UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
DATE OF REPORT December 5, 1995
MacDermid, Incorporated
(Exact name of registrant as specified in its charter)
Connecticut
(State or other jurisdiction of incorporation or organization)
COMMISSION FILE NUMBER 0-2413
06-0435750
(I.R.S. Employer Identification No.)
245 Freight Street, Waterbury, Connecticut 06702
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 575-5700
NONE
Former name or former address, if changed since last report.
<PAGE>
Item 2. ACQUISITION OF ASSETS:
On December 5, 1995, the Registrant, MacDermid, Incorporated, completed
the acquisition from Hercules Incorporated of all of the assets and
certain liabilities of its Electronics and Printing Division ("EPD") for
a purchase price of $100 million cash and $30 million in preferred stock.
The acquisition includes EPD's specialty chemical business, relating
to photopolymers used in the printing of electrical patterns on circuit
boards and printing of packaging and display materials, as well as its
manufacturing and research facilities located in Middletown, Delaware.
EPD's business is primarily located in the United States with a portion
located in Europe and Asia where MacDermid previously acted as a
commission seller of certain of EPD's products.
The funds used to purchase EPD were obtained through borrowings from
Chase Manhattan Bank, N.A., as Swingline Lender and Agent, under a
combined revolving loan and term loan agreement. The preferred stock
issued by a wholly-owned subsidiary of MacDermid, provides for 6%
dividends payable in preferred stock.
MacDermid intends to continue EPD's operations in Delaware, taking
advantage of its well-trained 165 person team which includes research,
manufacturing and marketing personnel.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
7(a) Financial Statements of Business Acquired, Electronics and
Printing Division of Hercules Incorporated as follows:
i. Balance Sheets as of December 31, 1994 and 1993
ii. Statement of Operations for each of the three years in the
period ended December 31, 1994
iii. Statement of Cash Flow for each of the three years in the
period ended December 31, 1994
iv. Statement of Changes in Division Equity for each of the
three years in the period ended December 31, 1994
v. Notes to the Financial Statements for the years ended
December 31, 1994, 1993 and 1992
vi. Report of Independent Accountants
vii. Unaudited Balance Sheet as of September 30, 1995
viii. Unaudited Statement of Operations for the nine months
ended September 30, 1995
7(b) Pro Forma Financial Information.
It is impracticable to file the pro forma financial information
required with the initial filing of this Report on Form 8-K.
Such pro forma financial information will be filed by amendment
to this Report as soon as practicable and within 60 days after
the required filing date for this Report.
<PAGE>
7(c) Exhibits.
2 Sale and Purchase Agreement dated as of November 29, 1995,
signed December 5, 1995, between Hercules Incorporated, as
seller, MacDermid, Incorporated, as buyer, and MacDermid
Imaging Technology, Inc., as assignee and joint and several
obligor of MacDermid.
4.1 Credit Agreement, dated as of December 5, 1995 among
MacDermid, Incorporated, MacDermid Imaging Technology, Inc.,
the Banks signatory hereto and The Chase Manhattan Bank,
N.A. as Swingline Lender and Agent.
4.2 Series A Preferred Stock Agreement, providing for issuance of
preferred stock of MacDermid Imaging Technology, Inc., among
Hercules Incorporated, MacDermid, Incorporated and MacDermid
Imaging Technology, Inc.
23 Consent of Coopers & Lybrand L.L.P.
27.1 Financial Data Schedule based upon Audited Financial
Statements of Electronics and Printing Division as of
December 31, 1994.
27.2 Financial Data Schedule based upon Interim Unaudited
Financial Statements of Electronics and Printing Division
as of September 30, 1995.
99.1 Press Release of MacDermid dated December 5, 1995.
SIGNATURE
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 hereunto duly authorized.
MacDermid, Incorporated
(Registrant)
By: /s/ John L. Cordani
Name: John L. Cordani
Title: Corporate Secretary
Dated: December 20, 1995
3
<PAGE>
<TABLE>
ELECTRONICS & PRINTING DIVISION
HERCULES INCORPORATED
DIVISION BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
December 31
--------------------
1994 1993
<S> <C> <C>
ASSETS
Current Assets:
Trade accounts receivable $12,916 $11,677
Less allowance for doubtful
accounts 318 317
------- -------
Net Accounts Receivable 12,598 11,360
Inventories
Finished products 6,413 6,270
Materials, supplies, and
work in process 5,883 3,945
------- -------
Total Inventories 12,296 10,215
------- -------
Total Current Assets 24,894 21,575
Property, plant & equipment
Land 17 17
Buildings and equipment 25,865 25,376
Construction in progress 1,495 1,042
Accumulated depreciation (16,345) (15,318)
------- -------
Net Property, Plant and
Equipment 11,032 11,117
Equipment at customer
locations, net 390 1,739
Deferred charges and other
assets 248 496
------- -------
TOTAL ASSETS $36,564 $34,927
======= =======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
4
<PAGE>
<TABLE>
ELECTRONICS & PRINTING DIVISION
HERCULES INCORPORATED
DIVISION BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
December 31
--------------------
1994 1993
<S> <C> <C>
LIABILITIES AND DIVISION EQUITY
Current liabilities
Accounts payable $ 2,844 $ 1,198
Accrued expenses
Payroll and employee
benefits 1,551 1,787
Other 3,203 1,352
------- -------
Total Current Liabilities 7,598 4,337
Deferred taxes on income 1,064 1,638
Division equity 27,902 28,952
------- -------
TOTAL LIABILITIES AND
DIVISION EQUITY $36,564 $34,927
======= =======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE>
<TABLE>
ELECTRONICS & PRINTING DIVISION
HERCULES INCORPORATED
STATEMENT OF OPERATIONS
(Dollars in Thousands)
<CAPTION>
Years Ended December 31,
------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net Sales $66,080 $56,666 $51,502
Cost of sales 35,660 29,471 26,467
------- ------- -------
Gross profit 30,420 27,195 25,035
Selling, general and
administrative expenses 10,068 9,870 9,437
Allocated selling, general
and administrative
expenses 4,613 4,611 3,610
Research and development 2,335 1,957 1,527
Other operating (income)
expenses 251 (1,282) 384
------- ------- -------
Income before taxes and
effect of changes in
accounting principles 13,153 12,039 10 077
Provision for taxes on
income 5,251 4,842 3,917
------- ------- -------
Income before effect of
changes in accounting
principles 7,902 7,197 6,160
Effect of changes in
accounting principles - 863 -
------- ------- -------
Net income $ 7,902 $ 6,334 $ 6,160
======= ======= =======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
6
<PAGE>
<TABLE>
ELECTRONICS & PRINTING DIVISION
HERCULES INCORPORATED
STATEMENT OF CASH FLOW
(Dollars in Thousands)
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993 1992
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $7,902 $6,334 $6,160
Adjustments to reconcile net
income to cash provided from
operations:
Depreciation 1,225 1,211 1,265
Deferred income taxes (574) (1,097) 1,210
Loss on disposal of
property, plant and
equipment 132 198 241
Accruals and deferrals of
cash receipts and payments:
Accounts receivable, net (1,238) 197 (681)
Inventories (2,081) (1,246) 622
Equipment at customer
locations 1,349 (46) 7
Accounts payable and
accrued expenses 3,261 (493) (1,074)
Deferred charges and
other assets 248 583 (397)
------ ------ ------
Net cash provided by
operations 10,224 5,641 7,353
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (1,280) (1,101) (203)
Proceeds from sale of
property and equipment 8 - 4
------ ------ ------
Net cash used for
investing activities (1,272) (1,101) (199)
CASH FLOW FROM FINANCING ACTIVITIES
Parent company capital
wihdrawals (8,952) (4,540) (7,154)
------ ------ ------
Net cash $ 0 $ 0 $ 0
====== ====== ======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
7
<PAGE>
<TABLE>
ELECTRONICS & PRINTING DIVISION
HERCULES INCORPORATED
STATEMENT OF CHANGES IN DIVISION EQUITY
(Dollars in Thousands)
<S> <C>
BALANCE AT JANUARY 1, 1992 $28,152
Net income 6,160
Capital withdrawal 7,154
-------
BALANCE AT DECEMBER 31, 1992 $27,158
Net income 6,334
Capital withdrawal 4,540
-------
BALANCE AT DECEMBER 31, 1993 $28,952
Net income 7,902
Capital withdrawal 8,952
-------
BALANCE AT DECEMBER 31, 1994 $27,902
=======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
8
<PAGE>
ELECTRONICS & PRINTING DIVISION
HERCULES INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
1. SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The Electronics & Printing Division (EPD) is a division of
Hercules Incorporated (the Parent). EPD supplies Aqua Mer dry film
resist used in the production of printed wiring boards (PWB). EPD
also supplies Merigraph Systems which consists of equipment used to
make the printing plate, photopolymer resin, and products required
in the process. Its geographic scope is primarily North America,
the location of its production facility. EPD's customers are a
large and diverse group with no single customer accounting for more
than 9% of sales for the electronics or printing businesses,
respectively. EPD performs ongoing evaluations of its customers and
generally does not require collateral. EPD has not experienced
significant losses from its customers in the past.
The financial statements reflect the results of operations
and financial position of EPD, including certain allocations by the
parent company. All material intercompany transactions and balances
have been eliminated.
EQUIPMENT AGREEMENTS AND RESIN PURCHASE AGREEMENTS
The Company enters into agreements with its customers for
the sale of equipment used to make printing plates. Concurrently,
most of these customers enter into Resin Purchase Agreements with
the Company whereby they are required to purchase all of their
materials requirements from EPD over the term of the contract. Gain
or loss on the sale of equipment is recorded at the time of sale.
ENVIRONMENTAL EXPENDITURES
Environmental expenditures that pertain to current
operations or relate to future revenues are expensed or capitalized
consistent with the company's capitalization policy. Expenditures
that result from the remediation of an existing condition caused by
past operations, that do not contribute to current or future revenues,
are expensed. Liabilities are recognized for remedial activities when
the cleanup is probable and the cost can be reasonably estimated.
INVENTORIES
Inventories are stated at the lower of cost or market.
Raw materials, work in process, and finished goods manufactured by
the Company are substantially valued on the last-in, first-out
(LIFO) method. Inventory under LIFO at December 31, 1994 and 1993
approximated $4,727 and $5,510, respectively. Equipment purchased
for sale, spare parts, and all other finished goods are valued on
9
<PAGE>
the average-cost method. Foreign inventories, representing
approximately $1,235, $1,097, and $550 in 1994, 1993, and 1992,
respectively, are valued on the average cost method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. EPD
changed to the straight-line method of depreciation, effective
January 1, 1991, for newly acquired processing facilities and
equipment. Assets acquired before the effective date of the change
continue to be depreciated principally by accelerated methods. EPD
believes that straight-line depreciation provides for a better
matching of costs and revenues over the lives of the assets. For
income tax purposes, accelerated depreciation methods are used.
Maintenance, repairs, and minor renewals are charged to
income; major renewals and betterments are capitalized. Upon normal
retirement or replacement, the cost of property (less proceeds of
sale or salvage) is charged to accumulated depreciation.
EQUIPMENT AT CUSTOMER LOCATIONS
Equipment at customer locations remains the property of
the Company and is depreciated to cost of sales based on accelerated
methods over 48 months or the Resin Purchase Agreement term, whichever
is shorter.
INCOME TAXES
EPD is not a separate tax paying entity. Accordingly, its
results of operations have been included in tax returns filed by
Hercules. The accompanying financial statements include a charge in
lieu of tax which approximates the tax provision assuming EPD filed
separate returns. This tax provision reflects the application of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" for all periods presented.
2. INVENTORIES:
If the cost of all inventories had been valued on the
average cost method, which approximates current cost, inventories
would have been $702 and $456 lower than as reported on the LIFO
method at December 31, 1994, and 1993, respectively.
3. PENSIONS:
EPD participates in various Hercules-defined benefit pension
plans covering substantially all employees. Benefits are based on
average final pay and years of service. EPD's allocation of amounts
credited directly to Selling, General and Administrative expense,
based on the relationship of EPD's total payroll to Hercules' payroll,
was $46, $76, and $108 in 1994, 1993 and 1992, respectively.
Information on the actuarial present value of benefit obligation, fair
value of plan assets, and pension costs is not provided as such
information is not maintained separately for employees of EPD.
10
<PAGE>
4. OTHER POSTRETIREMENT BENEFITS:
EPD participates in certain defined benefit postretirement
health care and life insurance programs provided to retired Hercules
employees. Substantially all employees are covered and become
eligible for these benefits upon satisfying the appropriate age and
service requirements necessary for receipt of these benefits.
Effective January 1, 1993, Hercules adopted Statement of
Financial Accounting Standards (SFAS) No. 106 "Employers' Accounting
for Postretirement Benefits Other than Pensions." SFAS No. 106
requires the recognition of these benefit costs on an accrual basis.
Prior to January 1, 1993, the costs of retiree health care and life
insurance were expensed as paid. The effect of adopting this
accounting standard has been recognized immediately as the effect of
a change in accounting principle and has resulted in a charge of $689
(net of a tax benefit of $455). This represents the accumulated
postretirement benefit obligation existing at January 1, 1993. EPD's
allocated portion of the net periodic postretirement cost was $247 and
$295 in 1994 and 1993, respectively. In 1992, the cost of these
benefits totaled $289 and were expensed as paid. The income statement
impact of this accumulated postretirement benefit expense was allocated
based on the relationship between EPD's number of active employees to
Hercules' number of active employees. The liability for such costs has
not been reflected in these financial statements.
5. POSTEMPLOYMENT BENEFITS:
EPD participates in certain disability and workers
compensation benefits, including medical benefits, provided to former
or inactive Hercules employees. Substantially all employees are
covered and become eligible for these benefits upon satisfying the
appropriate age and service requirements necessary for receipt of
these benefits.
Effective January 1, 1993, Hercules adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." This statement
requires recognition of these benefit costs on an accrual basis.
Prior to January 1, 1993, disability benefits and workers' compensation
benefits were expensed as claims were reported. The effect of adopting
SFAS No. 112 has been recognized immediately as the effect of a change
in accounting principle and has resulted in a charge of $174 (net of a
tax benefit of $116). The income statement impact of this accumulated
postemployment benefit expense was allocated based on the relationship
between EPD's total number of employees and Hercules' total number of
employees. The periodic postemployment benefit costs, which are
included in the corporate cost allocation, are impracticable to
determine. The liability for such costs has not been reflected in
these financial statements.
6. RELATED PARTY TRANSACTIONS:
The financial statements include allocations by Hercules
for certain corporate administrative and benefit costs incurred for
the benefit of all operating divisions. These costs are allocated
to operating divisions on a variety of methodologies as follows:
11
<PAGE>
a. Specific identification - based on estimates of time
and services provided.
b. Relative identification - based on relevant criteria
that establishes the division's relationship to the entire pool of
beneficiaries.
c. Formula driven - nonidentifiable to division but
incurred for the benefit of all.
Corporate costs include executive, legal, accounting, tax,
auditing, cash management, purchasing, safety, human resources,
health and environmental, international, and employee benefits.
Allocated costs included in selling, general, and
administrative costs are $4,613, $4,611, and $3,610 during 1994, 1993,
and 1992, respectively. These allocations, while reasonable under
the circumstances, may not represent the cost of similar activities on
a separate entity basis.
7. CASH AND CAPITAL REQUIREMENTS:
As an operating division of Hercules, EPD participated in
Hercules' centralized cash management system. Accordingly, cash
received from EPD operations was administered centrally while Hercules
financed operational and working capital requirements as well as
capital expenditures. EPD has had no external sources of financing,
such as available lines of credit, as may be necessary to operate as
a separate entity.
The statement of cash flow is prepared as though the cash
received and disbursed on behalf of EPD by Hercules was transacted
through EPD.
8. CAPITALIZED INTEREST:
As a result of cash management and funding practices within
Hercules, EPD has recorded capitalized interest of $25, $20, and $28
on active construction projects during 1994, 1993, and 1992,
respectively. These amounts are based on Hercules' weighted average
interest rate on borrowings outstanding during the construction periods.
The amortization of capitalized interest, included in cost of sales for
1994, 1993, and 1992, was $125, $124, and $123, respectively, while the
unamortized balance included as a cost of facilities at December 31,
1994 and 1993 was $704 and $804, respectively.
9. TAXES ON INCOME:
<TABLE>
The domestic and foreign components of income before taxes
on income are presented below.
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Domestic $12,927 $11,983 $10,077
Foreign 226 56 -
------- ------- -------
$13,153 $12,039 $10,077
</TABLE>
12
<PAGE>
<TABLE>
A summary of the components of the tax provision
follows:
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Currently payable
U.S. Federal $4,685 $4,355 $2,213
Foreign 91 23 -
State 1,049 990 494
Deferred
Domestic (574) (526) 1,210
------ ------ ------
$5,251 $4,842 $3,917
</TABLE>
<TABLE>
Deferred tax liabilities (assets) at December 31,
1994 and 1993 consist of:
<CAPTION>
1994 1993
<S> <C> <C>
Depreciation $2,516 $2,660
Inventory 883 967
------ ------
Gross deferred tax liabilities 3,399 3,627
Postretirement benefits (418) (424)
Accrued expenses (1,265) (1,140)
Inventory
Accounts receivable (179) (129)
Other (473) (296)
------ ------
Gross deferred tax assets (2,335) (1,989)
Valuation allowance - -
------ ------
Net deferred tax liability $1,064 $1,638
</TABLE>
<TABLE>
A reconciliation of income taxes at the U.S.
statutory rate with the income taxes recorded follows:
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Computed at statutory income
tax rate $4,579 $4,168 $3,426
State taxes, net of federal
benefit 614 570 472
Change in tax rates (3) 80 -
Difference in foreign tax rates 12 3 -
Other 49 21 19
------ ------ ------
Provision for income taxes $5,251 $4,842 $3,917
</TABLE>
13
<PAGE>
10. COMMITMENTS AND CONTINGENCIES:
EPD leases buildings, vehicles, and equipment under various
operating leases with third parties. The leases can be cancelled
within original periods ranging from less than one year to four years.
Rent expense under operating leases for the years ended
December 31, 1994, 1993, and 1992 was $188, $151, and $107, respectively.
11. Operations by Geographic Area:
<TABLE>
The following table represents operating results and other
financial data by geographic area:
<CAPTION>
United
States Other Total
<S> <C> <C> <C>
1994
Net sales $59,462 $6,618 $66,080
Profit (loss) from operations 13,363 (210) 13,153
Identifiable assets 33,402 2,524 35,926
1993
Net sales 54,667 1,999 56,666
Profit from operations 12,026 13 12,039
Identifiable assets 31,435 1,257 32,692
1992
Net sales 50,792 710 51,502
Profit from operations 10,075 2 10,077
Identifiable assets 31,714 237 31,951
</TABLE>
The company's foreign operations are primarily in Belgium
and Taiwan. Identifiable assets include net trade accounts receivable,
inventories, and net property, plant and equipment.
12. SUBSEQUENT EVENT:
On September 27, 1995, a letter of intent was signed by
the company's Parent with a third party for the pending sale of
substantially all the assets and liabilities of the company.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the Board of Directors of
Hercules Incorporated:
We have audited the accompanying balance sheets of the Electronics
and Printing Division of Hercules Incorporated as of December 31,
1994 and 1993 and the related statements of operations, division
equity, and cash flow for each of the three years in the period
ended December 31, 1994. These financial statements are the
responsibility of the company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
Electronics and Printing Division of Hercules Incorporated as of
December 31, 1994 and 1993 and the results of its operations and
its cash flow for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Notes 4 and 5 to the financial statements, in 1993,
the company changed its methods of accounting for postretirement and
postemployment benefits other than pensions.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
November 9, 1995
15
<PAGE>
The pro forma financial statements of the Electronics and Printing
Division of Hercules Incorporated include the unaudited Interim
Division Balance Sheet at September 30, 1995 and the unaudited
Interim Statement of Operations and Changes in Division Equity for
the nine months ended September 30, 1995, as follows:
<TABLE>
ELECTRONICS AND PRINTING DIVISION
HERCULES INCORPORATED
INTERIM - DIVISION BALANCE SHEET
September 30, 1995
(Dollars in Thousands)
<CAPTION>
(Unaudited)
<S> <C>
ASSETS
Current Assets:
Trade accounts receivable $13,943
Less allowance for doubtful accounts 362
-------
Net Accounts Receivable 12,598
Inventories
Finished products 6,227
Materials, supplies, and work
in process 6,039
-------
Total Inventories 12,266
Property, plant and euipment 25,564
Less accumulated depreciation 15,525
-------
Net Property, Plant and Equipment 10,039
Equipment at customer locations, net 2,264
Deferred charges and other assets 123
-------
TOTAL ASSETS $38,255
=======
LIABILITIES AND DIVISION EQUITY
Current liabilities
Accounts payable and accrued expenses $ 4,985
Accrued income taxes 1,577
-------
Total Current Liabilities 6,562
Deferred income taxes 2,437
Division equity 29,256
-------
TOTAL LIABILITIES AND DIVISION EQUITY $38,255
=======
</TABLE>
16
<PAGE>
<TABLE>
ELECTRONICS & PRINTING DIVISION
HERCULES INCORPORATED
INTERIM DIVISION STATEMENT OF OPERATIONS
AND CHANGES IN DIVISION EQUITY
Nine Months Ended September 30, 1995
(Dollars in Thousands)
<CAPTION>
(Unaudited)
<S> <C>
Net sales $53,708
Cost of sales 26,332
-------
Gross profit 27,376
Selling, general and administrative expenses 11,087
Allocated selling, general and administrative
expenses 2,600
Other operating expenses, net 522
-------
Income before taxes 13,167
Provision for taxes on income 5,267
-------
Net income 7,900
Division equity at December 31, 1994 27,902
Capital withdrawal (6,546)
-------
Division equity at September 30, 1995 $29,256
=======
</TABLE>
17
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT dated as of November 29, 1995, is between
Hercules Incorporated as seller ("HERCULES"), and MacDermid,
Incorporated as buyer ("MACDERMID") and MacDermid Imaging
Technology, Inc., as the assignee and joint and several
obligor of MACDERMID ("MACDERMID DELAWARE"). Sometimes herein,
HERCULES and MACDERMID are referred to individually as a "PARTY" and
collectively as the "PARTIES".
WHEREAS, MACDERMID had expressed an interest in a possible
transaction concerning the E&PD BUSINESS and pursuant to such
interest, the PARTIES held discussions which led to the execution of
the CONFIDENTIALITY AGREEMENTS under which HERCULES provided
MACDERMID with confidential or proprietary information about the E&PD
BUSINESS and MACDERMID provided HERCULES with confidential or
proprietary information about the business and financial condition of
MACDERMID;
WHEREAS, the PARTIES continued their discussions and entered
into the LETTER OF INTENT and in furtherance of the LETTER OF INTENT,
now desire to enter into this AGREEMENT as part of the DEFINITIVE
AGREEMENTS;
WHEREAS, the PARTIES desire to enter into this AGREEMENT
pursuant to which, upon the terms and subject to the conditions
contained in the DEFINITIVE AGREEMENTS, the TRANSACTIONS will be
effectuated;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the PARTIES agree as follows:
ARTICLE I
TERMS
1.1 CERTAIN DEFINITIONS. For all purposes of this
AGREEMENT, the following capitalized terms shall have the respective
meanings set forth below:
1.1.1 "AFFILIATE" of any specified PERSON means any
other PERSON directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified PERSON.
For the purposes of this definition, "control" when used with respect
to any specified PERSON means the direct or indirect (i) power to
direct the management and policies of such PERSON, whether through
the ownership of voting securities, by contract or otherwise, (ii)
power to appoint or have elected more than fifty percent (50%) of
the governing body (e.g., board of directors) of such PERSON or (iii)
ownership of more than fifty percent (50%) of the voting ownership
interest (whether in the form of shares or securities, or other form)
of such PERSON. Sometimes herein AFFILIATE(s) of MACDERMID or of
HERCULES are referred to individually and collectively as a MACDERMID
AFFILIATE, MACDERMID AFFILIATES, a HERCULES AFFILIATE or HERCULES
AFFILIATES, as the case may be.
1.1.2 "AGREEMENT" means this Sale And Purchase
Agreement, including the ENVIRONMENTAL ANNEX, the
FINANCIAL/ACCOUNTING ANNEX, the HUMAN RESOURCES ANNEX, the TAX
ANNEX
and each and all of the other annexes, exhibits and schedules
referred to herein or attached hereto.
1.1.3 "ANCILLARY DOCUMENTS" means, collectively, the
APPLICATIONS LABORATORY LEASE, the EMPLOYEE LEASE AGREEMENT, the
HERCULES PLAZA OFFICE LEASE, the SERIES A PREFERRED STOCK
AGREEMENT,
the TECHNICAL CENTER/METTON BUILDING LEASE, the THREE-DIMENSIONAL
PHOTO LITHOGRAPHY AGREEMENT, the TRANSITION SERVICES AGREEMENT,
and
all other agreements, documents and certificates delivered by any
PARTY at the CLOSING.
1.1.4 "APPLICATIONS LABORATORY LEASE" means a lease
between the PARTIES and substantially in the form of Exhibit Four and
to be delivered at the CLOSING.
1.1.5 "ASSIGNED CONTRACTS" means all CONTRACTS,
BIDS
and contractual rights that are transferred as part of the PURCHASED
ASSETS. Schedule 1.1.5 lists all ASSIGNED CONTRACTS calling for
payment by a party thereto in excess of $25,000 or providing for a
remaining duration in excess of six (6) months.
1.1.6 "ASSUMED LIABILITIES" has the meaning set forth
in Section 2.4 but shall exclude the EXCLUDED ITEMS.
1.1.7 "AUTHORITY" means any national, federal, state
or local governmental, judicial or regulatory body or agency or
authority within or without the United States.
1.1.8 "BID" means any quotation, bid or proposal of
any nature whatsoever, whether written or oral, and including all
modifications and amendments thereof and supplements thereto, that if
accepted or awarded would lead to a CONTRACT with any PERSON for the
development, design, manufacture and/or sale of products or the
provision of services by the E&PD BUSINESS.
1.1.9 "BUSINESS DAY" means any day other than a
Saturday, Sunday or federal or state holiday or day on which banks in
Delaware, Connecticut or New York are required or permitted by law to
be closed.
1.1.10 "CASH PORTION" has the meaning set forth in
Section 3.1(A).
1.1.11 "CLAIM" or "CLAIM(S)" shall mean any and all
damages, deficiencies, demands, debts, obligations, losses, claims,
assessments, remediation, product liability claims, actions, suits,
arbitrations, proceedings, liabilities, damages, fines, penalties,
judgments, costs and expenses (including legal expenses, settlement
payments, investigation expenses and reasonable fees of counsel and
other experts) of every kind (whether absolute, accrued, contingent
or other). The foregoing described items include those asserted
against or incurred by a PERSON seeking indemnification (the
INDEMNITEE) from a PERSON providing indemnification (the
"INDEMNITOR").
1.1.12 "CLOSING" has the meaning set forth in Section
4.1.
1.1.13 "CLOSING DATE " has the meaning set forth in
Section 4.1. "1995 CARVE-OUT FINANCIAL STATEMENTS" has the meaning
set forth in Section 2.6.2.
1.1.14 "CONFIDENTIALITY AGREEMENTS" shall mean those
letter agreements, as the same may be amended from time to time,
between the PARTIES and (i) dated August 28, 1995, covering
information provided by HERCULES to MACDERMID, and (ii) dated
September 11, 1995, covering information provided by MACDERMID to
HERCULES.
1.1.15 "CONSENT" has the meaning set forth in Section
4.4.1.
1.1.16 "CONTRACT" means any lease, sales order,
purchase order and other contract, agreement, arrangement,
understanding and commitment of any nature whatsoever, whether
written or oral, and including all modifications and amendments
thereof and supplements thereto; provided however, all items or
matters relating to insurance or to funding or providing employee
benefits pursuant to those Hercules plans listed on the annexes,
exhibits or schedules to the HUMAN RESOURCES ANNEX are excluded from
this definition.
1.1.17 "CREDIT" has the meaning set forth in Section
3.3.
1.1.18 "DEFINITIVE AGREEMENTS" means, individually and
collectively, this AGREEMENT, the ANCILLARY DOCUMENTS and the
agreements, certificates, instruments and documents specifically
required in or contemplated by this AGREEMENT or any ANCILLARY
DOCUMENT.
1.1.19 [Intentionally left blank]
1.1.20 "E&PD" means the Electronics & Printing Division
of HERCULES which is currently part of the Hercules Food & Functional
Products Group. The major Business Units of the Electronics &
Printing Division are known as the Merigraph (Registered Trademark)
and AquaMer (Registered Trademark) Business Units.
1.1.21 "E&PD BUSINESS" means the business and related
activities of E&PD, which are the businesses of (i) liquid
photopolymer resins for use in making printing plates, as well as
sale of such materials for other uses such as an embossing screen for
paper towels, and (ii) liquid and dry film soldermask, dry film
photoresist and liquid photoresist for the electronics industry; all
as the foregoing (i) and (ii) are currently, or were heretofore,
carried on, developed or planned by the E&PD. However, nothing
herein is intended to or shall include any business, activity or
interest in the toner resin business of Hercules-Sanyo, Inc., or
resins used in inks or toners or paper or paperboard chemicals
produced or sold by Hercules Chemical Specialties Company, or in
SYCAR (Registered Trademark) RESINS, or in any non-E&PD part of Hercules
Food & Functional Products Group or HERCULES or the three-dimensional
photo lithography process and products developed by HERCULES other than
specifically disclosed in Proposal No. 5060 submitted on March 1, 1994.
A copy of such Proposal No. 5060 is set forth in Schedule 1.1.21.
1.1.22 "E&PD BUSINESS ITEMS" shall mean individually
and collectively the PURCHASED ASSETS and the ASSUMED LIABILITIES.
1.1.23 "E&PD CARVE-OUT FINANCIAL STATEMENTS" has the
meaning set forth in Section 2.6.1.
1.1.24 "E&PD INTELLECTUAL PROPERTY" means any and all
INTELLECTUAL PROPERTY owned, controlled (in the sense of having the
right to license or sublicense others) or licensed by HERCULES and
developed for or used currently or heretofore in the E&PD BUSINESS,
including the patents, patent applications, records of invention,
license agreements and trademarks listed in Schedule 1.1.24 and
including the royalty bearing licenses with Asahi Chemical Industry
Co., Ltd., and MarkTrece Inc. identified in Schedule 1.1.24.
1.1.25 "E&PD MANAGEMENT PERFORMANCE REPORTS" mean
individually and collectively the reports described in Section 2.6.3.
1.1.26 "E&PD MATERIAL ADVERSE EFFECT" means a material
adverse effect upon or change in the business, assets, liabilities,
properties, condition (financial or otherwise), operations or results
of operations of the E&PD BUSINESS taken as a whole or any adverse
effect upon or change in (i) HERCULES' ability to continue to conduct
the E&PD BUSINESS in the ORDINARY COURSE or (ii) on HERCULES' ability
to consummate its part of the TRANSACTIONS. Notwithstanding the
foregoing, the matters listed or described in Schedule 1.1.26 shall
not constitute a E&PD MATERIAL ADVERSE EFFECT, and matters approved
by MACDERMID in writing as exceptions to this Section 1.1.26 in
writing from time to time shall not constitute a E&PD MATERIAL
ADVERSE EFFECT.
1.1.27 "E&PD MATERIAL CONTRACT" has the meaning set
forth in Section 5.13.
1.1.28 "E&PD MATERIALITY STANDARD" shall mean to the
extent that the item(s) or matter(s) in question, individually or in
the aggregate, would or could be reasonably expected to have a E&PD
MATERIAL ADVERSE EFFECT.
1.1.29 "EMPLOYEE LEASE AGREEMENT" means an agreement
between the PARTIES and substantially in the form of Exhibit Seven
and to be delivered at the CLOSING.
1.1.30 "ENCUMBRANCES" means all liens, CLAIMS, charges,
security interests, pledges, mortgages or other encumbrances or
rights or CLAIMS of others (including, without limitation, any
options or similar rights) of any character whatsoever.
1.1.31 "ENVIRONMENTAL ANNEX" means that Environmental
Annex attached hereto as Annex Two.
1.1.32 "EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated
thereunder.
1.1.33 "EXCLUDED ITEMS" has the meaning set forth in
Section 2.2.
1.1.34 "FINANCIAL/ACCOUNTING ANNEX" means that
Financial/Accounting Annex attached hereto as Annex Three.
1.1.35 "HSR ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
1.1.36 "HERCULES" means Hercules Incorporated, a
Delaware corporation, having offices at Hercules Plaza, Wilmington,
DE 19894-0001.
1.1.37 "HERCULES INDEMNITEES" has the meaning set forth
in Section 12.3.
1.1.38 "HERCULES INSURANCE" means any and all
insurance policies, self-insurance programs and other forms of
insurance purchased, acquired or accepted by HERCULES to cover risks
or losses of any E&PD BUSINESS ITEM prior to the TURNOVER POINT.
1.1.39 "HERCULES PLAZA OFFICE LEASE" means a lease
between the PARTIES and substantially in the form of Exhibit Five and
to be delivered at the CLOSING.
1.1.40 "HUMAN RESOURCES ANNEX" means that Human
Resources Annex attached hereto as Annex Four.
1.1.41 "INDEMNITEE" has the meaning set forth in
Section 1.1.11.
1.1.42 "INDEMNITOR" has the meaning set forth in
Section 1.1.11.
1.1.43 "INSTRUMENTS OF RECEIPT AND ASSUMPTION" has the
meaning set forth in Section 4.3.
1.1.44 "INSTRUMENTS OF TRANSFER" has the meaning set
forth in Section 4.2.
1.1.45 "INTELLECTUAL PROPERTY" means (a) all inventions
and discoveries (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all patents,
patent applications and patent disclosures (proposed or approved
records of invention), together with all reissues, continuations,
continuations-in-part, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and
renewals in connection therewith, (c) all copyrightable works, all
copyrights and all applications, registrations and renewals in
connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all know-
how, trade secrets, technical information, and business information,
whether patentable or unpatentable and whether or not reduced to
practice (including, ideas, research and development, formulas,
compositions, manufacturing and production processes, techniques and
methods, technical data, designs, drawings, laboratory notes,
laboratory notebooks, blue prints, patterns, specifications, assembly
procedures, test procedures, instruction manuals, operation manuals,
maintenance manuals, reliability data, quality control data, customer
and supplier lists, parts lists, pricing and cost information and
business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other
proprietary rights and (h) all copies and tangible embodiments
thereof (in whatever form or medium).
1.1.46 "INVENTORIES" has the meaning set forth in
Section 2.1 (E).
1.1.47 "LETTER OF INTENT" means that certain letter
agreement dated September 27, 1995, between the PARTIES and
concerning the E&PD BUSINESS.
1.1.48 "MACDERMID" means MacDermid, Incorporated, a
Connecticut corporation, having offices at 245 Freight Street,
Waterbury, Connecticut 06702.
1.1.49 "MACDERMID BUSINESS" means the business and
related activities of MACDERMID and the MACDERMID AFFILIATE(S) listed
in Schedule 6.4, including (i) chemicals for metal treating and
plating; (ii) chemicals used to plate surfaces on printed circuit
board; and (iii) products used in the surface preparation and
chemical etchants used to manufacture printed circuit boards.
1.1.50 "MACDERMID-DELAWARE" means MacDermid Imaging
Technology, Inc., a Delaware corporation, all of the capital stock of
which is owned by MACDERMID.
1.1.51 "MACDERMID FINANCIAL STATEMENTS" has the meaning
set forth in Section 6.5.2.
1.1.52 "MACDERMID INDEMNITEES" has the meaning set
forth in Section 12. 2.
1.1.53 "MACDERMID MATERIAL ADVERSE EFFECT" means a
material adverse effect upon or change in the business, assets,
liabilities, properties, condition (financial or otherwise),
operations or results of operations of MACDERMID and the AFFILIATES
of MACDERMID taken as a whole or any adverse effect upon or change in
(i) MACDERMID's ability to continue to conduct the MACDERMID BUSINESS
in the ORDINARY COURSE or (ii) MACDERMID's ability to consummate its
part of the TRANSACTIONS. Notwithstanding the foregoing, the matters
listed or described in Schedule 1.1.53 shall not constitute a
MACDERMID MATERIAL ADVERSE EFFECT, and matters approved by HERCULES
in writing as exceptions to this Section 1.1.53 from time to time
shall not constitute a MACDERMID MATERIAL ADVERSE EFFECT.
1.1.54 "MACDERMID MATERIALITY STANDARD" shall mean to
the extent that the item(s) or matter(s) in question individually or
in the aggregate would or could be reasonably expected to have a
MACDERMID MATERIAL ADVERSE EFFECT.
1.1.55 "MACDERMID PREFERRED STOCK" has the meaning set
forth in Section 3.1.
1.1.56 [Intentionally left blank.]
1.1.57 "NON-COMPETITION AGREEMENTS" mean individually
and collectively (i) the letter, dated October 5, 1995, submitted by
MACDERMID to HERCULES, a copy of which is set forth in Schedule
1.1.57, and (ii) the letter, dated October 6, 1995, submitted by
HERCULES to MACDERMID, a copy of which letter is set forth in
Schedule 1.1.57, and (iii) the provisions of Section 8.1.
1.1.58 "NOTICE" has the meaning set forth in Section
14.6.
1.1.59 "NOTICE OF CLAIM" has the meaning set forth in
Section 12.4.1.
1.1.60 "ORDINARY COURSE" shall mean conduct or
operation of a business, item, matter or activity in the ordinary
course consistent with normal past practice since January 1, 1995 as
to the E&PD BUSINESS and since April 1, 1995 as to the MACDERMID
BUSINESS.
1.1.61 "PERMITS" means all rights and incidents of
interest in and to all licenses, certificates, consents, permits,
approvals and other authorizations of any AUTHORITY. E&PD BUSINESS
PERMITS means all PERMITS necessary for the conduct of the E&PD
BUSINESS in the ORDINARY COURSE. MACDERMID BUSINESS PERMITS mean all
PERMITS necessary for the conduct of the MACDERMID BUSINESS in the
ORDINARY COURSE.
1.1.62 "PERMITTED ENCUMBRANCES" shall mean as of any
particular time:
(A) Liens for current state and local property taxes
not yet due and payable;
(B) Covenants, restrictions, liens, encumbrances,
servitudes, rights-of-way, easements, exceptions and limitations, and
agreements contained in instruments of record which, individually or
in the aggregate, are not material in character, amount or extent and
which do not materially affect, detract from or inhibit the use of
the E&PD BUSINESS ITEMS; and
(C) The items, if any, listed in Schedule 1.1.62,
which are not material in character, amount or extent and which do
not, individually or in the aggregate, materially adversely affect,
detract from or inhibit the use of the E&PD BUSINESS ITEMS.
1.1.63 "PERSON" means an individual, partnership
(general or limited), corporation, limited liability company, joint
venture, business trust, cooperative, association or other form of
business organization (whether or not regarded as a legal entity
under applicable law), trust, estate, agency or other entity.
1.1.64 "POST-CLOSING ADJUSTMENT" has the meaning set
forth in Section 3.2.
1.1.65 "PRE-CLOSING PERIOD" means the period from the
date of this AGREEMENT through the earlier of (A) the termination of
this AGREEMENT or (B) the CLOSING.
1.1.66 "PURCHASE PRICE" has the meaning set forth in
Section 3.1.
1.1.67 "PURCHASED ASSETS" has the meaning set forth in
Section 2.1, but shall exclude the EXCLUDED ITEMS.
1.1.68 "REAL PROPERTY" has the meaning set forth in
Section 2.1(A).
1.1.69 "RECORDS" has the meaning set forth in Section
8.10.
1.1.70 "RESOLUTION PANEL" has the meaning set forth in
Section 13.2.
1.1.71 "SEC" means the Securities and Exchange
Commission.
1.1.72 "SECURITIES ACT" means the Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder.
1.1.73 "SERIES A PREFERRED STOCK AGREEMENT" means an
agreement between the PARTIES and MACDERMID DELAWARE, relating to the
MACDERMID PREFERRED STOCK and substantially in the form of Exhibit
Two attached hereto and to be delivered at the CLOSING.
1.1.74 "SYCAR RESINS" means all INTELLECTUAL PROPERTY
and other matters related to prepolymers and polymers made by
hydrosilation from siloxanes and polyenes (including those which are
filled or fiber reinforced, or contain property modifiers), such as
those described by Leibfried in U.S. Patent Nos. 4,900,799 and
4,902,731; Cowan in U.S. Patent No. 4,877,820; and Bard and Burnier
in U.S. Patent No. 5,008,360 and other HERCULES patents and patent
applications.
1.1.75 "TAX ANNEX" means that Tax Annex attached hereto
as Annex Five.
1.1.76 "TECHNICAL CENTER /METTON BUILDING LEASE" means
that E&PD Technical Center/Metton Building Lease between the PARTIES
and substantially in the form of Exhibit Three attached hereto and to
be delivered by the PARTIES at the CLOSING.
1.1.77 "THIRD PERSON OR THIRD PERSONS" shall mean
PERSON(s) other than MACDERMID, HERCULES and their respective
AFFILIATES, directors, officers, employees, agents, consultants,
representatives and successors.
1.1.78 "THREE-DIMENSIONAL PHOTO LITHOGRAPHY
AGREEMENT"
means that Three-Dimensional Photo Lithography Agreement between the
PARTIES and substantially in the form of Exhibit Six and to be
delivered by the PARTIES at the CLOSING.
1.1.79 "TRANSACTIONS" means individually and
collectively the following: (i) the execution and delivery of each
and all of the DEFINITIVE AGREEMENTS; (ii) the sale, assignment,
transfer and delivery by HERCULES to MACDERMID of all right, title
and interest of HERCULES in, to and under the PURCHASED ASSETS, free
and clear of all ENCUMBRANCES other than PERMITTED ENCUMBRANCES, and
the purchase, receipt and acceptance by MACDERMID of such right,
title and interest; (iii) the assumption by MACDERMID of the ASSUMED
LIABILITIES; (iv) the effectuation and implementation of each and all
other transactions contemplated by the DEFINITIVE AGREEMENTS; and (v)
the taking of any and all action necessary to the foregoing.
1.1.80 "TRANSITION SERVICES AGREEMENT" means that
Transition Services Agreement between the PARTIES and substantially
in the form of Exhibit Three and to be delivered by the PARTIES at
the CLOSING.
1.1.81 "TURNOVER POINT" means, subject to completion of
the CLOSING, 12:01 AM on November 29, 1995, whereupon the E&PD
BUSINESS ITEMS shall be deemed to have been transferred to MACDERMID,
and except as otherwise provided herein all sales, profits, losses,
and other aspects of the E&PD BUSINESS after such time shall be for
the account of or otherwise belong to MACDERMID.
1.2 EXHIBITS, ETC. References made to an "Annex", "Exhibit"
or a "Schedule," unless otherwise specified, refer to one of the
Annexes, Exhibits or Schedules attached to this AGREEMENT, and
references made to an "Article" or a "Section," unless otherwise
specified, refer to one of the Articles or Sections of this
AGREEMENT.
1.3 PLURALS, ETC. (A) The plural form of any noun shall
include the singular and the singular shall include the plural,
unless the context requires otherwise. (B) Each of the masculine,
neuter and feminine forms of any pronoun shall include all such forms
unless the context requires otherwise. (C) The terms "include",
"includes", "including" and all other forms and derivations of such
term shall mean including without limitation. (D) The terms
"herein", "hereof", "hereunder", "hereby", "hereto", "herewith" and
words of similar import shall refer to this AGREEMENT as a whole and
not to any particular article, section or paragraph of this
AGREEMENT. (E) The "(s)" shall mean any one or more.
1.4 TIME OF DAY. Unless otherwise provided herein, all
references to a fixed time of day shall mean Eastern Standard Time or
Eastern Daylight Savings Time, whichever is in effect on the date in
question.
ARTICLE II
SALE AND PURCHASE
2.1 SALE AND PURCHASE. At the CLOSING and as of the
TURNOVER POINT, HERCULES shall (subject to Section 4.4) sell,
transfer, convey, assign and deliver to MACDERMID, free and clear of
all ENCUMBRANCES other than PERMITTED ENCUMBRANCES, and MACDERMID
shall purchase, acquire and accept from HERCULES all of HERCULES'
right, title and/or interest (e.g. licensing interest) in and to all
of the assets and properties of any nature whatsoever, wherever
located, whether now owned or acquired during the PRE-CLOSING PERIOD,
used solely or substantially in the E&PD BUSINESS (even if accounted
for or carried at zero value) (each and all of the foregoing items
referred to in this subclause being referred to as the "PURCHASED
ASSETS"),including all of HERCULES' right, title to and interest in
and to the items described below, (A) through (Q), but excluding the
EXCLUDED ITEMS.
