-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SUiZ6eLXQEn2DJQA0vb820yhnha2GmvOb30ycyAJsVNh9TTg1du9tvdcwiAnRWCk qzBgmD/OlD2S6kyiOv6Caw== 0000950123-00-000148.txt : 20000110 0000950123-00-000148.hdr.sgml : 20000110 ACCESSION NUMBER: 0000950123-00-000148 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20000107 GROUP MEMBERS: CITIBANK NA GROUP MEMBERS: CITICORP GROUP MEMBERS: CITICORP VENTURE CAPITAL LTD GROUP MEMBERS: CITIGROUP HOLDINGS COMPANY GROUP MEMBERS: CITIGROUP INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MACDERMID INC CENTRAL INDEX KEY: 0000061138 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 060435750 STATE OF INCORPORATION: CT FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-08053 FILM NUMBER: 503484 BUSINESS ADDRESS: STREET 1: 245 FREIGHT ST CITY: WATERBURY STATE: CT ZIP: 06702 BUSINESS PHONE: 2035755700 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CITICORP CENTRAL INDEX KEY: 0000020405 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 061515595 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 399 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10043 BUSINESS PHONE: 2125591000 MAIL ADDRESS: STREET 1: 425 PARK AVE- 2ND F STREET 2: ATTN: LEGAL AFFAIRS OFFICE CITY: NEW YORK STATE: NY ZIP: 10043 FORMER COMPANY: FORMER CONFORMED NAME: FIRST NATIONAL CITY CORP DATE OF NAME CHANGE: 19740414 FORMER COMPANY: FORMER CONFORMED NAME: CITY BANK OF NEW YORK NATIONAL ASSOCIATI DATE OF NAME CHANGE: 19680903 SC 13D 1 SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. __________)* MACDERMID, INCORPORATED ------------------------------------------------------ (Name of Issuer) COMMON STOCK ------------------------------------------------------ (Title of Class of Securities) 554273 10 2 ------------------------------------------------------ (CUSIP Number) Markus P. Bolsinger, Esq. KIRKLAND & ELLIS 153 East 53rd Street New York, NY 10022 (212) 446-4938 ------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 29, 1999 ------------------------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 19 Pages) - ---------------------- *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2
CUSIP No. 554273 10 2 13D Page 2 of 19 Pages - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CITICORP VENTURE CAPITAL, LTD. 13-2598089 - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER 4,249,025 ** ---------------------------------------------------------------------------------------------------------- NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY None OWNED BY EACH ---------------------------------------------------------------------------------------------------------- REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH 4,249,025 ** ---------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,249,025 ** - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.2% - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO ===================================================================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT! ** Represents (i) 3,774,781 shares directly beneficially owned by Citicorp Venture Capital, Ltd. ("CVC"), including 67,696 shares being held in escrow by State Street Bank and Trust Company, and (ii) 474,244 shares held by an affiliate of CVC, to which CVC disclaims beneficial ownership. 3
CUSIP No. 554273 10 2 13D Page 3 of 19 Pages - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CITIBANK, N.A. 13-52266470 - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER None ---------------------------------------------------------------------------------------------------------- NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 4,249,025 ** OWNED BY EACH ---------------------------------------------------------------------------------------------------------- REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH None ---------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,249,025 ** - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,249,025 ** - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.2% - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* BK ===================================================================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT! ** Represents (i) 3,774,781 shares directly beneficially owned by Citicorp Venture Capital, Ltd. ("CVC"), including 67,696 shares being held in escrow by State Street Bank and Trust Company, and (ii) 474,244 shares held by an affiliate of CVC, to which CVC disclaims beneficial ownership. 4
CUSIP No. 554273 10 2 13D Page 4 of 19 Pages - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CITICORP 06-1515595 - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER None ---------------------------------------------------------------------------------------------------------- NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 4,249,025 ** OWNED BY EACH ---------------------------------------------------------------------------------------------------------- REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH None ---------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,249,025 ** - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,249,025 ** - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.2% - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* HC ===================================================================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT! ** Represents (i) 3,774,781 shares directly beneficially owned by Citicorp Venture Capital, Ltd. ("CVC"), including 67,696 shares being held in escrow by State Street Bank and Trust Company, and (ii) 474,244 shares held by an affiliate of CVC, to which CVC disclaims beneficial ownership. 5
CUSIP No. 554273 10 2 13D Page 5 of 19 Pages - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CITIGROUP HOLDINGS COMPANY 06-1551348 - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER None ---------------------------------------------------------------------------------------------------------- NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 4,249,025 ** OWNED BY EACH ---------------------------------------------------------------------------------------------------------- REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH None ---------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,249,025 ** - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,249,025 ** - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.2% - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* HC ===================================================================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT! ** Represents (i) 3,774,781 shares directly beneficially owned by Citicorp Venture Capital, Ltd. ("CVC"), including 67,696 shares being held in escrow by State Street Bank and Trust Company, and (ii) 474,244 shares held by an affiliate of CVC, to which CVC disclaims beneficial ownership. 6
CUSIP No. 554273 10 2 13D Page 6 of 19 Pages - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CITIGROUP INC. 52-1568099 - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER None ---------------------------------------------------------------------------------------------------------- NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 4,311,564 ** OWNED BY EACH ---------------------------------------------------------------------------------------------------------- REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH None ---------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,311,564 ** - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,311,564 ** - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.4% - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* HC - -----------------------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! ** Represents (i) 3,837,320 shares directly beneficially owned by Citicorp Venture Capital, Ltd. ("CVC"), including 67,696 shares being held in escrow by State Street Bank and Trust Company, and (ii) 474,244 shares held by an affiliate of CVC, to which CVC disclaims beneficial ownership. 7 This Statement (the "Statement") on Schedule 13D is being filed with the Securities and Exchange Commission pursuant to Rule 13d-1 of the Securities Exchange Act of 1394, as amended (the "Exchange Act"). Item 1. Security and Issuer. This Statement relates to the common stock, no par value per share (the "Common Stock"), of MacDermid, Incorporated, a Connecticut corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 245 Freight Street, Waterbury, CT 06702. Item 2. Identity and Background. This Statement is being filed by (i) Citicorp Venture Capital, Ltd. ("CVC"), (ii) Citibank, N.A. ("Citibank"), (iii) Citicorp, (iv) Citigroup Holdings Company ("Citigroup Holdings"), and (v) Citigroup Inc. ("Citigroup"), (collectively, the "Reporting Persons", and each a "Reporting Person"). (a) - (c) CVC is a New York corporation. The address of its principal business office is 399 Park Avenue, New York, New York 10043. CVC is principally engaged in the business of venture capital investment. Citibank is a national banking association and is the sole stockholder of CVC. The address of its principal business office is 399 Park Avenue, New York, New York 10043. Citibank is a member of the Federal Reserve System and the Federal Deposit Insurance Corp. Citicorp is a Delaware corporation and is the sole stockholder of Citibank. Citicorp is a U.S. bank holding company. The address of its principal business office is 399 Park Avenue, New York, New York 10043. Citigroup Holdings is a Delaware corporation and is the sole stockholder of Citicorp. Citigroup Holdings is a holding company. The address of its principal business office is One Rodney Square, Wilmington, Delaware 19899. Citigroup is a Delaware corporation and is the sole stockholder of Citigroup Holdings. The address of its principal business office is 153 East 53rd Street, New York, New York 10022. Citigroup is a diversified holding company whose businesses provide a broad range of financial services to consumer and corporate customers around the world. Citigroup's activities are conducted through its Global Consumer Bank, Global Corporate Bank, Asset Management and Investment Activities segments. The following information with respect to each executive officer and director of each Reporting Person is set forth in Schedules A through E hereto: (i) name, (ii) business address, (iii) present principal occupation or employment and the name of any corporation or other organization in which such employment is conducted, together with the principal business and address of any such corporation or organization other than the Reporting Persons for which such information is set forth above. (d) - (f) During the last five years, none of the Reporting Persons or, to the best of the knowledge of the Reporting Persons, any of the persons listed on Schedules A through E hereto, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. The citizenship of each of the individuals identified pursuant to paragraphs (a) through (c) is identified on Schedule A through E hereto. A joint filing agreement of the Reporting Persons is attached hereto as Exhibit 1. Item 3. Source and Amount of Funds or Other Consideration. On February 18, 1999, the Issuer executed a plan and agreement of merger with the stockholders (the "Stockholders") of PTI, Inc., a Delaware corporation ("PTI"), and MCD Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Issuer ("MCD"). The Issuer, MCD and the Stockholders amended the plan and agreement of merger as of July 27, 1999, September 13, 1999, October 29, 1999 and December 15, 1999 (as so amended, the "Merger Agreement"). On December 29, 1999, pursuant to the terms of the Merger Agreement, PTI merged with and into MCD (the "Merger") and the Stockholders received as consideration for the capital stock of PTI 7,000,000 shares of the (Page 7 of 19 Pages) 8 Issuer's common stock, 127,000 shares of which will be held in escrow. No cash consideration, other than for fractional shares, has been paid by the Issuer to any Reporting Person. Item 4. Purpose of Transaction. (a), (b) The information set forth in item 3 above is incorporated herein by reference. The Reporting Persons acquired beneficial ownership upon the completion of the Merger. (c) Not applicable. (d) In connection with the Merger, the Issuer's Board of Directors (the "Board") has approved an increase in the size of the Board to seven from six and has elected Joseph M. Silvestri, an officer of CVC to fill that vacancy. Mr. Silvestri, age 37, has been Vice President of CVC for the last five years. (e) - (j) Not applicable. Item 5. Interest in Securities of the Issuer: (a) - (b) CVC beneficially owns 3,774,781 shares of Common Stock, 67,696 shares of which are held in escrow. An affiliate of CVC beneficially owns 474,244 shares of Common Stock to which CVC disclaims beneficial ownership. The aggregate number of shares held by CVC and its affiliate representing approximately 13.2% of the outstanding shares of Common Stock as to 3,774,781 of which CVC has the sole power to vote and the sole power to dispose of. Each of Citibank, Citicorp and Citigroup Holdings, exclusively through their holding company structures, also beneficially owns the same 3,774,781 shares of Common Stock held by CVC. The aggregate number of shares held through the holding company structures and by CVC's affiliate, representing approximately 13.2% of the outstanding shares of Common Stock as to 3,774,781 of which each of Citibank, Citicorp, and Citigroup Holdings has shared power to vote and shared power to dispose of. Citigroup, through its direct and indirect subsidiaries beneficially owns 3,837,320 shares of Common Stock, 67,696 shares of which are held in escrow. The aggregate number of shares held through Citigroup's direct and indirect subsidiaries and by CVC's affiliate representing approximately 13.4% of the outstanding shares of Common Stock as to 3,837,320 of which Citigroup has shared power to vote and shared power to dispose of. Except as stated above, none of the Reporting Persons beneficially owns any of the shares of capital stock of the Issuer. (c) - (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect To Securities of the Issuer. The information set forth in items 3 and 4 above is incorporated herein by reference. Except as set forth herein or in the Schedules or Exhibits hereto, to the best of the knowledge of the Reporting Persons, none of the persons listed on Schedules A through E has any other contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of the Issuer, including, but not limited to, transfer or voting of any securities of the Issuer, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees or profits, division of profits or loss or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits. 1. Joint Filing Agreement, dated as of January 7, 2000 by and among CVC, Citibank, Citicorp, Citigroup Holdings and Citigroup. 