UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549-1004
Form 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
Commission file number 0-2413
MACDERMID, INCORPORATED
(Exact name of Registrant as specified in its Charter)
Connecticut 06-0435750
(State of incorporation) (I.R.S. Employer I.D. No.)
245 Freight Street, Waterbury, Connecticut 06702-0671
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code (203) 575-5700
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of Class - Common Stock Without Par Value
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ( )
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to the filing requirements for the past 90 days. Yes (X) No ( )
The aggregate market value of the voting stock held by nonaffiliates of
the Registrant as of May 31, 1995 (based on the closing price on such date
as reported on Nasdaq Stock Market) was $68,668,000.
The number of shares of Registrant's Common Stock outstanding as of May
31, 1995 was 2,767,533 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1995 Annual Report to Shareholders are
incorporated by reference into Parts I and II hereof and filed as Exhibit
13 to this Report. The Proxy Statement mailed on or about June 26, 1995 to
the Corporation's stockholders in connection with the annual meeting
scheduled for July 20, 1995 are incorporated herein by reference into Part
III hereof.
<PAGE>
PART I
Item 1(a) GENERAL DEVELOPMENT OF BUSINESS
Incorporated in Connecticut in 1922, MacDermid, Incorporated and its
subsidiaries (collectively, "MacDermid" or the "Corporation") develops,
produces and markets a broad line of specialty chemical products which
are used in the metal and plastic finishing and electronics industries.
MacDermid offers a line of horizontal processing equipment used in the
production of printed circuit boards and in chemical machining, through
Hollmuller America, Inc., a joint venture with a German company.
MacDermid also markets chemical supplies and equipment produced by others.
In May 1995, the Corporation acquired certain assets of the Allied-
Kelite Company (a subsidiary of Witco Corporation), a major supplier of
plating surface preparation proprietary chemical products to automotive,
electronics hardware and other industries. The business, located
primarily in the United States includes licensing of technology to
companies in several other countries. The acquisition, accounted for as
a purchase and financed through borrowings, complements the Corporation's
existing metal finishing and electronics business and provides cost
benefits from consolidation.
On August 1, 1994, MacDermid acquired, for approximately $26 million,
851,899 shares of its common stock (approximately 24% of the shares then
outstanding) through a "Dutch Auction" self-tender offer. The self-
tender was financed by borrowings which include a $25 million six-year
term loan which is to be repaid in even quarterly payments.
For a description of the Corporation's business, see Item 1(c) on the
following page.
Item 1(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
MacDermid has one primary industry segment which is the manufacture and
sale of specialty chemicals used in finishing metals and non metallic
surfaces and in the marketing of supplies and equipment related to the
use of these chemicals.
Item 1(c) of this Report provides information concerning MacDermid's
classes of products and Item 1(d) of this report includes financial
information concerning operations by geographic area and on a
consolidated basis. Additional information with respect to the one
primary business is shown in the portions of MacDermid's 1995 Annual
Report to Shareholders, included in Exhibit 13 to this Form 10-K, and
is incorporated by reference.
Item 1(c) NARRATIVE DESCRIPTION OF BUSINESS
(i) MacDermid produces and markets over 1,000 proprietary chemical
compounds. The proprietary chemical compounds are used for the following
purposes: cleaning, activating and polishing, mechanical plating,
mechanical galvanizing, electro-plating and phosphatizing metal surfaces,
stripping of metal and final coating of metal surfaces, filtering, anti-
tarnishing and rust retarding and etching, imaging, deposition of metal
and other chemical processes. Research in connection with proprietary
products is conducted principally in the United States, with additional
research facilities in Israel and Japan.
In North America, MacDermid markets its entire line of products in the
United States through more than 80 sales and service personnel employed
by it and, in certain areas of the United States, through distributors
and manufacturing representatives. Throughout the United States, the
Corporation maintains inventories at distribution points which typically
are leased or rented. In Canada the Corporation both manufactures and
markets certain of its products through MacDermid Chemicals, Inc.
In Europe, the Corporation markets its proprietary products through
wholly owned subsidiaries. European sales are made from inventory stock
through approximately 45 sales and service representatives who are
employed by the Corporation's subsidiaries located in France, Germany,
Great Britain, Italy, Holland, Spain and Switzerland. MacDermid owns
and operates manufacturing facilities in Spain and Great Britain. In
addition, some of MacDermid's proprietary chemical products are
manufactured by contract chemical compounders located in Belgium, Great
Britain, Italy, Holland and Germany.
In the Asia/Pacific area, the Corporation markets its proprietary
products through wholly owned subsidiaries in Australia, Hong Kong,
Japan, Korea,New Zealand, Singapore, and Taiwan, and sales are made
through more than 30 sales and service representatives who are employed
by local subsidiaries. In addition, sales are made in China, Thailand,
Malaysia and The Philippines directly or through distributors. MacDermid
owns and operates manufacturing facilities in Australia and Taiwan and,
in addition, certain proprietary chemical products are manufactured by
a contract chemical compounder in Japan.
In other foreign markets, MacDermid manufactures and sells certain of
its proprietary chemicals through wholly owned subsidiaries in Israel
through MacDermid Israel Limited, where the Corporation also conducts
research, and in South Africa through a majority owned subsidiary,
MacDermid S.A. (Pty.) Ltd. In South America and in certain countries
in Europe and Asia, MacDermid products are manufactured and sold through
licensees. Certain proprietary chemical products are also sold through
distributors in many areas.
Chemicals, supplies and equipment manufactured by others and resold by
MacDermid consist of basic chemicals, automatic plating conveyors, barrel
plating and pollution control equipment, rectifiers, pumps and filters.
Resale items are marketed primarily in conjunction with and as an aid to
the sale of proprietary chemicals.
MacDermid's principal products fall into the three following classes:
(A) Chemical compounds produced by MacDermid, most of
which are the result of the Corporation's own research
and development and, therefore, are referred to as
proprietary products;
(B) Resale chemicals and supplies; and
(C) Equipment, substantially all of which is manufactured
by others and marketed by the Corporation.
The following table sets forth the classes of MacDermid's products and
the respective percentage of total consolidated revenue for each of the
last three fiscal years:
Class of Products 1995 1994 1993
Proprietary Chemicals 90% 87% 83%
Resale Chemicals
and Supplies 7 9 11
Equipment 3 4 6
(ii) MacDermid has not made a public announcement of, nor has
information otherwise become public about, a new product or line of
business requiring investment of a material amount of assets or which
otherwise is material.
(iii) MacDermid uses in excess of 700 chemicals as raw materials in
the manufacture of its proprietary products. With few exceptions,
several domestic sources of supply are available for all such raw
materials and for resale chemicals, supplies and equipment. During
fiscal 1995, there were no significant difficulties in obtaining raw
materials essential to its business.
(iv) During fiscal 1995, approximately 20% of MacDermid's proprietary
sales were derived from products covered by patents owned by the
Corporation or produced under patent license agreements. MacDermid owns
more than 70 unexpired U.S. Patents, for which corresponding patents have
been obtained or are pending in most industrialized nations, and has more
than 20 patent applications pending in the U.S. The patents owned by
Registrant are important to its business and have varying remaining lives.
Although certain of MacDermid's patents are increasingly more important
to its business, it believes that its ability to provide technical and
testing services to its customers and to meet the rapid delivery
requirements of its customers is equally, if not more, important. In
addition, MacDermid has many proprietary products which are not covered
by patents and which make a large contribution to its total sales.
Further, the Corporation owns a number of domestic and foreign trade
names and trademarks which it considers to be of value in identifying
MacDermid and its products. MacDermid neither holds nor has granted any
franchises or concessions.
(v) No material portion of MacDermid's business is seasonal.
(vi) It is necessary to maintain finished goods inventory at locations
throughout the United States and in the foreign countries in which the
Corporation operates so that it may meet the rapid delivery requirements
of its customers. This impacts working capital requirements by requiring
a considerable investment in inventories to service its customers.
Customer payment terms, which vary by country, are generally in accord
with local industry practice.
(vii) No major portion of MacDermid's business is dependent upon a
single customer or a few customers the loss of whom would have a
materially adverse effect on its business.
(viii) Since products are taken from inventory stock to ship against
current orders, there is essentially no backlog of orders for MacDermid's
proprietary chemical products. MacDermid does not consider the absence
of a backlog to be significant.
(ix) No material portion of MacDermid's business is subject to
renegotiation of profits or termination of contracts or subcontracts at
the election of the Government.
(x) The Corporation provides a broad line of proprietary chemical
compounds and supporting services. MacDermid has many competitors,
estimated to be in excess of 100 in some proprietary product areas.
Some large competitors operate globally, as does MacDermid, but most
operate locally or regionally. To the best of the Corporation's
knowledge no single competitor competes with all its proprietary
products. MacDermid maintains extensive supporting technical and
testing services for its customers, and is continuously developing new
products. Management believes that the Corporation's combined abilities
to manufacture, sell, service and develop new products and applications
enables it to compete successfully both locally and world-wide.
(xi) MacDermid spent approximately $9,644,000, $6,687,000 and
$5,796,000, during fiscal years 1995, 1994 and 1993, respectively, on
research and development activities. Substantially all research and
development activities were sponsored by the Corporation, the greater
percentage of which related to the development of new products.
(xii) For many years, MacDermid has developed proprietary products
designed to reduce the discharge of pollutant materials into the
environment and eliminate the use of certain targeted raw materials
while enhancing the efficiency of customer chemical processes. For
this reason, efforts to comply with Federal, State and local provisions,
which have been enacted or adopted regulating the discharge of materials
into the environment, may have had a positive effect upon the
Corporation's competitive position. Capital expenditures of
approximately $380,000 were made in fiscal 1995 and an estimated
$960,000 will be spent for environmental control facilities in fiscal
1996. Though difficult to predict, future spending for this purpose is
likely to average more than 10% of the capital budget.
(xiii) MacDermid employed 828 and 741 full time, regular employees as
of March 31, 1995 and 1994, respectively.
Item 1(d) FOREIGN AND DOMESTIC OPERATIONS
MacDermid's 1995 Annual Report to Shareholders, included as Exhibit 13 to
this Form 10-K and incorporated by reference, provides information with
respect to the Corporation's geographic segments including operating
information and the effect upon shareholder's equity of the translation
of foreign currency financial statements.
Item 2 PROPERTIES
In the United States, MacDermid owns the following properties:
In Waterbury, Connecticut, a 51,700 square foot building, principally
used for executive offices, marketing and corporate support, and a
62,000 square foot research and customer service facility, both of
which are located on a 5.8 acre tract. In addition, a 180,000 square
foot wood brick and concrete building complex is principally used for
manufacturing and warehousing but also includes some offices and
laboratories. The complex is located on a 7.2 acre tract. Directly
across a street from this property, a 31 acre tract of land is held
for possible future development.
In Ferndale, Michigan, a steel frame and steel sided building of 75,000
square feet consisting of factory, laboratory, warehouse and office
facilities, located on a 6.25 acre tract.
In Blue Ash, Ohio, a steel and brick single story building of 16,350 square
feet consisting of a warehouse and offices located on a 2.75 acre tract.
In New Hudson, Michigan, a steel and brick single story building of 15,000
square feet consisting of research laboratories and offices located on a 7
acre tract.
The Corporation also owns properties in Vernon, Connecticut, and Leominster,
Massachusetts, which are being held for sale or lease but which could be
used for manufacturing should the need arise.
Outside the United States, the Corporation owns additional properties as
follows:
At Barcelona, Spain, 31,000 square feet of factory, warehouse, laboratory
and office space.
At Telford, England, two brick, concrete and steel buildings, connected
by a walkway, containing a total of 43,000 square feet of manufacturing,
warehouse, laboratory and office space.
At Hsin Chu, Taiwan, Republic of China, two buildings of reinforced
concrete totaling 30,000 square feet, located on a 1.8 acre tract, used
for factory, warehouse and offices.
At Hong Kong, 31,000 square feet of office, laboratory and warehouse space
in a concrete block building.
In addition, MacDermid leases office, laboratory, warehouse and
manufacturing facilities as needed. During the year, such additional
facilities were leased in Minnesota, Canada, Holland, Hong Kong, Israel,
Japan, Singapore and several other foreign countries. All owned and
leased facilities are in good condition and are of adequate size for
present business volume.
Item 3 Legal Proceedings
There are no pending legal proceedings to which the Corporation or its
subsidiaries is a party which, in the opinion of Management, would
materially affect the Corporation's consolidated financial position,
results of operations or cash flow.
The Corporation is subject to the usual reviews and inspections by
environmental agencies of the various states in which the Corporation
has facilities and the Corporation has entered into agreements and
consent decrees at various times in connection with such reviews. On
two occasions the Corporation also has been identified as a potentially
responsible party ("PRP") by the U. S. Environmental Protection Agency
in connection with its investigation of certain waste disposal sites.
In both such instances the Corporation's involvement has been de minimis
(less than 0.3%). The Corporation has recorded its best estimate of
liabilities in connection with site clean-up based upon the extent of
its involvement, the number and financial resources of other PRPs and
estimates of the total costs of the site clean-up. Management believes
that the recorded liabilities are reasonable estimates of probable
liability and that future cash outlays are unlikely to be material to
the future financial condition of the Corporation.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Corporation's security
holders during the fourth quarter of fiscal 1995.
<PAGE>
Item 4A EXECUTIVE OFFICERS OF MACDERMID
The following is a list of the names, offices and ages (as of March 31,
1995) of all the executive officers of MacDermid, each of whom has been
employed in his respective office(s) for more than five years, except as
noted:
Name Age Office with Registrant
Harold Leever 80 Chairman since 1977
Daniel H. Leever 46 President and Chief Executive
Officer since August 1990,
previously and since April 1989
was Senior Vice President and
Chief Operating Officer.
Charles T. Cobb 52 Vice President since November
1993. Previously was Vice
President of The Shipley
Company since 1988.
Terrence C. Copeland 47 Vice President since July 1991.
Previously was Managing
Director/European Operations
since June 1989.
John L. Cordani (1) 32 Assistant Secretary since February
1995. Previously was General
Counsel since May 1993. From the
beginning of 1992, he was Manager
of Patents and Trademarks prior to
which he was a Research Chemist.
David A. Erdman 52 Vice President since November
1993. Previously, and since
1988, was Director of Quality
of the Electronics Group of
E.I. Dupont de Nemours, Inc.
John J. Grunwald 65 Vice President/Research since
1981
Peter E. Kukanskis 48 Vice President/Technical since
1986
Gary B. Larson 55 Vice President/Research since
1981
Michael A. Pfaff 51 Vice President/Industrial
Products since 1984
Gerald F. Renner (1) 60 Corporate Secretary since 1986
Charles D. Rice (2) 53 Vice President since May 1990,
Chief Financial Officer since
July 1991 and Treasurer since
April 1993.
<PAGE>
Name Age Office With Registrant
Sharon J. Stone 46 Assistant Treasurer since
February 1995. Previously, she
was for more than five years,
and continues to be, Manager
of General Accounting
Notes: 1. Mr. Cordani became Secretary upon Mr. Renner's retirement
which was effective March 31, 1995.
2. Mr. Rice resigned effective April 15, 1995.
PART II
Item 5 MARKET FOR MACDERMID'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
Information with respect to the market for MacDermid's Common Stock,
dividends paid and other related information is contained in its 1995
Annual Report to Shareholders included as Exhibit 13 to this form 10-K
and incorporated by reference.
Item 6 SELECTED FINANCIAL DATA
The selected financial data (Five-Year Summary) is contained in
MacDermid's 1995 Annual Report to Shareholders included as Exhibit 13
to this form 10-K and incorporated by reference.
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations is contained in MacDermid's 1995 Annual Report to
Shareholders included as Exhibit 13 to this form 10-K and incorporated
by reference.
Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, including the notes thereto, of
the Corporation are contained in MacDermid's 1995 Annual Report to
Shareholders included as Exhibit 13 to this form 10-K and incorporated
by reference. Additional financial information is contained in the
Financial Data Schedule appearing as Exhibit 27 to this report.
Item 9 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10 DIRECTORS AND OFFICERS
The discussion of "Election of Directors" and a portion of the discussion
in the section, "Interest of Management and Others in Certain Transactions
and Family Relationships" contained in MacDermid's Proxy Statement dated
June 26, 1995 are incorporated herein by reference thereto. Officers of
the Corporation are listed in Item 4A, above.
Item 11 EXECUTIVE COMPENSATION
The discussion of "Executive Compensation" contained in MacDermid's Proxy
Statement dated June 26, 1995 is incorporated herein by reference thereto.
Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to the security ownership of certain beneficial
owners and management contained in.MacDermid's Proxy Statement dated June
26, 1995 is incorporated herein by reference thereto.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND FAMILY
RELATIONSHIPS
The discussion of "Interest of Management and Others in Certain
Transactions and Family Relationships" contained in MacDermid's Proxy
Statement dated June 26, 1995 is incorporated herein by reference thereto.
PART IV
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The consolidated financial statements and report thereon of KPMG Peat
Marwick LLP, dated May 12, 1995 are contained in MacDermid's 1995 Annual
Report to Shareholders included as Exhibit 13 to this form 10-K and
incorporated herein by reference. Additional financial information is
contained in the Financial Data Schedule included as Exhibit 27 to this
report.
(2) Financial Statement Schedules
The following supplementary financial data should be read in conjunction
with the consolidated financial statements and comments thereto referred
to above. Schedules not included with this supplementary financial data
have been omitted because they are not applicable, are immaterial or the
required information is included in the consolidated financial statements
or related notes to consolidated financial statements.
Schedule II - Valuation and Qualifying Accounts and Reserves
Auditors' Report on Supporting Schedule
(3) Exhibits
An index to the exhibits filed or incorporated by reference immediately
precedes such exhibits.
(1) Form 11-K, MacDermid, Incorporated Employee
Stock Ownership Plan; including Accountants'
Consent to be added by amendment.
(2) Form 11-K, MacDermid, Incorporated Employees'
Profit Sharing Plan; including Accountants.
Consent to be added by amendment.
(c) Reports on Form 8-K
MacDermid has not filed any reports on Form 8-K
during the last quarter of the fiscal year covered
by this report.
(d) Schedules
The schedules listed above are filed as part of this
Annual Report on Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report
on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.
MACDERMID, INCORPORATED
(Registrant)
Dated: June 27, 1995
By /s/ Harold Leever By /s/ Daniel H. Leever
Harold Leever Daniel H. Leever
Director, Chairman Director, President and
Chief Executive Officer
By /s/ Gregory M. Bolingbroke.
Gregory M. Bolingbroke
Controller and Principal
Accounting Officer
Harold Leever, pursuant to powers of attorney which are being filed
with this Annual Report on Form 10-K, has signed below on June 27, 1995
as attorney-in-fact for the following directors of the Registrant:
Donald G. Ogilvie Walter F. Torrance, Jr.
Thomas W. Smith Robert F. Weltzien
Francis M. White
/s/ Harold Leever
Harold Leever
<PAGE>
<TABLE>
SCHEDULE II
MACDERMID, INCORPORATED AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years ended March 31, 1995, 1994 and 1993
<CAPTION>
Balance at Additions Balance
beginning charged to Deductions at end
Description of period earnings <F1> of period
----------- ---------- ---------- ---------- ---------
1995
----
<S> <C> <C> <C> <C>
Allowance for
doubtful
receivables $2,317,000 664,000 122,000 2,859,000
========== ========= ========= =========
1994
----
Allowance for
doubtful
receivables $2,660,000 1,792,000 2,135,000 2,317,000
========== ========= ========= =========
1993
----
Allowance for
doubtful
receivables $1,894,000 1,797,000 1,031,000 2,660,000
========== ========= ========= =========
<FN>
<F1> Bad debts charged off less recoveries.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP (Logo)
Certified Public Accountants
CityPlace II
Hartford, CT 06103-4103
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
MacDermid, Incorporated:
Under date of May 12, 1995, we reported on the consolidated balance
sheets of MacDermid, Incorporated and subsidiaries as of March 31,
1995 and 1994, and the related consolidated statements of earnings
and cash flows for each of the years in the three-year period ended
March 31, 1995, as contained in the 1995 annual report to shareholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the
year 1995. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
financial statement schedules as listed in the accompanying index
under Item 14(a)(2). These financial statement schedules are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statement schedules based
on our audits.
In our opinion, such schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
May 12, 1995
<PAGE>
EXHIBIT INDEX
1995 FORM 10-K ANNUAL REPORT
Exhibit
No.
3.1 Restated Certificate of Incorporation, MacDermid, By reference
Incorporated, dated November 19, 1984. Exhibit 19
to September 30, 1991 Form 10-Q Quarterly Report
is incorporated by reference herein.
3.2 By-Laws, amended as of November, 1984. Exhibit 3b By reference
to 1985 Form 10-K Annual Report is incorporated
by reference herein.
4.1 Amended and Restated Credit Agreement, dated as of Attached
October 6, 1994, among MacDermid, Incorporated, the
Banks signatory thereto and Chase Manhattan Bank,
N.A., as Agent.
4.2 First Amendment to Amended and Restated Credit Attached
Agreement, dated as of April 6, 1995, among
MacDermid, Incorporated, the banks signatory
thereto and Chase Manhattan Bank, N.A., as Agent
10.1 MacDermid, Incorporated Special Stock Purchase By reference
Plan, amended as of November 1, 1992. Exhibit 10
to 1993 Form 10-K Annual Report is incorporated
by reference herein.