(A) All real property, whether owned or leased, including
(i) all buildings, houses, facilities and other structures and
improvements thereon, (ii) all rights, privileges, hereditaments and
appurtenances appertaining thereto or to any of such buildings,
facilities or other structures or improvements and (iii) to the
extent constituting real property under applicable law, all fixtures,
installations, equipment and other property attached thereto or
located thereon (collectively, "REAL PROPERTY"); REAL PROPERTY
includes items listed or described in Schedule 2.1 (A);
(B) The E&PD manufacturing plant in Middletown, Delaware,
including all real, personal and other property located thereon or
therein and used in the operation of such manufacturing plant (the
"MIDDLETOWN PLANT"). The MIDDLETOWN PLANT is further described in
Schedule 2.1 (B);
(C) Subject to Section 2.8, the E&PD research and
development facility and the Metton Building, both located off
Hercules Road in New Castle County, Delaware, including the
buildings, the underlying four (4) acres of land more or less on
which the buildings sit, and the contents of such buildings (the
"E&PD TECHNICAL CENTER/METTON BUILDING"). The E&PD TECHNICAL
CENTER/METTON BUILDING is further described in Schedule 2.1 (C);
(D) All machinery, equipment, fixtures, installations and
all other personal property, whether owned or leased, including all
vehicles, furniture, tools, spare parts, supplies, items historically
expensed, office and laboratory equipment, research facilities,
materials, fuel, computer hardware, and other personal property not
normally included in inventory (collectively "PERSONAL PROPERTY");
PERSONAL PROPERTY includes the items listed or described in Schedule
2.1 (D);
(E) Subject to Section 8.7 hereof, all inventory items
(including raw materials, work in process, samples, finished goods
and products and storeroom and other supplies) (collectively
"INVENTORIES"); INVENTORIES include the items listed or described in
Schedule 2.1 (E) but subject to consumption and, as applicable,
reasonable wear and tear;
(F) All CONTRACTS and BIDS, including the items listed or
described in Schedule 2.1 (F);
(G) Subject to Sections 4.4 and 8.5, all sales and
promotional literature, drawings, photographs (of products,
facilities and equipment), books, records, files, customer lists,
supplier lists, credit information, business records and plans,
studies, surveys, reports, correspondence, and other selling
material, except those items covered by the HUMAN RESOURCES ANNEX;
(H) Subject to Section 4.4, all E&PD INTELLECTUAL
PROPERTY; provided, however, (a) that E&PD INTELLECTUAL PROPERTY that
is not currently used solely or substantially in the E&PD BUSINESS
shall be licensed to MACDERMID as described in Section 2.17, and (b)
recognizing that most written documents concerning E&PD INTELLECTUAL
PROPERTY are already in the possession of the individuals working for
the E&PD, and subject to HERCULES' normal document retention policy,
HERCULES agrees to make available to MACDERMID from the CLOSING until
eighteen (18) months after the CLOSING such documents in HERCULES'
possession (including laboratory notebook entries of E&PD
INTELLECTUAL PROPERTY) by providing to MACDERMID, at HERCULES'
election, either relevant copies or excerpts or access to two
employees of MACDERMID (approved by HERCULES, which approval shall
not be unreasonably withheld);
(I) Subject to Section 4.4, all PERMITS, but only to the
extent legally transferable by HERCULES;
(J) Subject to Section 8.6, all accounts receivable and
notes receivable, together with any unpaid interest or fees accrued
thereon or other amounts due with respect thereto and all CLAIMS
arising therefrom;
(K) All rights, claims, credits, causes of action or
rights of set-off against THIRD PERSONS relating to the E&PD BUSINESS
ITEMS, whether known or unknown, liquidated or unliquidated, fixed or
contingent, and all rights under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers,
contractors and other THIRD PERSONS in connection with products or
services purchased by or furnished to HERCULES for use in the E&PD
BUSINESS ITEMS, to the extent transferable by HERCULES;
(L) Subject to Sections 2.18 and 8.5, all books, paper
and electronic records, data, plans and recorded knowledge, including
correspondence, bookkeeping and accounting papers, invoices, bills of
sale, and other instruments and documents of title;
(M) Subject to Section 2.19, telephone, facsimile and e-
mail numbers;
(N) Subject to Sections 2.18 and 8.5, all stationery and
other imprinted material and office supplies, and packaging and
shipping materials;
(O) All goodwill associated with the E&PD BUSINESS;
(P) All properties and assets set out in Schedule 2.1
(P); and
(Q) All other properties and assets of every kind and
nature, real or personal, tangible or intangible, used solely or
substantially in the E&PD BUSINESS.
2.2 EXCLUDED ITEMS. Notwithstanding anything to the
contrary, the E&PD BUSINESS ITEMS do not include (i) items not used
solely or substantially in the E&PD BUSINESS; (ii) HERCULES
INSURANCE; (iii) FAS 106 and FAS 112 accruals, except as provided in
the HUMAN RESOURCES ANNEX; (iv) the items set forth on Schedule 2.2;
(v) items retained by HERCULES pursuant to one of the Annexes hereto
or to the DEFINITIVE AGREEMENT(s); and (vi) any right, title and
interest in and to any of the items described in the foregoing (i),
(ii), (iii), (iv), or (v), of every nature whatsoever, wherever
located, whether now owned or acquired prior to the CLOSING. The
ASSUMED LIABILITIES do not include any of the liabilities or
obligations described in Section 2.4.2.
2.3 E&PD ITEMS OF HERCULES AFFILIATE(S). If E&PD BUSINESS
ITEM(S) are in the possession of HERCULES AFFILIATE(S), including
those in Belgium and Taiwan, then HERCULES shall take or cause to be
taken all such actions as may be necessary to cause such ITEM(S) to
be conveyed to or assumed by MACDERMID as of the CLOSING. To the
greatest extent practicable, the relevant E&PD BUSINESS ITEM(S) and
HERCULES AFFILIATES having possession thereof are listed and
described on Schedule 2.3.
2.4 ASSUMPTION OF LIABILITIES.
2.4.1 Effective as of the TURNOVER POINT, MACDERMID shall
assume and agree to pay, perform, discharge and satisfy each and all
of the following liabilities set forth below in paragraphs (A)
through (F) of this Section (collectively the "ASSUMED LIABILITIES")
whether the ASSUMED LIABILITIES arise prior to, on or after the
TURNOVER POINT but only the ASSUMED LIABILITIES and not any EXCLUDED
ITEMS or any other liabilities or obligations. Such assumption by
MACDERMID of the ASSUMED LIABILITIES shall be in addition to the
PURCHASE PRICE paid by MACDERMID.
(A) All liabilities and obligations as described in
Schedule 2.4 (including those under executory CONTRACTS and standard
monthly accrued accounts payable, such as utilities and invoices not
yet received) incurred in the ORDINARY COURSE of the E&PD BUSINESS.
(B) All contracts, agreements, arrangements,
understandings and commitments to be performed after the TURNOVER
POINT under the PURCHASED ASSETS.
(C) All employee related liabilities and obligations
assumed by MACDERMID pursuant to the HUMAN RESOURCES ANNEX.
(D) All liabilities and obligations assumed by MACDERMID
pursuant to any provision of the DEFINITIVE AGREEMENTS.
(E) All claims, obligations, responsibilities and
liabilities relating to, arising from or incurred in connection with
MACDERMID's ownership, possession or operation of the E&PD BUSINESS
ITEMS after the CLOSING, including any closure or shutdown, partial
or otherwise, by MACDERMID of all or any part of the E&PD BUSINESS or
the PURCHASED ASSETS.
2.4.2 Except for the ASSUMED LIABILITIES, as of the
CLOSING, MACDERMID is not assuming or agreeing to pay, perform,
discharge or satisfy, and shall have no responsibility or obligation
whatsoever for, any liabilities or obligations, whether known or
unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due, of HERCULES or any of its
AFFILIATES, or relating to, arising from or incurred in connection
with the E&PD BUSINESS or the PURCHASED ASSETS, whether arising prior
to, on or after the TURNOVER POINT.
2.5 THIRD PERSONS. The TRANSACTIONS shall not enlarge any
rights of any THIRD PERSON and nothing contained in the DEFINITIVE
AGREEMENTS shall prevent a PARTY from contesting the rights or
obligations of any THIRD PERSON, subject to such PARTY's obligations
under ARTICLE XII.
2.6 E&PD FINANCIAL STATEMENTS.
2.6.1 HERCULES shall engage Coopers & Lybrand L.L.P. to
audit the balance sheets of the E&PD BUSINESS as of December 31,
1992, 1993 and 1994, and the related statement of operations, group
equity and cashflows for each of the three years in the period ended
December 31, 1994 (the "E&PD CARVE-OUT FINANCIAL STATEMENTS"). The
E&PD CARVE-OUT FINANCIAL STATEMENTS shall be delivered by HERCULES
to MACDERMID not later than thirty (30) days after the CLOSING. A
copy of the E&PD CARVE-OUT FINANCIAL STATEMENTS, when available,
shall be set forth in Schedule 2.6.1. Subject to the accuracy of
HERCULES' representations and warranties under Section 5.4, the
income statements for the year ended December 31, 1994, as delivered
to MACDERMID by HERCULES as part of the E&PD CARVE-OUT FINANCIAL
STATEMENTS shall not be materially different from the income
statements which are part of the E&PD MANAGEMENT PERFORMANCE REPORT
(excluding businesses which are not currently part of the E&PD
BUSINESS) for the year ended December 31, 1994.
2.6.2 HERCULES shall engage Coopers & Lybrand L.L.P. to
audit financial statements of the E&PD BUSINESS for the period from
January 1, 1995, to the TURNOVER POINT (the "1995 CARVE-OUT FINANCIAL
STATEMENTS"). A copy of the 1995 CARVE-OUT FINANCIAL STATEMENTS,
when available, shall be set forth in Schedule 2.6.2. The 1995
CARVE-OUT FINANCIAL STATEMENTS shall be delivered by HERCULES to
MACDERMID not later than sixty (60) days after the CLOSING. Subject
to the accuracy of HERCULES' representations and warranties under
Section 5.4, the income statements delivered to MACDERMID by HERCULES
as part of the 1995 CARVE-OUT FINANCIAL STATEMENTS shall not be
materially different from the income statements which are part of the
CLOSING DATE E&PD MANAGEMENT PERFORMANCE REPORT delivered to
MACDERMID by HERCULES.
2.6.3 In its conduct of the E&PD BUSINESS, HERCULES
develops on a monthly basis a report, known as a Management
Performance Report, which is submitted to HERCULES senior management
for its evaluation of the financial performance of the E&PD BUSINESS
(such report is herein the "E&PD MANAGEMENT PERFORMANCE REPORT").
HERCULES has provided to MACDERMID and MACDERMID acknowledges having
received a copy of the E&PD MANAGEMENT PERFORMANCE REPORT for
December 1994 and a copy of such report for July 1995. A copy of
each such report is set forth in Schedule 2.6.3.
2.6.4 Not later than sixty (60) days after the CLOSING,
HERCULES will prepare an E&PD MANAGEMENT PERFORMANCE REPORT for the
period from January 1, 1995, through November 28, 1995 (the "CLOSING
DATE E&PD MANAGEMENT PERFORMANCE REPORT"). A copy of the CLOSING
DATE E&PD MANAGEMENT PERFORMANCE REPORT, when available, shall be set
forth in Schedule 2.6.4. That the CLOSING DATE E&PD MANAGEMENT
PERFORMANCE REPORT shall be fairly stated on the same basis as the
July 1995 E&PD MANAGEMENT PERFORMANCE REPORT.
2.6.5 HERCULES shall prepare and deliver to MACDERMID the
Statement described in and in accordance with Section 1 of the
FINANCIAL/ACCOUNTING ANNEX.
2.6.6 Whether or not the CLOSING is held or the
TRANSACTIONS consummated, the fees of Coopers & Lybrand L.L.P. shall
be borne by the PARTIES with HERCULES paying the lesser of Two
Hundred Thousand Dollars ($200,000) or fifty percent (50%) of such
fees, and MACDERMID paying the remaining amount of such fees, (said
amount being due and payable immediately upon HERCULES' presentation
of Coopers and Lybrand's invoice to HERCULES for such service).
2.7 E&PD BUSINESS ITEMS SOLD "AS IS". EXCEPT AS PROVIDED
OTHERWISE IN THE DEFINITIVE AGREEMENTS, THE E&PD BUSINESS ITEMS
SHALL
BE SOLD, PURCHASED, CONVEYED, ASSIGNED AND TRANSFERRED "AS IS,
WHERE
IS" IN WHATEVER EXISTENCE AND CONDITION AS OF THE CLOSING DATE.
THE
FOREGOING AND ARTICLE V ARE EXCLUSIVE AND IN LIEU OF ANY AND ALL
OTHER REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE E&PD
BUSINESS ITEMS, WHETHER EXPRESS OR IMPLIED, INCLUDING THOSE OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND/OR ANY
OTHER
REPRESENTATION OR WARRANTY AS TO QUANTITY, QUALITY, KIND,
CHARACTER
OR CONDITION.
2.8 E&PD TECHNICAL CENTER/METTON BUILDING.
2.8.1 The PARTIES intend that the E&PD TECHNICAL
CENTER/METTON BUILDING shall be sold and purchased as part of the
PURCHASED ASSETS; however, if due to subdivision requirements or
otherwise a sale cannot be effectuated by the CLOSING DATE, then upon
and as of the CLOSING, HERCULES shall lease to MACDERMID the E&PD
TECHNICAL CENTER/METTON BUILDING until such time as a sale can be
effectuated or for a term of thirty-five years (35) years (subject to
extension by MACDERMID for certain additional terms), whichever is
sooner, at an annual rental of one dollar ($1.00) and on a triple net
lease basis, all in accordance with the TECHNICAL CENTER/METTON
BUILDING LEASE.
2.8.2 The terms, conditions and provisions of the TECHNICAL
CENTER/METTON BUILDING LEASE shall include provisions to the effect
that at the end of the lease term as extended if applicable,
MACDERMID shall, at MACDERMID's expense and option, either return the
E&PD TECHNICAL CENTER/METTON BUILDING to HERCULES in a safe and
occupiable condition or demolish the E&PD TECHNICAL CENTER/METTON
BUILDING and clear the land; such return, demolition and clearing, as
the case may be, to be to the reasonable satisfaction of HERCULES.
2.8.3 HERCULES, with the reasonable cooperation of
MACDERMID, shall diligently pursue the said subdivision and
subsequent sale by HERCULES to MACDERMID of the E&PD TECHNICAL
CENTER/METTON BUILDING, and if and when such sale can be effectuated,
it shall be promptly effectuated upon payment by MACDERMID to
HERCULES of a purchase price of one dollar ($1.00). HERCULES shall
bear and pay all subdivision expenses (e.g., legal, civil engineering
and application fees) related to the said subdivision. Costs of the
separation of utilities and other items necessary or appropriate to
the said subdivision or the separation of E&PD TECHNICAL
CENTER/METTON BUILDING from the HERCULES Research Center shall be
borne by the PARTIES with HERCULES paying the lesser of Two Hundred
Thousand Dollars ($200,000) or fifty percent (50%) of such costs and
MACDERMID paying the remaining amount of such costs. MACDERMID shall
bear and pay all closing costs (e.g., deed fees, transfer taxes and
stamp taxes) related to the said sale. The E&PD TECHNICAL
CENTER/METTON BUILDING LEASE shall be terminated forthwith upon the
consummation of such sale and purchase.
2.9 INTERCOMPANY ACCOUNTS. Prior to or as of the TURNOVER
POINT, HERCULES shall eliminate all outstanding amounts owing between
the E&PD BUSINESS on the one hand, and HERCULES or any of its
AFFILIATES (other than the E&PD BUSINESS) on the other hand, in such
manner that the E&PD BUSINESS will incur no liability to HERCULES or
any of its AFFILIATES by reason of the elimination of such
intercompany accounts and, provided, that such elimination shall not
reduce the PURCHASED ASSETS or increase the ASSUMED LIABILITIES.
2.10 BELGIUM OPERATION. The E&PD BUSINESS includes a
Photoresist Slitting And Packaging Facility located in Beringen,
Belgium. Such Facility and the treatment thereof in connection with
the TRANSACTIONS are described in Schedule 2.10.
2.11 TAIWAN OPERATION. The E&PD BUSINESS includes a Tolled
Photoresist Slitting And Packaging Operation located in Taipei,
Taiwan. Such Operation and the treatment thereof in connection with
the TRANSACTIONS are described in Schedule 2.11.
2.12 LETTER OF INTENT. The PARTIES acknowledge that the
DEFINITIVE AGREEMENTS carry out the intent and purposes of the LETTER
OF INTENT, including that the HUMAN RESOURCES ANNEX carries out
Section 12 of the LETTER OF INTENT, and the ENVIRONMENTAL ANNEX
carries out Section 13 of the LETTER OF INTENT and the SERIES A
PREFERRED STOCK AGREEMENT carries out Section 16 of the LETTER OF
INTENT. Accordingly, the PARTIES intend and agree that the LETTER OF
INTENT is hereby merged into and superseded by this AGREEMENT and the
other DEFINITIVE AGREEMENTS for all intent and purposes.
2.13 ALLOCATION; TAXES; PRORATIONS. Allocation of the
PURCHASE PRICE for tax purposes; treatment of taxes and assessments,
including ad valorem, sale and use, real estate and transfer taxes;
and items to be prorated or apportioned as of the CLOSING DATE are
addressed in the TAX ANNEX.
2.14 E&PD APPLICATIONS LABORATORY. The E&PD Applications
Laboratory located in Building 8136 at the HERCULES Research Center
shall be leased to MACDERMID as of the CLOSING in accordance with the
APPLICATIONS LABORATORY LEASE.
2.15 INTERIM OPERATIONS.
2.15.1 The PARTIES intend and acknowledge that although
MACDERMID will have financial responsibility for the E&PD BUSINESS
ITEMS (including the MIDDLETOWN PLANT) as of after the TURNOVER
POINT, MACDERMID shall not have operational control of the E&PD
BUSINESS ITEMS until the CLOSING DATE when the transfer from HERCULES
to MACDERMID of the following environmental permits shall have become
effective on the CLOSING DATE. During the period from the TURNOVER
POINT through the effective point of such transfer of permits,
HERCULES shall be deemed to have operated the MIDDLETOWN PLANT for
the benefit of MACDERMID.
2.15. 2 In order to facilitate the transition of the
E&PD BUSINESS from HERCULES to MACDERMID and MACDERMID's operation of
the E&PD BUSINESS as of and after the CLOSING, the PARTIES shall
enter an employee lease and a transition services agreement in
accordance with the EMPLOYEE LEASE and the TRANSITION SERVICES
AGREEMENT.
2.15. 3 The PARTIES recognize and acknowledge the
importance that each PARTY attributes to receiving in a timely manner
any and all monies owed to it as a result of the interim operations
conducted pursuant to the EMPLOYEE LEASE and the TRANSITION SERVICES
AGREEMENT. To facilitate the accuracy and timeliness of such receipts
of monies, the PARTIES have agreed upon the general concepts set
forth in Schedule 2.15.2.
2.16 HERCULES PLAZA OFFICE SPACE LEASE. The PARTIES shall
enter into a lease covering office space at Hercules Plaza, 1313
North Market Street, Wilmington, DE 19894-0001, all in accordance
with the HERCULES PLAZA OFFICE SPACE LEASE.
2.17 ANCILLARY INTELLECTUAL PROPERTY.
2.17.1 As of the CLOSING, HERCULES grants to MACDERMID
a royalty free, non-exclusive, non-transferable license (in all
instances, except in the case of a sale by MACDERMID of all or
substantially all of the PURCHASED ASSETS) with no right to
sublicense, to practice HERCULES non-E&PD knowhow which had been
practiced incidentally by its E&PD BUSINESS as a necessary part of
its business prior to the CLOSING DATE but only to the extent to
which this knowhow was practiced by the E&PD BUSINESS prior to the
CLOSING DATE and only for use by MACDERMID to practice the E&PD
BUSINESS subsequent to the CLOSING DATE.
2.17.2 As of the CLOSING, HERCULES agrees not to assert
against MACDERMID any claim of infringement resulting from
MACDERMID's making, using, selling or offering for sale any article
or process covered by one or more claims contained in any patent
which HERCULES owns or is licensed under which had been practiced
incidentally by its E&PD BUSINESS as a necessary part of its business
prior to the CLOSING DATE but only to the extent to which such
technology was practiced by the E&PD BUSINESS prior to the CLOSING
DATE and which is necessary for MACDERMID to practice the E&PD
BUSINESS subsequent to the CLOSING DATE.
2.17.3 As of the CLOSING, HERCULES grants to MACDERMID
the right to practice HERCULES' three-dimensional photo lithography
technology as existing on the date hereof, all in accordance with the
THREE-DIMENSIONAL PHOTO LITHOGRAPHY AGREEMENT.
2.18 COMMINGLED ITEMS. After the CLOSING DATE, MACDERMID
will have in its possession various non-public documents, records and
other non-E&PD items relating to HERCULES, and HERCULES will have in
its possession various non-public documents, records and other items
relating to MACDERMID ("the COMMINGLED ITEMS"). The PARTIES hereby
acknowledge that it would be impractical to remove, destroy or return
to the disclosing PARTY such ITEMS; therefore, the ITEMS will not be
separated from or segregated in the MACDERMID or HERCULES files, as
the case may be, but the non-disclosing PARTY agrees that, subject to
Section 8.3, it shall not use or take any action to use the
COMMINGLED ITEMS or any information contained therein.
2.19 TELECOMMUNICATIONS. The PARTIES recognize and
acknowledge that (i) E&PD, as a division of HERCULES, was tied into
HERCULES' corporate telecommunication system, which includes
telephone numbers, facsimile numbers, electronic mail and other
items, and (ii) it is not possible or practical for MACDERMID to
utilize such system after the CLOSING, except as may be otherwise
provided in the DEFINITIVE AGREEMENTS. Accordingly, any telephone
numbers, facsimile numbers, electronic mail and other
telecommunication items which are used solely or substantially in the
E&PD BUSINESS in the ORDINARY COURSE and which are NOT part of
HERCULES' corporate telecommunication system, shall be transferred to
MACDERMID as part of the PURCHASED ASSETS. Those items which are
part of HERCULES' corporate telecommunication system shall be
retained by HERCULES as part of the EXCLUDED ITEMS. Pursuant to and
in accordance with the EMPLOYEE LEASE AGREEMENT and the TRANSITION
SERVICES AGREEMENT, the HERCULES' corporate telecommunication system
or parts thereof may be used by or for MACDERMID in connection with
the conduct of the E&PD BUSINESS after the TURNOVER POINT.
2.20 MARK TRECE, INC. Set forth in Schedule 2.20 is
information concerning the contracts between HERCULES and Mark Trece,
Inc. relating to E&PD matters. Mark Trece alleges that HERCULES has
breached such contract(s). HERCULES denies such allegations.
Subject to Article XII (other than Section 12.5.1), HERCULES agrees
to and shall protect, defend, indemnify and hold harmless MACDERMID
INDEMNITEES from all CLAIMS related to any alleged or actual breach
by HERCULES of any contract with Mark Trece that is transferred to
MACDERMID as part of the E&PD BUSINESS ITEMS. This indemnification
shall survive for the period of limitations provided by law for such
CLAIMS. MACDERMID shall reasonably cooperate, at no material expense
to MACDERMID, with HERCULES to enable HERCULES to defend against such
allegations or CLAIMS.
ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE. The purchase price (subject to the
POST-CLOSING ADJUSTMENT described in Section 3.2) to be paid to
HERCULES for the PURCHASED ASSETS (the "PURCHASE PRICE") shall be
One Hundred Thirty Million Dollars ($130,000,000) paid in cash and
preferred stock as follows:
(A) a cash payment of One Hundred Million Dollars
($100,000,000) (the "CASH PORTION") paid at the CLOSING by bank
wire transfer in immediately available funds, PLUS
(B) Thirty Million Dollars ($30,000,000) of newly issued
shares of Series A Preferred Stock of MACDERMID DELAWARE free and
clear of any ENCUMBRANCES other than the SERIES A PREFERRED STOCK
AGREEMENT, and issued in accordance with and subject to the PREFERRED
STOCK AGREEMENT (the "MACDERMID PREFERRED STOCK"), and delivered to
HERCULES at the CLOSING.
3.2 POST-CLOSING ADJUSTMENT. To the extent that there is
more than a ten percent (10%) difference between (i) the aggregate
amount of Net Receivables, Net Inventories, Net Fixed Assets
(including $600,000 for capitalized interest), Other Assets and
Accounts Payable/Accrued Expenses of the E&PD BUSINESS as of the
TURNOVER POINT, as reflected on the CLOSING DATE E&PD MANAGEMENT
PERFORMANCE REPORT, and (ii) the aggregate amount of $32.7 Million
(i.e., $32.1 Million for Net Receivables, Net Inventories, Net Fixed
Assets, Other Assets, and Accounts Payable/Accrued Expenses reflected
on the July 1995 E&PD MANAGEMENT PERFORMANCE REPORT, PLUS $600,000
for capitalized interest), then the PURCHASE PRICE shall be adjusted
as follows: if item (i) is greater than $35.97 Million, then the
amount of MACDERMID PREFERRED STOCK to be delivered to HERCULES shall
be increased by the difference between item (i) and $35.97 million;
and if item (i) is less than $29.43 Million, then the amount of
MACDERMID PREFERRED STOCK to be delivered to HERCULES shall be
decreased by the difference between item (i) and $29.43 million. The
foregoing post-closing adjustment (the "POST-CLOSING ADJUSTMENT")
shall be effectuated sixty (60) days after the CLOSING.
3.3 EXCLUSIVITY PAYMENT CREDIT. If MACDERMID has made an
exclusivity payment to HERCULES pursuant to Section 18 of the LETTER
OF INTENT and the TRANSACTIONS are consummated, then at the CLOSING
MACDERMID shall receive a credit (the "CREDIT") against the CASH
PORTION in the amount of such exclusivity payment.
3.4 SERIES A PREFERRED STOCK AGREEMENT. The terms,
conditions and provisions of the MACDERMID PREFERRED STOCK, including
provisions related to (i) dividends, (ii) redemption, (iii) default,
and (iv) HERCULES' membership on the boards of directors of MACDERMID
and of MACDERMID DELAWARE, shall be set forth in the SERIES A
PREFERRED STOCK AGREEMENT.
3.5 PERFORMANCE PREMIUM.
3.5.1 Subject to achievement of the PERFORMANCE PREMIUM
EBITDA, MACDERMID shall pay HERCULES a premium of Fifteen Million
Dollars ($15,000,000) as additional consideration for the E&PD
BUSINESS ITEMS (the "PERFORMANCE PREMIUM"), all in accordance with
the following:
(A) HERCULES shall earn and be entitled to and
MACDERMID shall be obligated to pay the PERFORMANCE PREMIUM if, and
only if, the aggregate Earnings Before Interest, Taxes, Depreciation
And Amortization ("EBITDA") of MACDERMID for the first, second, third
and fourth MACDERMID Full Fiscal Years following the CLOSING DATE is
equal to or greater than Two Hundred Fifty Million Dollars
($250,000,000.) (the "PERFORMANCE PREMIUM EBITDA").
(B) The PERFORMANCE PREMIUM, if payable, shall be
paid ninety (90) days after the end of the seventh (7th) MACDERMID
Full Fiscal Year following the CLOSING DATE; provided, however, if
such payment exceeds the sum of fifty percent (50%) of MACDERMID's
cumulative Consolidated Net Income After Tax ("NIAT") for the period
from the first day of the month immediately before the CLOSING DATE
if the CLOSING DATE is a day before the 15th of the month or the
first day of the month immediately after the CLOSING DATE if the
CLOSING DATE is the 15th or a later day of the month less all
redemptions of the MACDERMID PREFERRED STOCK pursuant to the SERIES A
PREFERRED STOCK AGREEMENT through the date of such payment, then any
portion in excess of the said fifty percent shall be paid ninety (90)
days after the end of the next MACDERMID Full Fiscal Year and each
subsequent MACDERMID Full Fiscal Year until paid in full, subject in
the case of each MACDERMID Full Fiscal Year to the said fifty percent
NIAT limitation less redemptions and amounts theretofore paid on
account of the PERFORMANCE PREMIUM. The NIAT limitation-portion
carryover payment process shall continue year after year until the
entire $15 million PERFORMANCE PREMIUM has been paid in full.
(C) If after the CLOSING DATE and on or before the
end of the fourth MACDERMID Full Fiscal Year following the CLOSING
DATE (the "Interim Performance Period") there shall occur an event
described in Section 3.5.1 (D) (as hereinafter defined) of MACDERMID,
and further, if, and only if, the aggregate EBITDA of MACDERMID
during that portion of the Interim Performance Period preceding the
CHANGE IN CONTROL equals or exceeds the applicable amount in Column 4
of Schedule 3.5.1, then HERCULES shall be deemed to have earned and
be entitled to, and MACDERMID shall be obligated to pay, the
PERFORMANCE PREMIUM forthwith; provided, however, that, in the event
any such change in control of MACDERMID occurs during the first six
months of a Full Fiscal Year, the applicable aggregate EBITDA shall
be that for the immediately preceding Full Fiscal Year, and in the
event such change in control occurs during the last six months of a
Full Fiscal Year, the applicable aggregate EBITDA shall be prorated
on a monthly basis for the entire Full Fiscal Year.
(D) MACDERMID represents and warrants that the
following PERSON(S) directly or indirectly have ownership and/or
beneficial control (with the right to vote) of at least the following
aggregate percentage of MACDERMID's outstanding voting securities:
Thirty-Five Percent (35%) in the aggregate for
(i) Members of the family of Mr. and Mrs.
Harold Leever and the estate of, or any trust or foundation created
by, any such member, and
(ii) MacDermid, Incorporated Employees Profit
Sharing, Pension and Stock Ownership Plans.
MACDERMID covenants and agrees that until all obligations (including
payment dividend and redemption) of MACDERMID and MACDERMID DELAWARE
under or relating to the PERFORMANCE PREMIUM and the MACDERMID
PREFERRED STOCK have been fully satisfied and extinguished the above
named PERSONS shall own in the aggregate at least Twenty-Five Percent
(25%) of the voting securities of MACDERMID. In the event of a
breach or default under this Section 3.5.1 (D), then, in addition to
all other rights and remedies which HERCULES may have, HERCULES shall
have the rights and remedies that it would have were there a breach
or default by MACDERMID and/or MACDERMID DELAWARE under the PREFERRED
STOCK AGREEMENT.
(E) Payments on the MACDERMID PREFERRED STOCK and
payment of the PERFORMANCE PREMIUM (collectively "Payments") may not
be made in violation of MACDERMID's and/or MACDERMID DELAWARE's, as
the case may be, existing debt agreements (which MACDERMID and/or
MACDERMID DELAWARE, as the case may be, will represent at CLOSING are
true and correct) or MACDERMID's and/or MACDERMID DELAWARE's, as the
case may be, future debt agreements; provided that no such future
agreement may contain covenants or restrictions which on the basis of
the plans and information for the indebted period furnished by
MACDERMID and/or MACDERMID DELAWARE, as the case may be, to the
lender or underwriter at or prior to the execution of such future
debt agreement would per se at the time of such execution prevent
MACDERMID and MACDERMID DELAWARE making Payments. In the event of a
breach or default under this Section 3.5 (E), then in addition to all
other rights and remedies which HERCULES may have, HERCULES shall
have the right to one-third of the membership of MACDERMID's Board of
Directors, all as described in section 3.5 (F), and the judicial
resolution described in Section 13 of the PREFERRED STOCK AGREEMENT.
(F) If MACDERMID shall fail to fully and timely pay
the PERFORMANCE PREMIUM as required, and such failure continues for
thirty (30) days after NOTICE from HERCULES, then forthwith HERCULES
shall be entitled to have elected those nominees sufficient to
constitute one-third (1/3) of the membership of the Board of
Directors of MACDERMID as of the end of the said thirty-day period
and all times thereafter. MACDERMID irrevocably agrees and shall
take all steps necessary, appropriate and convenient to have such
nominees so elected. Such steps may include MACDERMID having to
expand the size of its Board of Directors in order to effectuate this
clause. HERCULES' right to one-third of the membership of the said
Board of Directors shall continue in effect until the PERFORMANCE
PREMIUM has been paid in full, and all outstanding MACDERMID
PREFERRED STOCK has been redeemed in full, and all other obligations
of MACDERMID and of MACDERMID DELAWARE relating to the PERFORMANCE
PREMIUM and/or to the MACDERMID PREFERRED STOCK have been completely
satisfied and extinguished.
(G) Furthermore, if MACDERMID shall fail to fully
and timely pay the PERFORMANCE PREMIUM as required, then in addition
to all other rights and remedies which HERCULES may have, HERCULES
shall have all the rights and remedies which it would have if there
were a breach or default by MACDERMID and/or MACDERMID DELAWARE under
the SERIES A PREFERRED STOCK AGREEMENT.
(H) For purposes of this Section 3.5, a "MACDERMID
Full Fiscal Year" shall mean a one-year period beginning April 1 and
ending March 31. The "EBITDA" shall be determined in accordance with
the FINANCIAL/ ACCOUNTING ANNEX. The "NIAT" shall be determined in
accordance with the FINANCIAL/ACCOUNTING ANNEX.
ARTICLE IV
CLOSING
4.1 TIME AND PLACE. The closing of the TRANSACTIONS (the
"CLOSING") shall take place at Hercules Plaza, 1313 North Market
Street, Wilmington, Delaware 19894-0001, at 10 A.M, on the first
BUSINESS DAY following the later to occur of (i) the expiration of
all applicable waiting periods under the HSR ACT and (ii) the
satisfaction or waiver of all other conditions applicable to the
TRANSACTIONS, or at such other place, time and date as the PARTIES
may agree (the "CLOSING DATE"). Upon the completion of the
CLOSING, the E&PD BUSINESS shall be deemed to have been turned over
to MACDERMID as of the TURNOVER POINT.
4.2 DELIVERIES BY HERCULES. At the CLOSING, HERCULES
shall:
(A) execute and deliver to MACDERMID such special
warranty deeds, bills of sale, endorsements, assignments, licenses
and other instruments and documents, reasonably satisfactory to
MACDERMID, necessary or appropriate to vest in MACDERMID as of the
CLOSING DATE good and marketable title to the PURCHASED ASSETS, free
and clear of any ENCUMBRANCES other than PERMITTED ENCUMBRANCES
("INSTRUMENTS OF TRANSFER"). Simultaneously with the foregoing
deliveries, HERCULES shall take all additional steps necessary or
appropriate to put MACDERMID in possession and operating control of
the E&PD BUSINESS as of the TURNOVER POINT; and
(B) deliver to MACDERMID all documents and
certificates specifically required by the DEFINITIVE AGREEMENTS to be
delivered by HERCULES at the CLOSING or necessary to carry out the
CLOSING as contemplated herein.
4.3 DELIVERIES BY MACDERMID. At the CLOSING, MACDERMID
shall:
(A) execute and deliver such agreements, receipts,
instruments and documents, reasonably satisfactory to HERCULES,
necessary to effectuate and evidence MACDERMID's purchase, receipt
and assumption of the E&PD BUSINESS ITEMS as of the TURNOVER POINT
("INSTRUMENTS OF RECEIPT AND ASSUMPTION"). Simultaneously with the
foregoing deliveries, MACDERMID shall take all additional steps
necessary or appropriate to receive and assume possession and
operating control of the E&PD BUSINESS as of the TURNOVER POINT;
(B) pay the CASH PORTION, less the amount of the CREDIT
if applicable, in United States dollars, by wire transfer of
immediately available funds to an account(s) of HERCULES at a bank(s)
(with bank wire instructions) specified by HERCULES, which
specification of banks shall be made at least two (2) BUSINESS DAYS
prior to the CLOSING DATE;
(C) issue and deliver to HERCULES certificates
representing the MACDERMID PREFERRED STOCK, free and clear of any
ENCUMBRANCES other than the SERIES A PREFERRED STOCK AGREEMENT; and
(D) deliver to HERCULES all documents and certificates
specifically required by the DEFINITIVE AGREEMENTS to be delivered by
MACDERMID at the CLOSING or necessary to carry out the CLOSING as
contemplated herein.
4.4 CERTAIN ASSIGNMENTS, CONSENTS AND PERMITS.
4.4.1 Notwithstanding anything to the contrary and without
limiting the conditions provided in Articles IX and X hereof, the
DEFINITIVE AGREEMENTS shall not constitute an agreement to transfer
or grant any rights in, to or under any E&PD BUSINESS ITEM or E&PD
BUSINESS PERMIT if a purported or an actual sale, purchase,
assignment, grant or transfer, without the consent, approval,
novation or waiver ("CONSENT") of a THIRD PERSON (including any
AUTHORITY), would constitute a breach or a default thereof, cause or
permit the acceleration or termination thereof, or in any way
materially and adversely affect the rights of HERCULES in respect
thereof, or the right of MACDERMID to conduct all or any part of the
E&PD BUSINESS substantially in the manner and on the terms presently
enjoyed by HERCULES.
4.4.2 Both prior to and after the CLOSING, HERCULES shall
use its best efforts, and MACDERMID shall provide its best
cooperation to HERCULES, at no material expense to MACDERMID, to
obtain CONSENTS required for the transfer of all E&PD BUSINESS ITEMS
and to transfer to MACDERMID, to the extent legally transferable, all
PERMITS used solely or substantially in the E&PD BUSINESS in the
ORDINARY COURSE, including the E&PD BUSINESS PERMITS.
4.4.3 Set forth in Schedule 4.4.3 are those CONSENTS and
E&PD BUSINESS PERMITS which HERCULES reasonably believes must be
obtained by the CLOSING in order for the E&PD BUSINESS to be
transferred to and operated by MACDERMID. If a CONSENT or E&PD
BUSINESS PERMIT set forth on Schedule 4.4.3 is not obtained by the
CLOSING and the PARTIES do not waive such obtainment, then the
CLOSING shall be delayed for a period of not more than thirty (30)
days to allow the PARTIES to negotiate in good faith a reasonable
arrangement designed to put the PARTIES to the greatest extent
practicable in the same respective positions as if such CONSENT or
E&PD BUSINESS PERMIT had been obtained prior to the CLOSING and the
subject E&PD BUSINESS ITEM(S) had been transferred as contemplated by
this AGREEMENT. If the PARTIES reach agreement on an arrangement,
then such arrangement shall remain in effect until the earlier of (i)
the items giving rise to the obligation to obtain such CONSENT or to
transfer such E&PD BUSINESS PERMIT shall have been terminated or
shall have expired, (ii) such CONSENT has been obtained or such E&PD
BUSINESS PERMIT has been transferred or obtained, or (iii) the
PARTIES have agreed that such CONSENT or E&PD BUSINESS PERMIT is no
longer necessary. If the PARTIES have been unable to reach agreement
on a reasonable arrangement, then this AGREEMENT may be terminated
pursuant to Section 11.1 (F) hereof.
4.4.4 If a CONSENT or PERMIT not listed on Schedule 4.4.3
is not obtained prior to the CLOSING, then the CLOSING shall be held
notwithstanding such nonobtainment and the PARTIES shall negotiate in
good faith a reasonable arrangement designed to put the PARTIES to
the greatest extent practicable in the same respective positions as
if each CONSENT or PERMIT had been obtained. Such arrangement shall
remain in effect until the earlier of (i) the items giving rise to
the obligation to obtain such CONSENT or to transfer such PERMIT
shall have been terminated or shall have expired, (ii) such CONSENT
has been obtained or such PERMIT has been transferred or obtained, or
(iii) the PARTIES have agreed that such CONSENT or PERMIT is no
longer necessary.
4.4.5 The arrangements contemplated in Sections 4.4.3 and
4.4.4 may include (a) entering into subleases, subcontracts, sale and
leasebacks, use and service agreements, supply agreements, collection
efforts or other contractual arrangements, all upon terms and
conditions no less favorable than those possessed by HERCULES under
the E&PD BUSINESS ITEM, the E&PD BUSINESS PERMIT or the PERMIT in
question, and (b) enforcing for the benefit of MACDERMID any and all
rights of HERCULES in respect of such E&PD BUSINESS ITEM, E&PD
BUSINESS PERMIT or PERMIT; provided that MACDERMID shall not be
required to accept or enter into, as a substitute for performance by
HERCULES under this AGREEMENT, any arrangement which would impose any
material additional cost, expense or liability on MACDERMID beyond
that which would have been incurred by MACDERMID if such E&PD
BUSINESS ITEM, E&PD BUSINESS PERMIT or PERMIT had been transferred.
4.4.6 The PARTIES recognize and acknowledge that in certain
instances (e.g. when a transfer by HERCULES is not legally possible
or is impracticable) item(s) (e.g. a PERMIT) may not be transferable
and that MACDERMID may have to apply for and obtain its own item(s).
In such instances, MACDERMID agrees to promptly make such
application(s) and diligently pursue the obtainment of its own
item(s); provided however that if in making such application or in
seeking such obtainment MACDERMID seeks a benefit or position
substantially greater than that possessed or enjoyed by HERCULES in
its use of such item(s) then HERCULES shall be relieved forthwith of
any obligations related to such item(s).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HERCULES
5.1 REPRESENTATIONS AND WARRANTIES OF HERCULES;
LIMITATION.
5.1.1 HERCULES represents and warrants to MACDERMID each of
the representations and warranties set forth in Sections 5.2 through
5.24 below, as of the TURNOVER POINT through the CLOSING. The
representations and warranties set forth in Sections 5.2 through 5.24
shall survive the CLOSING for a period of eighteen (18) months after
the CLOSING, except as otherwise provided in this Article V.
5.1.2 Except for the representations and warranties
specifically provided in the DEFINITIVE AGREEMENTS, HERCULES makes no
representation or warranty of any kind or nature, whether express or
implied, including any representation or warranty of (i)
merchantability, suitability or fitness for a particular purpose, or
quality, with respect to the E&PD BUSINESS ITEMS, or any part
thereof, or as to the condition or workmanship thereof, or the
absence of any defects therein, whether latent or patent; or (ii)
that the E&PD BUSINESS ITEMS or MACDERMID's ownership, possession,
operation or use thereof will yield any given or stated economic,
financial, profit or business result to MACDERMID or will result in
MACDERMID having any given standing or position in any business
(including the E&PD BUSINESS), market or product.
5.2 ORGANIZATION, GOOD STANDING AND CORPORATE POWER.
5.2.1 HERCULES is duly organized, validly existing and in
good standing under the laws of the State of Delaware. Subject to
the E&PD MATERIALITY STANDARD, HERCULES is duly qualified to do
business and is in good standing in each jurisdiction in which the
E&PD BUSINESS ITEMS or the nature of the E&PD BUSINESS makes such
qualification necessary.
5.2.2 HERCULES has the requisite corporate power and
authority to use, own or lease and operate the PURCHASED ASSETS.
HERCULES has the requisite corporate power and authority to conduct
the E&PD BUSINESS in the ORDINARY COURSE. HERCULES has the requisite
corporate power and authority to execute the DEFINITIVE AGREEMENTS
and to consummate the TRANSACTIONS. The DEFINITIVE AGREEMENTS and
the TRANSACTIONS have been duly authorized by the Board of Directors
of HERCULES, and no other consent, approval or action of HERCULES'
stockholders or Board of Directors is required.
5.2.3 The DEFINITIVE AGREEMENTS have been duly and validly
executed and delivered by HERCULES, and are valid and legally
binding obligations of HERCULES, enforceable against it in
accordance with their terms (subject to applicable bankruptcy,
insolvency or other similar laws relating to creditors' rights
generally and to applicable general principles of equity).
5.2.4 The indemnification period for this Section 5.2 shall
be the period of limitations provided by law.
5.3 AFFILIATES. Schedule 5.3 sets forth the name and
jurisdiction of incorporation of the HERCULES AFFILIATE(S) owning or
possessing directly or indirectly E&PD BUSINESS ITEM(S) and a
description of the particular E&PD BUSINESS ITEM(S) so owned or
possessed respectively by each such AFFILIATE.
5.4 FINANCIAL STATEMENTS.
5.4.1 The E&PD CARVE-OUT FINANCIAL STATEMENTS present
fairly the financial position of the E&PD BUSINESS at the dates and
for the results of operations of the E&PD BUSINESS for the periods
indicated therein.
5.4.2 The income statements for the year ended December
31, 1994, delivered to MACDERMID by HERCULES as part of the E&PD
CARVE-OUT FINANCIAL STATEMENTS shall not be materially different from
the income statements delivered to MACDERMID by HERCULES as part of
the E&PD MANAGEMENT PERFORMANCE REPORT (excluding businesses which
are not currently part of the E&PD BUSINESS) for the year ended
December 31, 1994.
5.4.3 The income statements delivered to MACDERMID by
HERCULES as part of the 1995 CARVE-OUT FINANCIAL STATEMENTS shall not
be materially different from the income statements delivered to
MACDERMID by HERCULES as part of the CLOSING DATE E&PD MANAGEMENT
PERFORMANCE REPORT.
5.4.4 The CLOSING DATE E&PD MANAGEMENT PERFORMANCE
REPORT,
when available and included in Schedule 2.6.4, shall have been
prepared on the same basis as the E&PD MANAGEMENT PERFORMANCE REPORT
for the seven-month period ended July, 1995.
5.5 ABSENCE OF CHANGES IN THE E&PD BUSINESS.
5.5.1. Except (A) for HERCULES' adoption of a $50
million deductible on its property insurance policies; (B) for
pension accruals as provided in the HUMAN RESOURCES ANNEX; and (C)
as set forth on Schedule 5.5 or as contemplated by this AGREEMENT,
HERCULES has conducted the E&PD BUSINESS in the ORDINARY COURSE and
there has not occurred any change or event which, individually or in
the aggregate, would or could be reasonably expected to result in an
E&PD MATERIAL ADVERSE EFFECT. Except for items (A), (B) and (C)
above, HERCULES has not taken any action with respect to the E&PD
BUSINESS which if taken during the PRECLOSING PERIOD would be
prohibited pursuant to Section 7.2.
5.5.2 Except as set forth in Schedule 5.5.2, HERCULES has
received no notice from any customer, supplier, group of employees,
licensor or licensee of the E&PD BUSINESS, and knows of no reasonable
basis for, any development that threatens to materially adversely
affect the arrangements or business relations of the E&PD BUSINESS
with such customer, supplier, group of employees, licensor or
licensee, or that has resulted in, or may reasonably be expected to
result in an E&PD MATERIAL ADVERSE EFFECT.
5.6 CONFLICTING AGREEMENTS; RESTRICTIONS. Except as set
forth on Schedule 5.6, neither the execution, delivery or performance
of the DEFINITIVE AGREEMENTS nor the consummation of the
TRANSACTIONS by HERCULES will (A) conflict with or constitute a
breach by HERCULES of its respective charter or bylaws; (B) subject
to the E&PD MATERIALITY STANDARD, result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result
in a violation of, or give rise to the acceleration of the time for
performance under, or require any payment by MACDERMID (other than
MACDERMID's satisfaction of the ASSUMED LIABILITIES and payments
which MACDERMID has agreed to pay pursuant to provisions of the
DEFINITIVE AGREEMENTS) under, or trigger any change adversely
affecting MACDERMID in the terms of any agreement, contract,
instrument, order, evidence of indebtedness, judgment or decree to
which HERCULES is a party or by which HERCULES is bound; (C) subject
to the E&PD MATERIALITY STANDARD, violate any provision of any
existing law, statute, rule or regulation of any jurisdiction or of
any order, decree, writ or injunction or decree of any court or
governmental department, bureau, board, agency or instrumentality; or
(D) result in the creation or imposition of any ENCUMBRANCE other
than PERMITTED ENCUMBRANCES on any E&PD BUSINESS ITEM(S), or result
in an E&P MATERIAL ADVERSE EFFECT.
