EXHIBIT 10.23
EXECUTION COPY
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RPM INTERNATIONAL INC.
(a Delaware corporation)
Senior Convertible Notes due 2033
PURCHASE AGREEMENT
Dated: May 8, 2003
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TABLE OF CONTENTS
Page
SECTION 1. Representations and Warranties..................................................................... 3
(a) Representations and Warranties by the Company................................................ 3
(i) Offering Memorandum............................................................... 3
(ii) Incorporated Documents............................................................ 3
(iii) Independent Accountants........................................................... 3
(iv) Financial Statements.............................................................. 3
(v) No Material Adverse Change in Business............................................ 3
(vi) Good Standing of the Company...................................................... 4
(vii) Good Standing of Subsidiaries..................................................... 4
(viii) Capitalization.................................................................... 4
(ix) Authorization of this Agreement................................................... 5
(x) Authorization of the Indenture.................................................... 5
(xi) Authorization of the Registration Rights Agreement................................ 5
(xii) Authorization of the Securities................................................... 5
(xiii) Description of the Securities, the Indenture and the Registration Rights Agreement 5
(xiv) Authorization and Description of Common Stock..................................... 6
(xv) Authorization of the Rights Agreement............................................. 6
(xvi) Absence of Defaults and Conflicts................................................. 6
(xvii) Absence of Labor Dispute.......................................................... 7
(xviii) Absence of Proceedings............................................................ 7
(xix) Possession of Intellectual Property............................................... 7
(xx) Absence of Further Requirements................................................... 7
(xxi) Investment Company Act............................................................ 8
(xxii) Good and Marketable Title......................................................... 8
(xxiii) Environmental Laws................................................................ 8
(xxiv) ERISA............................................................................. 9
(xxv) Insurance......................................................................... 9
(xxvi) Taxes............................................................................. 9
(xxvii) Internal Controls................................................................. 9
(xxviii) No Unlawful Payments.............................................................. 10
(xxix) No Brokerage Commission; Finder's Fee............................................. 10
(xxx) Dividend Payments................................................................. 10
(xxxi) Similar Offering.................................................................. 10
(xxxii) Rule 144A......................................................................... 10
(xxxiii) No General Solicitation or General Advertising.................................... 10
(xxxiv) No Registration Required.......................................................... 10
(xxxv) Reporting Company................................................................. 11
(b) Officer's Certificates....................................................................... 11
SECTION 2. Sale and Delivery to Initial Purchasers; Closing................................................... 11
(a) Initial Securities........................................................................... 11
(b) Option Securities............................................................................ 11
(c) Payment...................................................................................... 11
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(d) Denominations; Registration.................................................................. 12
SECTION 3. Covenants of the Company........................................................................... 12
(a) Offering Memorandum.......................................................................... 12
(b) Notice and Effect of Material Events......................................................... 12
(c) Amendments to Offering Memorandum and Supplements............................................ 13
(d) Qualifications of Securities for Offer and Sale.............................................. 13
(e) Use of Proceeds.............................................................................. 13
(f) Rating of Securities......................................................................... 13
(g) Listing on Securities Exchange............................................................... 14
(h) Restriction on Sale of Securities............................................................ 14
(i) PORTAL Designation........................................................................... 14
(j) DTC.......................................................................................... 14
(k) Reporting Requirements....................................................................... 14
SECTION 4. Payment of Expenses................................................................................ 14
(a) Expenses..................................................................................... 14
(b) Termination of Agreement..................................................................... 15
SECTION 5. Conditions of Initial Purchasers' Obligations...................................................... 15
(a) Opinions of Counsel for the Company.......................................................... 15
(b) Opinion of Counsel for Initial Purchasers.................................................... 15
(c) Officers' Certificate........................................................................ 16
(d) Accountant's Comfort Letter.................................................................. 16
(e) Bring-down Comfort Letter.................................................................... 16
(f) Maintenance of Rating........................................................................ 16
(g) Lock-up Agreements........................................................................... 16
(h) Indenture and Registration Rights Agreement.................................................. 16
(i) Conditions to Purchase of Option Securities.................................................. 17
(i) Officers' Certificate............................................................. 17
(ii) Opinions of Counsel for the Company............................................... 17
(iii) Opinion of Counsel for Initial Purchasers......................................... 17
(iv) Bring-down Comfort Letter......................................................... 17
(j) Additional Documents......................................................................... 17
(k) PORTAL Market................................................................................ 17
(l) Termination of Agreement..................................................................... 17
SECTION 6. Subsequent Offers and Resales of the Securities.................................................... 18
(a) Offer and Sale Procedures.................................................................... 18
(i) Offers and Sales to Qualified Institutional Buyers................................ 18
(ii) No General Solicitation........................................................... 18
(iii) Purchases by Non-Bank Fiduciaries................................................. 18
(iv) Subsequent Purchaser Notification................................................. 18
(v) Restriction on Transfer........................................................... 18
(b) Covenants of the Company..................................................................... 19
(i) Integration....................................................................... 19
(ii) Rule 144A Information............................................................. 19
(iii) Restriction on Purchases.......................................................... 19
(c) Qualified Institutional Buyer................................................................ 19
SECTION 7. Indemnification.................................................................................... 19
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(a) Indemnification of Initial Purchasers........................................................ 19
(b) Indemnification of the Company............................................................... 20
(c) Actions against Parties; Notification........................................................ 20
(d) Settlement without Consent if Failure to Reimburse........................................... 21
SECTION 8. Contribution................................................................................... 21
SECTION 9. Representations, Warranties and Agreements to Survive Delivery................................. 22
SECTION 10. Termination of Agreement....................................................................... 22
(a) Termination; General......................................................................... 23
(b) Liabilities.................................................................................. 23
SECTION 11. Default by One or More of the Initial Purchasers............................................... 23
SECTION 12. Notices........................................................................................ 24
SECTION 13. Parties........................................................................................ 24
SECTION 14. GOVERNING LAW AND TIME......................................................................... 24
SECTION 15. Effect of Headings............................................................................. 24
SECTION 16. Counterparts................................................................................... 24
SCHEDULES
Schedule A List of Initial Purchasers
Schedule B RPM International Inc. - Senior Convertible Notes Due 2033
Schedule C List of Material Subsidiaries
Schedule D List of Significant Subsidiaries
Schedule E Signatories of the Lock-Up Letter Agreement
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Opinion of P. Kelly Tompkins, General Counsel of the
Company, to be Delivered Pursuant to Section 5(a)
Exhibit C Form of Opinion of Calfee, Halter & Griswold LLP, United
States Counsel for the Company, to be Delivered Pursuant to
Section 5(a)
Exhibit D Form of Lock-Up Letter Agreement
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RPM INTERNATIONAL INC.
