e424b5
The information in
this preliminary prospectus supplement is not complete and may
be changed. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission and is effective. This preliminary prospectus
supplement and accompanying prospectus are not an offer to sell
these securities and we are not soliciting offers to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
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Filed
Pursuant to 424(b)(5)
Registration No.
333-173395
Subject to Completion
Preliminary Prospectus Supplement
Dated May 24, 2011
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 8, 2011)
$150,000,000
RPM International
Inc.
6.125% Notes due
2019
We are offering an additional $150 million aggregate
principal amount of 6.125% Notes due 2019. The notes will
be a further issuance of, be fully fungible with, rank equally
in right of payment with and form a single series with the
$300,000,000 aggregate principal amount of 6.125% Notes due
2019 initially issued by us on October 9, 2009. The notes
offered hereby will have the same CUSIP number assigned to such
previously issued notes.
RPM International Inc. will pay interest on the notes on April
15 and October 15 of each year. The notes will mature on
October 15, 2019. We may redeem the notes at our option, at
any time or from time to time, either in whole or in part, at
the redemption price described in this prospectus supplement. If
a change of control triggering event as described in this
prospectus supplement occurs, unless we have exercised our
option to redeem the notes, we will be required to offer to
repurchase the notes at a purchase price equal to 101% of their
principal amount plus accrued and unpaid interest.
The notes will be our general unsecured obligations. The notes
will rank equally with all of our current and future unsecured,
unsubordinated debt and will be senior in right of payment to
all of our future subordinated debt.
The notes are being offered for sale in the United States and
certain jurisdictions outside the United States in which it is
lawful to make such offers. The notes will not be listed on any
securities exchange.
Investing in the notes involves risks. See Risk
Factors beginning on
page S-10
of this prospectus supplement and Risk Factors
beginning on page 4 of the accompanying prospectus.
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Per Note
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Total
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Public offering price (1)
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%
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$
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Underwriting discount
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%
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$
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Proceeds, before expenses, to RPM International Inc.
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%
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$
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(1)
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In addition to the public offering price in the table above,
purchasers of the notes in the reopening will pay an aggregate
of $ of accrued interest on these
notes from, and including, April 15, 2011 (the most recent
interest payment date of the 6.125% Notes due
2019) to, and excluding, May , 2011, the
expected issue date. This amount of accrued interest will be
paid on October 15, 2011 to holders of the notes on the
applicable record date, along with interest accrued on the notes
from the issue date to October 15, 2011. If delivery occurs
after May , 2011, the purchasers will pay
additional accrued interest from May , 2011 to
the issue date.
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Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed on the accuracy or adequacy of this prospectus
supplement or the accompanying prospectus. Any representation to
the contrary is a criminal offense.
The notes will be delivered in book-entry form only through the
facilities of The Depository Trust Company, including for
the accounts of Euroclear Bank S.A./N.V., as operator of the
Euroclear System, or Clearstream Banking, société
anonyme, against payment in New York, New York on or about
May , 2011.
Joint Book-Running Managers
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BofA
Merrill Lynch |
Wells Fargo Securities |
Co-Manager
Goldman, Sachs &
Co.
The date of this prospectus supplement is May ,
2011
You should read this prospectus supplement along with the
accompanying prospectus dated April 8, 2011. This
prospectus supplement and the accompanying prospectus form one
single document and both contain information you should consider
when making your investment decision. You should rely only on
the information contained or incorporated by reference in this
prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized anyone to provide
you with information that is different. If the information
contained in this prospectus supplement is inconsistent with the
accompanying prospectus, you should rely on this prospectus
supplement. The information in this prospectus supplement and
the accompanying prospectus may only be accurate as of their
respective dates.
The distribution of this prospectus supplement and the
accompanying prospectus and the offering of the notes in certain
jurisdictions may be restricted by law. Persons who come into
possession of this prospectus supplement and the accompanying
prospectus should inform themselves about and observe any such
restrictions. This prospectus supplement and the accompanying
prospectus do not constitute, and may not be used in connection
with, an offer or solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to
do so or to any person to whom it is unlawful to make such offer
or solicitation.
TABLE OF
CONTENTS
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Prospectus Supplement
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S-ii
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S-iii
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S-1
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S-10
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S-11
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S-12
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S-13
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S-14
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S-22
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S-29
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S-31
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S-31
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Page
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Prospectus
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About This Prospectus
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1
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Where You Can Find More Information
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1
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Special Note Regarding Forward-Looking Statements
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2
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Risk Factors
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4
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Use of Proceeds
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4
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Ratio of Earnings to Fixed Charges
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4
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Description of Capital Stock
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5
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Description of Debt Securities
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11
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Description of Other Securities
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Plan of Distribution
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Validity of Securities
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23
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Experts
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S-i
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which contains the terms of this offering of notes.
The second part is the accompanying prospectus dated
April 8, 2011, which is part of our Registration Statement
on
Form S-3.
This prospectus supplement may add to, update or change the
information in the accompanying prospectus. If information in
this prospectus supplement is inconsistent with information in
the accompanying prospectus, the information in this prospectus
supplement will apply and will supersede that information in the
accompanying prospectus. It is important for you to read and
consider all information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus in
making your investment decision.
No person is authorized to give any information or to make any
representations other than those contained or incorporated by
reference in this prospectus supplement or the accompanying
prospectus and, if given or made, such information or
representations must not be relied upon as having been
authorized. The distribution of this prospectus supplement and
the accompanying prospectus and the offering of the notes in
certain jurisdictions may be restricted by law. This prospectus
supplement and the accompanying prospectus do not constitute an
offer to sell or the solicitation of an offer to buy any
securities other than the securities described in this
prospectus supplement or an offer to sell or the solicitation of
an offer to buy such securities in any circumstances in which
such offer or solicitation is unlawful. Neither the delivery of
this prospectus supplement and the accompanying prospectus, nor
any sale made hereunder, shall under any circumstances create
any implication that there has been no change in our affairs
since the date of this prospectus supplement, or that the
information contained or incorporated by reference in this
prospectus supplement or the accompanying prospectus is correct
as of any time subsequent to the date of such information.
In this prospectus supplement and the accompanying prospectus,
unless otherwise stated, references to RPM,
we, us, our and the
Company refer to RPM International Inc. and its
consolidated subsidiaries. With respect to the discussion of the
terms of the notes on the cover page, in the section entitled
Summary and in the section entitled
Description of Notes, the words RPM,
we, us, our and the
Company refer only to RPM International Inc. and not
to any of its subsidiaries.
S-ii
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus
(including the information incorporated by reference therein)
contains forward-looking statements. These statements relate to
our plans, expectations, estimates and beliefs of future events
or our future financial performance and involve known and
unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or
achievements to be materially different from those expressed or
implied by any forward-looking statements. In some cases, you
can identify forward-looking statements by terminology such as
may, will, could,
would, should, expect,
plan, anticipate, target,
project, intend, believe,
estimate, predict,
potential, pro forma, seek
or continue or the negative of those terms or other
comparable terminology. These statements are only predictions
and we can give no assurance that such expectations will prove
to be correct. Some of the things that could cause our actual
results to differ substantially from our expectations are:
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global markets and general economic conditions, including
uncertainties surrounding the volatility in financial markets,
the availability of capital and the effect of changes in
interest rates, and the viability of banks and other financial
institutions;
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the prices, supply and capacity of raw materials, including
assorted pigments, resins, solvents, and other natural gas- and
oil-based materials; packaging, including plastic containers;
and transportation services, including fuel surcharges;
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continued growth in demand for our products;
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legal, environmental and litigation risks inherent in our
construction and chemicals businesses and risks related to the
adequacy of our insurance coverage for such matters;
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the effect of changes in interest rates;
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the effect of fluctuations in currency exchange rates upon our
foreign operations;
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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;
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risks and uncertainties associated with our ongoing acquisition
and divestiture activities;
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risks related to the adequacy of our contingent liability
reserves;
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risks and uncertainties associated with the Specialty Products
Holding Corp. bankruptcy proceedings; and
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other factors referenced in this prospectus supplement and the
accompanying prospectus, including those set forth under the
caption Risk Factors, and in our filings with the
SEC, including those set forth or discussed in the Risk
Factors and Managements Discussion and
Analysis sections of those reports.
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We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise, after the date of this
prospectus supplement to conform them to actual results. All of
the forward-looking statements are qualified in their entirety
by reference to the factors discussed in and incorporated by
reference into the section captioned Risk Factors,
and by any cautionary language, in this prospectus supplement
and the accompanying prospectus. We caution you that these risk
factors may not be exhaustive. We operate in a continually
changing business environment, and new risk factors emerge from
time to time. We cannot predict such new risk factors, nor can
we assess the impact, if any, of such new risk factors on our
businesses or the extent to which any factor or combination of
factors, may cause actual results to differ materially from
those projected in any forward-looking statements. In light of
these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus supplement and the
accompanying prospectus or in documents incorporated by
reference therein might not occur.
S-iii
SUMMARY
The following summary is qualified in its entirety by the more
detailed information included elsewhere or incorporated by
reference in this prospectus supplement and the accompanying
prospectus. Because this is a summary, it may not contain all
the information that may be important to you. You should read
the entire prospectus supplement and the accompanying prospectus
as well as the documents incorporated by reference before making
an investment decision.
The
Company
Our subsidiaries manufacture, market and sell various specialty
chemical product lines, including high-quality specialty paints,
protective coatings, roofing systems, sealants and adhesives,
focusing on the maintenance and improvement needs of both the
industrial and consumer markets. Our family of products includes
those marketed under brand names such as Carboline, DAP, EUCO,
Fibergrate, Flecto, Flowcrete, Universal Sealants, illbruck,
Rust-Oleum, Stonhard, Tremco, Watco and Zinsser. As of
May 31, 2010, our subsidiaries marketed products in
approximately 150 countries and territories and operated
manufacturing facilities in approximately 77 locations in the
United States, Argentina, Belgium, Canada, Colombia, The Czech
Republic, France, Germany, Italy, Malaysia, Mexico, The
Netherlands, Norway, Poland, South Africa, Sweden, the United
Arab Emirates and the United Kingdom. Approximately 39% of our
sales are generated in international markets through a
combination of exports and direct sales in foreign countries.
For the fiscal year ended May 31, 2010, we recorded net
sales of $3.4 billion, and for the nine months ended
February 28, 2011, we recorded net sales of
$2.4 billion.
Our business is divided into two reportable segments: the
consumer reportable segment (consumer segment) and
the industrial reportable segment (industrial
segment). Within each reportable segment, we aggregate
several operating segments which comprise individual reporting
units and product lines that generally address common markets,
utilize similar technologies and are able to share manufacturing
or distribution capabilities. The industrial segment (RPM
Building Solutions Group, Performance Coatings Group and RPM2
Group), which comprised approximately 68% of our total net sales
for the fiscal year ended May 31, 2010 and for the nine
months ended February 28, 2011, includes maintenance and
protection products for roofing and waterproofing systems,
flooring, corrosion control and other specialty applications.
The consumer segment (Rust-Oleum Group and DAP Group) which
comprised approximately 32% of our total net sales for the
fiscal year ended May 31, 2010 and for the nine months
ended February 28, 2011, includes rust-preventative,
special purpose and decorative paints, caulks, sealants, primers
and other branded consumer products.
On May 31, 2010, Bondex International, Inc. and its parent,
Specialty Products Holding Corp. (SPHC), voluntarily
filed Chapter 11 reorganization proceedings in the United
States Bankruptcy Court for the District of Delaware. SPHC is
our wholly owned subsidiary. In accordance with Accounting
Standards Codification 810, when a subsidiary becomes subject to
the control of a government, court, administrator, or regulator,
deconsolidation of that subsidiary is generally required. We
have therefore deconsolidated SPHC and its subsidiaries from our
balance sheet as of May 31, 2010, and have eliminated the
results of SPHCs operations from our results of operations
beginning on that date.
Industrial
Segment
Our industrial segment products are sold throughout North
America and also account for the majority of our international
sales. Our industrial product lines are sold directly to
contractors, distributors and end-users, such as owners of
industrial manufacturing facilities, public institutions and
other commercial customers. Our industrial segment generated
$2.3 billion in net sales for the fiscal year ended
May 31, 2010
S-1
and $1.63 billion in net sales for the nine months ended
February 28, 2011, and includes the following major product
lines and brand names:
RPM Building Solutions Group:
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waterproofing and institutional roofing systems used in building
protection, maintenance and weatherproofing applications
marketed under our Tremco, Republic, Vulkem and Dymeric brand
names;
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sealants, tapes and foams that seal and insulate joints in
various construction assemblies marketed under our Tremco,
illbruck and Spectrem brand names;
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residential basement waterproofing systems marketed under our
Tuff-N-Dri and Watchdog Waterproofing brand names;
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specialized roofing and building maintenance and related
services marketed by our Weatherproofing Technologies subsidiary;
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specialty industrial adhesives and sealants marketed under our
Pactan brand name; and
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concrete and masonry additives and related construction
chemicals marketed under our EUCO, Increte and Tamms brand names.
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Performance Coatings Group:
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high-performance polymer flooring systems for industrial,
institutional and commercial facility floor surfaces marketed
under our Stonhard and Flowcrete brand names;
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industrial and commercial tile systems marketed under our
Lock-Tile and Ecoloc brand names;
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fiberglass reinforced plastic gratings and shapes used for
industrial platforms, staircases and walkways marketed under our
Fibergrate, Chemgrate, Corgrate and Safe-T-Span brand names;
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high-performance, heavy-duty corrosion-control coatings,
fireproofing products and containment linings for a wide variety
of industrial infrastructure applications marketed under our
Carboline, Nullifire, A/D Fire, Thermo-lag and Plasite brand
names; and
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specialty construction products including bridge expansion
joints, bridge deck waterproofing membranes, protective coatings
and concrete repair marketed under our Universal Sealants,
BridgeCare, StructureCare, Pitchmastic, Nufins and Visul brand
names.
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RPM2 Group:
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fluorescent colorants and pigments marketed under our Radiant
and Dane Color brand names;
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waterproofing and flooring products marketed under our RPM
Belgium brand name;
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waterproofing and concrete repair products marketed under our
Vandex brand name; and
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shellac-based-specialty coatings for industrial and
pharmaceutical uses, edible glazes and food coatings marketed
under our Mantrose-Haeuser and NatureSeal brand names.
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S-2
Consumer
Segment
Our consumer segment manufactures and markets professional use
and do-it-yourself (DIY) products for a variety of
mainly consumer applications, including home improvement and
personal leisure activities. Our consumer segments major
manufacturing and distribution operations are located primarily
in North America, along with a few locations in Europe. Consumer
segment products are sold directly to mass merchandisers, home
improvement centers, hardware stores, paint stores, craft shops
and to other smaller customers through distributors. Our
consumer segment generated $1.1 billion in net sales in the
fiscal year ended May 31, 2010 and $766 million in net
sales for the nine months ended February 28, 2011, and is
composed of the following major product lines and brand names:
Rust-Oleum Group:
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a broad line of coating products to protect and decorate a wide
variety of surfaces for the DIY and professional markets which
are sold under several key Rust-Oleum brand names, including
Stops Rust, American Accents, Painters Touch, Specialty,
Professional, Tremclad, Universal, Varathane, Watco, Epoxy
Shield, Industrial Choice, Labor Saver, Road Warrior, Sierra
Performance, Hard Hat, Mathys, CombiColor, Noxyde and
Blackfriar. In addition, Rust-Oleum branded products in Canada
are marketed under the Mono and Tremclad brand names;
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a broad line of specialty products targeted to solve problems
for the paint contractor and the DIYer for applications that
include surface preparation, mold and mildew prevention,
wallpaper removal and application, and waterproofing, under our
Zinsser, B-I-N, Bulls Eye 1-2-3,
Cover-Stain,
DIF, FastPrime, Sealcoat, Jomax, Gardz, Perma White, Shieldz,
Watertite, Okon, Parks, Papertiger and Walworks brand names;
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deck and fence restoration products marketed by our Wolman Wood
Care Products business;
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metallic and faux finish coatings marketed under our Modern
Masters brand name; and
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an assortment of other products, including hobby paints and
cements marketed under our Testors brand name.
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DAP Group:
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a complete line of caulks, sealants, adhesives, insulating foam,
spackling, glazing, and other general patch and repair products
for home improvement and construction marketed through a wide
assortment of DAP branded products, including 33,
1012, 2000, 4000, 7000, Alex, Alex Fast Dry, Alex
Plus, Alex Ultra, Beats The Nail, Blend Stick, Blockade,
Butyl-Flex,
Caulk-Be-Gone,
Crack Shot, Custom Patch, DAPtex, DAPtex Plus, DryDex, Dynaflex
230, Easy Solutions, Elastopatch, Fast N Final, Kwik Foam,
Kwik Seal, Kwik Seal Plus, One Stik2, Patch Stick,
Painters Putty 53, Patch-N-Paint, Plastic
Wood, Presto Patch, Quick Plug, Rely-On, Seal N Peel, SIDE
Winder, StikARounds, StrongStik, Weldwood and Phenoseal, which
is a brand of Gloucester Company Inc., which is a subsidiary of
DAP Products Inc.
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Our principal executive offices are at 2628 Pearl Road,
P.O. Box 777, Medina, Ohio 44258, and our telephone
number is
(330) 273-5090.
S-3
The
Offering
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Issuer |
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RPM International Inc. |
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Securities Offered |
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An additional $150 million aggregate principal amount of
6.125% Notes due 2019. The notes will be a further issuance
of, be fully fungible with, rank equally in right of payment
with and form a single series with the $300,000,000 aggregate
principal amount of 6.125% Notes due 2019 initially issued
by us on October 9, 2009. |
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Maturity |
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October 15, 2019. |
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Interest Rate |
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The notes will bear interest at a rate of 6.125% per year
payable semiannually in arrears on April 15 and October 15 of
each year. The first interest payment will be on
October 15, 2011 and will include accrued interest from,
and including, April 15, 2011. |
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Ranking |
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The notes will be our general unsecured obligations. The notes
will rank equally with all of our other current and future
unsecured, unsubordinated debt and senior in right of payment to
all of our future subordinated debt. The notes will be
effectively subordinated to: |
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any of our secured debt to the
extent of the assets securing that debt; and
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all debt for money borrowed and
other liabilities of our subsidiaries to the extent of the
assets of those subsidiaries.
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Covenants |
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The notes contain covenants that will limit our ability to: |
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incur some liens securing debt;
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engage in some sale-leaseback
transactions; and
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enter into some consolidations,
mergers or transfers of substantially all of our assets.
