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EXHIBIT 7
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into as of the 29th day of December, 1999,
by and among MacDermid, Incorporated, a Connecticut corporation ("Buyer"),
Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), Xxxxx Xxxxxxxxx
(the "Management Representative") and State Street Bank and Trust Company, a
Massachusetts trust company (the "Escrow Agent").
WHEREAS, Buyer has agreed to acquire all of the issued and outstanding
shares of capital stock of PTI, Inc., a Delaware corporation ("Seller"), in
exchange for shares of Buyer common stock, no par value (the "Buyer Shares"),
pursuant to that certain Plan and Agreement of Merger dated as of February 18,
1999, as amended by the First Amendment thereto dated as of July 27, 1999, the
Second Amendment thereto dated as of September 13, 1999, the Third Amendment
thereto dated as of October 29, 1999 and the Fourth Amendment dated as of
December 15, 1999 (as so amended, the "Merger Agreement") by and among Buyer,
MCD Acquisition Corp., Seller and CVC;
WHEREAS, Buyer has agreed to acquire a certain Warrant exercisable for
capital stock of Seller in partial exchange for the Escrow Warrant (as defined
below) pursuant to the Merger Agreement;
WHEREAS, CVC has entered into this Agreement on behalf of itself and as an
agent for and attorney-in-fact of those Seller stockholders designated as
outside stockholders on Schedule 1-A attached hereto (the "Outside
Stockholders") pursuant to that certain Agency Agreement dated as of December
29, 1999, 1999 (the "Agency Agreement");
WHEREAS, Management Representative has entered into this Agreement on his
own behalf and as agent for and attorney-in-fact of those Seller stockholders
designated as management stockholders on Schedule 1-A attached hereto (the
"Management Stockholders") pursuant to the Agency Agreement;
WHEREAS, the Merger Agreement provides that an Escrow Fund will be
established to secure the indemnification obligations to Buyer under Section
8.1(b) and 8.1(d) of the Merger Agreement on the terms and conditions set forth
herein; and
WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which such Escrow Fund will be established and maintained.
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NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINED TERMS.
"Closing Date" means December 29, 1999.
"CMP" means Citicorp Mezzanine Partners, L.P.
"Designated Percentages" has the meaning set forth in Section 3.2
hereof.
"Effective Date" means the effective date of the Merger, as
defined in the Merger Agreement.
"Escrow Account" has the meaning set forth in Section 3.2 hereof.
"Escrow Account Beneficiary" means CVC, the Management
Representative, a Person listed on Schedule 1-A hereto, or any
permitted successor or assignee of such Person.
"Escrow Fund" has the meaning set forth in Section 3.1 hereof.
"Escrow Security" means any Primary Escrow Security or any
Secondary Escrow Security that is an asset of an Escrow Account.
"Escrow Shares" means 127,000 shares of Buyer's common stock, no
par value, issued in connection with the Merger Agreement and
deposited with the Escrow Agent hereunder.
"Escrow Value" means, except as otherwise provided in this
Agreement, (i) with respect to each Escrow Share, $38.0670(1), (ii)
with respect to any Primary Escrow Security (other than an Escrow
Share or the Escrow Warrant), the Escrow Value of the equivalent
number of Escrow Shares as determined by CVC and the Buyer, (iii) with
respect to any Secondary Escrow Security that is listed on a national
exchange or Nasdaq, the average of the daily closing prices per such
for the thirty (30) consecutive trading days immediately prior to the
specified date, rounded to the nearest cent and ignoring the highest
and lowest closing prices during such period as determined by CVC and
the Buyer, and (iv) with
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(1) This amount shall be calculated as of the Closing and shall equal
the average of the daily closing price of Buyer Common Stock for the thirty (30)
consecutive trading days immediately prior to the Closing Date, rounded to the
nearest cent and ignoring the highest and lowest closing prices during such
period.
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respect to any other assets in the Escrow Fund, other than cash or a
cash equivalent instrument, such value as Buyer and CVC may mutually
agree, or, if Buyer and CVC are unable to agree, as determined by a
nationally recognized investment banking firm selected by CVC and
consented to by Buyer, such consent not to be unreasonably withheld,
and all fees and expenses incurred in connection with such retention
of an investment banking shall be split equally between Buyer and CVC.
The Escrow Value of the Escrow Warrant shall be equal to (X) the
Escrow Value of the total number of the Primary Escrow Securities
purchasable upon the full exercise thereof minus (Y) the aggregate
exercise price thereof. Notwithstanding anything contained herein to
the contrary, for the purpose of making distributions to the Buyer
pursuant to Section 6 hereof, the aggregate value of the Escrow Fund
and of each Escrow Account shall not be deemed to exceed the Escrow
Value of the Primary Escrow Securities held therein.
"Escrow Warrant" means that certain warrant for Buyer Shares held
by CMP or any successor holder and any replacement warrant issued in
exchange therefor.
"Primary Escrow Security" means the Escrow Shares and the Escrow
Warrant and any other securities distributable to the holders of those
Primary Escrow Securities in respect of or in exchange therefor,
whether by way of stock dividends, stock splits, merger or otherwise.
"Pooling Period Expiration Date" means that date on which results
covering at least thirty (30) days of combined operations of Buyer and
Seller have been published by Buyer, in the form of a quarterly
earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or
any public filing or announcement which includes the results of at
least 30 days of combined operations.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of the date of this Agreement, among Buyer,
CVC and certain other parties named therein providing for the
registration under the Securities Act of 1933, as amended, of the
resale of Buyer Shares.
