3M Co 10-Q for FY2026 Q2
3M Co (MMM)
10-Q
2026-07-21
For: 2026-06-30
View Original
Added on
July 21, 2026
About this 10-Q
3M Co filed this 10-Q on July 21, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $6.5B
- up 2.5% from $6.34B a year earlier
- Net income
- $933M
- up 29.0% from net income of $723M a year earlier
- Diluted EPS
- $1.78
- up 32.8% from $1.34 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For the quarterly period ended June 30, 2026
or
For the transition period from __________ to __________
Commission file number: 1-3285
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
(Registrant’s Telephone Number, Including Area Code) ( | ||||||||
Not Applicable | ||||||||
(Former Name or Former Address, if Changed Since Last Report) | ||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| NYSE Texas, Inc. | ||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| ☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at June 30, 2026 | |||||||
| Common Stock, $0.01 par value per share | ||||||||
1
3M COMPANY
Form 10-Q for the Quarterly Period Ended June 30, 2026
TABLE OF CONTENTS | PAGE | ||||
2
3M COMPANY
FORM 10-Q
For the Quarterly Period Ended June 30, 2026
PART I. Financial Information
Item 1. Financial Statements
3M Company and Subsidiaries
Consolidated Statement of Income
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| (Millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
| Research, development and related expenses | ||||||||||||||||||||||||||||||||
| Loss on business divestitures | ||||||||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||
| Other expense (income), net | ( | |||||||||||||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||||||||||||||
| Income of consolidated group | ||||||||||||||||||||||||||||||||
| Income from unconsolidated subsidiaries, net of taxes | ||||||||||||||||||||||||||||||||
Net income including noncontrolling interest | ||||||||||||||||||||||||||||||||
Less: net income attributable to noncontrolling interest | ||||||||||||||||||||||||||||||||
| Net income attributable to 3M | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Earnings per share attributable to 3M common shareholders: | ||||||||||||||||||||||||||||||||
| Weighted average 3M common shares outstanding — basic | ||||||||||||||||||||||||||||||||
| Earnings per share — basic | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Weighted average 3M common shares outstanding — diluted | ||||||||||||||||||||||||||||||||
| Earnings per share — diluted | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
3
3M Company and Subsidiaries
Consolidated Statement of Comprehensive Income
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Net income including noncontrolling interest | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||||||||
| Cumulative translation adjustment | ( | ( | ||||||||||||||||||||||||||||||
| Defined benefit pension and postretirement plans adjustment | ||||||||||||||||||||||||||||||||
| Cash flow hedging instruments | ( | ( | ||||||||||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ||||||||||||||||||||||||||||||||
Comprehensive income including noncontrolling interest | ||||||||||||||||||||||||||||||||
Comprehensive (income) attributable to noncontrolling interest | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Comprehensive income attributable to 3M | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
4
3M Company and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
| (Dollars in millions, except per share amount) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Marketable securities | ||||||||||||||
Accounts receivable — net of allowances of $ | ||||||||||||||
| Inventories | ||||||||||||||
| Prepaids | ||||||||||||||
| Assets held for sale | ||||||||||||||
| Other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property, plant and equipment — net | ||||||||||||||
| Goodwill | ||||||||||||||
| Intangible assets — net | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
Liabilities and equity | ||||||||||||||
| Current liabilities | ||||||||||||||
| Short-term borrowings and current portion of long-term debt | $ | $ | ||||||||||||
| Accounts payable | ||||||||||||||
| Accrued payroll | ||||||||||||||
| Liabilities held for sale | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Pension and postretirement benefits | ||||||||||||||
| Other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and contingencies (Note 15) | ||||||||||||||
| 3M Company shareholders’ equity: | ||||||||||||||
Common stock par value, $ | ||||||||||||||
Shares outstanding - June 30, 2026: | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Treasury stock, at cost | ( | ( | ||||||||||||
Shares at June 30, 2026: | ||||||||||||||
| Accumulated other comprehensive income (loss) | ( | ( | ||||||||||||
| Total 3M Company shareholders’ equity | ||||||||||||||
Noncontrolling interest | ||||||||||||||
| Total equity | ||||||||||||||
Total liabilities and equity | $ | $ | ||||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
5
3M Company and Subsidiaries
Consolidated Statement of Cash Flows
(Unaudited)
| Six months ended June 30, | ||||||||||||||||||||
| (Millions) | 2026 | 2025 | ||||||||||||||||||
| Cash flows from operating activities | ||||||||||||||||||||
Net income including noncontrolling interest | $ | $ | ||||||||||||||||||
Adjustments to reconcile net income including noncontrolling interest to net cash provided by (used in) operating activities | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Company pension and postretirement contributions | ( | ( | ||||||||||||||||||
| Company pension and postretirement expense | ||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||
Loss on business divestitures | ||||||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||
| Changes in assets and liabilities | ||||||||||||||||||||
| Accounts receivable | ( | ( | ||||||||||||||||||
| Inventories | ( | ( | ||||||||||||||||||
| Accounts payable | ||||||||||||||||||||
| Other — net | ( | ( | ||||||||||||||||||
| Net cash provided by (used in) operating activities | ( | |||||||||||||||||||
| Cash flows from investing activities | ||||||||||||||||||||
| Purchases of property, plant and equipment (PP&E) | ( | ( | ||||||||||||||||||
| Proceeds from sale of PP&E and other assets | ||||||||||||||||||||
| Purchases of marketable securities and investments | ( | ( | ||||||||||||||||||
| Proceeds from maturities and sale of marketable securities and investments | ||||||||||||||||||||
| Proceeds from (payments for) sale of businesses, net of cash sold | ( | |||||||||||||||||||
| Other — net | ( | |||||||||||||||||||
| Net cash provided by (used in) investing activities | ( | |||||||||||||||||||
| Cash flows from financing activities | ||||||||||||||||||||
| Repayment of debt (maturities greater than 90 days) | ( | |||||||||||||||||||
| Proceeds from debt (maturities greater than 90 days) | ||||||||||||||||||||
| Purchases of treasury stock | ( | ( | ||||||||||||||||||
| Proceeds from issuance of treasury stock pursuant to stock option and benefit plans | ||||||||||||||||||||
| Dividends paid to shareholders | ( | ( | ||||||||||||||||||
| Other — net | ( | ( | ||||||||||||||||||
| Net cash provided by (used in) financing activities | ( | ( | ||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | |||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents, including cash classified within assets held for sale | ( | ( | ||||||||||||||||||
Less: net increase (decrease) in cash classified within assets held for sale | ( | |||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ( | ||||||||||||||||||
| Cash and cash equivalents at beginning of year | ||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.
6
3M Company and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Significant Accounting Policies
Certain amounts in prior periods’ consolidated financial statements have been reclassified to conform to current period presentation. Also, effective in the first and second quarters of 2026, the Company made changes to the measure of segment operating performance and segment composition used by its chief operating decision maker ("CODM"). These changes impacted the disclosed measure of segment profit and other segment-related amounts as further described in Note 16. 3M's disclosed disaggregated revenue was also updated as a result of these changes (see Note 2). Information provided herein reflects the impact of these changes for all periods presented.
New Accounting Pronouncements: Refer to Note 1 to the Consolidated Financial Statements in 3M's 2025 Annual Report on Form 10-K for a discussion of applicable standards issued and not yet adopted by 3M.
Note 2. Revenue
Disaggregated Revenue Information: The Company views the following disaggregated disclosures as useful to understanding the composition of revenue recognized during the respective reporting periods:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
Net sales (millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Abrasives | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Automotive Aftermarket | ||||||||||||||||||||||||||||||||
| Electrical Markets | ||||||||||||||||||||||||||||||||
| Industrial Adhesives and Tapes | ||||||||||||||||||||||||||||||||
Industrial Specialties Division | ||||||||||||||||||||||||||||||||
| Personal Safety | ||||||||||||||||||||||||||||||||
| Roofing Granules | ||||||||||||||||||||||||||||||||
Total Safety and Industrial Business segment | ||||||||||||||||||||||||||||||||
| Advanced Materials | ||||||||||||||||||||||||||||||||
| Automotive and Aerospace | ||||||||||||||||||||||||||||||||
Commercial Branding and Transportation | ||||||||||||||||||||||||||||||||
| Electronics | ||||||||||||||||||||||||||||||||
Total Transportation and Electronics Business segment | ||||||||||||||||||||||||||||||||
| Consumer Safety and Well-Being | ||||||||||||||||||||||||||||||||
| Home and Auto Care | ||||||||||||||||||||||||||||||||
| Home Improvement | ||||||||||||||||||||||||||||||||
| Packaging and Expression | ||||||||||||||||||||||||||||||||
Total Consumer Business segment | ||||||||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||||||||
Total Company | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
Net sales by geographic area (millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Americas | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Asia Pacific | ||||||||||||||||||||||||||||||||
| Europe, Middle East and Africa | ||||||||||||||||||||||||||||||||
| Worldwide | $ | $ | $ | $ | ||||||||||||||||||||||||||||
7
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
Net sales by particular country (millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
United States | $ | $ | $ | $ | ||||||||||||||||||||||||||||
China/Hong Kong | ||||||||||||||||||||||||||||||||
Note 3. Acquisitions and Divestitures
Refer to Note 5 to the Consolidated Financial Statements in 3M's 2025 Annual Report on Form 10-K for more information on relevant pre-2026 acquisitions and divestitures.
Previously Announced Acquisition:
In July 2026, 3M, in partnership with Bain Capital ("Bain"), completed the acquisition of Madison Fire & Rescue ("Madison") for $1.95 billion, subject to closing and other adjustments. Madison offers a portfolio of rescue technology and fire-suppression products. Under related agreements, 3M and Bain established a venture to which 3M contributed its self-contained breathing apparatus business ("SCBA") and Bain contributed cash. The venture utilized the contribution and purchased Madison, while drawing on its term loan facility. 3M will consolidate the venture, of which it owns 50.1 %. On a consolidated basis, 3M received net proceeds of approximately $0.7 billion in the third quarter of 2026 from closing of the transactions, reflecting proceeds from the term loan facility and Bain's contribution, net of amounts used to acquire Madison. Madison will be combined with SCBA within 3M's Safety and Industrial segment. Bain's noncontrolling interest is redeemable after five years , will be presented outside of permanent equity in the consolidated balance sheet and measured at the greater of its initial carrying amount updated for its share of earnings or estimated redemption value, affecting net income attributable to 3M. Features of Bain's interest, along with other venture exit and liquidity provisions, also result in a derivative instrument that will be carried at fair value.
Given the acquisition's close on July 1, 2026, 3M will provide preliminary amounts recognized for major classes of assets acquired and liabilities assumed, including intangible assets and goodwill, in the third quarter.
Divestitures:
In April 2026, 3M completed the sale of its precision grinding and finishing business, formerly within the Safety and Industrial business. This business was classified as held for sale in the third quarter of 2025. 3M recorded a pre-tax charge of $159 million for the excess of its carrying value over its selling price less cost to sell in 2025 and an insignificant amount in 2026 for subsequent changes. This charge and related changes were reported within Corporate and reflected in loss on business divestitures on the consolidated statement of income. The transaction did not involve proceeds, but a balance of cash, subject to closing and other adjustments, was left in the transferring business and an amount was paid to purchaser at close. The business has annual sales of approximately $130 million and its operating income, excluding the charge reflected in Corporate, was not material.
In the second quarter of 2026, 3M approved and completed the divestiture of its Dyneon GmbH subsidiary, a manufacturer of PFAS prior to 3M's exit from PFAS manufacturing by the end of 2025 (included in Corporate — see Note 16). The transaction resulted in a $324 million pre-tax loss on business divestiture that was recorded within Corporate. The transaction did not involve proceeds, but a balance of cash was left in the transferring business and an amount was paid to purchaser at close. An accrued amount, subject to closing and other adjustments, is payable to purchaser upon finalization of those adjustments, expected later in 2026. Refer to Note 15 for discussion of indemnifications related to certain legal matters associated with this transaction.
The below summarizes the carrying amounts of the major classes of assets and liabilities classified as held for sale in the consolidated balance sheet:
| (Millions) | December 31, 2025 | |||||||||||||
| Assets held for sale | ||||||||||||||
| Cash and cash equivalents | $ | |||||||||||||
| Inventories | ||||||||||||||
| Property, plant and equipment — net | ||||||||||||||
| Other assets | ||||||||||||||
| Valuation allowance on assets held for sale | ( | |||||||||||||
Total assets held for sale | $ | |||||||||||||
| Liabilities held for sale | ||||||||||||||
| Pension and postretirement benefits | $ | ( | ||||||||||||
| Other liabilities | ( | |||||||||||||
| Valuation allowance on liabilities held for sale | ( | |||||||||||||
| Total liabilities held for sale | $ | ( | ||||||||||||
8
Note 4. Goodwill and Intangible Assets
Goodwill: The change in the carrying amount of goodwill by business segment was as follows:
| (Millions) | Safety and Industrial | Transportation and Electronics | Consumer | Corporate | Total Company | |||||||||||||||||||||||||||
Balance as of December 31, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Translation and other(a) | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Balance as of June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(a) The amounts in the “Translation and other” primarily relate to changes in foreign currency exchange rates.
As of June 30, 2026, the Company's accumulated goodwill impairment loss is $0.3 billion.
Acquired Intangible Assets: The carrying amount and accumulated amortization of the Company's acquired finite-lived intangible assets and the balances of non-amortizable intangible assets are presented below:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| (Millions) | Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||||||||||||||||||||||||||||||
| Finite-lived intangible assets | |||||||||||||||||||||||||||||||||||||||||||||||
Customer related | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||
| Patents and technology | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Definite-lived tradenames | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Other | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Indefinite lived intangible assets(b) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total intangible assets — net | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
(b) Indefinite lived intangible assets primarily consists of certain tradenames acquired by 3M that are not amortized because they have existed for over 60 years, maintain leading-market share positions, are continuously renewed, and are associated with products expected to generate cash flows for 3M for an indefinite period.
Amortization expense follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Amortization expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2026 follows:
| (Millions) | Remainder of 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | After 2031 | |||||||||||||||||||||||||||||||||||||
| Amortization expense | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Note 5. Restructuring Actions
Transformation Costs: In the third quarter of 2025, 3M began a transformation program intended as a structural redesign of longer-term manufacturing, distribution, and business process services and locations. In the second quarter and first six months of 2026, management approved and committed to additional actions resulting in a pre-tax charge of $74 million and $118 million, respectively, primarily employee related. Charges related to this initiative are reflected in Corporate (see Note 16) and primarily impacted selling, general and administrative expenses and cost of sales. The accrued restructuring liability was $25 million as of December 31, 2025 and $66 million as of June 30, 2026, reflecting new charges partially offset by cash payments. Additional actions are expected and are subject to management's future approval and commitment.
9
Note 6. Supplemental Income Statement Information
Other expense (income), net:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
Interest expense(a) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Interest income | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Pension and postretirement net periodic benefit cost (benefit)(b) | ( | ( | ||||||||||||||||||||||||||||||
Solventum ownership - change in value(c) | ( | ( | ||||||||||||||||||||||||||||||
| Total | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||
(a) Interest expense related to outstanding debt is as follows below. Interest expense in the table above also includes imputed interest associated with the obligations resulting from the PWS Settlement, New Jersey Settlement, and CAE Settlement (all discussed in Note 15).
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
Interest expense related to outstanding debt | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
(b) Pension and postretirement net periodic benefit income described in the table above includes all components of defined benefit plan net periodic benefit cost (benefit) except service cost, which is reported in various operating expense lines. Refer to Note 12 for additional details on the components of pension and postretirement net periodic benefit cost (benefit).
(c) Solventum ownership - change in value relates to the change in value of 3M's retained ownership interest in common stock of Solventum Corporation, an independent public company ("Solventum"), in connection with 3M's spin-off its former health care business completed in April 2024 ("Solventum Spin-off"). As of June 30, 2026 and December 31, 2025, the balance of unrealized gain on this investment was $1.4 billion and $1.5 billion, respectively.
Currency Effects: 3M estimates that year-on-year foreign currency transaction effects impacted pre-tax income (loss) approximately as follows. These estimates include transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||
| Year-on-year change in pre-tax income (loss) from foreign currency transactions | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Note 7. Supplemental Balance Sheet Information
Inventories
| (Millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Finished goods | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
| Raw materials and supplies | ||||||||||||||
| Total inventories | $ | $ | ||||||||||||
Property, Plant & Equipment
| (Millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Property, plant and equipment | $ | $ | ||||||||||||
| Less: accumulated depreciation | ( | ( | ||||||||||||
| Property, plant and equipment — net | $ | $ | ||||||||||||
Operating Leases
| (Millions) | Location on face of balance sheet | June 30, 2026 | December 31, 2025 | |||||||||||||||||
Right of use assets | $ | $ | ||||||||||||||||||
| Current liability | ||||||||||||||||||||
| Noncurrent liability | ||||||||||||||||||||
Supplier Finance Program Obligations
Under supplier finance programs, 3M agrees to pay participating banks the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices, generally within 90 days of the invoice date. 3M or the banks may terminate the agreements with advance notice. Separately, the banks may have arrangements with the suppliers that provide them the option to request early payment from the banks for invoices confirmed by 3M. 3M's outstanding balances of confirmed invoices in the programs as of June 30, 2026 and December 31, 2025 were each approximately $0.3
10
Note 8. Supplemental Equity and Comprehensive Income Information
Common stock ($.01 3 10
Cash dividends declared and paid totaled $0.78 0.73 1.56 and $1.46 per share for the first six months of 2026 and 2025, respectively.
The table below presents the consolidated changes in equity for the three and six months ended June 30, 2026 and 2025:
| 3M Company Shareholders | Noncontrolling interest | Total equity | ||||||||||||||||||||||||||||||||||||||||||
| (Millions) | Common stock and additional paid-in capital | Retained earnings | Treasury stock | Accumulated other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | |||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Reacquired stock | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuances pursuant to stock option and benefit plans | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | |||||||||||||||||||||||||||||||||||||||||||
| Solventum spin-off | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Reacquired stock | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuances pursuant to stock option and benefit plans | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | ( | |||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Reacquired stock | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuances pursuant to stock option and benefit plans | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | |||||||||||||||||||||||||||||||||||||||||||
| Solventum spin-off | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Purchase of noncontrolling interest | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Reacquired stock | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuances pursuant to stock option and benefit plans | ( | |||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||
11
The table below presents the changes in accumulated other comprehensive income (loss) attributable to 3M ("AOCI"), including the reclassifications out of AOCI by component:
| (Millions) | Cumulative translation adjustment | Defined benefit pension and postretirement plans adjustment | Cash flow hedging instruments, unrealized gain (loss)(a) | Total accumulated other comprehensive income (loss) | ||||||||||||||||||||||
Balance at March 31, 2026, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive income (loss), before tax: | ||||||||||||||||||||||||||
| Amounts before reclassifications | ( | ( | ( | |||||||||||||||||||||||
| Amounts reclassified out | ||||||||||||||||||||||||||
| Total other comprehensive income (loss), before tax | ( | |||||||||||||||||||||||||
Tax effect(b) | ( | ( | ( | |||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | |||||||||||||||||||||||||
Balance at June 30, 2026, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Balance at March 31, 2025, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive income (loss), before tax: | ||||||||||||||||||||||||||
| Amounts before reclassifications | ( | ( | ||||||||||||||||||||||||
| Amounts reclassified out | ( | |||||||||||||||||||||||||
| Total other comprehensive income (loss), before tax | ( | |||||||||||||||||||||||||
Tax effect(b) | ( | |||||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | |||||||||||||||||||||||||
| Solventum spin-off | ||||||||||||||||||||||||||
Balance at June 30, 2025, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Balance at December 31, 2025, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive income (loss), before tax: | ||||||||||||||||||||||||||
| Amounts before reclassifications | ( | ( | ||||||||||||||||||||||||
| Amounts reclassified out | ||||||||||||||||||||||||||
| Total other comprehensive income (loss), before tax | ( | |||||||||||||||||||||||||
Tax effect(b) | ( | ( | ( | ( | ||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | |||||||||||||||||||||||||
Balance at June 30, 2026, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Balance at December 31, 2024, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive income (loss), before tax: | ||||||||||||||||||||||||||
| Amounts before reclassifications | ( | ( | ||||||||||||||||||||||||
| Amounts reclassified out | ( | |||||||||||||||||||||||||
| Total other comprehensive income (loss), before tax | ( | |||||||||||||||||||||||||
Tax effect(b) | ( | |||||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | |||||||||||||||||||||||||
| Solventum spin-off | ||||||||||||||||||||||||||
Balance at June 30, 2025, net of tax: | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
(a) Based on exchange rates as of June 30, 2026, the after-tax net unrealized loss expected to be reclassified over the next 12 months is not significant, and the related impact will be offset by earnings or losses from underlying hedged items.
Income taxes are not provided for foreign translation relating to permanent investments in international subsidiaries, but tax effects within cumulative translation do include impacts from items such as net investment hedge transactions. The Company uses the portfolio approach for releasing income tax effects from accumulated other comprehensive income.
Additional details on the amounts reclassified from accumulated other comprehensive income (loss) into consolidated income include:
•Defined benefit pension and postretirement plan adjustments: amounts were reclassified into other (expense) income, net (see Note 12).
•Cash flow hedging instruments, realized gain (loss): amounts from foreign currency forward/option contracts were reclassified into cost of sales, while amounts from interest rate contracts were reclassified into interest expense (see Note 13).
•The tax effects, if applicable, associated with these reclassifications were reflected in provision for income taxes.
12
Note 9. Income Taxes
The effective tax rates were as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| (Percent of pre-tax income) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Effective tax rate | % | % | % | % | ||||||||||||||||||||||||||||
The primary factors that decreased the Company's effective tax rate for the three months ended June 30, 2026, compared to the same period in 2025, were the tax impacts of 3M's retained ownership interest in Solventum and the tax impacts of net costs of significant litigation, partially offset by the loss on business divestiture.
The primary factors that decreased the Company's effective tax rate for the six months ended June 30, 2026, compared to the same period in 2025, were the increased tax benefits from stock-based compensation and the tax impacts of net costs of significant litigation, partially offset by the loss on business divestiture and the tax impacts of 3M's retained ownership interest in Solventum.
Net deferred tax assets (net of valuation allowance and deferred tax liabilities) are included as components of other assets and other liabilities within the Consolidated Balance Sheet. This net balance was comprised of the following:
| (Millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Deferred tax asset (net of valuation allowance) | $ | $ | ||||||||||||
| Deferred tax liability | ||||||||||||||
| Net deferred tax assets | $ | $ | ||||||||||||
Note 10. Earnings Per Share
The computations for basic and diluted earnings per share follow:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| (Amounts in millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||||||||
Net income attributable to 3M | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||||||||
Weighted average 3M common shares outstanding – basic | ||||||||||||||||||||||||||||||||
| Dilution associated with stock-based compensation plans | ||||||||||||||||||||||||||||||||
Weighted average 3M common shares outstanding – diluted | ||||||||||||||||||||||||||||||||
Earnings per share attributable to 3M common shareholders: | ||||||||||||||||||||||||||||||||
Earnings per share — basic | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Earnings per share — diluted | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The difference in the weighted average 3M shares outstanding for calculating basic and diluted earnings per share attributable to 3M common shareholders is the result of the dilution associated with the Company’s stock-based compensation plans. Certain awards outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
(Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
Weighted average number of antidilutive shares | ||||||||||||||||||||||||||||||||
Note 11. Long-Term Debt and Short-Term Borrowings
2025 issuances, maturities, and extinguishments of short- and long-term debt are described in Note 12 to the Consolidated Financial Statements in 3M's 2025 Annual Report on Form 10-K.
Changes in future maturities of long-term debt since December 31, 2025 were not material. The Company had no
In April 2026, 3M and a subsidiary entered into a $1.43 billion unsecured term loan facility and a $200 million revolving credit facility, each with a variable rate and a 364-day term, replacing a facility established in March 2026. Both facilities were undrawn as of June 30, 2026. In July 2026, the subsidiary drew $1.43 billion under the term loan facility in connection with the acquisition of Madison and venture formation described in Note 3. The facilities may be extended, at the borrower's request, for up to 12 months from the closing date of that transaction.
13
Note 12. Pension and Postretirement Benefit Plans
The service cost component of defined benefit net periodic benefit cost is recorded in cost of sales; selling, general and administrative expenses; and research, development and related expenses. The other components of net periodic benefit cost are reflected in other expense (income), net. Components of net periodic benefit cost and other supplemental information for the three and six months ended June 30, 2026 and 2025 follow:
| Qualified and non-qualified pension benefits | Postretirement benefits | |||||||||||||||||||||||||||||||||||||
| United States | International | |||||||||||||||||||||||||||||||||||||
| Three months ended June 30, | ||||||||||||||||||||||||||||||||||||||
| Net periodic benefit cost (benefit) (millions) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Operating expense | ||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Non-operating expense | ||||||||||||||||||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Amortization of prior service benefit | ( | ( | ||||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss | ||||||||||||||||||||||||||||||||||||||
| Total non-operating expense (benefit) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total net periodic benefit cost (benefit) | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||
| Six months ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Operating expense | ||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Non-operating expense | ||||||||||||||||||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Amortization of prior service benefit | ( | ( | ||||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss | ||||||||||||||||||||||||||||||||||||||
| Total non-operating expense (benefit) | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total net periodic benefit cost (benefit) | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||
For the six months ended June 30, 2026, contributions totaling $67 million were made to the Company’s U.S. and international pension plans and $6 million to its postretirement plans. Future contributions will depend on market conditions, interest rates, and other factors. 3M’s annual measurement date for pension and postretirement assets and liabilities is December 31 each year, which is also the date used for the related annual measurement assumptions.
Note 13. Derivatives
The Company uses interest rate swaps, cross-currency swaps, and forward and option contracts to manage risks generally associated with foreign exchange rate and interest rate fluctuations. Note 15 to the Consolidated Financial Statements in 3M's 2025 Annual Report on Form 10-K explains the types of derivatives and financial instruments used by 3M, how and why 3M uses such instruments, and how such instruments are accounted for. It also contains information regarding previously initiated contracts or instruments.
Additional information with respect to derivatives is included elsewhere as follows:
•Impact on other comprehensive income of non-derivative hedging and derivative instruments is included in Note 8.
•Fair value of derivative instruments, excluding non-derivative instruments used as hedging instruments, and their location in the consolidated balance sheet is included in Note 14.
•Derivatives and/or hedging instruments associated with the Company’s long-term debt are described in Note 15 to the Consolidated Financial Statements in 3M's 2025 Annual Report on Form 10-K.
Refer to the section below titled Volume of Derivative Activity for information regarding the extent of 3M's use of derivatives. Additional information relative to cash flow hedges, net investment hedges and derivatives not designated as hedging instruments is included below as applicable.
Cash Flow Hedges: Refer to the amounts before reclassifications on the changes in accumulated other comprehensive income (loss) ("AOCI") table within Note 8 for the amount of pre-tax gain (loss) recognized in other comprehensive income (loss) ("OCI") related to derivative instruments designated as cash flow hedges. The amount of pre-tax (gain) loss on cash flow hedging relationships reclassified from AOCI into income was not significant. Amounts from foreign currency forward/option contracts were reclassified into cost of sales, while the amounts from interest rate contracts were reclassified into interest expense.
14
Net Investment Hedges: The gross notional amount of foreign exchange forward/option contracts and cross-currency swaps designated in net investment hedges are included in the totals within the gross notional table in the Volume of Derivative Activity section below. In addition, at June 30, 2026, 3M had a principal amount of long-term debt instruments designated in net investment hedges totaling €1.8 billion.
During the first quarter of 2026, 3M entered into foreign currency forward contracts and collared foreign currency forward contracts with a gross notional value at inception of $4.1 billion designated as hedges of portions of its net investment in international subsidiaries
The amount of gain (loss) excluded from effectiveness testing and recognized in income for instruments designated in net investment hedge relationships was not significant for the three and six months ended June 30, 2026 and 2025. The amounts of pre-tax gain (loss) recognized in OCI related to derivative and non-derivative instruments designated as net investment hedges are as follows.
| Pretax gain (loss) recognized as cumulative translation within OCI | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency denominated debt | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||
| Foreign currency forward/option contracts and cross-currency swaps | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments: Derivatives not designated as hedging instruments include de-designated foreign currency forward and option contracts that formerly were designated in cash flow hedging relationships. 3M may de-designate a cash flow hedge before the forecasted transaction occurs if the forecasted transaction is no longer probable, if the hedge is no longer expected to be highly effective in offsetting changes in the cash flows of the forecasted transaction, or in certain other circumstances. 3M might also enter into foreign currency contracts that are not designated in hedging relationships to offset changes in the value of various non-functional currency denominated items (including certain intercompany financing balances).
Because these various derivatives are not designated in hedging relationships, fair value gains and losses on them are recorded in earnings. The Company does not hold or issue derivative financial instruments for trading purposes.
The location and amount of pre-tax (gain) or loss regarding derivatives not designated as hedging instruments follows:
| (Gain) or loss on derivatives not designated as hedging instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income statement location (millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of sales | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other expense (income), net | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Volume of Derivative Activity: The table below summarizes the gross notional amount of specific derivatives designated and not designated as hedging instruments. Derivatives designated as hedging instruments consist of foreign currency forward/option contracts and cross-currency swaps. Derivatives not designated as hedging instruments, as presented in the table below, consist of foreign currency forward and option contracts.
Notional amounts for non-US denominated derivatives are presented at period-end foreign exchange rates, except for certain foreign currency forward/option contracts, which are presented using the foreign exchange rate at inception.
Gross notional amount (millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
Derivatives designated as hedging instruments | $ | $ | ||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||
15
Credit Risk and Offsetting of Assets and Liabilities of Derivative Instruments: The Company is exposed to credit loss in the event of nonperformance by counterparties in derivative contracts. However, the Company’s risk is limited to the fair value of the instruments. The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as counterparties. 3M enters into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master netting arrangement may allow each counterparty to net settle amounts owed between a 3M entity and the counterparty as a result of multiple, separate derivative transactions. The Company does not anticipate nonperformance by any of these counterparties.
3M has elected to present the fair value of derivative assets and liabilities within the Company’s consolidated balance sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. However, the following tables provide information as if the Company had to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties. For each counterparty, if netted, the Company would offset the asset and liability balances of all derivatives at the end of the reporting period based on the 3M entity that is a party to the transactions. Derivatives not subject to master netting agreements are not eligible for net presentation. For the periods presented, 3M has not received cash collateral from derivative counterparties.
Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties
| Derivatives subject to master netting agreements (millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Gross amount of derivative assets presented in the consolidated balance sheet | $ | $ | ||||||||||||
| Gross amount of eligible offsetting recognized derivative liabilities | ||||||||||||||
| Net amount of derivative assets | $ | $ | ||||||||||||
Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties
| Derivatives subject to master netting agreements (millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Gross amount of derivative liabilities presented in the consolidated balance sheet | $ | $ | ||||||||||||
| Gross amount of eligible offsetting recognized derivative assets | ||||||||||||||
| Net amount of derivative liabilities | $ | $ | ||||||||||||
Note 14. Fair Value Measurements and Marketable Securities
3M follows ASC 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis. Refer to Note 16 to the Consolidated Financial Statements in 3M's 2025 Annual Report on Form 10-K for a qualitative discussion of the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis, a description of the valuation methodologies used by 3M, and categorization within the valuation framework of ASC 820.
The following table provides information by level for material assets and liabilities that are measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025.
| Fair value at | Fair value measurements using inputs considered as | |||||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Millions) | June 30, 2026 | December 31, 2025 | June 30, 2026 | December 31, 2025 | June 30, 2026 | December 31, 2025 | June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale marketable securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate debt | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. government and treasury securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset backed securities and certificates of/time deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. municipal securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total marketable securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
Solventum common stock (a) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instruments(b) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instruments(c) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(a) Solventum common stock is reflected within other current assets on 3M's Consolidated Balance Sheet.
(b) Derivative assets are reflected within other current assets or other assets on 3M's Consolidated Balance Sheet.
(c) Derivative liabilities are reflected within other current liabilities or other liabilities on 3M's Consolidated Balance Sheet.
The Company had no material activity with level 3 assets and liabilities during the periods presented.
16
Marketable Securities: At June 30, 2026 and December 31, 2025, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were no
The balances at June 30, 2026 for marketable securities by contractual maturity are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
| (Millions) | ||||||||
| Due in one year or less | $ | |||||||
| Due after one year through five years | ||||||||
| Total marketable securities | $ | |||||||
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis: Other than the below, 3M had no
In the third quarter of 2025, 3M's precision grinding and finishing business was classified as held for sale and written down to its fair value less costs to sell. Fair value was determined based upon terms of the underlying agreement entered into to sell the business. The disposal group was similarly valued until the close of the transaction in April 2026. See Note 3 for additional information on the disposal group.
Fair Value of Financial Instruments: The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable, certain investments, notes receivable, accounts payable, borrowings, and derivative contracts. The fair values of cash equivalents, accounts receivable, accounts payable, and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments. The fair value of long-term notes receivable approximates the carrying value. Available-for-sale marketable securities, Solventum common stock and derivative instruments are recorded at fair values as indicated in the preceding disclosures, in addition to certain investments. To estimate fair values (classified as level 2) for its long-term debt, the Company utilized third-party quotes, which are derived all or in part from model prices, external sources, market prices, or the third-party’s internal records. Information with respect to the carrying amounts and estimated fair values of these financial instruments follow:
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| (Millions) | Carrying value | Fair value | Carrying value | Fair value | ||||||||||||||||||||||
| Long-term debt, excluding current portion | $ | $ | $ | $ | ||||||||||||||||||||||
The fair values reflected in the sections above consider the terms of the related debt absent the impacts of derivative/hedging activity. The carrying amount of long-term debt referenced above is impacted by foreign exchange rates on non-U.S. dollar denominated debt.
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Note 15. Commitments and Contingencies
Introduction
This Note is organized to:
•provide background on the Company's legal proceedings and the processes for disclosing and recording related liabilities;
•present the Company's legal proceedings and contingencies, including any liabilities recorded by the Company, by category: environmental matters, non-environmental product matters, and other matters; and
•describe insurance recoveries related to the disclosed legal proceedings and contingencies.
Legal Proceedings
Background of the Company's Legal Proceedings
The Company and certain of its subsidiaries are involved in numerous claims, legal proceedings, and investigations worldwide. These matters may include, among others, commercial disputes; products liability (involving products that the Company now or formerly manufactured and sold); securities and corporate governance; antitrust and competition; intellectual property; environmental, health and safety; tax; employment and employee benefits; consumer protection; the Foreign Corrupt Practices Act ("FCPA") and other anti-bribery and anti-corruption laws; international trade and sanctions compliance; laws and regulations applicable to industries served by the Company, including the False Claims Act, and anti-kickback laws; and other matters. Unless otherwise stated, the Company is vigorously defending these matters. From time to time, the Company receives subpoenas, investigative demands, or requests for information from, and self-discloses potential concerns to, government authorities in the United States and foreign countries, which may result in assertions of claims, initiations of administrative, civil, or criminal proceedings, or negotiated resolutions. The Company generally seeks to respond in a cooperative, thorough and timely manner. These responses sometimes require time and effort and can result in considerable costs being incurred by the Company. The Company also from time to time becomes aware of certain writs of summons, pre-suit claims, demands or other preliminary or informal assertions of claims or potential future claims that may proceed in the United States or in foreign countries. In response, the Company or its subsidiaries may engage in respect of such matters where it believes it would be appropriate. Any determination that the Company’s operations or activities are not, or were not, in compliance with applicable laws or regulations could result in fines, civil and/or criminal penalties, equitable remedies, including disgorgement, suspension and debarment, and injunctive relief. The outcomes of legal proceedings and investigations are inherently uncertain, difficult to predict, and could have a material adverse effect on the Company, its consolidated financial position, results of operations, and cash flows.
Process for Disclosure and Recording of Liabilities Related to Legal Proceedings
Many lawsuits and claims involve highly complex issues relating to causation, scientific evidence, and alleged actual damages, all of which are subject to substantial uncertainties. Assessments of lawsuits and claims can involve a series of complex judgments about future events and can rely heavily on many different estimates and assumptions. The categories of legal proceedings in which the Company is involved may include multiple lawsuits and claims, may be spread across multiple jurisdictions and courts which may handle the lawsuits and claims differently, may involve numerous and different types of plaintiffs, raising claims and legal theories based on specific allegations that may not apply to other matters, and may seek substantial compensatory and, in some cases, punitive, damages. These and other factors contribute to the complexity of these lawsuits and claims and make it difficult for the Company to predict outcomes and make reasonable estimates of any resulting losses or ranges of possibles losses, which is further complicated by the fact that a resolution of one or more matters within a category of legal proceedings may impact the resolution of other matters in that category in terms of timing, amount of liability, or both.
The Company records accruals for legal proceeding liabilities in accordance with ASC 450, Contingencies, and related guidance. Accruals are recorded when the loss is both probable and reasonably estimable. When the reasonable estimate of a probable loss is a range and no amount within the range is a better estimate, the Company records an accrual at the low end of the range. The Company discloses the amount of a possible loss or range of loss in excess of recorded accruals when the amounts are reasonably estimable, or states that an estimate cannot be made.
The Company also discloses significant legal proceedings if the Company believes there is at least a reasonable possibility that a loss may be incurred, even when liability is not probable or the loss amount is not reasonably estimable, or both. Based on experience and developments, the Company reassesses its estimates of probable losses, accruals, and associated expenses and receivables each reporting period, and the status of a loss previously determined to not be probable, reasonably estimable, or both, to determine whether the status of that loss has changed. Where appropriate, the Company makes additions to or adjustments of its reasonably estimated losses and accruals. As a result, the current accruals and estimates of loss may change over time and the potential impact on the Company’s consolidated financial position, results of operations and cash flows for the legal proceedings, and claims pending against the Company are likely to change over time.
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Because litigation is inherently uncertain, unfavorable rulings, developments, or settlements could result in charges substantially in excess of amounts currently accrued, including for matters for which no accruals are currently recorded because losses are not currently probable or reasonably estimable. Many of the matters described in this Note are at varying stages, seek an indeterminate amount of damages, or seek damages in amounts that the Company believes are not indicative of the ultimate losses that may be incurred. It is not uncommon for claims to be resolved over many years. As a matter progresses, the Company may receive information, through plaintiff demands, through discovery, in the form of reports of purported experts, or in the context of settlement or mediation discussions, that purport to quantify an amount of alleged damages, but with which the Company may not agree. Such information may or may not lead the Company to determine that it is able to make a reasonable estimate as to a probable loss or range of loss in connection with a matter. However, even when a loss or range of loss is not probable or cannot be reasonably estimated, developments in, or the ultimate resolution of, a matter could be material to the Company and could have a material adverse effect on the Company, its consolidated financial position, results of operations, and cash flows. In addition, future adverse rulings or developments, or settlements in, one or more matters could result in future changes to determinations of probable and reasonably estimable losses in other matters.
Process for Disclosure and Recording of Insurance Receivables Related to Legal Proceedings
The Company estimates insurance receivables based on the terms of its insurance policies, including applicable coverage limits and exclusions, relevant case law, experience with similar claims, and the nature of the underlying matters. The Company records as an insurance receivable an amount it concludes is recognizable and expects to receive in light of the applicable loss recovery and gain contingency models under ASC 450, ASC 610-30, and related guidance.
For insured matters where the Company has recorded an accrued liability in its financial statements, the Company also records an insurance receivable for the amount it concludes is recognizable. For insured matters where the Company has not recorded an accrued liability but has incurred defense expenses, the Company records an insurance receivable for the amount it concludes is recognizable for the expense incurred.
Environmental Matters
Background of Environmental Laws and Regulations
The Company’s operations are subject to a broad range of environmental laws and regulations in the United States and internationally, including those relating to air emissions, wastewater discharges, the manufacture, use, handling, and disposal of toxic or hazardous substances, and the management of solid and hazardous wastes. These laws and regulations are enforced by national, state, and local authorities around the world and, in certain jurisdictions, may also provide rights of action to private parties.
Compliance with environmental laws and regulations may require the Company to incur costs for investigation, remediation, capital investments, operational modifications, and the defense or resolution of claims involving alleged environmental contamination, natural resources damages, personal injury, and property damages. The Company has incurred, and expects to continue to incur, costs for environmental compliance, claims, defense, remediation, business modifications, and damages as part of its ongoing operations. The Company maintains policies and procedures designed to support compliance with applicable environmental laws and regulations and periodically updates those policies as laws, regulations, and business operations continue to evolve worldwide.
Under certain environmental laws, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") and similar state and foreign laws, the Company may be jointly and severally liable, sometimes with other potentially responsible parties, for the costs of investigation and remediation of environmental contamination at current or former facilities and at off-site locations where hazardous substances have been released or disposed. The Company has identified numerous locations around the world at which it has or may have liability for remediating contamination under applicable environmental laws. Information regarding the Company's environmental accruals and related estimation considerations is provided in “Environmental Liabilities.”
PFAS
This section describes the Company’s legal matters relating to various per- and polyfluoroalkyl substances (collectively, "PFAS"). PFAS refers to a broad category of compounds that encompass thousands of materials with distinct and widely varying properties and profiles. Examples include perfluorooctanoate ("PFOA"), perfluorooctane sulfonate ("PFOS"), perfluorohexanoic acid ("PFHxA"), perfluorohexane sulfonic acid ("PFHxS"), perfluorobutane sulfonate ("PFBS"), perfluorononanoic acid ("PFNA"), hexafluoropropylene oxide dimer acid (“HFPO-DA,”) and commercially known as “Gen-X”), perfluorobutane sulfonamide (“FBSA”), perfluorobutane sulfonamido diethanol (“FBSEE”), and certain perfluoro carboxylic acids ("PFCAs"), including C9-C14 and other long-chain PFCAs ("LC-PFCAs").
The Company's Actions Related to PFAS
The Company has voluntarily cooperated, and continues to cooperate, with reviews by local, state, federal (including the U.S. Environmental Protection Agency ("EPA")), and international authorities regarding the possible environmental and health effects of certain PFAS.
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In May 2000, the Company announced a decision to phase-out certain PFAS compounds including PFOA, PFOS, PFHxS, and their precursor compounds globally as a precautionary measure. Within approximately two years of the announcement, the Company ceased manufacturing and using the vast majority of those compounds and completed the phase-out of remaining manufacturing and significant use by the end of 2008.
In December 2022, the Company announced its intent to exit all PFAS manufacturing and to work toward discontinuing PFAS use across its product portfolio by the end of 2025. The Company completed its exit from PFAS manufacturing by the end of 2025. The Company will continue to take actions to address PFAS manufactured prior to the exit. For example, the Company's water treatment assets at facilities that manufactured PFAS will continue to treat PFAS from historical manufacturing activities and remediate residual PFAS in waste streams from the Company's operations. The Company has worked, and expects to continue working, through the disposition of its assets and its interests in manufacturing facilities, which may include dismantling, cleaning, and repurposing, and other dispositions of facilities or equipment. Notwithstanding the disposition of assets or interest in manufacturing facilities, in some circumstances the Company may continue to incur additional costs for dismantling, cleaning, repurposing, and other activities related to its now-discontinued manufacturing of PFAS. The Company remains in ongoing discussions with customers, government authorities, and other stakeholders and interested parties about customer agreements and the Company's interests in assets and facilities, which may be owned or leased from other parties that have interests and rights related to those facilities, including their future ownership.
The Company has made substantial progress in eliminating PFAS use across its product portfolio. For PFAS-containing components not manufactured by the Company but used within its supply chain, the Company continues to evaluate the availability and feasibility of PFAS alternatives. In certain cases, PFAS-containing third-party products (such as lithium ion batteries, printed circuit boards, certain seals and gaskets, and other products widely used in commerce across a variety of industries) continue to be used beyond the end of 2025 due to technological constraints, regulatory or industry standards, or the need for customer transitions, certifications, or approvals. Transitional efforts related to products manufactured prior to the end of 2025 and customer conversion processes also remain ongoing.
Background on Global PFAS Regulatory and Legislative Activity
Regulatory and legislative activities relating to PFAS continue to expand in the United States, Canada, Europe, Asia, Latin America, and other jurisdictions, at the national, state, and local levels, as well as before certain international bodies. These activities include information-gathering initiatives, risk assessments, remediation requirements, and increasingly stringent restrictions on PFAS manufacturing, emissions, environmental releases, and product uses. Regulatory limits for PFAS in emissions and in environmental media (including soil, groundwater, surface water, and drinking water) are being established at progressively lower levels, in some cases approaching limits that exceed current analytical detection capabilities.