10.2 MacDermid, Incorporated 1995 Equity Incentive Plan Attached
13 Portions of MacDermid's 1995 Annual Report to Attached
Stockholders as required by Item 8
21 Subsidiaries of MacDermid, Incorporated Attached
23 Independent Auditors' Consent Attached
24 Power of Attorney Attached
27 Financial Data Schedule Attached
EXHIBIT 4.1
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
October 6, 1994
among
MacDERMID, INCORPORATED
the Banks signatory hereto
and
THE CHASE MANHATTAN BANK, N.A.
as Agent
<PAGE>
Table of Contents
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
Section 1.01. Definitions 1
Section 1.02. Accounting Terms 12
ARTICLE 2. THE CREDIT
Section 2.01. The Revolving Loans 13
Section 2.02. The Term Loans 13
Section 2.03. The Notes 13
Section 2.04 Letters of Credit 14
Section 2.05. Purpose 18
Section 2.06. Borrowing Procedures 18
Section 2.07. Payments and Conversions 18
Section 2.08. Interest Periods: Renewals 19
Section 2.09. Changes of Commitments 19
Section 2.10. Certain Notices 19
Section 2.11. Minimum Amounts 20
Section 2.12. Interest 20
Section 2.13. Fees 21
Section 2.14. Payments Generally 21
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. Additional Costs 22
Section 3.02. Limitation of Types of Loans 24
Section 3.03. Illegality 24
Section 3.04. Certain Conversions pursuant to Sections
3.01 and 3.03 25
Section 3.05. Certain Compensation 26
Section 3.06. Indemnification for Taxes 26
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.01. Documentary Conditions Precedent 28
Section 4.02. Additional Conditions Precedent 28
Section 4.03. Deemed Representations 29
Section 4.04. First Borrowing by Each Eligible
Subsidiary 30
Section 4.05. Representations of Eligible Subsidiaries 30
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Section 5.01. Incorporation, Good Standing and Due
Qualification 31
Section 5.02. Corporate Power and Authority; No Conflicts 32
Section 5.03. Legally Enforceable Agreements 32
Section 5.04. Litigation 32
Section 5.05. Financial Statements; SEC Filings 32
Section 5.06. Taxes 33
Section 5.07. ERISA 33
i
<PAGE>
Section 5.08. Subsidiaries and Ownership of Stock 33
Section 5.09. Credit Arrangements 34
Section 5.10. No Default on Outstanding Judgments or
Orders 34
Section 5.11. Governmental Regulation 34
Section 5.12. Environmental Matters 34
Section 5.13. Margin Stock 35
Section 5.14. Full Disclosure 35
ARTICLE 6. AFFIRMATIVE COVENANTS
Section 6.01. Reporting Requirements 35
Section 6.02. Payment of Obligations 38
Section 6.03. Maintenance of Property; Insurance 38
Section 6.04. Conduct of Business and Maintenance of
Existence 38
Section 6.05. Compliance with Laws 39
Section 6.06. Inspection of Property, Books and Records 39
Section 6.07. Maintenance of Ownership of Subsidiaries 39
ARTICLE 7. NEGATIVE COVENANTS
Section 7.01. Debt 40
Section 7.02. Restricted Payments 40
Section 7.03. Investments 41
Section 7.04. Negative Pledge 41
Section 7.05. Consolidations, Mergers and Sales of Assets 42
Section 7.06. Transactions with Affiliates 42
ARTICLE 8. FINANCIAL COVENANTS
Section 8.01. EBIT to Interest Expense Ratio 43
Section 8.02. Minimum Consolidated Net Worth 43
Section 8.03. Maximum Total Debt to Net Worth Ratio 43
ARTICLE 9. EVENTS OF DEFAULT
Section 9.01. Events of Default 43
Section 9.02. Remedies 45
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER
Section 10.01. Appointment, Powers and Immunities of
Agent 46
Section 10.02. Reliance by Agent 46
Section 10.03. Defaults 47
Section 10.04. Rights of Agent as a Bank 47
Section 10.05. Indemnification of Agent 47
Section 10.06. Documents 48
Section 10.07. Non-Reliance on Agent and Other Banks 48
Section 10.08. Failure of Agent to Act 49
Section 10.09. Resignation of Agent 49
Section 10.10. Amendments Concerning Agency Function 49
Section 10.11. Liability of Agent 50
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Section 10.12. Transfer of Agency Function 50
Section 10.13. Non-Receipt of Funds by the Agent 50
Section 10.14. Withholding Taxes 50
Section 10.15. Several Obligations and Rights of Banks 51
Section 10.16. Pro Rata Treatment of Loans, Etc 51
Section 10.17. Sharing of Payments Among Banks 51
ARTICLE 11. GUARANTY
Section 11.01 The Guaranty 52
Section 11.02. Guaranty Unconditional 52
Section 11.03. Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances 53
Section 11.04. Waiver by the Company 53
Section 11.05. Subrogation 53
Section 11.06. Stay of Acceleration 53
ARTICLE 12. MISCELLANEOUS
Section 12.01. Amendments and Waivers 54
Section 12.02. Usury 54
Section 12.03. Expenses; Indemnification 54
Section 12.04. Survival 55
Section 12.05. Assignments; Participations 55
Section 12.06. Notices 56
Section 12.07. Setoff 56
Section 12.08. Jurisdiction; Immunities 57
Section 12.09. Judgment Currency 57
Section 12.10. Confidentiality 58
Section 12.11. Table of Contents: Headings 58
Section 12.12. Severability 58
Section 12.13. Counterparts 58
Section 12.14. Integration 59
Section 12.15. Governing Law 59
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EXHIBITS
Exhibit A-1 Revolving Promissory Note
Exhibit A-2 Term Promissory Note
Exhibit B Authorization Letter
Exhibit C Election to Participate
Exhibit D Election to Terminate
Exhibit E Opinion of Counsel for the Borrower
Exhibit F Opinion of Counsel for Each Eligible Subsidiary
Exhibit G Term Loan Amounts
Exhibit H Letters of Credit Documents
SCHEDULES
Schedule I Subsidiaries of the Borrower
Schedule II Credit Arrangements
Schedule III Litigation
Schedule IV Investments
Schedule V Environmental Disclosure
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of October 6, 1994
among MacDERMID, INCORPORATED, a corporation organized under the laws
of the State of Connecticut (the "Company"), each of the banks which is
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 agent for
the Banks (in such capacity, together with its successors in such
capacity, the "Agent").
This Credit Agreement amends and restates that certain Credit
Agreement dated as of June 22, 1994.
The Company desires that the Banks extend credit as provided
herein, and the Banks are prepared to extend such credit. Accordingly,
the Company, the Banks and the Agent agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. DEFINITIONS As used in this Agreement the
following terms have the following meanings (terms defined in the
singular to have a correlative meaning when used in the plural and vice
versa);
"Additional Costs" shall have the meaning set forth in Section
3.01(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 the Borrower from time to time.
"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 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 2.06.
"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 replacement 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 aggregate
principal amount following, as such amount may be reduced or otherwise
modified from time to time pursuant to the terms hereof:
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1. The Chase Manhattan Bank, N.A.: $10,000,000
2. Bank of Boston Connecticut: $ 5,000,000
3. Shawmut Bank, N.A.: $ 5,000,000
4. The Bank of New York: $ 5,000,000
"Common Stock" means common stock, no par value, of the Borrower.
"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 (a) the sum of
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 Worth" means at any date the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries
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.
"Credit Agreement" means that certain Amended and Restated Credit
Agreement (as amended from time to time) dated as of October 6, 1994
among the Company, the Banks and the Agent.
"Debt" means, with respect to any Person at any date, without
duplication: (a) all obligations of such Person for borrowed money,
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(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
Borrower), (f) all Debt of others 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 others 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.
"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 hereto.
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"Election to Terminate" means an Election to Terminate
substantially in the form of Exhibit D hereto.
"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 and other governmental
restrictions relating to the environment, 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 without limitation, 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
9.01.
"Facility Documents" means this Agreement, the Notes and any
documents relating to Letters of Credit.
"Federal Funds Rate" means, for any day, the rate per annum
(expressed on a 365/366 day basis of calculation, if the rate on
Variable Rate Loans is so calculated) equal to the weighted average of
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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 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 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 (i) the Fixed Base Rate for such Loan for such Interest
Period, divided by (ii) 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 and (b) extension of the principal amount of
the Term Loan being advanced to the Company.
"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 and MacDermid
Europe, Inc.
"Guaranty" means the Guaranty of the Guarantors in favor of the
Agent for the benefit of the Banks.
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"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, mixture, solution or substance which
may pose a present or potential hazard to human health or the
environment.
"Interest Margin" means (a) if the ratio of Debt of the Company
and its Consolidated Subsidiaries on a consolidated basis to
Consolidated EBITDA minus Consolidated Capital Expenditures is equal to
or greater than 3.00 to 1.00, a rate of 125 basis points over the Fixed
Rate for Eurocurrency Loans; (b) if the Company's ratio of Debt to
Consolidated EBITDA minus Consolidated Capital Expenditures is less
than 3.00 to 1.00 but greater than 1.75 to 1.00 a rate of 100 basis
points over the Fixed Rate for Eurocurrency Loans; and (c) if the
Company's ratio of Debt to Consolidated EBITDA minus Consolidated
Capital Expenditures is equal to or less than 1.75 to 1.00, at a rate
of 75 basis points over the Fixed Rate for Eurocurrency Loans. 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 6.01(c) hereof.
"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 2.08, 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.
"Investments" 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 Borrower
as the office by which its Loans of such type are to be made and
maintained.
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"Letter(s) of Credit" means any standby Letter of Credit issued by
the Agent for the account of a Borrower pursuant to Section 2.04 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 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 (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 2.04(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 it 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 and the Term Loans
made by a Bank pursuant to Section 2.01 or Section 2.02.
"Material Debt" means Debt (other than the Notes) of the Borrower
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 June 30, 2000; provided that if such date is
not a Banking Day, the Maturity Date shall be the next succeeding
Banking Day.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001 (a)(3) of ERISA to which any
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member of the ERISA Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions, including for these purposes 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 or Exhibit A-2 hereto evidencing the Loans made by
a Bank hereunder.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means liens:
(i) 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;
(ii) liens, if contested in good faith by appropriate proceedings
and appropriate reserves are maintained with respect thereto;
(iii) 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 Borrower
or any of its Subsidiaries is a party;
(iv) deposits to secure public or statutory obligations of the
Borrower and any of its Subsidiaries;
(v) 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;
(vi) deposits to secure surety or appeal bonds in proceedings to
which the Borrower or any of its Subsidiaries is a party;
(vii) existing leases by the Company or its Subsidiaries of real
and personal property; and
(viii) liens for taxes not yet due and payable.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
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"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 under Section 412 of the Code
and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has
at any time within the preceding five 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.
"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.
"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.
"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 federal, state,
municipal or foreign 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 federal, state, municipal or foreign 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 it be notified
within 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
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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, in the case of Eurocurrency
Loans, "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 (i) any dividend or other distribution
on any shares of the Borrower's capital stock (except dividends payable
solely in shares of its capital stock) or (ii) any payment on account
of the purchase, redemption, retirement or acquisition of (a) any
shares of the Borrower's capital stock or (b) any option, warrant or
other right to acquire shares of the Borrower's capital stock.
"Revolving Loans" means revolving Loans made by the Banks pursuant
to Section 2.01 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 "[British Pound sign]" 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
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similar functions are at the time owned directly or indirectly by such
Person.
"Termination Date" means June 30, 1997; 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).
"Term Loans" means the Term Loans made by the Banks pursuant to
Section 2.02 hereof.
"Unfunded Liabilities" means with respect to any Plan at any time,
the amount (if any) by which (i) 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 (ii) 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 1/4 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 1.02. 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
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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.
ARTICLE 2. THE CREDIT
Section 2.01. 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 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, pay 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
2.06 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, each
Alternative Currency Loan shall be the Dollar Equivalent for such Loan
as of the Denomination Date.
Section 2.02. 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 the Company in an amount equal to that set forth
opposite its name on Exhibit G hereto. The Term Loans may be
outstanding as Variable Rate Loans or Eurocurrency Loans. All Term
Loans shall be denominated in Dollars.
Section 2.03. THE NOTES. (a) The Revolving Loans of each Bank
shall be evidenced by promissory notes in favor of such Bank in the
form of Exhibit A-1, dated the date of this Agreement, duly completed
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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,
amount and currency of each Revolving Loan evidenced by such Note, and
each payment 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
made by such Bank.
(b) The Term Loans of each Bank shall be evidenced by promissory
notes in favor of such Bank in the form of Exhibit A-2, dated the date
of this Agreement duly completed and executed by the Borrower.
Section 2.04. 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 2.04(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 thereto, the aggregate outstanding Revolving Loans to the
Borrowers plus the aggregate amount of Letters of Credit Usage would
exceed the Commitments, (ii) in no event shall the Agent issue (x) any
Letter of Credit having an expiration date later than the tenth
Banking Day prior to the Termination Date, or (y) 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 $10,000,000. The issuance of any Letter of Credit in
accordance with the provisions of this Section 2.04 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 PRO RATA participation,
based upon its proportionate share of the total Commitments, 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
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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 funds in an account or
fund a cash collateral account 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 paid 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 the Letter of Credit has
passed. Each payment or deposit 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.
(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 time) at least ten
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 is attached as Exhibit H, as such
document may be amended from time to time with the consent of the
Required Banks. Promptly after receipt of a notice of issuance of a
Letter of Credit, 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 2.04(a).
(c) In the event of any request for 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 such drawing, and the applicable
Borrower shall reimburse the Agent on the day on which such drawing is
honored in compliance with the terms thereof in an amount in Dollars in
same day funds equal to the amount of such drawing if such drawing is
in Dollars and if the drawing is in an Alternative Currency the Dollar
Equivalent of the amount required to be paid in the Alternative
Currency pursuant to the terms of the Letter of Credit (the "Contract
Amount"); provided that, anything contained in this Agreement to the
contrary notwithstanding, (i) unless the applicable Borrower shall have
notified the Agent prior to 11:00 a.m. (New York City time) on the
first Banking Day after 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 2.06 requesting the Banks to make 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 such drawing not
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denominated in Dollars, and (ii) subsequent to satisfaction or waiver
of the conditions specified in Article 4, the Banks shall make Variable
Rate Loans on the date of such drawing, 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, proceeds of Variable
Rate Loans are not received by the Agent on such date in an amount
equal to the amount of such drawing, the applicable Borrower shall
reimburse the Agent on the Banking Day immediately following the date
of such drawing, in an amount in same day funds equal to the excess of
the amount of such drawing over the amount of such Variable Rate Loans,
if any, which are so received, plus accrued interest on such amount at
the rate set forth in Section 2.04(e)(1)(i).
(d) In the event a Borrower shall fail to reimburse the Agent as
provided in Section 2.04(c) in an amount equal to the amount of any
drawing honored in compliance with the terms thereof by the Agent under
a Letter of Credit issued by it and for any reason Variable Rate Loans
are not advanced to the applicable Borrower as contemplated by Section
2.04(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.
In the event that any Bank fails to make available to the Agent the
amount of such Bank's participation in such Letter of Credit as
provided in this Section 2.04(c), the Agent shall be entitled to
recover such amount on demand from such Bank together with interest at
the customary rate set by the Agent for the correction of errors among
banks for three Banking Days and thereafter at the Variable Rate. The
Agent shall distribute to each Bank which has paid all amounts payable
by it under this Section 2.04(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 Borrower in reimbursement of drawings honored by
the Agent under such Letter of Credit when such payments are received.
(e)(1) Each Borrower agrees to pay the following amount to the
Agent with respect to Letters of Credit issued by it for the account of
such Borrower:
(i) 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
thereof 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 2.04(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
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Variable Rate Loans, then interest shall accrue at the Default
Rate.
(ii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each drawing made thereunder,
documentary and processing charges agreed between the Borrower and
the Agent as of the date of such issuance, amendment or transfer.
Each Borrower agrees to pay the Agent for distribution to each
Bank in respect of all Letters of Credit outstanding issued for its
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, payable quarterly in arrears
commencing on the last day of the then current fiscal quarter of the
Company and at the end of each succeeding fiscal quarter. Such amounts
received by the Agent for the account of the Banks shall be promptly
paid to the Banks in accordance with their PRO RATA participation. If
any Letter of Credit is fully drawn upon or otherwise terminated each
Bank agrees to refund to the applicable Borrower its 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 in the event that no further
letter of credit fees shall become payable hereunder against which such
refund can be credited, then such Bank shall promptly pay to such
Borrower directly the amount of such refund.
(f) The obligations of each Borrower to reimburse the Agent for
drawings made under the Letters of Credit issued by it for such
Borrower and the obligations of the Banks under Section 2.04(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, without
limitation, 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
the Banks 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 Borrowers from
time to time.
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(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 2.05. PURPOSE. The Company shall use the proceeds of the
Term Loan and the Revolving Loans for the purchase of Common Stock of
the Company, the repayment of the amounts outstanding under that
certain Credit Agreement, dated as of January 31, 1992 between the
Company and The Chase Manhattan Bank, N.A., working capital, future
capital expenditures and for general corporate purposes of the
Borrowers. 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 2.06. BORROWING PROCEDURES. The applicable Borrower
shall give the Agent notice (a "Borrowing Request") of each Borrowing
to be made under Section 2.01 as provided in Section 2.10. Not later
than 2:00 p.m. New York City time on the date of such Borrowing, each
Bank shall, through its Lending Office and subject to the conditions of
this Agreement, make the amount of the Loan to be made by it on such
day in the currency in which such Loan is to be made available to the
Agent, at the principal office for the account of the Lending Office
designated by the Agent 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 with the Agent at the Principal Office.
Section 2.07. PAYMENTS 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 2.10; and (ii) Eurocurrency Loans
may be prepaid or converted only on the last day of an Interest Period
for such Loans. Each prepayment of the Term Loans shall be applied to
installments of the Term Loans PRO RATA in accordance with the
respective amounts thereof.
(b) If at any time the amount of the Revolving Loans outstanding
hereunder plus the Letters of Credit Usage exceeds the Commitments, the
Borrower shall immediately repay the Revolving Loans in an amount equal
to such excess. For the purposes of this clause (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 Term Loans shall be repaid in twenty-four equal payments,
each in a principal amount equal to one/twenty-fourth of the original
amount outstanding thereunder, due on the last day of each March, June,
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September and December, commencing on September 30, 1994, with a final
payment of all outstanding principal and accrued interest to be made on
the Maturity Date.
Section 2.08. INTEREST PERIODS: RENEWALS. (a) In the case of
each Eurocurrency Loan, the applicable Borrower shall select an
Interest Period of any duration in accordance with the definition of
Interest Period in Section 1.01, subject to the following limitations:
(i) no Interest Period may extend beyond the Termination Date in the
case of Revolving Loans, or Maturity Date in the case of Term Loans;
(ii) notwithstanding clause (i) above, 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 2.10 and
provided no Default or Event of Default has occurred and is continuing,
a Borrower may renew any Eurocurrency Loan on the last day of the
Interest Period therefor as the same type of Loan with an Interest
Period of the same or different duration in accordance with the
limitations provided above or may convert such Loan to a Variable Rate
Loan. If the Borrower shall fail to give notice to the Agent of such a
renewal or by the terms of this Agreement not be permitted to renew,
(a) in the case of a Eurocurrency Loan denominated in Dollars such
Eurocurrency Loan shall automatically become a Variable Rate Loan on
the last day of the current Interest Period and (b) in the case of a
Eurocurrency Loan denominated in an Alternative Currency, such
Eurocurrency Loan shall automatically become a Eurocurrency Loan
denominated in the same Alternative Currency having an Interest Period
of one month.
Section 2.09. CHANGES OF COMMITMENTS. The Company shall have the
right to reduce or terminate the amount of unused Commitments 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 as provided
in Section 2.10; 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 $500,000, the Banks shall have the right to either
reduce the Commitments to such amount or to terminate the Commitments
in whole. The Commitments once reduced or terminated may not be
reinstated.
Section 2.10. CERTAIN NOTICES. Borrowing Requests issued by a
Borrower to the Agent with respect to each Borrowing pursuant to
Section 2.06, and each notice of prepayment or conversion pursuant to
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Section 2.07, and each notice of renewal pursuant to Section 2.08(b),
and each notice of reduction or termination of the Commitments pursuant
to Section 2.09 shall be irrevocable and shall be effective only if
received by the Agent not later than 11:00 a.m. New York City time, and
(a) in the case of Borrowings and prepayments of, conversions into and
renewals of (i) Variable Rate Loans, given on the day of such
Borrowing; or (ii) Eurocurrency Loans, given three Banking Days prior
thereto; (b) in the case of reductions or termination of the
Commitments, given three Banking Days prior thereto. Each such notice
shall specify the Loans to be borrowed, prepaid, converted or renewed
and the currency and the amount (subject to Section 2.11) and type of
the Loans to be borrowed, or converted, or prepaid 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 or prepayment, or 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 2.11. 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 3.04, each
Borrowing, prepayment, conversion and renewal of principal of Revolving
Credit Loans of a particular type shall be, (a) in the case of a
Variable Rate Loan in an amount at least equal to $100,000 in the
aggregate for all Banks, and (b) in the case of Eurocurrency Loans in
an amount equal to the Dollar Equivalent of $1,000,000 or any larger
integral multiple of $100,000. (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 of Interest Period).