5.7 TITLE.
5.7.1 Except as set forth on Schedule 5.7 and subject to
Sections 4.4 and 5.12, HERCULES (directly or through AFFILIATE(S))
has, or shall have on the CLOSING DATE, and shall transfer and
deliver to MACDERMID on the CLOSING DATE with respect to the
PURCHASED ASSETS, (A) good and marketable title, free and clear of
any ENCUMBRANCES other than PERMITTED ENCUMBRANCES, to those of such
PURCHASED ASSETS which are owned, (B) a valid and enforceable lease
on those of such PURCHASED ASSETS which are leased, (C) a valid and
enforceable license on those of such PURCHASED ASSETS which are
licensed, and (D) a valid and enforceable right to use those of such
PURCHASED ASSETS which are neither owned, leased or licensed. The
indemnification period for this Section 5.7.1 shall be the period of
limitations provided by law.
5.7.2 After the transfer and delivery of the PURCHASED
ASSETS to MACDERMID as of the CLOSING, MACDERMID shall own, possess
or enjoy all right, title and interest in and to, or a valid and
enforceable right to use, each and all of the PURCHASED ASSETS
substantially to the same extent as owned, possessed or enjoyed by
HERCULES in the conduct of the E&PD BUSINESS in the ORDINARY COURSE.
5.8 INVENTORIES. Except as set forth on Schedule 5.8 and
subject to Section 8.7, (A) all inventory, including raw materials,
work-in-process and finished goods, transferred to MACDERMID as part
of the PURCHASED ASSETS consists of a quality and condition usable,
leasable or saleable in the E&PD BUSINESS in the ORDINARY COURSE; (B)
all such inventory does not contain material excess quantities; (C)
all such inventory has a remaining shelf life of two months or
greater, as such shelf life is determined in the conduct of the E&PD
BUSINESS in the ORDINARY COURSE and (D) to the knowledge of HERCULES,
HERCULES is not under any legal liability or obligation with respect
to the return of good and saleable inventory in the possession of
distributors, customers or others.
5.9 ACCOUNTS RECEIVABLE. Except as set forth on Schedule
5.9 and subject to Section 8.6, all accounts receivable transferred
to MACDERMID as part of the PURCHASED ASSETS consist of accounts that
are good and collectible in the ORDINARY COURSE of the E&PD BUSINESS.
5.10 ACCOUNTS PAYABLE. Except as set forth on Schedule
5.10, all accounts payable transferred to MACDERMID as part of the
ASSUMED LIABILITIES arose from the delivery of goods, the provision
of services, or other activities which occurred by, for or on behalf
of the E&PD BUSINESS in the ORDINARY COURSE.
5.11 CONDITION. Except as set forth on Schedule 5.11 or in
the DEFINITIVE AGREEMENTS (including schedules thereto) or in the
ENVIRONMENTAL ANNEX, all real property transferred or leased to
MACDERMID as part of the PURCHASED ASSETS complies, has been
grandfathered, has received and has in effect a valid variance or
complies in all material respects with all applicable building and
zoning laws, ordinances, regulations and PERMITS in effect on the
date hereof. Except as set forth on Schedule 5.11, all buildings,
facilities and other structures and improvements located on such real
property and all such material machinery and equipment reasonably
necessary to the conduct of the E&PD BUSINESS as conducted on the
date hereof are in good operating condition in all material respects
for property of its type and age, subject to ordinary wear and tear.
5.12 E&PD INTELLECTUAL PROPERTY.
5.12.1 Except as set forth on Schedule 5.12, the E&PD
INTELLECTUAL PROPERTY includes all INTELLECTUAL PROPERTY used solely
or substantially in the ORDINARY COURSE of the E&PD BUSINESS.
HERCULES owns, or possesses adequate rights in all the E&PD
INTELLECTUAL PROPERTY, or shall so own or possess such rights on the
CLOSING DATE. Subject to the E&PD MATERIALITY STANDARD, there is no
CLAIM against, or to the knowledge of HERCULES, threatened in writing
against HERCULES and/or its AFFILIATES with respect to an alleged or
actual infringement by the E&PD INTELLECTUAL PROPERTY currently
practiced by the E&PD BUSINESS, of any patent, trademark or
intellectual property of THIRD PERSONS in locations where the E&PD
BUSINESS is currently conducted by HERCULES or where E&PD products
are currently sold by HERCULES or its authorized distributors, sales
agents or sales representatives.
5.12.2 Subject to Section 5.12.1 and except as set
forth on Schedule 5.12., HERCULES has no knowledge of any instance in
which an inventor or author of any E&PD INTELLECTUAL PROPERTY has
refused, is refusing or will refuse to transfer all right, title and
interest in and to such E&PD INTELLECTUAL PROPERTY to HERCULES.
5.12.3 The indemnification period for this Section 5.12
shall be six (6) years after the CLOSING.
5.13 CONTRACTS AND AGREEMENTS.
5.13.1 Schedule 5.13 contains a list of all contracts,
agreements, leases (including real property leases) and commitments,
except for items listed in other schedules to this AGREEMENT or any
of the DEFINITIVE AGREEMENTS, to which HERCULES is a party or is
bound and which are material to and necessary for the conduct of the
E&PD BUSINESS in the ORDINARY COURSE. Each such contract,
agreement, lease or commitment is hereinafter referred to as a "E&PD
MATERIAL CONTRACT" and collectively as the "E&PD MATERIAL CONTRACTS".
The E&PD MATERIAL CONTRACTS include the following:
(A) each contract which provides for payments in
excess of $25,000 or which is not cancelable in sixty (60) days or
less without penalty or premium;
(B) each agreement between HERCULES (made on behalf
of the E&PD BUSINESS) on one hand and any HERCULES AFFILIATE on the
other hand, and which agreement relates to the sale or purchase of
products (whether raw material, finished products, consigned
inventories or other) or the provision of services material to the
conduct of the E&PD BUSINESS;
(C) each agreement (other than the DEFINITIVE
AGREEMENTS) that restricts after the CLOSING the right of MACDERMID
to engage or compete in any type of business with any PERSON or in
any area or to own, operate, sell, transfer, pledge or otherwise
dispose of or encumber the PURCHASED ASSETS;
(D) each agreement (whether of surety, guarantee,
letter of credit or indemnification), indenture, loan agreement or
note which will have an effect on the ASSUMED LIABILITIES after the
CLOSING;
(E) each distributorship, sales agency or sale
representative agreements with terms in excess of three (3) months or
which is not cancelable in ninety (90) days or less without penalty
or premium; and
(F) each contract, agreement, lease or commitment
related to E&PD BUSINESS ITEM(S) as to which the CONSENT of a THIRD
PERSON is required for the assignment thereof to MACDERMID or the
grant of any rights therein to MACDERMID, and such assignment or
grant is reasonably necessary for the conduct of the E&PD BUSINESS in
the ORDINARY COURSE.
5.13.2 Notwithstanding anything to the contrary,
HERCULES is not representing or warranting that every E&PD BUSINESS
ITEM to be assigned hereunder is assignable. The PARTIES acknowledge
that in the event of such non-assignability, it will be covered by
Section 4.4.
5.13.3 Except as set forth on Schedule 5.13, each E&PD
MATERIAL CONTRACT is in full force and effect, is an ASSIGNED
CONTRACT and is transferable to MACDERMID and is a valid and legally
binding agreement of HERCULES and, to the knowledge of HERCULES, of
the other parties thereto. Except as set forth on Schedule 5.13 and
subject to the E&PD MATERIALITY STANDARD, (A) neither HERCULES nor
any party thereto is in breach or default under any E&PD MATERIAL
CONTRACT, and (B) there exists no condition or event (and HERCULES
has not received written notice of any such condition or event) which
on the date hereof constitutes a breach or default, early termination
or cancellation or which, after notice or lapse of time or both,
would constitute a breach or default, early termination or
cancellation in connection with any E&PD MATERIAL CONTRACT.
5.14 INSURANCE. Schedule 5.14 sets forth a list of insurance
policies, self-insurance programs and other forms of insurance
maintained on the date hereof by or on behalf of HERCULES in
connection with the E&PD BUSINESS, except for those items or matters
listed on schedule(s) to the HUMAN RESOURCES ANNEX. None of such
policies, programs or insurance shall accrue to MACDERMID's benefit
or be applicable to the E&PD BUSINESS and/or any of the E&PD BUSINESS
ITEMS after the TURNOVER POINT.
5.15 CONSENTS. Subject to Section 4.4, the execution and
delivery by HERCULES of the DEFINITIVE AGREEMENTS do not, and the
performance by HERCULES of the TRANSACTIONS will not, require the
obtaining of any CONSENT or the taking of other action or the making
of any filing with or the giving of any NOTICE to, any AUTHORITY or
any other THIRD PERSON (including with respect to any PERMIT) which
HAS NOT BEEN obtained, made or given, except (A) approvals under
applicable HSR and EXCHANGE ACT provisions; (B) as disclosed on
Schedule 5.15 or (C) where failure to obtain such CONSENTS or
actions, make such filings or give such NOTICE (in each case from,
with or to a PERSON, including any AUTHORITY) would not have a E&PD
MATERIAL ADVERSE EFFECT.
5.16 NO LITIGATION. Except for the matters set forth on
Schedule 5.16, there is no CLAIM pending against or, to the knowledge
of HERCULES, threatened in writing against HERCULES and, subject to
the E&PD MATERIALITY STANDARD, affecting any E&PD BUSINESS ITEM or
which, individually or in the aggregate, would or could be reasonably
expected to give rise to an injunction to prevent or materially delay
the TRANSACTIONS or challenge the validity of the DEFINITIVE
AGREEMENTS or materially interfere with the conduct of the E&PD
BUSINESS in the ORDINARY COURSE. The indemnification period for this
Section 5.16 shall be the earlier of thirty-six (36) months after the
CLOSING or the period of limitation provided by law.
5.17 NON-ENVIRONMENTAL LAWS AND GOVERNMENTAL
CONSENTS.
5.17.1 Subject to the E&PD MATERIALITY STANDARD, and
excluding environmental laws (which laws are addressed in the
ENVIRONMENTAL ANNEX), HERCULES has complied and is complying with all
applicable judgments, rulings, writs, injunctions, awards, decrees,
laws, statutes, orders, rules and regulations promulgated by any
AUTHORITY to which the PURCHASED ASSETS are subject.
5.17.2 Except as set forth on Schedule 5.17, all E&PD
BUSINESS PERMITS have been duly obtained and are in full force and
effect or will be obtained, and there are no proceedings pending or,
to the knowledge of HERCULES, threatened in writing that would result
in the revocation, cancellation or suspension, or any adverse
modification, of any thereof.
5.18 TAXES. Any representations, warranties and covenants
applicable to Taxes are set forth solely in the TAX ANNEX. The
indemnification period for such representations and warranties shall
be the period of limitation provided by law.
5.19 ENVIRONMENTAL MATTERS. Any representations, warranties
and covenants applicable to environmental matters are set forth
solely in the ENVIRONMENTAL ANNEX. The indemnification period for
such representations and warranties shall be (A) unlimited in the
case of environmental areas (e.g. landfills, Superfund sites, etc.)
which are not located on or in the real property transferred or
leased hereunder to MACDERMID and (B) five (5) years in the case of
environmental areas which are located on such real property.
5.20 EMPLOYEES AND EMPLOYEE BENEFITS. Any representations,
warranties and covenants applicable to employee and employee benefits
matters are set forth solely in the HUMAN RESOURCES ANNEX. The
indemnification period for such representations and warranties shall
be eighteen (18) months.
5.21 INVESTMENT. HERCULES is acquiring the MACDERMID
PREFERRED STOCK for investment purposes only and not with a view
toward, or for sale in connection with, any distribution thereof in
violation of federal, state or other securities laws.
5.22 COMPLETE PURCHASED ASSETS. Except as set forth on
Schedule 5.22 and except for the EXCLUDED ITEMS, the PURCHASED ASSETS
include all of the material assets, properties and rights which were
used solely or substantially in HERCULES' operation of the E&PD
BUSINESS in the ORDINARY COURSE.
5.23 BROKERS. Neither HERCULES nor any of its AFFILIATES is
obligated to pay, or has retained any broker or finder or other
PERSON who is entitled to, any broker's or finder's fee or any other
commission or financial advisory fee based on any agreement or
undertaking made by HERCULES in connection with the TRANSACTIONS.
MACDERMID shall not, as a result of the TRANSACTIONS or otherwise,
have any obligation in respect of any such fees or commissions.
HERCULES shall protect, defend, indemnify and hold harmless the
MACDERMID INDEMNITEES against such fees or commissions.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF MACDERMID
6.1 REPRESENTATIONS AND WARRANTIES OF MACDERMID.
MACDERMID represents and warrants to HERCULES each of the
representations and warranties set forth in Sections 6.2 through 6.19
below as of the TURNOVER POINT through the CLOSING. The
representations and warranties set forth in Sections 6.2 through 6.19
shall survive the CLOSING for a period of eighteen (18) months after
the CLOSING, except as otherwise provided in this Article VI. Except
for the representations and warranties specifically provided in the
DEFINITIVE AGREEMENTS, MACDERMID makes no representation or warranty
of any kind or nature, whether express or implied.
6.2 ORGANIZATION, GOOD STANDING AND CORPORATE POWER.
6.2.1 MACDERMID and each of its AFFILIATES owning or
possessing directly or indirectly assets of the MACDERMID BUSINESS is
duly organized, validly existing and in good standing under the laws
of the State or country in which they are respectively incorporated.
Subject to the MACDERMID MATERIALITY STANDARD, MACDERMID and each of
its AFFILIATES is duly qualified to do business and is in good
standing in each jurisdiction in which the character of their assets
or the nature of their business makes such qualification necessary.
Complete and correct copies of the respective Certificate of
Incorporation and By-laws of MACDERMID and MACDERMID DELAWARE, as
currently in effect, have been provided to HERCULES.
6.2.2 MACDERMID and all of its AFFILIATES have the
requisite corporate power and authority to own or lease and operate
their assets and conduct their business in the ORDINARY COURSE.
MACDERMID has the requisite corporate power and authority to execute
the DEFINITIVE AGREEMENTS and to consummate the TRANSACTIONS. The
execution, delivery and performance of the DEFINITIVE AGREEMENTS and
the TRANSACTIONS have been duly authorized by the Board of Directors
of MACDERMID, and no other consent, approval or other action of
MACDERMID's stockholders or Board of Directors is required.
6.2.3 MACDERMID has approved the TRANSACTIONS (including
the issuance of the MACDERMID PREFERRED STOCK to HERCULES and the
acquisition of additional securities of MACDERMID by HERCULES
pursuant to the terms of the SERIES A PREFERRED STOCK AGREEMENT) and
they are exempt from the provisions of every applicable takeover
statute in effect in the State of Connecticut, including Sections 33-
374a to 33-374f of the Connecticut Stock Corporation Act, and from
any and all change of control, "anti-takeover" or similar provisions
in any contract, agreement, arrangement or understanding to which
MACDERMID is a party.
6.2.4 The DEFINITIVE AGREEMENTS have been duly and validly
executed and delivered by MACDERMID, and are valid and legally
binding obligations of MACDERMID, enforceable against it in
accordance with their terms (subject to applicable bankruptcy,
insolvency or other similar laws relating to creditors' rights
generally and to applicable general principles of equity).
6.2.5 The indemnification period for this Section 6.2
shall be the period of limitations provided by law.
6.3 CAPITALIZATION.
6.3.1 The authorized capital stock of MACDERMID consists
solely of 20,000,000 shares of common stock, with no par value per
share, and 2,000,000 shares of preferred stock, without par value.
As of November 29, 1995, 2,795,794 shares of common stock were
validly issued and outstanding, 1,398,547 shares of common stock were
held in the treasury of MACDERMID, and no shares of preferred stock
have been issued and no shares of preferred stock are held in the
treasury of MACDERMID. All of the outstanding shares of capital
stock of MACDERMID have been, and upon issuance the MACDERMID
PREFERRED STOCK will be, duly authorized, validly issued, fully paid
and nonassessable.
6.3.2 The authorized capital stock of MACDERMID DELAWARE
consists solely of 150,000 shares of common stock, $.01 par value per
share, and 150,000 shares of preferred stock, without par value. As
of the date hereof, 100 shares of common stock were validly issued
and outstanding. No shares of common stock were held in the treasury
of MACDERMID DELAWARE, and no shares of preferred stock have been
issued and no shares of preferred stock are held in the treasury of
MACDERMID DELAWARE. All of the outstanding shares of capital stock
of MACDERMID DELAWARE have been, and upon issuance of the MACDERMID
PREFERRED STOCK will be, duly authorized, validly issued, fully paid
and non-assessable.
6.3.3 At the CLOSING, upon delivery to HERCULES of
certificates representing the MACDERMID PREFERRED STOCK, HERCULES
will acquire good and valid title thereto, free and clear of any
ENCUMBRANCES other than such as may be imposed pursuant to the SERIES
A PREFERRED STOCK AGREEMENT.
6.4 AFFILIATES. Schedule 6.4 is complete and correct and
sets forth the name, jurisdiction and nature of business of each
MACDERMID AFFILIATE owning or possessing directly or indirectly
assets of the MACDERMID BUSINESS as well as MACDERMID's interest in
each such MACDERMID AFFILIATE.
6.5 REPORTS AND FINANCIAL STATEMENTS OF MACDERMID.
6.5.1 Since March 31, 1995, MACDERMID has filed with the
SEC all forms, statements, reports and documents (including all
exhibits, amendments and supplements thereto) required to be filed by
it under each of the SECURITIES ACT and the EXCHANGE ACT (such forms,
statements, reports and documents being collectively the "SEC
REPORTS"), all of which, as of the date filed, complied with
requirements of the appropriate act and the rules and regulations
promulgated thereunder and has heretofore made available to HERCULES,
in the form filed with the SEC (excluding any exhibits thereto) true
and complete copies of the SEC REPORTS.
6.5.2 Set forth in Part A of Schedule 6.5.2 are MACDERMID's
Consolidated Balance Sheet, Consolidated Statement of Earnings and
Consolidated Statement of Cash Flows as of and for the fiscal year
ended March 31, 1995 (the "MACDERMID FINANCIAL STATEMENTS"). The
MACDERMID FINANCIAL STATEMENTS present fairly the financial position
of the MACDERMID BUSINESS at the dates and for the results of
operations of the MACDERMID BUSINESS for the periods indicated
therein. Set forth in Part B of Schedule 6.5.2 is a true and
complete copy of a page from a financial model developed by Chase
Manhattan Bank, N.A., in conjunction with MACDERMID relating to
MACDERMID's acquisition of the E&PD BUSINESS.
6.6 ABSENCE OF CHANGES IN THE BUSINESS OF MACDERMID.
Except as set forth on Schedule 6.6 or as contemplated by the
DEFINITIVE AGREEMENTS, each of MACDERMID and its AFFILIATES owning or
possessing directly or indirectly assets of the MACDERMID BUSINESS
has conducted its respective business, including the MACDERMID
BUSINESS, in the ORDINARY COURSE and there has not occurred any
change, event or matter of any kind or nature whatsoever which,
individually or in the aggregate, has resulted in, would result in or
would or could be reasonably expected to result in a MACDERMID
MATERIAL ADVERSE EFFECT or which, after notice of lapse of time or
both, would result in or would or could be reasonably expected to
result in a MACDERMID MATERIAL ADVERSE EFFECT. Except as set forth
on Schedule 6.6, MACDERMID and its AFFILIATES owning or possessing
directly or indirectly assets of the MACDERMID BUSINESS each has not
taken any action with respect to the MACDERMID BUSINESS which would
be prohibited pursuant to Section 7.2 during the PRE-CLOSING PERIOD.
6.7 INSURANCE. MACDERMID acknowledges and agrees that all
HERCULES INSURANCE is for HERCULES protection only and as of the
TURNOVER POINT, MACDERMID shall be responsible for all insurance
related to the E&PD BUSINESS and/or the E&PD BUSINESS ITEMS
thereafter.
6.8 CONSENTS. The execution and delivery by MACDERMID of the
DEFINITIVE AGREEMENTS do not, and the performance by MACDERMID of the
TRANSACTIONS will not, require MACDERMID or any of its AFFILIATES to
obtain any CONSENT or take other action, or make any filing with or
give any NOTICE to, any AUTHORITY or any other THIRD PERSON
(including with respect to any PERMIT) which has not been obtained,
made or given, except (A) as disclosed on Schedule 6.8 or (B) where
failure to obtain such CONSENTS or actions, make such filings or give
such NOTICES (in each case from, with or to a PERSON, including any
AUTHORITY) would not have a MACDERMID MATERIAL ADVERSE EFFECT.
6.9 CONFLICTING AGREEMENTS, RESTRICTIONS. Except as set
forth on Schedule 6.9, neither the execution, delivery or performance
of the DEFINITIVE AGREEMENTS nor the consummation of the TRANSACTIONS
by MACDERMID will (A) conflict with or constitute a breach by
MACDERMID of its charter or bylaws; (B) subject to the MACDERMID
MATERIALITY STANDARD, result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in a
violation of, or give rise to the acceleration of the time for
performance under, or require any payment by MACDERMID under, or
trigger any change adversely affecting MACDERMID in the terms of any
agreement, contract, instrument, order, evidence of indebtedness,
judgment or decree to which MACDERMID is a party or by which
MACDERMID is bound; or (C) subject to the MACDERMID MATERIALITY
STANDARD, violate any provision of any existing law, statute, rule or
regulation of any jurisdiction or of any order, decree, writ or
injunction or decree of any court or governmental department, bureau,
board, agency or instrumentality; or (D) result in a MACDERMID
MATERIAL ADVERSE EFFECT.
6.10 NO LITIGATION. Except for the matters set forth on
Schedule 6.10, there is no CLAIM pending against or, to the knowledge
of MACDERMID, threatened in writing against MACDERMID and/or its
AFFILIATES, which is in excess of Five Hundred Thousand Dollars
($500,000). Except for the matters set forth on Schedule 6.10,
there is no CLAIM pending against or, to the knowledge of MACDERMID,
threatened in writing against MACDERMID and/or its AFFILIATES and
affecting the MACDERMID BUSINESS, which, individually or in the
aggregate, would or could be reasonably expected to (A) give rise to
an injunction to prevent or materially delay the TRANSACTIONS or
challenge the validity of the DEFINITIVE AGREEMENTS; or (B)
materially interfere with the conduct of the MACDERMID BUSINESS in
the ORDINARY COURSE. The indemnification period for this Section
6.10 shall be the earlier of thirty-six (36) months after the CLOSING
or the period of limitations provided by law.
6.11 NON-ENVIRONMENTAL LAWS AND GOVERNMENTAL
CONSENTS.
Subject to the MACDERMID MATERIALITY STANDARD and excluding
environmental laws (which laws are addressed in the ENVIRONMENTAL
ANNEX), MACDERMID and its AFFILIATES each (A) has complied and is
complying with all applicable judgments, rulings, writs, injunctions,
awards, decrees, laws, statutes, orders, rules and regulations
promulgated by any AUTHORITY to which MACDERMID or its AFFILIATES are
subject and (B) has duly obtained and has in full force and effect
all MACDERMID BUSINESS PERMITS.
6.12 TAXES. Any representations, warranties and covenants
made by MACDERMID and if and as applicable to Taxes are set forth in
the TAX ANNEX. The indemnification period for such representations
and warranties shall be the period of limitation provided by law.
6.13 ENVIRONMENTAL MATTERS. Any representations, warranties
and covenants made by MACDERMID and if and as applicable to
environmental matters are set forth in the ENVIRONMENTAL ANNEX. The
indemnification period for such representations and warranties shall
be five (5) years.
6.14 EMPLOYEES AND EMPLOYEE BENEFITS. Any representations,
warranties and covenants made by MACDERMID and applicable to
employee and employee benefits matters are set forth in the HUMAN
RESOURCES ANNEX. The indemnification period for such representations
and warranties shall be eighteen (18) months.
6.15 FINANCING AND INDEBTEDNESS.
6.15.1 MACDERMID has commitments (the "Commitments")
from reputable financial institutions to provide immediately
available funds in an aggregate amount, sufficient to enable
MACDERMID to pay HERCULES the CASH PORTION and related fees and
expenses hereunder required to be paid by MACDERMID. Schedule 6.15
sets forth a list of all such Commitments and all conditions which
must be met in order to have such funds actually loaned to and drawn
down by MACDERMID for purposes of the CLOSING.
6.15.2 Payments on the MACDERMID PREFERRED STOCK and
payments of the PERFORMANCE PREMIUM (collectively "Payments") may not
be made in violation of MACDERMID's existing debt agreements (which
MACDERMID will represent at CLOSING are true and correct) or
MACDERMID's future debt agreements; provided that no such future
agreement may contain covenants or restrictions which on the basis of
the plans and information for the indebted period furnished by
MACDERMID to the lender or underwriter at or prior to the execution
of such future debt agreement would per se at the time of such
execution prevent MACDERMID making Payments. Accordingly, MACDERMID
and MACDERMID DELAWARE each represents and warrants that each of the
Commitments was and is now and any debt agreements made pursuant to
the Commitments and any other existing debt agreements made by
MACDERMID were when made, and are now, consistent and in compliance
with the foregoing sentence of this Section 6.15.2. In the event of
a breach or default under this Section 6.15.2, then in addition to
all other rights and remedies which HERCULES may have, HERCULES shall
have the right to one-third of the membership on MACDERMID's Board of
Directors, all a described in Section 3.5 (F) and the judicial
resolution described in Section 13 of the PREFERRED STOCK AGREEMENT.
6.15.3 Set forth in Schedule 6.15.3 is a list of all
indebtedness of MACDERMID for borrowed monies in excess of Five
Million Dollars ($5,000,000) and the amounts and debt holder(s)
thereof.
6.16 BROKERS. Neither MACDERMID nor any of its AFFILIATES is
obligated to pay, or has retained any broker or finder or other
PERSON (other than Merrill Lynch & Co. and Wild & Co.) who is
entitled to, any broker's or finder's fee or any other commission or
financial advisory fee based on any agreement or undertaking made by
MACDERMID in connection with the TRANSACTIONS. HERCULES shall not,
as a result of the TRANSACTIONS or otherwise, have any obligation in
respect of any such fees or commissions, including those of Merrill
Lynch & Co. and Wild & Co., MACDERMID shall protect, defend,
indemnify and hold harmless the HERCULES INDEMNITEES against such
fees or commissions, including those of Merrill Lynch & Co and Wild &
Co.
ARTICLE VII
PRE-CLOSING COVENANTS
7.1 BEST EFFORTS; REGULATORY FILINGS.
7.1.1 Promptly after the execution hereof and during the
PRE-CLOSING PERIOD, each PARTY shall cooperate with the other PARTY
and use all best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or
advisable under any applicable laws and regulations, to ensure that
the conditions set forth in Articles IX and X are satisfied and to
consummate and make effective the TRANSACTIONS in accordance with the
respective terms and conditions of the DEFINITIVE AGREEMENTS.
7.1.2 Prior to the date hereof, each PARTY has made
filing(s) under the HSR ACT with respect to the consummation of the
TRANSACTIONS. Each PARTY shall use all best efforts to respond
promptly to any requests for additional information made by the
United States Federal Trade Commission or the United States
Department of Justice and to provide any supplemental information
which may be requested pursuant to the HSR ACT. All such filings
shall comply in all material respects with the requirements of the
respective laws or regulations pursuant to which they are filed.
7.1.3 In accordance with Section 4.4, each PARTY shall use
all best efforts to obtain, and to cooperate with the other PARTY in
obtaining, all authorizations, consents, orders and approvals of any
AUTHORITY or other PERSON that may be or become necessary in
connection with the consummation of the TRANSACTIONS prior to or
after the CLOSING.
7.2 CONDUCT OF BUSINESS.
7.2.1 During the PRE-CLOSING PERIOD , except as set forth
on Schedule 7.2.1 or as MACDERMID may otherwise consent to in writing
(which consent shall not be unreasonably withheld or delayed) or as
otherwise specifically contemplated by the DEFINITIVE AGREEMENTS,
HERCULES shall:
(A) operate the E&PD BUSINESS in the ORDINARY COURSE,
including preserving intact its business organization; keeping
available the services of the E&PD Employees (as defined in the HUMAN
RESOURCES ANNEX); maintaining the material manufacturing items in the
PURCHASED ASSETS in the same condition as existing on the date of
this AGREEMENT (subject to reasonable wear, tear and consumption and,
as covered by Section 7.8, casualty losses); preserving material
business relationships; and performing in all material respects its
obligations under each E&PD MATERIAL CONTRACT;
(B) operate the E&PD BUSINESS in such a manner and to an
extent that neither such business nor any material part thereof
undergoes or experiences a E&PD MATERIAL ADVERSE EFFECT;
(C) not enter into any transaction, take any action, or
by inaction permit any event to occur, which results in (i) any of
the representations and warranties of HERCULES contained in the
DEFINITIVE AGREEMENTS not being true and correct in all material
respects immediately after the occurrence of such transaction, action
or event or on the CLOSING DATE or (ii) a breach of any of the
agreements and covenants of HERCULES contained in the DEFINITIVE
AGREEMENTS; and
(D) not agree or otherwise commit to take any of the
actions prohibited by the foregoing paragraphs (A) through (C).
7.2.2 During the PRE-CLOSING PERIOD, except as set forth
on Schedule 7.2.2 or as HERCULES may otherwise consent in writing
(which consent shall not be unreasonably withheld or delayed) or as
specifically contemplated by the DEFINITIVE AGREEMENTS, MACDERMID
shall:
(A) operate the MACDERMID BUSINESS in the ORDINARY
COURSE
and in such a manner and to an extent that neither such business nor
any material part thereof undergoes or experiences a MACDERMID
MATERIAL ADVERSE EFFECT;
(B) account for the MACDERMID PREFERRED STOCK as
required by U.S. Generally Accepted Accounting Principles (commonly
referred to as "U.S. GAAP") and applicable securities laws and
regulations (e.g., SEC Regulation SX-41) in conjunction with input
from MACDERMID's independent auditors;
(C) not enter into any transaction, take any action, or
by inaction permit any event to occur which results in (i) any of the
representations or warranties of MACDERMID contained in the
DEFINITIVE AGREEMENTS not being true and correct in all material
respects immediately after the occurrence of such transaction, action
or event or on the CLOSING DATE or (ii) a breach of any of the
agreements and covenants of MACDERMID contained in the DEFINITIVE
AGREEMENTS; and
(D) not agree or otherwise commit to take any of the
actions prohibited by the foregoing paragraphs (A) through (C).
7.3 [Intentionally Left Blank]
7.4 REQUIRED NOTICES.
7.4.1 At all times during the PRE-CLOSING PERIOD, HERCULES
shall upon becoming aware thereof, promptly give written NOTICE to
MACDERMID of any facts or circumstances or the occurrence of any
event or the failure of any event to occur, which results in, which
will result in or which may reasonably be expected to result in a
E&PD MATERIAL ADVERSE EFFECT,
7.4.2 At all times during the PRE-CLOSING PERIOD, MACDERMID
shall upon becoming aware thereof, promptly give written NOTICE to
HERCULES of any facts or circumstances or the occurrence of any
event or the failure of any event to occur, which results in, which
will result in or which may reasonably be expected to result in a
MACDERMID MATERIAL ADVERSE EFFECT.
7.5 ACCESS.
7.5.1 During the PRE-CLOSING PERIOD, each PARTY shall
cause one or more of its representatives to confer on a regular basis
with representatives of the other PARTY to report on the general and
financial status of the ongoing operations of the E&PD BUSINESS or
the MACDERMID BUSINESS, as the case may be. In the receipt of
information pursuant to Sections 7.5.1, 7.5.2 and 7.5.3, the
receiving PARTY shall remain cognizant of any obligations that may be
applicable to "insiders" under the EXCHANGE ACT.
7.5.2 During the PRE-CLOSING PERIOD, HERCULES shall
provide, or cause to be provided to, MACDERMID and its
representatives (A) as soon as practicable after the end of each
month, general monthly financial and operating data and other
information as MACDERMID or its representatives may from time to time
reasonably request with respect to the E&PD BUSINESS and (B)
reasonable access (without interference to normal business operations
and subject to the rights of THIRD PERSONS) to the representatives,
officers and employees of HERCULES. HERCULES agrees that no such
information or access shall affect or limit the scope of the
representations and warranties of HERCULES contained in the
DEFINITIVE AGREEMENTS or limit liability for breach of any such
representation or warranty.
7.5.3 During the PRE-CLOSING PERIOD, MACDERMID shall
provide, or cause to be provided to, HERCULES and its representatives
(A) as soon as practicable after the end of each month such general
monthly financial and operating data and other information as
HERCULES or its representative(s) may from time to time reasonably
request with respect to MACDERMID and the MACDERMID BUSINESS, and
(B) reasonable access (without interference to normal business
operations and subject to the rights of THIRD PERSONS) to the
representatives, officers and employees of MACDERMID. MACDERMID
agrees that no such information or access shall affect or limit the
scope of the representations and warranties of MACDERMID contained in
the DEFINITIVE AGREEMENTS or limit liability for breach of any such
representation or warranty.
7.6 AGREEMENTS. Prior to entering this AGREEMENT, the
PARTIES have entered into the LETTER OF INTENT, the CONFIDENTIALITY
AGREEMENTS, and the NON-COMPETITION AGREEMENTS. Contemporaneously
with entering this AGREEMENT, the PARTIES shall enter into and attach
the ENVIRONMENTAL ANNEX, the FINANCIAL/ACCOUNTING ANNEX, the
HUMAN
RESOURCES ANNEX and the TAX ANNEX. At the CLOSING, the PARTIES shall
enter into the APPLICATIONS LABORATORY LEASE, the EMPLOYEE LEASE, the
HERCULES PLAZA OFFICE LEASE, the SERIES A PREFERRED STOCK
AGREEMENT,
the TECHNICAL CENTER/METTON BUILDING LEASE, the THREE-DIMENSIONAL
PHOTO LITHOGRAPHY AGREEMENT and the TRANSITION SERVICES
AGREEMENT.
7.7 ACQUISITION PROPOSALS.
7.7.1 From the date hereof through the CLOSING or the
termination of this AGREEMENT, whichever occurs first, HERCULES shall
not solicit or encourage, directly or indirectly, any inquiries,
discussions or proposals for, furnish any information for the purpose
of evaluating or determining whether to make or pursue any inquiries
or proposals with respect to, continue, propose or enter into
negotiations looking toward, or enter into or consummate any
agreement or understanding providing for, or take any action with
respect to, any sale or other disposition (including a repositioning)
of all or any material portion of the E&PD BUSINESS (other than in
accordance with Section 7.2) and HERCULES will, and will cause each
of its AFFILIATES to, use all reasonable efforts to prohibit any of
its respective officers or directors from doing any of the above.
HERCULES will promptly notify MACDERMID, upon a HERCULES officer
becoming aware thereof, if any such inquiries or proposals are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated with,
HERCULES, or any stockholder, officer, director, representative,
agent or any HERCULES AFFILIATE.
7.7.2 From the date hereof through the CLOSING or the
termination of this AGREEMENT, whichever occurs first, MACDERMID
shall not solicit or encourage, directly or indirectly, any
inquiries, discussions or proposals for, furnish any information for
the purpose of evaluating or determining whether to make or pursue
any inquiries or proposals with respect to, any sale or other
disposition (including a repositioning) of all or any material part
of the MACDERMID BUSINESS (other than in accordance with Section 7.2)
or any of the equity securities (whether newly issued or currently
outstanding) of MACDERMID or any AFFILIATES of MACDERMID other than
as expressly contemplated or permitted by the DEFINITIVE AGREEMENTS;
and MACDERMID will, and will cause each of its AFFILIATES to, use all
reasonable efforts to prohibit any of its respective officers or
directors from doing any of the above. MACDERMID will promptly
notify HERCULES, upon a MACDERMID officer becoming aware thereof, if
any such inquiries or proposals are received by, any such information
is requested from, or any such negotiations or discussions are sought
to be initiated with, MACDERMID, or any stockholder, officer,
director, representative, agent or any MACDERMID AFFILIATE.
7.7.3 Notwithstanding anything to the contrary, Section
7.7.1 shall not be applicable to matters relating to the non-E&PD
part of HERCULES or the composition, organization, or activities of
HERCULES in a post-sale of the E&PD BUSINESS environment.
7.8 CASUALTY LOSS.
7.8.1 In the event that any PURCHASED ASSET is destroyed or
substantially damaged by a fire or other casualty during the PRE-
CLOSING PERIOD, then promptly after first having knowledge of such
destruction or damage, HERCULES shall give NOTICE thereof to
MACDERMID. Such NOTICE shall include the particulars of the
casualty, destruction or damage and the particulars and estimated
cost (based on replacement cost or another reasonable basis) of the
full correction or remediation thereof as proposed by HERCULES.
7.8.2 If the E&PD BUSINESS can be conducted in the ORDINARY
COURSE, including a reasonable operation of the MIDDLETOWN PLANT,
notwithstanding such destruction or damage, then the PURCHASE PRICE
shall be adjusted by the reasonable cost of full correction or
remediation of such destruction or damage and the CLOSING shall be
effectuated with such adjusted PURCHASE PRICE and, in case of
destruction, the destroyed item shall be deemed deleted from the
PURCHASED ASSETS, and, in case of damage, the damaged item should be
included in the PURCHASED ASSETS on an "as is, where is" condition
and basis.
7.8.3 If the nature of the destroyed or damaged PURCHASED
ASSET is such that the destruction or damage so suffered makes it
reasonably impracticable to operate the E&PD BUSINESS in the ORDINARY
COURSE and the destruction or damage cannot be practically or
reasonably remedied by an adjustment of the PURCHASE PRICE, then the
CLOSING shall be delayed and the PARTIES shall attempt in good faith
to negotiate a fair and equitable resolution of the correction or
remediation of such destruction or damage. If the PARTIES do not
agree upon a resolution within thirty (30) BUSINESS DAYS after
receipt by MACDERMID of NOTICE of the destruction or damage, then
either PARTY may terminate this AGREEMENT pursuant to Section
11.1(G). If by the said thirtieth day the PARTIES have agreed upon a
resolution, then this AGREEMENT shall be amended to the extent
necessary to incorporate such resolution and the CLOSING shall be
effectuated in accordance with the amended AGREEMENT.
ARTICLE VIII
POST-CLOSING AGREEMENTS
8.1 NON-COMPETITION.
8.1.1 HERCULES covenants and agrees that (other than by
reason of its ownership of MACDERMID PREFERRED STOCK) from and after
the CLOSING and until the fifth (5th) anniversary of the CLOSING
DATE, HERCULES shall not, and it will cause its AFFILIATES not to,
directly or indirectly, engage anywhere in the world in the following
businesses or own, manage, operate or control any entity which
engages anywhere in the world in the following businesses:
(A) liquid or solid sheet photopolymer resins and
related materials and equipment used for printing plates in the
printing industry;
(B) liquid and dry film soldermask and dry film and
liquid resist for the electronics industry; and/or
(C) liquid photo imageable materials for use in the
electronics industry,
all as the foregoing (A), (B) and (C) are currently or have
heretofore been practiced by the E&PD BUSINESS;
provided, however, that HERCULES or its AFFILIATES shall not be
prohibited from directly or indirectly (i) owning, managing,
operating or controlling an interest in the aggregate of seven
percent (7%) or less of any class of securities, assets or business
of an entity engaged in any of such businesses or activities, or (ii)
merging with or acquiring any business in which such businesses or
activities constitute 7% or less of the post-merger combined business
or post-acquisition combined business whether or not HERCULES is the
surviving entity.
8.1.2 If an event described in the proviso of Section 8.1.1
shall occur, then for a period of thirty (30) months thereafter,
neither HERCULES nor its AFFILIATES shall directly or indirectly
solicit for employment or grant employment to any MACDERMID employees
who were transferred to MACDERMID pursuant to the HUMAN RESOURCES
ANNEX.
8.1.3 Nothing herein (including this Section 8.1)is
intended to or shall restrict, prohibit or inhibit any business,
activity or interest in the toner resin business of Hercules-Sanyo,
Inc., or resins used in inks or toners or paper or paperboard
chemicals produced or sold by Hercules Chemical Specialties Company,
or in SYCAR (Registered Trademark) RESINS, or in any non-E&PD part (as
currently constituted or conducted) of Hercules Food & Functional
Products Group of HERCULES, or, subject to the THREE- DIMENSIONAL
PHOTO LITHOGRAPHY AGREEMENT, the three-dimensional photo lithography
process and products developed by HERCULES other than specifically
disclosed in Proposal No. 5060 submitted on March 1, 1994.
8.2 FURTHER ASSURANCES.
8.2.1 At any time and from time to time after the CLOSING,
the PARTIES agree to cooperate with each other, to execute and
deliver, effective as of the TURNOVER POINT to the extent legally
practicable, such other documents, INSTRUMENTS OF TRANSFER,
INSTRUMENTS OF RECEIPT AND ASSUMPTION, E&PD BUSINESS ITEMS,
RECORDS,
files and schedules and do all such further acts and things as shall
reasonably be necessary or appropriate to carry out the DEFINITIVE
AGREEMENTS, the TRANSACTIONS and the intent of the PARTIES as
reflected herein or therein.
8.2.2 If any item is improperly included or excluded from a
Schedule to this AGREEMENT or any other DEFINITIVE AGREEMENT or
improperly retained or transferred, HERCULES and MACDERMID shall
promptly execute any documents necessary to amend or correct the
schedule and/or transfer, license or otherwise convey the item to the
proper party.
8.2.3 If after the CLOSING a PARTY discovers or receives an
item which rightfully belongs to the other PARTY or such other
PARTY's AFFILIATES, it shall promptly notify said other PARTY and
deliver such item(s) to said other PARTY.
8.3 CONFIDENTIAL INFORMATION.
8.3.1 From and after the CLOSING DATE for the applicable
period set forth in Section 8.3.3 and except as otherwise provided in
the DEFINITIVE AGREEMENTS:
(A) HERCULES shall not use or disclose or take any
action to so use or disclose and shall not permit any of its
AFFILIATES under its control to use or disclose or take any action to
so use or disclose any Confidential Information of MACDERMID
(including E&PD INTELLECTUAL PROPERTY and E&PD information retained
or possessed by HERCULES) so as to directly or indirectly compete in
any of the businesses described in Sections 8.1.1 (A), (B) and/or (C)
with MACDERMID or its AFFILIATES owning or possessing directly or
indirectly assets of the MACDERMID BUSINESS;
(B) HERCULES shall not disclose or take any action
to disclose to THIRD PERSONS and shall not permit any of its
AFFILIATES under its control to disclose or take any action to
disclose to THIRD PERSONS any E&PD INTELLECTUAL PROPERTY;
(C) HERCULES shall not use, disclose to THIRD
PERSONS or take any action to so use or disclose and shall not permit
any of its AFFILIATES under its control to use, disclose to THIRD
PERSONS or take any action to so use or disclose any Confidential
Information of MACDERMID received by HERCULES directly from
MACDERMID; and
(D) MACDERMID shall not use, disclose to THIRD
PERSONS or take any action to so use or disclose and shall not permit
any of its AFFILIATES under its control to use, disclose to THIRD
PERSONS or take any action to so use or disclose any Confidential
Information of HERCULES (except for E&PD INTELLECTUAL PROPERTY).
8.3.2 A PARTY (the "Receiving Party") possessing
Confidential Information of the other PARTY shall be under no
obligation pursuant to Section 8.3.1 with respect to information
that:
(A) is or shall have become generally available to
the public without breach of this covenant,
(B) is received by the Receiving Party from a THIRD
PERSON on a non-confidential basis, or
(C) is required to be disclosed by law, order or
regulation or by an AUTHORITY; provided, however, that in the event
that disclosure of such information is requested or required by any
such law, order, regulation or AUTHORITY, the Receiving Party shall
provide the other PARTY with prompt NOTICE of such request or
requirement and shall, prior to disclosing such information,
cooperate with such other PARTY with respect to any such disclosure
including, without limitation, assisting such other PARTY at such
other PARTY's expense in obtaining an appropriate protective order if
such other PARTY so elects. The Receiving Party acknowledges and
agrees that if it or any of its AFFILIATES under its control breaches
any provision of this Section 8.3 any remedy at law would be
inadequate and that such other PARTY, in addition to seeking monetary
damages in connection with any such breach, shall be entitled to
specific performance, injunctive and other equitable relief to
prevent or restrain a breach of Section 8.3 or to enforce the
provisions of this Section 8.3.
8.3.3 For purposes of this Section 8.3, "Confidential
Information" shall mean any non-public information. As to
Confidential Information of MACDERMID (including E&PD information
retained or possessed by HERCULES), the applicable period of non-use
or non-disclosure, as the case may be, shall be (A) unlimited where
the Confidential Information is the E&PD INTELLECTUAL PROPERTY
currently being practiced in the conduct of the E&PD BUSINESS in the
ORDINARY COURSE and (B) five (5) years where the Confidential
Information is other information of MACDERMID (including business
information and the E&PD INTELLECTUAL PROPERTY not so currently
practiced). As to Confidential Information of HERCULES (including
non-E&PD information of HERCULES and transferred to, received by or
possessed by MACDERMID), the applicable period of non-use or non-
disclosure, as the case may be, shall be five (5) years.
8.3.4 Effective as of the CLOSING, this Section 8.3
supersedes the CONFIDENTIALITY AGREEMENTS, and thereafter the
CONFIDENTIALITY AGREEMENTS shall no longer have any force or effect.
8.4 MAIL; PAYMENTS.
8.4.1 Each PARTY authorizes and empowers the other PARTY
on and after the TURNOVER POINT to receive and open all mail and
other communications received by it relating to the E&PD BUSINESS and
to determine whether the contents are a matter rightfully belonging
to or appropriately to be dealt with by the other PARTY, and if so,
such mail or communications shall be promptly delivered to such other
PARTY.