2. Agreement and Plan of Merger, dated as of February 18, 1999 by and among the Issuer, MCD and the Stockholders. 3. First Amendment, dated as of July 27, 1999. 4. Second Amendment, dated as of September 13, 1999. 5. Third Amendment, dated as of October 29, 1999. 6. Fourth Amendment, dated as of December 15, 1999. 7. Escrow Agreement, dated as of December 29, 1999. (Page 8 of 19 Pages) 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: January 7, 2000 CITICORP VENTURE CAPITAL, LTD. By: /s/ Joseph M. Silvestri ---------------------------------------------- Name: M. Silvestri Title: Vice President CITIBANK, N.A. By: /s/ Kenneth Cohen ---------------------------------------------- Name: Kenneth Cohen Title: Assistant Secretary CITICORP By: /s/ Kenneth Cohen ---------------------------------------------- Name: Kenneth Cohen Title: Assistant Secretary CITIGROUP HOLDINGS COMPANY By: /s/ Kenneth Cohen ---------------------------------------------- Name: Kenneth Cohen Title: Assistant Secretary CITIGROUP, INC. By: /s/ Joan Caridi ---------------------------------------------- Name: Joan Caridi Title: Assistant Secretary (Page 9 of 19 Pages) 10 SCHEDULE A EXECUTIVE OFFICERS AND DIRECTORS OF CITICORP VENTURE CAPITAL, LTD. Unless otherwise indicated, each individual is a United States citizen. If no address is given, the director's or executive officer's business address is 399 Park Avenue, New York, New York 10043. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to such individual's position with Citicorp Venture Capital, Ltd. Name, Title and Citizenship Principal Occupation and Business Address William T. Comfort Chairman and Director Director Ann M. Goodbody Director Director Thomas E. Jones Director Director Marc Weill Director Director Michael T. Bradley Vice President Executive Officer Richard M. Castin President Executive Officer Lauren M. Connelly Vice President and Secretary Executive Officer Charles E. Corpening Vice President Executive Officer Michael A. Delaney Vice President Executive Officer Ian D. Highet Vice President Executive Officer David Y. Howe Vice President Executive Officer Byron L. Knief Senior Vice President Executive Officer
(Page 10 of 19 Pages) 11 Name, Title and Citizenship Principal Occupation and Business Address Richard E. Mayberry Vice President Executive Officer Thomas F. McWilliams Vice President Executive Officer M. Saleem Muqaddam Vice President Executive Officer Thomas H. Sanders Vice President Executive Officer Paul C. Schorr Vice President Executive Officer Helene B. Shavin Vice President and Assistant Secretary Executive Officer Joseph M. Silvestri Vice President Executive Officer David F. Thomas Vice President Executive Officer James A. Urry Vice President Executive Officer John D. Weber Vice President Executive Officer
(Page 11 of 19 Pages) 12 SCHEDULE B EXECUTIVE OFFICERS AND DIRECTORS OF CITIBANK, N.A. Name, Title and Citizenship Principal Occupation and Business Address Paul J. Collins Vice Chairman Director Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 Robert I. Lipp Chairman & CEO Director Global Consumer Business United States Citigroup Inc. 153 East 53rd St., 4th fl New York, NY 10043 Victor J. Menezes Co-Chief Executive Officer Director and Global Corporate and Investment Bank Executive Officer Citigroup Inc. India 399 Park Avenue, 2nd fl New York, NY 10043 John S. Reed Chairman and Co-Chief Executive Officer Director and Citigroup Inc. Executive Officer 153 East 53rd Street, 4th fl United States New York, NY 10043 William R. Rhodes Vice Chairman Director and Citigroup Inc. Executive Officer 399 Park Avenue, 2nd fl United States New York, NY 10043 H. Onno Ruding Vice Chairman Director and Citicorp/Citibank, N.A. Executive Officer 399 Park Avenue, 2nd fl Netherlands New York, NY 10043 Edward D. Horowitz Corporate Executive Vice President Executive Officer Citicorp/Citibank, N.A. United States 153 East 53rd Street, 4th fl New York, NY 10043 Michael A. Ross Senior Vice President and General Counsel Executive Officer Citicorp/Citibank, N.A. United States 153 East 53rd Street, 3th fl New York, NY 10043
(Page 12 of 19 Pages) 13 SCHEDULE C EXECUTIVE OFFICERS AND DIRECTORS OF CITICORP Name, Title and Citizenship Principal Occupation and Business Address Paul J. Collins Vice Chairman Director Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 Robert I. Lipp Chairman & CEO Director Global Consumer Business United States Citigroup Inc. 153 East 53rd St., 4th fl New York, NY 10043 Victor J. Menezes Co-Chief Executive Officer Director and Global Corporate and Investment Bank Executive Officer Citigroup Inc. India 399 Park Avenue, 2nd fl New York, NY 10043 John S. Reed Chairman and Co-Chief Executive Officer Director and Citigroup Inc. Executive Officer 153 East 53rd Street, 4th fl United States New York, NY 10043 William R. Rhodes Vice Chairman Director and Citigroup Inc. Executive Officer 399 Park Avenue, 2nd fl United States New York, NY 10043 H. Onno Ruding Vice Chairman Director and Citicorp/Citibank, N.A. Executive Officer 399 Park Avenue, 2nd fl Netherlands New York, NY 10043 Edward D. Horowitz Corporate Executive Vice President Executive Officer Citicorp/Citibank, N.A. United States 153 East 53rd Street, 4th fl New York, NY 10043 Michael A. Ross Senior Vice President and General Counsel Executive Officer Citicorp/Citibank, N.A. United States 153 East 53rd Street, 3th fl New York, NY 10043
(Page 13 of 19 Pages) 14 SCHEDULE D EXECUTIVE OFFICERS AND DIRECTORS OF CITIGROUP HOLDINGS COMPANY Name, Title and Citizenship Principal Occupation and Business Address Paul J. Collins Vice Chairman Director Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 Robert I. Lipp Chairman & CEO Director Global Consumer Business United States Citigroup Inc. 153 East 53rd St., 4th fl New York, NY 10043 Victor J. Menezes Co-Chief Executive Officer Director Global Corporate and Investment Bank India Citigroup Inc. 399 Park Avenue, 2nd fl New York, NY 10043 John S. Reed Chairman and Co-Chief Executive Officer Director and Citigroup Inc. Executive Officer 153 East 53rd Street, 4th fl United States New York, NY 10043 William R. Rhodes Vice Chairman Director Citigroup Inc. United States 399 Park Avenue, 2nd fl New York, NY 10043 H. Onno Ruding Vice Chairman Director Citicorp/Citibank, N.A. Netherlands 399 Park Avenue, 2nd fl New York, NY 10043 Sanford I. Weill Chairman and Co-Chief Executive Officer Director and Citigroup Inc. Executive Officer 153 East 53rd Street, 4th fl United States New York, NY 10043 Heidi G. Miller Chief Financial Officer Executive Officer Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043
(Page 14 of 19 Pages) 15 SCHEDULE E EXECUTIVE OFFICERS AND DIRECTORS OF CITIGROUP INC. Name, Title and Citizenship Principal Occupation and Business Address C. Michael Armstrong Chairman & Chief Executive Officer Director AT&T Corporation United States 295 North Maple Avenue, Room 4353L Basking Ridge, NJ 07920 Alain J. P. Belda President & Chief Executive Officer Director Alcoa Inc. Brazil 201 Isabella Street, Floor 6J12 Pittsburgh, PA 15212-5858 Kenneth J. Bialkin Partner Director Skadden, Arps, Slate, Meagher & Flom United States 919 Third Avenue New York, NY 10022 Kenneth T. Derr Chairman & Chief Executive Officer Director Chevron Corporation United States 575 Market Street, 40th fl San Francisco, CA 94105 John M. Deutch Institute Professor Director Massachusetts Institute of Technology United States 77 Massachusetts Avenue, Room 6-208 Cambridge, MA 02139 The Honorable Gerald R. Ford Former President of the United States Honorary Director 40365 Sand Dune Road United States Rancho Mirage, CA 92270 Ann Dibble Jordan Consultant Director 2940 Benton Place, N.W. United States Washington, DC 20008-2718 Reuben Mark Chairman and Chief Executive Officer Director Colgate-Palmolive Company United States 300 Park Avenue New York, NY 10022-7499 Michael T. Masin Vice Chairman and President - International Director GTE Corporation United States 1255 Corporate Drive Mail Code SVC06C30 Irving, TX 75038 Dudley C. Mecum Managing Director Director Capricorn Management United States 30 East Elm Street Greenwich, CT 06830
(Page 15 of 19 Pages) 16 Name, Title and Citizenship Principal Occupation and Business Address Richard D. Parsons President Director Time Warner Inc. United States 75 Rockefeller Plaza, 29th fl New York, NY 10019 Andrall E. Pearson Chairman & Chief Executive Officer Director TRICON Global Restaurants, Inc. United States 660 Steamboat Road Greenwich, CT 06830 John S. Reed Chairman and Co-Chief Executive Officer Director and Citigroup Inc. Executive Officer 153 East 53rd Street, 4th fl United States New York, NY 10043 Robert E. Rubin Member of the Office of the Chairman Director and Citigroup Inc. Executive Officer 153 East 53rd Street, 4th fl United States New York, NY 10043 Robert B. Shapiro Chairman and Chief Executive Officer Director Monsanto Company United States 800 North Lindbergh Boulevard Mail Zone D1S St. Louis, MO 63167 Franklin A. Thomas Former President Director The Ford Foundation United States 595 Madison Avenue, 33rd fl New York, NY 10022 Sanford I. Weill Chairman and Co-Chief Executive Officer Director and Citigroup Inc. Executive Officer 153 East 53rd Street, 4th fl United States New York, NY 10043 Edgar S. Woolard, Jr. Former Chairman & Chief Executive Officer Director E.I. du Pont de Nemours & Company United States 1007 Market Street Wilmington, DE 19898 Arthur Zankel General Partner Director First Manhattan Co. United States 437 Madison Avenue New York, NY 10022 Michael A. Carpenter Co-Chief Executive Officer Executive Officer Global Corporate and Investment Bank United States Citigroup Inc. 399 Park Avenue, 2nd fl New York, NY 10043 Paul J. Collins Vice Chairman Executive Officer Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043
(Page 16 of 19 Pages) 17 Name, Title and Citizenship Principal Occupation and Business Address Michael D'Ambrose Senior Human Resources Officer Executive Officer Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 Jay S. Fishman President & CEO Executive Officer Travelers Property Casualty Corp. United States One Tower Square, 8GS Hartford, CT 06183 Edward D. Horowitz Citigroup Inc. Executive Officer 153 East 53rd St., 4th fl United States New York, NY 10043 Thomas Wade Jones Co-Chairman & CEO Executive Officer SSB Asset Management Group United States 153 East 53rd St., 4th fl New York, NY 10043 Robert I. Lipp Chairman & CEO Executive Officer Global Consumer Business United States Citigroup Inc. 153 East 53rd St., 4th fl New York, NY 10043 Deryck C. Maughan Vice Chairman Executive Officer Citigroup Inc. United Kingdom 153 East 53rd St., 4th fl New York, NY 10043 Victor J. Menezes Co-Chief Executive Officer Executive Officer Global Corporate and Investment Bank India Citigroup Inc. 399 Park Avenue, 2nd fl New York, NY 10043 Heidi G. Miller Chief Financial Officer Executive Officer Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 Charles O. Prince, III Co-General Counsel/Corporate Secretary Executive Officer Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 William R. Rhodes Vice Chairman Executive Officer Citigroup Inc. United States 399 Park Avenue, 2nd fl New York, NY 10043 Petros Sabatacakis Senior Risk Officer Executive Officer Citigroup Inc. United States 153 East 53rd Street New York, NY 10043
(Page 17 of 19 Pages) 18 Name, Title and Citizenship Principal Occupation and Business Address Todd S. Thomson Senior Vice President Executive Officer Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 Marc P. Weill Head of Citigroup Investments Executive Officer Citigroup Inc. United States 153 East 53rd St., 4th fl New York, NY 10043 Robert B. Willumstad Chairman Executive Officer CitiFinancial Credit Company United States 153 East 53rd St., 5th fl New York, NY 10043