$247,514,000
Senior Convertible Notes due 2033
PURCHASE AGREEMENT
May 8, 2003
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representative of the several Initial Purchasers
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
RPM International Inc., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and each of the other Initial Purchasers
named in Schedule A hereto (collectively, the "Initial Purchasers," which term
shall also include any initial purchaser substituted as hereinafter provided in
Section 11 hereof), for whom Merrill Lynch is acting as representative (in such
capacity, the "Representative"), with respect to the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective principal amounts at maturity set forth in said
Schedule A of $247,514,000 aggregate principal amount at maturity of the
Company's Senior Convertible Notes due 2033 (the "Notes"), and with respect to
the grant by the Company to the Initial Purchasers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of an additional $49,486,000 aggregate principal amount at maturity of
Notes to cover over-allotments, if any. The aforesaid $247,514,000 aggregate
principal amount at maturity of Notes (the "Initial Securities") to be purchased
by the Initial Purchasers and all or any part of the $49,486,000 aggregate
principal amount at maturity of Notes subject to the option described in Section
2(b) hereof (the "Option Securities") are hereinafter called, collectively, the
"Securities." The Securities are to be issued pursuant to an indenture, to be
dated as of the Closing Time (as defined in Section 2(c)) (the "Indenture"),
between the Company and The Bank of New York, as trustee (the "Trustee").
The Securities are convertible, subject to certain conditions, at the
option of the holder prior to maturity (unless previously redeemed or otherwise
purchased) into shares of common stock, par value $.01 per share, of the Company
(the "Common Stock") in accordance with the terms of the Securities and the
Indenture, as described in Schedule B hereto. The shares of Common Stock will
have attached thereto rights (the "Rights") to purchase one-tenth of a share of
Common Stock. The Rights are to be issued pursuant to a Rights Agreement, dated
as of April 28, 1999 (the "Rights Agreement"), between the Company and National
City Bank, as successor Rights Agent to Computershare Investor Services
(formerly Harris Trust and Savings Bank), as the same may be amended from time
to time. Securities issued in book-entry form will
be issued to Cede & Co. as nominee of The Depository Trust Company ("DTC")
pursuant to a letter agreement, to be dated as of the Closing Time (as defined
in Section 2(c)), among the Company, the Trustee and DTC.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may initially resell, subject to the
conditions set forth herein, all or a portion of the Securities to purchasers
("Subsequent Purchasers") at any time after this Agreement has been executed and
delivered. The Securities are to be sold to the Initial Purchasers and offered
and resold by the Initial Purchasers without being registered under the
Securities Act of 1933, as amended (the "1933 Act"), in reliance upon exemptions
therefrom. Pursuant to the terms of the Securities and the Indenture, investors
that acquire Securities may only resell or otherwise transfer such Securities if
such Securities are hereafter registered under the 1933 Act or pursuant to an
available exemption from the registration requirements of the 1933 Act
(including the exemption afforded by Rule 144A ("Rule 144A") of the rules and
regulations of the Securities and Exchange Commission (the "Commission") under
the 1933 Act (the "1933 Act Regulations"). On or prior to the Closing Time, the
Company will enter into with the Initial Purchasers an agreement (the
"Registration Rights Agreement"), in substantially the form attached hereto as
Exhibit A, with such changes as shall be agreed to by the parties hereof,
pursuant to which, subject to the conditions set forth therein, the Company is
required to file and use its reasonable efforts to have declared effective a
registration statement (the "Registration Statement") under the 1933 Act to
register resales of the Securities and the shares of Common Stock issuable upon
conversion thereof.
The Company has prepared and will deliver to the Initial Purchasers, on
the date hereof or the next succeeding day, copies of an offering memorandum
dated May 8, 2003 (the "Offering Memorandum") to be used by each Initial
Purchaser in connection with its solicitation of purchases of, or offering of,
the Securities. "Offering Memorandum" means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum delivered by
the Company to the Initial Purchasers (whether the Offering Memorandum, or any
amendment or supplement to such document), including exhibits thereto and any
documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchasers in connection with their
solicitation of purchases of, or offering of, the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included," "stated" or "described"
in the Offering Memorandum (or other references of like import) shall be deemed
to mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Offering Memorandum.
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SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Initial Purchaser as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
Initial Purchaser, as follows:
(i) Offering Memorandum. The Offering Memorandum does
not, and at the Closing Time referred to in Section 2 (and, if any
Option Securities are purchased, at each Date of Delivery) will not,
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The representations and warranties in this subsection shall not apply
to statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with information furnished to the
Company in writing by any Initial Purchaser through Merrill Lynch
expressly for use in the Offering Memorandum.
(ii) Incorporated Documents. The Offering Memorandum as
delivered from time to time shall incorporate by reference the most
recent Annual Report of the Company on Form 10-K filed with the
Commission and each Quarterly Report of the Company on Form 10-Q filed
with the Commission and each Current Report of the Company on Form 8-K
filed (not furnished) with the Commission and such other reports as
specifically incorporated by reference in the Offering Memorandum. The
documents incorporated by reference in the Offering Memorandum (the
"Incorporated Documents"), at the time they were or hereafter are filed
with the Commission, or if amended, as so amended, complied and will
comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission thereunder (the "1934
Act Regulations").
(iii) Independent Accountants. The accountants who
certified the financial statements and supporting schedules
incorporated by reference in the Offering Memorandum are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv) Financial Statements. The financial statements,
together with the related schedules and notes, incorporated by
reference into the Offering Memorandum present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of income, shareholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules incorporated by reference into the Offering Memorandum
present fairly in accordance with GAAP the information required to be
stated therein.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum (exclusive of any amendment thereto), except as otherwise
stated therein, (A) there has been no material adverse
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change in the condition, financial or otherwise, or in the earnings,
business or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its Material
Subsidiaries (as defined below), other than those in the ordinary
course of business, which are material with respect to the Company and
its Material Subsidiaries considered as one enterprise, and (C) except
for regular quarterly dividends on the Common Stock in amounts per
share that are consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and to
enter into and perform its obligations under, or as contemplated by,
this Agreement. The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each other jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each subsidiary of the
Company listed on Schedule C hereto (collectively, the "Material
Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Offering Memorandum. Each Material Subsidiary is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good
standing would not result in a Material Adverse Effect. All of the
issued and outstanding shares of capital stock of each subsidiary of
the Company have been duly authorized and validly issued, are fully
paid and non-assessable, and except for directors' qualifying shares
and third party interests in joint ventures in which the Company
invests, are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims. The subsidiaries
of the Company listed on Schedule D hereto are the only subsidiaries of
the Company which meet the criteria in the definition of "significant
subsidiary" pursuant to Rule 1-02(w) of Regulation S-X under the 1933
Act.
(viii) Capitalization. The authorized, issued and
outstanding shares of capital stock of the Company are as set forth in
the Offering Memorandum in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any,
pursuant to this Agreement, pursuant to reservations, agreements,
employee benefit plans referred to in the Offering Memorandum or
pursuant to the exercise of convertible securities or options referred
to in the Offering Memorandum). The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; none of the outstanding
shares of capital stock of the Company was issued in violation of any
preemptive or other similar rights of any
4
securityholder of the Company. Other than as disclosed in the Offering
Memorandum, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding.
(ix) Authorization of this Agreement. This Agreement has
been duly authorized, executed and delivered by the Company.
(x) Authorization of the Indenture. The Indenture has
been duly authorized by the Company and, when executed and delivered by
the Company and the Trustee, will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(xi) Authorization of the Registration Rights Agreement.
The Registration Rights Agreement has been authorized by the Company
and, when executed and delivered by the Company and the Initial
Purchasers, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(xii) Authorization of the Securities. The Securities have
been duly authorized and, at the Closing Time, will have been duly
executed by the Company and, when authenticated, issued and delivered
in the manner provided for in the Indenture and delivered against
payment of the purchase price therefor as provided in this Agreement,
will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law), and will be in the form contemplated by, and entitled to the
benefits of, the Indenture.