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Repurchase at the Option of Holders Upon a Change of Control
Triggering Event |
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If we experience a Change of Control Triggering
Event (as defined in Description of
NotesChange of Control), we will be required, unless
we have exercised our right to redeem the notes, to offer to
purchase the notes at a purchase price equal to 101% of their
principal amount plus accrued and unpaid interest. |
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Optional Redemption |
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The notes will be redeemable at our option, at any time in whole
or from time to time in part, at a redemption price equal to the
greater of (1) 100% of the principal amount of the notes to
be redeemed and (2) the sum of the present values of the
remaining scheduled payments of principal and interest thereon
discounted to the redemption date on a semiannual basis
(assuming a
360-day |
S-4
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year consisting of twelve
30-day
months) at the Treasury Rate plus 45 basis points, plus
accrued and unpaid interest. See Description of
NotesOptional Redemption. |
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Sinking Fund |
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None. |
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Use of Proceeds |
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We intend to use the net proceeds from the sale of the notes for
general corporate purposes, including working capital and
possible acquisitions of complementary businesses or other
assets. We expect to apply a portion of the net proceeds to fund
our increased minority interest in Kemrock Industries and
Exports Ltd. (Kemrock), a fully integrated
fiberglass reinforced plastic composites manufacturer located in
India. The actual amount of proceeds used for this purpose
depends on the results of a tender offer made to Kemrock
shareholders. Although we have an approximately $40 million
letter of credit supporting the maximum amount of our potential
tender offer obligations, we expect that the actual amount of
the proceeds that will be used for this purpose will be
substantially less than that amount. |
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Denominations and Form |
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We will issue the notes of each series in the form of one or
more fully registered global notes registered in the name of the
nominee of The Depository Trust Company (DTC). The notes
will be issued in minimum denominations of $2,000 and in
integral multiples of $1,000 in excess thereof. |
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No Listing |
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We do not intend to apply for the listing of the notes on any
securities exchange or for the quotation of the notes in any
dealer quotation system. |
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Risk Factors |
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An investment in the notes involves risks. You should carefully
consider the information set forth in the section of this
prospectus supplement entitled Risk Factors
beginning on
page S-10,
as well as other information included or incorporated by
reference in this prospectus supplement and the accompanying
prospectus before deciding whether to invest in the notes. |
S-5
Summary
Historical Consolidated Financial Information
The following information sets forth summary historical
consolidated financial information of RPM International Inc. for
the periods presented. We derived the summary historical
consolidated financial information presented below for each of
the five fiscal years in the period ended May 31, 2010 from
our audited consolidated financial statements and our 2010
Annual Report to Stockholders. The information as of and for the
nine months ended February 28, 2010 and February 28,
2011 was derived from our unaudited interim consolidated
financial statements and includes, in the opinion of management,
all normal and recurring adjustments necessary to present fairly
the information for such periods. The results of operations for
the nine months ended February 28, 2010 and
February 28, 2011 are not necessarily indicative of the
results to be expected for the fiscal year ending May 31,
2011.
You should read the financial information presented below in
conjunction with the respective audited and unaudited
consolidated financial statements and related notes,
Managements Discussion and Analysis of Results of
Operations and Financial Condition and other financial
information contained in our Annual Report on
Form 10-K
for the year ended May 31, 2010 and our Quarterly Report on
Form 10-Q
for the quarter ended February 28, 2011, which are
incorporated by reference in the accompanying prospectus.
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Nine Months
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Ended
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Fiscal Years Ended May 31,
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February 28,
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2006
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2007
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2008
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|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
2011 (h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(In millions, except per share amounts and percentages)
|
|
|
|
|
|
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$3,008.3
|
|
|
|
$3,338.8
|
|
|
|
$3,643.8
|
|
|
|
$3,368.2
|
|
|
|
$3,412.7
|
|
|
|
$2,441.2
|
|
|
|
$2,400.1
|
|
Cost of sales
|
|
|
1,760.9
|
|
|
|
1,978.3
|
|
|
|
2,145.3
|
|
|
|
2,015.1
|
|
|
|
1,977.3
|
|
|
|
1,424.3
|
|
|
|
1,415.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,247.4
|
|
|
|
1,360.5
|
|
|
|
1,498.5
|
|
|
|
1,353.1
|
|
|
|
1,435.4
|
|
|
|
1,016.9
|
|
|
|
984.4
|
|
Selling, general and administrative expenses (a)
|
|
|
948.5
|
|
|
|
1,021.0
|
|
|
|
1,124.4
|
|
|
|
1,096.5
|
|
|
|
1,115.2
|
|
|
|
800.0
|
|
|
|
759.4
|
|
Asbestos charges (income)
|
|
|
380.0
|
|
|
|
(15.0
|
)
|
|
|
288.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible asset impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
47.9
|
|
|
|
58.2
|
|
|
|
65.5
|
|
|
|
54.5
|
|
|
|
59.3
|
|
|
|
43.3
|
|
|
|
49.0
|
|
Investment expense (income), net
|
|
|
(6.5
|
)
|
|
|
(11.2
|
)
|
|
|
(13.5
|
)
|
|
|
5.7
|
|
|
|
(7.6
|
)
|
|
|
(5.0
|
)
|
|
|
(11.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(122.5
|
) (c)
|
|
|
307.5
|
(d)
|
|
|
34.0
|
(e)
|
|
|
180.9
|
(f)
|
|
|
268.5
|
(g)
|
|
|
178.6
|
|
|
|
187.2
|
(h)
|
Provision (benefit) for income taxes
|
|
|
(46.3
|
)
|
|
|
99.2
|
|
|
|
(10.4
|
)
|
|
|
61.3
|
|
|
|
87.4
|
|
|
|
58.3
|
|
|
|
57.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(76.2
|
)
|
|
|
208.3
|
|
|
|
44.4
|
|
|
|
119.6
|
|
|
|
181.1
|
|
|
|
120.3
|
|
|
|
129.7
|
|
Less: Net income attributable to Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.1
|
|
|
|
0.8
|
|
|
|
10.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to RPM International Inc.
stockholders
|
|
|
$(76.2
|
)
|
|
|
$208.3
|
|
|
|
$44.4
|
|
|
|
$119.6
|
|
|
|
$180.0
|
|
|
|
$119.5
|
|
|
|
$118.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share (basic) (j)
|
|
|
$(0.68
|
)
|
|
|
$1.71
|
|
|
|
$0.36
|
|
|
|
$0.93
|
|
|
|
$1.40
|
|
|
|
$0.93
|
|
|
|
$0.92
|
|
Earnings (loss) per share (diluted) (j)
|
|
|
(0.68
|
)
|
|
|
1.64
|
|
|
|
0.36
|
|
|
|
0.93
|
|
|
|
1.39
|
|
|
|
0.93
|
|
|
|
0.91
|
|
Cash dividends declared per share
|
|
|
0.630
|
|
|
|
0.685
|
|
|
|
0.745
|
|
|
|
0.790
|
|
|
|
0.815
|
|
|
|
0.610
|
|
|
|
0.625
|
|
Average number of shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
116.8
|
|
|
|
118.2
|
|
|
|
120.2
|
|
|
|
126.4
|
|
|
|
127.0
|
|
|
|
126.9
|
|
|
|
127.4
|
|
Diluted
|
|
|
116.8
|
(k)
|
|
|
127.6
|
|
|
|
121.4
|
|
|
|
127.7
|
|
|
|
127.7
|
|
|
|
127.5
|
|
|
|
128.0
|
|
S-6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
|
|
|
|
|
Ended
|
|
|
|
Fiscal Years Ended May 31,
|
|
|
February 28,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
2011 (h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(In millions, except per share amounts and percentages)
|
|
|
|
|
|
|
|
|
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT (b)
|
|
|
$(81.1
|
) (c)
|
|
|
$354.5
|
(d)
|
|
|
$86.0
|
(e)
|
|
|
$241.1
|
(f)
|
|
|
$320.2
|
(g)
|
|
|
$216.9
|
|
|
|
$225.0
|
|
EBITDA (b)
|
|
|
(6.8
|
) (c)
|
|
|
436.1
|
(d)
|
|
|
171.4
|
(e)
|
|
|
326.2
|
(f)
|
|
|
404.5
|
(g)
|
|
|
280.1
|
|
|
|
279.5
|
|
EBITDA margin (i)
|
|
|
(0.2
|
)%
|
|
|
13.1
|
%
|
|
|
4.7
|
%
|
|
|
9.7
|
%
|
|
|
11.9
|
%
|
|
|
11.5
|
%
|
|
|
11.6
|
%
|
Depreciation and amortization
|
|
|
$74.3
|
|
|
|
$81.6
|
|
|
|
$85.4
|
|
|
|
$85.1
|
|
|
|
$84.3
|
|
|
|
$63.2
|
|
|
|
$54.5
|
|
Cash flows from operating activities
|
|
|
185.5
|
|
|
|
202.3
|
|
|
|
234.7
|
|
|
|
267.0
|
|
|
|
203.9
|
|
|
|
188.9
|
|
|
|
191.0
|
|
Cash flows (used in) investing activities
|
|
|
(234.4
|
)
|
|
|
(208.2
|
)
|
|
|
(169.2
|
)
|
|
|
(81.5
|
)
|
|
|
(127.0
|
)
|
|
|
(87.7
|
)
|
|
|
(66.6
|
)
|
Cash flows from (used in) financing activities
|
|
|
(29.8
|
)
|
|
|
45.2
|
|
|
|
(11.5
|
)
|
|
|
(138.6
|
)
|
|
|
(98.6
|
)
|
|
|
(97.1
|
)
|
|
|
(87.8
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
3.2
|
|
|
|
11.1
|
|
|
|
18.2
|
|
|
|
(24.7
|
)
|
|
|
(16.3
|
)
|
|
|
(1.3
|
)
|
|
|
23.5
|
|
Capital expenditures
|
|
|
(61.2
|
)
|
|
|
(70.4
|
)
|
|
|
(71.8
|
)
|
|
|
(55.0
|
)
|
|
|
(23.2
|
)
|
|
|
(14.1
|
)
|
|
|
(21.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of May 31,
|
|
|
As of February 28,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$108.6
|
|
|
|
$159.0
|
|
|
|
$231.3
|
|
|
|
$253.4
|
|
|
|
$215.4
|
|
|
|
$256.2
|
|
|
|
$275.5
|
|
All other current assets, excluding cash and cash equivalents
|
|
|
1,262.6
|
|
|
|
1,411.2
|
|
|
|
1,552.7
|
|
|
|
1,299.5
|
|
|
|
1,233.3
|
|
|
|
1,210.7
|
|
|
|
1,256.3
|
|
Working capital (j)
|
|
|
655.7
|
|
|
|
705.5
|
|
|
|
937.6
|
|
|
|
703.8
|
|
|
|
817.2
|
|
|
|
827.3
|
|
|
|
927.1
|
|
Property, plant and equipment, net
|
|
|
444.7
|
|
|
|
473.3
|
|
|
|
497.7
|
|
|
|
470.1
|
|
|
|
382.5
|
|
|
|
445.0
|
|
|
|
381.5
|
|
Total assets
|
|
|
2,996.1
|
|
|
|
3,333.1
|
|
|
|
3,763.6
|
|
|
|
3,409.9
|
|
|
|
3,004.0
|
|
|
|
3,337.4
|
|
|
|
3,155.8
|
|
Current and long-term debt
|
|
|
876.6
|
|
|
|
988.1
|
|
|
|
1,073.6
|
|
|
|
930.8
|
|
|
|
928.6
|
|
|
|
908.1
|
|
|
|
935.7
|
|
Stockholders equity
|
|
|
925.9
|
|
|
|
1,086.9
|
|
|
|
1,136.6
|
|
|
|
1,143.7
|
|
|
|
1,079.5
|
|
|
|
1,204.7
|
|
|
|
1,211.5
|
|
|
|
|
(a) |
|
Selling, general and administrative expenses include research
and development and other operating expenses. |
|
(b) |
|
EBIT is defined as earnings (loss) before interest and taxes,
while EBITDA is defined as earnings (loss) before interest,
taxes, depreciation and amortization. We evaluate the profit
performance of our segments based on income before income taxes,
but also look to EBIT as a performance evaluation measure
because interest expense is essentially related to corporate
acquisitions, as opposed to segment operations. We believe EBIT
is useful to investors for this purpose as well, using EBIT as a
metric in their investment decisions. EBIT should not be
considered an alternative to, or more meaningful than, operating
income as determined in accordance with GAAP, since EBIT omits
the impact of interest and taxes in determining operating
performance, which represent items necessary to our continued
operations, given our level of indebtedness and ongoing tax
obligations. We evaluate our liquidity based on cash flows from
operating, investing and financing activities, as defined by
GAAP, but also look to EBITDA as a supplemental liquidity
measure, because we find it useful to understand and evaluate
our capacity, excluding the impact of interest, taxes, and
non-cash depreciation and amortization charges, for servicing
our debt and otherwise meeting our cash needs, prior to our
consideration of the impacts of other potential sources and uses
of cash, such as working capital items. We believe that EBITDA
is useful to investors for these purposes as well. EBITDA should
not be considered an alternative to, or more meaningful than,
cash |
S-7
|
|
|
|
|
flows from operating activities, as determined in accordance
with GAAP, since it omits the impact of interest, taxes and
changes in working capital that use/provide cash (such as
receivables, payables and inventories) as well as the
sources/uses of cash associated with changes in other balance
sheet items (such as long-term loss accruals and deferred
items). Since EBITDA excludes depreciation and amortization,
EBITDA does not reflect any cash requirements for the
replacement of the assets being depreciated and amortized, which
assets will often have to be replaced in the future. Further,
EBITDA, since it also does not reflect the impact of debt
service, cash dividends or capital expenditures, does not
represent how much discretionary cash we have available for
other purposes. Nonetheless, EBIT and EBITDA are key measures
expected by and useful to our fixed income investors, rating
agencies and the banking community all of whom believe, and we
concur, that these measures are critical to the capital
markets analysis of (i) our segments core
operating performance, and (ii) our ability to service
debt, fund capital expenditures and otherwise meet cash needs,
respectively. The following table contains a reconciliation of
EBIT and EBITDA to the respective GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
Fiscal Years Ended May 31,
|
|
|
February 28,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
$(122.5
|
)
|
|
|
$307.5
|
|
|
|
$34.0
|
|
|
|
$180.9
|
|
|
|
$268.5
|
|
|
|
$178.6
|
|
|
|
$187.2
|
|
Interest expense
|
|
|
47.9
|
|
|
|
58.2
|
|
|
|
65.5
|
|
|
|
54.5
|
|
|
|
59.3
|
|
|
|
43.3
|
|
|
|
49.0
|
|
Investment expense (income), net
|
|
|
(6.5
|
)
|
|
|
(11.2
|
)
|
|
|
(13.5
|
)
|
|
|
5.7
|
|
|
|
(7.6
|
)
|
|
|
(5.0
|
)
|
|
|
(11.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
|
(81.1
|
)
|
|
|
354.5
|
|
|
|
86.0
|
|
|
|
241.1
|
|
|
|
320.2
|
|
|
|
216.9
|
|
|
|
225.0
|
|
Depreciation and amortization
|
|
|
74.3
|
|
|
|
81.6
|
|
|
|
85.4
|
|
|
|
85.1
|
|
|
|
84.3
|
|
|
|
63.2
|
|
|
|
54.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
$(6.8
|
)
|
|
|
$436.1
|
|
|
|
$171.4
|
|
|
|
$326.2
|
|
|
|
$404.5
|
|
|
|
$280.1
|
|
|
|
$279.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense)
|
|
|
(47.9
|
)
|
|
|
(58.2
|
)
|
|
|
(65.5
|
)
|
|
|
(54.5
|
)
|
|
|
(59.3
|
)
|
|
|
(43.3
|
)
|
|
|
(49.0
|
)
|
Investment (expense) income, net
|
|
|
6.5
|
|
|
|
11.2
|
|
|
|
13.5
|
|
|
|
(5.7
|
)
|
|
|
7.6
|
|
|
|
5.0
|
|
|
|
11.2
|
|
(Provision) benefit for income taxes
|
|
|
46.3
|
|
|
|
(99.2
|
)
|
|
|
10.4
|
|
|
|
(61.3
|
)
|
|
|
(87.4
|
)
|
|
|
(58.3
|
)
|
|
|
(57.5
|
)
|
Items not affecting cash and other
|
|
|
213.3
|
|
|
|
(29.3
|
)
|
|
|
176.9
|
|
|
|
(19.9
|
)
|
|
|
(66.1
|
)
|
|
|
(23.0
|
)
|
|
|
28.7
|
|
Changes in operating assets and liabilities
|
|
|
(25.9
|
)
|
|
|
(58.3
|
)
|
|
|
(72.0
|
)
|
|
|
82.2
|
|
|
|
4.6
|
|
|
|
28.4
|
|
|
|
(21.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from operating activities
|
|
|
$185.5
|
|
|
|
$202.3
|
|
|
|
$234.7
|
|
|
|
$267.0
|
|
|
|
$203.9
|
|
|
|
$188.9
|
|
|
|
$191.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Fiscal year 2006 income before income taxes, EBIT and EBITDA
include the unfavorable impact of asbestos charges of
$380.0 million ($244.3 million after-tax). |
|
(d) |
|
Fiscal year 2007 income before income taxes, EBIT and EBITDA
include the favorable impact of asbestos-related insurance
settlement income of $15.0 million ($9.7 million
after-tax). |
|
(e) |
|
Fiscal year 2008 income before income taxes, EBIT and EBITDA
include the unfavorable impact of asbestos charges of
$288.1 million ($185.1 million after-tax). |
|
(f) |
|
Fiscal year 2009 income before income taxes, EBIT and EBITDA
include the unfavorable impact of goodwill and other intangible
asset impairment charges of $15.5 million
($15.3 million after-tax). |
|
(g) |
|
Fiscal year 2010 income before income taxes, EBIT and EBITDA
include the impact of the loss on deconsolidation of Specialty
Products Holding Corp. (SPHC) of $7.9 million. |
S-8
|
|
|
(h) |
|
Results of operations data for the nine months ended
February 28, 2011 includes the impact of the
deconsolidation of SPHC on May 31, 2010. |
|
(i) |
|
EBITDA margin represents the percentage of EBITDA to net sales.
See footnote (b) above for a reconciliation of EBITDA to
cash from operating activities. |
|
(j) |
|
Working capital is defined as the excess of total current assets
over total current liabilities. |
|
(k) |
|
For the year ended May 31, 2006, net issuable common share
equivalents totaling 2.8 million shares, and shares
relating to our convertible securities and their related income
effect, totaling 8.0 million shares and $3.7 million,
respectively, were not assumed in our computation of fully
diluted earnings per share, since the result would have been
anti-dilutive. |
S-9
RISK
FACTORS
You should carefully consider the following risks, as well as
the other information contained or incorporated by reference in
this prospectus supplement and the accompanying prospectus,
before investing in the notes. If any of the following risks
actually occur, our business could be harmed. You should refer
to the other information set forth or incorporated by reference
in this prospectus supplement and the accompanying prospectus,
including the Risk Factors sections of our Annual
Report on
Form 10-K
for the year ended May 31, 2010 and our Quarterly Report on
Form 10-Q
for the quarter ended February 28, 2011 and our
consolidated financial statements and the related notes
incorporated by reference in this prospectus supplement and the
accompanying prospectus.
