
in the ordinary course of business must be for a monetary or business consideration which would be
substantially as advantageous to the
67
Company or such Consolidated Subsidiary as the monetary or business consideration which would
obtain in a comparable arms length transaction with a Person not an Affiliate of the Company.
8.2.5
Continuation of or Change in Business
. The Company and its Consolidated
Subsidiaries, taken as a whole, shall not engage to any substantial extent in any line or lines of
business activity other than present related product lines.
8.2.6
Lease Payments
. Neither the Company nor any of its Consolidated Subsidiaries
has incurred or assumed or will incur or assume (whether pursuant to a Guaranty or otherwise) any
liability for rental payments under a lease with a lease term (as defined in Financial Accounting
Standards No. 13 of the Financing Accounting Standards Board, as in effect on the date hereof) if
(i) such lease is of an asset previously owned by the Company or any of its Consolidated
Subsidiaries and (ii) after giving effect thereto, the aggregate amount of minimum lease payments
that the Company and its Consolidated Subsidiaries have so incurred or assumed will exceed, on a
consolidated basis, $100,000,000 for any calendar year under all such leases.
8.2.7
Anti-Terrorism Laws
. Neither the Company nor any of its Consolidated
Subsidiaries shall be in violation of any law or regulation or appear on any list of any government
agency (including, without limitation, the U.S. Office of Foreign Asset Control list, Executive
Order No. 13224 or the USA PATRIOT Act) that prohibits or limits the conduct of business with or
the receiving of funds, goods, or services to or for the benefit of certain Persons specified
therein or that prohibits or limits any Lender or the Issuing Lender from making any advance or
extension of credit to any Borrower.
8.2.8
Maximum Leverage Ratio
. The Company will not permit the consolidated Indebtedness of
the Company and its Consolidated Subsidiaries, to exceed 60% of the sum of (i) such consolidated
Indebtedness, and (ii) consolidated shareholders equity of the Company and its Consolidated
Subsidiaries, as calculated on the last day of each fiscal quarter ending after the Closing Date;
provided that for purposes of calculating consolidated shareholders equity, non-cash charges
related to the writedown or impairment of goodwill or other intangibles shall be included in such
calculation.
8.2.9
Minimum Interest Coverage Ratio
. The Company shall not permit the ratio, calculated
as of the end of each fiscal quarter ending after the Closing Date for the four fiscal quarters
then most recently ended, of EBITDA for such period to Interest Expense for such period to be less
than 3.50 to 1.00.
8.3
Reporting Requirements.
The Company will furnish or cause to be furnished to the
Administrative Agent and each of the Lenders:
8.3.1
Quarterly Financial Statements
. As soon as available and in any event within
forty-five (45) calendar days after the end of each of the first three fiscal quarters in each
fiscal year, financial statements of the Company and its Consolidated Subsidiaries, consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal quarter and related
consolidated and consolidating statements of income, stockholders equity and cash flows for the
68
fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and
certified (subject to normal year-end audit adjustments and footnotes) by the Chief Executive
Officer, President, Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer of the Company as having been prepared in accordance with GAAP, consistently applied, and
setting forth in comparative form the respective financial statements for the corresponding date
and period in the previous fiscal year. The Borrowers will be deemed to have complied with the
delivery requirements of this Section 8.3.1 if within forty-five (45) days (or any such earlier
date as may be mandated by the Securities and Exchange Commission) after the end of its fiscal
quarter, the Company delivers to the Administrative Agent on behalf of the Lenders a copy of its
Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission and the
financial statements contained therein meet the requirements described in this Section 8.3.1.
8.3.2
Annual Financial Statements
. As soon as available and in any event within
ninety (90) days after the end of each fiscal year of the Company and its Consolidated
Subsidiaries, financial statements of the Company and its Consolidated Subsidiaries consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal year, and related
consolidated and consolidating statements of income, stockholders equity and cash flows for the
fiscal year then ended, all in reasonable detail and setting forth in comparative form the
financial statements as of the end of and for the preceding fiscal year, and certified by
independent certified public accountants of nationally recognized standing satisfactory to the
Administrative Agent. The certificate or report of accountants shall be free of qualifications
(other than any consistency qualification that may result from a change in the method used to
prepare the financial statements as to which such accountants concur) and shall not indicate the
occurrence or existence of any event, condition or contingency which would materially impair the
prospect of payment or performance of any covenant, agreement or duty of any Borrower under any of
the Loan Documents. The Borrowers will be deemed to have complied with the delivery requirements
of this Section 8.3.2 if within ninety (90) days (or any such earlier date as may be mandated by
the Securities and Exchange Commission) after the end of its fiscal year, the Company delivers to
the Administrative Agent on behalf of the Lenders a copy of its Annual Report on Form 10-K as filed
with the Securities and Exchange Commission and the financial statements and certification of
public accountants contained therein meet the requirements described in this Section 8.3.2.
8.3.3
Certificate of the Company
. Concurrently with the financial statements of the
Company furnished to the Administrative Agent and to the Lenders pursuant to Sections 8.3.1
[Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements], a certificate (each a
Compliance Certificate
) of the Company signed by a Senior Officer, in the form of
Exhibit
8.3.3
.
8.3.4
Notices
.
8.3.4.1
Default
. Promptly (and in any event within three (3) Business Days) after any
Senior Officer of the Company has learned of the occurrence of an Event of Default or Potential
Default, a certificate signed by an Authorized Officer setting forth the details of such Event of
Default or Potential Default and the action which the Company proposes to take with respect
thereto.
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8.3.4.2
Litigation
. Promptly after the commencement thereof, notice of all actions,
suits, legal or arbitral proceedings or investigations before or by any governmental or regulatory
authority or agency or any other Person against any Borrower or Consolidated Subsidiary which if
adversely determined could reasonably be expected to have a Material Adverse Effect.
8.3.4.3
Financial Statements
. Promptly upon the mailing thereof to the shareholders
of the Company generally, copies of all financial statements, reports and proxy statements so
mailed.
8.3.4.4
Intentionally Deleted
.
8.3.4.5
Registration Statements
. Promptly upon the filing thereof, copies of all
registration statements (other than any registration statements on Form S-8 or its equivalent) and
any report which the Company shall have filed with the Securities and Exchange Commission.
8.3.4.6
ERISA Event
. Immediately upon the occurrence of any ERISA Event.
8.3.4.7
Change in Rating
. Promptly after a Senior Officer of the Company knows of a
change in the ratings accorded to the Company by Fitch, Standard & Poors and/or Moodys or in the
outlook with respect thereto, a notice of such change in the rating.
8.3.4.8
Other Information
. From time to time such other information regarding the
financial condition, operations, prospects of business of the Company or any Borrower as the
Administrative Agent or any Lender through the Administrative Agent may reasonably request.
9.
DEFAULT
9.1
Events of Default.
An Event of Default shall mean the occurrence or existence of
any one or more of the following events or conditions (whatever the reason therefor and whether
voluntary, involuntary or effected by operation of Law):
9.1.1
Payments Under Loan Documents
. The Borrowers shall fail to pay (i) any
principal of any Loan (including scheduled installments, mandatory prepayments or the payment due
at maturity), Reimbursement Obligation or Letter of Credit Obligation when due or (ii) shall fail
to pay any interest on any Loan, Reimbursement Obligation or Letter of Credit Obligation or any
other amount owing hereunder or under the other Loan Documents within five (5) Business Days after
the date on which such principal, interest or other amount becomes due in accordance with the terms
hereof or thereof;
9.1.2
Breach of Warranty
. Any representation or warranty made at any time by any of
the Borrowers herein or by any of the Borrowers in any other Loan Document, or in any certificate,
other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove
to have been false or misleading in any material respect as of the time it was made or furnished;
70
9.1.3
Breach of Specified Covenants or Visitation Rights
. Any of the Borrowers shall
default in the observance or performance of any covenant contained in Section 2.7 [Use of
Proceeds], Section 8.1.5 [Visitation Rights], Section 8.3.2 [Annual Financial Statements], Section
8.3.1 [Quarterly Financial Statements]; Section 8.3.4.1 [Default]; Section 8.2.8 [Maximum Leverage
Ratio], Section 8.2.10 [Minimum Interest Coverage Ratio], Section 8.2.3 [Liquidations, Mergers,
Consolidations, Acquisitions], Section 8.2.1 [Liens; Lien Covenants], Section 8.2.2 [Loans and
Investments], Section 8.2.4 [Affiliate Transactions], Section 8.2.6 [Lease Payments], Section 8.2.7
[Anti-Terrorism Laws];
9.1.4
Breach of Other Covenants
. Any of the Borrowers shall default in the observance
or performance of any other covenant, condition or provision hereof or of any other Loan Document
and such default shall continue unremedied for a period of thirty (30) days after notice thereof to
the Company by the Administrative Agent or the Lender (through the Administrative Agent);
9.1.5
Defaults in Other Material Indebtedness
. A default or event of default shall
occur at any time if the Company or any of its Consolidated Subsidiaries shall default in the
payment when due of any principal of or interest on Indebtedness having an aggregate outstanding
principal amount of at least $50,000,000 (other than the Loans); or any event or condition shall
occur which results in the acceleration of the maturity of any such Indebtedness or enables (or,
with the giving of notice or lapse of time or both, would enable) the holder of any such
Indebtedness or any Person acting on such holders behalf to accelerate the maturity thereof;
9.1.6
Final Judgments or Orders
. Any final judgments or orders for the payment of
money shall be rendered by a court or courts against the Company or any of its Consolidated
Subsidiaries in excess of $50,000,000 in the aggregate (excluding any amount of such judgment as to
which an Acceptable Insurer has acknowledged liability), and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof shall not be
procured, within 10 days from the date of entry thereof, or the Company or such Consolidated
Subsidiary shall not, within said period of 10 days, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal;
9.1.7
Inability to Pay Debts
. The Company, any other Borrower or any of the Companys
Significant Subsidiaries shall admit in writing its inability to, or be generally unable to, pay
its debts as such debts become due;
9.1.8
Loan Document Unenforceable
. Any of the Loan Documents shall cease to be legal,
valid and binding agreements enforceable against the party executing the same or such partys
successors and assigns (as permitted under the Loan Documents) in accordance with the respective
terms thereof or shall in any way be terminated (except in accordance with its terms) or become or
be declared ineffective or inoperative or shall in any way be challenged or contested or cease to
give or provide the respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
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moratorium or other similar laws generally affecting creditors rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law);
9.1.9
Events Relating to Plans and Benefit Arrangements
. (i) An ERISA Event occurs
with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $25,000,000, or (ii) Borrower or
any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $25,000,000;
9.1.10
Change of Control
. (i) Any person or group of persons (within the meaning of
Sections 13(d) or 14(a) of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) 30% or more of the voting capital stock of the Company; or (ii)
within a period of twelve (12) consecutive calendar months, individuals who were directors of the
Company on the first day of such period shall cease to constitute a majority of the board of
directors of the Company.
9.1.11
Relief Proceedings
. (i) A Relief Proceeding shall have been instituted against
the Company, any other Borrower, or any of the Companys Significant Subsidiaries and such Relief
Proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60)
consecutive days or such court shall enter a decree or order granting any of the relief sought in
such Relief Proceeding, (ii) the Company, any other Borrower, or any of the Companys Significant
Subsidiaries institutes, or takes any action in furtherance of, a Relief Proceeding, or (iii) the
Company, any other Borrower, or any of the Companys Significant Subsidiaries ceases to be solvent
or admits in writing its inability to pay its debts as they mature.
9.2
Consequences of Event of Default.
9.2.1
Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings
. If an Event of Default specified under Sections 9.1.1 through 9.1.10 shall occur
and be continuing, the Lenders and the Administrative Agent shall be under no further obligation to
make Loans and the Issuing Lender shall be under no obligation to issue Letters of Credit and the
Administrative Agent may, and upon the request of the Required Lenders, shall (i) by written notice
to the Borrowers, declare the unpaid principal amount of the Loans then outstanding and all
interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the
Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon
become and be immediately due and payable to the Administrative Agent for the benefit of each
Lender without presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, and (ii) terminate any Letter of Credit that may be terminated in
accordance with its terms and/or require the Borrowers to, and the Borrowers shall thereupon,
deposit in a non-interest-bearing account with the Administrative Agent, as cash collateral for its
Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any
time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrowers
hereby pledge to the Administrative Agent and the Lenders, and grants to the Administrative Agent
and the Lenders a security interest in, all such cash as security for such Obligations; and
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9.2.2
Bankruptcy, Insolvency or Reorganization Proceedings
. If an Event of Default
specified under Section 9.1.11 [Relief Proceedings] shall occur, the Lenders shall be under no
further obligations to make Loans hereunder and the Issuing Lender shall be under no obligation to
issue Letters of Credit and the unpaid principal amount of the Loans then outstanding and all
interest accrued thereon, the Unpaid Drawings, any unpaid fees and all other Indebtedness of the
Borrowers to the Lenders hereunder and thereunder shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and
the Borrowers shall immediately deposit in a non-interest-bearing account with the Administrative
Agent, as cash collateral for its Obligations under the Loan Documents, an amount equal to the
maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters
of Credit, and the Borrowers hereby pledges to the Administrative Agent and the Lenders, and grants
to the Administrative Agent and the Lenders a security interest in, all such cash as security for
such Obligations; and
9.2.3
Set-off
. If an Event of Default shall have occurred and be continuing, each
Lender, the Issuing Lender, and each of their respective Affiliates and any participant of such
Lender or Affiliate which has agreed in writing to be bound by the provisions of Section 5.3
[Sharing of Payments by Lenders] is hereby authorized at any time and from time to time, to the
fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the Issuing Lender or any such
Affiliate or participant to or for the credit or the account of any Borrower against any and all of
the Obligations of such Borrower now or hereafter existing under this Agreement or any other Loan
Document to such Lender, the Issuing Lender, Affiliate or participant, irrespective of whether or
not such Lender, Issuing Lender, Affiliate or participant shall have made any demand under this
Agreement or any other Loan Document and although such Obligations of the Borrowers or such
Borrower may be contingent or unmatured or are owed to a branch or office of such Lender or the
Issuing Lender different from the branch or office holding such deposit or obligated on such
Indebtedness. The rights of each Lender, the Issuing Lender and their respective Affiliates and
participants under this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender, the Issuing Lender or their respective Affiliates and
participants may have. Each Lender and the Issuing Lender agrees to notify the Borrowers and the
Administrative Agent promptly after any such setoff and application; provided that the failure to
give such notice shall not affect the validity of such setoff and application; and
9.2.4
Application of Proceeds
. From and after the date on which the Administrative
Agent has taken any action pursuant to this Section 9.2 and until all Obligations of the Borrowers
have been paid in full, any and all proceeds received by the Administrative Agent, the Issuing
Lender or any other Lender shall, unless otherwise required by the terms of the other Loan
Documents or by applicable law, be applied as follows:
(i) first, to reimburse the Administrative Agent and the Lenders for out-of-pocket costs,
expenses and disbursements, including reasonable attorneys and paralegals fees and legal
expenses, incurred by the Administrative Agent or the Lenders in connection with the collection of
any Obligations of any of the Borrowers under any of the Loan Documents;
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(ii) second, to the repayment of all Obligations then due and unpaid of the Borrowers to
the Lenders or their Affiliates incurred under this Agreement or any of the other Loan Documents
and to cash collateralize the Letter of Credit Obligations, ratably among the Lenders in proportion
to the respective amounts payable to them with respect to such Obligations; and
(iii) the balance, if any, as required by Law.
10.
THE ADMINISTRATIVE AGENT
10.1
Appointment and Authority.
