-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JWmKa8n/fjDqpDPU/95G8p3Y8HRk68CtYr52fktSUSmCtGSxfGscni3yw0+lPBmT cF/K9zU3TeTC1Tw2th0hmg== 0000950152-02-007546.txt : 20021011 0000950152-02-007546.hdr.sgml : 20021011 20021011165156 ACCESSION NUMBER: 0000950152-02-007546 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20020831 FILED AS OF DATE: 20021011 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RPM INC/OH/ CENTRAL INDEX KEY: 0000110621 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 346550857 STATE OF INCORPORATION: OH FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14187 FILM NUMBER: 02787793 BUSINESS ADDRESS: STREET 1: 2628 PEARL RD STREET 2: P O BOX 777 CITY: MEDINA STATE: OH ZIP: 44258 BUSINESS PHONE: 3302735090 MAIL ADDRESS: STREET 1: 2628 PEARL RD STREET 2: P O BOX 777 CITY: MEDINA STATE: OH ZIP: 44258 FORMER COMPANY: FORMER CONFORMED NAME: REPUBLIC POWDERED METALS INC DATE OF NAME CHANGE: 19711027 10-Q 1 l96562ae10vq.txt RPM, INC. 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE - --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2002, OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________________ TO ___________________. COMMISSION FILE NO. 1-14187 ------- RPM, INC. - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OHIO 34-6550857 - ------------------------------------ ---------------------------------- (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) P.O. BOX 777; 2628 PEARL ROAD; MEDINA, OHIO 44258 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (330) 273-5090 - -------------------------------------------------------------------------------- INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO THE FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO . --- --- AS OF OCTOBER 7, 2002 114,909,905 RPM INC. COMMON SHARES WERE OUTSTANDING. RPM, INC. AND SUBSIDIARIES INDEX PAGE NO. -------- PART I. FINANCIAL INFORMATION - ------------------------------ ITEM 1. FINANCIAL STATEMENTS (UNAUDITED): CONSOLIDATED BALANCE SHEETS 3 CONSOLIDATED STATEMENTS OF INCOME 4 CONSOLIDATED STATEMENTS OF CASH FLOWS 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 16 ITEM 4. CONTROLS AND PROCEDURES 16 PART II. OTHER INFORMATION - -------------------------- ITEM 1. LEGAL PROCEEDINGS 17 ITEM 2. CHANGES IN SECURITIES 19 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 20 SIGNATURES 22 CERTIFICATION OF CHIEF EXECUTIVE OFFICER 23 CERTIFICATION OF CHIEF FINANCIAL OFFICER 24 3 PART I. -- FINANCIAL INFORMATION ITEM 1. -- FINANCIAL STATEMENTS RPM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except per share amounts)
ASSETS August 31, 2002 May 31, 2002 ---------------------------- -------------------------- Current Assets Cash and short-term investments $ 40,247 $ 42,172 Trade accounts receivable (less allowances of $16,503 and $15,884, respectively) 392,632 397,659 Inventories 254,859 251,446 Prepaid expenses and other current assets 106,325 110,037 ---------------------------- -------------------------- Total current assets 794,063 801,314 ---------------------------- -------------------------- Property, Plant and Equipment, At Cost 661,600 655,841 Less: accumulated depreciation and amortization (309,882) (300,044) ---------------------------- -------------------------- Property, plant and equipment, net 351,718 355,797 ---------------------------- -------------------------- Other Assets Goodwill 596,250 592,329 Other intangible assets, net of amortization 262,260 264,530 Other 23,116 22,433 ---------------------------- -------------------------- Total other assets 881,626 879,292 ---------------------------- -------------------------- Total Assets $ 2,027,407 $ 2,036,403 ============================ ========================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 141,728 $ 160,767 Current portion of long-term debt 6,063 5,876 Accrued compensation and benefits 57,987 80,530 Accrued loss reserves 51,373 51,914 Other accrued liabilities 51,925 58,144 Income taxes payable 16,251 7,483 ---------------------------- -------------------------- Total current liabilities 325,327 364,714 ---------------------------- -------------------------- Long-Term Liabilities Long-term debt, less current maturities 710,189 707,921 Other long-term liabilities 51,279 55,458 Deferred income taxes 49,605 50,204 ---------------------------- -------------------------- Total long-term liabilities 811,073 813,583 ---------------------------- -------------------------- Shareholders' Equity Common shares, stated value $.015 per share; authorized 200,000 shares; outstanding 114,886 shares and 114,696 shares, respectively 1,786 1,786 Paid-in capital 585,737 585,566 Treasury shares, at cost (86,253) (88,364) Accumulated other comprehensive loss (49,778) (50,485) Retained earnings 439,515 409,603 ---------------------------- -------------------------- Total shareholders' equity 891,007 858,106 ---------------------------- -------------------------- Total Liabilities and Shareholders' Equity $ 2,027,407 $ 2,036,403 ============================ ==========================
The accompanying notes to consolidated financial statements are an integral part of these statements. 4 RPM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
THREE MONTHS ENDED AUGUST 31, --------------------------------------------------------- 2002 2001 ----------------------- ----------------------- Net sales $ 542,413 $ 533,275 Cost of sales 283,209 282,601 ----------------------- ----------------------- Gross profit 259,204 250,674 Selling, general and administrative expenses 184,107 181,619 Interest expense, net 7,204 13,064 ----------------------- ----------------------- Income before income taxes 67,893 55,991 Provision for income taxes 23,720 19,422 ----------------------- ----------------------- Net income $ 44,173 $ 36,569 ======================= ======================= Average Number of Common Shares Outstanding: Basic 114,765 102,211 ======================= ======================= Diluted 115,760 102,237 ======================= ======================= Basic and diluted earnings per common share $ 0.38 $ 0.36 ======================= ======================= Cash dividends per common share $ 0.1250 $ 0.1250 ======================= =======================
The accompanying notes to consolidated financial statements are an integral part of these statements. 5 RPM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended August 31, --------------------------------------------------- 2002 2001 ----------------------- ----------------------- Cash Flows From Operating Activities: Net income $ 44,173 $ 36,569 Depreciation and amortization 14,083 14,549 Items not affecting cash and other (3,055) (4,727) Changes in operating working capital (33,195) 6,629 ----------------------- ----------------------- 22,006 53,020 ----------------------- ----------------------- Cash Flows From Investing Activities: Capital expenditures (5,252) (6,998) Acquisition of new businesses, net of cash acquired (7,595) ----------------------- ----------------------- (12,847) (6,998) ----------------------- ----------------------- Cash Flows From Financing Activities: Increase (decrease) in debt 2,456 (20,885) Cash dividends (14,261) (12,716) Exercise of stock options 721 14 ----------------------- ----------------------- (11,084) (33,587) ----------------------- ----------------------- Net (Decrease) Increase in Cash and Short Term Investments (1,925) 12,435 Cash and Short Term Investments at Beginning of Period 42,172 23,926 ----------------------- ----------------------- Cash and Short Term Investments at End of Period $ 40,247 $ 36,361 ======================= =======================
The accompanying notes to consolidated financial statements are an integral part of these statements. 6 RPM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2002 (Unaudited) - -------------------------------------------------------------------------------- NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included for the three month periods ended August 31, 2002 and 2001. For further information, refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended May 31, 2002. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. NOTE B - INVENTORIES Inventories were composed of the following major classes: AUGUST 31, 2002 MAY 31, 2002 --------------- ------------ (IN THOUSANDS) Raw materials and supplies $ 94,439 $75,080 Finished goods 160,420 176,366 -------------- -------------- $254,859 $251,446 ============== ============== NOTE C - COMPREHENSIVE INCOME Other comprehensive income includes foreign currency translation adjustments, minimum pension liability adjustments and unrealized gains or losses on securities. Total comprehensive income, comprised of net income and other comprehensive income, amounted to $44,880,000 and $42,717,000 during the first quarter of fiscal years 2002 and 2001, respectively. NOTE D - SUBSEQUENT EVENT At the annual shareholders meeting on October 11, 2002, RPM shareholders approved a plan to change RPM's legal place of incorporation from Ohio to Delaware. Under the plan, a new legal entity, RPM International Inc., was incorporated in Delaware and will become the parent holding company of Ohio-based RPM, Inc. and several other intermediate holding companies and wholly owned subsidiaries. In addition to the creation of a newly formed Delaware legal entity, the legal structure of various operating companies will be realigned in consistency with their respective business objectives. Shareholders of RPM, Inc. will hold the same number of shares of common stock of RPM International Inc. upon completion of the reincorporation. 7 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements include the accounts of RPM, Inc. and its majority-owned subsidiaries. Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate these estimates, including those related to allowances for doubtful accounts, inventories, allowances for recoverable taxes, useful lives of property, plant and equipment, goodwill, environmental and other contingent liabilities, income tax valuation allowances, pension plans and the fair value of financial instruments. We base our estimates on historical experience and other assumptions, which we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying value of our assets and liabilities. Actual results may differ from these estimates under different assumptions and conditions. We have identified below the accounting policies that are critical to our financial statements. REVENUE RECOGNITION Revenues are recognized when title and risk of loss passes to customers. The Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition," provides guidance on the application of Generally Accepted Accounting Principles (GAAP) in the U.S. to selected revenue recognition issues. We have concluded that our revenue recognition policy is appropriate and in accordance with GAAP and SAB No. 101. TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS AND FOREIGN CURRENCY TRANSACTIONS Our reporting currency is the U.S. dollar. However, the functional currency of all of our foreign subsidiaries is their local currency. We translate the amounts included in our consolidated statements of income from our foreign subsidiaries into U.S. dollars at year-to-date average exchange rates, which we believe are fairly representative of the actual exchange rates on the dates of the transactions. Our foreign subsidiaries' assets and liabilities are translated into U.S. dollars from local currency at the actual exchange rates as of the end of each reporting date, and we record the resulting foreign exchange translation adjustments in our consolidated balance sheets as a component of accumulated other comprehensive income (loss). If we determine that the functional currency of any of our foreign subsidiaries should be the U.S. dollar, our financial statements would be affected. Should this occur, we would adjust our reporting to appropriately account for such change(s). 8 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- As appropriate, we use permanently invested intercompany loans as a source of capital to reduce exposure to foreign currency fluctuations at our foreign subsidiaries. These loans are treated as analogous to equity for accounting purposes. Therefore, foreign exchange gains or losses on these intercompany loans are recorded in other comprehensive income (loss). If we were to determine that the functional currency of any of our subsidiaries should be the U.S. dollar, we would no longer record foreign exchange gains or losses on such intercompany loans. GOODWILL We adopted two new accounting standards issued by the Financial Accounting Standards Board in June 2001. Statement of Financial Accounting Standards, or SFAS, No. 141, "Business Combinations," eliminates the pooling method of accounting for all business combinations initiated after June 30, 2001, and addresses the initial recognition and measurement of goodwill and intangible assets acquired in a business combination. Accordingly, we apply the provisions of SFAS No. 141 to all business combinations initiated after its effective date. We also adopted SFAS No. 142, "Goodwill and Other Intangible Assets," effective June 1, 2001. Goodwill amortization ceased upon adoption of the standard, and the required initial impairment tests were performed. Results of these impairment tests have not generated any impairment loss to date. Prospectively, goodwill will be tested on an annual basis, or more frequently as impairment indicators arise. Impairment tests, which involve the use of estimates related to the fair market values of the business operations with which goodwill is associated, are performed at the end of our first quarter. Losses, if any, resulting from impairment tests will be reflected in operating income in our income statement. OTHER LONG-LIVED ASSETS We assess for impairment of identifiable non-goodwill intangibles and other long-lived assets whenever events or changes in facts and circumstances indicate the possibility that the carrying value may not be recoverable. Factors considered important which might trigger an impairment evaluation, include the following: - significant under-performance relative to historical or projected future operating results; - significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and - significant negative industry or economic trends. When we determine that the carrying value of non-goodwill intangibles and other long-lived assets may not be recoverable based upon the existence of one or more of the above described indicators, any impairment would be measured based on projected net cash flows expected from the asset(s), including eventual disposition. 9 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- CONTINGENCIES We are party to claims and lawsuits arising in the normal course of business. Although we cannot precisely predict the amount of any liability that may ultimately arise with respect to any of these matters, we record provisions when we consider the liability probable and reasonably estimable. The provisions are based on historical experience and legal advice, are reviewed quarterly and are adjusted according to developments. Changes in the amount of the provisions affect our consolidated statements of income. Due to the inherent uncertainties in the loss reserve estimation process, actual results may differ. Our environmental-related accruals are similarly established and/or adjusted as information becomes available upon which costs can be reasonably estimated. Here again, actual costs may vary from these estimates because of the inherent uncertainties involved, including the identification of new sites and the development of new information about contamination. Certain sites are still being investigated and therefore we have been unable to fully evaluate the ultimate cost for those sites. As a result, reserves have not been taken for certain of these sites and costs may ultimately exceed existing reserves for other sites. We have received indemnities for potential environmental issues from purchasers of certain of our properties and businesses and from sellers of properties or businesses we have acquired. We have also purchased insurance to cover potential environmental liabilities at certain sites. If the indemnifying or insuring party fails to, or becomes unable to, fulfill its obligations under those agreements or policies, we may incur additional environmental costs in addition to any amounts reserved, which could have a material adverse effect on our financial condition, results of operations or cash flows. 10 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- REPORTABLE SEGMENT INFORMATION The Company has determined that it has two operating segments -- Industrial and Consumer -- based on the nature of business activities, products and services; the structure of management; and the structure of information as presented to the Board of Directors. Within each segment, individual operating companies or groups of companies generally address common markets, utilize similar technologies, and can share manufacturing or distribution capabilities. The Company evaluates the profit performance of its two operating segments based on earnings before interest and taxes since interest expense is essentially related to corporate acquisitions, as opposed to segment operations. In addition to the two operating segments, there are certain business activities, referred to as corporate/other, that do not constitute an operating segment, including corporate headquarters and related administrative expenses, results of our captive insurance company, gains or losses on the sales of certain assets and other expenses not directly associated with either operating segment. Related assets consist primarily of investments, prepaid expenses, deferred pension assets, and headquarters property and equipment. Comparative first quarter results on this basis are as follows:
QUARTER ENDED AUGUST 31, --------------------------------------- (In thousands) 2002 2001 --------------------- --------------- Net External Sales Industrial Segment $ 292,245 $ 289,168 Consumer Segment 250,168 244,107 --------------------- --------------- TOTAL $ 542,413 $ 533,275 ===================== =============== Earnings Before Interest and Taxes (EBIT)(a) Industrial Segment $ 45,037 $ 42,178 Consumer Segment 39,549 33,980 Corporate/Other (9,489) (7,103) --------------------- --------------- TOTAL $ 75,097 $ 69,055 ===================== =============== Identifiable Assets AUGUST 31, 2002 MAY 31, 2002 --------------------- --------------- Industrial Segment $ 984,716 $ 962,742 Consumer Segment 982,810 1,000,928 Corporate/Other 59,881 72,733 --------------------- --------------- TOTAL $ 2,027,407 $ 2,036,403 ===================== ===============
(a) EBIT is defined as earnings before interest and taxes. EBIT is presented because it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare companies on the basis of operating performance. EBIT is not intended to represent cash flows for the period, nor is it presented as an alternative to operating income or as an indicator of operating performance. EBIT should not be considered in isolation, but with Generally Accepted Accounting Principles in the U.S., and it is not indicative of operating income or cash flow from operations as determined by those principles. Our method of computation may or may not be comparable to other similarly titled measures of other companies. EBIT may not be indicative of historical operating results nor is it meant to be predictive of potential future results. - -------------------------------------------------------------------------------- 11 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS Net Sales Fiscal 2003 first quarter net sales of $542.4 million increased $9.1 million, or 1.7 percent, over last year's first quarter results. This growth is primarily the result of higher unit volume as pricing adjustments have been negligible. Sales from several minor product line acquisitions midway through the quarter were offset by slightly negative year over year foreign exchange differences. Although foreign exchange differences were minimal overall during the quarter, the U.S. dollar was weaker against the euro, but stronger against Latin American and Canadian currencies. Industrial segment sales grew by 1.1 percent to $292.2 million. This growth in industrial volume comes after several quarters of flat to declining sales, and represents a sequential improvement from fourth quarter to first quarter, in contrast to a sequential decline last year. As reported during the preceding four quarters, a number of higher cost maintenance and replacement projects have been delayed during the last 12-18 months, creating pent-up demand for those maintenance products and services, some of which came through in this first quarter to help generate the sales increase. Consumer net sales grew 2.5 percent to $250.2 million during this first quarter, representing continuing solid, although somewhat slower growth compared to last year's first quarter growth rate. We continue to anticipate modest growth in industrial volume and solid sales from our consumer segment throughout the 2003 fiscal year. Gross Profit Margin The gross profit margin improved this first quarter to 47.8 percent of sales from 47.0 percent a year ago. By segment, industrial gross margin held steady at 48.4 percent both years, with the benefits from higher volume and some lower raw material costs being offset by the effects of lower pricing affecting certain more competitive product lines within this segment. Consumer gross margin improved to 47.0 percent from 45.4 percent last year, reflecting positive cost leverage from the higher sales volume, a number of favorable raw material costs, and restructuring-related savings from the last plant closure under that fiscal year end 2000 and 2001 program. Additionally, manufacturing efficiencies from expanded Class A manufacturing initiatives are being realized. Selling, General and Administrative Expenses (SG&A) SG&A expense levels also improved to 33.9 percent of sales from 34.1 percent during the first quarter last year. By segment, industrial SG&A of 33.0 percent compares favorably against 33.8 percent the prior year. This improvement reflects the beginning of benefits from selected cost structure reduction efforts made during fiscal 2002, and continued cost-containment efforts throughout the segment. Consumer SG&A of 31.2 percent this year also compares favorably against 31.5 percent a year ago, as a result of the higher sales volume and continued cost-containment efforts throughout this segment as well. Corporate/Other costs also fall within the SG&A category and amounted to $9.5 million this year compared with $7.1 million during the first quarter of last year. This change reflects increased product liability costs of $1.3 million and a change in export sales incentive tax legislation that went into effect this fiscal year. This latter change caused $1 million of the increase in corporate/other costs this quarter, offset by $0.5 million reductions of expense in both the industrial and consumer operating segments; consolidated SG&A is not effected by the tax law change. This approximate difference will continue each quarter through this fiscal year, as a result of the change in tax legislation. License fee and joint venture income of $0.3 million during each of the first quarters of fiscal 2003 and 2002 are reflected as credits to SG&A expenses. 12 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- Earnings Before Interest and Taxes (EBIT) We believe that EBIT best reflects the performance of our operating segments as interest expense and income taxes are not consistently allocated to operating segments by the various constituencies utilizing our financial statements. Requests for operating performance measures received from research analysts, financial institutions and rating agencies typically focus on EBIT, and we believe EBIT disclosure is responsive to investors. EBIT increased $6.0 million, or 8.8 percent, to $75.1 million during the first quarter of fiscal 2003. EBIT improved in both operating segments, with industrial EBIT of $45.0 million, or 15.4 percent of sales, improving by 6.8 percent on a 1.1 percent growth in sales, compared to the prior year first quarter EBIT of $42.2 million, or 14.6 percent of sales. Consumer EBIT of $39.5 million, or 15.8 percent of sales, improved from $34.0 million, or 13.9 percent of sales a year ago, a 16.4 percent improvement on a 2.5 percent growth in sales. Generally, these EBIT improvements reflect the combination of the higher sales volume, certain lower raw material costs and continued cost-containment efforts throughout both operating segments. Net Interest Expense Net interest expense was $5.9 million lower than a year ago as a result of a combination of lower interest rates on the variable debt portion of total debt, and much lower debt levels year over year. Approximately 70 percent of debt is based upon variable interest rates. The average effective interest rate during this first quarter was 4 percent compared with 5.3 percent a year ago, and debt levels averaged $249.3 million lower this year than during last year's first quarter, accounting for approximately $3.4 million of the interest savings this year. Income Tax Rate The effective income tax rate this year of 34.9 percent compares with 34.7 percent a year ago. The effective income tax rate will tend to increase as our earnings grow and the one-time static benefit from the June 1, 2002 adoption of Statement of Financial Accounting Standards No. 142, related to the elimination of non-tax deductible goodwill amortization, becomes less and less significant. Net Income This year's first quarter net income of $44.2 million and diluted earnings per common share of $0.38 increased 21 percent and 6 percent, respectively, from last year's first quarter result. During March 2002, we sold 11.5 million common shares (see Financing Activities below) through a follow-on public equity offering, and this transaction had a dilutive effect of $.04 per share on this year's first quarter earnings. For all of fiscal 2003, this transaction is expected to have a dilutive effect on earnings of approximately $.07 per share, based on fiscal 2002 average interest rates. 13 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES Cash Flows From: Operating Activities There was $22.0 million of cash generated from operations this first quarter compared with $53.0 million a year ago. This difference resides in the changes in working capitals. At May 31, 2001, as we completed our restructuring program, there was an inefficient build-up in accounts receivable and inventory, which we worked down during the first quarter a year ago, generating an abnormally high amount of cash from operations. This year, we are back to a more normal relationship pattern in working capitals relative to sales growth. Additionally, there was a higher payout of accrued incentives during this first quarter, as the fiscal year 2002 performance significantly surpassed that of the year ended May 31, 2001. Cash provided from operations remains our primary source of financing internal growth, with limited use of short-term credit. Investing Activities Capital expenditures, other than for ordinary repairs and replacements, are made to accommodate our continued growth through improved production and distribution efficiencies and capacity and to enhance administration. Capital expenditures during the first three months of fiscal 2003 of $5.3 million compare with depreciation of $11.0 million, well within the maintenance level of spending. We are not capital intensive and capital expenditures generally do not exceed depreciation in a given year. Capital spending is expected to hold at approximately the maintenance level of between $40 and $50 million per year for the next several years, as many larger spending needs have been accomplished in recent years, such as to accommodate the restructuring program and to upgrade several major information technology platforms. We believe there is adequate production capacity to meet our needs for the next several years at normal growth rates. During the first quarter of fiscal 2003, there were investments totaling $7.6 million for several minor product line and minority interest acquisitions. 14 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- Financing Activities During the first quarter of fiscal 2002, our $200 million dollar revolving credit facility was refinanced with a one-year term loan due July 12, 2002. During March 2002, we sold 11.5 million common shares through a follow-on public offering at $14.25 per share, closing on April 2, 2002. The entire proceeds of the offering, $156 million, were used to permanently pay down the outstanding balance under this $200 million term loan facility, which was then retired. On November 27, 2001, we issued and sold $30 million aggregate principal amount of 7.3 percent senior unsecured notes due 2008, $10 million aggregate principal amount of 6.61 percent senior unsecured notes due 2006, and $15 million aggregate principal amount of 6.12 percent senior unsecured notes due 2004 to various insurance companies. The proceeds from these notes were used to reduce the outstanding balance under the $500 million revolving credit agreement. On June 6, 2002, we entered into a securitization transaction with several banks for certain of our subsidiaries, providing for a wholly owned special purpose entity (SPE) to receive investments of up to $125 million. This securitization is being accomplished by having certain subsidiaries sell various of their accounts receivable to the SPE, and by having the SPE then transfer those receivables to a conduit administered by the banks. This securitization transaction will not constitute a form of off-balance sheet financing, but will be fully reflected in our financial statements. This transaction increases our liquidity and reduces our financing costs by replacing up to $125 million of existing borrowings at lower interest rates. As of August 31, 2002, $95 million was securitized under this agreement, which was used to reduce the outstanding balance of the $500 million revolver to $295 million, leaving $205 million of liquidity then available under that facility. Our debt-to-capital ratio remained at 45 percent at August 31, 2002, comparing with year-end May 31, 2002. 15 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- The following summarizes our financial obligations and their expected maturities at August 31, 2002, and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated:
Less than After Total 1 Year 1-3 Years 3 Years ----- ------ --------- ------- ($ in millions) Current portion of long-term debt $ 6.1 $ 6.1 $ - $ - Long-term debt 710.2 - 570.0 140.2 Non-cancelable operating lease obligations(1) 62.2 16.4 19.3 26.5 -------- ------ ------- ------- $ 778.5 $ 22.5 $ 589.3 $ 166.7 ======== ====== ======= =======
(1) We calculate non-cancelable operating lease obligations on an annual basis and consequently such information is not available at August 31, 2002. Therefore, the amounts shown above are for the fiscal year end May 31, 2002. The strength of the U.S. dollar has fluctuated among various foreign currencies, as mentioned above, with the net effect causing foreign net assets to slightly increase shareholder's equity compared to this past year end, May 31, 2002. This trend could continue if the dollar continues to weaken against, principally, the Canadian dollar or the euro. We maintain excellent relations with our banks and other financial institutions to provide continual access to financing for future growth opportunities. OFF-BALANCE SHEET FINANCINGS We do not have any off-balance sheet financings. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in or relationships with any special purpose entities that are not reflected in our financial statements. OTHER MATTERS ENVIRONMENTAL MATTERS Environmental obligations continue to be appropriately addressed and, based upon the latest available information, it is not anticipated that the outcome of such matters will materially affect the Company's results of operations or financial condition. Our critical accounting policies and estimates set forth above describe our method of establishing and adjusting environmental-related accruals and should be read in conjunction with this disclosure. (Additionally refer to Note H to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended May 31, 2002). 16 RPM, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED AUGUST 31, 2002 - -------------------------------------------------------------------------------- FORWARD-LOOKING STATEMENTS The foregoing discussion includes forward-looking statements relating to the business of the Company. These forward-looking statements, or other statements made by the Company, are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond the control of the Company. As a result, actual results of the Company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) general economic conditions; (b) the price and supply of raw materials, particularly titanium dioxide, certain resins, aerosols and solvents; (c) continued growth in demand for the Company's products; (d) legal, environmental and litigation risks inherent in the Company's construction and chemicals businesses and risks related to the adequacy of insurance and reserves for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon the Company's foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with the Company's ongoing acquisition and divestiture activities; and other risks detailed in the Company's other reports and statements filed with the Securities and Exchange Commission, including the risk factors set forth in the Company's prospectus and prospectus supplement included as part of the Company's recently filed Registration Statement on Form S-3 (File No. 333-77028), as the same may be amended from time to time. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates and foreign exchange rates since it funds its operations through long- and short-term borrowings and denominates its business transactions in a variety of foreign currencies. There were no material changes in the Company's exposure to market risk from May 31, 2002. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. ------------------------------------------------- The Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-14) as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"), have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. (b) Changes in internal controls. ----------------------------- There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date. 17 RPM, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- ITEM 1. LEGAL PROCEEDINGS - ------------------------- EIFS LITIGATION As previously reported, Dryvit is a defendant or co-defendant in numerous exterior insulated finish systems ("EIFS") related lawsuits. As of August 31, 2002, Dryvit was a defendant or co-defendant in approximately 750 single family residential EIFS cases, the vast majority of which are pending in North Carolina, South Carolina and Alabama. Dryvit is also defending EIFS lawsuits involving office buildings and other commercial structures. The vast majority of Dryvit's EIFS lawsuits seek monetary relief for water intrusion related property damages, although some claims also stem from alleged personal injuries from exposure to mold. As previously reported, Dryvit settled the North Carolina class action styled Ruff, et al. v. Parex, Inc., et al. ("Ruff"). As of August 31, 2002, approximately 628 claims had been submitted to the Ruff claims administrator for verification and validation since the January 17, 2000 notice to the class. Of these 628 claims, 126 claims were rejected and 303 claims were paid in the amount of $4,922,508 pursuant to funding arrangements with Dryvit's insurers. The remaining claims are at various stages of investigation, review and validation by the Ruff claims administrator. As previously reported, Dryvit is a defendant in an attempted state class action filed in Jefferson County, Tennessee styled Bobby R. Posey, et al. v. Dryvit Systems, Inc. (formerly styled William J. Humphrey, et al. v. Dryvit Systems, Inc.) (Case No. 17,715-IV). The Posey case is an attempted state-wide class action which seeks various types of damages on behalf of all similarly situated persons who paid for the purchase of a Dryvit-EIFS-clad structure in the State of Tennessee during the period beginning November 14, 1990 to the date of the complaint. As described below, the Posey case is now the subject of a proposed nationwide class action settlement. As previously reported, a preliminary approval order was entered in the Posey case for a nationwide class action settlement of a substantial portion of Dryvit's residential EIFS litigation. The proposed settlement class covers all persons in any state (other than North Carolina) who own a one- or two-family residential dwelling or townhouse clad with Dryvit EIFS installed after January 1, 1989. Nationwide notice to all eligible class members began on or about June 13, 2002. A fairness hearing was held on October 1, 2002, to seek final court approval of the proposed settlement. The matter is currently under review by the court with a final decision expected in several months. If the court grants final approval of the settlement and there are no appeals, the settlement will result in the dismissal of all other pending attempted state class actions including cases filed in Madison County, Illinois styled Osborne, et al. v. Dryvit Systems, Inc. (Case No. 00L000395) and in Mobile County, Alabama styled Tony Bryan, et al. v. Dryvit Systems, Inc. (Case No. CV-01-00761 JSJ). Certain of Dryvit's insurers have paid or are currently paying a portion of Dryvit's defense costs in the class actions, and individual commercial building and homeowner lawsuits. Dryvit, the Company's wholly-owned captive insurer First Colonial Insurance Company and certain of Dryvit's umbrella insurers have entered into cost-sharing agreements to cover both the individual and class action cases, which have been subject to periodic renegotiations. Under these cost- 18 RPM, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- sharing agreements, Dryvit's insurers have covered a substantial portion of Dryvit's indemnity and defense costs. Dryvit is currently in discussions with these insurers to secure funding for the proposed national class action settlement. Based on consultation with its legal counsel, management believes that the ultimate costs of the proposed national settlement will be substantially covered by such insurers and that the proposed settlement will not have a material adverse effect on the Company's consolidated financial condition, results of operations or cash flows. ASBESTOS LITIGATION As previously reported, the Company and certain of its wholly-owned subsidiaries, principally Bondex International, Inc. (collectively referred to as "the Company"), are defendants in various asbestos-related bodily injury lawsuits. These cases generally seek damages for asbestos-related diseases based on alleged exposures to asbestos-containing products previously manufactured by the Company. The Company continues to vigorously defend all asbestos-related lawsuits. In many cases, the claimants are unable to demonstrate that any injuries they have incurred, in fact, resulted from exposure to one of the Company's products. In such cases, the Company is generally dismissed without payment. With respect to those cases where compensable disease, exposure and causation are established with respect to one of the Company's products, the Company generally settles for amounts that reflect the confirmed disease, the seriousness of the case, the particular jurisdiction and the number and solvency of other parties in the case. As of August 31, 2002, Defendants had a total of 2,154 active asbestos cases compared to 1,451 as of August 31, 2001. For the quarter ended August 31, 2002, Defendants secured dismissals and/or settlements of 132 cases, the total cost of which collectively to Defendants, net of insurer payments and excluding defense costs, amounted to $1,566,766, which compared to dismissals and/or settlements of 74 cases and $394,312 for the same quarter ended August 31, 2001. This increase in the number of claims filed is due, in part, to the bankruptcy filings of various other asbestos litigation defendants. The Company's third party insurers have historically been responsible, under a cost sharing agreement, for the payment of approximately 90% of the indemnity and defense costs associated with the Company's asbestos litigation. The Company expects that its insurers will continue to cover a substantial portion of these costs associated with its asbestos litigation at least into the 2004 fiscal year. For the estimated costs associated with asbestos litigation which are not covered by insurance, the Company has established a financial reserve in an amount which it deems to be adequate. Based on the Company's existing insurance arrangements and the financial reserve mentioned above, at the present time management does not believe that the Company's current asbestos litigation will have a material adverse effect on the Company's consolidated financial condition or results of operations. However, the potential cost of liabilities associated with asbestos claims is subject to many uncertainties, including (i) the ultimate number of claims filed against the 19 RPM, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- Company, (ii) the cost of resolving current and future claims, (iii) the amount of insurance available to cover such claims, (iv) future earnings and cash flow of the Company, (v) the impact of bankruptcies of other companies whose share of liability may be imposed on the Company under certain state liability laws, (vi) the unpredictable aspects of the litigation process, and (vii) potential legislative changes. Accordingly, management cannot be certain that the future costs of the Company's asbestos litigation will not have a material adverse effect on the Company's future business, consolidated financial condition, results of operations or cash flows. ENVIRONMENTAL PROCEEDINGS As previously reported, various of the Company's subsidiaries are, from time to time, identified as a "potentially responsible party" under the Comprehensive Environmental Response, Compensation and Liability Act and similar state environmental statues. In some cases, the Company's subsidiaries are participating in the cost of certain clean-up efforts or other remedial actions. The Company's share of such costs, however, has not been material and management believes that these environmental proceedings will not have a material adverse effect on the Company's consolidated financial condition or results of operations. See "Business-Environmental Matters," in the Company's Annual Report on Form 10-K for the year ended May 31, 2002. ITEM 2. CHANGES IN SECURITIES - ----------------------------- (c) Recent Sales of Unregistered Securities. No securities of the Company that were not registered under the Securities Act of 1933 have been issued or sold by the Company during the period covered by this Quarterly Report on Form 10-Q other than the following: (i) Effective as of July 17, 2002, the Company issued 114,906 Common Shares to certain of its officers and other employees pursuant to the RPM, Inc. 1997 Restricted Stock Plan (the "Restricted Stock Plan"). Such shares are restricted pursuant to the terms of the Restricted Stock Plan. The issuance of such shares was made to individuals who were participants in the RPM, Inc. Benefit Restoration Plan and such awards were designed to replace cash benefit payments being canceled under the RPM, Inc. Benefit Restoration Plan. Consequently, no additional consideration was received by the Company for such issuance. The dollar value of the restricted share awards was based on the closing price of the Company's Common Shares on July 17, 2002 (the effective date of the grant), of $13.59 per share. Registration under the Securities Act of 1933 was not effected with respect to the transaction described above in reliance upon the exemption from the registration contained in Section 4(2) of the Securities Act of 1933. 20 RPM, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ---------------------------------------- (a) Exhibits -------- Official Exhibit Number Description ----------------------- ------------ 10.1 Receivables Sale Agreement among certain subsidiaries of the Company, the Company and RPM Funding Corporation, dated June 6, 2002 10.2 Receivables Purchase Agreement among certain subsidiaries of the Company, RPM Funding Corporation and Bank One and Wachovia Bank, NA, as co-agents and administrative agent dated June 6, 2002 10.3 Performance Undertaking related to the Bank One, NA Receivables Sale Agreement and Receivables Purchase Agreement, dated June 6, 2002 10.4 Assignment, Assumption and Amendment Agreement, dated as of August 23, 2002, between the Company, RPM International Inc. and the holders of Notes under the Private Placement Note Purchase Agreement, dated as of November 15, 2001, as the same may be amended or supplemented from time to time, between the Company and certain institutional investors named therein 10.5 Amendment No. 2 to Credit Agreement, dated as of July 12, 2002, by and among the Company, the Lender parties thereto and JPMorgan Chase Bank, as administrative agent 10.6 Second Supplemental Indenture, dated as of August 26, 2002, by and among the Company, RPM International Inc. and Bank One, N.A. (f/k/a The First National Bank of Chicago) as Trustee, relating to the Indenture, dated as of June 1, 1995, by and between the Company and the Trustee 10.7 Amendment No. 1 to RPM, Inc. 401(k) Trust and Plan, dated as of August 27, 2002 10.8 Amendment No. 1 to RPM, Inc. Union 401(k) Retirement Savings Trust and Plan, dated as of August 27, 2002 11.1 Statement regarding computation of per share earnings 21 RPM, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- (b) Reports on Form 8-K ------------------- The Company filed the following current reports on Form 8-K during the three month period ended August 31, 2002: (i) Current Report on Form 8-K, dated August 29, 2002, in connection with the filing of sworn statements of its Principal Executive Officer and Principal Financial Officer, pursuant to Section 21(a)(1) of the Securities Exchange Act of 1934, as amended; and (ii) Current Report on Form 8-K, dated August 30, 2002, to file a news release issued with respect to the Company's announcement that it will seek shareholder approval of a plan to reincorporate in Delaware. 22 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. RPM, INC. BY /s/ Frank C. Sullivan --------------------------------- FRANK C. SULLIVAN PRESIDENT & CHIEF EXECUTIVE OFFICER BY /s/ Robert L. Matejka --------------------------------- ROBERT L. MATEJKA VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND CONTROLLER DATED: OCTOBER 11, 2002 23 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Frank C. Sullivan, President and Chief Executive Officer of RPM, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of RPM, Inc. (the "registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Frank C. Sullivan Frank C. Sullivan President and Chief Executive Officer October 11, 2002 24 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Robert L. Matejka, Vice President, Chief Financial Officer and Controller of RPM, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of RPM, Inc. (the "registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Robert L. Matejka Robert L. Matejka Vice President, Chief Financial Officer and Controller October 11, 2002 EX-10.1 3 l96562aexv10w1.txt EXHIBIT 10.1 Exhibit 10.1 - -------------------------------------------------------------------------------- RECEIVABLES SALE AGREEMENT DATED AS OF JUNE 6, 2002 AMONG CONSOLIDATED COATINGS CORPORATION, WEATHERPROOFING TECHNOLOGIES, INC., DAP PRODUCTS INC., THE TESTOR CORPORATION, ZINSSER CO., INC., TREMCO INCORPORATED, RUST-OLEUM CORPORATION, THE EUCLID CHEMICAL COMPANY, AND REPUBLIC POWDERED METALS, INC., AS ORIGINATORS AND RPM FUNDING CORPORATION, AS BUYER - -------------------------------------------------------------------------------- TABLE OF CONTENTS -----------------
