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Exhibit 2.2
EXECUTION COPY
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
This Amendment No. 1 is made and entered into effective as of the 1st
day of February, 1997, by and between THE B.F. GOODRICH COMPANY, a New York
corporation ("Seller"), and RPM, INC., an Ohio corporation ("Buyer").
RECITALS
A. Seller owns one hundred percent (100%) of the issued and outstanding
shares of common stock, par value $1.00 per share (the "Common Stock"), of
TREMCO INCORPORATED, an Ohio corporation ("Company").
B. Seller and Buyer entered into a Stock Purchase Agreement as of
October 21, 1996 (the "Stock Purchase Agreement") whereby Seller agreed to
transfer, sell and assign to Buyer and Buyer agreed to purchase from Seller, one
hundred percent (100%) of the Common Stock on the terms and conditions set forth
in the Stock Purchase Agreement.
C. Seller and Buyer desire to amend the Stock Purchase Agreement as
set forth below.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Seller and Buyer agree as follows:
SECTION 1. AMENDMENTS TO THE STOCK PURCHASE AGREEMENT.
1.01 SECTION 1.2(d) of the Stock Purchase Agreement is deleted in its
entirety and restated as follows:
"(d) subject to the provisions of SECTION 6.4, all rights and interests
in and under the BFGoodrich Insurance Policies (as hereinafter defined in
SECTION 4.1(u));"
1.02 A new SECTION 1.3(f) is added to the Stock Purchase Agreement as
follows:
"(f) subject to the terms contained in ARTICLE XI-A, all Litigation
Costs (as hereinafter defined) and Warranty Costs (as hereinafter defined)
associated with Non-roofing Products (as hereinafter defined) shipped by the
Company prior to the Closing Date."
1.03 SECTION 2.1 of the Stock Purchase Agreement is deleted in its
entirety and restated as follows:
"2.1 PURCHASE PRICE. In consideration of the sale, transfer,
conveyance, assignment, and delivery of the Common Stock by Seller to Buyer and
the mutual covenants, undertakings, and agreements herein contained, Buyer shall
on the Closing Date pay to Seller Two Hundred Thirty Million Seven Hundred
Thousand Dollars ($230,700,000) (the "Purchase
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Price") by wire transfer in immediately available funds to Seller's bank
account, which Seller shall identify in writing at least forty-eight (48) hours
prior to the Closing."
1.04 SECTION 6.4 of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"6.4 INSURANCE COVERAGE. For the purposes of this SECTION 6.4,
the term "Seller Insurance" means the BFGoodrich Insurance Policies in effect on
and before the Closing Date, in excess of Seller's applicable self-insured
retention amounts. From and after the Closing Date, Seller agrees to provide
Company and its Affiliates with continuing access as an insured party to Seller
Insurance, subject always to the terms, conditions and limitations thereof,
which are applicable to insurable claims and litigation asserted against Company
and its Affiliates as of the Closing Date. Seller shall be solely responsible
for notification of the underwriters of the Seller Insurance and thereafter for
the management of claims and litigation asserted against Company and its
Affiliates prior to, on or within thirty (30) days after the Closing Date.
Provided however, that Seller may, in its sole discretion, elect to purchase
tail insurance coverage which shall be reasonably acceptable to Buyer and which
will provide the same level and quality of coverage to Company and its
Affiliates as would have otherwise been provided by the Seller Insurance ("Tail
Insurance"). In the event Seller elects to so provide the Tail Insurance,
Company and its Affiliates shall not have any access to the Seller Insurance
after the Closing Date. The foregoing does not constitute, and shall not be
construed to constitute, an independent assumption, assurance, guarantee or
indemnity of any nature whatsoever by Seller with respect to claims and
litigation asserted against Company and its Affiliates as of the Closing Date."
SECTION 9.2(h) of the Stock Purchase Agreement is deleted in its
entirety.