(xiii) Description of the Securities, the Indenture and the
Registration Rights Agreement. As of the Closing Time, the Securities,
the Indenture and the Registration Rights Agreement will conform in all
material respects to the respective statements relating thereto
contained in the Offering Memorandum.
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(xiv) Authorization and Description of Common Stock. The
Common Stock conforms to all descriptions relating thereto set forth in
the Offering Memorandum, and such description conforms to the rights
set forth in the instruments defining the same (including the rights
associated with the Rights Agreement). Upon issuance and delivery of
the Securities in accordance with this Agreement and the Indenture, the
Securities will be convertible at the option of the holder thereof into
shares of Common Stock (including the rights associated with the Rights
Agreement) in accordance with the terms of the Securities and the
Indenture; the shares of Common Stock issuable upon conversion of the
Securities have been duly authorized and reserved for issuance upon
such conversion by all necessary corporate action and such shares, when
issued upon such conversion, will be validly issued and will be fully
paid and non-assessable; no holder of such shares will be subject to
personal liability by reason of being such a holder; and the issuance
of such shares upon such conversion will not be subject to the
preemptive or other similar rights of any securityholder of the
Company.
(xv) Authorization of the Rights Agreement. The Rights
Agreement has been duly authorized, executed and delivered by the
Company; the Rights have been duly authorized by the Company and, when
issued upon issuance of the Common Stock issuable upon conversion of
the Securities, will be validly issued, and the Common Stock have been
duly authorized by the Company and validly reserved for issuance upon
the exercise of the Rights in accordance with the terms of the Rights
Agreement, and when issued, such Common Stock will be validly issued,
fully paid and non-assessable.
(xvi) Absence of Defaults and Conflicts. Neither the
Company nor any of its Material Subsidiaries is in violation of its
charter or by-laws or other constituting or organizational document or
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its Material
Subsidiaries is a party or by which the Company or any of its Material
Subsidiaries may be bound, or to which any of the property or assets of
the Company or any of its Material Subsidiaries is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not reasonably be expected to result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement,
the Registration Rights Agreement, the Indenture and the Securities and
the consummation of the transactions contemplated herein and in the
Offering Memorandum (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as
described in the Offering Memorandum under the caption "Use of
Proceeds" and the issuance of the shares of Common Stock issuable upon
conversion of the Securities) and compliance by the Company with its
obligations hereunder and under the Indenture, the Registration Rights
Agreement and the Securities do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or a Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries pursuant to, the Agreements and Instruments (except
for such conflicts, breaches, defaults or Repayment Events or liens,
charges or encumbrances that, singly or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect), nor
will such
6
action result in any violation of (i) the provisions of the charter or
by-laws or other constituting or organizational document of the Company
or any of its Material Subsidiaries or (ii) any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any
of their assets, properties or operations, except in the case of clause
(ii), for such violation that would not result in a Material Adverse
Effect. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment prior to
the stated maturity or date of mandatory redemption or repayment
thereof of all or a portion of such indebtedness by the Company or any
of its subsidiaries.
(xvii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its Material Subsidiaries exists or,
to the knowledge of the Company, is imminent which might be expected to
have a Material Adverse Effect.
(xviii) Absence of Proceedings. Except as disclosed in the
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any of its
subsidiaries, which, singly or in the aggregate, if determined
adversely, would reasonably be expected to result in a Material Adverse
Effect.
(xix) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and to the Company's
knowledge, neither the Company nor any of its subsidiaries has received
any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of
the Company or any of its subsidiaries therein, and which infringement
or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would
result in a Material Adverse Effect.
(xx) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder or under the Registration Rights Agreement or
the Indenture, in connection with the offering, issuance or sale of the
Securities hereunder, the issuance of shares of Common Stock upon
conversion of Securities or the consummation of the transactions
contemplated by this Agreement or the Offering Memorandum, or for the
due execution, delivery or performance by the Company of this
Agreement, the Registration Rights Agreement or the Indenture, or for
the valid
7
authorization, issuance, sale and delivery of the Securities, except
such as have been already obtained and or as may be required under the
1933 Act or the 1933 Act Regulations or state securities laws in
connection with the transactions contemplated in the Registration
Rights Agreement and except for the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act") and
the listing of the Common Stock issued upon conversion of the
Securities on the NYSE.
(xxi) Investment Company Act. Neither the Company nor any
of its subsidiaries is, nor upon the issuance and sale of the
Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Offering Memorandum will be, an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(xxii) Good and Marketable Title. The Company and each of
its Material Subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects, except such as are described in the Offering
Memorandum, and all assets held under lease by the Company and its
Material Subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as have not had and would not,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(xxiii) Environmental Laws. There has been no storage,
disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes or
hazardous substances by the Company or any of its subsidiaries (or, to
the knowledge of the Company, any of their predecessors in interest)
at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of, and the Company or
any of its subsidiaries has no liability under, any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which
would require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a Material Adverse Effect; there has
been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to
or caused by the Company or any of its subsidiaries or with respect to
which the Company or any of its subsidiaries have knowledge, except for
any such spill, discharge, leak, emission, injection, escape, dumping
or release which would not have or would not be reasonably likely to
have, singularly or in the aggregate with all such spills, discharges,
leaks, emissions, injections, escapes, dumpings and releases, a
Material Adverse Effect. The terms "hazardous wastes," "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
8
In the ordinary course of its business, the Company conducts a
periodic review of the effect of any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws") on the business, operations and properties of the Company and
its subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license
or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review,
the Company has reasonably concluded that such associated costs and
liabilities have not had and would not, singularly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(xxiv) ERISA. The Company is in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company would
have any liability; the Company has not incurred and does not expect to
incur liability under (A) Title IV of ERISA with respect to the
termination of, or withdrawal from, any "pension plan" or (B) Section
412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code");
and each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(xxv) Insurance. The Company and each of its subsidiaries
carry, or are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective businesses and
the value of their respective properties.
(xxvi) Taxes. The Company has filed all federal, state and
local income and franchise tax returns required to be filed through the
date hereof and has paid all taxes due thereon, and no tax deficiency
has been determined adversely to the Company or any of its subsidiaries
which has had, nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, might have, a Material Adverse Effect.
(xxvii) Internal Controls. The Company (A) makes and keeps
accurate books and records and (B) maintains internal accounting
controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets,
(iii) access to its assets is permitted only in accordance with
management's authorization and (iv) the reported accountability for its
assets is compared with existing assets at reasonable intervals.
9
(xxviii) No Unlawful Payments. To the best of the Company's
knowledge after due inquiry, neither the Company nor any of its
subsidiaries, nor any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
subsidiaries, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(xxix) No Brokerage Commission; Finder's Fee. To the best of
the Company's knowledge after due inquiry, there are no contracts,
agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Initial
Purchaser for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(xxx) Dividend Payments. No Material Subsidiary of the
Company is currently prohibited, directly or indirectly, under any
agreement or other instrument to which it is a party or is subject,
from paying any dividends to the Company, from making any other
distribution on such Material Subsidiary's capital stock or from
repaying to the Company any loans or advances to such Material
Subsidiary from the Company.