PAGE ---- ARTICLE I. AMOUNTS AND TERMS.........................................................................2 Section 1.1 [Reserved].....................................................................2 Section 1.2 Sales of Receivables...........................................................2 Section 1.3 Payment for the Purchases......................................................3 Section 1.4 Purchase Price Credit Adjustments..............................................4 Section 1.5 Payments and Computations, Etc.................................................4 Section 1.6 Transfer of Records............................................................4 Section 1.7 Characterization...............................................................5 ARTICLE II. REPRESENTATIONS AND WARRANTIES...........................................................6 Section 2.1 Representations and Warranties of Originators..................................6 ARTICLE III. CONDITIONS OF PURCHASE.................................................................10 Section 3.1 Conditions Precedent to Initial Purchase......................................10 Section 3.2 Conditions Precedent to Subsequent Payments...................................10 Section 3.3 Reaffirmation of Representations and Warranties...............................10 ARTICLE IV. COVENANTS...............................................................................11 Section 4.1 Affirmative Covenants of Originators..........................................11 Section 4.2 Negative Covenants of Originators.............................................16 ARTICLE V. TERMINATION EVENTS.......................................................................18 Section 5.1 Termination Events............................................................18 Section 5.2 Remedies......................................................................19 ARTICLE VI. INDEMNIFICATION.........................................................................20 Section 6.1 Indemnities by Originators....................................................20 Section 6.2 Other Costs and Expenses......................................................22 ARTICLE VII. MISCELLANEOUS..........................................................................22 Section 7.1 Waivers and Amendments........................................................22 Section 7.2 Notices.......................................................................23 Section 7.3 Protection of Ownership Interests of Buyer....................................23 Section 7.4 Confidentiality...............................................................24 Section 7.5 Bankruptcy Petition...........................................................24 Section 7.6 CHOICE OF LAW.................................................................25 Section 7.7 CONSENT TO JURISDICTION.......................................................25
i
Section 7.8 WAIVER OF JURY TRIAL..........................................................25 Section 7.9 Integration; Binding Effect; Survival of Terms................................26 Section 7.10 Counterparts; Severability; Section References................................26
EXHIBITS AND SCHEDULES Exhibit I - Definitions Exhibit II - States of Organization; Chief Executive Offices; Locations of Records; Federal Employer Identification Numbers; Organizational Identification Numbers; Other Names Exhibit III - Lock-Boxes; Collection Accounts; Collection Banks Exhibit IV - [Form of] Compliance Certificate Exhibit V - Credit and Collection Policy Exhibit VI - [Form of] Subordinated Note Exhibit VII - [Form of] Monthly Report for Each Originator Schedule A Preferred Shares Schedule B List of Documents to Be Delivered to Buyer Prior to the initial Purchase ii RECEIVABLES SALE AGREEMENT THIS RECEIVABLES SALE AGREEMENT, dated as of June 6, 2002, is by and among Consolidated Coatings Corporation, an Ohio corporation, Weatherproofing Technologies, Inc., a Delaware corporation, DAP Products Inc., a Delaware corporation, The Testor Corporation, an Ohio corporation, Zinsser Co., Inc., a New Jersey corporation, Tremco Incorporated, an Ohio corporation, Rust-Oleum Corporation, an Illinois corporation, The Euclid Chemical Company, an Ohio corporation, and Republic Powdered Metals, Inc., an Ohio corporation (each of the foregoing, an "ORIGINATOR" and collectively, the "ORIGINATORS"), and RPM Funding Corporation, a Delaware corporation ("BUYER"). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in EXHIBIT I hereto (or, if not defined in Exhibit I hereto, the meanings assigned to such terms in EXHIBIT I to the Purchase Agreement hereinafter defined). PRELIMINARY STATEMENTS Each of the Originators now owns, and from time to time hereafter will own, Receivables. Each of the Originators wishes to sell and assign to Buyer, and Buyer wishes to purchase from such Originator, all of such Originator's right, title and interest in and to its Receivables, together with the Related Security and Collections with respect thereto. Each of the Originators and Buyer intends the transactions contemplated hereby to be true sales of the Receivables from such Originator to Buyer, providing Buyer with the full benefits of ownership of the Receivables originated by such Originator, and none of the Originators or Buyer intends these transactions to be, or for any purpose to be characterized as, loans from Buyer to any Originator. Buyer will sell undivided interests in the Receivables and in the associated Related Security and Collections pursuant to that certain Receivables Purchase Agreement dated as of June 6, 2002 (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the "PURCHASE AGREEMENT") among Buyer, RPM, Inc., an Ohio corporation ("RPM"), as initial Servicer, Jupiter Securitization Corporation ("JUPITER"), Blue Ridge Asset Funding Corporation (together with Jupiter, the "CONDUITS"), Wachovia Bank, National Association, individually and as Blue Ridge Agent, and Bank One, NA (Main Office Chicago), individually, as Jupiter Agent and as administrative agent (in such last capacity, the "ADMINISTRATIVE AGENT"). NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1 ARTICLE I. AMOUNTS AND TERMS Section 1.1 [RESERVED]. Section 1.2 SALES OF RECEIVABLES. (a) In consideration for payment of the Purchase Price in accordance with SECTION 1.3 and upon the terms and subject to the conditions set forth herein, each Originator hereby sells, assigns, transfers, sets-over and otherwise conveys to Buyer, without recourse (except to the extent expressly provided herein), and Buyer hereby agrees to purchase from each Originator, all of such Originator's right, title and interest in and to all of such Originator's Receivables existing on the Initial Cutoff Date and all Receivables originated by such Originator on each day from and after the Initial Cutoff Date through and including such Originator's Termination Date, together with all Related Security relating thereto and all Collections thereof. In connection with the payment of the Purchase Price for any Receivables purchased hereunder, Buyer may request that the applicable Originator deliver, and such Originator shall deliver, such approvals, opinions, information, reports or documents as Buyer may reasonably request. (b) It is the intention of the parties hereto that each Transfer of Receivables made hereunder shall constitute a "sale of accounts" (as such term is used in Article 9 of the UCC) or other absolute conveyance, which Transfer is absolute and irrevocable and provides Buyer with the full benefits of ownership of the Receivables. Except for the Purchase Price Credits owed pursuant to SECTION 1.4, the Transfers of Receivables hereunder are made without recourse to the Originators; PROVIDED, HOWEVER, that (i) each Originator shall be liable to Buyer for all representations, warranties and covenants made by such Originator pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such Transfers do not constitute and are not intended to result in an assumption by Buyer or any assignee thereof of any obligation of the applicable Originator or any other Person arising in connection with the Receivables, the related Contracts and/or other Related Security or any other obligations of any Originator. In view of the intention of the parties hereto that each Transfer of Receivables made hereunder shall constitute a sale or other outright conveyance of such Receivables rather than a loan secured thereby, each Originator agrees that it will, on or prior to the date hereof and in accordance with SECTION 4.1(e)(ii), mark its master data processing records relating to the Receivables with a legend acceptable to Buyer and to the Administrative Agent (as Buyer's collateral assignee), evidencing that Buyer has purchased such Receivables as provided in this Agreement and agrees to note in its financial statements that its Receivables have been sold to Buyer. Upon the request of Buyer or the Administrative Agent (as Buyer's collateral assignee), each Originator will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer's ownership interest in the Receivables originated by such Originator and the Related Security and Collections with 2 respect thereto, or as Buyer or the Administrative Agent (as Buyer's collateral assignee) may reasonably request. Section 1.3 PAYMENT FOR THE PURCHASES. (a) The Purchase Price for each Receivable shall be due and owing in full by Buyer to the applicable Originator or its designee on the date each such Receivable comes into existence (except that Buyer may, with respect to any such Purchase Price, offset against such Purchase Price any amounts owed by such Originator to Buyer hereunder and which have become due but remain unpaid) and shall be paid to such Originator in the manner provided in the following paragraphs (b), (c) and (d). (b) With respect to any Receivables coming into existence after the Initial Cutoff Date, on each Settlement Date, Buyer shall pay the Purchase Price therefor to the applicable Originator in accordance with SECTION 1.3(d) and in the following manner: FIRST, by delivery of immediately available funds, to the extent of funds available to Buyer from its subsequent sale of an interest in the Receivables to the Administrative Agent for the benefit of the Purchasers under the Purchase Agreement, or other cash on hand; and/or SECOND, by delivery of the proceeds of a Subordinated Loan in an amount not to exceed the least of (A) the remaining unpaid portion of such Purchase Price, and (B) the maximum Subordinated Loan that could be borrowed without rendering Buyer's Net Worth less than the Required Capital Amount. Such Originator is hereby authorized by Buyer to endorse on the schedule attached to its Subordinated Note an appropriate notation evidencing the date and amount of each advance thereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any obligation of Buyer thereunder and/or THIRD, by accepting such Receivables as a contribution to Buyer's preferred equity capital associated with such Originator's Preferred Shares identified on SCHEDULE A hereto; provided that no such capital contribution shall be made from and after the date on which any Originator notifies Buyer in writing that it has designated a date as such Originator's Termination Date. Subject to the limitations set forth in clause SECOND above, each Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer on or prior to such Originator's Termination Date. The Subordinated Loans shall be evidenced by, and shall be payable in accordance with the terms and provisions of such Originator's Subordinated Note and shall be payable solely from funds which Buyer is not required under the Purchase Agreement to set aside for the benefit of, or otherwise pay over to, the Administrative Agent or the Purchasers. (c) From and after an Originator's Termination Date, each Originator shall not be obligated to (but may, at its option) (i) sell its Receivables to Buyer, or (ii) 3 contribute Receivables to Buyer's preferred equity capital pursuant to clause THIRD of SECTION 1.3(b) unless such Originator reasonably determines that the Purchase Price therefor will be satisfied with funds available to Buyer from sales of interests in the Receivables pursuant to the Purchase Agreement, Collections, proceeds of Subordinated Loans, other cash on hand or otherwise. (d) Although the Purchase Price for each Receivable shall be due and payable in full by Buyer to the applicable Originator on the date such Receivable comes into existence, settlement of the Purchase Price between Buyer and such Originator shall be effected on a monthly basis on Settlement Dates with respect to all Receivables coming into existence during the same Calculation Period and based on the information contained in the Monthly Report delivered by the Servicer pursuant to Article VIII of the Purchase Agreement for the Calculation Period then most recently ended. Although settlement shall be effected on Settlement Dates, increases or decreases in the amount owing under the applicable Subordinated Note made pursuant to SECTION 1.3(b) and any contribution of preferred equity capital by an Originator to Buyer made pursuant to SECTION 1.3(b) shall be deemed to have occurred and shall be effective as of the last Business Day of the Calculation Period to which such settlement relates. Section 1.4 PURCHASE PRICE CREDIT ADJUSTMENTS. If on any day, any Originator is deemed to have received a Deemed Collection with respect to any Receivable sold by it to Buyer hereunder, then, in such event, Buyer shall be entitled to a credit (each, a "PURCHASE PRICE CREDIT") against the Purchase Price otherwise payable to such Originator hereunder in an amount equal to such Deemed Collection. If such Purchase Price Credit exceeds the original Outstanding Balance of the Receivables originated by the applicable Originator on such day, then the applicable Originator shall pay the remaining amount of such Purchase Price Credit in cash within 10 Business Days thereafter; PROVIDED that if the applicable Originator's Termination Date has not occurred, such Originator shall be allowed to deduct the remaining amount of such Purchase Price Credit from any indebtedness owed to it under its Subordinated Note to the extent permitted thereunder. Section 1.5 PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid or deposited by Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Originator designated from time to time by such Originator or as otherwise directed by such Originator. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid in full; PROVIDED, HOWEVER, that such Default Fee shall not at any time exceed the maximum rate permitted by applicable law. Section 1.6 TRANSFER OF RECORDS. (a) In connection with each Transfer of a Receivable by an Originator hereunder, such Originator hereby sells, transfers, assigns and otherwise conveys to 4 Buyer all of such Originator's right and title to and interest in the Records relating to such Receivable without the need for any further documentation in connection with such Transfer. In connection with each such Transfer, such Originator hereby grants to each of Buyer, the Administrative Agent and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all software used by such Originator to account for the Receivables originated or serviced by such Originator, to the extent necessary to administer such Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto, provided that should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, such Originator hereby agrees that upon the request of Buyer (or the Administrative Agent, as Buyer's collateral assignee), such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable until the indefeasible payment in full of the Aggregate Unpaids, and shall terminate on the date this Agreement terminates in accordance with its terms. (b) Each Originator (i) shall take such action requested by Buyer and/or the Administrative Agent (as Buyer's collateral assignee), from time to time hereafter, that may be necessary or appropriate to ensure that Buyer has an enforceable ownership interest in the Records relating to the Receivables purchased from such Originator hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the Administrative Agent and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for such Receivables and/or to recreate such Records. Section 1.7 CHARACTERIZATION. (a) If, notwithstanding the intention of the parties expressed in SECTION 1.2(b), any sale by any Originator to Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale, or such sale shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties' intention that each sale of Receivables hereunder shall constitute a true sale thereof, each Originator hereby grants to Buyer a valid and perfected security interest in all of such Originator's right, title and interest in, to and under all Receivables now existing and hereafter arising, and in all Collections and Related Security with respect thereto (including, without limitation, each Lock-Box and Collection Account), all other rights and payments relating to the Receivables and all proceeds of the foregoing to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Purchase Price of the Receivables originated by such Originator together with all other obligations of such Originator hereunder, which security interest shall be prior to all other Adverse Claims thereto. Buyer shall have, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative, Each Originator hereby 5 authorizes Buyer (or the Administrative Agent, as Buyer's collateral assignee), within the meaning of Section 9-509 of any applicable enactment of the UCC, as secured party, to file, without the signature of the debtor, the UCC financing statements contemplated hereby. (b) Each Originator acknowledges that Buyer, pursuant to the Purchase Agreement, shall collaterally assign to the Administrative Agent, for the benefit of the Administrative Agent and the Purchasers thereunder, all of its rights, remedies, powers and privileges under this Agreement and that the Administrative Agent may further assign such rights, remedies, powers and privileges to the extent permitted in the Purchase Agreement. Each Originator agrees that the Administrative Agent, as the collateral assignee of Buyer, shall, following the occurrence and during the continuance of an Amortization Event, have the right to enforce this Agreement and to exercise directly all of Buyer's rights and remedies under this Agreement (including, without limitation, the right to give or withhold any consents or approvals of Buyer to be given or withheld hereunder, and, in any case, without regard to whether specific reference is made to Buyer's assigns or collateral assignees in the provisions of this Agreement which set forth such rights and remedies) and each Originator agrees to cooperate fully with the Administrative Agent and the Purchasers in the exercise of such rights and remedies. Each Originator further agrees to give to the Administrative Agent copies of all notices it is required to give to Buyer hereunder. ARTICLE II. REPRESENTATIONS AND WARRANTIES Section 2.1 REPRESENTATIONS AND WARRANTIES OF ORIGINATORS. Each Originator hereby represents and warrants to Buyer, as to such Originator and the Receivables originated by it, that, as of the date of each Purchase: (a) CORPORATE EXISTENCE AND POWER. Such Originator is a corporation duly organized, validly existing and in good standing under the laws of the state mentioned after its name in the preamble to this Agreement, and is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect. (b) POWER AND AUTHORITY; DUE AUTHORIZATION, EXECUTION AND DELIVERY. The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and such Originator's use of the proceeds of each Purchase made from it hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Originator is a party has been duly executed and delivered by such Originator. 6 (c) NO CONFLICT; NO BULK SALE. The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws or any shareholder agreements, voting trusts, and similar arrangements applicable to any of its authorized shares, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Originator or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect. No transaction contemplated hereby with respect to such Originator requires compliance with any bulk sales act or similar law. (d) GOVERNMENTAL AUTHORIZATION. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. (e) ACTIONS, SUITS. There are no actions, suits or proceedings pending, or to the best of such Originator's knowledge, threatened, against or affecting such Originator, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Such Originator is not in default with respect to any order of any court, arbitrator or governmental body. (f) BINDING EFFECT. This Agreement and each other Transaction Document to which such Originator is a party constitute the legal, valid and binding obligations of such Originator enforceable against such Originator in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (g) ACCURACY OF INFORMATION. All information heretofore furnished by a Responsible Officer of such Originator to Buyer (or to the Administrative Agent, as Buyer's collateral assignee) for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by a Responsible Officer of such Originator to Buyer (or to the Administrative Agent, as Buyer's collateral assignee) will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading. (h) USE OF PROCEEDS. No proceeds of any Purchase from such Originator hereunder will be used (i) for a purpose that violates, or would be inconsistent with, any law, rule 7 or regulation applicable to such Originator or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended. (i) GOOD TITLE. Immediately prior to each Purchase from such Originator hereunder, such Originator (i) is the legal and beneficial owner of the Receivables which are to be the subject of such Purchase and (ii) is the legal and beneficial owner of the Related Security with respect thereto or possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. (j) PERFECTION. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to transfer to Buyer (and Buyer shall acquire from such Originator) (i) legal and equitable title to, with the right to sell and encumber each Receivable originated by such Originator, whether now existing or hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator's right, title and interest in the Related Security associated with each such Receivable, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed (or delivered to the Administrative Agent (as Buyer's collateral assignee) in form suitable for filing) all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's ownership interest in the Receivables originated by such Originator, the Related Security and the Collections. (k) PLACES OF BUSINESS AND LOCATIONS OF RECORDS. The state of organization and chief executive office of such Originator and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in accordance with SECTION 4.2(a) in jurisdictions where all action required by SECTION 4.2(a) has been taken and completed. Such Originator's Federal Employer Identification Number and organizational identification number are correctly set forth on Exhibit II. (l) COLLECTIONS. The conditions and requirements set forth in SECTION 4.1(i) have at all times been satisfied and duly performed. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of such Originator at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit III. Such Originator has not granted any Person, other than Buyer (and, to the extent contemplated by the Purchase Agreement, the Servicer and the Administrative Agent, as Buyer's collateral assignee) dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event. (m) MATERIAL ADVERSE EFFECT. Since May 31, 2001, no event has occurred that would have a Material Adverse Effect. (n) NAMES. In the past five (5) years, such Originator has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement and as listed on Exhibit II. 8 (o) OWNERSHIP OF ORIGINATORS. RPM owns, directly or indirectly, 100% of the issued and outstanding shares of capital stock of such Originator, free and clear of any Adverse Claim. Such capital stock is validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of such Originator. (p) NOT A HOLDING COMPANY OR AN INVESTMENT COMPANY. Such Originator is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Originator is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. (q) COMPLIANCE WITH LAW. Such Originator has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable originated by such Originator, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect. (r) COMPLIANCE WITH CREDIT AND COLLECTION POLICY. Such Originator has complied in all material respects with its Credit and Collection Policy with regard to each Receivable originated by it and the related Contract, and has not made any material change to such Credit and Collection Policy, except such material change as permitted by SECTION 4.2(c) and in compliance with the notification requirements in SECTION 4.1(a)(vii). (s) PAYMENTS TO SUCH ORIGINATOR. With respect to each Receivable transferred hereunder by such Originator to Buyer, the Purchase Price received by such Originator constitutes reasonably equivalent value in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by such Originator of any Receivable hereunder is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101 et seq.), as amended. (t) ENFORCEABILITY OF CONTRACTS. Each Contract with respect to each Receivable originated by such Originator is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (u) NATURE OF RECEIVABLES. Each Receivable originated by such Originator is an "account" under and as defined in the UCC of all applicable jurisdictions. 9 (v) ACCOUNTING. The manner in which such Originator accounts for the transactions contemplated by this Agreement does not jeopardize the true sale analysis. (w) PURPOSE. Such Originator has determined that, from a business viewpoint, its sales of Receivables to Buyer and the other transactions contemplated herein and in the Purchase Agreement are in the best interests of such Originator. (x) ELIGIBLE RECEIVABLES. Each Receivable originated by such Originator that was included on any Monthly Report as an Eligible Receivable was an Eligible Receivable on the date on which it was sold or contributed to Buyer hereunder. ARTICLE III. CONDITIONS OF PURCHASE Section 3.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial Purchase from each Originator under this Agreement is subject to the conditions precedent that (a) Buyer shall have received on or before the date of such Purchase those documents listed on SCHEDULE B and (b) all of the conditions to the initial purchase under the Purchase Agreement shall have been satisfied or waived in accordance with the terms thereof. Section 3.2 CONDITIONS PRECEDENT TO SUBSEQUENT PAYMENTS. Buyer's obligation to pay each Originator for Receivables coming into existence after the Initial Cutoff Date shall be subject to the further conditions precedent that: (a) the Facility Termination Date shall not have occurred; (b) Buyer (or the Administrative Agent, as Buyer's collateral assignee) shall have received such other opinions or documents as it may reasonably request pursuant to SECTION 6.2 of the Purchase Agreement, and (c) on the date such Receivable came into existence, the following statements shall be true (and acceptance of the proceeds of any payment for such Receivable shall be deemed a representation and warranty by such Originator that such statements are then true): (i) the representations and warranties of such Originator set forth in ARTICLE II are true and correct on and as of the date such Receivable came into existence as though made on and as of such date; and (ii) no event has occurred and is continuing that will constitute a Termination Event or a Potential Termination Event. Section 3.3 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each Originator, by accepting the Purchase Price related to each Purchase of such Originator's Receivables and Related Security, shall be deemed to have certified that the representations and warranties of such Originator contained in ARTICLE II are true and correct as to such Originator on and as of the date of such Purchase, with the same effect as though made on and as of such day, and that each of the applicable conditions precedent set forth in this ARTICLE III has been satisfied as of the date of such purchase. 10 ARTICLE IV. COVENANTS Section 4.1 AFFIRMATIVE COVENANTS OF ORIGINATORS. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants as set forth below: (a) FINANCIAL REPORTING. Such Originator will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish to Buyer (or to the Administrative Agent, as Buyer's collateral assignee): (i) ANNUAL REPORTING. As soon as available and in any event within 90 days after the end of each fiscal year of such Originator, consolidated statements of income, shareholders' equity and cash flows of RPM (or, once applicable, Parent) and its Subsidiaries for such year and the related consolidated balance sheet as at the end of such year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, and accompanied by an opinion thereon of Ciulla, Smith & Dale LLP or other independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of such Originator and its Subsidiaries as at the end of, and for, such fiscal year; provided that delivery to the Buyer of RPM's (or, once applicable, Parent's) filing with the SEC of SEC Form 10-K for each fiscal year shall satisfy the requirements of this SECTION 4.1(A)(I) for each Originator. (ii) QUARTERLY REPORTING. As soon as available and in any event within 60 days after the end of each fiscal quarter of such Originator other than the last fiscal quarter in each fiscal year, consolidated statements of income, shareholders' equity and cash flows of RPM (or, once applicable, Parent) and its Subsidiaries for such fiscal quarter and for the portion of the fiscal year ended at the end of such fiscal quarter, and the related consolidated balance sheet as at the end of such fiscal quarter, accompanied, in each case, by a certificate of a Senior Officer, which certificate shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of RPM (or, once applicable, Parent) in accordance with GAAP (except for footnotes of the type required by the SEC to be included in quarterly reports on Form 10-Q), consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); provided that delivery to the Buyer of RPM's (or, once applicable, Parent's) filing with the SEC of SEC Form 10-Q for the first three quarters of each fiscal year shall satisfy the requirements of this SECTION 4.1(a)(ii) for each Originator. (iii) COMPLIANCE CERTIFICATE. Together with the financial statements required hereunder, a compliance certificate in substantially the form of EXHIBIT 11 IV signed by an Authorized Officer of each Originator and dated the date of such annual financial statement or such quarterly financial statement, as the case may be. (iv) SHAREHOLDERS STATEMENTS AND REPORTS. Promptly upon the furnishing thereof to the shareholders of RPM (or, once applicable, Parent), copies of all financial statements, reports and proxy statements so furnished. (v) SEC FILINGS. Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports (other than SEC Forms 10-K and 10-Q filed by RPM (or, once applicable, Parent) and delivered in accordance with SECTIONS 4.1(a)(i) and (ii) and other than SEC Forms 3, 4 or 5) which RPM or any of its Subsidiaries files with the SEC. (vi) COPIES OF NOTICES. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than Buyer, any of the Agents or any of the Purchasers, copies of the same. (vii) CHANGE IN CREDIT AND COLLECTION POLICY. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to such Originator's Credit and Collection Policy, a copy of its Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables originated by such Originator or decrease the credit quality of any newly created Receivables, requesting Buyer's consent thereto. (viii) OTHER INFORMATION. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Originator as Buyer (or the Administrative Agent, as Buyer's collateral assignee) may from time to time reasonably request in order to protect the interests of Buyer (and the Administrative Agent, as Buyer's collateral assignee) under or as contemplated by this Agreement. (b) NOTICES. Such Originator will notify the Buyer (and the Administrative Agent, as Buyer's collateral assignee) in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto: (i) TERMINATION EVENTS OR POTENTIAL TERMINATION EVENTS. The occurrence of each Termination Event and each Potential Termination Event, by a statement of an Authorized Officer of such Originator. 12 (ii) JUDGMENT AND PROCEEDINGS. (1) The entry of any judgment or decree against any Originator or any of its Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against the Originators and their Subsidiaries exceeds $35,000,000 after deducting (a) the amount with respect to which the applicable Originator or Subsidiary is insured and with respect to which the insurer has acknowledged responsibility, and (b) the amount for which the applicable Originator or Subsidiary is otherwise indemnified if the terms of such indemnification are satisfactory to Buyer (and the Administrative Agent, as Buyer's collateral assignee), and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against any Originator which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (iii) MATERIAL ADVERSE EFFECT. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect. (iv) DEFAULTS UNDER OTHER AGREEMENTS. The occurrence of a default or an event of default under any other financing arrangement involving Indebtedness or a line of credit in excess of $5,000,000 pursuant to which such Originator is a debtor or an obligor. (v) DOWNGRADE OF RPM (OR, ONCE APPLICABLE, PARENT). Any downgrade in the rating of any Indebtedness of RPM (or, once applicable, Parent) by Standard and Poor's Ratings Group or by Moody's Investors Service, Inc., setting forth the Indebtedness affected and the nature of such change. (c) COMPLIANCE WITH LAWS AND PRESERVATION OF CORPORATE EXISTENCE. Such Originator will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such Originator will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Material Adverse Effect and except that any Originator may merge with and into another Originator. (d) AUDITS. Such Originator will furnish to Buyer (and to the Agents, as Buyer's collateral assignees) from time to time such information with respect to it and the Receivables originated or serviced by it as Buyer (or any of the Agents) may reasonably request. Such Originator will, from time to time during regular business hours as requested by Buyer (or any of the Agents), upon reasonable notice and at the sole cost of such Originator, permit Buyer and the Agents or their respective agents or representatives: (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Originator relating to such Receivables and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Originator for the purpose of examining such 13 materials described in clause (i) above, and to discuss matters relating to such Originator's financial condition or such Receivables and the Related Security or such Originator's performance under any of the Transaction Documents or such Originator's performance under the Contracts and, in each case, with any of the officers or employees of such Originator having knowledge of such matters (each of the foregoing examinations and visits, a "REVIEW"); PROVIDED, HOWEVER, that, except in connection with an Extension Request under and as defined in the Purchase Agreement, so long as no Amortization Event or Potential Amortization Event (each, as defined in the Purchase Agreement) has occurred, the Originators shall only be responsible for the costs and expenses of one (1) Review in any one calendar year. (e) KEEPING AND MARKING OF RECORDS AND BOOKS. (i) Such Originator will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables originated by it in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all such Receivables (including, without limitation, records adequate to permit the immediate identification of each such new Receivable and all Collections of and adjustments to each such existing Receivable). Such Originator will give Buyer (and the Agents, as Buyer's collateral assignees) notice of any material change in the administrative and operating procedures referred to in the previous sentence other than a change in the type of software used by such Originator. (ii) Such Originator will: (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Receivables originated by it with a legend, acceptable to Buyer (and to the Administrative Agent, as Buyer's collateral assignee), describing Buyer's ownership interests in such Receivables and further describing the Purchaser Interests of the Administrative Agent (on behalf of the Purchasers) under the Purchase Agreement and (B) upon the request of Buyer (or any of the Agents, as Buyer's collateral assignees) following the occurrence of a Termination Event or an Amortization Event (as defined in the Purchase Agreement: (x) mark each Contract with a legend describing Buyer's ownership interests in such Receivables and further describing the Purchaser Interests of the Administrative Agent (on behalf of the Purchasers) and (y) deliver to Buyer (or, following the occurrence and during the continuance of an Amortization Event, to the Administrative Agent, as Buyer's collateral assignee) all Contracts (including, without limitation, all multiple originals of any such Contract that constitutes an instrument, a certificated security or chattel paper under the UCC) relating to such Receivables. (f) COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION POLICY. Such Originator will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables originated 14 or serviced by it, and (ii) comply in all material respects with its Credit and Collection Policy in regard to each such Receivable and the related Contract. (g) OWNERSHIP. Such Originator will take all necessary action to establish and maintain, irrevocably in Buyer, (i) legal and equitable title to the Receivables originated by such Originator and the associated Collections and (ii) all of such Originator's right, title and interest in the Related Security associated with such Receivables, in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and the Administrative Agent, as Buyer's collateral assignee) (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Buyer as Buyer (or the Administrative Agent, as Buyer's collateral assignee) may reasonably request). (h) PURCHASERS' RELIANCE. Such Originator acknowledges that the Administrative Agent and the Purchasers are entering into the transactions contemplated by the Purchase Agreement in reliance upon Buyer's identity as a legal entity that is separate from such Originator and any Affiliates thereof. Therefore, from and after the date of execution and delivery of this Agreement, such Originator will take all reasonable steps including, without limitation, all steps that Buyer (or the Administrative Agent, as Buyer's collateral assignee) may from time to time reasonably request to maintain Buyer's identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of such Originator and any Affiliates thereof and not just a division of such Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, such Originator (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own the Receivables and other assets acquired by Buyer, (ii) will take all other actions necessary on its part to ensure that Buyer is at all times in compliance with the covenants set forth in SECTION 7.1(i) of the Purchase Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between such Originator and Buyer on an arm's-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations ss.ss.1.1502-33(d) and 1.1552-1. (i) COLLECTIONS. Such Originator shall direct all Obligors to make payments of such Originator's Receivables directly to a Lock Box or Collection Account that has been transferred into the name of the Buyer (or the Administrative Agent, as Buyer's collateral assignee) and is the subject of a Collection Account Agreement at a Collection Bank. If, notwithstanding the foregoing, any Obligor makes payment to such Originator, such Originator further agrees to remit any Collections (including any security deposits applied to the Outstanding Balance of any Receivable) that it receives on such Receivables directly to a Collection Bank for deposit into a Collection Account within two (2) Business Days after receipt thereof, and agrees that all such Collections shall be deemed to be received in trust for Buyer (and the Administrative Agent, as Buyer's collateral assignee); PROVIDED THAT, to the extent permitted pursuant to SECTION 1.3, such Originator may retain such Collections as a portion of the 15 Purchase Price then payable to or apply such Collections to the reduction of the outstanding balance of its Subordinated Note. (j) TAXES. Except to the extent that such Originator is included in consolidated tax returns or reports filed by RPM (or, once applicable, Parent), such Originator will file all tax returns and reports required by law to be filed by it and will promptly pay all taxes and governmental charges at any time owing, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Such Originator will also pay when due any taxes payable in connection with the Receivables originated by it, exclusive of taxes on or measured by income or gross receipts of Buyer and its assigns. (k) INSURANCE. Such Originator will maintain in effect, at such Originator's expense, such casualty and liability insurance as such Originator deems appropriate in its good faith business judgment. Such Originator will pay the premiums therefor. The foregoing requirements shall not be construed to negate, reduce or modify, and are in addition to, such Originator's obligations hereunder. (l) REPORTS. Such Originator shall prepare the following reports and forward to the Servicer (i) on the 12th day of each month or if such date is not a Business Day, the next Business Day (the "MONTHLY REPORTING Date"), and at such times as the Servicer shall request, a Monthly Report and (ii) at such times as the Servicer shall reasonably request, a listing by Obligor of all Receivables originated by such Originator together with an aging of such Receivables. Section 4.2 NEGATIVE COVENANTS OF ORIGINATORS. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants that: (a) NAME CHANGE, OFFICES AND RECORDS. Such Originator will not (i) change its name (within the meaning of Section 9-507(c) of any applicable enactment of the UCC), identity, corporate structure or location of books and records unless, at least fifteen (15) Business Days prior to the effective date of any such name change, change in corporate structure or change in location of books and records, such Originator notifies Buyer thereof and delivers to Buyer (or to the Administrative Agent, as Buyer's collateral assignee) such financing statements (Forms UCC-1 and UCC-3) executed by such Originator (if required under applicable law) which Buyer (or the Administrative Agent, as Buyer's collateral assignee) may reasonably request to reflect such name change, location change or change in corporate structure, together with such other documents and instruments that Buyer (or the Administrative Agent, as Buyer's collateral assignee) may reasonably request in connection therewith and has taken all other steps to ensure that Buyer continues to have an exclusive perfected ownership or security interest in the Receivables originated by it, the Related Security related thereto and any Collections thereon, or (ii) change its jurisdiction of organization unless Buyer (and the Administrative Agent, as Buyer's collateral assignee) shall have received from such Originator, prior to such change, (A) those items described in clause (i) hereof, and (B) if Buyer (or the Administrative Agent, as 16 Buyer's collateral assignee) shall so request, an opinion of counsel, in form and substance reasonably satisfactory to such Person, as to such organization and such Originator's valid existence and good standing and the perfection and priority of Buyer's ownership or security interest in the Receivables originated by such Originator and the Related Security and the Collections related thereto. (b) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Such Originator will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless Buyer (and the Administrative Agent, as Buyer's collateral assignee) shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that such Originator may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account. (c) MODIFICATIONS TO CONTRACTS AND CREDIT AND COLLECTION POLICY. Such Originator will not make any change to its Credit and Collection Policy that could adversely affect the collectibility of the Receivables originated or serviced by such Originator or decrease the credit quality of any such newly created Receivables. Except as otherwise permitted in its capacity as a permitted sub-Servicer pursuant to Article VIII of the Purchase Agreement, such Originator will not extend, amend or otherwise modify the terms of any Receivable originated or serviced by it or any Contract related thereto in any material respect other than in accordance with its Credit and Collection Policy. (d) SALES, LIENS. Except pursuant to the Transaction Documents, such Originator will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable originated by it or the associated Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of Buyer provided for herein), and such Originator will defend the right, title and interest of Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Originator. Such Originator shall not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien, charge or other similar arrangement on any of its inventory. (e) ACCOUNTING FOR PURCHASE. Such Originator will not, and will not permit any Affiliate to, account for the transactions contemplated hereby in any manner other than as a sale by such Originator to Buyer of Receivables originated by such Originator and the associated Collections and Related Security. 