Regulatory focus has also broadened to include a wider range of PFAS compounds, including substances previously manufactured by the Company prior to its exit from PFAS manufacturing, contained in third-party materials used in the Company's current products, or associated with the Company's legacy manufacturing activities. In certain jurisdictions, proposed legislation may authorize recovery of healthcare or related public costs allegedly associated with PFAS exposure.
Regulatory or legislative changes could expand the Company's potential PFAS-related liability, including for activities prior to the Company's exit from PFAS manufacturing. For example, as a result of the CERCLA designation of PFOA and PFOS as hazardous substances in 2024, and to the extent the EPA finalizes additional proposals related to PFAS, the Company may be required to undertake additional investigative, compliance, and remediation activities, including where the Company conducts or conducted operations or where the Company has disposed of waste. The Company may also face additional litigation for contribution claims sought by other potentially responsible parties for their increased costs.
The Company cannot predict what additional PFAS-related regulatory or legislative actions in the United States, Canada, Europe, Asia, Latin America, and elsewhere arising from the matters disclosed in this Note or other proceedings and activities, if any, may be taken, or the consequences of any such actions to the Company, including to its operations and its products. Given divergent and rapidly evolving regulatory standards, there currently is significant uncertainty about the potential costs to industry and communities associated with remediation and control technologies that may be required.
As regulatory requirements continue to evolve and become enforceable, the Company may incur material costs to comply with new standards, undertake investigative or remedial actions, or respond to regulatory enforcement or related litigation. Regulatory developments may also affect the Company's litigation exposure, public perception, and compliance and remedial costs, particularly where legal defenses rely on regulatory thresholds that may change over time. Given divergent and rapidly evolving global PFAS standards, significant uncertainty remains regarding those factors and associated costs.
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PFAS Litigation, Investigations, and Other Activities in the United States
Aqueous Film Forming Foam ("AFFF") Litigation and the AFFF MDL
In December 2018, the Judicial Panel on Multidistrict Litigation ("JPML") approved motions to transfer and consolidate all aqueous film forming foam ("AFFF") cases pending in federal courts into a multidistrict litigation proceeding ("AFFF MDL") in the U.S. District Court for the District of South Carolina ("AFFF MDL Court") to centralize pre-trial proceedings. As of July 1, 2026, based upon information published by the JPML, approximately 15,200 cases relating in whole or in part to alleged PFAS contamination or exposure associated with AFFF were pending in the AFFF MDL. Many personal injury cases, both inside and outside the AFFF MDL, include multiple plaintiffs, so the number of plaintiffs asserting AFFF-related claims is substantially higher than the number of cases published by the JPML
Claims in the AFFF MDL have been asserted by individuals, public water suppliers, putative class members, state and territorial sovereigns, and other entities. Plaintiffs seek various forms of relief, including damages for personal injury, property damage, water treatment costs, medical monitoring, natural resource damages, and punitive damages. The parties in the AFFF MDL have conducted, or continue to conduct, master discovery, site-specific product identification discovery, and case-specific discovery for various categories of cases.
The Company generally seeks, where possible, to remove and transfer AFFF-related cases to the AFFF MDL and the vast majority of pending AFFF-related cases are being litigated in the AFFF MDL. The Company also continues to defend certain AFFF-related matters that remain in state court and engages in discussions with pre-suit claimants where appropriate. In general, preliminary judicial proceedings evaluate whether these lawsuits should proceed in the AFFF MDL or outside of the AFFF MDL, with some cases being moved to the AFFF MDL or remanded to another venue, such as state court. In September 2022, the AFFF MDL Court denied defendants' AFFF MDL-wide summary judgment motions on the government contractor defense, although the defense may be presented to juries in future trials.
AFFF MDL: Water System Cases
In June 2023, the Company entered into a class-action settlement to resolve a wide range of drinking water claims by eligible public water suppliers ("PWS") in the United States (“PWS Settlement”). The AFFF MDL Court approved the PWS Settlement in March 2024 and it became effective in May 2024. The PWS Settlement provides that the Company does not admit any liability or wrongdoing and does not waive any defenses.
Following the PWS Settlement, certain PWS cases remain pending, including matters brought by water suppliers that did not qualify as eligible claimants under the PWS Settlement and those that did not participate in the PWS Settlement, which includes cases pending in both the AFFF MDL and various federal and state courts.
Under the PWS Settlement, the Company will pay $10.5 billion to $12.5 billion in total to resolve released claims. The Company recorded a pre-tax charge of $10.3 billion in the second quarter of 2023, reflecting the discounted present value (discounted at an estimated 5.2 % interest rate at the time of proposed settlement) of the expected $12.5 billion nominal value of the payments. Under the PWS Settlement, as amended to include payments to certain other water providers, payments are scheduled from 2024 through 2036. The ultimate amount payable will be determined in part based on PFAS testing results received by certain class members by the end of 2025, and class members seeking compensation based on those results must submit them to the PWS Settlement's claims administrator by July 31, 2026.
AFFF MDL: Personal Injury Cases
In December 2023, the AFFF MDL parties selected an initial set of 25 plaintiffs for potential bellwether AFFF-related personal injury cases ("Initial AFFF Personal Injury Bellwether Group"). In March 2024, the AFFF MDL Court established a process applicable to most personal injury claims for diseases not included in the Initial AFFF Personal Injury Bellwether Group and four additional diseases. The process resulted in dismissal without prejudice of thousands of personal injury claims and includes a tolling provision for certain dismissed claims filed in or transferred to the AFFF MDL by April 24, 2024. In July 2024, the AFFF MDL Court selected 9 cases in the Initial AFFF Personal Injury Bellwether Group for additional discovery, including expert discovery. In April 2025, the court selected 3 additional cases for discovery. In January 2025, the AFFF MDL Court set a first bellwether personal injury trial for October 2025, and in May 2025, indicated that the trial would involve one or more of three kidney cancer plaintiffs. In August 2025, the AFFF MDL Court vacated the schedule for the first bellwether personal injury trial that was to begin in October 2025. No new trial date has been set. The AFFF MDL Court conducted a "Science Day" in June 2025 regarding liver and thyroid cancers, and the parties completed general causation expert discovery for those conditions in April 2026.
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In August 2025, the AFFF MDL Court also entered orders relating to filing personal injury cases in the AFFF MDL and requesting transfer of certain categories of cases, including those involving firefighting personal protective equipment, including turnout gear, to the AFFF MDL. Following those orders, thousands of additional plaintiffs filed claims in the AFFF MDL. The orders also impose certain information requirements on plaintiffs. The JPML case counts for the AFFF MDL have remained relatively stable since November 2025. In February 2026, the AFFF MDL Court entered an order to address noncompliance with those information requirements, including an opportunity to cure certain noncompliance. Noncompliant plaintiffs may be subject to further proceedings or dismissal by the AFFF MDL Court. Under these procedures, some plaintiffs have voluntarily dismissed their claims, and defendants have filed motions to dismiss additional plaintiffs. In June 2026, the AFFF MDL Court appointed a special master to address those motions to dismiss. At the AFFF MDL Court's direction, the parties continue to participate in court-ordered settlement discussions regarding the personal injury claims. Those ongoing discussions are being facilitated by a court-appointed mediator.
Other AFFF Cases
In June 2019, subsidiaries of Valero Energy Corporation, an independent petroleum refiner, filed eight AFFF-related cases against the Company and other defendants, including DuPont/Chemours, National Foam, Buckeye Fire Equipment, and Kidde-Fenwal, in various state courts seeking damages allegedly incurred or to be incurred in investigating and remediating PFAS contamination at their properties and replacing or disposing of AFFF products containing long-chain PFAS compounds. Two cases have been removed to federal court and transferred to the AFFF MDL, one was voluntarily dismissed, and the remaining five state court cases are stayed by the parties' agreement.
The Company is aware of other AFFF-related suits outside the AFFF MDL. The Company expects to seek removal to federal court and transfer to the AFFF MDL for most of these AFFF-related cases, where available. However, some AFFF-related cases may remain pending in state courts.
State Attorneys General Litigation Related to PFAS
Overview and Relationship to AFFF MDL
Several state attorneys general have filed lawsuits against the Company and other defendants alleging PFAS contamination. Certain matters are pending in the AFFF MDL, while others are proceeding outside the AFFF MDL. In general, preliminary judicial proceedings evaluate whether these lawsuits should proceed in state or federal court and inside the AFFF MDL or outside of the AFFF MDL. Cases at times are moved to the AFFF MDL or remanded to another venue, such as a state court.
These state attorneys general lawsuits generally seek on a state-wide basis injunctive relief, investigative and remedial work, compensatory damages, natural resource damages, consumer protection civil penalties, attorneys’ fees, and, where available, punitive damages related to the states’ response to PFAS contamination. State attorneys general lawsuits pending in the AFFF MDL include actions on behalf of the people of the states of Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, and Wisconsin, as well as on behalf of the people of the District of Columbia and the territories of Guam, Puerto Rico, and the Northern Mariana Islands.
New Jersey Settlement
In March 2019, the New Jersey Attorney General filed two actions against the Company on behalf of New Jersey and certain of its departments regarding alleged PFAS discharges at two facilities: the "Chambers Works Facility" in Salem County and the "Parlin Facility" in Middlesex County, neither of which the Company ever owned or operated, based on allegations that the Company supplied PFAS to those facilities, which was then discharged into the environment. In May 2025, the Company agreed to a proposed judicial consent order with New Jersey ("New Jersey Settlement"), subject to public notice and comment and approval by the U.S. District Court for the District of New Jersey ("D.N.J. Court"). If approved by the D.N.J. Court and conditions are satisfied, New Jersey and its departments would dismiss with prejudice the two actions and New Jersey’s pending AFFF MDL case against the Company. The New Jersey Settlement would also resolve broader New Jersey statewide current and future PFAS-related claims. The New Jersey Settlement is not an admission of liability by the Company.
Pursuant to the New Jersey Settlement, the Company agreed to pay New Jersey up to $450 million. The Company recorded a pre-tax charge of $281 million in the second quarter of 2025, reflecting the discounted present value of the $400 million amount the Company expects to pay (discounted at an estimated 5.0 % blended interest rate at the time of proposed settlement). The New Jersey Settlement entered in May 2025 includes payments with then-present values of $207 million beginning in 2026 over 8 years for the Chambers Works Facility and other elements and $74 million beginning in 2030 and running through 2050 for existing and future PFAS-related claims by New Jersey. The actual amount payable by the Company will be determined in part based on the Company's ultimate obligations under the PWS Settlement and may be reduced by certain credits towards its payment obligations under the New Jersey Settlement based on other contingencies. The D.N.J. Court held a hearing in January 2026. After New Jersey and the remaining objectors to the New Jersey Settlement submitted additional information, the D.N.J. Court held another hearing in June 2026. The parties are now awaiting the D.N.J Court's ruling on the motion to approve the New Jersey Settlement.
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Additional State Attorneys General Matters Outside of AFFF MDL
Additional state attorneys general lawsuits outside the AFFF MDL are described below. In addition, the Company is in discussions with several state attorneys general and agencies, responding to information and other requests, including entering into tolling agreements, relating to PFAS matters and exploring potential resolution of some of the matters raised.
Connecticut: In January 2024, the Connecticut Attorney General filed a lawsuit in Connecticut state court, which the Company removed to federal court. Following the federal court's remand of the case to state court, the Company filed an appeal. In November 2025, the federal court of appeals held a hearing on the Company's appeal.
Illinois: In March 2022, the Illinois Attorney General filed a lawsuit in Illinois state court against the Company alleging contamination of the state's natural resources by PFAS compounds disposed of by, or discharged, or emitted from the Company's facility in Cordova, Illinois ("Cordova Facility"). The complaint requests monetary damages, injunctive relief, civil penalties, a testing program, and a public outreach and information sharing program. In April 2025, the state court granted in part and denied in part a motion to dismiss filed by the Company. In October 2025, the Company removed the case to federal court. In November 2025, the federal court remanded the case back to state court. The Company's appeal of that decision remains pending before the federal court of appeals. In the interim, the case is proceeding in state court. In February 2026, the state court set an updated trial date of March 2027 in lieu of the previously scheduled September 2026 trial date.
Maine: In March 2023, the Maine Attorney General filed a lawsuit in Maine state court, which the Company removed to federal court. Following the federal court's remand of the case to state court, the Company filed an appeal, which the federal court of appeals granted in November 2025. In April 2026, the JPML transferred the case to the AFFF MDL.
Maryland: In May 2023, the Maryland Attorney General filed a lawsuit in Maryland state court, which the Company removed to federal court. Following the federal court's remand of the case to state court, the Company filed an appeal. In March 2025, the federal court of appeals reversed the prior remand decision. In October 2025, Maryland filed a petition for review by the U.S. Supreme Court, which was denied in March 2026. In June 2026, the JPML transferred the case to the AFFF MDL.
New Hampshire: In May 2019, the New Hampshire Attorney General filed a lawsuit in New Hampshire state court, which the Company removed to federal court. Following the federal court's remand of the case to state court, the Company filed an appeal, which the federal court of appeals denied in March 2025. The state court has set a Spring 2029 trial ready date.
New York: In July 2026, the New York Attorney General filed a lawsuit in New York state court seeking relief based on alleged harm to consumers and the environment from sales in the state of consumer products containing PFAS, which the Company removed to federal court and is seeking to transfer to the AFFF MDL.
South Carolina: In August 2023, the South Carolina Attorney General filed a lawsuit in South Carolina state court, which the Company removed to the AFFF MDL. Following the AFFF MDL Court's remand of the case to state court, the Company filed an appeal. In March 2025, the federal court of appeals reversed the prior remand decision. In October 2025, South Carolina filed a petition for review by the U.S. Supreme Court, which was denied in March 2026. In April 2026, the AFFF MDL Court denied South Carolina's motion to remand the case to state court.
Texas: In December 2024, the Texas Attorney General filed a consumer protection lawsuit in Texas state court, which the Company removed to federal court. Following the federal court's remand of the case to state court, the Company filed an application for leave to appeal the remand order, which the federal court of appeals denied in October 2025. After the state court denied the Company's January 2026 motion to dismiss for lack of personal jurisdiction, the Company filed an appeal in February 2026.
Vermont: In June 2019, the Vermont Attorney General filed a lawsuit in Vermont state court, which the Company removed to federal court. In December 2025, the federal court held a hearing on Vermont's motion to remand the case to state court.
Other PFAS-related Product and Environmental Litigation
Background
Since 2017, numerous other PFAS-related lawsuits naming the Company and others as co-defendant have been filed outside the AFFF MDL in state and federal courts across the U.S. by a variety of plaintiffs, including individuals, putative class actions, mass tort actions, and drinking water providers that opted out of the PWS Settlement. The Company expects to seek removal to federal court and transfer to the AFFF MDL for most of the cases that relate to AFFF, where available. However, some of the cases initially filed outside the AFFF MDL are likely to remain in state or federal courts outside the AFFF MDL.
These PFAS-related lawsuits allege, among other things, that: improper disposal by the Company or third parties of certain forms of PFAS manufactured by the Company contaminated water, soil, or biosolids; the Company failed to warn third parties and the plaintiffs about the hazards of improper product disposal; products containing PFAS caused harm; and the plaintiffs suffered damages, including personal injury, property damage, loss of use and enjoyment of their properties, diminished property values, investigation and remediation costs, and medical monitoring costs. Some of the suits involve claims under the U.S. Racketeer Influenced and Corrupt Organizations Act of 1970, as amended ("RICO") and state conspiracy laws, product liability, consumer protection, and deceptive trade practices. These lawsuits name different companies as co-defendants, including DuPont/Chemours, and various carpet, paper, and textile manufacturers.
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Alabama
As previously reported, the Company resolved numerous claims relating to alleged PFAS contamination of properties and water supplies associated with its Decatur, Alabama facility (the "Decatur Facility"), and continues to make payments pursuant to those resolutions.
Since December 2023, a number of personal injury actions have also been filed against the Company and other defendants, alleging exposure to PFAS from operations in Decatur. The Company removed these cases to federal court, where they were transferred to the AFFF MDL, and plaintiffs have moved to remand most of these matters back to state court.
The Company, together with multiple co-defendants, were named in several lawsuits filed in Alabama state court by municipal water utilities, including Shelby and Talladega Counties in April 2023, Five Star Water Supply District in August 2025, City of Clanton Water Works & Sewer Board in August 2025, and Coosa Valley Water Supply District in September 2025. The plaintiffs in these four cases allege that the discharge of PFAS has contaminated drinking water supplies of cities located downstream along the Coosa River in Alabama. The Company removed these cases to federal court. The plaintiffs moved to remand all of these cases to state court, but were denied without prejudice and all of the cases were stayed pending the ruling by the U.S. Court of Appeals for the Eleventh Circuit ("Eleventh Circuit") in the Pine Hill Appeal (described below). The Company filed a notice with the JPML seeking to transfer three of these cases (Shelby and Talladega Counties, City of Clanton Water Works & Sewer Board, and Coosa Valley Water Supply District) to the AFFF MDL. The JPML transferred all three cases to the AFFF MDL in April 2026.
In March 2024, the City of Albertville, Alabama filed a lawsuit against the Company and other defendants in Alabama state court alleging contamination of the Tennessee River (upstream of the Decatur Facility) by a carpet manufacturer in Alabama that used PFAS allegedly supplied by the defendants. Defendants filed a joint motion to dismiss in May 2024. In October 2025, the court dismissed plaintiff’s private nuisance and trespass claims, but allowed remaining claims to proceed. In February 2026, a scheduling order was entered, but no trial date has been set and fact discovery is ongoing.
In April 2024, the Board of Water and Sewer Commissioners of the City of Mobile, Alabama filed a lawsuit against the Company and other defendants in Alabama state court alleging that the defendants are responsible for PFAS contamination of the city’s water supply resulting from PFAS released by a local landfill. In October 2024, the court granted the Company’s and several other defendants’ motions to dismiss. Claims against one defendant remain pending, which prevents the motion to dismiss ruling from becoming final.
In July 2024, the Town of Pine Hill, Alabama ("Pine Hill") filed a lawsuit against the Company and other defendants in Alabama state court alleging that PFAS discharges from paper mills currently owned by International Paper contaminated its water supply. The Company removed the case to federal court. In March 2025, the federal court granted the plaintiff’s motion to remand the case to state court. In March 2025, the Company filed a notice of appeal to the Eleventh Circuit ("Pine Hill Appeal"), and the federal court granted the Company’s motion to stay the remand order in April 2025 . Briefing in the Eleventh Circuit was completed in August 2025. In June 2025, the state court ruled that Pine Hill could proceed with discovery notwithstanding the federal court’s stay of the remand order. In July 2025, the Company filed a petition in the Alabama Supreme Court challenging that state court ruling. In April 2026, the Alabama Supreme Court granted the Company's petition and stayed the underlying case, pending the Eleventh Circuit's decision in the Pine Hill Appeal. Oral argument in the Eleventh Circuit was held in May 2026.
In August 2024, the City of Irondale, Alabama filed a lawsuit against the Company and other defendants in Alabama state court alleging PFAS contamination of its water supply due to industrial discharges from several users of PFAS in different industries, including the Company's alleged customers. The Company removed the case to federal court and, in August 2025, the plaintiffs’ motion to remand was denied. In September 2025, the case was stayed pending the Eleventh Circuit’s decision in the Pine Hill Appeal. While the case was stayed, the JPML transferred it to the AFFF MDL in April 2026.
In May 2025 the City of Foley, Alabama filed a lawsuit against the Company and other defendants in Alabama state court alleging that releases by users of PFAS in local manufacturing operations contaminated groundwater used for drinking water supplies. In July 2025, the Company filed a motion to dismiss. In January 2026, the court granted the Company’s and other supplier defendants’ motions to dismiss. Claims against one defendant remain pending, which prevents the motion to dismiss ruling from becoming final. In May 2026, the plaintiff filed a motion to reconsider the dismissal of the supplier defendants, including the Company, which was denied in July 2026.
In June 2024, a mass tort lawsuit was filed against the Company in Alabama state court by hundreds of individual customers of the Water Works and Sewer Board for the City of Gadsden, Alabama, alleging emotional distress and property damage related to PFAS contamination of their drinking water. In June 2024, the Company removed the case to federal court, where the case was proceeding through discovery. In December 2025, the Company filed a motion for judgment on the pleadings based on the expiration of the applicable statute of limitations prior to the filing of the complaint. In April 2026, the Court granted the Company's motion without prejudice, allowing the plaintiffs an opportunity to file an amended complaint. The plaintiffs did not file an amended complaint by the deadline, so the court dismissed the case with prejudice in June 2026.
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In December 2025, the City of Montevallo, Alabama, filed a lawsuit against the Company and other defendants in Alabama state court alleging that releases by users of PFAS in local commercial industries and in non-military firefighting foam contaminated groundwater used for drinking water supplies. In February 2026, the Company filed a motion to dismiss, which was heard in April 2026 and remains pending.
In April 2026, eighteen Alabama public water systems that opted out of the PWS Settlement filed lawsuits against the Company and other defendants in Alabama state and federal courts, alleging that releases by users and dischargers of PFAS in local commercial and manufacturing industries contaminated their drinking water sources. Seven of those eighteen lawsuits were filed by the cities of Auburn, Grove Hill, West Escambia, Childersburg, Talladega, Tuskegee, and Weaver in Alabama federal court. In April 2026, the Company filed notices with the JPML seeking to transfer those seven cases to the AFFF MDL, and in May 2026, the JPML transferred those seven cases to the AFFF MDL. Another nine of those eighteen lawsuits were filed by the cities of Helena, Loachapoka, Alabaster, Leeds, Thomasville, Jackson, Huntsville, Grand Bay, and Pelham in Alabama state court. In May 2026, the Company removed those nine lawsuits to federal court and sought to transfer them to the AFFF MDL. Each of the nine plaintiffs filed a motion to remand, and the Company filed motions to stay a ruling on remand pending the JPML’s transfer decision. In May 2026, conditional transfer orders were issued for each of those nine lawsuits. In June 2026, each of the nine plaintiffs filed motions to vacate the conditional transfer orders, and briefing on those motions to vacate the conditional transfer orders is ongoing. In all but the Grand Bay lawsuit, the federal court has entered a stay pending a decision on transferring to the AFFF MDL. In the Grand Bay lawsuit, briefing in the federal court on the plaintiff's motion to remand is complete and a hearing is set for July 2026. The final two of the eighteen lawsuits were filed by the cities of Saraland and Frisco City in Alabama state court, where they remain pending. In June 2026, the Company and certain other defendants filed a joint motion to dismiss the Saraland and Frisco City lawsuits.
California
In November 2025, the City of Fresno, California filed a lawsuit against the Company and multiple other defendants in California state court alleging that various industrial PFAS discharges contaminated the city's drinking water. In December 2025, the Company removed the case to federal court. In April 2026, the JPML transferred the case to the AFFF MDL.
In March 2026, a putative nationwide class action was filed against the Company and numerous other defendants in California federal court on behalf of all entities who bought firefighting personal protective equipment, including turnout gear, from the named defendants, alleging injuries from exposure to PFAS in the turnout gear and claims under RICO and common law conspiracy, product liability, misrepresentation, breach of warranty, negligence, unjust enrichment, consumer protection, and deceptive trade practices laws. In June 2026, the Company filed a motion to dismiss. This case is one of several subject to a pending motion for transfer to a new multidistrict litigation for certain turnout gear claims, described below under Minnesota.
Connecticut
In June 2024, a putative class action lawsuit was filed against the Company and numerous other defendants in Connecticut federal court by individual firefighters and several firefighter unions, alleging exposure to PFAS from certain firefighting personal protective equipment, including turnout gear, worn by the class members. The plaintiffs filed an amended complaint in July 2024 adding claims on behalf of certain plaintiffs that purchased turnout gear. The plaintiffs filed a second amended complaint in April 2025. In June 2025, the Company filed a motion to dismiss, which remains pending. In February 2026, the plaintiffs dismissed all purchaser plaintiffs, who were subsequently added in March 2026 to the putative class action pending in Montana. No scheduling order has been entered, except for jurisdictional discovery regarding certain other defendants.
Delaware
In May 2019, a putative class action lawsuit was filed against the Company and multiple other defendants in Delaware state court alleging PFAS contamination of the class's water supply resulting from the operations of local metal plating facilities. In September 2019, the Company removed the case to federal court. In August 2023, the court dismissed all claims against the Company except plaintiffs' negligence claim. In March 2025, the court granted the Company's motion for summary judgment as to the remaining claim. The case is proceeding against the remaining defendants.
Georgia
In February 2021, a putative class action lawsuit was filed against the Company and other defendants in Georgia federal court by plaintiffs seeking relief on behalf of a class of individual ratepayers in Summerville, Georgia, alleging their water supply was contaminated by PFAS discharged from a textile mill. In March 2022, the City of Summerville intervened in the case and also brought claims against the Company and other defendants. Discovery is finished and dispositive motions were denied in July 2026. No trial date has been set.
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In November 2019, a putative class action lawsuit was filed against the Company and other defendants in federal court in Georgia by individuals alleging PFAS contamination and seeking economic damages and injunctive relief on behalf of a class of Rome and Floyd County water subscribers. Class certification has been fully briefed, and the plaintiff's injunctive relief claims were dismissed in December 2024. Plaintiff's claims for economic damages related to alleged increases in their water rates due to the presence of PFAS remain pending. In August 2025, discovery was reopened in a limited fashion due to plaintiffs’ request to investigate whether recent increases in water utility rates by the City of Rome was attributable to PFAS. In December 2025, the defendants filed a consolidated motion for summary judgment. No trial date has been set.
In February 2024, two landowners in Gordon County, Georgia filed a lawsuit against the Company and other defendants in Georgia state court alleging property contamination from wastewater treatment sludge containing PFAS from nearby carpet manufacturing operations. One of the Company's co-defendants, the City of Calhoun, Georgia, filed a cross claim against the Company and other defendants alleging that biosolids from its wastewater treatment plant were contaminated with PFAS that has migrated into its water supply. In June 2024, a related lawsuit was filed in Georgia state court on behalf of other property owners who allege that their properties are contaminated with PFAS due to runoff from the properties of the Gordon County landowners from the initial lawsuit. Motions to dismiss were denied, and fact and expert discovery are closed. The Company filed a motion for summary judgment in July 2026. In January 2025 and January 2026, two two three No schedule has been set for the lawsuit filed in January 2026.
In July 2024, the City of Lyerly, Georgia filed a lawsuit against the Company and other defendants in Georgia state court, alleging that discharges from local carpet mills contaminated the city's water supply. In August 2024, the Company filed a motion to dismiss, which is still pending. The parties are currently engaging in fact discovery. A tentative trial date is set for June 2027.
In November 2024, Mohawk Industries, a carpet manufacturer, filed a lawsuit in Whitfield County, Georgia state court against the Company and other defendants, including DuPont, and Daikin, alleging various counts of tort and contract liability, including fraud, related to sales of certain PFAS. Motions to dismiss the case were denied in August 2025. Discovery in the case is proceeding. A tentative trial date is set for August 2027.
In December 2024, Dalton Utilities, located in Dalton, Georgia, filed a lawsuit against the Company and other defendants in Georgia federal court seeking clean-up costs under CERCLA and common law theories for alleged PFAS contamination related to the Dalton Land Application System, which is a nearly 10,000 acre field that has received carpet mill effluent pursuant to a Georgia Environmental Protection Division permit since the late 1980s. The Company filed a motion to dismiss, which was denied in March 2026. Discovery in the case is proceeding. In May 2026, the Company filed a motion to transfer this case to the AFFF MDL.
In December 2024, Murray County, Georgia filed a lawsuit against the Company and other defendants in Georgia state court seeking clean-up costs for alleged PFAS contamination related to the Murray County landfill and other locations throughout the county. The Company filed a motion to dismiss, which was denied in October 2025. Discovery in the case is proceeding.
In January 2025, Catoosa County, Georgia and Gordon County, Georgia filed lawsuits in Georgia state courts substantively identical to Murray County's lawsuit against the Company and other defendants alleging similar PFAS impacts related to the Catoosa County and Gordon County landfills. The Company filed motions to dismiss, which were denied in October 2025. Discovery in the cases is proceeding.
In October 2025, Walker County, Georgia filed a lawsuit in Georgia state court substantively identical to those filed by Murray, Catoosa, and Gordon Counties alleging similar PFAS impacts related to the Walker County landfill. In January 2026, the Company filed a motion to dismiss, which is fully briefed and currently pending.
In June and July 2025, property owners in Gordon County and Murray County, Georgia, filed eight separate lawsuits against the Company and other defendants in Georgia state courts alleging that the discharge of PFAS from various carpet manufacturer facilities contaminated their properties. The Company filed motions to dismiss these cases, which were denied in April 2026 and May 2026. Discovery in the cases is proceeding. The court in one of these cases certified its motion to dismiss order for interlocutory appeal. In June 2026, the defendants filed an application for interlocutory appeal with the Georgia Court of Appeals requesting a review of the order denying the motion to dismiss, which was denied. In July 2026, the defendants filed a Notice of Intent to appeal that ruling to the Georgia Supreme Court.
In October 2025, property owners in Floyd County and Whitfield County, Georgia filed two separate lawsuits against the Company and other defendants in Georgia state courts that are substantively identical to those filed by property owners in Gordon County and Murray County. In December 2025 and January 2026, the Company filed motions to dismiss these cases, which are fully briefed and remain pending.
In April 2025, the City of Chatsworth, Georgia filed a lawsuit against the Company and multiple other defendants, including carpet makers, in Georgia state court alleging PFAS discharges have contaminated its water supply. In August 2025, the Company filed a motion to dismiss, which is fully briefed and remains pending.
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In April 2025, a private landowner in Gordon County, Georgia and an environmental organization (Coosa River Basin Initiative) filed a lawsuit against the Company and other defendants, including carpet makers and Dalton Utilities, in federal court in Georgia for property damages and injunctive relief related to the Dalton Utilities Land Application System. Dalton Utilities filed a motion to stay the case in favor of its pending action in the same district court, which was denied in March 2026. In September 2025, the plaintiffs filed a motion to consolidate this case with the putative class action of Rome and Floyd County water subscribers described above, but withdrew the motion to stay in April 2026. Motion to dismiss briefing is underway. In May 2026, the Company filed a motion to transfer this case to the AFFF MDL.
In April 2025, private landowners in Chattooga County, Georgia filed a lawsuit against the Company and multiple other defendants, including a textile mill, in Georgia state court alleging that PFAS discharges to the Town of Trion, Georgia wastewater treatment plant made its way to sludge that was deposited on plaintiffs’ properties via land application for years. In August 2025, the case was voluntarily dismissed. In September 2025, it was re-filed in Gwinnett County, Georgia in Georgia state court. In December 2025, the Company filed a motion to dismiss, which is fully briefed and remains pending. No hearing date has been set.
In June 2025, Walker County, Georgia and the City of Chickamauga, Georgia filed a lawsuit against the Company and multiple other defendants, including carpet makers, in Georgia state court alleging that the carpet manufacturers discharged PFAS into the public sewer system, which caused it to enter plaintiffs’ drinking water. In August 2025, the Company filed a motion to dismiss, and the court held a hearing but has not issued its ruling.
In September 2025, Dougherty County and Chattooga County, Georgia filed a lawsuit against the Company in federal court in Georgia on behalf of a putative class of all governmental entities in Georgia who own or operate municipal landfills impacted by PFAS. The Company filed a motion to dismiss in November 2025, which is fully briefed and remains pending. The case is stayed pending resolution of the motion to dismiss.
Between November 2025 and early January 2026, property owners in Murray, Whitfield, Gordon, and Catoosa counties filed eight separate lawsuits against the Company and other defendants in Georgia state courts alleging that the discharge of PFAS from various carpet manufacturer facilities contaminated their properties. In March 2026, the Company filed motions to dismiss in these cases. Motions to dismiss were denied in six of these cases in April 2026 and May 2026. The motions to dismiss remain pending in the other two cases.
In January 2026, the Cities of Blakely, Cartersville, Meigs, and Pelham filed a lawsuit against the Company in the Middle District of Georgia on behalf of a putative class of all governmental entities in Georgia that own a wastewater treatment facility impacted by PFAS. In March 2026, the Company filed a motion to dismiss, which is currently pending. The case is stayed pending resolution of the motion to dismiss.
In April 2026, the City of Griffin filed a lawsuit in Georgia state court alleging that the Company and other defendants sold PFAS to industrial PFAS users and that these users and a landfill discharged PFAS-contaminated wastewater and leachate into the Flint River basin, contaminating the City of Griffin's water supply. In May 2026, the case was removed from Clayton County to federal court in Georgia, where a motion to stay and a motion to remand are pending. In May 2026, the Company sought to transfer the case to the AFFF MDL and a conditional transfer order was issued. In June 2026, the plaintiff filed a motion to vacate the conditional transfer order. Briefing on the plaintiff’s motions to vacate the conditional transfer order is ongoing.
In April 2026 and May 2026, property owners in Whitfield, Gordon, and Murray counties filed four separate lawsuits against the Company and other defendants in Georgia state court alleging that the discharge of PFAS from various carpet manufacturer facilities contaminated their properties.
In June 2026, Paulding County, Georgia filed a lawsuit in Georgia state court substantively identical to those filed by Murray, Catoosa, and Gordon Counties against the Company and other defendants alleging similar PFAS impacts related to landfills in Paulding County.
In June 2026, Floyd County, Georgia filed a lawsuit in Georgia state court substantively identical to those filed by Murray, Catoosa, Gordon, and Paulding Counties against the Company and other defendants alleging similar PFAS impacts related to landfills in Floyd County.
Illinois
In November 2023, a lawsuit was filed against the Company and other defendants in state court by a plaintiff alleging personal injuries relating to alleged PFAS contamination from the Cordova Facility and exposure to various other chemicals from other sources. The Company removed the case to federal court, but it was remanded back to state court in May 2025.
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Maine
In October 2022, the Company and several other alleged chemical suppliers were added as defendants in a lawsuit in Maine federal court previously filed by a group of landowners against several paper mills, alleging PFAS contamination from waste generated by the paper mills that was then incorporated into biosolids. The case involves 98 plaintiffs asserting property damage claims against two alleged paper mill chemical suppliers, including the Company. In December 2025, discovery closed as to the six original plaintiffs. The parties agreed to conduct fact discovery on five additional plaintiffs. Expert discovery for all eleven initial plaintiffs is expected to conclude in October 2026. In June 2026, the parties stipulated to voluntarily dismiss the owner of the last paper mill in the action. No trial date has been set.
Massachusetts
In August 2022, several landowners filed a putative class action lawsuit against the Company and several other defendants in Massachusetts state court alleging PFAS contamination from waste generated by local paper manufacturing facilities that was subsequently incorporated into biosolids at a local composting facility. The lawsuit alleges property damage and seeks medical monitoring on behalf of plaintiffs within the Town of Westminster. This case was removed to federal court, where it was consolidated with a previously filed federal case involving similar allegations and claims against the Company's co-defendants. In February and March 2024, the Company and the remaining defendants answered the complaint and filed cross claims against each other. In April 2025, the class action was consolidated with another class action brought by the same plaintiffs against different defendants. The court denied the plaintiffs’ previous motion for class certification, without prejudice, to allow them to submit a motion and expert reports addressing the new defendants. The plaintiffs’ renewed motion for class certification is due in August 2026. No trial date has been set.
In October 2024, one of the former plaintiffs in the putative class action described above filed a separate lawsuit against the Company and other defendants in Massachusetts state court alleging PFAS-related personal injury. In June 2025, the Company filed a motion to dismiss. In March 2026, the court partially granted the Company’s motion, but allowed the plaintiff’s negligence and failure to warn claims to proceed. The case is in fact discovery, which is scheduled to close in November 2026. No trial date has been set.
In March 2025, another resident of Westminster, Massachusetts filed an additional lawsuit against the Company and other defendants in Massachusetts state court alleging PFAS-related personal injury. In April 2026, the court denied the Company’s motion to dismiss the plaintiff’s negligence and failure to warn claims. The case is in fact discovery, which is scheduled to close in November 2026. No trial date has been set
In May 2026, the parties responsible for site remediation costs in the above Massachusetts cases sought leave to file an amended complaint adding the Company and other defendants to their lawsuit seeking contribution to remediation costs from numerous suppliers and transporters of material to the composting facility at issue under Massachusetts law. The Company's opposition to the motion for leave was filed in July 2026.
In May 2026, a third resident of Westminster, Massachusetts filed another lawsuit in Massachusetts state court alleging PFAS-related personal injury. Although the original complaint named only other defendants, the plaintiff filed an amended complaint in June 2026 adding the Company as a defendant.
Michigan
The Company previously settled claims brought by Wolverine World Wide ("Wolverine") related to Wolverine’s alleged use of 3M Scotchgard in its shoe manufacturing operations. The Company continues to incur liabilities for immaterial amounts pursuant to the settlement agreement. In December 2025, a lawsuit was filed against the Company and Wolverine in Michigan federal court by the owners of two landfills alleging that the Company and Wolverine are both liable for remediating PFAS contamination at and around the landfills under CERCLA and Michigan's Natural Resources and Environmental Protection Act. In February 2026, the Company filed a motion to dismiss, which was denied in May of 2026. Discovery is ongoing.
Minnesota
In May 2025, a putative nationwide class action lawsuit was filed against the Company, DuPont, and Chemours in Minnesota federal court on behalf of all municipalities and governmental entities who purchased firefighting personal protective equipment, including turnout gear, from the named defendants alleging injuries from exposure to PFAS in the protective equipment. In February 2026, the plaintiff filed an amended complaint, and now only seeks to certify a Massachusetts-only purchaser class instead of a nationwide class.
In April 2026, two additional putative nationwide class action lawsuits were filed in Minnesota federal court against the Company and other defendants on behalf of all municipalities and governmental entities who purchased firefighting personal protective equipment.
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In May 2026, one of the two new putative nationwide class action plaintiffs, Rochester, filed a motion to create a new multidistrict litigation for claims by purchasers of turnout gear. The motion identified the other two Minnesota putative class actions and the Montana and California putative class actions as related actions. Responses to Rochester's motion have been filed by parties to all five cases, plus plaintiff from a tag-along action in New York, and the Plaintiffs' Co-Lead Counsel for the AFFF MDL. The motion will be considered by the JPML at its July 2026 hearing session.
Mississippi
In January 2026, Corinth Gas & Water for the City of Corinth, Mississippi filed a lawsuit against the Company and other defendants in Mississippi state court alleging that discharge from operations at the Decatur Facility contaminated the Tennessee River, which feeds water into the Tennessee-Tombigbee Waterway, Corinth’s primary source of drinking water. In March 2026, the Company removed the case to federal court. In June 2026, the JPML transferred the case to the AFFF MDL.
Missouri
In April 2024, the Company was added as a defendant to a pending putative class action lawsuit filed in Missouri federal court alleging PFAS contamination of the class's properties and drinking water from metal plating operations in southeastern Missouri. In October 2024, the court denied the Company's motion to dismiss. Plaintiffs filed their motion for class certification in January 2026. A trial date is set for October 2027.
In September 2025, a personal injury lawsuit was filed against the Company and other defendants in Missouri state court alleging injuries caused by exposure to PFAS in firefighting personal protective equipment, including turnout gear. The Company removed the case to federal court. In September 2025 the Company moved to transfer the case to the AFFF MDL, which the JPML denied in December 2025. In April 2026, the case was remanded to state court. The Company is appealing this order. Meanwhile, the case is pending in state court, where defendants moved to transfer venue in May 2026.
Montana
In April 2025, a putative nationwide class action lawsuit was filed against the Company, DuPont, and Chemours in Montana federal court on behalf of all entities who purchased firefighting personal protective equipment, including turnout gear, from the named defendants alleging injuries from exposure to PFAS in the turnout gear and claims under RICO and state conspiracy, product liability, consumer protection, and deceptive trade practices laws. In September 2025, the court denied the defendants’ motion to transfer the case to the federal court in the District of Delaware. In October 2025, the Company filed a motion to dismiss, which the court denied in January 2026. In March 2026, the plaintiffs filed an amended complaint, adding alleged purchaser plaintiffs from Connecticut, California, Maryland, and Missouri. The plaintiffs further amended their complaint to add additional purchaser plaintiffs and claims in May 2026. Motions to dismiss are fully briefed, and a hearing on the motions to dismiss was held in July 2026. This case is one of several subject to a pending motion for transfer to a new multidistrict litigation for certain turnout gear claims, described above under Minnesota.
New Jersey
The Company and several co-defendants are defending numerous lawsuits filed in New Jersey federal court by individuals with private drinking water wells near certain DuPont and Solvay facilities that were allegedly supplied with PFAS manufactured by the Company. The Company settled for an immaterial amount with the plaintiffs in certain cases that sought property damages. Applicable court approval was granted in May 2025, and those cases against the Company have been dismissed. Plaintiffs in remaining individual lawsuits allege personal injuries to themselves or to their adult children. Discovery is proceeding in the personal injury cases.
In May 2025, a lawsuit was filed against the Company and several other defendants in New Jersey state court by individuals who resided near Solvay’s facility alleging personal injuries to themselves or to their children from PFAS exposure. In August 2025, the Company removed the case to federal court. In December 2025, the Company's motion to transfer the case to the AFFF MDL was denied. In January 2026, the plaintiffs voluntarily dismissed their claims against the Company without prejudice. In June 2026, the plaintiffs in that action and a number of other individuals filed a new lawsuit against the Company in New Jersey federal court.
In June 2026, the estate of an individual who resided near certain DuPont and Solvay facilities filed a lawsuit against the Company and several other defendants in New Jersey state court alleging personal injuries and wrongful death from alleged PFAS exposure.
In March 2023, a lawsuit was filed against the Company and Middlesex Water Company by a Middlesex Water Company customer alleging personal injury from drinking water allegedly contaminated with PFAS. In May 2026, the case was settled for an immaterial amount. In July 2026, the plaintiff dismissed the case with prejudice.
New York
In May 2025, a lawsuit was filed against the Company, Saint-Gobain Performance Plastics Corp., Honeywell International Inc., and DuPont in New York federal court by the owner of a tree nursery located in Hoosick Falls alleging property damage from PFOA contamination the plaintiff attributes to a nearby fabric coating facility. In October 2025, the Company and other defendants filed a motion to dismiss, which remains pending.
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In June 2026, a state-wide putative class action lawsuit was filed against the Company and other defendants in New York state court on behalf of all New York municipalities and governmental entities who purchased firefighting personal protective equipment, including turnout gear, from the named defendants. In June 2026, the Company removed the case to federal court and identified it as a potential related action with respect to the pending motion to create a new multidistrict litigation for certain turnout gear claims, described above under Minnesota.
Ohio
In October 2018, a putative class action was filed against the Company and other defendants, including DuPont and Chemours, in the U.S. District Court for the Southern District of Ohio ("S.D. Ohio Court") by the named plaintiff, a firefighter allegedly exposed to PFAS chemicals through his use of firefighting foam, purporting to represent a putative class of all U.S. individuals with detectable levels of PFAS in their blood. In March 2022, the S.D. Ohio Court certified a class of individuals subject Ohio laws, who have 0.05 parts per trillion ("ppt") of PFOA (C-8) and at least 0.05 ppt of any other PFAS in their blood serum. In November 2023, the U.S. Court of Appeals for the Sixth Circuit ("Sixth Circuit") issued an order vacating the class certification decision and remanding the case with instructions that the S.D. Ohio Court dismiss the case and later denied a motion for rehearing en banc. In March 2024, the S.D. Ohio Court vacated the class certification order and dismissed the case for lack of jurisdiction. In June 2024, a new putative nationwide class action was filed against the Company and other defendants by the same named plaintiff who filed the previously dismissed Ohio putative class action lawsuit. The new suit was brought against only the Company and DuPont entities and seeks to establish a putative class of anyone subject to the laws of Ohio or subject to the law of states that recognize the claims for relief filed by plaintiffs with blood serum levels of 2 parts per billion ("ppb") or more of PFOS and PFOA (combined) manufactured by the defendants. The Company was served with the suit in July 2024 and subsequently filed a motion to transfer the case to the AFFF MDL, which was denied in October 2024. In October 2024, the Company filed a motion to dismiss. In March 2026, the court denied the Company's motion to dismiss in part, held a part of the argument for a later decision, and certified a legal question to the Sixth Circuit regarding one of the Company's arguments for dismissal. The case is stayed pending a ruling by the Sixth Circuit on the Company's request for leave to appeal the certified issue.