Section 2.12. INTEREST. (a) Interest shall accrue on the
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; 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 paid in full at the Default
Rate.
(b) The interest rate on each Variable Rate Loan shall change when
the Variable Rate changes. Interest on the Loans shall be calculated
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on the basis of a year of 360 days for 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
payment of principal or conversion and (i) for each Variable Rate Loan,
on the last day of each month, 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 2.13. 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 for the period from and including the Closing
Date to the date the Commitments are terminated at a rate per annum
equal to 3/8%, calculated on the basis of a year of 360 days for the
actual number of days elapsed; 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 twelve month period then ended) is equal to or less than 1.75 to
1.00, the commitment fee shall be reduced to a rate per annum equal to
<%. 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 September
30, 1994 and on the Termination Date.
(b) The Company shall pay to the Agent as compensation for its
services hereunder an agency fee and an arrangement fee as set forth in
that certain letter dated June 22, 1994 between the Agent and the
Company.
Section 2.14. 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 not later than 1:00 p.m. New York City time on the relevant
dates specified above 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. 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 is to 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
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account of the Borrower with the Agent or such Bank, as the case may
be, and any Bank so doing shall promptly notify the Agent and the
Company. Each Borrower shall, at the time of making each payment under
this Agreement or any Notes, 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 in the event that it fails
to so specify, or if a Default or Event of Default has occurred and is
continuing, the Agent may apply such payment as it may elect in its
sole discretion (subject to Section 10.16)). If the due date of any
payment under this Agreement or any Notes 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 to such Bank, in immediately available funds, for the
account of such Bank's Lending Office.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. 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 Loans under this Agreement or its Notes or its obligation
to make any such Loans hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any such Loans or such
obligation (such increases in costs and reductions 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); or (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital
ratio or similar requirements 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 1.01); 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
Borrower of any event occurring after the date of this Agreement which
will entitle such Bank to compensation pursuant to this Section 3.01(a)
as promptly as practicable after it 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 a Borrower under
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this Section 3.01(a), or under Section 3.01(c), the Borrower 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 3.04:
(b) Without limiting the effect of the foregoing provisions of
this Section 3.01, in the event that, 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 3.04).
(c) Without limiting the effect of the foregoing provisions of
this Section 3.01 (but without duplication), the Company shall pay
directly to each Bank from time to time on request such amounts as such
Bank may determine to be necessary to compensate such Bank for any
costs which it determines are attributable to the maintenance by it
pursuant to any law or regulation of any jurisdiction or any
interpretation, directive 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, without limitation, 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 a Borrower is entitled to compensation pursuant to
this Section 3.01(c) as promptly as practicable after it determines to
request such compensation, and the Agent will notify the applicable
Borrower. 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 3.01 of the effect of any Regulatory Change pursuant to
subsections (a) or (b), or of the effect of capital maintained pursuant
to subsection (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, it in respect of Loans or such obligation, and of the
additional amounts required to compensate such Bank under this Section
3.01, shall be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
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Section 3.02. LIMITATION OF TYPES OF LOANS. Anything herein to
the contrary notwithstanding, 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 1.01
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 1.01 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 the
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 2.07.
Section 3.03. ILLEGALITY. Notwithstanding any other provision in
this Agreement, in the event that 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 Loans of
such type, or (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 national or international financial,
political or economic conditions (including the imposition of or any
change in exchange controls) or any currency exchange rates would make
it impracticable for any Bank to make Loans denominated in such
Alternative Currency, then such Bank shall promptly notify the Borrower
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
Loans of such type 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, as the
case may be, shall be converted in accordance with Section 3.04.
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Section 3.04. CERTAIN CONVERSIONS PURSUANT TO SECTIONS 3.01 AND
3.03. 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 3.01 or 3.03, 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 3.01(b) or
3.03, on such earlier date as such Bank may specify to the applicable
Borrower with a copy to the Agent) and, unless and until such Bank
gives notice as provided below that the circumstances specified in
Section 3.01 or 3.03 which give rise to such conversion no longer
exist:
(a) to the extent that such Bank's Affected Loans have been
converted to 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 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 a Borrower (with a copy to the Agent) that
the circumstances specified in Section 3.01 or 3.03 which gave rise to
the conversion of such Bank's Affected Loans pursuant to this Section
3.04 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.
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Section 3.05. 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 2.06, 2.07 or 2.08, as the case may be.
Without limiting the foregoing, such compensation shall include any
losses arising from converting Loans denominated in an Alternative
Currency to the Dollar Equivalent on the day of payment, prepayment,
conversion or renewal. A determination of any Bank as to the amounts
payable pursuant to this Section 3.05 shall be conclusive absent
manifest error.
Section 3.06. INDEMNIFICATION FOR TAXES. (a) All payments
hereunder and under any of the Facility Documents (including, without
limitation, 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 by the jurisdiction in which such Bank is organized, in which
its Lending Office is located or in which it 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:
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(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 proviso 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 3.06(a), the applicable Borrower and the Bank concerned will
discuss in good faith with a view to determining whether any means (not
being detrimental in the opinion of the Bank to any of the Bank's
interests) exist or may be implemented by which such amounts may
lawfully be mitigated or reduced, (or the Bank be compensated in some
other way) so as to leave the Bank in the same position in which it
would have been had such Taxes not been payable.
(c) If any Borrower makes any payment hereunder in respect of
which it is required by law to make any deduction or withholding of any
Taxes, it 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 paragraph (a) of this
Section 3.06, 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 clause (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 of
any Bank arising by virtue of payments under this Section 3.06(c),
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computed in a manner consistent with Section 3.06(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.
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.01. DOCUMENTARY CONDITIONS PRECEDENT. The obligations
of the Banks to make the Loans on the Closing Date are subject to the
condition precedent that the Agent shall have received on or before the
date of such Loans each of the following, in form and substance
satisfactory to the Agent and its counsel:
(a) this Agreement duly executed by the Company; and
(b) the Notes duly executed by the Borrowers.
Section 4.02. ADDITIONAL CONDITIONS PRECEDENT. The obligations of
the Banks to make the Term Loan or any Loans pursuant to the initial
Borrowing Request shall be subject to the further conditions precedent
set forth in sub-section (a), (b), (c) and (d) below, and in the case
of Loans pursuant to a subsequent Borrowing Request shall be subject to
the further conditions precedent set forth in sub-sections (a) and (c)
below:
(a) that on the date of such Loans the following statements shall
be true:
(i) the representations and warranties contained in Article
5, and in the case of a Borrowing by an Eligible Subsidiary,
Section 4.05, and the representation and warranties made by
the Guarantors in Section 5 of the Guaranty, are true and
correct in all material respects on and as of the date of
such Loans as though made on and as of such date; and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such Loans;
(b) that on the Funding Date the Agent shall have received the
following in form and substance satisfactory to the Agent and its
counsel:
(i) the Authorization Letter duly executed by the Company, and as
applicable, any Eligible Subsidiary;
(ii) the Guaranty, duly executed by MacDermid Overseas Asia
Limited and MacDermid Europe, Inc.;
(iii) evidence satisfactory to the Agent that the amount available
under the London Multi-Currency Loan Facility (as defined in that
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certain Credit Agreement, dated as of January 31, 1992, between
the Company and The Chase Manhattan Bank, N.A.) has been reduced
to $5,000,000;
(iv) a certificate of the Secretary or Assistant Secretary of the
Company, dated the Funding Date, attesting to all corporate action
taken by the Company, including resolutions of its Board of
Directors authorizing the execution, delivery and performance of
the Facility Documents and each other document to be delivered
pursuant to this Agreement;
(v) a certificate of the Secretary or Assistant Secretary of the
Company, dated the Funding Date, certifying the names and true
signatures of the officers of the Company authorized to sign the
Facility Documents and the other documents to be delivered by the
company under this Agreement;
(vi) a certificate of a duly authorized officer of the Company,
dated the Funding Date, stating that the representations and
warranties in Article 5 are true and correct on such date as
though made on and as of such date and that no event has occurred
and is continuing which constitutes a Default or Event of Default;
(vii) a favorable opinion of counsel for the Company, dated the
Funding Date, in substantially the form of Exhibit E and as to
such other matters as the Agent or any Bank may reasonably
request;
(viii) the audited financial statements of the Company and its
Consolidated Subsidiaries for the fiscal year ending March 31,
1994; and
(ix) evidence that the amounts payable under that certain Credit
Agreement, dated as of January 31, 1992, have been paid in full.
(c) 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
(d) the Agent shall have received such consents, approvals,
opinions or documents as the Agent or any Bank may reasonably request.
Section 4.03. DEEMED REPRESENTATIONS. Each Borrowing Request
hereunder and acceptance by the Company, or an Eligible Subsidiary of
the proceeds of such Borrowing or Borrowings shall constitute a
representation and warranty that the statements contained in Section
4.02(a) are true and correct both on the date of such notice and,
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unless the Borrower otherwise notifies the Agent prior to such
Borrowing, as of the date of such Borrowing.
Section 4.04. FIRST BORROWING BY EACH ELIGIBLE SUBSIDIARY. The
obligation of each Bank to make a Loan on the occasion of the first
Borrowing 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 Note of such Eligible Subsidiary dated on or before the date
of such Borrowing complying with the provisions of Section 2.03;
(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 hereto 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 the Election to Participate
of such Eligible Subsidiary, this Agreement 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 4.05
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 clause (d) above shall be dated no more than
five Banking Days before the date of the first Borrowing by such
Eligible Subsidiary hereunder.
Section 4.05. REPRESENTATIONS 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
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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 Election to
Participate and its Notes, and the 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 and do not contravene, or constitute a default under, any
provision of 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 or 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 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, imposed by or in the nature of withholding or
otherwise, which is imposed on any payment to be made by such Eligible
Subsidiary pursuant hereto or on its Notes, or is imposed on or by
virtue of the execution, delivery or enforcement of its Election to
Participate or of its Notes.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants that:
Section 5.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION.
Each of the Company and its 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.
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Section 5.02. CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The
execution, delivery and performance by the Company 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, without
limitation, 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
the Borrower is a party or by which it or its properties may be bound;
(e) or 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 5.03. LEGALLY ENFORCEABLE AGREEMENTS. Each Facility
Document to which the Company is a party is, or when delivered under
this Agreement will be, a legal, valid and binding obligation of the
Company enforceable against the Company 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 5.04. LITIGATION. Except as disclosed on Schedule III
hereto, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, 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 affect on the
financial condition, operations, properties or business of the Company
or its Subsidiaries as taken as a whole or the ability of the Company
to perform its obligation under the Facility Documents.
Section 5.05. FINANCIAL STATEMENTS; SEC FILINGS. The consolidated
balance sheet of the Company and its Consolidated Subsidiaries as at
March 31, 1994, 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 footnotes, together with the opinion
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thereon, of KPMG Peat, Marwick & Co., independent certified public
accountants, a copy of which has been furnished to each of the Banks,
are complete and correct and fairly present the financial condition of
the Company and its Consolidated Subsidiaries as at such dates 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, 1994, 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 5.06. TAXES. 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 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 5.07. 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
(i) sought a waiver of the minimum funding standard under Section 412
of the Code in respect of any Plan, (ii) 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 (iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.
Section 5.08. 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 stock or other interest of each such
Subsidiary. Except as set forth on Schedule I, all of the outstanding
capital stock or other interest of each such Subsidiary has been
validly issued, is fully paid and nonassessable and is owned by the
Company free and clear of all Liens.
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Section 5.09. CREDIT ARRANGEMENTS. As of March 31, 1994,
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, 1994.
Section 5.10. NO DEFAULT 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, the Company and its Subsidiaries are in compliance with all
applicable Environmental Laws and neither the Company nor its
Subsidiaries has any fixed or contingent liability under any
Environmental Law applicable to the business, operations or properties
of the Company and it Subsidiaries (for purposes of this Section
"liabilities" shall include, without limitation, liabilities for any
capital or operating expenditures required for clean-up or closure of
properties presently or previously owned, any capital or operating
expenditure 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 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
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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. 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 Consolidated
Subsidiaries, taken as a whole, or the ability of the Company or its
Subsidiaries to perform their obligations under this Agreement and the
Notes.
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 6.01. REPORTING REQUIREMENTS. The Company shall furnish
directly to each of the Banks:
(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 a 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 & Co. or other independent public
accountants of nationally recognized standing, and (ii) in the case of
consolidating statements, all certified as to fairness of presentation,
generally accepted accounting principles and consistency by the chief
financial officer of the Company.
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(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 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 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, generally
accepted accounting principles and consistency;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (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 7.01
through 7.04, inclusive, and Sections 7.06, 8.01, 8.02 and 8.03 on the
date of such financial statements, and (ii) stating whether any Default
exists on the date of such certificate and, if any 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
Borrower 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 have filed
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
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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 given or required
to be given 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
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 or its
Subsidiaries taken as a whole;
(i) If, at any time, the Company shall become aware or have
reasonable cause to believe that Hazardous Substances or solid wastes
have been released or have otherwise come to be located on, in or
affecting 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 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
Subsidiaries or off-site environmental conditions which now or
hereafter may materially impair the Borrowers' ability to meet their
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obligations under the Facility Documents, the Company shall promptly
give notice of that event to the Agent.
(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 6.02. 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, without limitation, tax liabilities, except where the same
may be contested in good faith by appropriate proceedings, and will
maintain, and will cause each Subsidiary to maintain, in accordance
with generally accepted accounting principles, appropriate reserves for
the accrual of any of the same.
Section 6.03. 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 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
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 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 6.04. 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, and will preserve, renew and keep in full
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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 rights, privileges and franchises necessary or
desirable in the normal conduct of business; PROVIDED that nothing in
this Section 6.04 shall prohibit (i) 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 (ii) the
termination of the corporate existence of any Subsidiary if (a) 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 (b) such termination is in compliance with
clause (ii) of the proviso in Section 7.05.
Section 6.05. COMPLIANCE WITH LAWS. The Company will comply, and
cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations and requirements of
governmental authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder) 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.
Section 6.06. 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 transactions 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 6.07. 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 set forth on Schedule I of each of its
Subsidiaries, except as modified by mergers permitted pursuant to the
proviso to Section 7.05.
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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 7.01. 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) in an aggregate principal amount
not to exceed $10,000,000 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 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 $15,000,000; and at such
time as such ratio is equal to or less than 1.75 to 1.00, the Company
and its Subsidiaries may incur Debt in an aggregate principal amount
not to exceed $20,000,000;
(d) Debt subordinated to the Debt hereunder, in amounts and on
terms and conditions satisfactory to the Required Banks;
(e) Guarantees by MacDermid Overseas Asia Limited and MacDermid
Europe Inc. of the Debt hereunder;
(f) From the date hereof until March 31, 1995, Guarantees of
obligations which do not exceed in the aggregate $2,500,000; from April
1, 1995 until March 31, 1996, Guarantees of obligations which do not
exceed in the aggregate $4,500,000; from April 1, 1996 until March 31,
1997, Guarantees of obligations which do not exceed in the aggregate
$6,500,000; and thereafter Guarantees of obligations which do not
exceed in the aggregate $7,500,000; and
(g) Up to an aggregate of $10,000,000 of intercompany Debt.
Section 7.02. RESTRICTED PAYMENTS. Declare or make any
Restricted Payment unless (i) no Default or Event of Default has
occurred or is continuing and (ii) immediately after giving effect
thereto, the aggregate of all Restricted Payments declared or made
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subsequent to the Closing Date does not exceed 50% of consolidated net
income (less consolidated net loss, if any) of the Company and its
Consolidated 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
7.02 shall prohibit (a) the payment of any dividend or distribution
within 60 days after the declaration thereof if such declaration was
not prohibited by this Section 7.02; or (ii) the Company from
repurchasing up to $30,000,000 of its Common Stock on or before June
30, 1995 pursuant to the proposed tender offer for shares of the
Company's Common Stock or subsequent open market purchases; PROVIDED
that notwithstanding the above, after June 30, 1994 and prior to June
30, 1995, to the extent that the Company does not repurchase up to
$30,000,000 of its Common Stock, the Company may pay a dividend in an
aggregate amount equal to $30,000,000, MINUS the amount used to
repurchase Common Stock.
Section 7.03. INVESTMENTS. Make or acquire any Investment in any
Person other than:
(a) Investments outstanding as of March 31, 1994 and, of which
those in excess of $1,000,000 are set forth on Schedule IV hereto;
(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 $5,000,000 outstanding at any one
time, excluding any Investments described in clause (a) above ;
(c) deposits with, or time deposits with, including certificates
of deposits, issued by any office located in the United States of (i)
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 or (ii) any Bank
(d) Investments in investment grade securities; and
(e) Investments made in another Person pursuant to a merger or
asset acquisition made in compliance with subsection (i) of the proviso
in Section 7.05.
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 7.04. NEGATIVE PLEDGE. Create, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired by it, except:
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(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 $5,000,000 during the period from the Closing Date
until June 30, 1995; (ii) in an amount up to $6,000,000 during the
period from July 1, 1995 until June 30, 1996; and (iii) which amount
shall be increased by $1,000,000 for each twelve month period
thereafter.
Section 7.05. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The
Company shall not(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 the assets of the Company and its Subsidiaries, taken as a
whole, to any other Person; PROVIDED that (i) the Company 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 is the
surviving entity and (B) after giving effect thereto the ratio of
Consolidated Debt to Consolidated EBITDA on a proforma basis is equal
to or less than 3.0 to 1.0, (ii) the Company may sell assets in the
ordinary course of business and sell (x) up to $5,000,000 additional
assets during the period from the Closing Date until June 30, 1995; (y)
up to $6,000,000 additional assets during the period from July 1, 1995
to June 30, 1996, which amount shall be increased by $1,000,000 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 7.06. TRANSACTIONS WITH AFFILIATES. Directly or
indirectly, pay any funds to or for the account of, make any investment
(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) in, 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 7.06 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 services rendered by any Affiliate, if such sales
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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 and (f)
loans from the Company to its Subsidiaries which do not exceed
$7,500,000 in the aggregate.
ARTICLE 8. FINANCIAL 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 Borrower covenants that:
Section 8.01. 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 8.02. 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 $37,000,000; 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 8.03. 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 December 31, 1994 1.50 to 1.00
January 1, 1995 to December 31, 1995 1.20 to 1.00
January 1, 1996 and thereafter 90 to 1.00
ARTICLE 9. EVENTS OF DEFAULT.
Section 9.01. EVENTS OF DEFAULT. Any of the following events
shall be an "Event of Default":
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(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
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 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 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 Sections 7.01 to 7.06 inclusive, and
Sections 8.01, 8.02 and 8.03.
(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
9.01) in any Facility Document and such failure shall continue for 30
consecutive 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
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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 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;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $500,000 which it 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, 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,
30 days; or
Section 9.02. 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 9.01(g) or
9.01(h) above, the Commitments shall be immediately terminated, and the
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Notes, all interest thereon and all other amounts payable under this
Agreement 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 the Borrowers.
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 10.01. 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 and 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 and 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 of them
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
its obligations hereunder or thereunder. The Agent may employ agents
and attorneys-in-fact and shall not be responsible, except as to
money or securities received by it 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 it or 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 10.02. RELIANCE BY AGENT. The Agent shall be entitled to
rely upon any certification, notice or other communication (including
any thereof by telephone, 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 it for all purposes hereof unless and until a notice of
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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 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 10.03. DEFAULTS. The Agent shall not be deemed to have
knowledge of the occurrence of a 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." In the event that 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 10.08) 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 it shall deem advisable in the best
interest of the Banks; and provided further that the Agent shall not be
required to take any such action which it determines to be contrary to
law.
Section 10.04. 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 its affiliates) as if it 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 10.05. INDEMNIFICATION OF AGENT. The Banks agree to
indemnify the Agent (to the extent not reimbursed under Section 12.03
or under the applicable provisions of any other Facility Document, but
without limiting the obligations of the Borrower under Section 12.03 or
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such provisions), 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 the transactions contemplated
hereby or thereby (including, without limitation, the costs and
expenses which any Borrower is obligated to pay under Section 12.03 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 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
Borrowers of the party to be indemnified.
Section 10.06. 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 10.07. 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 its
Subsidiaries and 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 analysis 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 its
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 their
affiliates) which may come into the possession of the Agent or any of
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its 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 anyone.
Section 10.08. 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 it
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 10.05 in respect of any and all
liability and expense which may be incurred by it by reason of taking
or continuing to take any such action.
Section 10.09. 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, 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 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 its benefit
in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent.
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 it shall have given its prior
consent thereto.
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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 its obligations hereunder 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 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 (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 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, in the event that 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
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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 its obligation
to make its Loan 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 2.06 shall
be made from the Banks, each reduction or termination of the amount of
the Commitments under Section 2.09 shall be applied to the Commitments
of the Banks, and each payment of commitment fee accruing under Section
2.13 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 2.07 of Loans of a particular type (but not conversions
provided for by Section 3.04), 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; (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, it shall promptly purchase from
the other Banks participations in (or, if and to the extent specified
by such Bank, direct interests in) 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 them. 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)
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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 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 11.01 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 Note issued by any Eligible Subsidiary pursuant to this Agreement,
and the full and punctual payment of all other amounts payable by any
Eligible Subsidiary under this Agreement. Upon failure by 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.