Your
Right to Receive Payments on The Notes is Effectively
Subordinated to the Rights of our Existing and Future Secured
Creditors.
The notes represent unsecured obligations of RPM. Accordingly,
holders of our secured indebtedness will have claims that are
superior to your claims as holders of the notes to the extent of
the value of the assets securing that other indebtedness. The
notes are also effectively subordinated to any existing and
future liabilities of our subsidiaries. We or our subsidiaries
may incur substantial additional indebtedness in the future,
which may be senior to the notes. The terms of the notes do not
impose any limitation on us or our subsidiaries ability to
incur such additional debt.
In the event of any distribution or payment of our assets in
foreclosure, dissolution,
winding-up,
liquidation, reorganization or other bankruptcy proceeding, our
secured creditors will have a superior claim to those of our
assets that constitute their collateral. If any of the foregoing
events occur, we cannot assure you that there will be sufficient
assets to pay amounts due on the notes. Holders of the notes
will participate ratably with all holders of our other unsecured
senior indebtedness, and with all of our other general senior
creditors, based upon the respective amounts owed to each holder
or creditor, in our remaining assets. As a result, holders of
the notes may receive less, ratably, than our secured creditors.
We are a
Holding Company and we Depend upon Cash from our Subsidiaries to
Service our Debt. If we do not Receive Cash Distributions,
Dividends or Other Payments from our Subsidiaries, we may not be
Able to Make Payments on the Notes.
We are a holding company and all of our operations are conducted
through our subsidiaries. Accordingly, we are dependent upon the
earnings and cash flows of, and cash distributions, dividends or
other payments from, our subsidiaries to provide the funds
necessary to meet our debt service obligations, including the
required payments on the notes. If we do not receive cash
distributions, dividends or other payments from our
subsidiaries, we may not be able to pay the principal or
interest on the notes.
Our subsidiaries are permitted under the terms of our
indebtedness to incur additional indebtedness that may restrict
or prohibit the making of distributions, the payment of
dividends or the making of loans by our subsidiaries to us. We
cannot assure you that agreements governing the current and
future indebtedness of our subsidiaries will permit our
subsidiaries to provide us with sufficient cash distributions,
dividends or other payments to fund payments on these notes when
due.
We may
not have the Funds to Repurchase the Notes upon a Change of
Control Triggering Event as Required by the Notes.
Upon a change of control triggering event, as defined in the
notes, subject to certain conditions, we are required to offer
to repurchase all outstanding notes at 101% of the principal
amount of the notes, plus accrued and unpaid interest to the
date of repurchase. The source of funds for that repurchase of
notes will be our available cash or cash generated from our
subsidiaries operations or other potential sources,
including borrowings, sales of assets or sales of equity. We
cannot assure you that sufficient funds from those sources
S-10
will be available at the time of any change of control
triggering event to make required repurchases of notes tendered.
In addition, the terms of our credit agreement provide that
specified change of control events constitute an event of
default under the credit agreement. Our future debt agreements
may contain similar restrictions and provisions. If the holders
of the notes exercise their right to require us to repurchase
all their notes upon a change of control triggering event, the
financial effect of such a repurchase could cause a default
under our other debt agreements, even if the change of control
itself would not cause a default under those agreements.
Accordingly, it is possible that we will not have sufficient
funds at the time of the change of control triggering event to
make the required repurchase of our other debt and the notes or
that restrictions in our credit agreement will not allow such
repurchases. See Description of NotesChange of
Control Offer for additional information.
There are
Uncertainties Regarding the Price and Terms on Which a Holder
could Dispose of the Notes, if at All.
We have not applied to list the notes on any national securities
exchange or inter-dealer quotation system. As a result, we are
unable to assure you as to the presence or the liquidity of any
trading market for the notes.
We cannot assure you that you will be able to sell your notes at
a particular time or that the prices that you receive when you
sell your notes will be favorable. We also cannot assure you as
to the level of liquidity of the trading market for the notes.
Future trading prices of the notes will depend on many factors,
including:
|
|
|
|
|
our operating performance and financial condition;
|
|
|
|
the interest of securities dealers in making a market and the
number of available buyers; and
|
|
|
|
the market for similar securities.
|
You should not purchase any of the notes unless you understand
the investment risks involving the notes and determine that you
are able to take such risks.
USE OF
PROCEEDS
We expect to receive net proceeds of approximately
$ million, after deducting
the underwriting discount but before deducting our expenses
relating to the offering. We intend to use the net proceeds from
the sale of the notes for general corporate purposes, including
working capital and possible acquisitions of complementary
businesses or other assets. We expect to apply a portion of the
net proceeds to fund our increased minority interest in Kemrock
Industries and Exports Ltd. (Kemrock), a fully
integrated fiberglass reinforced plastic composites manufacturer
located in India. The actual amount of proceeds used for this
purpose depends on the results of a tender offer made to Kemrock
shareholders. Although we have an approximately $40 million
letter of credit supporting the maximum amount of our potential
tender offer obligations, we expect that the actual amount of
the proceeds that will be used for this purpose will be
substantially less than that amount.
S-11
CAPITALIZATION
The following table sets forth our consolidated cash and cash
equivalents and our consolidated capitalization as of
February 28, 2011 and on an as adjusted basis to reflect
the issuance and sale of the notes. This table should be read in
conjunction with the financial information contained elsewhere
or incorporated by reference in this prospectus supplement and
the accompanying prospectus.
|
|
|
|
|
|
|
|
|
|
|
As of February 28,
|
|
|
|
2011
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
|
(Unaudited, dollars in millions)
|
|
|
Cash and cash equivalents
|
|
|
$275.5
|
|
|
|
$
|
(1)
|
|
|
|
|
|
|
|
|
|
Long-term debt, including current portion:
|
|
|
|
|
|
|
|
|
6.70% Senior Notes issued by RPM United Kingdom G.P. due
2015 fully and unconditionally guaranteed by RPM International
Inc. (2)
|
|
|
$150.0
|
|
|
|
$150.0
|
|
6.25% Senior Notes due 2013
|
|
|
200.1
|
|
|
|
200.1
|
|
$400 million, five-year revolving credit facility through
January 5, 2015
|
|
|
|
|
|
|
|
|
$150 million Accounts Receivable Securitization Program
with two banks, through April 6, 2012
|
|
|
|
|
|
|
|
|
6.50% Notes due 2018 (3)
|
|
|
247.4
|
|
|
|
247.4
|
|
6.125% Notes due 2019 (4) (5)
|
|
|
299.7
|
|
|
|
449.7
|
|
Other notes and mortgages payable at various rates of interest
|
|
|
38.5
|
|
|
|
38.5
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt, including current portion
|
|
|
935.7
|
|
|
|
1,085.7
|
|
|
|
|
|
|
|
|
|
|
Stockholders Equity:
|
|
|
|
|
|
|
|
|
Preferred stock (par value $0.01 per share);
authorized50,000,000 shares; none issued
|
|
|
|
|
|
|
|
|
Common stock (par value $0.01 per share);
300,000,000 shares authorized; 129,097,090 shares
issued and outstanding
|
|
|
1.3
|
|
|
|
1.3
|
|
Paid-in capital
|
|
|
745.5
|
|
|
|
745.5
|
|
Treasury stock, at cost
|
|
|
(62.5
|
)
|
|
|
(62.5
|
)
|
Accumulated other comprehensive (loss)
|
|
|
(13.1
|
)
|
|
|
(13.1
|
)
|
Retained earnings
|
|
|
540.3
|
|
|
|
540.3
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
1,211.5
|
|
|
|
1,211.5
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
|
$2,147.2
|
|
|
|
$2,297.2
|
|
|
|
|
|
|
|
|
|
|
Ratio of total debt to total capitalization
|
|
|
43.6
|
%
|
|
|
47.3
|
%
|
|
|
|
(1) |
|
Cash and cash equivalents in the As
Adjusted column has been increased to reflect the addition
of $ million in proceeds from
this offering, and reduced to reflect approximately
$1.5 million in offering expenses. |
|
(2) |
|
We entered into a cross-currency swap, which fixed the interest
and the principal payments in Euros, resulting in an effective
borrowing rate of 5.31%. |
|
(3) |
|
The $250 million face amount of the notes due 2018 is
adjusted for the original issue discount, which approximated
$2.6 million at February 28, 2011. The original issue
discount effectively reduced the ultimate proceeds from the
financing. The effective interest rate on the notes, including
the amortization of the discount, is 6.704%. |
S-12
|
|
|
(4) |
|
The $300 million face amount of the notes due 2019 is
adjusted for the original issue discount, which approximated
$0.03 million at February 28, 2011. The original issue
discount effectively reduced the ultimate proceeds from the
financing. The effective interest rate on the notes, including
the amortization of the discount, is 6.139%. |
|
(5) |
|
The notes will be a further issuance of, be fully fungible with,
rank equally in right of payment with and form a single series
with the $300,000,000 aggregate principal amount of
6.125% Notes due 2019 initially issued by us on
October 9, 2009. |
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our
fixed charges for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
Fiscal Years Ended May 31,
|
|
|
February 28,
|
|
2006 (1)
|
|
|
2007 (2)
|
|
|
2008 (3)
|
|
|
2009 (4)
|
|
|
2010
|
|
|
2011 (5)
|
|
|
|
|
|
|
|
5.40
|
|
|
|
1.42
|
|
|
|
3.66
|
|
|
|
4.67
|
|
|
|
4.14
|
|
|
|
|
(1) |
|
Earnings were inadequate to cover fixed charges for the fiscal
year ended May 31, 2006. The coverage deficiency for that
fiscal year totaled $181.2 million. Fiscal year 2006 income
from continuing operations before taxes includes the unfavorable
impact of asbestos charges of $380.0 million. |
|
(2) |
|
Fiscal year 2007 income from continuing operations before taxes
includes the favorable impact of asbestos-related insurance
settlement income of $15.0 million. |
|
(3) |
|
Fiscal year 2008 income from continuing operations before taxes
includes the impact of asbestos-related charges of
$288.1 million. |
|
(4) |
|
Fiscal year 2009 income from continuing operations before taxes
includes the impact of goodwill and other intangible asset
impairment charges of $15.5 million. |
|
(5) |
|
Fiscal year 2011 income from continuing operations before taxes
includes the impact of the deconsolidation of SPHC on
May 31, 2010. |
For purposes of computing the ratios of earnings to fixed
charges, earnings represent income from continuing operations
before taxes and cumulative effect of changes in accounting
principles plus fixed charges. Fixed charges consist of interest
expense, amortization of debt issuance costs and an estimation
of the interest portion of rental expenses.
S-13
DESCRIPTION
OF NOTES
The following discussion of the terms of the notes supplements
the description of the general terms and provisions of the debt
securities contained in the accompanying prospectus and
identifies any general terms and provisions described in the
accompanying prospectus that will not apply to the notes.
Certain terms used but not defined in this prospectus supplement
have the meanings specified in the accompanying prospectus. In
this prospectus supplement, we refer to the 6.125% Notes
due 2019 offered hereby as the notes.
General
The notes will be issued in an initial aggregate principal
amount of $150 million. We will issue the notes under an
indenture, dated as of February 14, 2008 between The Bank
of New York Mellon Trust Company, N.A., as Trustee, and us
(the indenture). You should read the accompanying
prospectus for a general discussion of the terms and provisions
of the indenture. The notes will be a further issuance of, be
fully fungible with, rank equally in right of payment with and
form a single series with the $300,000,000 aggregate principal
amount of 6.125% Notes due 2019 initially issued by us on
October 9, 2009. Upon completion of this offering,
$450,000,000 aggregate principal amount of our 6.125% Notes
due 2019 will be outstanding. We may, from time to time, without
giving notice to or seeking the consent of the holders of the
notes, issue additional notes having the same terms (except for
the issue date, the public offering price and the first interest
payment due) and ranking equally and ratably with the notes
offered hereby and our 6.125% Notes due 2019 issued on
October 9, 2009. Any additional securities having such
similar terms, together with the notes offered hereby and our
6.125% Notes due 2019 issued on October 9, 2009, will
constitute a single series of debt securities under the
indenture.
The notes will mature on October 15, 2019. The notes will
not be listed on any securities exchange.
Ranking
The notes will be our senior unsecured obligations and will rank
equally with all of our other existing and future senior
unsecured indebtedness. The notes will be effectively
subordinated to all of our existing and future secured
indebtedness to the extent of the assets securing that
indebtedness. In addition, we are structured as a holding
company, and we conduct all of our business operations through
our subsidiaries. The notes will be structurally subordinated to
all existing and future indebtedness and other liabilities and
commitments of our subsidiaries to the extent of the assets of
such subsidiaries, which are distinct legal entities having no
obligation to pay any amounts pursuant to the notes or to make
funds available for such purposes.
Interest
The notes will bear interest at a rate of 6.125% per year from
the most recent interest payment date on which we paid or
provided for interest on the notes. The interest payment dates
for the notes are each April 15 and October 15 and regular
record dates for interest payments are April 1 and
October 1. The first interest payment will be on
October 15, 2011 and will include accrued interest from,
and including, April 15, 2011. See Description of
Debt SecuritiesGeneral in the accompanying
prospectus.
Optional
Redemption
The notes are redeemable at our option, at any time or from time
to time, either in whole or in part, at a redemption price equal
to the greater of the following amounts, plus, in each case,
accrued and unpaid interest thereon to the redemption date:
|
|
|
|
(i)
|
100% of the principal amount of the notes to be
redeemed; and
|
|
|
(ii)
|
the sum of the present values of the Remaining Scheduled
Payments.
|
S-14
In determining the present values of the Remaining Scheduled
Payments, such payments shall be discounted to the
Redemption Date on a semi-annual basis (assuming a
360-day year
consisting of twelve
30-day
months) using a discount rate equal to the Treasury Rate plus
45 basis points.
Comparable Treasury Issue means the United
States Treasury security selected by an Independent Investment
Banker as having an actual or interpolated maturity comparable
to the remaining term of the notes to be redeemed that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of
such notes.
Comparable Treasury Price means (A) the
arithmetic average of the Reference Treasury Dealer Quotations
for such redemption date after excluding the highest and lowest
Reference Treasury Dealer Quotations, or (B) if the
Quotation Agent obtains fewer than four Reference Treasury
Dealer Quotations, the arithmetic average of all Reference
Treasury Dealer Quotations for such redemption date.
Independent Investment Banker means a
Reference Treasury Dealer or its respective successors as may be
appointed from time to time by the Quotation Agent after
consultation with the Company; provided, however, that if
any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a
primary treasury dealer), another primary treasury
dealer shall be substituted therefor by the Company.
Quotation Agent means, for purposes of
determining the redemption price, such primary treasury dealer
as may be selected by the Company.
Reference Treasury Dealer means Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as
successor in interest to Banc of America Securities LLC, and a
primary treasury dealer selected by Wells Fargo Securities, LLC
or their respective successors and any other primary treasury
dealer selected by the Quotation Agent after consultation with
the Company.
Reference Treasury Dealer Quotations means,
with respect to each Reference Treasury Dealer and any
redemption date, the arithmetic average, as determined by the
Quotation Agent, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Quotation Agent by
such Reference Treasury Dealer by 3:30 p.m. on the third
Business Day preceding such redemption date.
Remaining Scheduled Payments means, with
respect to any note, the remaining scheduled payments of the
principal and interest thereon that would be due after the
related redemption date but for such redemption; provided,
however, that, if such redemption date is not an interest
payment date with respect to such note, the amount of the next
scheduled interest payment thereon shall be reduced by the
amount of interest accrued thereon to such redemption date.
Treasury Rate means, with respect to any
redemption date, the rate per annum equal to the
semi-annual
equivalent yield to maturity or interpolated yield to maturity
of the Comparable Treasury Issue. In determining this rate, the
price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) shall be assumed to be equal
to the Comparable Treasury Price for such redemption date.
A partial redemption of the notes of this series may be affected
by such method as the Trustee shall deem appropriate and may
provide for the selection for redemption of a portion of the
principal amount of the notes equal to an authorized
denomination.
Notice of any redemption shall be mailed at least 30 days
but not more than 60 days before the redemption date to
each Holder of the notes to be redeemed.
S-15
Unless we default in payment of the redemption price, on and
after the redemption date interest shall cease to accrue on the
notes or portions thereof called for redemption.
Change of
Control Offer
If a Change of Control Triggering Event occurs, unless the
Company has exercised its option to redeem the notes, the
Company shall be required to make an offer (a Change of
Control Offer) to each Holder of the notes to repurchase
all or any part (equal to $2,000 and in integral multiples of
$1,000 in excess thereof) of that Holders notes on the
terms set forth herein. In a Change of Control Offer, the
Company shall be required to offer payment in cash equal to 101%
of the aggregate principal amount of notes repurchased, plus
accrued and unpaid interest, if any, on the notes repurchased to
the date of repurchase (a Change of Control
Payment). Within 30 days following any Change of
Control Triggering Event or, at the Companys option, prior
to any Change of Control, but after public announcement of the
transaction that constitutes or may constitute the Change of
Control, a notice shall be mailed to Holders of the notes
describing the transaction that constitutes or may constitute
the Change of Control Triggering Event and offering to
repurchase such notes on the date specified in the notice, which
date shall be no earlier than 30 days and no later than
60 days from the date such notice is mailed (a Change
of Control Payment Date). The notice shall, if mailed
prior to the date of consummation of the Change of Control,
state that the offer to purchase is conditioned on the Change of
Control Triggering Event occurring on or prior to the Change of
Control Payment Date.
On the Change of Control Payment Date, the Company shall, to the
extent lawful:
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(i)
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accept for payment all notes or portions of such notes properly
tendered pursuant to the Change of Control Offer;
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(ii)
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deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all notes or portions of such
notes properly tendered; and
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(iii)
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deliver or cause to be delivered to the Trustee the notes
properly accepted together with an Officers Certificate
stating the aggregate principal amount of notes or portions of
such notes being repurchased.
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The Company shall not be required to make a Change of Control
Offer upon the occurrence of a Change of Control Triggering
Event if a third party makes such an offer in the manner, at the
times and otherwise in compliance with the requirements for an
offer made by the Company and the third party purchases all
notes properly tendered and not withdrawn under its offer. In
addition, the Company shall not repurchase any notes if there
has occurred and is continuing on the Change of Control Payment
Date an Event of Default under the indenture, other than a
default in the payment of the Change of Control Payment upon a
Change of Control Triggering Event.
The Company shall comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with the repurchase of the notes as
a result of a Change of Control Triggering Event. To the extent
that the provisions of any such securities laws or regulations
conflict with the Change of Control Offer provisions of the
notes, the Company shall comply with those securities laws and
regulations and shall not be deemed to have breached its
obligations under the Change of Control Offer provisions of the
notes by virtue of any such conflict.