(Page 18 of 19 Pages) 19 EXHIBIT INDEX 1. Joint Filing Agreement, dated as of January 7, 2000 by and among CVC, Citibank, Citicorp, Citigroup Holdings and Citigroup. 2. Agreement and Plan of Merger, dated as of February 18, 1999 by and among the Issuer, MCD and the Stockholders. 3. First Amendment, dated as of July 27, 1999. 4. Second Amendment, dated as of September 13, 1999. 5. Third Amendment, dated as of October 29, 1999. 6. Fourth Amendment, dated as of December 15, 1999. 7. Escrow Agreement, dated as of December 29, 1999. (Page 19 of 19 Pages) EX-99.1 2 JOINT FILING AGREEMENT 1 EXHIBIT 1 JOINT FILING AGREEMENT This will confirm the agreement by and among all of the undersigned that the Schedule 13D on or about this date with respect to the beneficial ownership by the undersigned of MacDermid, Incorporated is being, and any and all amendments to such Schedule may be, filed on behalf of each of the undersigned. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. Dated: January 7, 2000 CITICORP VENTURE CAPITAL, LTD. By: /s/ Joseph M. Silvestri ---------------------------------------------- Name: Joseph M. Silvestri Title: Vice President CITIBANK, N.A. By: /s/ Kenneth Cohen ---------------------------------------------- Name: Kenneth Cohen Title: Assistant Secretary CITICORP By: /s/ Kenneth Cohen ---------------------------------------------- Name: Kenneth Cohen Title: Assistant Secretary CITIGROUP HOLDINGS COMPANY By: /s/ Kenneth Cohen ---------------------------------------------- Name: Kenneth Cohen Title: Assistant Secretary CITIGROUP, INC. By: /s/ Joan Caridi ---------------------------------------------- Name: Joan Caridi Title: Assistant Secretary EX-99.2 3 AGREEMENT AND PLAN OF MERGER 1 EXHIBIT 2 APPENDIX A PLAN AND AGREEMENT OF MERGER A-1 2 TABLE OF CONTENTS
PAGE ---- SECTION 1. Definitions................................................. A-6 SECTION 2. Merger...................................................... A-12 2.1 General..................................................... A-12 2.2 Closing..................................................... A-12 2.3 Actions at Closing.......................................... A-12 2.4 Effect of Merger............................................ A-13 2.5 Buyer Warrants.............................................. A-15 2.6 Anti-Dilution............................................... A-15 SECTION 3. Representations and Warranties of Seller.................... A-16 3.1 Organization, Qualification, and Corporate Power............ A-16 3.2 Authorization of Merger..................................... A-16 3.3 Noncontravention............................................ A-16 3.4 Capitalization of Seller and its Subsidiaries............... A-16 3.5 Subsidiaries................................................ A-17 3.6 Financial Statements........................................ A-17 3.7 Litigation.................................................. A-18 3.8 Absence of Certain Developments............................. A-18 3.9 Taxes....................................................... A-19 3.10 Environmental, Health, and Safety Matters................... A-21 3.11 Employee Benefit Plans...................................... A-21 3.12 Proprietary Rights.......................................... A-23 3.13 Year 2000................................................... A-24 3.14 Inventories................................................. A-25 3.15 Accounts Receivable......................................... A-25 3.16 Tangible Property........................................... A-25 3.17 Books and Records........................................... A-26 3.18 Brokers' Fees............................................... A-26 3.19 Tax-Free Reorganization Representations..................... A-26 3.20 Pooling of Interest Treatment............................... A-27 3.21 Certain Contracts........................................... A-27 3.22 Absence of Improper Payments................................ A-28 3.23 Insurance................................................... A-28 3.24 Employees................................................... A-28 3.25 Disclosure.................................................. A-28 SECTION 4. CVC Representations and Warranties.......................... A-28 4.1 Organization and Corporate Power............................ A-28 4.2 Authorization of Merger..................................... A-28 4.3 Noncontravention............................................ A-29 4.4 Agency Agreement............................................ A-29 4.5 CVC Shares.................................................. A-29 4.6 Securities Law Issues....................................... A-29 4.7 Tax-Free Reorganization..................................... A-30 4.8 Pooling of Interest Treatment............................... A-30 4.9 Disclosure.................................................. A-30
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PAGE ---- SECTION 5. Representations and Warranties of Buyer and Merger Sub...... A-30 5.1 Organization, Qualification, and Corporate Power............ A-30 5.2 Authorization of Merger..................................... A-30 5.3 Noncontravention............................................ A-30 5.4 Capitalization.............................................. A-31 5.5 SEC Filings................................................. A-31 5.6 Financial Statements........................................ A-31 5.7 Litigation.................................................. A-32 5.8 Absence of Certain Developments............................. A-32 5.9 Taxes....................................................... A-32 5.10 Environmental, Health, and Safety Matters................... A-33 5.11 Employee Benefit Plans...................................... A-33 5.12 Broker's Fee................................................ A-34 5.13 Tax-Free Reorganization Representations..................... A-34 5.14 Pooling of Interest Treatment............................... A-35 5.15 Disclosure.................................................. A-35 SECTION 6. Covenants................................................... A-35 6.1 General..................................................... A-35 6.2 Joint Proxy Statement -- Prospectus and S-4 Registration Statement; Stockholder Approval; NYSE Listing............... A-35 6.3 Other Regulatory Matters and Approvals...................... A-38 6.4 Seller's Interim Operation of Business...................... A-38 6.5 Covenants of Buyer.......................................... A-40 6.6 Access...................................................... A-41 6.7 Notice of Developments...................................... A-42 6.8 Acquisition Proposals....................................... A-42 6.9 Board of Directors.......................................... A-42 6.10 Financing................................................... A-43 6.11 Press Releases and Public Announcements..................... A-43 6.12 Covenants of CVC............................................ A-43 SECTION 7. Conditions to Closing....................................... A-44 7.1 Joint Conditions to Obligations of Buyer, Merger Sub and Seller...................................................... A-44 7.2 Conditions to Obligations of Buyer and Merger Sub........... A-45 7.3 Conditions to Obligations of Seller......................... A-46 SECTION 8. Indemnification............................................. A-47 8.1 Agreements to Indemnify..................................... A-47 8.2 Limitations on Indemnification.............................. A-48 8.3 Method of Asserting and Resolving Claims.................... A-49 SECTION 9. Termination and Its Consequences............................ A-51 9.1 Termination of Agreement.................................... A-51 9.2 Effect of Termination....................................... A-51 9.3 Termination Fee............................................. A-51 SECTION 10. Miscellaneous............................................... A-52 10.1 Representations and Survival................................ A-52 10.2 No Third Party Beneficiaries................................ A-52 10.3 Entire Agreement............................................ A-52 10.4 Succession and Assignment................................... A-52 10.5 Counterparts and Delivery................................... A-52
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PAGE ---- 10.6 Notices..................................................... A-52 10.7 Governing Law............................................... A-53 10.8 Consent to Jurisdiction..................................... A-53 10.9 Waiver of Jury Trial........................................ A-54 10.10 Amendments and Waivers...................................... A-54 10.11 Construction................................................ A-54 10.12 Time is of the Essence; Computation of Time................. A-54 10.13 Specific Performance........................................ A-54
A-4 5 SCHEDULES Seller Schedules 2.4(e) Distribution of Buyer Shares Among Seller Stockholders 3.1 Organization, Qualification and Corporate Power 3.3 Seller Noncontravention 3.4 Capitalization of Seller and Subsidiaries 3.5 Subsidiaries 3.6 Financial Statements 3.7 Litigation 3.8 Absence of Certain Developments 3.9(a) Tax Returns of Seller Subject to IRS Audit 3.9(b) Tax Indemnification, Tax Allocation and Tax Sharing Agreements 3.10(a) Non-Compliance with Environmental, Health and Safety Matters Environmental Investigations, Studies, Reviews, Audits, 3.10(b) Tests and Other Analyses 3.11 Employee Benefit Plans 3.12 Proprietary Rights 3.14 Inventories 3.16 Real Property 3.17 Books and Records 3.20 Seller Affiliates 3.21(a) Contracts 3.23 Insurance 3.24 Employees Buyer's Schedules 5.3 Buyer Noncontravention 5.4 Capitalization 5.6 Financial Statements 5.8 Absence of Certain Developments 5.9(a) Tax Returns of Buyer Subject to IRS Audit 5.9(b) Tax Indemnification, Tax Allocation and Tax Sharing Agreements 5.10 Environmental, Health and Safety Matters Other Schedules 1 Seller Stockholders 6.4(g) Increases in Compensation or Fringe Benefits; Bonuses EXHIBITS EXHIBIT A Form of Agency Agreement EXHIBIT B Form of Escrow Agreement EXHIBIT C Form of Registration Rights Agreement EXHIBIT D Form of Seller Affiliate Agreement
A-5 6 PLAN AND AGREEMENT OF MERGER This Plan and Agreement of Merger is entered into as of February 18, 1999, by and among MacDermid, Incorporated, a Connecticut corporation ("Buyer"), MCD Acquisition Corp., a Delaware corporation ("Merger Sub") and wholly owned subsidiary of Buyer, PTI, Inc., a Delaware corporation ("Seller"), and Citicorp Venture Capital, Ltd., a New York corporation ("CVC"). Buyer, Merger Sub, Seller, and CVC are referred to collectively herein as the "Parties." RECITALS The respective boards of directors of Buyer and Seller have approved this agreement and declared its advisability, having determined that it would be consistent with and in furtherance of the long-term business strategy of Buyer and Seller, as applicable, and that it would be fair to and in the best interests of Buyer, Seller and their respective stockholders, to engage in a transaction whereby Seller and the Merger Sub will merge on the terms described herein (the "Merger"). For federal income tax purposes, it is intended that the Merger qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that as a consequence each Seller Stockholder will not recognize income or loss for federal income tax purposes except to the extent they receive cash in lieu of fractional shares or as a holder of Dissenting Shares (as defined herein). Therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. SECTION 1. Definitions. In this Agreement: "AAA Rules" has the meaning given to that term in Section 8.3. "Agency Agreement" means that certain agreement, to be dated as of the Closing Date, among CVC, the Management Representative, all other Seller Stockholders (other than Seller Stockholders who have perfected dissenters rights) and CMP, which agreement shall be in substantially the form of Exhibit A hereto. "Acquisition Proposal" means, with respect to any Person, any proposal (other than any proposal with respect to the Merger) regarding (i) any merger, consolidation, share exchange, business combination or other similar transaction or series of related transactions involving that Person or any Subsidiary of that Person; (ii) any sale, lease, exchange, transfer or other disposition of the assets of that Person or any of its Subsidiaries; and (iii) any offer to purchase, tender offer, exchange offer or any similar transaction or series of related transactions made by any other Person involving the outstanding shares of any class of capital stock of that Person or the filing of any Statement on Schedule 14D-1 with the SEC in connection therewith. "Affiliate" means, with respect to any Person, any other Person controlling, controlled by or under common control with such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") means the possession, directly or indirectly, of power to direct or cause the direction of the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise. A-6 7 "Arbitration Notice" has the meaning given to that term in Section 8.3. "Benefit Plan" has the meaning given to that term in Section 3.11. "Business Day" means each Monday, Tuesday, Wednesday, Thursday or Friday that banks located in New York, New York are not required or permitted by law to be closed. "Buyer Affiliate" has the meaning given to that term in Section 