Section 11.02. GUARANTY UNCONDITIONAL. The obligations of the
Company hereunder 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, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any Note;
(c) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of any Eligible Subsidiary under
this Agreement or any Note;
(d) Any change in the corporate existence, structure or ownership
of any Eligible Subsidiary, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Eligible
Subsidiary or its assets or any resulting release or discharge of any
obligation of any Eligible Subsidiary contained in this Agreement or
any Note;
(e) the existence of any claim, set-off or other rights which the
company may have at any time against 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;
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(f) any invalidity or unenforceability relating to or against any
Eligible Subsidiary for any reason of this Agreement or any Note, 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
(g) any other act or omission to act or delay of any kind by any
Eligible Subsidiary, the Agent, any Bank or any other Person or any
other circumstance whatsoever which might, but for the provisions of
this paragraph, constitute a legal or equitable discharge of the
Company's obligations hereunder.
Section 11.03. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT
IN CERTAIN CIRCUMSTANCES. The Company's obligations hereunder 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 and each Eligible Subsidiary under this
Agreement shall have been paid in full. If at any time any payment of
the principal of or interest on any Note or any other amount payable by
any Eligible Subsidiary under this Agreement is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of 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.
Section 11.04. 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 11.05. 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 an Eligible Subsidiary with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by an
Eligible Subsidiary in respect thereof.
Section 11.06. STAY OF ACCELERATION. In the event that
acceleration of the time for payment of any amount payable by any
Eligible Subsidiary under this Agreement or its Notes is stayed upon
insolvency, bankruptcy or reorganization of 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.
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ARTICLE 12. MISCELLANEOUS.
Section 12.01. AMENDMENTS AND WAIVERS. No amendment or waiver of
any provision of this Agreement nor 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
Documents, (c) postpone any date fixed for any payment of principal of,
or interest on, any Loans or any fees or other amounts payable under
any Facility Documents, (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 Documents (e) amend this Section 12.01 (e)
release the Company Guaranty described in Article 11 hereof, or (f)
extend the expiration date of a Letter of Credit beyond the Termination
Date; PROVIDED FURTHER that no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Banks
required hereinabove to take such action, affect the rights or duties
of the Agent under any Facility Documents. No failure on the part of
the Agent or any Bank to exercise, and no delay in exercising, any
right hereunder 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 12.02. 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 12.03. EXPENSES; INDEMNIFICATION. (a) The Company shall
reimburse (i) the Agent on demand for all reasonable out-of-pocket
costs, expenses, and charges (including, without limitation, 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, without limitation, fees and expenses
of counsel) in connection with the enforcement of this Agreement.
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(b) The Company agrees to indemnify the Agent and each Bank and
their respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities,
claims, damages or expenses incurred by any of them arising out of or
by reason of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other
proceedings) arising out of this Agreement or any actual or proposed
use by the Company or any Subsidiary of the proceeds of the Loans,
including without limitation, 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 incurred by reason of the
gross negligence, willful misconduct, or intentional breach of
obligations under this Agreement of the Person to be indemnified).
(c) The Company agrees to indemnify, hold harmless and defend the
Agent and each Bank and any current or former officer, director,
employee, shareholder or agent of the Agent and each Bank or any of
them from 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, but not limited to: (a) claims of third parties (including,
but not limited to, agencies) for damages, penalties, response costs,
clean-up costs, injunctive or other relief; (b) costs and expenses of
removal and restoration, including fees of attorneys and experts, and
costs of reporting the existence of Hazardous Substances to any
governmental body, and (c) any and all expenses or obligations incurred
at, before and after any trial or appeal therefrom whether or not
taxable as costs, including, without limitation, witness fees
deposition costs, copying and telephone charges, other expenses and
reasonable attorneys' fees, all of which shall be paid by Company when
incurred.
Section 12.04. SURVIVAL. The obligations of the Borrower under
Sections 3.01, 3.05 and 12.03 shall survive the repayment of the Loans
and the termination of the Commitments.
Section 12.05. 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 neither the Company nor any Eligible Subsidiaries may assign or
transfer its rights or obligations hereunder. Each Bank may assign all
or any part of any Loan, its Commitment or its interest in any Letters
of Credit to another bank or other entity with the consent of the
Company in which event the assignee shall have, to the extent of such
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assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it were a Bank hereunder.
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.
Each Bank may sell participations in, all or any part of any Loan, its
Commitment or its interest in any Letters of Credit to another bank or
other entity, in which event, 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. Such Bank shall deliver a notice to the Company and the
Agent of any such participation which shall set forth the participant
and the amount of such participation. The agreement executed by such
Bank in favor of the participant shall not give the participant the
right to require such Bank to take or omit to take any action hereunder
except action directly relating to (i) the extension of a payment date
with respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (ii) the
reduction of the principal amount outstanding hereunder or (iii) the
reduction of the rate of interest payable on such amount or any amount
of fees payable hereunder to a rate or amount, as the case may be,
below that which the participant is entitled to receive under its
agreement with such Bank. Such 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.
Section 12.06. NOTICES. Unless the party to be notified
otherwise notifies the other party in writing as provided in this
Section, 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 Borrower by
ordinary mail, telex 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 or facsimile, when the telex or facsimile is transmitted
to the telex or facsimile number as aforesaid; provided that notices to
the Agent and the Banks shall be effective upon receipt.
Section 12.07. 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 it 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 the Borrowers to such Bank under this Agreement
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or such Bank's Note which is not paid when due (regardless of whether
such balances are then due to any Borrower), in which case it shall
promptly notify the Borrowers and the Agent thereof; provided that such
Bank's failure to give such notice shall not affect the validity
thereof. Payments by any Borrower hereunder shall be made without
setoff or counterclaim.
Section 12.08. 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 Agreement or the Notes,
and the Borrower hereby irrevocably agree 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 its 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 the Banks waive any right they may have to jury trial.
(b) Nothing in this Section 12.08 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 its property in the courts
of any other jurisdictions.
(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 its obligations under this Agreement and the
Notes.
Section 12.09. 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
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given. The obligations of each Borrower in respect of any sum due to
any Bank or the Agent hereunder or under any Note 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 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 10.07, 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 (i) 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, (ii) upon the order of a court or
administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such party,
(iv) which has become publicly available without breach of any
agreement among the parties hereto, (v) as necessary for the exercise
of any remedy hereunder or under any Note, or (vi) subject to
provisions similar to those contained in this Section, to any
prospective participant or assignee.
Section 12.11. TABLE OF CONTENTS: HEADINGS. Any table of
contents and the headings and captions hereunder are for convenience
only 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
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constitute one and the same instrument, and any party hereto may
execute this Agreement by signing any such counterpart.
Section 12.14. INTEGRATION. The Facility Documents set forth the
entire 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 /s/ C. Rice
Name: Charles D. Rice
Title: Vice President
Address for Notices:
245 Freight Street
Waterbury, Connecticut 06702
Attn: Corporate Secretary
AGENT:
THE CHASE MANHATTAN BANK, N.A.
By /s/ A. Neil Sweeney
Name: A. Neil Sweeney
Title: Vice President
Address for Notices:
Gaspare Galante
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
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
<PAGE>
BANKS:
THE CHASE MANHATTAN BANK, N.A.
By /s/ A. Neil Sweeney
Name: A. Neil Sweeney
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
<PAGE>
BANK OF BOSTON CONNECTICUT
By /s/ Donald W. Peters
Name: Donald W. Peters
Title: Vice President
Lending Office for Variable Rate
Loans:
Bank of Boston Connecticut
81 West Main Street
Waterbury, Connecticut 06702
Attn: Donald W. Peters
Telephone: (203) 575-3733
Telefax: (203) 574-7599
Lending Office for Eurocurrency
Loans:
Bank of Boston Connecticut
81 West Main Street
Waterbury, Connecticut 06702
Attn: Donald W. Peters
Telephone: (203) 575-3733
Telefax: (203) 574-7599
Address for Notices:
Donald W. Peters, Vice President
Bank of Boston Connecticut
81 West Main Street
Waterbury, Connecticut 06702
Deanna L. Enhorning
Bank of Boston Connecticut
81 West Main Street
Waterbury, Connecticut 06702
<PAGE>
SHAWMUT BANK, N.A.
By /s/ Robert C. Rubino
Name: Robert Rubino
Title: Vice President
Lending Office for Variable Rate
Loans:
Shawmut Bank, N.A.
1 Federal Street, OF-0324
Boston, Massachusetts 02211
Attn: Robert Rubino, V.P.
Telephone: (617) 292-4168
Lending Office for Eurocurrency
Loans:
Shawmut Bank Connecticut, N.A.
1 Federal Street, OF-0324
Boston, Massachusetts 02211
Attn: Robert Rubino
Telephone: (617) 292-4168
Address for Notices:
Shawmut Bank Connecticut, N.A.
1 Federal Street, OF-0324
Boston, Massachusetts 02211
Attn: Robert Rubino
<PAGE>
THE BANK OF NEW YORK
By /s/ Edward J. Moriarty
Name: Edward J. Moriarty
Title: Vice President
Lending Office for Variable Rate
Loans:
The Bank of New York
123 Main Street, 4th Floor
White Plains, New York 10602
Attn: Kelly Donohue
Telephone: (914) 421-8048
Lending Office for Eurocurrency
Loans:
The Bank of New York
123 Main Street, 4th Floor
White Plains, New York 10602
Attn: Kelly Donohue
Telephone: (914) 421-8048
Address for Notices:
Joseph F. Markey, Vice President
BNY Business Center
301 Tresser Blvd.
Stamford, Connecticut 06901
Edward J. Moriarty,
Vice President
The Bank of New York
123 Main Street, 4th Floor
White Plains, New York 10602
<PAGE>
Exhibit G
Term Loan Amounts
The Chase Manhattan Bank, N.A.: $10,000,000
Bank of Boston Connecticut: $ 5,000,000
Shawmut Bank, N.A.: $ 5,000,000
The Bank of New York: $ 5,000,000
EXHIBIT 4.2
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
First Amendment to Amended and Restated Credit Agreement
(this "Agreement"), dated as of April 6, 1995, among MacDermid,
Incorporated, a Connecticut corporation (the "Company"), each of
the banks which is 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, as agent for the Banks (in such capacity, the
"Agent").
W I T N E S S E T H
WHEREAS, the Company, the Banks and the Agent are parties to
that certain Amended and Restated Credit Agreement, dated as of
October 6, 1994 (as amended from time to time, the "Credit
Agreement"). Unless otherwise defined, capitalized terms used
herein without definition shall have the meanings assigned to
them in the Credit Agreement;
WHEREAS, the parties hereto wish to amend the Credit
Agreement to reduce the availability under the Revolving Loan and
amend certain provisions thereof; and
WHEREAS, the Bank of New York, a signatory Bank under the
Credit Agreement has assigned all of its rights and obligations
thereunder pursuant to that certain Assignment and Acceptance,
dated as of April 3, 1995;
NOW THEREFORE, in consideration of the premises and for
other valuable consideration received by each party to its full
satisfaction, the Company, the Banks and the Agent agree as
follows:
ARTICLE I
Amendments
Section 1.1 Amendments to Article 1 of the Credit Agreement.
(a) The definition of "Commitment" is hereby amended to
read in its entirety as follows:
"Commitment" means with respect to each Bank, the obligation
of such Bank to make Revolving Loans under this Agreement in
the aggregate principal amount following, as such amount may be
reduced or otherwise modified from time to time pursuant to the
terms hereof:
"1. The Chase Manhattan Bank, N.A.: $ 5,142,857
2. The Bank of Boston Connecticut: 2,000,000
3. Shawmut Bank, N.A.: 2,857,143
------------
Total $ 10,000,000
(b) The definition of "Interest Margin" is hereby amended to
read in its entirety as follows:
"Interest Margin" means (a) if the ratio of Debt of the
Company and its Consolidated Subsidiaries on a consolidated
basis to Consolidated EBITDA minus Consolidated Capital
Expenditures is equal to or greater than 3.00 to 1.00, a
rate of 125 basis points over the Fixed Rate for
Eurocurrency Loans; (b) if the ratio of Debt of the Company
and its Consolidated Subsidiaries on a consolidated basis to
Consolidated EBITDA minus Consolidated Capital Expenditures
is less than 3.00 to 1.00 but greater than 2.00 to 1.00, a
rate of 100 basis points over the Fixed Rate for
Eurocurrency Loans; (c) if the ratio of Debt of the Company
and its Consolidated Subsidiaries on a consolidated basis to
Consolidated EBITDA minus Consolidated Capital Expenditures
is equal to or less than 2.00 to 1.00 but greater than 1.75
to 1.00, a rate of 75 basis points over the Fixed Rate for
Eurocurrency Loans; (d) if the ratio of Debt of the Company
and its Consolidated Subsidiaries on a consolidated basis to
Consolidated EBITDA minus Consolidate Capital Expenditures
is less than 1.75 to 1.00 but greater than 1.50 to 1.00, a
rate of 62.5 basis points over the Fixed Rate for
Eurocurrency Loans; and (e) if the ratio Debt of the Company
and its Consolidated Subsidiaries on a consolidated basis to
Consolidated EBITDA minus Consolidated Capital Expenditures
is less than 1.50 to 1.00, a rate of 50 basis points over
the Fixed Rate for Eurocurrency Loans. 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 6.01 (c) hereof."
(c) The definition of "Required Banks" is hereby amended to read
in its entirety as follows:
"Required Banks" means, at any time while no Revolving Loans
are outstanding, Banks having at least 66.66% of the aggregate
amount of the Commitments and Term Loans outstanding and, at any
time while Revolving Loans are outstanding, Banks holding at
least 66.66% of the aggregate principal amount of the Loans."
Section 1.2 Amendments to the Exhibits of the Credit Agreement.
(a) Exhibit A-1 and A-2 of the Credit Agreement are hereby
amended to read as Exhibit A-1 and A-2 attached hereto.
(b) Exhibit G of the Credit Agreement is hereby amended to
read in its entirety as follows:
"Term Loan Amounts
1. The Chase Manhattan Bank, N.A.: $ 11,250,000.12
2. The Bank of Boston Connecticut: 4,375,000.00
3. Shawmut Bank, N.A.: 6,249,999.87
---------------
Total $ 21,874,999.99
Section 1.3 No Other Amendment or Waiver. Except as expressly
amended herein all of the representations, warranties, terms
covenants and conditions of the Credit Agreement, shall remain
unamended and unwaived and shall continue to be and shall remain
in full force and effect in accordance with their respective
terms. The waivers and amendments set forth herein shall not be
deemed as waivers, amendments or modifications of any other term
or provision of the Credit Agreement or any other document or of
any transaction or further or future action on the Company's part
requiring the Banks' consent.
ARTICLE II
Representations and Warranties
Section 2.1 No Default. The Company represents and warrants
that as of the date hereof after giving effect to this Agreement,
(a) no Default or Event of Default shall have occurred and be
continuing under the Credit Agreement, and (b) all
representations and warranties contained in the Credit Agreement
made by the Company are made in connection with this Agreement
and are true and correct as of the date hereof as if made on the
date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date or to transactions
not prohibited by the Credit Agreement.
Section 2.2 Due Authorization and Execution. The execution and
delivery and performance of this Agreement has been duly
authorized by all necessary corporate action and the Credit
Agreement as amended by this Agreement is the legal, valid and
binding obligation of the Company and each Eligible Subsidiary
which has entered into an Election to Participate, enforceable in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency or other similar laws of
general application relating to affecting the enforcement of
creditor's rights or remedies or by general equitable principals.
Section 2.3 Organization, Consents, etc. The Company
represents and warrants that (a) it is a corporation duly
organized and validly existing under the laws of the State of
Connecticut and has all power and authority necessary to execute
and deliver this Agreement; (b) no approval, consent or
withholding of objection is required from any governmental
authority or other Person with respect to the entering into or
performance by the Company of this Agreement; and (c) the
entering into and performance by the Company and any Eligible
Subsidiary of this Agreement will not violate any judgment,
order, law, rule or regulation applicable to the Company or its
Subsidiaries or result in any breach of, or constitute a default
under, or give any party the right to terminate, or result in the
creation of any lien, charge, security interest or other
encumbrance upon any assets of the Company or its Subsidiaries
pursuant to, its or their charter documents or any indenture,
lease, mortgage, deed of trust, loan or credit agreement or other
instrument or agreement to which the Company or its Subsidiaries
is a party or by which the Company or its subsidiaries or its
assets may be bound or affected.
Section 2.4 Ratification And Acknowledgement. The Credit
Agreement, as amended by this Agreement, is hereby ratified and
confirmed in all respects.
ARTICLE III
Conditions Precedent
Section 3.1 Effective. The terms of this Agreement shall
become effective upon the occurrence of the following events:
(1) receipt by the Agent of at least three (3) duly
executed counterparts of this Agreement;
(2) the Notes duly executed;
(3) evidence satisfactory to the Agent that the Bank of
New York has assigned all of its interests in the Credit
Agreement and other Facility Documents to the Banks signatory
hereto;
(4) receipt by the Agent of a certificate of the
Company's Secretary certifying as to good standing, corporate
resolutions, incumbency and such other matters as the Banks may
reasonably request;
(5) receipt by the Agent of reimbursement of its costs and
expenses in connection herewith, including the reasonable fees
and expenses of its counsel; and
(6) receipt by the Agent of such other documents as the
Banks may reasonably request.
ARTICLE IV
Miscellaneous
Section 4.1 Governing Law. This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of
the State of New York, without regard to the application of its
conflict of laws rules, and shall bind and inure to the benefit
of the successors and assigns of the parties hereto.
Section 4.2 Counterparts. This Agreement may be executed in
several counterparts and by the parties hereto on separate
signature pages. Each counterpart bearing, on one or more
signature pages, the signatures of the parties shall be an
original but all of the counterparts together shall be deemed
to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective
officers, hereunto duly authorized, all as of the date first
above written.
MACDERMID INCORPORATED
By:__________________________
Name:
Title:
AGENT:
THE CHASE MANHATTAN BANK, N.A.
By:_____________________________
Name:
Title:
BANKS:
THE CHASE MANHATTAN BANK, N.A.
By:_____________________________
Name:
Title:
BANK OF BOSTON CONNECTICUT
By:_____________________________
Name:
Title:
SHAWMUT BANK, N.A.
By:_____________________________
Name:
Title:
EXHIBIT 10.2
MACDERMID, INCORPORATED
1995 EQUITY INCENTIVE PLAN
Effective May 15, 1995
1. PURPOSES. The purposes of the MacDermid, Incorporated 1995
Equity Incentive Plan (the "Plan") are (a) to enable MacDermid,
Incorporated and its subsidiary corporations (hereinafter referred to,
unless the context otherwise requires, as the "Company") to provide to
its employees the means to acquire a proprietary interest in the Company,
in order that such persons will have additional financial incentives to
contribute to the Company's growth and profitability, and (b) to enhance
the ability of the Company to attract and retain individuals of outstanding
ability upon whom the success of the Company will depend. The Plan is
intended to accomplish these goals by enabling the Company to grant awards
("Awards") in the form of restricted stock, all as more fully described
below.
2. ADMINISTRATION. The Plan shall be administered by a committee of
not fewer than two members of the Board of Directors of the Company (the
"Board"). Each member of the Committee shall be a "disinterested person"
within the meaning of Rule 16b-3(c) under the Securities Exchange Act of
1934, as amended (the "Act") and an "outside director" within the meaning
of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as
amended (the "Code") and applicable Treasury regulations thereunder. The
Committee may adopt such rules and regulations as it may deem necessary
or advisable for the administration of the Plan. The Committee shall
have no authority to take any action if the authority to take such action,
or the taking of such action, would disqualify the Plan from the exemption
provided by Rule 16b-3 under the Act or any successor provision.
3. PARTICIPANTS. All employees of the Company shall be eligible to
receive Awards and thereby become participants in the Plan. In granting
Awards the Committee may include or exclude previous participants in the
Plan as the Committee may determine. Receipt of an Award shall in no way
be deemed to constitute a consent to or promise of continued employment
by the Company.
4. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided
herein, an aggregate of up to 50,000 shares of the Common Stock, without
par value per share (the "Common Stock"), shall be available for issuance
under the Plan. Such shares may be authorized and unissued shares or
shares held in the Company's treasury. If any Award in respect of shares
of Common Stock is forfeited for any reason or settled in a manner that
results in fewer shares of Common Stock outstanding than were initially
awarded, including without limitation the surrender of shares of Common
Stock in payment of any tax obligation on the Award, the shares of Common
Stock subject to such Award or so surrendered, as the case may be, to the
extent of such forfeiture or decrease, shall again be available for award
under the Plan.
5. GRANT OF AWARDS.
(a) Subject to the provisions of the Plan, the Committee may
award shares of restricted stock to a participant under the Plan. A
restricted stock Award entitles the recipient to acquire, for a purchase
price equal to or exceeding par value, shares of Common Stock subject to
the restrictions described in Section 6 below ("Restricted Stock"). A
maximum of 25,000 shares of Restricted Stock may be awarded by the
Committee in any year.