Each of the Lenders and the Issuing Lender hereby
irrevocably appoints PNC to act on its behalf as the Administrative Agent hereunder and under the
other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental thereto. The
provisions of this Section 10 are solely for the benefit of the Administrative Agent, the Lenders
and the Issuing Lender, and neither the Borrowers nor any other Borrower shall have rights as a
third party beneficiary of any of such provisions.
10.2
Rights as a Lender.
The Person serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term Lender or Lenders
shall, unless otherwise expressly indicated or unless the context otherwise requires, include the
Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and
its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with the Borrowers or any
Consolidated Subsidiary or other Affiliate thereof as if such Person were not the Administrative
Agent hereunder and without any duty to account therefor to the Lenders.
10.3
Exculpatory Provisions.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a
Potential Default or Event of Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan
Documents that the Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Loan Documents);
provided
that the Administrative Agent shall
not be required to take any action that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law;
and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and shall not be liable for the failure to disclose, any information relating to
the Borrowers or any of their Affiliates that is communicated to or
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obtained by the Person serving as the Administrative Agent or any of its Affiliates in any
capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 12.1 [Modifications, Amendments or
Waivers] and 9.2 [Consequences of Event of Default]) or (ii) in the absence of its own gross
negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge
of any Potential Default or Event of Default unless and until notice describing such Potential
Default or Event of Default is given to the Administrative Agent by the Borrowers, a Lender or the
Issuing Lender.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Potential Default or Event of Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document or (v) the satisfaction of any condition set forth in Section 7 [Conditions
of Lending and Issuance of Letters of Credit] or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.
10.4
Reliance by Administrative Agent.
The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including any electronic message,
Internet or intranet website posting or other distribution) believed by it to be genuine and to
have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender,
the Administrative Agent may presume that such condition is satisfactory to such Lender or the
Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such
Lender or the Issuing Lender prior to the making of such Loan or the issuance of such Letter of
Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the
Borrowers), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.
10.5
Delegation of Duties.
The Administrative Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan Document by or through
any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any
such sub-agent may perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this Section
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10 shall apply to any such sub-agent and to the Related Parties of the Administrative Agent
and any such sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities as Administrative
Agent.
10.6
Resignation of Administrative Agent.
The Administrative Agent may at any time
give notice of its resignation to the Lenders, the Issuing Lender and the Borrowers. Upon receipt
of any such notice of resignation, the Required Lenders shall have the right, with approval from
the Borrowers (so long as no Event of Default has occurred and is continuing), to appoint a
successor, such approval not to be unreasonably withheld or delayed. If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such appointment within
thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may on behalf of the Lenders and the Issuing Lender, appoint a
successor Administrative Agent;
provided
that if the Administrative Agent shall notify the
Borrowers and the Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice and (i) the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder and under the
other Loan Documents (except that in the case of any collateral security held by the Administrative
Agent on behalf of the Lenders or the Issuing Lender under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (ii) all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be made by or to each
Lender and the Issuing Lender directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section 10.6. Upon the acceptance of a
successors appointment as Administrative Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this Section). The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrowers and such successor. After the retiring Administrative Agents resignation
hereunder and under the other Loan Documents, the provisions of this Section 10 and Section 12.3
[Expenses; Indemnity; Damage Waiver] shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.
If PNC resigns as Administrative Agent under this Section 10.6, PNC shall also resign as an
Issuing Lender. Upon the appointment of a successor Administrative Agent hereunder, such successor
shall (i) succeed to all of the rights, powers, privileges and duties of PNC as the retiring
Issuing Lender and Administrative Agent and PNC shall be discharged from all of its respective
duties and obligations as Issuing Lender and Administrative Agent under the Loan Documents, and
(ii) issue letters of credit in substitution for the Letters of Credit issued by PNC, if any,
outstanding at the time of such succession or make other arrangement satisfactory to PNC to
effectively assume the obligations of PNC with respect to such Letters of Credit.
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10.7
Non-Reliance on Administrative Agent and Other Lenders.
Each Lender and the
Issuing Lender acknowledges that it has, independently and without reliance upon the Administrative
Agent or any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently
and without reliance upon the Administrative Agent or any other Lender or any of their Related
Parties and based on such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document furnished hereunder or
thereunder.
10.8
No Other Duties, etc.
Anything herein to the contrary notwithstanding, none of
the Lenders, the Arrangers, the Co-Syndication Agents, the Co-Documentation Agents or other parties
listed on the cover page hereof shall have any powers, duties or responsibilities under this
Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the Issuing Lender hereunder.
10.9
Administrative Agents Fee.
The Borrowers shall pay to the Administrative Agent
a nonrefundable fee (the
Administrative Agents Fee
) under the terms of a letter (the
Administrative Agents Letter
) between the Borrowers and Administrative Agent, as amended from
time to time.
10.10
No Reliance on Administrative Agents Customer Identification Program.
Each
Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on the Administrative Agent to carry out such Lenders, Affiliates,
participants or assignees customer identification program, or other obligations required or
imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
CIP Regulations
),
or any other Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with any of the Borrowers, their Affiliates or their agents, the Loan
Documents or the transactions hereunder or contemplated hereby: (i) any identity verification
procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices
or (v) other procedures required under the CIP Regulations or such other Laws.
11. GUARANTY
11.1
Guaranty by the Company
. The Company hereby irrevocably and unconditionally
guarantees, for the benefit of the Benefited Creditors, all of the following (collectively, the
Company Guaranteed Obligations): (a) the principal of and interest on the Notes issued by, and
the Loans made to, and the other Obligations of, the Foreign Borrowers under this Agreement, and
(b) all reimbursement obligations and Unpaid Drawings with respect to Letters of Credit issued for
the benefit of any Borrower (other than the Company) under this Agreement, in all cases under
subparts (a) or (b) above, whether now existing, or hereafter incurred or arising, including any
such interest or other amounts incurred or arising during the pendency of any bankruptcy,
insolvency, reorganization, receivership or similar proceeding, regardless of whether allowed or
allowable in such proceeding or subject to an automatic stay
77
under Section 362(a) of the Bankruptcy Code. Upon failure by any Borrower to pay punctually any of
the Company Guaranteed Obligations, the Company shall forthwith on demand by the Administrative
Agent pay the amount not so paid at the place and in the currency and otherwise in the manner
specified in this Agreement or any other applicable agreement or instrument.
11.2
Additional Undertaking
. As a separate, additional and continuing obligation, the
Company unconditionally and irrevocably undertakes and agrees, for the benefit of the Benefited
Creditors that, should any amounts not be recoverable from the Company under Section 11.1 [Guaranty
by the Company] for any reason whatsoever (including, without limitation, by reason of any
provision of any Loan Document or any other agreement or instrument executed in connection
therewith being or becoming void, unenforceable, or otherwise invalid under any applicable law)
then, notwithstanding any notice or knowledge thereof by any Lender, the Administrative Agent, any
of their respective Affiliates, or any other Person, at any time, the Company as sole, original and
independent obligor, upon demand by the Administrative Agent, will make payment to the
Administrative Agent, for the account of the Benefited Creditors, of all such obligations not so
recoverable by way of full indemnity, in such currency and otherwise in such manner as is provided
in the Loan Documents or any other applicable agreement or instrument.
11.3
Guaranty Unconditional
. The obligations of the Company under this Section 11 shall be
unconditional and absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by the occurrence, one or more times, of any of the
following:
11.3.1 any extension, renewal, settlement, compromise, waiver or release in respect to any
Company Guaranteed Obligation under any agreement or instrument, by operation of law or otherwise;
11.3.2 any modification or amendment of or supplement to this Agreement, any Note, any other
Loan Document, or any agreement or instrument evidencing or relating to any Company Guaranteed
Obligation;
11.3.3 any release, non-perfection or invalidity of any direct or indirect security for any
Company Guaranteed Obligation under any agreement or instrument evidencing or relating to any
Company Guaranteed Obligation;
11.3.4 any change in the corporate or limited liability company existence, structure or
ownership of any Borrower or other Consolidated Subsidiary or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Borrower or other Consolidated Subsidiary
or its assets or any resulting release or discharge of any obligation of any Borrower or other
Consolidated Subsidiary contained in any agreement or instrument evidencing or relating to any
Company Guaranteed Obligation;
11.3.5 the existence of any claim, set-off or other rights which the Company may have at any
time against any other Borrower, the Administrative Agent, any Lender, any Affiliate of any Lender
or any other person, whether in connection herewith or any unrelated transactions;
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11.3.6 any invalidity or unenforceability relating to or against any other Borrower for any
reason of any agreement or instrument evidencing or relating to any Company Guaranteed Obligation,
or any provision of applicable law or regulation purporting to prohibit the payment by any Borrower
of any of the Company Guaranteed Obligations; or
11.3.7 any other act or omission of any kind by any other Borrower, the Administrative Agent,
any Lender or any other Person or any other circumstance whatsoever which might, but for the
provisions of this Section, constitute a legal or equitable discharge of the Companys obligations
under this Section other than the irrevocable payment in full of all Company Guaranteed Obligations
and the termination of the Commitments hereunder.
11.4
Company Obligations to Remain in Effect; Restoration
. The Companys obligations under
this Section shall remain in full force and effect until the indefeasible payment in full of all of
the Obligations and the termination of the Commitments hereunder, and the principal of and interest
on the Notes and other Company Guaranteed Obligations, and all other amounts payable by the
Company, any other Borrower or other Consolidated Subsidiary, under the Loan Documents or any other
agreement or instrument evidencing or relating to any of the Company Guaranteed Obligations, shall
have been paid in full. If at any time any payment of any of the Company Guaranteed Obligations is
rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of such Borrower, the Companys obligations under this Article with respect to such
payment shall be reinstated at such time as though such payment had been due but not made at such
time.
11.5
Waiver of Acceptance, etc
. The Company irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as any requirement
that at any time any action be taken by any person against any other Borrower or any other Person,
or against any collateral or guaranty of any other Person.
11.6
Subrogation
. Until the indefeasible payment in full of all of the Obligations and the
termination of the Commitments hereunder, the Company shall have no rights, by operation of law or
otherwise, upon making any payment under this Section to be subrogated to the rights of the payee
against any other Borrower with respect to such payment or otherwise to be reimbursed, indemnified
or exonerated by any such Borrower in respect thereof.
11.7
Effect of Stay
. In the event that acceleration of the time for payment of any amount
payable by any Borrower under any Company Guaranteed Obligation is stayed upon insolvency,
bankruptcy or reorganization of such Borrower, all such amounts otherwise subject to acceleration
under the terms of any applicable agreement or instrument evidencing or relating to any Company
Guaranteed Obligation shall nonetheless be payable by the Company under this Section forthwith on
demand by the Administrative Agent.
12.
MISCELLANEOUS
12.1
Modifications, Amendments or Waivers.
With the written consent of the Required
Lenders, the Administrative Agent, acting on behalf of all the Lenders, and the Borrowers, on
behalf of the Borrowers, may from time to time enter into written agreements amending or changing
any provision of this Agreement or any other Loan Document or the
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rights of the Lenders or the Borrowers hereunder or thereunder, or may grant written waivers
or consents hereunder or thereunder. Any such agreement, waiver or consent made with such written
consent shall be effective to bind all the Lenders and the Borrowers;
provided
, that no
such agreement, waiver or consent may be made which will:
12.1.1
Increase of Commitment
. Subject to Section 2.1.2 [Discretionary Increase in
Revolving Credit Commitments], increase the amount of the Revolving Credit Commitment of any Lender
hereunder without the consent of such Lender;
12.1.2
Extension of Payment; Reduction of Principal Interest or Fees; Modification of
Terms of Payment
. Whether or not any Loans are outstanding, extend the Expiration Date or the
time for payment of principal or interest of any Loan (excluding the due date of any mandatory
prepayment of a Loan), any fee payable to any Lender, or reduce the principal amount of or the rate
of interest borne by any Loan or the fees payable to any Lender, without the consent of each Lender
directly affected thereby;
12.1.3
Release of Companys Guaranty
. Release the Company from its Obligations under
Article 11 [Guaranty] hereof without the consent of all Lenders (other than Defaulting Lenders); or
12.1.4
Miscellaneous
. Amend Section 5.2 [Pro Rata Treatment of Lenders], 10.3
[Exculpatory Provisions] or 5.3 [Sharing of Payments by Lenders] or this Section 12.1, alter any
provision regarding the pro rata treatment of the Lenders or requiring all Lenders to authorize the
taking of any action or reduce any percentage specified in the definition of Required Lenders, in
each case without the consent of all of the Lenders (other than Defaulting Lenders);
provided
that no agreement, waiver or consent which would modify the interests, rights or
obligations of the Administrative Agent or the Issuing Lender may be made without the written
consent of such Administrative Agent or Issuing Lender, as applicable, and
provided,
further
that, if in connection with any proposed waiver, amendment or modification referred to
in Sections 12.1.1 through 12.1.4 above, the consent of the Required Lenders is obtained but the
consent of one or more of such other Lenders whose consent is required is not obtained (each a
Non-Consenting Lender
), then the Borrowers shall have the right to replace any such
Non-Consenting Lender with one or more replacement Lenders pursuant to Section 5.6.2 [Replacement
of a Lender].
12.2
No Implied Waivers; Cumulative Remedies.
No course of dealing and no delay or
failure of the Administrative Agent or any Lender in exercising any right, power, remedy or
privilege under this Agreement or any other Loan Document shall affect any other or future exercise
thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude
any further exercise thereof or of any other right, power, remedy or privilege. The rights and
remedies of the Administrative Agent and the Lenders under this Agreement and any other Loan
Documents are cumulative and not exclusive of any rights or remedies which they would otherwise
have.
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12.3
Expenses; Indemnity; Damage Waiver.
12.3.1
Costs and Expenses
. The Borrowers shall pay (i) all out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent), and shall pay all fees and time charges and
disbursements for attorneys who may be employees of the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all out-of-pocket expenses
incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iii) all out-of-pocket expenses
incurred by the Administrative Agent, any Lender or the Issuing Lender (including the fees, charges
and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Lender),
and shall pay all fees and time charges for attorneys who may be employees of the Administrative
Agent, any Lender or the Issuing Lender, in connection with the enforcement or protection of its
rights (A) in connection with this Agreement and the other Loan Documents, including its rights
under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit, and (iv) all reasonable out-of-pocket
expenses of the Administrative Agents regular employees and agents engaged periodically to perform
audits of the Borrowers books, records and business properties.
12.3.2
Indemnification by the Borrowers
. Subject to Section 12.14, the Borrowers
shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing
Lender, and each Related Party of any of the foregoing Persons (each such Person being called an
Indemnitee
) against, and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including the fees, charges and disbursements of any counsel for
any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time
charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any
Indemnitee or asserted against any Indemnitee by any third party or by the Borrowers or any other
Borrower arising out of, in connection with, or as a result of (i) the execution or delivery of
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance or nonperformance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby,
(ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including
any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) breach of representations, warranties or covenants of the Borrowers under
the Loan Documents, or (iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, including any such items or losses relating to or
arising under Environmental Laws or pertaining to environmental matters, whether based on contract,
tort or any other theory, whether brought by a third party or by the Borrowers or any other
Borrower, and regardless of whether any Indemnitee is a party thereto;
provided
that such
indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (x) are
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determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a
claim brought by the Borrowers or any other Borrower against an Indemnitee for breach in bad faith
of such Indemnitees obligations hereunder or under any other Loan Document, if the Borrowers or
such Borrower has obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction. Notwithstanding the foregoing, a Foreign Borrower
shall only be required to indemnify any Indemnitee pursuant to this Section to the extent that any
such losses, liabilities, claims, penalties, damages or expenses have been caused by such Foreign
Borrower or are otherwise directly related or attributable to such Foreign Borrower.