(xxxi) Similar Offering. Neither the Company nor any of its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly, solicited any
offer to buy, sold or offered to sell or otherwise negotiated in
respect of, or will solicit any offer to buy, sell or offer to sell or
otherwise negotiate in respect of, in the United States or to any
United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the 1933 Act.
(xxxii) Rule 144A. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same
class as securities listed on a national securities exchange registered
under Section 6 of the 1934 Act, or quoted in a U.S. automated
interdealer quotation system.
(xxxiii) No General Solicitation or General Advertising. None
of the Company, its Affiliates or any person acting on its or any of
their behalf (other than the Initial Purchasers and their respective
Affiliates, as to whom the Company makes no representation) has engaged
or will engage, in connection with the offering of the Securities, in
any form of general solicitation or general advertising within the
meaning of Rule 502(c) under Regulation D of the 1933 Act.
(xxxiv) No Registration Required. Subject to compliance by
the Initial Purchasers with the representations and warranties and the
procedures set forth in Section 6 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers and the initial resale by the Initial Purchasers to
each Subsequent Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum
10
to register the Securities under the 1933 Act or to qualify the
Indenture under the 1939 Act.
(xxxv) Reporting Company. The Company is subject to the
reporting requirements of Section 13 or Section 15(d) of the 1934 Act.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company delivered to the Initial Purchasers or to counsel for the Initial
Purchasers shall be deemed a representation and warranty by the Company to the
Initial Purchasers as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Initial Securities. On the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to each Initial Purchaser, severally and
not jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company at the price set forth in Schedule B hereto the
principal amount at maturity of the Initial Securities set forth opposite the
name of such Initial Purchaser in Schedule A plus any additional principal
amount at maturity of Initial Securities that such Initial Purchaser may become
obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) Option Securities. In addition, on the basis of the
representations, warranties and agreements herein contained and subject to the
terms and conditions herein set forth, the Company hereby grants an option to
the Initial Purchasers, severally and not jointly, to purchase up to an
additional $49,486,000 aggregate principal amount at maturity of Option
Securities at the same price per Security set forth in Schedule B for the
Initial Securities. The option hereby granted will expire 30 days after the date
hereof and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Securities as may be modified by
subsequent purchases and sales by the Initial Purchasers upon notice by the
Representative to the Company setting forth the number of Option Securities as
to which the Initial Purchasers are then exercising the option and the time and
date of payment and delivery for such Option Securities. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representative,
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined,
unless otherwise agreed upon by the Initial Purchasers and the Company. If the
option is exercised as to all or any portion of the Option Securities, each of
the Initial Purchasers, acting severally and not jointly, will purchase that
proportion of the principal amount at maturity of Option Securities then being
purchased which the principal amount at maturity of Initial Securities set forth
opposite the name of such Initial Purchaser in Schedule A bears to the total
principal amount at maturity of Initial Securities.
(c) Payment. Payment of the purchase price for, and delivery of one or
more global certificates for, the Initial Securities shall be made at the
offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022,
or at such other place as shall be agreed upon by the Representative and the
Company, at 9:00 A.M. (Eastern time) on the third business day after the date
hereof (unless postponed in accordance with the provisions of Section 11
hereof), or at such other time not later than ten business days
11
after such date as shall be agreed upon by the Representative and the Company
(such time and date of payment and delivery being herein called the "Closing
Time").
In addition, in the event that the Initial Purchasers have exercised
their option to purchase all or any of the Option Securities, payment of the
purchase price for, and delivery of one or more global certificates for, such
Option Securities shall be made at the above-mentioned offices, or at such other
place as shall be agreed upon by the Representative and the Company, on each
Date of Delivery as specified in the notice from the Representative to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Initial Purchasers of the
Securities to be purchased by them. It is understood that each Initial Purchaser
has authorized the Representative, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Initial Securities
and the Option Securities, if any, which it has agreed to purchase. Merrill
Lynch, individually and not as representative of the Initial Purchasers, may
(but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Initial Purchaser whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Initial Purchaser from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations
($1,000 or integral multiples thereof) and registered in such names as the
Representative may request in writing at least one full business day before the
Closing Time or the relevant Date of Delivery, as the case may be; provided that
any Securities in global form be registered in the name of Cede & Co. The
certificates for the Initial Securities and the Option Securities, if any, will
be made available for examination and packaging by the Initial Purchasers in The
City of New York not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with
each Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to the Initial Purchasers, without charge, such number of copies of the
Offering Memorandum and any amendments and supplements thereto and any
Incorporated Documents as the Initial Purchasers may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other securities regulatory body
in the United States or any other jurisdiction, and (y) prior to the completion
of the placement of the Securities by the Initial Purchasers as evidenced by a
notice from the Initial Purchasers to the Company in writing, any material
changes in or affecting the
12
condition, financial or otherwise, or the earnings, business or business
prospects of the Company and its subsidiaries considered as one enterprise which
(i) make any statement in the Offering Memorandum false or misleading or (ii)
are not disclosed in the Offering Memorandum. In such event or if during such
time any event shall occur as a result of which it is necessary, in the
reasonable opinion of any of the Company, its counsel, the Initial Purchasers or
counsel for the Initial Purchasers, to amend or supplement the Offering
Memorandum in order that the Offering Memorandum not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in the light of the circumstances
then existing, the Company will forthwith amend or supplement the Offering
Memorandum by preparing and furnishing to each Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Offering Memorandum (in
form and substance satisfactory in the reasonable opinion of counsel for the
Initial Purchasers) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendments to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect any such amendment or supplement
without the consent of the Initial Purchasers. Neither the consent of the
Initial Purchasers, nor the Initial Purchasers' delivery of any such amendment
or supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualifications of Securities for Offer and Sale. The Company will
use its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities and the shares of Common Stock issuable upon conversion of Securities
for offering and sale under the applicable securities laws of such states and
other jurisdictions as the Representative may designate and will maintain such
qualification in effect as long as required in connection with the distribution
of the Securities; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject. In each jurisdiction
in which the Securities or such shares of Common Stock issuable upon conversion
of the Securities have been so qualified, the Company will file such statements
and reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required in connection with the
distribution of the Securities.
(e) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner indicated in the Offering
Memorandum under "Use of Proceeds."
(f) Rating of Securities. The Company shall take all reasonable action
necessary to enable Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc. ("S&P") and Moody's Investor Service, Inc.
("Moody's") to provide their respective credit ratings of the Securities.
13
(g) Listing on Securities Exchange. The Company will use its reasonable
best efforts to cause all shares of Common Stock issuable upon conversion of the
Securities to be listed on the NYSE or listed on a "national securities
exchange" registered under Section 6 of the 1934 Act.
(h) Restriction on Sale of Securities. During a period of 90 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Merrill Lynch, (i) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant for the sale
of, lend or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable or exercisable
for or repayable with Common Stock, or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap or
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, any of the economic consequence of ownership of the Common Stock,
or any securities convertible into or exchangeable or exercisable for or
repayable with Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder or the Common Stock to be delivered
upon conversion thereof, (B) the resale registration statement to be filed by
the Company pursuant to the Registration Rights Agreement relating to the resale
of the Securities and the shares of Common Stock, (C) Common Stock to be issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation benefit plans or pursuant to currently outstanding
options, warrants or rights existing on the date hereof and referred to in the
Offering Memorandum.