"Secondary Escrow Security" means any security (other than a
Primary Escrow Security) that is an asset of an Escrow Account.
"Termination Date" means December 31, 2000 unless two (2)
business days prior to such date the Escrow Agent receives notice that
such date will not be the Termination Date, in which event, the
Termination Date shall be the date which is five (5) days after Escrow
Agent has received written notice from Buyer that the audit of Buyer's
financial statements for the fiscal year ending March 31, 2000 is
completed.
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2. ESCROW AGENT. The Escrow Agent accepts appointment hereunder and
agrees to hold in escrow the Escrow Fund in accordance with the terms of this
Escrow Agreement.
3. ESCROW FUND.
3.1 Escrow Fund. In accordance with the provisions of the Merger
Agreement, Buyer will deliver to the Escrow Agent the Closing Date (i) a
certificate evidencing the Escrow Shares and (ii) a certificate evidencing the
Escrow Warrant, each registered in the name of the Escrow Agent, as Escrow Agent
under this Agreement. The Primary Escrow Securities represented by such
certificates and any income thereon, or other property which is delivered to the
Escrow Agent under the terms of this Agreement with respect thereto, shall be
referred to herein as the "Escrow Fund." The Escrow Fund and each Escrow Account
shall be held as a separate fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party hereto. The Escrow Agent will hold the Escrow Fund until it is released in
accordance with the provisions of this Agreement. In order to facilitate the
sale or release, in accordance with the terms of this Agreement, of the Escrow
Warrant (or an interest therein) or any Primary Escrow Securities purchasable
upon the exercise of the Escrow Warrant, Buyer shall deliver a replacement
Escrow Warrant to the Escrow Agent promptly after receipt of a written request
therefor from the Escrow Agent, which replacement Escrow Warrant shall be
adjusted appropriately to reflect the partial exercise of such Escrow Warrant,
the assignment of an interest therein, or the release of a portion of the
underlying Primary Escrow Securities thereof to Buyer or each Escrow Account
Beneficiary entitled thereto. The Escrow Agent shall have no responsibility for
the genuineness, validity, market value, title or sufficiency for any intended
purpose of the Escrow Fund.
3.2 Escrow Accounts. The Escrow Agent shall establish and maintain
separate escrow accounts (each an "Escrow Account") within the Escrow Fund for
each Escrow Account Beneficiary. Schedule 1-B attached hereto specifies (i) the
percentage (each, a "Designated Percentage") of the total Escrow Fund which each
such Escrow Account shall constitute as of the Closing Date and (ii) the
specific assets (e.g., Escrow Shares or Escrow Warrant) that comprise each such
Escrow Account as of the Closing Date. The Escrow Agent shall promptly amend
Schedule 1-B to reflect any change in the assets comprising an Escrow Account;
provided, however, that the Designated Percentages of the Escrow Accounts shall
remain fixed. The Escrow Agent shall deliver an amended Schedule 1-B to Buyer,
CVC, the Management Representative and each Escrow Account Beneficiary on a
quarterly basis along with the reports required by Section 4.2 below.
4. CUSTODY OF ESCROW FUND.
4.1. Investments. The Escrow Agent shall hold assets in an Escrow
Account until (i) sold in accordance with the written direction of the
respective Escrow Account Beneficiary or (ii) released in accordance with the
provisions of this Agreement. The Escrow Agent will invest
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and reinvest, from time to time, any cash or cash equivalents in an Escrow
Account (including without limitation cash received as a result of dividends on
or the sale of any Escrow Security) in any one or more of the following
investments as designated in writing by the respective Escrow Account
Beneficiary: (a) obligations of the United States of America having a remaining
maturity of one year or less; (b) general obligations of any State of the United
States of America having a remaining maturity of one year or less, if such
obligations are rated by at least two recognized rating services as at least
"AAA"; (c) certificates of deposit of any domestic commercial bank or trust
company (including, if applicable, the Escrow Agent or an affiliate of the
Escrow Agent) if the deposits of such bank are insured up to applicable limits
by the Federal Deposit Insurance Corporation (FDIC) and the bank has a net worth
in excess of $500 million (an "Acceptable Bank"), provided that the maturity
date of any such certificate of deposit is prior to April 30, 2000; (d) demand
interest bearing accounts of Escrow Agent or an affiliate of Escrow Agent if
Escrow Agent is an Acceptable Bank; or (e) any open-end or closed-end management
type investment company or investment trust registered under the Investment
Company Act of 1940, as amended, which invests in any of the investments
described in clause (a) or (b) of this sentence. In the absence of such
instructions, the Escrow Agent shall invest any cash in a State Street Money
Market account.
The Escrow Agent shall not be responsible or liable for any loss accruing
from any investment made in accordance herewith. All earnings received from the
investment of property in an Escrow Account shall be credited to, and shall
become a part of such Escrow Account (and any losses on such investments shall
be debited to the appropriate Escrow Account). The Escrow Agent shall have no
liability for any investment losses, including any losses on any investment
required to be liquidated prior to maturity in order to make a payment required
hereunder.