6.2(i). "Buyer Board of Directors" means the board of directors of Buyer as constituted from time to time. "Buyer Common Stock" means Buyer Common Stock, no par value per share. "Buyer Share" means a share of Buyer Common Stock issued in the Merger. "Buyer Special Meeting" means a meeting of holders of Buyer Common Stock at which such holders will vote on a proposal to approve this Agreement. "Buyer Stockholder Approval" means the affirmative vote of the holders of a majority of the outstanding shares of Buyer Common Stock in favor of the approval of the Merger Agreement in accordance with the certificate of incorporation and bylaws of Buyer and the NYSE Rule. "Buyer Warrants" means the Escrow Warrant and the Closing Warrant to purchase Buyer Shares issued pursuant to Section 2.5 in substitution for the CMP Warrant. "Certificate of Merger" has the meaning given to that term in Section 2.3. "Claim Notice" has the meaning given to that term in Section 8.3. "Closing" and "Closing Date" have the meanings given to those terms in Section 2.2. "Closing Warrant" means the warrant to purchase Buyer Shares as defined in Section 2.5(c). "CMP" means Citicorp Mezzanine Partners, L.P. "CMP Warrant" means the warrant to purchase 150,000 shares of Seller Class B Common Stock at an exercise price of $.01 per share issued to CMP as of December 29, 1994. "Code" means the Internal Revenue Code of 1986, as amended. "Computer Systems" means computer software, computer firmware, computer hardware (whether general or special purpose), and other similar or related items of automated, computerized, and/or software system(s), including but not limited to microprocessors that control telecommunication systems, elevators, diagnostic equipment, HVAC systems, automated assembly lines or other operating systems of Seller or any of its Subsidiaries. "Confidential Information" has the meaning given to that term in Section 6.6. "Contract" means any loan or credit agreement, note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument, benefit plan or practice or other agreement, arrangement, obligation, instrument or commitment of any nature, whether written or oral. "Credit Agreement" means (i) a certain Amended and Restated Credit Agreement dated January 17, 1997 with Banque Paribas as Agent and (ii) a certain Senior Subordinated Credit Agreement, as amended, dated December 29, 1994 with CMP. A-7 8 "Current Market Price" means the price per share of Buyer Common Stock, with respect to any specific date, as determined by taking the average of the daily closing prices per share of Buyer Common Stock as traded on the NYSE for the thirty (30) consecutive trading days ending immediately prior to such date, rounded to the nearest cent, and ignoring the highest and lowest daily closing prices during such period. "CVC Shares" has the meaning given to that term in Section 4.5. "DGCL" means the General Corporation Law of the State of Delaware, as amended from time to time. "DOJ" has the meaning given to that term in Section 6.3. "Damages" has the meaning given to that term in Section 8.1. "Dissenting Shares" means all Seller Shares whose holders have perfected dissenters' rights under Section 262 of the DGCL. "Effective Time" has the meaning given to that term in Section 2.4(a). "Escrow Agent" means State Street Bank and Trust Company, a Massachusetts trust company, or a successor Escrow Agent under the terms of the Escrow Agreement. "Escrow Agreement" means the agreement by and among the Escrow Agent, Buyer, CVC and the Management Representative and substantially in the form of Exhibit B attached hereto, with such changes as the Escrow Agent may reasonably request. "Escrow Ratio" has the meaning given to that term in Section 2.4(h). "Escrow Shares" means the Buyer Shares deposited with the Escrow Agent as of the Closing in accordance with the terms of Section 2.4(h) and the Escrow Agreement. "Escrow Warrant" means the warrant to purchase Buyer Shares as defined in Section 2.5(b). "Environmental, Health, and Safety Requirements" means all federal, state, local and foreign statutes, regulations ordinances and other provisions having the force or effect of law, each as amended, all judicial and administrative orders and determinations, and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Materials or noise. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended and the regulations and formal interpretations issued thereunder. "ERISA Affiliate" means any Person who, together with Seller, could be treated as a single employer under Sections 414(b), 414(c), 414(m) or 414(o) of the Code. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Financial Statements" has the meaning given to that term in Section 3.6. "FTC" has the meaning given to that term in Section 6.3. "GAAP" means, at any time, the United States generally accepted accounting principles as in effect at that time. A-8 9 "Grace Agreement" means that certain Grace Printing Products Restated Worldwide Purchase and Sale Agreement, dated as of October 14, 1994, among Seller, Print Tech International, Inc., W. R. Grace & Co., W. R. Grace & Co. -- Conn., Grace S. A. and the other parties named therein. "Governmental Entity" means any administrative agency, commission, court or other governmental authority or instrumentality, domestic or foreign, including any government-sponsored corporation having regulatory authority under law. "Hazardous Material" means any pollutant, contaminant, hazardous material, hazardous waste, toxic substance or hazardous substance as defined under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. sec.sec.9601 et seq., or the Resource Conversation and Recovery Act., 42 U.S.C. sec.sec.6901 et seq., the Clean Water Act, 33 U.S.C. sec.1251, et seq., the Toxic Substance Control Act, 15 U.S.C. sec.sec.2601, et seq. or any other federal, state or local law relating to safety, health, or environmental protection or any regulations promulgated under any of the foregoing, and specifically includes oil and any other petroleum derived products, asbestos, polychlorinated biphenyls (PCBs) and radiation. "HSRA" means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended from time to time. "Indemnified Party" has the meaning given to that term in Section 8.1. "Indemnifying Party" has the meaning given to that term in Section 8.1. "Indemnity Threshold" shall have the meaning set forth in Section 8.2(c). "IRS" means the Internal Revenue Service. "Joint Proxy Statement -- Prospectus" means the Joint Proxy Statement -- Prospectus which will be a part of the S-4 Registration Statement and by which (i) Buyer will solicit proxies from the holders of Buyer Common Stock to vote in favor of the approval of this Agreement at the Buyer Special Meeting and (ii) Seller will either solicit proxies or written consents from the holders of Seller Voting Shares to approve this Agreement. "Liability" means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes. "Loss Contingency" means an existing condition, situation, or set of circumstances involving uncertainty as to possible Liability to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur. "Management Representative" means the Seller Stockholder designated in the Agency Agreement as the agent of those Seller Stockholders who are identified in such agreement as "Management Stockholders." "Material Adverse Effect" means, with respect to any Person, any change in or effect on the business of that Person or any of its Subsidiaries that, in the aggregate, is or reasonably could be expected to be materially adverse to the business, operations (including the income statement), properties (including intangible properties), condition (financial or otherwise), assets, liabilities, regulatory status or prospects of that Person and its Subsidiaries taken as a whole. A-9 10 "Merger Sub" means MCD Acquisition Corp., a Delaware corporation wholly-owned by Buyer and formed solely for the purpose of consummating the Merger. "NYSE" means the New York Stock Exchange. "NYSE Rule" means the rule of the NYSE requiring that proxies be solicited from the shareholders of any listed corporation which issues stock in an amount exceeding 20% of its then-existing capital stock. "Ordinary Course" means with respect to any Person, in the ordinary course of that Person's business consistent with past custom and practice, including as to the quantity, quality and frequency. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Entity (or any department, agency, or political subdivision thereof). "Preferred Exchange Shares" means the Buyer Shares issued in the Merger to the holders of Seller Preferred Shares pursuant to Section 2.4(e). "Proprietary Rights" means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium). "Recapitalization" has the meaning given to that term in Section 2.6. "Registration Rights Agreement" means that certain Registration Rights Agreement by and among Buyer, CVC and CMP that shall be executed and delivered as of the Closing in substantially the form of Exhibit C hereto. "Representatives" means each of the applicable Person's directors, officers, employees, agents, representatives and advisors. "Response Notice" has the meaning given to that term in Section 8.3. "S-4 Registration Statement" shall mean the registration statement referenced in Section 6.2(a) that includes the Joint Proxy Statement -- Prospectus, or such other registration statement as the SEC may require in connection with the Merger. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. A-10 11 "Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or other security interest, equity or other encumbrance, other than (a) statutory liens for current taxes or other governmental charges, (b) mechanics and similar statutory liens arising or incurred in the ordinary course of business, (c) zoning, entitlement, building and other land use regulations imposed by governments or agencies which are not violated by any current or presently proposed use or operation, (d) covenants, conditions, restrictions, easements and other similar matters of record affecting title to any real property which do not materially impair the current occupancy, use or value of that Property and which have been disclosed in Schedule 3.16, (e) liens for Taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (f) purchase money liens and liens securing rental payments under capital lease arrangements, and (g) other liens arising in the Ordinary Course and not incurred in connection with the borrowing of money. "Seller Affiliate" means a Person listed on Schedule 3.20. "Seller Affiliate Agreement" means the agreement referenced in Section 6.2(h), which agreement shall be in the form of Exhibit D attached hereto. "Seller Common Ratio" means with respect to any holder of Seller Common Shares, the number of Seller Common Shares held by that Person immediately prior to the Closing divided by the total number of Seller Common Shares outstanding at that time on a pro forma basis assuming the purchase of all Seller Common Shares then purchasable upon the exercise of the CMP Warrant. "Seller Common Share" means a share of Seller Class A Common Stock, par value $.01 per share, or Seller Class B Common Stock, par value $.01 per share. "Seller Board of Directors" means the board of directors of Seller as constituted from time to time. "Seller Inventory" has the meaning given to that term in Section 3.14. "Seller Preferred Share" means a share of Series 2 Junior Exchangeable 14.0% Preferred Stock, $1.00 par value per share, or Series 3 Junior Exchangeable 14.0% Preferred Stock, par value $1.00 per share, or Series 4 Junior Exchangeable 14.0% Preferred Stock, par value $1.00 per share. "Seller Share" means any issued and outstanding share of Seller's capital stock. "Seller Stockholder" means a holder of any Seller Share immediately prior to the Closing. "Seller Stockholder Agreement" means that certain agreement dated as of December 29, 1994 by and among Seller, CVC, CMP, David R. Beckerman, Thomas C. Weaver and the other Persons specified on Schedule 1 hereto. "Seller Stockholder Approval" means the affirmative vote in favor of a proposal to approve this Agreement, at a meeting or by written consent, of the holders of a majority of each class of Seller Voting Shares entitled to vote thereon in accordance with the certificate of incorporation and bylaws of Seller and Section 251(c) of the DGCL. "Seller Voting Share" means a Seller Share entitled to vote on the Merger. "Senior Subordinated Credit Notes" means those promissory notes issued in connection with the Credit Agreements. A-11 12 "Subsidiary" means any corporation, partnership, limited liability company or other organization, whether or not incorporated, with respect to which a specified Person owns (directly or indirectly through one or more Subsidiaries thereof) at least twenty-five percent (25%) of the voting securities or equity interests or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors. "Surviving Corporation" means Seller as in existence after the Effective Time. "Tax" means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profits, environmental (including without limitation under Section 59A of the Code), customs, duties, real property, personal property, capital stock, intangibles, social security (or similar), unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or similar items in respect of the foregoing (whether disputed or not). "Tax Affiliate" means a Subsidiary of Seller and any affiliated, combined, or unitary group of which Seller or any Subsidiary is or was a member. "Tax Return" means any return, report, declaration, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax of any party or the administration of any laws, regulations or administrative requirements relating to any Tax (including any amendment or other modification thereof). "10% PIK Subordinated Notes" means those certain promissory notes dated December 29, 1994 and March 15, 1996, the holder of which is W.R. Graced. "Termination Fee" shall have the meaning given to that term in Section 9.2 "Warrant Shares" has the meaning set forth in Section 2.5(a). "Year 2000 Compliant" has the meaning given to that term in Section 3.13. SECTION 2. Merger. 