12.3.3
Reimbursement by Lenders
. To the extent that the Borrowers for any reason fail
to indefeasibly pay any amount required under Sections 12.3.1 [Costs and Expenses] or
Indemnification by the Borrowers
. [Indemnification by the Borrowers] to be paid by it to
the Administrative Agent (or any sub-agent thereof), the Issuing Lender or any Related Party of any
of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), the Issuing Lender or such Related Party, as the case may be, such Lenders Ratable
Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount,
provided
that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, (A) was incurred by or asserted
against the Administrative Agent (or any such sub-agent) or the Issuing Lender in its capacity as
such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or
any such sub-agent) or Issuing Lender in connection with such capacity; and (B) was not determined
by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of the Administrative Agent, the Issuing Lender or
any Related Party of any of the foregoing.
12.3.4
Waiver of Consequential Damages, Etc.
To the fullest extent permitted by
applicable Law, the Borrowers shall not assert, and each of the Borrowers hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as
a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of
the proceeds thereof. No Indemnitee referred to in Section 12.3.2 [Indemnification by the
Borrowers] shall be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement or the other Loan Documents or
the transactions contemplated hereby or thereby.
12.3.5
Payments
. All amounts due under this Section shall be payable not later than
ten (10) days after demand therefor.
12.4
Holidays.
Whenever payment of a Loan to be made or taken hereunder shall be due
on a day which is not a Business Day such payment shall be due on the next Business Day (except as
provided in Section 4.2 [Interest Periods]) and such extension of time shall be included in
computing interest and fees, except that the Loans shall be due on the Business Day preceding the
Expiration Date if the Expiration Date is not a Business Day. Whenever any
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payment or action to be made or taken hereunder (other than payment of the Loans) shall be
stated to be due on a day which is not a Business Day, such payment or action shall be made or
taken on the next following Business Day, and such extension of time shall not be included in
computing interest or fees, if any, in connection with such payment or action.
12.5
Notices; Effectiveness; Electronic Communication.
12.5.1
Notices Generally
. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in Section 12.5.2 [Electronic
Communications]), all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier (i) if to a Lender, to it at its address set forth in its administrative
questionnaire, or (ii) if to any other Person, to it at its address set forth on
Schedule
1.1(B)
.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the extent provided in
Section 12.5.2 [Electronic Communications], shall be effective as provided in such Section.
12.5.2
Electronic Communications
. Notices and other communications to the Lenders and
the Issuing Lender hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative
Agent;
provided
that the foregoing shall not apply to notices to any Lender or the Issuing
Lender if such Lender or the Issuing Lender, as applicable, has notified the Administrative Agent
that it is incapable of receiving notices under such Article by electronic communication. The
Administrative Agent or the Borrowers may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to procedures approved by it;
provided
that approval of such procedures may be limited to particular notices or
communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the senders receipt of an
acknowledgement from the intended recipient (such as by the return receipt requested function, as
available, return e-mail or other written acknowledgement);
provided
that if such notice or
other communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
12.5.3
Change of Address, Etc.
Any party hereto may change its address, e-mail
address or telecopier number for notices and other communications hereunder by notice to the other
parties hereto.
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12.6
Severability.
The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
12.7
Duration; Survival.
All representations and warranties of the Borrowers
contained herein or made in connection herewith shall survive the execution and delivery of this
Agreement, the completion of the transactions hereunder and Payment In Full. All covenants and
agreements of the Borrowers contained herein relating to the payment of principal, interest,
premiums, additional compensation or expenses and indemnification, including those set forth in the
Notes, Section 5 [Payments] and Section 12.3 [Expenses; Indemnity; Damage Waiver], shall survive
Payment In Full. All other covenants and agreements of the Borrowers shall continue in full force
and effect from and after the date hereof and until Payment In Full.
12.8
Successors and Assigns.
12.8.1
Successors and Assigns Generally
. The provisions of this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their respective successors and
assigns permitted hereby, except that neither the Company nor any other Borrower may assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the provisions of
Section 12.8.2 [Assignments by Lenders], (ii) by way of participation in accordance with the
provisions of Section 12.8.4 [Participations], or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of Section 12.8.6 [Certain Pledges; Successors and
Assigns Generally] (and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and assigns permitted
hereby, Participants to the extent provided in Section 12.8.4 [Participations] and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the
Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
12.8.2
Assignments by Lenders
. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it);
provided
that any such
assignment shall be subject to the following conditions:
(i)
Minimum Amounts
.
(A) in the case of an assignment of the entire remaining amount of the assigning Lenders
Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned, except as set forth
in Section 12.8.8 [Netherland Bank Rules]; and
84
(B) in any case not described in clause (i)(A) of this Section 12.8.2, the aggregate amount of
the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable
Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment and Assumption
Agreement with respect to such assignment is delivered to the Administrative Agent or, if Trade
Date is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be
less than $5,000,000, in respect of the Revolving Credit Commitment of the assigning Lender, unless
each of the Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or
delayed).
(ii)
Proportionate Amounts
. Each partial assignment shall be made as an assignment of
a proportionate part of all the assigning Lenders rights and obligations under this Agreement with
respect to the Loan or the Commitment assigned.
(iii)
Required Consents
. No consent shall be required for any assignment except for
the consent of the Administrative Agent (which shall not be unreasonably withheld or delayed) and:
(A) the consent of the Company (such consent not to be unreasonably withheld or delayed) shall
be required unless (x) an Event of Default has occurred and is continuing at the time of such
assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;
provided that each Borrower shall be deemed to have consented to any such assignment unless it has
objected thereto by written notice to the Administrative Agent within five (5) Business Days after
having received notice thereof; and
(B) the consent of the Issuing Lender (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of the assignee to
participate in exposure under one or more Letters of Credit (whether or not then outstanding).
(iv)
Assignment and Assumption Agreement
. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption Agreement, together
with a processing and recordation fee of $3,500.00, and the assignee, if it is not a Lender, shall
deliver to the Administrative Agent an administrative questionnaire provided by the Administrative
Agent.
(v)
No Assignment to Borrowers
. No such assignment shall be made to the Borrowers or
any of the Borrowers Affiliates or Consolidated Subsidiaries.
(vi)
No Assignment to Natural Persons
. No such assignment shall be made to a natural
person.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 12.8.3
[Register], from and after the effective date specified in each Assignment and Assumption
Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to
85
the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its
obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement
covering all of the assigning Lenders rights and obligations under this Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 4.4
[Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available], 5.8 [Increased
Costs], and 12.3 [Expenses, Indemnity; Damage Waiver] with respect to facts and circumstances
occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender
of rights or obligations under this Agreement that does not comply with this Section 12.8.2 shall
be treated for purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 12.8.4 [Participations].
12.8.3
Register
. The Administrative Agent, acting solely for this purpose as an agent
of the Borrowers, shall maintain a record of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time. Such register shall be conclusive, and the Borrowers, the Administrative
Agent and the Lenders may treat each Person whose name is in such register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. Such register shall be available for inspection by the Borrowers and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
12.8.4
Participations
. Any Lender may at any time, without the consent of, or notice
to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a
natural person or the Borrowers or any of the Borrowers Affiliates or Consolidated Subsidiaries)
(each, a
Participant
) in all or a portion of such Lenders rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing to it);
provided
that (i) such Lenders obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent and the Lenders, Issuing Lender
shall continue to deal solely and directly with such Lender in connection with such Lenders rights
and obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement;
provided
that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver with respect to Sections 12.1.1
[Increase of Commitment] or 12.1.2 [Extension of Payment, Etc.]. Subject to Section 12.8.5
[Limitations upon Participant Rights Successors and Assigns Generally], the Borrowers agrees that
each Participant shall be entitled to the benefits of Sections 4.4 [Euro-Rate Unascertainable;
Illegality; Increased Costs; Deposits Not Available] and 5.8 [Increased Costs] to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.8.2
[Assignments by Lenders]. To the extent permitted by Law, each Participant also shall be entitled
to the benefits of Section 9.2.3 [Setoff] as though it were a Lender;
provided
such
Participant agrees to be subject to Section 5.3 [Sharing of Payments by Lenders] as though it were
a Lender.
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12.8.5
Limitations upon Participant Rights Successors and Assigns Generally
. A
Participant shall not be entitled to receive any greater payment under Sections 5.8 [Increased
Costs], 5.9 [Taxes] or 12.3 [ Expenses; Indemnity; Damage Waiver] than the applicable Lender would
have been entitled to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrowers prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to
the benefits of Section 5.9 [Taxes] unless the Borrowers are notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with
Section 5.9.5 [Status of Lenders] as though it were a Lender.
12.8.6
Certain Pledges; Successors and Assigns Generally
. Any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank;
provided
that no such pledge or assignment shall release such Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.
12.8.7
Disapplication or Amendment of the Swiss Bank Rules
. If the Swiss Bank Rules
are disapplied or amended in any material respect from their form as of the date hereof, the Swiss
Borrowers or the Administrative Agent may (and the Administrative Agent shall, at the request of
the Required Lenders) request in writing to the Administrative Agent or the Swiss Borrowers,
respectively, that this Agreement be amended to reflect such change. Thereafter, the Swiss
Borrowers and the Lenders shall enter into discussions with a view to agreeing on any amendments
required to be made to this Agreement to place the Swiss Borrowers and the Lenders in substantially
the same position (or otherwise in a position acceptable to the Swiss Borrower and the Lenders)
from a Swiss withholding Tax viewpoint as they would have been in if the change of which they have
been notified under this Section 12.8.7 had not happened. Any agreement between the Swiss Borrowers
and the Administrative Agent will be, with the prior consent of the Lenders, binding on all the
parties hereto; if no agreement is reached under this Section 12.8.7, this Agreement shall continue
in effect in accordance with its terms.
12.8.8
Netherlands Bank Rules
. The share of each new Lender located in or organized
under the laws of the Netherlands in the Loans and the share of each new Lender hereunder in the
Loans to a Netherlands Borrower (or its portion in the rights and obligations relating to such
Loans transferred by an existing Lender) shall initially be at least the Dollar Equivalent of EUR
50,000 (or such higher amount as may be required at the time of the transfer in order for the New
Lender to qualify as a Professional Market Party) or such new Lender shall otherwise qualify as a
Professional Market Party, and each such new Lender shall confirm the foregoing on the date on
which it becomes a Lender hereunder by execution and delivery of its Assignment and Assumption
Agreement in which the new Lender confirms that it is a Professional Market Party.
12.9
Confidentiality.
12.9.1
General
. Each of the Administrative Agent, the Lenders and the Issuing Lender
agrees to maintain the confidentiality of the Information, except that Information may be
87
disclosed (i) to its Affiliates and to its and its Affiliates respective partners, directors,
officers, employees, agents, advisors and other representatives (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to the extent requested by
any regulatory authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (iii) to the extent
required by applicable Laws or regulations or by any subpoena or similar legal process, (iv) to any
other party hereto, (v) in connection with the exercise of any remedies hereunder or under any
other Loan Document or any action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement
containing provisions substantially the same as those of this Section, to (A) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrowers and their obligations, (vii) with the consent of
the Borrowers or (viii) to the extent such Information (Y) becomes publicly available other than as
a result of a breach of this Section or (Z) becomes available to the Administrative Agent, any
Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a
source other than the Borrowers or the other Borrowers. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.
12.9.2
Sharing Information With Affiliates of the Lenders
. Each Borrower acknowledges
that from time to time financial advisory, investment banking and other services may be offered or
provided to the Borrowers or one or more of their Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Consolidated Subsidiaries or Affiliates of such Lender
and each of the Borrowers hereby authorizes each Lender to share any information delivered to such
Lender by such Borrower and its Consolidated Subsidiaries pursuant to this Agreement to any such
Consolidated Subsidiary or Affiliate subject to the provisions of Section 12.9.1 [General].
12.10
Counterparts; Integration; Effectiveness.
12.10.1
Counterparts; Integration; Effectiveness
. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents, and any separate letter agreements with respect to
fees payable to the Administrative Agent, constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof including any prior confidentiality agreements
and commitments. Except as provided in Section 7 [Conditions Of Lending And Issuance Of Letters Of
Credit], this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by
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telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this
Agreement.
12.11
CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS;
WAIVER OF JURY TRIAL.
12.11.1
Governing Law
. This Agreement shall be deemed to be a contract under the Laws
of the State of Ohio without regard to its conflict of laws principles. Each standby Letter of
Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and
Practice for Documentary Credits, as most recently published by the International Chamber of
Commerce (the
ICC
) at the time of issuance (
UCP
) or the rules of the International Standby
Practices (ICC Publication Number 590) (
ISP98
), as determined by the Issuing Lender, and each
trade Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent
therewith, the Laws of the State of Ohio without regard to is conflict of laws principles.
12.11.2
SUBMISSION TO JURISDICTION
. THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE U.S. FEDERAL OR OHIO STATE COURT SITTING IN CLEVELAND AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH OHIO STATE COURT OR, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY
LENDER OR THE ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION.
12.11.3
WAIVER OF VENUE
. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION
12.11. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
89
PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
12.11.4
SERVICE OF PROCESS
. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 12.5 [NOTICES; EFFECTIVENESS; ELECTRONIC
COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
12.11.5
WAIVER OF JURY TRIAL
. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
12.12
USA PATRIOT Act Notice.
Each Lender that is subject to the USA PATRIOT Act and
the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Borrowers
that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and
record information that identifies the Borrowers, which information includes the name and address
of Borrowers and other information that will allow such Lender or Administrative Agent, as
applicable, to identify the Borrowers in accordance with the USA PATRIOT Act.
12.13
Borrower Agent.
Each of the Borrowers hereby irrevocably appoints the Company
as its agent for purposes of requesting, continuing and converting Loans (including all elections
of interest rates and currencies), for delivering notices as to prepayments and commitment
reductions and for providing consents pursuant to clauses (i) and (iii) of Section 12.8.2
[Assignments by Lenders]. The Administrative Agent shall be entitled to rely in such matters on
all communications delivered by the Company as being delivered on behalf of all Borrowers.
12.14
Foreign Borrowers.
12.14.1
Generally
. Without limiting the joint and several nature of all Domestic
Borrowers Obligations, the Obligations of the Foreign Borrowers shall be several in nature.
12.14.2
Liability of Foreign Borrowers
. The parties intend that this Agreement shall
in all circumstances be interpreted to provide that each Foreign Borrower is
90
liable only for Loans made to such Foreign Borrower, interest on such Loans, such Foreign
Borrowers reimbursement obligations with respect to any Letter of Credit issued for its account
and its ratable share of any of the other Obligations, including, without limitation, general fees,
reimbursements, indemnities and charges hereunder and under any other Loan Document that are
attributable, or attributed as a ratable share, to it. The liability of each Foreign Borrower for
the payment of any of the Obligations or the performance of its covenants, representations and
warranties set forth in this Agreement and the other Loan Documents shall be several from but not
joint with the Obligations of the Company and each other Borrower. Nothing in this Section 12.14
is intended to limit, nor shall it be deemed to limit, any of the liability of the Company or any
Domestic Borrower for any of the Obligations, whether in its primary capacity as a Borrower, as a
Guarantor, at law or otherwise.
12.14.3
Company as Agent
. Each Foreign Borrower, in addition to the appointment of
the Company as the Borrowers agent as provided in Section 12.13 [Borrower Agent], further hereby
irrevocably appoints the Company as its agent to receive the proceeds of any Loans made by the
Lender to any such Foreign Borrower hereunder. The Administrative Agent shall be entitled to rely
in such matters on all communications delivered by the Company as being delivered on behalf of the
Foreign Borrowers.