Pennsylvania
In March 2025, a lawsuit was filed against the Company, DuPont, and the designers, manufacturers, and distributors of AstroTurf in the Philadelphia Court of Common Pleas by former Philadelphia Phillies players alleging personal injury claims allegedly resulting from exposure to PFAS and ethylene oxide in AstroTurf at Veterans Stadium. Plaintiffs’ alleged exposures date back to the 1970s. In September 2025, the Company removed the case to federal court. In October 2025, plaintiffs filed a motion to remand the case to state court, which was denied in February 2026. The plaintiffs filed a motion for reconsideration, which was denied in April 2026. In March 2026, the Company filed a motion to dismiss, which remains pending. In July 2026, the Company filed a motion to transfer the case to the AFFF MDL.
South Carolina
In March 2022, a putative class action lawsuit was filed against the Company and other defendants in South Carolina state court alleging property damage from contamination from PFAS compounds used and disposed of at a defunct textile plant in Society Hill, South Carolina and seeking both property and punitive damages. In May 2022, the case was removed to federal court. Discovery is proceeding in the putative property damage class action.
In August 2024, a companion personal injury lawsuit was filed against the Company and other defendants in South Carolina state court and the Company removed case to federal court. Before ruling on the motions to dismiss by the Company and other defendants, the federal court remanded the personal injury case to state court in April 2026. The Company re-filed a motion to dismiss in May 2026, which remains pending.
Virginia
In August 2024, a lawsuit was filed against the Company and other defendants in Virginia state court alleging that plaintiff’s decedent, a civilian firefighter, died from cancer allegedly caused by exposure to PFAS in firefighting personal protective equipment, including turnout gear. A co-defendant removed the case to federal court, and plaintiffs’ motion to remand has been fully briefed since December 2024. In April 2025, the Company was named as a defendant in a similar lawsuit in Virginia state court, which was removed to federal court by another defendant. In August 2025, the Company filed motions to transfer both cases to the AFFF MDL. In December 2025, the JPML declined to transfer these cases to the AFFF MDL. In March 2026, one of the cases was remanded to state court, and the removing defendant has appealed that order. The plaintiffs’ motion to remand the other case remains pending.
Between July 2024 and April 2025, three lawsuits were filed against the Company and other defendants in Virginia state court relating to firefighting personal protective equipment, including turnout gear. In September 2025, the Company removed those three cases to Virginia federal court and moved to transfer them to the AFFF MDL. In December 2025, the JPML declined to transfer one case to the AFFF MDL, and the Company withdrew its motions to transfer the other two cases. The plaintiffs in all three cases moved to remand to state court. Two cases were remanded to state court in March 2026 and July 2026, and the Company is appealing both orders. The plaintiffs' motion to remand the remaining case to state court remains pending.
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Wisconsin
In August 2023, a putative class action lawsuit was filed against the Company and other defendants in Wisconsin federal court by several residents of Oneida County alleging property damage resulting from PFAS contamination they attribute to waste generated from the operations of a paper mill in Rhinelander, Wisconsin that was then incorporated into biosolids. The Company’s motion to dismiss was granted in part and denied in part in June 2025. The plaintiffs' motion for class certification is due in August 2026. In June 2026, the court removed the trial date previously set for June 2027, and no new trial date has been set.
In December 2024, a putative class action lawsuit was filed against the Company in Wisconsin federal court by several private well owners near the Company's Wausau Greystone quarry alleging property damages and medical monitoring costs related to PFAS contamination. The case also includes non-class personal injury and property damage claims on behalf of select plaintiffs. In October 2025, the court set a July 24, 2026, deadline for the plaintiffs to move for class certification and set a trial date for November 2027. In March 2026, the court partially granted the Company's motion to dismiss, narrowing certain claims in the case. In June 2026, the court granted plaintiffs' motion for leave to file a third amended complaint, which eliminated the medical monitoring class and substituted a personal injury class.
Other PFAS-related Matters
Coordination with Government Authorities
The Company continues to engage with relevant federal and state agencies, including the EPA, the U.S. Department of Justice ("DOJ"), state environmental agencies, and state attorneys general, in connection with information requests, inspections, and other agency actions. The Company is in negotiations with the EPA, the DOJ, and state environmental agencies, including the Alabama Department of Environmental Management ("ADEM"), the Illinois Environmental Protection Agency ("IEPA"), and the Minnesota Pollution Control Agency ("MPCA"), regarding potential claims arising under different authorities, including the U.S. Toxic Substances Control Act of 1976 ("TSCA"), the U.S. Clean Water Act of 1972, as amended ("CWA"), the U.S. Safe Drinking Water Act of 1974, as amended ("SDWA"), and the Resource Conservation and Recovery Act ("RCRA"), related to the Company’s operations in those states. The Company cannot predict the outcomes of these matters, the actions that may be taken by the regulatory agencies, or the potential consequences to the Company.
Alabama (Decatur)
Grand Jury Matter: The Company previously operated under a 2009 consent order issued under the TSCA (“2009 TSCA Consent Order”) covering manufacture and use of two PFAS (FBSA and FBSEE) at the Decatur Facility in Alabama, and that prohibits release of these materials into “the waters of the United States.” In March 2019, after learning that these materials may have been released into the Tennessee River from specified processes at the Decatur Facility, the Company halted the manufacture, processing, and use of these materials at the Decatur Facility and voluntarily disclosed the matter to the EPA and ADEM in April 2019. During June and July 2019, the Company implemented controls intended to fully capture wastewater and treat air emissions from the specified processes. The specified processes that were the subject of the Company's April 2019 disclosure are no longer in use.
In December 2019, the Company received a grand jury subpoena from the U.S. Attorney’s Office for the Northern District of Alabama ("USAO-NDAL") seeking documents relating to, among other matters, compliance with the 2009 TSCA Consent Order and alleged unpermitted discharges into the Tennessee River from the Decatur Facility. The Company continues to cooperate with the USAO-NDAL, the DOJ, and the EPA with respect to these issues.
In parallel, the Company continues to engage with the EPA, ADEM, MPCA, and the IEPA related to potential civil claims arising out of the discharges at issue in the above-described grand jury matter and certain discharges of PFAS from the Company's Cottage Grove, Minnesota facility (the "Cottage Grove Facility") and Cordova Facility, which are described below.
Other Regulatory: The Decatur Facility discharges wastewater pursuant to a National Pollutant Discharge Elimination System ("NPDES") permit issued by ADEM. In June 2019 the Company voluntarily disclosed to the EPA and ADEM that certain monthly and quarterly reports contained incorrect values and submitted corrected information. In September 2019, the Company also disclosed to the EPA and ADEM that it had discovered that the Decatur Facility's NPDES permit did not include all PFAS identified in its discharge, and temporarily idled certain manufacturing processes at the Decatur Facility.
The Company submitted an application to ADEM to modify the NPDES permit and implemented additional wastewater treatment controls, which are now operating as the Company continues optimization efforts. ADEM and the Company are discussing the NPDES permit modification application.
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In July 2020, the Company and ADEM entered into an interim consent order ("ADEM ICO") addressing PFAS-related wastewater discharges and air emissions from the Decatur Facility. The ADEM ICO included requirements relating to ongoing operations (including notices, reporting, analytical and characterization studies, capital improvements, and remediation activities, including on-site and off-site investigations and studies). In May 2026, the Company and ADEM entered into an addendum to the ADEM ICO reflecting changed conditions at the Decatur Facility, including the exit from PFAS manufacturing, the completion of many of the requirements of the ADEM ICO, and the completed construction of an advanced wastewater treatment system at Decatur. The addendum also requires limited additional private well water sampling for certain PFAS within a four-mile radius of the Decatur Facility. Compliance with the ADEM ICO, the addendum, or any further investigations may result in additional operating costs and capital expenditures over multiple years.
Illinois/Iowa (Cordova)
The Cordova Facility discharges wastewater pursuant to a NPDES permit issued by IEPA. In November 2019, the Company disclosed to the EPA, and in January 2020 disclosed to IEPA, that the Cordova Facility's NPDES permit did not include all PFAS identified in its discharge. As noted above, the Company continues to engage with the EPA and IEPA on potential civil claims related to these discharges. The Company submitted an application to modify the NPDES permit and implemented additional wastewater treatment controls, which are now operating as the Company continues optimization efforts. IEPA and the Company are discussing the NPDES permit modification application.
In November 2022, the Company entered into an administrative consent order with the EPA under the SDWA ("SDWA ACO") requiring ongoing sampling and surveying of private and public drinking water wells near the Cordova Facility, treatment of private wells within a three-mile radius, and provision of alternate treatment or supply for the City of Camanche, Iowa's public drinking water system. The Company continues to implement the SDWA ACO in coordination with the EPA and the City of Camanche, Iowa.
In January 2025, the Company entered into a consent order ("RCRA CO") with the EPA under the RCRA requiring the Company to delineate PFAS in soil and groundwater at the Cordova Facility and a surrounding area that extends up to 1/2 mile from the Cordova Facility, and to undertake specified soil and groundwater sampling at up to 80 locations in the area extending 5 miles from the Cordova Facility. The Company continues implement the RCRA CO in coordination with the EPA.
Indiana (Hartford City)
In July 2025, the Indiana Department of Environmental Management ("IDEM") issued notices of liability requiring the Company to investigate and remediate hazardous substances, including PFAS, at the Company’s Hartford City, Indiana facility and nearby off-site properties, along with related information requests. The Company responded to the information requests in January 2026 and is engaging with IDEM regarding site investigation work plans.
Kentucky (Cynthiana)
In May 2025, the Company received a subpoena and a letter from the Kentucky Energy and Environment Cabinet ("KEEC") seeking information regarding PFAS and alleged hazardous substances used or released at the Company's Cynthiana, Kentucky facility and directing the Company to develop a site characterization plan to investigate suspected PFAS releases. The Company is engaging with KEEC regarding these issues.
Minnesota
Minnesota 2018 Natural Resources Defense Settlement: As previously disclosed, in the first quarter of 2018, the Company recorded a pre-tax charge of $897 million (inclusive of legal fees and related obligations) in connection with a settlement with the State Minnesota relating to PFAS in certain natural resources in the state ("MN NRD Settlement"). The MN NRD Settlement established a fund intended to enhance drinking water quality in the East Metropolitan Area of Minneapolis-St. Paul, with projects subject to approval by MPCA and required to be reasonable and necessary. If the fund is depleted, additional funding could be sought from the Company. MPCA and the Company disagree regarding whether certain approved projects satisfy the MN NRD Settlement's conditions and how certain projected long-term operations and maintenance costs should treated in assessing whether the fund is depleted. The Company initiated mediation under the MN NRD Settlement in February 2025, and that process remains ongoing.
Cottage Grove: The Cottage Grove Facility discharges wastewater pursuant to a NPDES permit issued by MPCA. In early 2020, the Company disclosed to the EPA and MPCA that the Cottage Grove Facility's NPDES permit did not include all PFAS identified in its discharge. The Company continues to engage with the EPA and MPCA on potential civil claims related to these discharges. In July 2025, the Company commenced operation of a new wastewater treatment system to address PFAS.
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The Company continues to work with MPCA under the previously disclosed May 2007 Settlement Agreement and Consent Order ("SACO") addressing certain PFAS in soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Cottage Grove Facility. The SACO includes obligations relating to evaluating PFAS releases and response actions, including treatment or alternative drinking water where concentrations exceed applicable Minnesota Department of Health ("MDH") health-based values or health risk limits for certain PFAS, remediation of identified sources of other PFAS not controlled by actions addressing PFOA and PFOS, and information-sharing with MPCA. In January 2024, MDH issued updated, more stringent, health-based values for PFOA and PFOS, and in October 2024, MDH proposed health risk limits for those PFAS. The Company continues to evaluate potential impacts of these developments on its SACO obligations. The Company also continues to implement the previously disclosed remedial decisions adopted by MPCA in 2008 (Woodbury and Oakdale) and 2009 (Cottage Grove Facility).
In January 2021, MPCA issued a notice of violation addressing the presence of PFAS in wastewater and requiring certain improvements related to the wastewater discharge system at the Cottage Grove Facility ("January 2021 Notice"). The Company continues to work with MPCA regarding the notice.
In June 2022, MPCA directed the Company to address PFAS in its stormwater discharges from the Cottage Grove Facility. The Company coordinated with MPCA to develop a plan that is in a MPCA order issued in December 2022, which the Company is working to implement ("December 2022 MPCA Order").
In May 2025, MPCA issued a final NPDES permit for the Cottage Grove Facility, effective June 1, 2025. The permit includes ultra-low effluent limits for certain PFAS, including limits below current quantification levels for some compounds, and also includes low, but measurable, limits for demonstrating permit compliance. In June 2025, the Company appealed elements of the NPDES permit not related to the discharge limits for PFAS. In June 2026, the Minnesota Court of Appeals issued an order ruling in favor of the Company in part, in favor of MPCA in part, and remanding to MPCA for further proceedings. If the Cottage Grove Facility is unable to meet permit requirements, it could have a significant adverse impact on the Company's normal operations and the Company's businesses that receive products and other materials from the Cottage Grove Facility, some of which may not be available in similar quantities or at all from the Company's other facilities, which could in turn impact the Company's ability to fulfill supply obligations to its customers.
In April 2026, the State of Minnesota by and through MPCA filed a lawsuit against the Company seeking civil penalties and injunctive relief related in part to alleged PFAS releases at and from the Cottage Grove Facility, and relating in part to the January 2021 Notice, the December 2022 MPCA Order, and the SACO. The Company has removed the lawsuit to federal court and has moved to transfer it to the AFFF MDL. The case has been stayed pending a transfer ruling.
Fairmont: In July 2025, MPCA issued a notice of violation alleging stormwater and fire-water discharges containing PFAS at the Company's Fairmont, Minnesota facility and requiring corrective actions, including a stormwater action plan and a soil and groundwater investigation. The Company responded contesting the alleged violations and provided a plan to address the requested corrective actions. The Company continues to engage with MPCA regarding the alleged violations.
Hutchinson: In March 2023, MPCA issued a notice of violation alleging stormwater discharges containing PFAS at the Company's Hutchinson, Minnesota facility. The Company continues to engage with MPCA regarding the alleged violations.
Wisconsin (Wausau)
In August 2024, the Company received an EPA request for information under CERCLA seeking information and documents regarding PFAS use and disposal at the Company's Greystone facility ("Greystone Facility") and its downtown facility in Wausau, Wisconsin. The Company provided responsive information and, in October 2025, the EPA informed the Company it had not identified an immediate need for additional action.
In March 2025, the Wisconsin Department of Natural Resources ("WDNR") notified the Company that it determined there had been a release of hazardous substances from the Greystone Facility based on PFAS detected in groundwater and ordered the Company to submit a site investigation work plan. In June 2025, the Company submitted an initial work plan, which WDNR has approved. In January 2026, the Company reported initial sampling results to WDNR. In April 2026, the Company submitted a site investigation report to WDNR, and is continuing to engage with WDNR on this matter.
PFAS Litigation, Investigations, and Other Activities Outside the United States
Australia
In May 2025, the New South Wales Environmental Protection Agency issued a notice requiring 3M Australia Pty Ltd. ("3M Australia") to investigate and clean up PFAS contamination at a site formerly leased by 3M Australia. The Company is working with the regulator regarding the notice, has obtained limited access from the site owner to conduct investigation activities under the notice, and is proceeding with those activities. The Company has also been conducting sampling of adjacent properties.
The Company is aware of a writ of summons filed against the Company and its subsidiary, 3M Australia Pty Ltd, in the Supreme Court of Victoria in November 2024 on behalf of individuals with connections to property allegedly impacted by Company products containing PFAS. The Company has not been served with the writ, but the service period has been extended to December 8, 2026.
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In May 2026, the Commonwealth of Australia filed a lawsuit against the Company and its subsidiary, 3M Australia, in the Victoria Registry of the Federal Court of Australia. The lawsuit seeks damages related to alleged AFFF contamination at Australian military bases, including compensation for amounts previously paid by the Commonwealth to settle prior lawsuits related to AFFF use as well as past and future cleanup costs.
Canada
Since December 2023, numerous PFAS-related actions have been filed against the Company, 3M Canada Company - Compagnie 3M Canada ("3M Canada"), and other defendants in Canada. As of June 30, 2026, a total of eighteen PFAS-related actions were pending in Canadian courts in British Columbia, Manitoba, New Brunswick, Newfoundland, Ontario, and Quebec. These matters include class and non-class claims by individuals, municipalities, federal, provincial, and territorial governments, Indian Bands, and other entities for alleged impacts from AFFF and other PFAS-containing products, including property, drinking water, and other natural resources contamination, personal injury, and other damages. These actions remain in early stages.
Europe
Belgium
PFAS manufacturing in Zwijndrecht, Antwerp, Belgium: 3M Belgium, a subsidiary of the Company, owns and operates a facility in Zwijndrecht, Antwerp, Belgium ("Zwijndrecht Facility") where PFAS manufacturing ceased in 2024 as part of the Company’s global exit from PFAS manufacturing.
3M Belgium continues to engage with the Public Flemish Waste Agency ("OVAM") and other authorities to investigate and remediate PFAS impacts associated with the historical operations at the Zwijndrecht Facility, including with respect to soil, groundwater, wastewater treatment, and a nearby ring road construction project in Antwerp ("Oosterweel Project"). Over the years, regulatory proceedings have included permit reviews, appeals, parliamentary investigations, and ongoing remediation oversight.
In August 2024, the province of Antwerp approved 3M Belgium's latest application for modifying its water discharge permit related to certain PFAS parameters. Following an appeal against the permit by a local non-profit organization, in March 2025, the Flemish government confirmed the permit. The Flemish government's confirmation was judicially appealed by a Belgian non-profit organization. 3M Belgium cannot predict the outcome of such judicial appeal and is therefore unable to assess whether the current Zwijndrecht Facility wastewater treatment system, or currently conceived additional treatment technology, will be able to meet the ultimately determined permit limits with respect to ongoing non-PFAS manufacturing at the Zwijndrecht Facility. It is possible that the outcome of the appeal or future permit amendments will alter discharge limits and will require additional actions to reduce legacy sources of PFAS, or that the wastewater treatment system there will be unable to meet future discharge limits. If 3M Belgium is unable to meet the eventual discharge limits, it could have a significant adverse impact on 3M Belgium's normal operations and the Company's businesses that receive products and other materials from the Zwijndrecht Facility, some of which may not be available or available in similar quantities from the Company's other facilities, which could in turn impact these businesses' ability to fulfill supply obligations to their customers.
Soil remediation and environmental law compliance in Belgium:
Flemish government actions and the 2022 Flemish Remediation Agreement: In July 2022, 3M Belgium entered into a remediation agreement with the Flemish government ("Flemish Remediation Agreement") under which 3M Belgium committed €571 million to address issues associated with PFAS relating to the Zwijndrecht Facility, including enhancements to site discharge control technologies, support for qualifying local commercial farmers impacted by restrictions on sale of agricultural products, ongoing off-site descriptive soil investigations, amounts to address certain identified priority remedial actions (which may include supporting additional actions as required under the Decree on Soil Remediation and Soil Protection ("Flemish Soil Decree")), funds to be used by the Flemish government in its sole discretion in connection with PFAS emissions from the Zwijndrecht Facility, and support for the Oosterweel Project in cash and support services. The Flemish Remediation Agreement contains certain provisions ending litigation and providing certain releases of liability for 3M Belgium, while preserving the Flemish government's regulatory authority. In the first half of 2022, the Company recorded a pre-tax charge of approximately $500 million in connection with the Flemish Remediation Agreement.
The Flemish government requested a series of technical meetings with 3M Belgium regarding the scope and implementation of 3M Belgium’s commitments under the Flemish Remediation Agreement. 3M Belgium is continuing regular interactions with the government on these topics and discussions to address issues raised by both the Flemish Government and 3M Belgium are ongoing.
Soil/groundwater remediation: Consistent with Flemish environmental law, 3M Belgium has submitted to OVAM required descriptive soil investigations (“DSIs”), conducted by an accredited third-party soil remediation expert, to assess areas of potential PFAS contamination that may require remediation. In the fourth quarter of 2025, OVAM required 3M Belgium to submit an additional DSI relating to ultra-short chain PFAS by June 2026, which was timely submitted.
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The accredited third-party soil remediation expert has prepared multiple remedial action plans ("RAPs") that have been approved by OVAM and implementation activities are underway. 3M Belgium also submitted additional required RAPs, which OVAM deemed to be not in conformity with the Flemish Soil Decree. OVAM provided extensions of time for 3M Belgium to revise and re-submit each RAP OVAM found to be non-conforming. In May 2026, 3M Belgium submitted a revised RAP for soil and groundwater at the site. 3M Belgium representatives continue to engage with the Flemish authorities regarding further soil remediation and related groundwater actions in connection with the Flemish Soil Decree.
Changes to Flemish Soil Decree: Certain regulatory decisions and executive actions relating to remediation standards under the Flemish Soil Decree have been challenged, annulled, withdrawn, or repealed and remain subject to judicial or administrative review. In January 2026, 3M learned that one or more non-governmental organizations ("NGOs") appealed the Flemish government's withdrawal of a temporary action framework setting soil and groundwater values for evaluating PFAS remediation. 3M Belgium is unable to predict the ultimate outcome of this regulatory review process and any changes to existing standards could impose additional financial and remedial obligations on 3M Belgium depending on the standards ultimately adopted.
In May 2024, the Flemish government adopted legislation expanding OVAM's authority to require financial assurances and allocate remediation costs to various parties, which could result in additional, unknown financial obligations for 3M Belgium depending on future regulatory determinations. To date, no such financial assurances or allocation of remediation costs have been sought or imposed on 3M Belgium.
In May 2026, the Flemish government proposed draft legislation that, if ultimately enacted, would empower the relevant executive branch agency in the Flemish Region to seek, in certain circumstances such as the financial insecurity of a Belgian company, to hold non-Belgian parent or affiliate entities of Belgian companies jointly and severally liable for soil remediation costs. The proposal is subject to threshold legal review by the Belgian Council of State’s Legislative section.
Other litigation: As of June 30, 2026, twenty-two actions against 3M Belgium were pending in Belgian civil courts, and 3M Belgium has also received pre-litigation notices from others in Belgium indicating potential claims. These matters include claims by individuals, municipalities, and other entities for alleged PFAS impacts, including soil, wastewater, and rainwater contamination, nuisance, tort liability, personal injury, and requests for injunctive relief.
While most of the actions are in early stages, one matter resulted in provisional damages awards of €500 to each of four family members living near the Zwijndrecht Facility. Approximately 1,400 individuals have petitioned to intervene in a "follow-on action" primarily alleging nuisance claims. The Belgian court has not yet determined whether to permit the intervention. After a February 2026 hearing, the court ordered additional briefing for an additional hearing scheduled to be held in November 2026.
In December 2023, 3M Belgium, 3M Company, and several additional 3M entities were named in a lawsuit identifying approximately 1,400 individuals as plaintiffs. The lawsuit, which is separate from the follow-on action described in the preceding paragraph, alleges defective products and unlawful acts, including by 3M entities as directors or shareholders of 3M Belgium, among other claims. At an introductory hearing in November 2024, the case was stayed with no new deadlines established.
In June 2024, Lantis, an entity involved in the Oosterweel Project, filed a lawsuit against 3M Belgium seeking damages related to soil storage costs and other alleged claims. The parties resolved certain claims in November 2025, while the remaining claims are proceeding, with all pre-hearing submissions scheduled to be completed by November 2026.
In May 2026 and June 2026, the Company, 3M Global Capital Limited, and 3M EMEA GmbH were added to two existing lawsuits against 3M Belgium brought by EVAL Europe N.V. and NV Borealis Antwerpen, two companies neighboring the Zwijndrecht facility, seeking damages for PFAS remediation on their sites. Separate initial hearings are set for November 2026.
Other investigations: As previously disclosed, the Company is aware of criminal complaints filed against 3M Belgium with an Antwerp investigatory judge alleging, among other things, violations of environmental care obligations relating to unlawful waste abandonment. Additional parties reportedly joined the complaints. 3M Belgium has not been served with any of the complaints and has been cooperating with the investigation.
Germany
Dyneon Divestiture: In June 2026, the Company's German subsidiary, 3M Deutschland GmbH (“3M Deutschland”) completed the divestiture of its subsidiary, Dyneon GmbH (“Dyneon”). Dyneon manufactured PFAS prior to the Company’s exit from PFAS manufacturing by the end of 2025. Under the terms of the transaction, 3M Deutschland remains responsible for PFAS-related claims arising from activities conducted prior to the divestiture of Dyneon, and is coordinating the response to such claims, including those described below.
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Government interactions related to PFAS manufacturing in Gendorf, Germany: Prior to the divestiture, Dyneon and prior operators of the Gendorf, Germany facility ("Gendorf Facility") commissioned a voluntary feasibility study by an independent soil consultant evaluating the potential feasibility, environmental impact, approaches, and related costs for remediating PFOA in soil and groundwater around the Gendorf Facility. The study was shared with the competent German authority, which provided feedback and requested additional investigations and measures. Dyneon agreed to sponsor environmental studies related to potential soil disposal solutions. A local authority indicated that Dyneon should contribute to those soil disposal solutions.
In July and August 2025, authorities issued orders requiring Dyneon to plan a hydraulic barrier to capture a PFOA plume in groundwater originating from the Gendorf Facility and to assess remediation measures in and around the site. In August and September 2025, Dyneon appealed these orders and enforceability is suspended by this appeal. Despite the suspension of those orders, in June 2026, Dyneon received a new administrative order requiring it to install the hydraulic barrier that is the subject of the suspended planning order. Dyneon intends to appeal the order, which is likely to be suspended pending the outcome of that appeal. Following the Dyneon divestiture, 3M Deutschland will continue discussions with authorities regarding potential future remedial actions related to the Gendorf Facility.
Litigation: In July 2025, Dyneon received pre-litigation notices from two German cities and a private citizen seeking payment for alleged costs associated with PFAS-impacted soil encountered during construction works.
The Netherlands
In May 2023, the government of the Netherlands sent 3M Belgium a notice of liability stating that it believes 3M Belgium to be liable for damages related to alleged PFAS contamination in the Netherlands. The notice purports to identify claims by the Dutch government and references potential damages to other parties. 3M Belgium continues to meet with representatives of the Dutch government to discuss the issues raised in the notice as well as with parties whose interests the Dutch government may also represent.
Certain private groups in the Netherlands have indicated that they may bring legal claims on behalf of one or more parties for purported damages allegedly caused by PFAS. In December 2024, the Dutch Fishermen's Association, on behalf of an individual fisherman, filed a lawsuit in a Dutch court naming 3M Belgium and the Company as defendants, alleging that PFAS from 3M Belgium’s Zwijndrecht Facility impacted certain aspects of the Dutch fishing industry, and seeking damages from alleged PFAS contamination. A hearing for that matter is scheduled for the fourth quarter of 2026.
Other Environmental Matters
In July 2018, the Company, along with more than 120 other companies, was served with a complaint filed by Occidental Chemical Corporation ("Occidental") seeking cost recovery and contribution relating to remediation of approximately eight miles of the Lower Passaic River in New Jersey. Occidental alleges that it agreed to design and fund an estimated $165 million sediment removal and capping remedy addressing eight chemicals of concern, including PCBs and dioxins, and seeks to allocate those costs among the defendants, including the Company. The Company’s alleged connection to the site relates to its historical use of two commercial drum conditioning facilities in New Jersey. The Company's potential contribution, if any, has not been determined.
In January 2025, the EPA issued a notice of violation that was received by the Cottage Grove Facility in February 2025. The notice is based on a 2021 EPA RCRA inspection and asserted observations relating to hazardous waste management practices for certain containers and tanks and related recordkeeping. Certain items were corrected during the inspection, and the Company responded to the notice in March 2025. In May 2025, the EPA issued a notice of violation and opportunity to confer. The Company is cooperating with EPA.
In July 2024, the Company received a violation notice from IEPA alleging regulatory violations relating to certain air emissions of volatile organic material at the Cordova Facility. The Company has responded to the violation notice.
In January 2026, the Company received a violation notice from IEPA alleging regulatory violations tied to emissions of volatile organic material at the Cordova Facility. The Company responded to the notice. In April 2026, the Company received notice from IEPA that it did not accept the terms proposed by the Company for a compliance commitment agreement and in May 2026 the Company received a notice of intent to pursue legal action. The Company continues to cooperate with IEPA.
Environmental Liabilities
The Company periodically evaluates contingent liabilities associated with the environmental matters and litigation described above to determine whether losses are probable and reasonably estimable based on historical experience, ongoing developments, and discussions regarding potential resolutions. For the matters described under "Environmental Matters", unless otherwise described below, no liability has been recorded because the Company believes a loss is not both probable and reasonably estimable and the Company is unable to estimate a possible loss or range of possible loss at this time.
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During the first six months of 2026, the Company increased its accrual for PFAS-related environmental matters primarily for interest accretion associated with the PWS Settlement and made related payments. As of June 30, 2026 and December 31, 2025, the Company had recorded “other environmental liabilities” of $7.4 billion ($2.9 billion within other current liabilities and $4.5 billion within other liabilities on the Company’s consolidated balance sheet) and $7.7 billion ($0.7 billion within other current liabilities and $7.0 billion within other liabilities on the Company’s consolidated balance sheet), respectively. These accruals represent the Company’s estimate of probable losses associated with the PFAS-related environmental matters described above. The Company is unable to estimate a possible loss or range of possible loss in excess of the amounts accrued at this time.
As of June 30, 2026 and December 31, 2025, the Company's recorded liabilities for estimated costs for non-PFAS environmental matters were not significant. These matters relate to the investigation, treatment, or removal of hazardous substances at current or former Company manufacturing sites and certain third-party sites. The Company evaluates each site quarterly and records remediation liabilities on an undiscounted basis when costs are probable and reasonably estimable, generally no later than completion of feasibility studies or commitment to a remediation plan. Estimates are based primarily on internal and third-party environmental studies, the extent and nature of contamination, expected remedial approaches, and participation and financial viability of other potentially responsible parties. The Company adjusts recorded liabilities as additional information becomes available or circumstances change. The Company expects to pay the amounts recorded over remediation periods that currently extend up to approximately 20
Estimating environmental compliance and remediation costs involve significant uncertainties, including evolving scientific and regulatory standards, changes in environmental laws, permissible contaminant levels, or enforcement policies, development of new analytical or remediation technologies, allocation of liability among responsible parties, and the financial condition of co-responsible parties and indemnitors. For sites where remediation activities are substantially complete and remaining obligations primarily relate to operation, maintenance, or monitoring, the Company believes the risk of loss in excess of recorded amounts would not be material to the Company’s consolidated results of operations or financial condition. For sites where remediation activities remain ongoing, the Company cannot estimate a possible loss or range of possible loss in excess of recorded accruals due to the uncertainties described above.
Non-Environmental Product Matters
Impact of Certain Prior Transactions
On April 1, 2008, the Company acquired Aearo Technologies (“Aearo”) in a stock purchase transaction. Aearo manufactured and sold various products, including personal protective equipment such as eye, ear, head, face, fall, and certain respiratory protection products. The Company is subject to legal proceedings relating to both Aearo’s pre-acquisition and post-acquisition operations. Two significant categories of legal proceedings involving the Company and Aearo relate to: Aearo’s respirator business and Aearo’s Dual-Ended Combat Arms – Version 2 Earplugs products. These legal proceedings, including agreements among the Company, Aearo, and other parties that affect the allocation of potential liability, are described below.
Non-Aearo Respirator Mask/Asbestos Litigation
Background of Non-Aearo Respirator Mask/Asbestos Litigation
As of June 30, 2026, the Company is a named defendant, together with multiple co-defendants, in numerous lawsuits pending in various courts that collectively involve approximately 4,000 individual claimants, compared to approximately 3,700 individual claimants with actions pending as of December 31, 2025.
The vast majority of resolved or pending lawsuits and claims allege use of the Company’s mask or respirator products and seek damages for alleged personal injury arising from occupational exposures to asbestos, silica, coal mine dust, or other occupational dusts found in products manufactured by other defendants or generally present in the workplace. A minority of the resolved or pending lawsuits and claims allege personal injury from occupational exposure to asbestos from products previously manufactured by the Company, which are often unspecified, as well as products manufactured by other defendants or, in some cases, exposure at Company premises.
The Company’s current volume of new and pending matters is substantially lower than at the peak of filings in 2003. Claims alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, are expected to represent a greater proportion of total claims than in prior periods. Over more than two decades, the Company has prevailed in nineteen of the twenty cases tried to a jury.
Based on prior trial outcomes, the Company believes that its respiratory protection products perform effectively when used as intended and that claimants have been unable to establish a causal connection between their alleged medical conditions, even if significant, and the Company’s respiratory protection products. Nonetheless, the Company’s litigation experience indicates that claims alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, are costlier to litigate and resolve than the claims of unimpaired persons. As a result, the Company expects the average cost of resolving pending and future claims on a per-claim basis to remain higher than it experienced in prior periods dominated by medically unimpaired claimants.
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In 2003, West Virginia, through its Attorney General, filed a complaint, amended in 2005, against the Company and two other manufacturers of respiratory protection products in the Circuit Court of Lincoln County, West Virginia. The amended complaint seeks substantial, but unspecified compensatory damages, primarily for reimbursement of workers' compensation and healthcare costs allegedly incurred for all workers with occupational pneumoconiosis, as well as unspecified punitive damages. In October 2019, the court severed the State’s unfair trade practices claim, which seeks civil penalties of up to $5,000 per violation under the West Virginia Consumer Credit and Protection Act ("WVCCPA") based on allegations that certain statements regarding the Company's 8710 respirators, last sold in the United States in 1998, were misleading. An initial bench trial commenced in January 2025 and remains ongoing with periodic trial days. Issues presented include the statute of limitations, the applicable penalty period under the WVCCPA, and whether the 8710 respirators performed as advertised. The amount, if any, of civil penalties would be determined in subsequent proceedings. An expert witness retained by the State has estimated that the Company sold over five million respirators in West Virginia during the relevant period, and the State has alleged that each respirator sold constitutes a separate violation under the WVCCPA. The Company disputes these estimates and the State's interpretation of what constitutes a separate violation under the WVCCPA. The Company has asserted multiple defenses, including that its marketing did not violate the WVCCPA, and that the claims are time-barred under the applicable statute of limitations. No liability has been recorded for this matter because the Company believes a loss is neither probable nor reasonably estimable at this time, and is unable to estimate a possible loss or range of loss due to unresolved factual and legal issues.
Non-Aearo Respirator Mask/Asbestos Liabilities
The Company regularly evaluates its respirator mask/asbestos liabilities based on a comprehensive review of current and historical claims data, including the number and nature of pending claims, the mix of alleged exposure substances between asbestos, silica, coal, or other occupational dusts, the mix of claims alleging exposures relating to use of the Company’s mask or respirator products versus claims relating to asbestos-containing products allegedly manufactured by the Company, defense and resolution costs, and trends in claim filings and costs. The Company also engages a third party with expertise in analyzing such data to assist in estimating the costs to defend and resolve pending and future claims.
Based on this analysis, the Company records accruals reflecting its estimate of probable losses. Developments that could affect these estimates include, changes in claim volume or mix, defense and resolution costs, trial and appellate outcomes, applicable law and procedure, and financial condition of co-defendants and insurers.
As of June 30, 2026 and December 31, 2025, the Company's accruals for non-Aearo respirator mask/asbestos liabilities and defense costs were $456 million and $473 million, respectively. These accruals represent the Company’s estimate of probable loss and an estimation period for future claims extending through approximately 2050. The Company cannot estimate the amount or upper end of the range by which actual liabilities may exceed recorded accruals due to inherent uncertainty in projecting future claims, the application of joint and several liability principles, and the potential impact of future developments.
Aearo Respirator Mask/Asbestos Litigation
Background of Aearo Respirator Mask/Asbestos Litigation
Aearo manufactured and sold certain respiratory protection products prior to its acquisition by the Company. Aearo, together with certain prior owners of its respirator business and, in some cases, the Company is named as a defendant in numerous lawsuits in various courts alleging personal injury from occupational exposures to asbestos, silica, coal mine dust, or other occupational dusts, generally involving workplace conditions or products manufactured by other defendants.
Aearo Respirator Mask/Asbestos Liabilities
As of June 30, 2026 and December 31, 2025, the Company, through its Aearo subsidiary, recorded accruals of $57 million and $59 million, respectively, for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related, and coal mine dust claims. Responsibility for defense costs, settlements, and judgments is shared among Aearo and other parties and their insurers pursuant to an informal arrangement based on the number of years each company sold applicable respiratory products and the years of exposure alleged by the plaintiff.
Aearo’s potential liability is further limited by a 1995 agreement with Cabot Corporation ("Cabot"), under which Cabot retains responsibility for certain claims involving respirators sold prior to July 11, 1995, subject to Aearo paying a quarterly $100,000 fee and Cabot being able to meet its obligations in these matters. Under this arrangement, Aearo's exposure is generally limited to claims alleging exposures on or after January 1, 1997. To date, Aearo has elected to continue participating in this arrangement.
38
Future developments, including changes in claim volume, costs, legal outcomes, allocation among co-defendants, or the financial viability of payor parties and insurers, could materially affect Aearo's liabilities and cause the actual amount of these liabilities for existing and future claims to be significantly larger than the amount accrued. Due to these uncertainties, the Company cannot estimate the amount or range of amounts by which Aearo’s liabilities may exceed recorded accruals.
Combat Arms Earplugs Litigation
Background of Combat Arms Earplugs Litigation
Aearo manufactured and sold Dual-Ended Combat Arms – Version 2 Earplugs ("CAE") beginning in approximately 1999. Following the Company's acquisition of Aearo in 2008, the Company sold CAE until they were discontinued in 2015. The Company and Aearo believe the CAE were effective and safe when used properly, but faced litigation from a significant number of claimants in a consolidated multidistrict litigation ("CAE MDL") in U.S. District Court for the Northern District of Florida ("CAE MDL Court") and a coordinated state court proceeding in the 4th Judicial District, County of Hennepin, Minnesota.
In August 2023, the Company, Aearo, and related entities entered into a settlement arrangement (as amended, the “CAE Settlement”), intended to resolve substantially all existing and potential claims related to the CAE in the CAE MDL and coordinated Minnesota state court proceeding. The CAE Settlement was structured to promote broad claimant participation and does not constitute an admission of liability or wrongdoing.
Under the CAE Settlement, the Company agreed to contribute up to $6.0 billion between 2023 and 2029, subject to claimant participation thresholds being met and the Company receiving a full release of claims involving the CAE.
In March 2024, the Company announced that, claimant participation rates exceeded 99 %, which exceeded the required 98 % participation threshold. As a result, the Company commenced payments pursuant to the payment schedule in the CAE Settlement. In September 2025, the CAE MDL Court confirmed that all cases in the CAE MDL had been resolved as of that time. Other litigation may continue or be filed inside or outside the CAE MDL, including in international jurisdictions. For example, the Company is aware of a writ of summons filed in Australia and has received a Letter Before Action in the United Kingdom, both on behalf of purported users of the CAE.
Combat Arms Earplugs Liabilities
As a result of the CAE Settlement, the Company recorded a pre-tax charge of $4.2 billion in the third quarter of 2023, reflecting the discounted present value of the Company's $5.3 billion pre-tax contributions to the CAE Settlement (discounted at an estimated 5.6 % interest rate at the settlement time), net of the Company's then-existing accrual of $1.1 billion related to this matter.
During the first six months of 2026, the Company increased its existing accrual for CAE primarily for interest accretion on the CAE Settlement and made related payments. As of June 30, 2026 and December 31, 2025, and the Company had accrued liabilities related to the CAE litigation of $1.9 billion ($1.0 billion within other current liabilities and $0.9 billion within other liabilities on the Company’s consolidated balance sheet) and $2.4 billion ($1.4 billion within other current liabilities and $1.0 billion within other liabilities on the Company’s consolidated balance sheet), respectively. These accruals represent the Company’s estimate of probable losses associated with the CAE litigation. The Company is unable to estimate a possible loss or range of possible loss in excess of the amounts accrued at this time.
Watson Grinding
The Company is a defendant in proceedings in Texas state court under a master docket relating to the January 2020 explosion at a Watson Grinding facility in Houston, Texas. Over 1,900 claimants allege claims against multiple defendants. The claims against the Company relate to services on gas detection devices provided by a former subsidiary, Detcon, Inc., which the Company sold in August 2019. Jury trials took place in June 2025, November 2025, and April 2026, and additional trials are scheduled in 2026. In the June 2025 trial, a jury determined the Company was partially liable. In October 2025, the Company appealed the judgment entered following the June 2025 trial, and that appeal remains pending. In the November 2025 trial, a jury determined the Company was partially liable and, in June 2026, the Company's post-trial motions were denied. In June 2026, the Company appealed the judgment entered following the November 2025 trial, and that appeal remains pending. In the April 2026 trial, a jury determined the Company was not liable in connection with the Watson Grinding facility explosion. No liability has been recorded for any of these judgments because the Company believes a loss is neither probable nor reasonably estimable at this time, and is unable to estimate a possible loss or range of loss due to unresolved factual and legal issues.
Other Matters
In May 2023, an incident at the Company's Prairie du Chien, Wisconsin facility resulted in an employee fatality. The U.S. Department of Labor’s (“DOL”) Occupational Safety and Health Administration (“OSHA”) initiated an investigation after the Company reported the incident. In November 2023, the DOL announced that it issued two citations to the Company alleging willful safety violations. In September 2024, the Company entered into a settlement agreement with OSHA and the DOL relating to the incident that included an immaterial payment amount and did not include a finding of willful safety violations.
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In October 2024, the Company received a grand jury subpoena from the U.S. Attorney’s Office for the Western District of Wisconsin seeking records relating to, among other matters, the Prairie du Chien facility, the incident, workplace injuries at Prairie du Chien and certain other Company facilities, and OSHA inspections at other Company facilities. The Company will continue to cooperate with the investigation.
Insurance Recoveries
The Company is pursuing insurance recoveries to offset a portion of its liabilities, including those described above. For respirator mask/asbestos, CAE, and PFAS-related litigation and liabilities, recovery efforts are ongoing through litigation in U.S. courts, arbitration proceedings, mediations, and negotiations with insurers.
During the three and six months ended June 30, 2026, the Company recorded insurance recovery benefits of $13 million and $290 million, respectively, related to respirator mask/asbestos, CAE, and PFAS-related matters. During the three and six months ended June 30, 2025, the Company recorded insurance recovery benefits of $59 million and $85 million, respectively, related to respirator mask/asbestos, CAE, and PFAS-related matters. Under the CAE Settlement, insurance recoveries under relevant policies are contributed to the qualified settlement fund as part of the settlement consideration.
Note 16. Business Segments
3M’s businesses are organized and managed in three business segments: Safety and Industrial; Transportation and Electronics; and Consumer — based on differences in markets, products, technologies and services. These segments bring together related 3M technologies, enhance innovation and provide efficient resource sharing. As an integrated enterprise, 3M has substantial intersegment cooperation, cost allocations and inventory transfers. Accordingly, management does not represent that these segments, if operated independently, would report the operating income information shown.
3M discloses business segment operating income as its measure of segment profit, which is reconciled to both total 3M operating income and income before taxes. This measure excludes certain expenses and income not allocated to business segments (as described below in “Corporate”). Business segment disclosures consider information used by/provided to 3M's CODM, who is the chief executive officer. The CODM uses business segment operating income to allocate resources in the planning and forecasting process and in reviews of results and overall market activity.
In the first and second quarters of 2026, the measure of segment operating performance and segment composition used by the CODM changed. As a result, 3M’s disclosed measure of segment profit and other segment-related amounts were updated to reflect these changes for all periods presented. The changes include the following items now reflected within Corporate:
•Effective first quarter 2026—manufactured PFAS products activity and net costs for respirator mask/asbestos litigation special items: These special items were moved into Corporate from the Transportation and Electronics segment and Safety and Industrial segment, respectively.
•Effective second quarter 2026—business acquisition-related costs: These costs are now reflected as a Corporate special item rather than within reportable business segment operating income. There were no such material costs in prior periods presented.