(b) Subject to the provisions of the Plan, the Committee shall
determine the persons to whom Awards are to be granted, the size of the
Award and all other terms and conditions of the Award, provided, however,
that in the case of a Plan participant who is also then a participant in
a Company annual bonus plan, any Award granted by the Committee to such
participant shall be comprised of:
(i) That number of shares of Restricted Stock having a fair
market value as of the date of the Award, as determined in good faith by
the Committee, equal to twenty (20) percent of the annual bonus payout
awarded to the participant under the applicable bonus plan (such Award
to be in lieu of payment of the allocable bonus amount); plus
(ii) That additional number of shares, if any, which the
Committee in its sole discretion determines is appropriate to award to
the participant for long-term compensation and which is a fraction or
multiple of the number of shares awarded to the participant under the
immediately preceding clause (i);
provided, further, however, that in no event shall the fair market value
of shares awarded to any participant under the preceding clauses (i) and
(ii) exceed in any year one hundred (100) percent of the annual bonus
payout awarded to the participant under the applicable bonus plan.
6. TERMS OF RESTRICTED STOCK.
(a) A participant who is granted a Restricted Stock Award will
have no rights with respect to such Award unless the participant accepts
the Award by written instrument delivered or mailed to the Company
accompanied by payment in full of the specified purchase price, if any,
of the shares covered by the Award. Payment may be by certified or bank
check or other instrument acceptable to the Committee.
(b) A participant who receives Restricted Stock will have all
rights of a stockholder with respect to the Stock, including voting and
dividend rights, subject to the restrictions described in this Section 6
and any other conditions imposed by the Committee at the time of grant.
Unless the Committee otherwise determines, certificates evidencing shares
of Restricted Stock will remain in the possession of the Company until
(i) such shares are free of all restrictions under the Plan and (ii) the
participant provides for payment to (or withholding by) the Company of all
amounts, if any, required under then applicable provisions of the Code and
state and local tax laws to be withheld with respect to the issuance of
such shares to the participant.
(c) Except as otherwise specifically provided by the Plan,
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of, except to the Company (if the
Company agrees to purchase the shares) for an amount equal to the price
paid for the shares, for a period of four (4) years from the date of
issuance pursuant to an Award; provided, however, that the Committee in
its sole discretion may determine from time to time for any reason to
waive in whole or in part the restrictions applicable to any shares prior
to the expiration of such four (4) year period.
(d) If the employment of a holder of shares of Restricted Stock
is terminated for any reason other than death, retirement in accordance
with the Company's qualified pension plan at or after attainment of age
sixty (60), permanent disability or involuntary termination without
cause, while the shares are subject to the restrictions described in the
immediately preceding paragraph, the holder shall be required to sell
such shares to the Company for the price paid therefor by the holder, and
all rights of the holder with respect to such shares shall be immediately
canceled, unless the Company declines in writing to purchase the shares.
(e) If the employment of a holder of shares of Restricted Stock
is terminated for retirement in accordance with the Company's qualified
pension plan at or after attainment of age sixty (60), and the Committee,
at any time while the shares are subject to the restrictions described in
paragraph (c) above, determines that the holder, either before or after
termination of the holder's employment by the Company,
(i) has committed an act of misconduct for which he or she
could have been discharged for cause by the Company, or
(ii) has engaged, directly or indirectly, in competition
with the Company, whether as an officer, employee, agent, proprietor or
otherwise of, or by having any material investment or other material
interest in, any business that involves in whole or in part any product
or device similar to or competitive with any product or device sold by the
Company during the employment of the holder or under active development by
the Company at the time of the holder's cessation of employment, the holder
shall be required to sell such shares to the Company for the price paid
therefor by the holder, and all rights of the holder with respect to such
shares shall be immediately canceled, unless the Company declines in writing
to purchase the shares.
(f) If the employment of a holder of shares of Restricted Stock
is terminated due to involuntary termination without cause, while the
shares are subject to the restrictions described in paragraph (c) above,
the restrictions on such shares shall be deemed to have lapsed in annual
installments as follows: twenty-five (25) percent on the first anniversary
of the date of award of such shares and twenty-five (25) percent on each of
the next three anniversaries of such date (reduced in the event of any
resulting fraction to the next lowest whole number).
(g) If the employment of a holder of shares of Restricted Stock is
terminated due to death or permanent disability, while the shares are subject
to the restrictions described in paragraph (c) above, the restrictions on
such shares shall lapse as of the date of such event, and the holder shall
be free to dispose of the shares without further restriction.
(h) The restrictions imposed under this Section 6 shall apply
as well to all shares or other securities issued in respect of shares in
connection with any stock split, reverse stock split, stock dividend,
recapitalization, reclassification, spinoff, split-off, merger,
consolidation or reorganization. Any stock certificate issued in respect
of shares awarded under the Plan shall be registered in the name of the
participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such shares.
7. CONDITIONS TO EFFECTIVENESS OF THE PLAN. The Plan shall not
become effective, and any Awards granted under the Plan shall not be
effective, unless and until the Plan shall have been duly approved by the
shareholders of the Company.
8. AMENDMENT AND TERMINATION. The Board by resolution at any time
may amend, suspend or terminate the Plan, provided that (a) no such
action shall be taken which impairs the rights of any participant under
any outstanding Award, without such participant's consent, and (b) no
amendment shall be made without shareholder approval if such approval
is necessary to comply with any applicable tax or regulatory requirement,
including any requirements for exemptive relief under Section 16(b) of
the Act, or any successor provision.
9. EFFECT OF CHANGES IN COMMON STOCK. If the Company shall
combine, subdivide or reclassify the shares of Common Stock which have
been or may be awarded under the Plan, or shall declare thereon any
dividend payable in shares of Common Stock, or shall take any other
action of a similar nature affecting the Common Stock, then the number
and class of shares of stock as to which Awards may thereafter be granted
(in the aggregate and to any participant) shall be appropriately adjusted
and, in the case of each Award outstanding at the time of any such
action, the number and class of shares subject to such Award shall
likewise be appropriately adjusted, all to such extent as may be
determined by the Committee in its sole discretion, with the approval of
counsel, to be necessary to preserve unimpaired the rights of the
participant. Each and every such determination shall be conclusive and
binding upon the participants.
10. EFFECT OF REORGANIZATIONS. In case of any one or more
reclassifications, changes or exchanges of outstanding shares of Common
Stock or other stock (other than as provided in Section 11), or
consolidations of the Company with, or mergers of the Company into, other
corporations, or other recapitalizations or reorganizations (other than
consolidations with a subsidiary in which the Company is the continuing
corporation and which do not result in any reclassifications, changes or
exchanges of shares of the Company), or in case of any one or more sales
or conveyances to any other corporation of the property of the Company as
an entirety, or substantially as an entirety, any and all of which are
hereinafter in this Section called "Reorganizations," a participant shall
have the right, upon any subsequent receipt of shares pursuant to an Award,
to acquire the same kind and amount of securities and property which such
participant would then have if such participant had received such shares
immediately before the first of any such Reorganizations and continued to
hold all securities and property which came to such participant as a result
of that and subsequent Reorganizations, less all securities and property
surrendered or canceled pursuant to any of the same, the adjustment rights
in Section 9 and this Section 10 being continuing and cumulative.
Notwithstanding any provision of Section 6 or any foregoing
provision of this Section 10 to the contrary, the Committee shall have
the right in connection with any Reorganization, upon not less than
thirty (30) days' written notice to the participants, to terminate all
outstanding Awards. In connection with such termination, the Committee
in its discretion, prior to the effective date of the reorganization, may
remove the restrictions from some or all outstanding shares of Restricted
Stock.
11. CHANGE IN CONTROL. In the event that at any time after the
effective date of the Plan the Company shall have a "Principal
Stockholder," as hereinafter defined, then notwithstanding anything to
the contrary contained herein, upon the date such event occurs, all
restrictions imposed pursuant to Section 6 with respect to shares shall
immediately lapse, unless the Board by unanimous vote of members who
served as directors before such event and who constitute at least fifty-one
(51) percent of the Board determines otherwise.
For purposes of this Section 11, (a) the term "Principal
Stockholder" means any corporation, person or other entity ("person")
owning beneficially, directly or indirectly, shares of the capital stock
of the Company entitled to cast twenty-five percent (25%) or more of the
votes at the time entitled to be cast generally in the election of
Directors by all of the outstanding shares of all classes of capital
stock of the Company (other than any such shares held by any qualified
employee benefit plan maintained by the Company), considered for purposes
of this Section 11 as one class; (b) in determining such ownership, a
person shall be deemed to be the beneficial owner of any shares of
capital stock of the Company which are beneficially owned, directly or
indirectly, by any other person (i) with which it or its "affiliate" or
"associate," as hereinafter defined, has any agreement, arrangement or
understanding for the purposes of acquiring, holding, voting or disposing
of capital stock of the Company or (ii) which is its "affiliate" or
"associate;" (c) a person shall be deemed to be an "affiliate" of, or
affiliated with, a specified person if such person directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, the person specified; and (d) the term
"associate" used to indicate a relationship with any person shall mean (A)
any corporation or organization (other than the Company or any subsidiary
of the Company) of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten percent (10%) or more
of any class of equity security, (B) any trust or other estate in which
such person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity, and (C) any
relative or spouse of such person, or any relative of such spouse, who has
the same home as such person.
12. GENERAL PROVISIONS.
(a) Notwithstanding any other provision of the Plan, to the
extent required to qualify for the exemption provided by Rule 16b-3 under
the Act, and any successor provision, any Common Stock or other equity
security offered under the Plan to a person subject to Section 16 of the
Act may not be sold for at least six months after acquisition.
(b) Each Award under the Plan shall be evidenced by a writing
delivered to the participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable
to achieve the purposes of the Plan or comply with applicable tax or
regulatory laws and accounting principles.
(c) The terms of each Award need not be identical, and the
Committee need not treat participants uniformly. Except as otherwise
provided by the Plan or a particular Award, any determination with
respect to an Award may be made by the Committee at the time of award
or at any time thereafter.
(d) No Award may be transferred other than by will or by the
laws of descent and distribution.
(e) When a participant purchases Restricted Stock pursuant to
an Award for a price equal to the par value of the Restricted Stock, the
Committee in its discretion may determine that such price has been
satisfied by past services rendered by the participant.
13. INTERPRETATION. The interpretation and construction of any
provision of the Plan and the adoption of rules and regulations for
administering the Plan shall be made by the Committee. Determinations
made by the Committee with respect to any matter or provision contained
in the Plan shall be final, conclusive and binding upon the Company and
upon all participants, their heirs and legal representatives. Any rule
or regulation adopted by the Committee (whether under the authority of
this Section or Section 2 above) shall remain in full force and effect
unless and until altered, amended or repealed by the Committee.
EXHIBIT 13
PORTIONS OF MACDERMID'S 1995 ANNUAL REPORT TO STOCKHOLDERS.
Except for the pages and information expressly incorporated by
reference, the financial and other information included in this Exhibit
13 is provided solely for the information of the Securities and Exchange
Commission and is not deemed "filed."
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share data)
<CAPTION>
1995 1994 % Change
-----------------------------------
<S> <C> <C> <C>
Net Sales, North America $ 93,867 $ 73,861 27
Overseas 88,233 76,165 16
-----------------------------------
Total Revenues $ 182,100 $ 150,026 21
===================================
Net Earnings* $ 11,142 $ 7,771 43
Return on Sales* 6.1% 5.2% -
Return on Average Equity* 18.3% 11.7% -
Net Cash Provided by Operations $ 20,733 $ 15,766 32
Research and Development Expense $ 9,644 $ 6,687 44
Capital Expenditures $ 3,990 $ 7,526 (47)
Long-term Debt
(Includes Short-term Portion) $ 22,535 $ 1,157 1,848
Average Shares Outstanding 3,141,855 3,567,875 (12)
Shareholders' Equity $ 53,654 $ 68,169 (21)
Per Common Share
Net Earnings* $3.55 $2.18 63
Cash Dividends $0.60 $0.60 -
Book Value $19.56 $19.11 2
</TABLE>
<TABLE>
GRAPHIC PRESENTATION
(Three horizontal bar graphs are provided here, proprietary net sales,
net earnings and earnings per share. Each graph depicts one facet of
results of operations for the fiscal years 1991 through 1995. The graph
for proprietary net sales indicate a decline in sales in 1992, an
increase in 1993, followed by a marginal increase in 1994 and a large
increase in 1995. The graphs for both net earnings and earnings per
share indicate increases in each year since 1991 with a substantial
increase in 1995.)
GRAPH VALUES
(Amounts in thousands except per share data)
<CAPTION>
1991 1992 1993 1994 1995
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Proprietary net sales $120,937 $115,595 $130,132 $130,601 $163,315
Net earnings $ 6,784 $ 7,244 $ 7,687 $ 7,771 $ 11,142
Earnings per share $1.90 $2.03 $2.16 $2.18 $3.55
</TABLE>
* Before the cumulative effect of accounting changes which resulted
in one-time after tax charges of $371,000 ($0.12/share) in 1995 and
$2,082,000 ($0.58/share) in 1994. Fiscal 1995 indicates primary
earnings per share.
<PAGE>
<TABLE>
FIVE YEAR FINANCIAL REVIEW
(In thousands, except share and per share data)
<CAPTION>
OPERATING RESULTS 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 182,100 $ 150,026 $ 156,324 $ 144,984 $ 151,359
Net Earnings<F1> $ 11,142 $ 7,771 $ 7,687 $ 7,244 $ 6,784
Net Earnings Per Share <F1> <F2> $3.55 $2.18 $2.16 $2.03 $1.90
Return On Sales (%)<F1> 6.1 5.2 4.9 5.0 4.5
Return On Average Equity (%)<F1> 18.3 11.7 12.1 12.7 12.9
FINANCIAL POSITION AT YEAR END
- -------------------------------------------------------------------------------------------------------
Working Capital $ 34,711 $ 34,959 $ 31,050 $ 27,620 $ 23,301
Current Ratio 1.7 2.0 1.8 1.7 1.5
Capital Expenditures $ 3,990 $ 7,526<F3> $ 4,594 $ 4,453 $ 3,198
Total Assets $ 123,305 $ 105,867 $ 107,173 $ 101,214 $ 103,252
Long-Term Debt (Includes Short-Term Portion) $ 22,642 $ 1,157 $ 2,684 $ 2,812 $ 4,199
Percent of Total Capitalization 29.7 1.7 4.0 4.4 7.0
SHARE DATA
- -------------------------------------------------------------------------------------------------------
Shareholders' Equity $ 53,654 $ 68,169 $ 65,181 $ 61,050 $ 55,848
Per Share $19.56 $19.11 $18.27 $17.12 $15.67
Cash Dividends Per Share $0.60 $0.60 $0.60 $0.60 $0.60
Payout as Percent of Net Earnings <F1> 15.9 27.6 27.8 29.5 31.5
Shares Outstanding
Average During Year 3,141,855 3,567,875 3,565,371 3,565,000 3,565,000
At Year End 2,742,533 3,567,882 3,567,382 3,565,000 3,565,000
Stock Price
High 44 1/2 31 29 1/2 29 26 1/2
Low 24 24 1/2 23 3/4 21 16 1/2
Year End 43 26 27 28 1/8 24 1/2
<FN>
<F1> Before cumulative effect of accounting changes which resulted in one-time after tax charges of
$371,000 ($0.12/share) in 1995 and $2,082,000 ($0.58/share) in 1994.
<F2> For 1995 indicates primary earnings per share. Fully diluted earnings per share were $3.50 for
1995, the first period during which the dilutive effect was large enough to report.
<F3> Includes cost attributable to a new Hong Kong warehouse and office facility and is not offset by
proceeds from disposal of the previous facilities which occurred in fiscal 1995 and 1994.
</TABLE>
<PAGE>
MESSAGE TO SHAREHOLDERS
Fiscal 1995 was the third consecutive year of record earnings for
MacDermid.
Sales increased to $182.1 million from $150 million in 1994, up
21%. Earnings* increased to $11,142,000 from $7,771,000 in 1994, up
43%. Earnings per share* increased to $3.55 from $2.18 in 1994, up
63%. The significantly greater percentage increase in earnings per
share was largely a result of our repurchase in August of 24% of our
outstanding shares.
MacDermid is an international specialty chemical company
serving the metal finishing and electronics industries. Our focus
is to increase the per share intrinsic value of the business by the
combination of careful cost control, internal growth and
acquisitions. We are ever mindful of our responsibilities as a
corporate citizen. We know our source of sustainable competitive
advantage is our employees.
In 1995 we enjoyed growth across all product lines and in all
markets, both domestic and international. This was the result of
our on-going effort to run our business more efficiently, the
improved economy worldwide, and the Allied-Kelite acquisition. 1995
was better than we expected.
This year's annual report is evidence of our increased
attention to cost within MacDermid. The simple black and white
format resulted in lower cost. We know that elaborate reports do
not lower cost or increase revenues - our clearly understood
objectives.
Our effort to improve efficiency is Company-wide in all markets
and in all functions. In Europe we completed restructuring in a
number of countries, reducing costs and improving effectiveness. As
a result, today we are not only more competitive but more
profitable. The same is true in every country in which we operate.
This is important since some 52% of sales are outside the United
States.
Our effort to improve effectiveness is not focused solely on
costs. We believe effectiveness is also measured in terms of
customer satisfaction. We place a high priority not only on product
quality but on the quality of service we give to our customers. We
are committed to Total Quality Management, and teams are in place
throughout the Company. For example:
.CUSTOMER SATISFACTION TEAM
This team, in its second year, is charged with understanding
what our customers think of MacDermid and helping us respond
to their suggestions. The team's actions are supported with
hard data gathered through formal survey procedures.
.ISO 9002
We received this international certification in all major
manufacturing plants: England, Spain, Taiwan, Connecticut and
Michigan.
.ON TIME DELIVERY TEAM
This team is charged with monitoring and improving our
performance in meeting our customers' shipment requirements.
We have made considerable progress and we expect more.
.PRODUCT DEVELOPMENT PROTOCOL TEAM
We are working to reduce the cycle time and improve the
success ratio in new product development.
Research and development has always been an important priority
for MacDermid. We do not look upon R&D as a discretionary
expenditure. In 1995, our R&D investment was $9.6 million compared
with $6.7 million in 1994. R&D, like our acquisition effort, is
focused not only on broadening and improving our product line
serving current markets, but also on new products in new markets, all
within our core competencies. This is a long-term, on-going effort.
* Before the effects of accounting changes
In May of 1994 MacDermid acquired the metal finishing business
of Allied-Kelite (A.K.). We thought it a perfect fit for our metal
finishing business as they were strong in markets we were not.
Their product line complements ours. Importantly, with A.K. came
outstanding people. Because of the competent people within A.K. and
within MacDermid, the merger of the two businesses went smoothly,
and the results were better than expected.
In August of 1994 we repurchased, through a tender offer,
approximately 852,000 shares, 24% of our outstanding stock. The
tender offered shareholders who wished to sell a price substantially
higher than the market. It gave shareholders who wished to remain
shareholders, in essence, a dividend. The reduced number of share
outstanding gave each remaining shareholder 31% more of our future.
Because of our improved cash flow and improved balance sheet,
we were able to finance the acquisition of Allied-Kelite and the
tender offer with added debt. Our cash flow is at record levels.
Our debt/capital ratio is 34%. Our total debt is little more today
than it was in 1990 when our earnings were $1.49 per share and our
cash flow was considerably less. Nevertheless, at this juncture, a
dividend increase is not planned by your Board of Directors. The
Board believes shareholders are better served by utilizing excess
cash flow to reduce our debt and/or to grow the Company internally
and through acquisitions. We are aware that each dollar invested
should produce at least one added dollar of intrinsic value to our
business.
While a lot of things have been changing at MacDermid, one
thing has not - our Corporate Philosophy. It is published, as
usual, on the inside cover of our annual report. Everyone at
MacDermid is dedicated to conducting our business in accordance with
that Philosophy.
At MacDermid, we know we work for our shareholders. We know
our stewardship will be measured, over the years, in per share
terms. This is encouraged by the widespread and significant stock
ownership within the Company. Through our ESOP and other plans, we,
your employees, own 24% of the outstanding shares.
This year, three of our senior Directors are not standing for
reelection, having reach Board retirement age. Walter Torrance,
Robert Weltzien and Francis White have served your Company with
distinction. Their advice, judgment and support will be missed. We
know all shareholders join us in thanking them and wishing them
well.
We begin fiscal 1996 in the best shape ever. While fiscal 1995
results have undoubtedly been helped by the economy here in the
United States and internationally, they are also the result of a
four-year effort to reorganize and refocus our business.
Our effort to improve and grow is an everyday effort. We are
working to make what has been accomplished but a beginning.
We want to thank all of our associates at MacDermid who have
worked hard and effectively to produce an outstanding fiscal 1995,
and our shareholders for their confidence.