4.2. Reports. The Escrow Agent shall deliver to Buyer, CVC, the
Management Representative and each Escrow Account Beneficiary, as promptly as
practicable after the end of each calendar quarter during the term of this
Agreement, a statement setting forth the assets in each Escrow Account as of the
end of such calendar quarter, and the interest, income, dividends or
distributions which were added to or paid from, or any changes otherwise made
to, any Escrow Account during the quarter ending as of that date.
5. DIVIDENDS, VOTING AND SALE OF ESCROW FUND ASSETS.
5.1 Dividends, Etc. Any cash dividends or property (including,
without limitation, any securities distributable to the holders of Escrow
Securities in respect of or in exchange for any of the Escrow Securities,
whether by way of stock dividends, stock splits or otherwise) shall be delivered
to the Escrow Agent, in the name of the Escrow Agent or its nominee, who shall
hold such cash or securities in the applicable Escrow Account. Any such
dividends or property shall be accompanied by written notice from the person
making such deposit identifying such property as relating to an identified
Escrow Account Beneficiary and as being delivered for deposit to the Escrow
Account identified in such writing.
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5.2 Voting of Shares. Each Account Beneficiary shall have the right
to direct the Escrow Agent in writing as to the exercise of any voting rights
pertaining to such Account Beneficiary's Escrow Securities and the Escrow Agent
shall comply with any such written instructions. In the absence of such
instructions, the Escrow Agent shall not vote any of the Escrow Securities. The
Escrow Agent shall not be responsible for forwarding to any Account Beneficiary
or any other party, notifying any such Beneficiary or Party with respect to, or
taking any action with respect to, any notice, solicitation or other document or
information, written or otherwise, received from an issuer or other person with
respect to the assets in the Escrow Fund, including but not limited to, proxy
material, tenders, options, the pendency of calls and maturities and expiration
of rights.
5.3 Sale of Property Constituting Escrow Fund Assets. Except as
otherwise provided in this Agreement and the Registration Rights Agreement
pursuant to which CVC may request the registration of certain Primary Escrow
Securities pursuant to the Securities Act of 1933, as amended, at any time and
from time to time during the term of this Escrow Agreement, each Escrow Account
Beneficiary may direct in writing the Escrow Agent to sell for cash any or all
of assets, including without limitation, any of the Escrow Securities, in such
Escrow Account Beneficiary's Escrow Account. The Escrow Agent shall have no
responsibility for the adequacy of sale proceeds, compliance with securities
laws or otherwise in connection with any such sale Each Escrow Account
Beneficiary shall provide the Escrow Agent with the Notice Letter attached
hereto as Exhibit A and any information reasonably required by the Escrow Agent
to consummate such sale. No Escrow Securities may be sold or otherwise
transferred prior to the Pooling Period Expiration Date (which date shall be
noticed to the Escrow Agent by the Buyer).
5.4 Transferability. No interest in the Escrow Fund or in any
individual Escrow Account may be assigned or transferred, other than by
operation of law, provided that CMP may assign one or more interests in its
Escrow Account to any one or more of its partners. Notice of any such assignment
or transfer shall be given to the Escrow Agent and Buyer, and no such assignment
or transfer shall be valid until such notice is given. Upon receipt of written
notice substantially in the form of Exhibit B attached hereto that a total or
partial transfer or assignment of an Escrow Account has been made, the Escrow
Agent shall promptly amend Schedules 1-A and 1-B to reflect such transfer or
assignment and deliver such amended Schedules 1-A and 1-B to Buyer, CVC, the
Management Representative and each Escrow Account Beneficiary simultaneously
with the reports required by Section 4.2 above. Escrow Agent shall have no duty
or responsibility for determining that an assignment or transfer is permissible
hereunder.
5.5 CVC and Management Representative Representations and Succession.
(a) Each of CVC and the Management Representative represents and
warrants to the Escrow Agent that it or he has irrevocable right, power and
authority (i) to enter into and perform this Agreement and bind all of the
Outside Stockholders or Management Stockholders, as the case may be, to its
terms, (ii) to give and receive
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directions and notices hereunder; and (iii) to make all determinations that
may be required or that it or he deems appropriate under this Escrow
Agreement.
(b) Until notified in writing by CVC and the Management
Representative that it or he has resigned or been removed and a successor
has been named, the Escrow Agent may act upon the directions, instructions
and notices of CVC and the Management Representative and, thereafter, upon
the directions, instructions and notices of any successor named in such
writing.
6. CLAIMS AGAINST ESCROW FUND.
6.1 Claim Notice. If Buyer has incurred or suffered Damages for which
it is entitled to indemnification under Section 8.1(b) or (d) of the Merger
Agreement, Buyer shall, prior to the Termination Date, give written notice of
such claim (a "Claim Notice") to CVC, the Management Representative and the
Escrow Agent. Each Claim Notice shall state the amount of claimed Damages (the
"Claimed Amount") and the basis for such claim.
6.2 Response Notice. Within 30 days after delivery of a Claim Notice,
CVC shall provide to Buyer, with a copy to the Escrow Agent and the Management
Representative, a written response (the "Response Notice") in which CVC shall
either: (i) agree that the full Claimed Amount may be released from the Escrow
Fund to Buyer, (ii) agree that part, but not all, of the Claimed Amount (the
"Agreed Amount") may be released from the Escrow Fund to Buyer or (iii) contest
that any of the Escrow Fund may be released to Buyer. CVC may contest the
release of Escrow Fund assets equal to all or a portion or the Claimed Amount
only based upon a good faith belief that all or such portion of the Claimed
Amount does not constitute Damages for which Buyer is entitled to
indemnification under Section 8.1(b) or (d) of the Merger Agreement. If no
Response Notice is delivered to the Escrow Agent by CVC within the 30-day period
from the Escrow Agent's receipt of such Claim Notice, CVC shall be deemed to
have agreed, on behalf of itself and all Escrow Account Beneficiaries, including
the Management Stockholders, that all of the Claimed Amount may be released to
Buyer from the Escrow Fund.