12.15
Joinder of Borrowers; Release of Foreign Borrowers.
12.15.1
Joinder of Borrowers
. Any Consolidated Subsidiary of the Company which elects
to join this Agreement as a Borrower, pursuant to the terms and provisions of this Agreement, shall
execute and deliver to the Administrative Agent (i) a Borrower Joinder, pursuant to which it shall,
after acceptance of such Borrower Joinder by the Administrative Agent, join this Agreement as a
Domestic Borrower or Foreign Borrower, as applicable, and join each of the other Loan Documents to
which the Domestic Borrower or Foreign Borrower, as applicable, are parties, and (ii) documents in
the forms described in Section 7.1 [First Loans and Letters of Credit] (or foreign jurisdictional
equivalents, if any), modified as appropriate to relate to such Consolidated Subsidiary. The
Company, the other Borrowers and any Borrower joining this Agreement shall also (x) deliver to the
Administrative Agent such amendments or other modifications to the Loan Documents, fully executed
by the appropriate parties thereto, that the Administrative Agent deems necessary or appropriate in
connection with the addition of such Borrower and (y) provide to the Administrative Agent and the
Lenders such other items and shall have satisfied such other conditions as may be reasonably
required by the Administrative Agent or the Lenders. Notwithstanding the foregoing, no Foreign
Borrower may be joined pursuant to this Section 12.15.1 if its inclusion as a Borrower under the
Loan Documents would result in any adverse tax or other legal consequences for the Lenders, as
determined by the Administrative Agent. Joinder of each new Borrower pursuant to this Section
12.15.1 shall be subject to compliance with all the other terms and conditions set forth in this
Agreement and the other Loan Documents, including without limitation Section 8.1.7 [Compliance with
Laws; Use of Proceeds] and Section 5.9 [Taxes].
12.15.2
Release of Foreign Borrowers
. Any Foreign Borrower may from time to time
deliver a termination notice to the Administrative Agent requesting that it no longer be a party
hereto. Such termination shall be effective five (5) Business Days after receipt by the
Administrative Agent so long as all Obligations of such Foreign Borrower have been paid in full
91
(including principal, interest and all other amounts) and no Letter of Credit issued for the
account or benefit of such Foreign Borrower is outstanding;
provided
that, to the extent
this Agreement or any other Loan Document provides for the survival of certain provisions upon
termination hereof, such surviving provisions shall survive a termination under this subSection
with respect to any such Foreign Borrower.
92
[SIGNATURE PAGE TO CREDIT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have
executed this Agreement as of the day and year first above written.
ATTEST:
BORROWERS
|
|
|
|
|
|
RPM INTERNATIONAL INC.
|
|
|
By:
|
/s/ Keith R. Smiley
|
|
|
|
Name:
|
Keith R. Smiley
|
|
|
|
Title:
|
VP, Treasurer and Asst Secretary
|
|
|
|
RPM LUX HOLDCO S.ÀR.L.
|
|
|
By:
|
/s/ Pierre Lentz
|
|
|
|
Name:
|
Pierre Lentz
|
|
|
|
Title:
|
Manager A
|
|
|
|
By:
|
/s/ Edward W. Moore
|
|
|
|
Name:
|
Edward W. Moore
|
|
|
|
Title:
|
Manager B
|
|
|
|
RPOW UK LIMITED
|
|
|
By:
|
/s/ Ronald A. Rice
|
|
|
|
Name:
|
Ronald A. Rice
|
|
|
|
Title:
|
Director
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
RPM EUROPE HOLDCO B.V.
|
|
|
By:
|
/s/ Ronald A. Rice
|
|
|
|
Name:
|
Ronald A. Rice
|
|
|
|
Title:
|
Director
|
|
|
|
RPM CANADA
|
|
|
By:
|
/s/ Edward W. Moore
|
|
|
|
Name:
|
Edward W. Moore
|
|
|
|
Title:
|
Secretary & Committee
Member
|
|
|
|
TREMCO ILLBRUCK COATINGS LIMITED
|
|
|
By:
|
/s/ Edward W. Moore
|
|
|
|
Name:
|
Edward W. Moore
|
|
|
|
Title:
|
Director
|
|
|
|
RPM CANADA COMPANY
|
|
|
By:
|
/s/ Keith R. Smiley
|
|
|
|
Name:
|
Keith R. Smiley
|
|
|
|
Title:
|
Treasurer &
Director
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
TREMCO ASIA PACIFIC PTY. LIMITED
|
|
|
By:
|
/s/
Randall J. Korach
|
|
|
|
Name:
|
Randall J. Korach
|
|
|
|
Title:
|
Director
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
PNC BANK, NATIONAL
ASSOCIATION
,
individually and as
Administrative Agent
|
|
|
By:
|
/s/ Christian S. Brown
|
|
|
|
Name:
|
Christian S.
Brown
|
|
|
|
Title:
|
Senior Vice
President
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
BANK OF AMERICA, N.A.
|
|
|
By:
|
/s/ Irene Bertozzi Bartenstein
|
|
|
|
Name:
|
Irene Bertozzi
Bartenstein
|
|
|
|
Title:
|
Director
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
|
|
|
By:
|
/s/ Steven M. Buehler
|
|
|
|
Name:
|
Steven M.
Buehler
|
|
|
|
Title:
|
Managing
Director
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
THE BANK OF NOVA SCOTIA
|
|
|
By:
|
/s/ Karen Anillo
|
|
|
|
Name:
|
Karen Anillo
|
|
|
|
Title:
|
Director
|
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
|
|
|
By:
|
/s/ Christine A. Howatt
|
|
|
|
Name:
|
Christine Howatt
|
|
|
|
Title:
|
Authorized Signatory
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
KEYBANK NATIONAL ASSOCIATION
|
|
|
By:
|
/s/ Brian P. Fox
|
|
|
|
Name:
|
Brian P. Fox
|
|
|
|
Title:
|
Vice President
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
FIFTH THIRD BANK
AN OHIO BANKING CORPORATION
|
|
|
By:
|
/s/ Roy C. Lanctot
|
|
|
|
Name:
|
Roy C. Lanctot
|
|
|
|
Title:
|
Vice President
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
COMMERZBANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
|
|
|
By:
|
/s/ Patrick Hartweger
|
|
|
|
Name:
|
Patrick Hartweger
|
|
|
|
Title:
|
Managing Director
|
|
|
|
|
|
|
By:
|
/s/ Peter Wesemeier
|
|
|
|
Name:
|
Peter Wesemeier
|
|
|
|
Title:
|
Vice President
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
RBS CITIZENS, N.A.
|
|
|
By:
|
/s/ Joshua Botnick
|
|
|
|
Name:
|
Joshua Botnick
|
|
|
|
Title:
|
Vice President
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
THE HUNTINGTON NATIONAL BANK
|
|
|
By:
|
/s/ Brian H. Gallagher
|
|
|
|
Name:
|
Brian H. Gallagher
|
|
|
|
Title:
|
Senior Vice President
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
THE NORTHERN TRUST COMPANY
|
|
|
By:
|
/s/ Jeffrey P. Sullivan
|
|
|
|
Name:
|
Jeffrey P. Sullivan
|
|
|
|
Title:
|
Vice President
|
|
[SIGNATURE PAGE TO CREDIT AGREEMENT]
|
|
|
|
|
|
FIRSTMERIT BANK, N.A.
|
|
|
By:
|
/s/ Brett A. Johnson
|
|
|
|
Name:
|
Brett A. Johnson
|
|
|
|
Title:
|
Vice President
|
|
SCHEDULE 1.1(A)
PRICING GRID
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standby
|
|
Commercial
|
|
|
|
|
Euro- Rate
|
|
Base Rate
|
|
|
|
Letter of
|
|
Letter of
|
|
|
Debt Rating
|
|
Spread
|
|
Spread
|
|
Facility Fee
|
|
Credit Fee
|
|
Credit Fee
|
Tier I
|
|
A-/ A3 or higher
|
|
105 bps
|
|
5.0 bps
|
|
20 bps
|
|
105 bps
|
|
52.5 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier II
|
|
BBB+/ Baa1
|
|
125 bps
|
|
25.0 bps
|
|
25 bps
|
|
125 bps
|
|
62.5 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier III
|
|
BBB/ Baa2
|
|
145 bps
|
|
45.0 bps
|
|
30 bps
|
|
145 bps
|
|
72.5 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier IV
|
|
BBB-/ Baa3
|
|
165 bps
|
|
65.0 bps
|
|
35 bps
|
|
165 bps
|
|
82.5 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier V
|
|
BB+/ Ba1
|
|
210 bps
|
|
110.0 bps
|
|
40 bps
|
|
210 bps
|
|
105 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier VI
|
|
<BB+/ Ba1
|
|
250 bps
|
|
150.0 bps
|
|
50 bps
|
|
250 bps
|
|
125 bps
|
The Applicable Margin, the Facility Fee and the Applicable Letter of Credit Fee Rate shall be
determined on the Closing Date based on Tier IV.
SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
Part 1 Commitments of Lenders and Addresses for Notices to Lenders
|
|
|
|
|
|
|
|
|
|
|
Amount of
|
|
|
|
|
|
|
Commitment for
|
|
|
|
|
|
|
Revolving Credit
|
|
|
|
|
Lender
|
|
Loans
|
|
|
Ratable Share
|
|
Name: PNC Bank, National Association
Address: 1900 East 9th Street
Locator B7-YB13-34-3
Cleveland, Ohio 44114
Attention: Christian Brown
Telephone: (216) 222-8120
Telecopy: (216) 222-9396
|
|
$
|
55,000,000
|
|
|
|
13.750000000
|
%
|
|
Name: Bank of America, N.A.
Address: 100 Federal Street, MA5-100-09-03
Boston, MA 02110
Attention: Irene Bartenstein
Telephone: (617) 434-2903
Telecopy: (617) 434-0601
|
|
$
|
47,500,000
|
|
|
|
11.875000000
|
%
|
|
Name: Wells Fargo Bank, National Association
Address: 230 W. Monroe Street
Suite 2900 18th Floor
Chicago, Illinois 60606
Attention: Steven Buehler
Telephone: (312) 845-4220
Telecopy: (312) 845-8606
|
|
$
|
47,500,000
|
|
|
|
11.875000000
|
%
|
|
Name: The Bank of Nova Scotia
Address: 711 Louisiana Street Suite 1400
Houston, Texas 77002
Attention: Karen Anillo
Telephone: (713) 759-3452
Telecopy: (832) 426-6023
|
|
$
|
40,000,000
|
|
|
|
10.000000000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Amount of
|
|
|
|
|
|
|
Commitment for
|
|
|
|
|
|
|
Revolving Credit
|
|
|
|
|
Lender
|
|
Loans
|
|
|
Ratable Share
|
|
Name: The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Address:1251 Avenue of Americas
New York, NY 10020-1104
Attention: John DiLegge
Telephone: (312) 696-4680
Telecopy: (312) 696-4535
|
|
$
|
40,000,000
|
|
|
|
10.000000000
|
%
|
|
Name: KeyBank National Association
Address:127 Public Square
Cleveland, Ohio 44114
Attention: Brian Fox
Telephone: (216) 689-4599
Telecopy: (216) 689-4649
|
|
$
|
35,000,000
|
|
|
|
8.750000000
|
%
|
|
Name: Fifth Third Bank an Ohio Banking
Corporation
Address: 38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Martin H. McGinty
Telephone: (216) 274-5098
Telecopy: (216) 274-5617
|
|
$
|
35,000,000
|
|
|
|
8.750000000
|
%
|
|
Name: Commerzbank AG
Address: 2 World Financial Center
New York, New York 10281-1050
Attention: Patrick Hartweger
Telephone: (212) 266-7726
Telecopy: (212) 266-7565
|
|
$
|
30,000,000
|
|
|
|
7.500000000
|
%
|
|
Name: RBS Citizens, N.A.
Address:1215 Superior Avenue
Cleveland, Ohio 44114
Attention: Joshua Botnick
Telephone: (216) 277-0250
|
|
$
|
25,000,000
|
|
|
|
6.250000000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Amount of
|
|
|
|
|
|
|
Commitment for
|
|
|
|
|
|
|
Revolving Credit
|
|
|
|
|
Lender
|
|
Loans
|
|
|
Ratable Share
|
|
Name: The Huntington National Bank
Address:41 South High Street
Columbus, Ohio 43215
Attention: Amanda M. Sigg
Telephone: (614) 480-4767
Telecopy: (877) 274-8593
|
|
$
|
20,000,000
|
|
|
|
5.000000000
|
%
|
|
Name: The Northern Trust Company
Address: 50 S. La Salle Street
Chicago, Illinois 60603
Attention: Jeffrey Sullivan
Telephone: (312) 444-7634
Telecopy: (312) 557-1425
|
|
$
|
15,000,000
|
|
|
|
3.750000000
|
%
|
|
Name: FirstMerit Bank, N.A.
Address: 106 South Main Street
Akron, Ohio 44308
Attention: Robert G. Morlan
Telephone: (330) 996-6420
Telecopy: (330) 996-6394
|
|
$
|
10,000,000
|
|
|
|
2.500000000
|
%
|
|
Total
|
|
$
|
400,000,000
|
|
|
|
100.000000000
|
%
|
|
|
|
|
|
|
|
SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
Part 2 Addresses for Notices to Borrowers:
ADMINISTRATIVE AGENT
Name: PNC Bank, National Association
Address: 1900 East 9th Street
Locator B7-YB13-34-3
Cleveland, Ohio 44114
Attention: Christian Brown
Telephone: (216) 222-8120
Telecopy: (216) 222-9396
With a Copy To:
Agency Services, PNC Bank, National Association
Mail Stop: P7-PFSC-04-I
Address: 500 First Avenue
Pittsburgh, PA 15219
Attention: Agency Services
Telephone: 412 762 6442
Telecopy: 412 762 8672
BORROWERS:
c/o RPM International Inc.
2628 Pearl Road
P.O. Box 777
Medina, Ohio 44258
Schedule 2.8.1
Letters of Credit
|
|
|
|
|
|
|
|
|
|
|
Standby Letter
|
|
Letter of Credit
|
|
|
|
|
|
|
of Credit Reference
|
|
Balance (as of
|
|
|
|
|
|
|
Number
|
|
Closing Date)
|
|
Maturity Date
|
|
Applicant
|
|
Beneficiary
|
12500451
|
|
$
|
779,000.00
|
|
|
4/1/2011
|
|
RPM International, Inc.
|
|
Lumbermans Mutual Insurance Company
|
12500450
|
|
$
|
477,000.00
|
|
|
8/31/2011
|
|
RPM International, Inc.
|
|
The Travelers Indemnity Company
|
12500452
|
|
$
|
3,000,000.00
|
|
|
4/1/2011
|
|
RPM International, Inc.
|
|
Ace American Insurance Company
|
12500454
|
|
$
|
215,485.00
|
|
|
10/11/2011
|
|
RPM International, Inc.
|
|
Bank of America
|
12500458
|
|
$
|
9,154.00
|
|
|
9/15/2011
|
|
Rust-Oleum Corporation
|
|
Village of Vernon Hills
|
12500349
|
|
$
|
68,431.59
|
|
|
8/1/2011
|
|
RPM Wood Finishes Group, Inc.
|
|
Solvents Recovery Service
|
12500457
|
|
$
|
4,926,092.70
|
|
|
7/22/2011
|
|
Rust-Oleum Corporation
|
|
A. Bruce White
|
12500570
|
|
$
|
550,503.57
|
|
|
8/1/2011
|
|
RPM Wood Finishes Group, Inc.
|
|
Solvents Recovery Service
|
18113430
|
|
$
|
30,485.95
|
|
|
7/14/2011
|
|
Rust-Oleum Corporation
|
|
Lake County Stormwater Management
|
Schedule 6.1.2
(
12/17/10)
|
|
|
Company Name
|
|
Place of Incorporation
|
A/D Fire Protection Systems Corp.
|
|
Nevada (USA)
|
A/D Fire Protection Systems Inc.
|
|
Canada
|
Advanced Construction Materials Limited
(Dormant)
|
|
United Kingdom
|
Advanced Sealants Limited
(Dormant)
|
|
United Kingdom
|
Agpro (N.Z.) Limited
|
|
New Zealand
|
AgriCoat Industries Limited
(Dormant)
|
|
United Kingdom
|
AgriCoat NatureSeal Limited
(83% JV)
|
|
United Kingdom
|
Alteco Technik GmbH
|
|
Germany
|
Amtred Limited
(Dormant)
|
|
United Kingdom
|
Anglo Building Products Limited
(Dormant)
|
|
United Kingdom
|
Ardenbrite Products Limited
(Dormant)
|
|
United Kingdom
|
Ascoat Contracting Pty. Ltd.
|
|
Australia
|
Ascoat Pty. Ltd.
|
|
Australia
|
AWCI Insurance Company, Ltd.