8.4.2 Each PARTY agrees promptly (but, in any event, not
more than five BUSINESS DAYS after receipt thereof) to pay when
received and cleared or deliver to the other PARTY any monies or
checks which have been mistakenly sent by customers to it and which
should properly have been sent to such other PARTY (including any
payments in respect of accounts receivable transferred to MACDERMID
pursuant to this AGREEMENT).
8.4.3 Each PARTY has the right and authority to endorse,
without recourse, the name of the other PARTY or any of its
AFFILIATES, as the case may be, on any check or other evidence of
indebtedness received by it in respect of the E&PD BUSINESS to which
the other PARTY is entitled under the DEFINITIVE AGREEMENTS,
including any accounts receivable included in the PURCHASED ASSETS,
and HERCULES and MACDERMID each shall furnish the other such
evidence of this AUTHORITY as is reasonably requested.
8.5 NAME CHANGE. Anything herein to the contrary
notwithstanding from and after the CLOSING, MACDERMID shall have the
right to use the name "HERCULES" and any variation thereof, on
existing supplies of product literature, signage and stationery, in
connection with MACDERMID's operation of the E&PD BUSINESS for as
long as reasonably necessary, but in no event longer than thirteen
(13) weeks following the CLOSING. During such thirteen (13) week
period, MACDERMID shall promptly commence and diligently pursue until
completion the cessation of such use at the earliest practicable
time.
8.6 ACCOUNTS RECEIVABLE.
8.6.1 HERCULES hereby irrevocably appoints MACDERMID as its
attorney and agent commencing at the TURNOVER POINT for the purpose
of collecting all outstanding accounts and notes receivable
transferred as part of the PURCHASED ASSETS, with full authority in
MACDERMID to take any and all lawful steps reasonably necessary to
accomplish said purpose. MACDERMID shall protect, defend , indemnify
and hold harmless HERCULES from any unlawful collection activities
taken by or on behalf of MACDERMID. HERCULES shall reasonably
cooperate with MACDERMID in collecting said accounts and notes
receivable and shall perform all acts and execute all instruments
reasonably necessary or proper in order to accomplish the purposes
and objectives of this Section.
8.6.2 MACDERMID shall use reasonable efforts to collect
following the CLOSING DATE all uncollected accounts receivable
transferred to MACDERMID as part of the PURCHASED ASSETS. In the
event that any such accounts receivable remain uncollected sixty (60)
days after the expiration of the normal historic collection period
for such account receivable if the E&PD BUSINESS has a collection
history with the other parties to such accounts receivable, or for
accounts receivable of a similar nature if the E&PD BUSINESS does not
have a collection history with the other parties to such accounts
receivable, MACDERMID may transfer such accounts receivable to
HERCULES at any time thereafter. HERCULES shall pay to MACDERMID by
check within five (5) BUSINESS DAYS following such transfer an amount
equal to the value of such uncollected account receivable as
reflected in the Net Receivables portion of the CLOSING DATE E&PD
MANAGEMENT PERFORMANCE REPORT less all amounts collected by MACDERMID
on such account receivable after the CLOSING DATE.
8.7 INVENTORIES.
8.7.1 As to any inventories transferred to MACDERMID as
part of the PURCHASED ASSETS and having as of the CLOSING DATE a
remaining shelf life of two (2) months or less, the PARTIES will
jointly inspect such inventories and determine the disposal thereof
(e.g., sale; rework or use by MACDERMID or MACDERMID DELAWARE; or
other disposal) . At HERCULES' expense, MACDERMID will dispose of
such inventories. HERCULES shall pay to MACDERMID by check within
five (5) BUSINESS DAYS following such disposal an amount equal to the
value of such disposed inventories represented in the Net Inventories
portion of the CLOSING DATE E&PD MANAGEMENT PERFORMANCE REPORT plus
the reasonable costs of such disposal.
8.7.2 At the request of either PARTY from time to time
after the CLOSING, the PARTIES shall make joint inspection(s) of then
existing inventories or parts thereof transferred to MACDERMID as
part of the PURCHASED ASSETS. The purpose of such joint inspections
is to have a reasonable, cooperative and good faith effort to jointly
determine whether the inspected inventories are or are not
substantially of a quality and condition usable, leasable or saleable
in the ORDINARY COURSE or are or are not of a material excess
quantity. If it is determined that such inventories are not of such
quality or condition or are a material excess quantity, then the
PARTIES shall determine the disposal thereof (e.g., sale; rework or
use by MACDERMID or MACDERMID DELAWARE; or other disposal). At
HERCULES' expense, MACDERMID will dispose of such inventories.
HERCULES shall pay to MACDERMID by check within five (5) BUSINESS
DAYS following such disposal an amount equal to the value of such
disposed inventories represented in the Net Inventories portion of
the CLOSING DATE E&PD MANAGEMENT PERFORMANCE REPORT plus the
reasonable costs of such disposal.
8.7.3 This Section 8.7 shall be in effect for a period of
eighteen (18) months after the CLOSING.
8.8 MACDERMID INDEBTEDNESS.
8.8.1 Payments on the MACDERMID PREFERRED STOCK and
payments of the PERFORMANCE PREMIUM (collectively "Payments") may not
be made in violation of MACDERMID's existing debt agreements (which
MACDERMID will represent at CLOSING are true and correct) or
MACDERMID's future debt agreements; provided that no such future
agreement may contain covenants or restrictions which on the basis of
the plans and information for the indebted period furnished by
MACDERMID to the lender or underwriter at or prior to the execution
of such future debt agreement would per se at the time of such
execution prevent MACDERMID making Payments. After the CLOSING DATE,
MACDERMID and MACDERMID DELAWARE each shall not directly or
indirectly enter into any debt agreements which contain covenants or
restrictions which on the basis of the plans and information for the
indebted period furnished by MACDERMID and/or MACDERMID DELAWARE, as
the case may be, to the lender or underwriter at or prior to the
execution of such debt agreements would per se at the time of such
execution prevent MACDERMID and/or MACDERMID DELAWARE, as the case
may be, making Payments. In the event of a breach or default under
this Section 8.8.1, then in addition to all other rights and remedies
which HERCULES may have, HERCULES shall have the right to one-third
of the membership on MACDERMID's Board of Directors, all as described
in Section 3.5 (F) and the judicial resolution described in Section
13 of the SERIES A PREFERRED STOCK AGREEMENT.
8.8.2 Upon HERCULES' request and from time to time after
the CLOSING DATE, MACDERMID shall provide HERCULES with a list of the
debt holders and respective debt amounts of all MACDERMID
indebtedness for borrowed monies in excess of Five Million Dollars
($5,000,000).
8.8.3 After the CLOSING, MACDERMID shall account for the
MACDERMID PREFERRED STOCK as required by U.S. Generally Accepted
Accounting Principles (commonly referred to as "U.S. GAAP") and
applicable securities laws and regulations (e.g., SEC Regulation SX-
41) in conjunction with input from MACDERMID's independent auditors.
8.8.4 In order to enable HERCULES to determine MACDERMID's
compliance with this Section 8.8, MACDERMID shall provide HERCULES
not later than thirty (30) days after MACDERMID files its Annual
Reports on Form 10-K filed under the EXCHANGE ACT with
certificate(s), reasonably satisfactory to HERCULES, from the Chief
Executive Officers of MACDERMID and of MACDERMID DELAWARE, certifying
that MACDERMID and MACDERMID DELAWARE each has fully complied with
this Section 8.8.
8.9 ENGINEERING MANUALS. The PARTIES acknowledge that
certain HERCULES manuals, including the Engineering Department
Manuals, Design Manuals, Project Management Manuals, Construction
Guidelines Manuals, and Hercules Standards (collectively the
"HERCULES Manuals") may be in the possession of E&PD employees after
CLOSING. MACDERMID acknowledges that HERCULES will not provide
revisions to the HERCULES Manuals after the CLOSING. MACDERMID
hereby releases, and agrees to protect, defend, indemnify and hold
harmless the HERCULES INDEMNITEES from and against any and all CLAIMS
arising out of or resulting from use of the HERCULES Manuals by
MACDERMID or any of its AFFILIATES after CLOSING DATE. Further,
notwithstanding anything to the contrary herein, MACDERMID agrees to
hold the HERCULES Manuals in confidence and only use them on a need-
to-know basis with respect to the operation of the E&PD BUSINESS.
8.10 RETENTION OF BOOKS AND RECORDS; FURTHER
INFORMATION.
For a period of eight (8) years from the CLOSING DATE:
(A) Neither PARTY shall destroy or dispose of any
material books and records in its possession and relating to the E&PD
BUSINESS ITEMS (herein the "RECORDS") without first offering to
turn over possession thereof to the other PARTY; and such offer shall
be contained in a NOTICE to such other PARTY at least thirty (30)
days prior to the proposed date of such disposition or destruction.
(B) Upon reasonable prior NOTICE to a PARTY, the other
PARTY shall allow the requesting PARTY and its representatives
reasonable access to all RECORDS during normal business hours at the
principal place(s) of business of such other PARTY or at any
location(s) where such RECORDS are located, and the requesting PARTY
shall have the right, at its expense, to make copies of or excerpts
from such RECORDS; provided, however, that any such access shall be
had or copying shall be done in such manner so as not to interfere
with the normal conduct of either PARTY'S business; and such access
shall be subject to the CONFIDENTIALITY AGREEMENTS and the provisions
of any contract to which the non-requesting PARTY or its properties
shall be bound.
(C) Each PARTY shall promptly make available to the other
PARTY upon reasonable request and at the requesting PARTY's expense,
but consistent with each PARTY's business requirements, (i) personnel
to assist the requesting PARTY in locating the RECORDS and (ii) any
personnel whose assistance or participation is necessary or
appropriate in anticipation of or in connection with existing or
future litigation, administrative proceedings, preparation or defense
of tax returns or other matters arising from or related to the E&PD
BUSINESS ITEMS.
ARTICLE IX
CONDITIONS TO MACDERMID'S OBLIGATIONS
The obligation of MACDERMID to effect the TRANSACTIONS shall be
subject to the satisfaction or written waiver (where permissible), on
and as of the TURNOVER POINT and on and as of the CLOSING DATE, of
each and all of the following conditions set forth in Sections 9.1
through 9.13.
9.1 REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of HERCULES contained in the
DEFINITIVE AGREEMENTS shall be true, complete and accurate in all
material respects on and as of the CLOSING DATE, except that any
representation and warranty made as of a specified date shall have
been true, complete and accurate in all material respects on and as
of such date.
9.2 PERFORMANCE OF AGREEMENTS. Subject to Sections 4.4 and
5.12, HERCULES shall have performed and complied in all material
respects with all of its agreements and covenants contained in the
DEFINITIVE AGREEMENTS to be performed or complied with by it on or
prior to the CLOSING DATE.
9.3 DELIVERIES. MACDERMID shall have received from HERCULES
the INSTRUMENTS OF TRANSFER and the other documents, affidavits and
instruments contemplated by Section 4.2.
9.4 NO PROHIBITION. No federal, state or local law, statute,
ordinance, regulation or executive order, domestic or foreign, shall
have been adopted or promulgated and no preliminary or permanent
injunction or other judgment or order issued by any federal, state or
local court of competent jurisdiction, domestic or foreign, or by any
AUTHORITY, shall be in effect, the enforcement of which would, in
either case (individually or in the aggregate)
(A) in any material respect, restrain, change, enjoin,
make illegal or otherwise prohibit the TRANSACTIONS,
(B) impose material civil penalties or damages in
connection with any such TRANSACTIONS,
(C) have or reasonably be expected to have a E&PD
MATERIAL ADVERSE EFFECT,
(D) materially impair MACDERMID's ability to consummate
the TRANSACTIONS, or
(E) compel MACDERMID or its AFFILIATES to dispose of,
discontinue, hold separate, or materially restrict the operations of
a significant portion of the E&PD BUSINESS or the MACDERMID BUSINESS
in connection with or as a result of the consummation of the
TRANSACTIONS.
9.5 NO INJUNCTION, PROCEEDING OR LITIGATION. No suit,
action or proceeding before any court or AUTHORITY, domestic or
foreign, shall have been commenced and be pending by any AUTHORITY as
a result of action or inaction of HERCULES and no investigation by
any AUTHORITY shall have been commenced and be pending against any of
the PARTIES or any of their AFFILIATES, associates, officers or
directors as a result of action or inaction of HERCULES (i) seeking
to restrain, prevent or change the TRANSACTIONS in any material
respect, (ii) seeking material civil penalties or damages in
connection with the TRANSACTIONS, or (iii) which would, individually
or in the aggregate, result in or reasonably be expected to result in
a E&PD MATERIAL ADVERSE EFFECT.
9.6 OFFICER'S CERTIFICATE. MACDERMID shall have received a
certificate from the President or other a duly authorized officer of
HERCULES, dated as of the CLOSING DATE, in reasonable form and
substance certifying as to the satisfaction of the conditions
specified in Sections 9.1 and 9.2.
9.7 HSR ACT. Any applicable waiting period (and any
extension thereof) under the HSR ACT relating to the TRANSACTIONS
shall have expired or been terminated.
9.8 APPROVALS AND CONSENTS. Subject to Section 4.4, (i)
all CONSENTS, approvals, authorizations, waivers and filings from or
with any AUTHORITY required for the consummation of the TRANSACTIONS
shall have been obtained or made, and (ii) HERCULES shall have
obtained all CONSENTS, approvals, novations, or authorizations of, or
exemptions or waivers by, THIRD PERSONS or any AUTHORITY with respect
to the CONTRACTS and PERMITS listed on Schedule 4.4.2.
9.9 OPINION OF COUNSEL FOR HERCULES. MACDERMID shall have
received an opinion of counsel for HERCULES (which may be from its
general counsel or assistant general counsel), substantially in the
form attached hereto as Exhibit Five. Such counsel shall not opine
on the schedules to the DEFINITIVE AGREEMENTS.
9.10 ANCILLARY DOCUMENTS. Each and all of the ANCILLARY
DOCUMENTS shall have been executed and delivered by all parties
thereto other than MACDERMID.
9.11 E&PD MATERIAL ADVERSE EFFECT. No E&PD MATERIAL
ADVERSE EFFECT shall have occurred and continue to exist as of the
CLOSING DATE.
9.12 FINANCING. Pursuant to the Commitments described in
Section 6.8, MACDERMID shall have in hand borrowed funds sufficient
to pay HERCULES the CASH PORTION and to pay all of MACDERMID's fees
and expenses hereunder.
9.13 BOARD OF DIRECTORS. The Board of Directors of each
PARTY shall have authorized and approved the execution and delivery
by such PARTY of the DEFINITIVE AGREEMENTS and the consummation of
the TRANSACTIONS.
9.14 PERMITS. MACDERMID shall have received each PERMIT
listed in Schedule 9.14 or have received approval from the AUTHORITY
having requisite jurisdiction for such PERMIT that MACDERMID may
operate the E&PD BUSINESS after the TURNOVER POINT without such
PERMIT being in hand.
ARTICLE X
CONDITIONS TO HERCULES' OBLIGATION
The obligation of HERCULES to effect the TRANSACTIONS shall be
subject to the satisfaction or written waiver (where permissible) on
and as of the TURNOVER POINT and on and as of the CLOSING DATE, of
each and all of the following conditions set forth in Sections 10.1
through 10.15.
10.1 REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of MACDERMID contained in the
DEFINITIVE AGREEMENTS shall be true, complete and accurate in all
material respects on and as of the CLOSING DATE, except that any
representation and warranty made as of a specified date shall have
been true, complete and accurate in all material respects on and as
of such date.
10.2 PERFORMANCE OF AGREEMENTS. MACDERMID shall have
performed and complied in all material respects with all of its
agreements and covenants contained in the DEFINITIVE AGREEMENTS to be
performed or complied with by it on or prior to the CLOSING DATE.
10.3 DELIVERIES. HERCULES shall have received from MACDERMID
the CASH PORTION, the MACDERMID PREFERRED STOCK, the INSTRUMENTS OF
RECEIPT AND ASSUMPTION, and the other documents, affidavits and
instruments contemplated by Section 4.3.
10.4 NO PROHIBITION. No federal, state or local law,
statute, ordinance, regulation or executive order, domestic or
foreign, shall have been adopted or promulgated and no preliminary or
permanent injunction or other judgment or order issued by any
federal, state or local court of competent jurisdiction, domestic or
foreign, or by any AUTHORITY, shall be in effect, the enforcement of
which would, in either case (individually or in the aggregate)
(A) in any material respect, restrain, change, enjoin,
make illegal or otherwise prohibit the TRANSACTIONS,
(B) impose material civil penalties or damages in
connection with any such TRANSACTIONS,
(C) have or reasonably be expected to have a MACDERMID
MATERIAL ADVERSE EFFECT,
(D) materially impair HERCULES' ability to consummate the
TRANSACTIONS, or
(E) compel HERCULES or its AFFILIATES to not sell, to
retain, to hold separate, or to materially restrict the operations of
a significant portion of the E&PD BUSINESS or of the business of
HERCULES or its AFFILIATES in connection with or as a result of the
consummation of the TRANSACTIONS.
10.5 NO INJUNCTION, PROCEEDING OR LITIGATION. No suit,
action or proceeding before any court or AUTHORITY, domestic or
foreign, shall have been commenced and be pending by any AUTHORITY as
a result of action or inaction of MACDERMID and no investigation by
any AUTHORITY shall have been commenced and be pending against any of
the PARTIES or any of their AFFILIATES, associates, officers or
directors as a result of action or inaction of MACDERMID (i) seeking
to restrain, prevent or change the TRANSACTIONS in any material
respect; (ii) seeking material civil penalties or damage in
connection with the TRANSACTIONS; or (iii) which would, individually
or in the aggregate, result in or reasonably be expected to result in
a MACDERMID MATERIAL ADVERSE EFFECT.
10.6 OFFICER'S CERTIFICATE. HERCULES shall have received a
certificate from a duly authorized officer of MACDERMID, dated as of
the CLOSING DATE, reasonable in form and substance, certifying as to
the satisfaction of the conditions specified in Sections 10.1 and
10.2.
10.7 HSR ACT. Any applicable waiting periods (and any
extension thereof) under the HSR ACT relating to the TRANSACTIONS
shall have expired or been terminated.
10.8 APPROVALS AND CONSENTS. All necessary corporate,
securities laws, stock exchange, and similar filings and steps
necessary or appropriate for the issuance and delivery of the
MACDERMID PREFERRED STOCK have been taken. Subject to Section 4.4,
(i) all CONSENTS, approvals, authorizations, waivers and filings from
or with any AUTHORITY required for the consummation of the
TRANSACTIONS shall have been obtained or made, and (ii) MACDERMID
shall have obtained all CONSENTS, approvals, novations, or
authorizations of, or exemptions or waivers by, THIRD PERSONS or any
AUTHORITY with respect to the CONTRACTS and PERMITS listed on
Schedule 10.8 to the extent necessary to consummate the TRANSACTIONS
without, subject to the MACDERMID MATERIALITY STANDARD, any violation
or breach thereof or default, termination or acceleration occurring
thereunder.
10.9 OPINION OF COUNSEL FOR MACDERMID. HERCULES shall have
received an opinion of counsel for MACDERMID (which may be from its
general counsel or assistant general counsel), substantially in the
form attached hereto as Exhibit Six. Such counsel shall not opine on
the schedules to the DEFINITIVE AGREEMENTS.
10.10 ANCILLARY DOCUMENTS. Each and all of the
ANCILLARY DOCUMENTS shall have been executed and delivered by all
parties thereto other than HERCULES.
10.11 MACDERMID MATERIAL ADVERSE EFFECT. No MACDERMID
MATERIAL ADVERSE EFFECT shall have occurred and be existing as of the
CLOSING DATE.
10.12 PERMITS. MACDERMID shall have received each PERMIT
listed in Schedule 9.14 or have received approval from the AUTHORITY
having requisite jurisdiction for such PERMIT that MACDERMID may
operate the E&PD BUSINESS after the TURNOVER POINT without such
PERMIT being in hand.
10.13 CHANGE OF CONTROL ARRANGEMENTS. MACDERMID shall
have taken all action necessary (consistent with applicable
Connecticut law) to (i) ensure that the purchase of the E&PD BUSINESS
and the payment therefor, as provided herein, will not invoke any
"change of control" or similar provisions in any agreement to which
MACDERMID or any of its AFFILIATES is a party (including any
employment, termination, credit agreement, stock option plan or
stockholders rights plan) and (ii) approve the purchase of the E&PD
BUSINESS and the payment therefor, as provided herein.
10.14 FINANCING. Pursuant to the Commitments described in
Section 6.8, MACDERMID shall have in hand borrowed funds sufficient
to pay HERCULES the CASH PORTION and to pay all of MACDERMID's fees
and expenses hereunder.
10.15 BOARD OF DIRECTORS. The Board of Directors of each
PARTY shall have authorized and approved the execution and delivery
by such PARTY of the DEFINITIVE AGREEMENTS and the consummation of
the TRANSACTIONS.
ARTICLE XI
TERMINATION PRIOR TO CLOSING
11.1 TERMINATION. This AGREEMENT may be terminated at any
time during the PRE-CLOSING PERIOD by any one or more of the
following:
(A) the mutual written consent of the PARTIES;
(B) NOTICE given by either PARTY to the other PARTY, if
the CLOSING shall not have occurred on or before January 31, 1996;
provided that the PARTY electing so to terminate this AGREEMENT (i)
shall have performed and complied with all of the covenants and
agreements set forth in the DEFINITIVE AGREEMENTS to be performed by
it as of such termination; and (ii) has not breached any of its
representations and warranties set forth in the DEFINITIVE
AGREEMENTS;
(C) NOTICE given by either PARTY to the other PARTY, if
as a result of action or inaction by such other PARTY any court of
competent jurisdiction or any AUTHORITY shall have issued an
injunction, order, decree, rule or regulation or taken any other
action, restraining, enjoining or otherwise prohibiting the
TRANSACTIONS, and such order, decree, ruling, or other action shall
have become final and nonappealable, and results in or would or could
be reasonably expected to result in a frustration of one or more of
the essential purposes of the DEFINITIVE AGREEMENTS;
(D) NOTICE given by either PARTY to the other PARTY, if
there shall have been a breach by such other PARTY of its
representations, warranties, covenants or agreements contained in the
DEFINITIVE AGREEMENTS which breach would entitle MACDERMID or
HERCULES, as the case may be, to decline to consummate the
TRANSACTIONS, and such breach has not been fully cured to the
reasonable satisfaction of the notifying PARTY prior to the earlier
of (i) thirty days after such written NOTICE or (ii) the CLOSING
DATE;
(E) NOTICE given by HERCULES to MACDERMID, if the
CLOSING price of MACDERMID Common Stock on the NASDAQ Stock Exchange
on the trading day immediately preceding the CLOSING DATE is less
than Twenty-Six Dollars ($26.00) per share;
(F) NOTICE given by either PARTY to the other PARTY that
a CONSENT or PERMIT set forth on Schedule 4.4.3 was not obtained by
the planned CLOSING and subsequent good faith negotiations between
the PARTIES have not resulted in a mutually agreed upon resolution;
and/or
(G) NOTICE given by either PARTY to the other PARTY that
a casualty loss as described in Section 7.8 has occurred and
subsequent good faith negotiations between the PARTIES have not
resulted in a mutually agreed upon resolution.
11.2 NO FURTHER OBLIGATIONS. In the event of a termination
of the AGREEMENT pursuant to Section 11.1 (other than Section 11.1
(D), neither PARTY shall have any obligation or liabilities to the
other PARTY as a result of such termination. If HERCULES has earned
the EXCLUSIVITY PAYMENT described in Section 18 of the LETTER OF
INTENT, then such termination of this AGREEMENT shall not affect or
terminate HERCULES' right to receive or MACDERMID's obligation to pay
such EXCLUSIVITY PAYMENT.
11.3 TERMINATION OF OTHER ITEMS. Except as the PARTIES may
agree otherwise, the termination of this AGREEMENT shall forthwith
constitute a corresponding termination of the other DEFINITIVE
AGREEMENTS and any annexes, exhibits and schedules called for in this
AGREEMENT and executed prior to or in effect at the time of such
termination; provided, however, that if the CLOSING is not completed,
then the CONFIDENTIALITY AGREEMENTS and the two letters (dated
October 5, 1995 and October 6, 1995 respectively) which are part of
the NON-COMPETITION AGREEMENTS, shall survive such termination.
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Except as provided otherwise in Articles V and VI of this
AGREEMENT or in the DEFINITIVE AGREEMENTS, each representation and
warranty made in this AGREEMENT or any of the DEFINITIVE AGREEMENTS
shall survive the CLOSING and remain in full force and effect for a
period of eighteen (18) months thereafter; provided, however, to the
extent that NOTICE of any indemnification claim for breach of any
representation or warranty (indicating with reasonable specificity
the basis for such claim) shall have been timely delivered to the
other PARTY within the applicable notice and indemnification periods,
such indemnification claim shall survive the termination of the
indemnification period until resolution of such claim. The covenants
and agreements contained in this AGREEMENT or any of the other
DEFINITIVE AGREEMENTS shall survive the CLOSING and continue in
accordance with their terms.
12.2 INDEMNIFICATION BY HERCULES. From and after the
CLOSING, HERCULES shall indemnify and hold harmless MACDERMID, its
AFFILIATES, and their respective officers, directors, employees,
agents, consultants, representatives and successors (collectively,
the "MACDERMID INDEMNITEES") from and against any and all CLAIMS
incurred by any of them arising out of or resulting from any of the
following:
(A) any breach by HERCULES of any of the representations
or warranties made by HERCULES in the DEFINITIVE AGREEMENTS;
(B) any failure by HERCULES to perform any of its
covenants or agreements contained in the DEFINITIVE AGREEMENTS;
(C) any failure by HERCULES to pay, perform, discharge or
satisfy when due any liability or obligation of HERCULES or any of
its AFFILIATES other than the ASSUMED LIABILITIES; and/or
(D) any CLAIM by HERCULES stockholders asserted against
MACDERMID to the extent that such CLAIM relates to the TRANSACTIONS,
provided that it is not judicially determined that such CLAIM is
based on the violation by MACDERMID of applicable law.
12.3 INDEMNIFICATION BY MACDERMID. From and after the
CLOSING, MACDERMID shall indemnify and hold harmless HERCULES, its
AFFILIATES, and their respective officers, directors, employees,
agents, consultants, representatives and successors (collectively,
the "HERCULES INDEMNITEES") from and against any and all CLAIMS
incurred by any of them arising out of or resulting from any of the
following:
(A) any breach by MACDERMID of any of the representations
or warranties made by MACDERMID in the DEFINITIVE AGREEMENTS;
(B) any failure by MACDERMID to perform any of its
covenants or agreements contained in the DEFINITIVE AGREEMENTS;
(C) any failure by MACDERMID to pay, perform, discharge
or satisfy when due any liability or obligation of MACDERMID or any
of its AFFILIATES, including any of the ASSUMED LIABILITIES; and/or
(D) any CLAIM by MACDERMID stockholders asserted against
HERCULES to the extent that such CLAIM relates to the TRANSACTIONS or
the MACDERMID PREFERRED STOCK, provided that it is not judicially
determined that such CLAIM is based on the violation by HERCULES of
applicable law.
12.4 PROCEDURE FOR INDEMNIFICATION. Except as otherwise
provided in the other DEFINITIVE AGREEMENTS for matters specifically
covered therein, the procedures and provisions of this Section 12.4
shall be applicable.
12.4.1 PARTY to PARTY CLAIMS: The below paragraphs (A)
and (B) shall be applicable to CLAIM(S) by a PARTY and/or its
AFFILIATES against the other PARTY and/or its AFFILIATES.
(A) In the event that any INDEMNITEE shall incur or
suffer any CLAIM(S) in respect of which indemnification may be sought
hereunder by a PARTY and/or its AFFILIATES, the INDEMNITEE shall
assert a CLAIM for indemnification by written NOTICE with reasonable
information and details of the CLAIMS as then known (the "NOTICE OF
CLAIM") to the INDEMNITOR stating the nature and basis of such
claim. Such NOTICE OF CLAIM must be given not later than forty-five
(45) days after an officer or management employee at the level of
plant manager, business director or above, or an employee holding a
position comparable to or higher than any of the foregoing, of
INDEMNITEE has actual knowledge of a matter that would be the basis
for indemnification hereunder or not later than the end of the
applicable indemnification period, whichever shall occur first.
(B) The INDEMNITOR shall have ninety (90) days after
receipt of such NOTICE OF CLAIM to object to the subject matter and
the amount of the CLAIM for indemnification set forth in such NOTICE
OF CLAIM by delivering NOTICE of objection thereof to the INDEMNITEE.
If the INDEMNITOR does not so object within such ninety-day period,
it shall be conclusively deemed to have agreed to the matters set
forth in such NOTICE OF CLAIM. If the INDEMNITOR sends NOTICE to the
INDEMNITEE objecting to the matters set forth in such NOTICE OF
CLAIM, the PARTIES shall use their best efforts to settle (without an
obligation to settle) such claim for indemnification. If the PARTIES
are unable to settle such dispute, the question shall be resolved in
accordance with Article XIII.
12.4.2 THIRD PERSON CLAIMS: The below paragraphs (A)
through (F) shall be applicable to THIRD PERSON CLAIMS against a
PARTY and/or its AFFILIATES.
(A) Within forty-five (45) days after receipt by an
INDEMNITEE of written NOTICE of the assertion of a CLAIM or the
commencement of any action, litigation or proceeding by any THIRD
PERSON (a "THIRD PERSON CLAIM") with respect to any matter for
which indemnification is or may be owing pursuant to Section 12.2 or
12.3, the INDEMNITEE shall give a NOTICE OF CLAIM to the INDEMNITOR
and shall thereafter keep the INDEMNITOR reasonably informed with
respect thereto.
(B) The INDEMNITOR shall have the right, at its
option and at its own expense, to participate in or, by giving
written NOTICE to the INDEMNITEE no later than thirty (30) days after
delivery of the NOTICE OF CLAIM, to take exclusive control of (after
acknowledging its obligation to provide indemnification under this
Article XII for such CLAIM), the defense, negotiations and/or
settlement of any such THIRD PERSON CLAIM with counsel reasonably
satisfactory to the INDEMNITEE, whereupon the INDEMNITOR shall assume
all past and future responsibility for any CLAIMS incurred by the
INDEMNITEE with respect to such THIRD PERSON CLAIM.
(C) The INDEMNITEE shall have the right to
participate in the defense, negotiation and/or settlement of any such
THIRD PERSON CLAIM with counsel of its own choosing; provided that
after NOTICE from the INDEMNITOR to the INDEMNITEE of the
INDEMNITOR's election to take control of the defense, negotiation
and/or settlement of any THIRD PERSON CLAIM, the INDEMNITOR shall not
be liable to the INDEMNITEE for any legal or other expenses incurred
by the INDEMNITEE on its own volition in connection with the defense,
negotiation and/or settlement thereof other than reasonable costs of
investigation.
(D) Each PARTY agrees to cooperate with and render
to the other PARTY such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any such THIRD
PERSON CLAIM or proceeding which assistance shall include, without
limitation, making appropriate personnel reasonably available for any
discovery or trial.
(E) If the INDEMNITOR fails or refuses to undertake
the defense of any such THIRD PERSON CLAIM within thirty (30) days
after delivery of the NOTICE OF CLAIM, the INDEMNITEE shall have the
right to take exclusive control of the defense, negotiation and/or
settlement of such THIRD PERSON CLAIM at the INDEMNITOR's expense.
(F) Neither the INDEMNITOR nor the INDEMNITEE shall
settle or compromise any THIRD PERSON CLAIM without the consent of
the other, which consent shall not be unreasonably withheld.
12.4.3 COMPLETE BAR: With respect to the filing of a
NOTICE OF CLAIM within the applicable filing period and
indemnification period, time is of the essence. If a NOTICE OF CLAIM
is not timely and properly filed within the 45-day period described
in Sections 12.4.1 or 12.4.2 or within the applicable indemnification
period described in Article V or VI or Section 12.1 or in the
DEFINITIVE AGREEMENTS, then such NOTICE OF CLAIM shall be deemed
invalid, null and void and the underlying CLAIM(S) may not and shall
not be a cause of indemnification or action. A FAILURE TO GIVE A
NOTICE OF CLAIM IN A TIMELY AND PROPER MANNER SHALL BE A
CONCLUSIVE
AND FINAL BAR TO SUCH CLAIM AND THE INDEMNITOR SHALL HAVE NO
INDEMNIFICATION OBLIGATION WHATSOEVER WITH RESPECT TO THE
SUBJECT
CLAIM(S).
12.5 LIMITATION ON INDEMNIFICATION.
12.5.1 Notwithstanding anything to the contrary, no
indemnification shall be payable by HERCULES for any individual claim
of $20,000 or less under Section 12.2 unless and until the amount of
CLAIMS in respect of all matters for which indemnification is sought
from HERCULES under Section 12.2 shall exceed $100,000 in the
aggregate, in which event HERCULES shall only be obligated to
indemnify for the amount of such CLAIMS in excess of $100,000.
12.5.2 Notwithstanding anything to the contrary, no
indemnification shall be payable by MACDERMID under Section 12.3 for
any individual claim of $20,000 or less unless and until the amount
of CLAIMS in respect of all matters for which indemnification is
sought from MACDERMID under Section 12.3 shall exceed $100,000 in the
aggregate, in which event MACDERMID shall only be obligated to
indemnify for the amount of such CLAIMS in excess of $100,000.
12.5.3 An INDEMNITEE shall have an obligation to
reasonably mitigate damages.
12.6 PAYMENT. With respect to THIRD PERSON CLAIMS for which
indemnification is payable under the DEFINITIVE AGREEMENTS, such
indemnification shall be paid by the INDEMNITOR promptly upon (A) the
entry of a judgment against the INDEMNITEE and the expiration of any
applicable appeal period; (B) the entry of a non-appealable judgment
or final appellate decision against the INDEMNITEE; (C) the closing
under any settlement or similar agreement; or (D) the entry of any
final non-appealable consent order or decree binding upon the
INDEMNITEE. Notwithstanding the foregoing, provided that there is no
reasonable dispute as to whether the INDEMNITEE is entitled to
indemnification hereunder, expenses of the INDEMNITEE for which the
INDEMNITOR is responsible shall be reimbursed on a current basis by
the INDEMNITOR.
12.7 OVERLAPPING CLAIMS FOR INDEMNIFICATION. If any
INDEMNITEE shall be entitled to indemnification pursuant hereto due
to events, acts or omissions determined to have occurred in part
prior to the CLOSING and in part after the CLOSING, then HERCULES and
MACDERMID, as an INDEMNITOR as the case may be, shall be required to
provide indemnification as provided herein but only to the extent of
its respective share of the responsibility.
12.8 RIGHT TO INFORMATION ABOUT INDEMNIFICATION MATTERS.
MACDERMID shall furnish to HERCULES from time to time such
information as HERCULES may reasonably request with respect to the
matters which might become the subject of a claim for indemnification
hereunder from HERCULES. HERCULES shall furnish to MACDERMID from
time to time such information as MACDERMID may reasonably request
with respect to the matters which might become the subject of a claim
for indemnification hereunder from MACDERMID.
12.9 COVERS OTHER AGREEMENTS. The provisions of this Article
XII shall also govern any right of indemnification granted by any
provision of any of the DEFINITIVE AGREEMENTS and any indemnification
procedure related thereto unless such provision or agreement
specifically provides for a different indemnification right and/or
procedure.
12.10 SUBROGATION. To the extent that an INDEMNITOR shall
make payment to an INDEMNITEE pursuant to this AGREEMENT, the
INDEMNITOR shall be subrogated to any and all rights and claims which
the INDEMNITEE may have with respect to such indemnified CLAIMS; but
only to the extent of such payment. If any such amount shall be paid
to the INDEMNITOR on account of any subrogation rights while the
INDEMNITEE has outstanding any CLAIM for an indemnifiable loss, such
amount shall be received in trust for the benefit of the INDEMNITEE
and shall forthwith be applied to the satisfaction of such
indemnifiable losses.
ARTICLE XIII
RESOLUTION OF DISPUTES
13.1 RESOLUTION PROCEDURE. Each PARTY agrees to use its
best efforts to resolve disputes under the DEFINITIVE AGREEMENTS
(including disputes under this AGREEMENT) by a negotiated resolution
between the PARTIES or as provided for in this Article XIII.
13.2 RESOLUTION PANEL. The RESOLUTION PANEL shall consist
of two members, of which one member shall be the President of
HERCULES, and the other member shall be the President of MACDERMID
(the "RESOLUTION PANEL"). The RESOLUTION PANEL may act only by the
affirmative vote of both its members.
13.3 EXCHANGE OF WRITTEN STATEMENTS. In the event of a
dispute under the DEFINITIVE AGREEMENTS, either PARTY may give a
NOTICE to the other PARTY requesting that the RESOLUTION PANEL try in
good faith to negotiate a resolution of (but without any obligation
to resolve) such dispute. Not later than fifteen (15) days after
said NOTICE, each PARTY shall submit to the other PARTY a written
statement setting forth such PARTY's description of the dispute and
of the respective positions of the PARTIES on such dispute; and such
PARTY's recommended resolution and the reasons why such PARTY feels
its recommended resolution is fair and equitable in light of the
terms and spirit of the DEFINITIVE AGREEMENTS. The PARTIES shall
make appropriate arrangements so that the submission and exchange of
such written statements of the PARTIES shall be simultaneous. Such
statements represent part of a good-faith effort to resolve a dispute
and as such, neither statement may be introduced as evidence or used
as an admission against interest in any judicial resolution of such
dispute.
13.4 GOOD FAITH NEGOTIATIONS. If the dispute continues
unresolved for a period of fifteen (15) days (or such longer period
as the RESOLUTION PANEL may otherwise agree upon) after the
simultaneous exchange of such written statements, then the RESOLUTION
PANEL shall promptly commence good-faith negotiations to resolve such
dispute but without any obligation to resolve it. The initial
negotiating meeting shall be held in Wilmington, Delaware, if
MACDERMID sent said NOTICE, and in Waterbury, Connecticut, if
HERCULES sent said NOTICE.
13.5 SUBMISSION TO COURT OR ARBITRATION. Not later than
sixty (60) days after the commencement of good-faith negotiations,
(i) if the RESOLUTION PANEL renders an agreed resolution on the
matter in dispute, then both PARTIES shall be bound thereby and
judgment upon such resolution may be entered in any court having
requisite jurisdiction; and (ii) if the RESOLUTION PANEL does not
render an agreed resolution, then the matter in dispute shall be
submitted for resolution forthwith to a court in the State of
Delaware in accordance with Section 13.6 hereof or to binding
arbitration in accordance with Section 13.7 hereof, whichever forum
is chosen by MACDERMID. MACDERMID shall notify HERCULES not later
than fifteen (15) days after the termination of such negotiation of
the forum (i.e. judicial or arbitration) chosen by MACDERMID and if
MACDERMID fails to timely provide such notice then the forum shall be
the Delaware Court, described in Section 13.6.
13.6 SUMMARY PROCEEDINGS. A matter in dispute which by its
nature and/or amount in controversy, qualifies as a matter of right
or discretion to be determined in the Superior Court of the State of
Delaware in and for New Castle County under its Rules governing
Summary Proceedings for Commercial Disputes, shall proceed and be
determined in such Summary Proceedings only. In addition to such
procedures, the below Paragraphs (A) through (E) shall be applicable
to any dispute under such Summary Proceedings.
(A) Any dispute which cannot be determined in such
Summary Proceedings shall proceed and be determined in whichever
Delaware Court has requisite jurisdiction.
(B) Any disputing party may make application to the said
Superior Court for resolution of a dispute to be determined in such
Summary Proceedings. No disputing party shall directly or indirectly
oppose such application in any way.
(C) Except as provided in Section 13.8, no disputing
party shall directly or indirectly initiate or pursue any case,
proceeding or claim (whether for damages or other relief) relating to
a dispute in any forum other than a Delaware Court.
(D) Each and all disputing parties hereby reciprocally
and irrevocably waive in advance any and all objections to the
Delaware Courts or directly or indirectly to cause any aspect of the
dispute to be heard in another forum.
(E) For purposes of all actions or proceedings that
involve a dispute, all disputing parties do hereby irrevocably submit
themselves to the personal jurisdiction of each and all Delaware
Courts and agree that service of process may be duly perfected by a
lawful method.
13.7 BINDING ARBITRATION. A matter in dispute hereunder
submitted for resolution by arbitration shall be finally settled by
arbitration in accordance with the then existing commercial
arbitration rules of the American Arbitration Association, and
judgement upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof, subject to (A) through (H)
below.
(A) Upon the request of either PARTY, the Arbitration
shall be conducted under the expedited rules of the American
Arbitration Association for commercial arbitrations.
(B) The Arbitrators shall be three (3) independent
arbitrators, with one appointed by each PARTY, and the two appointees
selecting the third arbitrator in accordance with the said Rules. If
any PARTY fails to select an arbitrator within ten (10) days after
notice of such failure from the other PARTY or the American
Arbitration Association, then the American Arbitration Association
shall appoint such arbitrator. If the two appointees are unable to
agree on the third arbitrator, then the American Arbitration
Association shall select the same using the foregoing qualification.
Each arbitrator shall be a competent and reputable individual with
experience as a judge, a chief executive officer or chief financial
officer.
(C) The arbitration hearing shall be held in New York,
New York, at such date, time and place as established by the
Arbitrators.
(D) The Arbitrators shall have power to rule on their own
competency and on the validity of this AGREEMENT to make reference to
arbitration.
(E) Not later than fifteen (15) days after the conclusion
of the arbitration hearing, but prior to the rendering of any
arbitral decision and award, each PARTY may submit to the Arbitrators
a written statement of such PARTY's (i) understanding of and view on
the PARTIES' respective positions on the dispute, and (ii)
recommendation as to an appropriate resolution of the dispute and the
reasons why it believes such resolution is appropriate. In reaching
a decision on any dispute hereunder, the Arbitrators may take into
account such statement.
(F) The Arbitrators must render their arbitral decision
and award and give a written opinion setting forth the basis of their
decision, all not later than forty-five (45) days after the
conclusion of the Arbitration.
(G) Each PARTY shall take or cause to be taken all
reasonable action to facilitate the conduct of the arbitration and
the rendering of the arbitral award at the earliest possible date.
(H) The costs of the Arbitration shall be borne and paid
equally by the PARTIES.
13.8 INJUNCTIVE RELIEF. The PARTIES recognize and
acknowledge that (i) in the event of a potential, anticipatory or
actual breach of Section 8.1 (dealing with non-competition) or
Section 8.3 (dealing with Confidential Information) or similar
provision of any of the DEFINITIVE AGREEMENTS, it may be necessary or
appropriate for the non-breaching PARTY to seek injunctive relief, if
and to the extent legally available, in order to avoid harm or
further harm to the non-breaching PARTY, and (ii) such injunctive
relief may not be available under the Summary Proceedings Act
referred to in Section 13.6 or the Arbitration referred to in Section
13.7. If a PARTY desires injunctive relief, it may pursue the same
in any court of competent jurisdiction; provided, however, that, if
granted, such injunctive relief shall apply only to prevent a breach
or further breaches of Sections 8.1 or Section 8.3 or such similar
provision and shall remain in effect only so long as the Court deems
necessary or appropriate to permit resolution of the underlying
disputes in accordance with this Section 13, including Sections 13.5
and 13.6 in particular. Neither the seeking of injunctive relief nor
the granting thereof is intended or shall result in the application
of a substantive or procedural law other than the applicable
governing law pursuant to Section 14.8 hereof.
ARTICLE XIV
MISCELLANEOUS
14.1 ENTIRE AGREEMENT. The CONFIDENTIALITY AGREEMENTS, the
NON-COMPETITION AGREEMENTS, and the DEFINITIVE AGREEMENTS (including
the Annexes, Exhibits, Schedules, and other documents referred to or
contemplated herein or therein) constitute the entire agreement
between the PARTIES and supersede all prior agreements and
understandings, oral and written between the PARTIES with respect to
the subject matter hereof and thereof.
14.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
14.2.1 The terms and conditions of the DEFINITIVE
AGREEMENTS shall inure to the benefit of and be binding upon the
respective successors and assigns of the PARTIES; provided, however,
that none of the DEFINITIVE AGREEMENTS in whole, in material part or
otherwise may be assigned by either PARTY without the prior written
consent of the other PARTY; and further provided that after the
CLOSING, such consent shall not be unreasonably withheld.
Notwithstanding the foregoing, each PARTY shall be entitled to assign
all or any part of its rights and obligations under the DEFINITIVE
AGREEMENTS to one or more of its wholly owned AFFILIATES, upon NOTICE
to the other PARTY and provided that the assigning PARTY and its
assignee AFFILIATE(S) shall be jointly and severally obligated under
and responsible for the assigned item(s) or matter(s). Nothing in
the DEFINITIVE AGREEMENTS, express or implied, is intended to confer
any rights or remedies thereunder on any PERSON other than MACDERMID
or HERCULES and their respective AFFILIATES, successors and permitted
assigns.
14.2.2 The PARTIES acknowledge and consent to the
assignment by MACDERMID to MACDERMID DELAWARE of all rights and
obligations of MACDERMID under this AGREEMENT (other than Section 3.5
hereof concerning the PERFORMANCE PREMIUM) and the DEFINITIVE
AGREEMENTS (other than the SERIES A PREFERRED STOCK AGREEMENT) and
MACDERMID DELAWARE accepts such assignment. MACDERMID and MACDERMID
DELAWARE, individually and collectively, agree that as of the
effective date of such assignment and at all times thereafter, it and
they shall be jointly, severally and primarily liable for the rights
and obligations so assigned.
14.3 HEADINGS; ETC. The headings of the articles, sections
and paragraphs contained in the DEFINITIVE AGREEMENTS and the Table
of Contents, including the List of Annexes, Exhibits and Schedules
are inserted for convenience only and shall not be deemed to
constitute part thereof or to affect the construction thereof.