6.3 Contested Amount. If CVC in the Response Notice contests the
release of Escrow Fund assets equal to all or part of the Claimed Amount (the
"Contested Amount"), Buyer and CVC shall use good faith efforts to resolve the
matter between themselves. If the matter is not resolved within 15 days of the
delivery of the Response Notice contesting the Claimed Amount, either Buyer or
CVC shall have the right, by delivery of written notice to the other (the
"Arbitration Notice"), to submit the matter to binding arbitration in Stamford,
Connecticut. Such matter shall then be settled by three arbitrators in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the "AAA Rules"). CVC and Buyer shall each designate
one arbitrator within 15 days of the delivery of the Arbitration Notice. CVC and
Buyer shall cause such designated arbitrators mutually to agree upon and shall
designate a third arbitrator; provided, however, that (i) failing such agreement
within 45 days of delivery of
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the Arbitration Notice, the third arbitrator shall be appointed in accordance
with the AAA Rules and (ii) if either CVC or Buyer fails to timely designate an
arbitrator, the dispute shall be resolved by the one arbitrator timely
designated. CVC and Buyer shall pay the fees and expenses of their respectively
designated arbitrators and shall bear equally the fees and expenses of the third
arbitrator. CVC and Buyer shall cause the arbitrators to decide the matter to be
arbitrated pursuant hereto within 60 days after the appointment of the last
arbitrator. The arbitrators' decision shall relate solely to whether Buyer is
entitled to receive the Contested Amount (or a portion thereof) pursuant to the
applicable terms of the Merger Agreement and this Agreement. The final decision
of the majority of the arbitrators shall be furnished to CVC, the Management
Representative, Buyer and the Escrow Agent in writing and shall constitute a
conclusive, final and nonappealable determination of the issue in question,
binding upon CVC, the Management Representative, Buyer, the Escrow Agent and all
Escrow Account Beneficiaries. Such decision may be used in a court of law only
for the purpose of seeking enforcement of the arbitrators' award. After delivery
of a Response Notice that the Claimed Amount is contested by CVC, the Escrow
Agent shall continue to hold in the Escrow Fund an amount of Escrow Fund assets
sufficient to cover the Contested Amount (or such lesser amount as is then
available in the Escrow Fund), notwithstanding the occurrence of the Termination
Date, until (i) delivery of a copy of a settlement agreement executed by Buyer
and CVC setting forth instructions to the Escrow Agent as to the release of
Escrow Fund, if any, that shall be made with respect to the Contested Amount or
(ii) delivery of a copy of the final award of the majority of the arbitrators
setting forth instructions to the Escrow Agent as to the amount of the Escrow
Fund, if any, that shall be released with respect to the Contested Amount. The
Escrow Agent shall promptly thereafter release such Escrow Fund assets in
accordance with Section 6.4 of this Agreement.
6.4 Release of Escrow Fund to Buyer. If (i) pursuant to Section 6.2
CVC agrees (or is deemed to have agreed) that Escrow Fund assets having a value
equal to all of the Claimed Amount may be released from the Escrow Fund to Buyer
or (ii) the Escrow Agent is instructed pursuant to Section 6.3 to release Escrow
Fund assets to Buyer, the Escrow Agent shall promptly thereafter transfer,
deliver and assign to Buyer such an amount of assets from the Escrow Fund equal
to (X) in the case of clause (i) of this sentence, the amount of the Escrow Fund
assets that CVC has agreed (or is deemed to have agreed) to allow the Escrow
Agent to release (or such lesser amount of assets as then comprises the entire
Escrow Fund) or (Y) in the case of clause (ii) of this sentence, the amount of
the Escrow Fund assets that the Escrow Agent has been directed to release (or
such lesser amount of assets as then comprises the entire Escrow Fund), in each
case pro rata from each Escrow Account in accordance with the Designated
Percentages. For purpose of calculating the amount of Escrow Fund assets to be
released, Escrow Securities shall be valued at the Escrow Value. If less than
all of the Escrow Fund assets in an Escrow Account will be released to Buyer
pursuant to this Section 6.4 such assets shall be released in the following
order: (i) first, Primary Escrow Securities in such amounts as the Escrow
Account Beneficiary may direct in writing and (ii) second (to the extent that
assets in addition to Escrow Securities must be released in order to give effect
to the provisions hereof), Secondary Escrow Securities, cash or cash equivalents
or other property constituting assets of each Escrow Account or any combination
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thereof per the written instructions of each Escrow Account Beneficiary). If the
Escrow Agent does not receive such instruction from an Escrow Account
Beneficiary at least two (2) business days prior to an anticipated release date,
Buyer shall so instruct the Escrow Agent. Under no circumstances shall the terms
of this Escrow Agreement require the Escrow Agent to release or distribute all
or any portion of the Escrow Fund sooner than two (2) Business Days after the
Escrow Agent has received the requisite notices or paperwork in good form, or
passage of the applicable claims period or release date, as the case may be.