S-16
For purposes of the Change of Control Offer provisions of the
notes, the following terms are applicable:
Change of Control means the occurrence of any
of the following: (1) the direct or indirect sale, lease,
transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or more series of related
transactions, of all or substantially all of the assets of the
Company and its subsidiaries, taken as a whole, to any person,
other than the Company or a subsidiary; (2) the
consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any
person becomes the beneficial owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act), directly or indirectly, of more than
50% of the Companys outstanding Voting Stock or other
Voting Stock into which the Companys Voting Stock is
reclassified, consolidated, exchanged or changed, measured by
voting power rather than number of shares; (3) the Company
consolidates with, or merges with or into, any person, or any
person consolidates with, or merges with or into, the Company,
in any such event pursuant to a transaction in which any of the
Companys outstanding Voting Stock or the Voting Stock of
such other person is converted into or exchanged for cash,
securities or other property, other than any such transaction
where the shares of the Companys Voting Stock outstanding
immediately prior to such transaction constitute, or are
converted into or exchanged for, a majority of the Voting Stock
of the surviving person or any direct or indirect parent company
of the surviving person immediately after giving effect to such
transaction; (4) the first day on which a majority of the
members of the Companys Board of Directors are not
Continuing Directors; or (5) the adoption of a plan
relating to the Companys liquidation or dissolution. The
term person, as used in this definition, has the
meaning given thereto in Section 13(d)(3) of the Exchange
Act.
Change of Control Triggering Event means the
occurrence of both a Change of Control and a Rating Event.
Continuing Directors means, as of any date of
determination, any member of the Companys Board of
Directors who (1) was a member of such Board of Directors
on the date the notes were issued or (2) was nominated for
election, elected or appointed to such Board of Directors with
the approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such
nomination, election or appointment (either by a specific vote
or by approval of the Companys proxy statement in which
such member was named as a nominee for election as a director,
without objection to such nomination).
Fitch means Fitch Inc., and its successors.
Investment Grade Rating means a rating equal
to or higher than Baa3 (or the equivalent) by Moodys, BBB-
(or the equivalent) by S&P and BBB- (or the equivalent) by
Fitch and the equivalent investment grade credit rating from any
replacement rating agency or rating agencies selected by the
Company.
Moodys means Moodys Investors
Service, Inc., and its successors.
Rating Agencies means (1) each of
Moodys, S&P and Fitch; (2) if any of
Moodys, S&P or Fitch ceases to rate the notes or
fails to make a rating of the notes publicly available for
reasons outside of the Companys control, a
nationally recognized statistical rating
organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act selected by the Company (as certified by
a resolution of the Companys Board of Directors) to act as
a replacement agency for Moodys, S&P or Fitch or all
of them, as the case may be.
Rating Event means the credit rating on the
notes is lowered by at least two of the three Rating Agencies
and the notes are rated below an Investment Grade Rating by at
least two of the
S-17
three Rating Agencies on any day during the period (which period
shall be extended so long as the rating of the notes is under
publicly announced consideration for a possible downgrade by any
of the Rating Agencies) commencing 60 days prior to the
first public notice of the occurrence of a Change of Control or
the Companys intention to effect a Change of Control and
ending 60 days following consummation of such Change of
Control.
S&P means Standard &
Poors Rating Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
Voting Stock means, with respect to any
specified person (as that term is used in
Section 13(d)(3) of the Exchange Act) as of any date, the
capital stock of such person that is at the time entitled to
vote generally in the election of the board of directors of such
person.
Limitation
on Liens
The Company covenants and agrees for the benefit of the Holders
that for so long as any notes are outstanding, the Company will
not, and will not permit any of its subsidiaries to, create,
assume, incur or suffer to exist any Lien upon any Principal
Property or upon any shares of Capital Stock or Indebtedness of
any subsidiary owning or leasing any Principal Property, whether
owned or leased on the date of the indenture or thereafter
acquired, other than Permitted Liens or as permitted under
Exempted Liens and Sale-Leaseback Transactions
below, to secure any Indebtedness incurred or guaranteed by the
Company or any subsidiary, without in any such case making
effective provision whereby all of the notes then outstanding
(together with, if the Company so determines, any other
Indebtedness or guarantee thereof by the Company ranking equally
with the notes) shall be secured equally and ratably with, or
prior to, such Indebtedness so long as such Indebtedness shall
be so secured.
Permitted Liens means:
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(i)
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Liens existing on the date of the indenture or the date the
notes are issued and securing Indebtedness in an aggregate
principal amount not exceeding the greater of $25.0 million
or 5% of Consolidated Stockholders Equity of the Company;
provided that no increase in the amount secured thereby is
permitted;
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(ii)
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Liens on the property or assets of the Company or any other
property or assets of the subsidiaries of the Company given to
secure the payment of the purchase price incurred in connection
with the acquisition, lease (including any Capital Lease
Obligation) or construction of property (other than accounts
receivable or inventory) intended to be used in carrying on of
the business of the Company or the businesses of the
subsidiaries of the Company, including Liens existing on such
property at the time of acquisition, lease or construction
thereof or improvements thereon, or Liens incurred within
180 days of such acquisition or the completion of such
construction; provided that (i) the Lien shall attach
solely to the property acquired, purchased, leased, constructed
or improved, (ii) at the time of acquisition or
construction of such property, the aggregate amount remaining
unpaid on all Indebtedness secured by Liens on such property,
whether or not assumed by the Company or any subsidiary of the
Company, shall not exceed an amount equal to the lesser of the
total purchase price or Fair Market Value at the time of
acquisition or construction of such property, and (iii) the
aggregate principal amount of all Indebtedness secured by such
Liens shall not exceed the lesser of (y) the cost of the
acquisition, lease or construction, as the case may be or
(z) the Fair Market Value of such property;
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(iii)
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Liens on property or assets of any Person existing at the time
such Person becomes a subsidiary of the Company or is merged
with or into or consolidated with the Company or any subsidiary
of the Company or, at the time of a sale, lease or other
disposition of the properties of a Person
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S-18
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as an entirety or substantially as an entirety to the Company or
any subsidiary of the Company, or arising thereafter pursuant to
contractual commitments entered into prior to and not in
contemplation of such Person becoming a subsidiary and not in
contemplation of any such merger or consolidation or any such
sale, lease or other disposition; provided that such Liens shall
not extend to the property or assets of the Company or any other
property or assets of the subsidiaries of the Company;
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(iv)
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Any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien
referred to in the foregoing clauses; provided, however, that
the principal amount of Indebtedness secured thereby shall not
exceed the principal amount of Indebtedness so secured prior to
such extension, renewal or replacement and that such extension,
renewal or replacement Lien shall be limited to all or a part of
the assets that secured the Lien so extended, renewed or
replaced (plus improvements and construction on such real
property);
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(v)
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Other Liens arising in the ordinary conduct of the business of
the Company or the businesses of the subsidiaries of the Company
(including Liens to secure the performance by the Company or the
subsidiaries of the Company of bids, tenders or trade contracts
for sums not yet due and payable) which are not incurred in
connection with the borrowing of money or the obtaining of
advances or credit, or that is incidental to the ownership of
properties and assets by the Company or the subsidiaries of the
Company in the ordinary conduct of the Companys business
or the businesses of the subsidiaries of the Company (including
landlords, carriers, warehousemens,
mechanics, materialmens and other similar Liens for
sums not yet due and payable), or to secure the performance by
the Company or the subsidiaries of the Company of its or their
statutory obligations (including obligations under workers
compensation, unemployment insurance and other social security
legislation), surety or appeal bonds and other similar liens
(including Liens of attorneys on client files); provided in each
case that such Liens do not, in the aggregate, materially
detract from the value of the property or assets of the Company
or the property or assets of the subsidiaries of the Company or
materially impair the use thereof in the operation of the
business of the Company or the businesses of the subsidiaries of
the Company;
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(vi)
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Leases or subleases entered into by the Company or the
subsidiaries of the Company as either lessors or sublessors,
easements,
rights-of-way,
restrictions and other similar charges or encumbrances
(including zoning restrictions), in each case, that is
incidental to the ownership of property or assets or the
ordinary conduct of the business of the Company or the
businesses of the subsidiaries of the Company; provided that
such Liens do not, in the aggregate, materially detract from the
value of such property;
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(vii)
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Liens for taxes, assessments or other governmental charges which
are not yet due and payable as of the date of the Indenture or
the date the notes are issued; and
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(viii)
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Liens on receivables, leases, other financial assets, and any
assets related thereto, incurred in connection with a Permitted
Receivables Transaction.
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Permitted Receivables Transaction means any
transaction or series of transactions entered into by the
Company or any of its subsidiaries in order to monetize or
otherwise finance a pool (which may be fixed or revolving) of
receivables, leases or other financial assets (including,
without limitation, financing contracts) or other transactions
evidenced by receivables purchase agreements, including, without
limitation, factoring agreements and other similar agreements
pursuant to which receivables, leases, other financial assets,
and any assets related thereto, are sold at a discount (in each
case whether now existing or arising in the future), and which
may include a grant of a security interest in any such
receivables, leases, other financial assets (whether now
existing or arising in the future) of the Company or any of its
subsidiaries, and any assets related thereto,
S-19
including all collateral securing such receivables, leases, or
other financial assets, all contracts and all guarantees or
other obligations in respect thereof, proceeds thereof and other
assets that are customarily transferred, or in respect of which
security interests are customarily granted, in connection with
asset securitization transactions involving receivables, leases,
or other financial assets or other transactions evidenced by
receivables purchase agreements, including, without limitation,
factoring agreements and other similar agreements pursuant to
which receivables are sold at a discount.
Principal Property means, whether owned or
leased on the date of the indenture or acquired after the date
hereof, each manufacturing or processing plant or facility and
office facilities of ours or our subsidiaries located in
the United States.
Restrictions
on Sale-Leaseback Transactions
Except as permitted under Exempted Liens and
Sale-Leaseback Transactions below, the Company will not,
and it will not permit any of its subsidiaries to, engage in the
sale or transfer by the Company or any of its subsidiaries of
any Principal Property to a person (other than a subsidiary of
the Company or the Company) and the taking back by the Company
or any of its subsidiaries, as the case may be, of a lease of
such Principal Property, unless:
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(i)
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such sale-leaseback transaction involves a lease for a period,
including renewals, of not more than three years; or
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(ii)
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the Company or its subsidiary, within a one-year period after
such sale-leaseback transaction, applies or causes to be applied
an amount not less than the net proceeds from such
sale-leaseback transaction to the prepayment, repayment,
redemption, reduction or retirement (other than pursuant to any
mandatory sinking fund, redemption or prepayment provision) of
Funded Indebtedness.
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Funded Indebtedness means Indebtedness having
a maturity of more than 12 months from the date as of which
the amount thereof is to be determined or having a maturity of
less than 12 months but by its terms being renewable or
extendible beyond 12 months from such date at the option of
the obligor.
Exempted
Liens and Sale-Leaseback Transactions
Notwithstanding the foregoing restrictions on Liens and
sale-leaseback transactions, and in addition to Permitted Liens
otherwise permitted hereunder, the Company may, and may permit
any subsidiary to, create, assume, incur, or suffer to exist any
Lien upon any Principal Property, or upon any shares of Capital
Stock or Indebtedness of any of its subsidiaries owning or
leasing any Principal Property, to secure Indebtedness incurred
or guaranteed by the Company or any of its subsidiaries or
effect any sale-leaseback transaction of a Principal Property
that is not excepted by Restrictions on Sale-Leaseback
Transactions above without equally and ratably securing
the notes; provided that, after giving effect thereto, the
aggregate principal amount of outstanding Indebtedness secured
by Liens other than Permitted Liens upon Principal Property
and/or upon
such shares of Capital Stock or Indebtedness of any subsidiary
owning or leasing any Principal Property, plus the Attributable
Indebtedness from sale-leaseback transactions of Principal
Property not so excepted, does not exceed 15% of the
Consolidated Stockholders Equity as of the date of
determination.
Consolidated Stockholders Equity means,
at any time, the consolidated stockholders equity of the
Company and its subsidiaries calculated on a consolidated basis
as of such time.
S-20
Events of
Default
The Events of Default with respect to the notes will be those
events described under Description of Debt
SecuritiesEvents of Default in the accompanying
prospectus. Furthermore the following shall also be considered
an Event of Default: any final judgment or order for the payment
of money in excess of the greater of $50,000,000 or 7% of
Consolidated Stockholders Equity, either individually or
in the aggregate (net of any amounts to the extent that they are
covered by insurance), shall have been rendered against the
Company or any of its subsidiaries and which shall not have been
paid or discharged, and there shall be any period of 60
consecutive days following the entry of the final judgment or
order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged
against the Company or any of its subsidiaries to exceed the
greater of $50,000,000 or 7% of Consolidated Stockholders
Equity during which a stay of enforcement of such final judgment
or order, by reason of a pending appeal or otherwise, shall not
be in effect.
S-21
MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain of the United States
federal income tax consequences of the purchase, ownership and
disposition of the notes. This summary:
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is based on the Internal Revenue Code of 1986, as amended (the
Code), United States Treasury regulations issued
under the Code, judicial decisions and administrative
pronouncements, all as in effect as of the date hereof and all
of which are subject to different interpretation or to change.
Any such change may be applied retroactively and may adversely
affect the federal income tax consequences described in this
prospectus supplement;
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addresses only tax consequences to investors that purchase the
notes upon their original issuance for cash at their initial
offering price, and hold the notes as capital assets within the
meaning of Section 1221 of the Code (that is, for
investment purposes);
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does not discuss all of the tax consequences that may be
relevant to particular investors in light of their particular
circumstances (such as the application of the alternative
minimum tax);
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does not discuss all of the tax consequences that may be
relevant to investors that are subject to special treatment
under the United States federal income tax laws (such as
insurance companies, financial institutions, tax-exempt
organizations, retirement plans, regulated investment companies,
dealers in securities or currencies, holders whose functional
currency for tax purposes is not the United States dollar,
persons holding the notes as part of a hedge, straddle,
constructive sale, conversion or other integrated transaction,
former United States citizens or long-term residents subject to
taxation as expatriates under Section 877 of the Code, or
traders in securities that have elected to use a
mark-to-market
method of accounting for their securities holdings);
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does not discuss the effect of other United States federal lax
laws (such as estate and gift tax laws) except to the limited
extent specifically indicated below, and does not discuss any
state, local or foreign tax laws; and
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does not discuss the tax consequences to a person holding notes
through a partnership (or other entity or arrangement classified
as a partnership for United States federal income tax purposes),
except to the limited extent specifically indicated below.
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We have not sought and will not seek a ruling from the Internal
Revenue Service (the IRS) with respect to any
matters discussed in this section, and we cannot assure you that
the IRS will not take a different position concerning the tax
consequences of the purchase, ownership or disposition of the
notes, or that any such position would not be sustained.
If a partnership (or other entity or arrangement classified as a
partnership for United States federal income tax purposes) holds
the notes, the tax treatment of a partner in the partnership
generally will depend on the status of the partner and the
activities of the partnership. If you are a partnership or a
partner in a partnership holding notes, you should consult your
independent tax advisor regarding the tax consequences of the
purchase, ownership or disposition of the notes.
Prospective investors should consult their own independent tax
advisors with regard to the application of the United States
federal income tax laws to their particular situation and the
application of any other United States federal as well as state
or local or foreign tax laws and tax treaties, including gift
and estate tax laws.
S-22
WE ARE INFORMING YOU THAT (A) THIS SUMMARY IS NOT
INTENDED AND WAS NOT WRITTEN TO BE USED, AND CANNOT BE USED, BY
ANY TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES UNDER THE
UNITED STATES FEDERAL TAX LAWS THAT MAY BE IMPOSED ON THE
TAXPAYER, (B) THIS SUMMARY WAS WRITTEN IN CONNECTION WITH
THE PROMOTION OR MARKETING BY US OF THE NOTES, AND (C) EACH
TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
Certain
United States Federal Income Tax Consequences To U.S.
Holders
The following is a summary of certain United States federal
income tax consequences of the purchase, ownership and
disposition of the notes by a holder that is a
U.S. Holder. For purposes of this summary,
U.S. Holder means a beneficial owner of a note
or notes that is for United Stales federal income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States (or any state thereof
or the District of Columbia);
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an estate whose income is subject to United States federal
income taxation regardless of its source; or
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a trust if (i) a court within the United States is able to
exercise primary supervision over its administration and one or
more United States persons (within the meaning of the Code) have
the authority to control all of its substantial decisions, or
(ii) such trust has a valid election in effect under
applicable United States Treasury regulations to be treated as a
United States person.
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Qualified
Reopening
We intend to treat, for U.S. federal income tax purposes,
the issuance of the notes as a qualified reopening
of our 6.125% Notes due 2019 that were issued on
October 9, 2009. Accordingly, we intend to treat the notes
offered hereby as having the same issue date and the same issue
price as those previously issued notes. The remainder of this
summary assumes this treatment.
Pre-Issuance
Accrued Interest
A portion of the price paid for the notes is attributable to the
amount of unpaid interest on the notes that has accrued from the
last regularly scheduled interest payment date, April 15,
2011 (the pre-issuance accrued interest). Pursuant
to certain regulations, we intend to treat a portion of the
first interest payment on the notes as a return of the
pre-issuance accrued interest, rather than an amount payable on
such notes. You should be able to treat a portion of the first
interest payment on the notes as a non-taxable return of the
pre-issuance accrued interest paid by you, rather than as
taxable interest, as if you purchased a debt instrument on the
secondary market between interest payment dates. You should
consult your own tax advisor concerning the tax treatment of the
pre-issuance accrued interest on the notes.
Treatment
of Interest
Stated interest on the notes will be taxable to a
U.S. Holder as ordinary interest income as the interest is
paid or accrues in accordance with the U.S. Holders
regular method of accounting for United States federal income
tax purposes.
S-23
Amortizable
Bond Premium
A U.S. Holder of a note that purchases the note at a cost
greater than its redemption price (disregarding for this purpose
the portion of the cost attributable to pre-issuance accrued
interest) will be considered to have purchased the note at a
premium, and may elect to amortize such premium (as an offset to
interest income), using a constant-yield method, over the
remaining term of the note. Such election, once made, generally
applies to all debt instruments held or subsequently acquired by
the U.S. Holder on or after the first taxable year to which
the election applies and may not be revoked without the consent
of the IRS. A U.S. Holder that elects to amortize such
premium must reduce its tax basis in the note by the amount of
the premium amortized during its holding period. With respect to
a U.S. Holder that does not elect to amortize bond premium,
the amount of bond premium is included in the
U.S. Holders tax basis in the note.