/s/ Harold Leever /s/ Daniel H. Leever
Harold Leever Daniel H. Leever
Chairman of the Board President and Chief Executive Officer
<PAGE>
<TABLE>
MACDERMID, INCORPORATED AND SUBSIDIARIES
FIVE YEAR OPERATIONS REPORT
(In thousands, except per share amounts) Year Ended March 31
--------------------------------------------------------
<CAPTION>
1995 1994 1993 1992 1991
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales:
Proprietary chemicals $163,315 $130,601 $130,132 $115,595 $120,937
Equipment, chemicals and supplies resale 18,785 19,425 26,192 29,389 30,422
---------------------------------------------------------
182,100 150,026 156,324 144,984 151,359
Cost of sales 94,059 76,914 83,900 79,908 82,175
---------------------------------------------------------
Gross profit 88,041 73,112 72,424 65,076 69,184
Selling, technical and administrative expenses 67,904 60,063 56,880 54,038 55,938
---------------------------------------------------------
Operating profit 20,137 13,049 15,544 11,038 13,246
Other income (expense):
Interest income 185 300 364 384 368
Interest expense (2,029) (1,403) (1,870) (1,576) (2,021)
Foreign exchange (291) (683) (472) (392) (189)
Other, net 145 1,161 (1,228) 1,531 (71)
---------------------------------------------------------
(1,990) (625) (3,206) (53) (1,913)
---------------------------------------------------------
Earnings before income taxes and
cumulative effect of accounting change 18,147 12,424 12,338 10,985 11,333
Income taxes 7,005 4,653 4,651 3,741 4,549
---------------------------------------------------------
Earnings before cumulative effect
of accounting change 11,142 7,771 7,687 7,244 6,784
Cumulative effect of accounting change (371) (2,082) - - -
---------------------------------------------------------
Net earnings $ 10,771 $ 5,689 $ 7,687 $ 7,244 $ 6,784
=========================================================
Earnings per share before cumulative effect
of accounting change $3.55<F1> $2.18 $2.16 $2.03 $1.90
Cumulative effect of accounting change (0.12) (0.58) - - -
---------------------------------------------------------
Net earnings per common share $3.43 $1.60 $2.16 $2.03 $1.90
=========================================================
Average number of shares 3,141,855 3,567,875 3,565,371 3,565,000 3,565,000
=========================================================
<FN>
<F1> For 1995 indicates primary earnings per share. Fully diluted earnings per share for 1995, the first
period during which the dilutive effect was large enough to report, was $3.50 before the cumulative
effect of an accounting change and $3.38 after such change.
</TABLE>
<PAGE>
<TABLE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
FIVE YEAR SUMMARY
<CAPTION>
(In thousands, except per share amounts) 1995 1994 1993 1992 1991
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales:
North America $ 93,867 $ 78,861 $ 74,068 $ 73,119 $ 79,881
Overseas 88,233 76,165 82,256 71,865 71,478
--------------------------------------------------------
$182,100 $150,026 $156,324 $144,984 $151,359
========================================================
Net Earnings<F1> $ 11,142 $ 7,771 $ 7,687 $ 7,244 $ 6,784
Net Earnings per Common Share<F1><F2> $3.55 $2.18 $2.16 $2.03 $1.90
Cash Dividends Declared per Share $0.60 $0.60 $0.60 $0.60 $0.60
Total Assets $123,305 $105,867 $107,173 $101,214 $103,252
Long Term Obligations - non current $ 18,229 $ 922 $ 983 $ 1,348 $ 1,940
<FN>
<F1> Before cumulative effect of accounting changes which resulted in one-time after tax charges of
$371,000 ($0.12/share) in 1995 and $2,082,000 ($0.58/share) in 1994.
<F2> For 1995 indicates primary earnings per share. Fully diluted earnings per share were $3.50 for
1995, the first period during which the dilutive effect was large enough to report.
</TABLE>
NET SALES & OPERATING PROFITS
OVERVIEW
Worldwide proprietary chemical sales were $163.3 million, an
increase of 25% in fiscal 1995 over the previous year's record
levels. This increase reflects the effects of new accounts in
every geographic segment, improving business conditions and a
business acquisition in the U.S. Total sales of $182.1 million,
which increased 21%, were affected by a change during fiscal 1994
to an agency basis for certain products previously resold.
Net earnings increased for the fifth consecutive year to
$11,142,000, $3.55 per share, as compared to fiscal 1994 net
earnings of $7,771,000, $2.18 per share (before deducting for
the cumulative effect of accounting changes in each year).
NORTH AMERICA
1995 vs 1994
Total net sales increased in North America 27% because of a
strengthening economic climate strongly enhanced by the effects
of the purchase of Allied-Kelite's proprietary chemical business
during the first quarter of fiscal 1995 and despite reduced
direct sales of process equipment.
During the transition period following the acquisition of
assets,costs of sales were affected by inventory purchased from
Allied-Kelite at prices higher than MacDermid's normal replacement
costs.
Selling, technical and administrative expenses increased
principally as a result of additional sales and research
personnel hired in connection with the Allied-Kelite business,
continuing development of imaging products, and employee
incentives related to higher earnings levels.
An increase in interest expense resulting from borrowings
to finance a common stock repurchase was more than offset by an
increase in the Corporation's share of earnings from Hollmuller
America, a joint venture manufacturer of high quality,
precision, modular, horizontal production equipment used by
printed circuit and chemical machining industries, plus the
effects of higher royalties received on overseas sales and
reduced foreign exchange losses.
During the first quarter of fiscal year 1995, the
Corporation acquired certain assets of the Allied-Kelite Company
(a subsidiary of Witco Corporation), a major supplier of plating
surface preparation proprietary chemical products to automotive and
electronics hardware industries. The business, located primarily in
the United States, includes licenses of technology to companies in
several other countries. The acquisition cost (approximately $8.9
million), financed through short-term borrowings, included
inventories,a research facility and technology. The acquisition,
accounted for as a purchase, is producing consolidation cost
benefits in addition to improved domestic sales coverage.
During fiscal 1995, the Corporation adopted the provisions
of Statement of Financial Accounting Standards No. 112,
Employers' Accounting for Postemployment Benefits (SFAS 112).
SFAS 112 requires accrual accounting for recognition of the
postemployment cost of salary continuation benefits rather than
the previously used cash basis accounting. Adoption of SFAS 112
resulted in a one-time $371,000 charge against earnings, net of
income taxes. The ongoing expense effects are not material to
the consolidated financial statements.
1994 vs 1993
In fiscal 1994, sales of proprietary chemical products began a
recovery from the U.S. recession which started in fiscal 1990.
Operating profits increased despite additional spending for
research and market development in support of new programs. Net
earnings in North America reflect the effects of a decline in
royalty income because of lower covered sales overseas.
Hollmuller America, Inc., a joint venture with a German partner,
reported profits for the first time in fiscal 1994 reflecting
aggressive cost reductions and standardization of certain
equipment offerings. End of year sales backlogs were greatly
improved over the previous year.
During fiscal 1994, the Corporation adopted the provisions
of Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other than
Pensions (SFAS 106). Adoption of the accrual accounting,
required by SFAS 106, resulted in a one-time charge against
earnings, net of income taxes, of $2,082,000 in recognition of
the postretirement cost of health benefits. The effect upon
ongoing expense is not material.
EUROPE
1995 vs 1994
Net sales for the European group (which includes operations in
Israel and South Africa) increased almost 9% despite a change
in the marketing of certain resale products to an agency basis
which was completed during fiscal 1994. (MacDermid now receives
a commission on the covered products.) Proprietary chemical
product sales, which account for 84% of the group's business,
were generally improved throughout the area.
Selling, technical and administrative expenses were reduced
overall by over 6% from fiscal 1994 to size the operations more
appropriately for the level of sales achieved. Operating
profits in fiscal 1995 were almost double those of the previous
year reflecting, in large measure, the effects of proprietary
chemical sales increases and the expense reductions made in
Germany during fiscal years 1994 and 1995.
1994 vs 1993
The group's net sales for fiscal 1994 were $38 million compared
to $45 million for fiscal 1993. The sales decline was
principally the result of changing currency exchange rates,
which accounted for $4.8 million, and the change in marketing of
certain resale products which accounted for another $1.1
million. Actual proprietary chemical sales were little changed
overall, in terms of local currency, despite the effects of
severe recession in Germany.
Net earnings for the group were marginal in fiscal 1994
because no tax benefit was recorded in connection with 1994
losses in Germany and because of expenses incurred to make group
operations more efficient.
ASIA/PACIFIC
1995 vs 1994
Total net sales for the Asia/Pacific group increased 23% to $47
million in fiscal year 1995 and earnings before income taxes
increased 31%. The sales increase was principally due to new
business in expanding markets, enhanced by economic recovery in
certain areas, with only a small effect late in the fiscal year
from a rapidly strengthening Japanese yen. Costs of sales
percentages were down 2% as sales of proprietary chemical
products grew much faster than sales of equipment and resale
chemicals.
Selling, technical and administrative expenses rose
8% as a new research and technical center in Japan was fully
operational throughout the year and some additional expenses
were incurred to support the higher sales levels. Other income
and expense for fiscal 1995 includes profit on the sale of
certain office and warehouse property following expansion into
new quarters. This income, however, was offset by additions to
reserves to cover losses by a joint venture operation, higher
levels of foreign exchange losses on transactions and increased
royalties paid to the parent company due to increased sales.
Profits recorded in fiscal 1994 on sales of a minority interest
in a Hong Kong company were not repeated in fiscal 1995.
1994 vs 1993
Total net sales of $38.2 million in fiscal 1994 were about 3%
above the previous year. The group achieved real proprietary
chemical sales growth with some benefit from favorable currency
changes. Profits from sales of a minority interest in a Hong
Kong company and profits from sales of property more than offset
increased costs related to a new research group in Japan and a
charge against earnings for a bad debt loss. Net earnings were
14% above fiscal year 1993.
INTEREST EXPENSE
Interest expense, net of interest income, in fiscal 1995,
increased by $741,000 over fiscal 1994 following a decrease of
$403,000 from the previous year. The increase in 1995 was due
principally to U.S. borrowings in August 1994 to finance the
purchase of treasury stock pursuant to a self-tender offer and
to an increase in short-term borrowings to finance the Allied-
Kelite business acquisition. The 1994 decrease was attributable
to repayments of borrowings and generally lower interest rates
than in 1993.
INCOME TAXES
Overall effective income tax rates increased slightly to 38.6%
in fiscal 1995 from 37.5% in fiscal 1994 as compared to 37.7%
in fiscal 1993. The 1995 increase and the 1994 decrease were
principally attributable to changes in the amounts included in
each year's earnings before income taxes for non taxable one-
time profits on sales of property and minority equity interests,
a 1995 non tax-deductible charge for losses in a joint venture
and 1994 losses in a subsidiary where tax benefits were not
recognized until 1995.
DIVIDENDS
MacDermid has paid cash dividends out of accumulated earnings
continuously since 1948. The total dividend paid for fiscal
1995 was $0.60 per share or approximately 16% of net earnings
before the cumulative effect of an accounting change.
LIQUIDITY & CAPITAL RESOURCES
Cash flows from operations are used to fund dividend payments to
shareholders, other working capital requirements of the
Corporation and most capital projects. From time to time
MacDermid utilizes additional outside sources to fund overall
needs, including major capital projects for new and upgraded
research and technical, manufacturing and administrative
facilities, and for business acquisitions. During the last
several years, most of the funds previously provided by such
outside sources have been repaid utilizing cash flows from
operations and from disposition of certain business and
properties no longer required after consolidation of
manufacturing and other operations. Total borrowings, which
were over $26 million at March 31, 1990, were reduced to $9
million by the end of fiscal 1994. Early during fiscal 1995,
MacDermid purchased certain assets used in Allied-Kelite's metal
finishing business for approximately $8.9 million, financed
through short-term loans. Subsequently (August 1, 1994), the
Corporation completed the purchase of approximately 852,000
shares of MacDermid's common stock under a self-tender offer at
a price of $30 per share. The total cost of this purchase,
including commitment fees, professional costs, etc., was
approximately $26.2 million, financed through a six-year term loan
with a group of banks. (This loan is further discussed in note
7 to the Consolidated Financial Statements.) Because of the
strong cash flows generated by operations and sales of certain
assets, total debt at March 31, 1995 is approximately $27
million.
New capital spending during fiscal 1995 of approximately $4
million, as compared with $7.5 million in fiscal 1994 and $4.5
million in fiscal 1993, included upgrades to manufacturing
facilities and new equipment to provide for the transfer of
Allied-Kelite manufacturing operations to existing facilities
and technical equipment. For fiscal 1996, planned new capital
projects total approximately $5 million.
New opportunities for business acquisitions, which become
available from time to time, are evaluated individually as they
arise based upon MacDermid's criteria for technological
improvement and innovation, potential for earnings growth and
compatibility with existing manufacturing capability and
distribution channels. Management intends to pursue those
opportunities which have strong potential to enhance shareholder
value.
The Board of Directors has, from time to time, authorized
the purchase of issued and outstanding shares of the
Corporation's common stock for its treasury. Following the
August 1, 1994 completion of the self-tender offer, the
directors authorized the purchase of up to an additional 148,000
shares of MacDermid's common stock. Pursuant to this
authorization, MacDermid acquired 11,000 shares in December
1994 in a privately negotiated purchase. Treasury shares may be
used for transfer or sale to employee benefit plans, business
acquisitions or for other Corporate purposes. The outstanding
authorization to purchase up to 137,000 shares, if exercised at
the Nasdaq Stock Market closing price on March 31, 1995, would
cost approximately $5.9 million.
<TABLE>
The principal sources and uses of cash in fiscal years 1995
and 1994 were as follows:
<CAPTION>
(In Thousands) 1995 1994
------------------------
<S> <C> <C>
Cash provided by:
Operations $20,733 $15,766
Proceeds from dispositions of
fixed assets and certain
business 3,376 2,998
Net increase in borrowings 17,718 -
------------------------
$41,827 $18,764
========================
Cash used for:
Capital expenditures $ 3,990 $ 7,526
Business acquisitions 8,910 -
Purchase of treasury shares 26,152 -
Dividend payments 1,767 2,141
Net decrease in borrowings - 7,295
Other - net (138) 1,149
------------------------
$40,681 $18,111
========================
</TABLE>
MacDermid's financial position is strong and, other than
satisfaction of debt obligations, there are no long-range
commitments which would have a significant impact upon results
of operations, financial condition or liquidity. At March 31,
1995 the Corporation had unused domestic and foreign short-term
credit lines with banks approximating $43 million and management
believes that additional borrowing could be obtained if needed.
INFLATION AND CHANGING PRICES
MacDermid operates principally in stable areas throughout the
world. Sales are mainly to companies whose outputs become
components in consumer and industrial products having wide
application and demand and no one customer accounts for a
material proportion of sales. Management, therefore, believes
that inflation, generally, has had little overall impact upon
the Corporation's operations and reported earnings. While there
may be temporary disruptions of economic stability, management
believes that their long-term effects will not be significant to
the Corporation.
ENVIRONMENTAL ACTIVITIES
MacDermid continues its commitment to an active program of
environmental responsibility through its Environmental Initiative
2000 program, research and development of alternative,
environmentally safer products and installation of equipment to
reduce or eliminate emissions.
The Corporation sponsors community clean-up programs and
promotes community awareness of environmental issues. The terms of
a State of Connecticut permit require MacDermid to have periodic
environmental compliance and environmental management audits
performed at its Waterbury, Connecticut facility. These audits take
place over a five-year period which commenced in 1993. An
environmental consultant retained by MacDermid conducts the audits
and submits appropriate recommendations.
MacDermid continuously conducts research to formulate products
which are environmentally friendly and which provide superior
operating characteristics in customer applications. Many companies
have come to MacDermid for assistance in meeting their environmental
needs.
Environmental expenditures that relate to current operations
are expensed; long-term betterments are capitalized. The
expenditure by MacDermid for these various programs is estimated to
be in excess of $1 million per year. MacDermid has been named as a
potentially responsible party (PRP) by the Environmental Protection
Agency in connection with two waste sites. There are many other
companies involved at each of these sites and MacDermid's
participation is minor. The Corporation has recorded its best
estimate of liabilities in connection with site clean-up based upon
the extent of its involvement, the number of PRPs and estimates of
the total costs of the site clean-up. Though it is difficult to
predict the final costs of site remediation, management believes
that the recorded liabilities are reasonable estimates of probable
liability and that future cash outlays are unlikely to be material
to financial condition, results of operations or cash flows.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended March 31
-------------------------------------
<CAPTION>
(In thousands, except share and per share amounts) 1995 1994 1993
-------------------------------------
<S> <C> <C> <C>
Net sales:
Proprietary chemicals $163,315 $130,601 $130,132
Equipment, chemicals and supplies resale 18,785 19,425 26,192
-------------------------------------
182,100 150,026 156,324
Cost of Sales 94,059 76,914 83,900
-------------------------------------
Gross profit 88,041 73,112 72,424
Selling, technical and administrative expenses 67,904 60,063 56,880
-------------------------------------
Operating profit 20,137 13,049 15,544
Other income (expense):
Interest income 185 300 364
Interest expense (2,029) (1,403) (1,870)
Foreign exchange (291) (683) (472)
Miscellaneous, net 145 1,161 (1,228)
-------------------------------------
(1,990) (625) (3,206)
-------------------------------------
Earnings before income taxes and cumulative
effect of accounting change 18,147 12,424 12,338
Income taxes (note 5) 7,005 4,653 4,651
-------------------------------------
Earnings before cumulative
effect of accounting change 11,142 7,771 7,687
Cumulative effect of accounting change (note 4) (371) (2,082) -
-------------------------------------
Net earnings $ 10,771 $ 5,689 $ 7,687
=====================================
Net earnings per share (note 1):
Primary
Before cumulative effect of
accounting change $3.55 $2.18 $2.16
Cumulative effect of accounting change (note 4) (0.12) (0.58) -
---------------------------------------
$3.43 $1.60 $2.16
=======================================
Fully diluted
Before cumulative effect of
accounting change $3.50 $2.18 $2.16
Cumulative effect of accounting changes (note 4) (0.12) (0.58) -
---------------------------------------
$3.38 $1.60 $2.16
=======================================
Weighted average number of shares outstanding (note 1)
Primary 3,141,855 3,567,875 3,565,371
=======================================
Fully Diluted 3,179,832 3,567,875 3,565,371
=======================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
ASSETS March 31
-----------------------------
<CAPTION>
(In thousands) 1995 1994
-----------------------------
<S> <C> <C>
Current assets:
Cash and equivalents $ 7,630 $ 6,484
Accounts receivable, less allowance for doubtful receivables
of $2,859 and $2,317 45,559 39,738
Inventories (note 2) 22,801 17,744
Prepaid expenses 2,052 1,380
Deferred income taxes 3,155 3,069
-----------------------------
81,197 68,415
Total current assets -----------------------------
Property, plant and equipment, at cost:
Land and improvements 2,829 2,590
Buildings and improvements 26,346 26,190
Machinery, equipment and fixtures 33,581 31,699
-----------------------------
62,756 60,479
Less accumulated depreciation and amortization 35,721 32,690
-----------------------------
Net property, plant and equipment 27,035 27,789
-----------------------------
Other assets 15,073 9,663
-----------------------------
$123,305 $105,867
=============================
</TABLE>
<PAGE>
<TABLE>
LIABILITIES & SHAREHOLDERS' EQUITY March 31
-----------------------------
<CAPTION>
(In thousands, except share and per share data) 1995 1994
-----------------------------
<S> <C> <C>
Current liabilities:
Notes payable (note 3) $ 4,720 $ 7,609
Current installments of long-term obligations (note 7) 4,413 429
Accounts payable 18,064 12,961
Dividends payable 411 535
Accrued compensation 6,089 2,588
Accrued expenses, other 7,258 6,663
Income taxes (note 5) 5,531 2,671
-----------------------------
Total current liabilities 46,486 33,456
-----------------------------
Long-term obligations (note 7) 18,229 922
Accrued postretirement benefits (note 4) 3,899 3,214
Deferred income taxes (note 5) 960 106
Shareholders' equity (note 9):
Preferred stock, authorized 2,000,000 shares; none issued - -
Common stock. Authorized 20,000,000 shares; issued
4,136,080 and 4,098,530 shares at stated value of
$1.00 per share (note 4) 4,136 4,099
Additional paid-in capital (note 4) 1,676 834
Retained earnings 84,043 75,039
Equity adjustment from foreign currency translation 1,551 (203)
Less cost of 1,393,547 and 530,648 common shares in treasury (37,752) (11,600)
------------------------------
Total shareholders' equity 53,654 68,169
------------------------------
Contingencies and commitments (notes 8 and 10)
$123,305 $105,867
==============================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended March 31
---------------------------------------
<CAPTION>
(In thousands) 1995 1994 1993
---------------------------------------
<S>
Cash flows from operating activities: <C> <C> <C>
Net earnings $ 10,771 $ 5,689 $ 7,687
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 4,349 4,596 4,745
Effect of change in accounting (note 4) 371 2,082 -
Amortization of goodwill and other intangible assets 685 1,011 911
Provision for bad debts 664 1,792 1,797
Deferred income taxes (1,420) (422) (518)
Changes in assets and liabilities net of effects
from acquisitions and dispositions:
Decrease (increase) in receivables (4,685) 1,090 (7,822)
Decrease (increase) in inventories (265) 931 1,870
Decrease (increase) in prepaid expenses (713) (111) (362)
Increase (decrease) in accounts payable 4,453 (1,697) (989)
Increase (decrease) in accrued expenses 3,505 2,094 2,171
Increase (decrease) in income tax liabilities 2,860 596 (26)
Other 158 (1,885) (122)
---------------------------------------
Net cash flows provided by operating activities 20,733 15,766 9,342
---------------------------------------
Cash flows from investing activities:
Capital expenditures (3,990) (7,526) (4,594)
Proceeds form disposition of fixed assets 3,376 2,998 916
Acquisitions of business (8,910) - (2,259)
Other investments (216) (1,062) (662)
---------------------------------------
Net cash flows used in investing activities (9,740) (5,590) (6,599)
---------------------------------------
Cash flows from financing activities:
Long-term and short-term borrowings 26,609 1,943 5,814
Long-term and short-term repayments (8,891) (9,238) (5,003)
Acquisition of treasury stock (note 9) (26,152) - -
Dividends paid (1,767) (2,141) (2,139)
---------------------------------------
Net cash flows used in financing activities (10,201) (9,436) (1,328)
---------------------------------------
Effect of exchange rate changes on cash
and equivalents 354 (87) (216)
---------------------------------------
Net increase in cash and equivalents 1,146 653 1,199
Cash and equivalents at beginning of year 6,484 5,831 4,632
---------------------------------------
Cash and equivalents at end of year $ 7,630 $ 6,484 $ 5,831
=======================================
Cash paid for interest $ 2,182 $ 1,627 $ 1,823
=======================================
Cash paid for income taxes $ 4,226 $ 4,398 $ 4,768
=======================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation. The accompanying consolidated
financial statements include accounts of the parent corporation and
all of its domestic and foreign subsidiaries. Certain foreign
subsidiaries, for practical purposes, are included on a calendar
year basis. All significant intercompany accounts and transactions
have been eliminated in consolidation.