6.5 Limitations on Escrow Account Beneficiary Liability.
Notwithstanding anything contained in this Agreement to the contrary, if the
Escrow Value of the Escrow Fund assets in an Escrow Account is insufficient to
satisfy the indemnification obligations to the Buyer with respect thereto, none
of CVC, the Management Representative, the Escrow Account Beneficiary of that
Escrow Account or any other Escrow Account Beneficiary shall be liable hereunder
for such deficiency.
7. RELEASE OF ESCROW FUND UPON TERMINATION DATE. Promptly after the
Termination Date, the Escrow Agent shall distribute to the Escrow Account
Beneficiaries, all of the assets constituting each such Escrow Account
Beneficiary's Escrow Account after the payment of such Escrow Account
Beneficiary's share of the fees and expenses of the Escrow Agent.
Notwithstanding the immediately preceding sentence, if Buyer has previously
given a Claim Notice which has not then been resolved in accordance with Section
6, the Escrow Agent shall retain in the Escrow Fund after the Termination Date
an amount of assets from the Escrow Fund equal to the Claimed Amount which has
not then been resolved, which amount shall be retained pro rata from each Escrow
Account in accordance with the Designated Percentages. For purpose of
calculating the amount of Escrow Fund assets to be distributed pursuant to this
Section 7, Escrow Securities shall be valued at the Escrow Value. If less than
all of the Escrow Fund assets in an Escrow Account will be released to an Escrow
Account Beneficiary pursuant to this Section 7, such assets shall be released in
the following order: (i) first, Secondary Escrow Securities, cash or cash
equivalents, or other property (other than Primary Escrow Securities) in such
amounts as the Escrow Account Beneficiary may direct in writing and (ii) second
(to the extent that additional assets from an Escrow Account must be released in
order to give effect to the provisions hereof), Primary Escrow Securities in
such amounts as the Escrow Account Beneficiary may direct in writing. If the
Escrow Agent does not receive such instruction from an Escrow Account
Beneficiary, Buyer shall so instruct the Escrow Agent.
8. FEES AND EXPENSES. The fees and expenses of the Escrow Agent
(including reasonable attorneys' fees and expenses) for the preparation of this
agreement and the services to be rendered by the Escrow Agent hereunder in
accordance with the attached fee schedule (which may be subject to change
hereafter on an annual basis) shall be payable out of the Escrow Account pro
rata in accordance with the Designated Percentages of the Escrow Account
Beneficiaries. To the extent there is insufficient cash in an Escrow Account to
pay the fees and expenses of the Escrow Agent in full on a timely basis, Buyer
shall advance such funds to the Escrow Agent,
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which amounts shall be reimbursed in cash or Escrow Securities prior to any
release of Escrow Fund assets to the respective Escrow Account Beneficiary,
provided, however, that if there are insufficient assets in an Escrow Account to
repay in full any such advance, Buyer shall not be entitled to recover the
deficiency from any other Escrow Account or from any other Person.
9. LIMITATION OF ESCROW AGENT'S LIABILITY.
9.1 Duties and Responsibilities. (a) The Escrow Agent may act on any
instrument or other writing reasonably believed by it to be genuine and to have
been signed or presented by the proper person and shall have no responsibility
for the accuracy thereof. The Escrow Agent shall incur no liability with respect
to any action taken or suffered by it in reliance upon any notice, direction,
instruction (including without limitation, wire transfer instructions, whether
incorporated herein or provided in a separate written instruction), consent,
statement or other documents believed by it to be genuine and duly authorized,
nor for other action on inaction except its own willful misconduct or gross
negligence. The Escrow Agent is not charged with any knowledge of, or any duties
or responsibilities in connection with, any other documents and agreements
(including without limitation the Merger Agreement or Agency Agreement), and
shall not be responsible for determining or compelling compliance therewith, and
shall not otherwise be bound thereby. The Escrow Agent's duties and
responsibilities shall be entirely administrative and not discretionary and
determined only with reference to this Escrow Agreement and applicable laws. The
Escrow Agent shall not be responsible for the validity or sufficiency of this
Agreement. In all questions arising under the Escrow Agreement, the Escrow Agent
may rely on the advice of counsel (provided such counsel is not counsel to any
other party to this Agreement) including in-house counsel, and for anything
done, omitted or suffered in good faith by the Escrow Agent based on such advice
the Escrow Agent shall not be liable to anyone. The Escrow Agent shall not be
required to take any action hereunder involving any expense or liability unless
the payment of such expense or liability is made or provided for in a manner
reasonably satisfactory to it. The Escrow Agent shall be obligated only for the
performance of such duties as are expressly and specifically set forth in this
Escrow Agreement on its part to be performed, each of which is ministerial (and
shall not be construed to be fiduciary) in nature, and no implied duties or
obligations of any kind shall be read into this Agreement against or on the part
of the Escrow Agent. In no event shall the Escrow Agent be liable for indirect,
punitive, special or consequential damage or loss (including but not limited to
lost profits) whatsoever, even if the Escrow Agent has been informed of the
likelihood of such loss or damage and regardless of the form of action.