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Business Segment Information
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| Net sales (millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Safety and Industrial | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Transportation and Electronics | ||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Total reportable business segment net sales | ||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||
| Total Company | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Significant segment expenses and operating performance (millions) | ||||||||||||||||||||||||||||||||
| Safety and Industrial | ||||||||||||||||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
| Research, development and related expenses | ||||||||||||||||||||||||||||||||
| Safety and Industrial operating income | ||||||||||||||||||||||||||||||||
| Transportation and Electronics | ||||||||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
| Research, development and related expenses | ||||||||||||||||||||||||||||||||
| Transportation and Electronics operating income | ||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
| Research, development and related expenses | ||||||||||||||||||||||||||||||||
| Consumer operating income | ||||||||||||||||||||||||||||||||
| Total reportable business segment operating income | ||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||
| Corporate-level (expense) income | ||||||||||||||||||||||||||||||||
| Corporate special items: | ||||||||||||||||||||||||||||||||
| Net costs for significant litigation and PFAS exit | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Business acquisition-related costs | ( | ( | ||||||||||||||||||||||||||||||
| (Loss) gain on business divestitures | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Manufactured PFAS products | ( | ( | ( | |||||||||||||||||||||||||||||
| Transformation costs | ( | ( | ||||||||||||||||||||||||||||||
| Total Corporate | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Total Company operating income | ||||||||||||||||||||||||||||||||
| Other expense/(income), net | ( | |||||||||||||||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||
| Depreciation and amortization (millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Safety and Industrial | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Transportation and Electronics | ||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Capital expenditures (millions) | ||||||||||||||||||||||||||||||||
| Safety and Industrial | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Transportation and Electronics | ||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||
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| Assets (millions) | June 30, 2026 | December 31, 2025 | ||||||||||||||||||
| Business segment assets: | ||||||||||||||||||||
| Inventories | ||||||||||||||||||||
| Safety and Industrial | $ | $ | ||||||||||||||||||
| Transportation and Electronics | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| Total business segment assets | ||||||||||||||||||||
| All other current assets | ||||||||||||||||||||
| Total non-current assets | ||||||||||||||||||||
| Total assets | $ | $ | ||||||||||||||||||
"Business segment assets" represent inventories, based on the extent of business segment information regularly provided to 3M's CODM.
Business segment depreciation reflected above is based on the underlying usage of assets and allocated depreciation.
Corporate: Outside of 3M's reportable segments, 3M has Corporate which is not a reportable business segment as it does not meet the segment reporting criteria. Because Corporate includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.
Corporate operating income (loss) includes:
•Corporate-level (expense) income includes:
◦certain enterprise and governance activities resulting in unallocated corporate costs and other activity or costs that 3M may choose not to allocate directly to its business segments,
◦commercial activity with Solventum following its April 2024 spin-off from 3M, as well as certain operations of 3M’s former health care business segment that were retained by 3M, and
◦transition arrangement agreements (e.g., fees charged by 3M, net of underlying costs) related to divested businesses, including those related to Solventum.
•Corporate special items include, for the periods presented:
◦net costs for significant litigation and PFAS exit impacting operating income (loss),
◦business acquisition-related costs,
◦manufactured PFAS products activity,
◦(loss) gain on business divestitures (see Note 3), and
◦transformation program restructuring (see Note 5) and related charges.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of 3M’s financial statements with a narrative from the perspective of management. The MD&A should be read in conjunction with 3M's consolidated financial statements and the accompanying notes to the consolidated financial statements. 3M’s MD&A is presented in the following sections:
•Overview
•Results of Operations
•Performance by Business Segment
•Financial Condition and Liquidity
•Forward-Looking Statements
Forward-looking statements in Part I, Item 2 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to the section entitled "Forward-Looking Statements" in Part I, Item 2 and described in Part I, Item 1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, 2025 for discussion of these risks and uncertainties).
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Overview
3M is a diversified global manufacturer, technology innovator and marketer of a wide variety of products and services.
As discussed in Note 1, certain changes are reflective in this document for all applicable periods presented. Effective in the first and second quarters of 2026, the Company made changes to the measure of segment operating performance and segment composition used by its CODM, impacting the disclosed measure of segment profit (business segment operating income). Further details are provided in Note 16.
3M manages its operations in three operating business segments: Safety and Industrial; Transportation and Electronics; and Consumer. From a geographic perspective, "EMEA" refers to Europe, the Middle East, and Africa on a combined basis.
Unless otherwise noted, all year-over-year ("YoY") comparisons in this MD&A refer to the second quarter and the first six months of 2026 compared with the second quarter and first six months of 2025.
Financial highlights for the second quarter and the first six months of 2026:
| Three months ended June 30, 2026 | Six months ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||
| GAAP | Adjusted(a) | GAAP | Adjusted(a) | |||||||||||||||||||||||||||||||||||
| Net sales (millions) | $ | 6,500 | $ | 6,500 | $ | 12,530 | $ | 12,503 | ||||||||||||||||||||||||||||||
| Total sales change | 2.4 | % | 5.5 | % | 1.9 | % | 4.7 | % | ||||||||||||||||||||||||||||||
Organic sales change(b) | 2.3 | % | 5.4 | % | 0.5 | % | 3.3 | % | ||||||||||||||||||||||||||||||
(a) The Company refers to various "adjusted" amounts or measures on an “adjusted" basis. These exclude special items. These non-GAAP measures are further described and reconciled to the most directly comparable GAAP financial measures in the Certain amounts adjusted for special items - (non-GAAP measures) section below.
(b) Organic sales change (which includes both organic volume and selling price impacts), is defined as the change in net sales, absent the impacts from foreign currency translation and acquisitions, net of divestitures. 3M believes this information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.
Net sales change was driven by strength in industrial, safety, semiconductor and data center—supported by commercial excellence and innovation. This strength was partially offset by weakness in consumer/consumer electronics, and the YoY impact of the manufactured PFAS products special item.
| Three months ended June 30, 2026 | Six months ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||
| GAAP | Adjusted(a) | GAAP | Adjusted(a) | |||||||||||||||||||||||||||||||||||
| Operating income margin | 15.1 | % | 24.9 | % | 19.0 | % | 24.3 | % | ||||||||||||||||||||||||||||||
| YoY change in operating income margin | (2.9) | ppts | 0.4 | ppts | (0.4) | ppts | 0.3 | ppts | ||||||||||||||||||||||||||||||
GAAP operating margins were affected by the YoY impact of special items. The primary drivers were higher losses on business divestitures, and transformation costs. These drivers were partially offset by lower net costs for significant litigation and PFAS exit, which on a year-to-date basis reflect increased insurance recoveries (discussed in Note 15).
Outside of special items, both GAAP and adjusted operating margins reflect benefits from growth, productivity, and favorable foreign currency impacts, partially offset by tariff impacts, cost dis-synergies (following the exit of PFAS manufacturing and the 2024 spin of Solventum), and growth investments.
| Three months ended June 30, 2026 | Six months ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||
| GAAP | Adjusted(a) | GAAP | Adjusted(a) | |||||||||||||||||||||||||||||||||||
| Earning per diluted share (EPS) | $ | 1.78 | $ | 2.40 | $ | 3.01 | $ | 4.54 | ||||||||||||||||||||||||||||||
| YoY change in EPS | 33 | % | 11 | % | (11) | % | 12 | % | ||||||||||||||||||||||||||||||
GAAP EPS YoY was affected by the net impact of special items, including those impacting operating income discussed above, as well as by the impact of changes in Solventum's share price (which was a YoY benefit in the second quarter and YoY headwind in the first six months of 2026).
Outside of special items, both GAAP and adjusted EPS reflect the operating margin drivers discussed above, while non-operating benefits were primarily driven by a lower share count. On a year-to-date basis, EPS also benefited from favorable tax timing.
3M completed its exit of PFAS manufacturing by the end of 2025. As discussed in Note 15, the Company continues to address PFAS manufactured prior to exit through treatment, remediation, and disposition of its assets and interests in manufacturing facilities, which may include dismantling, cleaning, and repurposing. Decisions or circumstances associated with the extent and type of remaining activity at particular locations and impacts on assets and potential obligations, among other factors, could result in additional expenses.
Additional information regarding certain items impacting pre-2026 periods that may also be relevant in 2026 can be found in the Overview section of Part II, Item 7 as well as in further sections of 3M’s 2025 Annual Report on Form 10-K.
43
Results of Operations
Net Sales: Discussion of business segment results is provided in the Performance by Business Segment section. Information regarding sales by geographic area is included below.
| Three months ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Americas | Asia Pacific | EMEA | Worldwide | |||||||||||||||||||||||||||||||||||||||||
| Net sales (millions) | $ | 3,516 | $ | 1,870 | $ | 1,114 | $ | 6,500 | ||||||||||||||||||||||||||||||||||||
| % of worldwide sales | 54.1 | % | 28.8 | % | 17.1 | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||
| Components of net sales change: | ||||||||||||||||||||||||||||||||||||||||||||
Organic sales(b) | 0.7 | 5.6 | 2.3 | 2.3 | ||||||||||||||||||||||||||||||||||||||||
Divestitures(c) | (0.4) | (0.3) | (1.8) | (0.6) | ||||||||||||||||||||||||||||||||||||||||
| Translation | 0.7 | (0.4) | 2.7 | 0.7 | ||||||||||||||||||||||||||||||||||||||||
| Total sales change | 1.0 | % | 4.9 | % | 3.2 | % | 2.4 | % | ||||||||||||||||||||||||||||||||||||
| Six months ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Americas | Asia Pacific | EMEA | Worldwide | |||||||||||||||||||||||||||||||||||||||||
| Net sales (millions) | $ | 6,669 | $ | 3,653 | $ | 2,208 | $ | 12,530 | ||||||||||||||||||||||||||||||||||||
| % of worldwide sales | 53.2 | % | 29.2 | % | 17.6 | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||
| Components of net sales change: | ||||||||||||||||||||||||||||||||||||||||||||
Organic sales(b) | (0.9) | % | 3.8 | % | (0.4) | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||
Divestitures(c) | (0.3) | (0.2) | (0.9) | (0.4) | ||||||||||||||||||||||||||||||||||||||||
| Translation | 0.9 | 0.7 | 6.2 | 1.8 | ||||||||||||||||||||||||||||||||||||||||
| Total sales change | (0.3) | % | 4.3 | % | 4.9 | % | 1.9 | % | ||||||||||||||||||||||||||||||||||||
(c) Acquisition and divestiture sales change impacts are measured separately for the first twelve months post-transaction.
Operating Expenses: | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Percent of net sales) | 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of sales | 58.7 | % | 57.5 | % | 1.2 | % | 59.0 | % | 57.9 | % | 1.1 | % | ||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses (SG&A) | 16.4 | 19.9 | (3.5) | 14.4 | 18.0 | (3.6) | ||||||||||||||||||||||||||||||||||||||||||||
| Research, development and related expenses (R&D) | 4.6 | 4.5 | 0.1 | 4.9 | 4.7 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||
| Loss on business divestitures | 5.2 | 0.1 | 5.1 | 2.7 | — | 2.7 | ||||||||||||||||||||||||||||||||||||||||||||
Operating income margin | 15.1 | % | 18.0 | % | (2.9) | % | 19.0 | % | 19.4 | % | (0.4) | % | ||||||||||||||||||||||||||||||||||||||
Cost of Sales measured as a percent of sales: Increases in the second quarter and first six months of 2026 were primarily due to cost dis-synergies following the exit of PFAS manufacturing and headwinds from rising oil prices and tariff impacts, partially offset by ongoing manufacturing productivity initiatives. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.
SG&A measured as a percent of sales: Decreases in the second quarter and first six months of 2026 were primarily driven by lower net costs from significant litigation. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.
R&D measured as a percent of sales: 3M continues to invest in a range of R&D activities from application development, product and manufacturing support, product development and technology development aimed at disruptive innovations. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.
Loss on Business Divestitures measured as a percent of sales: Applicable information on 2026 items is discussed in Note 3.
Other Expense (Income), Net: See Note 6 for a detailed breakout of this line item.
Interest expense (net of interest income): decreased YoY driven by a reduction in interest expense on debt and reduced imputed interest associated with obligations resulting from the PWS Settlement and the CAE Settlement (discussed in Note 15).
The non-service pension and postretirement net period cost decreased in the second quarter and first six months of 2026 YoY. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.
Solventum ownership - change in value resulted in a YoY tailwind of $310 million in the second quarter of 2026 and YoY headwind of $389 million in the first six months of 2026, as Solventum's share price increased during the second quarter of 2026 compared a decrease in 2025 and decreased during the first six months of 2026 compared to an increase in 2025.
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Provision for Income Taxes: | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||
| (Percent of pre-tax income) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Effective tax rate | 16.3 | % | 26.6 | % | 20.2 | % | 22.1 | % | ||||||||||||||||||||||||
Adjusted effective tax rate(a) | 19.3 | 20.8 | 18.5 | 20.9 | ||||||||||||||||||||||||||||
The primary factors that decreased the Company's effective tax rate YoY for the three months ended June 30, 2026 were the tax impacts of 3M's retained ownership interest in Solventum and the tax impacts of net costs of significant litigation, partially offset by the loss on business divestiture.
The primary factors that decreased the Company's effective tax rate YoY for the six months ended June 30, 2026 were the increased tax benefits from stock-based compensation and the tax impacts of net costs of significant litigation, partially offset by the loss on business divestiture and the tax impacts of 3M's retained ownership interest in Solventum.
Income from Unconsolidated Subsidiaries, Net of Taxes: | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Income from unconsolidated subsidiaries, net of taxes | $ | 1 | $ | 47 | $ | 3 | $ | 49 | ||||||||||||||||||||||||
Income from unconsolidated subsidiaries, net of taxes, is attributable to the Company’s accounting under the equity method for ownership interests in certain entities. In the second quarter of 2025, 3M sold its interest in one of these investments.
Net Income Attributable to Noncontrolling Interest: | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||
| (Millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
Net income attributable to noncontrolling interest | $ | 5 | $ | 2 | $ | 11 | $ | 8 | ||||||||||||||||||||||||
Net income attributable to noncontrolling interest represents the elimination of the income or loss attributable to non-3M ownership interests in 3M consolidated entities. The primary noncontrolling interest relates to 3M India Limited, of which 3M’s effective ownership is 75 percent.
Certain Expenses Impacting Multiple Line Items within Results of Operations:
Stock compensation impacts cost of sales, SG&A, and R&D. YoY stock compensation expense was relatively consistent.
Pre-tax defined benefit pension and postretirement service cost expense impacts cost of sales, SG&A, and R&D while the non-service cost component of pension and postretirement benefits impacts the other expense (income), net line item. Refer to Note 12 for additional information.
Pre-tax stock compensation expense and defined benefit pension and postretirement expense for the periods presented were the following:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| Pre-tax amounts (millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Stock compensation expense | $ | 41 | $ | 44 | $ | 121 | $ | 129 | ||||||||||||||||||
Defined benefit pension and postretirement benefit expense | ||||||||||||||||||||||||||
| Service cost | $ | 39 | $ | 43 | $ | 78 | $ | 84 | ||||||||||||||||||
| Non-service cost (benefit) | (3) | 23 | (5) | 51 | ||||||||||||||||||||||
| Total defined pension and postretirement expense | $ | 36 | $ | 66 | $ | 73 | $ | 135 | ||||||||||||||||||
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Performance by Business Segment
Disclosures relating to 3M’s business segments are provided in Note 16. 3M manages its operations in three business segments. The reportable segments are Safety and Industrial; Transportation and Electronics; and Consumer.
Safety and Industrial Business: | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Sales (millions) | $ | 3,091 | $ | 2,857 | $ | 6,021 | $ | 5,602 | ||||||||||||||||||||||||
| Sales change analysis: | ||||||||||||||||||||||||||||||||
Organic sales(b) | 8.2 | % | 5.7 | % | ||||||||||||||||||||||||||||
| Divestitures | (1.3) | (0.7) | ||||||||||||||||||||||||||||||
| Translation | 1.3 | 2.5 | ||||||||||||||||||||||||||||||
| Total sales change | 8.2 | % | 7.5 | % | ||||||||||||||||||||||||||||
Business segment operating income (millions) | $ | 859 | $ | 738 | $ | 1,635 | $ | 1,437 | ||||||||||||||||||||||||
| Percent change | 16.4 | % | 13.8 | % | ||||||||||||||||||||||||||||
| Percent of sales | 27.8 | % | 25.8 % | 27.2 | % | 25.7 % | ||||||||||||||||||||||||||
Second quarter 2026 results: Sales in Safety and Industrial were up 8.2 percent in U.S. dollars.
Organic sales increased in electrical markets, abrasives, industrial adhesives and tapes, industrial specialties, personal safety, and roofing granules and decreased in automotive aftermarket. Progress on commercial excellence and innovation drove strong growth.
Business segment operating income margins increased YoY, driven by benefits from growth and productivity. These benefits were partially offset by tariffs, continued growth investments, and cost dis-synergies following the exit of PFAS manufacturing.
First six months 2026 results: Sales in Safety and Industrial were up 7.5 percent in U.S. dollars.
Organic sales increased in electrical markets, industrial adhesives and tapes, abrasives, personal safety, and industrial specialties, driven by progress on commercial excellence and innovation; market weakness in roofing granules and automotive aftermarket resulted in decreased sales.
Business segment operating income margins increased YoY primarily driven by benefits from growth and productivity. These benefits were partially offset by tariffs, continued growth investments, and cost dis-synergies following the exit of PFAS manufacturing.
Transportation and Electronics Business: | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Sales (millions) | $ | 2,066 | $ | 1,944 | $ | 3,914 | $ | 3,760 | ||||||||||||||||||||||||
| Sales change analysis: | ||||||||||||||||||||||||||||||||
Organic sales(b) | 5.9 | % | 2.9 | % | ||||||||||||||||||||||||||||
Divestitures(c) | (0.2) | (0.3) | ||||||||||||||||||||||||||||||
| Translation | 0.5 | 1.5 | ||||||||||||||||||||||||||||||
| Total sales change | 6.2 | % | 4.1 | % | ||||||||||||||||||||||||||||
| Business segment operating income (millions) | $ | 503 | $ | 479 | $ | 902 | $ | 869 | ||||||||||||||||||||||||
| Percent change | 5.2 | % | 3.8 | % | ||||||||||||||||||||||||||||
| Percent of sales | 24.4 | % | 24.6 | % | 23.1 | % | 23.1 | % | ||||||||||||||||||||||||
Second quarter 2026 results: Sales in Transportation and Electronics were up 6.2 percent in U.S. dollars.
Organic growth was driven by strength in semiconductor, aerospace, data center, advanced materials, and commercial branding.
Business segment operating income margins decreased YoY reflecting tariffs, continued growth investments, and cost dis-synergies following the exit of PFAS manufacturing, partially offset by benefits from growth and productivity.
First six months 2026 results: Sales in Transportation and Electronics were up 4.1 percent in U.S. dollars.
Organic growth was driven by strength in semiconductor, aerospace, data center, advanced materials, and commercial branding, partially offset by weakness in auto and consumer electronics.
Business segment operating income margins were flat YoY due to benefits from growth and productivity, offset by tariffs, continued growth investments, and cost dis-synergies following the exit of PFAS manufacturing.
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Consumer Business: | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Sales (millions) | $ | 1,247 | $ | 1,270 | $ | 2,378 | $ | 2,394 | ||||||||||||||||||||||||
| Sales change analysis: | ||||||||||||||||||||||||||||||||
Organic sales(b) | (2.1) | % | (1.7) | % | ||||||||||||||||||||||||||||
| Translation | 0.3 | 1.0 | ||||||||||||||||||||||||||||||
| Total sales change | (1.8) | % | (0.7) | % | ||||||||||||||||||||||||||||
| Business segment operating income (millions) | $ | 252 | $ | 268 | $ | 469 | $ | 487 | ||||||||||||||||||||||||
| Percent change | (6.4) | % | (3.8) | % | ||||||||||||||||||||||||||||
| Percent of sales | 20.1 | % | 21.1 | % | 19.7 | % | 20.3 | % | ||||||||||||||||||||||||
Second quarter 2026 results: Sales in Consumer were down 1.8 percent in U.S. dollars.
Organic sales decreased in packaging and expression, and in home improvement, and increased in home and auto care, and consumer safety and well-being. Lower U.S. retailer inventory levels more than offset positive POS and share gains.
Business segment operating income margins decreased YoY reflecting tariffs, continued growth investments, and cost dis-synergies following the exit of PFAS manufacturing, partially offset by benefits from productivity.
First six months 2026 results: Sales in Consumer were down 0.7 percent in U.S. dollars.
Organic sales decreased in packaging and expression, and in home improvement, and increased in home and auto care, and consumer safety and well-being. Lower U.S. retailer inventory levels more than offset positive POS and share gains.
Business segment operating income margins decreased YoY reflecting tariffs, continued growth investments, and cost dis-synergies following the exit of PFAS manufacturing, partially offset by benefits from productivity.
Corporate: Outside of 3M's reportable segments, 3M has Corporate, which is not a reportable business segment as it does not meet the segment reporting criteria. Because Corporate includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis. Corporate is further described in Note 16.
Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section below and Note 16 for details on the components of corporate special items and their impact. Corporate-level income decreased YoY in the second quarter and first six months of 2026, primarily due to Solventum-related items and corporate costs.
Certain amounts adjusted for special items - (non-GAAP measures)
In addition to reporting financial results in accordance with U.S. GAAP, 3M also provides certain non-GAAP measures. These measures are not in accordance with, nor are they a substitute for GAAP measures, and may not be comparable to similarly titled measures used by other companies.
Certain measures adjust for the impact of special items. Special items for the periods presented include the items described in the section entitled “Description of special items”. Because 3M provides certain information with respect to business segments, it is noteworthy that special items impacting operating income (loss) are reflected in Corporate.
This document contains measures for which 3M provides the reported GAAP measure and a non-GAAP measure adjusted for special items. The document also contains additional measures which are not defined under U.S. GAAP. These measures and reasons 3M believes they are useful to investors (and, as applicable, used by 3M) include:
| GAAP amounts for which a measure adjusted for special items is also provided: | Reasons 3M believes the measure is useful | |||||||
•Net sales (and sales change) | Considered in evaluating and managing operations; useful in understanding underlying business performance, provides additional transparency to special items | |||||||
•Operating income (loss) and operating income (loss) margin | ||||||||
•Income before taxes | ||||||||
•Provision for income taxes and effective tax rate | ||||||||
•Net income | ||||||||
•EPS | ||||||||
47
Special items for the periods presented include:
Net costs for significant litigation and PFAS exit:
•Net costs for significant litigation relate to 3M's respirator mask/asbestos (which include Aearo and non-Aearo items), PFAS-related other environmental, and Combat Arms Earplugs matters (as discussed in Note 15). Net costs include the impacts of changes in accrued liabilities (including interest imputation on applicable settlement obligations), legal costs, and insurance recoveries, along with the associated tax impacts. Associated tax impacts of significant litigation include impacts on Foreign-Derived Deduction Eligible Income ("FDDEI"), Net Controlled Foreign Corporation Tested Income ("NCTI"), foreign tax credits, and tax costs of repatriation. PFAS exit costs include amounts outside of significant litigation related to impacted site disposition and treatment post-first quarter 2026 completion of substantive PFAS product sales. 3M does not consider the elements of the net costs associated with these matters to be normal, operating expenses related to the Company’s ongoing operations, revenue generating activities, business strategy, industry, and regulatory environment.
Business acquisition-related costs
•These include transaction and integration costs as applicable in the respective periods.
Gain/loss on business divestitures:
•In the third quarter of 2025, 3M classified a business as held for sale. In the first half of 2026, 3M reflected an adjustment to carrying it at its selling price less cost to sell. In the second quarter of 2026, 3M recorded a loss on the divestiture of its Dyneon GmbH subsidiary. See Note 3 for additional information.
Manufactured PFAS products:
•These amounts relate to sales and income (loss) regarding manufactured PFAS products that 3M exited by the end of 2025. Income does not contemplate impacts on non-operating items such as net interest income/expense and the non-service cost components portion of defined benefit plan net periodic benefit costs.
Solventum ownership - change in value:
•This amount relates to the change in value of 3M's retained ownership interest in Solventum common stock reflected in other expense (income), net.
Transformation costs:
•These represent net costs associated with 3M's transformation program, intended as a structural redesign of longer-term manufacturing, distribution, and business process services and locations. Accordingly, 3M does not consider the nature or effect of this program to be normal, operating expenses related to the Company’s ongoing operations, revenue generating activities, and day-to-day business strategy. Net costs include restructuring and other related items such as site closure, sale, moving and set-up, accelerated depreciation, and program management.
| Three months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total Company (Dollars in millions, except per share amounts) | Net sales | Operating income | Operating income margin | Income before taxes | Provision for income taxes | Effective tax rate | Net income attributable to 3M | EPS | ||||||||||||||||||||||||||||||||||||||||||
| GAAP amounts | $ | 6,344 | $ | 1,140 | 18.0 | % | $ | 923 | $ | 245 | 26.6 | % | $ | 723 | $ | 1.34 | ||||||||||||||||||||||||||||||||||
| Adjustments for special items: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net costs for significant litigation and PFAS exit | — | 347 | 471 | 46 | 425 | 0.79 | ||||||||||||||||||||||||||||||||||||||||||||
| Loss on business divestitures | — | 3 | 3 | 1 | 2 | — | ||||||||||||||||||||||||||||||||||||||||||||
| Manufactured PFAS products | (186) | 17 | 17 | 4 | 13 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||
| Solventum ownership - change in value | — | — | 7 | — | 7 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||
| Total special items | (186) | 367 | 498 | 51 | 447 | 0.82 | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted amounts (non-GAAP measures) | $ | 6,158 | $ | 1,507 | 24.5 | % | $ | 1,421 | $ | 296 | 20.8 | % | $ | 1,170 | $ | 2.16 | ||||||||||||||||||||||||||||||||||
| Three months ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Company (Dollars in millions, except per share amounts) | Operating income | Operating income margin | Income before taxes | Provision for income taxes | Effective tax rate | Net income attributable to 3M | EPS | EPS percent change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP amounts | $ | 984 | 15.1 | % | $ | 1,120 | $ | 183 | 16.3 | % | $ | 933 | $ | 1.78 | 33 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments for special items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net costs for significant litigation and PFAS exit | 183 | 296 | 64 | 232 | 0.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business acquisition-related costs | 12 | 12 | — | 12 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on business divestitures | 336 | 336 | 20 | 316 | 0.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Solventum ownership - change in value | — | (303) | 11 | (314) | (0.60) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transformation costs | 100 | 100 | 24 | 76 | 0.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total special items | 631 | 441 | 119 | 322 | 0.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted amounts (non-GAAP measures) | $ | 1,615 | 24.9 | % | $ | 1,561 | $ | 302 | 19.3 | % | $ | 1,255 | $ | 2.40 | 11 | % | ||||||||||||||||||||||||||||||||||||||||||||||
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| Three months ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| Sales change | Organic sales | Divestitures | Translation | Total sales change | ||||||||||||||||||||||||||||
| Total Company | 2.3 | % | (0.6) | % | 0.7 | % | 2.4 | % | ||||||||||||||||||||||||
| Remove manufactured PFAS products special item impact | 3.1 | (0.1) | 0.1 | 3.1 | ||||||||||||||||||||||||||||
| Adjusted total Company (non-GAAP measures) | 5.4 | % | (0.7) | % | 0.8 | % | 5.5 | % | ||||||||||||||||||||||||
| Six months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Company (Dollars in millions, except per share amounts) | Net sales | Operating income | Operating income margin | Income before taxes | Provision for income taxes | Effective tax rate | Net income attributable to 3M | EPS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP amounts | $ | 12,298 | $ | 2,386 | 19.4 | % | $ | 2,308 | $ | 510 | 22.1 | % | $ | 1,839 | $ | 3.38 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments for special items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net costs for significant litigation and PFAS exit | — | 421 | 695 | 44 | 651 | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on business divestitures | — | 3 | 3 | 1 | 2 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Manufactured PFAS products | (360) | 55 | 55 | 13 | 42 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Solventum ownership - change in value | — | — | (336) | — | (336) | (0.62) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total special items | (360) | 479 | 417 | 58 | 359 | 0.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted amounts (non-GAAP measures) | $ | 11,938 | $ | 2,865 | 24.0 | % | $ | 2,725 | $ | 568 | 20.9 | % | $ | 2,198 | $ | 4.04 | ||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Company (Dollars in millions, except per share amounts) | Net sales | Sales change | Operating income | Operating income margin | Income before taxes | Provision for income taxes | Effective tax rate | Net income attributable to 3M | EPS | EPS percent change | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP amounts | $ | 12,530 | 1.9 | % | $ | 2,381 | 19.0 | % | $ | 1,998 | $ | 404 | 20.2 | % | $ | 1,586 | $ | 3.01 | (11) | % | ||||||||||||||||||||||||||||||||||||||||||
| Adjustments for special items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net costs for significant litigation and PFAS exit | — | 13 | 251 | 39 | 212 | 0.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business acquisition-related costs | — | 12 | 12 | — | 12 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on business divestitures | — | 343 | 343 | 21 | 322 | 0.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Manufactured PFAS products | (27) | 126 | 126 | 31 | 95 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Solventum ownership - change in value | — | — | 53 | 11 | 42 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transformation costs | — | 166 | 166 | 40 | 126 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total special items | (27) | 660 | 951 | 142 | 809 | 1.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted amounts (non-GAAP measures) | $ | 12,503 | 4.7 | % | $ | 3,041 | 24.3 | % | $ | 2,949 | $ | 546 | 18.5 | % | $ | 2,395 | $ | 4.54 | 12 | % | ||||||||||||||||||||||||||||||||||||||||||
| Six months ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| Sales change | Organic sales | Divestitures | Translation | Total sales change | ||||||||||||||||||||||||||||
| Total Company | 0.5 | % | (0.4) | % | 1.8 | % | 1.9 | % | ||||||||||||||||||||||||
Remove manufactured PFAS products special item impact | 2.8 | — | — | 2.8 | ||||||||||||||||||||||||||||
| Adjusted total Company (non-GAAP measures) | 3.3 | % | (0.4) | % | 1.8 | % | 4.7 | % | ||||||||||||||||||||||||
Financial Condition and Liquidity
The strength and stability of 3M’s business model and strong free cash flow capability, together with proven capital markets access, provide financial flexibility to deploy capital in accordance with the Company's stated priorities and meet needs associated with contractual commitments and other obligations. Investing in 3M’s business to drive organic growth and deliver strong returns on invested capital remains the first priority for capital deployment. This includes research and development, capital expenditures, and commercialization capability. The Company also continues to actively manage its portfolio through acquisitions and divestitures to maximize value for shareholders. 3M expects to continue returning cash to shareholders through dividends and share repurchases. To fund cash needs in the United States, the Company relies on ongoing cash flow from U.S. operations, access to capital markets and repatriation of the earnings of its foreign affiliates that are not considered to be permanently reinvested. For those international earnings considered to be reinvested indefinitely, the Company currently has no plans or intentions to repatriate these funds for U.S. operations.
3M maintains a strong liquidity profile. The Company believes its primary short-term liquidity needs can be met through cash on hand and U.S. commercial paper issuances. 3M expects to have continuous access to the commercial paper market. 3M’s commercial paper program permits the Company to have a maximum of $5 billion outstanding with a maximum maturity of 397 days from date of issuance. The Company had no commercial paper outstanding at June 30, 2026 and December 31, 2025.
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Total debt: The strength of 3M’s credit profile and significant ongoing cash flows provide 3M proven access to capital markets. Additionally, the Company’s debt maturity profile is staggered to help make refinancing needs in any given year reasonable in proportion to the total portfolio. As of the date of this report, 3M had the following credit ratings:
| Credit rating agency | Long-term rating | Outlook | ||||||||||||
| Moody's Investors Service | A3 | Stable | ||||||||||||
| S&P Global Ratings | BBB+ | Stable | ||||||||||||
| Fitch Ratings | A- | Stable | ||||||||||||
The Company’s total debt at June 30, 2026, remained largely consistent with December 31, 2025, as there were no material debt maturities or issuances during the period.
In February 2026, the Company renewed its "well-known seasoned issuer" shelf registration statement, which registers an indeterminate amount of debt or equity securities for future issuance and sale.
Information with respect to long-term debt issuances and maturities for the periods presented is included in Note 11, as applicable.
3M has a principal amount of long-term debt of $1.5 billion that will mature in 2026. The Company's financial condition and liquidity enable it to address these obligations by refinancing, redemption, or both.
3M has a $4.25 billion five-year revolving credit facility that expires in May 2028. The revolving credit agreement includes a provision under which 3M may request an increase of up to $1.0 billion (at lenders' discretion), bringing the total facility up to $5.25 billion. The credit facility was undrawn at June 30, 2026. Under the $4.25 billion credit facility, the Company is required to maintain its EBITDA to Interest Ratio as of the end of each fiscal quarter at not less than 3.0 to 1. This is calculated (based on amounts defined in the amended agreement) as the ratio of consolidated total EBITDA for the four consecutive quarters then ended to total interest expense on all funded debt for the same period. At June 30, 2026, 3M was in compliance with this requirement. Debt covenants do not restrict the payment of dividends.
In April 2026, as discussed in Note 11, 3M and a subsidiary entered into a $1.43 billion term loan facility and a $200 million revolving credit facility, both of which were undrawn as of June 30, 2026. These facilities were established to provide financing in connection with the Madison acquisition and venture formation described in Note 3. In July 2026, $1.43 billion was drawn under the term loan facility to fund the acquisition.
The Company had $0.6 billion in stand-alone letters of credit, bank guarantees, and other similar instruments issued and outstanding at June 30, 2026. These instruments are utilized in connection with normal business activities.
Cash, cash equivalents and marketable securities: Cash, cash equivalents and marketable securities are invested in bank instruments and other high quality securities. The table below provides the breakout of the balance between the Company's foreign subsidiaries and the United States as of June 30, 2026 and December 31, 2025.
| (Billions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Foreign subsidiaries | $ | 2.8 | $ | 3.5 | ||||||||||
| United States | 0.5 | 2.4 | ||||||||||||
| Total cash, cash equivalents and marketable securities | $ | 3.3 | $ | 5.9 | ||||||||||
The decrease from December 31, 2025, was primarily driven by $3.0 billion in purchases of treasury stock. Additionally, $1.0 billion in payments associated with the CAE legal settlement and PFAS-related environmental liabilities and $0.8 billion in dividend payments further reduced cash. Overall outflows were partially offset by $0.4 billion in insurance recoveries related to the CAE and PFAS matters (as discussed in Note 15), $0.4 billion in proceeds from the issuances of treasury shares pursuant to option/benefit plans, and cash generated from operating activities (see "Cash Flows from Operating Activities" section below for further discussion).
Current equity investments: Current equity investments consist of 3M's ownership interest in Solventum. As of June 30, 2026, 3M owned approximately 15% of Solventum's common stock, with a fair value of $2.0 billion. As previously disclosed, 3M expects to sell its ownership in Solventum within five years of its 2024 spin-off. Sales of 3M's retained stake are subject to regulatory and other restrictions.
Balance Sheet: 3M’s strong balance sheet and liquidity provide the Company with significant flexibility to fund its numerous opportunities going forward. The Company intends to continue investing in its operations to drive growth, including continual review of acquisition opportunities.
Cash Flows: Discussions of cash flows from operating, investing and financing activities are provided in the sections that follow.
Cash Flows from Operating Activities:
Cash flows from operating activities can fluctuate significantly from period to period, as working capital movements, tax timing differences and other items such as litigation payments can significantly impact cash flows.
50
In the first six months of 2026, cash flows provided by operating activities of $1.6 billion increased by $2.6 billion YoY, primarily driven by lower net payments for PFAS-related environmental liabilities and the CAE legal settlement impacted by insurance recoveries.
Working capital, defined as current assets minus current liabilities, decreased from December 31, 2025. This decrease was primarily driven by a reduction in current assets, including lower balances of cash, cash equivalents, and marketable securities, as well as an increase in current liabilities related to the PWS legal settlement.
Cash Flows from Investing Activities:
Investments in PP&E enable growth across many diverse markets, helping to meet product demand and increasing manufacturing efficiency. 3M invested $0.4 billion on PP&E in the first six months of 2026. The Company expects 2026 capital spending to be approximately $1.1 billion as 3M continues to invest in growth, productivity and sustainability.
Purchases of marketable securities and investments and proceeds from maturities and sale of marketable securities and investments are primarily attributable to certificates of deposit/time deposits, commercial paper, and other securities, which are classified as available-for-sale. Refer to Note 14 for more details about 3M’s diversified marketable securities portfolio.
Cash Flows from Financing Activities:
3M’s primary short-term liquidity needs are met through cash on hand and U.S. commercial paper issuances. Refer to Note 11 for more detail regarding debt.
In February 2025, 3M’s Board of Directors replaced the Company’s 2018 repurchase program with a new repurchase program. This new program authorizes the repurchase of up to $7.5 billion of 3M’s outstanding common stock, with no pre-established end date. Repurchases of common stock are made to support the Company’s stock-based employee compensation plans and for other corporate purposes. In the first six months of 2026, the Company purchased $3.0 billion of its own stock, compared to $2.2 billion of stock purchases in the first six months of 2025. As of June 30, 2026, approximately $1.8 billion remained available under the authorization. For more information, refer to the table titled “Issuer Purchases of Equity Securities” in Part II, Item 2. The Company also had $0.4 billion in proceeds from issuance of treasury stock pursuant to stock option and benefit plans in the first six months of 2026.
3M has paid dividend continuously since 1916. In February 2026, 3M's Board of Directors declared a first-quarter 2026 dividend of $0.78 per share, an increase of 7 percent. In May 2026, 3M's Board of Directors declared a second-quarter 2026 dividend of $0.78 per share.
Other cash flows from financing activities may include various other items, such as cash paid associated with certain derivative instruments, distributions to or sales of noncontrolling interests, changes in overdraft balances, and principal payments for finance leases.
Significant Accounting Policies: Information regarding new accounting standards is included in Note 1 to the Consolidated Financial Statements.
Material Cash Requirements from Known Contractual and Other Obligations: See the Financial Condition and Liquidity - Material Cash Requirements from Known Contractual and Other Obligations section of Item 7 of 3M's 2025 Annual Report on Form 10-K.
Forward-Looking Statements
Certain statements in this document, as well as other filings we make with the United States Securities and Exchange Commission (“SEC”) and other written and oral information we release, including statements regarding our performance, estimates, expectations, beliefs, intentions, projections, strategies for the future, costs and effects of legal proceedings, or other events or developments in the future are considered "forward-looking statements" under the federal securities laws, including the Private Securities Litigation Reform Act of 1995, as amended ("PSLRA"). Forward-looking statements may appear throughout this document and are typically identified by the words "aim," "anticipate," "believe," "can," "continue," "could," "estimate," "evaluate," "expect," "forecast," "future," "goal," "guidance," "impact," "initial," "intend," "likely," "may," "outlook," "plan," "possible," "potential," "predict," "probable," "project," "seek," "should," "strategy," "target," "will," "would," and other words that are similar to, or have the opposite meanings, of those words.
All forward-looking statements are intended to enjoy the protection of the PSLRA’s safe harbor for forward-looking statements, as well as the protections provided by other securities laws. Forward-looking statements speak only as of the date they are made and the Company assumes no obligation to update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
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Although the Company believes it has a reasonable basis for the forward-looking statements it makes, those statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Changes in those assumptions, expectations, or other factors could produce materially different results. The most important risks, uncertainties, and other factors that could cause the Company's actual results to differ from the Company's forward-looking statements include: (1) worldwide economic, political, regulatory, international trade, geopolitical, tariffs, and retaliatory countermeasures, capital markets, and other external conditions, (2) foreign currency exchange rates and fluctuations in those rates, (3) liabilities and contingencies related to PFAS, including liabilities related to claims, lawsuits, and government regulatory proceedings concerning various PFAS-related products and chemistries, as well as risks related to the Company's exit of PFAS manufacturing and work to discontinue use of PFAS across its product portfolio, (4) risks related to the PWS Settlement to resolve claims by public water suppliers in the United States regarding PFAS, as well as risks related to ongoing PFAS-related settlements and claims, (5) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the Company's reports on Form 10-K, 10-Q, and 8-K, as well as compliance risks related to legal or regulatory requirements, government contract requirements, policies and practices, or other matters that require or encourage the Company or its customers, suppliers, vendors, or channel partners to conduct business in a certain way, (6) competitive conditions and customer preferences, (7) the timing and market acceptance of new product and service offerings, (8) the availability and cost of purchased components, compounds, raw materials and energy due to shortages, increased demand and wages, tariffs, supply chain interruptions, or natural or other disasters, (9) unanticipated problems or delays when implementing new business systems and solutions, including with the phased implementation of a global enterprise resource planning system, or security breaches and other disruptions to the Company's information or operational technology infrastructure, (10) use of artificial intelligence technologies, (11) the impact of acquisitions, strategic alliances, divestitures, and other strategic events resulting from portfolio management actions and other evolving business strategies, (12) operational execution, including the extent to which the Company can realize the benefits of planned productivity improvements, as well as the impact of organizational restructuring activities, (13) financial market risks that may affect the Company's funding obligations under defined benefit pension and postretirement plans, (14) the Company’s credit ratings and its cost of funding, (15) tax-related external conditions, including changes in tax rates, laws, or regulations, (16) matters relating to the Company's Aearo Entities, Combat Arms Earplugs Settlement, and related products, and (17) matters relating to the spin-off of Solventum, the Company's former Health Care business, into an independent public company.
Those risks, uncertainties, and other factors are further described in Part I, Item 1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, 2025. For additional information concerning factors that may cause actual results to differ materially from the Company's forward-looking statements, see the Company's reports on Form 10-K, 10-Q, and 8-K filed with the SEC from time to time.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the context of Item 3, 3M is exposed to market risk due to the risk of loss arising from adverse changes in foreign currency exchange rates, interest rates and commodity prices. Changes in those factors could impact the Company’s results of operations and financial condition. For a discussion of sensitivity analysis related to these types of market risks, refer to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in 3M's 2025 Annual Report on Form 10-K. There have been no material changes in information that would have been provided in the context of Item 3 from the end of the preceding year until June 30, 2026.
Item 4. Controls and Procedures
a. The Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.
b. There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
52
3M COMPANY
FORM 10-Q
For the Quarterly Period Ended June 30, 2026
PART II. Other Information
Item 1. Legal Proceedings
Discussion of legal matters is incorporated by reference from Part I, Item 1, Note 15, “Commitments and Contingencies,” of this document, and should be considered an integral part of Part II, Item 1, “Legal Proceedings.”
Item 1A. Risk Factors
There have been no material changes to the risk factors described in Part I, Item 1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities: Repurchases of 3M common stock are made to support the Company’s stock-based employee compensation plans and for other corporate purposes. In February 2025, 3M’s Board of Directors replaced the Company’s 2018 repurchase program with a new repurchase program. This new program authorizes the repurchase of up to $7.5 billion of 3M’s outstanding common stock, with no pre-established end date.
Issuer Purchases of Equity Securities (registered pursuant to Section 12 of the Exchange Act)
| Period | Total Number of Shares Purchased (a) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (Millions) | ||||||||||||||||||||||
April 1 - 30, 2026 | 3,363,294 | $ | 145.79 | 3,363,294 | $ | 2,241 | ||||||||||||||||||||
May 1 - 31, 2026 | 2,480,600 | 145.11 | 2,480,600 | 1,881 | ||||||||||||||||||||||
June 1 - 30, 2026 | 716,900 | 159.26 | 716,900 | 1,766 | ||||||||||||||||||||||
April 1 - June 30, 2026 | 6,560,794 | 147.01 | 6,560,794 | |||||||||||||||||||||||
(a) The total number of shares purchased includes: (i) shares purchased under the Board’s authorizations described above, and (ii) shares purchased in connection with the exercise of stock options.
(b) The total number of shares purchased as part of publicly announced plans or programs includes shares purchased under the Board’s authorizations described above.
Item 3. Defaults Upon Senior Securities — No matters require disclosure.
Item 4. Mine Safety Disclosures
Pursuant to Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”), the Company is required to disclose, in connection with the mines it operates, information concerning mine safety violations or other regulatory matters in its periodic reports filed with the SEC. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Act is included in Exhibit 95 to this quarterly report.