(27.03% JV)
|
|
Bermuda
|
Beijing Dryvit Chemical Building Materials Co., Ltd.
(88% JV)
|
|
China
|
Bondex International, Inc.
|
|
Delaware (USA)
|
Bridgecare (UK) Limited
|
|
United Kingdom
|
Britflex Limited
(Dormant)
|
|
United Kingdom
|
CAI-Tec GmbH
|
|
Switzerland
|
Canam Building Envelope Specialists Inc.
|
|
Canada
|
Carboline Company
|
|
Delaware (USA)
|
Carboline Dalian Paint Production Co., Ltd.
(49% JV)
|
|
China
|
Carboline Dubai Corporation
|
|
Missouri (USA)
|
Carboline France S.A.S.
|
|
France
|
Carboline (India) Private Limited
(80% JV)
|
|
India
|
Carboline International Corporation
|
|
Delaware (USA)
|
Carboline Italia S.p.A.
|
|
Italy
|
Carboline Korea Ltd.
(49% JV)
|
|
Korea
|
Carboline Marine Europe AS
|
|
Norway
|
Carboline Norge AS
|
|
Norway
|
Chemical Specialties Manufacturing Corporation
|
|
Maryland (USA)
|
Chemrite Equipment Systems (Pty.) Ltd.
|
|
South Africa
|
Chemspec Europe Limited
|
|
United Kingdom
|
Chemtec Chemicals B.V.
|
|
Netherlands
|
Colcon NV
|
|
Belgium
|
Corgrate Fiberglass Systems, S.A. de C.V.
|
|
Mexico
|
Crossco (261) Limited
(Dormant)
|
|
United Kingdom
|
Crossco (754) Limited
(Dormant)
|
|
United Kingdom
|
Dane Color UK Limited
|
|
United Kingdom
|
DAP Brands Company
|
|
Delaware (USA)
|
DAP Holdings, LLC
|
|
Delaware (USA)
|
DAP Products Inc.
|
|
Delaware (USA)
|
Day-Glo Color Corp.
|
|
Ohio (USA)
|
Day-Glo Hong Kong Limited
|
|
Hong Kong
|
Deancove Limited
(Dormant)
|
|
United Kingdom
|
Dryvit Holdings, Inc.
|
|
Delaware (USA)
|
Dryvit Systems, Inc.
|
|
Rhode Island (USA)
|
|
|
|
**
|
|
When a % is noted without JV, the remaining % of shares are held by the directors of the
company.
|
|
|
|
Company Name
|
|
Place of Incorporation
|
Dryvit Systems USA (Europe) Sp. zo.o.
|
|
Poland
|
Dryvit UK Limited
|
|
United Kingdom
|
Duratec Coatings Consultants Limited
(Dormant)
|
|
United Kingdom
|
Ecoloc NV
|
|
Belgium
|
Espan Corporation Pte. Ltd.
|
|
Singapore
|
Euclid Admixture Canada Inc.
|
|
Canada
|
The Euclid Chemical Company
|
|
Ohio (USA)
|
Euclid Chemical de Centroamérica S.A.
|
|
Costa Rica
|
Euclid Chemical, Venezuela, S.A.
|
|
Venezuela
|
Euclid Ecuador, S.A.
|
|
Ecuador
|
Eucomex S.A. de C.V.
|
|
Mexico
|
Failsafe Metering International Limited
|
|
United Kingdom
|
Fibergrate Composite Structures Incorporated
|
|
Delaware (USA)
|
Fibergrate Composite Structures Limited
|
|
United Kingdom
|
FibreGrid Limited
|
|
United Kingdom
|
First Continental Services Co.
|
|
Vermont (USA)
|
Flowcrete Asia Sdn. Bhd.
|
|
Malaysia
|
Flowcrete Australia Pty. Limited
|
|
Australia
|
Flowcrete Europe Limited
(Dormant)
|
|
United Kingdom
|
Flowcrete Group Limited
|
|
United Kingdom
|
Flowcrete (Hong Kong) Limited
|
|
Hong Kong
|
Flowcrete India Private Limited
|
|
India
|
Flowcrete International Limited
(Dormant)
|
|
United Kingdom
|
Flowcrete Middle East FZCO
|
|
United Arab Emirates
|
Flowcrete New Zealand Limited
|
|
New Zealand
|
Flowcrete North America, Inc.
|
|
Texas (USA)
|
Flowcrete Norway AS
|
|
Norway
|
Flowcrete Polska Sp. zo.o
|
|
Poland
|
Flowcrete S.A. (Pty.) Limited
|
|
South Africa
|
Flowcrete Sweden AB
|
|
Sweden
|
Flowcrete UK Limited
|
|
United Kingdom
|
GJP Holdings Limited
|
|
United Kingdom
|
GJP Overseas Limited
|
|
United Kingdom
|
Gloucester Co., Inc.
|
|
Massachusetts (USA)
|
Grandcourt NV
|
|
Netherlands Antilles
|
Grupo StonCor, S.A. de C.V.
|
|
Colombia
|
Grupo StonCor, S.A. de C.V.
|
|
Mexico
|
Guardian Protection Products, Inc.
|
|
Delaware (USA)
|
Hermeta GmbH
|
|
Germany
|
Holdtite Adhesives Limited
|
|
United Kingdom
|
Hummervoll Industribelegg AS
|
|
Norway
|
ilbruck Holdings Limited
(Dormant)
|
|
United Kingdom
|
ilbruck Sealant Systems NV
|
|
Belgium
|
Industrial Flooring Services Limited
(Dormant)
|
|
United Kingdom
|
Isocrete Floor Screeds Limited
|
|
United Kingdom
|
Ivory Industrials (Pty.) Limited
(Dormant)
|
|
South Africa
|
Japan Carboline Company Ltd.
(50% JV)
|
|
Japan
|
Juárez Inmobiliaria, S.A.
|
|
Mexico
|
Kop-Coat Australia Pty. Limited
|
|
Australia
|
Kop-Coat, Inc.
|
|
Ohio (USA)
|
Kop-Coat New Zealand Limited
|
|
New Zealand
|
Magnagro Industries Pte. Ltd.
(Dormant)
|
|
China
|
Mantrose-Haeuser Co., Inc.
|
|
Massachusetts (USA)
|
|
|
|
**
|
|
When a % is noted without JV, the remaining % of shares are held by the directors of the
company.
|
|
|
|
Company Name
|
|
Place of Incorporation
|
Mantrose UK Limited
|
|
United Kingdom
|
Martin Mathys NV
|
|
Belgium
|
Modern Masters Inc.
|
|
California (USA)
|
Monile France S.àr.l.
|
|
France
|
NatureSeal, Inc.
(83% JV)
|
|
Delaware (USA)
|
NMBFil, Inc.
|
|
Ohio (USA)
|
Nufins Limited
(Dormant)
|
|
United Kingdom
|
Nullifire Limited
(Dormant)
|
|
United Kingdom
|
Oakdyke Limited
(Dormant)
|
|
United Kingdom
|
Paramount Technical Products, Inc.
|
|
South Dakota (USA)
|
Park Dis Ticaret A.S.
|
|
Turkey
|
Parklin Management Group, Inc.
|
|
New Jersey (USA)
|
PDR GmbH
(9.214% JV)
|
|
Germany
|
PDR Recycling GmbH & Co. KG
(8.32% JV)
|
|
Germany
|
Permaquik Western Ltd.
(77% JV) (In Liquidation)
|
|
Canada
|
Perstorp Industrial Surfaces Limited
(20% JV)
|
|
China
|
Pipeline and Drainage Systems Limited
|
|
United Kingdom
|
Pitchmastic PMB Limited
|
|
United Kingdom
|
Plasite, S.A. de C.V. Mexico
(Dormant)
|
|
Mexico
|
Portazul, S.A. (94%)
|
|
Dominican Republic
|
Productos Cave S.A.
|
|
Chile
|
Productos DAP de Mexico, S.A. de C.V.
|
|
Mexico
|
Radiant Color NV
|
|
Belgium
|
Redwood Transport, Inc.
|
|
Ohio (USA)
|
Republic Powdered Metals, Inc.
|
|
Ohio (USA)
|
ROC Sales, Inc.
|
|
Delaware (USA)
|
RPM Asia Pte. Ltd.
|
|
Singapore
|
RPM/Belgium NV
|
|
Belgium
|
RPM Building Solutions Europe GmbH
|
|
Germany
|
RPM Building Solutions Group, Inc.
|
|
Delaware (USA)
|
RPM Canada, a General Partnership
|
|
Canada
|
RPM Canada Company
|
|
Canada
|
RPM Canada Investment Company
|
|
Canada
|
RPM China Pte. Ltd.
|
|
Singapore
|
RPM Consumer Holding Company
|
|
Delaware (USA)
|
RPM Enterprises, Inc.
|
|
Delaware (USA)
|
RPM Europe Coöperatief U.A.
|
|
Dutch Co-op
|
RPM Europe Holdco B.V.
|
|
Netherlands
|
RPM Europe SA
|
|
Belgium
|
RPM FCP I, Inc.
|
|
Delaware (USA)
|
RPM FCP II, Inc.
|
|
Delaware (USA)
|
RPM FCP Belgium SPRL
|
|
Belgium
|
RPM Funding Corporation
|
|
Delaware (USA)
|
RPM German Real Estate GmbH & Co. KG
|
|
Germany
|
RPM German Real Estate Management GmbH
|
|
Germany
|
RPM Germany GmbH
|
|
Germany
|
RPM Holdco Corp.
|
|
Delaware (USA)
|
RPM Holdings UK Limited
|
|
United Kingdom
|
RPM Industrial Holding Company
|
|
Delaware (USA)
|
RPM International Inc.
|
|
Delaware (USA)
|
RPM Ireland IP Limited
|
|
Ireland
|
RPM Lux Enterprises S.àr.l.
|
|
Luxembourg
|
RPM Lux Holdco S.àr.l.
|
|
Luxembourg
|
|
|
|
**
|
|
When a % is noted without JV, the remaining % of shares are held by the directors of the
company.
|
|
|
|
Company Name
|
|
Place of Incorporation
|
RPM Nova Scotia ULC
|
|
Canada
|
RPM Performance Coatings Group, Inc.
|
|
Delaware (USA)
|
RPM United Kingdom G.P.
|
|
Non-registered UK Partnership
|
RPM Wood Finishes Group, Inc.
|
|
Nevada (USA)
|
RPM Wood Finishes-Hong Kong Limited
|
|
Hong Kong
|
RPM Wood Finishes Ltd.-Shanghai
|
|
China
|
RPOW France S.A.S.
|
|
France
|
RPOW UK Limited
|
|
United Kingdom
|
RSIF International Limited
|
|
Ireland
|
Rust-Oleum Argentina S.A.
|
|
Argentina
|
Rust-Oleum Brands Company
|
|
Delaware (USA)
|
Rust-Oleum Corporation
|
|
Illinois (USA)
|
Rust-Oleum France S.A.S.
|
|
France
|
Rust-Oleum International, LLC
|
|
Delaware (USA)
|
Rust-Oleum Japan Corporation
|
|
Japan
|
Rust-Oleum Mathys Italia S.r.l.
(In Liquidation)
|
|
Italy
|
Rust-Oleum Netherlands B.V.
|
|
Netherlands
|
Rust-Oleum Sales Company, Inc.
|
|
Ohio (USA)
|
Rust-Oleum UK Limited
|
|
United Kingdom
|
Sandco 953 Limited
(Dormant)
|
|
United Kingdom
|
Shanghai Tremco International Trading Co., Ltd.
(Dormant
)
|
|
China
|
Sino-British Flowcrete (Beijing) Trading Limited
|
|
China
|
SK Polymers FZCO
(50% JV)
|
|
United Arab Emirates
|
Specialty Products Holding Corp.
|
|
Ohio
|
StonCor Africa (Pty.) Ltd.
|
|
South Africa
|
StonCor Benelux B.V.
|
|
Netherlands
|
StonCor Corrosion Specialists Group Ltda.
|
|
Brazil
|
StonCor (Deutschland) GmbH
|
|
Germany
|
StonCor España SL
|
|
Spain
|
StonCor Group, Inc.
|
|
Delaware (USA)
|
StonCor Ireland Limited
|
|
Ireland
|
StonCor Lux S.ár.l
|
|
Luxembourg
|
StonCor Middle East LLC
(49% JV)
|
|
United Arab Emirates
|
StonCor Namibia (Pty.) Ltd.
|
|
Namibia
|
StonCor Poland Sp. zo.o.
|
|
Poland
|
StonCor South Cone S.A.
|
|
Argentina
|
StonCor (Zhangjiagang Free Trade Zone) Trading Co., Ltd.
|
|
China
|
Stonhard de Mexico, S.A. de C.V.
(99.99%)
|
|
Mexico
|
Stonhard Nederland B.V.
|
|
Netherlands
|
Stonhard S.A.S.
|
|
France
|
Stonhard (U.K.) Limited
|
|
United Kingdom
|
Structurecare Limited
|
|
United Kingdom
|
TCI, Inc.
|
|
Georgia (USA)
|
TCI Powder Coatings de Mexico, S.A. de C.V.
|
|
Mexico
|
The Testor Corporation
|
|
Ohio (USA)
|
Timberex International Limited
(Dormant)
|
|
United Kingdom
|
Tor Coatings Limited
|
|
United Kingdom
|
Toxement S.A.
|
|
Colombia
|
Tremco Asia Pacific Pty. Limited
|
|
Australia
|
Tremco Asia Pte. Ltd.
|
|
Singapore
|
Tremco Barrier Solutions, Inc.
|
|
Delaware (USA)
|
Tremco B.V.
|
|
The Netherlands
|
Tremco Far East Limited
(99.999%)
|
|
Hong Kong
|
|
|
|
**
|
|
When a % is noted without JV, the remaining % of shares are held by the directors of the
company.
|
|
|
|
Company Name
|
|
Place of Incorporation
|
Tremco GmbH
(Dormant)
|
|
Germany
|
Tremco illbruck AB
|
|
Sweden
|
Tremco illbruck B.V.
|
|
Netherlands
|
Tremco illbruck Coatings Limited
|
|
United Kingdom
|
Tremco illbruck Export Limited
|
|
United Kingdom
|
Tremco illbruck GmbH
|
|
Austria
|
Tremco illbruck GmbH & Co. KG
|
|
Germany
|
Tremco illbruck International GmbH
|
|
Germany
|
Tremco illbruck kft
|
|
Hungary
|
Tremco illbruck Limited
|
|
United Kingdom
|
Tremco illbruck NV
|
|
Belgium
|
Tremco illbruck ooo
|
|
Russia
|
Tremco illbruck OY
|
|
Finland
|
Tremco illbruck Productie B.V.
|
|
Netherlands
|
Tremco illbruck Production SAS
|
|
France
|
Tremco illbruck Produktion GmbH
|
|
Germany
|
Tremco illbruck SAS
|
|
France
|
Tremco illbruck Sp. zo.o.
|
|
Poland
|
Tremco illbruck s.r.o.
|
|
Czech Republic
|
Tremco illbruck Swiss AG
|
|
Switzerland
|
Tremco Incorporated
|
|
Ohio (USA)
|
Tremco (Malaysia) Sdn. Bhd.
|
|
Malaysia
|
Tremco Pty. Limited
|
|
Australia
|
Tremco Roofing & Facility Services Private Limited
|
|
India
|
Tremco Roofing UK Limited
|
|
United Kingdom
|
Tretobond Limited
(Dormant)
|
|
United Kingdom
|
Tretol Group Limited
(Dormant)
|
|
United Kingdom
|
Tretol Limited
(Dormant)
|
|
United Kingdom
|
Universal Sealants Limited
(Dormant)
|
|
United Kingdom
|
Universal Sealants (U.K.) Limited
|
|
United Kingdom
|
USL Asia Pacific Pte. Ltd.