2.1 General. On and subject to the terms and conditions of this Agreement, the Merger will take place at the Effective Time. The structure of the Merger will be a reverse merger of Merger Sub with and into Seller, with Seller being the Surviving Corporation. The Parties will take all steps necessary to cause the Merger to comply with applicable requirements of the DGCL regarding corporate mergers. 2.2 Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Nutter, McClennen & Fish, LLP in Boston, Massachusetts, commencing at 10:00 a.m. local time on the second Business Day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at or after the Closing itself) or such other date as the Parties may mutually determine) (the "Closing Date"). 2.3 Actions at Closing. At the Closing, (i) Seller and, as applicable, the Seller Stockholders will deliver to Merger Sub and Buyer the various certificates, instruments, and documents referred to in Section 7.2, (ii) Merger Sub and Buyer will deliver to Seller the various certificates, instruments, and documents referred to in Section 7.3, (iii) Seller and Merger Sub will file with the Secretary of State of Delaware a certificate of merger in A-12 13 due and proper form (the "Certificate of Merger"), (iv) Buyer will deliver to CVC, as agent for the Seller Stockholders, the certificates evidencing the Buyer Shares (other than the Escrow Shares) issued in the Merger in exchange for all of the certificates representing the Seller Shares, together with checks representing amounts of cash payable in lieu of fractional shares, if any, which each Seller Stockholder is entitled to receive, (v) Buyer will deliver to CVC, as agent for CMP, the Closing Warrant, and (vi) Buyer will deliver to the Escrow Agent, the certificates evidencing the Escrow Shares and the Escrow Warrant. 2.4 Effect of Merger. (a) General. The Merger shall become effective at the time (the "Effective Time") the Certificate of Merger is accepted for filing by the Secretary of State of Delaware. The Merger shall have the effect set forth under relevant provisions of the DGCL. The Surviving Corporation may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name and on behalf of the Merger Sub in order to fully carry out and effectuate the Merger. (b) Certificate of Incorporation. The Certificate of Incorporation of Merger Sub as in effect immediately prior to the Effective Time will, pursuant to the terms of the Certificate of Merger, become the Certificate of Incorporation of the Surviving Corporation. (c) By-laws. The By-laws of Merger Sub as in effect immediately prior to the Effective Time will remain unchanged by the Merger and be the By-laws of the Surviving Corporation. (d) Directors and Officers. The directors and officers of Merger Sub in office immediately prior to the Effective Time will be the directors and officers of the Surviving Corporation. (e) Conversion of Seller Shares. Subject to the provisions of Section 2.4(h), at and as of the Effective Time, (i) each holder of Seller Preferred Shares then outstanding shall by virtue of the Merger be entitled to receive that number of Buyer Shares, rounded to the nearest thousandth, equal to the quotient obtained by dividing (X) the aggregate liquidation value of the Preferred Shares held by such holder plus any and all accumulated and unpaid dividends thereon to but not including the Effective Time by (Y) the Current Market Price as of the Closing Date (the Buyer Shares delivered pursuant to this Section 2.4(e)(i) to all holders of Seller Preferred Shares being collectively referred to as the "Preferred Exchange Shares"); and (ii) each holder of Seller Common Shares then outstanding, other than any holder of Dissenting Shares, shall by virtue of the Merger be entitled to receive that number of Buyer Shares, rounded to the nearest thousandth, which is equal to the product of (X) the Seller Common Ratio applicable to such holder of Seller Common Shares multiplied by (Y) Seven Million Seven Hundred Thousand (7,700,000) minus the aggregate number of the Preferred Exchange Shares. After the Closing, there shall be no transfers on the stock transfer books of Seller Shares which were issued and outstanding at the Effective Time and converted pursuant to the provisions of this Section 2.4(e). After the Effective Time, holders of certificates of Seller Shares shall cease to be, and shall have no rights as, stockholders of Seller, other than to receive Buyer Shares into which such Seller Shares have been converted and, if applicable, fractional share payments pursuant to the provisions hereof. Schedule 2.4(e) to this Agreement illustrates the distribution pursuant to this Agreement of the Buyer Shares and the Buyer Warrants (including the Escrow Shares and the Escrow Warrant) among, respectively, the A-13 14 Seller Stockholders and holder of the CMP Warrant (which is the only option, warrant or similar right to acquire Seller Shares that is outstanding as of the date of this Agreement), assuming solely for purposes of that presentation that (i) there are no Dissenting Shares, (ii) there are no accrued and unpaid dividends on the Seller Preferred Shares as of the Closing Date, and (iii) the Current Market Price as of the Closing Date is equal to $38.875. (f) Lost Certificates. In the event any certificate representing one or more Seller Shares shall have been lost, stolen or destroyed, upon receipt of appropriate evidence as to such loss, theft or destruction and to the ownership of such certificate by the Person claiming such certificate to be lost, stolen or destroyed, and the receipt by Buyer of an appropriate and customary indemnity, Buyer will issue, in exchange for such lost, stolen or destroyed certificate, one or more certificates representing Buyer Shares and the fractional share payment, if any, deliverable with respect thereof, as determined in accordance with this Section 2.4. (g) Fractional Shares. In lieu of the issuance of fractional Buyer Shares pursuant to Section 2.4(e), cash adjustments, without interest, will be paid to the holders of Seller Shares in respect of any fractional share that would otherwise be issuable pursuant to Section 2.4(e) after combining for each Seller Stockholder the number of Buyer Shares, if any, issued in exchange for Seller Preferred Shares with the number of Buyer Shares issued in exchange for Seller Common Shares, and the amount of such cash adjustment shall be determined by multiplying such holder's fractional interest by the Current Market Price as of the Closing Date. (h) Escrow Shares. At the Closing, CVC and the Escrow Agent shall enter into the Escrow Agreement, which Escrow Agreement is intended to serve as an adjustment to the aggregate amount of consideration payable to the holders of Seller Common Shares and the CMP Warrant in connection with the Merger. At the Closing, there shall be withheld from each holder of Seller Common Shares a number of Buyer Shares (collectively, the "Escrow Shares") equal to the product, rounded to the nearest whole share, of (X) the number of Buyer Shares such holder would have otherwise received pursuant to Section 2.4(e) multiplied by (Y) the Escrow Ratio. The "Escrow Ratio" shall be the quotient obtained by dividing (X) One Hundred Twenty-Seven Thousand (127,000) by (Y) the arithmetic difference between Seven Million Seven Hundred Thousand (7,700,000) and the aggregate number of the Preferred Exchange Shares. At the Closing, Buyer shall deposit with the Escrow Agent one or more stock certificates representing the Escrow Shares. (i) Restricted Shares. To the extent that any Seller Share is subject to restrictions on transfer and/or forfeiture provisions pursuant to any agreement between the holder and Seller, the Buyer Shares delivered in exchange therefor shall be subject to the same restrictions if in the reasonable opinion of Buyer's legal and accounting advisors the continuation of such restrictions are necessary in order for the Merger to qualify for "pooling of interests" accounting treatment under Accounting Principles Board Opinion No. 16. (j) Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, Dissenting Shares shall not be converted into the right to receive, or be exchangeable for, the Merger consideration provided for in Section 2.4(e), but, instead, each holder of Dissenting Shares shall be entitled to payment by the Surviving Corporation of the value of such Dissenting Shares as agreed upon or determined in accordance with the provisions of Section 262 of DGCL. A-14 15 2.5 Buyer Warrants. At the Closing, Buyer shall deliver the Buyer Warrants in exchange for the CMP Warrant. (a) Warrant Shares. As used in this Agreement, the term "Warrant Shares" means that number, rounded up to the nearest whole integer, which is equal to the product of (X) the Seller Common Ratio applicable to the CMP Warrant, treating CMP as a holder of Seller Common Shares, multiplied by (Y) Seven Million Seven Hundred Thousand (7,700,000) minus the aggregate number of the Preferred Exchange Shares. (b) Escrow Warrant. Buyer shall deliver at the Closing to the Escrow Agent a warrant (the "Escrow Warrant") entitling CMP or any successor holder thereof to purchase Buyer Shares. The Escrow Warrant shall be identical in all material respects to the CMP Warrant, except that (i) the number of Buyer Shares purchasable immediately after the Closing upon the full exercise of the Escrow Warrant shall be that number, rounded to the nearest whole share, which is equal to the product of (X) the total number of Warrant Shares multiplied by (Y) the Escrow Ratio, and (ii) the exercise price per Buyer Share of the Escrow Warrant shall be that price, rounded to the nearest tenth of a cent ($.001), which is equal to the quotient of (X) $1,500 divided by (Y) the total number of Warrant Shares. (c) Closing Warrant. Buyer shall deliver at the Closing to CVC, as agent for CMP, a warrant (the "Closing Warrant") entitling CMP or any successor holder thereof to purchase Buyer Shares. The exercise price per Buyer Share of the Closing Warrant shall be the same as the exercise price per Buyer Share of the Escrow Warrant, and the Closing Warrant shall otherwise be identical in all material respects to the Escrow Warrant, except that the number of Buyer Shares purchasable immediately after the Closing upon the full exercise of the Closing Warrant shall be equal to the arithmetic difference between (X) the total number of Warrant Shares and (Y) the number of Buyer Shares purchasable immediately after the Closing upon the full exercise of the Escrow Warrant. (d) If the CMP Warrant is exercised in part prior to the Closing, there will be an appropriate adjustment to the number of Warrant Shares and the exercise price of the Buyer Warrants. If the CMP Warrant is exercised in full prior to the Closing, none of the Buyer Warrants will be issued in the Merger. 2.6 Anti-Dilution. In the event that, subsequent to the date of this Agreement but prior to the Effective Time, the outstanding shares of Buyer Common Stock shall have been increased, decreased, changed into or exchanged for a different number of shares or securities through a split, reverse stock split, or other like changes in Buyer's capitalization, other than pursuant to this Agreement, as the case may be (a "Recapitalization"), then an appropriate and proportionate adjustment shall be made to the number of Buyer Shares so that each Seller Stockholder shall receive under Section 2.4, or upon exercise of the Buyer Warrants, the number of Buyer Shares (except for fractional shares) that such stockholder would have held immediately after the Recapitalization if the Merger had occurred immediately prior to the Recapitalization or the record date therefor, as applicable. For purposes of this Section 2.6 and by way of illustration and not limitation, a "Recapitalization" will in no event include the (i) issuance of shares or securities by Buyer pursuant to any existing or hereafter established or granted stock option or equity award or other compensation plan or arrangement to, or for the benefit of, one or more employees, officers, directors or contractors of Buyer or any of its Subsidiaries or (ii) in connection with Buyer acquiring directly or indirectly the stock or assets of any other Person. A-15 16 SECTION 3. Representations and Warranties of Seller. Seller represents and warrants to Buyer and the Merger Sub that the statements contained in this Section 3 are correct and complete as of the date of this Agreement. The representations and warranties which follow are deemed to be repeated on the Closing Date. 3.1 Organization, Qualification, and Corporate Power. Each of Seller and its Subsidiaries is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation. Each of Seller and its Subsidiaries is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where the absence of such qualification would have a Material Adverse Effect on Seller. Schedule 3.1 lists each of the jurisdictions in which Seller or any of its Subsidiaries possess any foreign qualification or license and lists such license held in such jurisdiction. Each of Seller and its Subsidiaries has the corporate power and authority necessary to carry on the businesses in which each is engaged and to own, lease and use the respective properties owned, leased and/or used by each. Seller has delivered to Buyer a true and complete copy of its certificate of incorporation and by-laws as in effect on the date hereof. 