1.05 SECTION 6.11 of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"6.11 CASH BALANCES. The parties agree that all cash balances
located outside the U.S. of Company and its Affiliates will be left on deposit
in the accounts of Company and its Affiliates on the Closing Date. In the event
that the aggregate amount of such cash on the Closing Date is greater than
U.S.$2.0 million, then, subject to the Net Worth provisions of SECTION 2.2(e),
the amount equivalent to such excess (less an amount equal to the face amount of
all checks written by or on behalf of Company before the Closing Date that have
not been paid as of the Closing Date) shall be paid by Buyer to Seller by wire
transfer of immediately available funds within seven (7) days after the Closing
Date. In the event that the aggregate amount of such cash on the Closing Date is
less than U.S.$2.0 million, then the amount equivalent to such shortfall (plus
an amount equal to the face amount of all checks written by or on behalf of
Company before the Closing Date that have not been paid as of the Closing Date)
shall be paid by Seller to Buyer by wire transfer of immediately available funds
within seven (7) days after the Closing Date."
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1.06 SECTION 6.1A of the Stock Purchase Agreement is amended by adding
the following sentence to the end of such section:
"It is hereby agreed that Buyer will accept the Schedules set
forth in this Agreement as updated to include statements to the effect that: (i)
Company's Cleveland plant may be operating its felt line in excess of air
operating permit limits based on throughput; (ii) Company's Cleveland plant may
not have records of earlier service on a chiller system, which may have involved
addition of CFCs to the chillers; (iii) Company's plants operated in Wigan,
England and Slough, England may be subject in the future to a statute similar to
CERCLA, which has been enacted in the UK, but is not yet effective; (iv)
volatile organic compounds have been detected in the groundwater beneath
Company's Toronto plant's Wicksteed Avenue Buildings and an adjacent property;
and (v) asbestos-containing material is present in buildings at Company's
facility in Beachwood, Ohio."
1.07 SECTION 6.3A of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"6.3A ANCILLARY AGREEMENTS. After the date of execution
hereof, the parties shall negotiate in good faith the following agreements:
License Agreement for Retained Technology related to Ultrem; Joint Development
Agreement related to Ultrem; Agreement for High Solids Polymer and Dispersion
Products; Lease Agreement for the Pilot Plant; Distribution Agreement for Tremco
S.A.; Manufacturing License Agreement for Tremco S.A.; Services Agreement for
Tremco S.A.; and Transition Services Agreement. From and after the Closing Date,
Seller and Buyer agree that they shall cause their respective subsidiaries and
affiliates to perform and comply with the duties and obligations of such
ancillary agreements in accordance with the terms of the executed agreements."
SECTIONS 9.1(e) and 9.2(e) of the Stock Purchase Agreement are
deleted in their entirety and restated to read as follows:
"9.1(e) ANCILLARY AGREEMENTS. Execution and delivery of the agreements
identified in SECTION 6.3A.
"9.2(e) ANCILLARY AGREEMENTS. Execution and delivery of the agreements
identified in SECTION 6.3A."
All references to the Ancillary Agreements in the Agreement shall be
deemed to only refer to those agreements set forth in SECTION 6.3A, including
the list of Exhibits, which shall be revised as follows:
"Exhibit A Ancillary Agreements
Exhibit A-1 --License Agreement for Retained Technology for Ultrem
Exhibit A-2 --Joint Development Agreement for Ultrem
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Exhibit A-3 --Agreement for High Solids Polymer and Dispersion
Products
Exhibit A-4 --Lease Agreement for Pilot Plant
Exhibit A-5 --Distribution Agreement for Tremco S.A.
Exhibit A-6 --Manufacturing License Agreement for Tremco S.A.
Exhibit A-7 --Services Agreement for Tremco S.A.
Exhibit A-8 --Transition Services Agreement"
1.08 SECTION 11.1(a) of the Stock Purchase Agreement is deleted in its
entirety and restated to read as follows:
"11.1 INDEMNIFICATION.