(25% JV)
|
|
Singapore
|
Vandex AG
(95%)
|
|
Switzerland
|
Vandex Holding AG
(99%)
|
|
Switzerland
|
Vandex International AG
(99.88%)
|
|
Switzerland
|
Vandex Isoliermittel Gesellschaft m.b.H
|
|
Germany
|
Vandex (UK) Limited
|
|
United Kingdom
|
Vandex (USA) LLC
(49% JV)
|
|
Pennsylvania (USA)
|
Visul Systems Limited
|
|
United Kingdom
|
Watco GmbH
|
|
Germany
|
Watco Group Manufacturing Limited
(Dormant)
|
|
United Kingdom
|
Watco International Limited
(Dormant)
|
|
United Kingdom
|
Watco Limited
(Dormant)
|
|
United Kingdom
|
Watco S.àr.l.
|
|
France
|
Watco UK Limited
|
|
United Kingdom
|
Weatherproofing Technologies, Inc.
|
|
Delaware (USA)
|
Wm. Zinsser Limited
(Dormant)
|
|
United Kingdom
|
Zhongshan Star Marine Coating Ltd.
(25% JV) (Dormant)
|
|
China
|
Zinsser Asia Pacific Pty. Limited
|
|
Australia
|
Zinsser Brands Company
|
|
Delaware (USA)
|
Zinsser Divestiture Co., Inc.
|
|
New York (USA)
|
Zinsser Europe NV
(Dormant) (In liquidation)
|
|
Belgium
|
Zinsser Holdings, LLC
|
|
Delaware (USA)
|
|
|
|
**
|
|
When a % is noted without JV, the remaining % of shares are held by the directors of the
company.
|
Schedule 8.2.4
Affiliate Transactions
1.
|
|
All transactions contemplated by that certain Administrative Services Agreement,
dated as of June 1, 2010, between the Company and Specialty Products Holding Corp.
|
2.
|
|
Administrative, management and other similar services (and reimbursements therefor)
performed by Consolidated Subsidiaries for Excluded Subsidiaries, or by Excluded
Subsidiaries for the Company or its Consolidated Subsidiaries, in the ordinary course of
business consistent with past practice.
|
3.
|
|
Performance and other guaranties or credit support issued by the Company or any of
its Consolidated Subsidiaries before June 1, 2010 in favor of any of the Excluded
Subsidiaries in an aggregate amount of less than $3,000,000, and any renewals thereof.
|
4.
|
|
Indemnification agreements and similar arrangements entered into with officers,
directors, consultants and key employees of any Excluded Subsidiaries entered into in the
ordinary course of business, and the payment of amounts under such agreements and
arrangements.
|
5.
|
|
Royalties and similar fees in an aggregate amount not to exceed $1,000,000 in any
fiscal year, and any associated licensing agreements.
|
6.
|
|
Sharing of warehouse and other storage and work space in the ordinary course of
business consistent with past practice.
|
7.
|
|
Other transactions (excluding transfers, sales, leases, assignments and other
dispositions of assets) entered into in the ordinary course of business in accordance with
past practice and not having a material impact on the Companys and its Consolidated
Subsidiaries business or operations
|
EXHIBIT 1.1(A)
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the
Assignment and Assumption
) is dated as of the
Effective Date set forth below and is entered into by and between [
Insert name of Assignor
] (the
Assignor
) and [
Insert name of Assignee
] (the
Assignee
). Capitalized terms used but not defined
herein shall have the meanings given to them in the Credit Agreement identified below (as the same
may be amended, restated, modified, or supplemented, the
Credit Agreement
), receipt of a copy of
which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and made
a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignors
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including, without limitation, any
Letters of Credit and guarantees included in such facilities), and (ii) to the extent permitted to
be assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned
pursuant to clauses (i) and (ii) above being referred to herein collectively as, the
Assigned
Interest
). Such sale and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty by the Assignor.
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
|
Assignor:
|
|
____________________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
|
|
Assignee:
|
|
____________________________________
|
|
|
|
|
|
|
|
|
[and is an Affiliate of [
identify Lender
]]
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
|
Borrowers:
|
|
RPM INTERNATIONAL INC., and certain of its Affiliates named in the
Credit Agreement (referred to below)
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
|
|
Administrative Agent:
|
|
PNC BANK, NATIONAL ASSOCIATION, as the administrative agent under the Credit Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
|
|
Credit Agreement:
|
|
The Credit Agreement dated as of January 5, 2011 among RPM
International Inc., the other Borrowers now or hereafter party thereto, the Lenders now
or party thereto, and PNC Bank, National Association, as Administrative Agent
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
|
|
Assigned Interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
Amount of
|
|
|
Percentage Assigned
|
|
|
|
|
Facility
|
|
Commitment/Loans
|
|
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Commitment/
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of
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Assigned
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for all Lenders
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Loans Assigned
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Commitment/Loans
1
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CUSIP Number
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Revolving Credit Commitment
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$
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$
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%
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7.
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[Trade Date:
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______________
]
2
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1
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Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder.
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2
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To be completed if the Assignor and the
Assignee intend that the minimum assignment amount is to be determined as of
the Trade Date.
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2
Effective Date: ________________, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
3
The terms set forth in this Assignment and Assumption are hereby agreed to:
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ASSIGNOR
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By:
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Name:
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Title:
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ASSIGNEE
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By:
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Name:
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Title:
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3
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Assignor shall pay a fee of $3,500 to the
Administrative Agent in connection with the Assignment and Assumption.
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Consented to and Accepted:
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PNC BANK, NATIONAL ASSOCIATION
, as
Administrative Agent
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By:
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Name:
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Title:
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Consented to:
4
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RPM INTERNATIONAL INC.
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By:
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Name:
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Title:
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RPM LUX HOLDCO S.ÀR.L.
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By:
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Name:
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Title:
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RPOW UK LIMITED
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By:
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Name:
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Title:
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4
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INCLUDE BORROWERS CONSENT ONLY IF APPLICABLE.
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RPM EUROPE HOLDCO B.V.
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By:
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Name:
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Title:
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RPM CANADA
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By:
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Name:
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Title:
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TREMCO ILLBRUCK COATINGS LIMITED
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By:
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Name:
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Title:
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RPM CANADA COMPANY
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By:
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Name:
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Title:
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TREMCO ASIA PACIFIC PTY. LIMITED
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By:
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Name:
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Title:
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ANNEX 1
RPM INTERNATIONAL INC. ET AL.
CREDIT FACILITY
STANDARD TERMS AND CONDITIONS
FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
1.
Representations and Warranties
.
1.1
Assignor
. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim, and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document, or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective obligations under any
Loan Document.
1.2.
Assignee
. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all requirements of an eligible assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 8.3 [Reporting Requirements] thereof, as
applicable, and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Administrative Agent or any other Lender, [(v) [
to be included in case
Commitment/Loans to a Netherlands Borrower is/are assigned and in case the Assignee (new Lender) is
located in or organized under the laws of the Netherlands
] the Assignee confirms on the Trade
Date that its amount of Commitments/Loans assumed is at least the Dollar Equivalent of EUR 50,000
or that it otherwise qualifies as a professional market party (
professionele marktpartij
) within
the meaning of the Dutch Act on Financial Supervision (
Wet op het financieel toezicht
) and any
regulation promulgated thereunder as amended or replaced from time to time.,] and (v[i]) if
Assignee is not incorporated or organized under the Laws of the United States of America or a state
thereof,
attached to the Assignment and Assumption is any
documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b)
agrees that (i) it will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be performed by it as a
Lender.
2.
Payments
. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3.
General Provisions
. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the internal laws of the State of New York without regard to
its conflict of laws principles.
2
EXHIBIT 1.1(B)
BORROWER JOINDER AND ASSUMPTION AGREEMENT
THIS BORROWER JOINDER AND ASSUMPTION AGREEMENT is made as of _______________, 20___, by
_____________________________, a _________________________ [corporation/partnership/limited
liability company] (the
New Borrower
).
Background
Reference is made to (i) the Credit Agreement dated as of January 5, 2011 (as the same may be
modified, supplemented or amended, the
Credit Agreement
) by and among RPM International Inc., a
Delaware corporation (the
Company
), the other Borrowers and Borrowers now or hereafter party
thereto, PNC Bank, National Association, in its capacity as administrative agent for the Lenders
party thereto (in such capacity, the
Administrative Agent
), and the Lenders now or hereafter
party thereto, (ii) the Revolving Credit Notes dated as of January 5, 2011 made by the Borrowers
and payable to the Lenders (the
Revolving Credit Notes
), (iii) the Swing Loan Note dated as of
January 5, 2011 made by the Borrowers and payable to PNC Bank, National Association (the
Swing
Loan Note
and together with the Revolving Credit Notes, collectively referred to herein as the
Notes
), and (iv) the other Loan Documents referred to in the Credit Agreement, as the same may be
modified, supplemented or amended (the
Loan Documents
).
Agreement
Capitalized terms defined in the Credit Agreement are used herein as defined therein. In
consideration of the New Borrower becoming a Borrower under the terms of the Credit Agreement and
in consideration of the value of the direct and indirect benefits received by New Borrower as a
result of becoming affiliated with the Borrowers and the Borrowers, the New Borrower hereby agrees
that effective as of the date hereof it hereby is, and shall be deemed to be, a Borrower under the
Credit Agreement, the Notes and each of the other Loan Documents to which the Borrowers are a party
and agrees that from the date hereof and so long as any Loan or any Commitment of any Lender shall
remain outstanding and until the Payment In Full, subject in the case of a Foreign Borrower to the
applicable provisions of the Credit Agreement, New Borrower has assumed the joint and several
obligations of a Borrower or a Company, as applicable, under, and New Borrower shall perform,
comply with and be subject to and bound by, jointly and severally, each of the terms, provisions
and waivers of, the Credit Agreement, the Notes and each of the other Loan Documents which are
stated to apply to or are made by a Borrower or a Company, as the case may be. Without
limiting the generality of the foregoing, the New Borrower hereby represents and warrants that (i)
each of the representations and warranties set forth in Article 6 of the Credit Agreement
applicable to New Borrower as a Borrower is true and correct as to New Borrower on and as of the
date hereof, and (ii) New Borrower has heretofore received a true and correct copy of the Credit
Agreement, the Notes and each of the other Loan Documents (including any modifications thereof or
supplements or waivers thereto) in effect on the date hereof.
New Borrower hereby makes, affirms and ratifies in favor of the Lenders and the Administrative
Agent the Credit Agreement, the Notes and each of the other Loan Documents given by the Borrowers
and the Companies, as the case may be, to Administrative Agent and any of the Lenders.
New Borrower is simultaneously delivering to the Administrative Agent the following documents
together with the Borrower Joinder required under Section 12.15.1 [Joinder of Borrowers]:
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Updated Schedules to Credit Agreement as described below [
Note: updates to schedules
do not cure any breach of warranties
].
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Items for New Borrower specified in Sections 7.1.1(i), (ii), (iii), (iv), (v) and
(viii) of the Credit Agreement, and fulfillment of any other appropriate
requirements set forth in Section 7.1.1., as applicable and as applied to New
Borrower.
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Not
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Schedule No. and Description
|
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Delivered
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Delivered
|
Schedule 6.1.2 - Subsidiaries
|
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o
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o
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Opinion of Counsel (Schedule 7.1.1)
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o
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o
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Any other Schedules to Credit Agreement that
necessitate updates after giving effect to
this Borrower Joinder and Assumption
Agreement
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o
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o
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In furtherance of the foregoing, New Borrower shall execute and deliver or cause to be
executed and delivered at any time and from time to time such further instruments and documents and
do or cause to be done such further acts as may be reasonably necessary in the reasonable opinion
of the Administrative Agent to carry out more effectively the provisions and purposes of this
Borrower Joinder and Assumption Agreement.
This Borrower Joinder and Assumption Agreement may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute one and the same instrument. New
Borrower acknowledges and agrees that a telecopy transmission to the Administrative Agent or any
Lender of signature pages hereof purporting to be signed on behalf of New Borrower shall constitute
effective and binding execution and delivery hereof by New Borrower.
[SIGNATURE PAGE FOLLOWS]
2
[SIGNATURE PAGE BORROWER JOINDER AND ASSUMPTION AGREEMENT]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the New Borrower has duly
executed this Borrower Joinder and Assumption Agreement and delivered the same to the
Administrative Agent for the benefit of the Lenders, as of the date and year first above written
with the intention that it constitute a sealed instrument.
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Acknowledged and accepted:
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PNC BANK, NATIONAL ASSOCIATION
,
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as Administrative Agent
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By:
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Name:
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Title:
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EXHIBIT
1.1 (L)
LENDER JOINDER AND ASSUMPTION AGREEMENT
THIS LENDER JOINDER AND ASSUMPTION AGREEMENT (the
Joinder
) is made as of ____________, 20__
(the
Effective Date
) by ____________________________, (the
New Lender
).
Background
Reference is made to the Credit Agreement dated as of January 5, 2011 among RPM INTERNATIONAL
INC., a Delaware corporation, the other Borrowers now or hereafter party thereto, Lenders now or
hereafter party thereto and PNC BANK, NATIONAL ASSOCIATION, as administrative agent (the
Administrative Agent
) (as the same has been and may hereafter be modified, supplemented, amended
or restated, the
Credit Agreement
). Capitalized terms defined in the Credit Agreement are used
herein as defined therein.
Agreement
In consideration of the Lenders permitting the New Lender to become a Lender under the Credit
Agreement, the New Lender agrees that effective as of the Effective Date it shall become, and shall
be deemed to be, a Lender under the Credit Agreement and each of the other Loan Documents and
agrees that from the Effective Date and so long as the New Lender remains a party to the Credit
Agreement, such New Lender shall assume the obligations of a Lender under and perform, comply with
and be bound by each of the provisions of the Credit Agreement which are stated to apply to a
Lender and shall be entitled (in accordance with its Ratable Share) to the benefits, rights and
remedies set forth therein and in each of the other Loan Documents. The New Lender hereby
acknowledges that it has heretofore received (i) a true and correct copy of the Credit Agreement
(including any modifications thereof or supplements or waivers thereto) as in effect on the
Effective Date, and (ii) the executed original of its Revolving Credit Note dated the Effective
Date issued by the Borrowers under the Credit Agreement in the face amount of $____________.