(i) PORTAL Designation. The Company will use its best efforts to permit
the Securities to be designated as PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to the PORTAL Market.
(j) DTC. The Company will cooperate with the Representative and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(k) Reporting Requirements. The Company, during the period when the
Offering Memorandum is required to be delivered, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any Incorporated Document) and of each amendment or supplement
thereto, (ii) the preparation, printing and delivery to the Initial Purchasers
of this Agreement, any Agreement among Initial Purchasers, the Indenture, the
Securities, the Registration Rights Agreement and such other documents as may be
required in connection with the offer, purchase, sale, issuance or delivery of
the Securities or the issuance or delivery of the Common Stock issuable upon
conversion thereof, (iii) the preparation, issuance and delivery of the
certificates
14
for the Securities to the Initial Purchasers and the certificates for the Common
Stock issuable upon conversion thereof including any transfer taxes, any stamp
or other duties payable upon the sale, issuance and delivery of the Securities
to the Initial Purchasers, the issuance and delivery of the Common Stock
issuable upon conversion thereof and any charges of DTC in connection therewith,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities and the shares of Common Stock
issuable upon conversion of the Securities under securities laws in accordance
with the provisions of Section 3(d), including filing fees and the reasonable
fees and disbursements of counsel for the Initial Purchasers in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) any fees of the NASD in connection with the Securities,
(vii) the fees and expenses of the Trustee, including the fees and disbursements
of counsel for the Trustee in connection with the Indenture and the Securities,
(viii) the fees and expenses of any transfer agent or registrar for the Common
Stock, (ix) any fees payable in connection with the rating of the Securities,
and (x) any fees and expenses payable in connection with the initial and
continued designation of the Securities as PORTAL securities under the PORTAL
Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinions of Counsel for the Company. At the Closing Time, the
Initial Purchasers shall have received the opinion of P. Kelly Tompkins, General
Counsel of the Company, and the opinion of Calfee, Halter & Griswold LLP,
counsel for the Company, each in form and substance satisfactory to counsel for
the Initial Purchasers and dated as of the Closing Time, to the effect set forth
in Exhibits B and C hereto, respectively. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of the officers of the Company and
certificates of public officials.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Initial Purchasers shall have received the opinion, dated as of the Closing
Time, of Shearman & Sterling, counsel for the Initial Purchasers, in form and
substance satisfactory to the Initial Purchasers. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York, the federal law of the United States and
the General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to the Initial Purchasers. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and
certificates of public officials.
15
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum (exclusive of any amendments or
supplements thereto after the date of this Agreement), any material adverse
change in the condition, financial or otherwise, or in the earnings, business or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Initial Purchasers shall have received a certificate of the President or a
Senior Vice President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of the Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of the Closing
Time, and (iii) the Company has complied with all of the agreements entered into
in connection with the transaction contemplated herein and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Time.
(d) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Initial Purchasers shall have received from Ciulla, Smith & Dale,
LLP a letter dated such date, in the form and substance satisfactory to the
Initial Purchasers, containing statements and information of the type ordinarily
included in accountants' comfort letters to Initial Purchasers with respect to
the financial statements and certain financial information contained in the
Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial
Purchasers shall have received from Ciulla, Smith & Dale, LLP a letter, dated as
of the Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities shall be
rated at least BBB with a negative outlook by S&P and Baa3 by Moody's, and the
Company shall have delivered to the Initial Purchasers a letter dated the
Closing Time, from each such rating agency, or other evidence satisfactory to
the Initial Purchasers, confirming that the Securities have such rating. Since
the date of this Agreement, there shall not have occurred a downgrading in the
rating assigned to the Securities or any of the Company's other securities by
any "nationally recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and
no such security rating organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
the Securities or any of the Company's other securities.
(g) Lock-up Agreements. On or prior to the date of this Agreement, the
Initial Purchasers shall have received an agreement substantially in the form of
Exhibit D hereto signed by the persons listed in Schedule E hereto.
(h) Indenture and Registration Rights Agreement. At or prior to the
Closing Time, the Company and the Trustee shall have executed and delivered the
Indenture, and the Company, and the Initial Purchasers shall have executed and
delivered the Registration Rights Agreement.
16
(i) Conditions to Purchase of Option Securities. In the
event that the Initial Purchasers exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the Option Securities, the obligations
of the Initial Purchasers to purchase such Option Securities is subject to the
accuracy as of each Date of Delivery of the representations and warranties of
the Company contained in Section 1 or in certificates of any officer of the
Company delivered pursuant to the provisions hereof, to the performance by the
Company of their covenants and other obligations hereunder, and at the relevant
Date of Delivery, the Initial Purchasers shall have received:
(i) Officers' Certificate. A certificate, dated such Date
of Delivery, of the President or Senior Vice President of the Company
and the Chief Financial Officer or Chief Accounting Officer of the
Company confirming that the certificate delivered at the Closing Time
pursuant to Section 5(c) hereof remains true and correct as of such
Date of Delivery.
(ii) Opinions of Counsel for the Company. The opinion of
P. Kelly Tompkins, General Counsel of the Company, and the opinion of
Calfee, Halter & Griswold LLP, counsel for the Company, each in form
and substance satisfactory to the Initial Purchasers, each dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(a) hereof.
(iii) Opinion of Counsel for Initial Purchasers. The
opinion of Shearman & Sterling, counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof.
(iv) Bring-down Comfort Letter. A letter from Ciulla,
Smith & Dale, LLP, in form and substance satisfactory to the Initial
Purchasers and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Initial Purchasers
pursuant to Section 5(d) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than three business days prior to such Date of Delivery.
(j) Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Initial Purchasers shall have been furnished with such
documents, certificates and opinions as they may reasonably request for the
purpose of enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy and completeness of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Initial Purchasers and
counsel for the Initial Purchasers.
(k) PORTAL Market. At the Closing Time, the Securities and the Common
Stock issuable upon conversion of the Securities shall have been designated for
trading on PORTAL.
(l) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement (or, in the case of any
17
condition to the purchase of Option Securities, on a Date of Delivery which is
after the Closing Time, the obligations of the several Initial Purchasers to
purchase the relevant Option Securities on such Date of Delivery) may be
terminated by the Initial Purchasers by notice to the Company at any time at or
prior to the Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 7, 8 and 9 shall survive any
such termination and remain in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company, as the case may be, hereby establish and agree to observe the following
procedures in connection with the offer and sale of the Securities.
(i) Offers and Sales to Qualified Institutional Buyers.
Offers and sales of the Securities shall only be made to persons whom
the offeror or seller reasonably believes to be qualified institutional
buyers, as defined in Rule 144A under the 1933 Act ("Qualified
Institutional Buyers").
(ii) No General Solicitation. No general solicitation or
general advertising (within the meaning of Rule 502(c) under the 1933
Act) shall be used in the United Stated in connection with the offering
or sale of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser of Securities acting as a fiduciary for
one or more third parties, each third party shall, in the reasonable
belief of such Initial Purchaser, be a Qualified Institutional Buyer to
whom the notice required in subsection (iv) has been given.