17 ARTICLE V. TERMINATION EVENTS Section 5.1 TERMINATION EVENTS. The occurrence of any one or more of the following events shall constitute a Termination Event with respect to an Originator: (a) Such Originator shall fail to make any payment or deposit required hereunder on or within one (1) Business Day after the date on which the same is required to be made. (b) Such Originator or Performance Guarantor shall fail to perform or observe any covenant contained in SECTION 4.1(l) or any provision of SECTION 4.2 other than SECTION 4.2(c). (c) (i) Such Originator or Performance Guarantor shall fail to perform or observe any other covenant, agreement or other obligation hereunder (other than as referred to in another paragraph of this SECTION 5.1) or any other Transaction Document to which it is a party and such failure shall continue for three (3) consecutive Business Days following the earlier to occur of (i) notice from Buyer (or any Agent, as its collateral assignee) of such non-performance or non-observance, or (ii) the date on which a Responsible Officer of such Originator (or Performance Guarantor, as the case may be) otherwise becomes aware of such non-performance or non-observance. (d) Any representation, warranty, certification or statement made by such Originator in this Agreement, any other Transaction Document or in any other document required to be delivered pursuant hereto or thereto shall prove to have been incorrect when made or deemed made in any material respect and is not cured within five (5) Business Days following the earlier to occur of (i) notice from Buyer (or any Agent, as its collateral assignee) of such inaccuracy, or (ii) the date on which a Responsible Officer of such Originator (or Performance Guarantor, as the case may be) otherwise becomes aware of such inaccuracy, PROVIDED THAT the materiality threshold in this subsection shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold although the five (5) Business Day cure period shall continue to apply. (e) Any Originator shall default, or the Performance Guarantor or any of its Subsidiaries (other than an Originator) shall default, in the payment when due of any principal or of or interest on any Material Indebtedness; or any event or condition shall occur which results in the acceleration of the maturity of any such Material Indebtedness. (f) (i) Such Originator, Performance Guarantor or any of their respective Subsidiaries shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against such Originator, Performance Guarantor or any of their respective Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, 18 arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (iii) such Originator, Performance Guarantor or any of their respective Subsidiaries shall take any corporate action to authorize any of the actions set forth in the foregoing clauses (i) or (ii) of this subsection (f). (g) A Change of Control shall occur with respect to such Originator or Performance Guarantor. (h) One or more final judgments for the payment of money in an amount in excess of $35,000,000, individually or in the aggregate, shall be entered against such Originator or Performance Guarantor on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for thirty (30) consecutive days without a stay of execution. Section 5.2 REMEDIES. Upon the occurrence and during the continuation of a Termination Event, Buyer may take any of the following actions: (i) declare the applicable Originator's Termination Date to have occurred, whereupon such Originator's Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by the Originators; PROVIDED, HOWEVER, that upon the occurrence of a Termination Event described in SECTION 5.1(f), or of an actual or deemed entry of an order for relief with respect to Performance Guarantor or any Originator under the Federal Bankruptcy Code, such Originator's Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Originator and (ii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any amounts then due and owing by each Originator to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Buyer (or the Administrative Agent, as Buyer's collateral assignee) otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative. 19 ARTICLE VI. INDEMNIFICATION Section 6.1 INDEMNITIES BY ORIGINATORS. Without limiting any other rights that Buyer may have hereunder or under applicable law, each Originator hereby agrees to indemnify (and pay upon demand to) Buyer and its assigns, officers, directors, agents and employees (each, an "INDEMNIFIED PARTY") from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys' fees (which attorneys may be employees of Buyer or any such assign) and disbursements (all of the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by Buyer of an interest in the Receivables originated by such Originator, excluding, however, in all of the foregoing cases: (a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification; (b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or (c) taxes imposed by the United States, the Indemnified Party's jurisdiction of organization (or, in the case of an individual, primary residence) or any other jurisdiction in which such Indemnified Party has established a taxable nexus other than in connection with the transactions contemplated hereby and by the Purchase Agreement on or measured by the overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the Intended Characterization; PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the liability of such Originator or limit the recourse of Buyer to such Originator for amounts otherwise specifically provided to be paid by such Originator under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, but subject to the exclusions in clauses (a), (b) and (c) above, each Originator shall indemnify Buyer for Indemnified Amounts (including, without limitation, losses in respect of uncollectible Receivables, regardless of whether reimbursement therefor would constitute recourse to such Originator) relating to or resulting from: (i) any representation or warranty made by such Originator (or any of its officers) under or in connection with this Agreement, any other Transaction Document to which such Originator is a party or any other information or report required to be delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made; 20 (ii) the failure by such Originator to comply with any applicable law, rule or regulation with respect to any Receivable originated by it, or any Contract related thereto, or the nonconformity of any such Receivable or Contract with any such applicable law, rule or regulation or any failure of any Originator to keep or perform any of its obligations, express or implied, with respect to any such Contract; (iii) any failure of such Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document to which it is a party; (iv) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with goods that are the subject of any Contract or any Receivable originated by such Originator; (v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable originated by such Originator (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of goods or services related to such Receivable or the furnishing or failure to furnish such goods or services; (vi) the commingling of Collections of such Receivables at any time with other funds; (vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document to which such Originator is a party, the transactions contemplated hereby, the use by such Originator of the proceeds of any purchase from it hereunder or any other investigation, litigation or proceeding relating to such Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; (viii) any inability to litigate any claim against any Obligor in respect of any such Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; (ix) (A) failure of such Originator generally to pay its debts as such debts become due or admission by such Originator in writing of its inability to pay its debts generally or any making by such Originator of a general assignment for the benefit of creditors; or (B) the institution of any proceeding by or against such Originator seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order 21 for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property, or (C) the taking by such Originator of any corporate action to authorize any of the actions set forth in clauses (A) or (B) above in this clause (ix); (x) any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and ownership of, an exclusive perfected ownership interest in the Receivables originated by such Originator and the associated Related Security and Collections, free and clear of any Adverse Claim (except as created by the Transaction Documents); (xi) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any such Receivable, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of sale to Buyer or at any subsequent time; and (xii) any action or omission by such Originator which reduces or impairs the rights of Buyer with respect to any Receivable or the value of any such Receivable. Section 6.2 OTHER COSTS AND EXPENSES. In addition to the obligations of each Originator under SECTION 6.1, each Originator agrees to pay on demand: (a) all reasonable costs and expenses, including attorneys' fees, in connection with the enforcement against such Originator of this Agreement and the other Transaction Documents executed by such Originator; and (b) all stamp duties and other similar filing or recording taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or the other Transaction Documents executed by such Originator, and agrees to indemnify Indemnified Parties against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. ARTICLE VII. MISCELLANEOUS Section 7.1 WAIVERS AND AMENDMENTS. (a) No failure or delay on the part of Buyer (or, following the occurrence and during the continuance of an Amortization Event, the Administrative Agent, as Buyer's collateral assignee) in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and 22 nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given. (b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by each Originator and Buyer and, to the extent required under the Purchase Agreement, the Administrative Agent and the Financial Institutions or the Required Financial Institutions. Section 7.2 NOTICES. All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (c) if given by any other means, when received at the address specified in this SECTION 7.2. Section 7.3 PROTECTION OF OWNERSHIP INTERESTS OF BUYER. (a) Each Originator agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Buyer (or the Administrative Agent, as Buyer's collateral assignee) may request, to perfect, protect or more fully evidence the interest of Buyer hereunder and the Purchaser Interests, or to enable Buyer (or, following the occurrence and during the continuance of an Amortization Event, the Administrative Agent, as Buyer's collateral assignee) to exercise and enforce its (or their) rights and remedies hereunder. At any time, Buyer may, at the applicable Originator's sole cost and expense, direct such Originator to notify the Obligors of Receivables originated or serviced by it of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee. (b) If any Originator fails to perform any of its obligations hereunder, Buyer may (but shall not be required to) perform, or cause performance of, such obligation, and Buyer's costs and expenses incurred in connection therewith shall be payable by such Originator as provided in SECTION 6.2. Each Originator irrevocably authorizes Buyer (and, from and after the occurrence and during the continuance of an Amortization Event, the Administrative Agent, as Buyer's collateral assignee) at any time and from time to time in the sole discretion of Buyer (or the Administrative Agent), and appoints Buyer (and, from and after the occurrence and during the continuance of an Amortization Event, the Administrative Agent) as its attorney(ies)-in-fact, to act on behalf of such Originator (i) to execute on behalf of such Originator as debtor and to file financing statements necessary or desirable in Buyer's sole discretion to perfect and to maintain the perfection 23 and priority of the ownership interest of Buyer in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as Buyer (or, as applicable, the Administrative Agent) in its sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Buyer's interests in the Receivables. This appointment is coupled with an interest and is irrevocable. Section 7.4 CONFIDENTIALITY. (a) Each of the parties hereto shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letters and the other confidential or proprietary information with respect to the Originators, the Agents, the Purchasers and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such party and its officers and employees may disclose such information (i) to such party's external accountants and attorneys and (ii) as required by any applicable law, regulation or order of any judicial or administrative proceeding provided that each party shall use commercially reasonable efforts to ensure, to the extent permitted given the circumstances, that any such information which is so disclosed is kept confidential. (b) Anything herein to the contrary notwithstanding, each Originator hereby consents to the disclosure of any nonpublic information with respect to it (i) to each of the Agents and Purchasers, (ii) to any prospective or actual assignee or participant of any of the Agents or Purchasers, and (iii) to any rating agency, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to a Conduit or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which either of the Co-Agents acts as the administrative agent or administrator and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, provided each such Person is advised of the confidential nature of such information and, in the case of a Person described in clause (ii) above, agrees to be bound by the provisions of this SECTION 7.4. In addition, the Agents and the Purchasers may disclose any such nonpublic information pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law) although each of them shall use commercially reasonable efforts to ensure, to the extent permitted given the circumstances, that any such information which is so disclosed is kept confidential. Section 7.5 BANKRUPTCY PETITION. (a) Each Originator and Buyer each hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of each of the Conduits, it will not institute against, or join any other Person in instituting against, such Conduit or any such entity any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. 24 (b) Each Originator covenants and agrees that, prior to the date that is one year and one day after the payment in full of all Aggregate Unpaids under the Purchase Agreement, it will not institute against, or join any other Person in instituting against, Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS. Section 7.7 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT, AND EACH ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ANY ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER. 25 Section 7.9 INTEGRATION; BINDING EFFECT; SURVIVAL OF TERMS. (a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. (b) This Agreement shall be binding upon and inure to the benefit of the Originators, Buyer and their respective successors and permitted assigns (including any trustee in bankruptcy). No Originator may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Buyer. Buyer may pledge and assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of any Originator, and hereby notifies the Originators that it has pledged and collaterally assigned its right, title and interest hereunder with respect to each Receivable in which the Purchasers have acquired any interest under the Receivables Purchase Agreement to the Administrative Agent, for the benefit of the Agents and the Purchasers under the Purchase Agreement. This Agreement shall create and constitute the continuing obligation of each of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Originator pursuant to Article II; (ii) the indemnification and payment provisions of Article VI; and (iii) SECTION 7.5 shall be continuing and shall survive any termination of this Agreement. Section 7.10 COUNTERPARTS; SEVERABILITY; SECTION REFERENCES. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which, taken together, shall constitute one and the same agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and sections of, and schedules and exhibits to, this Agreement. [SIGNATURE PAGES FOLLOW] 26 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof. CONSOLIDATED COATINGS CORPORATION, DAP PRODUCTS INC., THE TESTOR CORPORATION, ZINSSER CO., INC., TREMCO INCORPORATED, RUST-OLEUM CORPORATION, THE EUCLID CHEMICAL COMPANY, AND REPUBLIC POWDERED METALS, INC. By: /s/ P. Kelly Tompkins ---------------------------------- Name: P. Kelly Tompkins Title: Secretary ADDRESS: c/o RPM, Inc. 2628 Pearl Road P.O. Box 777 Medina, Ohio 44258 Attention: Treasurer Phone: (330) 273-8837 Fax: (330) 225-6574 WEATHERPROOFING TECHNOLOGIES, INC. By: /s/ Jeffrey L. Korach ---------------------------------- Name: Jeffrey L. Korach Title: President ADDRESS: c/o RPM, Inc. 2628 Pearl Road P.O. Box 777 Medina, Ohio 44258 Attention: Treasurer Phone: (330) 273-8837 Fax: (330) 225-6574 27 RPM FUNDING CORPORATION By: /s/ P. Kelly Tompkins ---------------------------------- Name: P. Kelly Tompkins Title: Vice President, Secretary ADDRESS: RPM Funding Corporation 2628 Pearl Road, Suite 100 Medina, Ohio 44258 Attention: Treasurer Phone: (330) 273-8837 Fax: (330) 225-6574 28 EXHIBIT I DEFINITIONS This is Exhibit I to the Agreement (as hereinafter defined). As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). If a capitalized term is used in the Agreement, or any Exhibit or Schedule thereto, and not otherwise defined therein or in this Exhibit I, such term shall have the meaning assigned thereto in Exhibit I to the Purchase Agreement. "ADMINISTRATIVE AGENT" has the meaning set forth in the Preliminary Statements to the Agreement. "AGREEMENT" means the Receivables Sale Agreement, dated as of June 6, 2002, among the Originators and Buyer, as the same may be amended, restated or otherwise modified. "AMORTIZATION EVENT" has the meaning set forth in the Purchase Agreement. "AUTHORIZED OFFICER" means, with respect to each Originator, its president, corporate controller, chief financial officer, treasurer or secretary. "BUYER" has the meaning set forth in the preamble to the Agreement. "CALCULATION PERIOD" means each calendar month or portion thereof which elapses during the term of the Agreement. The first Calculation Period for each Originator shall commence on the date of the initial Purchase of Receivables from such Originator hereunder and the final Calculation Period shall terminate on its Termination Date. "CHANGE OF CONTROL" means (a) the acquisition by any Person (other than Parent), or two or more Persons acting in concert (other than Parent and any Subsidiary of Parent), of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of RPM (or, once applicable, Parent) or (b) RPM (or, once applicable, Parent) ceases to own, directly or indirectly, 100% of the outstanding voting stock of any Originator or Buyer. "COLLECTIONS" means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all yield, Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable. "CONDUITS" has the meaning set forth in the Preliminary Statements to the Agreement. 29 "CREDIT AND COLLECTION POLICY" means each Originator's credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in EXHIBIT V, as modified from time to time in accordance with the Agreement. "DEEMED COLLECTIONS" means the aggregate of all amounts an Originator shall have been deemed to have received as a Collection of a Receivable sold by it. An Originator shall be deemed to have received a Collection (but only to the extent of the reduction or cancellation identified below) of a Receivable sold by it if at any time (i) the Outstanding Balance of any such Receivable is either (x) reduced as a result of any defective or rejected goods, any discount or any adjustment or otherwise by such Originator (other than cash Collections on account of the Receivables) or (y) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction) or (ii) any of the representations or warranties in Article II were not true with respect to such Receivable at the time of its sale hereunder (in which case, such Originator shall be deemed to have received a Collection in an amount equal to the Outstanding Balance of such Receivable). "DEFAULT FEE" means a per annum rate of interest equal to the sum of (i) the Base Rate, PLUS (ii) 2% per annum (computed for actual days elapsed on the basis of a year consisting of 360 days). "DISCOUNT FACTOR" means, with respect to any Receivable, a percentage calculated to provide Buyer with a reasonable return on its investment in such Receivable after taking account of (i) the time value of money based upon the anticipated dates of collection of such Receivable and the cost to Buyer of financing its investment in such Receivable during such period and (ii) the risk of nonpayment by the related Obligor. Each Originator and Buyer may agree from time to time to change the Discount Factor with respect to the Receivables originated by such Originator based on changes in one or more of the items affecting the calculation thereof, PROVIDED that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment in respect of a Purchase which occurred during any Calculation Period ending prior to the Calculation Period during which any Originator and Buyer agree to make such change. "FINANCE CHARGES" means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract. "INITIAL CUTOFF DATE" means the close of business on the date of this Agreement. "INTENDED CHARACTERIZATION" means, for income tax purposes, the characterization of the acquisition by the Purchasers of Purchaser Interests under the Purchase Agreement as a loan or loans by the Purchasers to the Seller secured by the Receivables, the Related Security and the Collections. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the financial condition or operations of any Originator, or of RPM (or, once applicable, Parent) and its 30 Subsidiaries, taken as a whole, (ii) the ability of any Originator to perform its obligations under the Agreement or any other Transaction Document, (iii) the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) Buyer's (or any of its assigns') interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables, in each case, relating to Receivables sold by such Originator hereunder. "MATERIAL INDEBTEDNESS" means (a) with respect to the Performance Guarantor and its Subsidiaries (other than the Originators), Indebtedness in excess of $20 million in aggregate principal amount and (b) with respect to any Originator, Indebtedness in excess of $10 million in aggregate principal amount. "MONTHLY REPORT" means a report, in substantially the form of EXHIBIT VII hereto (appropriately completed), furnished by an Originator to the Servicer pursuant to SECTION 4.1(l). "NET WORTH" means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Receivables at such time, OVER (b) the sum of (i) the Aggregate Capital outstanding at such time, PLUS (ii) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on the date of determination). "OBLIGOR" means a Person obligated to make payments pursuant to a Contract. "ORIGINAL BALANCE" means, with respect to any Receivable coming into existence after the Initial Cutoff Date, the Outstanding Balance of such Receivable on the date it was created. "ORIGINATOR(S)" has the meaning set forth in the preamble to the Agreement. "PARENT" means any publicly-held corporation, limited liability company or partnership that (a) is formed for the sole purpose of acquiring, directly or indirectly (whether by distribution or otherwise), substantially all of the outstanding voting stock of all classes of RPM, (b) is owned immediately after the acquisition described in clause (a) of this definition by the same shareholders as were shareholders of RPM immediately prior to the acquisition described in clause (a) of this definition, and (c) hereafter owns, directly or indirectly, all of the outstanding voting stock of all classes of RPM. "PERFORMANCE GUARANTOR" means RPM (or any Parent that hereafter unconditionally assumes in writing RPM's obligations under the Performance Undertaking in accordance with the Purchase Agreement). "PERFORMANCE UNDERTAKING" has the meaning provided in the Purchase Agreement. 31 "POTENTIAL TERMINATION EVENT" means an event which, without remedial action and with the passage of time or the giving of notice, or both, would constitute a Termination Event. "PREFERRED SHARES" means shares of Buyer's Serial Preferred Stock, as defined in Buyer's Certificate of Incorporation, as amended. "PURCHASE" means each purchase pursuant to SECTION 1.2(a) of the Agreement by Buyer from an Originator of Receivables originated by such Originator and the Related Security and Collections related thereto, together with all related rights in connection therewith. "PURCHASE AGREEMENT" has the meaning set forth in the Preliminary Statements to the Agreement. "PURCHASE PRICE" means, with respect to any Receivable, the price to be paid by Buyer to the applicable Originator for such Receivable and the Related Security and Collections with respect thereto in accordance with SECTION 1.3 of the Agreement, which price shall equal (i) the product of (x) the Original Balance of such Receivable, MULTIPLIED BY (y) one minus the Discount Factor then in effect, minus (ii) any Purchase Price Credits to be credited against the Purchase Price otherwise payable in accordance with SECTION 1.4 of the Agreement. "PURCHASE PRICE CREDIT" has the meaning set forth in SECTION 1.4 of the Agreement. "RECEIVABLE" means all rights to payment owed to an Originator (at the times it arises, and before giving effect to any transfer or conveyance under the Agreement) or Buyer (after giving effect to the transfers under the Agreement) constituting an account arising in connection with the sale of goods or the rendering of services by such Originator and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; PROVIDED, FURTHER, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether the account debtor or such Originator treats such indebtedness, rights or obligations as a separate payment obligation. "RECORDS" means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor. "RELATED SECURITY" means, with respect to any Receivable: (i) all of the applicable Originator's interest in the inventory and goods (including returned or repossessed inventory or goods), if any, the sale of which by 32 such Originator gave rise to such Receivable, and all insurance contracts with respect thereto, (ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable, (iii) all guaranties, letters of credit, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise, (iv) all enforcement rights or rights to receive payment with respect to service contracts and other contracts and agreements associated with such Receivable, (v) all Records related to such Receivable, (vi) all of the applicable Originator's right, title and interest in each Lock-Box and each Collection Account, and (vii) all proceeds of any of the foregoing. "REQUIRED CAPITAL AMOUNT" means, as of any date of determination, an amount equal to the greater of (i) 3% of the aggregate Outstanding Balance of all Receivables as of such date and (ii) $15,000,000. "RESPONSIBLE OFFICER" means, with respect to any Person, each of the following officers (if applicable) of such Person (or anyone performing substantially the same functions as the following officers typically perform): any of such Person's Senior Officers, or such Person's assistant treasurer, credit manager or controller . "RPM" has the meaning set forth in the Preliminary Statements to the Agreement. "SEC" means the United States Securities and Exchange Commission or any successor regulatory body. "SENIOR OFFICER" means, as to each Originator, the chief executive officer, president, chief financial officer, vice president, treasurer, or secretary. "SERVICER" means the Person who from time to time is designated as the "SERVICER" under and as defined in the Purchase Agreement, 33 "SUBORDINATED LOAN" has the meaning set forth in SECTION 1.3(a) of the Agreement. "SUBORDINATED NOTE" means each promissory note in substantially the form of EXHIBIT VI hereto as more fully described in SECTION 1.3 of the Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time. "TERMINATION DATE" means, as to each Originator, the earliest to occur of (i) the Facility Termination Date, (ii) the Business Day immediately prior to the occurrence of a Termination Event set forth in SECTION 5.1(f) with respect to such Originator or Performance Guarantor, (iii) the Business Day specified in a written notice from Buyer (or its assigns) to such Originator following the occurrence of any other Termination Event with respect to such Originator , and (iv) the date which is thirty (30) days after Buyer's receipt of written notice from such Originator that it wishes to terminate the facility evidenced by this Agreement. "TERMINATION EVENT" has the meaning set forth in SECTION 5.1 of the Agreement. "TRANSACTION DOCUMENTS" means, collectively, this Agreement, each Collection Account Agreement, the Subordinated Notes, the Performance Undertaking and all other instruments, documents and agreements executed and delivered in connection herewith. "TRANSFER" means a sale or contribution of Receivables pursuant to the Agreement. ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE CONSTRUED IN ACCORDANCE WITH GAAP. ALL TERMS USED IN ARTICLE 9 OF THE UCC IN THE STATE OF ILLINOIS, AND NOT SPECIFICALLY DEFINED HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9. 34 EX-10.2 4 l96562aexv10w2.txt EXHIBIT 10.2 Exhibit 10.2 RECEIVABLES PURCHASE AGREEMENT DATED AS OF JUNE 6, 2002 AMONG RPM FUNDING CORPORATION, AS SELLER, RPM, INC., AS SERVICER, JUPITER SECURITIZATION CORPORATION, BANK ONE, NA (MAIN OFFICE CHICAGO), INDIVIDUALLY AND AS JUPITER AGENT, BLUE RIDGE ASSET FUNDING CORPORATION, WACHOVIA BANK, NATIONAL ASSOCIATION, INDIVIDUALLY AND AS BLUE RIDGE AGENT, AND BANK ONE, NA (MAIN OFFICE CHICAGO), AS ADMINISTRATIVE AGENT RECEIVABLES PURCHASE AGREEMENT THIS RECEIVABLES PURCHASE AGREEMENT dated as of June 6, 2002, is among: (a) RPM Funding Corporation, a Delaware corporation ("SELLER"), (b) RPM, Inc., an Ohio corporation ("RPM"), as initial Servicer, (c) Jupiter Securitization Corporation, a Delaware corporation ("JUPITER" or a "CONDUIT"), and Blue Ridge Asset Funding Corporation, a Delaware corporation ("BLUE RIDGE" or a "CONDUIT"), (d) Bank One, NA (Main Office Chicago), a national banking association ("BANK ONE"), and its assigns (collectively, the "JUPITER LIQUIDITY BANKS" and, together with Jupiter, the "JUPITER GROUP"), and Wachovia Bank, National Association, a national banking association ("WACHOVIA"), and its assigns (collectively, the "BLUE RIDGE LIQUIDITY BANKS" and, together with Blue Ridge, the "BLUE RIDGE GROUP"), (e) Bank One, NA (Main Office Chicago), a national banking association, in its capacity as agent for the Jupiter Group (the "JUPITER AGENT" or a "CO-AGENT"), and Wachovia Bank, National Association, a national banking association, in its capacity as agent for the Blue Ridge Group (the "BLUE RIDGE AGENT" or a "CO-AGENT"), and (f) Bank One, NA (Main Office Chicago), a national banking association, in its capacity as administrative agent for the Jupiter Group, the Blue Ridge Group and each Co-Agent (in such capacity, together with its successors and assigns, the "ADMINISTRATIVE AGENT" and, together with each of the Co-Agents, the "AGENTS"). UNLESS DEFINED ELSEWHERE HEREIN, CAPITALIZED TERMS USED IN THIS AGREEMENT SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN EXHIBIT I. PRELIMINARY STATEMENTS Seller desires to transfer and assign Purchaser Interests to the Purchasers from time to time. Each of the Conduits may, in its absolute and sole discretion, purchase its Percentage of each Purchaser Interest from Seller from time to time. In the event that either Conduit declines to make any such purchase, its Liquidity Banks shall make such purchase. Bank One, NA (Main Office Chicago) has been requested and is willing to act as Jupiter Agent on behalf of the Jupiter Group in accordance with the terms hereof. Wachovia Bank, National Association has been requested and is willing to act as Blue Ridge Agent on behalf of the Blue Ridge Group in accordance with the terms hereof. Bank One, NA (Main Office Chicago) has been requested and is willing to act as Administrative Agent on behalf of the Purchasers in accordance with the terms hereof. ARTICLE I. PURCHASE ARRANGEMENTS Section 1.1 PURCHASE FACILITY. (a) On the terms and subject to the conditions set forth in this Agreement, Seller may from time to time prior to the Facility Termination Date, sell Purchaser Interests to the Purchasers by delivering (or causing Servicer to deliver, on Seller's behalf) a Purchase Notice to the Co-Agents in accordance with Section 1.2. Upon receipt of a copy of each Purchase Notice from Seller or Servicer, each of the Co-Agents shall determine whether its Conduit will purchase its Percentage of such Purchaser Interest, and (i) in the event that Jupiter elects not to make any such purchase of its Percentage, the Jupiter Agent shall promptly notify Seller and the Jupiter Liquidity Banks of such fact, whereupon each of the Jupiter Liquidity Banks severally agrees to purchase its Ratable Share of such Percentage, on the terms and subject to the conditions hereof, PROVIDED that at no time may the aggregate Capital of the Jupiter Group at any one time outstanding exceed the lesser of (A) the aggregate amount of the Jupiter Liquidity Banks' Commitments hereunder, and (B) Jupiter's Percentage of the Net Receivables Balance (such lesser amount, the "JUPITER ALLOCATION LIMIT") less Aggregate Reserves; and (ii) in the event that Blue Ridge elects not to make any such purchase of its Percentage, the Blue Ridge Agent shall promptly notify Seller and each of the Blue Ridge Liquidity Banks of such fact, whereupon each of the Blue Ridge Liquidity Banks severally agrees to purchase its Ratable Share of such Percentage, on the terms and subject to the conditions hereof, PROVIDED that at no time may the aggregate Capital of the Blue Ridge Group at any one time outstanding exceed the lesser of (A) the aggregate amount of the Blue Ridge Liquidity Banks' Commitments hereunder, and (B) Blue Ridge's Percentage of the Net Receivables Balance (such lesser amount, the "BLUE RIDGE ALLOCATION LIMIT") less Aggregate Reserves. In no event shall the Aggregate Capital outstanding hereunder exceed the lesser of (1) the Purchase Limit and (2) the Net Receivables Balance less Aggregate Reserves. All Liquidity Banks' Commitments to Seller under this Agreement shall terminate on the Facility Termination Date. 2 (b) Seller may, upon at least 10 Business Days' notice to the Agents, terminate in whole or reduce in part, ratably between the Blue Ridge Group and the Jupiter Group in accordance with their respective Percentages (and within each Group, ratably among the Liquidity Banks that are members thereof in accordance with their respective Ratable Shares), the unused portion of the Purchase Limit; PROVIDED that each partial reduction of the Purchase Limit shall be in an aggregate amount equal to $10,000,000 or a larger integral multiple of $1,000,000. Section 1.2 INCREASES. Seller (or Servicer, on Seller's behalf) shall provide each of the Co-Agents with at least two (2) Business Days' prior notice in a form set forth as Exhibit II hereto of each Incremental Purchase (a "PURCHASE NOTICE"). Each Purchase Notice shall be subject to Section 6.2 hereof and, except as set forth below, shall be irrevocable and shall specify the requested Purchase Price (which shall not be less than $3,000,000) and date of purchase (which, in the case of any Incremental Purchase (after the initial Incremental Purchase hereunder), shall only be on a Settlement Date) and, in the case of an Incremental Purchase to be funded by either Conduit's Liquidity Banks, the requested Discount Rate and Tranche Period. Following receipt of a Purchase Notice, each Co-Agent will determine whether its Conduit agrees to make its purchase. If either Conduit declines to make a proposed purchase, the Incremental Purchase of that Conduit's Percentage of such Purchaser Interest will be made by such Conduit's Liquidity Banks while the other Conduit's Percentage of such Purchaser Interest will be purchased by such other Conduit. On the date of each Incremental Purchase, upon satisfaction of the applicable conditions precedent set forth in Article VI, each of the Conduits or its Liquidity Banks, as applicable, shall deposit to the Facility Account, in immediately available funds, no later than 1:00 p.m. (Chicago time), an amount equal to (i) in the case of a Conduit, its Percentage of the Purchase Price of the Purchaser Interest then being purchased or (ii) in the case of a Liquidity Bank, such Liquidity Bank's Ratable Share of its Conduit's Percentage of the Purchase Price of the Purchaser Interest then being purchased. Section 1.3 DECREASES. Seller (or Servicer, on Seller's behalf) shall provide each of the Co-Agents with prior written notice in conformity with the Required Notice Period (each, a "REDUCTION NOTICE") of any proposed reduction of Aggregate Capital. Such Reduction Notice shall designate (i) the date (the "PROPOSED REDUCTION DATE") upon which any such reduction of Aggregate Capital shall occur (which date shall give effect to the applicable Required Notice Period), (ii) the amount of Aggregate Capital to be reduced (the "AGGREGATE REDUCTION"), (iii) each Group's Percentage of such Aggregate Reduction, which shall be applied ratably to the Purchaser Interests of the Conduit and Liquidity Banks in such Group in accordance with the amount of Capital (if any) owing to such Conduit, on the one hand, and the amount of Capital (if any) owing to such Liquidity Banks (ratably, based on their respective Ratable Shares), on the other hand. Only one (1) Reduction Notice shall be outstanding at any time. Section 1.4 PAYMENT REQUIREMENTS. All amounts to be paid or deposited by any Seller Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 11:00 a.m. (Chicago time) on the day when due in immediately available funds, and if not received before 11:00 a.m. (Chicago time) shall be deemed to be received on the next succeeding Business Day. If such amounts are payable to the Administrative Agent, the Jupiter Agent or to a member of the Jupiter Group, they shall be paid to account no. 59-48118 at Bank One, NA (Main Office Chicago), in Chicago, Illinois, ABA No. 3 01071000013 until otherwise notified by the Jupiter Agent or the Administrative Agent (the "JUPITER GROUP ACCOUNT"). If such amounts are payable to the Blue Ridge Agent or to a member of the Blue Ridge Group, they shall be paid to account no. 8735-098787 at Wachovia Bank, National Association, in Winston-Salem, North Carolina, ABA No. 053100494, until otherwise notified by the Blue Ridge Agent (the "BLUE RIDGE GROUP ACCOUNT"). All computations of Yield, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letters shall be made on the basis of a year of 360 days for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day. Section 1.5 EXTENSION OF EACH CONDUIT'S LIQUIDITY TERMINATION DATE. Provided that no Amortization Event or Potential Amortization Event has occurred, the Seller (or Servicer, on Seller's behalf) may request an extension of each Conduit's Liquidity Termination Date by submitting a request for an extension (each, an "EXTENSION REQUEST") to the Co-Agents no more than 120 days and not less than 30 days prior to the Conduits' then current Liquidity Termination Date. Upon receipt of such an Extension Request, the Blue Ridge Agent shall notify the Blue Ridge Group, and the Jupiter Agent shall notify the Jupiter Group, of the contents thereof and shall request each member of its respective Group to approve the Extension Request. Each Purchaser approving the Extension Request shall deliver its written approval to its Co-Agent no later than thirty (30) days after the request (the "RESPONSE DATE"), whereupon such Co-Agent shall notify the Administrative Agent, the other Co-Agent and the Seller within one Business Day thereafter as to whether all members of such Co-Agent's Group have approved the Extension Request. If all members of the Blue Ridge Group and all members of the Jupiter Group have approved the Extension Request by the Response Date, each Conduit's Liquidity Termination Date shall be extended to the date which is 364 days from the earlier to occur of the Response Date or the Administrative Agent's receipt of notice from each of the Co-Agents that their respective Groups have unanimously approved the requested extension (such earlier date, the "EXTENSION DATE"). If the members of either Group do not unanimously agree to an Extension Request, the Seller (or Servicer, on Seller's behalf) shall have the right to require the members of such Group to assign all, but not less than all, of their Commitments (as applicable) and all, but not less than all, of their outstanding Obligations (as applicable) by entering into written assignment(s) with one or more Eligible Assignees (who shall, unless an Amortization Event or Potential Amortization Event shall exist and be continuing, be acceptable to RPM (or, once applicable, Parent), which consent shall not be unreasonably withheld or delayed) not later than the 10th Business Day after such Eligible Assignee(s) are identified. Each such assignment to an Eligible Assignee (including, if agreed by the members of the other Group, to the members of the other Group) shall become effective on the Business Day following execution and delivery of the applicable written assignment; PROVIDED THAT the assigning Purchasers receive payment in full of their Obligations (it being understood that any breakage costs, expenses or other amounts which would be owing to such Purchaser pursuant to any indemnification provision hereof shall be payable by the Seller). 