Item 5. Other Information
Insider Trading Arrangements and Policies
During the quarter ended June 30, 2026, no director or officer of the Company adopted terminated
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Item 6. Exhibits
Filed herewith:
| 3.1 | ||||||||
| 3.2 | ||||||||
| 10.1 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 95 | ||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
Long-term debt instruments under which the total amount of securities authorized does not exceed 10% of 3M Company’s total consolidated assets are not filed as exhibits to this report. 3M Company will furnish a copy of these agreements to the Securities and Exchange Commission on request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
3M COMPANY
(Registrant)
Date: July 21, 2026 | |||||||||||
| By | /s/ Anurag Maheshwari | ||||||||||
Anurag Maheshwari, | |||||||||||
Executive Vice President and Chief Financial Officer (Mr. Maheshwari is a Principal Financial Officer and has been duly authorized to sign on behalf of the Registrant.) | |||||||||||
55
Exhibit 10.1
Execution Version
$1,430,000,000 Delayed Draw Term Loan Facility and $200,000,000 Revolving Credit Facility
CREDIT AGREEMENT
Dated as of April 30, 2026
Among
3M COMPANY
as Company,
as Company,
FIRE SAFETY PLATFORM HOLDCO, INC.,
as Borrower
MORGAN STANLEY SENIOR FUNDING, INC.,
as Administrative Agent,
as Administrative Agent,
CITIBANK, N.A. and U.S. BANK NATIONAL ASSOCIATION
as Co-Syndication Agents
as Co-Syndication Agents
and
THE BANKS NAMED HEREIN,
as Banks
as Banks
MORGAN STANLEY SENIOR FUNDING, INC.,
as Sole Lead Arranger and Sole Bookrunner
as Sole Lead Arranger and Sole Bookrunner
Table of Contents
Page
1. DEFINITIONS. 1
1.1 Generally. 1
1.4. Divisions 21
2.2 [Reserved]. 23
3. FEES AND EXPENSES 25
3.1 Commitment Fees. 25
3.2 Extension Fee. 25
3.4 Expenses. 25
3.5 Additional Fees. 26
4. INTEREST 26
4.1 Floating Rate. 26
4.2 Term SOFR. 26
4.3 Default Rate. 27
4.4 Fees on Term SOFR Loans; Capital Adequacy; Funding Exceptions. 27
4.5 Mitigation of Yield Protection. 30
4.6 Alternate Rate of Interest. 31
4.7 365/366-Day Year. 36
5. DISBURSEMENTS AND PAYMENTS 36
5.1 Requests for Borrowings. 36
5.2 Payments. 37
5.3 Prepayments. 38
5.4 Termination or Reduction of the Commitments. 40
5.5 Taxes. 42
5.6 Judgment Currency. 47
5.7 Defaulting Banks. 48
5.8 Replacement of Banks. 48
6. CONDITIONS PRECEDENT 49
6.1 Conditions Precedent to Effectiveness. 49
6.2 Conditions Precedent to Closing Date 50
i
6.3 Conditions Precedent to Each Revolving Advance After the Closing Date 52
6.4 Certain Funds Period. 53
7. REPRESENTATIONS AND WARRANTIES 53
8. COVENANTS. 56
8.1 Financial Information 56
8.2 Covenants 58
9. EVENTS OF DEFAULT AND REMEDIES. 60
9.1 Default 60
9.2 Remedies. 61
9.3 Application of Funds. 62
9.4 Setoff 62
10. AGENCY 63
10.1 Authorization. 63
10.2 Distribution of Payments and Proceeds. 65
10.3 Expenses. 65
10.4 Indemnification. 66
10.5 Exculpation of the Agent by the Banks. 66
10.6 Agent and Affiliates. 67
10.7 Acknowledgements of Banks. 67
10.8 Resignation. 70
10.9 Co-Syndication Agents. 71
10.10 Delegation of Duties. 71
10.11 Bank ERISA Representation 71
10.12 Agent’s Reliance, Limitation of Liability, Etc. 73
11. MISCELLANEOUS. 75
11.1 Notices. 75
11.2 Sharing of Payments. 77
11.3 No Waiver; Cumulative Remedies. 78
11.4 Amendments, Etc. 78
11.5 Binding Effect: Assignments and Participations. 78
11.6 New York Law. 82
11.7 Severability of Provisions. 82
11.8 Integration. 82
11.9 Indemnification by the Loan Parties; Damage Waiver. 82
11.10 Customer Identification - USA Patriot Act Notice. 84
11.11 Execution in Counterparts. 84
11.12 Waiver of Jury Trial. 84
11.13 Jurisdiction. 85
11.14 [Reserved]. 85
11.15 No Fiduciary Relationship. 85
ii
11.16 [Reserved.] 86
11.17 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. 86
11.18 Confidentiality. 87
12. THE GUARANTY. 89
12.1 Guaranty. 89
12.2 Obligations Unconditional. 89
12.3 Reinstatement. 91
12.4 Certain Additional Waivers. 91
12.5 Remedies. 91
12.6 Guarantee of Payment; Continuing Guarantee. 92
Schedule I Commitments
Exhibit A Form of Note
Exhibit B Form of Compliance Certificate
Exhibit C Form of Solvency Certificate
Exhibit D Form of U.S. Tax Compliance Certificates
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Credit Agreement
Dated as of April 30, 2026
Fire Safety Platform Holdco, Inc., a Delaware corporation, as borrower, 3M Company, a Delaware corporation, as guarantor, the Banks (as defined below) and Morgan Stanley Senior Funding, Inc., as Agent (as defined below) for the Banks, hereby agree as follows:
1. DEFINITIONS
1.1 Generally.
“Acquired Business” means Madison Safety & Flow Holdings LLC, a Delaware limited liability company, and its subsidiaries.
“Acquiror” means Fire Safety Platform Holdco, Inc., a Delaware corporation.
“Acquisition Debt” means any indebtedness for borrowed money of the Company or any of its Subsidiaries that has been issued for the purpose of financing, in whole or in part, a Material Acquisition and any related transactions or series of related transactions (including for the purpose of refinancing or replacing all or a portion of any pre-existing indebtedness for borrowed money of the Company, any of its Subsidiaries or the Person(s) or assets to be acquired); provided that (a) (i) the release of the proceeds thereof to the Company and its Subsidiaries is contingent upon the consummation of such Material Acquisition and, pending such release, such proceeds are held pursuant to an escrow or similar arrangement and (ii) if the definitive agreement (or, in the case of a tender offer or similar transaction, the definitive offer document) for such Material Acquisition is terminated prior to the consummation of such Material Acquisition or if such Material Acquisition is otherwise not consummated by the date specified in the definitive documentation relating to such indebtedness for borrowed money, such proceeds shall be promptly applied to satisfy and discharge all obligations of the Company and its Subsidiaries in respect of such indebtedness for borrowed money or (b) (i) such indebtedness for borrowed money contains a “special mandatory redemption” provision (or other similar provision) or otherwise permits such indebtedness for borrowed money to be redeemed or prepaid if such Material Acquisition is not consummated by the date specified in the definitive documentation relating to such indebtedness for borrowed money, and (ii) if the definitive agreement (or, in the case of a tender offer or similar transaction, the definitive offer document) for such Material Acquisition is terminated in accordance with its terms prior to the consummation of such Material Acquisition or such Material Acquisition is otherwise not consummated by the date specified in the definitive documentation relating to such indebtedness for borrowed money, such indebtedness for borrowed money is so redeemed or prepaid within ninety (90) days of such termination or such specified date, as the case may be.
“Acquisition Agreement” means that certain Securities Purchase Agreement, dated as of March 18, 2026, by and among, inter alios, Madison Industrial Solutions Corporation, a Delaware corporation, Madison Technologies Safety & Flow Holdings LLC, a Delaware limited liability company, Madison Safety & Flow Managers LLC, a Delaware limited liability company, and the Acquiror (together with the schedules and exhibits thereto).
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“Acquisition Agreement Representations” means such of the representations made by or with respect to the Acquired Business in the Acquisition Agreement as are material to the interests of the Banks, but only to the extent that the Acquiror has the right to (x) terminate its obligations under the Acquisition Agreement or (y) decline to consummate the Madison Acquisition pursuant to the Acquisition Agreement, as a result of a breach of such representations in the Acquisition Agreement.
“Act” has the meaning set forth in Section 11.10.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Agent.
“Affected Financial Institution” has the meaning set forth in Section 11.17.
“Affiliate”, as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.
“Agent” means Morgan Stanley Senior Funding, Inc., in its capacity as Arranger and administrative agent for the Banks hereunder (which may act through any of its Affiliates in performance of its duties hereunder).
“Agent’s Account” means (a) the account of the Agent maintained by the Agent at Morgan Stanley Senior Funding Inc., at its office at 1300 Thames Street, 4th Floor, Thames Street Wharf, Baltimore, MD 21231, Attention: Agency Borrowers, Telephone: (443) 627-4798; Email: Agency.Borrowers@morganstanley.com, (b) [reserved] and (c) in any such case, such other account of the Agent as is designated in writing from time to time by the Agent to the Borrower and the Banks for such purpose.
“Aggregate Commitment Amount” means the sum of each Bank’s Commitment. The Aggregate Commitment Amount as of the Effective Date shall be $1,630,000,000.
“Aggregate DDTL Commitment Amount” means the sum of each Bank’s DDTL Commitment. The Aggregate DDTL Commitment Amount as of the Effective Date shall be $1,430,000,000.
“Aggregate DDTL Outstandings” means, at any time, an amount equal to the aggregate principal balance of the Delayed Draw Term Loans then outstanding.
“Aggregate Outstandings” means, at any time, an amount equal to the aggregate principal balance of the Loans then outstanding.
“Aggregate Revolving Commitment Amount” means the sum of each Bank’s Revolving Commitment. The Aggregate Revolving Commitment Amount as of the Effective Date shall be $200,000,000.
2
“Aggregate Revolving Outstandings” means, at any time, an amount equal to the aggregate principal balance of the Revolving Advances then outstanding.
“Agreement” means this Credit Agreement (as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time).
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Loan Parties or their respective Subsidiaries from time to time concerning or relating to bribery, money laundering or corruption.
“Applicable Margin” means (a) for Term SOFR Loans as of any date, a percentage per annum equal to 0.875% and (b) for Floating Rate Loans as of any date, a rate per annum equal to 0.00%.
“Applicable Parties” has the meaning set forth in Section 11.1(b).
“Arranger” means Morgan Stanley Senior Funding, Inc., in its capacity as sole lead arranger and sole bookrunner under this Agreement (which may act through any of its Affiliates in performance of its duties hereunder).
“Asset Sale” means any sale or other disposition (including as a result of casualty or condemnation) of any assets outside the ordinary course of business by any of the Borrower and the Restricted Subsidiaries (including issuances of stock by the Restricted Subsidiaries), except for (A) asset sales (including issuances of stock by the Borrower’s Subsidiaries) between or among the Borrower and the Restricted Subsidiaries, and (B) asset sales (including issuances of stock by the Restricted Subsidiaries), the Net Cash Proceeds of which do not exceed $75,000,000 in any single transaction or related series of transactions or $125,000,000 in the aggregate, to the extent that such Net Cash Proceeds are not reinvested (or committed to be reinvested) in the business of the Borrower or any of the Restricted Subsidiaries within 9 months following receipt thereof.
“Assignment Certificate” means a certificate, acceptable to the Agent in form and substance, assigning a Bank’s rights and obligations under this Agreement or a related document pursuant to Section 11.5.
“Availability Period” means the period from and including the Effective Date to 11:59 P.M. on March 25, 2027.
“Available Tenor” has the meaning set forth in Section 4.6.
“Bail-In Action” has the meaning set forth in Section 11.17.
“Bail-In Legislation” has the meaning set forth in Section 11.17.
“Bain” means Bain Capital Private Equity, LP, and its affiliates and associated funds.
3
“Bain Equity Investment” means an equity investment made in cash by Bain, directly or indirectly, in the Acquiror in accordance with the terms of the SCBA Transaction Agreement (as in effect on March 18, 2026).
“Bank-Related Party” and “Bank-Related Parties” have the meanings set forth in Section 11.9(c).
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a governmental authority or instrumentality thereof; provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such governmental authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Banks” means Morgan Stanley Senior Funding, Inc., acting on its own behalf and not as Agent; and each other Person (other than the Loan Parties) that is a party hereto or hereafter becomes a party hereto pursuant to the procedures set forth in Section 11.5.
“Base Rate” means, for any day, a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all time be equal to the highest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus one-half of one percent (0.50%) and (iii) the Term SOFR Rate for a one-month tenor in effect on such day plus 1.00%. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Term SOFR Rate, respectively. If the Base Rate is being used as an alternate rate of interest pursuant to Section 4.6 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 4.6(a)), then the Base Rate shall be the greater of clauses (i) and (ii) above and shall be determined without reference to clause (iii) above. For the avoidance of doubt, if the Base Rate as determined pursuant to the foregoing would be less than 1.00% such rate shall be deemed to be 1.00% for purposes of this Agreement.
“Base Rate Loan” means a Loan that bears interest at a rate based on the Base Rate.
“Base Rate Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR Rate”.
“Benchmark” has the meaning set forth in Section 4.6.
“Benchmark Replacement” has the meaning set forth in Section 4.6.
4
“Benchmark Replacement Adjustment” has the meaning set forth in Section 4.6.
“Benchmark Replacement Date” has the meaning set forth in Section 4.6.
“Benchmark Transition Event” has the meaning set forth in Section 4.6.
“Benchmark Unavailability Period” has the meaning set forth in Section 4.6.
“Beneficial Ownership Regulation” means 31 C.F.R § 1010.230.
“Borrower” means Fire Safety Platform Holdco, Inc., a Delaware corporation.
“Borrower Materials” has the meaning set forth in Section 8.1.
“Borrowing” means a borrowing under Section 2.1 consisting of simultaneous pro rata Loans to the Borrower of the same Class and Type, and in the case of a Term SOFR Borrowing, having the same Interest Period, made by each of the Banks severally.
“Borrowing Minimum” means $5,000,000.
“Bribery Act” means the United Kingdom Bribery Act of 2010.
“Business Day” means a day other than a Saturday, Sunday, United States national holiday or other day on which banks in New York are permitted or required by law to close.
“CAE Settlement” means the settlement agreement to resolve, to the fullest extent possible, all litigation and alleged claims involving the Combat Arms Earplugs (CAE) sold or manufactured by Aearo Technologies LLC and certain of its related entities and/or the Company, including claims that are part of the multi-district litigation in the Northern District of Florida and, separately, claims in the coordinated state court action in Minnesota, as well as future claims that may be filed, and in connection with which, if all conditions therein are met, the Company will contribute a total amount of $6.01 billion between 2023 and 2029, which is structured under the settlement to include $5.01 billion in cash consideration and $1 billion in the Company’s common stock, par value $0.01 per share, all as described in the Master Settlement Agreements dated as of August 29, 2023 and the Company’s Form 8-K dated August 29, 2023.
“Certain Funds Period” has the meaning set forth in Section 6.4.
“Class” means, when used in reference to any Loan or Borrowing, whether such Loan, or the Loans comprising such Borrowing, are Delayed Draw Term Loans or Revolving Advances.
“Closing Date” means the date on which the conditions precedent set forth in Section 6.2 have been satisfied or waived in accordance with this Agreement.
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.
“Commitment” means a DDTL Commitment or a Revolving Commitment.
5
“Commitment Fee Rate” means 0.05%.
“Commitment Fees” has the meaning set forth in Section 3.1.
“Communications” has the meaning set forth in Section 11.1(b).
“Company” means 3M Company, a Delaware corporation.
“Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term SOFR Loan, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Agent decides, following consultation with the Borrower, in its reasonable discretion may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Corresponding Tenor” has the meaning set forth in Section 4.6.
“Daily Simple SOFR” has the meaning set forth in Section 4.6.
“DDTL Bank” means a Bank with a DDTL Commitment and/or outstanding Delayed Draw Term Loans.
“DDTL Extension Election” has the meaning set forth in Section 2.3(a)(i).
“DDTL Commitment” means, with respect to each DDTL Bank, (a) the Dollar amount set forth opposite such DDTL Bank’s name on Schedule I hereto under the caption “DDTL Commitment” or if such Bank has entered into an Assignment Certificate, the Dollar amount set forth for such Bank in the records maintained by the Agent as such DDTL Bank’s “DDTL Commitment”, as such amount may be reduced pursuant to Section 5.4, or (b) the commitment of that DDTL Bank to make Delayed Draw Term Loans hereunder, as the context may require.
“DDTL Maturity Date” means the date that is 364 days after the Closing Date, subject to any extension thereof pursuant to Section 2.3 or, if earlier, the date on which the Banks’ Aggregate DDTL Outstandings are prepaid pursuant to Section 5.4, Section 9 or by agreement of the parties; provided, that if such date is not a Business Day, the DDTL Maturity Date shall be the prior Business Day.
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“Debt Incurrence” means any incurrence of indebtedness for borrowed money by any of the Borrower and the Restricted Subsidiaries, other than any of the following: (i) any borrowings under the Revolving Credit Facility hereunder, (ii) any intercompany indebtedness owed by the Borrower or any of the Restricted Subsidiaries to the Borrower or any of the Restricted Subsidiaries, (iii) any issuances of commercial paper in the ordinary course of business, (iii) any borrowings under working capital, letter of credit, overdraft facilities, factoring arrangements, hedging and cash management arrangements, surety bonds and other local credit facilities and/or lines of credit of foreign Restricted Subsidiaries, (iv) any lease, purchase money debt, equipment financing or other capital expenditure financing indebtedness, in each case, incurred in the ordinary course of business, (v) any indebtedness with respect to capital leases or financial leases incurred in the ordinary course of business, (vi) any indebtedness incurred to finance acquisitions and/or investments in an aggregate amount not to exceed $50,000,000 and (vii) any other indebtedness in an aggregate amount not to exceed $100,000,000.
“Default” means an event that, with the giving of notice, the passage of time or both, would constitute an Event of Default.
“Defaulting Bank” means any Bank that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to the Agent or any other Bank any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Bank notifies the Agent in writing that such failure is the result of such Bank’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower, the Agent or any Bank in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Bank’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Bank that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement, provided that such Bank shall cease to be a Defaulting Bank pursuant to this clause (c) upon the Agent’s receipt of such certification in form and substance satisfactory to it and the Agent, or (d) has become the subject of a Bankruptcy Event or a Bail-In Action.
“Delayed Draw Term Borrowing” means a borrowing consisting of Delayed Draw Term Loans of the same Type and having the same Interest Period made under this Agreement.
“Delayed Draw Term Loans” has the meaning set forth in Section 2.1(b).
“Dollars” and the “$” sign each means lawful currency of the United States of America.
“Duration Fee” has the meaning set forth in Section 3.3.
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“EBITDA” means, for any period, determined on a consolidated basis for the Company and its Subsidiaries, net income (or net loss) (determined in accordance with GAAP) for such period plus
(a) the sum of (i) interest expense, (ii) income tax expense, (iii) depreciation expense, (iv) amortization expense, (v) extraordinary, unusual or non-recurring charges (provided that the aggregate amount added back to net income (or net loss) for any twelve month period pursuant to this clause (v) shall not exceed $1,250,000,000), (vi) all losses arising from the extinguishment of indebtedness, (vii) other non-cash charges (including, without limitation, impairment charges, non-cash operating costs and non-cash share based compensation expense), (viii) charges related to, arising out of or in connection with the June 2023 PWS Settlement and (ix) charges related to, arising out of or in connection with the CAE Settlement, less
(b) the sum of the following, without duplication, to the extent included in the determination of net income for such period: (i) extraordinary, unusual or non-recurring income and (ii) other non-cash income (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced net income or EBITDA in any prior period).
Notwithstanding anything to the contrary herein or in any classification under GAAP of any Person, business, assets or operations, in respect of which a definitive agreement for the disposition, abandonment, transfer, closure or discontinuation of operations thereof has been entered into, as discontinued operations, no pro forma effect shall be given to any discontinued operations (and the income or loss attributable to any such Person, business, assets or operations shall not be excluded for any purposes hereunder) until such disposition, abandonment, transfer, closure or discontinuation of operations shall have been consummated.
“EBITDA to Interest Ratio” means, as of the last day of any Fiscal Quarter, the ratio of (i) EBITDA of the Company and its Subsidiaries for the period of four consecutive Fiscal Quarters then ended to (ii) interest expense on, and amortization of debt discount in respect of, all Funded Debt of the Company and its Subsidiaries during such period of four Fiscal Quarters.
“EEA Financial Institution” has the meaning set forth in Section 11.17.
“EEA Member Country” has the meaning set forth in Section 11.17.
“EEA Resolution Authority” has the meaning set forth in Section 11.17.
“Effective Date” means the date on which the conditions precedent set forth in Section 6.1 have been satisfied or waived in accordance with this Agreement, which date is April 30, 2026.
“Electronic Signatures” has the meaning set forth in Section 11.11.
“Eligible Assignee” means (i) any Bank or any Affiliate of any Bank (excluding any Defaulting Bank); (ii) a commercial or investment bank organized under the laws of the United States or any state thereof; or (iii) a commercial or investment bank organized under the laws of any other
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country which is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; provided that (w) neither Loan Party nor any Affiliate of any Loan Party shall be an Eligible Assignee, (x) any Eligible Assignee or any corporation controlling such Eligible Assignee must also have senior unsecured long-term debt ratings which are rated at least BBB+ (or the equivalent) as publicly announced by S&P or Baa1 (or the equivalent) as publicly announced by Moody’s, (y) any Eligible Assignee or any corporation controlling such Eligible Assignee must have shareholders’ equity in an amount not less than $3,000,000,000 and (z) no natural person (or a holding company, investment vehicle or trust for, owned and operated by or for the primary benefit of one or more natural persons) shall be an Eligible Assignee.
“Entitled Person” has the meaning set forth in Section 5.6.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and rulings issued thereunder.
“EU Bail-In Legislation Schedule” has the meaning set forth in Section 11.17.
“Event of Default” means an event specified in Section 9.1.
“Equity Issuance” means any issuance of equity interests by the Borrower or any Restricted Subsidiary, other than (i) issuances pursuant to employee stock option plans or other benefit or employee incentive arrangements or any dividend reinvestment plans, (ii) issuances among the Borrower and the Restricted Subsidiaries and (iii) issuance of common stock as consideration for the Madison Acquisition or any other acquisition or strategic initiatives.
“Erroneous Payment” has the meaning set forth in Section 10.7(c).
“Erroneous Payment Subrogation Rights” has the meaning set forth in Section 10.7(f).
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Bank or the Agent or required to be withheld or deducted from a payment to any Bank or the Agent: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Bank or the Agent, as applicable, being organized or incorporated under the laws of, or having its principal or relevant office or, in the case of any Bank, its applicable or relevant lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Bank, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Bank with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Bank acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 4.5) or (ii) such Bank changes its lending office, except to the extent that, pursuant to Section 5.5, amounts with respect to such Taxes were payable either to such Bank’s assignor immediately before such Bank acquired the applicable interest in the Loan or Commitment or to such Bank immediately before it changed its lending office, (c) Taxes
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attributable to a failure by such Bank or the Agent to comply with Section 5.5(d), and (d) any Taxes imposed under FATCA.
“Extension” has the meaning set forth in Section 2.3(c).
“Extension Date” has the meaning set forth in Section 2.3(a).
“Extension Election” has the meaning set forth in Section 2.3(a)(ii).
“Extension Fee” has the meaning set forth in Section 3.2.
“Facilities” means each of (a) the Revolving Credit Facility and (b) the DDTL Commitments, including the Delayed Draw Term Loans made thereunder, as the context requires.
“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code (or any amended or successor version described above), and any fiscal or regulatory legislation, rules, guidance notes or practices adopted pursuant to any such intergovernmental agreement, treaty or convention among governmental authorities and implementing the foregoing.
“FCPA” means the United States Foreign Corrupt Practices Act of 1977.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as the NYFRB shall set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“Fee Letter” means one or more separate agreements between the Company, the Borrower and the Agent, setting forth the terms of certain fees to be paid by the Company or the Borrower, as applicable, to the Agent for the benefit of the Banks and/or for the Agent’s own behalf, as more fully set forth therein.
“Fiscal Quarter” means any of the four periods, each approximately three calendar months in length, comprising the Company or the Borrower’s fiscal year (as applicable).
“Floating Rate” means, for any period, a fluctuating interest rate per annum equal for each such day during such period to the sum of the Base Rate for such day, plus the Applicable Margin for such day.
“Floor” has the meaning set forth in Section 4.6.
“Foreign Bank” means a Bank that is not a U.S. Person.
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“Funded Debt” means the sum of (i) all indebtedness for borrowed money of the Company and its Subsidiaries, (ii) all purchase money obligations of the Company and its Subsidiaries, including obligations under any finance lease and (iii) the face amount of all letters of credit issued for the account of the Company and its Subsidiaries to the extent drawn; provided that, at any time after the definitive agreement for any Material Acquisition shall have been executed (or, in the case of a Material Acquisition in the form of a tender offer or similar transaction, after the offer shall have been launched) and prior to the consummation of such Material Acquisition (or termination of the definitive documentation in respect thereof (or such later date as such indebtedness ceases to constitute Acquisition Debt as set forth in the definition of “Acquisition Debt”)), any Acquisition Debt (and the proceeds of such Acquisition Debt) shall be excluded from the definition of “Funded Debt”; provided, further, that any indebtedness for borrowed money shall be excluded from the foregoing clauses (i), (ii) and (iii) to the extent incurred or issued for the purpose of financing, in whole or in part, the spin-off or other disposition of SpinCo and its Subsidiaries (the “Spinoff”) and (A)(1) the release of the proceeds thereof to SpinCo and its Subsidiaries is contingent upon the consummation of the Spinoff and, pending such release, such proceeds are held pursuant to an escrow or similar arrangement and (2) if the definitive agreement for the Spinoff is terminated prior to the consummation of the Spinoff or if the Spinoff is otherwise not consummated by the date specified in the definitive documentation relating to such indebtedness for borrowed money, such proceeds shall be promptly applied to satisfy and discharge all obligations of SpinCo and its Subsidiaries in respect of such indebtedness for borrowed money or (B)(1) such indebtedness for borrowed money contains a “special mandatory redemption” provision (or other similar provision) or otherwise permits such indebtedness for borrowed money to be redeemed or prepaid if the Spinoff is not consummated by the date specified in the definitive documentation relating to such indebtedness for borrowed money, and (2) if the definitive agreement for the Spinoff is terminated in accordance with its terms prior to the consummation of the Spinoff or the Spinoff is otherwise not consummated by the date specified in the definitive documentation relating to such indebtedness for borrowed money, such indebtedness for borrowed money is so redeemed or prepaid within ninety (90) days of such termination or such specified date, as the case may be. All determinations under this definition shall be made with respect to the Company and its Subsidiaries on a consolidated basis.
“GAAP” has the meaning set forth in Section 1.5.
“Guaranteed Obligations” has the meaning set forth in Section 12.1.
“Governmental Rule” means any law, rule, regulation, ordinance, order, code interpretation, judgment, decree, directive, guidelines, policy or similar form of decision of any governmental authority.
“Indemnified Party” or “Indemnified Parties” has the meaning set forth in Section 11.9.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Loan Parties under this Agreement and (b) to the extent not otherwise described in clause (a), Other Taxes.
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“Interest Payment Date” means (a) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date and (b) as to any Term SOFR Loan, the last day of each Interest Period therefor and, in the case of any Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at three month intervals after the first day of such Interest Period, and the Maturity Date.
“Interest Period” means, for each Term SOFR Loan comprising part of the same Term SOFR Borrowing, the period commencing on the date of such Term SOFR Loan or the date of the conversion of any Floating Rate Loan into such Term SOFR Loan and ending on the last day of the period selected by the Borrower pursuant to the provisions of Section 4.2 and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions of Section 4.2. The duration of each such Interest Period shall be one, three or six months, as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period that ends after the applicable Maturity Date;
(b) Interest Periods commencing on the same date for Term SOFR Loans comprising part of the same Borrowing shall be of the same duration;
(c) no tenor that has been removed from the definition pursuant to Section 4.6(d) shall be available for specification in such notice;
(d) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and
(e) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.
“IRS” means the U.S. Internal Revenue Service.
“Judgment Currency” has the meaning set forth in Section 5.6.
“June 2023 PWS Settlement” means the proposed class-action settlement, subject to court approval, to resolve a wide range of drinking water claims by public water systems in the United States regarding any per- or poly-fluoroalkyl substance, and in connection with which, if so approved by the applicable court and all conditions therein are met, the Company will pay $10.5
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billion to $12.5 billion in total to resolve the claims released thereby, all as described in the Settlement Agreement dated as of June 22, 2023 and the Company’s Form 8-K dated June 22, 2023.
“JV Agreement” has the meaning given to such term in the SCBA Transaction Agreement.
“Loan” means a Revolving Advance or a Delayed Draw Term Loan made by the Banks to the Borrower pursuant to Section 2.1.
“Loan Documents” means this Agreement, the Notes, any Fee Letter and any other document related hereto, together with all amendments, modifications and restatements thereof.
“Loan Parties” means the Company and the Borrower.
“Madison Acquisition” means the acquisition by the Acquiror, directly or indirectly, of the Acquired Business pursuant to the Acquisition Agreement.
“Madison Closing Refinancing” means the repayment in full of, and the release of liens securing and guarantees in respect of, all outstanding indebtedness of the Acquired Business with respect to which a payoff letter is required to be delivered under the Acquisition Agreement, as in effect on March 18, 2026.
“Madison Transactions” means the Madison Acquisition, the Madison Closing Refinancing, the Bain Equity Investment, the SCBA Transfer, the execution of this Agreement and the funding of the Loans hereunder and the transactions contemplated by or related to the foregoing (including the payment of all fees and expenses incurred in connection therewith).
“Material Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition by the Company or any of its Subsidiaries of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition by the Company or any of its Subsidiaries of in excess of 50% of the capital stock, partnership interests, membership interests or equity of any Person (other than a Person that is a Subsidiary), or otherwise causing any Person to become a Subsidiary of the Company, (c) a merger or consolidation or any other combination by the Company or any of its Subsidiaries with another Person (other than a Person that is a Subsidiary), provided that (i) the Company (or a Person that succeeds to the Company pursuant to Section 8.2(d) in connection with such transaction or series of related transactions) or a Subsidiary of the Company (or a Person that becomes a Subsidiary of the Company as a result of such transaction) is the surviving entity and (ii) any Person that is a Subsidiary at the time of execution of the definitive agreement related to any such transaction or series of related transactions (or, in the case of a tender offer or similar transaction, at the time of filing of the definitive offer document) shall constitute a Subsidiary for purposes of this definition even if in connection with such transaction or series of related transactions, such Person becomes a direct or indirect holding company of the Company or (d) the acquisition of assets by the Company or any of its Subsidiaries that are expected to be used in whole or in part in the normal operations of the Company or its Subsidiaries, in each case the total consideration for which is equal to or greater than $350,000,000.
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“Material Adverse Effect” means a material adverse effect on (a) the consolidated financial condition or results of operations of the Loan Parties and the Restricted Subsidiaries taken as a whole, (b) the ability of each Loan Party to perform any of its payment obligations under this Agreement, or (c) the rights and remedies of the Agent or any Bank under this Agreement, taken as a whole.
“Maturity Date” means (i) with respect to Revolving Advances, the Revolving Maturity Date and (ii) with respect to Delayed Draw Term Loans, the DDTL Maturity Date.
“Moody’s” means Moody’s Investors Service, Inc.
“Net Cash Proceeds” means, with respect to any event, the cash (which term, for purposes of this definition, shall include cash equivalents) proceeds actually received by the Borrower and/or the Restricted Subsidiaries in respect of such event, including any cash received in respect of any noncash proceeds, but only as and when received, net of the sum, without duplication, of (i) all underwriting discounts and commissions and other fees and expenses incurred in connection with such event by the Borrower and/or the Restricted Subsidiaries, (ii) in the case of a sale, transfer, lease or other disposition (including pursuant to a sale and leaseback transaction) of an asset, the amount of all payments required to be made by the Borrower and/or the Restricted Subsidiaries as a result of such event to repay debt for borrowed money secured by such asset and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower and/or the Restricted Subsidiaries, and the amount of any reserves established by the Borrower and/or the Restricted Subsidiaries in accordance with GAAP or other applicable accounting standards; provided that if the amount of such reserves exceeds the amounts charged against such reserve, then such excess, upon determination thereof, shall then constitute Net Cash Proceeds.
“Note” means a note in substantially the form of Exhibit A hereto with all blanks appropriately completed, together with any modifications and extensions thereof and any note or notes issued in renewal thereof or substitution or replacement therefor.
“Notice” has the meaning set forth in Section 11.1(c).
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 A.M. on such day received by the Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Other Connection Taxes” means, with respect to any Bank or the Agent, Taxes imposed as a result of a present or former connection between such Bank or the Agent, as applicable, and the jurisdiction imposing such Tax (other than connections arising solely from such Bank or the
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Agent, as applicable, having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced this Agreement, or sold or assigned an interest in any Loan or Loan Document pursuant to Section 4.5).
“Other Taxes” means any present or future stamp, court, documentary, intangible, recording, filing or similar excise or property Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, or from the registration, receipt or perfection of a security interest under, or otherwise with respect to, this Agreement, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 4.5).
“Outstandings” means, at any time with respect to any Bank, an amount equal to the aggregate principal balance of that Bank’s Loans then outstanding.
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
“Participant Register” has the meaning set forth in Section 11.5(b).
“Payee” has the meaning set forth in Section 5.5(a).
“Payment Recipient” has the meaning set forth in Section 10.7(c).
“Percentage” means, with respect to each Bank under the applicable Facility, the ratio of (i) such Bank’s aggregate unused Commitments and Outstandings under such applicable Facility to (ii) the aggregate unused Commitments and Outstandings under such applicable Facility; provided that, in the case of Section 5.6 when a Defaulting Bank shall exist, the calculation of “Percentage” shall exclude any Defaulting Bank’s unused Commitments or Outstandings. If the Commitments under the applicable Facility have been terminated or have expired, the Percentages shall be determined based upon the amounts of the outstanding Loans thereunder or, if no such Loans are outstanding, based upon the Commitments most recently in effect thereunder, giving effect to any assignments and to any Bank’s status as a Defaulting Bank at the time of the determination.
“Periodic Term SOFR Determination Day” has the meaning set forth in the definition of “Term SOFR Rate”.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or other entity or government or any agency or political subdivision thereof.
“Platform” has the meaning set forth in Section 8.1.
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“Prime Rate” means the rate of interest per annum from time to time published in the “Money Rates” section of The Wall Street Journal as being the “Prime Lending Rate” or, if more than one rate is published as the Prime Lending Rate, then the highest of such rates (each change in the Prime Rate to be effective as of the date of publication in The Wall Street Journal of a “Prime Lending Rate” that is different from that published on the preceding domestic business day); provided, that in the event that The Wall Street Journal shall, for any reason, fail or cease to publish the Prime Lending Rate, the Agent shall choose a reasonably comparable index or source to use as the basis for the Prime Lending Rate.
“Proceeding” has the meaning set forth in Section 11.9(a).
“Qualifying Loan Facility” shall mean a loan facility entered into by the Company or any of its Subsidiaries for the purpose of financing the Madison Transactions that is subject to conditions precedent to funding that are no less favorable to the Borrower than the conditions set forth herein to the funding of the DDTL Commitments, as determined by the Borrower in its reasonable discretion.
“Qualifying Loan Notice” has the meaning set forth in Section 5.4(d).
“Reduction Events” means (a) any Debt Incurrence, (b) any Equity Issuance and (c) any Asset Sale.
“Register” has the meaning set forth in Section 11.5(f)(i).
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
“Related Person” of any Person means (a) any controlling Person, controlled Affiliate or Subsidiary of such Person, (b) the respective directors, officers or employees of such Person or any of its Subsidiaries, controlled Affiliates or controlling Persons and (c) the respective agents of such Person or any of its Subsidiaries, controlled Affiliates or controlling Persons.
“Relevant Governmental Body” has the meaning set forth in Section 4.6.
“Required Banks” means, at any time, Banks holding more than fifty percent (50%) of the Aggregate Commitment Amount and any Delayed Draw Term Loans at such time or, if the Commitments have been terminated at such time pursuant to Section 5.4 or Section 9.2, Banks owed more than 50% of the Aggregate Outstandings owing to Banks at such time; provided that the Commitment of, and the Loans held or deemed held by, any Defaulting Bank shall be excluded for purposes of making a determination of Required Banks.
“Required Facility Banks” means, at any time and with respect to each Facility, Banks holding at least a majority of (i) with respect to such Facility that is a delayed draw term loan facility, the aggregate unpaid principal amount of the Delayed Draw Term Loans of such Facility or unfunded DDTL Commitments then outstanding and in effect, respectively, and (ii) with respect
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to such Facility that is a revolving credit facility, the Revolving Commitments of such Facility then in effect (or if the Revolving Commitments of such Facility have been terminated, the sum of the Aggregate Revolving Outstandings); provided that the unused Commitments of, and the portion of the Loans held or deemed held by, any Defaulting Bank shall be excluded for purposes of making a determination of Required Facility Banks.
“Resolution Authority” has the meaning set forth in Section 11.17.
“Restricted Subsidiaries” means, collectively, the Subsidiaries of the Borrower; any such Subsidiary is a “Restricted Subsidiary”.
“Revolving Advance” means a revolving loan under Section 2.1(a).
“Revolving Bank” means a Bank with a Revolving Commitment and/or outstanding Revolving Advances.
“Revolving Commitment” means, with respect to any Revolving Bank at any time, the amount set forth opposite such Revolving Bank’s name on Schedule I hereto under the caption “Revolving Commitment” or, if such Revolving Bank has entered into one or more Assignment and Assumptions, set forth for such Revolving Bank in the Register maintained by the Agent pursuant to Section 11.5(f) as such Revolving Bank’s “Revolving Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 5.4.
“Revolving Credit Borrowing” means a borrowing consisting of Revolving Advances of the same Type and having the same Interest Period made under this Agreement.
“Revolving Credit Exposure” means, with respect to any Bank (i) at any time prior to termination of the Revolving Commitments in full, such Bank’s Revolving Commitment (whether used or unused) provided that in the case of Section 5.7 when a Defaulting Bank shall exist, “Revolving Credit Exposure” shall mean the percentage of the total Revolving Commitments (disregarding any Defaulting Bank’s Revolving Commitment) represented by such Bank’s Revolving Commitment, or (ii) thereafter, such Bank’s Revolving Outstandings.
“Revolving Credit Facility” means the revolving credit facility established pursuant to Section 2.1(a).
“Revolving Extension Election” has the meaning set forth in Section 2.3(a)(ii).
“Revolving Maturity Date” means the date that is 364 days after the Closing Date, subject to any extension thereof pursuant to Section 2.3 or, if earlier, the date on which the Banks’ Revolving Commitments are terminated in full pursuant to Section 5.4, Section 9 or by agreement of the parties; provided that if such date is not a Business Day, the Revolving Maturity Date shall be the prior Business Day.
“Revolving Outstandings” means, at any time with respect to any Bank, an amount equal to the aggregate principal balance of that Bank’s Revolving Advances then outstanding.
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“S&P” means S&P Global Ratings.
“Sanctioned Country” means, at any time, a country or territory which is itself the subject or target of comprehensive or territory-wide Sanctions (as at the date hereof, Cuba, Iran, North Korea, the Crimea region and the non-government controlled areas of the Kherson and Zaporizhzhia regions of Ukraine, and the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic).
“Sanctioned Person” means, at any time, any Person that is the subject or target of Sanctions, including (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the United Kingdom, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country to the extent such Person is the subject of Sanctions, or (c) any Person owned or controlled 50% or more by any such Person or Persons described in the foregoing clauses (a) or (b).
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, the United Kingdom, any EU member state or Canada.
“SCBA Transaction Agreement” means that certain Transaction Agreement, dated as of March 18, 2026, by and among the Company, Fire Safety Platform Holding, LP, a Delaware limited partnership, BCPE Fuego Investor, LP, a Delaware limited partnership, Bain Capital Fund XIV, L.P., a Delaware limited partnership, and Bain Capital Fund (Lux) XIV, SCSp, a Luxembourg special limited partnership (together with any exhibits and schedules thereto).
“SCBA Transfer” has the meaning set forth in the SCBA Transaction Agreement.
“SEC” has the meaning set forth in Section 7(c).
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Determination Date” has the meaning set forth in the definition of “Daily Simple SOFR”.
“SOFR Rate Day” has the meaning set forth in the definition of “Daily Simple SOFR”.
“Solvent” means, as to each Loan Party and its respective Subsidiaries, on a consolidated basis, as of any date of determination, that on such date (i) the fair value of the assets of such Loan Party and its Subsidiaries on a consolidated basis, at a fair valuation, exceeds the debts and liabilities, direct, subordinated, contingent or otherwise, of such Loan Party and its Subsidiaries
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on a consolidated basis; (ii) the present fair saleable value of the property of such Loan Party and its Subsidiaries on a consolidated basis is greater than the amount that will be required to pay the probable liability of such Loan Party and its Subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) such Loan Party and its Subsidiaries on a consolidated basis is able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) such Loan Party and its Subsidiaries on a consolidated basis do not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted
“Specified Currency” has the meaning set forth in Section 5.6.
“Specified Representations” means the representations and warranties of each Loan Party set forth in clauses (a), (b)(i), (b)(ii)(A), (b)(ii)(B)(x), (h), (i), (j), (l) and (m) of Section 7.
“SpinCo” means 3M Health Care Company or another wholly-owned Subsidiary of the Company that will hold substantially all of the health care business of the Company in connection with the Spinoff.
“Spinoff” has the meaning set forth in the definition of “Funded Debt”.
“Subsidiary” of any specified Person means any other Person of which such first Person owns (either directly or indirectly through one or more other Subsidiaries) a majority of the outstanding equity securities or other ownership interests carrying a majority of the voting power in the election of the board of directors or other governing body of such Person.
“Taxes” means any present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges in the nature of a tax imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.
“Term SOFR” means the Term SOFR Rate and, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Term SOFR Rate (other than pursuant to clause (iii) of the definition of “Base Rate”); provided if Term SOFR would otherwise be less than 0.00%, then Term SOFR shall be deemed 0.00% per annum.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Agent in its reasonable discretion).
“Term SOFR Rate” means,
(a) for any calculation with respect to any Term SOFR Borrowing, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period (such day, the “Periodic Term SOFR Determination Date”) that is two (2) U.S. Government
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Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 P.M. on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 P.M. on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Type” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Term SOFR Rate or the Base Rate.
“Unadjusted Benchmark Replacement” has the meaning set forth in Section 4.6.
“UK Financial Institution” has the meaning set forth in Section 11.17.
“UK Resolution Authority” has the meaning set forth in Section 11.17.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
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“U.S. Tax Compliance Certificate” has the meaning set forth in Section 5.5(d)(ii)(B)(3).
“Write-Down and Conversion Powers” has the meaning set forth in Section 11.17.
1.2 Times
All references to times of day in this Agreement shall be references to New York, New York time unless otherwise specifically provided.
1.3 Interest Rates; Benchmark Notification
The interest rate on any Loan may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 4.6(a) provides a mechanism for determining an alternative rate of interest. The Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to (a) the continuation of, administration of, submission of, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof (including any Benchmark Replacement), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability or (b) the effect, implementation or composition of any Conforming Changes. The Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Bank or any other Person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
1.4. Divisions
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its equity interests at such time.
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1.5 GAAP
Except as otherwise stated in this Agreement, all financial information provided to the Agent or the Banks and all calculations for compliance with financial covenants will be made using generally accepted accounting principles as in effect in the United States of America from time to time (“GAAP”) consistently applied. If the Borrower notifies the Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Agent notifies the Borrower that the Required Banks request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith; provided that, if any change in GAAP occurs that would impact any financial covenant hereunder, such financial covenants shall be subject to GAAP as in effect immediately prior to such change until an agreement by the parties is reached to maintain the original intent of such financial covenant.