(iv) Subsequent Purchaser Notification. Each Initial
Purchaser will take reasonable steps to inform, and cause each of its
United States Affiliates to take reasonable steps to inform, persons
acquiring Securities from such Initial Purchaser or its Affiliate that
the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the
1933 Act in reliance on Rule 144A or in accordance with another
exemption from registration under the 1933 Act, as the case may be, and
(C) may not be offered, sold or otherwise transferred except (1) to the
Company, (2) outside the United States in accordance with Regulation S
under the 1933 Act or (3) inside the United States in accordance with
(x) Rule 144A to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that is purchasing such Securities for
its own account or for the account of a Qualified Institutional Buyer
to whom notice is given that the offer, sale or transfer is being made
in reliance on Rule 144A or (y) pursuant to another available exemption
from registration under the 1933 Act.
(v) Restriction on Transfer. The transfer restrictions
and the other provisions set forth in the Offering Memorandum under the
caption "Transfer Restrictions," including the legend required thereby,
shall apply to the Securities except as otherwise agreed by the Company
and the Initial Purchasers. Following the sale of the Securities
18
by the Initial Purchasers to each Subsequent Purchaser pursuant to the
terms hereof, the Initial Purchasers shall not be liable or responsible
to the Company for any losses, damages or liabilities suffered or
incurred by the Company, including any losses, damages or liabilities
under the 1933 Act, arising from or relating to any subsequent resale
or transfer of any Security.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Integration. The Company agrees that it will not and
will cause its Affiliates not to, directly or indirectly, solicit any
offer to buy, sell or make any offer or sale of, or otherwise negotiate
in respect of, securities of the Company or any Affiliate thereof of
any class if, as a result of the doctrine of "integration" referred to
in Rule 502 under the 1933 Act, such offer and sale would render
invalid (for the purpose of (A) the sale of the Securities by the
Company to the Initial Purchasers, (B) the resale of the Securities by
the Initial Purchasers to Subsequent Purchasers, or (C) the resale of
the Securities by such Subsequent Purchasers to others) the exemption
from the registration requirements of the 1933 Act provided by Section
4(2) thereof or by Rule 144A thereunder or otherwise.
(ii) Rule 144A Information. The Company agrees that, in
order to render the Securities eligible for resale pursuant to Rule
144A under the 1933 Act, while any of the Securities remain
outstanding, it will make available, upon request, to any holder of
Securities or prospective purchasers of Securities the information
specified in Rule 144A(d)(4), unless the Company furnishes information
to the Commission pursuant to Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Purchases. Until the expiration of two
years after the original issuance of the Securities, the Company will
not, and will cause its "affiliates" (as such term is defined in Rule
144(a)(1) under the 1933 Act) not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as
such term is defined under Rule 144(a)(3) under the 1933 Act), whether
as beneficial owner or otherwise (except as agent on behalf of and for
the account of customers in the ordinary course of business as a
securities broker in unsolicited broker's transactions) unless,
immediately upon any such purchase, the Company or any such affiliate
shall submit such Securities to the Trustee for cancellation.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a Qualified Institutional Buyer.
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
19
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Offering Memorandum (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 7(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum (or any amendment or supplement thereto).
(b) Indemnification of the Company. Each Initial Purchaser severally
agrees to indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Offering Memorandum (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Initial Purchasers through Merrill
Lynch expressly for use in the Offering Memorandum (or any amendment or
supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section
20
7(b) above, counsel to the indemnified parties shall be selected by the Company.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into, and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. Contribution. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total purchase discount received by the Initial Purchasers,
bear to the aggregate initial offering price of the Securities.
21
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased and sold by it hereunder exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company. The Initial Purchasers' respective
obligations to contribute pursuant to this Section are several in proportion to
the principal amount of Securities set forth opposite their respective names in
Schedule A hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or any person who
controls an Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
22
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), any material adverse change in the condition, financial or
otherwise, or in the earnings, business or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or in the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representative, impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the NYSE or if trading generally on the NYSE, the American Stock
Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the
United States, or (iv) if a banking moratorium has been declared by either
federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7, 8 and 9 shall survive such termination and remain in full force and
effect.
SECTION 11. Default by One or More of the Initial Purchasers. If
one or more of the Initial Purchasers shall fail at the Closing Time to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Initial Purchasers shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Initial Purchasers, or any other initial purchasers, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the Initial
Purchasers shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the aggregate principal amount of the Securities to be purchased
hereunder, each of the non-defaulting Initial Purchasers shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the
aggregate principal amount of the Securities to be purchased hereunder,
this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
23
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Initial Purchasers or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Offering Memorandum or in any other
documents or arrangements. As used herein, the term "Initial Purchaser" includes
any person substituted for an Initial Purchaser under this Section.
SECTION 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Initial Purchasers shall be directed to Merrill Lynch at 4 World Financial
Center, New York, New York 10080, attention of Investment Banking Counsel; and
notices to the Company shall be directed to them at P.O. Box 777, 2628 Pearl
Road, Medina, Ohio 44258, attention of General Counsel (Fax: (330) 225-6574),
with a copy to Edward W. Moore at Calfee, Halter & Griswold LLP, 800 Superior
Avenue, Suite 1400, Cleveland, Ohio 44114 (Fax: (216) 241-0816).
SECTION 13. Parties. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Initial Purchasers and the Company and their respective
successors, and said controlling persons and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from the Initial Purchasers shall be deemed to be a
successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement.
24
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
RPM INTERNATIONAL INC.
By: /s/ P. KELLY TOMPKINS
------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
For itself and the other Initial Purchasers named in Schedule A hereto.
By: /s/ PURNA R. SAGGURTI
-----------------------------------------------
Authorized Signatory
SCHEDULE A
Principal
Amount at
Maturity of
Name of Initial Purchaser Securities
------------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................... $173,260,000
Wachovia Securities, Inc.................................................. 37,129,000
BNY Capital Markets, Inc.................................................. 12,375,000
Banc One Capital Markets, Inc............................................. 12,375,000
McDonald Investments Inc., a KeyCorp Company.............................. 12,375,000
------------
Total................................................................. $247,514,000
============
SCH A-1
SCHEDULE B
RPM INTERNATIONAL INC.
SENIOR CONVERTIBLE NOTES DUE 2033
1. The initial offering price per $1,000 principal amount at maturity
of the Securities shall be $505.19, which represents a yield to maturity of
2.75% per annum (computed on a semiannual bond equivalent basis), adjusted for
any cash interest.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be $495.09, being an amount equal to the initial offering price
set forth above, less $10.10 per $1,000 principal amount at maturity of
Securities.
3. Cash interest on the Securities at the rate of 1.389% per annum on
the principal amount at maturity shall be payable semiannually in arrears on May
13 and November 13 of each year, beginning November 13, 2003 until May 13, 2008.
4. Contingent cash interest on the Securities shall be payable during
any six-month period commencing after November 13, 2008 if the average market
price of the Securities for the five trading days ending on the third trading
day immediately preceding the first day of the relevant six-month period equals
120% or more of the sum of the issue price, accrued original issue discount and
accrued cash interest, if any, for a Security to the day immediately preceding
the relevant six-month period. Contingent cash interest payable per Security in
respect of any six-month period in which contingent interest is payable will
equal the annual rate of 1.0% of the average market price of a Security for the
five trading day measurement period.
5. The Securities shall be convertible into shares of common stock, par
value $.01 per share, of the Company at an initial rate of 27.0517 shares of
Common Stock per $1,000 principal amount at maturity of Securities.