4 ARTICLE II. PAYMENTS AND COLLECTIONS Section 2.1 PAYMENTS. Notwithstanding any limitation on recourse contained in this Agreement, Seller (or Servicer, on Seller's behalf) shall immediately remit to each of the Co-Agents when due, for the account of the relevant Purchaser or Purchasers in its Group, on a full recourse basis, all of the following (collectively, the "OBLIGATIONS"): (i) such fees as set forth in the Fee Letters (which fees shall be sufficient to pay all fees owing to the Liquidity Banks), (ii) all CP Costs, (iii) all amounts payable as Yield, (iv) all amounts payable as Deemed Collections (which shall be immediately due and payable by Seller and applied to reduce outstanding Aggregate Capital hereunder in accordance with Sections 2.2 and 2.3 hereof), (v) all amounts required pursuant to Section 2.6, (vi) all amounts payable pursuant to Article X, if any, (vii) all Servicer costs and expenses, including the Servicing Fee, in connection with servicing, administering and collecting the Receivables, (viii) all Broken Funding Costs, and (ix) all Default Fees. If Seller fails to pay any of the Obligations when due, Seller agrees to pay, on demand, the Default Fee in respect thereof until paid. Notwithstanding the foregoing, no provision of this Agreement or the Fee Letters shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law. If at any time Seller receives any Collections or is deemed to receive any Collections, Seller (or Servicer, on Seller's behalf) shall immediately pay such Collections or Deemed Collections to the Servicer for application in accordance with the terms and conditions hereof and, at all times prior to such payment, such Collections or Deemed Collections shall be held in trust by Seller for the exclusive benefit of the Purchasers and the Agents. Section 2.2 COLLECTIONS PRIOR TO AMORTIZATION. Prior to the Amortization Date, any Collections and/or Deemed Collections received by the Servicer shall be set aside and held in trust by the Servicer for the payment of any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided in this Section 2.2. If on any Business Day prior to the Amortization Date, any Collections are received by the Servicer after payment of any Obligations that are then due and owing, Seller hereby requests and the Purchasers hereby agree to make, simultaneously with such receipt, a reinvestment (each a "REINVESTMENT") with that portion of the balance of 5 each and every Collection received by the Servicer that is part of any Purchaser Interest, such that after giving effect to such Reinvestment, the amount of Capital of such Purchaser Interest immediately after such receipt and corresponding Reinvestment shall be equal to the amount of Capital immediately prior to such receipt. On each Settlement Date prior to the occurrence of the Amortization Date, the Servicer shall remit to the Blue Ridge Group's Account and the Jupiter Group's Account each Group's respective Percentage of the amounts set aside during the preceding Settlement Period that have not been subject to a Reinvestment and apply such amounts (if not previously paid in accordance with Section 2.1) to reduce the Obligations. Once such Obligations shall be reduced to zero, any additional Collections received by the Servicer (i) if applicable, shall be remitted to the Blue Ridge Group's Account and the Jupiter Group's Account no later than 11:00 a.m. (Chicago time) to the extent required to fund the Groups' respective Percentages of any Aggregate Reduction on such Settlement Date and (ii) any balance remaining thereafter shall be remitted from the Servicer to Seller on such Settlement Date. Section 2.3 COLLECTIONS FOLLOWING AMORTIZATION. On the Amortization Date and on each day thereafter, the Servicer shall set aside and hold in trust, for the holders of each Purchaser Interest, all Collections received on such day and an additional amount of the Seller's funds for the payment of any accrued and unpaid Obligations owed by Seller and not previously paid by Seller in accordance with Section 2.1. On and after the Amortization Date, the Servicer shall, at any time upon the request from time to time by (or pursuant to standing instructions from) any Agent (i) remit to the Blue Ridge Group's Account and the Jupiter Group's Account the Groups' respective Percentages of the amounts set aside pursuant to the preceding sentence, and (ii) apply such amounts to reduce the applicable Group's Capital associated with each such Purchaser Interest and any other Aggregate Unpaids. Section 2.4 APPLICATION OF COLLECTIONS. If there shall be insufficient funds on deposit for the Servicer to distribute funds in payment in full of the aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), the Servicer shall distribute funds: FIRST, to the payment of the Servicer's reasonably and properly documented out-of-pocket costs and expenses in connection with servicing, administering and collecting the Receivables, including the Servicing Fee, if RPM or one of its Affiliates is not then acting as the Servicer, SECOND, to the reimbursement of the Administrative Agent's costs of collection and enforcement of this Agreement, THIRD, ratably to the payment of all accrued and unpaid fees under the Fee Letters, CP Costs and Yield, FOURTH, for the ratable payment of all other unpaid Obligations, provided that to the extent such Obligations relate to the payment of Servicer costs and expenses, including the Servicing Fee, when RPM or one of its Affiliates is acting as the Servicer, such costs and expenses will not be paid until after the payment in full of all other Obligations, 6 FIFTH, unless the Amortization Date has occurred or a Reduction Notice has been delivered, to the making of a Reinvestment, SIXTH, to the ratable reduction of the Aggregate Capital, and SEVENTH, after the Aggregate Unpaids have been indefeasibly reduced to zero, to Seller. Collections applied to the payment of Aggregate Unpaids shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.4, shall be shared ratably (within each priority) among the Agents and the Purchasers in accordance with the amount of such Aggregate Unpaids owing to each of them in respect of each such priority. Section 2.5 PAYMENT RESCISSION. No payment of any of the Aggregate Unpaids shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Seller shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the applicable Co-Agent (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus the Default Fee from the date of any such rescission, return or refunding. Section 2.6 MAXIMUM PURCHASER INTERESTS. Seller shall ensure that the Purchaser Interests of the Purchasers shall at no time exceed in the aggregate 100%. If the aggregate of the Purchaser Interests of the Purchasers exceeds 100%, Seller shall pay to each of the Co-Agents within two (2) Business Days its respective Percentage of an amount to be applied to reduce the aggregate Capital outstanding from the members of its Group (as allocated by such Co-Agent), such that after giving effect to such payment, the aggregate of the Purchaser Interests equals or is less than 100%. Section 2.7 CLEAN UP CALL. In addition to Seller's rights pursuant to Section 1.3, Seller shall have the right (after providing written notice to the Agents in accordance with the Required Notice Period), at any time following the reduction of the Aggregate Capital to a level that is less than 20.0% of the original Purchase Limit, to repurchase from the Purchasers all, but not less than all, of the then outstanding Purchaser Interests. The purchase price in respect thereof shall be an amount equal to the Aggregate Unpaids through the date of such repurchase, payable in immediately available funds. Such repurchase shall be without representation, warranty or recourse of any kind by, on the part of, or against any Purchaser or any Agent except for a representation and warranty that the reconveyance to Seller is being made free and clear of any Adverse Claim created by any Agent or any Purchaser. 7 ARTICLE III. CONDUIT FUNDING Section 3.1 CP COSTS. Seller shall pay CP Costs with respect to the Capital associated with each Purchaser Interest of a Conduit for each day that any Capital in respect of such Purchaser Interest is outstanding. Each Purchaser Interest funded substantially with Pooled Commercial Paper will accrue CP Costs each day on a pro rata basis, based upon the percentage share the Capital in respect of such Purchaser Interest represents in relation to all assets held by such Conduit and funded substantially with related Pooled Commercial Paper Section 3.2 CP COSTS PAYMENTS. On each Settlement Date, Seller shall pay to each of the Co-Agents (for the benefit of its Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the Capital associated with all Purchaser Interests of such Conduit for the immediately preceding Accrual Period in accordance with Article II. Section 3.3 CALCULATION OF CP COSTS. Not later than the 3rd Business Day immediately preceding each Settlement Date, each Conduit shall calculate the aggregate amount of CP Costs allocated to the Capital of its Purchaser Interests for the applicable Accrual Period and shall notify Seller in writing of such aggregate amount. ARTICLE IV. LIQUIDITY BANK FUNDING Section 4.1 LIQUIDITY BANK FUNDING. Each Purchaser Interest of either Conduit's Liquidity Banks shall accrue Yield for each day during its Tranche Period at either the LIBO Rate or the Prime Rate in accordance with the terms and conditions hereof. Until Seller gives notice to the applicable Co-Agent of another Discount Rate in accordance with Section 4.4, the initial Discount Rate for any Purchaser Interest transferred by a Conduit to its Liquidity Banks pursuant to the terms and conditions of its Liquidity Agreement shall be the Prime Rate. If either Conduit's Liquidity Banks acquire by assignment from such Conduit any Purchaser Interest pursuant to the applicable Liquidity Agreement, each Purchaser Interest so assigned shall each be deemed to have a new Tranche Period commencing on the date of any such assignment. Section 4.2 YIELD PAYMENTS. On the Settlement Date for each Purchaser Interest of a Conduit's Liquidity Banks, Seller shall pay to the applicable Co-Agent (for the ratable benefit of the Liquidity Banks in its Group) an aggregate amount equal to the accrued and unpaid Yield for the entire Tranche Period of each such Purchaser Interest in accordance with Article II. Section 4.3 SELECTION AND CONTINUATION OF TRANCHE PERIODS. (a) Seller (or Servicer, on Seller's behalf) shall from time to time request Tranche Periods for the Purchaser Interests of the Liquidity Banks in such Co-Agent's Group, PROVIDED that if at any time such Liquidity Banks shall have a Purchaser Interest, Seller shall always request Tranche Periods such that at least one Tranche Period shall end on the date specified in clause (A) of the definition of Settlement Date. 8 (b) Seller, Servicer (on Seller's behalf) or the applicable Co-Agent, upon notice to and consent by the other received at least three (3) Business Days prior to the end of a Tranche Period (the "TERMINATING TRANCHE") for any Purchaser Interest, may, effective on the last day of the Terminating Tranche: (i) divide any such Purchaser Interest into multiple Purchaser Interests, (ii) combine any such Purchaser Interest with one or more other Purchaser Interests that have a Terminating Tranche ending on the same day as such Terminating Tranche or (iii) combine any such Purchaser Interest with a new Purchaser Interest to be purchased on the day such Terminating Tranche ends, PROVIDED that in no event may a Purchaser Interest of a Conduit be combined with a Purchaser Interest of its Liquidity Banks. Section 4.4 LIQUIDITY BANK DISCOUNT RATES. Seller may select the LIBO Rate or the Prime Rate for each Purchaser Interest of either Conduit's Liquidity Banks. Seller shall by 11:00 a.m. (Chicago time): (i) at least three (3) Business Days prior to the expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as a new Discount Rate and (ii) at least one (1) Business Day prior to the expiration of any Terminating Tranche with respect to which the Prime Rate is being requested as a new Discount Rate, give the applicable Co-Agent irrevocable notice of the new Discount Rate for the Purchaser Interest associated with such Terminating Tranche. Until Seller gives notice to the applicable Co-Agent of another Discount Rate, the initial Discount Rate for any Purchaser Interest transferred to the Liquidity Banks in its Group pursuant to the terms and conditions of the applicable Liquidity Agreement shall be the Prime Rate. Section 4.5 SUSPENSION OF THE LIBO RATE (a) If any Liquidity Bank notifies the applicable Co-Agent that it has determined that funding its Ratable Share of the Purchaser Interests of the Liquidity Banks in its Group at a LIBO Rate would violate any applicable law, rule, regulation, or directive of any governmental or regulatory authority, whether or not having the force of law, or that (i) deposits of a type and maturity appropriate to match fund its Purchaser Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately reflect the cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then such Co-Agent shall suspend the availability of such LIBO Rate for its Group and require Seller to select the Prime Rate for any Purchaser Interest of its Group accruing Yield at such LIBO Rate. (b) If less than all of the Liquidity Banks in a Group give a notice to their applicable Co-Agent pursuant to Section 4.5(a), each Liquidity Bank which gave such a notice shall be obliged, at the request of Seller, the applicable Conduit or the applicable Co-Agent, to assign all of its rights and obligations hereunder to (i) another Liquidity Bank or (ii) another funding entity reasonably acceptable to the applicable Conduit and Seller and willing to participate in this Agreement through the Liquidity Termination Date in the place of such notifying Liquidity Bank; PROVIDED that (i) the notifying Liquidity Bank receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such notifying Liquidity Bank's Ratable Share of the Capital and Yield owing to all of the Liquidity Banks in its Group and all accrued but unpaid fees and other costs and expenses payable in respect of its Ratable of the Purchaser Interests of such Liquidity Banks, and (ii) the replacement Liquidity Bank otherwise satisfies the requirements of Section 12.1(b). 9 ARTICLE V. REPRESENTATIONS AND WARRANTIES Section 5.1 REPRESENTATIONS AND WARRANTIES OF SELLER . Seller hereby represents and warrants to the Agents and the Purchasers, as to itself, as of the date hereof and as of the date of each Incremental Purchase and the date of each Reinvestment that: (a) EXISTENCE AND POWER. Seller is duly organized, validly existing and in good standing under the laws of its state of organization. Seller is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect. (b) POWER AND AUTHORITY; DUE AUTHORIZATION, EXECUTION AND DELIVERY. The execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party, the performance of its obligations hereunder and thereunder and the use of the proceeds of purchases made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which Seller Party is a party has been duly executed and delivered by Seller. (c) NO CONFLICT. The execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of Seller (except as created hereunder) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. (d) GOVERNMENTAL AUTHORIZATION. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. (e) ACTIONS, SUITS. Seller represents and warrants that (i) there are no actions, suits or proceedings pending, or to the best of Seller's knowledge, threatened, against or affecting Seller, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect, and (ii) Seller is not in default with respect to any order of any court, arbitrator or governmental body. 10 (f) BINDING EFFECT. This Agreement and each other Transaction Document to which Seller is a party constitute the legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (g) ACCURACY OF INFORMATION. Seller represents and warrants that all information heretofore furnished by Seller or by any Responsible Officer of an Originator to any of the Agents or Purchasers for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by Seller or any such Responsible Officer to any of the Agents or Purchasers will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading. Servicer represents and warrants that each Monthly Report completed and compiled by it accurately aggregates the information received by it from the Originators and correctly computes the ratios and concentrations set forth therein based upon such aggregates. (h) USE OF PROCEEDS. Seller represents and warrants that it will not use the proceeds of any purchase hereunder (i) for a purpose that violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended. (i) GOOD TITLE. Seller represents and warrants that immediately prior to each purchase hereunder, Seller shall be the legal and beneficial owner of the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents. Seller represents and warrants that there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller's ownership or security interest in each Receivable, its Collections and the Related Security. (j) PERFECTION. Seller represents and warrants that this Agreement, together with the filing of the financing statements contemplated hereby, is effective to, and shall, upon each purchase hereunder, transfer to the Administrative Agent for the benefit of the relevant Purchaser or Purchasers (and the Administrative Agent for the benefit of such Purchaser or Purchasers shall acquire from Seller) a valid and perfected first priority undivided percentage ownership or security interest in each Receivable existing or hereafter arising and in the Related Security and Collections with respect thereto, free and clear of any Adverse Claim, except as created by the Transactions Documents. Seller represents and warrants that there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of 11 all appropriate jurisdictions to perfect the Administrative Agent's (on behalf of the Purchasers) ownership or security interest in the Receivables, the Related Security and the Collections. (k) PLACES OF BUSINESS AND LOCATIONS OF RECORDS. The principal places of business and chief executive office of Seller and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Agents have been notified in accordance with Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has been taken and completed. Seller's Federal Employer Identification Number and Organizational Identification Number are correctly set forth on Exhibit III. (l) COLLECTIONS. Each of the Seller Parties represents and warrants that the conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed. Seller represents and warrants that the names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of Seller at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit IV. Seller represents and warrants that Seller has not granted any Person, other than the Administrative Agent as contemplated by this Agreement, dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event. Notwithstanding the foregoing, Seller confirms that it has granted the Servicer a right of access to the Lock-Boxes and Collection Accounts to the extent permitted in the Collection Account Agreements. (m) MATERIAL ADVERSE EFFECT. Seller represents and warrants that since May 31, 2001, no event has occurred that would have a Material Adverse Effect. (n) NAMES. In the past five (5) years, Seller has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement. (o) OWNERSHIP OF SELLER. Seller represents and warrants that RPM (or, once applicable, Parent) and the Originators, collectively, own, directly or indirectly, 100% of the issued and outstanding capital stock of all classes of Seller, free and clear of any Adverse Claim. Seller represents and warrants that such capital stock is validly issued, fully paid and nonassessable, and that there are no options, warrants or other rights to acquire securities of Seller. (p) NOT A HOLDING COMPANY OR AN INVESTMENT COMPANY. Seller is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Seller is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. (q) COMPLIANCE WITH LAW. Seller has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which 12 it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect. (r) COMPLIANCE WITH CREDIT AND COLLECTION POLICY. Seller has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any material change to such Credit and Collection Policy, except such material change as to which the Agents have been notified in accordance with Section 4.1(a)(vii) of the Receivables Sale Agreement. (s) PAYMENTS TO APPLICABLE ORIGINATOR. With respect to each Receivable transferred to Seller under the Receivables Sale Agreement, Seller has given reasonably equivalent value to the applicable Originator in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by any Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.ss.ss.101 et seq.), as amended. (t) ENFORCEABILITY OF CONTRACTS. Seller represents and warrants that each Contract with respect to each Eligible Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Eligible Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (u) ELIGIBLE RECEIVABLES. Seller represents and warrants that each Receivable included in the Net Receivables Balance as an Eligible Receivable was an Eligible Receivable on the date so included. (v) NET RECEIVABLES BALANCE. Seller represents and warrants that Seller has determined that, immediately after giving effect to each purchase hereunder, the Net Receivables Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the Aggregate Reserves. (w) ACCOUNTING. The manner in which Seller accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis. Section 5.2 LIQUIDITY BANK REPRESENTATIONS AND WARRANTIES. Each Liquidity Bank hereby represents and warrants to the applicable Co-Agent and the applicable Conduit that: 13 (a) EXISTENCE AND POWER. Such Liquidity Bank is a corporation or a banking association duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all corporate power to perform its obligations hereunder. (b) NO CONFLICT. The execution and delivery by such Liquidity Bank of this Agreement and the performance of its obligations hereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its certificate or articles of incorporation or association or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets. This Agreement has been duly authorized, executed and delivered by such Liquidity Bank. (c) GOVERNMENTAL AUTHORIZATION. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Liquidity Bank of this Agreement and the performance of its obligations hereunder. (d) BINDING EFFECT. This Agreement constitutes the legal, valid and binding obligation of such Liquidity Bank enforceable against such Liquidity Bank in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). ARTICLE VI. CONDITIONS OF PURCHASES Section 6.1 CONDITIONS PRECEDENT TO INITIAL INCREMENTAL PURCHASE. The initial Incremental Purchase of a Purchaser Interest under this Agreement is subject to the conditions precedent that (a) the Administrative Agent shall have received on or before the date of such purchase those documents listed on Schedule B, and (b) each of the Agents shall have received all fees and expenses required to be paid on such date pursuant to the terms of this Agreement and the applicable Fee Letter. Section 6.2 CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each purchase of a Purchaser Interest and each Reinvestment shall be subject to the further conditions precedent that (a) in the case of each such purchase or Reinvestment: (i) the Servicer shall have delivered to the Co-Agents on or prior to the date of such purchase, in form and substance satisfactory to each of the Co-Agents, all Monthly Reports as and when due under Section 8.5 and (ii) upon either Co-Agent's reasonable request, the Servicer shall have delivered to the Co-Agents at least three (3) days prior to such purchase or Reinvestment an interim Monthly Report showing the amount of Eligible Receivables; (b) the Facility Termination Date shall not have occurred; (c) the Agents shall have received such other approvals, opinions or documents as it may reasonably 14 request and (d) on the date of each such Incremental Purchase or Reinvestment, the following statements shall be true (and acceptance of the proceeds of such Incremental Purchase or Reinvestment shall be deemed a representation and warranty by Seller that such statements are then true): (i) the representations and warranties set forth in Section 5.1 are true and correct on and as of the date of such Incremental Purchase or Reinvestment as though made on and as of such date; PROVIDED, HOWEVER, that so long as the RPM Credit Agreement does not require the datedown as of each borrowing date of the absence of material adverse change representation thereunder, the representation contained in Section 5.1(m) of this Agreement need only be true as of the date of the initial Purchase hereunder; (ii) no event has occurred and is continuing, or would result from such Incremental Purchase or Reinvestment, that will constitute an Amortization Event, and no event has occurred and is continuing, or would result from such Incremental Purchase or Reinvestment, that would constitute a Potential Amortization Event; and (iii) the Aggregate Capital does not exceed the Purchase Limit and the aggregate Purchaser Interests do not exceed 100%. It is expressly understood that each Reinvestment shall, unless otherwise directed by any Agent or Purchaser, occur automatically on each day that the Servicer shall receive any Collections without the requirement that any further action be taken on the part of any Person and notwithstanding the failure of Seller to satisfy any of the foregoing conditions precedent in respect of such Reinvestment. The failure of Seller to satisfy any of the foregoing conditions precedent in respect of any Reinvestment shall give rise to a right of each Co-Agent, which right may be exercised at any time on demand of such Co-Agent, to rescind the related purchase and direct Seller to pay to the Co-Agents for the benefit of the Purchasers in their respective Group's their respective Percentages of the Collections prior to the Amortization Date that shall have been applied to the affected Reinvestment. ARTICLE VII. COVENANTS Section 7.1 AFFIRMATIVE COVENANTS OF THE SELLER PARTIES. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms: (a) FINANCIAL REPORTING. Such Seller Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Agents: (i) ANNUAL REPORTING. As soon as available and in any event within 90 days after the end of each fiscal year of RPM (or, once applicable, Parent), (A) the 15 audited annual financial statements of RPM required to be delivered under SECTION 4.1(a)(i) of the Receivables Sale Agreement, together with (B) comparable unaudited annual financial statements of Seller. (ii) QUARTERLY REPORTING. As soon as available and in any event within 60 days after the end of each fiscal quarter of RPM, (A) the quarterly financial statements of RPM required to be delivered under SECTION 4.1(a)(ii) of the Receivables Sale Agreement, together with (B) comparable unaudited quarterly financial statements of Seller. (iii) COMPLIANCE CERTIFICATE. Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit V signed by the applicable Seller Party's Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be. (iv) SHAREHOLDERS STATEMENTS AND REPORTS. Promptly upon the furnishing thereof to the shareholders of RPM (or, once applicable, Parent), copies of all financial statements, reports and proxy statements so furnished. (v) S.E.C. FILINGS. Promptly upon the filing thereof, copies of all registration statements (other than any registration statements on Form S-8 or its equivalent) and any reports which RPM (or, once applicable, Parent) files with the Securities and Exchange Commission. (vi) COPIES OF NOTICES. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Originator, the Performance Guarantor or any Collection Bank, copies of the same. (vii) OTHER INFORMATION. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the financial condition, operations, prospects or business of such Seller Party as any of the Agents may from time to time reasonably request in order to protect the interests of the Agents and the Purchasers under or as contemplated by this Agreement. (b) NOTICES. Such Seller Party will notify the Agents in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto: (i) AMORTIZATION EVENTS OR POTENTIAL AMORTIZATION EVENTS. The occurrence of each Amortization Event and each Potential Amortization Event, by a statement of an Authorized Officer of such Seller Party. (ii) JUDGMENT AND PROCEEDINGS. (A) (1) The entry of any judgment or decree against the Servicer or any of its respective Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against the Servicer and its Subsidiaries exceeds $35,000,000 after deducting (a) the amount with respect to which the Servicer or any such Subsidiary is insured and with respect to which the insurer has acknowledged 16 responsibility, and (b) the amount for which the Servicer or any such Subsidiary is otherwise indemnified if the terms of such indemnification are satisfactory to the Agents, and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against the Servicer which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; and (B) the entry of any judgment or decree or the institution of any litigation, arbitration proceeding or governmental proceeding against Seller. (iii) MATERIAL ADVERSE EFFECT. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect. (iv) DEFAULTS UNDER OTHER AGREEMENTS. The occurrence of a default or an event of default under any other financing arrangement relating to a line of credit or Indebtedness in excess of $5 million in aggregate principal amount pursuant to which such Originator is a debtor or an obligor. (v) TERMINATION DATE. The occurrence of the "TERMINATION DATE" under and as defined in the Receivables Sale Agreement. (vi) DOWNGRADE OF PERFORMANCE GUARANTOR. Any downgrade in the rating of any Indebtedness of Performance Guarantor by Standard & Poor's Ratings Group or by Moody's Investors Service, Inc., setting forth the Indebtedness affected and the nature of such change. (c) COMPLIANCE WITH LAWS AND PRESERVATION OF CORPORATE EXISTENCE. Such Seller Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such Seller Party will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify could not reasonably be expected to have a Material Adverse Effect. (d) AUDITS. Such Seller Party will furnish to the Agents from time to time such information with respect to it and the Receivables as any of the Agents may reasonably request. Such Seller Party will, from time to time during regular business hours as requested by any of the Agents upon reasonable notice and at the sole cost of such Seller Party, permit each of the Agents, or its agents or representatives (and shall cause each Originator to permit each of the Agents or its agents or representatives): (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Receivables and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person's financial condition or the Receivables and the Related Security or any Person's performance under any of the Transaction Documents or any Person's performance under the Contracts and, in each case, with any of the officers or employees of Seller or the Servicer having knowledge of such matters (each of the foregoing 17 examinations and visits, a "REVIEW"); PROVIDED, HOWEVER, that, except in connection with an Extension Request, so long as no Amortization Event or Potential Amortization Event has occurred, the Seller Parties shall only be responsible for the costs and expenses of one (1) Review in any one calendar year. (e) KEEPING AND MARKING OF RECORDS AND BOOKS. (i) The Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Servicer will (and will cause each Originator to) give the Agents notice of any material change in the administrative and operating procedures referred to in the previous sentence. (ii) Servicer will (and will cause each Originator to) (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Purchaser Interests with a legend, acceptable to the Agents, describing the Purchaser Interests and (B) upon the request of any of the Agents following the occurrence of an Amortization Event, deliver to the Administrative Agent all invoices included in the Contracts (including, without limitation, all multiple originals of any such invoice) relating to the Receivables. (f) COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION POLICY. Servicer will (and will cause each Originator to) timely and fully (i) perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Contract. (g) PERFORMANCE AND ENFORCEMENT OF RECEIVABLES SALE AGREEMENT AND PERFORMANCE UNDERTAKING. Seller will, and will require each of the Originators to, perform each of their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Seller under the Receivables Sale Agreement. Seller will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Agents and the Purchasers as assignees of Seller) under the Receivables Sale Agreement as any Agent may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement. In addition, Seller will vigorously enforce the rights and remedies accorded to Seller under the Performance Undertaking. (h) OWNERSHIP. Seller will (or will cause each Originator to) take all necessary action to (i) vest legal and equitable title to the Receivables, the Related Security and the 18 Collections purchased under the Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse Claims other than Adverse Claims in favor of the Administrative Agent and the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller's interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Seller therein as any Agent may reasonably request), and (ii) establish and maintain, in favor of the Administrative Agent, for the benefit of the Purchasers, a valid and perfected first priority undivided percentage ownership interest (and/or a valid and perfected first priority security interest) in all Receivables, Related Security and Collections to the full extent contemplated herein, free and clear of any Adverse Claims other than Adverse Claims in favor of the Administrative Agent for the benefit of the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent's (for the benefit of the Purchasers) interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of the Administrative Agent for the benefit of the Purchasers as any Agent may reasonably request). (i) PURCHASERS' RELIANCE. Seller acknowledges that the Agents and the Purchasers are entering into the transactions contemplated by this Agreement in reliance upon Seller's identity as a legal entity that is separate from the Norwegian Company, each of the Originators, the Performance Guarantor and their respective other Affiliates (collectively, the "RPM GROUP"). Therefore, from and after the date of execution and delivery of this Agreement, Seller shall take all reasonable steps, including, without limitation, all steps that any Agent or Purchaser may from time to time reasonably request, to maintain Seller's identity as a separate legal entity and to make it manifest to third parties that Seller is an entity with assets and liabilities distinct from those of the members of the RPM Group thereof and not just a division thereof. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Seller will: (A) conduct its own business in its own name and require that all full-time employees of Seller, if any, identify themselves as such and not as employees of any member of the RPM Group (including, without limitation, by means of providing appropriate employees with business or identification cards identifying such employees as Seller's employees); (B) compensate all employees, consultants and agents directly, from Seller's own funds, for services provided to Seller by such employees, consultants and agents and, to the extent any employee, consultant or agent of Seller is also an employee, consultant or agent of a member of the RPM Group, allocate the compensation of such employee, consultant or agent between Seller and the members of the RPM Group on a basis that reflects the services rendered to Seller and the RPM Group; (C) clearly identify its offices (by signage or otherwise) as its offices and, if such office is located in the offices of a member of the RPM Group, Seller shall lease such office at a fair market rent; 19 (D) have separate stationery, invoices and checks in its own name; (E) conduct all transactions with the members of the RPM Group strictly on an arm's-length basis, allocate all overhead expenses (including, without limitation, telephone and other utility charges) for items shared between Seller and the RPM Group on the basis of actual use to the extent practicable and, to the extent such allocation is not practicable, on a basis reasonably related to actual use; (F) at all times have a Board of Directors consisting of not less than three members, at least one member of which is an Independent Director; (G) observe all corporate formalities as a distinct entity, and ensure that all corporate actions relating to (A) the selection, maintenance or replacement of the Independent Director, (B) the dissolution or liquidation of Seller or (C) the initiation of, participation in, acquiescence in or consent to any bankruptcy, insolvency, reorganization or similar proceeding involving Seller, are duly authorized by unanimous vote of its Board of Directors (including the Independent Director); (H) maintain Seller's books and records separate from those of the members of the RPM Group and otherwise readily identifiable as its own assets rather than assets of a member of the RPM Group; (I) prepare its financial statements separately from those of the RPM Group and insure that any consolidated financial statements of the RPM Group (or any member thereof) that include Seller and that are filed with the Securities and Exchange Commission or any other governmental agency have notes clearly stating that Seller is a separate legal entity and that its assets will be available first and foremost to satisfy the claims of the creditors of Seller; (J) except as herein specifically otherwise provided, maintain the funds or other assets of Seller separate from, and not commingled with, those of the members of the RPM Group and only maintain bank accounts or other depository accounts to which Seller alone is the account party, into which Seller alone (or Servicer, on Seller's behalf) makes deposits and from which Seller alone (or Servicer, on Seller's behalf, or the Administrative Agent hereunder) has the power to make withdrawals; (K) pay all of Seller's operating expenses from Seller's own assets (except for certain payments by a member of the RPM Group or other Persons pursuant to allocation arrangements that comply with the requirements of this Section 7.1(i)); 20 (L) operate its business and activities such that: it does not engage in any business or activity of any kind, or enter into any transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking, other than the transactions contemplated and authorized by this Agreement and the Receivables Sale Agreement; and does not create, incur, guarantee, assume or suffer to exist any indebtedness or other liabilities, whether direct or contingent, other than (1) as a result of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (2) the incurrence of obligations under this Agreement, (3) the incurrence of obligations, as expressly contemplated in the Receivables Sale Agreement, to make payment to Originators thereunder for the purchase of Receivables from Originators under the Receivables Sale Agreement, and (4) the incurrence of operating expenses in the ordinary course of business of the type otherwise contemplated by this Agreement; (M) maintain its Organic Documents in conformity with this Agreement, such that it does not amend, restate, supplement or otherwise modify its Organic Documents in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, this Section 7.1(i); (N) maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement and the Performance Undertaking, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement or the Performance Undertaking, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement or the Performance Undertaking or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of each of the Agents; (O) maintain its legal separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; (P) maintain at all times the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained; 21 (Q) maintain its investment in the Norwegian Company at a level not to exceed 5% of the Norwegian Company's outstanding voting Equity Interests; and (R) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Calfee, Halter & Griswold, LLP, as counsel for Seller, in connection with the closing or initial Incremental Purchase under this Agreement and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times. (j) COLLECTIONS. Such Seller Party will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection Account to be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to Seller or any Affiliate of Seller, Seller will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposited into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such remittance, Seller will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Agents and the Purchasers. Seller will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Administrative Agent as contemplated by this Agreement and except that Seller may authorize the Servicer to make deposits to and withdrawals from the Collection Accounts prior to delivery of the Collection Notices. (k) TAXES. Such Seller Party will file all tax returns and reports required by law to be filed by it and will promptly pay all taxes and governmental charges at any time owing, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Seller will pay when due any taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of any of the Agents or Purchasers. (l) INSURANCE. Seller will maintain in effect, or cause to be maintained in effect, at Seller's own expense, such casualty and liability insurance as Seller shall deem appropriate in its good faith business judgment. (m) PAYMENT TO ORIGINATORS. With respect to any Receivable purchased by Seller from an Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable. 22 Section 7.2 NEGATIVE COVENANTS OF THE SELLER PARTIES. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms: (a) NAME CHANGE, OFFICES AND RECORDS. Seller will not change its name, identity or legal structure (within the meaning of Section 9-507(c) of any applicable enactment of the UCC) or relocate its chief executive office or any office where Records are kept unless it shall have: (i) given the Agents at least forty-five (45) days' prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents reasonably requested by any of the Agents in connection with such change or relocation. (b) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Except as may be required by the Administrative Agent pursuant to Section 8.2(b), such Seller Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless the Agents shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; PROVIDED, HOWEVER, that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account. (c) MODIFICATIONS TO CONTRACTS AND CREDIT AND COLLECTION POLICY. No Seller Party will, and will not permit any Originator to, make any change to the Credit and Collection Policy that could adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables. Except as provided in SECTION 8.2(d), no Seller Party will, or will permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto in any material respect other than in accordance with the Credit and Collection Policy. (d) SALES, LIENS. Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of the Administrative Agent and the Purchasers provided for herein), and Seller will defend the right, title and interest of the Agents and the Purchasers in, to and under any of the foregoing property, against all claims of third parties claiming through or under Seller or any Originator. (e) NET RECEIVABLES BALANCE. At no time prior to the Amortization Date shall Seller permit the Net Receivables Balance to be less than an amount equal to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves. (f) TERMINATION DATE DETERMINATION. Seller will not designate the Termination Date (as defined in the Receivables Sale Agreement), or send any written notice to any 23 Originator in respect thereof, without the prior written consent of the Agents, except with respect to the occurrence of such Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement. (g) RESTRICTED JUNIOR PAYMENTS. From and after the occurrence of any Amortization Event, Seller will not make any Restricted Junior Payment if, after giving effect thereto, Seller would fail to meet its obligations set forth in Section 7.2(e). (h) SELLER INDEBTEDNESS. Seller will not incur or permit to exist any Indebtedness or liability on account of deposits except: (i) the Obligations, (ii) the Subordinated Loans (as defined in the Receivables Sale Agreement), and (iii) other current accounts payable arising in the ordinary course of business and not overdue. (i) PROHIBITION ON ADDITIONAL NEGATIVE PLEDGES. Seller will not (and will not authorize any Originator to) enter into or assume any agreement (other than this Agreement and the other Transaction Documents) prohibiting the creation or assumption of any Adverse Claim upon the Receivables, Collections or Related Security except as contemplated by the Transaction Documents, or otherwise prohibiting or restricting any transaction contemplated hereby or by the other Transaction Documents. Seller will not (and will not authorize any Originator to) enter into or assume any agreement creating any Adverse Claim upon the Subordinated Notes (as defined in the Receivables Sale Agreement). ARTICLE VIII. ADMINISTRATION AND COLLECTION Section 8.1 DESIGNATION OF SERVICER. (a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the "SERVICER") so designated from time to time in accordance with this Section 8.1. RPM is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement; provided that, upon notice to the Purchasers, a Parent may succeed to and assume in writing the duties and obligations of RPM as the Servicer hereunder if (i) such Parent has become the borrower under the RPM Credit Agreement, (ii) such Parent has the same or higher long-term unsecured debt ratings from each of Standard & Poor's Ratings Group and Moody's Investor Services, Inc. as RPM had immediately prior to such Parent's assumption of the duties of the Servicer hereunder , (iii) such Parent simultaneously assumes in writing RPM's responsibilities under the Performance Undertaking, and (iv) no Amortization Event or Potential Amortization Event exists and is continuing. At any time after the occurrence of an Amortization Event, the Agents may at any time designate as Servicer any Person to succeed RPM (or, once applicable, Parent) or any successor Servicer. (b) RPM (or, once applicable, Parent) may delegate, and RPM hereby advises the Purchasers and the Agents that it has delegated, to the Originators, as sub-servicers of the Servicer, certain of its duties and responsibilities as Servicer hereunder in respect of the Receivables originated by such Originators. Without the prior written consent of the Co- 24 Agents, the Servicer shall not be permitted to delegate any of its duties or responsibilities as Servicer to any Person other than (i) Seller, (ii) the Originators, and (iii) with respect to certain Charged-Off Receivables, outside collection agencies in accordance with its customary practices, except as permitted in Section 8.1(a). Seller shall not be permitted to further delegate to any other Person any of the duties or responsibilities of Servicer delegated to it by RPM (or, once applicable, Parent). If at any time following the occurrence of an Amortization Event, the Co-Agents shall designate as Servicer any Person other than RPM (or, once applicable, Parent), all duties and responsibilities theretofore delegated by RPM (or, once applicable, Parent) to Seller or any Originator may, at the discretion of any of the Agents, be terminated forthwith on notice given by any Agent to the other Agents, RPM (or, once applicable, Parent) and to Seller. (c) Notwithstanding the foregoing subsection (b), (i) Servicer shall be and remain primarily liable to the Agents and the Purchasers for the full and prompt performance of all duties and responsibilities of the Servicer hereunder and (ii) the Agents and the Purchasers shall be entitled to deal exclusively with Servicer in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder. The Agents and the Purchasers shall not be required to give notice, demand or other communication to any Person other than Servicer in order for communication to the Servicer and its sub-servicer or other delegate with respect thereto to be accomplished. Servicer, at all times that it is the Servicer, shall be responsible for providing any sub-servicer or other delegate of the Servicer with any notice given to the Servicer under this Agreement. Section 8.2 DUTIES OF SERVICER. (a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy. (b) The Servicer will instruct all Obligors to pay all Collections directly to a Lock-Box or Collection Account. The Servicer shall effect a Collection Account Agreement substantially in the form of Exhibit VI with each bank party to a Collection Account at any time. In the case of any remittances received in any Lock-Box or Collection Account that shall have been identified, to the satisfaction of the Servicer, to not constitute Collections or other proceeds of the Receivables or the Related Security, the Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances. From and after the date the Administrative Agent delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the Administrative Agent may request that the Servicer, and the Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Administrative Agent and, at all times thereafter, Seller and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new depositary account any cash or payment item other than Collections. 