14.4 MODIFICATION AND WAIVER. No amendment, modification or
alteration of the terms or provisions of the DEFINITIVE AGREEMENTS
shall be binding unless the same shall be in writing and duly
executed by the PARTIES, except that any of the terms or provisions
of the DEFINITIVE AGREEMENTS may be waived in writing at any time by
the PARTY which is entitled to the benefits of such waived terms or
provisions. No waiver of any of the provisions of the DEFINITIVE
AGREEMENTS shall be deemed to or shall constitute a waiver of any
other provision hereof (whether or not similar). No delay on the
part of any PARTY in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
14.5 EXPENSES. Except as otherwise expressly provided in the
DEFINITIVE AGREEMENTS, whether or not the TRANSACTIONS are
consummated, each PARTY shall pay all costs and expenses of every
kind incurred by it or on its behalf in connection in any way with
the DEFINITIVE AGREEMENTS and/or the TRANSACTIONS, including, without
limiting the generality of the foregoing, fees and expenses of its
own financial consultants, accountants and counsel fees.
14.6 NOTICES. Any notice, request, instruction or other
document to be given hereunder by any PARTY to any other PARTY shall
be in writing and delivered personally, by telecopy, or sent by
registered or certified mail, postage prepaid, or sent by overnight
courier (e.g., FedEx, Airborne or UPS) (herein a "NOTICE")
if to HERCULES to:
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19894-0001
Telecopier: (302) 594-7252
Attention: Michael B. Keehan, Esq.
Vice President and General Counsel
with a copy to each of the following persons at the HERCULES address:
(i) George MacKenzie, Vice President & Chief Financial Officer, (ii)
Peter R. Kapuscinski, Director, Financial Analysis & Planning, and
(ii) Israel J. Floyd, Corporate Secretary and Assistant General
Counsel;
if to MACDERMID to:
MacDermid, Incorporated
245 Freight Street
Waterbury, Connecticut 06702
Telecopier: (203) 575-7900
Attention: Corporate Secretary
and with a copy to
Michael E. Mooney, Esquire
Nutter, McClennen and Fish
One International Place
Boston, Massachusetts 02110-2699
or at such other address for a PARTY as shall be specified by like
Notice. Any NOTICE which is given in the manner provided herein
shall be deemed to have been duly given to the PARTY to whom it is
directed upon actual receipt by such PARTY (evidenced, in the case of
a telecopy, by the receipt of the correct answer back). A PARTY
giving NOTICE by telecopy shall send a confirmation copy thereof to
the addressee by overnight courier.
14.7 SPECIFIC PERFORMANCE AND OTHER REMEDIES.
14.7.1 HERCULES acknowledges that MACDERMID will have
no adequate remedy at law if HERCULES fails to perform any of its
obligations under the DEFINITIVE AGREEMENTS. In such event and if
the dispute forum is a Delaware Court pursuant to Section 13.6,
MACDERMID shall have the right, in addition to any other rights it
may have, to specific performance of the DEFINITIVE AGREEMENTS,
including Sections 8.1 and 8.3 of this AGREEMENT which Sections
pertain to Non-Competition and Confidential Information,
respectively, and any similar provisions of the DEFINITIVE
AGREEMENTS.
14.7.2 MACDERMID acknowledges that HERCULES will have
no adequate remedy at law if MACDERMID fails to perform any of its
obligations under the DEFINITIVE AGREEMENTS. In such event and if
the dispute forum is a Delaware Court pursuant to Section 13.6,
HERCULES shall have the right, in addition to any other rights it may
have, to specific performance of the DEFINITIVE AGREEMENTS,
including Section 8.3 of this AGREEMENT, which Section pertains to
Confidential Information, and any similar provisions of the
DEFINITIVE AGREEMENTS.
14.7.3 Except as otherwise provided herein, each and
all of the rights and remedies of a PARTY provided in or under the
DEFINITIVE AGREEMENTS shall be in addition to all rights and remedies
provided at law, in equity or otherwise. Such rights and remedies
shall be cumulative, and the use of any right or remedy at any time
or from time to time shall not preclude or affect the use of the same
or any other similar or dissimilar right or remedy.
14.7.4 In no event shall any PARTY, its AFFILIATE(s),
and/or its or their respective directors, officers, employees or
agents be liable for punitive, consequential, special, incidental or
similar damages under or in connection with the DEFINITIVE AGREEMENTS
and/or the TRANSACTIONS.
14.8 GOVERNING LAW. The validity, performance and enforcement
of the DEFINITIVE AGREEMENTS shall be governed by the law of the
State of Delaware, without giving effect to the principles of
conflicts of law thereof, except that with respect to matters
regarding the transfer of right, title to and interest in any E&PD
BUSINESS ITEM, the laws governing such E&PD BUSINESS ITEM shall
govern, without giving effect to the principles of conflicts of law
thereof.
14.9 BULK SALES LAWS. The PARTIES waive compliance with the
so-called "bulk sales" provisions of Article 6 of the Uniform
Commercial Code as it is in effect in the states where applicable to
the PURCHASED ASSETS and any other "bulk sales" provisions or laws of
any jurisdiction that may be applicable to the TRANSACTIONS.
14.10 PUBLIC ANNOUNCEMENTS. During the PRE-CLOSING
PERIOD, neither MACDERMID nor HERCULES shall make any public
statements, including any press releases, with respect to the
DEFINITIVE AGREEMENTS and/or the TRANSACTIONS, except as may be
required by law or by the obligations pursuant to any agreement with
any securities exchange (in which case, the nature of the statement
shall be described to the other PARTY prior to dissemination to the
public) or as otherwise provided in the DEFINITIVE AGREEMENTS or as
otherwise agreed to by the PARTIES.
14.11 COUNTERPARTS. The DEFINITIVE AGREEMENTS may be
executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original and all of which together shall
constitute one and the same instrument.
14.12 SEVERABILITY. If any provision of the DEFINITIVE
AGREEMENTS or the application of any such provision to any PERSON(s)
or circumstance(s) shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision
thereof and the affected DEFINITIVE AGREEMENTS shall remain in force
and be effectuated as if such illegal, invalid or unenforceable
provision is not part thereof; provided, however, (A) if the deletion
of any provision of the DEFINITIVE AGREEMENTS frustrates an essential
purpose(s) of the DEFINITIVE AGREEMENTS or material right(s) of a
PARTY, then such PARTY may terminate this AGREEMENT without further
liability or obligation, and (B) absent such frustration and to the
extent legally possible, the PARTIES shall seek in good faith
alternate provisions or arrangements to achieve the same purposes as
the invalid, illegal or unenforceable provision.
IN WITNESS WHEREOF, HERCULES and MACDERMID each has caused
this AGREEMENT to be executed by its duly authorized officer on its
behalf as of the date first above written, and MACDERMID DELAWARE has
executed this AGREEMENT as the assignee of MACDERMID pursuant to
Section 14.2.2.
Attested: HERCULES INCORPORATED
By: _______________________ By: ____________________________
Name: _______________________ Name: ____________________________
Title: _______________________ Title:
_____________________________
Attested: MACDERMID, INCORPORATED
By: _______________________ By: _____________________________
Name: _______________________ Name: _____________________________
Title: _______________________ Title:
_____________________________
Attested: MACDERMID IMAGING
TECHNOLOGY, INC.
By: _______________________ By: _____________________________
Name: _______________________ Name: _____________________________
Title: _______________________ Title:
_____________________________
SALE AND PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE I-1-
TERMS-1-
1.1 CERTAIN DEFINITIONS-1-
1.2 EXHIBITS, ETC-10-
1.3 PLURALS, ETC-10-
1.4 TIME OF DAY-10-
ARTICLE II-11-
SALE AND PURCHASE-11-
2.1 SALE AND PURCHASE-11-
2.2 EXCLUDED ITEMS-13-
2.3 E&PD ITEMS OF HERCULES AFFILIATE(S)-13-
2.4 ASSUMPTION OF LIABILITIES-13-
2.5 THIRD PERSONS-14-
2.6 E&PD FINANCIAL STATEMENTS-14-
2.7 E&PD BUSINESS ITEMS SOLD "AS IS".-16-
2.8 E&PD TECHNICAL CENTER/METTON BUILDING. -16-
2.9 INTERCOMPANY ACCOUNTS. -17-
2.10 BELGIUM OPERATION.-17-
2.11 TAIWAN OPERATION-17-
2.12 LETTER OF INTENT.-17-
2.13 ALLOCATION; TAXES; PRORATIONS-17-
2.14 E&PD APPLICATIONS LABORATORY-17-
2.15 INTERIM OPERATIONS.-17-
2.16 HERCULES PLAZA OFFICE SPACE LEASE-18-
2.17 ANCILLARY INTELLECTUAL PROPERTY. -18-
2.18 COMMINGLED ITEMS.-19-
2.19 TELECOMMUNICATIONS.-19-
2.20 MARK TRECE, INC.-19-
ARTICLE III-20-
PURCHASE PRICE-20-
3.1 PURCHASE PRICE. -20-
3.2 POST-CLOSING ADJUSTMENT-20-
3.3 EXCLUSIVITY PAYMENT CREDIT-20-
3.4 SERIES A PREFERRED STOCK AGREEMENT-20-
3.5 PERFORMANCE PREMIUM-21-
ARTICLE IV-24-
CLOSING-24-
4.1 TIME AND PLACE-24-
4.2 DELIVERIES BY HERCULES-24-
4.3 DELIVERIES BY MACDERMID-24-
4.4 CERTAIN ASSIGNMENTS, CONSENTS AND PERMITS.-25-
ARTICLE V-27-
REPRESENTATIONS AND WARRANTIES OF HERCULES-27-
5.1 REPRESENTATIONS AND WARRANTIES OF HERCULES;
LIMITATION -27-
5.2 ORGANIZATION, GOOD STANDING AND CORPORATE POWER-27-
5.3 AFFILIATES-28-
5.4 FINANCIAL STATEMENTS-28-
5.5 ABSENCE OF CHANGES IN THE E&PD BUSINESS-28-
5.6 CONFLICTING AGREEMENTS; RESTRICTIONS.-29-
5.7 TITLE-29-
5.8 INVENTORIES-30-
5.9 ACCOUNTS RECEIVABLE-30-
5.10 ACCOUNTS PAYABLE. -30-
5.11 CONDITION.-30-
5.12 E&PD INTELLECTUAL PROPERTY-30-
5.13 CONTRACTS AND AGREEMENTS.-31-
5.14 INSURANCE-32-
5.15 CONSENTS-32-
5.16 NO LITIGATION-33-
5.17 NON-ENVIRONMENTAL LAWS AND GOVERNMENTAL CONSENTS-33-
5.18 TAXES-33-
5.19 ENVIRONMENTAL MATTERS-33-
5.20 EMPLOYEES AND EMPLOYEE BENEFITS-33-
5.21 INVESTMENT-34-
5.22 COMPLETE PURCHASED ASSETS-34-
5.23 BROKERS-34-
ARTICLE VI-35-
REPRESENTATIONS AND WARRANTIES OF MACDERMID-35-
6.1 REPRESENTATIONS AND WARRANTIES OF MACDERMID-35-
6.2 ORGANIZATION, GOOD STANDING AND CORPORATE POWER-35-
6.3 CAPITALIZATION-36-
6.4 AFFILIATES-36-
6.5 REPORTS AND FINANCIAL STATEMENTS OF MACDERMID-36-
6.6 ABSENCE OF CHANGES IN THE BUSINESS OF MACDERMID-37-
6.7 INSURANCE-37-
6.8 CONSENTS-37-
6.9 CONFLICTING AGREEMENTS, RESTRICTIONS-38-
6.10 NO LITIGATION-38-
6.11 NON-ENVIRONMENTAL LAWS AND GOVERNMENTAL CONSENTS-38-
6.12 TAXES.-38-
6.13 ENVIRONMENTAL MATTERS-39-
6.14 EMPLOYEES AND EMPLOYEE BENEFITS-39-
6.15 FINANCING AND INDEBTEDNESS-39-
6.16 BROKERS-40-
ARTICLE VII-41-
PRE-CLOSING COVENANTS-41-
7.1 BEST EFFORTS; REGULATORY FILINGS-41-
7.2 CONDUCT OF BUSINESS-41-
7.3 [Intentionally Left Blank]-42-
7.4 REQUIRED NOTICES-43-
7.5 ACCESS-43-
7.6 AGREEMENTS-44-
7.7 ACQUISITION PROPOSALS-44-
7.8 CASUALTY LOSS-45-
ARTICLE VIII-46-
POST-CLOSING AGREEMENTS-46-
8.1 NON-COMPETITION-46-
8.2 FURTHER ASSURANCES-47-
8.3 CONFIDENTIAL INFORMATION-47-
8.4 MAIL; PAYMENTS-49-
8.5 NAME CHANGE-49-
8.6 ACCOUNTS RECEIVABLE-49-
8.7 INVENTORIES-50-
8.8 MACDERMID INDEBTEDNESS-51-
8.9 ENGINEERING MANUALS-52-
8.10 RETENTION OF BOOKS AND RECORDS; FURTHER INFORMATION-
52-
ARTICLE IX-53-
CONDITIONS TO MACDERMID'S OBLIGATIONS-53-
9.1 REPRESENTATIONS AND WARRANTIES TRUE-53-
9.2 PERFORMANCE OF AGREEMENTS-53-
9.3 DELIVERIES-53-
9.4 NO PROHIBITION-53-
9.5 NO INJUNCTION, PROCEEDING OR LITIGATION-54-
9.6 OFFICER'S CERTIFICATE-54-
9.7 HSR ACT-54-
9.8 APPROVALS AND CONSENTS-54-
9.9 OPINION OF COUNSEL FOR HERCULES-54-
9.10 ANCILLARY DOCUMENTS-54-
9.11 E&PD MATERIAL ADVERSE EFFECT-54-
9.12 FINANCING. -54-
9.13 BOARD OF DIRECTORS. -55-
9.14 PERMITS.-55-
ARTICLE X-56-
CONDITIONS TO HERCULES' OBLIGATION-56-
10.1 REPRESENTATIONS AND WARRANTIES TRUE-56-
10.2 PERFORMANCE OF AGREEMENTS-56-
10.3 DELIVERIES-56-
10.4 NO PROHIBITION.-56-
10.5 NO INJUNCTION, PROCEEDING OR LITIGATION-57-
10.6 OFFICER'S CERTIFICATE-57-
10.7 HSR ACT-57-
10.8 APPROVALS AND CONSENTS-57-
10.9 OPINION OF COUNSEL FOR MACDERMID.-57-
10.10 ANCILLARY DOCUMENTS-57-
10.11 MACDERMID MATERIAL ADVERSE EFFECT-58-
10.12 PERMITS.-58-
10.13 CHANGE OF CONTROL ARRANGEMENTS-58-
10.14 FINANCING. -58-
10.15 BOARD OF DIRECTORS. -58-
ARTICLE XI-59-
TERMINATION PRIOR TO CLOSING-59-
11.1 TERMINATION-59-
11.2 NO FURTHER OBLIGATIONS. -60-
11.3 TERMINATION OF OTHER ITEMS-60-
ARTICLE XII-61-
SURVIVAL AND INDEMNIFICATION-61-
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS -61-
12.2 INDEMNIFICATION BY HERCULES-61-
12.3 INDEMNIFICATION BY MACDERMID-61-
12.4 PROCEDURE FOR INDEMNIFICATION-62-
12.5 LIMITATION ON INDEMNIFICATION-64-
12.6 PAYMENT-64-
12.7 OVERLAPPING CLAIMS FOR INDEMNIFICATION-64-
12.8 RIGHT TO INFORMATION ABOUT INDEMNIFICATION MATTERS-
65-
12.9 COVERS OTHER AGREEMENTS-65-
12.10 SUBROGATION-65-
ARTICLE XIII-66-
RESOLUTION OF DISPUTES-66-
13.1 RESOLUTION PROCEDURE-66-
13.2 RESOLUTION PANEL-66-
13.3 EXCHANGE OF WRITTEN STATEMENTS-66-
13.4 GOOD FAITH NEGOTIATIONS.-66-
13.5 SUBMISSION TO COURT OR ARBITRATION-66-
13.6 SUMMARY PROCEEDINGS. -67-
13.7 BINDING ARBITRATION.-67-
13.8 INJUNCTIVE RELIEF. -68-
ARTICLE XIV-70-
MISCELLANEOUS-70-
14.1 ENTIRE AGREEMENT-70-
14.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES-70-
14.3 HEADINGS; ETC.-70-
14.4 MODIFICATION AND WAIVER-70-
14.5 EXPENSES-71-
14.6 NOTICES-71-
14.7 SPECIFIC PERFORMANCE AND OTHER REMEDIES-72-
14.8 GOVERNING LAW-72-
14.9 BULK SALES LAWS-73-
14.10 PUBLIC ANNOUNCEMENTS-73-
14.11 COUNTERPARTS-73-
14.12 SEVERABILITY-73-
CREDIT AGREEMENT
dated as of
December 5, 1995
among
MacDERMID, INCORPORATED
MacDERMID IMAGING TECHNOLOGY, INC.
the Banks signatory hereto
and
THE CHASE MANHATTAN BANK, N.A.
as Swingline Lender and Agent
<PAGE>
Table of Contents
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
Section 1.1. Definitions 1
Section 1.2. Accounting Terms 14
Section 1.3. Construction 14
ARTICLE 2. THE CREDIT
Section 2.1. The Revolving Loans 15
Section 2.2. The Swingline Loans 15
Section 2.3. The Term Loans 16
Section 2.4. The Notes 16
Section 2.5. Letters of Credit 17
Section 2.6. Purpose 21
Section 2.7. Borrowing Procedures 21
Section 2.8. Payments, Prepayments and Conversions 21
Section 2.9. Interest Periods; Renewals 22
Section 2.10. Changes of Commitments 23
Section 2.11. Certain Notices 23
Section 2.12. Minimum Amounts 24
Section 2.13. Interest 24
Section 2.14. Fees 25
Section 2.15. Payments Generally 25
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.1. Additional Costs 26
Section 3.2. Limitation of Types of Loans 27
Section 3.3. Illegality 28
Section 3.4. Certain Conversions pursuant to
Sections 3.1 and 3.3 28
Section 3.5. Certain Compensation 29
Section 3.6. Indemnification for Taxes 30
Section 3.7. Partial Defeasance 32
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.1. Initial Conditions Precedent 32
Section 4.2. Subsequent Loans or Letters of Credit 34
Section 4.3. Deemed Representations 35
Section 4.4. First Borrowing by Each Eligible
Subsidiary 35
Section 4.5. Representations of Eligible
Subsidiaries 36
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Section 5.1. Incorporation, Good Standing and Due
Qualification 37
Section 5.2. Corporate Power and Authority; No
Conflicts 37
Section 5.3. Legally Enforceable Agreements 37
Section 5.4. Litigation 38
Section 5.5. Financial Statements; SEC Filings 38
i
<PAGE>
Section 5.6. Taxes 38
Section 5.7. ERISA 38
Section 5.8. Subsidiaries and Ownership of Stock 39
Section 5.9. Credit Arrangements 39
Section 5.10. No Default on Outstanding Judgments
or Orders 39
Section 5.11. Governmental Regulation 39
Section 5.12. Environmental Matters 39
Section 5.13. Margin Stock 40
Section 5.14. Full Disclosure 40
ARTICLE 6. AFFIRMATIVE COVENANTS
Section 6.1. Reporting Requirements 41
Section 6.2. Payment of Obligations 43
Section 6.3. Maintenance of Property; Insurance 43
Section 6.4. Conduct of Business and Maintenance
of Existence 44
Section 6.5. Compliance with Laws 44
Section 6.6. Inspection of Property, Books and
Records 45
Section 6.7. Maintenance of Ownership of
Subsidiaries 45
Section 6.8. Reviewed Division Financial Statements 45
ARTICLE 7. NEGATIVE COVENANTS
Section 7.1. Debt 45
Section 7.2. Restricted Payments 46
Section 7.3. Investments 46
Section 7.4. Negative Pledge 47
Section 7.5. Consolidations, Mergers and Sales
of Assets 47
Section 7.6. Transactions with Affiliates 48
ARTICLE 8. FINANCIAL COVENANTS
Section 8.1. EBIT to Interest Expense Ratio 49
Section 8.2. Minimum Consolidated Net Worth 49
Section 8.3. Maximum Total Debt to Net Worth Ratio 49
ARTICLE 9. EVENTS OF DEFAULT
Section 9.1. Events of Default 49
Section 9.2. Remedies 51
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER
Section 10.1. Appointment, Powers and Immunities
of Agent 52
Section 10.2. Reliance by Agent 52
Section 10.3. Defaults 53
Section 10.4. Rights of Agent as a Bank 53
Section 10.5. Indemnification of Agent 53
Section 10.6. Documents 54
ii
<PAGE>
Section 10.7. Non-Reliance on Agent and Other Banks 54
Section 10.8. Failure of Agent to Act 55
Section 10.9. Resignation of Agent 55
Section 10.10. Amendments Concerning Agency
Function 55
Section 10.11. Liability of Agent 56
Section 10.12. Transfer of Agency Function 56
Section 10.13. Non-Receipt of Funds by the Agent 56
Section 10.14. Withholding Taxes 56
Section 10.15. Several Obligations and Rights
of Banks 57
Section 10.16. PRO RATA Treatment of Loans, Etc 57
Section 10.17. Sharing of Payments Among Banks 57
ARTICLE 11. GUARANTY
Section 11.1. The Guaranty 58
Section 11.2. Guaranty Unconditional 58
Section 11.3. Discharge Only Upon Payment in Full;
Reinstatement in Certain
Circumstances 59
Section 11.4. Waiver by the Company 59
Section 11.5. Subrogation 59
Section 11.6. Stay of Acceleration 60
ARTICLE 12. MISCELLANEOUS
Section 12.1. Amendments and Waivers 60
Section 12.2. Usury 60
Section 12.3. Expenses; Indemnification 61
Section 12.4. Survival 62
Section 12.5. Assignments; Participations 62
Section 12.6. Notices 63
Section 12.7. Setoff 63
Section 12.8. Jurisdiction; Immunities 63
Section 12.9. Judgment Currency 64
Section 12.10. Confidentiality 64
Section 12.11. Table of Contents; Headings 65
Section 12.12. Severability 65
Section 12.13. Counterparts 65
Section 12.14. Integration 65
Section 12.15. Governing Law 65
iii
<PAGE>
EXHIBITS
Exhibit A-1 Form of Revolving Promissory Note
Exhibit A-2 Form of Term Promissory Note
Exhibit A-3 Form of Swingline Promissory Note
Exhibit B Form of Authorization Letter
Exhibit C Form of Election to Participate
Exhibit D Form of Election to Terminate
Exhibit E Form of Opinion of Counsel for the Borrower
and MacDermid Imaging
Exhibit F Form of Opinion of Counsel for Each Eligible
Subsidiary
Exhibit G Revolving Loan Commitments
Exhibit H Term Loan Amounts
Exhibit I Forms of Letter of Credit Documents
Exhibit J Interest Margins and Commitment Fees
SCHEDULES
Schedule I Subsidiaries of the Borrower
Schedule II Credit Arrangements
Schedule III Litigation
Schedule IV Investments
Schedule V Environmental Disclosure
Schedule VI Hercules Division Monthly Management Report
iv
<PAGE>
CREDIT AGREEMENT dated as of December 5, 1995 among
MacDERMID, INCORPORATED, a corporation organized under the laws
of the State of Connecticut (the "Company"), MacDERMID IMAGING
TECHNOLOGY, INC., a corporation organized under the laws of the
State of Delaware ("MacDermid Imaging"), each of the banks which
is now, or hereafter becomes, a signatory hereto (individually a
"Bank" and collectively the "Banks") and THE CHASE MANHATTAN
BANK, N.A., a national banking association organized under the
laws of the United States of America, as Swingline Lender (in
such capacity, together with its successors in such capacity, the
"Swingline Lender") and THE CHASE MANHATTAN BANK, N.A., as agent
for the Banks (in such capacity, together with its successors in
such capacity, the "Agent").
The Company and MacDermid Imaging desire that the Banks and
the Swingline Lender extend a $150,000,000 aggregate credit
facility as provided herein, and the Banks and the Swingline
Lender are prepared to extend such credit. Accordingly, the
Company, the Banks, the Swingline Lender and the Agent agree as
follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
Section 1.1. DEFINITIONS. As used in this Agreement the
following terms have the following meanings:
"Additional Costs" shall have the meaning set forth in
Section 3.1(a).
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the
Borrower (a "Controlling Person") or (ii) any Person (other than
the Borrower or a Subsidiary) which is controlled by or is under
common control with a Controlling Person. As used herein, the
term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means The Chase Manhattan Bank, N.A.
"Agreement" means this Credit Agreement, as amended or
supplemented from time to time. References to Articles,
Sections, Exhibits, Schedules and the like refer to the Articles,
Sections, Exhibits, Schedules and the like of this Agreement
unless otherwise indicated.
"Alternative Currency" means Sterling, Deutschemarks, Lira,
Guilders or Francs or such other currency that the Banks may in
their sole discretion make available to one or more Borrowers
from time to time.
<PAGE>
"Alternative Currency Equivalent" means with respect to an
amount of Dollars on any date in relation to any specific
Alternative Currency, the amount of such Alternative Currency
that may be purchased with such amount of Dollars at the Spot
Exchange Rate with respect to Dollars on such date.
"Alternative Currency Loan" means any Revolving Loan
denominated in an Alternative Currency.
"Authorization Letter" means the letter agreement executed
by the Borrower in the form of EXHIBIT B.
"Banking Day" means any day on which commercial banks are
not authorized or required to close in New York City and whenever
such day relates to a Eurocurrency Loan or notice with respect to
any Eurocurrency Loan, a day on which dealings in Dollar deposits
are also carried out in the London interbank market.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a
Plan or Multiemployer Plan and which is maintained or otherwise
contributed to by any member of the ERISA Group.
"Borrower" means the Company, MacDermid Imaging or any
Eligible Subsidiary, as the context may require, and their
respective successors and assigns and "Borrowers" means all of
the foregoing.
"Borrowing" means a Loan or group of Loans of a single type
as to which a single Interest Period is in effect.
"Borrowing Request" means a request by a Borrower in
accordance with Section 2.7.
"Capital Expenditures" means for any period, the Dollar
amount of gross expenditures (including obligations under Capital
Leases) made for fixed assets, real property, plant and
equipment, and all renewals, improvements and replacements
thereto (but not repairs thereof) incurred during such period.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with
generally accepted accounting principles.
"Closing Date" means the date this Agreement has been
executed by the Company, the Banks and the Agent.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commitment" means with respect to each Bank, the obligation
of such Bank to make Revolving Loans under this Agreement in the
2
<PAGE>
aggregate principal amount set forth on EXHIBIT G, as such amount
may be reduced or otherwise modified from time to time pursuant
to the terms hereof.
"Common Stock" means common stock, no par value, of the
Company.
"Company" means MacDermid, Incorporated, a Connecticut
corporation, and its successors and assigns.
"Consolidated Capital Expenditures" means Capital
Expenditures of the Company and its Consolidated Subsidiaries on
a consolidated basis.
"Consolidated EBIT" means, for any period the sum of
(a) Consolidated Net Income of the Company and its Consolidated
Subsidiaries for such period, plus (b) to the extent deducted in
determining Consolidated Net Income, the sum of (i) Consolidated
Interest Expense and (ii) consolidated taxes of the Company and
its Consolidated Subsidiaries for such period.
"Consolidated EBITDA" means, for any period, the sum of
(a) Consolidated Net Income of the Company and its Consolidated
Subsidiaries for such period, PLUS (b) to the extent deducted in
determining such Consolidated Net Income, the sum of
(i) Consolidated Interest Expense, (ii) consolidated depreciation
and amortization expense and (iii) consolidated taxes of the
Company and its Consolidated Subsidiaries for such period.
"Consolidated Interest Expense" means, for any period, the
interest expense of the Company and its Consolidated Subsidiaries
determined on a consolidated basis for such period.
"Consolidated Net Income" means, for any period, the net
income of the Company and its Consolidated Subsidiaries for such
period as adjusted to exclude the following:
(a) the effect of each change in accounting principles;
(b) any gain, together with any related provisions for
taxes on such gain, realized upon the sale or other disposition
of any asset of the Company or any Consolidated Subsidiary
(including pursuant to any sale/leaseback transaction) which is
not sold or otherwise disposed of in the ordinary course of
business;
(c) any gain or loss, together with any related provision
for taxes on such gain, realized in connection with the
extinguishment of any Debt of the Company or any of its
Consolidated Subsidiaries;
3
<PAGE>
(d) all extraordinary gains and losses determined in
accordance with generally accepted accounting principles;
(e) all foreign currency translation gains and losses;
(f) the net income or loss of any Person that is not a
Consolidated Subsidiary of the Company or that the Company
accounts for by the equity method of accounting, whether or not
distributed to the Company; and
(g) the net income or loss of any Person acquired in a
pooling of interests transaction for any period prior to the date
of such acquisition.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Company and its Consolidated
Subsidiaries, including the Preferred Stock, as of such date.
"Consolidated Subsidiary" means any Subsidiary whose
accounts are, or are required to be, consolidated with the
accounts of the Company.
"Consolidated Total Debt" means at any date the total Debt
of the Company and its Consolidated Subsidiaries on a
consolidated basis.
"Debt" means, with respect to any Person at any date,
without duplication: (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in
the ordinary course of business, (d) all obligations of such
Person as lessee which are capitalized in accordance with
generally accepted accounting principles, (e) all obligations of
such Person to reimburse or prepay any bank or other Person in
respect of amounts paid under a letter of credit, banker's
acceptance or similar instrument, whether drawn or undrawn
(PROVIDED, however, if the Company provides standby letters of
credit or bank guarantees in support of obligations of a
Subsidiary, only the underlying obligation and not the contingent
liability created by the letter of credit or bank guaranty shall
be treated as Debt of the Company and such Subsidiary), (f) all
Debt of other Persons secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and
(g) all Debt of other Persons Guaranteed by such Person.
"Default" means any event which constitutes an Event of
Default or which with the giving of notice or lapse of time, or
both, would become an Event of Default.
4
<PAGE>
"Default Rate" means, with respect to an amount of any Loan
not paid when due, a rate per annum equal to: (a) if such Loan
is a Variable Rate Loan, a variable rate 2% above the rate of
interest thereon; (b) if such Loan is a Eurocurrency Loan, a
fixed rate 2% above the rate of interest in effect thereon
(including any Interest Margin).
"Denomination Date" means (a) in relation to any Borrowing
in an Alternative Currency, the date that is three Banking Days
prior to the date such Borrowing is made and in the case of a
renewal of, or conversion to, such a Loan, the date that is three
Banking Days prior to the date of such renewal or conversion, and
(b) in relation to any Letter of Credit payable in an Alternative
Currency the date such Letter of Credit is issued or, in the case
of Letters of Credit to fund insurance payments, renewed, as
applicable.
"Deutschemarks" and the sign "DM" means lawful money of
Germany.
"Dollars" and the sign "$" mean lawful money of the United
States of America.
"Dollar Equivalent" means, with respect to an amount of any
Alternative Currency on any date, the amount of Dollars that may
be purchased with such amount of such Alternative Currency at the
Spot Exchange Rate with respect to such Alternative Currency on
such date.
"Election to Participate" means an Election to Participate
substantially in the form of EXHIBIT C.
"Election to Terminate" means an Election to Terminate
substantially in the form of EXHIBIT D.
"Eligible Subsidiary" means any Wholly-Owned Consolidated
Subsidiary of the Company as to which an Election to Participate
shall have been delivered to the Agent and as to which an
Election to Terminate shall not have been delivered to the Agent.
Each such Election to Participate and Election to Terminate shall
be duly executed on behalf of such Wholly-Owned Consolidated
Subsidiary and the Company in such number of copies as the Agent
may request. The delivery of an Election to Terminate shall not
affect any obligation of an Eligible Subsidiary theretofore
incurred. The Agent shall promptly give notice to the Banks of
the receipt of any Election to Participate or Election to
Terminate.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, injunctions,
permits, conversions, grants, franchises, licenses, agreements
5
<PAGE>
and other governmental restrictions relating to the environment,
to the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including ambient air,
surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute
including any rules and regulations promulgated thereunder.
"ERISA Group" means the Company, any Subsidiary and all
members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control
which, together with the Borrower or any Subsidiary, are treated
as a single employer under Section 414(c) of the Code.
"Eurocurrency Loan" means any Loan when and to the extent
the interest rate therefor is determined on the basis of the
definition "Fixed Base Rate."
"Event of Default" has the meaning given such term in
Section 9.1.
"Existing Credit Facility" means that certain Credit
Agreement, dated as of October 6, 1994, between the Company, the
banks signatory thereto, and The Chase Manhattan Bank, N.A., as
agent, as heretofore amended.
"Facility Documents" means this Agreement, the Notes, the
Guaranty and any documents relating to Letters of Credit.
"Federal Funds Rate" means, for any day, the rate per annum
equal to the weighted average of the rates on overnight federal
funds transactions as published by the Federal Reserve Bank of
New York for such day (or for any day that is not a Banking Day,
for the immediately preceding Banking Day).
"Fixed Base Rate" means with respect to any Interest Period
for a Eurocurrency Loan, the rate per annum (rounded upwards if
necessary to the nearest 1/16 of 1%) quoted at approximately
11:00 a.m. London time by the principal London branch of the
Agent two (2) Banking Days prior to the first day of such
Interest Period for the offering to leading banks in the London
interbank market of Dollar deposits or deposits in an Alternative
Currency, as the case may be, in immediately available funds, for
a period, and in an amount, comparable to the Interest Period and
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principal amount of the Eurocurrency Loan which shall be made by
the Banks and outstanding during such Interest Period.
"Fixed Rate" means, for any Eurocurrency Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Agent to
be equal to the quotient of (a) the Fixed Base Rate for such Loan
for such Interest Period, divided by (b) one minus the Reserve
Requirement for such Loan for such Interest Period.
"Francs" and the sign "FF" means lawful money of France.
"Funding Date" means the date of the earlier to occur of
(a) the initial Borrowing Request, (b) the initial issuance of a
Letter of Credit and (c) extension of the principal amount of the
Term Loan being advanced to MacDermid Imaging.
"Guarantee" means any obligation, contingent or otherwise,
of any Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or
(b) entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect
thereof (in whole or in part); PROVIDED that the term Guarantee
shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Guarantors" means MacDermid Overseas Asia Limited,
MacDermid Europe, Inc., MacDermid Equipment, Inc. and MacDermid
Imaging Technology, Inc.
"Guaranty" means the Joint and Several Guaranty of the
Guarantors in favor of the Agent for the benefit of the Banks.
"Guilders" means the lawful money of the Netherlands.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its
derivatives, by-products and other hydro-carbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics and any other element, compound,
"Intercompany Debt" means Debt representing loans from the
Company to any Subsidiary which is not a Guarantor.
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mixture, solution or substance poses a present or potential
hazard to human health or the environment.
"Hercules Division" means the Electronics and Printing
Division of Hercules Incorporated.
"Interest Margin" means for Variable Rate Loans and
Eurocurrency Loans the applicable number of basis points
specified on EXHIBIT J based on the ratio of Debt of the Company
and its Consolidated Subsidiaries on a consolidated basis to
Consolidated EBITDA minus Consolidated Capital Expenditures. The
above ratio will be tested at the end of each calendar quarter
for the twelve-month period then ended and will be in effect with
respect to any Borrowing, conversion or renewal made subsequent
to the receipt by the Agent of the certificate described in
Section 6.1(c). hereof and prior to the Agent's receipt of the
next such certificate, PROVIDED that the Interest Margin for all
Eurocurrency Loans shall be 125 basis points with respect to any
Borrowing, conversion or renewal made after the date on which
such a certificate is to be delivered and prior to the date such
certificate is actually delivered.
"Interest Period" means, with respect to any Eurocurrency
Loan, the period commencing on the date such Loan is made,
converted from another type of Loan or renewed, as the case may
be, and ending, as the applicable Borrower may select pursuant to
Section 2.9, on the numerically corresponding day in the first,
second, third, or sixth calendar month thereafter, PROVIDED that
each such Interest Period which commences on the last Banking Day
of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the
appropriate calendar month.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit
or otherwise.
"Lending Office" means, for each Bank and for each type of
Loan, the lending office of such Bank (or of an affiliate of such
Bank) designated as such for such type of Loan on its signature
page hereof or such other office of such Bank (or of an affiliate
of such Bank) as such Bank may from time to time specify to the
Agent and the Company as the office by which its Loans of such
type are to be made and maintained.
"Letter(s) of Credit" means any standby Letter of Credit
issued by the Agent for the account of a Borrower pursuant to
Borrowers, as at any date of determination, the sum of (i) the
maximum aggregate amount which is or at any time thereafter may
become available (including any amounts drawn but not yet
honored) under all Letters of Credit then outstanding and
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Section 2.5 for the purpose of supporting performance, payment
deposit, or surety obligations of such Borrower, in any case if
required by law or governmental rule or regulation or if in
accordance with the custom or practice in the industry of such
Borrower.
"Letters of Credit Usage" means with respect to the
(ii) the aggregate amount of all drawings under Letters of Credit
honored by the Agent and not theretofore reimbursed by a
Borrower. Letters of Credit Usage of each Bank shall be
determined as if the Banks had bought the participations referred
to in Section 2.5(a) with respect to all then outstanding Letters
of Credit. In determining Letters of Credit Usage, any Letters
of Credit denominated in an Alternative Currency, shall be
converted to the Dollar Equivalent (as of the Denomination Date
for such Letter of Credit).
"Lien" means with respect to any asset, any mortgage, deed
of trust, lien (statutory or otherwise), pledge, charge, security
interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of
creating a security interest, in respect of such asset. For the
purposes of this Agreement, the Company or any Subsidiary shall
be deemed to own subject to a Lien any asset which the Company or
such Subsidiary has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to such asset.
"Lira" means lawful money of Italy.
"Loan" or "Loans" means the Revolving Loans, the Swingline
Loans and the Term Loans made by a Bank pursuant to Section 2.1,
Section 2.2 or Section 2.3.
"MacDermid Imaging" means MacDermid Imaging Technology, Inc.
a Delaware corporation and a wholly-owned subsidiary of the
Company, and its successors and assigns.
"Material Debt" means Debt (other than the Notes) of the
Company and/or one or more of its Subsidiaries, arising in one or
more related or unrelated transactions, in an aggregate principal
amount exceeding $1,000,000.
"Material Plan" means at any time a Plan or Plans having an
aggregate amount of Unfunded Liabilities in excess of $500,000.
"Maturity Date" means December 4, 2002; PROVIDED that if
such date is not a Banking Day, the Maturity Date shall be the
next succeeding Banking Day.
(5) plan years made contributions, including for these purposes
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"Monthly Management Report" means the September 30, 1995
Monthly Management Report of the Hercules Division a copy of
which is attached hereto as Schedule VI.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to
which any member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five
any Person which ceased to be a member of the ERISA Group during
such five year-period.
"Note" or "Notes" means a promissory note of a Borrower in
the form of EXHIBIT A-1, EXHIBIT A-2 or EXHIBIT A-3 evidencing
the Loans made by a Bank or Swingline Lender hereunder and all
promissory notes delivered in substitution or exchange therefor,
in each case as the same shall be modified and supplemented and
in effect from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means:
(a) in the case of real properties, easements,
restrictions, exceptions, reservations or defects which, in
the aggregate, do not interfere materially with the
continued use of such properties for the purposes for which
they are used and do not affect materially the value
thereof;
(b) liens, if contested in good faith by appropriate
proceedings and appropriate reserves are maintained with
respect thereto;
(c) pledges or deposits to secure obligations under
workmen's compensation laws or similar legislation or to
secure performance in connection with bids, tenders and
contracts (other than contracts for the payment of borrowed
money) to which the Company or any of its Subsidiaries is a
party;
(d) deposits to secure public or statutory obligations of
the Company or any of its Subsidiaries;
(e) materialmen's, mechanics', carriers', workmen's or
other like liens arising in the ordinary course of business,
or deposits of cash or United States obligations to obtain
the release of such liens;
(f) deposits to secure surety or appeal bonds in
proceedings to which the Company or any of its Subsidiaries
is a party;
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(g) existing leases by the Company or its Subsidiaries of
real and personal property;
(h) liens for taxes not yet due and payable; and
(i) liens on the assets acquired by the Company pursuant
to the Purchase Agreement that are acceptable to the Agent
as of the Closing Date in the Agent's sole discretion.
"Person" means an individual, partnership, limited liability
partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever
nature.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of
ERISA or subject to the minimum funding standards set forth in
Section 412 of the Code and either (a) is maintained, or
contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (b) has at any time within the
preceding five (5) years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the
ERISA Group.
"Preferred Stock" means the preferred stock issued by
MacDermid Imaging to Hercules, Inc. pursuant to the terms of the
Purchase Agreement.
"Preferred Stock Agreement" means that certain Series A
Preferred Stock Agreement among MacDermid Imaging, the Company
and Hercules, Inc. with respect to the Preferred Stock.
"Prime Rate" means that rate of interest from time to time
announced by the Agent at its principal office as its prime
commercial lending rate. Notwithstanding the foregoing, each
Borrower acknowledges that the Agent may regularly make
commercial loans at rates of interest less than the rate of
interest referred to in the immediately preceding sentence.
"Principal Office" means the principal office of the Agent,
presently located at One Chase Manhattan Plaza, New York, New
York 10081.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Purchase Agreement" means the Sale and Purchase Agreement,
together with each Annex, Schedule and Exhibit thereto, among the
Company, MacDermid Imaging and Hercules Incorporated.
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"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as the same may be amended or
supplemented from time to time.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as the same may be amended or
supplemented from time to time.
"Regulatory Change" means, with respect to any Bank, any
change after the date of this Agreement in United States or
foreign federal, state or municipal laws or regulations
(including Regulation D) or the adoption or making after such
date of any interpretations, directives or requests applying to a
class of banks including such Bank of or under any United States
or foreign federal, state or municipal laws or regulations
(whether or not having the force of law) by any court or
governmental or monetary authority charged with the
interpretation or administration thereof.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA as to which events the PBGC by
regulation has not waived the requirement of Section 4043(a) of
ERISA that the PBGC be notified within thirty (30) days of the
occurrence of such event, PROVIDED that a failure to meet the
minimum funding standard of Section 412 of the Code or Section
302 of ERISA shall be a Reportable Event regardless of any
waivers given under Section 412(d) of the Code.
"Required Banks" means, at any time while no Revolving Loans
are outstanding, Banks having at least 51% of the aggregate
amount of the Commitments and Term Loans outstanding and, at any
time while Revolving Loans are outstanding, Banks holding at
least 51% of the aggregate principal amount of the Loans.
"Reserve Requirement" means, for any Eurocurrency Loan for
any Interest Period therefor, the average maximum rate at which
reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest
Period under Regulation D by member banks of the Federal Reserve
System in New York City with deposits exceeding $1,000,000,000
against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to
be maintained by such member banks by reason of any Regulatory
Change against any category of extensions of credit or other
assets which include Variable Rate Loans.
"Restricted Payment" means (a) any dividend or other
distribution on any shares of any Borrower's capital stock
(except dividends payable solely in shares of such Borrower's
capital stock), (b) any payment on account of the purchase,
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redemption, retirement or acquisition of (i) any shares of any
Borrower's capital stock or (ii) any option, warrant or other
right to acquire shares of any Borrower's capital stock or (c)
any payment by any Borrower of a "Performance Premium" (as that
term is defined in the Purchase Agreement) to Hercules
Incorporated.
"Revolving Loans" means revolving Loans made by the Banks
pursuant to Section 2.1 hereof.
"Senior Debt" means Debt which has been or is incurred by
the Borrower which is senior in right of payment pursuant to its
terms to the Debt under this Agreement.
"Spot Exchange Rate" means, on any day, (a) with respect to
any Alternative Currency, the spot rate at which Dollars are
offered on such day by the Agent in London for such Alternative
Currency at approximately 11:00 a.m. (London time), and (b) with
respect to Dollars in relation to any specified Alternative
Currency, the spot rate at which such specified Alternative
Currency is offered on such day by the Agent in London for
Dollars at approximately 11:00 a.m. (London time). For purposes
of determining the Spot Exchange Rate in connection with an
Alternative Currency Borrowing, such Spot Exchange Rate shall be
determined as of the Denomination Date for such Borrowing with
respect to transactions in the applicable Alternative Currency
that will settle on the date of such Borrowing.
"Sterling" or "(pound sterling symbol)" means lawful money
of the United Kingdom.
"Subsidiary" means, as to any Person, any corporation or
other entity of which at least a majority of the securities or
other ownership interests having ordinary voting power
(absolutely or contingently) for the election of directors or
other persons performing similar functions are at the time owned
directly or indirectly by such Person.
"Swingline Commitment" shall mean the obligation of the
Swingline Lender to make Swingline Loans pursuant to Section 2.2
hereof in an aggregate amount at any one time outstanding up to
but not exceeding $5,000,000 (as the same may be reduced at any
time or from time to time pursuant to Section 2.10 hereof).
"Swingline Loans" means the Swingline Loans made by the
Swingline Lender pursuant to Section 2.2 hereof.
"Termination Date" means December 4, 2000; PROVIDED that if
such date is not a Banking Day, the Termination Date shall be the
next succeeding Banking Day (or, if such next succeeding Banking
Day falls in the next calendar month, the next preceding Banking
Day).
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"Term Loans" means the Term Loans made by the Banks pursuant
to Section 2.3 hereof.
"Unfunded Liabilities" means with respect to any Plan at any
time, the amount (if any) by which (a) the value of all benefit
liabilities under such Plan, determined on a plan termination
basis using the assumptions prescribed by the PBGC for purposes
of Section 4044 of ERISA, exceeds (b) the fair market value of
all Plan assets allocable to such liabilities under Title IV of
ERISA (excluding any accrued but unpaid contributions), but only
to the extent that such excess represents a potential liability
of any member of the ERISA Group to the PBGC or any other Person
under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the
Federal Funds Rate for such day plus 1/2 of 1% or (b) the Prime
Rate for such day.
"Variable Rate Loan" means any Loan when and to the extent
the interest rate for such Loan is determined in relation to the
Variable Rate.