Treatment
of Dispositions of Notes
Upon the sale, exchange, redemption, retirement or other taxable
disposition (collectively, a disposition) of a note,
a U.S. Holder generally will recognize gain or loss equal
to the difference between the amount received on such
disposition (other than amounts received in respect of accrued
and unpaid interest, which will generally be taxable to that
U.S. Holder as ordinary interest income at that time in
accordance with the U.S. Holders regular method of
accounting for United States federal income tax purposes if not
previously included in the U.S. Holders income) and
the U.S. Holders adjusted tax basis in the note,
reduced by any principal payments with respect to the note
received by the U.S. Holder. A U.S. Holders
adjusted tax basis in a note will be, in general, the cost of
the note to the U.S. Holder. Gain or loss realized on the
disposition of a note generally will be capital gain or loss and
will be long-term capital gain or loss if, at the time of such
disposition, the note has been held for more than one year.
Otherwise, such gain or loss generally will be short-term
capital gain or loss. Net long-term capital gain recognized by a
non-corporate U.S. Holder generally is eligible for reduced
rates of United States federal income taxation. The
deductability of capital losses is subject to limitations.
If a U.S. Holder disposes of a note between interest
payment dates, a portion of the amount received by the
U.S. Holder will reflect interest that has accrued on the
note but has not been paid as of the disposition date. That
portion is treated as ordinary interest income and not as sale
proceeds.
Recent
Legislation Affecting U.S. Holders
For taxable years beginning after December 31, 2012, a
U.S. Holder that is an individual or estate, or a trust
that does not fall into a special class of trusts that is exempt
from such tax, will be subject to a 3.8% Medicare tax on the
lesser of (1) the U.S. Holders net
investment income for the relevant taxable year and
(2) the excess of the U.S. Holders modified
adjusted gross income for the taxable year over a certain
threshold (which in the case of individuals will be between
$125,000 and $250,000, depending on the individuals
circumstances). A holders net investment income will
generally include its interest income and its net gains from the
disposition of notes, unless such interest income or net gains
are derived in the ordinary course of the conduct of a trade or
business (other than a trade or business that consists of
certain passive or trading activities). If you are a
U.S. Holder that is an individual, estate or trust, you are
urged to consult your tax advisors regarding the applicability
of the Medicare tax to your income and gains in respect of your
investment in the notes.
Certain
United States Federal Tax Consequences to
Non-U.S.
Holders
The following is a summary of the United States federal income
and estate tax consequences of the purchase, ownership and
disposition of the notes by a holder that is a
Non-U.S. Holder.
For purposes of this summary,
Non-U.S. Holder
means a beneficial owner of a note or notes, other than a
partnership (or an entity or arrangement classified as a
partnership for United States federal income tax purposes), who
is not a U.S. Holder.
S-24
Special rules may apply to
Non-U.S. Holders
that are subject to special treatment under the Code, including
controlled foreign corporations and passive
foreign investment companies. Such
Non-U.S. Holders
should consult their own tax advisors to determine the United
States federal, state, local and other tax consequences that may
be relevant to them.
Treatment
of Interest
Subject to the discussion below concerning backup withholding, a
Non-U.S. Holder
will not be subject to United States federal income or
withholding tax in respect of interest income on the notes if
the interest income qualifies for the portfolio interest
exception. Generally, interest income will qualify for the
portfolio interest exception if each of the
following requirements is satisfied:
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The interest is not effectively connected with the conduct of a
trade or business in the United States;
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The
Non-U.S. Holder
appropriately certifies its status as a
non-United
States person (as described below);
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The
Non-U.S. Holder
does not directly or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to
vote;
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The
Non-U.S. Holder
is not for U.S. federal income tax purposes a
controlled foreign corporation that is directly or
constructively related to us through stock ownership; and
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The
Non-U.S. Holder
is not a bank which acquired the notes in consideration for an
extension of credit made pursuant to a loan agreement entered
into in the ordinary course of business.
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The certification requirement referred to above generally will
be satisfied if the
Non-U.S. Holder
provides us, our paying agent, or other qualified
intermediary with a statement on IRS
Form W-8BEN
(or suitable substitute or successor form), together with all
appropriate attachments, signed under penalties of perjury,
identifying the
Non-U.S. Holder
and stating, among other things, that the
Non-U.S. Holder
is not a United States person (within the meaning of the Code).
If the
Non-U.S. Holder
holds its notes through a financial institution, other agent
acting on the holders behalf, or other qualified
intermediary, the
Non-U.S. Holder
will be required to provide appropriate documentation to that
agent, and that agent will then be required to provide
appropriate documentation to us or our paying agent (either
directly or through other intermediaries). For payments made to
foreign partnerships and certain other pass-through entities,
the certification requirement will generally apply to the
partners or other interest holders rather than the partnership
or other pass-through entity. We may be required to report
annually to the IRS and to each
Non-U.S. Holder
the amount of interest paid to, and the tax withheld, if any,
with respect to each
Non-U.S. Holder.
Prospective
Non-U.S. Holders
should consult their independent tax advisors regarding this
certification requirement, and alternative methods for
satisfying the certification requirement.
If the requirements of the portfolio interest
exception are not satisfied with respect to a
Non-U.S. Holder,
payments of interest to that
Non-U.S. Holder
will be subject to a 30% United States withholding tax, unless
another exemption or a reduced withholding rate applies. For
example, an applicable income tax treaty may reduce or eliminate
such tax, in which event a
Non-U.S. Holder
claiming the benefit of such treaty must provide the withholding
agent with a properly executed IRS
Form W-8BEN
(or suitable substitute or successor form) claiming the benefit
of the applicable tax treaty. Alternatively, an exemption
applies to the 30% United States withholding tax if the interest
is effectively connected with the
Non-U.S. Holders
conduct of a trade or business in the United States (or if an
income tax treaty applies, is attributable to a permanent
establishment or fixed base maintained by the
Non-U.S. Holder
in the United States) and the
Non-U.S. Holder
provides an appropriate statement to that effect on a properly
executed IRS
Form W-8ECI
(or suitable substitute or successor form). In the latter case,
such
Non-U.S. Holder
generally
S-25
will be subject to United States federal income tax with respect
to all income from the notes in the same manner as
U.S. Holders, as described above, unless an applicable
income tax treaty provides otherwise. In addition, such a
Non-U.S. Holder
that is a corporation may be subject to a branch profits tax
with respect to any such United States trade or business income
at a rate of 30% (or at a reduced rate under an applicable
income tax treaty provided certain certification requirements
are met).
Offer to
Purchase Upon Change of Control
If a Change of Control Triggering Event occurs, unless the
Company has exercised its option to redeem the notes, the
Company is required to make an offer to each holder of the notes
to repurchase all or any part of the notes for an amount equal
to 101% of the aggregate principal amount of the notes
repurchased, plus accrued and unpaid interest. If such a
repurchase was expected to occur prior to the fifth anniversary
of the issuance of the notes, the repurchase of the notes at
101% would result in the notes being treated as issued with more
than de minimis original issue discount. The Company intends to
take the position that, for purposes of the application of the
original issue discount rules in Sections 1271 through 1275
of the Code, the likelihood of a Change of Control Triggering
Event occurring prior to the fifth anniversary is a remote
contingency. Accordingly, the possibility of the notes being
repurchased prior to the fifth anniversary of the issue date of
the notes for 101% of the aggregate principal amount of such
notes will be disregarded for tax purposes and will not result
in the notes being treated as issued with original issue
discount. Pursuant to Treasury Regulation
section 1.1275-2(h)(5),
the Companys determination that such possibility is a
remote contingency is binding on all holders for tax purposes
unless a holder explicitly discloses to the Internal Revenue
Service that its determination is different than the
Companys determination.
Treatment
of Dispositions of Notes
Subject to the discussion below concerning backup withholding, a
Non-U.S. Holder
generally will not be subject to United States federal income
tax or withholding tax on gain realized upon the disposition of
a note unless:
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the
Non-U.S. Holder
is an individual present in the United States for 183 days
or more in the taxable year of the disposition and certain other
conditions are met; or
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the gain is effectively connected with the
Non-U.S. Holders
conduct of a trade or business in the United States (or if
certain tax treaties apply, is attributable to a permanent
establishment or fixed base maintained by the
Non-U.S. Holder
within the United States).
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If the first exception applies, the
Non-U.S. Holder
generally will be subject to United States federal income tax at
a rate of 30% (or at a reduced rate under an applicable income
tax treaty) on the amount by which capital gains allocable to
United States sources (including gains from the sale, exchange,
retirement or other disposition of the notes) exceed capital
losses allocable to United States sources. If the second
exception applies, the
Non-U.S. Holder
generally will be subject to United States federal income tax
with respect to such gain in the same manner as
U.S. Holders, as described above, unless an applicable
income tax treaty provides otherwise. Additionally,
Non-U.S. Holders
that are corporations could be subject to a branch profits tax
with respect to such gain at a rate of 30% (or at a reduced rate
under an applicable income tax treaty).
Treatment
of Notes for United States Federal Estate Tax Purposes
A note held, or beneficially held, by an individual who is not a
citizen or resident of the United States at the time of his or
her death will not be includable in the individuals gross
estate for United States federal estate tax purposes, provided
that (i) the
Non-U.S. Holder
does not at the time of death actually or constructively own 10%
or more of the combined voting power of all classes of our stock
entitled to vote and (ii) at the time of death, payments
with respect to such note would not have been effectively
connected with
S-26
the conduct by such holder of a trade or business in the United
States. In addition, under the terms of an applicable estate tax
treaty, United States federal estate tax may not apply with
respect to a note.
United
States Information Reporting Requirements and Backup
Withholding
U.S.
Holders
Information
Reporting and Backup Withholding
Under the tax rules concerning information reporting to the IRS:
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Assuming you hold your notes through a broker or other
securities intermediary, the intermediary must provide
information to the IRS and to you on IRS Form 1099
concerning interest and retirement proceeds on your notes as
well as on proceeds from sale or other disposition of the notes,
unless an exemption applies.
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Similarly, unless an exemption applies, you must provide the
intermediary with your Taxpayer Identification Number for its
use in reporting information to the IRS. If you are an
individual, this is your social security number. You are also
required to comply with other IRS requirements concerning
information reporting.
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If you are subject to these requirements but do not comply, the
intermediary must withhold at a rate currently equal to 28% (and
scheduled to increase to 31% in 2013) of all amounts
payable to you on the notes (including principal payments and
sale proceeds). This is called backup withholding.
If the intermediary withholds payments, you may use the withheld
amount as a credit against your federal income tax liability.
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All individuals are subject to these requirements. Some holders,
including all corporations, tax-exempt organizations and
individual retirement accounts, are exempt from these
requirements.
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Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules will generally be
allowed as a refund or a credit against a
U.S. Holders U.S. federal income tax liability
provided that the U.S. Holder furnishes the required
information to the IRS on a timely basis.
Recently-Enacted
Legislation
Recently enacted legislation imposes U.S. withholding tax
on interest payments and proceeds of sale of interest-bearing
obligations for payments made after December 31, 2012 to
certain foreign financial institutions and non-financial foreign
entities if certain disclosure requirements related to
U.S. accounts or ownership are not satisfied. In general,
the withholding tax will not apply to obligations that are
issued prior to March 18, 2012. If the notes were modified
on or after March 18, 2012 in such a way that they were
considered to be re-issued for U.S. federal income tax
purposes, this legislation could apply to interest payments and
proceeds of sale in respect of the notes. RPM will not be
obligated to pay any additional amounts to gross up
payments to holders of the notes or beneficial owners of the
notes as a result of any withholding or deduction for, or on
account of, any present or future taxes, duties, assessments or
government charges with respect to payments in respect of the
notes. Prospective investors are encouraged to consult their tax
advisors regarding the implications of this legislation on their
investment in the notes, as well as the status of any related
federal regulations.
Non-U.S.
Holders
In the case of payments of interest or of proceeds from the sale
or disposition of a note to a
Non-U.S. Holder,
current Treasury Regulations provide that the backup withholding
tax and certain
S-27
information reporting requirements will not apply to payments
with respect to which either the requisite certification, as
described above under Certain United States Federal Tax
Consequences to
Non-U.S. HoldersTreatment
of Interest, has been received or an exemption has
otherwise been established, provided that neither the
withholding agent nor any intermediary has actual knowledge or
reason to know that the
Non-U.S. Holder
is a U.S. person or that the conditions of any other
exemption are not in fact satisfied.
Information reporting requirements, but not backup withholding,
will apply to payment of the proceeds from a sale or disposition
of the notes by or through a foreign office of a
U.S. broker or foreign brokers with certain types of
relationships to the U.S., unless the broker has documentary
evidence in its file that the
Non-U.S. Holder
of the notes is not a U.S. person and the broker has no
actual knowledge or reason to know that the
Non-U.S. Holder
of the notes is a U.S. person or the
Non-U.S. person
establishes an exemption. Neither information reporting nor
backup withholding generally will apply to payment of the
proceeds from a sale or disposition of the notes by or through a
foreign office of a foreign broker not subject to the preceding
sentence.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules will generally be
allowed as a refund or a credit against a
Non-U.S. Holders
U.S. federal income tax liability provided that the
Non-U.S. Holder
furnishes the required information to the IRS on a timely basis.
Prospective
Non-U.S. Holders
should consult their independent tax advisors concerning the
application of information reporting and backup withholding
rules.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE
IS INCLUDED FOR GENERAL INFORMATION ONLY, IS NOT TAX ADVICE AND
MAY NOT BE APPLICABLE DEPENDING UPON A HOLDERS PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR INDEPENDENT TAX ADVISORS
REGARDING THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE TAX
CONSEQUENCES UNDER UNITED STATES FEDERAL NON-INCOME, STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS (AND ANY PROPOSED CHANGES IN
APPLICABLE LAW).
S-28
UNDERWRITING
(CONFLICTS OF INTEREST)
We and the underwriters for the offering named below, for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Wells Fargo Securities, LLC are acting as representatives, have
entered into an underwriting agreement dated as of the date of
this prospectus supplement with respect to the notes. Subject to
certain conditions, each underwriter has severally agreed to
purchase, and we have agreed to sell to each underwriter, the
total principal amount of notes shown in the following table.
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Principal Amount
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Underwriter
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of Notes
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Merrill Lynch, Pierce, Fenner & Smith
Incorporated
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$
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Wells Fargo Securities, LLC
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Goldman, Sachs & Co.
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Total
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$
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The obligations of the several underwriters to purchase the
notes offered hereby are subject to certain conditions. The
underwriters are obligated to purchase all of the notes, if they
purchase any of them. The offering of the notes by the
underwriters is subject to receipt and acceptance and subject to
the underwriters right to reject any order in whole or in
part.
Notes sold by the underwriters to the public initially will be
offered at the public offering price set forth on the cover of
this prospectus supplement. Any notes sold by the underwriters
to securities dealers may be sold at discounts from the
applicable public offering price of up to 0.400% of the
principal amount of notes. Any such securities dealers may
resell any notes purchased from the underwriters to certain
other brokers or dealers at discounts from the applicable public
offering price of up to 0.250% of the principal amount of notes.
If all the notes are not sold at the applicable public offering
price, the underwriters may change such offering price and the
other selling terms.
The notes will not be listed on any securities exchange or on
any automated dealer quotation system. We have been advised that
the representatives intend to make a market in the notes, but
they are not obligated to do so and may discontinue such
market-making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the notes.
In connection with the offering, the representatives may
purchase and sell the notes in the open market. These
transactions may include short sales, stabilizing transactions
and purchases to cover positions created by short sales. Short
sales involve the sale by the representatives of a greater
number of notes than they are required to purchase in the
offering. Stabilizing transactions consist of certain bids or
purchases made for the purpose of preventing or retarding a
decline in the market price of the notes while the offering is
in progress.
The representatives may also impose a penalty bid. This occurs
when a particular underwriter repays to the representatives a
portion of the underwriting discount received by it because a
representative has repurchased notes sold by or for the account
of such underwriter in stabilizing or short covering
transactions.
Stabilizing transactions may have the effect of preventing or
retarding a decline in the market price of the notes, and
together with the imposition of the penalty bid, may stabilize,
maintain or otherwise affect the market price of the notes. As a
result, the price of the notes may be higher than the price that
otherwise might exist in the open market. If these activities
are commenced, they may be discontinued by the underwriters at
any time without notice. These transactions may be effected in
the
over-the-counter
market or otherwise.
S-29
In addition to the underwriting discounts payable to the
underwriters as set forth on the cover page of this prospectus
supplement, we estimate that our expenses for this offering will
be approximately $525,000.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933, or contribute to payments the underwriters may be required
to make in respect of those liabilities.
The notes are offered for sale in the United States and certain
jurisdictions outside the United States in which such offer and
sale is permitted.
Notice to
Prospective Investors in the European Economic Area
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), with effect from and
including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the Relevant
Implementation Date) no offer of notes may be made to the
public in that Relevant Member State other than:
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A.
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to any legal entity which is a qualified investor as defined in
the Prospectus Directive;
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B.
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to fewer than 100 or, if the Relevant Member State has
implemented the relevant provision of the 2010 PD Amending
Directive, 150, natural or legal persons (other than qualified
investors as defined in the Prospectus Directive), as permitted
under the Prospectus Directive, subject to obtaining the prior
consent of the representative[s]; or
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C.
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in any other circumstances falling within Article 3(2) of
the Prospectus Directive,
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provided that no such offer of notes shall require the Company
or the representatives to publish a prospectus pursuant to
Article 3 of the Prospectus Directive or supplement a
prospectus pursuant to Article 16 of the Prospectus
Directive.
This prospectus has been prepared on the basis that any offer of
notes in any Relevant Member State will be made pursuant to an
exemption under the Prospectus Directive from the requirement to
publish a prospectus for offers of notes. Accordingly any person
making or intending to make an offer in that Relevant Member
State of notes which are the subject of the offering
contemplated in this prospectus may only do so in circumstances
in which no obligation arises for the Company or any of the
underwriters to publish a prospectus pursuant to Article 3
of the Prospectus Directive in relation to such offer. Neither
the Company nor the underwriters have authorized, nor do they
authorize, the making of any offer of notes in circumstances in
which an obligation arises for the Company or the underwriters
to publish a prospectus for such offer.
For the purpose of the above provisions, the expression an
offer to the public in relation to any notes in any
Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer
and the notes to be offered so as to enable an investor to
decide to purchase or subscribe the notes, as the same may be
varied in the Relevant Member State by any measure implementing
the Prospectus Directive in the Relevant Member State and the
expression Prospectus Directive means Directive
2003/71/EC (including the 2010 PD Amending Directive, to the
extent implemented in the Relevant Member States) and includes
any relevant implementing measure in the Relevant Member State
and the expression 2010 PD Amending Directive means
Directive 2010/73/EU.