(b) Acquisition. In May 1994 the Corporation acquired certain
assets of the U.S. based Allied-Kelite Company from Witco
Corporation. Chemical products produced by Allied-Kelite include
plating and surface preparation proprietary chemical products which
are sold to customers in the aerospace, automotive and electronics
hardware industries. Certain technology was also acquired which is
licensed to several customers in specific overseas markets. The
total purchase price for the acquisition was approximately $8.9
million including inventory, fixed assets, goodwill (being amortized
over 15 years) and other intangibles. Total assets and pretax
earnings resulting from the purchase were less than 10% of the
Corporation's consolidated total assets and pretax earnings before
acquisition. The acquisition was accounted for as a purchase
transaction. Consolidated operating results for fiscal 1995 include
the results of the Allied-Kelite business from May 2, 1994.
(c) Inventories. Inventories are stated at the lower of cost
(average moving cost) or replacement market.
(d) Property, Plant and Equipment. Property, plant and equipment
are stated at cost. Depreciation and amortization of property,
plant and equipment are provided over the estimated useful lives of
the respective assets, principally on the straight-line basis.
Expenditures for maintenance and repairs are charged directly to
expense; renewals and betterments, which significantly extend the
useful lives, in general are capitalized. Costs and accumulated
depreciation and amortization on assets retired or disposed of are
removed from the accounts and the gains or losses resulting
therefrom, if any, are credited or charged to earnings.
(e) Employee Benefits. The Corporation sponsors a variety of
employee benefit programs, most of which are non-contributory.
Retirement. Pension, profit sharing and other retirement plans
generally are non-contributory and cover substantially all
employees. Domestically, the Corporation funds a pension plan based
upon plan costs accrued in accordance with the principles of
Statement of Financial Accounting Standards No. 87. The projected
unit credit actuarial method is used for financial reporting
purposes. The pension plan provides retirement benefits based upon
years of service and compensation levels. In addition, the
Corporation contributes to profit sharing and employee stock
ownership plans which provide retirement benefits based upon amounts
credited to employee accounts within the plans. The Corporation's
funding policy for qualified plans is consistent with federal or
other regulations and customarily equals the amount deducted for
income tax purposes. Foreign subsidiaries contribute to plans which
may be administered privately or by government agencies in
accordance with local regulations.
Postretirement. The Corporation has postretirement health care
benefits for most employees. Effective April 1, 1993, the
Corporation adopted Statement of Financial Accounting Standards No.
106, Employers' Accounting for Postretirement Benefits Other than
Pensions (SFAS 106), for its domestic plan. For its foreign plans
the effect was immaterial. SFAS 106 requires accrual accounting for
all postretirement benefits other than pensions rather than the
previously used pay-as-you-go method. The postretirement health
care plan is unfunded.
Postemployment. The Corporation provides postemployment
disability benefits to employees meeting specified service
requirements. Effective April 1, 1994, the Corporation adopted
Statement of Financial Accounting Standards No. 112, Employers'
Accounting for Post Employment Benefits (SFAS 112). SFAS 112
requires accrual for such benefits if the obligation is attributable
to employees' services already rendered, employees' rights to those
benefits accumulate or vest, payment of the benefits is probable,
and the amount of the benefits can be reasonably estimated.
(f) Research and Development. Research and development costs,
charged to expenses as incurred, were $9,644,000, $6,687,000 and
$5,796,000 in 1995, 1994 and 1993, respectively.
(g) Income Taxes. In fiscal year 1993 the Corporation adopted
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes (SFAS 109), which requires the use of the liability
method of accounting for deferred income taxes. Pursuant to SFAS
109, the provision for income taxes includes Federal, foreign, state
and local income taxes currently payable and those deferred because
of temporary differences between the financial statement and tax
bases of assets and liabilities. No provision for deferred income
taxes is made with respect to equity adjustments from foreign
currency translation or to undistributed earnings of subsidiaries
which, in management's opinion, will be permanently reinvested or
repatriated at a minimal tax cost to the Corporation. Foreign tax
credits are recorded as a reduction of the provision for Federal
income taxes in the year realized.
(h) Foreign Operations. The balance sheet accounts of foreign
subsidiaries are translated into U.S. dollars at year-end rates of
exchange while revenue and expense accounts are translated at
weighted average rates in effect during the periods. Translation of
the balance sheets resulted in an increase in equity of $1,754,000
in 1995 and decreases in equity of $781,000 and $1,569,000 in 1994
and 1993, respectively. Gains and losses on foreign currency
transactions are included in the consolidated statements of
earnings.
(i) Cash and Equivalents. For the purpose of the consolidated
statements of cash flows, the Corporation considers all highly
liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
(j) Fair Value of Financial Instruments. Statement of Financial
Accounting Standards No. 107 requires that reporting entities
provide, to the extent practicable, the fair value of financial
instruments, both assets and liabilities. The carrying amounts for
the Corporation's financial instruments approximate fair value
because of the short maturity of those instruments. The carrying
values of other financial instruments approximate fair value or are
not material to the balance sheets.
(k) Earnings Per Common Share. The computation of primary earnings
per share is based upon the weighted average number of outstanding
shares plus (in periods in which they have a dilutive effect) the
effect of common shares contingently issuable from stock options.
The fully diluted per share computations also reflect additional
dilution related to stock options due to the use of the market price
at the end of the period, when higher than the average price for the
period. Fiscal 1995 is the only year presented for which the
dilutive effect was large enough to report.
<TABLE>
2. INVENTORIES
The major components of inventory at March 31 were as follows:
<CAPTION>
(In thousands) 1995 1994
----------------------
<S> <C> <C>
Finished goods $16,074 $13,091
Raw materials and supplies 6,727 4,653
----------------------
$22,801 $17,744
======================
</TABLE>
3. NOTES PAYABLE
Notes payable at March 31, 1995 consisted primarily of $4,720,000 of
outstanding borrowings under available lines of credit aggregating
approximately $48,000,000. The terms of the lines of credit
generally provide for interest rates at or below the prime rate on
the date of borrowing domestically and, for foreign company
borrowings, rates that vary with base rates in each currency. With
the exception of a $10 million committed revolving credit line, the
lines of credit can be withdrawn at any time at the option of the
banks. The weighted average interest rates on short-term borrowings
outstanding were 5.1% and 7.9% at the end of 1995 and 1994,
respectively.
4. EMPLOYEE RETIREMENT & WELFARE PLANS
The Corporation has defined benefit pension, defined contribution
profit sharing and employees' stock ownership plans, each of which
is funded annually, as required, for substantially all its domestic
employees. Aggregate amounts charged to earnings for these plans
were $1,791,000, $1,194,000 and $971,000 in 1995, 1994 and 1993,
respectively.
<TABLE>
Pension. Net pension cost of the Corporation's defined benefit plan
included the following components for the years ended March 31:
<CAPTION>
(In thousands) 1995 1994 1993
---------------------------------
<S> <C> <C> <C>
Service cost $ 581 $ 557 $ 564
Interest cost 1,158 1,119 1,012
Actual return on investment (1,879) (238) (1,511)
Net amortization and deferrals 341 (1,320) 36
---------------------------------
Net periodic pension cost $ 201 $ 118 $ 101
=================================
</TABLE>
The rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit
obligation was 5% for 1995, 4% for 1994 and 5% for 1993. The
expected long-term rate of return on assets was 9% for 1995, 1994
and 1993, and the weighted average settlement rate was 8% for 1995,
7.5% for 1994 and 8.25% for 1993.
<TABLE>
The following table sets forth the plan's funded status at March
31, 1995 and 1994 and the amount recognized in the Corporation's
consolidated balance sheet at March 31:
<CAPTION>
(In thousands) 1995 1994
-----------------------
<S> <C> <C>
Actuarial present value of
benefit obligation:
Accumulated benefit obligation
including vested benefits of
$11,989 and $11,780 $12,588 $12,421
=======================
Projected benefit obligation $15,947 $15,115
Plan assets at fair value (primarily
listed stocks, bonds and guaranteed
investment contracts) 16,685 15,130
-----------------------
Plan assets in excess of
projected benefits obligation 738 15
Unrecognized portion of transition
asset (being amortized over 14 years) (1,145) (1,314)
Unrecognized net loss 311 1,146
Accrued pension cost $ (96) $ (153)
=======================
</TABLE>
Plan assets included 43,695 and 58,695 shares of the
Corporation's common stock having a market value of $1,879,000 and
$1,526,000 at March 31, 1995 and 1994, respectively.
Postretirement benefits. The Corporation sponsors a defined
benefit postretirement medical and dental plan that covers all of
its domestic full-time employees. Employees who retire after age 55
with at least 10 to 20 years of service (depending upon the date of
hire) are eligible. Current retirees are required to contribute
toward the cost of the plan until they attain age 65. All future
retirees will be required to contribute. The Corporation's subsidy
level is subject to a cap which increases by 3% each year. Retirees
will be required to contribute the plan cost in excess of the cap in
addition to other required contributions.
During fiscal 1994 adoption of SFAS 106 resulted in a one-time
charge against earnings for the transition obligation for past
services of $2,082,000 (net of a $1,382,000 deferred income tax
benefit). The ongoing additional after tax annual cost to the
Corporation is not material.
The Corporation's postretirement medical and dental plan is
unfunded. The accumulated postretirement benefit obligation,
covering both active and retired employees, was $3,882,000 and
$3,749,000 at March 31, 1995 and 1994, respectively. The
Corporation's accrued postretirement medical and dental benefit
liability at March 31, 1995 was $3,502,000 consisting of the
unfunded postretirement benefit obligation of $3,882,000 less the
unrecognized net loss of $380,000 and at March 31, 1994 was
$3,419,000 consisting of the unfunded postretirement benefit
obligation of $3,749,000 less the unrecognized loss of $330,000.
For measurement purposes, a 10.5% annual rate of increase in the
per capita cost of covered medical benefits was assumed for fiscal
1994; the rate is assumed to decrease gradually down to 6% for
fiscal 2002 and remain at that level thereafter. No annual rate
increase is assumed for the dental benefit cost since it is a
scheduled plan. The medical cost trend rate assumption has only a
small effect on the amounts reported due to the cap on contributions
paid by the Corporation. Increasing the assumed health care cost
trend rate one percentage point in each year would increase the
accumulated postretirement benefit obligation as of March 31, 1995
by approximately $200,000 (5%). The aggregate of the service and
interest cost components of the net periodic postretirement benefit
cost for fiscal 1995 would increase by approximately $12,000 (4%).
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 8%, 7.5% and 8.25%
at March 31, 1995, 1994 and 1993, respectively. Since the plan is
unfunded, no assumption is needed as to the long-term rate of return
on assets.
<TABLE>
The net periodic postretirement benefit costs for the years ended
March 31 were as follows:
<CAPTION>
(In thousands) 1995 1994
--------------------
<S> <C> <C>
Service cost $ 62 $ 47
Interest cost 292 279
Net amortization 11 -
Recognition of transition obligation
at April 1, 1993 - 3,464
--------------------
Net periodic postretirement benefit cost $ 365 $3,790
====================
</TABLE>
Postemployment benefits. The Corporation sponsors a defined
benefit postemployment compensation continuation plan that covers
all of its full time domestic employees. Employees who have
completed at least six months of service, become permanently
disabled and are unable to return to work are eligible to receive a
benefit under the plan. The benefit may range from one week to a
maximum of six months of compensation.
During fiscal 1995 adoption of SFAS 112 resulted in a one-time
charge against earnings for the transition obligation for past
services of $371,000 (net of a $248,000 deferred income tax benefit)
which was recorded on April 1, 1994. The estimated ongoing
additional after-tax annual cost of this plan is not material.
The postemployment salary continuation plan is unfunded. The
expected net periodic postemployment benefit cost for salary
continuation for fiscal 1995 included approximately $2,000 for
service cost (benefits attributed to service during the period),
$6,000 for interest cost and $619,000 for recognition of the
transition obligation at April 1, 1994 for a total net periodic
postemployment benefit cost of $627,000. The rate of increase in
future compensation levels used in determining the actuarial present
value of the projected benefit obligation was 5% and the weighted
average settlement rate was 8%.
Stock option plan. Under a non-qualified stock option plan
approved by the Shareholders in July 1992 (the 1992 Plan), certain
employees have been granted options to purchase up to an aggregate
294,500 shares of common stock. During fiscal 1995 there were
96,500 options granted having an exercise price of $16.1505 and
8,500 options were canceled upon termination of employment of the
grantees; during fiscal 1994 there were 73,500 options granted
having exercise prices from $16.983 to $18.315; and during fiscal
1993 there were 68,500 options granted having exercise prices from
$17.649 to $17.982. Options granted under the 1992 Plan generally
are exercisable during a four-year period beginning with the grant
date. Options for 37,550, 500 and 2,382 shares were exercised during
fiscal years 1995, 1994 and 1993, respectively, at prices ranging
from $14.652 to $17.982 per share. At March 31, 1995, there were
254,068 options outstanding with exercise prices from $14.652 to
$18.315 per share.
The options are exercisable into restricted shares of common
stock which cannot be sold or transferred, except back to the
Corporation at cost, during the four-year period commencing with the
exercise date. Compensation expense, which is equal to the
difference between the fair market value on the date of an option
grant and the exercise price of shares which may be purchased
thereunder, is amortized over an estimated combined period from the
date of grant through the end of the four-year period during which
purchased shares must be held or resold to the Corporation. The
amounts of such compensation expense charged to results of
operations following the date of grant for the years ended March 31,
1995, 1994 and 1993 were $370,000, $213,000, and $117,000,
respectively.
5. INCOME TAXES
As discussed in Note 1, the Corporation adopted SFAS 109 at the
beginning of fiscal year 1993. The cumulative effect of this change
in accounting for income taxes was immaterial.
Earnings before income taxes included foreign earnings of
$11,896,000, $7,864,000 and $7,141,000 for 1995, 1994 and 1993,
respectively.
<TABLE>
Income tax expense attributable to income from operations for the
years ended March 31 consisted of:
<CAPTION>
(In thousands) Current Deferred Total
-------------------------------------
1995
----
<S> <C> <C> <C>
U.S. Federal $ 3,887 $ (504) $ 3,383
State and local 500 36 536
Foreign 4,038 (952) 3,086
-------------------------------------
Totals $ 8,425 $(1,420) $ 7,005
=====================================
1994
----
U.S. Federal $ 2,272 $ (434) $ 1,838
State and local 590 (86) 504
Foreign 2,213 98 2,311
-------------------------------------
Totals $ 5,075 $ (422) $ 4,653
=====================================
1993
----
U.S. Federal $ 2,044 $ (44) $ 2,000
State and local 663 (12) 651
Foreign 2,462 (462) 2,000
-------------------------------------
Totals $ 5,169 $ (518) $ 4,651
=====================================
</TABLE>
<TABLE>
Income tax expense for the years ended March 31, 1995, 1994 and
1993 differed from the amounts computed by applying the U.S. Federal
statutory tax rates to pretax income from operations as a result of
the following:
<CAPTION>
(In thousands, except tax rates) 1995 1994 1993
------------------------------------
<S> <C> <C> <C>
U.S. Federal statutory tax rate 35% 34% 34%
====================================
Computed "expected"
Federal income tax $6,351 $4,224 $4,195
State income taxes, net of
Federal tax benefit 354 333 429
Adjustment of prior years
tax accruals 1,251 (24) 177
Foreign tax rate differential (132) (442) (405)
Change in the beginning of
the year balance of the
valuation allowance for
deferred income taxes
allocated to income tax
expense (872) 482 34
No tax benefit for (gain) loss of
unconsolidated corporate
joint venture (172) (10) 200
Other, net 225 90 21
--------------------------------------
Actual income taxes $7,005 $4,653 $4,651
======================================
Effective tax rate 38.6% 37.5% 37.7%
======================================
</TABLE>
<TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and liabilities at
March 31 are:
<CAPTION>
(In thousands) 1995 1994
------------------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts $ 228 $ 277
Inventories, principally due to additional
costs inventoried for tax purposes pursuant
to the Tax Reform Act of 1986 and non-
deductible inventory reserves 607 420
Accrued liabilities 3,527 2,169
Foreign net operating loss carry forwards 1,198 1,345
Other 1,248 308
------------------
Total gross deferred tax assets 6,808 4,519
Less valuation allowance - 872
------------------
Net deferred assets 6,808 3,647
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation 773 550
Other 187 166
------------------
Total gross deferred tax liabilities 960 716
------------------
Net deferred asset $5,848 $2,931
==================
</TABLE>
The deferred tax asset of $1,198,000 and $1,345,000 at March 31,
1995 and 1994, respectively, which relate to foreign net operating
loss carry forwards, results primarily from prior year losses
incurred by a foreign subsidiary. The valuation allowance in 1994
was related to those losses. The valuation allowance decreased
$872,000 in 1995 and increased $482,000 in 1994. Management now
believes the deferred tax asset is more likely than not to be
realized from future taxable income generated by the subsidiary.
The net operating loss carry forward has an indefinite expiration
period.
The Corporation has not recognized a deferred tax liability for
the undistributed earnings of subsidiaries that arose in 1995 and
prior years because the Corporation currently does not expect those
unremitted earnings to reverse and become taxable to the Corporation
in the foreseeable future. A deferred tax liability will be
recognized when the Corporation expects that it will recover those
undistributed earnings in a taxable manner, such as through receipt
of dividends, net of available foreign tax credits, or sale of the
investments. At March 31, 1995, the undistributed earnings of those
subsidiaries were approximately $22,000,000.
6. SEGMENT REPORTING
The Corporation is engaged in the business of developing,
manufacturing and marketing industrial chemicals, supplies and
related equipment.
<TABLE>
The following table is a summary of the Corporation's operations
by geographic area:
<CAPTION>
North Asia-
(In thousands) America Europe Pacific Consolidated
--------------------------------------------
1995
----
<S> <C> <C> <C> <C>
Net sales to unaffiliated
customers:
Proprietary $90,177 $34,490 $38,648 $163,315
========================================
Total Sales $93,866 $41,196 $47,038 $182,100
Cost of goods sold 47,544 24,200 22,315 94,059
Selling, technical and
administrative expense 40,308 12,311 15,285 67,904
----------------------------------------
Operating profit 6,014 4,685 9,438 20,137
Other income (expense) 1,532 (1,488) (2,034) (1,990)
----------------------------------------
Earnings before
income taxes <F1> 7,546 3,197 7,404 18,147
Income taxes 3,476 1,458 2,071 7,005
----------------------------------------
Net earnings <F1> $ 4,070 $ 1,739 $ 5,333 $ 11,142
========================================
Identifiable assets $67,780 $21,943 $33,582 $123,305
========================================
1994 <F2>
----
Net sales to unaffiliated
customers:
Proprietary $68,864 $31,469 $30,268 $130,601
========================================
Total Sales $73,861 $37,951 $38,214 $150,026
Cost of goods sold 35,538 22,416 18,960 76,914
Selling, technical and
administrative expense 32,785 13,118 14,160 60,063
----------------------------------------
Operating profit 5,538 2,417 5,094 13,049
Other income (expense) 268 (1,478) 585 (625)
----------------------------------------
Earnings before
income taxes <F1> 5,806 939 5,679 12,424
Income taxes 2,843 683 1,127 4,653
----------------------------------------
Net earnings <F1> $ 2,963 $ 256 $ 4,552 $ 7,771
========================================
Identifiable assets $56,708 $19,942 $29,217 $105,867
========================================
1993 <F2>
----
Net sales to unaffiliated
customers:
Proprietary $66,822 $35,406 $27,904 $130,132
========================================
Total Sales $74,068 $45,042 $37,214 $156,324
Cost of goods sold 38,363 27,372 18,165 83,900
Selling, technical and
administrative expense 30,472 14,197 12,211 56,880
----------------------------------------
Operating profit 5,233 3,473 6,838 15,544
Other income (expense) 880 (2,637) (1,449) (3,206)
----------------------------------------
Earnings before
income taxes 6,113 836 5,389 12,338
Income taxes 3,076 177 1,398 4,651
----------------------------------------
Net earnings $ 3,037 $ 659 $ 3,991 $ 7,687
========================================
Identifiable assets $53,645 $24,796 $28,732 $107,173
========================================
<FN>
<F1> Before the cumulative effect of accounting changes which
resulted in one-time after tax charges of $371,000 ($0.12/share) in
1995 and $2,082,000 ($0.58/share in 1994).