25 (c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II. The Servicer shall set aside and hold in trust for the account of Seller and the Purchasers their respective shares of the Collections (or such funds or other assets arising therefrom) in accordance with Article II. The Servicer shall, upon the request of any Agent, segregate, in a manner acceptable to the Agents, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Seller prior to the remittance thereof in accordance with Article II. If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Administrative Agent such allocable share of Collections of Receivables set aside for the Purchasers on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer. (d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; PROVIDED, HOWEVER, that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable, Defaulted Receivable or Charged-Off Receivable or limit the rights of the Agents or the Purchasers under this Agreement. Notwithstanding anything to the contrary contained herein, the Administrative Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security. (e) The Servicer shall hold in trust for Seller and the Purchasers all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of any Agent, deliver or make available to the Administrative Agent all such Records, at a place selected by the Administrative Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Seller any cash collections or other cash proceeds received with respect to Indebtedness not constituting Receivables. The Servicer shall, from time to time at the request of any Purchaser, furnish to the Purchasers (promptly after any such request) a calculation of the amounts set aside for the Purchasers pursuant to Article II. (f) Any payment by an Obligor in respect of any indebtedness owed by it to an Originator or Seller shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Administrative Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor. Section 8.3 COLLECTION NOTICES. The Administrative Agent is authorized at any time to date and to deliver to the Collection Banks the Collection Notices. Seller hereby transfers to the Administrative Agent for the benefit of the Purchasers, effective when the Administrative Agent delivers such notice, the exclusive ownership and control of each Lock-Box and the Collection Accounts. In case any authorized signatory of Seller whose signature appears on a Collection 26 Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall nevertheless be valid as if such authority had remained in force. Seller hereby authorizes the Administrative Agent, and agrees that the Administrative Agent shall be entitled after the occurrence of an Amortization Event to (i) endorse Seller's name on checks and other instruments representing Collections, (ii) enforce the Receivables, the related Contracts and the Related Security and (iii) take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Administrative Agent rather than Seller. Section 8.4 RESPONSIBILITIES OF SELLER. Anything herein to the contrary notwithstanding, the exercise by the Agents and the Purchasers of their rights hereunder shall not release the Servicer, any Originator or Seller from any of their duties or obligations with respect to any Receivables or under the related Contracts. The Purchasers shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Seller. Section 8.5 REPORTS. The Servicer shall compile and complete the following reports based on information received by it from the Originators under the Receivables Sale Agreement and forward to the Agents (i) on the 15th day of each month or if such date is not a Business Day, the next Business Day (the "MONTHLY REPORTING Date"), and at such times as any Agent shall request, a Monthly Report and (ii) at such times as any Agent shall reasonably request, a listing by Obligor of all Receivables together with an aging of such Receivables. Section 8.6 SERVICING FEES. In consideration of RPM's agreement to act as Servicer hereunder, the Purchasers hereby agree that, so long as RPM (or, once applicable, Parent) shall continue to perform as Servicer hereunder, Seller shall pay over to RPM (or, once applicable, Parent) a fee (the "SERVICING FEE") on the first calendar day of each month, in arrears for the immediately preceding month, equal to 1% per annum of the average aggregate Outstanding Balance of all Receivables during such period, as compensation for its servicing activities. ARTICLE IX. AMORTIZATION EVENTS Section 9.1 AMORTIZATION EVENTS. The occurrence of any one or more of the following events shall constitute an Amortization Event: (a) Any Seller Party shall fail to make any payment or deposit required under this Agreement or any other Transaction Document to which it is a party on or within one (1) Business Day after the date on which the same is required to be made. (b) Any Seller Party shall fail to perform or observe any covenant contained in any provision of SECTION 7.2 other than SECTION 7.2(c) or SECTION 8.5. (c) Any Seller Party shall fail to perform or observe any other covenant, agreement or other obligation hereunder (other than as referred to in another paragraph of this SECTION 9.1) or any other Transaction Document to which it is a party and such 27 failure shall continue for three (3) consecutive Business Days following the earlier to occur of (i) notice from any Agent of such non-performance or non-observance, or (ii) the date on which a Responsible Officer of such Seller Party otherwise becomes aware of such non-performance or non-observance. (d) Any representation, warranty, certification or statement made by any Seller Party in this Agreement, any other Transaction Document or in any other document required to be delivered pursuant hereto or thereto shall prove to have been incorrect when made or deemed made in any material respect and is not cured within five (5) Business Days following the earlier to occur of (i) notice from any Agent of such inaccuracy or (ii) the date on which a Responsible Officer of such Seller Party otherwise becomes aware of such inaccuracy; PROVIDED THAT the materiality threshold in this subsection shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold although the five (5) Business Day cure period shall continue to apply. (e) (i) Seller shall default in the payment when due of any principal or of or interest on any Indebtedness, or any event or condition shall occur which results in the acceleration of the maturity of any such Indebtedness; or (ii) any Originator shall default, or the Performance Guarantor or any of its Subsidiaries (other than an Originator or Seller) shall default, in the payment when due of any principal or of or interest on any Material Indebtedness; or any event or condition shall occur which results in the acceleration of the maturity of any such Material Indebtedness. (f) (i) Any Seller Party, any Originator or any Significant Subsidiary (as defined in the RPM Credit Agreement) shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Seller Party, any Originator or any Significant Subsidiary seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (iii) any Seller Party, any Originator or any Significant Subsidiary shall take any corporate action to authorize any of the actions set forth in clauses (i) or (ii) above in this subsection (f). (g) Seller shall fail to comply with the terms of Section 2.6 hereof. (h) As at the end of any calendar month: (i) the average of the Dilution Ratios for the three months then most recently ended shall exceed 5.5%; (ii) the average of the Delinquency Ratios for the three months then most recently ended shall exceed 2.75%; or 28 (iii) the average of the Past Due Ratios for the three months then most recently ended shall exceed 7.5%. (i) A Change of Control shall occur. (j) (i) One or more final judgments for the payment of money shall be entered against Seller or (ii) one or more final judgments for the payment of money in an amount in excess of $35,000,000, individually or in the aggregate, shall be entered against the Servicer on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for thirty (30) consecutive days without a stay of execution. (k) Either (i) the "TERMINATION DATE" under and as defined in the Receivables Sale Agreement shall occur with respect to any Originator or (ii) any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Seller under the Receivables Sale Agreement, PROVIDED, HOWEVER, that upon 30 days' prior written notice, an Originator may cease to sell or contribute Receivables to the Seller under the Receivables Sale Agreement without causing an Amortization Event under this Agreement if (1) such Originator has consolidated or merged with or into another Originator, or (2) to the extent that (a) Aggregate Capital plus Aggregate Reserves continue to be equal to or less than the Net Receivables Balance after such Originator ceases to sell or contribute, (b) RPM and the remaining Originators agree to such modified transaction terms which may be requested by the Agents as being necessary to maintain an implied rating equivalent to the implied rating of the facility evidenced by this Agreement prior to such Originator ceasing to sell or contribute, as determined in the exercise of the Agents' reasonable credit judgment, including to (I) establish the Dilution Ratio, Delinquency Ratio and Past Due Ratio for this Agreement after such Originator ceases to sell or contribute which shall be set and calculated consistent with the methodology used to set and calculate such ratios prior to such Originator ceasing to sell or contribute, (II) establish Concentration Limits and Aggregate Reserves (such Aggregate Reserves to be structured to an "A" level using Standard & Poor's Ratings Group's trade receivables securitization methodology) for the facility evidenced by this Agreement after such Originator ceases to sell or contribute which shall be set and calculated consistent with such methodology prior to such Originator's ceasing to sell or contribute and (III) establish standards for items(ii)-(v) of the definition of "ELIGIBLE RECEIVABLE" which are consistent with those required for the Facility prior to such Originator's ceasing to sell or contribute and are based on the Receivables of the remaining Originators, and (c) no Amortization Event or Potential Amortization Event shall exist after such Originator shall cease to sell or contribute. (l) This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Seller, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Administrative Agent for the benefit of the Purchasers shall cease to have a valid and perfected first priority security interest in the Receivables, the Related Security and the Collections with respect thereto and the Collection Accounts. 29 (m) The Performance Guarantor shall fail to pay, upon demand, any amount required to be paid by it under the Performance Undertaking, or the Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of RPM (or, once applicable, Parent), or RPM (or, once applicable, Parent) shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability. (n) RPM (or, once applicable, Parent) shall permit the Indebtedness of RPM (or, once applicable, Parent) and its Subsidiaries, determined on a consolidated basis, on any date to exceed 65% of the sum of such Indebtedness and consolidated shareholders' equity of RPM (or, once applicable, Parent) and its consolidated Subsidiaries on such date. (o) RPM (or, once applicable, Parent) shall permit the ratio, calculated as at the end of each fiscal quarter ending after the date of this Agreement for the four fiscal quarters then ended, of EBITDA for such period to Interest Expense for such period to be less than 3.5:1.0. Section 9.2 REMEDIES. Upon the occurrence and during the continuation of an Amortization Event, the Administrative Agent may, and upon the direction of either of the Co-Agents, shall, take any of the following actions: (i) replace the Person then acting as Servicer, (ii) declare the Amortization Date to have occurred, whereupon the Amortization Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Seller Party; provided, however, that upon the occurrence of an Amortization Event described in Section 9.1(f)(ii), or of an actual or deemed entry of an order for relief with respect to any Seller Party under the Federal Bankruptcy Code, the Amortization Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Seller Party, (iii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any of the Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices to the Collection Banks, and (v) notify Obligors of the Purchasers' interest in the Receivables. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Agents and the Purchasers otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative. ARTICLE X. INDEMNIFICATION Section 10.1 INDEMNITIES BY THE SELLER. Without limiting any other rights that any Agent or any Purchaser may have hereunder or under applicable law, Seller hereby agrees to indemnify (and pay upon demand to) each of the Agents, the Purchasers and their respective assigns, officers, directors, agents and employees (each an "INDEMNIFIED PARTY") from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys' fees (which attorneys may be employees of 30 such Agent or such Purchaser) and disbursements (all of the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by a Purchaser of an interest in the Receivables EXCLUDING, HOWEVER, in all of the foregoing instances: (a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification; (b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or (c) taxes imposed by the jurisdiction in which such Indemnified Party's principal executive office is located, on or measured by the overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the characterization for income tax purposes of the acquisition by the Purchasers of Purchaser Interests as a loan or loans by the Purchasers to Seller secured by the Receivables, the Related Security, the Collection Accounts and the Collections; PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the liability of Seller or limit the recourse of the Purchasers to Seller for amounts otherwise specifically provided to be paid by Seller under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, Seller shall indemnify the Indemnified Parties for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to Seller) relating to or resulting from: (i) any representation or warranty made by any Seller Party or any Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report required to be delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made; (ii) the failure by any Seller Party or any Originator to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of any Originator to keep or perform any of its obligations, express or implied, with respect to any Contract; (iii) any failure of any Seller Party or any Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document; 31 (iv) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable; (v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services; (vi) the commingling of Collections of Receivables at any time with other funds; (vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of an Incremental Purchase or a Reinvestment, the ownership of the Purchaser Interests or any other investigation, litigation or proceeding relating to any Seller Party or any Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; (viii) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; (ix) any Amortization Event described in Section 9.1(f); (x) any failure of Seller to acquire and maintain legal and equitable title to, and ownership of any Receivable and the Related Security and Collections with respect thereto from any Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Seller to give reasonably equivalent value to the applicable Originator under the Receivables Sale Agreement in consideration of the transfer by such Originator of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action; (xi) any failure to vest and maintain vested in the Administrative Agent for the benefit of the Purchasers, or to transfer to the Administrative Agent for the benefit of the Purchasers, legal and equitable title to, and ownership of, a first priority perfected undivided percentage ownership interest (to the extent of the Purchaser Interests contemplated hereunder) or security interest in the Receivables, the Related Security and the Collections, free and clear of any Adverse Claim (except as created by the Transaction Documents); 32 (xii) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of any Incremental Purchase or Reinvestment or at any subsequent time; (xiii) any action or omission by any Seller Party which reduces or impairs the rights of the Agents or the Purchasers with respect to any Receivable or the value of any such Receivable; (xiv) any attempt by any Person to void any Incremental Purchase or Reinvestment hereunder under statutory provisions or common law or equitable action; and (xv) the failure of any Receivable included in the calculation of the Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable at the time so included. Section 10.2 INDEMNITIES BY THE SERVICER. Without limiting any other rights that any Agent or any Purchaser may have hereunder or under applicable law, Servicer hereby agrees to indemnify (and pay upon demand to) each Indemnified Party from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys' fees (which attorneys may be employees of such Agent or such Purchaser) and disbursements (all of the foregoing being collectively referred to as "SERVICER INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of or as a result of Servicer's failure to duly and punctually perform its obligations under this Agreement EXCLUDING, HOWEVER, in all of the foregoing instances: (a) Servicer Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Servicer Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification; and (b) Servicer Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the liability of Servicer or limit the recourse of the Purchasers to Servicer for Collections received by the Servicer and required to be remitted by it under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, Servicer shall indemnify the Indemnified Parties for Servicer Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to the Servicer) relating to or resulting from: 33 (i) any representation or warranty made by Servicer (or any officers of Servicer) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made; (ii) the failure by Servicer to comply with any applicable law, rule or regulation with respect to the collection of any Receivable or Related Security; (iii) any failure of Servicer to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document; (iv) the commingling by the Servicer of Collections of Receivables or funds or other assets arising therefrom at any time with other funds; (v) any investigation, litigation or proceeding relating to Servicer in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; (vi) any Amortization Event of the described in Section 9.1(f) with respect to Servicer; and (vii) any action or omission by Servicer relating to its obligations hereunder which reduces or impairs the rights of the Agents or the Purchasers with respect to any Receivable or the value of any such Receivable. Section 10.3 INCREASED COST AND REDUCED RETURN. If after the date hereof, any Funding Source shall be charged any fee, expense or increased cost on account of the adoption of any applicable law, rule or regulation (including any applicable law, rule or regulation regarding capital adequacy) or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency (a "REGULATORY CHANGE"): (i) that subjects any Funding Source to any charge or withholding on or with respect to any Funding Agreement or a Funding Source's obligations under a Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to any Funding Source of any amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of a Funding Source or taxes excluded by Section 10.1) or (ii) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of a Funding Source, or credit extended by a Funding Source pursuant to a Funding Agreement or (iii) that imposes any other condition the result of which is to increase the cost to a Funding Source of performing its obligations under a Funding Agreement, or to reduce the rate of return on a Funding Source's capital as a consequence of its obligations under a Funding Agreement, or to reduce the amount of any sum received or receivable by a Funding Source under a Funding Agreement or to require any payment calculated by reference to the amount of 34 interests or loans held or interest received by it, then, upon demand by the applicable Co-Agent, Seller shall pay to such Co-Agent, for the benefit of the relevant Funding Source, such amounts charged to such Funding Source or such amounts to otherwise compensate such Funding Source for such increased cost or such reduction. Notwithstanding the foregoing, no Funding Source that is not organized under the laws of the United States of America, or a state thereof, shall be entitled to reimbursement or compensation hereunder unless and until it has delivered to the Seller two (2) duly completed and signed originals of United States Internal Revenue Service Form W-8BEN or W-8ECI, as applicable, certifying in either case that such Funding Source is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes. Section 10.4 OTHER COSTS AND EXPENSES. Subject to the limitations set forth in the Fee Letters, Seller shall pay to the Agents and Conduits on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the cost of Conduit's auditors auditing the books, records and procedures of Seller, reasonable fees and out-of-pocket expenses of legal counsel for Conduits and the Agents (which such counsel may be employees of a Conduit or an Agent) with respect thereto and with respect to advising Conduits and the Agents as to their respective rights and remedies under this Agreement. Seller shall pay to the Agents on demand any and all costs and expenses of the Agents and the Purchasers, if any, including reasonable counsel fees and expenses in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following an Amortization Event. ARTICLE XI. THE AGENTS Section 11.1 APPOINTMENT. (a) Each Purchaser and Co-Agent hereby irrevocably designates and appoints Bank One, NA as Administrative Agent hereunder, and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Purchaser or Co-Agent, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Administrative Agent shall be read into this Agreement or otherwise exist against the Administrative Agent. (b) Each of Blue Ridge and the Blue Ridge Liquidity Banks hereby irrevocably designates and appoints Wachovia Bank, National Association as its Co-Agent hereunder, and authorizes such Co-Agent to take such action on its behalf under the provisions of this Agreement, the Blue Ridge Fee Letter and the Blue Ridge Liquidity Agreement and to exercise 35 such powers and perform such duties as are expressly delegated to such Co-Agent by the terms of this Agreement, if any, together with such other powers as are reasonably incidental thereto. Each of Jupiter and the Jupiter Liquidity Banks hereby irrevocably designates and appoints Bank One, NA as its Co-Agent hereunder, and authorizes such Co-Agent to take such action on its behalf under the provisions of this Agreement, the Jupiter Fee Letter and the Jupiter Liquidity Agreement and to exercise such powers and perform such duties as are expressly delegated to such Co-Agent by the terms of this Agreement, if any, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Fee Letters or the Liquidity Agreements, no Co-Agent shall have any duties or responsibilities, except those expressly set forth herein , or any fiduciary relationship with any Purchaser, Liquidity Bank or other Agent, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Co-Agent shall be read into this Agreement, the Fee Letters or the Liquidity Agreements or otherwise exist against such Co-Agent. (c) The provisions of this Article XI are solely for the benefit of the Agents and the Purchasers, and neither of the Seller Parties shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Article XI, except that this Article XI shall not affect any obligations which any Agent or any Purchaser may have to either of the Seller Parties under the other provisions of this Agreement. Furthermore, no Purchaser or Liquidity Bank shall have any rights as a third-party beneficiary or otherwise under any of the provisions hereof in respect of a Co-Agent which is not the Co-Agent for such Person. (d) In performing its functions and duties hereunder, the Administrative Agent shall act solely as the agent of the Purchasers and the Co-Agents and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for either of the Seller Parties or any of their respective successors and assigns. In performing its functions and duties hereunder, each Co-Agent shall act solely as the agent of its respective Conduit and its respective Liquidity Bank(s), and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for either of the Seller Parties, any other Purchaser, Liquidity Bank or Agent, or any of their respective successors and assigns. Section 11.2 DELEGATION OF DUTIES. Each Agent may execute any of its duties under the applicable Transaction Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. Section 11.3 EXCULPATORY PROVISIONS. No Agent nor any of its directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them or any Person described in Section 11.2 under or in connection with the Transaction Documents (except for its, their or such Person's own bad faith, gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Purchasers or other agents for any recitals, statements, representations or warranties made by the Seller contained in any Transaction Document or in any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, any Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other document furnished in connection herewith, or for any failure of either of the Seller Parties to 36 perform its respective obligations hereunder, or for the satisfaction of any condition specified in Article VI, except receipt of items required to be delivered to such Agent. No Agent shall be under any obligation to any Purchaser, Liquidity Bank or other Agent to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, any Transaction Document, or to inspect the properties, books or records of the Seller Parties. This Section 11.3 is intended solely to govern the relationship between each Agent, on the one hand, and the Purchasers and their respective Liquidity Banks, on the other. Section 11.4 RELIANCE BY AGENTS. (a) Each Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Seller Parties), independent accountants and other experts selected by such Agent. Each Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other document furnished in connection herewith unless it shall first receive such advice or concurrence of (i) in the case of the Administrative Agent, each of the Co-Agents (except where another provision of this Agreement specifically authorizes the Administrative Agent to take action based on the instructions of either of the Co-Agents) or (ii) in the case of a Co-Agent, such of its Purchasers and Liquidity Banks, as it shall determine to be appropriate under the relevant circumstances, or it shall first be indemnified to its satisfaction by its Constituent Liquidity Banks against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action. (b) Any action taken by the Administrative Agent in accordance with Section 11.4(a) shall be binding upon all Purchasers and Agents. (c) Each Co-Agent shall determine with its Conduit and, as applicable, its Liquidity Banks, the number of such Persons which shall be required to request or direct such Co-Agent to take action, or refrain from taking action, under this Agreement on behalf of such Persons and whether any consent of the rating agencies who rate such Conduit's Commercial Paper is required (such Persons and, if applicable, rating agencies, a "VOTING BLOCK"). Such Co-Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of its appropriate Voting Block, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of such Co-Agent's Constituents. (d) Unless otherwise advised in writing by a Co-Agent or by any Purchaser or Liquidity Bank on whose behalf such Co-Agent is purportedly acting, each party to this Agreement may assume that (i) such Co-Agent is acting for the benefit of each of its Constituent Purchasers and, as applicable, Liquidity Banks, as well as for the benefit of each permitted assignee from any such Person, and (ii) each action taken by such Co-Agent has been duly authorized and approved by all necessary action on the part of its Voting Block. Each Conduit (or, with the consent of all other Purchasers then existing, any other Purchaser) shall have the right to designate a new Co-Agent (which may be itself) to act on its behalf and on behalf of its 37 assignees and transferees for purposes of this Agreement by giving to the Agents and the Seller Parties written notice thereof signed by such Purchaser(s) and the newly designated Co-Agent. Such notice shall be effective when receipt thereof is acknowledged by the retiring Co-Agent and the Seller Parties, which acknowledgments shall not be withheld or unreasonably delayed, and thereafter the party named as such therein shall be Co-Agent for such Purchasers under this Agreement. Each Co-Agent and its Purchasers and Liquidity Banks shall agree amongst themselves as to the circumstances and procedures for removal and resignation of such Co-Agent. Section 11.5 NOTICE OF AMORTIZATION EVENTS. No Agent shall be deemed to have knowledge or notice of the occurrence of any Amortization Event or Potential Amortization Event unless such Agent has received notice from another Agent, a Purchaser, a Liquidity Bank or a Seller Party referring to this Agreement, stating that an Amortization Event or Potential Amortization Event has occurred hereunder and describing such Amortization Event or Potential Amortization Event. In the event that any of the Agents receives such a notice, it shall promptly give notice thereof to the other Agents for distribution, in the case of a Co-Agent, to the members of its Group. The Administrative Agent shall take such action with respect to such Amortization Event or Potential Amortization Event as shall be directed by either of the Co-Agents. Section 11.6 NON-RELIANCE ON AGENTS AND OTHER PURCHASERS. Each of the Purchasers expressly acknowledges that no Agent, nor any of such Agent's officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by any Agent hereafter taken, including, without limitation, any review of the affairs of the Seller Parties, shall be deemed to constitute any representation or warranty by such Agent. Each of the Purchasers also represents and warrants to the Agents and the other Purchasers that it has, independently and without reliance upon any such Person (or any of their Affiliates) and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller Parties and made its own decision to enter into this Agreement. Each of the Purchasers also represents that it will, independently and without reliance upon any Agent or any other Liquidity Bank or Purchaser, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, prospects, financial and other condition and creditworthiness of the Seller Parties. None of the Agents or the Purchasers, nor any of their respective Affiliates, shall have any duty or responsibility to provide any party to this Agreement with any credit or other information concerning the business, operations, property, prospects, financial and other condition or creditworthiness of the Seller Parties which may come into the possession of such Person or any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates, except that each of the Co-Agents shall promptly distribute to its related Conduit (and, as applicable, its Liquidity Banks), copies of financial and other information expressly provided to such Co-Agent by either of the Seller Parties pursuant to this Agreement for distribution to the Agents and/or Purchasers. 38 Section 11.7 INDEMNIFICATION OF AGENTS. (a) Each Liquidity Bank agrees to indemnify the Administrative Agent and its officers, directors, employees, representatives and agents (to the extent not reimbursed by the Seller Parties and without limiting the obligation of the Seller Parties to do so), ratably in accordance with their respective Percentages or Capital, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for the Administrative Agent or such Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not the Administrative Agent in its capacity as Administrative Agent or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against the Administrative Agent or such Person as a result of, or arising out of, or in any way related to or by reason of, any of the transactions contemplated hereunder or the execution, delivery or performance of this Agreement or any other document furnished in connection herewith (but excluding any such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the bad faith, gross negligence or willful misconduct of the Administrative Agent or such Person as finally determined by a court of competent jurisdiction). (b) Each Liquidity Bank agrees to indemnify its Co-Agent and such Co-Agent's officers, directors, employees, representatives and agents (to the extent not reimbursed by the Seller and without limiting the obligation of the Seller to do so), ratably in accordance with their respective Percentages or Purchaser Interests, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel for such Co-Agent or such Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not such Co-Agent in its capacity as Co-Agent or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against such Co-Agent or such Person as a result of, or arising out of, or in any way related to or by reason of, any of the transactions contemplated hereunder or the execution, delivery or performance of this Agreement or any other document furnished in connection herewith (but excluding any such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the bad faith, gross negligence or willful misconduct of such Co-Agent or such Person as finally determined by a court of competent jurisdiction). Section 11.8 AGENTS IN THEIR INDIVIDUAL CAPACITIES. Each of the Agents in its individual capacity and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Seller Parties and their Affiliates as though such Agent were not an Agent hereunder. With respect to its Purchaser Interests, if any, pursuant to this Agreement, each Agent shall have the same rights and powers under this Agreement as any Purchaser and may exercise the same as though it were not an Agent, and the terms "Purchaser" and "Purchasers" shall include each of the Agents in their individual capacities. Section 11.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent, upon five (5) days' notice to the Seller Parties, the Purchasers and the Co-Agents, may voluntarily resign and 39 may be removed at any time, with or without cause, by both Co-Agents, whereupon Wachovia shall become the successor Administrative Agent; PROVIDED, HOWEVER, that Bank One shall not voluntarily resign as the Administrative Agent so long as any of the Jupiter Liquidity Banks' respective Commitments remain in effect or Jupiter has any outstanding Purchaser Interests hereunder. Upon resignation or replacement of any Administrative Agent in accordance with this Section 11.9, the retiring Administrative Agent shall execute such UCC-3 assignments and amendments, and assignments and amendments of the Transaction Documents, as may be necessary to give effect to its replacement by a successor Administrative Agent. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of Article X and this Article XI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. Section 11.10 AGENTS' CONFLICT WAIVERS. (a) Wachovia acts, or may in the future act, (i) as administrative agent for Blue Ridge, (ii) as issuing and paying agent for Blue Ridge's Commercial Paper Notes, (iii) to provide credit or liquidity enhancement for the timely payment for Blue Ridge's Commercial Paper Notes and (iv) to provide other services from time to time for Blue Ridge (collectively, the "WACHOVIA ROLES"). Without limiting the generality of Sections 11.1 and 11.8, each Agent, Purchaser and Liquidity Bank hereby acknowledges and consents to any and all Wachovia Roles and agrees that in connection with any Wachovia Role, Wachovia may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for Blue Ridge, the giving of notice to Blue Ridge's Liquidity Banks of a mandatory purchase pursuant to Blue Ridge's Liquidity Agreement, and hereby acknowledges that neither Wachovia nor any of its Affiliates has any fiduciary duties hereunder to any Purchaser (other than Blue Ridge) or to any of Blue Ridge's Liquidity Banks arising out of any Wachovia Roles. (b) Bank One acts, or may in the future act, (i) as administrative agent for Jupiter, (ii) as issuing and paying agent for Jupiter's Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for Jupiter's Commercial Paper and (iv) to provide other services from time to time for Jupiter (collectively, the "BANK ONE ROLES"). Without limiting the generality of Sections 11.1 and 11.8, each of the Agents and the Purchasers hereby acknowledges and consents to any and all Bank One Roles and agrees that in connection with any Bank One Role, Bank One may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for Jupiter, the giving of notice to Jupiter's Liquidity Banks of a mandatory purchase pursuant to Jupiter's Liquidity Agreement, and hereby acknowledges that neither Bank One nor any of its Affiliates has any fiduciary duties hereunder to any Purchaser (other than Jupiter) or to any of Jupiter's Liquidity Banks arising out of any Bank One Roles. Section 11.11 UCC FILINGS. Each of the Purchasers hereby expressly recognizes and agrees that the Administrative Agent may be designated as the secured party of record on the various UCC filings required to be made under this Agreement and the party entitled to amend, release and terminate the UCC filings under the Receivable Sale Agreement in order to perfect their respective interests in the Receivables, Collections and Related Security, that such designation shall be for administrative convenience only in creating a record or nominee holder 40 to take certain actions hereunder on behalf of the Purchasers and that such listing will not affect in any way the status of the Purchasers as the true parties in interest with respect to the Purchaser Interests. In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Article XI. ARTICLE XII. ASSIGNMENTS; PARTICIPATIONS Section 12.1 ASSIGNMENTS. (a) Each of the parties hereto hereby agrees and consents to the complete or partial assignment by a Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement to such Conduit's Liquidity Banks pursuant to its Liquidity Agreement or to any other Person, and upon such assignment, such Conduit shall be released from its obligations so assigned. Further, each of the parties hereto hereby agrees that any assignee of a Conduit of this Agreement or all or any of the Purchaser Interests of such Conduit shall have all of the rights and benefits under this Agreement as if the term "CONDUIT" explicitly referred to such party, and no such assignment shall in any way impair the rights and benefits of such Conduit hereunder. Neither Seller nor the Servicer shall have the right to assign its rights or obligations under this Agreement. (b) Any Liquidity Bank may at any time and from time to time assign to one or more Persons ("PURCHASING LIQUIDITY BANKS") all or any part of its rights and obligations under this Agreement and the applicable Liquidity Agreement pursuant to an assignment agreement, substantially in the form set forth in Exhibit VII hereto (the "ASSIGNMENT AGREEMENT") executed by such Purchasing Liquidity Bank and such selling Liquidity Bank. The consent of the applicable Conduit shall be required prior to the effectiveness of any such assignment, and prior to the occurrence of an Amortization Event, the consent of the Seller (which consent shall not be unreasonably withheld or delayed) shall also be required prior to the effectiveness of any such assignment other than to an existing Liquidity Bank. Each assignee of a Liquidity Bank must (i) have a short-term debt rating of A-1 or better by Standard & Poor's Ratings Group and P-1 by Moody's Investor Service, Inc. and (ii) agree to deliver to the applicable Co-Agent, promptly following any request therefor by such Co-Agent or its Conduit, an enforceability opinion in form and substance satisfactory to such Co-Agent and Conduit. Upon delivery of the executed Assignment Agreement to such Co-Agent, such selling Liquidity Bank shall be released from its obligations hereunder and under the applicable Liquidity Agreement to the extent of such assignment. Thereafter the Purchasing Liquidity Bank shall for all purposes be a Liquidity Bank party to this Agreement and shall have all the rights and obligations of a Liquidity Bank under this Agreement and the applicable Liquidity Agreement to the same extent as if it were an original party hereto and thereto, and no further consent or action by Seller, the Purchasers or the Agents shall be required. (c) Each of the Liquidity Banks agrees that in the event that it shall cease to have a short-term debt rating of A-1 or better by Standard & Poor's Ratings Group and P-1 by 41 Moody's Investor Service, Inc. (an "AFFECTED LIQUIDITY BANK"), such Affected Liquidity Bank shall be obliged, at the request of the applicable Conduit or Co-Agent, to assign all of its rights and obligations hereunder and under the applicable Liquidity Agreement to (x) another Liquidity Bank or (y) another funding entity nominated by such Co-Agent and acceptable to such Conduit, and willing to participate in this Agreement and the applicable Liquidity Agreement through the applicable Liquidity Termination Date in the place of such Affected Liquidity Bank; PROVIDED that the Affected Liquidity Bank receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such Liquidity Bank's Pro Rata Share of the Aggregate Capital and Yield owing to the Liquidity Banks and all accrued but unpaid fees and other costs and expenses payable in respect of its Pro Rata Share of the Purchaser Interests of the Liquidity Banks. Section 12.2 PARTICIPATIONS. Any Liquidity Bank may, in the ordinary course of its business at any time sell to one or more Persons (each a "PARTICIPANT") participating interests in its Ratable Share of the Commitments and Purchaser Interests of the Liquidity Banks in its Group. Notwithstanding any such sale by a Liquidity Bank of a participating interest to a Participant, such Liquidity Bank's rights and obligations under this Agreement shall remain unchanged, such Liquidity Bank shall remain solely responsible for the performance of its obligations hereunder, and each of the parties hereto shall continue to deal solely and directly with such Liquidity Bank in connection with such Liquidity Bank's rights and obligations under this Agreement. Each Liquidity Bank agrees that any agreement between such Liquidity Bank and any such Participant in respect of such participating interest shall not restrict such Liquidity Bank's right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i). ARTICLE XIII. [RESERVED]. ARTICLE XIV. MISCELLANEOUS Section 14.1 WAIVERS AND AMENDMENTS. (a) No failure or delay on the part of any Agent or any Purchaser in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given. (b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 14.1(b). Each 42 of the Conduits, Seller and the Agents may enter into written modifications or waivers of any provisions of this Agreement, provided, however, that no such modification or waiver shall: (i) without the consent of each affected Purchaser, (A) extend the Liquidity Termination Date or the date of any payment or deposit of Collections by Seller or the Servicer, (B) reduce the rate or extend the time of payment of Yield or any CP Costs (or any component of Yield or CP Costs), (C) reduce any fee payable to the Administrative Agent for the benefit of the Purchasers, (D) except pursuant to Article XII hereof, change the amount of the Capital of any Purchaser, any Liquidity Bank's Pro Rata Share or any Liquidity Bank's Commitment, (E) amend, modify or waive any provision of the definition of this Section 14.1(b), (F) consent to or permit the assignment or transfer by Seller of any of its rights and obligations under this Agreement, (G) change the definition of "ELIGIBLE RECEIVABLE," "LOSS RESERVE," "DEFAULT RATIO," "DILUTION RESERVE," "DILUTION RATIO," or "YIELD RESERVE" or (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses; or (ii) without the written consent of the then Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Agent. Notwithstanding the foregoing, (i) without the consent of the Liquidity Banks, but with the consent of Seller, the Agents may amend this Agreement solely to add additional Persons as Liquidity Banks hereunder and (ii) the Agents and Conduits may enter into amendments to modify any of the terms or provisions of Article XI, Article XII, or Section 14.13 of this Agreement without the consent of Seller, provided that such amendment has no negative impact upon Seller. Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Purchasers equally and shall be binding upon Seller, the Purchasers and the Agents. Section 14.2 NOTICES. Except as provided in this Section 14.2, all communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 14.2. Seller hereby authorizes the Co-Agents to effect purchases and Tranche Period and Discount Rate selections based on telephonic notices made by any Person whom the Administrative Agent in good faith believes to be acting on behalf of Seller. Seller agrees to deliver promptly to the Administrative Agent a written confirmation of each telephonic notice signed by an authorized officer of Seller; provided, however, the absence of such confirmation shall not affect the 43 validity of such notice. If the written confirmation differs from the action taken by the Administrative Agent, the records of the Administrative Agent shall govern absent manifest error. Section 14.3 RATABLE PAYMENTS. If any Purchaser, whether by setoff or otherwise, has payment made to it with respect to any portion of the Aggregate Unpaids owing to such Purchaser (other than payments received pursuant to Section 10.3 or 10.4) in a greater proportion than that received by any other Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such Purchaser agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Aggregate Unpaids held by the other Purchasers so that after such purchase each Purchaser will hold its ratable proportion of such Aggregate Unpaids; provided that if all or any portion of such excess amount is thereafter recovered from such Purchaser, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. Section 14.4 PROTECTION OF PURCHASER INTERESTS. (a) Seller agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that the Administrative Agent may request, to perfect, protect or more fully evidence the Purchaser Interests, or to enable the Administrative Agent or the Purchasers to exercise and enforce their rights and remedies hereunder. At any time after the occurrence of an Amortization Event, the Administrative Agent may, or the Administrative Agent may direct Seller or the Servicer to, notify the Obligors of Receivables, at Seller's expense, of the ownership or security interests of the Purchasers under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Administrative Agent or its designee. Seller or the Servicer (as applicable) shall, at any Purchaser's request, withhold the identity of such Purchaser in any such notification. (b) If any Seller Party fails to perform any of its obligations hereunder, the Administrative Agent or any Purchaser may (but shall not be required to) perform, or cause performance of, such obligations, and the Administrative Agent's or such Purchaser's costs and expenses incurred in connection therewith shall be payable by Seller as provided in Section 10.4. Each Seller Party irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent, and appoints the Administrative Agent as its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on behalf of Seller as debtor and to file financing statements necessary or desirable in the Administrative Agent's sole discretion to perfect and to maintain the perfection and priority of the interest of the Purchasers in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the interests of the Purchasers in the Receivables. This appointment is coupled with an interest and is irrevocable. 44 Section 14.5 CONFIDENTIALITY. Each of the parties hereto agrees to comply with the confidentiality provisions of Section 7.4 of the Receivables Sale Agreement with the same force and effect as if it were a direct party to such agreement. Section 14.6 BANKRUPTCY PETITION. Each of Seller, the Servicer, the Agents, the Liquidity Banks and the other Conduit hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of a Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Section 14.7 LIMITATION OF LIABILITY. Except with respect to any claim arising out of the willful misconduct or gross negligence of any Agent or any Purchaser, no claim may be made by any Seller Party or any other Person against any Agent or Purchaser or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Seller Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. Section 14.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS. Section 14.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT SITTING IN CHICAGO, ILLINOIS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST ANY AGENT OR ANY PURCHASER OR ANY AFFILIATE OF ANY AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. Section 14.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY 45 OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER. Section 14.11 INTEGRATION; BINDING EFFECT; SURVIVAL OF TERMS. (a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. (b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Seller Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement. Section 14.12 COUNTERPARTS; SEVERABILITY; SECTION REFERENCES. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to "ARTICLE," "SECTION," "SCHEDULE" or "EXHIBIT" shall mean articles and sections of, and schedules and exhibits to, this Agreement. Section 14.13 BANK ONE ROLES. Each of the Liquidity Banks acknowledges that Bank One acts, or may in the future act, (i) as administrative agent for Jupiter or any Liquidity Bank, (ii) as issuing and paying agent for the Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for the Commercial Paper and (iv) to provide other services from time to time for Conduit or any Liquidity Bank (collectively, the "BANK ONE ROLES"). Without limiting the generality of this Section 14.13, each Liquidity Bank hereby acknowledges and consents to any and all Bank One Roles and agrees that in connection with any Bank One Role, Bank One may take, or refrain from taking, any action that it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for Jupiter, and the giving of notice to the Jupiter Liquidity Banks of a put pursuant to the Jupiter Liquidity Agreement. 46 Section 14.14 CHARACTERIZATION. (a) It is the intention of the parties hereto that each purchase hereunder shall constitute and be treated as an absolute and irrevocable sale, which purchase shall provide the applicable Purchaser with the full benefits of ownership of the applicable Purchaser Interest. Except as specifically provided in this Agreement, each sale of a Purchaser Interest hereunder is made without recourse to Seller; provided, however, that (i) Seller shall be liable to each of the Purchasers and Agents for all representations, warranties, covenants and indemnities made by Seller pursuant to the terms of this Agreement, and (ii) such sale does not constitute and is not intended to result in an assumption by any Purchaser or Agent or any assignee thereof of any obligation of Seller or any Originator or any other Person arising in connection with the Receivables, the Related Security, or the related Contracts, or any other obligations of Seller or any Originator. (b) In addition to any ownership interest which the Administrative Agent may from time to time acquire pursuant hereto, Seller hereby grants to the Administrative Agent for the ratable benefit of the Purchasers a valid and perfected security interest in all of Seller's right, title and interest in, to and under all Receivables now existing or hereafter arising, the Collections, each Lock-Box, each Collection Account, all Related Security, all other rights and payments relating to such Receivables, and all proceeds of any thereof prior to all other liens on and security interests therein to secure the prompt and complete payment of the Aggregate Unpaids. The Administrative Agent and the Purchasers shall have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative. [SIGNATURE PAGES FOLLOW] 47 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof. RPM FUNDING CORPORATION, AS SELLER By: /s/ P. Kelly Tompkins -------------------------------------------------- Name: P. Kelly Tompkins Title: Vice President, Secretary ADDRESS: RPM Funding Corporation 2628 Pearl Road, Suite 100 Medina, Ohio 44258 Attention: Treasurer Phone: (330) 273-8837 Fax: (330) 225-6574 RPM, Inc., AS SERVICER By: /s/ P. Kelly Tompkins -------------------------------------------------- Name: P. Kelly Tompkins Title: Vice President, General Counsel and Secretary ADDRESS: RPM, Inc. 2628 Pearl Road P.O. Box 777 Medina, Ohio 44258 Attention: Treasurer Phone: (330) 273-8837 Fax: (330) 225-6574 48 JUPITER SECURITIZATION CORPORATION By: /s/ Sherri Gerner -------------------------------------------------- Name: Sherri Gerner Title: Authorized Signer Address: c/o Bank One, NA (Main Office Chicago) Asset Backed Finance Suite IL1-0079, 1-19 1 Bank One Plaza Chicago, Illinois 60670-0079 Fax: (312) 732-1844 BANK ONE, NA (MAIN OFFICE CHICAGO), INDIVIDUALLY , AS JUPITER AGENT AND AS ADMINISTRATIVE AGENT By: /s/ Sherri Gerner -------------------------------------------------- Name: Sherri Gerner Title: Director, Capital Markets Address: c/o Bank One, NA (Main Office Chicago) Asset Backed Finance 1 Bank One Plaza Mail Suite IL1-0594 Attention: Portfolio Management Chicago, IL 60670-0594 Fax: 312-732-2245 BLUE RIDGE ASSET FUNDING CORPORATION BY: WACHOVIA BANK, NATIONAL ASSOCIATION, ATTORNEY-IN FACT By: /s/ Douglas R. Wilson Sr. -------------------------------------------------- Name: Douglas R. Wilson Sr. Title: Vice President ADDRESS: Blue Ridge Asset Funding Corporation 100 North Main Street Winston-Salem, NC 27150 Attention: John Dillon Phone: (336) 735-6097 Fax: (336) 735-6099 WITH A COPY TO: Blue Ridge Asset Funding Corporation c/o AMACAR Group, L.L.C. 6525 Morrison Blvd., Suite 318 Charlotte, North Carolina 28211 Attention: Douglas K. Johnson Phone: (704) 365-0569 Fax: (704) 365-1362 WACHOVIA BANK, NATIONAL ASSOCIATION, INDIVIDUALLY AND AS BLUE RIDGE AGENT By: /s/ Kenny Karpowicz -------------------------------------------------- Name: Kenny Karpowicz Title: Vice President ADDRESS: Wachovia Bank, National Association 191 Peachtree Street, 26th Floor GA8047 Atlanta, Georgia 30303 Attention: Elizabeth R. Wagner Phone: (404) 332-1398 Fax: (404) 332-5152 EXHIBIT I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "ACCRUAL PERIOD" means each calendar month, provided that the initial Accrual Period hereunder means the period from (and including) the date of the initial purchase hereunder to (and including) the last day of the calendar month thereafter. "ADJUSTED DILUTION RATIO" means, at any time, the rolling average of the Dilution Ratio for the 12 Calculation Periods then most recently ended. "ADJUSTED ELIGIBLE RECEIVABLES" means the aggregate Outstanding Balance of Eligible Receivables less (i) the Cash Discount Exposure Factor; (ii) the Contractual Rebate Accruals; (iii) the aggregate Outstanding Balance of all Government Receivables in excess of 3% of the aggregate Outstanding Balance of all Receivables; (iv) the aggregate Outstanding Balance of all Canadian Receivables in excess of 3% of the aggregate Outstanding Balance of all Receivables; (v) the aggregate Outstanding Balance of all Eligible Receivables which by their terms are due 62-91 days after the date of invoice in excess of 15% of the aggregate Outstanding Balance of all Receivables; and (v) the aggregate Outstanding Balance of all Eligible Receivables which by their terms are due 92-121 days after the date of invoice in excess of 3% of the aggregate Outstanding Balance of all Receivables. "ADVERSE CLAIM" means a lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person's assets or properties in favor of any other Person. "AFFECTED LIQUIDITY BANK" has the meaning specified in Section 12.1(c). "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "AGENT" has the meaning set forth in the preamble to this Agreement. "AGGREGATE CAPITAL" means, on any date of determination, the aggregate amount of Capital of all Purchaser Interests outstanding on such date. "AGGREGATE REDUCTION" has the meaning specified in Section 1.3. 51 "AGGREGATE RESERVES" means the Aggregate Reserve Percentage multiplied by the Net Receivables Balance. "AGGREGATE RESERVE PERCENTAGE" means, on any date of determination, the sum of the Loss Reserve, the Yield Reserve and the Dilution Reserve. "AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of all Aggregate Capital and unpaid Obligations (whether due or accrued) at such time. "AGREEMENT" means this Receivables Purchase Agreement, as it may be amended or modified and in effect from time to time. "AMORTIZATION DATE" means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Amortization Event set forth in Section 9.1(f)(ii), (iii) the Business Day specified in a written notice from any Agent following the occurrence of any other Amortization Event, and (iv) the date which is 30 days after the Co-Agents' receipt of written notice from Seller that it wishes to terminate the facility evidenced by this Agreement. "AMORTIZATION EVENT" has the meaning specified in Article IX. "APPLICABLE MARGIN" means the sum of (a) 0.25% per annum, plus (b) the "Applicable Margin" from time to time in effect for "Eurodollar Committed Loans" under the RPM Credit Agreement. "ASSIGNMENT AGREEMENT" has the meaning set forth in Section 12.1(b). "AUTHORIZED OFFICER" means, with respect to any Person, its president, corporate controller, treasurer, chief financial officer or secretary. "BANK ONE" has the meaning specified in the preamble to this Agreement. "BLUE RIDGE" has the meaning specified in the preamble to this Agreement. "BLUE RIDGE ALLOCATION LIMIT" has the meaning set forth in Section 1.1(a). "BLUE RIDGE FEE LETTER" means that certain Blue Ridge Fee Letter dated as of the date hereof by and among Seller, Blue Ridge and the Blue Ridge Agent. "BLUE RIDGE LIQUIDITY AGREEMENT" means the Liquidity Asset Purchase Agreement dated as of the date hereof among Blue Ridge, the Blue Ridge Agent, and the Blue Ridge Liquidity Banks from time to time party thereto, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time. "BROKEN FUNDING COSTS" means for any Purchaser Interest which: (i) has its Capital reduced without compliance by Seller with the notice requirements hereunder or (ii) does not become subject to an Aggregate Reduction following the delivery of any Reduction Notice or (iii) is assigned under a Liquidity Agreement or terminated prior to the date on which it was 52 originally scheduled to end; an amount equal to the excess, if any, of (A) the CP Costs or Yield (as applicable) that would have accrued during the remainder of the Tranche Periods or the tranche periods for Commercial Paper determined by the applicable Co-Agent to relate to such Purchaser Interest (as applicable) subsequent to the date of such reduction, assignment or termination (or in respect of clause (ii) above, the date such Aggregate Reduction was designated to occur pursuant to the Reduction Notice) of the Capital of such Purchaser Interest if such reduction, assignment or termination had not occurred or such Reduction Notice had not been delivered, over (B) the sum of (x) to the extent all or a portion of such Capital is allocated to another Purchaser Interest, the amount of CP Costs or Yield actually accrued during the remainder of such period on such Capital for the new Purchaser Interest, and (y) to the extent such Capital is not allocated to another Purchaser Interest, the income, if any, actually received during the remainder of such period by the holder of such Purchaser Interest from investing the portion of such Capital not so allocated. In the event that the amount referred to in clause (B) exceeds the amount referred to in clause (A), the relevant Purchaser or Purchasers agree to pay to Seller the amount of such excess. All Broken Funding Costs shall be due and payable hereunder upon written demand. "BUSINESS DAY" means any day on which banks are not authorized or required to close in New York, New York, Atlanta, Georgia, or Chicago, Illinois and The Depository Trust Company of New York is open for business, and, if the applicable Business Day relates to any computation or payment to be made with respect to the LIBO Rate, any day on which dealings in dollar deposits are carried on in the London interbank market. "CALCULATION PERIOD" means a calendar month. "CANADIAN RECEIVABLE" means a Receivable as to which the Obligor (a) if a natural person, is a resident of Canada, and (b) if a corporation or other business entity, is organized under the laws of and/or maintains its chief executive office in Canada. "CAPITAL" of any Purchaser Interest means, at any time, (A) the Purchase Price of such Purchaser Interest, minus (B) the sum of the aggregate amount of Collections and other payments received by the Administrative Agent which in each case are applied to reduce such Capital in accordance with the terms and conditions of this Agreement; provided that such Capital shall be restored (in accordance with Section 2.5) in the amount of any Collections or other payments so received and applied if at any time the distribution of such Collections or payments are rescinded, returned or refunded for any reason. "CAPITAL LEASE OBLIGATIONS" means, as to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board) and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13). 53 "CASH DISCOUNT EXPOSURE FACTOR" means 1.5% multiplied by the aggregate Outstanding Balance of all Receivables less than 31 days past due. "CHANGE OF CONTROL" has the meaning set forth in the Receivables Sale Agreement. "CHARGED-OFF RECEIVABLE" means a Receivable: (i) as to which the Obligor thereof has taken any action, or suffered any event to occur, of the type described in Section 9.1(f) (as if references to Seller Party therein refer to such Obligor); (ii) as to which the Obligor thereof, if a natural person, is deceased, (iii) which, consistent with the Credit and Collection Policy, would be written off Seller's books as uncollectible, or (iv) which has been identified by Seller as uncollectible. "CODE" means the Internal Revenue Code of 1986, as amended, or any successor statute. "COLLECTION ACCOUNT" means each concentration account, depositary account, lock-box account or similar account in which any Collections are collected or deposited and which is listed on Exhibit IV. "COLLECTION ACCOUNT AGREEMENT" means an agreement substantially in the form of Exhibit VI among an Originator, Seller, the Administrative Agent and a Collection Bank. "COLLECTION BANK" means, at any time, any of the banks holding one or more Collection Accounts. "COLLECTION NOTICE" means a notice, in substantially the form of Annex A to Exhibit VI, from the Administrative Agent to a Collection Bank. "COLLECTIONS" means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all yield, Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable. "COMMERCIAL PAPER" means promissory notes of Conduit issued by Conduit in the commercial paper market. "COMMITMENT" means, for each Liquidity Bank, the commitment of such Liquidity Bank to purchase Purchaser Interests from (i) Seller and (ii) Conduit, in an amount not to exceed (i) in the aggregate, the amount set forth opposite such Liquidity Bank's name on Schedule A to this Agreement, as such amount may be modified in accordance with the terms hereof and (ii) with respect to any individual purchase hereunder, its Pro Rata Share of the Purchase Price therefor. "CONCENTRATION LIMIT" means, at any time, for any Obligor and its Affiliates, considered as if they were one and the same Obligor, 6.5% of Adjusted Eligible Receivables with long-term debt ratings of at least "Baa3" by Moody's Investors Services, Inc. and at least "BBB-" by Standard & Poor's Ratings Group, or 5% of the Adjusted Eligible Receivables, or 54 such other amount (a "SPECIAL CONCENTRATION LIMIT") for such Obligor designated by the Co-Agents; PROVIDED that either of the Co-Agents may, upon not less than five Business Days' notice to Seller, cancel any Special Concentration Limit. As of the date hereof, (x) the Special Concentration Limit for The Home Depot, Inc. and its Affiliates is the lesser of (i) $40,000,000 or (ii) 20% of Adjusted Eligible Receivables; (y) the Special Concentration Limit for Wal-Mart Stores Inc. and its Affiliates is the lesser of (i) $20,000,000 or (ii) 10% of Adjusted Eligible Receivables; and (z) the Special Concentration Limit for Lowe's Companies, Inc. and its Affiliates is the lesser of (i) $20,000,000 or (ii) 10% of Adjusted Eligible Receivables. "CONDUIT" has the meaning set forth in the preamble to this Agreement. "CONSTITUENTS" means, as to either Co-Agent, the Conduit represented by it as specified in the preamble to this Agreement, and each of such Conduit's Liquidity Banks, and the term "CONSTITUENT" when used as an adjective shall have a correlative meaning. "CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit. "CONTRACT" means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable. "CONTRACTUAL REBATE ACCRUAL" means, with respect to any Receivable on any date of determination, the ending balance of all accounting accruals or reserves for potential volume rebates, seasonal and other promotional discounts, advertising and other cooperative subsidies, or similar contractual credits booked with respect to such Receivable. "CP COSTS" means, for each Conduit for each day, the sum of (i) discount or yield accrued on such Conduit's Pooled Commercial Paper on such day, plus (ii) any and all accrued commissions in respect of placement agents and Commercial Paper dealers, and issuing and paying agent fees incurred, in respect of such Conduit's Pooled Commercial Paper for such day, plus (iii) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase facilities which are funded by such Conduit's Pooled Commercial Paper for such day, minus (iv) any accrual of income net of expenses received on such day from investment of collections received under all receivable purchase facilities funded substantially with such Conduit's Pooled Commercial Paper, minus (v) any payment received on such day by such Conduit net of expenses in respect of Broken Funding Costs related to the prepayment of any Purchaser Interest of such Conduit pursuant to the terms of any receivable purchase facilities funded substantially with its Pooled Commercial Paper. In addition to the foregoing costs, if Seller shall request any Incremental Purchase during any period of time determined by such Conduit's Co-Agent in its sole discretion to result in incrementally higher CP Costs applicable to such Incremental Purchase, the Capital associated with any such Incremental Purchase shall, 55 during such period, be deemed to be funded by such Conduit in a special pool (which may include capital associated with other receivable purchase facilities) for purposes of determining such additional CP Costs applicable only to such special pool and charged each day during such period against such Capital. "CREDIT AND COLLECTION POLICY" means the Originators' credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit VIII hereto, as modified from time to time in accordance with this Agreement. "CUT-OFF DATE" means the last day of a Calculation Period. "DAYS SALES OUTSTANDING" means, as of any day, an amount equal to the product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the aggregate Outstanding Balance of all Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date. "DEEMED COLLECTIONS" means the aggregate of all amounts Seller shall have been deemed to have received as a Collection of a Receivable. Seller shall be deemed to have received a Collection in full of a Receivable if at any time any of the representations or warranties in Article V are no longer true with respect to any Receivable. If (i) the Outstanding Balance of any Receivable is either (x) reduced as a result of any defective or rejected goods or services, any discount or any adjustment or otherwise by Seller (other than cash Collections on account of the Receivables) or (y) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), Seller shall be deemed to have received a Collection of such Receivable to the extent of such reduction or cancellation. "DEFAULT FEE" means with respect to any amount due and payable by Seller in respect of any Aggregate Unpaids, an amount equal to interest on any such unpaid Aggregate Unpaids at a rate per annum equal to 2% above the Prime Rate. "DEFAULT HORIZON RATIO" means, as of any Cut-Off Date, the ratio (expressed as a decimal) computed by dividing (a) the sum of (i) the aggregate sales generated by the Originators during the three Calculation Periods ending on such Cut-Off Date and (ii) 50% of the aggregate sales generated by the Originators during the Calculation Period ending three Cut-Off Dates prior to such Cut-Off Date, by (b) the Net Receivables Balance as of such Cut-Off Date. "DEFAULT RATIO" means, as of any Cut-Off Date, the ratio (expressed as a percentage) computed by dividing (x) the total amount of Receivables which became Defaulted Receivables or which became Charged-Off Receivables before becoming Defaulted Receivables, in either case during the Calculation Period that includes such Cut-Off Date, by (y) the aggregate sales generated by the Originators during the Calculation Period occurring four months prior to the Calculation Period ending on such Cut-Off Date. 56 "DEFAULTED RECEIVABLE" means a Receivable as to which any payment, or part thereof, remains unpaid for 91 days or more from the original due date for such payment. "DELINQUENCY RATIO" means, at any time, a percentage equal to (i) the aggregate Outstanding Balance of all Receivables that were Delinquent Receivables at such time divided by (ii) the aggregate Outstanding Balance of all Receivables at such time. "DELINQUENT RECEIVABLE" means a Receivable as to which any payment, or part thereof, remains unpaid for 61-90 days from the original due date for such payment. "DESIGNATED OBLIGOR" means an Obligor indicated by any of the Agents to Seller in writing. "DILUTION HORIZON RATIO" means, as of any Cut-off Date, a ratio (expressed as a decimal), computed by dividing (i) the aggregate sales generated by the Originators during the two Calculation Periods ending on such Cut-Off Date, by (ii) the Net Receivables Balance as of such Cut-Off Date. "DILUTION RATIO" means, as of any Cut-Off Date, a ratio (expressed as a percentage), computed by dividing (a) the total amount of Dilutions during the Calculation Period ending on such Cut-Off Date, by (b) the aggregate sales generated by the Originators during the Calculation Period that ended two Cut-Off Dates prior to such Cut-Off Date. "DILUTION RESERVE" means, for any Calculation Period, the greater of (i) 8% or (ii) the product (expressed as a percentage) of: (a) the sum of (i) two (2) times the Adjusted Dilution Ratio as of the Cutoff Date for such Calculation Period, plus (ii) the Dilution Volatility Component as of the Cutoff Date for such Calculation Period, TIMES (b) the Dilution Horizon Ratio as of the Cutoff Date for such Calculation Period. "DILUTION VOLATILITY COMPONENT" means the product (expressed as a percentage) of (i) the difference between (a) the highest three (3)-month rolling average Dilution Ratio over the past 12 Calculation Periods and (b) the Adjusted Dilution Ratio, and (ii) a fraction, the numerator of which is equal to the amount calculated in (i)(a) of this definition and the denominator of which is equal to the amount calculated in (i)(b) of this definition. "DILUTIONS" means, at any time, the aggregate amount of reductions or cancellations described in clause (i) of the definition of "Deemed Collections" other than those for which a Contractual Rebate Accrual has been booked. "DISCOUNT RATE" means, the LIBO Rate or the Prime Rate, as applicable, with respect to each Purchaser Interest of the Liquidity Banks. "DOWNGRADED LIQUIDITY BANK" means a Liquidity Bank which has been the subject of a Downgrading Event. 57 "DOWNGRADING EVENT" with respect to any Person means the lowering of the rating with regard to the short-term securities of such Person to below (i) A-1 by S&P, or (ii) P-1 by Moody's. "EBITDA" means, for any period, determined on a consolidated basis for RPM and its Subsidiaries, net operating income of RPM and its Subsidiaries (calculated before provision for income taxes, interest expense, extraordinary items, income attributable to equity in Affiliates and all amounts attributable to depreciation and amortization) for such period. "ELIGIBLE ASSIGNEE" means (a) any "bankruptcy remote" special purpose entity which is administered by Wachovia or Bank One (or any Affiliate of the foregoing) that is in the business of acquiring or financing receivables, securities and/or other financial assets and which issues commercial paper notes that are rated at least A-1 by S&P and P-1 by Moody's, (b) any Qualifying Liquidity Bank having a combined capital and surplus of at least $250,000,000, or (c) any Downgraded Liquidity Bank whose liquidity commitment has been fully drawn by the applicable Conduit or its Co-Agent and funded into a collateral account. "ELIGIBLE RECEIVABLE" means, at any time, a Receivable: (i) the Obligor of which (a) if a natural person, is a resident of the United States, Puerto Rico or Canada or, if a corporation or other business organization, is organized under the laws of the United States, Puerto Rico, Canada or any political subdivision of the foregoing and has its chief executive office in the United States, Puerto Rico or Canada; (b) is not an Affiliate of any of the parties hereto; and (c) is not a Designated Obligor; (ii) the Obligor of which is not the Obligor of any Charged-Off Receivable, (iii) which is not a Charged-Off Receivable, a Defaulted Receivable or a Delinquent Receivable, (iv) which is not owing from an Obligor as to which more than 25% of the aggregate Outstanding Balance of all Receivables owing from such Obligor are Delinquent Receivables or Defaulted Receivables, (v) which by its terms is due and payable on or within 121 days of the original billing date therefor and has not had its payment terms extended, (vi) which is an "account" within the meaning of Section 9-102 of the UCC of all applicable jurisdictions, (vii) which is denominated and payable only in United States dollars in the United States, (viii) which arises under a Contract in substantially the form of one of the form contracts set forth on Exhibit IX hereto or otherwise approved by the Co-Agents in writing, which, together with such Receivable, is in full force and effect 58 and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense, (ix) which arises under a Contract which (A) does not require the Obligor under such Contract to consent to the transfer, sale or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Purchaser to exercise its rights under this Agreement, including, without limitation, its right to review the Contract, (x) which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by the applicable Originator, (xi) which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation, (xii) which satisfies in all material respects the applicable requirements of the Credit and Collection Policy, (xiii) which was generated in the ordinary course of the applicable Originator's business, (xiv) which arises solely from the sale of goods or the provision of services to the related Obligor by an Originator, and not by any other Person (in whole or in part), (xv) as to which a Co-Agent has not notified Seller that such Co-Agent has determined in the exercise of its commercially reasonable credit judgment that such Receivable or class of Receivables is not acceptable as an Eligible Receivable, including, without limitation, because such Receivable arises under a Contract that is not acceptable to such Co-Agent, (xvi) which is not subject to (A) any right of rescission or set-off, or (B) any currently asserted counterclaim or other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against any Originator or any other Adverse Claim, and the Obligor thereon holds no right as against any Originator to cause any Originator to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract) ); PROVIDED, HOWEVER, that if such dispute, offset, counterclaim or defense affects only a portion of the Outstanding 59 Balance of such Receivable, then such Receivable may be deemed an Eligible Receivable to the extent of the portion of such Outstanding Balance which is not so affected, and PROVIDED, FURTHER, that Receivables of any Obligor which has any accounts payable by the applicable Originator or by a wholly-owned Subsidiary of such Originator (thus giving rise to a potential offset against such Receivables) may be treated as Eligible Receivables to the extent that the Obligor of such Receivables has agreed pursuant to a written agreement in form and substance satisfactory to the Agents, that such Receivables shall not be subject to such offset, (xvii) as to which the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor, and (xviii) all right, title and interest to and in which has been validly transferred by the applicable Originator directly to Seller under and in accordance with the Receivables Sale Agreement, and Seller has good and marketable title thereto free and clear of any Adverse Claim. "EQUITY INTERESTS" means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non-voting), of capital of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership, whether outstanding on the date hereof or issued after the date of this Agreement. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "EXTENSION REQUEST" has the meaning set forth in Section 1.5 of this Agreement. "FACILITY ACCOUNT" means RPM Funding Corporation Collection Account #657548978 at National City Bank, 1900 East Ninth St., Cleveland, Ohio 44114, ABA #041000124. "FACILITY TERMINATION DATE" means the earliest of (i) June 4, 2005, (ii) the Liquidity Termination Date for either Conduit, and (iii) the Amortization Date. "FEDERAL BANKRUPTCY CODE" means Title 11 of the United States Code entitled "Bankruptcy," as amended and any successor statute thereto. "FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating interest rate per annum for each day during such period equal to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York in the Composite Closing 60 Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:30 a.m. (Chicago time) for such day on such transactions received by the applicable Co-Agent from three federal funds brokers of recognized standing selected by it. "FEE LETTERS" means, collectively, the Blue Ridge Fee Letter and the Jupiter Fee Letter. "FINANCE CHARGES" means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract. "FUNDING AGREEMENT" means this Agreement and any agreement or instrument executed by any Funding Source with or for the benefit of Conduit. "FUNDING SOURCE" means (i) any Liquidity Bank or (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to Conduit. "GAAP" means generally accepted accounting principles in effect in the United States of America from time to time. "GOVERNMENT RECEIVABLE" means a Receivable as to which the Obligor is a government or a governmental subdivision or agency. "GROUP" means the Blue Ridge Group or the Jupiter Group. "GUARANTEED" has the meaning ascribed thereto in the definition of "GUARANTY" in the RPM Credit Agreement. "INCREMENTAL PURCHASE" means a purchase of a Purchaser Interest which increases the total outstanding Aggregate Capital hereunder. "INDEBTEDNESS" means, as to any Person (determined without duplication): (i) indebtedness of such Person for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase or acquisition price of property or services other than accounts payable (other than for borrowed money) incurred in the ordinary course of such Person's business, (ii) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person (whether or not such obligations are contingent); (iii) Capital Lease Obligations of such Person; (iv) obligations of such Person to redeem or otherwise retire shares of capital stock of such Person; (v) indebtedness of others of the type described in clause (i), (ii), (iii) or (iv) above secured by a Lien on the property of such Person, whether or not the respective obligation so secured has been assumed by such Person; and (vi) indebtedness of others of the type described in clause (i), (ii), (iii) or (iv) above Guaranteed by such Person. "INDEPENDENT DIRECTOR" shall mean a member of the Board of Directors of Seller who is not at such time, and has not been at any time during the preceding five (5) years, (A) a director, officer, employee or affiliate of any Seller Party, any Originator, or any of their 61 respective Subsidiaries or Affiliates, or (B) the beneficial owner (at the time of such individual's appointment as an Independent Director or at any time thereafter while serving as an Independent Director) of any of the outstanding common shares of any Seller Party, any Originator, or any of their respective Subsidiaries or Affiliates, having general voting rights. "INTEREST EXPENSE" means, for any period, the sum (determined without duplication) of the aggregate amount of interest accruing during such period on Indebtedness of RPM and its Subsidiaries (on a consolidated basis), including the interest portion of payments under Capital Lease Obligations and any capitalized interest, and excluding amortization of debt discount and expense. "JUPITER" has the meaning provided in the preamble of this Agreement. "JUPITER AGENT" has the meaning provided in the preamble of this Agreement. "JUPITER ALLOCATION LIMIT" has the meaning set forth in Section 1.1(b). "JUPITER FEE LETTER" means that certain Jupiter Fee Letter dated as of the date hereof by and among Seller, Jupiter and the Jupiter Agent. "JUPITER LIQUIDITY AGREEMENT" means the Liquidity Asset Purchase Agreement dated as of the date hereof among Jupiter, the Jupiter Agent, and the Jupiter Liquidity Banks from time to time party thereto, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time. "LIBO RATE" means the rate per annum equal to the sum of (i) (a) the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of the relevant Tranche Period, and having a maturity equal to such Tranche Period, provided that, (i) if Reuters Screen FRBD is not available to the Administrative Agent for any reason, the applicable LIBO Rate for the relevant Tranche Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, and having a maturity equal to such Tranche Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Administrative Agent, the applicable LIBO Rate for the relevant Tranche Period shall instead be the rate determined by the Administrative Agent to be the rate at which Bank One offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, in the approximate amount to be funded at the LIBO Rate and having a maturity equal to such Tranche Period, divided by (b) one minus the maximum aggregate reserve requirement (including all basic, supplemental, marginal or other reserves) which is imposed against the Administrative Agent in respect of Eurocurrency liabilities, as defined in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to such Tranche Period plus (ii) the Applicable Margin per annum. The LIBO Rate shall be rounded, if necessary, to the next higher 1/16 of 1%. 62 "LIQUIDITY AGREEMENTS" means the Jupiter Liquidity Agreement and Blue Ridge Liquidity Agreement. "LIQUIDITY BANKS" means, collectively, the Blue Ridge Liquidity Banks and the Jupiter Liquidity Banks. "LIQUIDITY TERMINATION DATE" means June 4, 2003. "LOCK-BOX" means each locked postal box with respect to which a bank who has executed a Collection Account Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Exhibit IV. "LOSS RESERVE" means, for any Calculation Period, the greater of (i) 20% and (ii) the product (expressed as a percentage) of (a) 2.0, times (b) the highest three-month rolling average Default Ratio during the 12 Calculation Periods ending on the immediately preceding Cut-Off Date, times (c) the Default Horizon Ratio as of the immediately preceding Cut-Off Date. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the financial condition or operations of Seller or RPM and any of its subsidiaries, taken as a whole, (ii) the ability of Seller to perform its obligations under this Agreement or (at any time RPM is acting as Servicer or Performance Guarantor), the ability of the Servicer or the Performance Guarantor to perform its obligations under this Agreement or the Performance Undertaking, as the case may be, (iii) the legality, validity or enforceability of this Agreement or any other Transaction Document, (iv) any Purchaser's interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or the Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables. "MATERIAL INDEBTEDNESS" means (a) with respect to the Performance Guarantor and its Subsidiaries (other than the Originators), Indebtedness in excess of $20 million in aggregate principal amount and (b) with respect to any Originator, Indebtedness in excess of $10 million in aggregate principal amount. "MONTHLY REPORT" means a report, in substantially the form of Exhibit X hereto (appropriately completed), furnished by the Servicer to the Co-Agents pursuant to Section 8.5. "MONTHLY REPORTING DATE" shall have the meaning set forth in Section 8.5. "NET RECEIVABLES BALANCE" means, at any time, Adjusted Eligible Receivables at such time reduced by the aggregate amount by which (a) the difference of (i) the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates minus (ii) the Cash Discount Exposure Factor and Contractual Rebate Accrual attributable to such Obligor and its Affiliates exceeds (b) the Concentration Limit for such Obligor. "NORWEGIAN COMPANY" means Carboline Norge A/S , a Norwegian corporation. "OBLIGATIONS" shall have the meaning set forth in Section 2.1. "OBLIGOR" means a Person obligated to make payments pursuant to a Contract. 63 "ORGANIC DOCUMENT" means, relative to any Person, its certificate of incorporation, its by-laws, its partnership agreement, its memorandum and articles of association, its limited liability company agreement and/or operating agreement, share designations or similar organization documents and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized Equity Interests. "ORIGINATOR" has the meaning specified in the Receivables Sale Agreement. "OUTSTANDING BALANCE" of any Receivable at any time means the then outstanding principal balance thereof. "PARENT" has the meaning set forth in the Receivables Sale Agreement. "PARTICIPANT" has the meaning set forth in Section 12.2. "PAST DUE RATIO" means, at any time, the following quotient (expressed as a percentage): (a) the sum (without duplication) of Defaulted Receivables and Charged-Off Receivables at such time, DIVIDED BY (b) the aggregate Outstanding Balance of all Receivables. "PERCENTAGE" means (a) 60% as to Jupiter, and (b) 40% as to Blue Ridge. "PERFORMANCE GUARANTOR" means RPM and its successors. "PERFORMANCE UNDERTAKING" means that certain Performance Undertaking, dated as of June 6, 2002, by Performance Guarantor in favor of Seller, substantially in the form of Exhibit XI, as the same may be amended, restated or otherwise modified from time to time. "PERSON" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "POOLED COMMERCIAL PAPER" means Commercial Paper notes of a Conduit subject to any particular pooling arrangement by such Conduit, but excluding Commercial Paper issued by such Conduit for a tenor and in an amount specifically requested by any Person in connection with any agreement effected by such Conduit. "POTENTIAL AMORTIZATION EVENT" means an event which, with the passage of any applicable cure period or the giving of notice, or both, would constitute an Amortization Event. "PRIME RATE" means, as to either Group, a rate per annum equal to the prime rate of interest announced from time to time by the applicable Co-Agent or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes. "PROPOSED REDUCTION DATE" has the meaning set forth in Section 1.3. "PURCHASE LIMIT" means $125,000,000. 