"Wholly-Owned Consolidated Subsidiary" means any
Consolidated Subsidiary all of the shares of capital stock or
other ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by the
Company.
Section 1.2. ACCOUNTING TERMS. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Company's
independent public accountants) with the most recent audited
consolidated financial statements of the Company and its
Consolidated Subsidiaries delivered to the Banks; PROVIDED that,
if the Company notifies the Agent that the Company wishes to
amend any covenant in Article 8 to eliminate the effect of any
change in generally accepted accounting principles on the
operation of such covenant (or if the Agent notifies the Company
that the Required Banks wish to amend Article 8 for such
purpose), then the Company's compliance with such covenant shall
be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in
generally accepted accounting principles became effective, until
either such notice is withdrawn or such covenant is amended in a
manner satisfactory to the Company and the Required Banks.
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Section 1.3. CONSTRUCTION. Unless the context of this
Agreement otherwise clearly requires, references to the plural
include the singular, references to the singular include the
plural, references to any gender include the other genders, the
term "including" is not limiting and has the inclusive meaning
represented by the phrase "including without limitation;" and the
term "or" has the inclusive meaning represented by the phrase
"and/or." The terms "hereof," "herein," "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and
not to any particular provision of this Agreement.
ARTICLE 2. THE CREDIT
Section 2.1. THE REVOLVING LOANS. (a) Subject to the terms
and conditions of this Agreement, each of the Banks severally and
not jointly agrees to make Revolving Loans to the Company and its
Eligible Subsidiaries (as specified in the Borrowing Request with
respect thereto) from time to time from and including the date
hereof to and including the Banking Day next preceding the
Termination Date, in an aggregate principal amount up to but not
exceeding at any one time outstanding, the amount of its
Commitment; PROVIDED that the aggregate amount of Revolving Loans
outstanding plus the Letters of Credit Usage shall not at any
time exceed in the aggregate Commitments of the Banks. Each
Borrowing under this Section 2.1 shall be made by the Banks
ratably in accordance with their Commitments. The Revolving
Loans may be outstanding as Variable Rate Loans or Eurocurrency
Loans (each a "type" of Loan). Eurocurrency Loans may be
denominated in Dollars or in one or more Alternative Currencies,
and all Variable Rate Loans shall be denominated only in Dollars.
Subject to the terms hereof, the Borrowers may borrow, repay or
prepay and reborrow Revolving Loans hereunder prior to the
Termination Date. Each type of Loan of each Bank shall be made
and maintained at such Bank's Lending Office for such type of
Loans.
(b) Any Revolving Loans may be made in the Alternative
Currency specified in the applicable Borrowing Request given
pursuant to Section 2.7 in an amount equal to the Alternative
Currency Equivalent of the Dollar amount specified in such
Borrowing Request, as determined by the Agent as of the
Denomination Date for such Borrowing (which determination shall
be conclusive absent manifest error). For purposes of
determining the amount outstanding under any Bank's Commitment,
such amount outstanding for each Alternative Currency Loan shall
be the Dollar Equivalent for such Loan as of the Denomination
Date.
Section 2.2. THE SWINGLINE LOANS (a) Subject to the terms
and conditions of this Agreement, the Swingline Lender agrees to
make Swingline Loans to the Company and its Eligible Subsidiaries
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(as specified in the Borrowing Request with respect thereto) from
time to time from and including the date hereof to and including
the Banking Day next preceding the Termination Date, in an
aggregate principal amount at any one time outstanding up to but
not exceeding the Swingline Commitment, PROVIDED that the
Swingline Loans outstanding PLUS the Revolving Loans PLUS the
Letters of Credit Usage of the Swingline Lender shall not at any
time exceed the Commitment of the Agent, and PROVIDED further
that the aggregate amount of Revolving Loans outstanding PLUS the
Letters of Credit Usage PLUS Swingline Loans shall not at any
time exceed the aggregate Commitments of the Banks. Each
Borrowing under this Section 2.2 shall be made by the Agent. The
Swingline Loans may be outstanding as Variable Rate Loans or
Eurocurrency Loans (each a "type" of Loan). Eurocurrency Loans
may be denominated in Dollars or in one or more Alternative
Currencies, and all Variable Rate Loans shall be denominated only
in Dollars. Subject to the terms hereof, the Borrowers may
borrow, repay or prepay and reborrow Swingline Loans hereunder
prior to the Termination Date.
(b) Any Swingline Loans may be made in the Alternative
Currency specified in the applicable Borrowing Request given
pursuant to Section 2.7 in an amount equal to the Alternative
Currency Equivalent of the Dollar amount specified in such
Borrowing Request, as determined by the Agent as of the
Denomination Date for such Borrowing (which determination shall
be conclusive absent manifest error).
(c) Each Bank irrevocably agrees that if a Borrower fails
to repay a Swingline Loan to the Agent when due (including upon
an Event of Default and acceleration of such Loans) then each
Bank shall be deemed to have purchased participations in the
Swingline Loans in proportion to their respective Commitments.
Section 2.3. THE TERM LOANS. Subject to the terms and
conditions of this Agreement, each of the Banks, severally and
not jointly, agrees to make a Term Loan to MacDermid Imaging on
the Closing Date in an amount equal to that set forth opposite
its name on EXHIBIT H. The Term Loans may be outstanding as
Variable Rate Loans or Eurocurrency Loans. All Term Loans shall
be denominated in Dollars.
Section 2.4. THE NOTES. (a) The Revolving Loans of each
Bank shall be evidenced by a promissory note in favor of such
Bank in the form of EXHIBIT A-1, dated the date of this
Agreement, duly completed and executed by the applicable
Borrower. Each Bank shall, and is hereby authorized by each of
the Borrowers to, endorse on the schedule attached to each Note
held by such Bank, or otherwise record in such Bank's internal
records, an appropriate notation evidencing the date, type,
amount and currency of each Revolving Loan or Swingline Loan
evidenced by such Note and the date, amount and currency of each
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repayment or prepayment of principal; PROVIDED that the failure
of any Bank to make such notation or any error therein shall not
affect the obligations of the applicable Borrower to repay the
Revolving Loans or Swingline Loans made by such Bank.
(b) The Swingline Loans of the Swingline Lender shall be
evidenced by a promissory note in favor of the Swingline Lender
in the form of EXHIBIT A-3, dated the date of this Agreement,
duly completed and executed by the applicable Borrower. The
Swingline Lender shall, and is hereby authorized by each of the
Borrowers to, endorse on the schedule attached as the Swingline
Note, or otherwise record in such Bank's internal records, an
appropriate notation evidencing the date, type, amount and
currency of each Swingline Loan evidenced by such Note and the
date, amount and currency of each repayment or prepayment of
principal; PROVIDED that the failure of the Swingline Lender to
make such notation or any error therein shall not affect the
obligations of the applicable Borrower to repay the Swingline
Loans made by the Swingline Lender.
(c) The Term Loans of each Bank shall be evidenced by a
promissory note in favor of such Bank in the form of EXHIBIT A-2,
dated the date of this Agreement, duly completed and executed by
MacDermid Imaging.
Section 2.5. LETTERS OF CREDIT. (a) Subject to the terms
and conditions of this Agreement, in addition to requesting that
the Banks make the Loans, any Borrower may request, in accordance
with the provisions of this Section 2.5(a), that the Agent issue
Letters of Credit for the account of such Borrower; PROVIDED that
(i) no Borrower shall request that the Agent issue any Letter of
Credit if, after giving effect to such issuance, the aggregate
outstanding Revolving Loans to the Borrowers plus the aggregate
amount of Letters of Credit Usage would exceed the aggregate of
all Commitments, (ii) in no event shall the Agent issue (A) any
Letter of Credit having an expiration date later than the tenth
Banking Day prior to the Termination Date, or (B) any Letter of
Credit having an expiration date more than one year after its
date of issuance, except those used to fund payment of insurance
premiums which, by their terms, are renewed automatically, and
(iii) no Borrower shall request that the Agent issue any Letter
of Credit if, after giving effect to such issuance, the aggregate
Letter of Credit Usage would exceed $15,000,000. The issuance of
any Letter of Credit in accordance with the provisions of this
Section 2.5(a) shall require the satisfaction of each condition
set forth in Article 4. All Letters of Credit may be denominated
in Dollars or in an Alternative Currency.
Immediately upon the issuance of each Letter of Credit, each
Bank shall be deemed to, and hereby agrees to, have irrevocably
agreed to participate with the Agent in such Letter of Credit and
any drawing thereunder in an amount equal to such Bank's ratable
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share (determined in accordance with such Bank's Commitment) of
the maximum amount which is or at any time may become available
to be drawn thereunder.
Each Letter of Credit may provide that the Agent, with the
written consent of the Required Banks, may (but shall not be
required to) pay all or any part of the maximum amount which may
at any time be available for drawing thereunder to the
beneficiary thereof upon the occurrence of an Event of Default
and the acceleration of the maturity of the Loans. If payment is
not due to the beneficiary of an outstanding Letter of Credit,
upon the occurrence of an Event of Default the applicable
Borrower shall deposit immediately available funds, in the
applicable currency, in an account or fund a cash collateral
account, in the applicable currency, with the Agent to secure
payment to the beneficiary under such Letter of Credit. Any
funds so deposited or standing to the credit of such account
shall be paid to the beneficiary of such Letter of Credit if
conditions to such payment are satisfied or returned to the Agent
for distribution to the Banks (or, if all Loans shall have been
repaid in full in cash in the applicable currency, to the
applicable Borrower) if no payment to the beneficiary has been
made and the final date available for drawings under such Letter
of Credit has passed. Each payment or distribution of funds by
the Agent as provided in this paragraph shall be treated for all
purposes of this Agreement as a drawing duly honored by the Agent
under the related Letter of Credit and each deposit by the
Borrower as provided in this paragraph shall be treated for all
purposes of this Agreement as a reimbursement by Borrower for a
portion of such drawing equal to the amount of such deposit.
(b) Whenever a Borrower desires the issuance of a Letter of
Credit, it shall deliver to the Agent at the Principal Office a
written notice no later than 1:00 p.m. (New York City local time)
at least ten (10) Banking Days prior to the proposed date of
issuance. Such notice shall consist of the form of application
and agreement for letters of credit customarily used by the
Agent, a copy of the current form of which is attached hereto as
EXHIBIT I, as such document may be amended from time to time.
Promptly after receipt of a notice of desired issuance of a
Letter of Credit, (i) if the conditions set forth in Section
2.5(a) have been satisfied, the Agent shall notify each Bank of
the proposed issuance and the amount of each such other Bank's
respective participation therein, determined in accordance with
Section 2.5(a); and (ii) if such conditions have not been
satisfied, the Agent shall notify the applicable Borrower.
(c) In the event of any request for a drawing under any
Letter of Credit by the beneficiary thereof, the Agent shall give
telephonic notice (promptly confirmed in writing) to the
applicable Borrower (x) confirming receipt of such request and
(y) of the date on or before which the Agent intends to honor
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such drawing, and the applicable Borrower shall reimburse the
Agent on the day on which such drawing is honored in compliance
with the terms of the applicable Letter of Credit in an amount in
Dollars in same day funds equal to: (i) the amount of such
drawing if such drawing is in Dollars or (ii) the Dollar
Equivalent on the date of such drawing of the amount required to
be paid in the Alternative Currency pursuant to the terms of the
applicable Letter of Credit if such drawing is in an Alternative
Currency (the "Contract Amount"); PROVIDED that, and anything
contained in this Agreement to the contrary notwithstanding,
(A) unless the applicable Borrower shall have notified the Agent
prior to 11:00 a.m. (New York City local time) on the Banking Day
immediately before the date on or before which the Agent has
indicated that it intends to honor such drawing that the
applicable Borrower intends to reimburse the Agent for the amount
of such drawing with funds other than the proceeds of Variable
Rate Loans, such Borrower shall be deemed to have timely given a
notice of borrowing pursuant to Section 2.7 requesting the Banks
to make Variable Rate Loans on the date on which such drawing is
honored in an amount equal to (x) the amount of such drawing if
such drawing is denominated in Dollars or (y) the Contract Amount
if such drawing is not denominated in Dollars, and (B) subsequent
to satisfaction or waiver of the conditions specified in
Article 4, the Banks shall make Variable Rate Loans on the date
on which such drawing is honored, the proceeds of which shall be
applied directly to reimburse the Agent for the amount of such
drawing; and PROVIDED further that if, for any reason, the Agent
does not receive proceeds of Variable Rate Loans on the date on
which such drawing is honored in an amount equal to the amount of
such drawing (or the Contract Amount for any drawing not
denominated in Dollars), the applicable Borrower shall reimburse
the Agent on the Banking Day immediately following the date of
such drawing, in an amount in Dollars in same day funds equal to
the excess of the amount of such drawing (or the Contract Amount
for any drawing not denominated in Dollars) over the proceeds of
such Variable Rate Loans, if any, which are so received, plus
accrued interest on such excess amount at the rate set forth in
Section 2.5(e)(i)(A).
(d) If a Borrower shall fail to reimburse the Agent as
provided in Section 2.5(c) in an amount equal to the amount of
any drawing under a Letter of Credit issued by the Agent and
honored by the Agent in compliance with the terms of such Letter
of Credit and for any reason Variable Rate Loans are not advanced
to the applicable Borrower as contemplated by Section 2.5(c), the
Agent shall promptly notify each Bank of the unreimbursed amount
of such drawing and of such Bank's PRO RATA participation
therein. Each Bank shall make available to the Agent an amount
equal to its PRO RATA participation in same day funds, at the
office of the Agent specified in such notice, immediately upon
demand of the Agent. If any Bank fails to make available to the
Agent the amount of such Bank's PRO RATA participation in such
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Letter of Credit as provided in this Section 2.5(d), the Agent
shall be entitled to recover such amount on demand from such Bank
together with interest (i) at the customary rate set by the Agent
for the correction of errors among banks for three (3) Banking
Days and (ii) thereafter at the Variable Rate. The Agent shall
distribute to each Bank which has paid all amounts payable by it
under this Section 2.5(d) with respect to any Letter of Credit
issued by the Agent such Bank's PRO RATA share of all payments
received by the Agent from the applicable Borrower in
reimbursement of drawings honored by the Agent under such Letter
of Credit when such payments are received.
(e)(i) Each Borrower agrees to pay the following amount to
the Agent with respect to Letters of Credit issued by the Agent
for the account of such Borrower:
(A) with respect to drawings made under any
Letter of Credit, interest, payable on demand, on the
amount paid by the Agent in respect of each such drawing
made in compliance with the terms of such Letter of Credit
from the date of the drawing through the date such amount is
reimbursed by a Borrower (including, if any, any such
reimbursement out of the proceeds of Variable Rate Loans
pursuant to Section 2.5(c) at a rate per annum equal to the
Variable Rate; PROVIDED that if a Default or Event of
Default shall exist and such Borrower is not, by reason
thereof, eligible to borrow Variable Rate Loans, then
interest shall accrue on such amount paid by the Agent at
the Default Rate.
(B) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made
thereunder, the Agent's standard documentary and processing
charges as in effect on the date of such issuance, amendment
or transfer.
(ii) Each Borrower agrees to pay the Agent for
distribution to each Bank in respect of all Letters of Credit
outstanding issued for such Borrower's account such Bank's PRO
RATA share of a commission equal to 1% per annum of the maximum
amount available from time to time to be drawn under such
outstanding Letter of Credit, based on the actual number of days
in the quarter that such amount was available to be drawn and the
actual number of days in the quarter, payable quarterly in
arrears on the last day of each fiscal quarter of the Company
commencing on the last day of the fiscal quarter of the Company
during which such letter of credit is issued and terminating on
the last day of the last fiscal quarter of the Company during
which such Letter of Credit is outstanding. The Agent shall
promptly pay to the Banks such amounts received by the Agent for
the account of the Banks in accordance with the Banks' PRO RATA
participation. If any Letter of Credit is fully drawn upon or
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otherwise terminated, each Bank agrees to refund to the
applicable Borrower such Bank's share of any letter of credit
fees paid in advance by such Borrower hereunder for the amount so
drawn or terminated on any such Letter of Credit and with respect
to any period (determined on a PRO RATA basis for actual days
elapsed) from and after the date on which such Letter of Credit
is so drawn upon or otherwise terminated. Any refund owing by a
Bank to a Borrower pursuant to the preceding sentence may be
effected by a reduction in the amount of any letter of credit
fees next payable by such Borrower to such Bank, PROVIDED that if
no further letter of credit fees shall become payable hereunder
against which such refund can be credited, then such Bank shall
promptly pay the amount of such refund directly to such Borrower.
(f) The obligations of each Borrower to reimburse the Agent
for drawings made under the Letters of Credit issued by the Agent
for such Borrower and the obligations of the Banks under
Section 2.5(d) shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement
under all circumstances and irrespective of any setoff,
counterclaim or defense to payment which a Borrower may have or
have had against the Agent, including any defense based upon the
failure of any drawing under any Letter of Credit to comply
strictly with the terms and conditions of such Letter of Credit;
PROVIDED, HOWEVER, that neither a Borrower nor any Bank shall be
obligated to reimburse the Agent for any wrongful payment made by
the Agent under a Letter of Credit as a result of acts or
omissions constituting gross negligence or willful misconduct on
the part of the Agent.
(g) The face amount of each Letter of Credit shall not be
less than an amount agreed upon between the Agent and the
Borrower from time to time.
(h) In the event of any conflict between the terms of any
application and agreement for a letter of credit hereunder and
the terms of this Agreement, the terms of this Agreement shall
control.
Section 2.6. PURPOSE. The Borrowers shall use the proceeds
of the Term Loan and the Revolving Loans for the purchase of the
Hercules Division pursuant to the Purchase Agreement, the
repayment of the amounts outstanding under the Existing Credit
Facility, working capital, future capital expenditures and for
general corporate purposes of the Borrowers, and the proceeds of
Swingline Loans for working capital purposes. Such proceeds
shall not be used for the purpose, whether immediate, incidental
or ultimate, of buying or carrying "margin stock" in violation of
Regulation U.
Section 2.7. BORROWING PROCEDURES. The applicable Borrower
shall give the Agent notice (a "Borrowing Request") of each
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Borrowing to be made under Section 2.1 or Section 2.2 as provided
in Section 2.11. Not later than 2:00 p.m. New York City local
time on the date of such Borrowing pursuant to Section 2.1, each
Bank shall, through its Lending Office and subject to the
conditions of this Agreement, make available to the Agent, at the
Principal Office for the account of the Lending Office designated
by the Agent, the amount of the Loan to be made by such Bank on
such day in the currency in which such Loan is to be made and in
immediately available funds for the account of the applicable
Borrower. The amount so received by the Agent shall, subject to
the conditions of this Agreement, be made available to the
applicable Borrower, in immediately available funds, by the Agent
crediting an account of such Borrower designated by such Borrower
and maintained by such Borrower with the Agent at the Principal
Office.
Section 2.8. PAYMENTS, PREPAYMENTS AND CONVERSIONS. (a)
Subject to the terms of this Agreement the Borrowers shall have
the right to make prepayments of principal, or to convert one
type of Loan into another type of Loan, at any time or from time
to time; PROVIDED that: (i) the applicable Borrower shall give
the Agent notice of each such prepayment or conversion as
provided in Section 2.11; (ii) each Eurocurrency Loan may be
prepaid or converted only on the last day of the applicable
Interest Period for such Loan, and (iii) each prepayment shall be
in a minimum principal amount of $1,000,000. Each prepayment of
the Term Loans shall be applied to installments of the Term Loans
PRO RATA in accordance with the respective amounts thereof,
PROVIDED that the Borrowers may prepay up to the next succeeding
two (2) quarterly installments of principal on the Term Loan at
any time, and from time to time, upon notice to the Agent as
provided in Section 2.11.
(b) If at any time the amount of the Revolving Loans
outstanding hereunder plus the Letters of Credit Usage plus the
amount of the Swingline Loans exceeds the aggregate amount of the
Commitments, the Borrowers shall immediately repay the Revolving
Loans in an amount equal to such excess. For the purposes of
this Section 2.8(b) the amount outstanding under any Alternative
Currency Loan at any time shall be the Dollar Equivalent thereof
as of the Denomination Date.
(c) The principal balance of the Term Loans shall be repaid
in quarterly installments, due on the last day of each March,
June, September and December commencing with March 31, 1996, in
the following amounts:
March 31, 1996 - December 31, 1997: $1,517,857
March 31, 1998 - December 31, 2000: $3,035,714
March 31, 2001 - Maturity Date: $4,553,571,
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with a final payment of all outstanding principal and accrued
interest to be made on the Maturity Date.
Section 2.9. INTEREST PERIODS; RENEWALS. (a) In the case
of each Eurocurrency Loan, the applicable Borrower shall select
an Interest Period of a duration specified in the definition of
Interest Period in Section 1.1, subject to the following
limitations: (i) no Interest Period may extend beyond the
Termination Date in the case of Revolving Loans and Swingline
Loans, or Maturity Date in the case of Term Loans; (ii)
notwithstanding Section 2.9(a)(i), no Interest Period shall have
a duration less than one month, and if any such proposed Interest
Period would otherwise be for a shorter period, such Interest
Period shall not be available; (iii) if an Interest Period would
end on a day which is not a Banking Day, such Interest Period
shall be extended to the next Banking Day, unless such Banking
Day would fall in the next calendar month in which event such
Interest Period shall end on the immediately preceding Banking
Day; and (iv) only seven Interest Periods of each Bank may be
outstanding at any one time.
(b) Upon notice to the Agent as provided in Section 2.11
and PROVIDED no Default or Event of Default has occurred and is
continuing, on the last day of the Interest Period therefor a
Borrower may (i) renew any Eurocurrency Loan as the same type of
Loan with an Interest Period of the same or different duration in
accordance with the limitations set forth in Section 2.9(a) or
(ii) convert such Loan to a Variable Rate Loan. If a Borrower
shall fail to give notice to the Agent of such a renewal or by
the terms of this Agreement shall not be permitted to renew a
Eurocurrency Loan, (A) in the case of a Eurocurrency Loan
denominated in Dollars, on the last day of the current Interest
Period such Eurocurrency Loan shall automatically become a
Variable Rate Loan and (B) in the case of a Eurocurrency Loan
denominated in an Alternative Currency, on the last day of the
current Interest Period such Eurocurrency Loan shall
automatically become a Eurocurrency Loan denominated in the same
Alternative Currency having an Interest Period of one month.
Section 2.10. CHANGES OF COMMITMENTS. The Company shall
have the right to reduce or terminate the amount of unused
Commitments or the Swingline Commitment at any time or from time
to time, PROVIDED that: (a) the Company shall give notice of
each such reduction or termination to the Agent and the Swingline
Lender as provided in Section 2.11; and (b) each partial
reduction shall be in an aggregate amount at least equal to
$1,000,000; PROVIDED that if any such reduction would cause the
aggregate Commitments to be reduced below the amount of
$5,000,000, the Banks shall have the right either to reduce the
Commitments to such amount or to terminate the Commitments in
whole. The Commitments once reduced or terminated may not be
reinstated.
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Section 2.11. CERTAIN NOTICES. Borrowing Requests issued
by a Borrower to the Agent with respect to each Borrowing
pursuant to Section 2.7, each notice of prepayment or conversion
pursuant to Section 2.8, each notice of renewal pursuant to
Section 2.9(b), and each notice of reduction or termination of
the Commitments pursuant to Section 2.10 shall be irrevocable and
shall be effective only if received by the Agent not later than
11:00 a.m. New York City local time, and (a) in the case of
Borrowings and prepayments of, conversions into and renewals of
(i) Variable Rate Loans, given on or before the day of such
Borrowing; or (ii) Eurocurrency Loans, given at least three
Banking Days prior thereto; (b) in the case of reductions or
termination of the Commitments, given at least three Banking Days
prior thereto. Each such notice shall specify the Loans to be
borrowed, prepaid, converted or renewed and the currency, the
amount and type of the Loans to be borrowed, prepaid, converted
or renewed (and, in the case of a conversion, the type of Loans
to result from such conversion and, in the case of a Eurocurrency
Loan, the Interest Period therefor) and the date of the
Borrowing, prepayment, conversion or renewal (which shall be a
Banking Day). Each such notice of reduction or termination shall
specify the amount of the Commitments to be reduced or
terminated. The Agent shall promptly notify the Banks of the
contents of each such notice.
Section 2.12. MINIMUM AMOUNTS. Except for Borrowings which
exhaust the full remaining amount of the Commitments, prepayments
or conversions which result in the prepayment or conversion of
all Loans of a particular type or conversions made pursuant to
Section 3.4, each Borrowing, prepayment, conversion and renewal
of principal of Revolving Loans of a particular type shall be,
(a) in the case of a Variable Rate Loan in an amount at least
equal to $500,000 (or the Dollar Equivalent of $500,000) in the
aggregate for all Banks, and (b) in the case of Eurocurrency
Loans in an amount equal to $2,000,000 or any larger integral
multiple of $100,000 (or the Dollar Equivalent of $2,000,000 or
any integral multiple of $100,000 in excess thereof) in the
aggregate for all Banks. Each Borrowing, prepayment, conversion,
and renewal of principal of Swingline Loans shall be in an amount
at least equal to $1,000,000 (or the Dollar Equivalent of
$1,000,000), except in the case of prepayments when the
outstanding principal balance of the Swingline Loans is less than
$1,000,000; PROVIDED that in such case any prepayment shall be in
an amount equal to such outstanding principal balance.
Borrowings, prepayments, conversions or renewals of or into Loans
of different types or, in the case of Eurocurrency Loans, having
different Interest Periods at the same time hereunder shall be
deemed separate Borrowings, prepayments, conversions and renewals
for the purposes of the foregoing minimum amounts, one for each
type or Interest Period.
Section 2.13. INTEREST. (a) Interest shall accrue on the
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outstanding and unpaid principal amount of each Loan for the
period from and including the date of such Loan to but excluding
the date such Loan is due, at the following rates per annum: (i)
for a Variable Rate Loan, at a variable rate per annum equal to
the Variable Rate PLUS the applicable Interest Margin; and (ii)
for a Eurocurrency Loan, at a fixed rate equal to the Fixed Rate
PLUS the applicable Interest Margin. If any principal amount
shall not be paid when due (at stated maturity, by acceleration
or otherwise), interest shall accrue on such amount from and
including such due date to but excluding the date such amount is
finally paid in full at the Default Rate.
(b The interest rate on each Variable Rate Loan shall
change when the Variable Rate changes, without notice of demand
of any kind, effective as of the opening of business on the
calendar day on which such change in the Variable Rate becomes
effective. Interest on the Loans shall be calculated on the
basis of a year of 365/366 days and the actual number of days
elapsed. Promptly after the determination of any interest rate
provided for herein or any change therein, the Agent shall notify
the Borrower and the Banks.
(c) Accrued interest shall be due and payable in arrears
upon any repayment or prepayment of principal on or conversion of
any Loan and (i) for each Variable Rate Loan, on the last day of
each March, June, September and December, in arrears, commencing
the first such date after such Loan and (ii) for each
Eurocurrency Loan, in arrears on the last day of the applicable
Interest Period (unless a six month interest period is chosen in
which case interest will be payable in arrears ninety days from
the date of the Loan and on the last day of the Interest Period);
PROVIDED that interest accruing at the Default Rate shall be due
and payable from time to time on demand of the Agent.
Section 2.14. FEES. (a) The Company shall pay to the Agent
for the account of each Bank a commitment fee on the daily
average unused Commitment of such Bank (it being understood that
outstanding Swingline Loans, if any, shall not be taken into
account when calculating the unused Commitment of any Bank) for
the period from and including the Closing Date to the date the
Commitments are terminated at the applicable rate per annum
specified in EXHIBIT J, based on the ratio of Debt of the Company
and its Consolidated Subsidiaries on a consolidated basis to
Consolidated EBITDA minus Consolidated Capital Expenditures,
calculated on the basis of a year of 365/366 days for the actual
number of days elapsed. The accrued commitment fee shall be due
and payable in arrears upon any reduction or termination of the
Commitments, on the last day of each March, June, September and
December, commencing on March 31, 1996 and on the Termination
Date.
(b) The Company shall pay to the Agent as compensation for
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its services hereunder an agency fee and an arrangement fee as
set forth in that certain letter dated December 5, 1995 between
the Agent and the Company.
Section 2.15. PAYMENTS GENERALLY. All payments under this
Agreement or the Notes shall be made in immediately available
funds. In the case of Loans denominated in Dollars, payment
shall be made in Dollars on the relevant payment date not later
than 1:00 p.m. New York City local time at the Principal Office
for the account of the applicable Lending Office of each Bank.
In the case of Loans denominated in an Alternative Currency,
payment shall be made in such Alternative Currency on the
relevant payment date not later than 1:00 p.m. New York City
local time at the Principal Office for the account of the Lending
Office designated by the Agent for the account of the applicable
Lending Office of each Bank. Each such payment made after such
time on such due date shall be deemed to have been made on the
next succeeding Banking Day. The Agent, or any Bank for whose
account any such payment is to be made, may (but shall not be
obligated to) debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Borrower
with the Agent or such Bank, as the case may be, and any Bank
that makes such a debit shall promptly notify the Agent and the
Company. Each Borrower shall, at the time of making each payment
under this Agreement or any Note, specify to the Agent the
principal or other amount payable by such Borrower under this
Agreement or the Notes to which such payment is to be applied
(and if a Borrower fails so to specify, or if a Default or Event
of Default has occurred and is continuing, the Agent may apply
such payment as the Agent may elect in its sole discretion
(subject to Section 10.16(c)). If the due date of any payment
under this Agreement or any Note would otherwise fall on a day
which is not a Banking Day, such date shall be extended to the
next succeeding Banking Day and interest shall be payable for any
principal so extended for the period of such extension. Each
payment received by the Agent hereunder or under any Note for the
account of a Bank shall be paid promptly by the Agent to such
Bank, in immediately available funds, for the account of such
Bank's Lending Office.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.1. ADDITIONAL COSTS. (a) The Company shall pay
directly to each Bank from time to time on demand such amounts as
such Bank may determine to be necessary to compensate it for any
costs which such Bank determines are attributable to its making
or maintaining any Eurocurrency Loan or Eurocurrency Loans under
this Agreement or its Notes or its obligation to make any such
Loan or Loans hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any such Loan or
Loans or such obligation (such increases in costs and reductions
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in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to such Bank under this
Agreement or its Notes in respect of any of such Loans (other
than taxes imposed on the overall net income of such Bank or of
its Lending Office for any of such Loans by the jurisdiction in
which such Bank has its principal office or such Lending Office);
(ii) imposes or modifies any reserve, special deposit, deposit
insurance or assessment, minimum capital, capital ratio or
similar requirement relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such
Bank (including any of such Loans or any deposits referred to in
the definition of "Fixed Base Rate" in Section 1.1); or (iii)
imposes any other condition affecting this Agreement or its Notes
(or any of such extensions of credit or liabilities). Each Bank
will notify the Company of any event occurring after the date of
this Agreement which will entitle such Bank to compensation
pursuant to this Section 3.1(a) as promptly as practicable after
such Bank obtains knowledge thereof and determines to request
such compensation. Such notice will set forth in reasonable
detail the calculation of any Additional Costs due hereunder. If
any Bank requests compensation from the Company under this
Section 3.1(a), or under Section 3.1(c), the Company may, by
notice to such Bank (with a copy to the Agent), require that such
Bank's Loans of the type with respect to which such compensation
is requested be converted in accordance with Section 3.4.
(b) Without limiting the effect of the foregoing provisions
of this Section 3.1, if, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by
the excess above a specified level of the amount of a category of
deposits or other liabilities of such Bank which includes
deposits by reference to which the interest rate on Eurocurrency
Loans is determined as provided in this Agreement or a category
of extensions of credit or other assets of such Bank which
includes Eurocurrency Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if such Bank so elects by notice
to the Company (with a copy to the Agent), the obligation of such
Bank to make or renew, and to convert Loans of any other type
into, Loans of such type hereunder shall be suspended until the
date such Regulatory Change ceases to be in effect, and all Loans
of such type held by such Bank then outstanding shall be
converted in accordance with Section 3.4.
(c) Without limiting the effect of the foregoing provisions
of this Section 3.1 (but without duplication), the Company shall
pay directly to each Bank from time to time on demand such
amounts as such Bank may determine to be necessary to compensate
such Bank for any costs which such Bank determines are
attributable to the maintenance by it, pursuant to any law or
regulation of any jurisdiction or any interpretation, directive
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or request (whether or not having the force of law and whether in
effect on the date of this Agreement or thereafter) of any court
of governmental or monetary authority, of capital in respect of
its Loans hereunder or its obligation to make Loans hereunder
(such compensation to include an amount equal to any reduction in
return on assets or equity of such Bank to a level below that
which it could have achieved but for such law, regulation,
interpretation, directive or request). Each Bank will notify the
Agent if such Bank is entitled to compensation pursuant to this
Section 3.1(c) as promptly as practicable after such Bank it
determines to request such compensation, and the Agent will
notify the Company. Such notice will set forth in reasonable
detail the calculation of any amounts due hereunder.
(d) Determinations and allocations by a Bank for purposes
of this Section 3.1 of the effect of any Regulatory Change
pursuant to Sections 3.1(a) or 3.1(b), or of the effect of
capital maintained pursuant to Section 3.1(c), on its costs of
making or maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, such Bank in
respect of Loans or such obligation, and of the additional
amounts required to compensate such Bank under this Section 3.1,
shall be conclusive, PROVIDED that such determinations and
allocations are made on a reasonable basis.
Section 3.2. LIMITATION OF TYPES OF LOANS. Notwithstanding
any other provision in this Agreement, if:
(a) the Agent determines (which determination shall be
conclusive) that quotations of interest rates for the
relevant deposits referred to in the definition of "Fixed
Base Rate" in Section 1.1 are not being provided in the
relevant amounts or for the relevant maturities for purposes
of determining the rate of interest for any type of
Eurocurrency Loans as provided in this Agreement; or
(b) the Required Banks determine (which determination shall
be conclusive) and notify the Agent that the relevant rates
of interest referred to in the definition of "Fixed Base
Rate" in Section 1.1 upon the basis of which the rate of
interest for any type of Eurocurrency Loans is to be
determined do not adequately cover the cost to the Banks of
making or maintaining such Loans;
then the Agent shall give the applicable Borrowers and each Bank
prompt notice thereof, and so long as such condition remains in
effect, the Banks shall be under no obligation to make or renew
Loans of such type or to convert Loans of any other type into
Loans of such type, and each Borrower shall, on the last day(s)
of the then current Interest Period(s) for the outstanding Loans
of the affected type, either prepay such Loans or convert such
Loans into another type of Loans in accordance with Section 2.8.
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Section 3.3. ILLEGALITY. Notwithstanding any other
provision in this Agreement, if it becomes unlawful for any Bank
or its Lending Office to (a) honor its obligation or make or
renew Eurocurrency Loans hereunder or convert Loans of any type
into Eurocurrency Loans, (b) maintain Eurocurrency Loans
hereunder or (c) in the case of a Borrowing denominated in an
Alternative Currency, there shall have occurred a change in (i)
national or international financial, political or economic
conditions (including the imposition of or any change in exchange
controls) or (ii) any currency exchange rate which would make it
impracticable for any Bank to make Loans denominated in such
Alternative Currency, then such Bank shall promptly notify the
Company thereof (with a copy to the Agent), and such Bank's
obligation to make or renew Eurocurrency Loans and to convert
other types of Loans into Eurocurrency Loans or to make Loans
denominated in such Alternative Currency hereunder shall be
suspended until such time as such Bank may again make, renew, or
convert and maintain such affected Loans and such Bank's
outstanding Eurocurrency Loans or Alternative Currency Loans, as
the case may be, shall be converted in accordance with
Section 3.4.
Section 3.4. CERTAIN CONVERSIONS PURSUANT TO SECTIONS 3.1
AND 3.3. If the Loans of any Bank of a particular type (Loans of
such type being herein called "Affected Type" or "Affected
Loans") are to be converted pursuant to Section 3.1 or 3.3, such
Bank's Affected Loans shall be automatically converted into
Variable Rate Loans (and in the case of Loans denominated in an
Alternative Currency, to Variable Rate Loans denominated in
Dollars in the Dollar Equivalent amount) on the last day(s) of
the then current Interest Period(s) for the Affected Loans or, in
the case of a conversion required by Section 3.1(b) or 3.3, on
such earlier date as such Bank may specify to the Company with a
copy to the Agent) and, unless and until such Bank gives notice
as provided below that the circumstances specified in Section 3.1
or 3.3 which gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been
converted into Variable Rate Loans, all payments and
prepayments of principal which would otherwise be applied to
such Bank's Affected Loans shall be applied instead to its
Variable Rate Loans; and
(b) all Loans which would otherwise be made or renewed by
such Bank as Loans of the Affected Type shall be made
instead as Variable Rate Loans and all Loans of such Bank
which would otherwise be converted into Loans of the
Affected Type shall be converted instead into (or shall
remain as) Variable Rate Loans; and
(c) if Loans of other Banks of the Affected Type are
subsequently converted into Loans of another type (other
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than Variable Rate Loans), such Bank's Variable Rate Loans
shall be automatically converted on the conversion date into
Loans of such other type to the extent necessary so that,
after giving effect thereto, all Loans held by such Bank and
the Banks whose Loans are so converted are held PRO RATA (as
to principal amounts, types and Interest Periods) in
accordance with their respective Commitments.
If such Bank gives notice to the Company (with a copy to the
Agent) that the circumstances specified in Section 3.1 or 3.3
which gave rise to the conversion of such Bank's Affected Loans
pursuant to this Section 3.4 no longer exist (which such Bank
agrees to do promptly upon such circumstances ceasing to exist)
at a time when Loans of the Affected Type are outstanding, such
Bank's Variable Rate Loans shall be automatically converted, on
the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type to the extent
necessary so that, after giving effect thereto, all Loans held by
the Banks holding Loans of the Affected Type and by such Bank are
held PRO RATA (as to principal amounts, types and Interest
Periods) in accordance with their respective Commitments.
Section 3.5. CERTAIN COMPENSATION. The Company shall pay
to the Agent for the account of each Bank, upon the request of
such Bank through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Bank) to compensate
it for any loss, cost or expense which such Bank determines is
attributable to:
(a) any payment, prepayment, conversion or renewal of a
Eurocurrency Loan made by such Bank on a date other than the
last day of an Interest Period for such Loan (whether by
reason of acceleration or otherwise); or
(b) any failure by the Borrower to borrow, convert into or
renew a Eurocurrency Loan to be made, converted into or
renewed by such Bank on the date specified therefor in the
relevant notice under Section 2.7, 2.8 or 2.9, as the case
may be.
Without limiting the foregoing provisions of this Section 3.5,
such compensation shall include any losses (including loss of
anticipated profits), costs or expenses arising from converting
Loans denominated in an Alternative Currency to the Dollar
Equivalent on the day of payment, prepayment, conversion or
renewal or incurred by reason of liquidation or reemployment of
deposits or other funds acquired by any Bank to fund or maintain
any prepaid principal amount at the yield being earned prior to
such prepayment. A determination by any Bank as to the amounts
payable pursuant to this Section 3.5 shall be conclusive absent
manifest error.
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Section 3.6. INDEMNIFICATION FOR TAXES. (a) All payments
hereunder and under any of the Facility Documents (including
payments on account of principal and interest and fees) shall be
made by the Borrowers without deduction or withholding for or on
account of any present or future tax, duty, levy, impost,
assessment or other governmental charge imposed by any
jurisdiction ("Taxes"). If a Borrower is required by law to make
any deduction or withholding of any Taxes from any payment due
hereunder or under any of the Facility Documents, then the amount
payable will be increased to such amount which, after deduction
from such increased amount of all Taxes required to be withheld
or deducted therefrom, will not be less than the amount due and
payable hereunder had no such deduction or withholding been
required. Notwithstanding the foregoing, Taxes shall not
include, and no such additional amounts shall be payable in
respect of:
(i) any tax imposed on the overall net income of the
Lending Office of any Bank in respect of which the relevant
payment is made to the jurisdiction in which such Bank is
organized, in which such Bank's Lending Office is located or
in which such Bank is managed and controlled; or
(ii) any such deduction or withholding which would not
have been required to be so deducted or withheld if the Bank
to which such payment was made had at the date of payment
been either:
(A) a Bank carrying on a bona fide banking
business in the United Kingdom recognized by the Inland
Revenue Service and bringing the interest payable
hereunder into account as a trading receipt of such
business; or
(B) resident in a country with which the United
Kingdom has an appropriate Double Taxation Treaty
giving exemption from United Kingdom taxation on
interest and had any necessary application thereunder
been made
(except that this Section 3.6(a)(ii) shall not operate to
prevent a Bank receiving such additional amounts to the
extent that such amounts become payable solely as a result
of any revocation or repeal of, or any change in, or any
published change in the interpretation or application of,
any relevant law or the practice of the Inland Revenue
Service or the provisions of a double taxation treaty since
the date of this Agreement).
(b) If any additional amounts shall become payable pursuant
to Section 3.6(a), the applicable Borrower and the Bank concerned
will discuss in good faith with a view to determining whether any
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means (not being detrimental in the opinion of such Bank to any
of such Bank's interests) exist or may be implemented by which
such amounts may lawfully be mitigated or reduced, (or such Bank
be compensated in some other way) so as to leave such Bank in the
same position in which such Bank would have been had such Taxes
not been payable.
(c) If any Borrower makes any payment hereunder in respect
of which such Borrower is required by law to make any deduction
or withholding of any Taxes, such Borrower shall pay the full
amount to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the Banks as soon as
practicable after it has made such payment to the applicable
authority a receipt issued by such authority or a statement of
the Borrower confirming the payment to such authority of all
amounts so required to be deducted or withheld from such payment.
(d) Without prejudice to the provisions of Section3.6(a),
if any Bank, or the Agent on its behalf, is required by law to
make any payment on account of Taxes (other than those referred
to in Section 3.6(a)(i) above) on or in relation to any sum
received or receivable hereunder or under any of the Facility
Documents by such Bank, or the Agent on its behalf, or any
liability for such Taxes in respect of any such payment is
imposed, levied or assessed against any Bank, or the Agent on its
behalf, the Borrowers will promptly indemnify such person against
such Tax payment or liability, together with any interest,
penalties and expenses (including counsel fees and expenses)
payable or incurred in connection therewith, including any such
Tax on any Bank arising by virtue of payments under this
Section 3.6(d), computed in a manner consistent with
Section 3.6(a). A certificate as to the amount of such payment
by such Bank, or the Agent on its behalf, absent manifest error,
shall be final, conclusive and binding for all purposes.
Section 3.7. PARTIAL DEFEASANCE. If the Company shall
become obligated to make any payment to any Bank under this
Article 3 or any Bank shall be excused from performing by the
provisions of Article 3, then the Company shall have the right,
on giving to the Agent and such Bank not less than thirty (30)
days prior written notice, to prepay in full, without penalty or
premium, the outstanding principal amount of the Loans held by
such Bank, together with interest accrued thereon to the date of
such prepayment. Such prepayment shall terminate the Commitment
of each Bank whose Loans are prepaid, and the other Banks shall
be under no obligation to increase their respective Commitments
to cover such terminated Commitment; provided that the other
Banks shall be deemed to have increased their pro-rata
participation (determined in accordance with their respective
Commitments) in outstanding Letters of Credit by the
participation amount previously held by each Bank whose Loans are
prepaid.
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ARTICLE 4. CONDITIONS PRECEDENT
Section 4.1. INITIAL CONDITIONS PRECEDENT. The obligations
of the Banks to make the Loans pursuant to the initial Borrowing
Request, to advance the Term Loan on the Funding Date or to issue
a Letter of Credit on the Closing Date are subject to
satisfaction of the following conditions precedent on the Funding
Date:
(a) this Agreement in form and substance satisfactory to
the Agent and its counsel shall have been duly executed and
delivered to the Agent by the Company and MacDermid Imaging;
(b) the Notes shall have been duly executed and delivered
to the Agent by the applicable Borrowers;
(c) the Agent shall have received Certificates of duly
authorized officers of the Company and MacDermid Imaging
certifying that the following statements shall be true as of the
Funding Date:
(i) the representations and warranties contained in
Article 5, and in the case of a Borrowing by an
Eligible Subsidiary, Section 4.5, and the
representations and warranties made by the Guarantors
in Section of the Guaranty, are true and correct in all
material respects on and as of the date of such Loans
or the issuance of such Letter of Credit as though made
on and as of such date (unless they specifically
related to an earlier date); and
(ii) no Default or Event of Default has occurred and
is continuing, or would result from such Loans or the
issuance of such Letter of Credit; and
(d) an Authorization Letter in form and substance
satisfactory to the Agent and its counsel shall have been duly
executed and delivered to the Agent by each of the Company,
MacDermid Imaging and as applicable, any Eligible Subsidiary;
(e) the Guaranty, in form and substance satisfactory to the
Agent and its counsel shall have been duly executed and delivered
to the Agent by the Guarantors;
(f) all amounts outstanding under the Existing Credit
Facility shall have been repaid;
(g) a certificate of the Secretary or Assistant Secretary
of each of the Company and MacDermid Imaging, dated the Funding
Date, shall have been delivered to the Agent attesting to all
corporate action taken by the Company and MacDermid Imaging,
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including resolutions adopted by their respective Boards of
Directors authorizing the execution, delivery and performance of
the Facility Documents and each other document to be delivered
pursuant to this Agreement and certifying the names and true
signatures of the officers of the Company and MacDermid Imaging,
authorized to sign the Facility Documents and the other documents
to be delivered by the Company and MacDermid Imaging, under this
Agreement;
(h) a certificate of a duly authorized officer of the
Company, dated the Funding Date, shall have been delivered to the
Agent setting forth the calculation of the ratio for the twelve-
month period ending September 30, 1995, of (i) the Debt of the
Company and its Consolidated Subsidiaries on a consolidated basis
adjusted to include the Debt of the Division during such period
as reflected in the Division's internally prepared financial
reports and the Debt incurred pursuant to this Agreement on the
Funding Date to (ii) Consolidated EBITDA adjusted to include the
earnings before interest, taxes, depreciation and amortization of
the Division for such period minus Consolidated Capital
Expenditures adjusted to include capital expenditures of the
Division during such period;
(i) a favorable opinion of counsel for the Company and
MacDermid Imaging dated the Funding Date, in substantially the
form of EXHIBIT E and as to such other matters as the Agent may
reasonably request shall have been delivered to the Agent;
(j) since September 30, 1995, there has been no material
adverse change in the business, financial position or results of
operations of the Hercules Division from that reflected in the
Monthly Management Report and no event shall have occurred (and
the Agent shall not have become aware of conditions) which the
Agent or any Bank reasonably determines could have a material
adverse effect on (i) the operations, assets or prospects of the
Company and the Hercules Division from those reflected in the
September 30, 1995 Monthly Management Report, taken as a whole,
or (ii) any Borrower's ability to meet its obligations under any
Facility Document;
(k) the Agent shall have received evidence satisfactory to
the Agent that each Borrower and Hercules is in compliance in all
material respects with all foreign and U.S. federal, state and
local laws (including laws relating to the environment);
(l) the Agent shall have received phase one and phase two
environmental assessments of the properties of the Hercules
Division which shall be satisfactory to the Agent in its sole
discretion;
(m) MacDermid Imaging shall have received a credit at
closing (subject to subsequent adjustment as contemplated by the
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Purchase Agreement) of not less than $30,000,000 against the
purchase price paid to Hercules Inc. pursuant to the Purchase
Agreement from the issuance of its preferred stock, and the terms
and conditions of such preferred stock shall be satisfactory to
the Agent in its sole discretion;
(n) the transactions contemplated by the Purchase Agreement
shall have been consummated;
(o) the audited financial statements of the Company and its
Consolidated Subsidiaries for the fiscal year ending March 31,
1995 shall have been delivered to the Agent;
(p) the Agent shall have received a Consent and
Acknowledgement Agreement relating to the Preferred Stock in form
and substance satisfactory to the Agent from Hercules
Incorporated agreed to by the Company and MacDermid Imaging;
(q) the Agent shall have received audited financial
statements for the Hercules Division as of December 31, 1994,
December 31, 1993, and December 31, 1992; and
(r) the Agent shall have received such other certificates,
opinions and information as the Agent shall reasonably request.