3.2 Authorization of Merger. Seller has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized by the board of directors of Seller, has been duly executed and delivered on behalf of Seller, and constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions. The only vote of Seller Stockholders necessary to approve this Agreement or the consummation of the Merger is the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock entitled to vote thereon approving this Agreement, and the Seller Board of Directors has directed the officers of Seller to submit this Agreement to the holders of Seller Voting Shares for Seller Stockholder Approval. No other corporate proceedings on the part of Seller not heretofore taken are necessary to approve this Agreement or to consummate the Merger. 3.3 Noncontravention. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller or any of its Subsidiaries is subject or any provision of the certificate of incorporation or charter or bylaws of Seller or any of its Subsidiaries or (ii) conflict with, result in a breach of, constitute a default (or any event which, with notice or lapse of time, or both, would constitute a default) under, result in the acceleration of, create in any party a put right or repurchase obligation or the right to accelerate, terminate, modify or cancel, create any Security Interest or require any notice, under any material Contract to which Seller or any of its Subsidiaries is a party or by which any is bound or to which any of its assets is subject, including, without limitation, the Grace Agreement, except for any such matters identified on Schedule 3.3. Other than in connection with the provisions of the HSRA and the DGCL, none of Seller or any of its Subsidiaries needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or other Person in order to consummate the Merger. 3.4 Capitalization of Seller and its Subsidiaries. Seller's authorized capital stock consists of 2,019,076 authorized shares of capital stock, which shares are fully described on and held of record by the persons and in the amounts set forth on Schedule 3.4. Except as set forth on Schedule 3.4, neither Seller nor any of its Subsidiaries has (i) any shares of A-16 17 common stock or preferred stock issued or reserved for issuance, or (ii) any Contract of any character to which Seller or any of its Subsidiaries or, to Seller's knowledge, any Affiliate of Seller is a party or subject relating to its capital stock or otherwise representing a right to receive any of its capital stock, nor are there any pending or, to Seller's knowledge, threatened claims or demands for, a direct or indirect equity interest in Seller or any Subsidiary, including, without limitation, any option, warrant, right or call or any stock appreciation, phantom stock, profit participation or similar rights. All of the issued and outstanding shares of capital stock of Seller have been duly authorized and validly issued, and are fully paid and are nonassessable. Except as set forth on Schedule 3.4, there are no voting trusts, proxies or any other agreements or understandings with respect to the voting of the capital stock of Seller or any of its Subsidiaries. 3.5 Subsidiaries. All Subsidiaries of Seller are listed on Schedule 3.5. Except as otherwise disclosed in Schedule 3.5, neither Seller nor any Subsidiary owns any shares of stock of any corporation or any equity interest in a partnership, joint venture or other business entity, and neither Seller nor any of its Subsidiaries controls any other corporation, partnership, joint venture or other business entity by means of ownership, management contract or otherwise. Except for nominal qualifying shares held by residents of certain foreign jurisdictions but which are beneficially owned by Seller or its Subsidiaries, all of the outstanding capital stock of, or other ownership interests in, each Subsidiary of Seller is owned beneficially and of record by Seller, directly or indirectly, is validly issued, fully paid and nonassessable and free and clear of any preemptive rights, restrictions on transfer, Taxes or Security Interests, except as provided under the Securities Act or state securities laws. 3.6 Financial Statements. Schedule 3.6 includes the following: (A) Seller's audited consolidated balance sheet for the fiscal year ended December 31, 1997 and the statements of income, cash-flow and shareholders' equity for each of the three years in the period ended December 31, 1997; and (B) Seller's unaudited consolidated balance sheet and statements of income, cash-flow and shareholders' equity as of and for the three-month and twelve-month periods ended December 31, 1998 (all such items mentioned previously in this Section, the "Financial Statements"). The Financial Statements (i) are correct and complete in all material respects, (ii) are consistent with the books and records of the Company and its Subsidiaries (which books and records are correct and complete, and are maintained in accordance with applicable regulations), (iii) have been prepared in conformity with GAAP applied on a consistent basis and present fairly the financial position of the respective entities as at the dates indicated and the results of their operations for the periods specified, and (iv) comply in all material respects, except as may be reflected in the notes to the Financial Statements, as to form with the accounting requirements of the Securities Act, the Securities Act regulations, including, without limitation, Regulation S-X, and the Exchange Act, except as may be described on Schedule 3.6. Except as set forth in the Financial Statements or described on Schedule 3.6, neither Seller nor any of its Subsidiaries has (i) any Loss Contingency which is not required by GAAP to be accrued and which if resolved adversely to Seller or any of its Subsidiaries could have an Material Adverse Effect on Seller or (ii) any other Liability material to Seller and its Subsidiaries on a consolidated basis that is not required by GAAP to be accrued. The financial statements to be delivered pursuant to Section 6.4(i) will be derived from the accounting books and records of Seller, will provide adequate disclosure of material changes to the accounts or business of Seller and its Subsidiaries and will be prepared in accordance with GAAP and otherwise on the same basis as the A-17 18 Financial Statements, subject to normal year-end adjustments in the case of monthly financial statements. 3.7 Litigation. Except as set forth in Schedule 3.7, there are no judgments, decrees, lawsuits, actions, proceedings, claims, complaints, injunctions, orders or investigations by or before any Governmental Entity pending or, to Seller's knowledge, threatened against Seller or its Subsidiaries (i) which could be reasonably expected to have a Material Adverse Effect on Seller if adversely determined, or (ii) seeking to enjoin any aspect of the Merger. To Seller's knowledge, there are no existing facts or circumstances which give any reason to believe that any such action, suit, proceeding, hearing or investigation may be brought or threatened against Seller or any of its Subsidiaries. 3.8 Absence of Certain Developments. Except as disclosed in Schedule 3.8, since December 31, 1997 no event has occurred which has had or reasonably could be expected to have a Material Adverse Effect on Seller. Except as disclosed in the Financial Statements, and except for this Agreement and the Merger, since December 31, 1997, each of Seller and its Subsidiaries has been operated in the Ordinary Course. Without limiting the generality of the foregoing, except as disclosed on Schedule 3.8, since December 31, 1997: (i) no party (including Seller or any of its Subsidiaries) has accelerated, terminated, modified or canceled any Contract (or series of related Contracts) involving more than $250,000 to which Seller or any of its Subsidiaries is a party or by which any of them is bound; (ii) neither Seller nor any of its Subsidiaries has imposed any Security Interest upon any of its assets, tangible or intangible, except in the Ordinary Course; (iii) neither Seller nor any of its Subsidiaries has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) either involving more than $500,000 or that is outside the Ordinary Course; (iv) neither Seller nor any of its Subsidiaries has issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $100,000 singly or $200,000 in the aggregate; (v) neither Seller nor any of its Subsidiaries has delayed or postponed the payment of accounts payable and other liabilities outside the Ordinary Course; (vi) neither Seller nor any of its Subsidiaries has granted any license or sublicense of any rights under or with respect to any Proprietary Rights either involving more than $100,000 or outside the Ordinary Course; (vii) there has been no change made or authorized in the charter or bylaws of Seller or any of its Subsidiaries; (viii) neither Seller nor any of its Subsidiaries has issued, sold or otherwise disposed of any of its capital stock, or granted or entered into any option, warrant or other Contract to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock; (ix) neither Seller nor any of its Subsidiaries has declared, set aside or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased or otherwise acquired any of its capital stock other A-18 19 than dividends payable in cash in the Ordinary Course on Seller Preferred Shares in accordance with the terms of Seller's Certificate of Incorporation; (x) neither Seller nor any of its Subsidiaries has entered into a Contract or any other transaction with any of its Affiliates; (xi) neither Seller nor any of its Subsidiaries has entered into any employment Contract or collective bargaining agreement, written or oral, or modified the terms of any existing such Contract or agreement; (xii) neither Seller nor any of its Subsidiaries has granted any increase in the base compensation of any of its employees other than in the Ordinary Course; (xiii) neither Seller nor any of its Subsidiaries has adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance or other plan or contract for the benefit of any of its directors, officers and employees (or taken any such action with respect to any other Benefit Plan (as hereinafter defined); (xiv) neither Seller nor any of its Subsidiaries has made any other change in employment terms for any of its officers or employees outside the Ordinary Course; (xv) there has not been any other occurrence, event, incident, action, failure to act or transaction outside the Ordinary Course involving Seller or any of its Subsidiaries; and (xvi) neither Seller nor any of its Subsidiaries has committed to do any of the foregoing. 3.9 Taxes. (a) All Tax Returns of Seller or any Tax Affiliate now subject to audit by the IRS or other applicable governmental authority or in respect of which an audit has been formally proposed are listed on Schedule 3.9(a), and Seller has provided to Buyer correct and complete copies of each such Tax Return. Seller and each of its Tax Affiliates has duly and timely filed all material Tax Returns required to be filed by it, all such Tax Returns have been prepared in compliance with all applicable laws and regulations and are true, correct and complete in all material respects. All Taxes owed by Seller and each of its Tax Affiliates, whether or not shown on any Tax Return, have been timely paid or are not yet due and payable. Seller has made available to Buyer correct and complete copies of its federal and state income Tax returns for the 1995, 1996 and 1997 taxable years and the corresponding balance sheets of Seller as of the end of each such year. (b) Except as set forth on Schedule 3.9(b): (i) each taxable period of Seller and each of its Tax Affiliates either (A) has been audited by the relevant taxing authority or (B) has closed, so that no further assessment or collection of Tax may occur and such taxable period is not subject to review by any relevant taxing authority; (ii) neither Seller nor any of its Tax Affiliates is the subject of a Tax audit or examination, in which any Tax may be assessed or collected by any taxing authority; (iii) neither Seller nor any of its Tax Affiliates has received from any taxing authority any written notice of proposed adjustment, deficiency, underpayment of Taxes or any other such written notice which has not been satisfied by payment or been withdrawn, and no claims have been asserted in writing relating to such Taxes against Seller or any such Tax Affiliate; A-19 20 (iv) neither Seller nor any of its Subsidiaries (A) is or has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Seller) or (B) has any Liability for the Taxes of any Person (other than Seller and its Subsidiaries) under Treas. Reg. sec.