6. Prior to May 13, 2008, the Securities will not be redeemable.
7. The redemption price shall be $505.19 plus accrued original issue
discount or accrued cash interest, if any, as of the applicable redemption date.
8. The purchase dates and the purchase prices included in the Offering
Memorandum and correspondingly in the Indenture shall be:
Purchase Date Purchase Price
- ------------- --------------
May 13, 2008 $505.19
May 13, 2013 $579.11
May 13, 2018 $663.85
May 13, 2023 $761.00
May 13, 2028 $872.35
SCH B-1
9. Contingent Conversion Triggers:
(i) In any fiscal quarter (commencing after May 31, 2003), if, as
of the last day of the preceding fiscal quarter, the closing sale price of the
Common Stock for at least 20 trading days in a period of 30 consecutive trading
days ending on the last trading day of such preceding fiscal quarter is more
than 120% of the accreted conversion price per share of Common Stock (excluding
accrued cash interest, if any) on the last day of such quarter;
(ii) During any period in which the credit rating assigned to the
Securities is below a specified level;
(iii) The Securities are called for redemption; and
(iv) Corporate transactions specified in the Offering Memorandum
have occurred.
SCH B-2
SCHEDULE C
LIST OF MATERIAL SUBSIDIARIES
Jurisdiction of
Subsidiary Corporation
---------- -----------
RPM, Inc............................................... Ohio
RPM Industrial Holding Company......................... Delaware
RPM Consumer Holding Company........................... Delaware
StonCor Group, Inc..................................... Delaware
Dryvit Holdings, Inc................................... Rhode Island
Rust-Oleum Corporation................................. Illinois
Zinsser Co., Inc....................................... New Jersey
Tremco Incorporated.................................... Ohio
DAP Products Inc....................................... Delaware
SCH C-1
SCHEDULE D
LIST OF SIGNIFICANT SUBSIDIARIES
Jurisdiction of
Subsidiary Corporation
---------- -----------
StonCor Group, Inc..................................... Delaware
Dryvit Holdings, Inc................................... Rhode Island
Rust-Oleum Corporation................................. Illinois
Zinsser Co., Inc....................................... New Jersey
Tremco Incorporated.................................... Ohio
DAP Products Inc....................................... Delaware
SCH D-1
SCHEDULE E
LIST OF PERSONS SUBJECT TO THE LOCK-UP LETTER AGREEMENT
James A. Karman
Frank C. Sullivan
Dennis F. Finn
Glenn R. Hasman
Paul G. Hoogenboom
Stephen J. Knoop
Robert L. Matejka
Ronald A. Rice
Keith R. Smiley
P. Kelly Tompkins
Thomas C. Sullivan
Dr. Max D. Amstutz
E. Bradley Jones
Albert B. Ratner
Dr. Jerry Sue Thornton
Edward B. Brandon
William A. Papenbrock
Donald K. Miller
Joseph P. Viviano
Bruce Carbonari
SCH E-1
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
Exhibit A-1
EXHIBIT B
FORM OF OPINION OF P. KELLY TOMPKINS
GENERAL COUNSEL OF THE COMPANY,
TO BE DELIVERED PURSUANT TO SECTION 5(a)
(i) The Company is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its businesses require such qualification
and has all power and authority necessary to own or hold its properties and
conduct the businesses in which it is engaged, except where the failure to be so
qualified or to be in good standing as a foreign corporation have not had and
would not, singularly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(ii) Each of the Material Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such qualification and
has all power and authority necessary to own or hold its properties and conduct
the business in which its is engaged, except where the failure to be so
qualified or to be in good standing as a foreign corporation has not and would
not, singularly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(iii) All of the issued shares of capital stock of each Material
Subsidiary have been duly and validly authorized and issued and are fully paid
and non-assessable and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(iv) To the best of such counsel's knowledge after due inquiry and
other than as set forth in the Offering Memorandum, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, singularly or in the aggregate, might have a Material
Adverse Effect; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(v) The statements contained in the Offering Memorandum or in the
documents incorporated by reference under the captions "Legal Proceedings",
"Business--Environmental Matters", "Risk Factors--The chemical and construction
products industries we serve inherently expose us to other potential significant
litigation-related costs", "Risk Factors-Certain of our subsidiaries,
principally Bondex International, Inc., are defendants in numerous
asbestos-related personal injury lawsuits. Resolutions of existing and future
asbestos related lawsuits may have a material effect on our future consolidated
financial condition, operating results and liquidity. We anticipate taking a
material charge to our fiscal 2003 earnings", "Risk Factors--Environmental laws
and regulations could subject us to significant future liabilities", and
"Certain Relationships and Related Transactions" insofar as they describe
charter documents, contracts, legal proceedings, federal and state statutes,
rules and regulations, constitute a fair summary thereof.
Exhibit B-1
(vi) The issue and sale of the Securities and the execution,
delivery and compliance by the Company with all of the provisions of the
Purchase Agreement, the Indenture, the Registration Rights Agreement and the
Securities and the consummation of the transactions contemplated thereby do not
and will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other similar agreement or instrument to which
the Company or any of its Material Subsidiaries is a party or by which the
Company or any of its Material Subsidiaries is bound or to which any of the
properties or assets of the Company or any of it Material Subsidiaries is
subject, (except for such conflicts, breaches or violations that, singly or in
the aggregate, would not result in a Material Adverse Effect), nor will such
actions result in any violation of the provisions of the charter or by-laws of
the Company or any of its Material Subsidiaries or any statute or any order,
rule or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its Material Subsidiaries or
any of their properties or assets.
(vii) Neither the Company nor any of its Material Subsidiaries is in
violation of its charter or by-laws or other constituting or organizational
document.
(viii) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which have had and would not be
reasonably likely to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and releases, a
Material Adverse Effect.
In rendering such opinion, such counsel may state that their
opinion is limited to matters governed by the Federal laws of the United States
of America, the General Corporation Law of the State of Ohio and the General
Corporation Law of the State of Delaware. Such opinion shall also be to the
effect that (x) such counsel has acted as counsel to the Company in connection
with the preparation of the Offering Memorandum (and the documents incorporated
by reference) and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead them to believe that the Offering
Memorandum or any amendment or supplement thereto (including the documents
incorporated by reference therein) (except for the financial statements and
related schedules and other financial data included or incorporated by reference
therein, as to which such counsel need express no belief), at the time the
Offering Memorandum was issued, at the time any such amended or supplemented
Offering Memorandum was issued or
Exhibit B-2
at the Closing Time, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The foregoing opinion and statement may be qualified by a
statement to the effect that such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Offering Memorandum (other than as set forth in clause (v) above).
Exhibit B-3
EXHIBIT C
FORM OF OPINION OF Calfee, Halter & Griswold LLP
UNITED STATES COUNSEL FOR THE COMPANY,
TO BE DELIVERED PURSUANT TO SECTION 5(a)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has an authorized capitalization as set forth in
the Offering Memorandum. All of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the Offering
Memorandum.
(iii) Except as described in the Offering Memorandum, there are no
preemptive or other rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of the Common Stock pursuant to the
Company's charter or by-laws or any agreement or other instrument filed as an
exhibit to the documents incorporated by reference into the Offering Memorandum.