Section 4.2. SUBSEQUENT LOANS OR LETTERS OF CREDIT. The
obligations of the Banks to make Loans (other than renewals of
Eurocurrency Loans pursuant to Section 2.9) pursuant to any
subsequent Borrowing Request or to issue any Letter of Credit
after the Funding Date shall be subject to satisfaction of the
following conditions precedent:
(a) from and after the Closing Date no material adverse
change which would be reasonably likely to result in a Default or
an Event of Default shall have occurred in the business,
financial position or results of operation of the Company and its
Consolidated Subsidiaries, taken as a whole; and
(b) the statements in Section 4.1(c) shall be true and
correct as of such date.
Section 4.3. DEEMED REPRESENTATIONS. Each Borrowing
Request hereunder and each acceptance by the Company or any
Eligible Subsidiary of the proceeds of such Borrowing or
Borrowings and each request for issuance of a Letter of Credit
shall constitute a representation and warranty that the
statements contained in Section 4.2 are true and correct both on
the date of such notice and, unless the Borrower otherwise
notifies the Agent prior to such Borrowing, as of the date of
such Borrowing or issuance of a Letter of Credit.
Section 4.4. FIRST BORROWING BY EACH ELIGIBLE SUBSIDIARY.
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The obligation of each Bank to make a Loan or issue a Letter of
Credit on the occasion of the first Borrowing Request or request
for issuance of a Letter of Credit by each Eligible Subsidiary is
subject to the satisfaction of the following further conditions:
(a) receipt by the Agent for the account of each Bank of a
duly executed Revolving Note of such Eligible Subsidiary dated on
or before the date of such Borrowing complying with the
provisions of Section 2.4;
(b) receipt by the Agent of an Authorization Letter duly
executed by the Eligible Subsidiary;
(c) receipt by the Agent of an Election to Participate duly
executed by the Eligible Subsidiary;
(d) receipt by the Agent of an opinion of counsel for such
Eligible Subsidiary acceptable to the Agent, substantially in the
form of EXHIBIT F and covering such additional matters relating
to the transactions contemplated hereby as the Required Banks may
reasonably request;
(e) receipt by the Agent of all documents which it may
reasonably request relating to the existence of such Eligible
Subsidiary, the corporate authority for and the validity of this
Agreement, the Authorization Letter, the Election to Participate
and the Notes of such Eligible Subsidiary, and any other matters
relevant thereto, all in form and substance satisfactory to the
Agent; and
(f) the representations and warranties contained in
Section 4.5 shall be true and correct on and as of the date of
such Borrowing as though made on and as of such date, and no
Default or Event of Default shall have occurred and be
continuing, or would result from such Loans.
The opinion referred to in Section 4.4(d) above shall be
dated no more than five Banking Days before the date of the first
Borrowing by such Eligible Subsidiary hereunder.
Section 4.5. REPRESENTAIONS OF ELIGIBLE SUBSIDIARIES. Each
Eligible Subsidiary shall be deemed by the execution and delivery
of its Election to Participate to have represented and warranted
as of the date thereof that:
(a) It is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and is a Wholly-Owned Consolidated Subsidiary of
the Company.
(b) The execution and delivery by it of its Authorization
Letter, its Election to Participate and its Notes, and the
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performance by it of this Agreement and its Notes: are within
its corporate powers; have been duly authorized by all necessary
corporate action; require no action by or in respect of, or
filing with, any governmental body, agency or official; do not
contravene, or constitute a default under, any provision of any
applicable law or regulation or of its certificate of
incorporation or by-laws or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the
Company or such Eligible Subsidiary; and will not result in the
creation or imposition of any Lien on any asset of the Company or
any of its Subsidiaries.
(c) This Agreement constitutes a legal, valid and binding
obligation of such Eligible Subsidiary, and its Notes, when
executed and delivered in accordance with this Agreement, will
constitute the legal, valid and binding obligation of such
Eligible Subsidiary, and each of this Agreement and its Notes is
enforceable against such Eligible Subsidiary in accordance with
its terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency or other similar
laws affecting creditors' rights generally.
(d) Except as disclosed in such Election to Participate,
there is no income, stamp or other tax of any country, or any
taxing authority thereof or therein, in the nature of withholding
or otherwise, which is imposed on any payment to be made by such
Eligible Subsidiary pursuant hereto or on any of its Notes, or is
imposed on or by virtue of the execution, delivery, performance
or enforcement of its Election to Participate or any of its
Notes.
ARTICLE 5. REPRESENTAIONS AND WARRANTIES
Each of the Company and MacDermid Imaging hereby represents
and warrants that:
Section 5.1. INCORPORATION, GOOD STANDING AND DUE
QUALIFICATION. Each of the Company, MacDermid Imaging and the
Company's Subsidiaries is duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
assets and to transact the business in which it is now engaged,
and is duly qualified as a foreign corporation and in good
standing under the laws of each other jurisdiction in which such
qualification is required except where failure to be so qualified
would not have a material adverse effect on the Company's
business as a whole or its properties, condition (financial or
otherwise) or operation.
Section 5.2. CORPORATE POWER AND AUTHORITY; NO CONFLICTS.
The execution, delivery and performance by each of the Company
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and MacDermid Imaging of the Facility Documents to which it is a
party have been duly authorized by all necessary corporate action
and do not and will not: (a) require any consent or approval of
its stockholders; (b) contravene its charter or by-laws; (c)
violate any provision of, or require any filing (except for the
filing of this Agreement with the Securities and Exchange
Commission and the New York Stock Exchange), registration,
consent or approval under, any law, rule, regulation (including
Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability
to the Company or any of its Subsidiaries or affiliates; (d)
result in a breach of, or constitute a default or require any
consent (except for those consents which have been obtained)
under, any indenture or loan or credit agreement or any other
agreement, lease or instrument to which any Borrower is a party
or by which it or its properties may be bound; (e) result in, or
require, the creation or imposition of any Lien upon or with
respect to any of the properties now owned or hereafter acquired
by the Company or any of its Subsidiaries; or (f) cause the
Company (or any Subsidiary or affiliate, as the case may be) to
be in default under any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
Section 5.3. LEGALLY ENFORCEABLE AGREEMENTS. Each Facility
Document to which the Company or MacDermid Imaging is a party is,
or when delivered under this Agreement will be, a legal, valid
and binding obligation of the Company or MacDermid Imaging, as
applicable, enforceable against the Company or MacDermid Imaging,
as applicable, in accordance with its terms, except to the extent
that such enforcement may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights
generally.
Section 5.4. LITIGATION. Except as disclosed on SCHEDULE
III, there are no actions, suits or proceedings pending or, to
the knowledge of the Company or MacDermid Imaging, threatened,
against or affecting the Company or any of its Subsidiaries
before any court, governmental agency or arbitrator, which, in
any one case or in the aggregate, would have a reasonable
likelihood of having a material adverse effect on the financial
condition, operations, properties or business of the Company and
its Subsidiaries as taken as a whole or the ability of the
Company or MacDermid Imaging to perform its obligation under the
Facility Documents.
Section 5.5. FINANCIAL STATEMENTS; SEC FILINGS. The
consolidated balance sheet of the Company and its Consolidated
Subsidiaries as at March 31, 1995, and the related consolidated
statements of income and statements of cash flows and changes in
stockholders' equity of the Company and its Consolidated
Subsidiaries for the fiscal year then ended, and the accompanying
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footnotes, together with the opinion thereon, of KPMG Peat
Marwick LLP, independent certified public accountants, a copy of
which has been furnished to the Agent, are complete and correct
and fairly present the financial condition of the Company and its
Consolidated Subsidiaries as at such date and the results of the
operations of the Company and its Consolidated Subsidiaries for
the periods covered by such statements, all in accordance with
generally accepted accounting principles. Since March 31, 1995,
there has been no material adverse change in the business,
financial position or results of operations of the Company and
its Subsidiaries. The Company has timely made all filings
required of it with the Securities and Exchange Commission and is
in material compliance with all securities laws applicable to it.
Section 5.6. TAXES. Each of the Company and its
Subsidiaries has filed all United States Federal income tax
returns and all other material tax returns required to be filed
and has paid all taxes, assessments and governmental charges and
levies shown thereon to be due, including interest and penalties,
except for those which are being contested in good faith and by
appropriate proceedings diligently conducted. The federal income
tax liability of the Company and its Subsidiaries has been
audited by the Internal Revenue Service and has been finally
determined and satisfied for all taxable years up to and
including the taxable year ended March 31, 1988. The charges,
accruals and reserves on the books of the Company and its
Subsidiaries with respect to taxes or other governmental charges
are adequate in the opinion of the Company.
Section 5.7. ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and is in compliance
in all material respects with the presently applicable provisions
of ERISA and the Code with respect to each Plan. No member of
the ERISA Group has (a) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any Plan,
(b) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has
resulted or could result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Code or
(c) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
Section 5.8. SUBSIDIARIES AND OWNERSHIP OF STOCK.
SCHEDULE I is a complete and accurate list of Subsidiaries of the
Company as of the date hereof, showing the jurisdiction of
incorporation or organization of each Subsidiary and showing the
percentage of the Company's ownership of the outstanding capital
stock or other ownership interest of each such Subsidiary.
Except as set forth on SCHEDULE I, all of the outstanding capital
stock or other ownership interest of each such Subsidiary has
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been validly issued, is fully paid and nonassessable and if owned
by the Company is free and clear of all Liens.
Section 5.9. CREDIT ARRANGEMENTS. As of the October 31,
1995, SCHEDULE II is a complete and correct list of all Debt of
the Company and its Subsidiaries outstanding pursuant to which
the Company or its Subsidiaries are or may be, in any manner,
directly or contingently, obligated in an amount equal to or
greater than $1,000,000 and all Liens existing securing Debt
outstanding. Except as set forth on SCHEDULE II, there has been
no material change in the amount of Debt outstanding of the
Company and its Subsidiaries since March 31, 1995.
Section 5.10. NO DEFAULTS ON OUTSTANDING JUDGMENTS OR
ORDERS. Each of the Company and its Subsidiaries has satisfied
all material judgments, and neither the Company nor any of its
Subsidiaries is in default with respect to any material judgment,
writ, injunction, decree, rule or regulation of any court,
arbitrator or federal, state, municipal or other governmental
authority, commission, board, bureau, agency or instrumentality,
domestic or foreign.
Section 5.11. GOVERNMENTAL REGULATION. Neither the Company
nor any of its Subsidiaries is a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company
Act of 1935, or an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or an "investment advisor"
within the meaning of the Investment Advisors Act of 1940, as
amended.
Section 5.12. ENVIRONMENTAL MATTERS. Except as disclosed
in SCHEDULE V, each of the Company and its Subsidiaries is in
compliance with all applicable Environmental Laws, and neither
the Company nor any of its Subsidiaries has any fixed or
contingent liability under any Environmental Law applicable to
the business, operations or properties of the Company or any of
its Subsidiaries (for purposes of this Section 5.12 "liabilities"
shall include liabilities for any capital or operating
expenditures required for clean-up or closure of properties
presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any losses or
expenses relating to periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of
operations conducted thereat, any costs or liabilities in
connection with off-site disposal of wastes or Hazardous
Substances, and any actual or potential liabilities to third
parties, including employees, and any related costs and
expenses), except in each case where the amount of the
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liabilities associated with such noncompliance and the amount of
such fixed or contingent liabilities does not exceed in the
aggregate $5,000,000. For purposes of determining the liability
of the Company and its Subsidiaries with respect to any remedial
obligation imposed pursuant to the Comprehensive Environmental
Response Compensation and Liability Act, as amended, or other
similar laws, whether state or federal, the Company and the Banks
shall take account of the contribution obligations of other
potentially responsible parties associated with such remedial
obligation.
Section 5.13. MARGIN STOCK. As of the Closing Date, the
fair market value of all margin stock (as defined in Regulation
U, 12 CFR Section 221.2(h)) owned by the Company and its
Subsidiaries does not exceed $100,000 (not including any shares
of the Company's Common Stock held in the MacDermid, Incorporated
Employee Pension Plan, the MacDermid, Incorporated Employees
Profit Sharing Plan and the MacDermid, Incorporated Employee
Stock Ownership Plan and 530,648 shares of Common Stock held in
the Company's treasury as of the date hereof).
Section 5.14. FULL DISCLOSURE. All information heretofore
furnished by the Company or any of its Subsidiaries to the Agent
or any Bank for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all such
information hereafter furnished by the Company to the Agent or
any Bank will be, true and accurate in all material respects on
the date as of which such information is stated or certified
(provided that the representation and warranty of the Company in
this Section 5.14, as it applies to information regarding the
Division furnished prior to the date hereof, is limited to the
extent of the representations and warranties of Hercules
Incorporated as to truth and accuracy contained in the Purchase
Agreement). The Company has disclosed to the Banks in writing
any and all facts, other than general economic conditions, which
materially and adversely affect or may affect (to the extent the
Company can now reasonably foresee) the business, operations or
financial condition of the Company and its Subsidiaries, taken as
a whole, or the ability of the Company or any of its Subsidiaries
to perform their respective obligations under this Agreement or
any Note.
ARTICLE 6. AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid, any amounts
shall be owing hereunder by any Borrower, or any Bank shall have
any Commitment under this Agreement, the Company shall comply
with the following covenants:
Section 6.1. REPORTING REQUIREMENTS. The Company shall
furnish directly to the Agent:
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(a) as soon as available and in any event within 90 days
after the end of each fiscal year of the Company, a consolidated
and consolidating balance sheet of the Company and its
Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated and consolidating statements of income
and consolidated statements of cash flows and changes in
stockholders' equity of the Company and its Consolidated
Subsidiaries for such fiscal year, all in reasonable detail and
stating in comparative form the respective consolidated and
consolidating figures for the corresponding date and period in
the prior fiscal year and (i) in the case of the consolidated
statements, all reported on in a manner acceptable to the
Securities and Exchange Commission by KPMG Peat Marwick LLP or
other independent public accountants of nationally recognized
standing, and (ii) in the case of consolidating statements, all
certified as to fairness of presentation, compliance with
generally accepted accounting principles and consistency by the
chief financial officer of the Company;
(b) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal
year of the Company, a consolidated and consolidating balance
sheet of the Company and its Consolidated Subsidiaries as of the
end of such quarter and the related consolidated and
consolidating statements of income and consolidated statements of
cash flows and changes in stockholders' equity of the Company and
its Consolidated Subsidiaries for such quarter and for the period
commencing at the end of the previous fiscal year and ending with
the end of such quarter, all in reasonable detail and stating in
comparative form the respective consolidated figures for the
corresponding quarter and the corresponding year-to-date period
in the previous fiscal year, and certified by the chief financial
officer of the Company (subject to year end adjustments and the
omission of notes permitted by the applicable regulations of the
Securities and Exchange Commission to be excluded from quarterly
reports filed on Form 10-Q) as to fairness of presentation,
compliance with generally accepted accounting principles and
consistency;
(c) simultaneously with the delivery of each set of
financial statements referred to in Sections 6.1(a) and 6.1(b)
above, a certificate of the chief financial officer of the
Company (i) setting forth in reasonable detail the calculations
required to establish whether the Company was in compliance with
the requirements of Sections 7.1 through 7.4, inclusive, and
Sections 7.6, 8.1, 8.2 and 8.3 on the date of such financial
statements, (ii) certifying as to the ratio for the twelve-month
period then ending of the Debt of the Company and its
Consolidated Subsidiaries on a consolidated basis to its
Consolidated EBITDA minus Consolidated Capital Expenditures for
such period, and (iii) stating whether any Default or Event of
Default exists on the date of such certificate and, if any
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Default or Event of Default then exists, setting forth the
details thereof and the action which the Company is taking or
proposes to take with respect thereto;
(d) within ten days after any officer of the Company
obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer of the
Company setting forth the details thereof and the action which
the Company is taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders
of the Company generally, copies of all financial statements,
reports and proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which
the Company shall file with the Securities and Exchange
Commission;
(g) if and when any member of the ERISA Group (i) gives or
is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that the Plan administrator of
any Plan has given or is required to give notice of any such
reportable event to the PBGC, a copy of such notice; (ii)
receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of
such notice; (iii) receives notice from the PBGC under Title IV
of ERISA of an intent to terminate, impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such notice;
(iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial
officer of the Company setting forth details as to such
occurrence and action, if any, which any member of the ERISA
Group is required or proposes to take;
(h) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental
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department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Company or any of its
Subsidiaries which have a reasonable likelihood of a material
adverse effect on the financial condition, properties, or
operations of the Company and its Subsidiaries taken as a whole;
(i) If, at any time, the Company shall become aware or have
reasonable cause to believe (i) that Hazardous Substances or
solid wastes have been released, or have otherwise come to be
located, on or in or have begun to affect any real property owned
or leased by the Company or any Subsidiary or that any liability
arising out of the violation of any Environmental Laws has
arisen, including liability for off-site environmental
conditions, or (ii) that a notice has been received from any
governmental body or other party seeking any information or
alleging any violation of any Environmental Laws or alleging any
liability with regard to any real property owned or leased by the
Company or any Subsidiary or off-site environmental conditions,
in either case which may materially impair the Borrowers' ability
to meet their obligations under the Facility Documents, the
Company shall promptly give notice of that event to the Agent;
and
(j) such other information respecting the condition or
operations, financial or otherwise, of the Company or any of its
Subsidiaries as the Agent or any Bank may from time to time
reasonably request.
Section 6.2. PAYMENT OF OBLIGATIONS. The Company will pay
and discharge, and will cause each Subsidiary to pay and
discharge, at or before maturity or in accordance with the
Company's customary trade practices, all their respective
material obligations and liabilities, including tax liabilities,
except where the same may be contested in good faith by appropri
ate proceedings, and will maintain, and will cause each Subsid
iary to maintain, in accordance with generally accepted account
ing principles, appropriate reserves for the accrual of any of
the same.
Section 6.3. MAINTENANCE OF PROPERTY; INSURANCE. (a) The
Company will maintain, and will cause each Subsidiary to
maintain, all property useful and necessary in its business in
good working order and condition, ordinary wear and tear
excepted.
(b) To the extent that insurance is reasonably available to
the Company and its Subsidiaries at a price comparable to the
price paid by other Persons in the same or similar types of
business conducted by the Company and such Subsidiary, the
Company will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Company or in such
Subsidiary's own name) with financially sound and responsible
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insurance companies, insurance on all their respective properties
in at least such amounts and against at least such risks (and
with such risk retention) as are (i) insured against under the
policies of insurance of the Company and its Subsidiaries set
forth on the schedule previously provided by the Company to the
Banks or (ii) usually insured against in the same general area by
companies of established repute engaged in the same or a similar
business; and will furnish to the Banks, upon request from the
Agent, information presented in reasonable detail as to the
insurance so carried. To the extent such insurance is not
obtained, the Company will adopt, in lieu of or supplemental to
such insurance, such other plan or method of protection, whether
by the establishment of an insurance fund or a reserve to be held
and applied to casualty losses, or otherwise, satisfactory to the
Banks and conforming to the practices of similar corporations
self-insurance.
Section 6.4. CONDUCT OF BUSINESS AND MAINTENANCE OF
EXISTENCE. The Company will continue, and will cause each
Subsidiary to continue, to engage in business of the same general
type as now conducted by the Company and its Subsidiaries (i.e.,
the business of specialty chemicals and related equipment), and
will preserve, renew and keep in full force and effect, and will
cause each Subsidiary to preserve, renew and keep in full force
and effect their respective corporate existence and their
respective permits, licenses, certifications, approvals, rights,
privileges and franchises necessary or desirable in the normal
conduct of business; PROVIDED that nothing in this Section 6.4
shall prohibit (a) the merger or consolidation of a Subsidiary
with or into another Person if the corporation surviving such
consolidation or merger is a Wholly-Owned Subsidiary or the
merger of a Subsidiary into the Company if, in each case, after
giving effect thereto, no Default shall have occurred and be
continuing, or (b) the termination of the corporate existence of
any Subsidiary if (i) such termination is not materially
disadvantageous to the Banks and the Company in good faith
determines that such termination is in the best interest of the
Company or (ii) such termination is in compliance with clause
(ii) of the proviso in Section 7.5.
Section 6.5. COMPLIANCE WITH LAWS. The Company will
comply, and will cause each Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules, regulations
and requirements of governmental authorities (including
Environmental Laws and ERISA and the rules and regulations
thereunder), whether foreign or domestic, except (a) where the
necessity of compliance therewith is contested in good faith by
appropriate proceedings and appropriate reserves are maintained
and (b) where failure to comply with such law, ordinance, rules,
regulation or requirement would not have a material adverse
effect on the financial condition of the Company and its
Subsidiaries taken as a whole.
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Section 6.6. INSPECTION OF PROPERTY, BOOKS AND RECORDS.
The Company will keep, and will cause each Subsidiary to keep,
proper books of record and account in which materially full, true
and correct entries shall be made of all dealings and transac
tions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives
of any Bank to visit and inspect any of their respective
properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers,
employees and independent public accountants, PROVIDED the
Company shall have the right to be present at any meeting with
its independent public accountants, all at such reasonable times,
upon reasonable notice and as often as may reasonably be desired.
Section 6.7. MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. The
Company will at all times maintain direct or indirect legal and
beneficial ownership of the percentage of outstanding shares of
each class of capital stock substantially as set forth on
SCHEDULE I of each of its Subsidiaries, except as modified by a
consolidation merger or sale permitted pursuant to the proviso to
Section 7.5.
Section 6.8. REVIEWED DIVISION FINANCIAL STATEMENTS. As
soon as available, but in no event later then ninety (90) days
following the Closing Date, the Company shall deliver to the
Agent the year to date reviewed financial statements of the
Hercules Division as of November 30, 1995, contemplated by the
Purchase Agreement.
ARTICLE 7.NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid, any amounts
shall be owing hereunder by any Borrower, or any Bank shall have
any Commitment under this Agreement, the Company shall not, and
will not permit any Subsidiary to:
Section 7.1. DEBT. Incur or at any time be liable with
respect to any Debt except:
(a) Debt outstanding under this Agreement and the Notes;
(b) Debt outstanding on the date of this Agreement and
identified on SCHEDULE II;
(c) Debt (in addition to the allowances in subsections (a),
(b), (d), (e), (f) and (g) of this Section 7.1 in an aggregate
principal amount not to exceed $15,000,000 at any time
outstanding; PROVIDED that at such time as the Company's ratio of
Debt to Consolidated EBITDA minus Consolidated Capital
Expenditures (tested at the end of each calendar quarter for the
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twelve-month period then ended) is equal to or less than 2.00 to
1.00, the Company and its Subsidiaries may incur Debt in an
aggregate principal amount not to exceed $25,000,000 pursuant to
this Section 7.1(c); and at such time as such ratio is equal to
or less than 1.75 to 1.0, the Company and its Subsidiaries may
incur Debt in an aggregate principal amount not to exceed
$30,000,000 pursuant to this Section 7.1(c);
(d) Debt subordinated to the Debt hereunder, in amounts and
on terms and conditions satisfactory to the Required Banks;
(e) Guarantees by the Guarantors of the Debt hereunder;
(f) From the date hereof until March 31, 1997, Guarantees
of obligations which do not exceed in the aggregate $10,000,000;
from April 1, 1997 until March 31, 1998, Guarantees of
obligations which do not exceed in the aggregate $14,000,000;
from April 1, 1998 until March 31, 1999, Guarantees of
obligations which do not exceed in the aggregate $20,000,000; and
thereafter Guarantees of obligations which do not exceed in the
aggregate $24,000,000; and
(g) Up to an aggregate of $15,000,000 of Intercompany Debt.
Section 7.2. RESTRICTED PAYMENTS. Declare or make any
Restricted Payment unless (a) no Default or Event of Default has
occurred and is continuing and (b) immediately after giving
effect thereto, the aggregate of all Restricted Payments declared
or made subsequent to the Closing Date does not exceed
$17,500,000 plus 50% of Consolidated Net Income (less
consolidated net loss, if any) of the Company and its Consolidat
ed Subsidiaries for the period from March 31, 1994 through the
end of the Company's then most recent fiscal quarter (treated for
this purpose as a single accounting period). Nothing in this
Section 7.2 shall prohibit the payment of any dividend or
distribution within 60 days after the declaration thereof if such
declaration was not prohibited by this Section 7.2.
Section 7.3. INVESTMENTS. Make or acquire any Investment
in any Person other than:
(a) Investments outstanding as of March 31, 1995 (such
Investments in excess of $1,000,000 are set forth on SCHEDULE
IV);
(b) Investments in joint ventures of the Company or its
Subsidiaries, if after giving effect thereto the aggregate amount
of all such Investments does not exceed $10,000,000 outstanding
at any one time, excluding any Investments described in
Section 7.3(a) above;
(c) deposits with, or time deposits with, including
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certificates of deposits issued by, (i) any office located in the
United States of any bank or trust company which is organized
under the laws of the United States or any state thereof and has
capital surplus and undivided profits aggregating at least
$100,000,000 (ii) any Bank or (iii) any foreign bank for which
Standard and Poors Rating Group or Moody's Investors Service,
Inc. issues a rating of "A" or higher and which has capital
surplus and undivided profits aggregating at least $100,000,000;
(d) Investments in investment grade securities;
(e) Investments made in another Person pursuant to a merger
or asset acquisition made in compliance with subsection (i) of
the proviso in Section 7.5; and
(f) other Investments up to $10,000,000 in the aggregate.
The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without
adjustments for increases or decreases in value, write-ups,
write-downs or write-offs with respect to such Investment.
Section 7.4. NEGATIVE PLEDGE. Create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by
it, except:
(a) Liens existing on the date of this Agreement securing
Debt outstanding on the date of this Agreement and identified on
Schedule II;
(b) Permitted Liens; and
(c) any Lien existing on any non-current asset securing
Debt (i) in an amount up to $7,500,000 during the period from the
Closing Date until June 30, 1996; (ii) in an amount up to
$9,000,000 during the period from July 1, 1996 until June 30,
1997; and (iii) which amount shall be increased by $1,500,000 for
each twelve month period thereafter.
Section 7.5. CONSOLIDATIONS, MERGERS ABD SALES OF ASSETS.
(a) consolidate or merge with or into any other Person or (b)
sell, lease or otherwise transfer, directly or indirectly in one
transaction or a series of related transactions, all or any
substantial part of its assets (including in the case of the
Company, the stock of its Subsidiaries) to any other Person;
PROVIDED that (i) the Company or any Subsidiary may merge with or
acquire the assets of another Person which is in the business of
specialty chemicals and related equipment if (A) the Company or
the Subsidiary is the surviving entity and (B) after giving
effect thereto the ratio of Consolidated Debt to Consolidated
EBITDA on a pro forma basis (including synergies agreed to by the
Agent) is equal to or less than 3.25 to 1.0, (ii) the Company or
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any Subsidiary may, in the aggregate, sell assets in the ordinary
course of business and sell (A) up to $7,500,000 additional
assets during the period from the Closing Date until June 30,
1996; (B) up to $9,000,000 additional assets during the period
from July 1, 1996 to June 30, 1997, which amount shall be
increased by $1,500,000 for each twelve month period thereafter;
and (iii) a Subsidiary of the Borrower may merge with the
Borrower or a Wholly-Owned Subsidiary of the Borrower if (A) the
Borrower or such Wholly-Owned Subsidiary, as the case may be, is
the corporation surviving such merger and (B) immediately after
giving effect to such merger, no Default shall have occurred and
be continuing.
Section 7.6. TRANSACTIONS WITH AFFILIATES. Directly or
indirectly, pay any funds to or for the account of, make any
Investment in (whether by acquisition of stock or indebtedness,
by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly,
any Debt, or otherwise), lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to, or participate
in, or effect any transaction in connection with any joint
enterprise or other joint arrangement with, any Affiliate;
PROVIDED, HOWEVER, that the foregoing provisions of this
Section 7.6 shall not prohibit (a) the Company from declaring or
paying any lawful dividend so long as, after giving effect
thereto, no Default shall have occurred and be continuing, (b)
the Company or any Subsidiary from making sales to or purchases
from any Affiliate and, in connection therewith, extending credit
or making payments, or from making payments for extending credit
or making payments, or from making payments for services rendered
by any Affiliate, if such sales or purchases are made or such
services are rendered in the ordinary course of business and on
terms and conditions at least as favorable to the Company or such
Subsidiary as the terms and conditions which would apply in a
similar transaction with a Person not an Affiliate, (c) the
Company or any Subsidiary from participating in, or effecting
any transaction in connection with, any joint enterprise or other
joint arrangement with any Affiliate if the Company or such
Subsidiary participates in the ordinary course of its business
and on a basis no less advantageous than the basis on which such
Affiliate participates, (d) any transactions between the Company
and any Eligible Subsidiary which has executed and delivered an
Election to Participate which is still in effect or any
Subsidiary that has executed a Guaranty hereunder, (e) any
payment from any Subsidiary to the Company, (f) intercompany
loans involving only the Company and its Subsidiaries which are
Guarantors, and (g) Intercompany Debt which does not exceed
$15,000,000 in the aggregate.
ARTICLE 8. FINANCIAL COVENANTS
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So long as any of the Notes shall remain unpaid, any amounts
shall be owing hereunder by any Borrower, or any Bank shall have
any Commitment under this Agreement, the Company covenants that:
Section 8.1. EBIT TO INTEREST EXPENSE RATIO. The Company's
ratio of Consolidated EBIT for the preceding four fiscal quarters
to Consolidated Interest Expense for the preceding four fiscal
quarters shall not be less than 2.50 to 1.00, tested at end of
each fiscal quarter.
Section 8.2. MINIMUM CONSOLIDATED NET WORTH. The Company
shall maintain at all times Consolidated Net Worth at the end of
each fiscal quarter of not less than $80,000,000 (subject to a
dollar for dollar downward adjustment equal to the amount, if
any, by which the Company's independent auditor's valuation of
the Preferred Stock is less than $30,000,000, but in no event
shall the adjustment be greater than $5,000,000), PLUS an amount
equal to the sum of (a) 50% of Consolidated Net Income for each
full fiscal quarter since the date hereof to the measurement date
PLUS (b) an amount equal to the net proceeds received by the
Borrower from the issuance of its capital stock during such
period.
Section 8.3. MAXIMUM TOTAL DEBT TO NET WORTH RATIO. The
Company's ratio of Consolidated Total Debt to Consolidated Net
Worth tested at the end of each quarter shall not during the
periods set forth below exceed the following:
PERIOD RATIO
Closing Date to March 31, 1997 2.00 to 1.00
April 1, 1997 to March 31, 1998 1.80 to 1.00
April 1, 1998 to March 31, 1999 1.60 to 1.00
April 1, 1999 to march 31, 2000 1.40 to 1.00
April 1, 2000 and thereafter 1.20 to 1.00
ARTICLE 9. EVENTS OF DEFAULT
Section 9.1. EVENTS OF DEFAULT. Any of the following
events shall be an "Event of Default":
(a) any Borrower shall: (i) fail to pay the principal of
any Note as and when due and payable and such failure shall
continue for five (5) Banking Days; (ii) fail to pay interest on
any Note or any fee or other amount due hereunder as and when due
and payable and such failure shall continue for thirty (30)
Banking Days;
(b) any representation or warranty made or deemed made by
any Borrower in this Agreement or in any other Facility Document
or which is contained in any certificate, document, opinion,
financial or other written statement furnished at any time under
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or in connection with any Facility Document shall prove to have
been incorrect in any material respect on or as of the date made
or deemed made;
(c) any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Article 6, Article 7 or
Article 8;
(d) any Borrower shall fail to perform or observe any term,
covenant or agreement on its part to be performed or observed
(other than the obligations specifically referred to elsewhere in
this Section 9.1) in any Facility Document and such failure shall
continue for thirty (30) consecutive calendar days after written
notice thereof has been given to the Company by the Agent at the
request of the Required Banks;
(e) the Company or any Subsidiary shall fail to make any
payment in respect of any Material Debt when due or within any
applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or,
with the giving of notice or lapse of time or both, would enable)
the holder of such Debt or any Person acting on such holder's
behalf to accelerate the maturity thereof;
(g) the Company or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced against the Company or any Subsidiary seeking
liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) days; or an order for relief
shall be entered against the Company or any Subsidiary under the
federal bankruptcy laws as now or hereafter in effect;
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(i) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $500,000 which
such member shall have become liable to pay under Title IV of
ERISA; or notice of intent to terminate a Material Plan shall be
filed under Title IV of ERISA by any member of the ERISA Group,
any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $500,000;
(j) a judgment or order for the payment of money in excess
of $5,000,000 shall be rendered against the Company or any
Subsidiary and such judgment or order shall continue unsatisfied
and unstayed for a period of (i) in the case of a judgment or
order rendered by a court, arbitrator or governmental authority
located in the United States, ten (10) days or (ii) in the case
of a judgment or order rendered by a court, arbitrator or
governmental authority located outside the United States, thirty
(30) days; or
(k) a "mandatory redemption" (as defined therein) occurs
under the Preferred Stock Agreement following a "change of
control" (as defined in the Preferred Stock Agreement").
Section 9.2. REMEDIES. If any Event of Default shall occur
and be continuing, the Agent shall, upon request of the Required
Banks, by notice to the Borrowers, (a) declare the Commitments to
be terminated, whereupon the same shall forthwith terminate, and
(b) declare the outstanding principal of the Notes, all interest
thereon and all other amounts payable under this Agreement and
the Notes to be forthwith due and payable, whereupon the Notes,
all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly
waived by the Borrowers; PROVIDED that, in the case of an Event
of Default referred to in Section 9.1(g) or 9.1(h) above, the
Commitments shall be immediately terminated, and the Notes, all
interest thereon and all other amounts payable under this
Agreement and each of the other Facility Documents shall be
immediately due and payable without notice, presentment, demand,
protest or other formalities of any kind, all of which are hereby
expressly waived by each of the Borrowers.
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ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 10.1. APPOINTMENT, POWERS AND IMMUNITIES OF AGENT.
Each Bank hereby irrevocably appoints and authorizes the Agent to
act as its agent hereunder and under any other Facility Document
with such powers as are specifically delegated to the Agent by
the terms of this Agreement or any other Facility Document,
together with such other powers as are reasonably incidental
thereto. The Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement or any other
Facility Document, and shall not by reason of this Agreement be a
trustee for any Bank. The Agent shall not be responsible to the
Banks for any recitals, statements, representations or warranties
made by any Borrower or any officer or official of any Borrower
or any other Person contained in this Agreement or any other
Facility Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any
Bank under, this Agreement or any other Facility Document, or for
the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other
Facility Document or any other document or instrument referred to
or provided for herein or therein, for the perfection or priority
of any collateral security for the Loans, if any, or for any
failure by any Borrower to perform any of such Borrower's
obligations under this Agreement or any other Facility Document.
The Agent may employ agents and attorneys-in-fact and shall not
be responsible, except as to money or securities received by the
Agent or its authorized agents, for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for
any action taken or omitted to be taken by the Agent or any one
or more of them hereunder or under any other Facility Document or
in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct or action not authorized
under this Agreement or by the Required Banks which is in
violation of law and results in a liability of the Banks to any
Borrower. The Company shall pay any fee agreed to by the Company
and the Agent with respect to the Agent's services hereunder.
Section 10.2. RELIANCE BY AGENT. The Agent shall be
entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, facsimile,
telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by
the Agent. The Agent may deem and treat each Bank as the holder
of the Loans made by such Bank for all purposes hereof unless and
until a notice of the assignment or transfer thereof satisfactory
to the Agent signed by such Bank shall have been furnished to the
Agent, but the Agent shall not be required to deal with any
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Person who has acquired a participation in any Loan from a Bank.
As to any matters not expressly provided for by this Agreement or
any other Facility Document, the Agent shall in all cases be
fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks and any action
taken or failure to act pursuant thereto shall be binding on all
of the Banks and any other holder of all or any portion of any
Loan.
Section 10.3. DEFAULTS. The Agent shall not be deemed to
have knowledge of the occurrence of any Default or Event of
Default (other than the non-payment of principal of or interest
on the Loans to the extent the same is required to be paid to the
Agent for the account of the Banks) unless the Agent has received
notice from a Bank or a Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default."
If the Agent receives such a notice of the occurrence of a
Default or Event of Default, the Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of
each such non-payment). The Agent shall (subject to
Section 10.8) take such action with respect to such Default or
Event of Default which is continuing as shall be directed by the
Required Banks; PROVIDED that, unless and until the Agent shall
have received such directions, the Agent may take such action, or
refrain from taking such action, with respect to such Default or
Event of Default as the Agent shall deem advisable and in the
best interest of the Banks; and PROVIDED further that the Agent
shall not be required to take any such action which the Agent
determines to be contrary to law.
Section 10.4. RIGHTS OF AGENT AS A BANK. With respect to
its Commitment and the Loans made by it, the Agent in its
capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as
though it were not acting as the Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include
the Agent in its capacity as a Bank. The Agent and its
affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to (on a secured or unsecured
basis), and generally engage in any kind of banking, trust or
other business with, any Borrower (and any of such Borrower's
Affiliates) as if the Agent were not acting as the Agent, and the
Agent may accept fees and other consideration from any Borrower
for services in connection with this Agreement or otherwise
without having to account for the same to the Banks.
Section 10.5. INDEMNIFICATION OF AGENT. The Banks agree to
indemnify the Agent (to the extent not reimbursed under
Section 12.3 or under the applicable provisions of any other
Facility Document, but without limiting the obligations of the
Borrowers under Section 12.3 or such applicable provisions),
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ratably in accordance with the aggregate unpaid principal amount
of the Loans made by the Banks (without giving effect to any
participations, in all or any portion of such Loans, sold by them
to any other Person) (or, if no Loans are at the time
outstanding, ratably in accordance with their respective
Commitments), for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement, any other Facility
Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or
thereby (including the costs and expenses which any Borrower is
obligated to pay under Section 12.3 or under the applicable
provisions of any other Facility Document but excluding, unless a
Default or Event of Default has occurred, normal administrative
costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof
or thereof or of any such other documents or instruments;
PROVIDED that no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful
misconduct of the Agent or actions not authorized under this
Agreement or by the Required Banks which are in violation of law
and result in a liability of the Banks to any Borrower.
Section 10.6. DOCUMENTS. The Agent will forward to each
Bank, promptly after the Agent's receipt thereof, a copy of each
report, notice or other document required by this Agreement or
any other Facility Document to be delivered to the Agent for such
Bank.
Section 10.7. NON-RELIANCE ON AGENT AND OTHER BANKS. Each
Bank agrees that it has, independently and without reliance on
the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Company and the Company's Subsidiaries and its
own decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analyses
and decisions in taking or not taking action under this Agreement
or any other Facility Document. The Agent shall not be required
to keep itself informed as to the performance or observance by
the Company or the Company's Subsidiaries of this Agreement or
any other Facility Document or any other document referred to or
provided for herein or therein or to inspect the properties or
books of the Company or any Subsidiary. Except for notices,
reports and other documents and information expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial
condition or business of the Company or any Subsidiary (or any of
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the Company's or any Subsidiary's Affiliates) which may come into
the possession of the Agent or any of the Agent's affiliates.
The Agent shall not be required to file this Agreement, any other
Facility Document or any document or instrument referred to
herein or therein, for record or give notice of this Agreement,
any other Facility Document or any document or instrument
referred to herein or therein, to any Person.
Section 10.8. FAILURE OF AGENT TO ACT. Except for action
expressly required of the Agent hereunder, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder
unless the Agent shall have received further assurances (which
may include cash collateral to the extent permitted by law) of
the indemnification obligations of the Banks under Section 10.5
in respect of any and all liability and expense which may be
incurred by the Agent by reason of taking or continuing to take
any such action.
Section 10.9. RESIGNATION OF AGENT. Subject to the
appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving thirty (30)
days prior written notice thereof to the Banks and the Company;
PROVIDED that the Company and the other Banks shall be promptly
notified thereof. Upon any such resignation, the Required Banks
shall have the right to appoint, with the consent of the Company,
which consent shall not be unreasonably withheld or delayed, a
successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any
state thereof, with an office in New York, New York and having a
combined capital and surplus of at least $100,000,000. If no
successor Agent shall have been so appointed by the Required
Banks and shall have accepted such appointment within thirty (30)
days after the retiring Agent gives notice of resignation, then
the retiring Agent may, on behalf of the Banks and without the
consent of the Company, appoint a successor Agent, which shall be
a commercial bank organized or licensed under the laws of the
United States of America or of any state thereof, with an office
in New York, New York, and having a combined capital and surplus
of at least $100,000,000. The Required Banks or the retiring
Agent, as the case may be, shall, upon the appointment of a
successor Agent, promptly so notify the Company and the other
Banks. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the
provisions of this Article 10 shall continue in effect for such
retiring Agent's benefit in respect of any actions taken or
omitted to be taken by such retiring Agent while it was acting as
the Agent.
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Section 10.10. AMENDMENTS CONCERNING AGENCY FUNCTION. The
Agent shall not be bound by any waiver, amendment, supplement or
modification of this Agreement or any other Facility Document
which affects its duties hereunder or thereunder unless the Agent
shall have given its prior consent thereto.
Section 10.11. LIABILITY OF AGENT. The Agent shall not
have any liabilities or responsibilities to any Borrower on
account of the failure of any Bank to perform such Bank's
obligations hereunder or under any other Facility Document or to
any Bank on account of the failure of any Borrower to perform its
obligations hereunder or under any other Facility Document. This
Section 10.11 shall not be construed to relieve the Agent of any
liability it may have as a Bank when acting in its capacity as a
Bank hereunder.
Section 10.12. TRANSFER OF AGENCY FUNCTION. Without the
consent of the Company or any Bank, the Agent may at any time or
from time to time transfer its functions as Agent hereunder to
any of its offices wherever located, PROVIDED that the Agent
shall promptly notify the Company and the Banks thereof.
Section 10.13. NON-RECEIPT OF FUNDS BY THE AGENT. Unless
the Agent shall have been notified by a Bank or a Borrower
(either one, as appropriate, being the "Payor") prior to the date
on which such Bank is to make payment hereunder to the Agent of
the proceeds of a Loan or any Borrower is to make payment to the
Agent, as the case may be (either such payment being a "Required
Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended recipient
on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment from the
Agent (and, if such recipient is a Borrower and the Payor Bank
fails to pay the amount thereof to the Agent forthwith upon
demand, such Borrower) shall, on demand, repay to the Agent the
amount made available to it together with interest thereon for
the period from the date such amount was so made available by the
Agent until the date the Agent recovers such amount at a rate per
annum equal to the average daily Federal Funds Rate for such
period.
Section 10.14. WITHHOLDING TAXES. Each Bank represents
that it is entitled to receive any payments to be made to it
hereunder without the withholding of any tax and will furnish to
the Agent such forms, certifications, statements and other
documents as the Agent may request from time to time to evidence
such Bank's exemption from the withholding of any tax imposed by
any jurisdiction or to enable the Agent to comply with any
applicable laws or regulations relating thereto. Without
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limiting the effect of the foregoing, if any Bank is not created
or organized under the laws of the United States of America or
any state thereof, if the payment of interest by any Borrower is
treated for U.S. income tax purposes as derived in whole or in
part from sources from within the U.S., such Bank will furnish to
the Agent and such Borrower Form 4224 or Form 1001 of the
Internal Revenue Service, or such other forms, certifications,
statements or documents, duly executed and completed by such Bank
as evidence of such Bank's exemption from the withholding of U.S.
tax with respect thereto. The Agent shall not be obligated to
make any payments hereunder to such Bank in respect of any Loan
or such Bank's Commitment until such Bank shall have furnished to
the Agent the requested form, certification, statement or
document.
Section 10.15. SEVERAL OBLIGATIONS AND RIGHTS OF BANKS.