2. COMMITMENTS AND LOANS.
2.1 Loans.
(a) Each Revolving Bank (acting through any of its branches or Affiliates) severally agrees, on the terms and conditions hereinafter set forth, to make revolving loans in Dollars (each, a “Revolving Advance”) to the Borrower from time to time on any Business Day during the period from the Closing Date until the Maturity Date applicable to the Revolving Credit Facility in accordance with this Section 2.1(a); provided, however, that no Bank shall have any obligation to make any Revolving Advance if, after giving effect to such Revolving Advance, (i) that Bank’s Revolving Outstandings would exceed that Bank’s Revolving Commitment, or (ii) the Aggregate Revolving Outstandings would exceed the Aggregate Revolving Commitment Amount. The Revolving Credit Facility established hereby is revolving; subject to the terms and conditions of this Agreement, the Borrower may borrow, prepay pursuant to Section 5.3 and reborrow under this Section 2.1(a). The obligations of the Banks hereunder shall be several, but not joint.
(b) Each DDTL Bank (acting through any of its branches or Affiliates) severally agrees, on the terms and conditions hereinafter set forth, to make delayed draw term loans in Dollars (the “Delayed Draw Term Loans”) to the Borrower during the Availability Period in a single drawing on the Closing Date in a principal amount not to exceed such Bank’s DDTL Commitment and in accordance with this Section 2.1(b). The DDTL Commitments are not revolving in nature, and amounts borrowed under this Section 2.1(b) and repaid under Section 5.3 may not be reborrowed. The obligations of the Banks hereunder shall be several, but not joint.
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2.2 [Reserved].
2.3 Extension of Maturity Date.
(a) The Borrower may, (i) at any one time in any calendar year (but not less than ten (10) days and not more than thirty (30) days prior to the proposed Extension Date (as defined below)) and on not more than one occasion following the Effective Date, by written notice to the Agent (who shall promptly provide a copy of such notice to each DDTL Bank), propose to extend the Maturity Date of the DDTL Commitments and Delayed Draw Term Loan by twelve (12) months (a “DDTL Extension Election”) and (ii) at any one time in any calendar year (but not less than ten (10) days and not more than thirty (30) days prior to the proposed Extension Date) and on not more than one occasion following the Effective Date, by written notice to the Agent (who shall promptly provide a copy of such notice to each Revolving Bank), propose to extend the Maturity Date of the Revolving Credit Facility by twelve (12) months (a “Revolving Extension Election” and together with a DDTL Extension Election, the “Extension Elections”). Such notice shall specify the Facility subject to such Extension Election and the date (which shall not be less than ten (10) days after such notice is delivered to the Agent) by which such extension is to become effective (the “Extension Date”).
(b) Upon the Extension Date, the Agent shall so notify the Borrower, and the Maturity Date then in effect for such Facility shall, subject to Section 2.3(c) below, be extended for the additional 12-month period as described in subsection (a) of this Section 2.3, and all references in this Agreement, and in the Notes to the “Maturity Date” shall, with respect to such Facility and each Bank thereunder refer to the Maturity Date as so extended. Promptly following each extension of the Maturity Date, the Agent shall notify the Banks of the extension of the scheduled Maturity Date in effect immediately prior thereto.
(c) Notwithstanding the foregoing, any extension of the Maturity Date pursuant to this Section 2.3 (each, an “Extension”) shall not be effective unless, on the Extension Date, (i) the Borrower shall pay the Extension Fee in accordance with Section 3.2, (ii) after giving effect to such Extension, (A) (x) the representations and warranties of the Loan Parties contained in this Agreement or any other Loan Document shall be true and correct in all material respects (unless already qualified by materiality or “Material Adverse Effect” in which case they shall be true and correct in all respects) on and as of the Extension Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (unless already qualified by materiality or “Material Adverse Effect” in which case they shall be true and correct in all respects) as of such earlier date and(y) all references in the representations and warranties in Section 7 to financial statements, and to annual
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reports, quarterly reports or current reports filed with the SEC, shall be deemed to refer to the corresponding versions of those documents most recently delivered (or deemed delivered) by the Company in accordance with Section 8.1 and (B) before and immediately after giving effect to such Extension, no Default or Event of Default shall have occurred and be continuing and (iii) the Agent shall have received a certificate of an officer of the Borrower certifying that before and immediately after giving effect to such Extension, the conditions set forth in Section 2.3(c)(ii) have been satisfied.
2.4 Evidence of Debt.
(a) Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Bank resulting from each Loan owing to such Bank from time to time, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder in respect of Loans. The Borrower agrees that upon notice by any Bank to the Borrower (with a copy of such notice to the Agent) to the effect that a Note is required or appropriate in order for such Bank to evidence (whether for purposes of pledge, enforcement or otherwise) the Commitments or Loans owing to, or to be made by, such Bank, the Borrower shall promptly execute and deliver to such Bank a Note payable to such Bank and its registered assigns in a principal amount up to the Commitments or of the Loans, as applicable, of such Bank.
(b) The Agent shall maintain a control account, and a subsidiary account for each Bank, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Class and Type of Loans comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assignment Certificate delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Bank hereunder and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Bank’s share thereof.
(c) Entries made in good faith and in conformity with sound industry standards by the Agent in the control and subsidiary accounts pursuant to subsection (b) above shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to each Bank under this Agreement, absent manifest error; provided, however, that the Borrower shall have the right to inspect such entries and the failure of the Agent to make an entry, or any finding that an entry is incorrect, in such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.
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3. FEES AND EXPENSES
3.1 Commitment Fees.
The Borrower will pay to the Agent, for the account of each Bank in accordance with its Percentage under the applicable Facility (the “Commitment Fees”):
(a) a commitment fee on the daily average undrawn Aggregate DDTL Commitment Amount from (and including) the Effective Date until the earlier of (but excluding) (x) the Closing Date and (y) termination in full of the DDTL Commitments, at a rate per annum equal to the Commitment Fee Rate, which shall be due and payable on the Closing Date (or the earlier termination in full of the DDTL Commitments); and
(b) a commitment fee on the daily average undrawn Aggregate Revolving Commitment Amount from (and including) the Effective Date until (but excluding) the Revolving Maturity Date; provided that such commitment fees payable under this Section 3.1(b) shall be due and payable quarterly in arrears on the 15th day following the last day of each March, June, September and December and on the Revolving Maturity Date
3.2 Extension Fee.
With respect to an Extension made pursuant to Section 2.3, the Borrower will pay to the Agent, for the account of each Bank in accordance with its Percentage under the Facility subject to such Extension, an extension fee (the “Extension Fee”) in Dollars equal to 0.10% of the aggregate principal amount of the undrawn Commitments and Loans extended pursuant to such Extension, which shall be earned, due and payable on the applicable Extension Date.
3.3 Duration Fee.
The Borrower will pay, or cause to be paid, a duration fee (the “Duration Fee”) for the account of each Bank equal to 0.10% of the aggregate principal amount of the Delayed Draw Term Loans of such Bank outstanding at 5 P.M. New York City time, on the date that is 18 months after the Closing Date, which Duration Fee shall be earned and payable on such date; provided that if such date is not a Business Day, such Duration Fee shall be payable on the next succeeding Business Day.
3.4 Expenses.
The Borrower shall pay (i) all reasonable and documented attorneys’ fees and out-of-pocket expenses of such attorneys incurred by the Agent in connection with the preparation, negotiation, execution and amendment of this Agreement and the other Loan Documents and (ii) all costs and expenses incurred by the Agent or any of the Banks in connection with the enforcement of this Agreement and the other Loan Documents (including but not limited to reasonable and documented attorneys’ fees and out-of-pocket expenses which shall be limited to the fees,
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charges and disbursements of one counsel to the Agent and the other Banks (and, if reasonably necessary, one local counsel in any relevant jurisdiction) and, solely in the case of an actual or potential conflict of interest, of one additional counsel (and, if reasonably necessary, one additional local counsel in any relevant jurisdiction) for all such affected Banks, whether paid to outside counsel or allocated to in-house counsel).
3.5 Additional Fees.
The Borrower shall pay to the Agent additional fees in the amounts set forth in any Fee Letter strictly pertaining to this Agreement.
4. INTEREST
4.1 Floating Rate.
The principal balance of the Loans shall bear interest at the Term SOFR Rate with an Interest Period of one month’s duration unless the Borrower elects an Interest Period of three or six months’ duration or a Floating Rate pursuant to a request for borrowing or conversion, subject, however, to imposition of the Default Rate pursuant to Section 4.3.
4.2 Term SOFR.
(a) The Borrower may from time to time notify the Agent in writing that a particular portion of the outstanding principal balance of the Loans shall bear interest at Term SOFR for a particular Interest Period. The portion of the outstanding balance of the Loans to which Term SOFR is applied must be in an amount not less than the Borrowing Minimum or a multiple thereof. Any Term SOFR notification shall be irrevocable, must be made pro rata with respect to the Loans of each Bank, and must be received by the Agent before 11:00 A.M. on the day three Business Days before the Business Day which is the first day of the applicable Interest Period. Commencing on the first day of the applicable Interest Period and continuing through the last day thereof, the portion of the outstanding principal balance of the Loans to which the notification related shall bear interest at Term SOFR (and the remaining part of the principal balance of the Loans, if any, shall continue to bear interest at the rate or rates previously applicable to such amounts), subject, however, to imposition of the Default Rate pursuant to Section 4.3. At the termination of such Interest Period, unless a new Term SOFR notification is requested and accepted by the Borrower, the interest rate applicable to the portion of the principal balance of the Loans to which the Term SOFR Rate was applicable shall revert to the Floating Rate.
(b) Notwithstanding anything to the contrary in this Section, the Borrower’s right to have a portion of the Loans bear interest at Term SOFR hereunder shall be suspended (i) upon the occurrence and during the continuation of an Event of Default under this Agreement, (ii) subject to Section 4.6, if the Agent is advised by the Required Banks that prior to the commencement of any Interest Period for
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a Term SOFR Borrowing, the Term SOFR Rate for the applicable Interest Period will not adequately and fairly reflect the cost to such Banks (or Bank) of making or maintaining their Loans (or its Loan) included in such Borrowing for the applicable currency and such Interest Period, (iii) during any period in which any Bank shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any governmental authority asserts that it is unlawful, for such Bank to perform its obligations hereunder or to fund or maintain Term SOFR Loans hereunder or (iv) subject to Section 4.6, if the Agent determines (which determination shall be conclusive absent manifest error) prior to the commencement of any Interest Period for a Term SOFR Borrowing, that adequate and reasonable means do not exist for ascertaining the Term SOFR Rate (including because the relevant screen rate is not available or published on a current basis), for such Interest Period, in which case (A) the Borrower shall either (x) prepay such Loans or (y) convert such Loans to the Floating Rate, (B) [reserved] and (C) the obligation of the Bank to make Term SOFR Loans shall be suspended until the Agent shall notify the Borrower and the Banks that the circumstances causing such suspension no longer exist.
(c) Absent manifest error, the records of the Agent shall be conclusive evidence as to the amount of the Loans bearing interest at Term SOFR and the date on which the Interest Period applicable to Term SOFR expires. Term SOFR Loans may not be outstanding as more than ten separate Interest Periods. The Agent shall give prompt notice to the Borrower and the Banks of the applicable interest rate determined by the Agent as the Floating Rate and Term SOFR.
4.3 Default Rate.
Upon the occurrence of an Event of Default pursuant to clause (a), (b) or (j) of Section 9.1, and so long as such Event of Default continues without written waiver thereof by the Agent and the Required Banks, (x) in the case of an Event of Default pursuant to clause (a) or (b) of Section 9.1, in the sole discretion of the Required Facility Banks or Required Banks, as applicable, and (y) in the case of an Event of Default pursuant to clause (j) of Section 9.1, automatically, in each case, and without waiving any of their other rights and remedies, the outstanding principal balance of the Loans shall bear interest at an annual rate which shall be equal to two percent (2.00%) over the annual rate or rates that would otherwise be in effect with respect to such Loans had there been no occurrence of such Event of Default.
4.4 Fees on Term SOFR Loans; Capital Adequacy; Funding Exceptions.
In addition to any interest payable on Loans made hereunder and any fees or other amounts payable hereunder, the Borrower agrees:
(a) Term SOFR Loans. If at any time any change in applicable law, rule or regulation or the interpretation or administration thereof by any governmental authority (including, without limitation, Regulation D of the Federal Reserve Board):
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(i) shall subject any Bank to any Taxes (other than (A) Indemnified Taxes and (B) Excluded Taxes) with respect to this Agreement; or
(ii) shall impose or deem applicable or increase any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Bank because of any portion of the principal balance of any Loans bearing interest at Term SOFR and the result of any of the foregoing would be to increase the cost to that Bank of making or maintaining any such portion or to reduce any sum received or receivable by that Bank with respect to such portion;
then, within 30 days after demand by that Bank the Borrower shall pay that Bank such additional amount or amounts as will compensate that Bank for such increased cost or reduction. A certificate in reasonable detail of any Bank setting forth the basis for the determination of such additional amount or amounts shall, absent obvious error, be conclusive evidence of such amount or amounts. The Agent shall endeavor to notify the Borrower of any change in applicable laws, rules, regulations, interpretations or administrative practices that may give rise to liability under this Section, but the Agent shall have no liability to the Borrower for failure to so notify the Borrower, and the failure to give such notification shall not be a defense to the Borrower’s obligation to pay any amounts under this paragraph (a).
(b) Capital Adequacy. If any Bank determines at any time that its Return has been reduced as a result of any Capital Adequacy Rule Change, that Bank may require the Borrower to pay it the amount necessary to restore that Bank’s Return to what it would have been had there been no Capital Adequacy Rule Change, provided that such Bank is generally charging, or intends to generally charge, such amounts to its customers that are similarly situated to the Borrower and with similar credit facilities, to the extent such Bank has the right under such similar credit facilities to do so (but such Bank shall not be required to disclose any confidential or proprietary information). For purposes of this paragraph (b), the following definitions shall apply:
(i) “Return”, for any calendar quarter or shorter period, means the percentage determined by dividing (A) the sum of interest and ongoing fees earned by a Bank under this Agreement during such period by (B) the average capital that Bank is required to maintain during such period as a result of its being a party to this Agreement, as determined by that Bank based upon its total capital requirements and a reasonable attribution formula that takes account of the Capital Adequacy Rules then in effect. Return may be calculated for each calendar quarter and for the shorter period between the end of a calendar quarter and the date of termination in whole of this Agreement.
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(ii) “Capital Adequacy Rule” means any law, rule, regulation or guideline regarding capital adequacy or liquidity that applies to any Bank, or the interpretation thereof by any governmental or regulatory authority including, without limitation, any agency of the European Union or similar monetary or multinational authority. Capital Adequacy Rules include rules requiring financial institutions to maintain total capital or liquidity in amounts based upon percentages of outstanding loans, binding loan commitments and letters of credit.
(iii) “Capital Adequacy Rule Change” means any change in any Capital Adequacy Rule occurring after the date of this Agreement, but does not include any changes in applicable requirements that at the date hereof are scheduled to take place under the existing Capital Adequacy Rules or any increases in the capital or liquidity that any Bank is required to maintain to the extent that the increases are required due to a regulatory authority’s assessment of that Bank’s financial condition. For the avoidance of doubt, any changes resulting from requests, rules, guidelines or directives concerning capital adequacy or liquidity (x) issued in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act or (y) promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to occur after the date of this Agreement, regardless of the date enacted, adopted or issued.
(iv) “Bank” includes (but is not limited to) the Agent, the Banks, as defined elsewhere in this Agreement, any assignee of any interest of any Bank hereunder and any holding company of any of the foregoing.
The initial notice sent by a Bank shall be sent as promptly as practicable after that Bank learns that its Return has been reduced, shall include a demand for payment of the amount necessary to restore that Bank’s Return for the quarter in which the notice is sent, shall state in reasonable detail the cause for the reduction in that Bank’s Return and that Bank’s calculation of the amount of such reduction, and shall include that Bank’s representation that it has made similar demand on one or more other commercial borrowers with revolving or term loans in excess of $500,000. Thereafter, that Bank may send a new notice during each calendar quarter setting forth the calculation of the reduced Return for that quarter and including a demand for payment of the amount necessary to restore that Bank’s Return for that quarter. A Bank’s calculation in any such notice shall be conclusive and binding absent demonstrable error.
(c) Funding Exceptions. The Borrower shall also compensate any Bank, upon written request by that Bank (which request shall set forth the basis for requesting such amounts), for all losses and imputed costs in respect of any interest or other
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consideration paid by that Bank to lenders of funds borrowed by it or deposited with it to maintain any portion of the principal balance of any Loans at Term SOFR which that Bank sustains (i) on account of any failure of the Borrower to borrow at Term SOFR on a date specified therefor in a notice provided by the Borrower to the Agent under Section 4.2 of this Agreement or (ii) due to any payment or prepayment (whether pursuant to Section 5.2, 5.3, 8.2(d) or 9.2) of any Loan bearing interest at Term SOFR on a date other than the last day of the applicable Interest Period for such Loan. A certificate as to any such loss or cost (including calculations, in reasonable detail, showing how the applicable Bank computed such loss or cost) shall be promptly submitted by that Bank to the Borrower and shall, in the absence of manifest error, be conclusive and binding as to the amount thereof. Such loss or cost may be computed as though the applicable Bank acquired deposits in the applicable interbank market to fund that portion of the principal balance whether or not such Bank actually did so.
4.5 Mitigation of Yield Protection.
Each Bank hereby agrees that, commencing as promptly as practicable after it becomes aware of the occurrence of any event giving rise to the operation of Section 4.4 or Section 5.5 with respect to such Bank, such Bank will give notice thereof through the Agent to the Borrower. The Borrower may at any time, by notice through the Agent to any Bank, request that such Bank change its lending office as to any Loan or Type of Loan or that it specify a new lending office with respect to its Commitment and any Loan held by it or that it rebook any such Loan with a view to avoiding or mitigating the consequences of an occurrence such as described in the preceding sentence, and such Bank will use reasonable efforts to comply with such request unless, in the opinion of such Bank, such change or specification or rebooking is, in the Bank’s good faith judgment, disadvantageous to such Bank. In addition, each Bank agrees that, except for changes or specifications or rebookings required by law or effected pursuant to the preceding sentence, if the result of any change or change of specification of lending office or rebooking would, but for this sentence, be to impose additional costs or requirements upon the Borrower pursuant to Section 4.4 or Section 5.5 (which would not be imposed absent such change or change of specification or rebooking) by reason of legal or regulatory requirements in effect at the time thereof and of which such Bank is aware at such time, then such costs or requirements shall not be imposed upon the Borrower but shall be borne by such Bank. All expenses incurred by any Bank in changing a lending office or specifying another lending office of such Bank or rebooking any Loan in response to a request from the Borrower shall be paid by the Borrower. Nothing in this Section 4.5 (including, without limitation, any failure by a Bank to give any notice contemplated in the first sentence hereof) shall limit, reduce or postpone any obligations of the Borrower under Section 4.4 or Section 5.5, including any obligations payable in respect of any period prior to the date of any change or specification of a new lending office or any rebooking of any Loan.
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4.6 Alternate Rate of Interest.
(a) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any other Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any other Loan Document in respect of any Benchmark setting at or after 5:00 P.M. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Banks without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Banks comprising the Required Banks.
(b) In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(c) The Agent will promptly notify the Borrower and the Banks of (i) any occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement and (iii) the effectiveness of any Conforming Changes. The Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (d) below and (y) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Agent or, if applicable, any Bank (or group of Banks) pursuant to this Section 4.6, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 4.6.
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(d) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(e) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Term SOFR Loans to be made, converted or continued, as applicable, during any Benchmark Unavailability Period and, failing that, either (x) the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to (A) a Borrowing bearing interest by reference to Daily Simple SOFR so long as Daily Simple SOFR is not the subject of a Benchmark Transition Event or (B) Floating Rate Loans if Daily Simple SOFR is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate. Furthermore, if any Term SOFR Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to the Term SOFR Reference Rate, then until such time as a Benchmark Replacement is implemented pursuant to this Section 4.6, (1) any Term SOFR Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Agent to, and shall (x) bear interest by reference to Daily Simple SOFR so long as Daily Simple SOFR is not the subject of a Benchmark Transition Event or (y) constitute a Floating Rate Loan if Daily Simple SOFR is the subject of a Benchmark Transition Event.
As used in this Agreement:
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“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (d) of Section 4.6.
“Benchmark” means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of Section 4.6.
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Agent for the applicable Benchmark Replacement Date:
(1) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for Dollar-denominated syndicated credit facilities and (b) the related Benchmark Replacement Adjustment;
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents. In determining the Benchmark Replacement pursuant to clause (2) above, the Agent will consider in good faith any proposal reasonably requested by the Borrower.
To the extent administratively and operationally feasible, the Agent shall use commercially reasonable efforts to ensure that any Benchmark Replacement shall meet the standards set forth in Section 1.1001-6 of the United States Treasury Regulations (or any successor or final version of such regulation) so as not to be treated as a “modification” (and therefore an exchange) of this Agreement for purposes of Section 1.1001-3 of the United States Treasury Regulations, it being understood that for these purposes, the substantially equivalent fair market value requirement of Treasury Regulations 1.1001-6(b)(2) shall be deemed satisfied, and it being further understood that the Agent shall not be required to take any action under this provision that would cause it any commercially unreasonable burden as determined in good faith by the Agent.
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“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for purposes of clause (1) of the definition of “Benchmark Replacement”, 0.00% (0 basis points); and
(2) for purposes of clause (2) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or the applicable Benchmark Replacement Date or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” means, with respect to any Benchmark, a date and time determined by the Agent, which date shall be no later than the earliest to occur of the following events with respect to such then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:
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(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, the Term SOFR Administrator, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any other Loan Document in accordance with Section 4.6 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any other Loan Document in accordance with Section 4.6.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), SOFR, with the conventions for this rate (which will include a lookback) being established by the Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided that if the Agent
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decides that any such convention is not administratively feasible for the Agent, then the Agent may establish another convention in its reasonable discretion. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate.
“Relevant Governmental Body” means the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
4.7 365/366-Day Year.
All interest on Loans subject to the Floating Rate due under this Agreement (only at times when the Floating Rate is based on the Prime Rate) will be calculated based on the actual days elapsed in a 365/366-day year. All interest on Loans subject to the Term SOFR Rate or the NYFRB Rate and all fees will be calculated based on the actual days elapsed in a 360-day year.
5. DISBURSEMENTS AND PAYMENTS
5.1 Requests for Borrowings.
Each Borrowing shall occur on written request to the Agent from a Person believed by the Agent to be an officer of or other authorized representative for the Borrower. Each such notice of a Borrowing shall be in a form as approved by the Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Agent), appropriately completed and signed by an officer or other authorized representative for the Borrower. A request for a Revolving Credit Borrowing must be received by the Agent not later than (i) 12:00 P.M. on the day that such Revolving Credit Borrowing is to be made in the case of a Revolving Credit Borrowing that is to bear interest initially at the Floating Rate or (ii) 11:00 A.M. on the day three Business Days before the Business Day which is the first day of the applicable Interest Period for such Revolving Credit Borrowing that is to bear interest initially at the Term SOFR Rate. A request for a Delayed Draw Term Borrowing must be received by the Agent not later than (i) 12:00 P.M. on the day one Business Day before the day that such Delayed Draw Term Borrowing is to be made in the case of a Delayed Draw Term Borrowing that is to bear interest initially at the Floating Rate or (ii) 11:00 A.M. on the day three Business Days before the Business Day which is the first day of the applicable Interest Period for such Delayed Draw Term Borrowing that is to bear interest initially at the Term SOFR Rate. Each Borrowing must be in an amount not less than the Borrowing Minimum or a multiple thereof and shall consist of the same Class and Type of Loans made on the same day by the Banks ratably according to their respective Commitments under the applicable Facility. Each such notice of a Borrowing shall
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specify (i) the Class of such Borrowing, (ii) the requested date of such Borrowing, (iii) whether the Loans comprising such Borrowing are to be Term SOFR Loans or Floating Rate Loans, (iv) the aggregate amount of such Borrowing, and (v) in the case of a Borrowing consisting of Term SOFR Loans, the initial Interest Period for each such Loan. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be a Term SOFR Borrowing with an Interest Period of one month’s duration. If no Interest Period with respect to any Borrowing of Term SOFR Loans is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Upon receipt of any such request, the Agent shall notify the Banks of the intended Borrowing no later than 2:00 P.M. on the date such request for such Borrowing is received by the Agent. At or before 3:00 P.M. on the date the requested Borrowing is to be made, each Bank shall remit its Percentage of the requested Borrowing to the Agent at the applicable Agent’s Account in immediately available funds. Prior to the close of business on the day the requested Borrowing is to be made, the Agent shall disburse such funds by crediting the same to the Borrower’s demand deposit account maintained with the Agent or in such other manner as the Agent and any officer of the Borrower may agree in writing. Any Borrowing that is to initially bear interest at Term SOFR shall also be subject to all conditions set forth in Section 4.2 hereof.
Unless the Agent shall have received notice from a Bank prior to the time of any Borrowing that such Bank will not make available to the Agent such Bank’s ratable portion of such Borrowing, the Agent may assume that such Bank has made such portion available to the Agent on the date of such Borrowing in accordance with this Section 5.1 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such ratable portion available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to such Loans comprising such Borrowing and (ii) in the case of such Bank, the NYFRB Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank’s Loan as part of such Borrowing for purposes of this Agreement.
5.2 Payments.
(a) Generally. The Borrower shall initiate all payments of principal, interest, fees and other payments due under this Agreement and all prepayments with respect to this Agreement to the Banks by means of payment made by the Borrower to the Agent in Dollars not later than 12:00 P.M. on the day when due in same day funds for the account of the Banks. All such payments shall be made in immediately available funds and shall be payable without setoff or counterclaim. Any payment due on a day on which the Agent is not open for substantially all of its business shall be due on the next day on which the Agent is so open. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of
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interest or fee or commission, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Term SOFR Loans to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. Absent obvious error, the records of the Agent will be conclusive evidence of the principal and accrued interest owing with respect to all Loans.
(b) Loans: Interest Payments. Interest accruing on the Loans shall be payable on each Interest Payment Date.
(c) Loans: Principal Payment. The entire principal balance of the Loans under each Facility owing to each Bank shall be due and payable in full on the Maturity Date applicable to such Bank under such Facility.
To the extent that the Agent receives funds for application to the amounts owing by the Borrower under or in respect of this Agreement or any Note in currencies other than Dollars to enable the Agent to distribute funds to the Banks in accordance with the terms of this Section 5.2, the Agent shall be entitled to convert or exchange such funds into Dollars, as the case may be, to the extent necessary to enable the Agent to distribute such funds in accordance with the terms of this Section 5.2; provided that the Borrower and each of the Banks hereby agree that the Agent shall not be liable or responsible for any loss, cost or expense suffered by the Borrower or such Bank as a result of any conversion or exchange of currencies effected pursuant to this Section 5.2 or as a result of the failure of the Agent to effect any such conversion or exchange, except for such loss, cost or expense due to the Agent’s negligence, gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final non-appealable judgment; provided further that the Borrower agrees to indemnify the Agent and each Bank, and hold the Agent and each Bank harmless, for any and all losses, costs and expenses incurred by the Agent or any Bank for any conversion or exchange of currencies (or the failure to convert or exchange any currencies) in accordance with this Section 5.2 except for such losses, costs or expenses due to the Agent’s or Bank’s negligence, gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final non-appealable judgment.
5.3 Prepayments.
(a) Optional. The Borrower may prepay the Loans in whole at any time or from time to time in part, without penalty or premium, provided that (i) prepayment of any Bank’s Loans must be accompanied by pro rata prepayment of each other Bank’s Loans under the applicable Facility, (ii) any partial prepayment of a Delayed Draw Term Loan must be in an aggregate amount not less than $25,000,000 or in a multiple of $25,000,000 in excess thereof, (iii) any partial prepayment of a Revolving Advance must be in an aggregate amount not less than $5,000,000 or in a multiple of $5,000,000 in excess thereof, (iv) prepayment of any principal of a Revolving Advance bearing interest at the Floating Rate may be made on same Business Day basis, provided irrevocable notice of such prepayment is made no later than 12:00 P.M. to the Agent, (v) prepayment of Term SOFR Revolving Advances shall be made only on three Business Days’ irrevocable notice (no later
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than 11:00 A.M.) to the Agent, (vi) prepayment of any principal of a Delayed Draw Term Loan bearing interest at the Floating Rate may be made on one Business Day’s irrevocable notice (no later than 12:00 P.M.) to the Agent, (vii) any prepayment of Term SOFR Delayed Draw Term Loan shall be made only on three Business Days’ irrevocable notice (no later than 11:00 A.M.) to the Agent, and (viii) prepayment of Loans must be accompanied by accrued interest on such amount prepaid through the date of prepayment and additional compensation calculated in accordance with Section 4.4(c) hereof (if applicable); provided, further, that, notwithstanding the foregoing, any such notice may state that such notice is conditioned upon the effectiveness of other credit facilities or the consummation of a specific transaction, in which case such notice may be revoked by the Borrower if such condition is not satisfied.
(b) Mandatory.
(i) In the event and on each occasion on or after the Closing Date that the Borrower or any Restricted Subsidiary receives any Net Cash Proceeds in respect of a Reduction Event, the Borrower shall promptly but in any event within three (3) Business Days of receipt of such Net Cash Proceeds, prepay the outstanding principal amount of and accrued and unpaid interest on the Delayed Draw Term Loans in an amount equal to 100% of the Net Cash Proceeds actually received by the Borrower or any Restricted Subsidiary from such Reduction Event. The Borrower shall give the Agent prompt written notice of receipt of any Net Cash Proceeds subject to mandatory prepayment under this Section 5.3(b), which notice shall be accompanied by reasonably detailed calculations of the applicable Net Cash Proceeds. Each prepayment of a Borrowing pursuant to this Section 5.3(b) shall be applied ratably to the Delayed Draw Term Loans. Prepayments shall be accompanied by accrued interest to the extent required by Section 4 and shall be subject to Section 4.4.
(ii) If, on any date, the Agent notifies the Borrower that, on any Interest Payment Date, the sum of (i) the aggregate principal amount of all Revolving Advances then outstanding exceeds 105% of the aggregate Revolving Commitments of the Banks on such date, the Borrower shall, as soon as practicable and in any event within two Business Days after receipt of such notice, subject to the proviso to this sentence set forth below, prepay the outstanding principal amount of any Revolving Advances in an aggregate amount sufficient to reduce such sum to an amount not to exceed 100% of the aggregate Revolving Commitments of the Banks on such date together with any interest accrued to the date of such prepayment on the aggregate principal amount of Revolving Advances prepaid; provided that if the aggregate principal amount of Floating Rate Revolving Advances outstanding at the time of such
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required prepayment is less than the amount of such required prepayment, the portion of such required prepayment in excess of the aggregate principal amount of Floating Rate Revolving Advances then outstanding shall be deferred until the earliest to occur of the last day of the Interest Period of the outstanding Term Benchmark Revolving Advances in an amount equal to the excess of such required prepayment.
(iii) The Agent shall give prompt notice of any prepayment required under this Section 5.3(b) to the Borrower and the Banks, and shall provide prompt notice to the Borrower of any such notice of required prepayment received by it from any Bank.
(iv) Notwithstanding anything to the contrary above, mandatory prepayments with respect to Net Cash Proceeds from Debt Incurrences or Asset Sales received by a foreign Restricted Subsidiary shall not be required if and for so long as the Borrower has determined in good faith that repatriation to the Borrower to make any such payments would have adverse tax consequences or would violate applicable local law or the applicable organizational documents of such foreign Restricted Subsidiary.
5.4 Termination or Reduction of the Commitments.
(a) Unless terminated prior to such date, (x) the DDTL Commitments shall be automatically and permanently reduced to zero on the earliest to occur of (i) the end of the Availability Period, (ii) on the Closing Date after giving effect to the Borrowing occurring on the Closing Date, (iii) the consummation of the Madison Acquisition without the making of any Delayed Draw Term Loans hereunder and (iv) the date of any public announcement by the Borrower or the abandonment by the Borrower of the Madison Acquisition or termination in accordance with the terms of the Acquisition Agreement (as in effect on March 18, 2026) of the Acquiror’s obligations thereunder to consummate the Madison Acquisition and (y) the Revolving Commitments shall be automatically and permanently reduced to zero at the earliest to occur of (i) the end of the Availability Period; provided that the Closing Date has not occurred prior to the end of the Availability Period, (ii) the consummation of the Madison Acquisition without the making of any Delayed Draw Term Loans hereunder, (iii) the date of any public announcement by the Acquiror or the abandonment by the Acquiror of the Madison Acquisition or termination in accordance with the terms of the Acquisition Agreement (as in effect on March 18, 2026) of the Acquiror’s obligations thereunder to consummate the Madison Acquisition and (iv) the Revolving Maturity Date.
(b) The Borrower may from time to time on at least three Business Days’ prior irrevocable notice received by the Agent (which shall promptly advise each Bank thereof) terminate the Commitments of the Banks in whole or permanently reduce the Commitments of the Banks in part without premium or penalty (other than the
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payment of compensation requested under Section 4.4); provided that (i) each partial reduction of the Commitments of the Banks shall be in the minimum amount of $25,000,000 or in a multiple of $25,000,000 in excess thereof with respect to DDTL Commitments and in the minimum amount of $5,000,000 or in a multiple of $5,000,000 in excess thereof with respect to Revolving Commitments, (ii) each partial reduction of the Commitments of the Banks shall be pro rata as to all of the Commitments of the Banks on the basis of the respective Percentages of the Banks, and (iii) no partial reduction of the Commitments of the Banks shall reduce the aggregate amount of the Commitments of the Banks to an amount less than the Aggregate Outstandings, with respect to the applicable Facility under which such Commitments are partially reduced; provided, further, that, notwithstanding the foregoing, any such notice may state that such notice is conditioned upon the effectiveness of other credit facilities or the consummation of a specific transaction, in which case such notice may be revoked by the Borrower if such condition is not satisfied.
(c) In the event and on each occasion on or after the Effective Date and prior to the Closing Date that the Borrower or any Restricted Subsidiary receives any Net Cash Proceeds in respect of a Reduction Event, the Borrower shall promptly but in any event within three Business Days of receipt of such Net Cash Proceeds give written notice of receipt of such Net Cash Proceeds subject to mandatory reduction under this Section 5.4(c), which notice shall be accompanied by reasonably detailed calculations of the applicable Net Cash Proceeds, to the Agent (which shall promptly advise each Bank thereof). On the date of receipt of such Net Cash Proceeds by the Borrower, the DDTL Commitments shall be ratably reduced on a dollar-for-dollar basis by an amount equal to 100% of the Net Cash Proceeds actually received by the Borrower or any Restricted Subsidiary from such Reduction Event (but for the avoidance of doubt, the Aggregate DDTL Commitment Amount shall not be reduced to an amount less than zero). Notwithstanding the foregoing, mandatory commitment reductions with respect to Net Cash Proceeds from Debt Incurrences or Asset Sales received by a foreign Restricted Subsidiary of the Borrower shall not be required if and for so long as the Borrower has determined in good faith that repatriation to the Borrower to make any such payments would have adverse tax consequences or would violate applicable local law or the applicable organizational documents of such foreign Restricted Subsidiary.
(d) In the event and on each occasion on or after the Effective Date and prior to the Closing Date that the Company or any of its Subsidiaries enters into a Qualifying Loan Facility, the Borrower shall promptly but in any event within three Business Days thereof, give written notice that such loan credit facility qualifies as a Qualifying Loan Facility subject to mandatory reduction under this Section 5.4(d) to the Agent (which shall promptly advise each Bank thereof) and that the definitive documentation and commitments in respect of such Qualifying Loan Facility are effective (such notice, a “Qualifying Loan Notice”). Upon the
41
Agent’s receipt of the Qualifying Loan Notice, the DDTL Commitments shall be ratably reduced on a dollar-for-dollar basis by an amount equal to 100% of such commitments actually provided to the Company or any of its Subsidiaries from such Qualifying Loan Facility (but for the avoidance of doubt, the Aggregate DDTL Commitment Amount shall not be reduced to an amount less than zero).
(e) Any Commitment that has been terminated or reduced may not be reinstated. Upon any reduction of the Commitments, the Commitment of each Bank shall be reduced by such Bank’s Percentage of such reduction amount under the applicable Facility. All fees accrued until the effective date of any termination of the Commitments shall be paid on the effective date of such termination of Commitments.
5.5 Taxes.
(a) All payments made by the Borrower to the Agent or any Bank (herein any “Payee”) under this Agreement shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by the Borrower or such withholding agent, then:
(i) the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay to the relevant governmental authority the full amount withheld or deducted to the extent required by and in accordance with applicable law;
(ii) to the extent that the withholding or deduction is made on account of Indemnified Taxes, then the sum payable by the Borrower shall be increased as necessary so that, after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 5.5), the applicable Payee receives an amount equal to the sum it would have received had no such deduction or withholding been made; and
(iii) after any payment of Taxes by the Borrower to a governmental authority pursuant to clause (i), the Borrower shall promptly forward to the Agent (for delivery to such Payee) a receipt issued by such governmental authority evidencing such payment or other documentation reasonably satisfactory to the Agent evidencing such payment to such authority.
(b) If any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.5) are directly asserted against any Payee, such Payee may pay such Indemnified Taxes and the Borrower promptly shall reimburse such Payee for such Indemnified Taxes paid by such Payee after written demand therefor. The Borrower shall reimburse each Payee,
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within 30 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.5) payable or paid by such Payee or required to be withheld or deducted from a payment to such Payee and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Bank (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Bank, shall be conclusive absent manifest error. The obligations of the Borrower under this Section 5.5(b) shall survive any termination of this Agreement, the resignation or replacement of the Agent, the assignment of rights by, or the replacement of, a Bank and the repayment, satisfaction or discharge of all obligations under any Loan Document.
(c) Each Bank shall severally indemnify the Agent, within 30 days after demand therefor, for (i) any Indemnified Taxes attributable to such Bank (but only to the extent that the Borrower has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Bank’s failure to comply with the provisions of Section 11.5(b) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Bank, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to any Bank by the Agent shall be conclusive absent manifest error. Each Bank hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Bank under any Loan Document or otherwise payable by the Agent to the Bank from any other source against any amount due to the Agent under this Section 5.5(c).
(d)
(i) Any Payee that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation prescribed by applicable law or the taxing authorities of a jurisdiction pursuant to such applicable law or reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Bank, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Bank is subject to backup withholding or information reporting requirements.
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Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 5.5(d)(ii)(A), (B), (D) and (E) below) shall not be required if, in the Bank’s reasonable judgement, such completion, execution or submission would subject such Bank to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Bank.
(ii) Without limiting the generality of the foregoing,
(A) any Bank that is a U.S. Person (or, if such Bank is disregarded as an entity separate from its owner for U.S. federal income tax purposes, is owned by a U.S. Person) shall deliver to the Borrower and the Agent on or prior to the date on which a Bank becomes a Bank under this Agreement (and from time to time thereafter as required by applicable law or upon the reasonable request of the Borrower or the Agent), executed copies of IRS Form W-9 (or any successor form) certifying that such Bank (or such U.S. Person, as applicable) is exempt from U.S. federal backup withholding Tax;
(B) any Foreign Bank shall, to the extent it is legally eligible to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Bank becomes a Bank under this Agreement (and from time to time thereafter as required by applicable law or upon the reasonable request of the Borrower or the Agent), whichever of the following is applicable:
(1) in the case of a Foreign Bank (or, if such Foreign Bank is disregarded as an entity separate from its owner for U.S. federal income tax purposes, such owner) eligible for the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under this Agreement, duly completed and executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under this Agreement, duly completed and executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) duly completed and executed copies of IRS Form W-8ECI with respect to such Foreign Bank (or, if a Foreign
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Bank is disregarded as an entity separate from its owner for U.S. federal income tax purposes, such owner);
(3) in the case of a Foreign Bank (or, if a Foreign Bank is disregarded as an entity separate from its owner for U.S. federal income tax purposes, such owner) entitled to the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a duly completed and executed certificate, substantially in the form of Exhibit D-1, to the effect that such Foreign Bank (or such owner, as applicable) is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Sections 881(c)(3)(B) and 871(h)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) duly completed and executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable; or
(4) to the extent a Foreign Bank (or, if a Foreign Bank is disregarded as an entity separate from its owner for U.S. federal income tax purposes, such owner) is not the beneficial owner, duly completed and executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable (and including any other information required to be provided by IRS Form W-8IMY); provided, that if the Foreign Bank is a partnership and one or more direct or indirect partners of such Foreign Bank are claiming the portfolio interest exemption, such Foreign Bank may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-4 on behalf of each such direct or indirect partner;
(C) any Foreign Bank shall, to the extent it is legally eligible to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Bank becomes a Bank under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly
45
completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Agent to determine the withholding or deduction required to be made;
(D) if a payment made to a Bank under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Bank were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Bank shall deliver to the Borrower and the Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine whether such Bank has complied with such Bank’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this Section 5.5(d)(ii)(D), “FATCA” shall include any amendments made to FATCA after the Effective Date; and
(E) The Agent, and any successor or supplemental Agent, shall deliver to the Borrower on or prior to the date on which the Agent becomes the administrative agent hereunder or under any other Loan Document (and from time to time thereafter upon the reasonable requested of the Borrower) executed copies of either (A) IRS Form W-9 (or any successor form) or (B) a U.S. branch withholding certificate on IRS Form W-8IMY (or any successor form) evidencing its agreement with the Borrower to be treated as a U.S. Person (within respect to amounts received on account of any Bank) and IRS Form W-8ECI (with respect to amounts received on its own account), with the effect that, in either case, the Borrower will be entitled to make payments hereunder to the Agent without withholding or deduction on account of U.S. federal withholding Tax.
(iii) Each Payee agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall promptly (A) update such form or certification or (B) notify the Borrower and the Agent in writing that (1) such form or certification has expired or has become obsolete or inaccurate and (2) such Payee is legally ineligible to update such form or certification. Notwithstanding any other provision of this paragraph, a
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Foreign Bank shall not be required to deliver any form pursuant to this paragraph that such Foreign Bank is not legally eligible to deliver.
(e) If any Payee determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5.5 (including by the payment of additional amounts pursuant to this Section 5.5), then such Payee shall pay an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 5.5 with respect to the Taxes giving rise to such refund) to the Borrower, net of all reasonable, documented, out-of-pocket expenses (including Taxes) of such Payee and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided, however, that if such Payee is required to repay such refund to such governmental authority, upon the request of such Payee, the Borrower shall promptly remit to such Payee the amount paid to the Borrower pursuant to this Section 5.5(e) (plus any penalties, interest, or other charges imposed by the relevant governmental authority). Notwithstanding anything to the contrary in this paragraph (e), in no event will the Payee be required to pay any amount to the Borrower pursuant to this paragraph (e) the payment of which would place the Payee in a less favorable net after-Tax position than the Payee would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any Payee to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.
(f) For purposes of this Section 5.5, the term “applicable law” includes FATCA.
5.6 Judgment Currency.
If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due under this Agreement in Dollars or any alternative currency (the “Specified Currency”) into another currency (the “Judgment Currency”), the rate of exchange which shall be applied shall be that at which, in accordance with normal banking procedures, the Agent could purchase the Specified Currency with the amount of the Judgment Currency on the Business Day next preceding the day on which such judgment is rendered. The obligation of the Borrower with respect to any such sum due from it to the Agent or any Bank (each, an “Entitled Person”) shall, notwithstanding the rate of exchange actually applied in rendering such judgment, be discharged only to the extent that on the Business Day following receipt by such Entitled Person of any sum adjudged to be due under this Agreement in the Judgment Currency, such Entitled Person may, in accordance with normal banking procedures, purchase and transfer to the required location of payment the Specified Currency with the amount of the Judgment Currency so adjudged to be due; and the Borrower hereby, as a separate obligation and notwithstanding any such judgment, agrees to indemnify such Entitled Person against, and to pay such Entitled Person on demand, in the
47
applicable Specified Currency, any difference between the sum originally due to such Entitled Person in the Specified Currency and the amount of the Specified Currency so purchased and transferred on that Business Day.
5.7 Defaulting Banks.
Notwithstanding any provision of this Agreement to the contrary, if any Bank becomes a Defaulting Bank, then the following provisions shall apply for so long as such Bank is a Defaulting Bank:
(a) Commitment Fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Bank pursuant to Section 3.1;
(b) no Duration Fee shall be payable to such Bank if on the date such fee becomes due and payable it is a Defaulting Bank; and
(c) the unused Commitments and Outstandings of such Defaulting Bank shall not be included in determining whether the Required Banks have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 11.4); provided, that this clause (c) shall not apply to the vote of a Defaulting Bank in the case of an amendment, waiver or other modification requiring the consent of such Bank or each Bank affected thereby.