The Commitments and Ratable Shares of the New Lender and each of the other Lenders are as set
forth on
Schedule 1.1(B)
to the Credit Agreement.
Schedule 1.1(B)
to the Credit
Agreement is being amended and restated effective as of the Effective Date hereof to read as set
forth on
Schedule 1.1(B)
hereto.
Schedule 1
hereto lists as of the date hereof the
amount of Loans under each outstanding Borrowing Tranche. Notwithstanding the foregoing on the
date hereof, the Borrowers shall repay all outstanding Loans to which either the Base Rate Option
or the Euro Rate Option applies and simultaneously reborrow a like amount of Loans under each such
Interest Rate Option from the Lenders (including the New Lender) according to the Ratable Shares
set forth on attached
Schedule 1.1(B)
and shall be subject to breakage fees and other
indemnities provided in
Section 5.10
[Indemnity].
The New Lender is executing and delivering this Joinder as of the Effective Date and
acknowledges that it shall: (A) participate in all new Revolving Credit Loans borrowed by the
Borrowers on and after the Effective Date according to its Ratable Share; and (B) participate in
all Letters of Credit outstanding on and after the Effective Date according to its Ratable
Share. [[
To be included to be included in case Commitment/Loans to a Netherlands Borrower
is/are provided and in case New Lender is located in or organized under the laws of the
Netherlands
] the New Lender further confirms on the date hereof that its amount of
Commitments/Loans is at least the Dollar Equivalent of EUR 50,000 or that it otherwise qualifies as
a professional market party (
professionele marktpartij
) within the meaning of the Dutch Act on
Financial Supervision (
Wet op het financieel toezicht
) and any regulation promulgated thereunder as
amended or replaced from time to time.]
[SIGNATURE PAGE FOLLOWS]
2
[SIGNATURE PAGE TO LENDER
JOINDER AND ASSUMPTION AGREEMENT]
IN WITNESS WHEREOF, the New Lender has duly executed and delivered this Joinder as of the
Effective Date.
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[
NEW LENDER
]
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By:
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Name:
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Title:
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[ACKNOWLEDGEMENT TO LENDER JOINDER AND ASSUMPTION AGREEMENT]
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ACKNOWLEDGED:
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PNC BANK, NATIONAL ASSOCIATION
,
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as Administrative Agent
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By:
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Name:
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Title:
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[SIGNATURE PAGE TO LENDER
JOINDER AND ASSUMPTION AGREEMENT]
BORROWERS:
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RPM INTERNATIONAL INC.
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By:
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Name:
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Title:
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RPM LUX HOLDCO S.ÀR.L.
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By:
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Name:
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Title:
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RPOW UK LIMITED
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By:
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Name:
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Title:
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[SIGNATURE PAGE TO LENDER
JOINDER AND ASSUMPTION AGREEMENT]
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RPM EUROPE HOLDCO B.V.
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By:
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Name:
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Title:
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RPM CANADA
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By:
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Name:
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Title:
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TREMCO ILLBRUCK COATINGS LIMITED
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By:
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Name:
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Title:
|
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RPM CANADA COMPANY
|
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By:
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Name:
|
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Title:
|
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[SIGNATURE PAGE TO LENDER
JOINDER AND ASSUMPTION AGREEMENT]
|
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TREMCO ASIA PACIFIC PTY. LIMITED
|
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By:
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Name:
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Title:
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SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS
SCHEDULE 1
OUTSTANDING TRANCHES
EXHIBIT 1.1(N)(1)
REVOLVING CREDIT NOTE
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$
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Pittsburgh, Pennsylvania
January 5, 2011
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FOR VALUE RECEIVED, the undersigned,
RPM INTERNATIONAL INC
., a Delaware corporation,
RPM LUX
HOLDCO S.ÀR.L
., a limited liability company formed under the laws of Luxembourg,
RPOW UK LIMITED
, a
limited liability company formed under the laws of England and Wales,
RPM EUROPE HOLDCO B.V
., a
private company with limited liability formed under the laws of The Netherlands,
RPM CANADA
, a
general partnership registered under the laws of the Province of Ontario,
TREMCO ILLBRUCK COATINGS
LIMITED
, a limited company formed under the laws of England and Wales,
RPM CANADA COMPANY
, an
unlimited company formed under the laws of Nova Scotia,
TREMCO ASIA PACIFIC PTY. LIMITED
, a
corporation incorporated under the laws of the Commonwealth of Australia (herein collectively
called the
Borrowers
), hereby unconditionally promise to pay to the order of
___________________________ (the
Lender
), the lesser of (i) the principal sum of
_______________________ Dollars (US$____________) (or the Dollar Equivalent of such amount in
Optional Currencies as provided in the Credit Agreement), or (ii) the aggregate unpaid principal
balance of all Revolving Credit Loans made by the Lender to the Borrowers pursuant to Section 2.1
[Revolving Credit Commitment] of the Credit Agreement, dated as of January 5, 2011 among the
Borrowers and the other Borrowers hereafter party thereto, the Lenders now or hereafter party
thereto and PNC Bank, National Association, as administrative agent, (hereinafter referred to in
such capacity as the
Administrative Agent
) (as amended, restated, modified, or supplemented from
time to time, the
Credit Agreement
), together with all outstanding interest thereon on the
Expiration Date or as otherwise provided in the Credit Agreement. This Revolving Credit Note is
subject to all the terms and conditions of the Credit Agreement.
The Borrowers shall pay interest on the unpaid principal balance hereof from time to time
outstanding from the date hereof at the rate or rates per annum specified by the Borrowers pursuant
to, or as otherwise provided in, the Credit Agreement. Subject to the provisions of the Credit
Agreement, interest on this Revolving Credit Note will be payable pursuant to Section 5.5 [Interest
Payment Dates] of, or as otherwise provided in, the Credit Agreement. If any payment or action to
be made or taken hereunder shall be stated to be or become due on a day which is not a Business
Day, such payment or action shall be made or taken on the next following Business Day, unless
otherwise provided in the Credit Agreement, and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or action. Upon the occurrence
and during the continuation of an Event of Default, the Borrowers shall pay interest on the entire
principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit
Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and
the other Loan Documents at a rate per annum and as otherwise set
forth in Section 4.3 [Interest After Default] of the Credit Agreement. Such interest rate
will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest
shall be made without setoff, counterclaim or other deduction of any nature at the office of the
Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219 unless otherwise
directed in writing by the Administrative Agent, in lawful money of the United States of America in
immediately available funds.
This Revolving Credit Note is one of the Notes referred to in, and is entitled to the benefits
of, the Credit Agreement and the other Loan Documents, including the representations, warranties,
covenants, conditions, security interests and Liens contained or granted therein. The Credit
Agreement among other things contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments, in certain circumstances, on account
of principal hereof prior to maturity upon the terms and conditions therein specified. Each
Borrower waives presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of this Revolving
Credit Note and the Credit Agreement.
This Revolving Credit Note shall bind the Borrowers and their successors and assigns, and the
benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All
references herein to the Borrowers and the Lender shall be deemed to apply to the Borrowers and
the Lender, respectively, and their respective successors and assigns as permitted under the Credit
Agreement.
This Revolving Credit Note and any other documents delivered in connection herewith and the
rights and obligations of the parties hereto and thereto shall for all purposes be governed, by and
construed and enforced in accordance with, the internal laws of the State of Ohio without giving
effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same
meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit
Agreement shall apply to this Revolving Credit Note.
The liability of the Foreign Borrowers under this Note is subject to the provisions of Section
12.14 [Foreign Borrowers
]
of the Credit Agreement.
[SIGNATURE PAGES FOLLOW]
2
[SIGNATURE PAGE 1 OF 3 TO REVOLVING CREDIT NOTE]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has
executed this Revolving Credit Note by its duly authorized officer with the intention that it
constitute a sealed instrument.
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BORROWERS:
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RPM INTERNATIONAL INC.
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By:
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Name:
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Title:
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RPM LUX HOLDCO S.ÀR.L.
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By:
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Name:
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Title:
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RPOW UK LIMITED
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By:
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Name:
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Title:
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[SIGNATURE PAGE 2 OF 3 TO REVOLVING CREDIT NOTE]
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RPM EUROPE HOLDCO B.V.
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By:
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Name:
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Title:
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RPM CANADA
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By:
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Name:
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Title:
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TREMCO ILLBRUCK COATINGS LIMITED
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By:
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Name:
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Title:
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RPM CANADA COMPANY
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By:
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Name:
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Title:
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[SIGNATURE PAGE 3 OF 3 TO REVOLVING CREDIT NOTE]
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TREMCO ASIA PACIFIC PTY. LIMITED
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By:
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Name:
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Title:
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EXHIBIT 1.1(N)(2)
SWING LOAN NOTE
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$35,000,000
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Pittsburgh, Pennsylvania
January 5, 2011
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FOR VALUE RECEIVED, the undersigned,
RPM INTERNATIONAL INC
., a Delaware corporation,
RPM LUX
HOLDCO S.ÀR.L
., a limited liability company formed under the laws of Luxembourg,
RPOW UK LIMITED
, a
limited liability company formed under the laws of England and Wales,
RPM EUROPE HOLDCO B.V
., a
private company with limited liability formed under the laws of The Netherlands,
RPM CANADA
, a
general partnership registered under the laws of the Province of Ontario,
TREMCO ILLBRUCK COATINGS
LIMITED
, a limited company formed under the laws of England and Wales,
RPM CANADA COMPANY
, an
unlimited company formed under the laws of Nova Scotia,
TREMCO ASIA PACIFIC PTY. LIMITED
, a
corporation incorporated under the laws of the Commonwealth of Australia (herein collectively
called the
Borrowers
), hereby unconditionally promise to pay to the order of
PNC BANK, NATIONAL
ASSOCIATION
(the
Lender
), the lesser of (i) the principal sum of Thirty-Five Million Dollars
(US$35,000,000), or (ii) the aggregate unpaid principal balance of all Swing Loans made by the
Lender to the Borrowers pursuant Section 2.1.4 [Swing Loan Commitment] to the Credit Agreement,
dated as of January 5, 2011, among the Borrowers and the other Borrowers now or hereafter party
thereto, the Lenders now or hereafter party thereto, and PNC Bank, National Association, as
administrative agent (in such capacity, the
Administrative Agent
) (as amended, restated,
modified, or supplemented from time to time, the
Credit Agreement
), payable with respect to each
Swing Loan evidenced hereby on the earlier of (i) demand by the Lender or (ii) the Expiration Date,
or as otherwise provided in the Credit Agreement. This Swing Loan Note is subject to all the terms
and conditions of the Credit Agreement. The aggregate amount of all Swing Loans is subject to
compliance with the Swing Loan Sublimit.
The Borrowers shall pay interest on the unpaid principal balance of each Swing Loan from time
to time outstanding from the date hereof at the rate per annum and on the date(s) provided in the
Credit Agreement. Subject to the provisions of the Credit Agreement, interest on this Swing Loan
Note will be payable pursuant to Section 5.5 [Interest Payment Dates] of, or as otherwise provided
in, the Credit Agreement. If any payment or action to be made or taken hereunder shall be stated
to be or become due on a day which is not a Business Day, such payment or action shall be made or
taken on the next following Business Day, unless otherwise provided in the Credit Agreement, and
such extension of time shall be included in computing interest or fees, if any, in connection with
such payment or action. Upon the occurrence and during the continuation of an Event of Default,
the Borrowers shall pay interest on the entire principal amount of the then outstanding Swing Loans
evidenced by this Swing Loan Note at a
rate per annum and as otherwise set forth in Section 4.3 [Interest After Default] of the
Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest
shall be made without setoff, counterclaim or other deduction of any nature at the office of the
Administrative Agent located at 500 First Avenue, Pittsburgh, Pennsylvania 15219, unless otherwise
directed in writing by the holder hereof, in lawful money of the United States of America in
immediately available funds.
This Swing Loan Note is one of the Notes referred to in, and is entitled to the benefits of,
the Credit Agreement and the other Loan Documents, including the representations, warranties,
covenants, conditions, security interests and Liens contained or granted therein. The Credit
Agreement among other things contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments, in certain circumstances, on account
of principal hereof prior to maturity upon the terms and conditions therein specified. Each
Borrower waives presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of this Swing Loan
Note and the Credit Agreement.
Each Borrower acknowledges and agrees that the Lender may at any time and in its sole
discretion demand payment of all amounts outstanding under this Swing Loan Note without prior
notice to the Borrowers.
This Swing Loan Note shall bind the Borrowers and their successors and assigns, and the
benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All
references herein to the Borrowers and the Lender shall be deemed to apply to the Borrowers and
the Lender, respectively, and their respective successors and assigns as permitted under the Credit
Agreement.
This Swing Loan Note and any other documents delivered in connection herewith and the rights
and obligations of the parties hereto and thereto shall for all purposes be governed, by and
construed and enforced in accordance with, the internal laws of the State of Ohio without giving
effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same
meanings given to such terms in the Credit Agreement and Section 1.2 [Construction] of the Credit
Agreement shall apply to this Swing Loan Note.
The liability of the Foreign Borrowers under this Note is subject to the provisions of Section
12.14 [Foreign Borrowers] of the Credit Agreement.
[SIGNATURE PAGES FOLLOW]
[SIGNATURE PAGE 1 OF 3 TO SWING LOAN NOTE]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has
executed this Revolving Credit Note by its duly authorized officer with the intention that it
constitute a sealed instrument.
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BORROWERS:
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RPM INTERNATIONAL INC.
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By:
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Name:
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Title:
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RPM LUX HOLDCO S.ÀR.L.
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By:
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Name:
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Title:
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RPOW UK LIMITED
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By:
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Name:
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Title:
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[SIGNATURE PAGE 2 OF 3 TO SWING LOAN NOTE]
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RPM EUROPE HOLDCO B.V.
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By:
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Name:
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Title:
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RPM CANADA
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By:
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Name:
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Title:
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TREMCO ILLBRUCK COATINGS LIMITED
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By:
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Name:
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Title:
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RPM CANADA COMPANY
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By:
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Name:
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Title:
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[SIGNATURE PAGE 3 OF 3 TO SWING LOAN NOTE]
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TREMCO ASIA PACIFIC PTY. LIMITED
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By:
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Name:
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Title:
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EXHIBIT
2.4.1
LOAN REQUEST
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TO:
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PNC Bank, National Association, as Administrative Agent
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PNC Firstside Center - P7-PFSC-05-W
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500 First Avenue
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Pittsburgh, Pennsylvania 15219
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Telephone No.: (412) 762-4532
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Telecopier No.: (412) 705-2006
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Attention: Sharon Turner, PNC Agency Services
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FROM:
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RPM International Inc., a Delaware corporation (the
Company
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RE:
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Credit Agreement (as it may be amended, restated, modified or supplemented, the
Credit Agreement
),
dated as of January 5, 2011, by and among the Company and the other Borrowers now or hereafter party
thereto, the Lenders now or hereafter party thereto and PNC Bank, National Association, as
administrative agent for the Lenders (the
Administrative Agent
).
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Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them
by the Credit Agreement.
A.
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Pursuant to Section 2.4.1 [Revolving Credit Loan Requests] or Section 4.1.1 [Revolving Credit Interest Options, etc.], as the case may be, of the
Credit Agreement, the Company irrevocably requests
[check one line under 1 below, as applicable, and fill in blank space next to the line as
appropriate].