(a) SELLER'S INDEMNITY. Subject to the conditions,
limitations and provisions of this ARTICLE XI, Seller agrees to hold harmless,
indemnify and defend, with respect to SECTIONS 11.1(a)(1) AND 11.1(a)(2) Buyer
and its affiliates and their respective officers, directors, employees, agents,
successors and assigns, and with respect to SECTION 11.1(a)(3) Buyer, Company
and their affiliates and their respective officers, directors, employees,
agents, successors and assigns, from and against any claim, cause of action,
demand, damage, loss, liability, expense or cost of any kind or amount
whatsoever (including court costs, expenses and reasonable accountants and
attorneys fees) incurred or suffered by any one or more of said parties, arising
or resulting from the following, including the enforcement thereof:
(1) the breach of any representation or warranty made
by Seller in this Agreement, it being expressly understood and agreed that
except as and to the extent set forth in this ARTICLE XI, Seller shall not
indemnify, defend or hold harmless any party or entity with respect to the
representations or warranties made by Seller;
(2) the breach of or failure to perform any covenant,
obligation or agreement of Seller set forth herein; or
(3) any Retained Liability.
SECTION 12.11 shall not be construed to limit the indemnification provided by
Seller to Company and its affiliates and their respective officers, directors,
employees, agents, successors and assigns to the extent such entities or persons
are expressly indemnified by Seller under ARTICLES XI or XI-A."
1.09 A new ARTICLE XI-A is added to the Stock Purchase Agreement as
follows:
"ARTICLE XI-A
COST-SHARING OF CERTAIN RETAINED LIABILITIES
(1) TERMS. For purposes of this Agreement:
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(i) "Litigation Costs" means the damages, losses, liabilities,
expenses, deficiencies or costs of any kind or amount whatsoever (including
court costs, expenses, reasonable accountants and attorneys fees, and any costs
resulting from any settlement or judgment, but not including any allocated
compensation expense for employees of Buyer or Company for assisting in any way
in the administration of claims that may result in Litigation Costs (as used in
this ARTICLE XI-A, the term "Company" shall include Company's subsidiaries))
incurred or suffered by Buyer, Company or their respective officers, directors
or employees, arising out of any legal proceeding, arbitration, hearing,
litigation or suit brought by a third party connected in any way with (a) any
defect or alleged defect in the manufacture, design, materials or workmanship of
a Non-roofing Product shipped by Company before the Closing Date which results
in or is alleged to result in damage to person or property (including damage to
the product itself) or (b) any failure or alleged failure of a Non-roofing
Product to meet or conform to express or implied warranties or representations
with respect thereto shipped by Company before the Closing Date, net of any
unaffiliated, third party insurance recoveries.
(ii) "Non-roofing Products" means all products manufactured,
sold or distributed by Company that have been shipped prior to the Closing Date,
other than those sheet & liquid membranes, adhesives and sealants, and
accessories used in the installation, repair, refurbishment and replacement of
roofs for the purpose of weather proofing such roofs in new and existing
buildings.
(iii) "Warranty Costs" means any losses, liabilities,
expenses, deficiencies or costs of any kind or amount whatsoever incurred or
suffered by Buyer, Company or their respective officers, directors or employees
resulting from any claim relating to failures or alleged failures of Non-roofing
Products to meet or conform to express or implied warranties or representations
with respect thereto, shipped by Company before the Closing Date of which
Company has received written notification at any time during the period from
prior to the Closing Date to the tenth anniversary of the Closing Date, net of
any unaffiliated, third party insurance recoveries and not including (i) costs
associated with the resolution of customer complaints by Company in the ordinary
course of business through the provision of product and/or other minor repair
services at Company's cost that do not exceed an aggregate of $5,000 in any one
instance, or (ii) allocated compensation expense for employees of Buyer or
Company for assisting in any way in the administration of claims that may result
in Warranty Costs.
(2) THRESHOLD AMOUNT. Seller and Buyer acknowledge and agree that
notwithstanding SECTION 1.3(f), Buyer and Company shall be responsible for the
first $3,000,000 (the "Threshold Amount") of the sum of Warranty Costs and
Litigation Costs in the aggregate before Seller shall be liable to Buyer,
Company or their respective officers, directors or employees under SECTION
1.3(f) or the Cost-Sharing provisions of subparagraph (3) below.