(b) The Escrow Agent shall have no more or less responsibility or
liability on account of any action or omission of any book-entry depository,
securities intermediary or other subescrow agent employed by the Escrow Agent
than any such book-entry depository, securities intermediary or other subescrow
agent has to the Escrow Agent, except to the extent that such action or omission
of any book-entry depository, securities intermediary or other subescrow agent
was
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caused by the Escrow Agent's own gross negligence, bad faith or wilful
misconduct in breach of this Agreement.
9.2 Indemnification. The Buyer, on the one hand, and the Escrow
Account Beneficiaries, on the other hand, hereby agree, severally and jointly,
to indemnify the Escrow Agent for, and to hold it harmless against, any loss,
liability or expense (including reasonable attorneys' fees and other costs and
expenses of defending or preparing to defend any claim of liability) incurred
without gross negligence or willful misconduct on the part of Escrow Agent
arising out of or in connection with its carrying out of its duties hereunder.
Without altering or limiting the joint and several liability of the parties
hereunder, as between themselves the Buyer, on the one hand, and the Escrow
Account Beneficiaries, on the other hand, shall be liable for half of any
indemnification amount due hereunder. The amount payable by the Escrow Account
Beneficiaries pursuant to this Section 9.2 shall be allocated among the Escrow
Accounts pro rata in accordance with the Designated Percentages and shall be
paid as an expense in accordance with Section 8. The foregoing indemnification
and agreement to hold harmless shall survive the termination of this Escrow
Agreement and the resignation of the Escrow Agent.
9.3 Tax-Related Terms.
(a) Tax Reporting. The parties hereto agree that, for tax
reporting purposes, all interest or other income earned from the investment
of the Escrow Funds in any tax year shall (i) to the extent such interest
or other income is distributed by the Escrow Agent to any person or entity
pursuant to the terms of this Agreement during such tax year, be allocated
to such person or entity, and (ii) otherwise shall be allocated to the
applicable Escrow Account Beneficiary.
(b) Certification of Tax Identification Number. Each of the
parties hereto agree to, and shall cause each Escrow Account Beneficiary
to, provide the Escrow Agent with a certified tax identification number by
signing and returning a Form W-9 (or Form W-8, in case of non-U.S. persons)
to the Escrow Agent prior to the date on which any income earned on the
investment of the Escrow Fund is credited to the appropriate Escrow
Account. The parties hereto understand that, in the event their tax
identification numbers are not certified to the Escrow Agent, the Internal
Revenue Code, as amended from time to time, may require withholding of a
portion of any interest or other income earned on the investment of the
Escrow Fund.
(c) Tax Indemnification. Each of the Buyer and the Escrow
Account Beneficiaries agrees, jointly and severally, (i) to assume any and
all obligations imposed now or hereafter by any applicable tax law with
respect to any payment or distribution of the Escrow Funds or performance
of other activities under this Agreement, (ii) to instruct the Escrow Agent
in writing with respect to the Escrow Agent's responsibility for
withholding and other taxes, assessments or other governmental charges, and
to instruct
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the Escrow Agent with respect to any certifications and governmental
reporting that may be required under any laws or regulations that may be
applicable in connection with its acting as Escrow Agent under this
Agreement, and (iii) to indemnify and hold the Escrow Agent harmless from
any liability or obligation on account of taxes, assessments, additions for
late payment, interest, penalties, expenses and other governmental charges
that may be assessed or asserted against the Escrow Agent in connection
with or relating to any payment made or other activities performed under
the terms of this Agreement, including without limitation any liability for
the withholding or deduction of (or the failure to withhold or deduct) the
same, and any liability for failure to obtain proper certifications or to
report properly to governmental authorities in connection with this
Agreement, including costs and expenses (including reasonable legal fees
and expenses), interest and penalties. The foregoing indemnification and
agreement to hold harmless shall survive the termination of this Agreement.
10. TERMINATION. This Agreement shall terminate upon the later of the
Termination Date or the release by the Escrow Agent of all of the Escrow Fund
assets in accordance with this Agreement.
11. NOTICES. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered two business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid, or one business day after it is
sent via a reputable nationwide overnight courier service for next day delivery.
If to Buyer:
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
If to CVC:
Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
If to Management Representative:
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PTI, Inc.
c/o Polyfibron Technologies, Inc.
000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000-0000
If to Escrow Agent:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust Department, Fourth Floor
Attention: Citicorp Venture Capital/ MacDermid
Fax: 000-000-0000
Any funds to be paid by the Escrow Agent hereunder shall be sent by wire
transfer (or by such method of payment as may be instructed in advance and in
writing to the Escrow Agent in accordance with Section 11 above) to the address
specified in writing in advance to the Escrow Agent in accordance with Section
11 above. Any funds to be paid to the Escrow Agent hereunder shall be sent by
wire transfer (or by such method of payment and pursuant to such instruction, as
the case may be, as may have been given in advance by the Escrow Agent in
accordance with Section 11 above) pursuant to the following instructions:
Bank: State Street Bank and Trust Company
ABA #: 0110 0002 8
A/C #: 0000-000-0
Attn: Corporate Trust Department, Fourth Floor
Ref: Citicorp Venture Capital/ MacDermid Escrow
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery, telecopy
or ordinary mail), but no such notice, instruction or communication shall be
deemed to have been delivered unless and until it is actually received by the
party to whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 11.
12. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, Escrow Agent may
resign and be discharged from its duties and obligations hereunder by delivering
a resignation to the parties to this Escrow Agreement, not less than sixty (60)
days prior to the date when such resignation shall take effect. Buyer may
appoint a successor Escrow Agent without the consent of CVC so long as such
designee meets the definition of an Acceptable Bank, and may appoint any other
successor Escrow Agent with the consent of CVC, which shall not be unreasonably
withheld. If, within such notice
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period, Buyer provides to the Escrow Agent written instructions with respect to
the appointment of a successor Escrow Agent and directions for the transfer of
the Escrow Fund then held by the Escrow Agent to such successor, the Escrow
Agent shall act in accordance with such instructions and promptly transfer such
Escrow Fund to such designated successor. If no successor is so named, the
Escrow Agent may apply to a court of competent jurisdiction for appointment of a
successor.
13. GENERAL.
13.1 Governing Law, Assigns. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Connecticut
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Connecticut or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Connecticut, and shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.
13.2 Jurisdiction, Venue and Waiver of Jury Trial.
EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE FEDERAL AND STATE COURTS SITTING IN THE STATE OF CONNECTICUT IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS ESCROW AGREEMENT, THE
MERGER AGREEMENT, THE AGENCY AGREEMENT AND THE WAIVER AND RELEASE OR THE
TRANSACTIONS CONTEMPLATED BY ANY OF THE FOREGOING. EACH PARTY HERETO HEREBY
IRREVOCABLY AGREES, THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
SHALL BE INSTITUTED, HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES ANY OBJECTION IT, HE OR SHE MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM.
EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT, HE OR SHE MAY HAVE TO TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS ESCROW AGREEMENT, THE MERGER AGREEMENT, THE WAIVER AND
RELEASE, THE AGENCY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY ANY OF THE
FOREGOING.
13.3 Dispute Resolution.
It is understood and agreed that should any dispute arise with respect to
the delivery, ownership, right of possession, and/or disposition of any or all
of the Escrow Fund, or should any claim be made upon the Escrow Agent or the
Escrow Fund by a third party, the Escrow Agent
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upon receipt of notice of such dispute or claim is authorized and shall be
entitled (at its sole option and election) to retain in its possession without
liability to anyone, all or any of said Fund until such dispute shall have been
settled either by the mutual written agreement of the parties involved or by a
final order, decree or judgment of a court in the United States of America, the
time for perfection of an appeal of such order, decree or judgment having
expired. The Escrow Agent may, but shall be under no duty whatsoever to,
institute or defend any legal proceedings which relate to the Escrow Fund.
13.4 Force Majeure.
The Escrow Agent shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall include but
not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.
13.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.6 Entire Agreement. Except as set forth in the Merger Agreement
(but then solely with respect to CVC, Buyer, and the Management Stockholders),
this Agreement constitutes the entire understanding and agreement of the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements or understandings, written or oral, between the parties with respect
to the subject matter hereof.
13.7 Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Escrow Agreement shall be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
13.8 Amendment. This Agreement may be amended only with the written
consent of Buyer, the Escrow Agent, CVC and the Management Representative.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
MACDERMID, INCORPORATED
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Title: Secretary
CITICORP VENTURE CAPITAL, LTD., on its own
behalf and as agent and attorney-in-fact
for the Outside Stockholders
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Title: Vice President
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx Xxxxxxxxx, on his own behalf and as
agent and attorney-in-fact for the
Management Stockholders
STATE STREET BANK AND TRUST COMPANY,
as Escrow Agent
By: /s/ Chi C. Ma
-----------------------------
Title: Vice President
17
EXHIBIT A TO ESCROW AGREEMENT
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust Department, Fourth Floor
Citicorp Venture Capital/ MacDermid
Ladies and Gentlemen:
Reference is hereby made to a certain Escrow Agreement by and among State
Street Bank and Trust Company (the "Escrow Agent"), Citicorp Venture Capital,
Ltd., Xxxxx Xxxxxxxxx and XxxXxxxxx, Incorporated (the "Escrow Agreement").
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Escrow Agreement.
Pursuant to Section 5.3 of the Escrow Agreement the undersigned hereby
delivers this Sale Request Notice to the Escrow Agent. The undersigned hereby
requests that the Escrow Agent sell _______ shares and use ______________,
brokerage firm, to effectuate such sale. Any special instructions with respect
to the sale (e.g.stop loss or minimum price per share instruction) are set forth
on the attached Appendix. The undersigned covenants and agrees to execute and
deliver any instruments reasonably required by the Escrow Agent in order to
carry out such sale.
In addition to the limitations on the Escrow Agent's liability set forth in
Section 9 of the Agreement, the undersigned acknowledges and agrees that the
Escrow Agent shall have no responsibility in connection with the sale of Escrow
Securities other than to make delivery of the Escrow Securities or any other
assets to the selected brokerage firm, with instruction (including any special
instruction provided by the undersigned), and to receive and deposit into the
Escrow Account (to be administered and distributed in accordance with the Escrow
Agreement) any net sale proceeds received therefrom. The Escrow Agent shall have
no duty or obligation to determine or accomplish compliance with any applicable
transfer restrictions; and it shall be the sole obligation of the undersigned to
take any remaining actions, and to provide or deliver any necessary instruments
or opinions (at its expense) necessary to comply with applicable transfer
restrictions or applicable securities laws. The Escrow Agent shall have no
liability for any actions or omissions of any such brokerage firm, and shall
have no liability for any actions or omissions of any such brokerage firm, and
shall have no liability for the price or execution achieved. Without limiting
the generality of the foregoing, the undersigned, expressly acknowledges that
(a) the Escrow Securities or any other assets may need to be sent to a transfer
agent to be reissued in saleable form, (b) the Escrow Securities or any other
assets may contain or be subject to transfer restrictions that may limit their
marketability and impose restrictions upon the number or types
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of purchasers to whom they can be offered or sold, and (c) the Escrow Agent
shall have no liability for any failure or delay (or any price change during any
such delay) on the part of the undersigned, or any transfer agent, or caused by
any necessary registration or delivery procedures, or compliance with any
applicable transfer restrictions involved in the transfer of such Escrow
Securities or any other assets.