(iv) All of the Company's options, warrants and other rights to
purchase or exchange any securities for shares of the Company's capital stock
have been duly and validly authorized and issued, and conform to the description
thereof contained in the documents incorporated by reference therein.
(v) The documents incorporated by reference in the Offering
Memorandum (other than the financial statements and related schedules therein,
as to which such counsel need express no belief), when they were filed with the
Commission complied as to form in all material respects with the requirements of
the 1934 Act and the 1934 Act Regulations.
(vi) The statements contained in the Offering Memorandum or in the
documents incorporated by reference therein under the captions, "Description of
Notes", "Description of Our Capital Stock", "Description of Our Other
Indebtedness" and "Material United States Federal Income Tax Consequences",
insofar as they describe charter documents, contracts, legal proceedings,
federal and state statutes, rules and regulations and other legal matters,
constitute a fair summary thereof.
(vii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the Company
and, when issued upon issuance of the Common Stock issuable upon conversion of
the Securities, will be validly issued, and the shares of Common Stock have been
duly authorized by the Company and validly reserved for issuance upon the
exercise of the Rights in accordance with the terms of the Rights Agreement, and
when issued, such shares of Common Stock will be validly issued, fully paid and
non-assessable.
Exhibit C-1
(ix) The Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
(x) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
(xi) The Securities are in the form contemplated by the Indenture,
have been duly authorized, executed, issued and delivered by the Company, and
when authenticated by the Trustee in the manner provided in the Indenture, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(xii) Upon issuance and delivery of the Securities in accordance
with the Purchase Agreement and the Indenture, the Securities will be
convertible at the option of the holder thereof for shares of Common Stock
(including the rights associated with the Rights Agreement) in accordance with
the terms of the Securities and the Indenture; the shares of Common Stock
issuable upon conversion of the Securities have been duly authorized and
reserved for issuance upon such conversion by all necessary corporate action and
such shares, and when issued upon such conversion, will be validly issued and
will be fully paid and non-assessable; and to our knowledge, the issuance of
such shares upon such conversion will not be subject to the preemptive or other
similar rights of any securityholder of the Company.
(xiii) The issue and sale of the Securities and the execution,
delivery and performance by the Company with all of the provisions of the
Purchase Agreement, the Indenture, the Registration Rights Agreement and the
Securities and the consummation of the transactions contemplated thereby do not
and will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument filed as an
exhibit to any of the documents incorporated by reference to the Offering
Memorandum, nor will such actions result in any violation of the provisions of
the charter or by-laws of the Company; and no consent, approval, authorization
or order of, or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and performance of the
Purchase Agreement, the Registration Rights Agreement or the Indenture or the
consummation of the transactions
Exhibit C-2
contemplated thereby, except for such consents, approvals, authorizations,
orders, filings or registrations as have been obtained or made and or as may be
required under the 1933 Act or the 1933 Act Regulations or state securities laws
in connection with the transactions contemplated in the Registration Rights
Agreement and except for the qualification of the Indenture under the 1939 Act
and the listing of the Common Stock issued upon conversion of the Securities on
the NYSE.
(xiv) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers and each Subsequent
Purchaser in the manner contemplated by the Purchase Agreement and the Offering
Memorandum to register the Securities under the 1933 Act or to qualify the
Indenture under the 1939 Act.
(xv) The Company is not, nor as of the Closing Date after giving
effect to the offering and sale of the Securities and the application of the net
proceeds therefrom will be, an "investment company" as defined in the Investment
Company Act of 1940, as amended.
(xvi) The Securities, the Common Stock, the Registration Rights
Agreement and the Indenture conform in all material respects to the descriptions
thereof contained in the Offering Memorandum.
In rendering such opinion, such counsel may state that their
opinion is limited to matters governed by the Federal laws of the United States
of America, the laws of the State of New York, the General Corporation Law of
the State of Ohio and the General Corporation Law of the State of Delaware. Such
opinion shall also be to the effect that (x) such counsel has acted as counsel
to the Company in connection with the preparation of the Offering Memorandum
(and the documents incorporated by reference) and (y) based on the foregoing, no
facts have come to the attention of such counsel which lead them to believe that
the Offering Memorandum or any amendment or supplement thereto (including the
documents incorporated by reference therein) (except for the financial
statements and related schedules and other financial data included or
incorporated by reference therein, as to which such counsel need express no
belief), at the time the Offering Memorandum was issued, at the time any such
amended or supplemented Offering Memorandum was issued or at the Closing Time,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum (other than as set forth in clauses (vi) and (xvi) above).
Exhibit C-3
EXHIBIT D
Form of Lock-Up Letter Agreement
May ___, 2003
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representative of the several Initial Purchasers named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Re: Proposed Offering by RPM International Inc. of Senior
Convertible Notes due 2033
Ladies and Gentlemen:
The undersigned understands that you, as Representative of the several
Initial Purchasers, propose to enter into a Purchase Agreement (the "Purchase
Agreement") with RPM International Inc., a Delaware corporation (the "Company"),
providing for the offering (the "Offering"), pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"), by the several
Initial Purchasers named in Schedule A to the Purchase Agreement (the "Initial
Purchasers"), of Senior Convertible Notes due 2033 of the Company (the "Initial
Securities") and the grant by the Company to the Initial Purchasers of the
option to purchase additional Senior Convertible Notes due 2033 to cover
over-allotments, if any (the "Option Securities"). The Initial Securities,
together with the Option Securities, are collectively referred to as the
"Securities". Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
In consideration of the Initial Purchasers' agreement to purchase and
make the Offering of the Securities, and for other good and valuable
consideration receipt of which is hereby acknowledged, the undersigned hereby
agrees that, without the prior written consent of the Representative on behalf
of the Initial Purchasers, the undersigned will not, during the period
commencing the date hereof and ending 90 days from the date of the Offering
Memorandum relating to the Offering, (1) offer, pledge, announce the intention
to sell, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or lend or otherwise transfer or dispose of, directly or
indirectly, any shares of the Company's common stock, par value $0.01 per share
(the "Common Stock") or any securities convertible into or exercisable or
exchangeable for or repayable with Common Stock (including without limitation,
Common Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and securities which may be issued upon exercise of a stock option or
warrant), other than as bona fide gifts to persons or entities provided that (i)
the persons or entities enter
Exhibit D-1
into a lock-up letter substantially in the form of this letter, (ii) the
Representative receive written notice prior to the transfer and (iii) no filing
by any party, including any donor or donee, under Section 16(a) of the
Securities Exchange Act of 1934, as amended, shall be required or shall be made
voluntarily in connection with such transfer, other than a filing on Form 5, or
(2) enter into any swap or other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, any of the economic consequences of
ownership of the Common Stock, or any securities convertible into or
exchangeable or exercisable for or repayable with Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. In addition, the
undersigned agrees that, without the prior written consent of the Representative
on behalf of the Initial Purchasers, it will not, during the period commencing
the date hereof and ending 90 days from the date of the Offering Memorandum,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for or repayable with Common Stock.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Purchase Agreement does not
become effective, or if the Purchase Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Securities to be sold thereunder, the
undersigned shall be released from all obligations under this Letter Agreement.
The undersigned understands that the Initial Purchasers are entering
into the Purchase Agreement and proceeding with the Offering in reliance upon
this Letter Agreement.
This lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
Signature:______________________________
Print Name:_____________________________
Exhibit D-2