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(3) COST-SHARING. Notwithstanding SECTION 1.3(f), after satisfaction of
the Threshold Amount, for each successive one-year period ending on the
anniversary of the Closing Date through the tenth anniversary of the Closing
Date, Buyer and Company shall be responsible for all Warranty Costs and
Litigation Costs incurred until the aggregate sum of such Warranty Costs and
Litigation Costs in such one-year period reaches $2,000,000 (the "Cost-Sharing
Limit"). Buyer's and Company's responsibility for Warranty Costs and Litigation
Costs shall be non-cumulative, i.e., to the extent such aggregate costs do not
exceed the Cost-Sharing Limit in any given year, the shortfall shall not be
added to the next year's Cost-Sharing Limit. For each such one-year period
through the tenth anniversary of the Closing Date, to the extent the aggregate
sum of such Warranty Costs and Litigation Costs in such one-year period exceeds
the Cost-Sharing Limit, Seller shall be responsible for one hundred percent
(100%) of the Warranty Costs and Litigation Costs incurred by Buyer and Company
in excess of said Cost-Sharing Limit. Notwithstanding SECTION 1.3(f), Seller
shall have no liability for Warranty Costs that it first receives notification
of after the tenth anniversary of the Closing Date. However, after the tenth
anniversary of the Closing Date, Seller shall be solely liable for Litigation
Costs, and Buyer and Company shall have no liability whatsoever for Litigation
Costs.
(4) Claims Management.
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(i) COVENANTS. On and after the Closing Date, Company will
service the product warranties (including warranties which may have been implied
or otherwise created by law in the ordinary course of the Business) extended
prior to such date by Company with respect to Non-roofing Products shipped by
Company or its subsidiaries prior to the Closing Date. With respect to a claim
which may result in Warranty Costs asserted after the Closing Date which
involves a Non-roofing Product shipped by Company or its subsidiaries prior to
the Closing Date, Company will proceed to investigate, defend and resolve such
claim with respect thereto in accordance with any and all applicable warranty
obligations in a manner consistent with past practices.
(ii) LITIGATION COSTS. Until the Threshold Amount and the
Cost-Sharing Limit have been met, Company shall manage matters relating to
Litigation Costs pursuant to this ARTICLE XI-A, including but not limited to
full control of the defense and proceedings relating to any such matter,
including any settlement thereof. Seller may retain separate counsel to
represent it in, but not control, any defense or settlement of any matter
relating to Litigation Costs controlled by Company pursuant to this clause
(4)(ii), and Seller will bear its own costs and expenses with respect to such
separate counsel. In the event either party should reasonably conclude, based
upon the Information (as hereinafter defined), that a particular matter relating
to Litigation Costs is of sufficient nature and potential liability to exceed
the Threshold Amount and the Cost-Sharing Limit, respectively, then the
concluding party shall have the right to have Seller assume full control of the
management of such matter, including defense and any settlement thereof with the
amount of such defense or settlement to be applied against any remaining balance
of the Threshold Amount and/or the Cost-Sharing Limit. Any matters relating to
Litigation Costs that arise (a) after the Threshold Amount and the Cost-Sharing
Limit have been met or (b) after the tenth anniversary of the Closing Date,
shall be managed
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by Seller, and Seller shall have full control of the defense and proceedings
relating to any such matter, including any settlement thereof. With respect to
settlements related to Litigation Costs, the party controlling the settlement
shall not, without the prior written consent of the non-controlling party (which
consent shall not be unreasonably withheld), enter into any compromise or
settlement which commits the non-controlling party to take, or to forbear to
take, any action other than the payment of money in an amount equal to or less
than $100,000 and shall be reasonable under the circumstances and made in good
faith. Once a matter related to Litigation Costs is being managed by Seller,
Seller shall retain such management even though, as the result of the passage of
time, a new Cost-Sharing Limit must be satisfied by Buyer and Company.
(iii) WARRANTY COSTS. With respect to any claim which may
result in Warranty Costs, Company shall have the exclusive right to handle and
resolve such claims, which will be handled by Company in a reasonable manner
and, to the extent appropriate, in accordance with Company's past practice;
provided, however, that once the Threshold Amount and the Cost-Sharing Limit
have been met, Company must obtain the prior written consent of Seller to the
payment of Warranty Costs of over $100,000 in the aggregate related to any one
claim, which consent shall not be unreasonably withheld.