Notice to
Prospective Investors in the United Kingdom
In addition, in the United Kingdom, this document is being
distributed only to, and is directed only at, and any offer
subsequently made may only be directed at persons who are
qualified investors (as defined
S-30
in the Prospectus Directive) (i) who have professional
experience in matters relating to investments falling within
Article 19 (5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as amended (the
Order)
and/or
(ii) who are high net worth companies (or persons to whom
it may otherwise be lawfully communicated) falling within
Article 49(2)(a) to (d) of the Order (all such persons
together being referred to as relevant persons).
This document must not be acted on or relied on in the United
Kingdom by persons who are not relevant persons. In the United
Kingdom, any investment or investment activity to which this
document relates is only available to, and will be engaged in
with, relevant persons.
Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future
perform, various financial advisory, commercial banking and
investment banking services for us and our affiliates, for which
they received or will receive customary fees and expense
reimbursement. Affiliates of most of the underwriters are
lenders under credit facilities for us and our affiliates, and
affiliates of some of the underwriters are lenders under our
accounts receivable securitization program. Several of the
underwriters and their affiliated and associated persons may
receive proceeds from this offering if they hold such debt on or
after the closing of this offering. Because it is possible that
the underwriters or their affiliated or associated persons could
receive more than 5% of the proceeds of the offering as
repayment for such debt, the offering is made in compliance with
the applicable provisions of Financial Industry Regulatory
Authority, or FINRA, Rule 5110 and Rule 2720 of the
National Association of Securities, or NASD, Conduct Rules.
Because the notes are investment-grade rated by one or more
nationally recognized statistical rating agencies, compliance
with these rules only requires the disclosure set forth in this
paragraph.
VALIDITY
OF NOTES
The validity of the notes will be passed upon for us by Calfee,
Halter & Griswold LLP, Cleveland, Ohio, and for the
underwriters by Squire, Sanders & Dempsey (US) LLP.
Squire, Sanders & Dempsey (US) LLP from time to time
performs legal services for us and Frederick R. Nance, a partner
of Squire, Sanders & Dempsey (US) LLP, is a member of
our board of directors.
EXPERTS
The consolidated financial statements of RPM International Inc.
incorporated by reference in RPM International Inc.s
Annual Report
(Form 10-K)
for the year ended May 31, 2010 (including the schedule
appearing therein), and the effectiveness of RPM International
Inc.s internal control over financial reporting as of
May 31, 2010, have been audited by Ernst & Young
LLP, an independent registered public accounting firm, as set
forth in their reports thereon incorporated by reference
therein, and incorporated by reference in the accompanying
prospectus. Such consolidated financial statements and schedule
are incorporated by reference in the accompanying prospectus in
reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
S-31
PROSPECTUS
RPM INTERNATIONAL
INC.
Debt Securities
Common Stock
Preferred Stock
Warrants
Purchase Contracts
Units
We will provide the specific terms of these securities in
supplements to this prospectus. You should read this prospectus
and the applicable supplement carefully before you invest.
Our common stock is traded on the New York Stock Exchange under
the symbol RPM.
Investing in our securities involves risks. Please read the
risk factors discussed or incorporated by reference under the
section of the prospectus captioned Risk Factors on
page 4.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is April 8, 2011.
TABLE OF
CONTENTS
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ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission
(SEC) using a shelf registration
procedure. Pursuant to that procedure and under this prospectus,
we may offer and sell:
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Debt Securities;
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Common Stock;
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Preferred Stock;
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Warrants;
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Purchase Contracts; and
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Units
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The securities described above may be offered and sold in one or
more offerings. Each time we offer and sell securities under the
registration statement of which this prospectus is a part, we
will file with the SEC a prospectus supplement that will contain
specific information about the terms of that offering. The
prospectus supplement may also add, update, or change
information contained in this prospectus. You should carefully
read this prospectus, and the applicable prospectus supplement,
together with the additional information described under the
heading Where You Can Find More Information, in
their entirety. They contain information that you should
consider when making your investment decision.
The registration statement that contains this prospectus
contains additional information about our company and the
securities offered under this prospectus. That registration
statement can be read at the SEC website or at the SEC offices
mentioned under the heading Where You Can Find More
Information.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. The reports, proxy
statements and other information that we file electronically
with the SEC are available to the public free of charge at the
SECs website at www.sec.gov. You may also read and copy
any document we file with the SEC, at prescribed rates, at the
SECs Public Reference Room at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. Please call
the SEC at
1-800-SEC-0330
for further information on the operation of its Public Reference
Room. You can also inspect our reports, proxy statements and
other information at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
We incorporate by reference into this prospectus the
information we file with the SEC, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus. Some information contained in
this prospectus updates the information incorporated by
reference into this prospectus, and information that we
subsequently file with the SEC will automatically update
information in this prospectus, as well as our other filings
with the SEC. In other words, in the case of a conflict or
inconsistency between information in this prospectus
and/or
information incorporated by reference into this prospectus, you
should rely on the information contained in the document that
was filed later. We incorporate by reference the documents
listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended (the Exchange Act),
after the initial filing of the registration statement that
contains this prospectus and prior to the time that we sell all
the securities offered under this prospectus,
1
other than the portions of such documents that by statute, by
designation in such documents, or otherwise are not deemed to be
filed with the SEC or are not required to be incorporated herein
by reference:
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Annual report on
Form 10-K
for the year ended May 31, 2010;
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Quarterly reports on
Form 10-Q
for the quarters ended August 31, 2010, November 30,
2010 and February 28, 2011;
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Current reports on
Form 8-K
filed on June 4, 2010, July 23, 2010 and
October 8, 2010;
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The description of our common stock and rights to purchase
shares of our common stock contained in the Registration
Statement on
Form S-3
(Registration
No. 333-108647),
filed with the SEC on September 9, 2003, and any amendments
and reports filed for the purpose of updating that
description; and
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Our Registration Statement on
Form 8-A,
filed with the SEC on May 11, 2009, related to the rights.
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We will provide to each person, including any beneficial owner,
to whom this prospectus is delivered any or all of these filings
(other than an exhibit to a filing unless that exhibit is
specifically incorporated by reference into that filing) at no
cost, upon written or oral request. You may request these
documents by writing to or telephoning us at the following
address and number:
Corporate
Secretary
RPM International Inc.
2628 Pearl Road
P.O. Box 777
Medina, Ohio 44258
(330) 273-5090
You should rely only on the information incorporated by
reference or set forth in this prospectus or the applicable
prospectus supplement. We have not authorized anyone else to
provide you with additional or different information. We may
only use this prospectus to sell securities if it is accompanied
by a prospectus supplement. We are only offering these
securities in states where the offer is permitted. You should
not assume that the information in this prospectus or the
applicable prospectus supplement is accurate as of any date
other than the dates on the front of those documents.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus (including the information incorporated by
reference) contains, and any accompanying prospectus supplement
will contain, forward-looking statements. These statements
relate to our plans, expectations, estimates and beliefs of
future events or our future financial performance and involve
known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or
achievements to be materially different from those expressed or
implied by any forward-looking statements. In some cases, you
can identify forward-looking statements by terminology such as
may, will, could,
would, should, expect,
plan, anticipate, target,
project, intend, believe,
estimate, predict,
potential, pro forma, seek
or continue or the negative of those terms or other
comparable terminology. These statements are only predictions
and we can give no assurance that such
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expectations will prove to be correct. Some of the things that
could cause our actual results to differ substantially from our
expectations are:
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global markets and general economic conditions, including
uncertainties surrounding the volatility in financial markets,
the availability of capital and the effect of changes in
interest rates, and the viability of banks and other financial
institutions;
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the prices, supply and capacity of raw materials, including
assorted pigments, resins, solvents, and other natural gas- and
oil-based materials; packaging, including plastic containers;
and transportation services, including fuel surcharges;
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continued growth in demand for our products;
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legal, environmental and litigation risks inherent in our
construction and chemicals businesses and risks related to the
adequacy of our insurance coverage for such matters;
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the effect of changes in interest rates;
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the effect of fluctuations in currency exchange rates upon our
foreign operations;
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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;
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risks and uncertainties associated with our ongoing acquisition
and divestiture activities;
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risks related to the adequacy of our contingent liability
reserves;
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risks and uncertainties associated with the SPHC bankruptcy
proceedings; and
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other factors referenced in this prospectus and any accompanying
prospectus supplement, including those set forth or referenced
under the caption Risk Factors.
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We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise, after the date of this
prospectus to conform them to actual results. All of the
forward-looking statements are qualified in their entirety by
reference to the factors discussed in and incorporated by
reference into the section captioned Risk Factors,
and by any cautionary language in this prospectus and any
accompanying prospectus supplement. We caution you that these
risk factors may not be exhaustive. We operate in a continually
changing business environment, and new risk factors emerge from
time to time. Management cannot predict such new risk factors,
nor can it assess the impact, if any, of such new risk factors
on our businesses or the extent to which any factor or
combination of factors, may cause actual results to differ
materially from those projected in any forward-looking
statements. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this
prospectus might not occur.
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RISK
FACTORS
Investing in our securities involves risks. Before deciding
whether to purchase any of our securities, you should carefully
consider the risks involved in an investment in our securities,
as set forth in:
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Item 1A, Risk Factors, in our Annual Report on
Form 10-K
for our fiscal year ended May 31, 2010; and
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the other risks described in any prospectus supplement or in any
of the documents incorporated by reference in this prospectus.
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USE OF
PROCEEDS
We intend to use the net proceeds from the sale of the
securities for the repayment of debt and for other general
corporate purposes unless otherwise indicated in the applicable
prospectus supplement relating to a specific issuance of
securities. Our general corporate purposes include, but are not
limited to, repayment, redemption or refinancing of debt,
capital expenditures, investments in or loans to subsidiaries
and joint ventures, funding of possible acquisitions, working
capital, contributions to one or more of our pension plans,
satisfaction of other obligations and repurchase of our
outstanding debt or equity securities. Pending any such use, the
net proceeds from the sale of the securities may be invested in
short-term, investment grade, interest-bearing instruments. We
will include a more detailed description of the use of proceeds
of any specific offering in the applicable prospectus supplement
relating to an offering of securities under this prospectus.
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our
fixed charges for the periods indicated:
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Nine Months Ended
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Fiscal Years Ended May 31,
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February 28,
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2006 (1)
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2007 (2)
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2008 (3)
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2009 (4)
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2010
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2011 (5)
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5.40
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1.42
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3.66
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4.67
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4.14
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(1) |
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Earnings were inadequate to cover fixed charges for the fiscal
year ended May 31, 2006. The coverage deficiency for that
fiscal year totaled $181.2 million. Fiscal year 2006 income
from continuing operations before taxes includes the unfavorable
impact of asbestos charges of $380.0 million. |
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Fiscal year 2007 income from continuing operations before taxes
includes the favorable impact of asbestos-related insurance
settlement income of $15.0 million. |
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Fiscal year 2008 income from continuing operations before taxes
includes the impact of asbestos-related charges of
$288.1 million. |
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Fiscal year 2009 income from continuing operations before taxes
includes the impact of goodwill and other intangible asset
impairment charges of $15.5 million. |
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Fiscal year 2011 income from continuing operations before taxes
includes the impact of the deconsolidation of Specialty Products
Holding Corp. (SPHC) on May 31, 2010. |
For purposes of computing the ratios of earnings to fixed
charges, earnings represent income from continuing operations
before taxes and cumulative effect of changes in accounting
principles plus fixed charges. Fixed charges consist of interest
expense, amortization of debt issuance costs and an estimation
of the interest portion of rental expense.
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DESCRIPTION
OF CAPITAL STOCK
The following description of our capital stock, amended and
restated certificate of incorporation and amended and restated
by-laws is a summary only and is subject to the complete text of
our amended and restated certificate of incorporation, amended
and restated by-laws, and the rights agreement between us and
the rights agent named therein, which we have filed as exhibits
to this registration statement.
Common
Stock
The following description of our common stock, together with the
additional information included in any applicable prospectus
supplements, summarizes the material terms and provisions of our
common stock, but is not complete. For the complete terms of the
common stock, please refer to our amended and restated
certificate of incorporation, our amended and restated by-laws
and our rights agreement, which are incorporated by reference
into the registration statement that includes this prospectus.
Our amended and restated certificate of incorporation authorizes
us to issue up to 300,000,000 shares of common stock. As of
April 1, 2011, there were 130,430,299 shares of common
stock outstanding, net of treasury shares, held by 26,163 direct
registered stockholders.
Our common stock is traded on the New York Stock Exchange under
the symbol RPM. The transfer agent and registrar for
our common stock is Wells Fargo Bank, N.A. Its address is
P.O. Box 64874, St. Paul, MN
55164-0874,
and its telephone number is
(800) 988-5238.
The holders of our common stock are entitled to one vote per
share on all matters to be voted upon by stockholders generally,
including the election of directors. There are no cumulative
voting rights, and, as a result, a plurality of stockholders
voting are able to elect directors. The Company has adopted a
majority voting policy with regard to the election of directors
which requires that any director who does not receive a majority
of the votes cast for his or her election tender their
resignation to the board. Holders of common stock are entitled
to receive ratably dividends, if any, as may be declared from
time to time by the board of directors out of funds legally
available for that purpose. In the event of our liquidation,
dissolution or winding up, the holders of common stock are
entitled to share ratably in all assets remaining after payment
of liabilities, subject to prior distribution rights of
outstanding shares of preferred stock, if any. The holders of
common stock have no preemptive or similar rights or other
subscription rights. There are no redemption or sinking fund
provisions applicable to the common stock. All outstanding
shares of common stock are legally issued, fully paid and
nonassessable.
Our amended and restated by-laws provide that special meetings
of stockholders can be called only by the chairman of the board,
the president, the majority of the board and the chairman of the
board or the president at the written request of stockholders
owning a majority of shares of voting stock.
Preferred
Stock
Our board of directors has the authority, without stockholder
approval, to issue shares of preferred stock in one or more
series and to fix the number of shares and terms of each series.
The board may determine the designation and other terms of each
series, including, among others:
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dividend rights;
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voting powers;
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preemptive rights;
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conversion rights;
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redemption rights; and
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liquidation rights.
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The issuance of preferred stock, while providing desired
flexibility in connection with possible acquisitions and other
corporate purposes, could adversely affect the voting power of
holders of common stock. It also could affect the likelihood
that holders of common stock will receive dividend payments and
payments upon liquidation.
Rights
Plan
On April 21, 2009, we entered into a rights agreement with
National City Bank, as rights agent. National City Banks
duties and obligations under the rights agreement have since
been assumed by Wells Fargo Bank, N.A. In connection with
the rights agreement, our board of directors declared a dividend
of one right for each outstanding share of common stock. Rights
have been issued in connection with each outstanding share of
common stock, and rights will be issued in connection with
shares of common stock issued subsequently until the
distribution date, and, in certain circumstances, for shares of
common stock issued after the distribution date referred to
below. Each right, when it becomes exercisable as described
below, will entitle the registered holder to purchase from us
one-tenth of a share of common stock at a price of $7.00 or
$70.00 per whole share, subject to adjustment in certain
circumstances. A more detailed description and the terms of the
rights are set forth in the rights agreement. The rights will
not be exercisable until the distribution date and will expire
on the tenth annual anniversary of the rights agreement, unless
earlier redeemed or exchanged by us. Until a right is exercised,
the holder, as such, will have no rights as a stockholder,
including the right to vote or to receive dividends.
Distribution
Date
Under the rights agreement, the distribution date is
the earlier of:
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(1)
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the close of business on the tenth calendar day following the
first date of public announcement by us that a person or group,
including any affiliate or associate of such person or group,
has acquired, or has obtained the right to acquire, beneficial
ownership of more than 15% of our outstanding voting securities
(such person or group being an acquiring person),
unless provisions preventing accidental triggering of the
distribution of the rights apply; and
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(2)
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the close of business on the tenth business day (or, unless the
distribution date shall have previously occurred, such later
date, if any, as may be designated by our board of directors)
following the commencement of a tender or exchange offer for
more than 15% of the
then-outstanding
voting securities.
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Triggering
Event and Effect of Triggering Event
When there is an acquiring person, the rights will entitle each
holder, other than such acquiring person, of a right to
purchase, at the purchase price, that number of shares of common
stock that at the time of such event would have a market value
of twice the purchase price.
If we are acquired in a merger or other business combination by
an acquiring person or an affiliate or associate of an acquiring
person, or if 50% or more of our assets or assets representing
50% or more of our earning power are sold to an acquiring person
or an affiliate or associate of an acquiring person, each right
will entitle its holder, other than rights beneficially owned by
such acquiring person, to purchase, for the purchase price, that
number of shares of common stock of such corporation which at
the time of the transaction would have a market value of twice
the purchase price.
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Any rights that are at any time beneficially owned by an
acquiring person, or any affiliate or associate of an acquiring
person, will be null and void and nontransferable, and any
holder of any such right will be unable to exercise or transfer
any such right.
Redemption
and Exchange
At any time prior to the close of business on the distribution
date, we may redeem the rights in whole, but not in part, at a
price of $0.001 per right, which amount shall be subject to
adjustment as provided in the rights agreement. Immediately upon
the action of our board of directors ordering the redemption of
the rights, and without any further action and without any
notice, the right to exercise the rights will terminate and the
only right of the holders of rights will be to receive the
redemption price.
In addition, at any time after the distribution date, our board
of directors may elect to exchange each right for consideration
per right consisting of one share of common stock, subject to
adjustment.
Amendment
At any time prior to the distribution date, we may, without the
approval of any holder of any rights, supplement or further
amend any provision of the rights agreement, including the date
on which the expiration date or distribution date shall occur,
the definition of acquiring person or the time during which the
rights may be redeemed, except that no supplement or amendment
shall be made that changes the redemption price other than under
certain adjustments therein.
Certain
Effects of the Rights Agreement
The rights agreement is designed to protect our stockholders in
the event of unsolicited offers to acquire us and other coercive
takeover tactics which, in the opinion of our board of
directors, could impair its ability to represent stockholder
interests. The provisions of the rights agreement may render an
unsolicited takeover of us more difficult or less likely to
occur or might prevent such a takeover, even though such
takeover may offer our stockholders the opportunity to sell
their stock at a price above the prevailing market rate and may
be favored by a majority of our stockholders.
Anti-takeover
Effects of Certificate of Incorporation, By-Laws, and the
Delaware General Corporation Law
General
Corporation Law
There are provisions in our amended and restated certificate of
incorporation, our amended and restated by-laws, and the
Delaware General Corporation Law that could discourage potential
takeover attempts. They could also make it more difficult for
stockholders to change management. These provisions could
adversely affect the market price of our common stock. These
provisions include:
Authorized
but Unissued Stock
The authorized but unissued common stock and preferred stock may
be issued without stockholder approval (although the board of
directors has represented that it will not issue any series of
preferred stock for any defensive or anti-takeover purpose
without stockholder approval). Authorized but unissued stock may
be used for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of
authorized but unissued common stock and preferred stock could
render it more difficult or discourage an attempt to obtain
control of us by means of a proxy contest, tender offer, merger
or otherwise.