64 "PURCHASE NOTICE" has the meaning set forth in Section 1.2. "PURCHASE PRICE" means, with respect to any Incremental Purchase of a Purchaser Interest, the amount paid to Seller for such Purchaser Interest which shall not exceed the least of (i) the amount requested by Seller in the applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the applicable purchase date and (iii) the excess, if any, of the Net Receivables Balance (less the Aggregate Reserves) on the applicable purchase date over the aggregate outstanding amount of Aggregate Capital determined as of the date of the most recent Monthly Report, taking into account such proposed Incremental Purchase. "PURCHASERS" means, collectively, the Conduits and the Liquidity Banks. "PURCHASER INTEREST" means, at any time, an undivided percentage interest (computed as set forth below) associated with a designated amount of Capital, selected pursuant to the terms and conditions hereof in (i) each Receivable arising prior to the time of the most recent computation or recomputation of such undivided interest, (ii) all Related Security with respect to each such Receivable, and (iii) all Collections with respect to, and other proceeds of, each such Receivable. Each such undivided percentage interest shall equal: C ---------------------- NRB - AR WHERE: C = the Capital of such Purchaser Interest. AR = the Aggregate Reserves. NRB = the Net Receivables Balance. Such undivided percentage interest shall be initially computed on its date of purchase. Thereafter, until the Amortization Date, each Purchaser Interest shall be automatically recomputed (or deemed to be recomputed) on each day prior to the Amortization Date. The variable percentage represented by any Purchaser Interest as computed (or deemed recomputed) as of the close of the business day immediately preceding the Amortization Date shall remain constant at all times thereafter. "PURCHASING LIQUIDITY BANK" has the meaning set forth in Section 12.1(b). "QUALIFYING LIQUIDITY BANK" means a Liquidity Bank with a rating of its short-term securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by Moody's. "RATABLE SHARE" means with respect to any Liquidity Bank, the ratio which its Commitment bears to the sum of the Commitments of all Liquidity Banks for the same Conduit. "RECEIVABLE" means any "Receivable" under and as defined in the Receivables Sale Agreement in which Seller now has or hereafter acquires any right, title or interest. Indebtedness and other rights and obligations arising from any one transaction, including, 65 without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether the account debtor or Seller treats such indebtedness, rights or obligations as a separate payment obligation. "RECEIVABLES SALE AGREEMENT" means that certain Receivables Sale Agreement, dated as of June 6, 2002, between Originators and Seller, as the same may be amended, restated or otherwise modified from time to time. "RECORDS" means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor. "REDUCTION NOTICE" has the meaning set forth in Section 1.3. "REDUCTION PERCENTAGE" means, for any Purchaser Interest acquired by the Liquidity Banks from Conduit for less than the Capital of such Purchaser Interest, a percentage equal to a fraction the numerator of which is the Conduit Transfer Price Reduction for such Purchaser Interest and the denominator of which is the Capital of such Purchaser Interest. "REGULATORY CHANGE" has the meaning set forth in Section 10.3(a). "REINVESTMENT" has the meaning set forth in Section 2.2. "RELATED SECURITY" means, with respect to any Receivable: (i) all "Related Security" under and as defined in the Receivables Sale Agreement in which Seller now has or hereafter acquires any right, title or interest, (ii) all of Seller's right, title and interest in, to and under the Receivables Sale Agreement in respect of such Receivable and all of Seller's right, title and interest in, to and under the Performance Undertaking, and (iii) all proceeds of any of the foregoing. "REQUIRED NOTICE PERIOD" means the number of days required notice set forth below applicable to the Aggregate Reduction indicated below: - ------------------------------------------ ------------------------------ Aggregate Reduction Required Notice Period ------------------- ---------------------- - ------------------------------------------ ------------------------------ less than $100,000,000 two Business Days - ------------------------------------------ ------------------------------ $100,000,000 to $125,000,000 five Business Days - ------------------------------------------ ------------------------------ 66 "RESPONSE DATE" has the meaning set forth in Section 1.5 of this Agreement. "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of Seller now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of stock of Seller, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of Seller now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of Seller now or hereafter outstanding, and (v) any payment of management fees by Seller (except for reasonable management fees to an Originator or its Affiliates in reimbursement of actual management services performed). "RPM CREDIT AGREEMENT" means that certain $500,000,000 Five-Year Credit Agreement dated as of July 14, 2000, as amended, restated or replaced from time to time, among RPM, the Lenders party thereto and The Chase Manhattan Bank, as administrative agent. "SELLER" has the meaning set forth in the preamble to this Agreement. "SELLER PARTIES" means, collectively, (a) Seller, (b) at any time that RPM is acting as Servicer or Performance Guarantor, RPM, and (c) at any time that Parent is acting as Servicer or Performance Guarantor, Parent. "SENIOR OFFICER" shall mean the chief executive officer, president, chief financial officer or vice president-treasurer of the Performance Guarantor. "SERVICER" means at any time the Person (which may be the Administrative Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables. "SERVICING FEE" has the meaning set forth in Section 8.6. "SETTLEMENT DATE" means (A) two (2) business days after each Monthly Reporting Date, and (B) the last day of the relevant Tranche Period in respect of each Purchaser Interest of the Liquidity Banks. "SETTLEMENT PERIOD" means (A) in respect of each Purchaser Interest of Conduit, the immediately preceding Accrual Period, and (B) in respect of each Purchaser Interest of the Liquidity Banks, the entire Tranche Period of such Purchaser Interest. "SUBSIDIARY" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability 67 company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of Servicer. "TERMINATING TRANCHE" has the meaning set forth in Section 4.3(b). "TRANCHE PERIOD" means, with respect to any Purchaser Interest held by a Liquidity Bank: (a) if Yield for such Purchaser Interest is calculated on the basis of the LIBO Rate, a period of one, two, three or six months, or such other period as may be mutually agreeable to the applicable Co-Agent and Seller, commencing on a Business Day selected by Seller or such Co-Agent pursuant to this Agreement. Such Tranche Period shall end on the day in the applicable succeeding calendar month which corresponds numerically to the beginning day of such Tranche Period, PROVIDED, HOWEVER, that if there is no such numerically corresponding day in such succeeding month, such Tranche Period shall end on the last Business Day of such succeeding month; or (b) if Yield for such Purchaser Interest is calculated on the basis of the Prime Rate, a period commencing on a Business Day selected by Seller, PROVIDED that no such period shall exceed one month. If any Tranche Period would end on a day which is not a Business Day, such Tranche Period shall end on the next succeeding Business Day, PROVIDED, HOWEVER, that in the case of Tranche Periods corresponding to the LIBO Rate, if such next succeeding Business Day falls in a new month, such Tranche Period shall end on the immediately preceding Business Day. In the case of any Tranche Period for any Purchaser Interest which commences before the Amortization Date and would otherwise end on a date occurring after the Amortization Date, such Tranche Period shall end on the Amortization Date. The duration of each Tranche Period which commences after the Amortization Date shall be of such duration as selected by the applicable Co-Agent. "TRANSACTION DOCUMENTS" means, collectively, this Agreement, each Purchase Notice, the Receivables Sale Agreement, each Collection Account Agreement, the Performance Undertaking, the Fee Letters, the Liquidity Agreements, the Subordinated Notes (as defined in the Receivables Sale Agreement) and all other instruments, documents and agreements required to be executed and delivered pursuant hereto. "UCC" means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction. "YIELD" means for each respective Tranche Period relating to Purchaser Interests of the Liquidity Banks, an amount equal to the product of the applicable Discount Rate for each Purchaser Interest multiplied by the Capital of such Purchaser Interest for each day elapsed during such Tranche Period, annualized on a 360 day basis. 68 "YIELD RESERVE" means for any Calculation Period, the greater of (A) 1.5% or (B) the product (expressed as a percentage) of (i) the sum of (a) 1.0% plus (b) the product of 1.5 times the Prime Rate as of the immediately preceding Cut-Off Date times (ii) a fraction, the numerator of which is the highest Days Sales Outstanding for the most recent 12 Calculation Periods and the denominator of which is 360. ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE CONSTRUED IN ACCORDANCE WITH GAAP. ALL TERMS USED IN ARTICLE 9 OF THE UCC IN THE STATE OF ILLINOIS, AND NOT SPECIFICALLY DEFINED HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9. 69 EX-10.3 5 l96562aexv10w3.txt EXHIBIT 10.3 Exhibit 10.3 PERFORMANCE UNDERTAKING This Performance Undertaking (this "UNDERTAKING"), dated as of June 6, 2002, is executed by RPM, Inc., an Ohio corporation ("RPM" or the "PERFORMANCE GUARANTOR") in favor of RPM Funding Corporation, a Delaware corporation (together with its successors and assigns, "RECIPIENT"). RECITALS Consolidated Coatings Corporation, an Ohio corporation, Weatherproofing Technologies, Inc., a Delaware corporation, DAP Products Inc., a Delaware corporation, The Testor Corporation, an Ohio corporation, Zinsser Co., Inc., a New Jersey corporation, Tremco Incorporated, an Ohio corporation, Rust-Oleum Corporation, an Illinois corporation, The Euclid Chemical Performance Guarantor , an Ohio corporation, Republic Powdered Metals, Inc., an Ohio corporation (all of the foregoing, collectively, the "ORIGINATORS"), and Recipient have entered into a Receivables Sale Agreement, dated as of June 6, 2002 (as amended, restated or otherwise modified from time to time, the "SALE AGREEMENT"), pursuant to which the Originators are selling and contributing to Recipient their respective right, title and interest in their accounts receivable and certain related rights subject to the terms and conditions contained therein. Recipient, RPM, as Servicer, Jupiter Securitization Corporation, Blue Ridge Asset Funding Corporation, Bank One, NA (Main Office Chicago), individually, as Jupiter Agent and as Administrative Agent, and Wachovia Bank, National Association, individually and as Blue Ridge Agent, have entered into a Receivables Purchase Agreement, dated as of June 6, 2002 (as amended, restated or otherwise modified from time to time, the "PURCHASE AGREEMENT"), pursuant to which Recipient is selling undivided interests in its assets to the Administrative Agent for the benefit of the Purchasers subject to the terms and conditions contained therein. Performance Guarantor owns, directly or indirectly, one hundred percent (100%) of the Equity Interests of each of the Originators, and Performance Guarantor and the Originators, collectively, own, directly or indirectly, 100% of the Equity Interests of Recipient. As a result, each of the Originators (and, accordingly, Performance Guarantor) is expected to receive substantial direct or indirect benefits from the Originators' sale and contribution of accounts receivable to Recipient pursuant to the Sale Agreement (which benefits are hereby acknowledged). As an inducement for Recipient to acquire and to continue to acquire the Originators' accounts receivable pursuant to the Sale Agreement, Performance Guarantor has agreed to guarantee the due and punctual performance by each of the Originators of its respective obligations under the Sale Agreement. AGREEMENT NOW, THEREFORE, Performance Guarantor hereby agrees as follows: Section 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein shall have the meanings attributed thereto in the Sale Agreement or the Purchase Agreement, and "GUARANTEED OBLIGATIONS" means, collectively, all covenants, agreements, terms, conditions and indemnities to be performed and observed by any of the Originators under and pursuant to the Sale Agreement and each other document executed and delivered by any of them pursuant to the Sale Agreement, including, without limitation, the due and punctual payment of all sums which are or may become due and owing by any of the Originators under the Sale Agreement, whether for fees, expenses (including counsel fees), indemnified amounts or otherwise, whether upon any termination or for any other reason. Section 2. GUARANTY OF PERFORMANCE OF GUARANTEED OBLIGATIONS. Performance Guarantor hereby guarantees to Recipient, the full and punctual payment and performance by each of the Originators of its Guaranteed Obligations. This Undertaking is an absolute, unconditional and continuing guaranty of the full and punctual performance of all Guaranteed Obligations under the Sale Agreement, and each other document executed and delivered by any of the Originators pursuant to the Sale Agreement and is in no way conditioned upon any requirement that Recipient first attempt to collect any amounts owing by the Originators to Recipient, any Agent or any Purchaser from any other Person or resort to any collateral security, any balance of any deposit account or credit on the books of Recipient, any Agent or any Purchaser in favor of any of the Originators or any other Person or other means of obtaining payment. Should any of the Originators default in the payment or performance of any of its Guaranteed Obligations, Recipient (or its assigns) may cause the immediate performance by Performance Guarantor of such Guaranteed Obligations and cause any payment of Guaranteed Obligations to become forthwith due and payable to Recipient (or its assigns) by Performance Guarantor, without demand or notice of any nature (other than as expressly provided herein), all of which are hereby expressly waived by Performance Guarantor. Section 3. PERFORMANCE GUARANTOR'S FURTHER AGREEMENTS TO PAY. Performance Guarantor further agrees, as the principal obligor and not as a guarantor only, to pay to Recipient (and its assigns), forthwith upon demand in funds immediately available to Recipient, all reasonable costs and expenses (including court costs and reasonable legal expenses) incurred or expended by Recipient in connection with the Guaranteed Obligations, this Undertaking and the enforcement thereof, together with interest on amounts recoverable under this Undertaking from the time when such amounts become due until payment, at a rate of interest (computed for the actual number of days elapsed based on a 360-day year) equal to the Prime Rate plus 2% per annum, such rate of interest changing when and as the Prime Rate changes. Section 4. WAIVERS BY PERFORMANCE GUARANTOR. Performance Guarantor waives notice of acceptance of this Undertaking, notice of any action taken or omitted by Recipient (or its assigns) in reliance on this Undertaking, and any requirement that Recipient (or its assigns) be diligent or prompt in making demands under this Undertaking, giving notice of any Termination Event, Amortization Event, other default or omission by any of the Originators or asserting any other rights of Recipient under this Undertaking. Performance Guarantor warrants that it has adequate means to obtain from the Originators, on a continuing basis, information concerning their financial condition, and that it is not relying on Recipient to provide such information, now 2 or in the future. Performance Guarantor also irrevocably waives all defenses (i) that at any time may be available in respect of the Guaranteed Obligations by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or hereafter in effect or (ii) that arise under the law of suretyship, including impairment of collateral. Recipient (and its assigns) shall be at liberty, without giving notice to or obtaining the assent of Performance Guarantor and without relieving Performance Guarantor of any liability under this Undertaking, to deal with each of the Originators and with each other party who now is or after the date hereof becomes liable in any manner for any of the Guaranteed Obligations, in such manner as Recipient in its sole discretion deems fit, and to this end Performance Guarantor agrees that the validity and enforceability of this Undertaking, including without limitation, the provisions of Section 7 hereof, shall not be impaired or affected by any of the following: (a) any extension, modification or renewal of, or indulgence with respect to, or substitutions for, the Guaranteed Obligations or any part thereof or any agreement relating thereto at any time; (b) any failure or omission to enforce any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto, or any collateral securing the Guaranteed Obligations or any part thereof; (c) any waiver of any right, power or remedy or of any Termination Event, Amortization Event, or default with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any other obligation of any Person or entity with respect to the Guaranteed Obligations or any part thereof; (e) the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to the Guaranteed Obligations or any part thereof; (f) the application of payments received from any source to the payment of any payment obligations of any Originator or any part thereof or amounts which are not covered by this Undertaking even though Recipient (or its assigns) might lawfully have elected to apply such payments to any part or all of the payment obligations of Originators or to amounts which are not covered by this Undertaking; (g) the existence of any claim, setoff or other rights which Performance Guarantor may have at any time against Originators in connection herewith or any unrelated transaction; (h) any assignment or transfer of the Guaranteed Obligations or any part thereof; or (i) any failure on the part of Originators to perform or comply with any term of the Sale Agreement or any other document executed in connection therewith or delivered thereunder, all whether or not Performance Guarantor shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (i) of this Section 4. Section 5. UNENFORCEABILITY OF GUARANTEED OBLIGATIONS AGAINST ORIGINATORS. Notwithstanding (a) any change of ownership of Originators or the insolvency, bankruptcy or any other change in the legal status of Originators; (b) any change in or the imposition of any law, decree, regulation or other governmental act which does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the Guaranteed Obligations; (c) the failure of any of the Originators or Performance Guarantor to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with the Guaranteed Obligations or this Undertaking, or to take any other action required in connection with the performance of all obligations pursuant to the Guaranteed Obligations or this Undertaking; or (d) if any of the moneys included in the Guaranteed Obligations have become irrecoverable from any of the Originators for any other reason other than final payment in full of the payment Guaranteed Obligations in 3 accordance with their terms, this Undertaking shall nevertheless be binding on Performance Guarantor. This Undertaking shall be in addition to any other guaranty or other security for the Guaranteed Obligations, and it shall not be rendered unenforceable by the invalidity of any such other guaranty or security. In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of any of the Originators or for any other reason with respect to any of the Originators, all such amounts then due and owing with respect to the Guaranteed Obligations under the terms of the Sale Agreement, or any other agreement evidencing, securing or otherwise executed in connection with the Guaranteed Obligations, shall be immediately due and payable by Performance Guarantor. Section 6. REPRESENTATIONS; WARRANTIES AND COVENANTS. 6.1. REPRESENTATIONS AND WARRANTIES. Performance Guarantor hereby represents and warrants to Recipient that: (a) EXISTENCE AND POWER. Performance Guarantor is duly organized, validly existing and in good standing under the laws of its state of organization. Performance Guarantor is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect. (b) POWER AND AUTHORITY; DUE AUTHORIZATION, EXECUTION AND DELIVERY. The execution and delivery by Performance Guarantor of this Undertaking, and the performance of its obligations hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Undertaking has been duly executed and delivered by Performance Guarantor. (c) NO CONFLICT. The execution and delivery by Performance Guarantor of this Undertaking, and the performance of its obligations hereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of Performance Guarantor or its Subsidiaries (except as created under the Transaction Documents) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. (d) GOVERNMENTAL AUTHORIZATION. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by Performance Guarantor of this Undertaking and the performance of its obligations hereunder. 4 (e) BINDING EFFECT. This Undertaking constitutes the legal, valid and binding obligation of Performance Guarantor, enforceable against Performance Guarantor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (f) NO ACTIONS; SUITS. There are no actions, suits or proceedings pending, or to the best of Performance Guarantor's knowledge, threatened, against or affecting Performance Guarantor, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Performance Guarantor is not in default with respect to any order of any court, arbitrator or governmental body. (g) MATERIAL ADVERSE EFFECT. Since May 31, 2001, no event has occurred that would have a Material Adverse Effect. 6.2. FINANCIAL REPORTING COVENANT. Performance Guarantor hereby covenants and agrees with Recipient that Performance Guarantor will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Recipient and the Agents: (a) ANNUAL REPORTING. As soon as available and in any event within 90 days after the end of each fiscal year of the Performance Guarantor, consolidated statements of income, shareholders' equity and cash flows of the Performance Guarantor and its Subsidiaries for such year and the related consolidated balance sheet as at the end of such year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, and accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of the Performance Guarantor and its Subsidiaries as at the end of, and for, such fiscal year; (b) QUARTERLY REPORTING. As soon as available and in any event within 60 days after the end of each fiscal quarter of the Performance Guarantor other than the last fiscal quarter in each fiscal year, consolidated statements of income, shareholders' equity and cash flows of the Performance Guarantor and its Subsidiaries for such fiscal quarter and for the portion of the fiscal year ended at the end of such fiscal quarter, and the related consolidated balance sheet as at the end of such fiscal quarter. (c) COMPLIANCE CERTIFICATE. Together with the financial statements required hereunder, a compliance certificate in substantially the form of EXHIBIT IV to the Sale Agreement (replacing references therein to "Originator" with references to "Performance Guarantor") signed by Performance Guarantor's Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be. (d) SHAREHOLDERS STATEMENTS AND REPORTS. Promptly upon the mailing thereof to the shareholders of the Performance Guarantor generally, copies of all financial statements, reports and proxy statements so mailed. 5 Section 7. SUBROGATION; SUBORDINATION. Notwithstanding anything to the contrary contained herein, until the Guaranteed Obligations are paid in full, Performance Guarantor: (a) will not enforce or otherwise exercise any right of subrogation to any of the rights of Recipient, any Agent or any Purchaser against any of the Originators, (b) hereby waives all rights of subrogation (whether contractual, under Section 509 of the United States Bankruptcy Code, at law or in equity or otherwise) to the claims of Recipient, the Agents and the Purchasers against any of the Originators and all contractual, statutory or legal or equitable rights of contribution, reimbursement, indemnification and similar rights and "claims" (as such term is defined in the United States Bankruptcy Code) which Performance Guarantor might now have or hereafter acquire against any of the Originators that arise from the existence or performance of Performance Guarantor's obligations hereunder, (c) will not claim any setoff, recoupment or counterclaim against any of the Originators in respect of any liability of Performance Guarantor to any of the Originators and (d) waives any benefit of and any right to participate in any collateral security which may be held by any Agent or any Purchaser. The payment of any amounts due with respect to any indebtedness of any of the Originators now or hereafter owed to Performance Guarantor is hereby subordinated to the prior payment in full of all of the Guaranteed Obligations. Performance Guarantor agrees that, after the occurrence of any default in the payment or performance of any of the Guaranteed Obligations, Performance Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of any of the Originators to Performance Guarantor until all of the Guaranteed Obligations shall have been paid and performed in full. If, notwithstanding the foregoing sentence, Performance Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness while any Guaranteed Obligations are still unperformed or outstanding, such amounts shall be collected, enforced and received by Performance Guarantor as trustee for Recipient (and its assigns) and be paid over to Recipient (or its assigns) on account of the Guaranteed Obligations without affecting in any manner the liability of Performance Guarantor under the other provisions of this Undertaking. The provisions of this Section 7 shall be supplemental to and not in derogation of any rights and remedies of Recipient under any separate subordination agreement which Recipient may at any time and from time to time enter into with Performance Guarantor. Section 8. TERMINATION OF PERFORMANCE UNDERTAKING. Performance Guarantor's obligations hereunder shall continue in full force and effect until all Aggregate Unpaids (as defined in the Purchase Agreement) are finally paid and satisfied in full and the Purchase Agreement is terminated, PROVIDED THAT this Undertaking shall continue to be effective or shall be reinstated, as the case may be, if at any time payment or other satisfaction of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, or reorganization of any of the Originators or otherwise, as though such payment had not been made or other satisfaction occurred, whether or not Recipient (or its assigns) is in possession of this Undertaking. No invalidity, irregularity or unenforceability by reason of the federal bankruptcy code or any insolvency or other similar law, or any law or order of any government or agency thereof purporting to reduce, amend or otherwise affect the Guaranteed Obligations shall impair, affect, be a defense to or claim against the obligations of Performance Guarantor under this Undertaking. Section 9. EFFECT OF BANKRUPTCY. This Performance Undertaking shall survive the insolvency of any of the Originators and the commencement of any case or proceeding by or against any of the Originators under the federal bankruptcy code or other federal, state or other 6 applicable bankruptcy, insolvency or reorganization statutes. No automatic stay under the federal bankruptcy code with respect to any of the Originators or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes to which any of the Originators is subject shall postpone the obligations of Performance Guarantor under this Undertaking. Section 10. SETOFF. Regardless of the other means of obtaining payment of any of the Guaranteed Obligations, Recipient is (and from and after the occurrence of an Amortization Event under and as defined in the Purchase Agreement which is not waived in writing by the Agents, the Administrative Agent is) hereby authorized at any time and from time to time, without notice to Performance Guarantor (any such notice being expressly waived by Performance Guarantor) and to the fullest extent permitted by law, to set off and apply any deposits and other sums against the obligations of Performance Guarantor under this Undertaking, whether or not Recipient (or, if applicable, the Administrative Agent) shall have made any demand under this Undertaking and although such obligations may be contingent or unmatured. Section 11. TAXES. All payments to be made by Performance Guarantor hereunder shall be made free and clear of any deduction or withholding. If Performance Guarantor is required by law to make any deduction or withholding on account of tax or otherwise from any such payment, the sum due from it in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, Recipient receive a net sum equal to the sum which they would have received had no deduction or withholding been made. Section 12. FURTHER ASSURANCES. Performance Guarantor agrees that it will from time to time, at the request of Recipient (or its assigns), provide information relating to the business and affairs of Performance Guarantor as Recipient may reasonably request. Performance Guarantor also agrees to do all such things and execute all such documents as Recipient (or its assigns) may reasonably consider necessary or desirable to give full effect to this Undertaking and to perfect and preserve the rights and powers of Recipient hereunder. Section 13. SUCCESSORS AND ASSIGNS. This Performance Undertaking shall be binding upon Performance Guarantor, its successors and permitted assigns, and shall inure to the benefit of and be enforceable by Recipient and its successors and assigns. Performance Guarantor may not assign or transfer any of its obligations hereunder. Recipient may not assign or transfer any of its rights hereunder except that Recipient may pledge (and hereby notifies the Performance Guarantor that it has pledged) Recipient's right, title and interest hereunder to the Administrative Agent, for the benefit of the Purchasers, under the Purchase Agreement. Section 14. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this Undertaking nor consent to any departure by Performance Guarantor therefrom shall be effective unless the same shall be in writing and signed by Recipient, the Agents and Performance Guarantor. No failure on the part of Recipient to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. 7 Section 15. NOTICES. All notices and other communications provided for hereunder shall be made in writing and shall be addressed as follows: if to Performance Guarantor, at the address set forth beneath its signature hereto, and if to Recipient, at the addresses set forth beneath its signature hereto, or at such other addresses as each of Performance Guarantor or any Recipient may designate in writing to the other. Each such notice or other communication shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (c) if given by any other means, when received at the address specified in this Section 15. Section 16. GOVERNING LAW. THIS UNDERTAKING SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS. Section 17. CONSENT TO JURISDICTION. EACH OF PERFORMANCE GUARANTOR AND RECIPIENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN COOK COUNTY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS UNDERTAKING, THE AGREEMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION THEREWITH OR DELIVERED THEREUNDER AND EACH OF PERFORMANCE GUARANTOR AND RECIPIENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. Section 18. BANKRUPTCY PETITION. Performance Guarantor hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior Indebtedness of Recipient, it will not institute against, or join any other Person in instituting against, Recipient any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Section 19. MISCELLANEOUS. This Undertaking constitutes the entire agreement of Performance Guarantor with respect to the matters set forth herein. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Undertaking shall be in addition to any other guaranty of or collateral security for any of the Guaranteed Obligations. The provisions of this Undertaking are severable, and in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of Performance Guarantor hereunder would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of Performance Guarantor's liability under this Undertaking, then, notwithstanding any other provision of this Undertaking to the contrary, the amount of such liability shall, without any further action by Performance Guarantor or Recipient, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding. Any provisions of this 8 Undertaking which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise specified, references herein to "SECTION" shall mean a reference to sections of this Undertaking. (signature page follows) 9 IN WITNESS WHEREOF, Performance Guarantor has caused this Undertaking to be executed and delivered as of the date first above written. RPM, INC. By: /s/ P. Kelly Tompkins -------------------------------- Name: P. Kelly Tompkins ------------------------------ Title: Vice President, General Counsel and Secretary ----------------------------- ADDRESS FOR NOTICES: RPM, Inc. 2628 Pearl Road P.O. Box 777 Medina, Ohio 44258 Attention: Treasurer Phone: (330) 273-8837 Fax: (330) 225-6574 ACKNOWLEDGED AND AGREED: RPM FUNDING CORPORATION By: /s/ P. Kelly Tompkins ----------------------------------- Name: P. Kelly Tompkins --------------------------------- Title: Vice President, General Counsel and Secretary -------------------------------- 10 EX-10.4 6 l96562aexv10w4.txt EXHIBIT 10.4 Exhibit 10.4 =============================================================================== RPM INTERNATIONAL, INC. ---------------- ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT ---------------- Dated as of August 23, 2002 Re: Note Purchase Agreement dated as of November 15, 2001 and $15,000,000 6.12% Senior Notes, Series A, due November 15, 2004 and $10,000,000 6.61% Senior Notes, Series B, due November 15, 2006 and $30,000,000 7.30% Senior Notes, Series C, due November 15, 2008 =============================================================================== TABLE OF CONTENTS
SECTION HEADING PAGE SECTION 1. DESCRIPTION OF ASSUMED OBLIGATIONS AND REORGANIZATION..................................1 SECTION 2. ASSIGNMENT AND ASSUMPTION; INDEMNIFICATION; CONSENT....................................2 Section 2.1. Assignment of Obligations..............................................................2 Section 2.2. Assumption of Obligations..............................................................2 Section 2.3. Indemnification........................................................................2 Section 2.4. Consent................................................................................2 SECTION 3. EFFECTIVE DATE.........................................................................2 SECTION 4. CONDITIONS TO ASSIGNMENT AND ASSUMPTION................................................3 Section 4.1. Representations and Warranties.........................................................3 Section 4.2. Performance; No Default................................................................3 Section 4.3. Compliance Certificates................................................................3 Section 4.4. Opinion of Counsel.....................................................................3 Section 4.5. Payment of Fee.........................................................................3 Section 4.6. Payment of Special Counsel Fees........................................................4 Section 4.7. Private Placement Number...............................................................4 Section 4.8. Proceedings and Documents..............................................................4 Section 4.9. Changes in Corporate Structure.........................................................4 SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................4 Section 5.1. Organization; Power and Authority......................................................4 Section 5.2. Authorization, etc.....................................................................4 Section 5.3. Compliance with Laws, Other Instruments, etc...........................................5 Section 5.4. Governmental Authorizations, etc.......................................................5 Section 5.5. Disclosure.............................................................................5 Section 5.6. Other Indebtedness.....................................................................5 Section 5.7. Additional Representations and Warranties..............................................5 Section 5.8. Reorganization.........................................................................5 SECTION 6. AMENDMENTS TO NOTE PURCHASE AGREEMENT..................................................6 Section 6.1. Amendment to Schedule B................................................................6 Section 6.2. Amendment to Exhibit 1.................................................................6 SECTION 7. MISCELLANEOUS..........................................................................6
-i- Section 7.1. Successors and Assigns.................................................................6 Section 7.2. Severability...........................................................................7 Section 7.3. Counterparts...........................................................................7 Section 7.4. Governing Law..........................................................................7 Signatures........................................................................................................8
SCHEDULE A -- NAMES OF HOLDERS SCHEDULE 5.15 -- EXISTING DEBTS; FUTURE LIENS EXHIBIT 1(a) -- Form of 6.12% Senior Note, Series A, due November 15, 2004 EXHIBIT 1(b) -- Form of 6.61% Senior Note, Series B, due November 15, 2006 EXHIBIT 1(c) -- Form of 7.30% Senior Note, Series C, due November 15, 2008 EXHIBIT 4.4 -- Form of Opinion of Counsel to the Company -ii- RPM INTERNATIONAL, INC. 2628 Pearl Road Medina, Ohio 44258 Re: Note Purchase Agreement dated as of November 15, 2001 and $15,000,000 6.12% Senior Notes, Series A, due November 15, 2004 and $10,000,000 6.61% Senior Notes, Series B, due November 15, 2006 and $30,000,000 7.30% Senior Notes, Series C, due November 15, 2008 Dated as of August 23, 2002 TO THE HOLDERS OF THE CAPTIONED NOTES OF RPM, INC. LISTED IN THE ATTACHED SCHEDULE A: Ladies and Gentlemen: RPM INTERNATIONAL, INC., a Delaware corporation (the "Company"), and RPM, Inc., an Ohio corporation ("RPM"), hereby agree with the holders of the Notes (as defined below) listed in the attached Schedule A as follows: SECTION 1. DESCRIPTION OF ASSUMED OBLIGATIONS AND REORGANIZATION. Pursuant to a Note Purchase Agreement dated as of November 15, 2001 (the Note Purchase Agreement as amended by this Agreement (and as assumed by the Company pursuant hereto) and as further amended or supplemented from time to time, the "Note Purchase Agreement") between RPM and certain institutional investors named therein, RPM heretofore issued and sold $15,000,000 6.12% Senior Notes, Series A, due November 15, 2004 and $10,000,000 6.61% Senior Notes, Series B, due November 15, 2006 and $30,000,000 7.30% Senior Notes, Series C, due November 15, 2008 (as assumed by the Company pursuant to this Agreement, collectively the "Notes"). Capitalized terms used herein without definition are used as defined in Schedule B to the Note Purchase Agreement; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Assignment, Assumption and Amendment Agreement (hereinafter this or the "Agreement"). Pursuant to a proposed corporate reorganization (i) the shareholders of RPM will transfer all of the outstanding shares of capital stock of RPM to the Company in exchange for all of the outstanding shares of capital stock of the Company, (ii) RPM will distribute to the Company RPM International, Inc. Assignment, Assumption and Amendment Agreement substantially all of its assets and (iii) RPM will become a Subsidiary of the Company (the "Reorganization"). The consummation of the Reorganization requires the prior written consent of the holders of Notes, and as a condition to granting such prior written consent, the holders of Notes have required, among other things, that the Company enter into this Agreement. SECTION 2. ASSIGNMENT AND ASSUMPTION; INDEMNIFICATION; CONSENT. Section 2.1. Assignment of Obligations. RPM hereby irrevocably and unconditionally assigns (the "Assignment") on and as of the Effective Date all of its right, title and interest in and to the Note Purchase Agreement and its obligations under the Notes to the Company. Section 2.2. Assumption of Obligations. The Company for good and valuable consideration, the receipt of which is hereby acknowledged, for the benefit of each of the holders from time to time of the Notes, hereby irrevocably and unconditionally assumes and agrees to be bound by, and comply with on and as of the Effective Date, each of the covenants, terms and provisions of the Note Purchase Agreement and the Notes, including without limitation the payment in full of the principal of, interest on, and Make-Whole Amount, if any, from time to time due thereon and outstanding thereunder as fully and as completely as if the Company were the original issuer thereunder and a party thereto (including the assumption of all accrued and unpaid interest on the Notes from and after May 15, 2002, the date of the last interest payment made by RPM) (hereinafter referred to as the "Assumption"). Section 2.3. Indemnification. The Company and RPM shall pay, indemnify and save harmless each holder of Notes from and against any and all liabilities, costs and expenses, claims, demands or judgments arising from or out of the assumption by the Company of the obligations of RPM under the Notes and the Note Purchase Agreement, including, without limitation, any income tax owed by the holders of Notes as a result of the issuance of new Notes by the Company in exchange for the Notes originally issued by RPM constituting a taxable event for income tax purposes. The indemnification contained in this Section 2.3 shall survive the payment or transfer of any Note and the termination of the Note Purchase Agreement. Section 2.4. Consent. Upon satisfaction of the conditions set forth in Sections 3 and 4 hereof, the holders of Notes, as evidenced by their execution and delivery of this Agreement, hereby consent to the Reorganization and the Assignment and Assumption as evidenced by this Agreement. SECTION 3. EFFECTIVE DATE. The Assignment and the Assumption shall become effective on the date when the merger of RPM Merger Sub, an Ohio corporation and wholly owned subsidiary of the Company with and into RPM is effective (the "Effective Date"); provided that the conditions set forth in Section 4 have been satisfied on or prior to the Effective Date and that the Company has delivered to Chapman and Cutler, your special counsel, on or before the Effective Date new Notes executed by the Company of the same series and in a principal amount equal to the unpaid -2- RPM International, Inc. Assignment, Assumption and Amendment Agreement principal amount of the Notes originally issued by RPM, payable to the same holders (or their nominees). The new Notes shall bear interest at the same rate, shall have the same maturity and the same semi-annual payments of interest and payments of principal as the original Notes and shall be dated May 15, 2002, the date of the most recent interest payment by RPM. The Notes originally issued by RPM shall be deemed cancelled on the Effective Date and each holder agrees to promptly return to the Company the original Notes issued by RPM following the Effective Date. SECTION 4. CONDITIONS TO ASSIGNMENT AND ASSUMPTION. The assumption of the obligations of RPM under the Note Purchase Agreement and the Notes pursuant to this Agreement and the consent of the holders granted pursuant to Section 2.4 hereof are subject to the satisfaction, on or prior to the Effective Date, of the following terms and conditions set forth in this Section 4: Section 4.1. Representations and Warranties. The representations and warranties of the Company in this Agreement shall be true and correct when made and on the Effective Date. Section 4.2. Performance; No Default. The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it on or prior to the Effective Date, and after giving effect to the issue of the new Notes by the Company, no Default or Event of Default shall have occurred and be continuing. Section 4.3. Compliance Certificates. (a) Officer's Certificate of the Company. The Company shall have delivered to you an Officer's Certificate, dated the Effective Date, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled. (b) Secretary's Certificate of the Company. The Company shall have delivered to you a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and the Agreement. Section 4.4. Opinion of Counsel. Each holder shall have received a opinion in form and substance satisfactory to such holder, dated the Effective Date (a) from Calfee, Halter & Griswold, counsel for the Company, covering the matters set forth in Exhibit 4.4 and covering such other matters incident to the transactions contemplated hereby as the holder or the holders' counsel may reasonably request (and the Company hereby instruct its counsel to deliver such opinion to each holder). Section 4.5. Payment of Fee. On or before the Effective Date, the Company shall have paid to each holder of Notes a fee equal to 5 basis points on the aggregate principal amount of the Notes held by such holder. -3- RPM International, Inc. Assignment, Assumption and Amendment Agreement Section 4.6. Payment of Special Counsel Fees. Without limiting the provisions of the Note Purchase Agreement, the Company shall have paid, on or before the Effective Date, the fees, charges and disbursements of Chapman and Cutler, your special counsel to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Effective Date. Section 4.7. Private Placement Number. A Private Placement number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for the new Notes. Section 4.8. Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. Section 4.9. Changes in Corporate Structure. Other than the transactions contemplated in connection with the Reorganization, neither the Company nor RPM has changed its jurisdiction of incorporation or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements of RPM furnished to the holders of the Notes. SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each holder that: Section 5.1. Organization; Power and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and assume the obligations of RPM under the Note Purchase Agreement and the Notes and to perform the provisions hereof and thereof. Section 5.2. Authorization, etc. This Agreement and the assumption of the obligations of RPM under the Note Purchase Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, this Agreement has been duly executed and delivered by the Company, and this Agreement and the Note Purchase Agreement after giving effect to the Assumption constitute, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting -4- RPM International, Inc. Assignment, Assumption and Amendment Agreement the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 5.3. Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by the Company of this Agreement and the assumption of the obligations of RPM under the Note Purchase Agreement and the Notes will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any law, statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. Section 5.4. Governmental Authorizations, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the assumption of the obligations of RPM under the Note Purchase Agreement and the Notes. Section 5.5. Disclosure. The Company and/or RPM have delivered to each holder written material relating to the transactions contemplated hereby. This Agreement, the documents, certificates or other writings delivered to the holders by or on behalf of the Company or RPM in connection with the transactions contemplated hereby, taken as a whole, do not contain any untrue statement of a Material fact or omit to state any Material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Section 5.6. Other Indebtedness. All Debt of RPM outstanding on the Effective Date (other than Debt having an unpaid principal amount not in excess of $2,000,000 in any one case and $10,000,000 in the aggregate for all such Debt) will be assigned by RPM to the Company and such Debt shall be assumed by the Company. Section 5.7. Additional Representations and Warranties. Each of the representations and warranties set forth in Section 5 of the Note Purchase Agreement is true and correct with the same force and effect as if each such representation or warranty were fully set forth herein except (i) for changes in the Schedule of Debt of RPM which shall be amended to read as set forth in Schedule 5.15 to this Agreement and as of the Effective Date there shall be no Material change in the amount of such Debt, and (ii) changes in the Schedule of Subsidiaries (Schedule 5.4) resulting from ordinary course mergers and dissolution of certain immaterial Subsidiaries. Section 5.8. Reorganization. As of the Effective Date, the Reorganization will have been duly authorized by all necessary corporate action on the part of the Company and RPM, as the case may be, and all necessary approvals by the stockholders of the Company and RPM, as the case may be, will have been obtained and the Reorganization will not violate any provisions -5- RPM International, Inc. Assignment, Assumption and Amendment Agreement of any law or any order of any court or governmental authority or agency and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under the Articles of Incorporation or By-laws of the Company or RPM, as the case may be, or any indenture or other agreement or instrument to which the Company or RPM, as the case may be, is a party or by which it may be bound or result in the imposition of any Liens or encumbrances on any property of the Company or RPM, as the case may be. SECTION 6. AMENDMENTS TO NOTE PURCHASE AGREEMENT. Upon the execution and delivery of this Agreement, the Note Purchase Agreement shall be and hereby is amended as follows: Section 6.1. Amendment to Schedule B. (a) The following definitions contained in Schedule B to the Note Purchase Agreement shall be and are hereby amended in their entirety and restated as follows: "Company" means RPM International, Inc., a Delaware corporation. "Notes" shall have the meaning assigned thereto in Section 1 hereof, as amended by the Assignment and Assumption and as hereafter amended from time to time. (b) Schedule B to the Note Purchase Agreement shall be and is hereby amended by the addition thereto of the following new definitions: "Agreement" shall mean the Note Purchase Agreement dated as of November 15, 2001 between RPM, Inc. and the institutional investors named therein, as amended by the Assignment and Assumption and as hereafter amended from time to time. "Assignment and Assumption" shall mean that certain Assignment, Assumption and Amendment Agreement dated as of August 23, 2002 by and among the Company, RPM, Inc. and the holders of the Notes. "RPM, Inc." shall mean RPM, Inc., an Ohio corporation. Section 6.2. Amendment to Exhibit 1. Exhibits 1(a), 1(b) and 1(c) to the Note Purchase Agreement shall be and hereby are amended in their entirety and restated to read as set forth in Exhibits 1(a), 1(b) and 1(c) to this Agreement. SECTION 7. MISCELLANEOUS. Section 7.1. Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns and inure to the benefit of each successive holder of a Note whether so expressed or not. -6- RPM International, Inc. Assignment, Assumption and Amendment Agreement Section 7.2. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. Section 7.3. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by fewer than all, but together signed by all, of the parties hereto. Section 7.4. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. * * * * * - 7 - RPM International, Inc. Assignment, Assumption and Amendment Agreement The execution hereof by the Company and RPM shall constitute a contract between the Company and RPM for the uses and purposes hereinabove set forth. This Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one agreement. Very truly yours, RPM INTERNATIONAL, INC. By /s/ Keith R. Smiley ----------------------------------------- Name: Keith R. Smiley Title: Treasurer RPM, INC. By /s/ Keith R. Smiley ----------------------------------------- Name: Keith R. Smiley Title: Vice President, Treasurer - 8 - RPM International, Inc. Assignment, Assumption and Amendment Agreement Accepted as of the first date written above. ALLSTATE LIFE INSURANCE COMPANY By /s/ Jerry D. Zinkula By /s/ Daniel C. Leimbach Authorized Signatories RPM International, Inc. Assignment, Assumption and Amendment Agreement Accepted as of the first date written above. ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK By /s/ Jerry D. Zinkula By /s/ Daniel C. Leimbach Authorized Signatories RPM International, Inc. Assignment, Assumption and Amendment Agreement Accepted as of the first date written above. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY By /s/ Mark W. Poeppelman Name: Mark W. Poeppelman Title: Vice President RPM International, Inc. Assignment, Assumption and Amendment Agreement Accepted as of the first date written above. NATIONWIDE LIFE INSURANCE COMPANY By /s/ Mark W. Poeppelman Name: Mark W. Poeppelman Title: Vice President RPM International, Inc. Assignment, Assumption and Amendment Agreement Accepted as of the first date written above. AMERICAN HERITAGE LIFE INSURANCE COMPANY By /s/ Jerry D. Zinkula By /s/ Daniel C. Leimbach Authorized Signatories RPM International, Inc. Assignment, Assumption and Amendment Agreement Accepted as of the first date written above. J. ROMEO & CO., as nominee for MONY Life Insurance Company By /s/ Michael Kurzyna ------------------------------ Name: Michael Kurzyna Title: Vice President NAMES OF HOLDERS ALLSTATE LIFE INSURANCE COMPANY 3075 SANDERS ROAD, STE G5D NORTHBROOK, ILLINOIS 60062-7127 ALLSTATE LIFE INSURANCE COMPANY/ NORTHBROOK LIFE INSURANCE COMPANY-TRUST 3075 Sanders Road, STE G5D Northbrook, Illinois 60062-7127 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK 3075 Sanders Road, STE G5D Northbrook, Illinois 60062-7127 NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY One Nationwide Plaza (1-33-07) Columbus, Ohio 43215-2220 NATIONWIDE LIFE INSURANCE COMPANY One Nationwide Plaza (1-33-07) Columbus, Ohio 43215-2220 AMERICAN HERITAGE LIFE INSURANCE COMPANY c/o Allstate Life Insurance Company 3075 Sanders Road, STE G5D Northbrook, Illinois 60062-7127 MONY LIFE INSURANCE COMPANY 1740 Broadway New York, New York 10019 SCHEDULE A (to Assignment, Assumption and Amendment Agreement) EXISTING DEBTS; FUTURE LIENS