In the event that the Agent and the Borrower each agrees that a Defaulting Bank has adequately remedied all matters that caused such Bank to be a Defaulting Bank, then such Bank shall purchase at par such of the Loans of the other Banks as the Agent shall determine may be necessary in order for such Bank to hold such Loans in accordance with its Percentage under the applicable Facility.
5.8 Replacement of Banks.
If any Bank becomes a Defaulting Bank or if any Bank requests compensation under Section 4.4 or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Bank or any governmental authority for the account of any Bank pursuant to Section 5.5, then the Borrower may, at its sole expense and effort, upon notice to such Bank and the Agent, require such Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.5), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Bank, if a Bank accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Agent, which consent shall not unreasonably be withheld, conditioned or delayed, (ii) such Bank shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), and (iii) in the case of any such assignment resulting from a claim for compensation under Section 4.4 or payments required to be made pursuant to Section 5.5, such assignment will result in a reduction in such
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compensation or payments. A Bank shall not be required to make any such assignment and delegation if, prior thereto, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
6. CONDITIONS PRECEDENT
6.1 Conditions Precedent to Effectiveness.
On or before the Effective Date, the Agent (or its counsel) shall have received the following documents, properly executed and in form and content acceptable to the Agent and the Banks:
(a) A counterpart of this Agreement from each party hereto duly signed on behalf of such party and a Note duly signed by the Borrower, substantially in the form of Exhibit A, to the order of the Banks (to the extent requested by any Bank pursuant to Section 2.4, at least three (3) Business Days prior to the Effective Date).
(b)
(i) A certified copy of resolutions or similar authorizing documentation of the governing body of each Loan Party authorizing the execution of this Agreement and all related documents.
(ii) A certificate of each Loan Party’s corporate secretary or assistant secretary as to the incumbency and signatures of the officers of such Loan Party signing the loan documentation.
(c)
(i) A certified copy of the Borrower’s Certificate of Incorporation from the Secretary of State of the state of the Borrower’s incorporation and Bylaws.
(ii) A certified copy of the Company’s Certificate of Incorporation from the Secretary of State of the state of the Company’s incorporation and Amended and Restated Bylaws.
(iii) A Certificate of Good Standing for each Loan Party issued by the Secretary of State of the state of such Loan Party’s incorporation dated not more than 30 days prior to the date hereof.
(d) An opinion of counsel to the Loan Parties, opining as to the due authorization, execution, delivery and enforceability of the Loan Documents and such other customary matters as the Agent may reasonably require.
(e) No Default or Event of Default shall have occurred and be continuing.
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(f) Each of the representations and warranties made by the Loan Parties (including for the avoidance of doubt, on behalf of the Subsidiaries of the Borrower) contained in this Agreement or in any other Loan Document shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) on and as of the Effective Date, except to the extent such representations and warranties expressly relate to an earlier date in which case such representations and warranties shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date.
(g) A certificate dated as of the Effective Date duly signed by the Company certifying as to clauses (e) and (f) of this Section 6.1.
(h) (i) At least three (3) Business Days prior to the Effective Date, all documentation and other information regarding each Loan Party requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Act, to the extent requested in writing by the Agent or any Bank of such Loan Party at least ten (10) Business Days prior to the Effective Date and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a customary FinCEN beneficial ownership certificate at least three (3) Business Days prior to the Effective Date if requested in writing by the Agent or any Bank of the Borrower at least ten (10) Business Days prior to the Effective Date.
In addition to the foregoing, the Agent and the Banks shall have received, to the extent invoiced at least three Business Days prior to the Effective Date, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.
For purposes of determining compliance with the conditions of this Section 6.1, each Bank shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Banks unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Bank prior to the date hereof, specifying its objection thereto.
6.2 Conditions Precedent to Closing Date
The obligation of each Bank to make any Delayed Draw Term Loans or any Revolving Advances hereunder on the Closing Date shall be subject solely to the satisfaction of the following conditions precedent:
(a) The Madison Acquisition shall have been consummated in all material respects in accordance with the Acquisition Agreement without giving effect to any amendments, modifications, supplements or waivers by you thereto or consents by you thereunder that are materially adverse to the Banks or the Arranger without the Arranger’s prior written consent (not to be unreasonably withheld, delayed or
50
conditioned), it being understood and agreed that any change in the price not exceeding a 10% increase or decrease in the aggregate purchase price consideration to be paid under the Acquisition Agreement will be deemed not to be materially adverse to the interests of the Banks or the Arranger and will not require the prior written consent of the Arranger to the extent, in the case of any decrease, that any such reduction in the cash portion of the purchase price consideration shall have been allocated to a reduction of the DDTL Commitments.
(b) The Bain Equity Investment, the SCBA Transfer and the Madison Closing Refinancing shall have been made or consummated prior to, or shall be made or consummated substantially concurrently with, the Closing Date.
(c) (i) Each of the Acquisition Agreement Representations shall be true and correct and (ii) each of the Specified Representations shall be true and correct (x) in the case of the representations and warranties qualified as to materiality, in all respects and (y) otherwise, in all material respects, in each case on and as of the date of the Closing Date, except in the case of any such representation and warranty that expressly relates to a prior date, in which case such representation and warranty shall be true and correct (if applicable as set forth above, in all material respects) on and as of such prior date;
(d) No Event of Default under clause (a), (b) or (j) of Section 9.1 shall have occurred and be continuing;
(e) Since March 18, 2026, there shall not have occurred and be continuing a Material Adverse Effect (as defined in the Acquisition Agreement as in effect on March 18, 2026);
(f) The Agent shall have received a (i) certificate, dated the date of consummation of the Closing Date and signed by an officer of the Borrower, confirming (x) satisfaction of the conditions set forth in clauses (a), (b), (c), (d) and (e) of this Section 6.2 and (y) no changes to the resolutions, organizational documents and incumbency certificates delivered pursuant to Section 6.1(b) above with respect to each of the Loan Parties following the Effective Date (or providing updates thereto), (ii) a solvency certificate from each of (x) a financial officer of the Borrower and (y) a financial officer of the Company, in each case, which shall be substantially in the form attached as Exhibit C, (iii) a borrowing notice as required by and in accordance with Section 5.1 and (iv) to the extent not provided on the Effective Date, a Note duly signed by the Borrower, substantially in the form of Exhibit A, to the order of the Banks (to the extent requested by any Bank pursuant to Section 2.4, at least three (3) Business Days prior to the Closing Date).
(g) The Arranger shall have received for the Company (a) audited consolidated balance sheets and related statements of earnings, comprehensive income and cash flows for the fiscal years ended December 31, 2024 and December 31, 2025
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and, in each case, for any subsequent fiscal year ended at least 60 days prior to the Closing Date, in each case, prepared in accordance with U.S. GAAP and (b) unaudited consolidated balance sheets and related statements of earnings, comprehensive income and cash flows for each subsequent fiscal quarter ended at least 45 days before the Closing Date (other than the fourth quarter of any fiscal year) prepared in accordance with U.S. GAAP (subject to normal year-end adjustments and the absence of footnotes). The Company’s filing of any required audited financial statements with respect to the Company on Form 10-K or required unaudited financial statements with respect to the Company on Form 10-Q, in each case, will satisfy the requirements under clauses (g)(a) or (g)(b), as applicable, of this paragraph. The Arranger hereby acknowledges receipt of the financial statements in the foregoing clause (g)(a) for the fiscal years ended December 31, 2024 and December 31, 2025.
(h) To the extent not provided on the Effective Date, the Agent and the Banks shall have received, at least three (3) Business Days prior to the Closing Date, all documentation and other information regarding each Loan Party requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Act and to the extent requested in writing of such Loan Party at least ten (10) Business Days prior to the Closing Date and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a customary FinCEN beneficial ownership certificate at least three (3) Business Days prior to the Closing Date if requested in writing of the Borrower by the Agent or any Bank at least ten (10) Business Days prior to the Closing Date.
(i) The Agent and the Banks shall have received all fees and other amounts due and payable on or prior to the Closing Date hereunder and under any Fee Letter, including, to the extent invoiced at least three Business Days prior to the Closing Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.
6.3 Conditions Precedent to Each Revolving Advance After the Closing Date
The obligation of each Revolving Bank to make any Revolving Advances hereunder during the period after the Closing Date until the applicable Maturity Date shall be subject solely to the satisfaction of the following conditions precedent (and any request for a Revolving Advance shall be deemed a representation and warranty by the Borrower that each of the following conditions precedent has been satisfied as of the date of such Revolving Advance):
(a) the representations and warranties of the Loan Parties (including for the avoidance of doubt, on behalf of Restricted Subsidiaries) contained in this Agreement (other than the representations and warranties in clauses (d), (e) and (g) of Section 7) shall be true and correct in all material respects (except to the extent such representations and warranties are qualified with “materiality” or “Material Adverse Effect” or similar
52
terms, in which case such representations and warranties shall be true and correct in all respects) on the date of such Revolving Advance as though made on and as of such date (except to the extent that any such representation or warranty is expressly stated to have been made as of a specific date, then such representation or warranty shall be true and correct in all material respects (except to the extent such representations and warranties are qualified with “materiality” or “Material Adverse Effect” or similar terms, in which case such representations and warranties shall be true and correct in all respects) as of such specific date); and
(b) no Default or Event of Default shall have occurred and be continuing.
6.4 Certain Funds Period.
During the period from and including the Effective Date to and including the termination of all DDTL Commitments hereunder (the “Certain Funds Period”), and notwithstanding (a) that any representation made on the Effective Date was incorrect, (b) any failure by any Loan Party or any Restricted Subsidiary to comply with the covenants in this Agreement, (c) (subject to clause (z) in the immediately succeeding sentence) any provision to the contrary in any Loan Document or otherwise, (d) that any condition to the occurrence of the Effective Date may subsequently be determined not to have been satisfied or (e) the occurrence of any Default or Event of Default (other than a Default under Section 9.1(a), (b) or (j) (with respect to any Loan Party)), neither the Agent nor any Bank shall be entitled to (i) cancel or reduce any of its Commitment (except as set forth in Section 5.4 above), (ii) rescind, terminate or cancel the Loan Documents or exercise any right or remedy or make or enforce any claim under the Loan Documents or otherwise it may have to the extent to do so would prevent, limit or delay the making of its Loan, (iii) refuse to participate in making its Loan; provided that the conditions in Section 6.2 have been satisfied or waived, or (iv) exercise any right of set-off or counterclaim in respect of its Loan to the extent to do so would prevent, limit or delay the making of its Loan. For the avoidance of doubt, (x) the rights and remedies of the Banks and the Agent shall not be limited in the event that any condition in Section 6.2 is not satisfied or waived on the Closing Date, (y) immediately after the expiration of the Certain Funds Period, all of the rights, remedies and entitlements of the Agent and the Banks shall be available notwithstanding that such rights were not available prior to such time as a result of the foregoing and (z) the Banks shall be entitled to terminate the Commitments under this Agreement prior to the Closing Date if a Default occurs under Section 9.1(a), (b) or (j) (with respect to any Loan Party) hereunder has occurred and is continuing.
7. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, each Loan Party makes the following representations and warranties on the Effective Date, the Closing Date and each Extension Date:
(a) Organizational Status. Each Loan Party and each Restricted Subsidiary is a corporation, partnership, limited liability company, unlimited liability company or other
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applicable business entity, as the case may be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.
(b) Authorization. (i) The execution, delivery and performance of this Agreement are within each Loan Party’s powers, have been duly authorized by all necessary action, and (ii) do not conflict with (A) the articles or bylaws (or analogous documents) of such Loan Party, (B) (x) solely with respect to the representations and warranties made on the Closing Date, any agreement evidencing debt for borrowed money of such Loan Party with an outstanding principal or committed amount in excess of $400,000,000 and (y) otherwise, any agreement by which such Loan Party is bound or (C) any applicable law or regulation or any court, administrative or other ruling, in each case, by which such Loan Party is bound, except to the extent that any such conflict referred to in the foregoing clauses (B) or (C) would not reasonably be expected to have a Material Adverse Effect.
(c) Financial Reports. The Company has provided the Banks with its annual audited financial statement as of December 31, 2025 and its quarterly unaudited financial statement as of March 31, 2026; provided that such financial statements shall be deemed to have been so provided if such financial statement shall be available on the website of the Securities and Exchange Commission (“SEC”) at http://www.sec.gov. The statements fairly represent in all material respects the financial condition of the Company and its Subsidiaries on a consolidated basis as of its date and were prepared in accordance with GAAP (except as otherwise expressly noted therein).
(d) Material Adverse Change. Except as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 or in the Company’s Quarterly Reports on Form 10-Q or reports on Form 8-K, as filed with the SEC prior to the Effective Date, since December 31, 2025, there has occurred no event or circumstance that would reasonably be expected to have individually or in the aggregate a material adverse effect on the consolidated financial condition or results of operations of the Company, the Borrower and the Restricted Subsidiaries taken as a whole.
(e) Litigation. Except as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 or in the Company’s Quarterly Reports on Form 10-Q or reports on Form 8-K, as filed with the SEC prior to the Effective Date, there are no legal or governmental proceedings pending or, to the best of the Company’s knowledge, threatened before any court, governmental agency or arbitrator, by which the Company, the Borrower or any of the Restricted Subsidiaries is or may be bound, which, if determined adversely to the Company, the Borrower or any Restricted Subsidiary, would reasonably be expected to have individually or in the aggregate a material adverse effect on the consolidated financial condition or results of operations of the Company, the Borrower and the Restricted Subsidiaries taken as a whole.
(f) ERISA. Each Loan Party and each Restricted Subsidiary is in compliance with ERISA, except to the extent any such noncompliance would not reasonably be expected to have a Material Adverse Effect.
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(g) Environmental Matters. Except as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 or in Company’s Quarterly Reports on Form 10-Q or reports on Form 8-K, as filed with the SEC prior to the Effective Date, to the best of the Company and the Borrower’s knowledge, the Company, the Borrower or the Restricted Subsidiaries have not incurred, directly or indirectly, any contingent liability in connection with (i) the release of any toxic or hazardous waste or substance into the environment or (ii) noncompliance with applicable environmental, health and safety statutes and regulations, in each case, which would reasonably be expected to have a Material Adverse Effect.
(h) Legal Agreements. This Agreement and the other Loan Documents constitute the legal, valid and binding obligations and agreements of the Loan Parties, enforceable against the Loan Parties in accordance with their respective terms, except as may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
(i) Regulation U. No Loan Party or Restricted Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System). After application of the proceeds of each Loan, not more than 25 percent of the value (as determined by any reasonable method) of the assets of the Company, the Borrower and the Restricted Subsidiaries, on a consolidated basis, subject to any provision of this Agreement under which the sale, pledge or disposition of assets is restricted, will consist of margin stock.
(j) Anti-Corruption Laws and Sanctions. Each Loan Party has implemented and maintains in effect policies and procedures reasonably designed to promote and achieve compliance by such Loan Party, the Restricted Subsidiaries and their respective directors, officers and employees, in all material respects with Anti-Corruption Laws and applicable Sanctions. Each Loan Party, the Restricted Subsidiaries, and to the knowledge of such Loan Party, its directors, officers and employees when acting on behalf of such Loan Party and the Restricted Subsidiaries, are in compliance in all material respects with Anti-Corruption Laws and applicable Sanctions. No Loan Party or any Restricted Subsidiary thereof is a Sanctioned Person. No use of proceeds of any Borrowing will directly or, to any Loan Party’s knowledge, indirectly constitute (i) a violation of the FCPA, (ii) a violation of the Bribery Act, or (iii) a material violation of any other Anti-Corruption Laws or applicable Sanctions.
(k) Affected Financial Institution. The Borrower is not an Affected Financial Institution.
(l) Solvency. On and as of the Closing Date, after giving effect to the Madison Transactions, including the funding of the Loans hereunder and the use of
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proceeds thereof, each of (x) the Company and its Subsidiaries and (y) the Borrower and the Restricted Subsidiaries, in each case, on a consolidated basis, are Solvent.
(m) Investment Company Act. No Loan Party nor any Subsidiary of the Borrower is an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.
The representations and warranties of the Loan Parties contained in this Agreement (other than the representation and warranty set forth in clause (l) of this Section 7 which is made only on the Closing Date) are made on the Effective Date, each Extension Date and the Closing Date. A request for a Borrowing under this Agreement constitutes a reaffirmation of these representations and warranties (other than, in the case of such Borrowing, the representations and warranties in clauses (d), (e) and (g) of this Section 7) as of the date of such Borrowing (other than the representation and warranty in clause (l) of this Section 7 which is made only on the Closing Date).
8. COVENANTS.
From the date hereof through the Maturity Date, and thereafter until the Loans are paid in full, unless the Required Banks (or the Agent, with the consent of the Required Banks) shall otherwise agree in writing, the Loan Parties shall do the following:
8.1 Financial Information
(a) The Company shall deliver to the Agent:
(i) Annual Financial Statements. Within 100 days of the end of each fiscal year of the Company, the Company’s consolidated annual financial statements, together with an audit report certified by independent certified public accountants of recognized standing, whose opinion shall not be qualified as to the scope of the audit or as to the status of the Company and its consolidated Subsidiaries as a going concern.
(ii) Interim Financial Statements. Within 60 days of the end of each of the first three Fiscal Quarters of each fiscal year of the Company, the Company’s unaudited interim financial statements. These statements will be prepared on a consolidated basis and in accordance with GAAP (subject to the absence of footnotes and to normal year-end audit adjustments). These statements will include a statement of cash flows.
(iii) Compliance Certificate. Concurrent with delivery of the financial statements required in (a)(i) and (a)(ii) above, a compliance certificate, substantially in the form of Exhibit B attached hereto, signed by an officer of the Company.
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(iv) Notices. Promptly upon obtaining knowledge of the same, written notice of any Default or Event of Default.
(v) Additional Information. Promptly following any written request therefor, such other information as the Agent or any Bank (through the Agent) may reasonably request.
(b) The Borrower shall deliver to the Agent:
(i) Annual Financial Statements. Commencing with the fiscal year of the Borrower for which such financial statements first become available after the Effective Date, promptly after such financial statements are finalized and the audit is complete for such fiscal year, the Borrower’s consolidated annual financial statements, together with an audit report certified by independent certified public accountants of recognized standing, whose opinion shall not be qualified as to the scope of the audit or as to the status of the Borrower and its consolidated Subsidiaries as a going concern.
(ii) Interim Financial Statements. Commencing with the first Fiscal Quarter of the Borrower for which such financial statements first become available after the Effective Date (with respect to the first three Fiscal Quarters of each fiscal year of the Borrower only), promptly after such financial statements are finalized, the Borrower’s unaudited interim financial statements. These statements will be prepared on a consolidated basis in accordance with accounting principles applied in the quarterly statements provided to the Bain Capital Investors and the 3M Investors (each as defined in the JV Agreement) under the terms of the JV Agreement (subject to the absence of footnotes and to normal year-end audit and other adjustments).
(iii) Compliance Certificate. Concurrent with delivery of the financial statements required in (b)(i) and (b)(ii) above, a compliance certificate, substantially in the form of Exhibit B attached hereto, signed by an officer of the Borrower.
Information required to be delivered pursuant to subsections (a)(i), (a)(ii), (b)(i) and (b)(ii) of this Section 8.1 shall be deemed to have been delivered if such information, or one or more annual or quarterly or other reports or proxy statements containing such information, shall have been posted and be available on the website of the SEC at http://www.sec.gov. The Borrower and the Company hereby acknowledge that the Agent will make available to the Banks materials and/or information provided by or on behalf of the Borrower and the Company hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar secure electronic system (the “Platform”).
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8.2 Covenants
Each Loan Party shall:
(a) Negative Pledge. Not create, incur or suffer to exist any pledge, lien, security interest, assignment or transfer upon or of any of such Loan Party’s or any Restricted Subsidiary’s accounts receivable, whether now existing or hereafter created or existing; provided, however, nothing in this Section 8.2(a) shall prohibit such Loan Party or such Restricted Subsidiary from (i) assigning or transferring its accounts receivable in connection with a transfer of the part of its business from which such accounts receivable have arisen, or (ii) transferring not more than 25% of its accounts receivable (with such percentage determined by face amount of the accounts receivable as of the time immediately before such transfer) so long as such Loan Party or such Restricted Subsidiary receives reasonably equivalent value on account of such transfer.
(b) Taxes. Pay, discharge or otherwise satisfy when due and payable, all taxes, assessments and governmental charges levied or imposed upon such Loan Party and any Restricted Subsidiary; provided, however, such Loan Party or such Restricted Subsidiary shall not be required to pay, discharge or otherwise satisfy any such taxes, assessments or governmental charges (i) whose amount, applicability or validity is being contested in good faith by appropriate proceedings, (ii) where reserves in conformity with GAAP with respect thereto have been provided on the books of such Loan Party or such Restricted Subsidiary or (iii) to the extent that the failure to do so, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(c) Insurance. Maintain insurance in amounts and covering such risks as is usually carried by Persons engaged in similar businesses and owning similar properties in the same general areas in which such Loan Party or any Restricted Subsidiary operates. Such insurance shall either be maintained by the Loan Parties and the Restricted Subsidiaries through self-insurance, through captive insurance companies or by insurance issued by responsible and reputable insurance companies.
(d) Merger. Refrain from being acquired by any other entity and refrain from transferring all or substantially all of its assets to, or consolidating, merging or otherwise combining with, any other entity where the Borrower (or in the case of a merger involving the Company and not the Borrower, the Company) is not the surviving entity; provided, further, that any Loan Party’s failure to comply with the requirements of this Section 8.2(d) shall not constitute an Event of Default under Section 9.1(f) of this Agreement, but instead shall give the Required Banks the right, by written notice to the Borrower, to demand payment of unpaid principal, accrued interest and all other amounts payable under this Agreement and to terminate the Commitments, with such demand and termination to be effective thirty calendar days’ following such written notice from the Required Banks to the Borrower.
(e) Maintenance of Properties. Make all repairs, renewals or replacements necessary to keep its (and in the case of the Borrower, its and the Restricted
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Subsidiaries’) plant, properties and equipment in good working condition, except to the extent that the failure to do so, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; provided, however, that nothing in this Section 8.2(e) shall prevent any Loan Party or any Restricted Subsidiary from discontinuing the operation or maintenance of such plant, properties or equipment if such discontinuance is, in the judgment of such Loan Party or such Restricted Subsidiary, desirable in the conduct of its business.
(f) Books and Records. Maintain and cause the Restricted Subsidiaries to maintain adequate books and records to permit the preparation of financial statements in accordance with GAAP.
(g) Compliance with Laws. Comply and cause the Restricted Subsidiaries of the Borrower to comply with all material laws and regulations applicable to its business, except to the extent that the failure to so comply, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(h) Preservation of Rights. Maintain and preserve its (and in the case of the Borrower, its and the Restricted Subsidiaries’) organizational existence and all material rights, privileges, charters and franchises it now has; provided, however, that such Loan Party and such Restricted Subsidiary may consummate any transaction permitted under Section 8.2(d); provided, further, that such Loan Party and such Restricted Subsidiary shall not be required to preserve any such right, privilege, charter or franchise if its applicable governing body shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Loan Party or such Restricted Subsidiary, as applicable.
(i) Inspection. Upon reasonable notice by the Agent to the applicable Loan Party, permit the Agent, subject to applicable law and third party confidentiality agreements entered into by such Loan Party in the ordinary course of business, to visit and inspect the properties of the Loan Parties or the Restricted Subsidiaries and examine its books and records to the extent the Agent determines in its reasonable discretion that such inspection and examination is necessary for the Agent to observe and monitor such Loan Party’s financial performance and financial condition and to assure such Loan Party’s and such Restricted Subsidiary’s compliance with its obligations under this Agreement; provided that, so long as no Default or Event of Default shall have occurred and be continuing, such inspections shall be limited to once per calendar year.
(j) Use of Proceeds. Use the proceeds of (i) the Revolving Advances solely for working capital, capital expenditures and other general corporate purposes of the Borrower and the Restricted Subsidiaries and (ii) the Delayed Draw Term Loans solely to finance, or to reimburse (including by way of dividend or distribution by the Borrower) all payments made on or prior to the Closing Date by any direct or indirect equityholder of the Borrower to finance, (x) the Madison Acquisition, (y) the Madison Closing Refinancing and (z) fees and expense in connection with the foregoing; provided, however, that the Borrower shall not directly or, to the knowledge of the Borrower,
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indirectly use the proceeds of any Borrowing (A) in furtherance of a corrupt offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in a manner which constitutes (1) a violation of the FCPA, (2) a violation of the Bribery Act, or (3) a material violation of any other Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, except to the extent licensed by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or otherwise authorized under the U.S. law, or (C) in any manner that would result in a material violation of any Sanctions applicable to the Borrower.
(k) Ratio of EBITDA to Interest. Maintain the Company’s EBITDA to Interest Ratio as of the end of each fiscal quarter of the Company at not less than 3.0 to 1.0.
(l) Anti-Corruption Laws and Sanctions. Maintain in effect and enforce policies and procedures reasonably designed to promote and achieve compliance by such Loan Party, the Restricted Subsidiaries and their respective directors, officers and employees in all material respects with Anti-Corruption Laws and applicable Sanctions.
9. EVENTS OF DEFAULT AND REMEDIES.
9.1 Default
As used herein, “Event of Default” means any of the following:
(a) Default in the payment when due by the Borrower of any principal due with respect to any of the Loans.
(b) Default in the payment when due of any interest, fees, costs, expenses or other payments required to be paid by the Borrower under this Agreement or any other Loan Document and the continuance of such default for five (5) Business Days.
(c) [Reserved].
(d) Default in the observance or performance of any covenant or agreement contained in Section 8.1(a)(iv), 8.2(a), 8.2(h) (as to existence) or 8.2(k) of this Agreement.
(e) Default in the observance or performance of any covenant or agreement contained in Section 8.1 (other than Section 8.1(a)(iv)) or Section 8.2(j) of this Agreement and continuance of such default for thirty (30) calendar days.
(f) Default in the observance or performance of any covenant or agreement contained in the Loan Documents (other than a covenant or agreement a default in whose performance is elsewhere in this Section 9.1 specifically dealt with) and continuance for
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more than thirty (30) calendar days after the earlier of the Loan Party’s knowledge thereof and written notice thereof from the Agent to the Borrower or the Company.
(g) Default in the payment of any indebtedness for borrowed money of any Loan Party or any Restricted Subsidiary when due (after giving effect to the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness for borrowed money) or, if payable on demand, on demand, in each case if the outstanding principal balance of all such indebtedness for borrowed money in default at any one time exceeds $400,000,000.
(h) Any representation or warranty made or deemed made by the Loan Parties (including for the avoidance of doubt, by the Borrower on behalf of the Restricted Subsidiaries) to the Agent or the Banks proves to be untrue in any material respect when made or deemed made.
(i) The rendering against any Loan Party or any Restricted Subsidiary of any judgment, decree or order for the payment of money in an aggregate amount in excess of $400,000,000 (excluding any portion of such judgment, decree or order which is insured by an unrelated third-party insurer which has not objected to or denied coverage), and either (i) enforcement proceedings upon such judgment, decree or order shall have been commenced by any creditor (and shall not have been stayed) or (ii) within ninety (90) calendar days after the entry, issue, or levy thereof, or due date therefor, as applicable, such judgment, decree or order has not been paid or discharged or stayed pending appeal or otherwise.
(j) With or without any Loan Party’s or any Restricted Subsidiary’s consent, a custodian, trustee or receiver shall be appointed for a substantial part of the properties of any such Loan Party or such Restricted Subsidiary (and such appointment, if made without any such Loan Party’s or such Restricted Subsidiary’s consent, continues undismissed or unstayed for a period of sixty (60) calendar days), or a petition shall be filed by or against any such Loan Party under the United States Bankruptcy Code or any similar comprehensive bankruptcy or insolvency law, whether domestic or foreign and, in the case of any such proceeding instituted against it (but not instituted by it), such proceeding shall remain undismissed or unstayed for a period of sixty (60) calendar days.
(k) the Company shall repudiate in writing any of its obligations under Section 12 or any such obligation shall be unenforceable against the Company in accordance with its terms, or the Company shall so assert in writing.
(l) the Company shall cease to own and control, of record and beneficially, directly or indirectly, at least 50.1% of the voting equity interests of the Borrower.
9.2 Remedies.
Upon the occurrence of any one or more Events of Default, or at any time thereafter, the Agent may, with the consent of the Required Banks, and shall, upon request of the Required Banks:
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(a) terminate the Commitments;
(b) declare the unpaid principal, accrued interest and all other amounts payable under this Agreement to be immediately due and payable; and/or
(c) exercise any or all remedies available to the Agent or the Banks under the other Loan Documents or otherwise available by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default under paragraph 9.1(j), the Commitments shall immediately terminate and the unpaid principal, accrued interest and all other amounts payable under this Agreement will become immediately due and payable.
9.3 Application of Funds.
After the exercise of remedies provided for in Section 9.2 (or after the Commitments have automatically become immediately due and payable as set forth in the proviso to Section 9.2), any amounts received on account of the Commitments shall, subject to the provisions of Section 5.7, be applied by the Agent in the following order:
First, to payment of that portion of the Commitments constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Agent and amounts payable under Section 5) payable to the Agent in its capacity as such;
Second, to payment of that portion of the Commitments constituting fees, indemnities and other amounts (other than principal and interest) payable to the Banks (including fees, charges and disbursements of counsel to the respective Banks and amounts payable under Section 5), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Commitments constituting accrued and unpaid interest on the Loans and other Commitments, ratably among the Banks in proportion to the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Commitments constituting unpaid principal of the Loans, ratably among the Banks in proportion to the respective amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Commitments have been indefeasibly paid in full, to the Borrower or as otherwise required by any Governmental Rule.
9.4 Setoff
Each Bank and each of its Affiliates may, upon the occurrence of an Event of Default or at any time thereafter, without prior notice to the Borrower, set off and apply any and all deposits held by, and other indebtedness owing by, such Bank or such Affiliate to or for the credit or the
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account of the Borrower against any and all obligations owing to such Bank or such Affiliate hereunder, whether now or hereafter existing, whether or not the Agent or such Bank or such Affiliate has made demand under this Agreement or any Loan Document and whether such obligations may be contingent or unmatured. Such right shall be in addition to and not in lieu of any other rights and remedies available to the Agent or the Banks or its Affiliates under the other Loan Documents or otherwise available by law or agreement. Each Bank will endeavor to notify the Borrower and the Agent promptly after any such setoff made by such Bank or such Affiliate; provided, however, that the failure to give such notice shall not affect the validity of such setoff or any application of funds realized by such setoff. Each Bank shall have the obligations, if any, specified in Section 11.2 with respect to any amounts obtained pursuant to this Section 9.4.
10. AGENCY
10.1 Authorization.
(a) Each Bank irrevocably appoints and authorizes the Agent to act on behalf of such Bank to the extent provided herein or in any document or instrument delivered hereunder or in connection herewith, and to take such other action as may be reasonably incidental thereto.
(b) As to any matters not expressly provided for by this Agreement or the other Loan Documents (including enforcement or collection), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written direction of the Required Banks, and, unless and until revoked in writing, such instructions shall be binding upon all Banks; provided, however, that the Agent shall not be required to take any action that (i) the Agent in good faith believes exposes it to liability unless the Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Banks with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Bank in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the Agent may seek clarification or direction from the Required Banks prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
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(c) In performing its functions and duties hereunder and under the other Loan Documents, the Agent is acting solely on behalf of the Banks, and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing:
(i) the Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee of or for any Bank or holder of any other obligation other than as expressly set forth herein and in the other Loan Documents, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in any other Loan Document with reference to the Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Bank agrees that it will not assert any claim against the Agent based on an alleged breach of fiduciary duty by the Agent in connection with this Agreement and/or the transactions contemplated hereby; and
(ii) nothing in this Agreement or any Loan Document shall require the Agent to account to any Bank for any sum or the profit element of any sum received by the Agent for its own account.
(d) In case of the pendency of any proceeding with respect to the Loan Parties under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Agent shall have made any demand on the Loan Parties) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Banks and the Agent (including any claim under Sections 3, 4.1, 4.3, 4.4(b) 5.5 and 11.9) allowed in such judicial proceeding; and
(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Bank to make such payments to the Agent and, in the event that the Agent shall consent to the making of such payments directly to the Banks, to pay to the Agent any amount due to it, in its capacity as the Agent, under the Loan Documents (including under Section 11.9). Nothing contained herein shall be deemed to authorize the Agent to authorize or consent to or accept or adopt on behalf of any Bank any plan of reorganization, arrangement, adjustment or composition affecting the
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obligations under the Loan Documents or the rights of any Bank or to authorize the Agent to vote in respect of the claim of any Bank in any such proceeding.
(e) The provisions of this Section 10 are solely for the benefit of the Agent and the Banks, and, except solely to the extent of each Loan Party’s rights to consent pursuant to and subject to the conditions set forth in this Section 10 and as set forth in Section 10.2(b) and Section 10.8, none of the Loan Parties or any of their respective Subsidiaries, or any of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions.
10.2 Distribution of Payments and Proceeds.
(a) After deduction of any costs of collection as hereinafter provided in Section 10.3, any fees specified herein or in any Fee Letter, and any servicing fee provided in any agreement between the Agent and the applicable Bank, the Agent shall remit to each Bank that Bank’s Percentage of all payments of principal, interest, fees and other payments that are received by the Agent under the Loan Documents. Each Bank’s interest in the Loan Documents shall be payable solely from payments, collections and proceeds actually received by the Agent under the Loan Documents; and the Agent’s only liability to the Banks hereunder shall be to account for each Bank’s Percentage of such payments, collections and proceeds in accordance with this Agreement. If the Agent is ever required for any reason to refund any such payments, collections or proceeds, each Bank will refund to the Agent, upon demand, its Percentage of such payments, collections or proceeds, together with its Percentage of interest or penalties, if any, payable by the Agent in connection with such refund. The Agent may, in its sole discretion, make payment to the Banks in anticipation of receipt of payment from the Borrower or the Company, as applicable. If the Agent fails to receive any such anticipated payment from the Borrower or the Company, as applicable, each Bank shall promptly refund to the Agent, upon demand, any such payment made to it in anticipation of payment from the Borrower or the Company, as applicable, together with interest for each day on such amount until so refunded at a rate equal to the NYFRB Rate for each such date.
(b) Notwithstanding the foregoing, if any Bank has wrongfully refused to fund its Percentage of any Borrowing or other Loan as required hereunder, or if the principal balance of any Bank’s Loans is for any other reason less than its Percentage of the aggregate principal balances of the Loans, the Agent may remit all payments received by it to the other Banks until such payments have reduced the aggregate amounts owed by the Borrower to the extent that the aggregate amount owing to such Bank hereunder is equal to its Percentage of the aggregate amount owing to all of the Banks hereunder. The provisions of this paragraph are intended only to set forth certain rules for the application of payments, proceeds and collections in the event that a Bank has breached its obligations hereunder and shall not be deemed to excuse any Bank from such obligations.
10.3 Expenses.
All payments, collections and proceeds received or effected by the Agent may be applied, first, to pay or reimburse the Agent (in its capacity as Agent) for all reasonable and documented costs, expenses, damages and liabilities at any time incurred by or imposed upon the Agent in
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connection with this Agreement or any other Loan Document (including but not limited to all reasonable and documented attorney’s fees, foreclosure expenses and Loans made to protect the security of any collateral), except to the extent that the Agent shall have previously received reimbursement of such costs, expenses, damages or liabilities from the Borrower. If the Agent does not receive payments, collections or proceeds sufficient to cover any such costs, expenses, damages or liabilities within five (5) calendar days after their incurrence or imposition, each Bank shall, upon demand, remit to the Agent its Percentage of the difference between (i) such costs, expenses, damages and liabilities, and (ii) such payments, collections and proceeds; provided, however, that no Bank shall be liable for any portion of such costs, expenses, damages and liabilities resulting from the gross negligence or willful misconduct of the Agent, as determined by a court of competent jurisdiction in a final non-appealable judgment.
10.4 Indemnification.
Each Bank severally (but not jointly) hereby agrees to indemnify and hold harmless the Agent (in its capacity as Agent, to the extent not reimbursed by any Loan Party), as well as the Agent’s Related Parties, ratably according to the respective Percentages of each of the Banks from and against any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, damages, costs, disbursements, or expenses (including reasonable and documented attorneys’ fees and expenses) of any kind or nature whatsoever, which are imposed on, incurred by, or asserted against the Agent or its Related Parties in any way relating to or arising out of this Agreement or the other Loan Documents, or as a result of any action taken or omitted to be taken by the Agent; provided, however, that no Bank shall be liable for any portion of any such losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, damages, costs, disbursements, or expenses resulting from the gross negligence or willful misconduct of the Agent, as determined by a court of competent jurisdiction in a final non-appealable judgment. Notwithstanding any other provisions of this Agreement or the other Loan Documents, the Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall be indemnified to its satisfaction by the Banks against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.
10.5 Exculpation of the Agent by the Banks.
The Agent shall be entitled to rely upon advice of counsel concerning legal matters, and upon any writing which it believes to be genuine or to have been presented by a proper Person. Neither the Agent nor any of its directors, officers, employees or agents shall (a) be responsible to any of the Banks for any recitals, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of this Agreement, any Loan Document, or any other instrument or document delivered hereunder or in connection herewith, (b) be responsible to any of the Banks for the validity, genuineness, perfection, effectiveness, enforceability, existence, value or enforcement of any collateral security, (c) be under any duty to any of the Banks to inquire into or pass upon any of the foregoing matters, or to make any inquiry concerning the performance by the Borrower, the Company or any other obligor of its obligations, or (d) in any event, be liable to any of the Banks for any action taken or omitted by it
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or them, except for its or their own gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final non-appealable judgment.
10.6 Agent and Affiliates.
The Agent shall have the same rights, powers and obligations hereunder in its individual capacity as any other Bank, and may exercise or refrain from exercising the same as though it were not the Agent, and the Agent and its affiliates may accept deposits from and generally engage in any kind of business with the Loan Parties as fully as if the Agent were not the Agent hereunder.
10.7 Acknowledgements of Banks.
(a) Each Bank represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility, (ii) it is engaged in making, acquiring or holding commercial loans set forth herein as may be applicable to such Bank in the ordinary course of business, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument (and each Bank agrees not to assert a claim in contravention of the foregoing), (iii) it has, independently and without reliance upon the Agent, any arranger, or any other Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Bank, and to make, acquire or hold Loans hereunder and (iv) it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans set forth herein, as may be applicable to such Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans, is experienced in making, acquiring or holding such commercial loans. Each Bank also acknowledges that it will, independently and without reliance upon the Agent, any arranger or any other Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Loan Parties and their respective Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. Each Bank also acknowledges and agrees that it will not assert any claim under federal or state securities law or otherwise in contravention of this Section 10.7(a).
(b) Each Bank, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment Certificate or any other Loan Document pursuant to which it shall become a Bank hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Agent or the Banks on the Effective Date.
(c) If the Agent (x) notifies a Bank, or any Person who has received funds on behalf of a Bank (any such Bank or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Agent) received by such Payment Recipient from the Agent or any
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of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Bank or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Agent pending its return or repayment as contemplated below in this Section 10.7 and held in trust for the benefit of the Agent, and such Bank shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Agent may, in its sole discretion, specify in writing), return to the Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Agent to any Payment Recipient under this clause (c) shall be conclusive, absent manifest error.
(d) Without limiting immediately preceding clause (c), each Bank or any Person who has received funds on behalf of a Bank (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Agent (or any of its Affiliates), or (z) that such Bank, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
(i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Bank shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Agent of its receipt of such payment, prepayment or repayment, the details
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thereof (in reasonable detail) and that it is so notifying the Agent pursuant to this clause (d).
For the avoidance of doubt, the failure to deliver a notice to the Agent pursuant to this clause (d) shall not have any effect on a Payment Recipient’s obligations pursuant to the immediately preceding clause (c) or on whether or not an Erroneous Payment has been made.
(e) Each Bank hereby authorizes the Agent to set off, net and apply any and all amounts at any time owing to such Bank under any Loan Document, or otherwise payable or distributable by the Agent to such Bank under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Agent has demanded to be returned under the preceding clause (c).
(f) The parties hereto agree that (x) irrespective of whether the Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Bank, to the rights and interests of such Bank, as the case may be) under the Loan Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations owed by the Borrower or any other Loan Party under or in respect of this Agreement or any other Loan Document; provided that this Section 10.7 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the obligations of the Borrower relative to the amount (and/or timing for payment) of the obligations that would have been payable had such Erroneous Payment not been made by the Agent; provided, further, that for the avoidance of doubt, the immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Agent from, or on behalf of (including through the exercise of remedies under any Loan Document), the Borrower for the purpose of making a payment on its obligations hereunder that became subject to such Erroneous Payment.
(g) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.
Each party’s obligations, agreements and waivers under this Section 10.7 shall survive the resignation or replacement of the Agent, any transfer of rights or obligations by, or the replacement of, a Bank, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Loans and other obligations of the Loan Parties (or any portion thereof) under or in respect of this Agreement or any other Loan Document.
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10.8 Resignation.
(a) The Agent may resign as such at any time upon at least 30 days’ prior notice to the Borrower and the Banks, whether or not a successor Agent has been appointed. In the event of any resignation of the Agent, the Required Banks shall, in consultation with the Borrower, as promptly as practicable appoint a successor Agent. If no such successor Agent shall have been so appointed by the Required Banks and shall have accepted such appointment within 30 days after the resigning Agent’s giving of notice of resignation, then the resigning Agent may, on behalf of the Banks and, in consultation with the Borrower, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon be entitled to receive from the prior Agent such documents of transfer and assignment as such successor Agent may reasonably request and the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After any resignation pursuant to this Section, the provisions of this Section shall inure to the benefit of the successor Agent as to any actions taken or omitted to be taken by it while it is an Agent hereunder and to the retiring Agent as to any actions taken or omitted to be taken by it while it was an Agent hereunder. Prior to any retiring Agent’s resignation hereunder as Agent, the retiring Agent shall take such action as may be reasonably necessary to assign to the successor Agent its rights as Agent under the Loan Documents.
(b) Notwithstanding paragraph (a) of this Section, in the event no successor Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its intent to resign, the retiring Agent may give notice of the effectiveness of its resignation to the Banks and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents; and (ii) the Required Banks shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Agent for the account of any Person other than the Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Agent shall directly be given or made to each Bank.
(c) If the Person serving as Agent is a Defaulting Bank pursuant to clause (d) of the definition thereof, the Required Banks may, by notice in writing to the Borrower and such Person, remove such Person as Agent. In connection therewith, the Required Banks, so long as no Event of Default shall have occurred and be continuing, in consultation with the Borrower, shall appoint a successor. If no such successor shall have been so appointed by the Required Banks and shall have accepted such appointment on or prior to the date that is 30 days following the date such Person became a Defaulting Bank (or such earlier day as shall be agreed by the Required Banks), then such removal shall nonetheless become effective on such date.
(d) Following the effectiveness of the Agent’s resignation from its capacity as such, the provisions of this Section 10 and Section 11.9, as well as any exculpatory,
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reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.
10.9 Co-Syndication Agents.
The Banks identified on the title page as “Co-Syndication Agents” shall have no right, power, obligation or liability under this Agreement or any other Loan Document other than those applicable to all Banks as such. Each Bank acknowledges that it has not relied, and will not rely, on any Bank so identified in deciding to enter into this Agreement or in taking or omitting any action hereunder.
10.10 Delegation of Duties.
The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Agent. The exculpatory provisions of this Section 10 shall apply to any such sub-agent. The Agent and any such sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Section 10 shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.