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Staggered
Board
Our board of directors is divided into three classes, with
regular three-year staggered terms. This classification system
increases the difficulty of replacing a majority of the
directors and may tend to discourage a third-party from making a
tender offer or otherwise attempting to gain control of us. In
addition, under Delaware law and our amended and restated
certificate of incorporation and amended and restated
by-laws, our
directors may be removed from office by the stockholders only
for cause and only in the manner provided for in our amended and
restated certificate of incorporation. These factors may
maintain the incumbency of our board of directors.
Amendment
of Certificate of Incorporation
Under Delaware law, in general, to amend a corporations
certificate of incorporation, the directors of the corporation
must first adopt a resolution deeming the amendment advisable
and then the holders of a majority of the outstanding stock
entitled to vote must vote in favor of the amendment. Our
amended and restated certificate of incorporation does not
change the effect of Delaware law in this regard, except that
the provision in our amended and restated certificate of
incorporation regarding the number, election and terms of
directors may not be repealed or amended without the vote of the
holders of not less than 80% of our voting stock, voting as a
single class.
Amendment
of By-Laws
Under Delaware law, the power to adopt, amend or repeal by-laws
is conferred upon the stockholders. A corporation may, however,
in its certificate of incorporation also confer upon the board
of directors the power to adopt, amend or repeal its by-laws.
Our amended and restated certificate of incorporation and
amended and restated by-laws grant our board of directors the
power to adopt, amend or repeal our by-laws at any meeting of
the board. Our stockholders also may adopt, amend or repeal our
by-laws by a vote of a majority of our voting stock, except that
the provision in our amended and restated by-laws regarding the
number, election and terms of directors may not be repealed or
amended without the vote of the holders of not less than 80% of
our voting stock, voting as a single class.
Stockholder
Action by Written Consent; Special Meetings of
Stockholders
Our amended and restated by-laws provide that no action that is
required or permitted to be taken by our stockholders at any
annual or special meeting may be taken by written consent of
stockholders in lieu of a meeting, and that, unless otherwise
prescribed by law, a special meeting of stockholders may be
called only by the chairman of the board, the president, a
majority of the board of directors or the chairman of the board
or president at the written request of stockholders holding a
majority of our voting stock.
Interested
Stockholder Rule
We are a Delaware corporation and are subject to
Section 203 of the Delaware General Corporation Law, which
regulates corporate acquisitions. Section 203 prevents an
interested stockholder, which is defined generally
as a person owning 15% or more of a corporations voting
stock, or any affiliate or associate of that person, from
engaging in a broad range of business combinations
with the corporation for three years after becoming an
interested stockholder unless:
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the board of directors of the corporation had previously
approved either the business combination or the transaction that
resulted in the stockholders becoming an interested
stockholder;
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upon completion of the transaction that resulted in the
stockholders becoming an interested stockholder, that
person owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding
shares owned by persons who are directors and
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also officers and shares owned in employee stock plans in which
participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered; or
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following the transaction in which that person became an
interested stockholder, the business combination is approved by
the board of directors of the corporation and at a meeting by
the vote of holders of at least two-thirds of the outstanding
voting stock not owned by the interested stockholder.
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Under Section 203, the restrictions described above also do
not apply to specific business combinations proposed by an
interested stockholder following the announcement or
notification of designated extraordinary transactions involving
the corporation and a person who had not been an interested
stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the
corporations directors, if such extraordinary transaction
is approved or not opposed by a majority of the directors who
were directors prior to any person becoming an interested
stockholder during the previous three years or were recommended
for election or elected to succeed such directors by a majority
of such directors.
Section 203 may make it more difficult for a person who
would be an interested stockholder to effect various business
combinations with a corporation for a three-year period.
Limitations
on Liability; Indemnification of Officers and
Directors
Under Delaware law and Article VIII of our amended and
restated certificate of incorporation, our directors will not be
personally liable to us or our stockholders for monetary damages
for breach of fiduciary duty as a director, except, if required
by Delaware law, for liability:
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for any breach of the duty of loyalty to us or our stockholders;
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for acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of the law;
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for unlawful payment of a dividend or unlawful stock purchases
or redemptions; and
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for any transaction from which the director derived an improper
personal benefit.
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As a result, neither we nor our stockholders have the right,
through stockholders derivative suits on our behalf, to
recover monetary damages against a director for breach of
fiduciary duty as a director, including breaches resulting from
grossly negligent behavior, except in the situations described
above.
Under Delaware law, Delaware corporations may indemnify
directors and officers from liability if the person acted in
good faith and in a manner reasonably believed by such person to
be in or not opposed to the best interests of the corporation,
and, with respect to any criminal actions, if the person had no
reason to believe his or her action was unlawful. In the case of
an action by or on behalf of a corporation, indemnification may
not be made if the person seeking indemnification is adjudged
liable to the corporation, unless the Delaware Court of Chancery
or the court in which such action was brought determines upon
application that, despite the adjudication but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnification. The indemnification
provisions of Delaware law require indemnification of any
director or officer who has been successful on the merits or
otherwise in defense of any action, suit or proceeding that he
or she was a party to by reason of the fact that he or she is or
was a director or officer of the corporation. Delaware law
permits corporations to advance amounts to directors and
officers in payment of expenses. The indemnification authorized
by Delaware law is not exclusive and is in addition to any other
rights granted to directors under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
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Our indemnification arrangements are set forth in our amended
and restated certificate of incorporation. Article IX of
our amended and restated certificate of incorporation provides
that we shall indemnify any person against all expenses,
liability and loss reasonably incurred or suffered by such
person in connection with the defense of either any action, suit
or proceeding to which he or she may be a party defendant or any
claim of liability asserted against such person by reason of the
fact that he or she is or was our director or he or she is or
was serving at our request as a director, officer, employee or
agent of another corporation or of a partnership, joint venture,
trust or other enterprise, provided that he or she acted in good
faith and in a manner he or she reasonably believed to be in or
not opposed to our best interests, and, with respect to any
criminal action or proceeding, if he or she had no reasonable
cause to believe his or her action was unlawful.
In addition, unless ordered by a court, indemnification shall be
made by us only as authorized in the specific case upon a
determination that indemnification of the director or officer is
proper because the person has met the applicable standard of
conduct under Delaware law. This determination is made, with
respect to a person who is a director or officer at the time of
such determination, by (i) a majority vote of the directors
who are not parties to or threatened with the action, even
though less than a quorum, (ii) a committee of such
directors designated by a majority vote of such directors, even
though less than a quorum, (iii) if there are no such
directors, or if such directors so direct, independent legal
counsel in a written opinion or (iv) the stockholders. The
indemnification provided for in our amended and restated
certificate of incorporation is not exclusive of any other
rights to which a director or officer may be entitled to under
any statute, our amended and restated certificate of
incorporation, our amended and restated by-laws, any agreement,
a vote of stockholders or disinterested directors or otherwise.
We have also entered into indemnity agreements under which we
have agreed, among other things, to indemnify our directors and
officers to the maximum extent then authorized or permitted by
our amended and restated certificate of incorporation or
Delaware law.
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DESCRIPTION
OF DEBT SECURITIES
The following description of the terms of the Debt Securities
(as defined below) sets forth certain general terms and
provisions of the Debt Securities to which any prospectus
supplement may relate. The particular terms of the Debt
Securities offered by any prospectus supplement and the extent,
if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the prospectus
supplement relating to such Debt Securities. Accordingly, for a
description of the terms of a particular issue of Debt
Securities, reference must be made to both the prospectus
supplement relating thereto and to the following description.
The Debt Securities will be issued under an indenture (the
Indenture) dated as of February 14, 2008,
between us and The Bank of New York Mellon Trust Company,
N.A. (the Trustee). As used in this prospectus,
Debt Securities means the debentures, notes, bonds
and other evidences of indebtedness that we issue and the
Trustee authenticates and delivers under the Indenture.
We have summarized certain terms and provisions of the Indenture
in this section. The summary is not complete. The Indenture is
also an exhibit to the registration statement that included this
prospectus. You should read the Indenture for additional
information before you buy any Debt Securities. The summary that
follows includes references to section numbers of the Indenture
so that you can more easily locate these provisions. Capitalized
terms used but not defined in this summary have the meanings
specified in the Indenture.
General
The Debt Securities will be our direct unsecured obligations.
The Indenture does not limit the amount of Debt Securities that
we may issue and permits us to issue Debt Securities from time
to time. Debt Securities issued under the Indenture will be
issued as part of a series that has been established by us
pursuant to the Indenture (Section 2.01(b)). Unless a
prospectus supplement relating to Debt Securities states
otherwise, the Indenture and the terms of the Debt Securities
will not contain any covenants designed to afford holders of any
Debt Securities protection in a highly leveraged or other
transaction involving us that may adversely affect holders of
the Debt Securities.
A prospectus supplement relating to a series of Debt Securities
being offered will include specific terms relating to the
offering. These terms will include some or all of the following:
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the title and type of the Debt Securities;
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any limit on the total principal amount of the Debt Securities;
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the price at which the Debt Securities will be issued;
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the date or dates on which the principal of and premium, if any,
on the Debt Securities will be payable;
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the maturity date of the Debt Securities;
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if the Debt Securities will bear interest, and if so:
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the interest rate on the Debt Securities,
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the date from which interest will accrue,
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the record and interest payment dates for the Debt Securities or
the method of determining such rate,
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the first interest payment date, and
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any circumstances under which we may defer interest payments;
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if the amount of principal, interest or premium, if any, with
respect to the Debt Securities may be determined with reference
to an index or pursuant to a formula, the manner in which such
amounts will be determined;
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any optional conversion provisions that would permit us or the
Holders (as defined below) of Debt Securities to elect to
convert the Debt Securities prior to their final maturity;
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any optional redemption provisions that would permit us or the
Holders (as defined below) of Debt Securities to elect
redemption of the Debt Securities prior to their final maturity;
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any sinking fund or analogous provisions that would obligate us
to redeem, purchase or repay the Debt Securities prior to their
final maturity;
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the currency or currencies in which the Debt Securities will be
denominated and payable, if other than U.S. dollars;
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any provisions that would permit us or the Holders of the Debt
Securities to elect the currency or currencies in which the Debt
Securities are paid;
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whether the Debt Securities will be subordinated to our other
debt;
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any changes to or additional Events of Default (as defined
below);
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any changes to or additional covenants or provisions to the
Indenture;
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whether the Debt Securities will be issued in whole or in part
in the form of Global Securities and, if so, the Depositary for
those Global Securities (a Global Security means a
Debt Security that we issue in accordance with the Indenture to
represent all or part of a series of Debt Securities);
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any material United States federal income tax consequences of
the Debt Securities; and
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any other terms of the Debt Securities (which terms shall not be
prohibited by the provisions of the Indenture).
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A Holder means the person in whose name a particular
Security is registered in the Security Register
(Section 1.01).
Payment
and Transfer
In the prospectus supplement relating to a series of Debt
Securities, we will designate a Place of Payment
where you can receive payment of the principal of and any
premium and interest on such Debt Securities or transfer such
Debt Securities. There will be no service charge for any
registration of transfer or exchange of the Debt Securities, but
we may require you to pay any tax or other governmental charge
payable in connection with a transfer or exchange of the Debt
Securities.
All funds which we pay to any paying agent for the payment of
principal, interest or premium, if any, with respect to the Debt
Securities that remain unclaimed at the end of two years after
such principal, interest or premium shall have become due and
payable will be repaid to us, and the holders of such Debt
Securities will thereafter look only to us for payment thereof.
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Denominations
Unless the prospectus supplement states otherwise, the Debt
Securities will be issued only in registered form, without
coupons, in denominations of $1,000 each, or multiples of $1,000.
Original
Issue Discount
Debt Securities may be issued under the Indenture as Original
Issue Discount Securities and sold at a substantial discount
below their stated principal amount. If a Debt Security is an
Original Issue Discount Security, that means that an
amount less than the principal amount of the Debt Security will
be due and payable upon a declaration of acceleration of the
maturity of the Debt Security pursuant to the Indenture
(Section 1.01). The prospectus supplement will describe the
federal income tax consequences and other special factors which
should be considered prior to purchasing any Original Issue
Discount Securities.
Consolidation,
Merger or Sale of Assets
The Indenture generally permits a consolidation or merger
between us and another company. It also permits the sale or
transfer by us of all or substantially all of our property and
assets and the purchase by us of all or substantially all of the
property and assets of another company. These transactions are
permitted if:
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the resulting or acquiring company (if other than us) is a
U.S. corporation, partnership or trust which assumes, or
has its parent company assume, all of our responsibilities and
liabilities under the Indenture, including the payment of all
amounts due on the Debt Securities and performance of the
covenants in the Indenture; and
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immediately after the transaction, no Event of Default exists.
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If we consolidate or merge with or into any other corporation or
sell all or substantially all of our assets according to the
terms and conditions of the Indenture, the resulting or
acquiring corporation will be substituted for us in the
Indenture with the same effect as if it had been an original
party to the Indenture. As a result, the successor corporation
may exercise our rights and powers under the Indenture, in our
name or in its own name and we will be released from all our
liabilities and obligations under the Indenture and under the
Debt Securities (Sections 11.01(a) and (b)).
Satisfaction
and Discharge; Defeasance and Covenant Defeasance
The following discussion of satisfaction and discharge,
defeasance and covenant defeasance will be applicable to a
series of Debt Securities only if we choose to have them apply
to that series. If we do so choose, we will state that in the
applicable prospectus supplement.
Satisfaction and Discharge. The Indenture will
be satisfied and discharged if:
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we deliver to the Trustee all Debt Securities then outstanding
for cancellation; or
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all Debt Securities not delivered to the Trustee for
cancellation have become due and payable, are to become due and
payable within one year upon their stated maturity or are to be
called for redemption within one year and we deposit an amount
sufficient to pay the principal, premium, if any, and interest
to the date of maturity or redemption as applicable, or deposit
(in the case of Debt Securities that have become due and
payable), provided that in either case we have paid all other
sums payable under the Indenture.
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Defeasance and Covenant Defeasance. The
Indenture provides, if such provision is made applicable to the
Debt Securities of a series, that:
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to defease and be discharged from any and all obligations with
respect to any Debt Security of such series (except for the
obligations to register the transfer or exchange of such Debt
Security, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in
respect of the Debt Securities and to hold moneys for payment in
trust) (defeasance); or
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to be released from our obligations with respect to certain
restrictive covenants that may be applicable for a particular
series; and
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that the Events of Default described in the third, fourth (only
with respect to those restrictive covenants that no longer
apply), fifth and seventh bullets under Events of
Default, shall not be Events of Default under the
Indenture with respect to such series (covenant
defeasance), upon the deposit with the Trustee (or other
qualifying trustee), in trust for such purpose, of money
and/or
certain U.S. government obligations which through the
payment of principal and interest in accordance with their terms
will provide money, in an amount sufficient to pay the principal
of (and premium, if any) and interest on such Debt Security, on
the scheduled due dates.
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In the case of defeasance, the holders of such Debt Securities
are entitled to receive payments in respect of such Debt
Securities solely from such trust. Such a trust may only be
established if, among other things, we have delivered to the
Trustee an opinion of counsel (as specified in the Indenture) to
the effect that the holders of the Debt Securities affected
thereby will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such defeasance or covenant defeasance had not
occurred. Such opinion of counsel, in the case of defeasance
described above, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable federal
income tax law occurring after the date of the Indenture.
Modification
and Waiver
Under the Indenture, certain of our rights and obligations and
certain of the rights of Holders of the Debt Securities may be
modified or amended with the consent of the Holders of a
majority in aggregate principal amount of the outstanding Debt
Securities of each series of Debt Securities affected by the
modification or amendment. The following modifications and
amendments will not be effective against any Holder of any
outstanding Debt Security affected thereby without its consent:
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a change in the stated maturity date of any payment of principal
or interest;
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a reduction in the principal amount, in the rate of interest or
in any premium payable upon redemption;
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a reduction in the principal amount of an Original Issue
Discount Security that would be due and payable upon a
declaration of acceleration of the maturity of a Debt Security
pursuant to the Indenture;
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a change in the Place of Payment or currency in which any
payment on the Debt Securities is payable;
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an impairment of a Holders right to sue us for the
enforcement of certain payments due on the Debt Securities;
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a reduction in the percentage of outstanding Debt Securities
required to consent to a modification, waiver or amendment of
the Indenture; and
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a modification of any of the foregoing requirements or a
reduction in the percentage in principal amount of outstanding
Debt Securities required to waive compliance with certain
provisions of the Indenture or to waive certain defaults under
the Indenture (Section 10.02).
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Events of
Default
The term Event of Default when used in the Indenture
with respect to any series of Debt Securities, means any of the
following:
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failure to pay interest (including defaulted interest, if any)
on any Debt Security of that series when due, and continuance of
such default for a period of 30 days;
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failure to pay the principal of or any premium on any Debt
Security of that series when due;
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failure to make any sinking fund payment when and as due by the
terms of a Debt Security of that series, and continuance of such
default for a period of 60 days;
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default in the performance, or breach, of any covenant or
warranty of the Company in the Indenture (other than a covenant
or warranty, a default in the performance or breach of which is
elsewhere specifically dealt with or which has expressly been
included in the Indenture solely for the benefit of one or more
series of Debt Securities other than that series), and
continuance of such default or breach for a period of 60
calendar days after there has been given and actually received
by the Company a Notice of Default with respect to such default
or breach;
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any nonpayment at maturity or other default is made under any
agreement or instrument relating to any other Indebtedness of
the Company (the unpaid principal amount of which is not less
than the greater of $50 million or 10% of Consolidated
Stockholders Equity of the Company), and, in any such
case, such default (A) continues beyond any period of grace
provided with respect thereto, (B) results in such
Indebtedness being accelerated or declared due and payable (or,
in the case of nonpayment, occurs at the final maturity of such
Indebtedness), and (C) such Indebtedness is not discharged,
or such acceleration or declaration has not been rescinded or
annulled, within a period of 30 days after actual receipt
by the Company of a Notice of Default from the Trustee or the
required Holders of such series; provided, however, that if any
such nonpayment or other default shall be cured, waived,
rescinded or annulled, then the Event of Default by reason
thereof shall be deemed not to have occurred;
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certain events in bankruptcy, insolvency or
reorganization; or
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any other Event of Default that may be specified for the Debt
Securities of that series when that series is created (Section
8.01(a)).
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If an Event of Default (other than the Event of Default referred
to in the sixth bullet above) for any series of Debt Securities
occurs and continues, the Trustee or the Holders of at least 25%
in aggregate principal amount of the outstanding Debt Securities
of the series may declare the entire principal of all the Debt
Securities of that series to be due and payable immediately. If
such a declaration occurs, the Holders of a majority of the
aggregate principal amount of the outstanding Debt Securities of
that series can, subject to certain conditions, rescind the
declaration. Upon the occurrence of the Event of Default
referred to in the sixth
15
bullet above the entire principal of, and interest and premium
(if any) on, all the Debt Securities of each series shall be due
and payable immediately without any declaration or other act on
the part of the Trustee or any Holder (Section 8.01(b) and
(c)).
