8-KMaterial AgreementsExhibits & Filings

SHERWIN WILLIAMS CO 8-K Report, Material Agreement (Mar 16, 2006)

Filed March 16, 2006For Securities:SHW

Summary

The Sherwin-Williams Company (SHW) filed an 8-K on March 16, 2006, to report a material amendment to its Second Amended and Restated Credit Agreement. This modification is directly related to a significant legal challenge, specifically the lead pigment and lead-based paint action brought by the State of Rhode Island. The amendment addresses a potential judgment exceeding $75 million that is not covered by insurance. Crucially, this amendment allows Sherwin-Williams to continue accessing its credit facility, including borrowing and obtaining letters of credit, even if such a judgment is entered against the company. This is a critical provision designed to maintain financial flexibility during the pendency of the legal proceedings. However, this relief is temporary and is contingent upon the judgment being effectively stayed, vacated, or bonded pending appeal within a specified timeframe, indicating a focus on managing potential financial impacts of ongoing litigation.

Key Highlights

  • 1Sherwin-Williams amended its credit agreement on March 15, 2006.
  • 2The amendment addresses potential judgments exceeding $75 million related to the Rhode Island lead pigment and lead-based paint lawsuit.
  • 3The modification ensures continued access to borrowing and letters of credit under the credit agreement despite such a judgment.
  • 4This provision is critical for maintaining financial operational flexibility.
  • 5The amendment's effectiveness is conditional on the judgment being stayed, vacated, or bonded pending appeal.
  • 6The amendment terminates if the judgment is not resolved (stayed, vacated, or bonded) within specific timeframes.
  • 7The full modification is filed as Exhibit 4 to the 8-K report.

Frequently Asked Questions

The main purpose of this filing is to inform investors about a material amendment to Sherwin-Williams' credit agreement. This amendment is specifically designed to ensure the company can continue to access its credit lines, even if a significant judgment is entered against it in the Rhode Island lead paint litigation.

The amendment addresses a potential judgment for the payment of money exceeding $75 million, which is not covered by insurance, arising from the lead pigment and lead-based paint action brought by the State of Rhode Island.

Yes, the amendment allows Sherwin-Williams to continue borrowing and obtaining letters of credit under its credit agreement even if a judgment is entered against them, provided that judgment is effectively stayed, vacated, or bonded pending an appeal within a specific timeframe. If not, the company's ability to borrow under the agreement could be impacted.

The modification to the credit agreement will terminate. This termination occurs either upon the occurrence of any Event of Default under the credit agreement or twenty days after the judgment is entered, unless the judgment has been stayed, vacated, or bonded pending appeal before that time.