The net sale proceeds of any such sale of Escrow Securities or any other
assets received by the Escrow Agent shall be deposited/allocated to the
undersigned's Escrow Account less a $ per sale fee (the "Sales
Administration Fee"). The Sales Administration fee shall be assessed each day a
sale is affected until the total number of shares specified in such written
direction from the undersigned are sold. The Escrow Agent shall also issue a
Form 1099-B to the undersigned.
Very truly yours,
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EXHIBIT B TO ESCROW AGREEMENT
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust Department, Fourth Floor
Citicorp Venture Capital/ MacDermid
Ladies and Gentlemen:
Reference is hereby made to a certain Escrow Agreement by and among State
Street Bank and Trust Company (the "Escrow Agent"), Citicorp Venture Capital,
Ltd., Xxxxx Xxxxxxxxx and XxxXxxxxx, Incorporated (the "Escrow Agreement").
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Escrow Agreement.
Pursuant to Section 5.4 of the Escrow Agreement the undersigned hereby
delivers this Transfer Notice to the Escrow Agent. The undersigned hereby
notifies the Escrow Agent that it has transferred ____ shares equaling ______ %
of its Escrow Account. Any special instructions with respect to the transfer are
set forth on the attached appendix.
The undersigned covenants and agrees to execute and deliver any instruments
reasonably required by the Escrow Agent in order to record such transfer on its
books and records.
Very truly yours,
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SCHEDULE 1-A
MANAGEMENT STOCKHOLDERS AND OUTSIDE STOCKHOLDERS
1. MANAGEMENT STOCKHOLDERS
Xxxxx X. Xxxxxxxxx
Xxxxxx Xxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxx
Xxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxxxx X. Xxxx
H. Xxxxxxxx Xxxxxx
Xxx Xxxx-Xxxxx
Xxxxxxx Xxxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxxxxxx
2. OUTSIDE STOCKHOLDERS
CCT Partners I, L.P.
Citicorp Mezzanine Partners, L.P.
Xxxxx X. Xxxxxxxxx
Xxxxxxx X. Comfort, Jr./63 BR Partnership
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx XxXxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxx
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21
Xxxxxx X. Xxxxxx
Xxxx Xxxxx
Xxxxx Xxxx
Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
Xxx X. XxXxxxxx
Xxxxx X. Xxxxxxx
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SCHEDULE 1-B TO ESCROW AGREEMENT
ESCROW ACCOUNT ESCROW DESIGNATED
BENEFICIARY ACCOUNT PERCENTAGE
Citi Venture Capital, Ltd. 67,696 53.303
CCT Partners I, L.P. 8,505 6.698
CMP (warrant) 18,955 14.92
Xxxxx X. Xxxxxxxxx 2148 1.69
63 BR Partnership 794 0.625
Xxxxxxx X. Xxxxxx 794 0.625
Xxxxxxx X. Xxxxxxxx 794 0.625
Xxxxx X. Xxxxxx 794 0.625
Xxxxxx X. Xxxxxxxxx 726 0.571
Xxxxxx X. Xxxxxx 545 0.429
Xxxxxxx X. Xxxxxxx 363 0.286
Xxxxxx XxXxxxxxxx 363 0.286
Xxxxxxx Xxxxxxx 242 0.19
Xxxxx Xxxx 242 0.19
Xxxxxxx X. Xxxxxxxx 182 0.143
Xxxxxx Xxxxxxxx 182 0.143
Xxxxx Xxxx 182 0.143
Xxxxxx X. Xxxxxx 121 0.095
Xxxx Xxxxx 121 0.095
Xxxxxx X. Xxxxxxxxxx 190 0.149
Xxx X. XXXxxxxx 190 0.149
Xxxxx X. Xxxx 379 0.298
Xxxxx X. Xxxxxxx 379 0.298
Xxxxx Xxxxxxxxx 3791 2.986
Xxxxxx Xxxx 2527 1.989
Xxxxxx Xxxxxx 2022 1.592
Xxxxxx Xxxxxx 1264 0.995
Shokiro Makino 1264 0.995
Xxxxxx Xxxxx 1264 0.995
Xxxx Xxxxxxxxx 1264 0.995
Etiennne Igersheim 1264 0.995
Xxxxxx Xxxxxx 1264 0.995
Xxxx Xxxxxx 505 0.397
Xxxxxxx Xxxx 505 0.397
H. Xxxxxxxx Xxxxxx 505 0.397
Kai WenkWolff 632 0.497
Xxxxxxxx Xxxxx 505 0.398
Xxxxx Xxxxxxx 505 0.398
Xxxxxxx Xxxx 505 0.398
Xxxxxx Pietrochinni 2527 1.99
TOTAL 127,000 99.985
22