The prospectus supplement relating to each series of Debt
Securities that are Original Issue Discount Securities will
describe the particular provisions that relate to the
acceleration of maturity of a portion of the principal amount of
such series when an Event of Default occurs and continues.
An Event of Default for a particular series of Debt Securities
does not necessarily constitute an Event of Default for any
other series of Debt Securities issued under the Indenture. The
Indenture requires us to file an Officers Certificate with
the Trustee each fiscal year that states that certain defaults
do not exist under the terms of the Indenture
(Section 6.05).
Other than its duties in the case of a default, a Trustee is not
obligated to exercise any of its rights or powers under the
Indenture at the request or direction of any Holders, unless the
Holders offer the Trustee indemnification satisfactory to it
(Section 9.02(e)). If such indemnification is provided,
then, subject to certain other rights of the Trustee, the
Holders of a majority in principal amount of the outstanding
Debt Securities of any series may, with respect to the Debt
Securities of that series, direct the time, method and place of:
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conducting any proceeding for any remedy available to the
Trustee; or
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exercising any trust or power conferred upon the Trustee
(Section 8.06).
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The Holder of a Debt Security of any series will have the right
to begin any proceeding with respect to the Indenture or for any
other remedy under the Indenture (including the appointment of a
receiver or trustee), only if:
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the Holder has previously given the Trustee written notice of a
continuing Event of Default with respect to the Debt Securities
of that series;
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the Holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of that series have made a written
request of, and offered satisfactory indemnification to, the
Trustee to begin such proceeding;
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the Holders have offered the Trustee indemnification to the
Trustees satisfaction with respect to compliance with the
request;
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the Trustee has not started such proceeding within 60 days
after receiving the request; and
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the Trustee has not received directions inconsistent with such
request from the Holders of a majority in aggregate principal
amount of the outstanding Debt Securities of that series during
those 60 days (Section 8.04).
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However, the Holder of any Debt Security will have an absolute
right to receive payment of principal of and any premium and
interest on the Debt Security when due and to institute suit to
enforce such payment (Section 8.09).
Street
Name and Other Indirect Holders
Investors who hold securities in accounts at banks or brokers
generally will not be recognized by us as legal Holders of Debt
Securities. This is called holding in Street Name.
Instead, we would recognize only the bank or broker, or the
financial institution that the bank or broker uses to hold its
securities. These intermediary banks, brokers and other
financial institutions pass along principal, interest and other
payments on the Debt
16
Securities, either because they agree to do so in their customer
agreements or because they are legally required to. If you hold
Debt Securities in Street Name, you should check
with your own institution to find out:
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How it handles payments and notices;
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Whether it imposes fees or charges;
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How it would handle voting if applicable;
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Whether and how you can instruct it to send you Debt Securities
registered in your own name so you can be a direct Holder as
described below; and
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If applicable, how it would pursue rights under your Debt
Securities if there were a default or other event triggering the
need for Holders to act to protect their interests.
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Direct
Holders
Our obligations, as well as the obligations of the Trustee under
the Indenture and those of any third parties employed by us or
the Trustee under the Indenture, run only to persons who are
registered as Holders of Debt Securities issued under the
Indenture. As noted above, we do not have obligations to you if
you hold in Street Name or other indirect means,
either because you choose to hold Debt Securities in that manner
or because the Debt Securities are issued in the form of global
securities as described below. For example, once we make payment
to the registered Holder, we have no further responsibility for
the payment even if that Holder is legally required to pass the
payment along to you as a Street Name customer but
does not do so.
Book-Entry,
Delivery and Form
We have obtained the information in this section concerning DTC,
Clearstream Banking S.A., or Clearstream, and
Euroclear Bank S.A./N.V., as operator of the Euroclear System,
or Euroclear, and the book-entry system and
procedures from sources that we believe to be reliable, but we
take no responsibility for the accuracy of this information.
Unless otherwise specified in the applicable prospectus
supplement, the Debt Securities will be issued as
fully-registered global securities which will be deposited with,
or on behalf of, DTC and registered, at the request of DTC, in
the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC. Beneficial
interests in the global securities will be represented through
book-entry accounts of financial institutions acting on behalf
of beneficial owners as direct or indirect participants in DTC.
Investors may elect to hold their interests in the global
securities through either DTC (in the United States) or (in
Europe) through Clearstream or through Euroclear. Investors may
hold their interests in the global securities directly if they
are participants in such systems, or indirectly through
organizations that are participants in these systems. Interests
held through Clearstream and Euroclear will be recorded on
DTCs books as being held by the U.S. depositary for
each of Clearstream and Euroclear (the
U.S. Depositories), which
U.S. Depositories will, in turn, hold interests on behalf
of their participants customers securities accounts.
Unless otherwise specified in the applicable prospectus
supplement, beneficial interests in the global securities will
be held in denominations of $100,000 and multiples of $1,000 in
excess thereof. Except as set forth below, the global securities
may be transferred, in whole and not in part, only to another
nominee of DTC or to a successor of DTC or its nominee.
Debt Securities represented by a global security can be
exchanged for definitive securities in registered form only if:
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DTC notifies us that it is unwilling or unable to continue as
depositary for that global security;
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at any time DTC ceases to be a clearing agency registered under
the Exchange Act;
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we in our sole discretion determine that that global security
will be exchangeable for definitive securities in registered
form and notify the trustee of our decision;
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an event of default with respect to the Debt Securities
represented by that global security has occurred and is
continuing; or
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other circumstances exist under which such an exchange is to be
permitted as established in accordance with the indenture in
connection with issuing Debt Securities.
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A global security that can be exchanged as described in the
preceding sentence will be exchanged for definitive securities
issued in authorized denominations in registered form for the
same aggregate amount. The definitive securities will be
registered in the names of the owners of the beneficial
interests in the global security as directed by DTC.
We will make principal and interest payments on all Debt
Securities represented by a global security to the paying agent
which in turn will make payment to DTC or its nominee, as the
case may be, as the sole registered owner and the sole holder of
the Debt Securities represented by a global security for all
purposes under the Indenture. Accordingly, we, the trustee and
any paying agent will have no responsibility or liability for:
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any aspect of DTCs records relating to, or payments made
on account of, beneficial ownership interests in a Debt Security
represented by a global security;
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any other aspect of the relationship between DTC and its
participants or the relationship between those participants and
the owners of beneficial interests in a global security held
through those participants; or
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the maintenance, supervision or review of any of DTCs
records relating to those beneficial ownership interests.
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DTC has advised us that its current practice is to credit
participants accounts on each payment date with payments
in amounts proportionate to their respective beneficial
interests in the principal amount of such global security as
shown on DTCs records, upon DTCs receipt of funds
and corresponding detail information. The underwriters or agents
for the Debt Securities represented by a global security will
initially designate the accounts to be credited. Payments by
participants to owners of beneficial interests in a global
security will be governed by standing instructions and customary
practices, as is the case with securities held for customer
accounts registered in Street Name, and will be the
sole responsibility of those participants. Book-entry notes may
be more difficult to pledge because of the lack of a physical
note.
DTC
So long as DTC or its nominee is the registered owner of a
global security, DTC or its nominee, as the case may be, will be
considered the sole owner and holder of the Debt Securities
represented by that global security for all purposes of the Debt
Securities. Owners of beneficial interests in the Debt
Securities will not be entitled to have Debt Securities
registered in their names, will not receive or be entitled to
receive physical delivery of the Debt Securities in definitive
form and will not be considered owners or holders of Debt
Securities under the Indenture. Accordingly, each person owning
a beneficial interest in a global security must rely on the
procedures of DTC and, if that person is not a DTC participant,
on the procedures of the participant through which that person
owns its interest, to exercise any rights of a holder of Debt
Securities. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of the
securities in certificated form. These laws may impair the
ability to transfer beneficial interests in a global security.
Beneficial owners may experience delays in receiving
distributions on their Debt Securities since distributions will
initially be made to DTC and must then be transferred through
the chain of intermediaries to the beneficial owners
account.
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We understand that, under existing industry practices, if we
request holders to take any action, or if an owner of a
beneficial interest in a global security desires to take any
action which a holder is entitled to take under the Indenture,
then DTC would authorize the participants holding the relevant
beneficial interests to take that action and those participants
would authorize the beneficial owners owning through such
participants to take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
Beneficial interests in a global security will be shown on, and
transfers of those ownership interests will be effected only
through, records maintained by DTC and its participants for that
global security. The conveyance of notices and other
communications by DTC to its participants and by its
participants to owners of beneficial interests in the Debt
Securities will be governed by arrangements among them, subject
to any statutory or regulatory requirements in effect.
DTC has advised us that it is a limited-purpose trust company
organized under the New York banking law, a banking
organization within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a clearing
corporation within the meaning of the New York Uniform
Commercial Code, and a clearing agency registered
under the Exchange Act.
DTC holds the securities of its participants and facilitates the
clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry
changes in accounts of its participants. The electronic
book-entry system eliminates the need for physical certificates.
DTCs participants include securities brokers and dealers,
including underwriters, banks, trust companies, clearing
corporations and certain other organizations. Banks, brokers,
dealers, trust companies and others that clear through or
maintain a custodial relationship with a participant, either
directly or indirectly, also have access to DTCs
book-entry system. The rules applicable to DTC and its
participants are on file with the SEC.
DTC has advised us that the above information with respect to
DTC has been provided to its participants and other members of
the financial community for informational purposes only and is
not intended to serve as a representation, warranty or contract
modification of any kind.
Clearstream
Clearstream has advised us that it is incorporated under the
laws of Luxembourg as a professional depositary. Clearstream
holds securities for its participating organizations, or
Clearstream Participants, and facilitates the
clearance and settlement of securities transactions between
Clearstream Participants through electronic book-entry changes
in accounts of Clearstream Participants, thereby eliminating the
need for physical movement of certificates. Clearstream provides
to Clearstream Participants, among other things, services for
safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and
borrowing. Clearstream interfaces with domestic securities
markets in several countries. As a professional depositary,
Clearstream is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Sector
(Commission de Surveillance du Secteur Financier). Clearstream
Participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations. Clearstreams U.S. Participants are
limited to securities brokers and dealers and banks. Indirect
access to Clearstream is also available to others, such as
banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Clearstream
Participant either directly or indirectly.
Distributions with respect to debt securities held beneficially
through Clearstream will be credited to cash accounts of
Clearstream Participants in accordance with its rules and
procedures, to the extent received by the U.S. Depositary
for Clearstream.
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Euroclear
Euroclear has advised us that it was created in 1968 to hold
securities for participants of Euroclear, or Euroclear
Participants, and to clear and settle transactions between
Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the
need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Euroclear
performs various other services, including securities lending
and borrowing and interacts with domestic markets in several
countries. Euroclear is operated by Euroclear Bank S.A./N.V., or
the Euroclear Operator, under contract with
Euroclear plc, a U.K. corporation. All operations are conducted
by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator, not Euroclear plc. Euroclear plc
establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks, including
central banks, securities brokers and dealers and other
professional financial intermediaries. Indirect access to
Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant,
either directly or indirectly.
The Euroclear Operator is a Belgian bank. As such it is
regulated by the Belgian Banking, Finance and Insurance
Commission (La Commission Bancaire, Financiere et des
Assurances) and the National Bank of Belgium (Banque Nationale
de Belgique).
Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating Procedures
of the Euroclear System, and applicable Belgian law, which we
will refer to herein as the Terms and Conditions.
The Terms and Conditions govern transfers of securities and cash
within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities
in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under
the Terms and Conditions only on behalf of Euroclear
Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Debt Securities held beneficially
through Euroclear will be credited to the cash accounts of
Euroclear Participants in accordance with the Terms and
Conditions, to the extent received by the U.S. Depositary
for Euroclear.
Euroclear has further advised us that investors that acquire,
hold and transfer interests in the Debt Securities by book-entry
through accounts with the Euroclear Operator or any other
securities intermediary are subject to the laws and contractual
provisions governing their relationship with their intermediary,
as well as the laws and contractual provisions governing the
relationship between such an intermediary and each other
intermediary, if any, standing between themselves and the global
securities.
What is a
Global Security?
A global security is a special type of indirectly held Debt
Security as described above under Street
Name and Other Indirect Holders. If we choose to
issue Debt Securities in the form of global securities, the
ultimate beneficial owners can only hold the Debt Securities in
Street Name. We would do this by requiring that the
global security be registered in the name of a financial
institution we select and by requiring that the Debt Securities
included in the global security not be transferred to the name
of any other direct Holder unless the special circumstances
described below occur. The financial institution that acts as
the sole direct Holder of the global security is called the
depositary. Any person wishing to own a Debt
Security issued in the form of a global security must do so
indirectly by virtue of an account with a broker, bank or other
financial institution that in turn has an account with the
depositary. The applicable prospectus supplement will indicate
whether a series of Debt Securities will be issued only in the
form of global securities and, if so, will describe the specific
terms of the arrangement with the depositary.
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Special
Investor Considerations for Global Securities
As an indirect holder, an investors rights relating to a
global security will be governed by the account rules of the
investors financial institution and of the depositary, as
well as general laws relating to securities transfers. We do not
recognize this type of investor as a holder of Debt Securities
and instead deal only with the depositary that holds the global
security.
An investor should be aware that if a series of Debt Securities
are issued only in the form of global securities:
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The investor cannot get Debt Securities of that series
registered in his or her own name;
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The investor cannot receive physical certificates for his or her
interest in the Debt Securities of that series;
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The investor will be a Street Name holder and must
look to his or her own bank or broker for payments on the Debt
Securities of that series and protection of his or her legal
rights relating to the Debt Securities of that series, as
described under Street Name and Other
Indirect Holders;
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The investor may not be able to sell interests in the Debt
Securities of that series to some insurance companies and other
institutions that are required by law to own their securities in
the form of physical certificates; and
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The depositarys policies will govern payments, transfers,
exchange and other matters relating to the investors
interest in the global security. We and the Trustee have no
responsibility for any aspect of the depositarys actions
or for its records of ownership interests in the global
security. We and the Trustee also do not supervise the
depositary in any way.
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Special
Situations When The Global Security Will be Terminated
In a few special situations, a global security will terminate,
and interests in it will be exchanged for physical certificates
representing Debt Securities. After that exchange, the choice of
whether to hold Debt Securities directly or in Street
Name will be up to the investor. Investors must consult
their own bank or brokers to find out how to have their
interests in Debt Securities transferred to their own name, so
that they will be direct Holders. The rights of Street
Name investors and direct Holders in Debt Securities have
been previously described in subsections entitled
Street Name and Other Indirect
Holders and Direct Holders.
The special situations for termination of a global security are:
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When the depositary notifies us that it is unwilling, unable or
no longer qualified to continue as depositary, and we do not
appoint a successor depositary;
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When an Event of Default on the series of Debt Securities has
occurred and has not been cured; and
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At any time if we decide to terminate a global security.
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The applicable prospectus supplement may also list additional
situations for terminating a global security that would apply
only to the particular series of Debt Securities covered by the
prospectus supplement. When a global security terminates, only
the depositary is responsible for deciding the names of the
institutions that will be the initial direct Holders.
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DESCRIPTION
OF OTHER SECURITIES
We will set forth in the applicable prospectus supplement a
description of any warrants, purchase contracts, or units that
may be offered pursuant to this prospectus.
PLAN OF
DISTRIBUTION
We may sell any combination of the securities offered pursuant
to this prospectus through agents, through underwriters or
dealers or directly to one or more purchasers, or through a
combination of these methods.
Underwriters, dealers and agents that participate in the
distribution of the securities offered pursuant to this
prospectus may be underwriters as defined in the Securities Act
of 1933 (the Securities Act) and any discounts or
commissions received by them from us and any profit on the
resale of the offered securities by them may be treated as
underwriting discounts and commissions under the Securities Act.
If a material arrangement with any underwriter, broker, dealer
or agent is entered into for the sale of the offered securities,
a prospectus supplement will be filed, if necessary, under the
Securities Act disclosing the material terms and conditions of
such arrangement. Any underwriters or agents will be identified
and their compensation (including underwriting discount) will be
described in the prospectus supplement. The prospectus
supplement will also describe other terms of the offering,
including any discounts or concessions allowed or reallowed or
paid to dealers and any securities exchanges on which the
offered securities may be listed.
The distribution of the securities offered under this prospectus
may occur from time to time in one or more transactions at a
fixed price or prices, which may be changed, at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If the prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by certain institutions
to purchase offered securities from us pursuant to contracts
that provide for payment and delivery on a future date. We must
approve all institutions, but they may include, among others:
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commercial and savings banks;
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insurance companies;
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pension funds;
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investment companies; and
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educational and charitable institutions.
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An institutional purchasers obligations under any contract
to purchase our securities will only be subject to the condition
that the purchase of the offered securities at the time of
delivery is allowed by the laws that govern the purchaser. The
dealers and our agents will not be responsible for the validity
or performance of these contracts.
We may have agreements with the underwriters, dealers and agents
to indemnify them against certain civil liabilities, including
liabilities under the Securities Act, or to contribute with
respect to payments which the underwriters, dealers or agents
may be required to make as a result of those certain civil
liabilities.
When we issue the securities offered by this prospectus, they
may be new securities without an established trading market. If
we sell a security offered by this prospectus to an underwriter
for public offering and sale, the underwriter may make a market
for that security, but the underwriter will not be obligated to
do so and could discontinue any market making without notice at
any time. Therefore, we cannot give any assurances to you
concerning the liquidity of any security offered by this
prospectus.
Underwriters and agents and their affiliates may be customers
of, engage in transactions with, or perform services for us or
our subsidiaries in the ordinary course of their businesses.
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VALIDITY
OF SECURITIES
The validity of the securities described in this prospectus has
been passed upon by Calfee, Halter & Griswold
LLP, 1400 KeyBank Center, 800 Superior Avenue, Cleveland, Ohio
44114.
EXPERTS
The consolidated financial statements of RPM International Inc.
incorporated by reference in RPM International Inc.s
Annual Report
(Form 10-K)
for the year ended May 31, 2010 (including the schedule
appearing therein), and the effectiveness of RPM International
Inc.s internal control over financial reporting as of
May 31, 2010 have been audited by Ernst & Young
LLP, independent registered public accounting firm, as set forth
in their reports thereon incorporated by reference therein, and
incorporated herein by reference. Such consolidated financial
statements and managements assessment of the effectiveness
of internal control as of May 31, 2010 are incorporated
herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
23
$150,000,000
RPM International
Inc.
6.125% Notes due
2019
PROSPECTUS SUPPLEMENT
Joint Book-Running Managers
BofA Merrill Lynch
Wells Fargo
Securities
Co-Manager
Goldman, Sachs &
Co.
May , 2011