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (v) Seller and each of its Tax Affiliates has complied with all applicable laws, rules and regulations relating to the payment and withholding of Taxes and has timely and properly withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws; (vi) neither Seller nor any of its Tax Affiliates (A) has filed a consent pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by Seller or any of its Tax Affiliates, (B) is required to include in income any adjustment pursuant to Section 481(a) of the Code by reason of a voluntary change in accounting method initiated by Seller or any of its Tax Affiliates, or has proposed any such adjustment or change in accounting method, or (C) is required, as a result of any excess loss account described in Treas. Reg. sec.1.1502-19 or Treas. Reg. sec.1.1502-32 (or any corresponding or similar provision or administrative rule of any federal, state, local or foreign income tax law), to include any item in income for any taxable period (or any portion thereof ending after the Closing Date); (vii) there are no liens for Taxes on any assets of Seller or any of its Tax Affiliates except liens for Taxes not yet due. No deficiency for any Tax has been proposed, asserted or assessed against Seller or any of its Tax Affiliates which has not been resolved and paid in full, and there are no outstanding waivers or consents given by Seller or any of its Tax Affiliates regarding the application of the statute of limitations with respect to any Taxes or the period for filing any Returns; (viii) neither Seller nor any of its Tax Affiliates is a party to or bound by any Tax indemnification, Tax allocation or Tax sharing agreement with any Person or has any current or potential contractual obligation to indemnify any other Person with respect to Taxes; and (ix) neither Seller nor any of its Subsidiaries has made or is affected by any election under Code Sections 108(b)(5), 338(g), or 565. (c) Seller and each of its Subsidiaries has established and until the Effective Time will maintain on its books and records reserves adequate to pay all Taxes accrued but not yet due and payable in accordance with GAAP, and such reserves are reflected on the Financial Statements to the extent required. All transactions that could give rise to an understatement of federal income tax within the meaning of Section 6662 of the Code have been adequately disclosed in accordance with Section 6662 of the Code. Neither Seller nor any of its Subsidiaries is a party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payment" within the meaning of Section 280G of the Code or in the payment of compensation that is not fully deductible pursuant to Section 162(m) of the Code. A-20 21 3.10 Environmental, Health, and Safety Matters. (a) Except as set forth on Schedule 3.10(a), (i) Seller and each of its Subsidiaries have complied with, and are in compliance with, the Environmental, Health, and Safety Requirements, in all material respects, (ii) without limiting the generality of the foregoing, Seller and each of its Subsidiaries have obtained and complied with, and are in compliance with, in all material respects, all permits, licenses and other authorizations that are required pursuant to the Environmental, Health, and Safety Requirements for the occupation of their facilities and the operation of their business, (iii) neither Seller nor any of its Subsidiaries has received any notice regarding any actual or alleged material violation of Environmental, Health, and Safety Requirements, or any material Liability or Loss Contingency arising under the Environmental, Health, and Safety Requirements (including any investigatory, remedial or corrective obligations) (iv) neither Seller nor any of its Subsidiaries has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any Hazardous Material or owned or operated any property or facility (and no such property or facility is contaminated by any Hazardous Material) in a manner that has given or reasonably could be expected to give rise to any material Liability, including Liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Solid Waste Disposal Act, as amended, or any other Environmental, Health, and Safety Requirements, and (vi) neither Seller nor any of its Subsidiaries has, either expressly or by operation of law, assumed, undertaken or otherwise become subject to any material Liability of any other Person relating to Environmental, Health, and Safety Requirements. (b) There are no environmental investigations, studies, reviews, audits, tests or other analyses of environmental conditions conducted by or which are in the possession, custody or control of Seller or any of its Subsidiaries relating to the operation of Seller's business or any facility owned, leased or operated by Seller or any of its Subsidiaries, except as listed on Schedule 3.10(b), copies of which have been made available to Buyer, except for those identified as privileged on Schedule 3.10(b). 3.11 Employee Benefit Plans. (a) Schedule 3.11(a) lists all bonus, compensation, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans, all employment or severance contracts, health and medical plans, life insurance and disability plans, vacation and other employee benefit plans, policies, contracts, agreements or arrangements, which at any time during the 24 month period ending on the Closing Date cover (or covered) any employee(s) or former employee(s) of Seller, any of its Subsidiaries, any ERISA Affiliate and/or any such employees' beneficiaries or with respect to which Seller or any of its Subsidiaries or any ERISA Affiliate had, or has, any actual or potential Liability, including, but not limited to, all "employee benefit plans" within the meaning of Section 3(3) of ERISA (the "Benefit Plans"); provided, however, that with reference to "employee benefit plans" within the meaning of Section 3(3) of ERISA, the 24 month period referenced above shall be lengthened to a 60 month period. Except, as set forth on Schedule 3.11(a), no Benefit Plan is or was established, maintained or contributed to including any Benefit Plan to which there is (or was) an obligation to contribute to pursuant to an agreement with an employee organization (within the meaning of Section 3(4) of ERISA). Except as set forth on Schedule 3.11(a), no Benefit Plan has terms requiring assumption by Buyer or the A-21 22 Merger Sub. No Benefit Plan is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA), neither Seller nor any of its Subsidiaries nor any of its ERISA Affiliates has incurred any withdrawal liability with respect to any multiemployer plan (and the transactions contemplated by this Agreement shall not give rise to any such withdrawal liability) or any Liability in connection with the termination or reorganization of any multiemployer plan and no Benefit Plan provides health or other welfare benefits to former employees extending beyond their retirement or other termination of service, other than coverage mandated by Part 6 of Title I of ERISA or death benefits or retirement benefits under any Benefit Plan that is an "employee pension plan," as that term is defined in Section 3(2) of ERISA. All contributions or other amounts payable by Seller or any of its Subsidiaries or any ERISA Affiliate as of the Effective Time with respect to each Benefit Plan in respect of current or prior plan years have been paid or accrued in accordance with GAAP, Section 302 of ERISA and Section 412 of the Code, and there is no accumulated funding deficiency with respect to any Benefit Plan. The present value of accrued benefits under each Benefit Plan which is an employee pension benefit plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such Benefit Plan's actuary with respect to such Benefit Plan, did not, as of its latest valuation date, exceed the then current value of the assets of such Benefit Plan allocable to such accrued benefits. (b) Neither Seller, nor any of its Subsidiaries, nor any ERISA Affiliate contributes or has contributed to any "multiemployer plan" as such term is defined in Section 3(37) of ERISA. Neither Seller nor any of its Subsidiaries nor any ERISA Affiliate is or was a substantial employer (within the meaning of Section 4001(a)(2) of ERISA) for any single employer plan that is (or was) subject to Section 4063 of ERISA. (c) To the extent applicable, each Benefit Plan (and its related trust) is maintained and administered in compliance in all respects with the applicable provisions of ERISA, the Code and any other laws. Each Benefit Plan (and its related trust) which is maintained, administered, reported or contributed to as if qualified under Sections 401(a) or 501(a) of the Code is so qualified and has received a favorable determination letter from the Internal Revenue Service that it is so qualified. Except as specified in Schedule 3.11(c), each Benefit Plan that is an employee benefit plan within the meaning of Section 3(3) of ERISA (and its related trust) may, by its terms, be amended or terminated, in whole or in part, at any time and from time to time by Seller (or, as applicable, any of its Subsidiaries or any ERISA Affiliate) without penalty or cost (other than out-of-pocket costs customary payable in the Ordinary Course in connection with the preparation and filing of any such amendment or termination, including reasonable fees and expenses of counsel). (d) No Liability to the Pension Benefit Guaranty Corporation (the "PBGC") (except for routine payment of premiums) has been incurred with respect to any Benefit Plan that is subject to Title IV of ERISA (and no fact or circumstance exists which could give rise to any such liability), no reportable event within the meaning of Section 4043 of ERISA has occurred with respect to any such Benefit Plan, the PBGC has not commenced proceedings for the termination of any Benefit Plan or the appointment of a trustee with respect to any Benefit Plan, and no fact or circumstance exists which can reasonably be expected to cause the PBGC to commence any proceedings under Title IV of ERISA with respect to any Benefit Plan. None of the assets of Seller or any of its Subsidiaries or any ERISA Affiliate is the subject of any Security Interest arising under Section 302 of ERISA or Section 412 of the Code, and no facts or circumstances exist which could give rise to such Security Interest. Neither Seller nor any of its Subsidiaries nor any ERISA A-22 23 Affiliate has been required to post any security under Section 307 of ERISA or Section 401(a) of the Code, and no facts or circumstances exist which could give rise to such posting of security. (e) With respect to each Benefit Plan, Seller has provided to Buyer true, complete and correct copies, to the extent applicable, of (i) all documents pursuant to which such Benefit Plans are maintained, funded and administered, (ii) the two most recent annual report (Form 5500 series), (iii) the two most recent actuarial and financial statements, and (iv) all governmental rulings, determinations and opinions (and any pending requests), including the most recent favorable determination letter issued by the IRS with respect to each such plan, or a written statement that no such determination exists or is required. (f) Neither Seller nor any of its Subsidiaries nor any ERISA Affiliate has engaged in a transaction in connection with which Seller, any of its Subsidiaries or any ERISA Affiliate, or any other Person or entity, could be subject to a Liability under ERISA, or the Code, including, without limitation, liability under Section 409 of ERISA or a civil penalty assessable pursuant to Section 502 of ERISA or a tax imposed pursuant to Section 4975 of the Code, and no event has occurred and no condition exists with respect to any Benefit Plan that could subject Seller or any of its Subsidiaries or any ERISA Affiliate to any tax, fine or penalty imposed by the Code or ERISA. (g) Except as provided in Schedule 3.11(g), neither the execution and delivery of this Agreement nor the consummation of the Merger will (i) result in any payment (including, without limitation, deferred compensation, severance, unemployment compensation, golden parachute or otherwise) becoming due to any director, employee, contractor, consultant or other service provider of Seller or any of its Subsidiaries or any ERISA Affiliate from Seller or any of its Subsidiaries or any ERISA Affiliate under any Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under any Benefit Plan or otherwise, (iii) result in any acceleration of the time of payment or vesting of any such benefits, or (iv) result in any increase in or acceleration of the contribution or funding obligation, if any, of Seller or any of its Subsidiaries or any ERISA Affiliate. (h) No Benefit Plan will be amended or terminated on or prior to the Closing Date without the prior written approval of Buyer. The Seller has made all contributions and payments required to each Benefit Plan through the Effective Time, inclusive, or provided for such contributions and payments in accordance with GAAP. 3.12 Proprietary Rights. Except as set forth in Schedule 3.12, Seller and its Subsidiaries own and possess all right, title and interest in, free and clear of all Security Interests, or have a license or other right to use, all Proprietary Rights which are used in, or held for use in, the operation of the business of Seller