<F2> Certain amounts in the 1994 and 1993 geographic segment
presentations have been reclassified to conform with the 1995
presentation.
</TABLE>
7. LONG-TERM OBLIGATIONS
<TABLE>
Long-term obligations at March 31 consisted of the following:
<CAPTION>
(In thousands) 1995 1994
----------------------
<S> <C> <C>
Term loan, variable interest
(7.5% at March 31, 1995), due
in quarterly installments to 2,001 $21,875 $ -
Note payable, variable interest - 450
Debenture, 3.5% interest due in
annual installments to 1999 607 649
Other, due in varying amounts
to 1999 160 252
-----------------------
Total long-term obligations 22,642 1,351
Less current portion 4,413 429
-----------------------
Long-term portion $18,229 $ 922
=======================
</TABLE>
<TABLE>
Minimum future principal payments on long-term obligations
subsequent to March 31, 1995 are as follows:
(In thousands)
<C> <C>
1996 $ 4,413
1997 4,385
1998 4,349
1999 4,288
2000 4,166
2001 1,041
-------
Total $22,642
=======
</TABLE>
The term loan bears interest at a variable rate, which initially
was equal to the London interbank market rate (LIBOR) plus 1.25
percentage points. The Corporation has purchased an interest rate
cap which limits the LIBOR interest rate payable on the outstanding
portions of the debt, except for the last $3.1 million. The maximum
payable rates increase gradually from 5.81%, initially, to 8.97%
when the interest rate cap expires. At March 31, 1995 the 7.5%
effective interest rate included a LIBOR rate of 6.5% plus 1%. The
maximum payable LIBOR rate under the interest rate cap was 6.98%.
The maximum effective interest rate payable would have been 7.98%.
Under the term loan, the most restrictive covenants provide that
dividends to shareholders cannot exceed 50% of net earnings; a
future business acquisition cannot cause consolidated debt to exceed
three hundred percent of earnings before interest, taxes,
depreciation and amortization; the ratio of earnings before income
taxes to interest expense must be at least 2.5 to 1; the minimum
consolidated net worth shall be at least $37 million plus one-half
of consolidated net earnings after October 6, 1994; and the ratio of
total debt to net worth shall be no greater than 1.2 to 1 during
calendar year 1995 and .9 to 1 thereafter.
8. LEASE COMMITMENTS
The Corporation leases certain warehouse space, transportation,
computer and other equipment. Contingent rentals are paid for
warehouse space on the basis of the monthly quantities of materials
stored and for transportation and other equipment on the basis of
mileage or usage. Total rental expense amounted to $4,968,000 in
1995, $4,126,000 in 1994, and $4,427,000 in 1993 of which $821,000,
$587,000 and $610,000, respectively, were contingent rentals.
<TABLE>
Minimum lease commitments under operating leases for the fiscal
years subsequent to March 31, 1995 are as follows:
(In thousands)
<C> <C>
1996 $2,648
1997 766
1998 261
1999 143
2000 31
------
Total $3,849
======
</TABLE>
9. SHAREHOLDERS' EQUITY
<TABLE>
The following summarizes the changes in shareholders' equity accounts
for each of the three years in the period ended March 31,1995:
(In thousands, except share data)
<CAPTION>
Common Stock Total
------------ Additional Cumulative Treasury Stock Share-
Stated Paid-in Retained Translation -------------- holders
Shares Value Capital Earnings Adjustment Shares Cost Equity
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance March 31, 1992 4,095,648 $4,096 $ 464 $65,943 $2,147 530,648 $(11,600) $61,050
Stock options
exercised 2,382 2 150 152
Net earnings 7,687 7,687
Cash dividends
$.60 per share (2,139) (2,139)
Foreign currency
translation
adjustment (1,569) (1,569)
-------------------------------------------------------------------------------
Balance March 31, 1993 4,098,030 4,098 614 71,491 578 530,648 (11,600) 65,181
Stock options
exercised 500 1 220 221
Net earnings 5,689 5,689
Cash dividends
$.60 per share (2,141) (2,141)
Foreign currency
translation
adjustment (781) (781)
--------------------------------------------------------------------------------
Balance March 31, 1994 4,098,530 4,099 834 75,039 (203) 530,648 (11,600) 68,169
Stock options
exercised 37,550 37 842 879
Net earnings 10,771 10,771
Cash dividends
$.60 per share (1,767) (1,767)
Foreign currency
translation
adjustment 1,754 1,754
Treasury stock purchase 862,899 (26,152) (26,152)
--------------------------------------------------------------------------------
Balance March 31, 1995 4,136,080 $4,136 $1,676 $84,043 $1,551 1,393,547 $(37,752) $53,654
================================================================================
</TABLE>
Effective August 1, 1994, the Corporation purchased 851,899
shares of its common stock at a price of $30 per share pursuant to a
"Dutch Auction" self tender offer that commenced on June 23, 1994
(the Offer). Under the terms of the Offer, the Corporation had
sought to purchase up to 1,000,000 shares at prices not greater than
$30 nor less than $25 per share, as specified by the tendering
shareholders. The shares purchased pursuant to the Offer represent
approximately 23.8% of the shares outstanding immediately prior to
the commencement of the Offer. The total cost of the Offer,
including all related fees and expenses, of approximately $26.2
million was funded primarily by borrowing $25 million on an
unsecured basis under a six-year term loan which is discussed under
Note 7 to these consolidated financial statements.
Separately, the Board of Directors authorized the purchase of up
to 148,000 shares of the Corporation's common stock to be acquired
through open market purchases or privately negotiated transactions
from time to time. During the third quarter of fiscal 1995, 11,000
shares of common stock were repurchased at $35 per share pursuant to
this authorization. Any future repurchases under this authorization
will depend on various factors, including the market price of the
shares, the Corporation's business and financial position and
general economic and market conditions. Additional shares acquired
pursuant to such authorization will be held in the Corporation's
treasury and will be available for the Corporation to issue without
further shareholder action (except as required by applicable law or
the rules of any securities exchange on which the share are then
listed). Such shares may be used for various Corporate purposes,
including contributions under existing or future employee benefit
plans, the acquisition of other businesses and the distribution of
stock dividends. At March 31, 1995, there was a balance of such
outstanding authorizations totaling 137,000 shares.
10. CONTINGENCIES
The Corporation has been named as a potentially responsible party
(PRP) by the Environmental Protection Agency in connection with two
waste sites. There are many other companies involved at each of
these sites and the Corporation's participation is minor. The
Corporation has recorded its best estimate of liabilities in
connection with site clean-up based upon the extent of its
involvement, the number of PRPs and estimates of the total costs of
the site clean-up. Though it is difficult to predict the final
costs of site remediation, management believes that the recorded
liabilities are reasonable estimates of probable liability and that
future cash outlays are unlikely to be material to its consolidated
financial position, results of operations or cash flows.
The Corporation is a party to a number of lawsuits and claims
arising out of the ordinary conduct of business. While the ultimate
results of the proceedings against the Corporation cannot be
predicted with certainty, management does not expect that resolution
of these matters will have a material adverse effect upon its
consolidated financial position.
The Corporation's business operations, consist principally of
manufacture and sale of specialty chemicals, supplies and related
equipment to customers throughout much of the world. Approximately
60% of the business is concentrated with manufacturers of printed
circuit boards which are used in a wide variety of end-use
applications, including computers, communications and control
equipment, appliances, automobiles and entertainment products. As
is usual for this business, the Corporation generally does not
require collateral or other security as a condition of sale,
choosing, rather, to control credit risk of trade account financial
instruments by credit approval, balance limitation and monitoring
procedures. Management believes that reserves for losses, which are
established based upon review of account balances and historical
experience, are adequate.
<PAGE>
MANAGEMENT'S STATEMENT OF FINANCIAL RESPONSIBILITY
MacDermid, Incorporated (Logo)
245 Freight Street
Waterbury, CT 06702
To The Shareholders
MacDermid, Incorporated
The financial information in this report, including the audited
consolidated financial statements, has been prepared by management.
Preparation of consolidated financial statements and related data
involves the use of judgment. Accounting principles used in
preparing consolidated financial statements are those that are
generally accepted in the United States.
To safeguard Corporate assets, it is important to have a sound
but dynamic system of internal controls and procedures that balances
benefits and costs. The Corporation employs professional financial
managers whose responsibilities include implementing and overseeing
the financial control system, reporting on management's stewardship
of assets entrusted to it by share owners and performing accurate
and proper maintenance of the accounts.
Management has long recognized its responsibility for conducting
the affairs of the Corporation and its affiliates in an ethical and
socially responsible manner. MacDermid, Incorporated is dedicated
to the highest standards of integrity. Integrity is not an
occasional requirement, but a continuing commitment.
KPMG Peat Marwick LLP conducts an objective, independent review
of management's fulfillment of its obligations relating to the
fairness of reported operating results and financial condition.
Their report for 1995 appears adjacent to this statement.
The Audit Committee of the Board of Directors, consisting solely
of Directors independent of MacDermid, maintains an ongoing
appraisal on behalf of the share owners of the effectiveness of the
independent auditors and the Corporation's staff of financial and
operating management with respect to the financial and internal
controls.
/s/Daniel H. Leever
Daniel H. Leever
President and Chief Executive Officer
<PAGE>
INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick LLP (Logo)
Certified Public Accountants
City Place II
Hartford, CT 06103-4103
The Board of Directors and Shareholders
MacDermid, Incorporated
We have audited the accompanying consolidated balance sheets of
MacDermid, Incorporated and subsidiaries as of March 31, 1995 and
1994, and the related consolidated statements of earnings and cash
flows for each of the years in the three-year period ended March 31,
1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated 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 that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of MacDermid, Incorporated and subsidiaries at March 31,
1995 and 1994 and the results of their operations and their cash
flows for each of the years in the three-year period ended March 31,
1995 in conformity with generally accepted accounting principles.
As discussed in Note 4 to the consolidated financial statements,
the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" in 1995,
and Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" in 1994.
/s/KPMG Peat Marwick LLP
/s/KPMG Peat Marwick LLP
May 12, 1995
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
SELECTED QUARTERLY RESULTS
(UNAUDITED)
(In thousands, except per share amounts)
1995 by Quarters
----------------------------------------------
<CAPTION>
June September December March Total
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $42,587 $46,498 $44,547 $48,468 $182,100
Gross profit 21,262 21,779 21,684 23,316 88,041
Net earnings 2,799<F2> 2,667 2,637 2,668 10,771<F2>
Primary earnings
per share<F1> $0.78<F2> $0.85 $0.92 $0.92 $3.43<F2>
1994 by Quarters
----------------------------------------------
June September December March Total
----------------------------------------------
Net sales $39,850 $37,755 $34,814 $37,607 $150,026
Gross profit 19,500 17,979 16,806 18,827 73,112
Net earnings (184)<F2> 1,860 1,477 2,536 5,689<F2>
Earnings per share $(0.05)<F2> $0.52 $0.42 $0.71 $1.60<F2>
<FN>
<F1> Fiscal 1995 was the first year in which the dilutive effect of
options granted was large enough to report.
<F2> After cumulative effect of accounting changes which resulted
in one-time after tax charges of $371,000 ($0.12/share) in 1995 and
$2,082,000 ($0.58/share) in 1994.
</TABLE>
- ---------------------------------------------------------------------------
<TABLE>
MARKET RANGE TRADING RECORD
Fiscal 1995 Fiscal 1994
------------------ -----------------
<CAPTION>
High Low High Low
QUARTER ------------------ -----------------
<S> <C> <C> <C> <C>
June 29 1/2 24 31 25 1/4
September 36 1/2 29 28 1/2 26 3/4
December 42 34 28 3/4 24 1/2
March 44 1/2 36 1/2 27 1/4 24 1/2
Closing price March 31 43 26
<FN>
Source: Nasdaq Stock Market Monthly Statistical Report
</TABLE>
<TABLE>
DIVIDEND RECORD
Fiscal 1995 Fiscal 1994
--------------------------- ----------------------------
<CAPTION>
Record Payable Amount Record Payable Amount
QUARTER Date Date Declared Date Date Declared
--------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
June 6/15/94 7/1/94 $0.15 6/15/93 7/1/93 $0.15
September 9/15/94 10/3/94 $0.15 9/15/93 10/1/93 $0.15
December 12/15/94 1/3/95 $0.15 12/15/93 1/3/94 $0.15
March 3/15/95 4/3/95 $0.15 3/15/94 4/1/94 $0.15
</TABLE>
<PAGE>
CORPORATE INFORMATION
DIRECTORS:
Harold Leever, Chairman of the Board
Daniel H. Leever, President and Chief Executive Officer
Donald G. Ogilvie, Executive Vice President,
American Bankers Association
James C. Smith, Chairman of the Board and Chief Executive Officer,
Webster Financial Corporation
Thomas W. Smith, President of Prescott Investors, Inc.
Walter F. Torrance, Jr., Partner, Carmody & Torrance, Attorneys
Robert F. Weltzien, Chairman and Chief Executive Officer of
LISA Products Corporation
Francis M. White, Retired Chairman of the Board,
Bank of Boston Connecticut
OFFICERS:
Harold Leever, Chairman of the Board
Daniel H. Leever, President and Chief Executive Officer
VICE PRESIDENTS:
Charles T. Cobb
Terrence C. Copeland
David A. Erdman
John J. Grunwald
Peter E. Kukanskis
Gary B. Larson
Michael A. Pfaff
OTHER OFFICERS:
Gregory M. Bolingbroke, Corporate Controller
John L. Cordani, Corporate Secretary
Sharon J. Stone, Assistant Treasurer
CORPORATE HEADQUARTERS:
245 Freight Street
Waterbury, Connecticut 06702
(203) 575-5700
AUDITORS:
KPMG Peat Marwick LLP
REGISTRAR OF STOCK AND TRANSFER AGENT:
Harris Trust Company of New York
SEC FORM 10-K:
The Annual Report and the SEC Form 10-K report are
available without charge by written request to:
Corporate Secretary
MacDermid, Incorporated
245 Freight Street
Waterbury, CT 06702
DIVIDEND REINVESTMENT PLAN:
A systematic investment service is available to all MacDermid
shareholders. The service permits investment of MacDermid,
Incorporated dividends and voluntary cash payments in additional
shares of MacDermid stock.
Please direct any inquiries to:
Harris Trust Company of New York
c/o Harris Trust and Saving Bank
Dividend Reinvestment Department
P.O. Box A3309
Chicago, IL 60690
SHAREHOLDERS' QUESTIONS:
Shareholders with questions concerning non-receipt of dividend
checks, transfer requirements, registration and address changes,
or who need a duplicate 1099 statement, should write to:
Harris Trust Company of New York
c/o Harris Trust and Savings Bank
111 West Monroe, P.O. Box 755
Chicago, IL 60690
MARKET & DIVIDEND INFORMATION:
The common shares of MacDermid, Incorporated are traded on
the Nasdaq Stock Market (Symbol: MACD). Price and shares
traded are listed in principal daily newspapers and are
supplied by Nasdaq. Approximate number of Holders as of
May 31, 1995 - 800. CUSIP-554273 102.
ANNUAL MEETING:
The Annual Meeting of Shareholders will be held on Thursday,
July 20, 1995 at 3:30 p.m., at the Holiday Inn Waterbury,
63 Grand Street, Waterbury, CT.
<PAGE>
LOCATIONS IN THE AMERICAS:
United States: Waterbury, CT; New Hudson, MI; Cincinnati, OH; Ferndale,
Dallas, TX
Canada: MacDermid Chemicals, Inc.
LOCATIONS WORLDWIDE:
Australia: MacDermid Australia Branch
Benelux: MacDermid Benelux, B.V.
England: MacDermid G.B., Ltd.
France: MacDermid France, S.A.
Germany: MacDermid GmbH
Hong Kong: MacDermid Asia Ltd; MacDermid Hong Kong, Ltd.
Israel: MacDermid Israel Ltd.
Italy: MacDermid Italiana SRL
Japan: Nippon MacDermid Co. Ltd.
Korea: MacDermid Korea Ltd.
New Zealand: MacDermid New Zealand, Ltd.
Rep. of South Africa: MacDermid S.A. (PTY) Ltd.
Singapore: MacDermid Singapore, Pte Ltd.
Spain: MacDermid Espanola, S.A.
Switzerland: MacDermid Suisse, S.A.
Taiwan: MacDermid Taiwan, Ltd.
AFFILIATE:
Hollmuller America, Inc.: Waterbury, CT
EXHIBIT 21
SUBSIDIARIES OF MACDERMID, INCORPORATED
MacDermid's principal subsidiaries, primarily wholly-owned, are as follows:
State of
Incorporation
MacDermid Asia, Ltd. Hong Kong
MacDermid Chemicals, Inc. Canada
MacDermid Espanola, S.A. Spain
MacDermid Europe, Incorporated Delaware
MacDermid France, S.A. France
MacDermid G.B., Ltd. United Kingdom
MacDermid GmbH Germany
MacDermid Hong Kong, Ltd. Hong Kong
MacDermid Israel, Ltd. Israel
MacDermid Italiana SRL Italy
MacDermid Korea, Ltd. Hong Kong
MacDermid New Zealand, Ltd. New Zealand
MacDermid S.A. (Pty.) Ltd. South Africa
MacDermid Singapore, Pte. Ltd. Singapore
MacDermid Suisse, S.A. Switzerland
MacDermid Taiwan, Ltd. Taiwan
Nippon MacDermid Co., Inc. Japan
In addition, the Corporation has several non operating subsidiaries
which, in the aggregate, are not significant.
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
KPMG Peat Marwick LLP (Logo)
Certified Public Accountants
CityPlace II
Hartford, CT 06103-4103
Independent Auditors' Consent
The Board of Directors
MacDermid, Incorporated:
We consent to incorporation by reference in the Registration
Statements (Nos. 2-66987 and 2-68181) on Form S-8 of MacDermid,
Incorporated of our reports dated May 12, 1995, relating to the
consolidated balance sheets of MacDermid, Incorporated and
subsidiaries as of March 31, 1995 and 1994, and the related
consolidated statements of earnings and cash flows and related
schedules for each of the years in the three-year period ended
March 31, 1995, which reports appear or are incorporated by
reference in the March 31, 1995 annual report on Form 10-K of
MacDermid, Incorporated.
Our report refers to a change in the Company's method of
accounting for postemployment benefits and postretirement benefits.
/s/ KPMG Peat Marwick LLP
June 27, 1995
EXHIBIT 24
POWER OF ATTORNEY
Each of the non employee Directors of MacDermid, Incorporated
signed identical powers of attorney in the following form:
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director
of MacDermid, Incorporated, hereby constitutes and appoints Harold
Leever and Daniel H. Leever, and each of them acting alone, the true
and lawful agents and attorneys-in-fact of the undersigned, with full
power and authority in said agents and attorneys-in-fact to delegate
the power herein conferred to any person or persons said agents and
attorneys-in-fact shall select, to sign in the place of the undersigned
in his capacity as a director of the Corporation, the Form 10-K for the
fiscal year ended March 31, 1995, of the Corporation to be filed with
the Securities and Exchange Commission, Washington, D.C., under the
Securities Exchange Act of 1934, as amended, and sign any amendment or
amendments to such Form 10-K; hereby ratifying and confirming all acts
taken by such agents and attorneys-in-fact or any one of them, as
herein authorized.
(Signature)*
April 28, 1995
* The Directors who signed the powers of attorney were:
Donald G. Ogilvie
James C. Smith
Thomas W. Smith
Walter F. Torrance
Robert F. Weltzien
Francis M. White
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Mar-31-1995
<PERIOD-START> Apr-01-1994
<PERIOD-END> Mar-31-1995
<CASH> 7360
<SECURITIES> 0
<RECEIVABLES> 48418
<ALLOWANCES> 2859
<INVENTORY> 22801
<CURRENT-ASSETS> 81197
<PP&E> 62756
<DEPRECIATION> 35721
<TOTAL-ASSETS> 123305
<CURRENT-LIABILITIES> 46486
<BONDS> 18229
0
0
<COMMON> 4136
<OTHER-SE> 49518
<TOTAL-LIABILITY-AND-EQUITY> 123305
<SALES> 182100
<TOTAL-REVENUES> 182100
<CGS> 94059
<TOTAL-COSTS> 163953
<OTHER-EXPENSES> 69894
<LOSS-PROVISION> 664
<INTEREST-EXPENSE> 2029
<INCOME-PRETAX> 18147
<INCOME-TAX> 7005
<INCOME-CONTINUING> 11142
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 371
<NET-INCOME> 10771
<EPS-PRIMARY> 3.43
<EPS-DILUTED> 3.38
</TABLE>