LOAN DESCRIPTION MATURITY DATE AMOUNT LIEN DEBT GREATER THAN $5,000,000 RPM, Inc. 7.0% Unsecured Senior Note due June 15, 2005* 7.0% Unsecured Senior Note due June 15, 2005 June 15, 2005 $ 150,000,000 No RPM, Inc. TIERS Certificates (LANCEs)* March 1, 2008 $ 100,000,000 No Semiannual interest payment due each March 1st and September 1st $500M-5 Year Revolving Credit Agreement (Bank Group)* July 14, 2005 Syndicate of Banks $70,000,000 No Syndicate of Banks $ 125,000,000 No Syndicate of Banks $ 100,000,000 No $125M Receivables Securitization Program July 6, 2003 Bank One $60,000,000 Yes Wachovia $40,000,000 Yes $55M Private Placement Notes* 6.12% Unsecured Senior Notes, Series A November 15, 2004 $15,000,000 No 6.61% Unsecured Senior Notes, Series B November 15, 2006 $10,000,000 No 7.30% Unsecured Senior Notes, Series C November 15, 2008 $30,000,000 No $15M-2 Year Multi-Currency Credit Agreement (KBC Bank)** December 31, 2002 RPM Holdings UK - GBP 2,250,000 @ 1.5637 $ 3,518,325 No
- ------------------------------ * Agreements to be assumed by RPM International, Inc. ** This agreement is to be cancelled upon the reincorporation and renegotiated with RPM International, Inc. SCHEDULE 5.15 (to Assignment, Assumption and Amendment Agreement) $3.7M 6.75% Unsecured Senior Note due and insurance August 3, 2003 company* 6.75% Unsecured Senior Note (installment) August 1, 2002 $ 1,714,285 No 6.75% Unsecured Senior Note (final installment) August 3, 2003 $ 1,714,284 No ----------- Total of Debt greater than $5,000,000 $ 706,946,894 ------------- DEBT LESS THAN $5,000,000 Other notes and mortgages payable at various rates of interest $ 7,796,048 ----------- Grand Total Outstanding Debt $ 714,742,942 -------------
5.15-2 [FORM OF SERIES A NOTE] RPM INTERNATIONAL, INC. 6.12% SENIOR NOTE, SERIES A, DUE NOVEMBER 15, 2004 No. [_______] [Date] $[__________] PPN ___________ FOR VALUE RECEIVED, the undersigned, RPM INTERNATIONAL, INC. (herein called the "Company"), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] DOLLARS on November 15, 2004 with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.12% per annum from the date hereof, payable semi-annually, on the fifteenth day of May and November in each year and at maturity, commencing with the May or November next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semi-annually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 8.12% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Note Purchase Agreement, dated as of November 15, 2001 between RPM, Inc. and the respective purchasers named therein (as assumed by the Company pursuant to the Assignment, Assumption and Amendment Agreement dated as of August 23, 2002 and as further amended, supplemented or modified from time to time, the "Note Purchase Agreement"), and this Note is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the Exhibit 1(a) (to Assignment, Assumption and Amendment Agreement) purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement. This Note shall be construed and enforced in accordance with, and the rights of the issuer and holder hereof shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. RPM INTERNATIONAL, INC. By______________________________________ Name: __________________________________ Title: _________________________________ E-1(a)-2 [FORM OF SERIES B NOTE] RPM INTERNATIONAL, INC. 6.61% SENIOR NOTE, SERIES B, DUE NOVEMBER 15, 2006 No. [_______] [Date] $[__________] PPN ___________ FOR VALUE RECEIVED, the undersigned, RPM INTERNATIONAL, INC. (herein called the "Company"), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] DOLLARS on November 15, 2006 with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.61% per annum from the date hereof, payable semi-annually, on the fifteenth day of May and November in each year and at maturity, commencing with the May or November next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semi-annually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 8.61% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Note Purchase Agreement, dated as of November 15, 2001 between RPM, Inc. and the respective purchasers named therein (as assumed by the Company pursuant to the Assignment, Assumption and Amendment Agreement dated as of August 23, 2002 and as further amended, supplemented or modified from time to time, the "Note Purchase Agreement"), and this Note is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreement. EXHIBIT 1(b) (to Assignment, Assumption and Amendment Agreement) This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement. This Note shall be construed and enforced in accordance with, and the rights of the issuer and holder hereof shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. RPM INTERNATIONAL, INC. By_____________________________________ Name: _________________________________ Title: ________________________________ E-1(b)-2 [FORM OF SERIES C NOTE] RPM INTERNATIONAL, INC. 7.30% SENIOR NOTE, SERIES C, DUE NOVEMBER 15, 2008 No. [_______] [Date] $[__________] PPN ___________ FOR VALUE RECEIVED, the undersigned, RPM INTERNATIONAL, INC. (herein called the "Company"), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [_____________________] or registered assigns, the principal sum of [______________] DOLLARS on November 15, 2008 with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.30% per annum from the date hereof, payable semi-annually, on the fifteenth day of May and November in each year and at maturity, commencing with the May or November next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semi-annually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 9.30% or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York, New York as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Note Purchase Agreement, dated as of November 15, 2001 between RPM, Inc. and the respective purchasers named therein (as assumed by the Company pursuant to the Assignment, Assumption and Amendment Agreement dated as of August 23, 2002 and as further amended, supplemented or modified from time to time, the "Note Purchase Agreement"), and this Note is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreement. Exhibit 1(c) (to Assignment, Assumption and Amendment Agreement) This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement. This Note shall be construed and enforced in accordance with, and the rights of the issuer and holder hereof shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. RPM INTERNATIONAL, INC. By___________________________________ Name: _______________________________ Title: ______________________________ E-1(c)-2 DESCRIPTION OF OPINION OF COUNSEL TO THE COMPANY AND RPM The closing opinion of Calfee, Halter & Griswold, counsel to the Company, which is called for by Section 4.4 of the Assignment, Assumption and Amendment Agreement, shall be dated the Effective Date and addressed to the holders, shall be satisfactory in scope and form to each holder and shall be to the effect that: 1. The Company is a corporation, duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, has the corporate power and the corporate authority to execute and perform the Assignment, Assumption and Amendment Agreement and perform the Note Purchase Agreement and to issue the Notes and has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary except in jurisdictions where the failure to be so qualified or licensed would not have a material adverse affect on the business of the Company. 2. The Assignment, Assumption and Amendment Agreement has been duly authorized by all necessary corporate action on the part of the Company and RPM, has been duly executed and delivered by the Company and RPM and constitutes the legal, valid and binding contract of the Company and RPM enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). 3. After giving effect to the Assignment, Assumption and Amendment Agreement, the Note Purchase Agreement constitutes the legal, valid and binding contract of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). 4. The Notes have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). 5. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any governmental body, Federal or state, is necessary in connection with the execution and delivery of the Assignment, Assumption and Amendment Agreement or the Notes. Exhibit 4.4 (to Assignment, Assumption and Amendment Agreement) 6. The issuance and sale of the Notes and the execution, delivery and performance by the Company and RPM of the Assignment, Assumption and Amendment Agreement do not conflict with or result in any breach of any of the provisions of or constitute a default under or result in the creation or imposition of any Lien upon any of the property of the Company pursuant to the provisions of the Articles of Incorporation or By-laws of the Company or RPM or any agreement or other instrument known to such counsel to which the Company or RPM is a party or by which the Company or RPM may be bound. 7. The issuance, sale and delivery of the Notes under the circumstances contemplated by the Assignment, Assumption and Amendment Agreement do not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended. 8. The Company is not an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. The opinion of Calfee, Halter & Griswold shall cover such other matters relating to the sale of the Notes as each holder may reasonably request. With respect to matters of fact on which such opinion is based, such counsel shall be entitled to rely on appropriate certificates of public officials and other officers of the Company. E-4.4-2 EX-10.5 7 l96562aexv10w5.txt EXHIBIT 10.5 Exhibit 10.5 CONFORMED COPY AMENDMENT NO. 2 TO CREDIT AGREEMENT AMENDMENT dated as of July 12, 2002 to the Five-Year Credit Agreement dated as of July 14, 2000 (the "CREDIT AGREEMENT"), among RPM, INC. (the "COMPANY"), the LENDERS party thereto (the "LENDERS") and JPMORGAN CHASE BANK (formerly THE CHASE MANHATTAN BANK), as Administrative Agent (the "ADMINISTRATIVE AGENT"). WITNESSETH: WHEREAS, the parties hereto desire to amend the Credit Agreement (i) to reflect a reincorporation in Delaware and corporate reorganization, by replacing RPM, Inc. as Borrower with its new parent company, RPM International Inc., and (ii) to add a domestic subsidiary debt covenant; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein with respect to the Credit Agreement which is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to "hereof', "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby. SECTION 2. Consent to Assignment by RPM, Inc. to RPM International Inc. The Lenders consent to the assignment by RPM, Inc. of all of its rights and obligations under the Credit Agreement and the Notes to RPM International Inc., and agree that each reference to the "Company" shall, after this Amendment becomes effective, be a reference to RPM International Inc. together with its successors. SECTION 3. Section 9.08. Section 9.08 of the Credit Agreement is amended by deleting the word "Ratio" from the title thereof, inserting "(a)" at the beginning thereof, and adding the following clause (b) at the end thereof: (b) The Company will not permit Indebtedness of its Subsidiaries that are organized under the laws of the United States of America, any State thereof or the District of Columbia, determined on a combined basis exclusive of Indebtedness to the Company and Indebtedness pursuant to receivables securitizations incurred in accordance with the terms and conditions of this Agreement, on any date to exceed 15% of consolidated shareholders' equity of the Company and its Subsidiaries on such date. SECTION 4. Representations of Company. The Company represents and warrants that (i) the representations and warranties of the Company set forth in Article 8 of the Credit Agreement will be true and correct on and as of the Amendment Effective Date (as defined below) to the same extent as they would be required to be under Section 7.02(b) of Credit Agreement on the occasion of any borrowing and (ii) no Default (as defined in the Credit Agreement) will have occurred and be continuing on such date. SECTION 5. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 6. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. SECTION 7. Effectiveness. This Amendment shall become effective on the date when the merger of RPM Merger Sub, a newly formed Ohio corporation and wholly-owned subsidiary of RPM International Inc., with and into RPM, Inc. is effective (the "AMENDMENT EFFECTIVE DATE") if the Administrative Agent shall have received (i) from each of the Company and the Lenders a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Administrative Agent) that such party has signed a counterpart hereof, (ii) from the Company for the account of each Lender which has executed and delivered to the Administrative Agent a counterpart hereof or such other satisfactory written confirmation by 12:00 Noon on July 26, 2002, an amendment fee equal to .05% of such Lender's Commitment (as in effect at 12:00 Noon on July 26, 2002), and (iii) from the Company evidence satisfactory to the Administrative Agent (which shall include an opinion of counsel to the Company) that the rights and obligations of RPM, Inc. under the Credit Agreement and the Notes and with respect to all other Indebtedness of RPM, Inc. outstanding on the Amendment Effective Date (including, without limitation, the 7.0% Senior Notes due 2005, the LANCEs due 2008 and the Senior Notes dated as of November 15, 2001) have been or are substantially simultaneously on the Amendment Effective Date being assigned by RPM, Inc. to RPM International Inc. 2 TN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. RPM, [NC. By: /s/ Keith R. Smiley ------------------------------------ Name: Keith R. Smiley Title: Vice President, Treasurer and Assistant Secretary JPMORGAN CHASE BANK By: /s/ Stacey Haimes ------------------------------------ Name: Stacey Haimes Title: Vice President KEYBANK NATIONAL ASSOCIATION By: /s/ Marianne T. Meil ------------------------------------ Name: Marianne T. Meil Title: Vice President NATIONAL CITY BANK By: /s/ James C. Ritchie ------------------------------------ Name: James C. Ritchie Title: Vice President BANK OF AMERICA, N.A. By: /s/ Chitt Swamidasan ------------------------------------ Name: Chitt Swamidasan Title: Principal 3 BANK ONE, NA (successor by merger to BANK ONE MICHIGAN) By: /s/ Glenn A. Currin ------------------------------------ Name: Glenn A. Currin Title: Managing Director WACHOVIA BANK, N.A. By: /s/ David K. Hall ------------------------------------ Name: David K. Hall Title: Vice President MELLON BANK, N.A. By: /s/ Mark F. Johnston ------------------------------------ Name: Mark F. Johnston Title: Vice President FIFTH THIRD BANK By: /s/ Roy C. Lanctot ------------------------------------ Name: Roy C. Lanctot Title: Vice President MIZUHO CORPORATE BANK, LTD. By: /s/ Peter L. Chinnici ------------------------------------ Name: Peter L. Chinnici Title: Senior Vice President and Group Head 4 SUNTRUST BANK By: /s/ William C. Humphries ----------------------------- Name: William C. Humphries Title: Director US BANK, N.A. (formerly known as FIRSTAR BANK, N.A.) By: /s/ Christine C. Gencer ----------------------------- Name: Christine C. Gencer Title: Vice President THE BANK OF NEW YORK By: /s/ Kenneth McDonnell ----------------------------- Name: Kenneth McDonnell Title: Assistant Vice President KBC BANK, N.Y. By: /s/ Jean-Pierre Diels ----------------------------- Name: Jean-Pierre Diels Title: First Vice President By: /s/ Eric Raskin ----------------------------- Name: Eric Raskin Title: Vice President 5 UFJ BANK LIMITED By: /s/ Kenneth C. Eichwald ----------------------------- Name: Kenneth C. Eichwald Title: Senior Vice President FIRST COMMERCIAL BANK By: /s/ Bruce Ju ----------------------------- Name: Bruce Ju Title: General Manager & VP 6 EX-10.6 8 l96562aexv10w6.txt EXHIBIT 10.6 Exhibit 10.6 SECOND SUPPLEMENTAL INDENTURE Dated as of August 26, 2002, by and among RPM, INC. RPM INTERNATIONAL INC. and BANK ONE, N.A. (FORMERLY KNOWN AS THE FIRST NATIONAL BANK OF CHICAGO) as Trustee, relating to the INDENTURE, dated as of June 1, 1995 by and between RPM, INC., and The First National Bank of Chicago, as Trustee, which secures 7% Senior Notes due June 15, 2005 as supplemented by FIRST SUPPLEMENTAL INDENTURE, dated March 5, 1998 by and between RPM, INC., and The First National Bank of Chicago, as Trustee, which secures Liquid Asset Notes with Coupon Exchange (Lance) Due 2008 SECOND SUPPLEMENTAL INDENTURE THIS SECOND SUPPLEMENTAL INDENTURE, dated as of August 26, 2002 (this "Second Supplemental Indenture"), by and among RPM, INC., a corporation duly organized and existing under the laws of the State of Ohio, and having its principal business office in Medina, Ohio ("RPM"), RPM INTERNATIONAL, INC., a corporation duly organized and existing under the laws of the State of Delaware, and having its principal business office in Medina, Ohio ("RPM International"), as transferee successor to the assets of RPM, Inc. substantially as an entirety, and BANK ONE, N.A. (formerly known as The First National Bank of Chicago), a national banking association duly organized and existing under the laws of the United States, in its capacity as trustee, having its principal corporate trust office in Chicago, Illinois (the "Trustee") supplements that certain Indenture, dated as of June 1, 1995, as heretofore amended by that certain First Supplemental Indenture, dated as of March 5, 1998 (the Indenture, as so amended by the First Supplemental Indenture, the "Indenture"), by and between RPM and the Trustee. Words and terms used as defined words and terms herein and not otherwise defined herein shall have the meanings given them in the Indenture. WITNESSETH: WHEREAS: (x) pursuant to the Indenture, RPM issued its 7% Senior Notes due June 15, 2005 and (y) pursuant to the Indenture, as amended by the First Supplemental Indenture, RPM issued its Liquid Asset Notes with Coupon Exchange ("Lances") Due 2008; WHEREAS, pursuant to an Agreement and Plan of Merger by and among RPM, RPM International, and a newly formed merger subsidiary of RPM International ("Newco"), Newco will merge into RPM on and as of the Effective Date (as defined herein below) and each of the common shares of RPM will be converted into the right to receive one share of the RPM International (the "Merger Transaction"); WHEREAS, in connection with the Merger Transaction, RPM will also on and as of Effective Date transfer the stock of certain of its operating subsidiaries to RPM International (which will in turn transfer such stock ownership to new intermediate holding companies wholly-owned by RPM International) and retain the stock of certain other operating companies (the "Asset Transfer" and, together with the Merger Transaction, the "Transaction"); WHEREAS, Section 801 of the Indenture provides that RPM may transfer its properties and assets substantially as an entirety to any Person, provided that the successor Person meets certain conditions precedent provided in the Indenture, including but not limited to the assumption of the due and punctual payment of the Securities and the performance of every other Indenture covenant; WHEREAS, Section 802 of the Indenture provides that upon any such transfer and assumption, the successor Person shall succeed to, and be substituted for, the Company with the same effect as if such successor had been named as the Company therein; and thereafter, RPM will be released from all obligations and covenants under the Indenture, the Securities and the Coupons; and WHEREAS, Section 901 of the Indenture provides that , from time to time and at any time and without the consent or concurrence of any Holder, RPM and the Trustee may execute a Supplemental Indenture for any one or more of the purposes set forth in Section 901 thereof, including, without limitation, (x) to evidence the succession of another Person to the Company, the assumption by such successor of the covenants of the Company contained in the Indenture and in the Securities or (y) to make any amendment provided no such amendment shall materially adversely affect the interests of the Holders of any Securities then Outstanding. NOW, THEREFORE, for and in consideration of the premises and other consideration the receipt of which is hereby acknowledged, it is mutually agreed as follows: SECTION 1 ASSIGNMENT TO, AND ASSUMPTION BY, RPM INTERNATIONAL. RPM hereby conveys, transfers and assigns to RPM International on and as of the Effective Date all of its right, title and interest in and to the Indenture as amended by the First Supplemental Indenture and this Second Supplemental Indenture. RPM International hereby agrees on and after the Effective Date to be bound, as successor by assignment to RPM, by all of the terms and conditions applicable to, and covenants of RPM under, (i) the Indenture, as amended by the First Supplemental Indenture and this Second Supplemental Indenture and (ii) the Securities issued by RPM under the Indenture as amended, all to the extent provided therein. RPM International hereby (x) assumes on and after the Effective Date, for the benefit of RPM, the Trustee, each Holder and each other party to or beneficiary of the Indenture, as amended, all of the obligations of RPM under (i) the Indenture, as amended and (ii) the Securities, including the due and punctual payment of the principal of, any premium and interest on and any Additional Amounts with respect to, all the Securities and the performance of every other covenants of the Indenture on the part of RPM to be performed or observed and (y) agrees on and after the Effective Date to provide for conversion or exchange rights in accordance with the provisions of the Securities. SECTION 2. RELEASE OF RPM. RPM International and the Trustee hereby acknowledge and agree that, as of the Effective Date, RPM International shall assume all of the obligations of RPM under the Indenture as described therein, RPM International will succeed to, and be substituted for, and may exercise every right and power of, RPM under the Indenture with the same force and effect as if RPM International had been named as the Company therein. Pursuant to the terms of Section 802 of the Indenture, each of RPM International and the Trustee hereby acknowledge and agree that on and after the Effective Date, and provided all of the conditions provided for in Section 4 hereof have been satisfied, RPM will be released from all obligations and covenants applicable to RPM under the Indenture and under the Securities. SECTION 3. EFFECTIVE DATE. This Second Supplemental Indenture shall become effective on the date when the Transaction is effective; provided that, upon the occurrence of the Transaction, the conditions set forth in Section 4 have been satisfied (the "Effective Date"). SECTION 4. CONDITIONS PRECEDENT. The effectiveness of this Second Supplemental Indenture is subject to the satisfaction, as of the Effective Date, of the following terms: (A) NO DEFAULT. Immediately after giving effect to the Transaction, no Event of Default, or event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing. (B) OFFICER'S CERTIFICATE. RPM International shall have delivered to the Trustee an Officer's Certificate, dated as of the Effective Date, certifying that such Transaction and this Second Supplement Indenture comply with Article Eight of the Indenture and that all conditions precedent provided in the Indenture relating to such transaction have been complied with. (C) OPINION OF COUNSEL. The Trustee shall have received an Opinion of Counsel, dated as of the Effective Date, to the effect that such Transaction and this Second Supplement Indenture comply with Article Eight of the Indenture and that all conditions precedent provided in the Indenture relating to such transaction have been complied with and that the execution of this Second Supplemental Indenture is authorized or permitted by the Indenture. SECTION 5. COUNTERPARTS. This Second Supplemental Indenture may be executed in multiple counterparts, each of which shall be regarded for all purposes as an original and all of which shall constitute but one and the same instrument. SECTION 6. EFFECT OF SUPPLEMENT ON INDENTURE. Upon the execution of this Second Supplemental Indenture by the parties hereto, the Indenture, as supplemented thereby shall remain in full force and effect. The Indenture, as supplemented by the First Supplemental Indenture and this Second Supplemental Indenture, is in all respects ratified and confirmed, and this Second Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided SECTION 7. GOVERNING LAW. This Second Supplemental Indenture shall be governed by the laws of the State of New York, without giving effect to the conflict of law principles thereof. [balance of page left blank intentionally] IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed, all as of the day and year first above written. [SEAL] RPM, INC. /s/ P. Kelly Tompkins By: /s/ Keith R. Smiley ----------------------- ------------------------------------- Attest: P. Kelly Tompkins Title: Vice President, Treasurer Vice President, General ------------------------------- Counsel and Secretary [SEAL] RPM INTERNATIONAL INC. /s/ P.Kelly Tompkins By: /s/ Keith R. Smiley ------------------------ ------------------------------------- Attest: P. Kelly Tompkins Title: Treasurer Secretary ------------------------------- [SEAL] BANK ONE, N.A. (formerly known as The First National Bank of Chicago), as Trustee Attest: /s/ Mietka Collins By: /s/ Renee Johnson ------------------------------------ Mietka Collins Renee Johnson Account Representative Title: Vice President ------------------------------- STATE OF OHIO ) : SS.: COUNTY OF MEDINA ) On the 26th day of August, 2002, before me personally came Keith R. Smiley, to me known, who, being by me duly sworn, did depose and say that he is a Vice President & Treasurer of RPM, INC., a corporation organized and existing under the laws of the State of Ohio, one of the persons described in and who executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporation's seal; that it was so affixed by authority of the Board of Directors of the corporation; and that he signed his name thereto by like authority /s/ Karin J. Owen ------------------------------- Notary Public [NOTARIAL SEAL] Karin J. Owen Notary Public, State of Ohio My Commission Expires 8-29-2006 (Recorded in Medina County) STATE OF OHIO ) : SS.: COUNTY OF MEDINA ) On the 26th day of August, 2002, before me personally came Keith R. Smiley, to me known, who, being by me duly sworn, did depose and say that he is a Treasurer of RPM INTERNATIONAL INC., a corporation organized and existing under the laws of the State of Ohio, one of the persons described in and who executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporation's seal; that it was so affixed by authority of the Board of Directors of the corporation; and that he signed his name thereto by like authority /s/ Karin J. Owen ------------------------------- Notary Public [NOTARIAL SEAL] Karin J. Owen Notary Public, State of Ohio My Commission Expires 8-29-2006 (Recorded in Medina County) STATE OF ILLINOIS ) : SS.: COUNTY OF COOK ) On the 26 day of August, 2002, before me personally came Renee Johnson, to me known, who, being by me duly sworn, did depose and say that s/he is a Vice President of Bank One, N.A., a national banking association organized and existing under the laws of the United States of America, one of the persons described in and who executed the foregoing instrument; that s/he knows the seal of said corporation; that the seal affixed to said instrument is such corporation's seal; that it was so affixed by authority of the Board of Directors of the corporation; and that s/he signed her/his name thereto by like authority /s/Caesar Frank Castro ------------------------------- Notary Public [NOTARIAL SEAL] "OFFICIAL SEAL" Caesar Frank Castro Notary Public, State of Illinois Cook County My Commission Expires June 6, 2005 EX-10.7 9 l96562aexv10w7.txt EXHIBIT 10.7 Exhibit 10.7 AMENDMENT NO. 1 TO RPM, INC. 401(K) TRUST AND PLAN ------------------------------- This Amendment No. 1 is executed as of the date set forth below by RPM, Inc. (hereinafter called the "Company"); WITNESSETH: ---------- WHEREAS, the Company maintains the RPM, Inc. 401(k) Trust and Plan (hereinafter called the "Trust and Plan") for the benefit of certain eligible employees of Participating Companies; and WHEREAS, it is the desire of the Company to amend the Trust and Plan to reflect that future matching contributions will be made in cash rather than Company stock, to permit Participants to direct the investment of a portion of future employee and matching contributions in Company stock and to permit Accountholders to transfer amounts out of the Pre-Tax Contribution Stock Fund and Matching Contribution Stock Fund into other investment funds; and WHEREAS, the Company reserved the right to amend the Trust and Plan pursuant to Section 21.1 thereof; NOW, THEREFORE, pursuant to Section 21.1 of the Trust and Plan, the Company hereby amends the Trust and Plan, effective as of October 1, 2002, as follows: 1. Section 5.3 of the Trust and Plan is hereby amended by the deletion of said Section 5.3 and the substitution in lieu thereof of the following: 5.3 PAYMENT TO THE TRUSTEE. The Participating Companies shall make the contributions specified in Sections 5.1 and 5.2 hereof to the Trustee in cash not later than the last day upon which the Participating Company may make a contribution under this Trust and Plan and secure under the Code a deduction of such contribution in the computation of its Federal income taxes for the Taxable Year for which such contribution is made. 2. Sections 7.7 and 7.8 of the Trust and Plan are hereby amended by the deletion of said Sections 7.7 and 7.8 and the substitution in lieu thereof of the following: 7.7 MAINTENANCE OF PRE-TAX CONTRIBUTION STOCK FUND. The Trustee shall maintain a Pre-Tax Contribution Stock Fund within the Trust Fund. Prior to June 1, 1996, pre-tax contributions made by the Participating Companies on a Participant's behalf and contributed to the Trust and Plan pursuant to the provisions of the Trust and Plan at such time and all dividends and other amounts attributable to such pre-tax contributions that were made in cash and used to purchase Shares shall continue to be held and invested in the Pre-Tax Contribution Stock Fund, subject to the diversification provisions of Section 7.15 hereof. On and after June 1, 1996 and prior to October 1, 2002, Accountholders were no longer permitted to direct the investment of amounts credited to their Pre-Tax Accounts into the Pre-Tax Contribution Stock Fund. On and after October 1, 2002, an Accountholder may, in accordance with Section 7.16 hereof, direct that a portion of the pre-tax contributions made on his behalf be held and invested in the Pre-Tax Contribution Stock Fund. 7.8 MAINTENANCE OF MATCHING CONTRIBUTION STOCK FUND. The Trustee shall maintain a Matching Contribution Stock Fund within the Trust Fund. Prior to October 1, 2002, matching contributions made by the Participating Companies on a Participant's behalf and contributed to the Trust and Plan pursuant to the 2 provisions of the Trust and Plan at such time and all dividends and other amounts attributable to such matching contributions that were made in Shares or made in cash and used to purchase Share shall continue to be held and invested in the Matching Contribution Stock Fund, subject to the diversification provisions of Section 7.15 hereof. On and after October 1, 2002, an Accountholder may, in accordance with Section 7.16 hereof, direct that the matching contributions made on his behalf be held and invested in the Matching Contribution Stock Fund. 3. Section 7.10 of the Trust and Plan is hereby deleted and the following is substituted therefor: 7.10 [RESERVED] 4. Section 7.15 of the Trust and Plan is hereby amended by the deletion of said Section 7.15 and the substitution in lieu thereof of the following: 7.15 DIVERSIFICATION OF INVESTMENTS. An Accountholder may elect to sell the Shares, if any, credited to his Pre-Tax Contribution Stock Fund or Matching Contribution Stock Fund at any time and to direct the investment of the proceeds from such sale into any other investment fund established hereunder. Any such direction shall be made in accordance with the provisions of this Article 7. Accountholders may not elect to invest in Shares in any investment fund hereunder except as permitted in Section 7.16 below. Accountholders may not elect to invest in Shares through the Pre-Tax Contribution Stock Fund or Matching Contribution Stock Fund by transferring amounts from other investment funds into said stock funds. 3 5. Article 7 of the Trust and Plan is hereby amended by the addition thereto of a new Section 7.16 to read as follows: 7.16 PROCEDURES FOR DIRECTION OF INVESTMENT IN COMPANY STOCK FUNDS. On and after October 1, 2002, an Accountholder may direct the Trustee to invest up to twenty percent (20%) of his pre-tax and matching contributions made to the Trust and Plan in the Pre-Tax Contribution Stock Fund and Matching Contribution Stock Fund. An Accountholder may only invest in Shares through the Pre-Tax Contribution Stock Fund and Matching Contribution Stock Fund for pre-tax and matching contributions made on or after October 1, 2002. All such directions shall be deemed to be continuing directions until they shall have been changed. Any such changes shall be made in accordance with the provisions of Sections 7.4 and 7.5 hereof. Amounts invested and held in the Pre-Tax Contribution Stock Fund and the Matching Contribution Stock Fund, pursuant to this Section, shall be subject to the diversification requirements of Section 7.15 hereof. IN WITNESS WHEREOF, the Company, by its duly authorized officers, has executed this Amendment No. 1 this 27th day of August, 2002. RPM, Inc. ("Company") By: /s/ Ronald Rice ---------------------------------- And: /s/ Keith R. Smiley ---------------------------------- 4 EX-10.8 10 l96562aexv10w8.txt EXHIBIT 10.8 Exhibit 10.8 AMENDMENT NO. 1 TO RPM, INC. UNION 401(K) RETIREMENT SAVINGS TRUST AND PLAN This Amendment No. 1 is executed as of the date set forth below by RPM, Inc. (hereinafter called the "Company"); WITNESSETH: WHEREAS, the Company maintains the RPM, Inc. Union 401(k) Retirement Savings Trust and Plan (hereinafter called the "Trust and Plan") for the benefit of certain eligible employees of Participating Companies; and WHEREAS, it is the desire of the Company to amend the Trust and Plan to reflect that future matching contributions will be made in cash rather than Company stock, to permit Participants to direct the investment of a portion of future employee and matching contributions in Company stock and to permit Accountholders to transfer amounts out of the Pre-Tax Contribution Stock Fund and Matching Contribution Stock Fund into other investment funds; and WHEREAS, the Company reserved the right to amend the Trust and Plan pursuant to Section 21.1 thereof; NOW, THEREFORE, pursuant to Section 21.1 of the Trust and Plan, the Company hereby amends the Trust and Plan, effective as of October 1, 2002, as follows: 1. Section 5.3 of the Trust and Plan is hereby amended by the deletion of said Section 5.3 and the substitution in lieu thereof of the following: 5.3 PAYMENT TO THE TRUSTEE. The Participating Companies shall make the contributions specified in Sections 5.1 and 5.2 hereof to the Trustee in cash not later than the last day upon which 70 the Participating Company may make a contribution under this Trust and Plan and secure under the Code a deduction of such contribution in the computation of its Federal income taxes for the Taxable Year for which such contribution is made. 2. Section 7.7 of the Trust and Plan is hereby amended by the deletion of said Section 7.7 and the substitution in lieu thereof of the following: 7.7 MAINTENANCE OF MATCHING CONTRIBUTION STOCK FUND. The Trustee shall maintain a Matching Contribution Stock Fund within the Trust Fund. Prior to October 1, 2002, matching contributions made by the Participating Companies on a Participant's behalf and contributed to the Trust and Plan pursuant to the provisions of the Trust and Plan at such time and all dividends and other amounts attributable to such matching contributions that were made in Shares or made in cash and used to purchase Share shall continue to be held and invested in the Matching Contribution Stock Fund, subject to the diversification provisions of Section 7.14 hereof. On and after October 1, 2002, an Accountholder may, in accordance with Section 7.17 hereof, direct that the matching contributions made on his behalf be held and invested in the Matching Contribution Stock Fund. 3. Section 7.9 of the Trust and Plan is hereby deleted and the following is substituted therefor: 7.9 [RESERVED] 4. Section 7.14 of the Trust and Plan is hereby amended by the deletion of said Section 7.14 and the substitution in lieu thereof of the following: 2 7.14 DIVERSIFICATION OF INVESTMENTS. An Accountholder may elect to sell the Shares, if any, credited to his Pre-Tax Contribution Stock Fund or Matching Contribution Stock Fund at any time and to direct the investment of the proceeds from such sale into any other investment fund established hereunder. Any such direction shall be made in accordance with the provisions of this Article 7. Accountholders may not elect to invest in Shares in any investment fund hereunder except as permitted in Section 7.17 below. Accountholders may not elect to invest in Shares through the Pre-Tax Contribution Stock Fund or Matching Contribution Stock Fund by transferring amounts from other investment funds into said stock funds. 5. Article 7 of the Trust and Plan is hereby amended by the addition thereto of a new Sections 7.16 and 7.17 to read as follows: 7.16 MAINTENANCE OF PRE-TAX CONTRIBUTION STOCK FUND. The Trustee shall maintain a Pre-Tax Contribution Stock Fund within the Trust Fund. On and after October 1, 2002, an Accountholder may, in accordance with Section 7.17 hereof, direct that a portion of the pre-tax contributions made on his behalf be held and invested in the Pre-Tax Contribution Stock Fund. 7.17 PROCEDURES FOR DIRECTION OF INVESTMENT IN COMPANY STOCK FUNDS. On and after October 1, 2002, an Accountholder may direct the Trustee to invest up to twenty percent (20%) of his pre-tax and matching contributions made to the Trust and Plan in the Pre-Tax Contribution Stock Fund and Matching Contribution Stock Fund. An Accountholder may only invest in Shares through the Pre-Tax Contribution Stock Fund and Matching Contribution Stock Fund for pre-tax and matching 3 contributions made on or after October 1, 2002. All such directions shall be deemed to be continuing directions until they shall have been changed. Any such changes shall be made in accordance with the provisions of Sections 7.4 and 7.5 hereof. Amounts invested and held in the Pre-Tax Contribution Stock Fund and the Matching Contribution Stock Fund, pursuant to this Section, shall be subject to the diversification requirements of Section 7.14 hereof. IN WITNESS WHEREOF, the Company, by its duly authorized officers, has executed this Amendment No. 1 this 27th day of August, 2002. RPM, Inc. ("Company") By: /s/ Ronald Rice --------------------------------- And: /s/ Keith R. Smiley --------------------------------- 4 EX-11.1 11 l96562aexv11w1.txt EXHIBIT 11.1 RPM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPUTATIONS OF EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENTS (Unaudited) EXHIBIT 11.1 (In thousands, except per share amounts)
THREE MONTHS ENDED AUGUST 31, ------------------------------ 2002 2001 ------------- ------------- SHARES OUTSTANDING For computation of basic earnings per common share Weighted average shares 114,765 102,211 ------------- ------------ Total shares for basic earnings per share 114,765 102,211 For computation of diluted earnings per common share Net issuable common share equivalents 995 26 ------------- ------------ Total shares for diluted earnings per share 115,760 102,237 ============= ============ NET INCOME Net income (loss) applicable to common shares for basic earnings per share $ 44,173 $ 36,569 ------------- ------------ Net income (loss) applicable to common shares for diluted earnings per share $ 44,173 $ 36,569 ============= ============= Basic Earnings (Loss) Per Common Share $ 0.38 $ 0.36 ============= ============= Diluted Earnings (Loss) Per Common Share $ 0.38 $ 0.36 ============= =============
The accompanying notes to consolidated financial statements are an integral part of these statements. -----END PRIVACY-ENHANCED MESSAGE-----