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1
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A new Revolving Credit Loan, OR
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Renewal of the Euro-Rate Option applicable to an outstanding
_______________ Revolving Credit Loan originally made on __________ ,
20__, OR
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Conversion of the Base Rate Option applicable to an outstanding
_______________ Revolving Credit Loan originally made on _________, 20__
to a Loan to which the Euro-Rate Option applies, OR
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Conversion of the Euro-Rate Option applicable to an outstanding
_______________ Revolving Credit Loan originally made on __________ __,
20__ to a Loan to which the Base Rate Option applies.
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SUCH NEW, RENEWED OR CONVERTED LOAN SHALL BEAR INTEREST:
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[Check 2(a) or (b), below and fill in blank spaces in line next to line]:
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2
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(a)
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Under the Base Rate Option. Such Loan shall have a Borrowing Date of
__________, 20___ (which date shall be the same Business Day of receipt by
the Administrative Agent by 12:00 p.m. eastern time of this Loan Request
for making a new Revolving Credit Loan to which the Base Rate Option
applies, or (ii) the last day of the preceding Interest Period if a Loan
to which the Euro-Rate Option applies is being converted to a Loan to
which the Base Rate Option applies).
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OR
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(b)
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Under the Euro-Rate Option. Such Loan shall have a Borrowing Date of
_____________, 20__ (which date shall be (i) three (3) Business Days (or
four (4) Business Days, in the case of Loans denominated in Optional
Currencies other than Canadian dollars and Euro) subsequent to the
Business Day of receipt by the Administrative Agent by 12:00 p.m. eastern
time of this Loan Request for making a new Revolving Credit Loan to which
the Euro-Rate Option applies, renewing a Loan to which the Euro-Rate
Option applies, or converting a Loan to which the Base Rate Option applies
to a Loan to which the Euro-Rate Option applies).
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[Check 3(a) or (b), below and fill in blank spaces in line next to line]:
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3
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(a)
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Such Loan is in Dollars, in the principal amount of U.S. $_____________ or the principal amount to be renewed or
converted is U.S. $_____________
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OR
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(b)
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Such Loan is in the following Optional Currency, in the principal amount of _____________, or the principal amount of
such Optional Currency to be renewed is ____________.
[for Loans under Section 2.4.1 not to be less than $5,000,000 and in increments of $1,000,000 for each Borrowing
Tranche under the Euro-Rate Option and not less than $1,000,000 and increments of $500,000 for each Borrowing Tranche
under the Base Rate Option
.
]
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4
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[Complete blank below if the Borrower is selecting the Euro-Rate Option]:
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Such Loan shall have an Interest Period of one, two, three, or six Month(s):
_____________________
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2
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5
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The proceeds of the Loan shall be advanced:
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To
o
the Company for its benefit [
check box if applicable
]
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OR to the following Borrower(s) for its/their benefit: [
insert names if applicable
]
_____________________
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OR, in compliance with the Credit Agreement, to the Company for the benefit of the following Borrower(s):
_____________________ [
insert names if applicable
]
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B
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As of the date hereof and the date of making the above-requested Loan (and after giving effect thereto): the Loan Parties have performed and complied
with all covenants and conditions of such Persons under the Credit Agreement and the other Loan Documents; all of the representations and warranties
contained in Section 6 of the Credit Agreement and in the other Loan Documents are true and correct in all material respects (unless any such
representation or warranty is qualified to materiality, in which case such representation or warranty is true and correct in all respects), except
for representations and warranties made as of a specified date (which were true and correct in all material respects, as applicable, as of such
date); no Event of Default or, [unless consented to by the Required Lenders,] Potential Default has occurred and is continuing or exists; the making
of such Loan shall not contravene any Law applicable to any Borrower, any other Loan Party, any Subsidiary of any Borrower or of any other Loan
Party; the making of such Loan shall not cause Revolving Facility Usage to exceed the Revolving Credit Commitments.
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C
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Each of the undersigned hereby irrevocably requests
[check one line below and fill in blank spaces next to the line as appropriate]
:
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1
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Funds to be deposited into a PNC Bank bank account per our current
standing instructions. Complete amount of deposit if not full loan
advance amount: U.S. $______________________ OR
Optional Currency_______________
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2
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Funds to be wired per the following wire instructions:
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_________________ [U.S. dollars OR Optional Currency] Amount of
Wire Transfer
Bank Name: _____________________
ABA: __________________________
Account Number: _________________
Account Name: ___________________
Reference: _______________________
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3
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Funds to be wired per the attached Funds Flow (multiple wire transfers).
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3
[SIGNATURE PAGE LOAN REQUEST]
The Company certifies to the Administrative Agent for the benefit of the Lenders as to the
accuracy of the foregoing on ________________, 20__.
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RPM INTERNATIONAL INC.
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By:
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Name:
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Title:
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EXHIBIT 2.4.2
SWING LOAN REQUEST
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TO:
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PNC Bank, National Association, as Administrative Agent
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PNC Firstside Center - P7-PFSC-05-W
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500 First Avenue
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Pittsburgh, Pennsylvania 15219
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Telephone No.: (412) 762-4532
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Telecopier No.: (412) 705-2006
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Attention: Sharon Turner, PNC Agency Services
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FROM:
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RPM International Inc., a Delaware corporation (the
Company
)
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RE:
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Credit Agreement (as it may be amended, restated, modified or
supplemented, the
Credit Agreement
), dated as of January 5, 2011,
by and among the Company and the other Borrowers now or hereafter
party thereto, the Lenders now or hereafter party thereto and PNC
Bank, National Association, as administrative agent for the Lenders
(the
Administrative Agent
).
|
Capitalized terms not otherwise defined herein shall have the respective meanings given to
them by the Agreement.
Pursuant to Section 2.4.2 [Swing Loan Requests] of the Agreement, the Company hereby makes the
following Swing Loan Request:
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1.
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Aggregate principal amount of such Swing Loan (may not be less than $500,000,
with minimum increments thereafter of $250,000)
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U.S. $
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2.
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Proposed Borrowing Date
(which date shall be on or after the date on which the Administrative Agent
receives this Swing Loan Request, with such Swing Loan Request to be received no
later than 12:00 noon eastern time on the Borrowing Date)
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3.
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As of the date hereof and the date of making the above-requested Swing Loan (and after giving effect thereto):
the Loan Parties and the other Guarantors have performed and complied with all covenants and conditions of such
Persons under the Credit Agreement and the other Loan Documents; all of the representations and warranties
contained in Section 6 of the Credit Agreement and in the other Loan Documents are true and correct in all
material respects (unless any such representation or warranty is qualified to materiality, in which case such
representation or warranty is true and correct), except for representations and warranties made as of a specified
date (which were true and correct in all material respects, as applicable, as of such date); no Event of Default
or [unless consented
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to by the Required Lenders] Potential Default has occurred and is continuing or exists; the
making of such Loan shall not contravene any Law applicable to the Borrower, any other Loan Party, any Subsidiary
of the Borrower or of any other Loan Party or any other Guarantor or any Lender; the making of such Loan shall
not exceed the Swing Loan Commitment or cause (i) the Revolving Facility Usage to exceed the Revolving Credit
Commitments or (ii) the amount of outstanding Swing Loans to exceed the Swing Loan Sublimit.
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4.
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Each of the undersigned hereby irrevocably requests
[check one line below and fill in blank spaces next to the
line as appropriate]
:
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A
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Funds to be deposited into a PNC Bank bank account per our
current standing instructions. Complete amount of deposit
if not full loan advance amount: U.S. $______________.
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B
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Funds to be wired per the following wire instructions:
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U.S. $ _______________
_________________ Amount of Wire Transfer
Bank Name: _____________________
ABA: __________________________
Account Number: _________________
Account Name: ___________________
Reference: _______________________
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C
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Funds to be wired per the attached Funds Flow (multiple
wire transfers).
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5.
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The proceeds of the Swing Loan shall be advanced:
To
o
the Company for its benefit [
check box if applicable
]
OR to the following Borrower(s) for its/their benefit: [
insert names if applicable
]
_____________________
OR, in compliance with the Credit Agreement, to the Company for the benefit of the following
Borrower(s): _____________________ [
insert names if applicable
]
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[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE SWING LOAN REQUEST]
The Company certifies to the Administrative Agent for the benefit of the Lenders as to the
accuracy of the foregoing on ________________, 20__.
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RPM INTERNATIONAL INC.
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By:
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Name:
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Title:
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EXHIBIT 8.3.3
QUARTERLY COMPLIANCE CERTIFICATE
This certificate is delivered pursuant to Section 8.3.3 of that certain Credit Agreement dated
as of January 5, 2011 (the
Credit Agreement
) by and among RPM INTERNATIONAL INC., a Delaware
corporation (the
Company
), the other Borrowers now or hereafter party thereto, the Lenders now or
hereafter party thereto (the
Lenders
), and PNC Bank, National Association, as Administrative
Agent for the Lenders (the
Administrative Agent
). Unless otherwise defined herein, terms defined
in the Credit Agreement are used herein with the same meanings.
The undersigned officer, ______________________, the ___________
[
Chief executive officer,
president, chief financial officer, chief operating officer, treasurer or assistant treasurer
]
of
the Company, in such capacity does hereby certify on behalf of the Company and other Borrowers as
of the quarter/year ended _________________, 20___ (the
Report Date
), as follows:
1
(1)
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Maximum Leverage Ratio
(Section 8.2.8). As of the Report Date, the consolidated
Indebtedness of the Company and its Consolidated Subsidiaries may not exceed 60% of the sum of
(i) such consolidated Indebtedness, and (ii) consolidated shareholders equity of the Company
and its Consolidated Subsidiaries (the
Leverage Ratio
). The Leverage Ratio is ____________%
[
insert from 1(D), below
].
|
The calculations for the Leverage Ratio (with dollar amounts in thousands) are as follows:
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(A)
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consolidated Indebtedness of the Company and its
Consolidated Subsidiaries, as of the Report Date,
calculated as follows (without duplication):
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(i)
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indebtedness for borrowed money (whether
by loan or the issuance and sale of debt
securities) or for the deferred purchase or
acquisition price of property or services,
other than accounts payable incurred in the
ordinary course of business
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$_____________
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(ii)
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obligations in respect of letters of
credit or similar instruments issued or
accepted by banks and other financial
institutions for the account of the Company
and its Consolidated Subsidiaries (whether or
not such obligations are contingent)
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$_____________
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1
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See Credit Agreement for full provisions
relating to all financial covenants.
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(iii)
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Capital Lease Obligations
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$_____________
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(iv)
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obligations of the Company and its
Consolidated Subsidiaries to redeem or
otherwise retire shares of capital stock of
such Person
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$_____________
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(v)
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indebtedness of others of the type
described in clauses (1)(A)(i), (ii), (iii) or
(iv), above, secured by a Lien on the property
of such Person, whether or not the respective
obligation so secured has been assumed by such
Person
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$_____________
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(vi)
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Guaranties of such Person of indebtedness
of others of the type described in clauses
(1)(A) (i), (ii), (iii) or (iv), above
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$_____________
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(vii)
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the sum of Items 1(A)(i) through
1(A)(vi) equals the consolidated Indebtedness
of the Company and its Consolidated
Subsidiaries
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$_____________
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(B)
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consolidated shareholders equity of the Company and
its Consolidated Subsidiaries, as calculated on the last
day of the fiscal quarter ended (provided that for
purposes of calculating consolidated shareholders equity,
non-cash charges related to the writedown or impairment of
goodwill or other intangibles shall be included in such
calculation)
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$_____________
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(C)
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the sum of Items (1)(A)(vii) and (1)(B)
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$_____________
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(D)
|
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Item (1)(A)(vii) divided by Item 1(C) equals the
Leverage Ratio
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_______%
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(2)
|
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Minimum Interest Coverage Ratio
(Section 8.2.9). As of the Report Date, the ratio of
EBITDA to Interest Expense, calculated as of the end of each fiscal quarter ending after the
Closing Date for the four fiscal quarters then most recently ended, is _________________
[insert ratio from Item (2)(C) below]
(
Interest Coverage Ratio
), which ratio is greater than
or equal to 3.50 to 1.00.
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The calculations for the Interest Coverage Ratio (with dollar amounts in thousands) are as
follows:
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(A)
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EBITDA for the Company and its Consolidated Subsidiaries is
calculated as follows:
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(i)
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net income of the Company and its Consolidated
Subsidiaries for such period
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$_____________
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A.
|
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provision for income taxes
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$_____________
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B.
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Interest Expense
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$_____________
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C.
|
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extraordinary items
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$_____________
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D.
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non-recurring gains or losses in
connection with asset dispositions
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$_____________
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E.
|
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income attributable to equity in
affiliates,
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$_____________
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F.
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amounts attributable to depreciation and
amortization
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$_____________
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G.
|
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non-cash charges associated with asbestos
liabilities
|
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$_____________
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(ii)
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all non-cash charges related to the writedown or
impairment of goodwill and other intangibles for such
period
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$_____________
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(iii)
|
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non-cash charges related to or resulting from
the bankruptcy filing of any Excluded Subsidiary for
such period
|
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$_____________
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(iv)
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non-recurring expenses related to the
acquisition of all or substantially all of the assets
or capital stock (including by merger or
amalgamation) of another Person (or, in the case of
assets, of a business unit of a Person), not to
exceed $10,000,000 in the aggregate for such period
of four consecutive fiscal quarters
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$_____________
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(v)
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non-cash charges in addition to those provided
for in clauses (ii) and (iii) above, up to an
aggregate amount of not more than $25,000,000
incurred in such period
|
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$_____________
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(vi)
|
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the sum of Items 2(A)(i) through 2(A)(v)
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$_____________
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(vii)
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cash payments made by the Company or any of its
Consolidated Subsidiaries in respect of asbestos
liabilities, for those payments which have not
already been expensed in cash in the ordinary course
of business (which liabilities include, without
limitation, defense costs and indemnification
liabilities incurred in connection with asbestos
liabilities) during such period
|
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$_____________
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(viii)
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non-cash gains for such period
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$_____________
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(ix)
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the sum of Items 2(A)(vii) and 2(A)(viii)
|
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$_____________
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(x)
|
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the sum of Item 2(A)(vi) minus Item 2(A)(ix)
equals EBITDA
|
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$_____________
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(B)
|
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Interest Expense calculated as the sum (determined without
duplication) of the aggregate amount of interest accruing during
such period on Indebtedness of the Company and its Consolidated
Subsidiaries (on a consolidated basis), including the interest
portion of payments under Capital Lease Obligations and any
capitalized interest, and excluding amortization of debt discount
and expense and any non-cash interest expense associated with
accretive type debt instruments (from Item 2(A)(i)(B) above)
|
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$_____________
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(C)
|
|
Item (2)(A)(x) divided by Item 2(B) equals the Interest
Coverage Ratio
|
|
_____ to 1.00
|
(3)
|
|
Representations, Warranties and Covenants
. All representations and warranties of the
Loan Parties under Article 6, other than the representation and warranty in Section 6.1.8(d),
are true and correct in all respects (in the case of any representation or warranty containing
a materiality qualification) or in all material respects (in the case of any representation or
warranty without any materiality qualifications) (except representations and warranties which
expressly relate to an earlier date or time, which representations or warranties are true and
correct on and as of the specific dates or times referred to therein).
|
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(4)
|
|
Event of Default or Potential Default
. No Event of Default or Potential Default
exists as of the date hereof.
|
[SIGNATURE PAGE FOLLOWS]
SIGNATURE PAGE QUARTERLY COMPLIANCE CERTIFICATE
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ____ day of ______,
20___.
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COMPANY (ON BEHALF OF BORROWERS):
|
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|
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RPM INTERNATIONAL INC.
, a Delaware corporation
|
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By:
|
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Name:
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Title:
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