(iv) REPORTING AND COOPERATION. Company shall provide Seller
with access to all reports, reserve information, insurance information,
technical service analysis, consultants' evaluations, reports and opinions of
counsel, and other data and information of Company ("Information") to allow for
regular and complete evaluation of claims which may result in Litigation Costs
or Warranty Costs. This Information shall be provided to Seller on a regular
basis consistent with preparation and distribution to Company and Buyer, and in
accordance with Seller's reasonable requests to fulfill requirements of Seller's
insurance. Due to the commonality of interest of the parties hereto and Company,
the parties agree that the Information shall be kept strictly confidential, and
if privileged, will be held and maintained as privileged. The parties hereto and
Company shall exercise their best efforts to avoid waiving any protection for
privileged or confidential information, or similar protection such as attorney
work product or internal critical review, without the prior written consent of
the other, or as required by law. Seller will have access with reasonable notice
to Company files, counsel, employees and consultants, and expenses thereof, to
allow review and evaluation of Litigation Costs and Warranty Costs. The parties
hereto and Company mutually agree to use all reasonable efforts to establish
technical and legal defenses and to cooperate in order to maximize the
opportunities for an applicable unaffiliated, third party insurer to provide
defense and indemnity coverage for any of the matters set forth herein.
Communication with an applicable insurer shall be controlled by the party with
the insurable interest.
(5) PAYMENT OF CLAIMS. Notwithstanding any other payment or claim
procedure for indemnification set forth in ARTICLE XI of this Agreement, on a
quarterly basis, Buyer or Company, as appropriate, shall provide Seller with a
reasonably detailed summary with supporting documentation of Litigation Costs
and Warranty Costs incurred by Buyer, Company or their respective officers,
directors or employees and, to the extent Buyer or
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Company is entitled to reimbursement under the provisions of subparagraph (3)
above, such amounts shall be processed and paid by Seller promptly, but no later
than 30 days following the date the summary of Litigation Costs and Warranty
Costs was received from Buyer or Company, as applicable.
(6) DRYVIT SYSTEMS, INC. In the event that Company has actual knowledge
that a structure that is the subject of a claim that may lead to Litigation
Costs or Warranty Costs contains products manufactured by Dryvit Systems, Inc.,
an indirect subsidiary of Buyer ("Dryvit"), Company shall give Seller notice of
such fact within thirty (30) days. A delay in giving notice shall only relieve
the recipient of liability to the extent the recipient suffers actual prejudice
because of the delay. In the event Dryvit and Company become co-defendants in
any litigation which involves Non-roofing Products, Buyer shall tender the
defense of the Company in such litigation to Seller and Seller shall manage such
defense pursuant to this ARTICLE XI-A. Buyer and Company shall not disclose any
information which has been classified by Company or its legal counsel as
attorney-client-privileged, or similar protection, such as attorney work product
or internal critical review. Further, Seller shall not disclose any information
which has been classified by Company or its legal counsel as
attorney-client-privileged, or similar protection, such as attorney work product
or internal critical review."
SECTION 2. REFERENCE TO AND EFFECT ON AGREEMENT.
2.01 Unless otherwise defined herein, capitalized terms used herein
shall have the meanings given to such terms in the Stock Purchase Agreement.
2.02 Each reference in the Stock Purchase Agreement to "this
Agreement," "hereunder," "hereof," "herein," or words of like import shall mean
and be a reference to the Stock Purchase Agreement as amended hereby, and each
reference to the Stock Purchase Agreement in any other document, instrument or
agreement shall mean and be a reference to the Stock Purchase Agreement as
amended hereby.
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2.03 Except as specifically amended above, the Stock Purchase Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, Seller and Buyer have caused this Amendment No. 1
to Stock Purchase Agreement to be executed by their respective duly authorized
officers as of the day and year first above written.
THE B.F.GOODRICH COMPANY
By:__________________________________
David L. Burner
President and
Chief Executive Officer
RPM, INC.
By:_________________________________
Thomas C. Sullivan
Chairman