The failure of any Bank to make any Loan to be made by it on the
date specified therefor shall not relieve any other Bank of such
other Bank's obligation to make its Loan or Loans on such date,
but no Bank shall be responsible for the failure of any other
Bank to make a Loan to be made by such other Bank. The amounts
payable at any time hereunder to each Bank shall be a separate
and independent debt, and each Bank shall be entitled to protect
and enforce its rights arising out of this Agreement, and it
shall not be necessary for any other Bank to be joined as an
additional party in any proceeding for such purpose.
Section 10.16. PRO RATA TREATMENT OF LOANS, ETC. Except to
the extent otherwise provided: (a) each Borrowing under
Section 2.7 shall be made from the Banks, each reduction or
termination of the amount of the Commitments under Section 2.10
shall be applied to the Commitments of the Banks, and each
payment of commitment fee accruing under Section 2.14 shall be
made for the account of the Banks, PRO RATA according to the
amounts of their respective unused Commitments; (b) each
conversion under Section 2.8 of Loans of a particular type (other
than conversions provided for by Section 3.4), shall be made PRO
RATA among the Banks holding Loans of such type according to the
respective principal amounts of such Loans by such Banks; and (c)
each prepayment and payment of principal of or interest on Loans
of a particular type and a particular Interest Period shall be
made to the Agent for the account of the Banks holding Loans of
such type and Interest Period PRO RATA in accordance with the
respective unpaid principal amounts of such Loans of such
Interest Period held by such Banks.
Section 10.17. SHARING OF PAYMENTS AMONG BANKS. If a Bank
shall obtain payment of any principal of or interest on any Loan
made by it through the exercise of any right of setoff, banker's
lien, counterclaim, or by any other means, such Bank shall
promptly purchase from the other Banks participations in (or, if
and to the extent specified by such Bank, direct interests in)
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the Loans made by the other Banks in such amounts, and make such
other adjustments from time to time as shall be equitable to the
end that all the Banks shall share the benefit of such payment
(net of any expenses which may be incurred by such Bank in
obtaining or preserving such benefit) PRO RATA in accordance with
the unpaid principal and interest on the Loans held by each of
the Banks. To such end the Banks shall make appropriate
adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise
be restored. Each Borrower agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by other
Banks may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation
(or direct interest). Nothing contained herein shall require any
Bank to exercise any such right of setoff, banker's lien,
counterclaim or similar right of setoff, banker's lien,
counterclaim or similar right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness of any Borrower.
ARTICLE 11. GUARANTY
Section 11.1. THE GUARANTY. The Company hereby
unconditionally guaranties the full and punctual payment (whether
at stated maturity, upon acceleration or otherwise) of the
principal of and interest on each Term Note and each Note issued
by any Eligible Subsidiary pursuant to this Agreement, and the
full and punctual payment of all other amounts payable by
MacDermid Imaging or any Eligible Subsidiary under this Agreement
and each other Facility Document. Upon failure by MacDermid
Imaging or any Eligible Subsidiary to pay punctually any such
amount, the Company shall forthwith on demand pay the amount not
so paid at the place and in the manner specified in this
Agreement or the other applicable Facility Document.
Section 11.2. GUARANTY UNCONDITIONAL. The obligations of
the Company under this Article 11 shall be unconditional and
absolute and, without limiting the generality of the foregoing,
shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver
or release in respect of any obligation of any Eligible
Subsidiary under this Agreement or any Note or any other Facility
Document, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any Note or any other Facility Document;
(c) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of any Eligible
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Subsidiary under this Agreement or any Note or any other Facility
Document;
(d) Any change in the corporate existence, structure or
ownership of MacDermid Imaging or any Eligible Subsidiary, or any
insolvency, bankruptcy, reorganization or other similar
proceeding affecting MacDermid Imaging or any Eligible Subsidiary
or its assets or any resulting release or discharge of MacDermid
Imaging or any obligation of any Eligible Subsidiary contained in
this Agreement or any Note; or any other Facility Document
(e) the existence of any claim, set-off or other rights
which the Company may have at any time against MacDermid Imaging
or any Eligible Subsidiary, the Agent, any Bank or any other
Person, whether in connection herewith or any unrelated
transactions; PROVIDED that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(f) any invalidity or unenforceability relating to or
against MacDermid Imaging or any Eligible Subsidiary, for any
reason, of this Agreement or any Note or any other Facility
Document, or any provision of applicable law or regulation
purporting to prohibit the payment by any Eligible Subsidiary of
the principal of or interest on any Note or any other amount
payable by it under this Agreement or any other Facility
Document; or
(g) any other act or omission to act or delay of any kind
by MacDermid Imaging or any Eligible Subsidiary, the Agent, any
Bank or any other Person or any other circumstance whatsoever
which might, but for the provisions of this Section 11.2,
constitute a legal or equitable discharge of the Company's
obligations hereunder.
Section 11.3. DISCHARGE ONLY UPON PAYMENT IN FULL;
REINSTATEMENT IN CERTAIN CIRCUMSTANCES. The Company's
obligations under this Article 11 shall remain in full force and
effect until the Commitments shall have terminated and the
principal of and interest on the Notes and all other amounts
payable by the Company MacDermid Imaging or and each Eligible
Subsidiary under this Agreement and each of the other Facility
Documents shall have been finally and indefeasibly paid in full
in cash. If at any time any payment of the principal of or
interest on any Note or any other amount payable by any MacDermid
Imaging or Eligible Subsidiary under this Agreement or any other
Facility Document is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of
MacDermid Imaging or any Eligible Subsidiary or otherwise, the
Company's obligations hereunder with respect to such payment
shall be reinstated at such time as though such payment had been
due but not made at such time.
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Section 11.4. WAIVER BY THE COMPANY. The Company
irrevocably waives acceptance hereof, presentment, demand,
protest and any notice not provided for herein, as well as any
requirement that at any time any action be taken by any Person
against any Eligible Subsidiary or any other Person.
Section 11.5. SUBROGATION. The Company irrevocably waives
any and all rights to which it may be entitled, by operation of
law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against MacDermid Imaging
or an Eligible Subsidiary with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by
MacDermid Imaging or an Eligible Subsidiary in respect thereof.
Section 11.6. STAY OF ACCELERATION. If acceleration of the
time for payment of any amount payable by MacDermid Imaging or
any Eligible Subsidiary under this Agreement or its Notes or any
other Facility Document is stayed upon insolvency, bankruptcy or
reorganization of MacDermid Imaging or such Eligible Subsidiary,
all such amounts otherwise subject to acceleration under the
terms of this Agreement shall nonetheless be payable by the
Company hereunder forthwith on demand by the Agent made at the
request of the Required Banks.
ARTICLE 12. MISCELLANEOUS
Section 12.1. AMENDMENTS AND WAIVERS. No amendment or
waiver of any provision of this Agreement, and no consent to any
departure by any Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Required Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and signed
by the Agent and all the Banks, do any of the following: (a)
increase the Commitments of the Banks or subject the Banks to any
additional obligations, (b) reduce the principal amount of, or
interest on, any Loan or any fees or other amounts payable under
any Facility Document, (c) postpone any date fixed for any
payment of principal of, or interest on, any Loan or any fees or
other amounts payable under any Facility Document, (d) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of Loans, or the number of Banks which shall be
required for the Banks or any of them to take any action under
any Facility Document, (e) amend this Section 12.1, (f) release
the Company's Guaranty described in Article 11 hereof, or (g)
extend the expiration date of a Letter of Credit beyond the tenth
Banking Day prior to the Termination Date; PROVIDED that no
amendment, waiver or consent, unless in writing and signed by the
Agent in addition to the Banks required hereinabove to take such
action, shall affect the rights or duties of the Agent under any
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Facility Document. No failure on the part of the Agent or any
Bank to exercise, and no delay in exercising, any right hereunder
or under any other Facility Document shall operate as a waiver
thereof or preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 12.2. USURY. Anything herein to the contrary
notwithstanding, the obligations of the Company and its
Subsidiaries under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required
to the extent that receipt thereof would be contrary to
provisions of law applicable to a Bank limiting rates of interest
which may be charged or collected by such Bank.
Section 12.3. EXPENSES; INDEMNIFICATION. (a) The Borrowers
shall reimburse (i) the Agent on demand for all reasonable out-
of-pocket costs, expenses, and charges (including fees and
charges of external legal counsel for the Agent and costs
allocated by its internal legal department) incurred by the Agent
in connection with the preparation, performance, or
administration of this Agreement or the Notes and (ii) the Agent
and the Banks on demand for all costs, expenses, and charges
(including fees and expenses of counsel) in connection with the
enforcement of this Agreement, PROVIDED that the Borrowers shall
not be required to reimburse the Agent for the fees and charges
of the Agent's external legal counsel that exceed $50,000 in
connection with the preparation of this Agreement and the other
Facility Documents.
(b) The Borrowers agree to indemnify the Agent and each
Bank and each of such Persons' respective affiliates and
controlling persons and each of their respective shareholders,
directors, officers, employees, attorneys and agents (each an
"Indemnified Person") from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages
(including consequential damages) or expenses incurred by any of
them arising out of or by reason of or in connection with any
investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings)
arising out of or relating to this Agreement or any other
Facility Document or any actual or proposed use by the Company or
any Subsidiary of the proceeds of the Loans, including the
reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other
proceedings (but excluding any such losses, liabilities, claims,
damages or expenses that are determined by a court of competent
jurisdiction to have resulted from the gross negligence or
willful misconduct of the applicable Indemnified Person or the
intentional breach by a Bank or the Agent of its agreement to
make Loans or issue a letter of credit in accordance with the
terms of this Agreement).
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(c) The Borrowers agree to indemnify, hold harmless and
defend each Indemnified Person or any of them from and against
any and all claims, losses, damages, response costs, clean-up
costs and expenses arising out of or in any way relating to the
existence of Hazardous Substances over, beneath, in or upon any
real property owned or leased by the Company or any Subsidiary or
a breach of the representations, warranties, covenants and
agreements set forth in this Agreement, or any violation of any
Environmental Laws or any allegations arising out of any
violation of any Environmental Laws, including: (i) claims of
third parties (including agencies) for damages, penalties,
response costs, clean-up costs, injunctive or other relief; (ii)
costs and expenses of removal and restoration, including
reasonable fees of attorneys and experts, and costs of reporting
the existence of Hazardous Substances to any governmental body,
and (iii) any and all reasonable expenses or obligations incurred
at, before and after any trial or appeal therefrom whether or not
taxable as costs, including witness fees deposition costs,
copying and telephone charges, and reasonable attorneys' fees,
all of which shall be paid by Company when incurred.
(d) Each of the Borrowers hereby waives any right it may
have to seek consequential damages against any Indemnified Person
in connection with this Agreement or any other Facility Document
or any of the transactions contemplated hereby or thereby.
Section 12.4. SURVIVAL. The obligations of the Borrowers
under Sections 3.1, 3.5 and 12.3 shall survive the repayment of
the Loans and the termination of the Commitments.
Section 12.5. ASSIGNMENTS; PARTICIPATIONS. This Agreement
shall be binding upon, and shall inure to the benefit of, the
Borrowers, the Agent, the Banks and their respective successors
and assigns, except that none of the Company, MacDermid Imaging,
or any Eligible Subsidiary may assign or transfer its rights or
obligations hereunder. Each Bank may assign or transfer, or sell
a participation in, all or any part of any Loan, its Commitment
or its interest in any Letters of Credit to another bank or other
financial institution acceptable to the Agent and upon notice to
the Company, in which event (i) in the case of an assignment or
transfer, the assignee or transferee shall have, to the extent of
such assignment or transfer (unless otherwise provided therein),
the same rights, benefits and obligations as such assignee or
transferee would have if it were a Bank hereunder, and (ii) in
the case of the sale of a participation, the participant shall
have no rights under the Facility Documents and all amounts
payable by any Borrower under Article 3 shall be determined as if
such Bank had not sold such participation. Each Bank that sells
any such participation shall deliver a notice to the Company and
the Agent of such participation which shall set forth the
participant and the amount of such participation. Any agreement
executed by such Bank in favor of the participant shall not give
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the participant the right to require such Bank to take or omit to
take any action hereunder except action requiring the consent of
all of the Banks as set forth in Section 12.1. Upon notice to
the Agent, but without consent of any Person, each Bank may
pledge all or any part of any Loan to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve
Bank. Any Bank may furnish any information concerning the
Borrowers in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and
participants); PROVIDED that such Bank shall require any such
prospective assignee or such participant (prospective or
otherwise) to agree in writing to maintain the confidentiality of
such information. In connection with any assignment or transfer
or sale of a participation hereunder, the assigning, transferring
or selling Bank shall pay to the Agent an administrative
processing fee in the amount of $2,500.
Section 12.6. NOTICES. Unless the party to be notified
otherwise notifies the other parties in writing as provided in
this Section 12.6, and except as otherwise provided in this
Agreement, notices shall be given to the Agent by telephone,
confirmed by telex, telecopy, facsimile or other writing, and to
the Banks and to the Borrowers by ordinary mail, telex, telecopy
or facsimile addressed to such party at its address on the
signature page of this Agreement. Notices shall be effective:
(a) if given by mail, 72 hours after deposit in the mails with
first class postage prepaid, addressed as aforesaid; and (b) if
given by telex, telecopy or facsimile, when the telex, telecopy
or facsimile is transmitted to the telex, telecopy or facsimile
number as aforesaid; PROVIDED that notices to the Agent and the
Banks shall be effective upon receipt.
Section 12.7. SETOFF. The Borrowers agree that, in
addition to (and without limitation of) any right of setoff,
banker's lien or counterclaim a Bank may otherwise have, each
Bank shall be entitled, at its option, to offset balances
(general or special, time or demand, provisional or final) held
by such Bank for the account of any Borrower at any of such
Bank's offices, in Dollars or in any other currency, against any
amount payable by any Borrower to such Bank under this Agreement
or any of such Bank's Notes which is not paid when due
(regardless of whether such balances are then due to any
Borrower), in which case such Bank shall promptly notify the
applicable Borrower and the Agent thereof; PROVIDED that such
Bank's failure to give such notice shall not affect the validity
of such offset. Payments by any Borrower hereunder shall be made
without setoff or counterclaim.
Section 12.8. JURISDICTION; IMMUNITIES. (a) The Borrowers
hereby irrevocably submit to the jurisdiction of any New York
State or United States Federal Court sitting in New York City
over any action or proceeding arising out of or relating to this
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Agreement or any Note or any other Facility Document, and each
Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such New
York State or Federal court. The Borrowers irrevocably consent
to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the
Company at the Company's address specified on the signature pages
hereof. The Borrowers agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other
manner provided by law. The Borrowers further waive any
objection to venue in such state and any objection to an action
or proceeding in such state on the basis of forum NON CONVENIENS.
The Borrowers further agree that any action or proceeding brought
against the Agent shall be brought only in New York State or
United States Federal court sitting in New York County. Each of
the Borrowers, the Agent and each of the Banks waives any right
such Person may have to jury trial.
(b) Nothing in this Section 12.8 shall affect the right of
the Agent or any Bank to serve legal process in any other manner
permitted by law or affect the right of the Agent or any Bank to
bring any action or proceeding against any Borrower or any of
such Borrower's property in the courts of any other jurisdiction.
(c) To the extent that any Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or from any
legal process (whether from service or notice, attachment prior
to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, such Borrower
hereby irrevocably waives such immunity in respect of such
Borrower's obligations under this Agreement, and the Notes and
the other Facility Documents.
Section 12.9. JUDGMENT CURRENCY. If for the purpose of
obtaining judgment in any court it is necessary to convert a sum
due from any Borrower hereunder or under any of the Notes in
Dollars into another currency, the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal
banking procedures the Agent could purchase Dollars with such
other currency at the Agent's New York office on the Banking Day
preceding that on which final judgment is given. The obligations
of each Borrower in respect of any sum due to any Bank or the
Agent hereunder or under any Note or under any other Facility
Document shall, notwithstanding any judgment in a currency other
than Dollars, be discharged only to the extent that on the
Banking Day following receipt by such Bank or the Agent (as the
case may be) of any sum adjudged to be so due in such other
currency such Bank or the Agent (as the case may be) may in
accordance with normal banking procedures purchase Dollars with
such other currency; if the amount of Dollars so purchased is
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less than the sum originally due to such Bank or the Agent, as
the case may be, in Dollars, the Borrowers agree, to the fullest
extent that they may effectively do so, as a separate obligation
and notwithstanding any such judgment, to indemnify such Bank or
the Agent, as the case may be, against such deficiency, and if
the amount of Dollars so purchased exceeds (a) the sum originally
due to any Bank or the Agent, as the case may be, and (b) any
amounts shared with other Banks as a result of allocations of
such excess as a disproportionate payment to such Bank under
Section 10.17, such Bank or the Agent, as the case may be, agrees
to remit such excess to the applicable Borrower.
Section 12.10. CONFIDENTIALITY. The Agent and each Bank
shall keep confidential any information provided by any Borrower
clearly identified as confidential; PROVIDED that nothing herein
shall prevent the Agent or any Bank from disclosing such
information (a) to its officers, directors, employees, agents,
attorneys and accountants in connection with the entry into and
administration of this Agreement and the extensions of credit
hereunder, (b) upon the order of a court or administrative
agency, (c) upon the request or demand of any regulatory agency
or authority having jurisdiction over such party, (d) which has
become publicly available without breach of any agreement among
the parties hereto, (e) as necessary for the exercise of any
remedy hereunder or under any Note, or (f) subject to provisions
similar to those contained in this Section 12.10, to any
participant or assignee or prospective participant or assignee.
Section 12.11. TABLE OF CONTENTS; HEADINGS. Any table of
contents and the headings and captions hereunder are for
convenience of reference only, are not a part of this Agreement
and shall not affect the interpretation or construction of this
Agreement.
Section 12.12. SEVERABILITY. The provisions of this
Agreement are intended to be severable. If for any reason any
provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any
other jurisdiction or the remaining provisions hereof in any
jurisdiction.
Section 12.13. COUNTERPARTS. This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing any such
counterpart.
Section 12.14. INTEGRATION. Except as set forth in
Section 2.14, the Facility Documents set forth the entire
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agreement among the parties hereto relating to the transactions
contemplated thereby and supersede any prior oral or written
statements or agreements with respect to such transactions.
Section 12.15. GOVERNING LAW. This Agreement shall be
governed by, and interpreted and construed in accordance with,
the law of the State of New York.
[The Remainder of This Page Has Been Left Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
MacDERMID, INCORPORATED
By___________________________
Name:
Title:
Address for Notices:
245 Freight Street
Waterbury, Connecticut 06702
Attn: Corporate Secretary
MacDERMID IMAGING
TECHNOLOGY, INC.
By______________________________
Name:
Title:
Address for Notices:
245 Freight Street
Waterbury, Connecticut 06702
Attn: President
AGENT:
THE CHASE MANHATTAN BANK, N.A.
By______________________________
Name: Susan M. Timmerman
Title: Vice President
Address for Notices:
Susan M. Timmerman
The Chase Manhattan Bank, N.A.
999 Broad Street
Bridgeport, Connecticut 06604
Telephone: (203) 368-5119
Telefax: (203) 382-6537
Lucy Dorazio
The Chase Manhattan Bank, N.A.
4 Chase Metrotech
Brooklyn, New York 11245
Telephone: (718) 242-7945
Telefax: (718) 242-6900
BANKS:
THE CHASE MANHATTAN BANK, N.A.
By______________________________
Name: Susan Timmerman
Title: Vice President
Lending Office for Variable Rate
Loans:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
Lending Office for Eurocurrency
Loans:
The Chase Manhattan Bank, N.A.
Nassau Branch c/o
Eurocurrency Operations
4 Chase Metrotech Center
Brooklyn, New York 11245
Address for Notices:
Susan Timmerman
The Chase Manhattan Bank of
Connecticut, N.A.
999 Broad Street
Bridgeport, Connecticut 06604
Telephone: (203) 368-5119
Telefax: (203) 382-6537
Lucy Dorazio
The Chase Manhattan Bank, N.A.
4 Chase Metrotech
Brooklyn, New York 11245
Telephone: (718) 242-7945
Telefax: (718) 242-6900
EXECUTION COPY
SERIES A PREFERRED STOCK AGREEMENT
This Series A Preferred Stock Agreement (the "PREFERRED
STOCK AGREEMENT"), dated as of December 5, 1995, by and among
Hercules Incorporated ("HERCULES"), MacDermid, Incorporated
(MACDERMID") and MacDermid Imaging Technology, Inc. ("MACDERMID
DELAWARE") is entered into pursuant to Section 3.4 of the Sales
and Purchase Agreement dated as of November 29, 1995 between
HERCULES and PARENT (the "SALE AND PURCHASE AGREEMENT"). This
PREFERRED STOCK AGREEMENT is part of the DEFINITIVE AGREEMENTS
referred to in the SALE AND PURCHASE AGREEMENT and is being
entered into by the parties hereto in consideration of the mutual
covenants and agreements contained in the DEFINITIVE AGREEMENTS.
Section 1 - DEFINITIONS
(a) Capitalized terms used herein and not otherwise
defined shall have the same meanings as set forth in the SALE AND
PURCHASE AGREEMENT.
(b) "CERTIFICATE OF DESIGNATIONS" means the
Certificate of Designations of the Series A Preferred Stock,
filed with the Secretary of State of Delaware on December 5,
1995. A copy of the CERTIFICATE OF DESIGNATIONS is attached
hereto as Exhibit A.
(c) "CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE
STOCK" means the Certificate of Designations of the EXCHANGE
STOCK. A copy of the CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE
STOCK for shares of EXCHANGE STOCK to be issued pursuant to
Section 5 upon the occurrence of an EXCHANGE EVENT described in
Sections 5 (a) (I) and (ii) and pursuant to Section 9 is attached
hereto as Exhibit B. A copy of the CERTIFICATE OF DESIGNATIONS OF
THE EXCHANGE STOCK for shares of EXCHANGE STOCK to be issued by
PARENT pursuant to Section 5 hereof upon the occurrence of the
EXCHANGE EVENT described in Section 5 (a) (iii) is attached
hereto as Exhibit C.
(d) "EXCHANGE STOCK" means the 6% Redeemable SERIES
A PREFERRED STOCK no par value, of PARENT to be issued to
HERCULES in exchange for the SERIES A PREFERRED STOCK pursuant to
Sections 5 and 9.
(e) "LIQUIDATION PREFERENCE" means the liquidation
preference defined and provided for in the CERTIFICATE OF
DESIGNATIONS and the CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE
STOCK.
(f) "PARENT" means MACDERMID, unless MACDERMID is
reincorporated into another entity by means of a holding company
merger or otherwise or otherwise restructured so that it is no
longer the ultimate parent of MACDERMID DELAWARE, in which case
then the term PARENT shall mean the ultimate parent of MACDERMID
and MACDERMID DELAWARE.
(g) "PREFERRED STOCK" means the EXCHANGE STOCK
and SERIES A PREFERRED STOCK, as the case may be.
(h) "SERIES A PREFERRED DIRECTORS" means the
Series A Preferred Directors as defined and provided for in the
CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE STOCK.
(i) "SERIES A PREFERRED STOCK" means the 6%
Redeemable Series A Preferred Stock, no par value, of MACDERMID
DELAWARE.
Section 2 - REPRESENTATIONS AND WARRANTIES
PARENT and MACDERMID DELAWARE, jointly and
severally, represent and warrant to HERCULES each of the
representations and warranties set forth below, as of the date
hereof, through and as of the CLOSING. The representations and
warranties set forth below shall survive the CLOSING and continue
so long as any share of the PREFERRED STOCK remains outstanding.
(a) MACDERMID DELAWARE is duly organized, validly
existing and is in good standing under the laws of the State of
Delaware. Complete and correct copies of the Certificate of
Incorporation and Bylaws of MACDERMID DELAWARE, as currently in
effect, have been provided to HERCULES.
(b) MACDERMID DELAWARE has the requisite
corporate power and authority to create the SERIES A PREFERRED
STOCK, to designate the rights and preferences of the SERIES A
PREFERRED STOCK and to issue the SERIES A PREFERRED STOCK to
HERCULES pursuant to this PREFERRED STOCK AGREEMENT. The
creating of the SERIES A PREFERRED STOCK, the designation of the
rights and preferences of the SERIES A PREFERRED STOCK and the
issuance of the SERIES A PREFERRED STOCK have been duly
authorized by the Board of directors of MACDERMID DELAWARE, and
no other consent, approval or other action of its stockholders or
Board of Directors is required therefor.
(c) PARENT has the requisite corporate power and
authority to create the EXCHANGE STOCK required to be issued
pursuant to Section 5 hereof upon the occurrence of an EXCHANGE
EVENT described in Sections 5 (a) (I) and (ii) and pursuant to
Section 9 hereof, to designate the rights and preferences of such
stock and to issue such stock pursuant to this PREFERRED STOCK
AGREEMENT.
(d) PARENT and MACDERMID DELAWARE each has the
requisite corporate power and authority to execute and perform
this PREFERRED STOCK AGREEMENT. All action necessary for the
authorization, execution and delivery of this PREFERRED STOCK
AGREEMENT has been taken, including, but not limited to,
obtaining any necessary approval by the stockholders or the board
of Directors of either PARENT or MACDERMID DELAWARE. This
PREFERRED STOCK AGREEMENT constitutes a valid and binding
obligation on each of PARENT and MACDERMID DELAWARE and neither
the execution, delivery nor performance of this PREFERRED STOCK
AGREEMENT by PARENT or MACDERMID DELAWARE will violate (i) any
provision of the Restated Certificate of Incorporation or Bylaws
of MACDERMID DELAWARE or (iii) subject to the MACDERMID
MATERIALITY STANDARD, any agreement or other instrument to which
PARENT and/or MACDERMID DELAWARE is a party or to which PARENT or
MACDERMID DELAWARE is bound.
(e) No holder of any of the capital stock of
MACDERMID DELAWARE is entitled to any preemptive rights and there
are no outstanding securities convertible into, exchangeable for
or carrying the right to acquire any class of securities of
MACDERMID DELAWARE, or subscriptions, warrants, options, calls,
rights or other arrangements or commitments of any kind that
relate to or require the issuance, sale or other disposition or
transfer of any such securities, or any interest therein. Upon
delivery to HERCULES of certificates representing the SERIES A
PREFERRED STOCK, HERCULES will acquire good and valid title
thereto.
(f) No holder of any of the shares of capital
stock of PARENT is entitled to any preemptive rights. Upon
delivery to HERCULES of certificates representing the EXCHANGE
STOCK, HERCULES will acquire good and valid title thereto, free
and clear of any ENCUMBRANCES other than such as may be imposed
pursuant to this PREFERRED STOCK AGREEMENT.
Section 3 - ISSUANCE OF THE SERIES A PREFERRED STOCK
Pursuant to Section 3.1 of the SALE AND
PURCHASE AGREEMENT, as partial consideration for the purchase and
sale of the E&PD Business, MACDERMID DELAWARE hereby issues and
sells to HERCULES, and HERCULES hereby purchases 30,000 shares of
SERIES A PREFERRED STOCK as such number may be adjusted pursuant
to the terms of the POST-CLOSING ADJUSTMENT, having the rights
and preferences set forth in the CERTIFICATE OF DESIGNATIONS.
Each share when issued pursuant hereto, or when issued in payment
of dividends thereon, is or shall be, as the case may be, validly
issued, fully paid, nonassessable and free and clear of any
ENCUMBRANCES, other than such as may be imposed pursuant to this
PREFERRED STOCK AGREEMENT.
Section 4 - FUNDS FOR REDEMPTION
Subject to the provisions set forth in the
CERTIFICATE OF DESIGNATIONS describing and limiting the
obligation of MACDERMID DELAWARE to redeem shares of SERIES A
PREFERRED STOCK so long as HERCULES holds shares of SERIES A
PREFERRED STOCK, parent shall provide to MACDERMID DELAWARE (by
loan, capital contribution or otherwise) sufficient funds to
enable MACDERMID DELAWARE to fully satisfy in a timely manner all
of its obligations under the CERTIFICATE OF DESIGNATIONS and
under this PREFERRED STOCK AGREEMENT.
Section 5 - EXCHANGE OF THE SHARES
(a) MACDERMID shall be required to immediately
(i) exchange each outstanding share of SERIES A PREFERRED STOCK
regardless of whether such share was issued as a dividend or as
part of the original issuance of the SERIES A PREFERRED STOCK for
one share of EXCHANGE STOCK and (ii) issue one share of EXCHANGE
STOCK for each $1,000 worth of accrued but unpaid dividends on
the SERIES A PREFERRED STOCK (whether or not the applicable
Dividend Payment Date has occurred under the CERTIFICATE OF
DESIGNATIONS) upon the occurrence of any of the following events
(each, an "EXCHANGE EVENT"):
(i) The failure of PARENT to cure any of the
following defaults by MACDERMID DELAWARE within fifteen days
after being notified by HERCULES that such default has occurred
and is continuing: The failure of MACDERMID DELAWARE to perform
its obligation to (a) redeem shares of SERIES A PREFERRED STOCK
pursuant to the terms and conditions in the CERTIFICATE OF
DESIGNATIONS or (b) pay any dividend on the SERIES A PREFERRED
STOCK pursuant to the CERTIFICATE OF DESIGNATIONS, in either
case, whether or not there are sufficient funds or surplus to
make such redemption or payment.
(ii) The incurrence of indebtedness or the
entering into a contractual arrangement by either PARENT or
MACDERMID DELAWARE which is prohibited by Section 7 of this
PREFERRED STOCK AGREEMENT, if such indebtedness or contractual
arrangement continues for fifteen days after PARENT receives
notice of such from HERCULES.
(iii) The reincorporation of PARENT from a
corporation organized under the laws of the State of Connecticut
to a corporation organized under the laws of the State of
Delaware (whether such reincorporation takes the form of a
holding company merger or otherwise). Immediately after PARENT
reincorporates from a corporation organized under the laws of the
State of Connecticut to a corporation organized under the laws of
the State of Delaware, it shall authorize the issuance of the
shares of EXCHANGE STOCK required pursuant to this Section.
(b) PARENT shall take all steps necessary to
ensure that (i) the shares of EXCHANGE STOCK issued upon the
occurrence of an EXCHANGE EVENT described in Section 5 (a) (I)
and (ii) or pursuant to Section 9 have the designations, rights
and preferences provided for in the CERTIFICATE OF DESIGNATIONS
OF THE EXCHANGE STOCK attached as Exhibit B hereto and (ii) the
share of EXCHANGE STOCK issued upon the occurrence of the
EXCHANGE EVENT described in Section 5 (a) (iii) hereof shall have
the designations, rights and preferences provided for in the
CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE STOCK attached as
Exhibit C hereto, unless otherwise agreed to by HERCULES.
(c) Upon the occurrence of an EXCHANGE EVENT,
PARENT (I) shall immediately deposit on the earliest practicable
date (the "EXCHANGE DATE") with a bank or trust company the
number of shares of EXCHANGE STOCK necessary to comply with the
provisions of this Section 5 and (ii) shall notify the holders of
the Series A Preferred Stock as soon as practicable thereafter of
the EXCHANGE EVENT and of the place where certificates for the
shares of SERIES A PREFERRED STOCK are to be surrendered for
exchange. Upon the surrender of a certificate evidencing the
SERIES A PREFERRED STOCK to PARENT at the place designated in
such notice, the holders of the SERIES A PREFERRED STOCK shall
thereupon be entitled to receive one share of EXCHANGE STOCK for
each share of SERIES A PREFERRED STOCK surrendered plus one share
of EXCHANGE STOCK for each $1,000.00 worth of accrued but unpaid
dividends on the SERIES A PREFERRED STOCK held by such holder,
whether or not the applicable Dividend Payment Date has occurred.
Section 6 - BOARD REPRESENTATION
(a) PARENT shall cause and maintain the
election of one designee of HERCULES, who is acceptable to PARENT
(which acceptance may be withheld by PARENT in its absolute
discretion), to the Board of Directors of PARENT as promptly as
possible following the acceptance by PARENT of a HERCULES
designee; PARENT hereby agreeing that Mr. R. Keith Elliott,
President and chief Operating Officer of HERCULES ("MR.
ELLIOTT"), if designated by HERCULES, will be accepted.
Notwithstanding the foregoing, if HERCULES does not designate a
person acceptable to PARENT by the second anniversary of the
CLOSING DATE (the "SECOND ANNIVERSARY DATE"), HERCULES, may
thereafter designate only MR. ELLIOTT, and if HERCULES does not
so designate MR. ELLIOTT during the thirty day period following
the SECOND ANNIVERSARY DATE, then all of HERCULES' rights under
this Section 6 (a) will terminate. Except as provided in the
preceding sentence, the right of HERCULES to have its designee
serve as a director of PARENT shall continue so long as HERCULES
beneficially owns any outstanding shares of PREFERRED STOCK. If,
at any time HERCULES no longer beneficially owns any outstanding
shares of PREFERRED STOCK (i) the rights and obligations
described above shall thereupon terminate and (ii) the term of
the designee of HERCULES as a director of the Board of Directors
of PARENT shall thereupon terminate.
(b) After the CLOSING DATE, the Board of
Directors of MACDERMID DELAWARE shall, so long as HERCULES is the
beneficial owner of SERIES A PREFERRED STOCK, consist solely of
the following directors: (1) Daniel H. Leever ("MR. LEEVER"),
unless MR. LEEVER shall be unable to serve as a director, then
the Chief Executive Officer of PARENT, (2) Arthur J. LoVetere
("MR. LOVETERE"), unless MR. LOVETERE shall be unable to serve as
a director, then the Chief Financial Officer of PARENT and (3)
MR. ELLIOTT, unless MR. ELLIOTT shall be unable to serve as a
director, then another senior executive officer of HERCULES
designated by HERCULES.
Section 7 - SPECIAL COVENANTS
(a) In the event and for so long as MACDERMID
DELAWARE shall be in default of its obligation to redeem shares
of SERIES A PREFERRED STOCK pursuant to the CERTIFICATE OF
DESIGNATIONS or fails to pay any dividend pursuant to the
CERTIFICATE OF DESIGNATIONS, neither PARENT nor MACDERMID
DELAWARE may pay, or declare and set aside for payment, any
dividends or other distributions on any other class or series of
capital stock of PARENT or MACDERMID DELAWARE, as the case may
be.
(b) So long as HERCULES holds shares of
PREFERRED STOCK, neither PARENT nor MACDERMID DELAWARE shall,
directly or indirectly, incur indebtedness, or enter into any
other contractual arrangement, which by its terms would
unconditionally prevent PARENT or MACDERMID DELAWARE from
fulfilling any of its obligations under (i) this PREFERRED STOCK
AGREEMENT, (ii) the CERTIFICATE OF DESIGNATIONS or (iii) the
CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE STOCK, including, but
not limited to any obligations respecting (a) the payment of
dividends to holders of shares of SERIES A PREFERRED STOCK or,
(b) the timely payment of the LIQUIDATION PREFERENCE or
REDEMPTION PRICE of any share of PREFERRED STOCK, pursuant to
either the CERTIFICATE OF DESIGNATIONS or the CERTIFICATE OF
DESIGNATIONS OF THE EXCHANGE STOCK.
Section 8 - MANDATORY REDEMPTION
PARENT shall be required to redeem all
outstanding shares of EXCHANGE STOCK and cause MACDERMID DELAWARE
to redeem all outstanding shares of SERIES A PREFERRED STOCK upon
the occurrence of a change in control of PARENT within the
meaning of Section 3.5 of the SALE AND PURCHASE AGREEMENT.
Shares required to be redeemed pursuant to this Section shall be
redeemed in cash at the redemption price of $1,000.00 per share
plus an amount equal to all accrued but unpaid dividends on such
share, whether or not the applicable DIVIDEND PAYMENT DATE has
occurred pursuant to the CERTIFICATE OF DESIGNATIONS or the
CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE STOCK.
Section 9 - PAYMENT UPON LIQUIDATION, DISSOLUTION OR WINDING-UP
OF THE AFFAIRS OF MACDERMID DELAWARE
In the event of any liquidation, dissolution of
winding-up of the affairs of MACDERMID DELAWARE or any conversion
of the SERIES A PREFERRED STOCK into any other security or
property deemed to be a liquidation, dissolution or winding-up of
the corporation pursuant to Section 5 of the CERTIFICATE OF
DESIGNATIONS (whether by merger, recapitalization or similar
transaction), in which HERCULES receives less than the full
LIQUIDATION PREFERENCE provided for in Section 5 of the
CERTIFICATE OF DESIGNATIONS irrespective of whether sufficient
assets of MACDERMID DELAWARE exist (the "LIQUIDATION PAYMENT"),
HERCULES shall be entitled to receive a payment from PARENT in
the amount of the LIQUIDATION PAYMENT minus the total amount of
payments of the LIQUIDATION PREFERENCE that HERCULES has
received as of the Distribution Date. Such payment may be made
by PARENT in cash or in shares of EXCHANGE STOCK, or any
combination thereof.
Section 10 - SALE OF MACDERMID
If an agreement for the sale, acquisition or
merger of PARENT (including the sale of substantially all of the
assets of PARENT) is entered into and the obligations of PARENT
under this PREFERRED STOCK AGREEMENT, the CERTIFICATE OF
DESIGNATION and/or the CERTIFICATE OF DESIGNATION OF THE EXCHANGE
STOCK are not either unconditionally assumed or assumed to the
reasonable satisfaction of HERCULES by operation of law or by
contract by the acquiring PERSON, PARENT agrees to arrange
alternative means of providing for such obligations prior to the
consummation of such agreement, including providing a performance
bond of an institutional surety or creating an escrow, in each
case, in an amount and upon the terms and conditions reasonably
satisfactory to HERCULES.
Section 11 - RESTRICTIONS ON TRANSFER
Prior to the tenth anniversary of the CLOSING,
no shares of PREFERRED STOCK held by HERCULES may be sold,
transferred or otherwise disposed of (each, a "TRANSFER") except
to PARENT, MACDERMID DELAWARE or a successor to all or
substantially all of the assets and business of HERCULES;
PROVIDED, HOWEVER, that if an EXCHANGE EVENT described in Section
5(a) (i ) or Section 5(a) (ii) shall have occurred or if PARENT
fails to perform its obligation to (i ) redeem shares of EXCHANGE
STOCK pursuant to the terms and conditions in the CERTIFICATE OF
DESIGNATIONS OF THE EXCHANGE STOCK issued pursuant to Section
5(a) (iii) hereof or (ii) pay any dividend on the EXCHANGE STOCK
pursuant to the CERTIFICATE OF DESIGNATIONS OF THE EXCHANGE STOCK
issued pursuant to Section 5(a) (iii) hereof, and such default
continues for fifteen days after HERCULES gives notice of such
default to PARENT, HERCULES shall be free to TRANSFER any of such
shares to a third party, so long as (i )such third party is not,
directly or indirectly, a competitor of PARENT or any of its
subsidiaries and (ii) prior to effecting the proposed TRANSFER to
such a third party, HERCULES shall first grant to PARENT the
right, exercisable during the ensuing thirty days, to purchase
all, but not less than all, of the shares of PREFERRED STOCK
proposed to be TRANSFERRED (the "RIGHT OF FIRST REFUSAL"), on the
same terms and conditions that HERCULES has agreed to TRANSFER
such shares to the third party.
Section 12 - LEGENDS ON CERTIFICATES
HERCULES hereby acknowledges and agrees that
each of the certificates representing SERIES A PREFERRED STOCK
issued to HERCULES in accordance with this PREFERRED STOCK
AGREEMENT shall be subject to stop transfer instructions and
shall include the following legends, to the extend applicable:
The shares represented by this certificate
have not been registered under the
Securities Act of 1933, as amended, or the
securities laws of any state.
The shares represented by this certificate
may not be transferred, sold or otherwise
disposed of except pursuant to and subject
to that certain Series A Preferred Stock
Agreement between MacDermid Imaging
Technology, Inc., MacDermid, Incorporated
and Hercules Incorporated. A copy of such
agreement is on file with the Secretary of
MacDermid Imaging Technology, Inc.
Section 13 - REMEDIES
Notwithstanding any other provision contained in
the DEFINITIVE AGREEMENTS, to ensure a prompt judicial resolution
if (i ) PARENT or MACDERMID DELAWARE shall at anytime be in
default of any of their respective obligations under this
PREFERRED STOCK AGREEMENT or if (ii) PARENT shall at anytime be
in default of its obligation to cause and maintain the election
of the SERIES A PREFERRED DIRECTORS (collectively the
"OBLIGATIONS"), PARENT and MACDERMID DELAWARE, individually and
collectively, agree to cooperate with HERCULES to have a prompt
resolution of such default in a Delaware Court, and:
(a) agree that a breach of any of the
OBLIGATIONS would constitute irreparable harm to HERCULES:
(b) waive PARENT's rights under the SALE AND
PURCHASE AGREEMENT to choose binding arbitration to resolve a
dispute regarding the OBLIGATION;
(c) irrevocably consent to jurisdiction and
venue for any proceeding relating to the OBLIGATIONS in the Court
of Chancery of the State of Delaware in and for New Castle County
(the "CHANCERY COURT");
(d) agree that if the CHANCERY COURT declines
to exercise jurisdiction over the matter it shall immediately be
transferred to the Superior Court of the State of Delaware in and
for New Castle County and that the matter should proceed and be
determined under its Rules governing Summary Proceedings for
Commercial Disputes;
(e) agree to file their answers to any
complaint filed by HERCULES with respect to the OBLIGATIONS
within four days after such complaint is filed and only to assert
affirmative defenses that solely relate to the PREFERRED STOCK,
the SERIES A PREFERRED DIRECTORS or this PREFERRED STOCK
AGREEMENT, and to no other DEFINITIVE AGREEMENT;
(f) agree to set forth their respective
position only in briefs to be filed within fifteen days of the
filing of any complaint by HERCULES with respect to the
OBLIGATIONS and reply briefs to be filed within five days
thereafter and the matter would then be SUB JUDICE; and
(g) agree that any counterclaim that they may
have sill solely relate to the PREFERRED STOCK, the SERIES A
PREFERRED DIRECTORS or to this PREFERRED STOCK AGREEMENT, and to
no other DEFINITIVE AGREEMENT.
Section 14 - ASSIGNMENT
This PREFERRED STOCK AGREEMENT and all of the
provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors (including
any successor by merger, reorganization, consolidation or other
business combination) and permitted assigns, but neither this
PREFERRED STOCK AGREEMENT nor any of the rights, interests or
obligations hereunder shall be assigned by HERCULES except as
expressly set forth in this PREFERRED STOCK AGREEMENT.
Section 15 - NOTICES
All notices referred to herein shall be in
writing, and all notices hereunder shall be deemed to have been
given upon the earlier of receipt thereof or three (3) business
days after the mailing thereof if sent by registered mail with
postage prepaid, addressed (i )if to PARENT, to its office at 245
Freight Street, Waterbury, Connecticut 06702-0671 (attention:
Secretary), (ii) if to MACDERMID DELAWARE, to its office at 245
Freight Street, Waterbury, Connecticut 06702-0671 (attention:
Secretary), (iii) if to HERCULES, to its office at Hercules
Plaza, 1313 North Market Street, Wilmington, Delaware 19894-0001
(attention: General Counsel) or (iv) to such other address as
the parties listed above shall have designated by notice
similarly given.
Section 16 - GOVERNING LAW
This PREFERRED STOCK AGREEMENT and the legal
relations among the PARTIES hereto shall be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to its conflicts of law doctrine.
Section 17 - COUNTERPARTS
This PREFERRED STOCK AGREEMENT may be executed
simultaneously in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
Section 18 - HEADINGS
The headings of the Sections of this PREFERRED
STOCK AGREEMENT are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or
interpretation of this PREFERRED STOCK AGREEMENT.
Section 19 - ENTIRE AGREEMENT
This PREFERRED STOCK AGREEMENT and the other
DEFINITIVE AGREEMENTS set forth the entire agreement and
understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
Section 20 - THIRD PARTIES
Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person or corporation,
other than the parties hereto and their successors or assigns,
any rights or remedies under or by reason of this PREFERRED STOCK
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have
caused this PREFERRED STOCK AGREEMENT to be duly executed, all as
of the day and year first above written.
MACDERMID, INCORPORATED
By:_______________________
Its
MACDERMID IMAGING TECHNOLOGY, INC.
By:________________________
Its
HERCULES INCORPORATED
By:_________________________
Its
CONSENT OF COOPERS & LYBRAND L.L.P.
We consent to the incorporation by reference in the Registration
Statements of MacDermid, Incorporated on Form S-8 (File No. 2-66987
and 2-68181) of our report dated November 9, 1995, on our audit of the
balance sheets of the Electronics and Printing Division of Hercules
Incorporated as of December 31, 1994 and 1993 and the related
statements of operations, division equity, and cash flows for the
three years in the period ended December 31, 1994, which report is
included in this Form 8-K.
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania 19103
December 20, 1995
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NEWSLINE
MACDERMID, INCORPORATED
Waterbury Ct. 06720-9984 Tel. (203) 575-5700 Offices located worldwide.
PRESS RELEASE
Contact: Daniel H. Leever
(203) 575-7907
MACDERMID ACQUIRES DIVISION OF HERCULES
Waterbury, Connecticut, December 5, 1995. MacDermid, Incorporated
(NASDAQ-MACD) today announced that it has completed the acquisition of
the Electronics and Printing Division from Hercules Incorporated for
$100 million cash and $30 million in preferred stock.
MacDermid has established a new entity, MacDermid Imaging Technology,
Inc., located in Wilmington, Delaware led by Patricia I. Janssen,
President.
MacDermid President and CEO Daniel H. Leever says, "We are
enthusiastic about the potential for growth associated with this
acquisition. We are adding a team of outstanding people with an
established track record. Important additions to our product line
will include Aqua Mer (Registered Trademark) dry film photoresist
which will strengthen our position in imaging systems for printed
circuit boards, and the Merigraph (Registered Trademark) liquid
photopolymer printing plate system that offers a strategic business
expansion opportunity."
The acquired business has annual sales of $70 million, split evenly
between photoresists, used to imprint electrical patterns on circuit
boards, and photopolymer printing, which reproduces quality graphics
on package printing and in-store displays.
MacDermid is an international specialty chemical company serving the
printing, metal finishing, and electronics industries, based in
Waterbury, Connecticut.
NASDAQ-MACD CUSIP-554373 10 2
December 5, 1995