10.11 Bank ERISA Representation
(a) Each Bank (x) represents and warrants, as of the date such Person became a Bank party hereto, to, and (y) covenants, from the date such Person became a Bank party hereto to the date such Person ceases being a Bank party hereto, for the benefit of, the Agent and not, for the avoidance of doubt, to or for the benefit of the Loan Parties, that at least one of the following is and will be true:
(i) such Bank is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Bank’s entrance into, participation in, administration of and performance of the Loans, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE
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96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Bank’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement,
(iii) (A) such Bank is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Bank to enter into, participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Bank, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Bank’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Agent, in its sole discretion, and such Bank.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Bank or (2) a Bank has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Bank further (x) represents and warrants, as of the date such Person became a Bank party hereto, to, and (y) covenants, from the date such Person became a Bank party hereto to the date such Person ceases being a Bank party hereto, for the benefit of, the Agent and not, for the avoidance of doubt, to or for the benefit of the Loan Parties, that the Agent is not a fiduciary with respect to the assets of such Bank involved in such Bank’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
As used in this Section:
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
10.12 Agent’s Reliance, Limitation of Liability, Etc.
(a) The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be
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administrative in nature. Without limiting the generality of the foregoing, the Agent or any of its Related Parties:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; and
(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Required Banks or the Required Facility Banks, as applicable (or such other number or percentage of the Banks as shall be expressly provided for herein or in the other Loan Documents); provided that, the Agent may seek clarification or direction from the Required Banks or the Required Facility Banks, as applicable, prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided; provided further that, the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any debtor relief law or that may effect a forfeiture, modification or termination of property of a Defaulting Bank in violation of any debtor relief law; and shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its branches or Affiliates in any capacity.
(b) Neither the Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be taken by the Agent or any of its Related Parties under or in connection with this Agreement or the other Loan Documents (x) with the consent of or at the request of the Required Banks or the Required Facility Banks, as applicable (or such other number or percentage of the Banks as shall be necessary, or as the Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) and, with respect to the Loan Parties only, subject to Section 11.9(c) or (ii) responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report statement or other document referred to or provided for in, or received by the Agent under or in connection with this Agreement or any other Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any other Loan Document or any other agreement, instrument or document (including, for the avoidance of doubt, in connection with the Agent’s reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page) or for any failure of the Loan Parties to perform their obligations
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hereunder or thereunder, or (v) the satisfaction of any condition set forth in Section 6 or elsewhere herein or in any other Loan Document, other than to confirm receipt of items (which on their face purport to be such items) expressly required to be delivered to the Agent.
(c) The Agent shall be deemed not to have knowledge of any (i) notice of any of the events or circumstances set forth or described in Section 8.1(a)(iv) unless and until written notice thereof stating that it is a “notice under Section 8.1(a)(iv)” in respect of this Agreement and identifying the specific clause under said Section is given to the Agent by the Borrower, or (ii) notice of any Default or Event of Default unless and until written notice thereof (stating that it is a “notice of Default” or a “notice of an Event of Default”) is given to the Agent by the Borrower or a Bank. Notwithstanding anything herein to the contrary, the Agent shall not be liable for, or be responsible for any liabilities, costs or expenses suffered by any Loan Party, any of their respective Subsidiaries or any Bank as a result of, any determination of the Percentage, the Revolving Credit Exposure, any of the component amounts thereof or any portion thereof attributable to each Bank.
(d) The Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Eligible Assignees. Without limiting the generality of the foregoing, the Agent shall not (i) be obligated to ascertain, monitor or inquire as to whether any Bank, prospective Bank or participant is an Eligible Assignee, or (ii) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any non-Eligible Assignee.
(f) The parties hereto acknowledges that the Agent, together with its respective affiliated companies (collectively, the “MS Group”), is a member of a global financial services firm engaged in the securities, investment management, credit services businesses and individual wealth management businesses involving, without limitation, the provision of securities underwriting, hedging, trading, brokerage activities, foreign exchange, commodities and derivatives trading, as well as providing investment banking, financing and financial advisory services. As a result, members of the MS Group and their respective Related Parties may also at any time (i) invest on a principal basis or manage funds that invest on a principal basis, in the loans or debt or equity securities of the Borrower, the other Loan Parties or any other company that may be involved in any of the transactions contemplated herein, or in any currency, commodity or instrument that may be involved in any of the transactions contemplated herein, or in any related derivative instrument, (ii) carry out ordinary course investment and wealth management or brokerage activities for any the Borrower, the other Loan Parties or any other company (or their respective Related Parties) that may be involved in any of the transactions contemplated herein, and (iii) perform various investment banking, commercial banking and financial advisory services for other clients and customers who may have conflicting interests with respect to the Borrower, the other Loan Parties and their respective Related Parties. The parties hereto therefore acknowledge that (i) in the course of such activities and relationships, one or more members of the MS Group, other than the Agent performing its duties and responsibilities expressly set forth in this Agreement, may acquire information about the Borrower, the other Loan Parties, their respective Related Parties
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or other entities and persons which may be the subject of any transaction contemplated hereunder, and (ii) any such member of the MS Group are doing do in their respective capacities (including, without limitation, as investment manager, hedge counterparty, financial advisor or Bank), which are separate from and independent of the function and duties of the Agent. The Banks party hereto further acknowledge that no other member of the MS Group (or the Agent to the extent it receives any such information from another member of the MS Group) shall have any obligation to disclose (or any liability for failing to disclose) such information, or the fact that any of them are in possession of such information, to any Bank or to use such information on behalf of any of them.
(e) Without limiting the foregoing, the Agent (i) may treat the payee of any Note as its holder until such Note has been assigned in accordance with Section 11.5, (ii) may consult with legal counsel (including counsel to the Loan Parties), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iii) makes no warranty or representation to any Bank and shall not be responsible to any Bank for any statements, warranties or representations made by or on behalf of the Loan Parties in connection with this Agreement or any other Loan Document, (iv) in determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Bank, may presume that such condition is satisfactory to such Bank unless the Agent shall have received notice to the contrary from such Bank sufficiently in Loan of the making of such Loan and (v) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the maker thereof).
11. MISCELLANEOUS.
11.1 Notices.
(a) Except as otherwise specified herein, all notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) sent by registered mail, postage prepaid, or (iii) transmitted by telecopy or email, as follows:
(i) if to the Borrower, to it at Building 223-02-W-16, 3M Center, St. Paul, MN 55144, Attention of Israel Owodunni (Email: ore.owodunni@mmm.com) and Tom Osteraas (Email: dealnotices@mmm.com);
(ii) if to the Company, to it at Building 223-02-W-16, 3M Center, St. Paul, MN 55144, Attention of Israel Owodunni (Email: ore.owodunni@mmm.com) and Tom Osteraas (Email: dealnotices@mmm.com);
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(ii) if to the Agent, to it at MORGAN STANLEY SENIOR FUNDING, INC, 1300 Thames Street, 4th Floor, Thames Street Wharf, Baltimore, MD 21231, Attention: Agency Borrowers; Email: Agency.Borrowers@morganstanley.com; Telephone: (443) 627-4798; and
(iii) if to any other Bank, to it at its address (or telecopy number) set forth in its Administrative Questionnaire;
or, as to each party, at such other address or telecopier number as may hereafter be designated in a notice by that party to the other party complying with the terms of this Section. All such notices or other communications shall be deemed to have been given (i) on the date received if delivered personally, (ii) on the date of posting if delivered by mail, or (iii) upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), if delivered by email, or (iv) when sent, if delivered by telecopy (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). All communications required hereunder to be delivered by e-mail shall be transmitted to the applicable e-mail address set forth above, or, as to each party, at such other e-mail address as may hereafter be designated in a notice by that party to the other party complying with the terms of this Section.
(b) Each Loan Party agrees that the Agent may make written information, documents, instruments and other material relating to such Loan Party or any of its Subsidiaries or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby (collectively, the “Communications”) available to the Banks by posting such Communications on the Platform. Each of the Banks and the Loan Parties acknowledges that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution. Each of the Banks and the Loan Parties hereby approves distribution of the Communications through the Platform and understands and assumes the risks of such distribution. THE PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE AGENT, ANY ARRANGER, ANY DOCUMENTATION AGENT, ANY SYNDICATION AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY BANK OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE AGENT’S
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TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE PLATFORM, EXCEPT TO THE EXTENT THAT SUCH DAMAGES ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY A FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH APPLICABLE PARTY; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL ANY APPLICABLE PARTY HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY BANK OR ANY OTHER PERSON FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES).
(c) Each Bank agrees that notice to it (as provided in the next sentence) (a “Notice”) specifying that any Communications have been posted to the Platform shall constitute effective delivery of such information, documents or other materials to such Bank for purposes of this Agreement; provided that if requested by any Bank the Agent shall deliver a copy of the Communications to such Bank by email or telecopier. Each Bank agrees (i) to notify the Agent in writing of such Bank’s e-mail address to which a Notice may be sent by electronic transmission (including by electronic communication) on or before the date such Bank becomes a party to this Agreement (and from time to time thereafter to ensure that the Agent has on record an effective e-mail address for such Bank) and (ii) that any Notice agreed by such Bank to be deliverable by email may be sent to such e-mail address.
(d) Each of the Banks and the Loan Parties agrees that the Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Platform in accordance with the Agent’s generally applicable document retention procedures and policies.
(e) Nothing herein shall prejudice the right of the Agent or any Bank to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.
11.2 Sharing of Payments.
If any Bank shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of principal of or interest on any Loans other than through distributions made in accordance with Section 10.2, such Bank shall promptly give notice of such fact to the Agent and shall purchase from the other Banks such participations in the Loans as shall be necessary to cause the purchasing Bank to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Bank, the purchase shall be rescinded and the purchasing Bank restored to the extent of such recovery (but without interest thereon). Each Loan Party agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 11.2 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Bank were the direct creditor of such Loan Party in the amount of such participation.
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11.3 No Waiver; Cumulative Remedies.
No failure or delay by the Agent or any Bank in exercising any rights under this Agreement shall be deemed a waiver of those rights. The remedies provided for in the Agreement are cumulative and not exclusive of any remedies provided by law.
11.4 Amendments, Etc.
(a) Any amendment, modification, termination, or waiver of any provision of this Agreement must be in writing and signed by the Agent with the approval of the Required Banks (or such other number of Banks, if any, as may be required hereunder for such amendment, modification, termination or waiver). Notwithstanding the foregoing (i) any modification of the type described in clause (b) of this Section 11.4 shall be effective only if signed by each Bank, and (ii) any amendment, modification, termination, or waiver of Section 11.17 shall be effective only if signed by each Bank that is an Affected Financial Institution.
(b) Notwithstanding any other provision of this Agreement, the Agent shall not have the power, without the written consent of all of the Banks, to (i) forgive or reduce any indebtedness of the Borrower arising under this Agreement, (ii) agree to reduce the rate of interest or fees charged under this Agreement except as expressly provided in this Agreement, (iii) agree to extend the due date for payment of principal, interest, fees or any other amount due under this Agreement, (iv) extend the Maturity Date or increase the amount of any of the Commitments except as provided in Section 2.3, (v) amend the definition of “Required Banks” or “Required Facility Banks”, (vi) amend this Section 11.4 or Section 11.5(a) of this Agreement, or any provision herein providing for consent or other action by all Banks, (vii) amend any provision for the pro rata treatment of the Banks with respect to the sharing of payments of principal or interest or the making of Loans, (viii) release the Borrower or the Company from personal liability on account of its respective obligations hereunder or (ix) release the Company from the obligations under Section 12.
11.5 Binding Effect: Assignments and Participations.
(a) This Agreement is binding on the Loan Parties, the Agent and the Banks and their successors and assigns. No Loan Party may not assign its rights hereunder without the prior written consent of all of the Banks.
(b) Participations. Any Bank may, at its option, sell one or more participations in that Bank’s Loans; provided, however, (i) no such participation shall relieve any Bank of its obligations under this Agreement and the other Loan Documents, including, without limitation, its obligation to make Loans hereunder on the terms and subject to the conditions set forth herein, (ii) the Loan Parties, the Agent and the other Banks shall continue to deal solely and directly with such Bank granting any such participation in connection with such Bank’s rights and obligations under this Agreement and the other Loan Documents, and (iii) no such participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or the other Loan Documents, or to
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consent to any departure by the Loan Parties therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Loans in which such participant has such participation, or any fees or other amounts payable hereunder if such participant participates therein, or would postpone any date fixed for any payment of principal of, or interest on, the Loans in which such participant has such participation, or any fees or other amounts payable hereunder if such participant participates therein. Except as set forth in (iii) above, no holder of any such participation shall be entitled to require the Bank granting such participation to take or omit to take any action hereunder.
The Loan Parties agree that such participant shall be entitled to the benefits of Sections 4.4 and Section 5.5 (subject to the participant’s compliance with the requirements and limitations therein, including the requirements under Section 5.5(d) (it being understood that the documentation required under Section 5.5(d) shall be delivered to the Bank who sells the participation)) to the same extent as if it were a Bank and had acquired its interest by assignment pursuant to subsection (c) of this Section 11.5; provided that such participant (A) agrees to be subject to the provisions of Sections 4.5, 9.3 and 11.2 as if it were an assignee under subsection (c) of this Section 11.5 and (B) shall not be entitled to receive any greater payment under Section 4.4 or Section 5.5, with respect to any participation, than the Bank from whom it acquired the applicable participation would have been entitled to receive, unless the sale of such participation is made with the prior written consent of each Loan Party and each Loan Party expressly waives the benefit of this provision at the time of such participation. Each Bank that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Sections 4.5, 9.3 and 11.2 with respect to any participant.
Each Bank that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Bank shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any Commitments, Loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Bank shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.
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(c) Assignments.
(i) Generally. Subject to the limitations set forth in subsection (ii) below, any Bank may, at its option, assign to another Person all or a part of its Commitment, Loans and other rights and obligations under this Agreement, but only pursuant to an Assignment Certificate. From and after the effective date of any such assignment, the assignee thereunder shall, to the extent that rights and obligations hereunder have been assigned to it pursuant to such assignment, have the rights and obligations so assigned to it, and the assigning Bank shall, to the extent that rights and obligations have been assigned by it pursuant to such assignment, relinquish its rights and be released from its obligations under this Agreement. Any Bank making an assignment under this Section shall pay the Agent a transfer fee in the amount of $3,500 concurrent with such assignment.
(ii) Limitations. Notwithstanding paragraph (i):
(A) Any assignment under paragraph (i) may be made only with the prior written consent of the Agent and the Borrower, which consent shall not be unreasonably withheld, conditioned or delayed; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Agent within ten Business Days after having received notice thereof.
(B) Unless the Agent and the Borrower otherwise consent in writing, which consent shall not be unreasonably withheld, conditioned or delayed, no assignment may be made to any Person that is not an Eligible Assignee.
(C) Unless the Agent and the Borrower otherwise consent in writing and except as provided herein, which consent shall not be unreasonably withheld, conditioned or delayed, the aggregate Revolving Credit Exposure assigned by any Bank shall not exceed 60% of its original Commitment hereunder, as such Commitment may have been reduced from time to time pursuant to Section 5.4.
(D) Unless the Agent and the Borrower otherwise consent in writing, which consent shall not be unreasonably withheld, conditioned or delayed, any assignment of a part of a Bank’s Commitment, Loans and other rights and obligations must be in a minimum amount of $25,000,000.
No consent of the Borrower that would otherwise be required under this subsection (ii) shall be required during any period in which an Event of
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Default pursuant to clause (a), (b) or (j) of Section 9.1 exists. No consent of the Agent or the Borrower that would otherwise be required under this subsection (ii) shall be required in connection with an assignment by any Bank to any Affiliate of that Bank or to another Bank, that in each case is an Eligible Assignee; provided that such Bank shall have given prior written notice thereof to the Agent and the Borrower.
(d) Information. Subject to compliance with Section 11.18, each Loan Party authorizes the Agent and each Bank to disclose to its affiliates and any participant or assignee and any prospective participant or assignee any and all financial and other information in the possession of the Agent or that Bank concerning the Loan Parties.
(e) Assignment as Security. Nothing herein shall prohibit any Bank from pledging or assigning all or part of its rights under this Agreement and the other Loan Documents to any Person, including, without limitation, to any Federal Reserve Bank in accordance with applicable law.
(f) Register.
(i) The Agent, acting for this purpose as a non-fiduciary agent of the Loan Parties, shall maintain at one of its offices a copy of each Assignment Certificate delivered to it and a register for the recordation of the names and addresses of the Banks, and the Commitment of, and principal amount (and stated interest) of the Loans owing to, each Bank pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Loan Parties, the Agent and the Banks shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Loan Parties and any Bank, at any reasonable time and from time to time upon reasonable prior notice.
(ii) Upon its receipt of a duly completed Assignment Certificate executed by an assigning Bank and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Bank hereunder), the transfer fee referred to in clause (c)(i) of this Section 11.5 and any written consent to such assignment required by clause (c)(ii) of this Section 11.5, the Agent shall accept such Assignment Certificate and record the information contained therein in the Register; provided that if either the assigning Bank or the assignee shall have failed to make any payment required to be made by it pursuant to Section 5.1 or 10.2(a), the Agent shall have no obligation to accept such Assignment Certificate and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest
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thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
11.6 New York Law.
This Agreement and each other Loan Document is governed by the substantive laws of the State of New York, without regard to conflicts of law principles thereof that would require the application of the laws of another jurisdiction; provided, that (a) the interpretation of Material Adverse Effect (as defined in the Acquisition Agreement) and whether a Material Adverse Effect has occurred, (b) the accuracy of any Acquisition Agreement Representation and whether as a result of a breach thereof the Acquiror (or any of its subsidiaries) have the right to terminate its (or their) obligations under the Acquisition Agreement, or to decline to consummate the Madison Acquisition pursuant to the Acquisition Agreement and (c) whether the Madison Acquisition has been consummated in accordance with the Acquisition Agreement, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws rules or principles that would result in the application of the law of any other state.
11.7 Severability of Provisions.
If any part of this Agreement is unenforceable, the rest of the Agreement may still be enforced.
11.8 Integration.
This Agreement contains the entire understanding between the parties and supersedes all other oral or written agreements between the Loan Parties and the Agent or any Bank.
11.9 Indemnification by the Loan Parties; Damage Waiver.
(a) Each Loan Party hereby agrees to indemnify and hold harmless the Agent and each Bank, as well as their agents, employees, officers, directors and other representatives (collectively, the “Indemnified Parties” and individually an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable and documented fees and disbursements of counsel) to which any Indemnified Party may become subject resulting from or in connection with this Agreement or the other Loan Documents (including, without limitation, in connection with any investigation, litigation or proceeding (any of the foregoing, a “Proceeding”), in each case arising out of or in connection with or by reason of this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby or any actual or proposed use of the proceeds of the Borrowings; provided, that (a) the foregoing indemnity will not, as to any Indemnified Party, apply to losses, claims, damages, liabilities or related expenses (i) to the extent that such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnified Party or any of its Related Persons, (ii) to the extent resulting from any Proceeding that does not involve an act or omission of any Loan Party or any of its Affiliates and that is brought by an Indemnified Party solely against another
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Indemnified Party, other than claims against the Agent, in its capacity in fulfilling its role as an administrative agent, or any arranger, in its capacity in fulfilling its roles as an arranger, hereunder or (iii) to the extent resulting from a material breach by such Indemnified Party or any Related Person thereof of its obligations hereunder as found by a final, non-appealable judgment by a court of competent jurisdiction, (b) notwithstanding anything herein to the contrary or otherwise, each Loan Party’s obligation to reimburse legal expenses pursuant hereto shall be limited to the fees, charges and disbursements of one counsel to all Indemnified Parties (and, if reasonably necessary, one local counsel in any relevant jurisdiction) and, solely in the case of an actual or potential conflict of interest, of one additional counsel (and, if reasonably necessary, one additional local counsel in any relevant jurisdiction), for all such affected Banks and (c) subject to clause (a)(ii) above, each Loan Party’s obligation to indemnify in the case of any Proceeding shall be effective whether or not such Proceeding is brought by any Loan Party, any of its directors, equity holders, security holders or creditors, an Indemnified Party or any other Person or an Indemnified Party is otherwise a party thereto and whether based on contract, tort or any other theory.
(b) No Loan Party will, without the prior written consent of the applicable Indemnified Party (which shall not be unreasonably withheld, conditioned or delayed), settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any Proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Party is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional release of such Indemnified Party from all liability or claims that are the subject matter of such Proceeding and (ii) does not include a statement as to, or an admission of, fault, culpability, or a failure to act by or on behalf of such Indemnified Party or any injunctive relief or other non-monetary remedy. No Loan Party will be liable for any settlement, compromise, consent or termination of any pending or threatened Proceeding effected without such Loan Party’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed); provided that the foregoing indemnity will apply to any such settlement, compromise, consent or termination in the event that such Loan Party was offered the ability to assume the defense of the action that was the subject matter of such settlement, compromise, consent or termination and elected not to assume such defense; provided, further, that if a Proceeding is settled, compromised, consented to or terminated with such Loan Party’s prior written consent or if there is a final judgment in any such Proceeding, such Loan Party agrees to indemnify and hold harmless each Indemnified Party to the extent and in the manner set forth above.
(c) Notwithstanding any other provision of this Agreement or any other Loan Document, none of the Agent, any Bank, or their respective agents, employees, officers and directors (collectively, the “Bank-Related Parties” and individually a “Bank-Related Party”) shall have any liability (whether in contract, tort or otherwise) to any Loan Party or any of its security holders or creditors for or in connection with the transactions contemplated hereby, except, in each case, to the extent such damages resulted from the bad faith, gross negligence or willful misconduct of such Bank-Related Party or any of its
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Related Persons or from a material breach by such Bank-Related Party or any of its Related Persons of their obligations hereunder as found by a final non-appealable judgment by a court of competent jurisdiction. In no event, however, shall any Bank-Related Party be liable on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings) in connection with this Agreement, the other Loan Documents or the use of proceeds of the Borrowings or any related transaction.
(d) No Loan Party shall be liable to the Agent, the Banks or any other Indemnified Party for any special, indirect, consequential or punitive damages in connection with this Agreement, the other Loan Documents or the use of proceeds of the Borrowings or any related transaction; provided that this sentence shall not limit the Loan Parties’ indemnification obligations as set forth in this Section 11.9.
11.10 Customer Identification - USA Patriot Act Notice.
Each Bank and the Agent (for itself and not on behalf of any other party) hereby notifies the Loan Parties that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Act”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of each Loan Party and other information that will allow such Bank or the Agent, as applicable, to identify such Loan Party in accordance with the Act. Each Loan Party agrees to promptly provide such information required by the Act upon reasonable request.
11.11 Execution in Counterparts.
This Agreement and the other Loan Documents may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts of this Agreement or such other Loan Document, as the case may be, taken together, shall constitute but one and the same instrument. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement and the other Loan Documents and/or any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures (as defined below), deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be. “Electronic Signatures” means any electronic symbol or process attached to, or associated with, any contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
11.12 Waiver of Jury Trial.
THE LOAN PARTIES, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
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WITH THIS AGREEMENT, THE NOTES AND ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIPS ESTABLISHED HEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
11.13 Jurisdiction.
Each of the Loan Parties, the Agent and the Banks hereby irrevocably and unconditionally (i) agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or in equity, whether in contract, tort or otherwise, against any other party hereto arising out of or in any way relating to this Agreement or any of the other Loan Documents in any forum other than any New York State or Federal court located in New York County, and any appellate court from any thereof, (ii) submits, for itself and its property, to the jurisdiction of such courts over any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents and agrees that all claims in respect of such actions or proceeding may be heard and determined in such state or federal court and (iii) waives, to the fullest extent it may effectively do so, any defense of an inconvenient forum to the maintenance of such action or proceeding. Each Loan Party consents to the service of any process, summons, notice or document in any such suit, action or proceeding by registered mail addressed to such Loan Party at its address referred to in Section 11.1. Each Loan Party agrees that a final judgment in any such action or proceeding may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section 11.13 shall affect the right of the Agent or any Bank to serve legal process in any other manner permitted by law.
11.14 [Reserved].
11.15 No Fiduciary Relationship.
The Agent and the Banks may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Affiliates, and neither the Agent nor any Bank has any obligation to disclose any of such interest to the Loan Parties or their respective Affiliates. Each Loan Party acknowledges that the Banks have no fiduciary relationship with, or fiduciary duty to, such Loan party arising out of or in connection with this Agreement or the other Loan Documents, and the relationship between each Bank and such Loan Party is solely that of creditor and debtor or guarantor, as applicable. This Agreement and the other Loan Documents do not create a joint venture among the parties hereto.
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11.16 [Reserved.]
11.17 Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
As used in this Agreement:
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act of 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
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“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
11.18 Confidentiality.
Each of the Agent and the Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its
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Affiliates’ respective managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it or its Affiliates (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or any action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 11.18, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective party (or its managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives) to any swap or derivative or similar transaction under which payments are to be made by reference to any Loan Party and its obligations, this Agreement or payments hereunder, (iii) any rating agency, or (iv) the CUSIP Service Bureau or any similar organization, (g) with the consent of the Loan Parties or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent, any Bank or any of their respective Affiliates on a non-confidential basis from a source other than the Loan Parties, which it has no reason, after due inquiry, to believe has any confidentiality or fiduciary obligation to the Loan Parties with respect to such Information.
For purposes of this Section 11.18, “Information” means all information received from any Loan Party or any of its Subsidiaries relating to such Loan Party or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Agent or any Bank on a non-confidential basis prior to disclosure by such Loan Party or any of its Subsidiaries and other than information pertaining to this Agreement customarily provided by arrangers to market data collectors, similar service providers, including league table providers, that serve the lending industry and service providers to the Agent or any Bank in connection with the administration of this Agreement, the other Loan Documents and the Loans and Commitments hereunder, provided that, in the case of information received from any Loan Party or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 11.18 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
For the avoidance of doubt, nothing herein prohibits or impedes any individual from communicating or disclosing Information regarding suspected violations of laws, rules, or regulations to a governmental authority or self-regulatory authority having jurisdiction over such individual to the extent that any such prohibition on disclosure set forth herein shall be prohibited by the laws or regulations applicable to such governmental or self-regulatory authority.
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12. THE GUARANTY.
12.1 Guaranty.
The Company hereby absolutely, unconditionally and irrevocably guarantees to the Agent and each Bank as hereinafter provided, as primary obligor and not merely as surety, the prompt payment of all indebtedness of the Borrower hereunder to the Agent and each of the Banks in any form, however and whenever incurred or evidenced, whether now existing or hereafter arising, including any and all credit extended and any other obligations owing by the Borrower to the Banks in connection with the Loans at any time outstanding during the term of this Agreement, plus interest, fees, reimbursement obligations, indemnity obligations and other amounts owed by the Borrower to the Agent and the Banks hereunder (collectively, the “Guaranteed Obligations”) in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof. The Company hereby further agrees that if any of the Guaranteed Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the Company will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal. There are no conditions precedent to the enforcement of this guaranty.
Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents or the other documents relating to the Guaranteed Obligations, the obligations of the Company under this Agreement and the other Loan Documents shall not exceed an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under applicable debtor relief laws.
12.2 Obligations Unconditional.
The obligations of the Company under Section 12.1 are absolute, unconditional and irrevocable, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents or other documents relating to the Guaranteed Obligations, or any substitution, release, impairment or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 12.2 that the obligations of the Company hereunder shall be absolute, unconditional and irrevocable under any and all circumstances. The Company agrees that it shall have no right of subrogation, indemnity, reimbursement or contribution against the Borrower for amounts paid under this Section 12.2 until such time as the Guaranteed Obligations have been paid in full and the Commitments have expired or terminated. Without limiting the generality of the foregoing, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the liability of the Company hereunder, which shall remain absolute, unconditional and irrevocable as described above:
89
(a) at any time or from time to time, without notice to the Company, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;
(b) any amendments, restatements, modifications, extensions, renewals or waivers of any of the terms of this Agreement or any other Loan Document;
(c) any change in the time, manner, terms, or place of payment of or in any other term of, all or any of the Guaranteed Obligations;
(d) any of the acts mentioned in any of the provisions of any of the Loan Documents or other documents relating to the Guaranteed Obligations shall be done or omitted;
(e) failure, omission, delay, waiver, or refusal by the Banks to exercise, in whole or in part, any right or remedy held by the Banks with respect to this Agreement or any other Loan Document;
(f) any change in the existence, structure, or ownership of the Company or the Borrower, or any insolvency, bankruptcy, reorganization, or other similar proceeding affecting the Borrower or its assets;
(g) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any right under any of the Loan Documents or other documents relating to the Guaranteed Obligations shall be waived or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released, impaired or exchanged in whole or in part or otherwise dealt with; or
(h) any of the Guaranteed Obligations shall be determined to be void or voidable (including for the benefit of any creditor of the Company) or shall be subordinated to the claims of any Person (including any creditor of the Company).
With respect to its obligations hereunder, the Company hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Agent or any other holder of the Guaranteed Obligations exhaust any right, power or remedy or proceed against any Person under any of the Loan Documents or any other document relating to the Guaranteed Obligations, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations.
90
12.3 Reinstatement.
The obligations of the Company under this Section 12.3 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, or is annulled, set aside, invalidated, declared to be fraudulent or preferential or must otherwise be returned, refunded or repaid by the Banks whether as a result of any debtor relief law or otherwise, and the Company agrees that it will indemnify the Agent and each other holder of the Guaranteed Obligations on demand for all reasonable costs and expenses (including the fees, charges and disbursements of counsel) incurred by the Agent or such holder of the Guaranteed Obligations in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any debtor relief law, except those arising from the bad faith, gross negligence or willful misconduct of the Agent or a holder of the Guaranteed Obligations.
12.4 Certain Additional Waivers.
The Company agrees that it shall have no right of recourse to security for the Guaranteed Obligations, except through the exercise of rights of subrogation pursuant to Section 12.2 and through the exercise of rights of contribution pursuant to Section 12.6. The Company hereby irrevocably waives the defense of any law or regulation of any jurisdiction, or any other event affecting any term of a Guaranteed Obligation.
12.5 Remedies.
The Company agrees that, to the fullest extent permitted by law, as between the Company, on the one hand, and the Agent and the other holders of the Guaranteed Obligations, on the other hand, the Guaranteed Obligations may be declared to be forthwith due and payable as specified in Section 12.2 (and shall be deemed to have become automatically due and payable in the circumstances specified in Section 12.2) for purposes of Section 12.1 notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Guaranteed Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Guaranteed Obligations being deemed to have become automatically due and payable), the Guaranteed Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Company for purposes of Section 12.1.
12.6 Guarantee of Payment; Continuing Guarantee.
The guaranty in this Section 12.6 is a guaranty of payment and not of collection, is a continuing guaranty, and shall apply to the Guaranteed Obligations whenever arising. The Company hereby waives:
91
(a) notice of acceptance of this Guaranty, of the creation or existence of any of the Guaranteed Obligations, and of any action by the Banks in reliance hereon or in connection herewith;
(b) notice of the entry into this Agreement between the Borrower and the Banks and of any amendments, supplements, or modifications to this Agreement, or any waiver of consent under this Agreement, (including waivers of the payment and performance of the obligations thereunder);
(c) notice of any reduction or rearrangement of the Borrower’s obligations under this Agreement or any extension of time for the payment of any sums due and payable to the Banks under this Agreement;
(d) except as expressly set forth herein, presentment, demand for payment, notice of dishonor or nonpayment, protest, and notice of protest or any other notice with respect to the Guaranteed Obligations;
(e) all diligence in collection or protection of or realization upon the Guaranteed Obligations or any part thereof, any obligation hereunder, or any security for any of the foregoing;
(f) until irrevocable payment in full in cash of all the Guaranteed Obligations, all rights of setoff, counterclaim, subrogation, indemnification, contribution, and reimbursement from the Borrower;
(g) all rights to enforce any remedy which the Banks may have against the Borrower and any benefit of, or right to participate in, any collateral or security now or hereinafter held by the Banks in respect of the Guaranteed Obligations;
(h) defense to its liability hereunder (other than payment in full in cash of the Guaranteed Obligations);
(i) any right of counterclaim or offset or recoupment of any nature or description which it may have or which may exist based upon (and shall be deemed to have consented to) any of the acts, omissions, or other matters described in Section 4 of this Guaranty; and
(j) any requirement that suit be brought against, or any other action by the Banks be taken against, or any demand be made on the Borrower or any other person, or that any other action be taken or not taken as a condition to the Company’s liability for the Guaranteed Obligations under this Guaranty or as a condition to the enforcement of this Guaranty against the Company.
[REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
92
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written.
FIRE SAFETY PLATFORM HOLDCO, INC.
By: /s/ Israel Owodunni
Name: Israel Owodunni
Title: Treasurer
3M COMPANY
By: /s/ Israel Owodunni
Name: Israel Owodunni
Title: Treasurer
[Signature Page to Fire Safety Platform - Credit Agreement]
MORGAN STANLEY SENIOR FUNDING, INC., as Agent
By: /s/ Katie Bodack
Name: Katie Bodack
Title: Authorized Signatory
MORGAN STANLEY BANK, N.A., as Bank
By: /s/ Katie Bodack
Name: Katie Bodack
Title: Authorized Signatory
[Signature Page to Fire Safety Platform - Credit Agreement]
CITIBANK, N.A., as Bank
By: /s/ Susan Olsen
Name: Susan Olsen
Title: Vice President
[Signature Page to Fire Safety Platform - Credit Agreement]
U.S. Bank National Association, as Bank
By: /s/ Tyrone Parker
Name: Tyrone Parker
Title: Vice President
[Signature Page to Fire Safety Platform - Credit Agreement]
GOLDMAN SACHS BANK USA, as Bank
By: /s/ Thomas Manning
Name: Thomas Manning
Title: Authorized Signatory
[Signature Page to Fire Safety Platform - Credit Agreement]
JPMORGAN CHASE BANK, N.A., as Bank
By: /s/ Eduardo Lopez Peiro
Name: Eduardo Lopez Peiro
Title: Vice President
[Signature Page to Fire Safety Platform - Credit Agreement]
PNC Bank, National Association, as Bank
By: /s/ Stephen J O'Hara
Name: Stephen J O'Hara
Title: Senior Vice President
[Signature Page to Fire Safety Platform - Credit Agreement]
Industrial and Commercial Bank of China Limited, New York Branch, as Bank
By: /s/ Xuan Zhang
Name: Xuan Zhang
Title: Vice President
By: /s/ Pinyen Shih
Name: Pinyen Shih
Title: Executive Director
[Signature Page to Fire Safety Platform - Credit Agreement]
Schedule I
COMMITMENTS
| Name of Bank | DDTL Commitment | Revolving Commitment | ||||||
| Morgan Stanley Bank, N.A. | $715,000,000.00 | $ | 28,571,428.58 | |||||
| Citibank, N.A. | $ | 160,000,000.00 | $ | 28,571,428.57 | ||||
| U.S. Bank National Association | $ | 160,000,000.00 | $ | 28,571,428.57 | ||||
| Goldman Sachs Bank USA | $ | 115,000,000.00 | $ | 28,571,428.57 | ||||
| JPMorgan Chase Bank, N.A. | $ | 115,000,000.00 | $ | 28,571,428.57 | ||||
| PNC Bank, National Association | $ | 115,000,000.00 | $ | 28,571,428.57 | ||||
| Industrial and Commercial Bank of China Ltd., New York Branch | $ | 50,000,000.00 | $ | 28,571,428.57 | ||||
| Total: | $ | 1,430,000,000.00 | $ | 200,000,000.00 | ||||
I-1
Exhibit A
NOTE
$_____________
__________ __, 20___
FOR VALUE RECEIVED, Fire Safety Platform Holdco, Inc., a Delaware corporation (the “Borrower”), promises to pay to ____________________________________ (together with its registered assigns, the “Bank”), at such place as Agent under the Credit Agreement defined below may from time to time designate in writing, the principal sum of _______________________________ Dollars ($_______________), or, if less, the aggregate unpaid principal amount of all [Revolving Advances] [Delayed Draw Term Loans] made by the Bank to the Borrower pursuant to Section 2.1 of the Credit Agreement, dated as of April 30, 2026, among the Borrower, 3M Company, Morgan Stanley Senior Funding, Inc., as Agent (in such capacity, the “Agent”), and various Banks, including the Bank (the “Credit Agreement”; capitalized terms used herein but not otherwise defined shall have the meanings ascribed therein), and to pay interest on the principal balance of this Note outstanding from time to time at the rate or rates determined pursuant to the Credit Agreement.
This Note is issued pursuant to, and is subject to, the Credit Agreement, which provides (among other things) for the amount and date of payments of principal and interest hereunder, for the acceleration of this Note upon an Event of Default, and for the voluntary prepayment of this Note. This Note is a “Note,” as defined in the Credit Agreement.
The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses, if this Note is not paid when due, whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest are expressly waived.
This Note is governed by the substantive laws of the State of New York.
FIRE SAFETY PLATFORM HOLDCO, INC.
By: _________________________________
Name:
Title:
A-1
Exhibit B
CERTIFICATE OF COMPLIANCE
In accordance with the Credit Agreement, dated as of April 30, 2026, by and among Morgan Stanley Senior Funding, Inc., as agent for the Banks, Fire Safety Platform Holdco, Inc. (the “Borrower”), 3M Company (the “Company”) and the Banks, as such Credit Agreement has been or may hereafter be amended from time to time (the “Credit Agreement”; capitalized terms used but otherwise defined herein shall have the meanings ascribed therein), attached are the consolidated financial statements for the Company for the period ending _______________, 20__ (the “Effective Date”).
[I certify that the financial statements have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with those applied in the annual financial statements]1/[I certify that the financial statements have been prepared in accordance with accounting principles applied in the quarterly statements provided to the Bain Capital Investors and the 3M Investors (each as defined in the JV Agreement) under the terms of the JV Agreement]2. [I also certify that as of the Effective Date, each Loan Party is in compliance with the covenants stated in the Credit Agreement.
I further certify that the Company’s EBITDA to Interest Ratio, as defined in the Credit Agreement, as of the Effective Date is as set forth below:
(a) EBITDA $_____________
(b) Interest $_____________
EBITDA to Interest Ratio [(a)/(b)] ____ to 1.0
Minimum Permitted EBITDA to Interest Ratio 3.0 to 1.0
Furthermore, I have no knowledge of the occurrence of an Event of Default under the Credit Agreement or of any event which with notice of lapse of time would constitute an Event of Default, except those specifically stated below.]3
[COMPANY]/[BORROWER]
By _________________________________
Name:
Title:
1 Note: To be included in the Compliance Certificate delivered by the Company or by the Borrower pursuant to Section 8.1(b)(i) of the Credit Agreement only.
2 Note: To be included in the Compliance Certificate delivered by the Borrower pursuant to Section 8.1(b)(ii) of the Credit Agreement only.
3 Note: To be included in the Compliance Certificate delivered by the Company only.
B-1
Exhibit C
SOLVENCY CERTIFICATE
[_________], 202[ ]
This Solvency Certificate is delivered pursuant to Section 6.2(f)(ii) of that certain Credit Agreement, dated as of April 30, 2026, by and among Morgan Stanley Senior Funding, Inc., as agent for the Banks, Fire Safety Platform Holdco, Inc., 3M Company (the “Company”) and the Banks, as such Credit Agreement has been or may hereafter be amended from time to time (the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
The undersigned hereby certifies, solely in his or her capacity as an officer of the [Borrower][Company] and not in his or her individual capacity, as follows:
1. I am the Chief Financial Officer of the [Borrower][Company]. I am familiar with the Madison Transactions, and have reviewed the Credit Agreement, financial statements referred to in Section 8.1 of the Credit Agreement and such documents and made such investigation as I have deemed relevant for the purposes of this Solvency Certificate.
2. As of the date hereof, immediately after giving effect to the consummation of the Madison Transactions, on and as of such date (i) the fair value of the assets of the [Borrower][Company] and its Subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of the [Borrower][Company] and its Subsidiaries on a consolidated basis; (ii) the present fair saleable value of the property of the [Borrower][Company] and its Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the [Borrower][Company] and its Subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) the [Borrower][Company] and its Subsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the [Borrower][Company] and its Subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date.
3. As of the date hereof, immediately after giving effect to the consummation of the Madison Transactions, the [Borrower][Company] does not intend to, and the [Borrower][ Company] does not believe that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing and amounts of cash to be received by it or any such subsidiary and the timing and amounts of cash to be payable on or in respect of its debts or the debts of any such subsidiary.
This Solvency Certificate is being delivered by the undersigned officer only in his or her capacity as Chief Financial Officer of the [Borrower][ Company] and not individually and the undersigned shall have no personal liability to the Agent or the Banks with respect thereto.
[Remainder of Page Intentionally Left Blank]
C-1
IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate on the date first written above.
FIRE SAFETY PLATFORM HOLDCO, INC.
By _________________________________
Name:
Title:
C-2
Exhibit D-1
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Banks That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of April 30, 2026 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Morgan Stanley Senior Funding, Inc., as Agent, Fire Safety Platform Holdco, Inc., 3M Company and the Banks from time to time party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.5 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform the Borrower and the Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF BANK]
By:_________________________________
Name:
Title:
Date: ________ __, 20[ ]
D-1
Exhibit D-2
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of April 30, 2026 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Morgan Stanley Senior Funding, Inc., as Agent, Fire Safety Platform Holdco, Inc., 3M Company and the Banks from time to time party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.5 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Bank with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Bank in writing, and (2) the undersigned shall have at all times furnished such Bank with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:_________________________________
Name:
Title:
Date: ________ __, 20[ ]
D-2
Exhibit D-3
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of April 30, 2026 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Morgan Stanley Senior Funding, Inc., as Agent, Fire Safety Platform Holdco, Inc., 3M Company and the Banks from time to time party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.5 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners is a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Bank with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Bank and (2) the undersigned shall have at all times furnished such Bank with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By:_________________________________
Name:
Title:
Date: ________ __, 20[ ]
D-3
Exhibit D-4
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Banks That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of April 30, 2026 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Morgan Stanley Senior Funding, Inc., as Agent, Fire Safety Platform Holdco, Inc., 3M Company and the Banks from time to time party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.5 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners is a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform the Borrower and the Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
[NAME OF BANK]
By:_________________________________
Name:
Title:
Date: ________ __, 20[ ]
D-4
EXHIBIT 31.1
SARBANES-OXLEY SECTION 302 CERTIFICATION
I, William M. Brown, certify that:
1.I have reviewed this quarterly report on Form 10-Q of 3M Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
| /s/ William M. Brown | |||||
| William M. Brown | |||||
| Chief Executive Officer | |||||
July 21, 2026 | |||||
EXHIBIT 31.2
SARBANES-OXLEY SECTION 302 CERTIFICATION
I, Anurag Maheshwari certify that:
1.I have reviewed this quarterly report on Form 10-Q of 3M Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
/s/ Anurag Maheshwari | |||||
Anurag Maheshwari | |||||
Executive Vice President and Chief Financial Officer | |||||
July 21, 2026 | |||||
EXHIBIT 32.1
SARBANES-OXLEY SECTION 906 CERTIFICATION
In connection with the Quarterly Report of 3M Company (the “Company”) on Form 10-Q for the period ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William M. Brown, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ William M. Brown | |||||
| William M. Brown | |||||
| Chief Executive Officer | |||||
July 21, 2026 | |||||
EXHIBIT 32.2
SARBANES-OXLEY SECTION 906 CERTIFICATION
In connection with the Quarterly Report of 3M Company (the “Company”) on Form 10-Q for the period ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anurag Maheshwari , Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Anurag Maheshwari | |||||
Anurag Maheshwari | |||||
Executive Vice President and Chief Financial Officer | |||||
July 21, 2026 | |||||
EXHIBIT 95
MINE SAFETY DISCLOSURES
For the second quarter of 2026, the Company has the following mine safety information to report in accordance with Section 1503(a) of the Act, in connection with the Pittsboro, North Carolina mine, the Little Rock, Arkansas mine, the Corona, California mine, and the Wausau, Wisconsin mine (including Greystone Plant):
| Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations Orders (#) | Section 104(b) Orders (#) | Section 104(d) Citations and Orders (#) | Section 110(b)(2) Violations (#) | Section 107(a) Orders (#) | Total Dollar Value of MSHA Assessments Proposed ($) | Total Number of Mining Related Fatalities (#) | Received Notice of Pattern of Violations Under Section 104(e) (yes/no) | Received Notice of Potential of Violations Under Section 104(e) (yes/no) | Legal Actions Pending as of Last Day of Period (#) | Aggregate Legal Actions Initiated During Period (#) | Aggregate Legal Action Resolved During Period (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3M Pittsboro ID: 3102153 | — | — | — | — | — | $ | 151 | — | No | No | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3M Little Rock ID: 0300426 | — | — | — | — | — | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3M Corona Plant ID: 0400191 | — | — | — | — | — | 3,902 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Greystone Plant ID: 4700119 | — | — | — | — | — | 302 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wausau Plant ID: 4702918 | — | — | — | — | — | 151 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | — | — | — | $ | 4,506 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||