and its Subsidiaries as presently conducted or as presently proposed to be conducted and which are material to such presently conducted or proposed business. Each of Seller and its Subsidiaries has taken all commercially reasonable action to maintain and protect each item of Proprietary Rights owned by Seller or any of its Subsidiaries. No item of the Proprietary Rights set forth in Schedule 3.12 has been adjudicated to be invalid or unenforceable and, to the knowledge of Seller and its Subsidiaries, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any of such Proprietary Rights. Notwithstanding any other provision of this Section, Schedule 3.12 lists all of the following items: all patented and registered Proprietary Rights owned by Seller or any of its Subsidiaries; all pending patent applications and applications for the registration of other Proprietary Rights filed by or on behalf of Seller or any of its Subsidiaries; all trade and corporate names owned or used by Seller or any of its Subsidiaries; and all joint A-23 24 development agreements to which Seller or any of its Subsidiaries is a party that assign or limit any Proprietary Rights owned or used by Seller or any of its Subsidiaries. Schedule 3.12 lists all licenses or other written contracts between Seller or any of its Subsidiaries and any third party regarding any of the Proprietary Rights (other than computer software) listed on Schedule 3.12. Neither Seller nor any of its Subsidiaries has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Proprietary Right of any third party as could reasonably be expected to have a Material Adverse Effect on Seller, and to the knowledge of Seller, neither Seller nor any of its Subsidiaries will interfere with, infringe upon, misappropriate, or otherwise come into conflict with any Proprietary Right of any third party as a result of the continued operation of its businesses as presently conducted and as presently proposed to be conducted as could reasonably be expected to have a Material Adverse Effect on Seller. Except as set forth on Schedule 3.12, each item of Proprietary Rights listed on Schedule 3.12 will be owned or available for use by Buyer or its Subsidiaries on identical terms and conditions immediately subsequent to the Effective Time. 3.13 Year 2000. (a) The Seller and the Subsidiaries have conducted an inventory and assessment (written summaries of which, to the extent prepared, have been provided to Buyer) of the computer software, computer firmware or computer hardware (whether general or special purpose) of Seller and each of its Subsidiaries in order to determine the extent to which such software, firmware or hardware is not Year 2000 Compliant (as defined below) and to estimate the cost of rendering such software, firmware or hardware Year 2000 Compliant prior to January 1, 2000 or such earlier date on which such software, firmware or hardware may shut down or may produce incorrect calculations or otherwise malfunction in any material respect. Any failure of the Computer Systems to be Year 2000 Compliant will not have a Material Adverse Effect on the Seller. The aggregate amount to be expended by Seller and its Subsidiaries, on a consolidated basis, during the 12-month period ending December 31, 1999 to render the Computer Systems Year 2000 Compliant, and to test whether any Computer System is Year 2000 Compliant, will not have a Material Adverse Effect on the Seller. For the purposes of this Agreement "Year 2000 Compliant" means that none of the Computer Systems or Benefit Plan Computer Systems (as defined below) of a particular Person will, in any material respect, malfunction, cease to function, generate incorrect data, or produce incorrect results when processing, receiving, calculating, writing and/or providing (i) date-related data into and between the twentieth and twenty-first centuries and (ii) date-related data in connection with any valid date in the twentieth and twenty-first centuries. (b) Seller has made available to Buyer copies of all material in-house correspondence and memoranda and all material correspondence between the Seller or any of its Subsidiaries with any customers, insurance company, vendor, supplier or service provider of Seller and its Subsidiaries concerning whether such Persons (including Seller or any of its Subsidiaries) are or expect to be Year 2000 Compliant or whether such Persons expect to be adversely affected by the failure of any other Person to be Year 2000 Compliant. (c) To the knowledge of Seller, no customer, supplier, contractor, distributor, insurance company, or other vendor or service provider with which Seller or any of its Subsidiaries transacts business can reasonably be expected not to be Year 2000 Compliant in any respect that could reasonably be expected to have a Material Adverse Effect on Seller. A-24 25 (d) To the knowledge of Seller (which for purposes of this Section 3.13(c) shall include, without limitation, the knowledge of each employee or consultant of Seller or any of its Subsidiaries that in the ordinary course is engaged in the administration or operation of any Benefit Plan), the Benefits Plans and each of the sponsors of and fiduciaries with respect to each Benefit Plan have conducted an inventory and assessment of the Computer Systems that are material to the administration or management of any Benefit Plan (including the management, investment and disposition of Benefit Plan assets, maintained under a trust or otherwise), including, without limitation, the Computer Systems of each Benefit Plan, the sponsor(s) of each such Benefit Plan, and third-party service providers to each such Benefit Plan, and each of the Computer Systems that are material to the investment of the assets of any of the Benefit Plans (the "Benefit Plan Computer Systems") in order to determine which parts of the Benefit Plan Computer Systems are not Year 2000 Compliant. The failure, individually or in the aggregate, of Benefit Plan Computer Systems to be Year 2000 Complaint will not result in any sponsor or fiduciary of any Benefit Plan incurring any liability or expense that will have a Material Adverse Effect on Seller. (e) Each Benefit Plan has made available to Buyer copies of all material in-house correspondence and memoranda and all material correspondence between such Benefit Plan (including its sponsor(s) and fiduciaries) and its agents, insurance companies, vendors, suppliers, service providers, participants and beneficiaries concerning whether such Persons are or expect to be Year 2000 Compliant or whether such Persons expect to be adversely affected by the failure of any other Person to be Year 2000 Compliant. (f) To the knowledge of Seller, no Benefit Plan (including its sponsor(s) and fiduciaries), and no agent, insurance company, supplier, vendor or service provider with which such Benefit Plan transacts business, can reasonably be expected not to be Year 2000 Compliant in any respect that could reasonably be expected to have a Material Adverse Effect on any Benefit Plan. 3.14 Inventories. Except as set forth on Schedule 3.14 and subject to applicable reserves reflected on Seller's unaudited consolidated balance sheet as of December 31, 1998, and except for obsolete items and items of below-standard quality, all of which have been written-off or written-down to net realizable value on Seller's unaudited consolidated balance sheet as of December 31, 1998, all items of finished goods reflected on the books of Seller and its Subsidiaries, or thereafter acquired (the "Seller Inventory") consist of items of a quality and quantity usable and saleable in the Ordinary Course. 3.15 Accounts Receivable. All accounts receivable reflected in the books of Seller and its Subsidiaries consist of accounts that are good and collectible in the Ordinary Course except for those which Seller and its Subsidiaries know to be invalid, past due or uncollectible and for which Seller and its Subsidiaries has created an applicable reserve for bad debts on Seller's unaudited consolidated balance sheet as of December 31, 1998. 3.16 Tangible Property. (a) Seller or one or more of its Subsidiaries own or lease all buildings, equipment, and other tangible assets necessary for the conduct of their businesses as presently conducted and as presently proposed to be conducted. Schedule 3.16 sets forth a true and complete list of all owned U.S. real property and owned foreign real property used by Seller or any of its Subsidiaries. Except as set forth in Schedule 3.16, the identified owner has good and marketable title to the parcel of real property, free and clear of any Security Interests, and there are no parties (other than Seller or its Subsidiaries) in possession of A-25 26 such parcel of real property. Schedule 3.16 also sets forth a list of all of the leased and subleased parcels of real property subject to leases and subleases in favor of Seller or one or more of its Subsidiaries which evidence leasehold or subleasehold interests of Seller or its Subsidiaries in such properties and designates those leases which require consent of a lessor or sublessor in connection with the Merger. (b) Except as set forth in Schedule 3.16, Seller has all easements, certificates of occupancy, permits, approvals, franchises, authorizations and other such rights, including but not limited to easements for all utilities (including without limitation all power lines, water lines and sewers) and roadways necessary to conduct the business conducted on such properties. 3.17 Books and Records. Except as set forth in Schedule 3.17 attached hereto, the books and records of Seller and each of its Subsidiaries are accurate and complete in all material respects, have been maintained in accordance with GAAP consistently applied, and accurately reflect in all material respects the ownership, use, and operations of Seller and each of its Subsidiaries. 3.18 Brokers' Fees. None of Seller and its Subsidiaries has any Liability or obligation to pay any fees or commissions to any broker, finder, or similar agent with respect to the transactions contemplated by this Agreement. 3.19 Tax-Free Reorganization Representations. To Seller's knowledge, it has not taken any action that would or reasonably could be expected to cause the Merger to fail to qualify as a "reorganization" within the meaning of Section 368 of the Code. Without limiting the generality of the immediately preceding sentence: (a) There is no intercorporate indebtedness existing between Seller and Buyer that was issued, acquired or will be settled at a discount. (b) Seller is not an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. (c) The Merger will be effected for a bona fide business purpose. (d) None of the Buyer Shares received by any stockholder/employee of Seller pursuant to the Merger are, or will be, separate consideration for, or allocable to, any employment, consulting or similar arrangement. The compensation paid to any stockholder/employee of Seller pursuant to any such employment, consulting or similar arrangement (including any covenant not to compete) is or will be for services actually rendered and performed (or not competing), and will be commensurate with amounts paid to third parties bargaining at arms length for similar services. (e) As at the Effective Time, Seller will hold at least ninety percent (90%) of the fair market value of its net assets and at least seventy percent (70%) of the fair market value of its gross assets held immediately prior to the Effective Time. For purposes of this representation, amounts paid or expected to be paid by Seller or the Surviving Corporation to dissenters, amounts paid by Seller to shareholders who receive cash or other property, amounts used or expected to be used by Seller or the Surviving Corporation to pay Seller's or any Seller Stockholder's reorganization expenses, and all redemptions and distributions (except for regular, normal dividends) made by Seller, will be included as assets of Seller immediately prior to the Merger. (f) In the Merger, Seller Shares representing control of Seller, as defined in Section 368(c) of the Code, will be exchanged for Buyer Shares. For purposes of this A-26 27 representation, Seller Shares exchanged for cash from Buyer will be treated as outstanding Seller Shares at the Effective Time. (g) Immediately after the Effective Time, Seller will not have outstanding any warrants, options, convertible securities, or any other type of right pursuant to which any Person could acquire stock in Seller that, if exercised or converted, would affect Buyer's acquisition or retention of control of Seller, as defined in Section 368(c) of the Code. (h) Immediately after the Effective Time, the fair market value of the assets of Seller will exceed the sum of its liabilities, plus the amount of liabilities, if any, to which the assets are subject. (i) Seller will not redeem any Seller Shares, or make an extraordinary distribution with respect to any Seller Shares prior to, or in connection with, the Merger within the meaning of Temporary Regulation sec.1.368-1T. 3.20 Pooling of Interest Treatment. To Seller's knowledge, it has not taken any action that would or reasonably could be expected to cause the Merger to fail to qualify for "pooling of interests" accounting treatment under Accounting Principles Board Opinion No. 16. Each of the Affiliates of Seller, within the meaning of SEC Accounting Staff Releases Nos. 130 and 135, is listed on Schedule 3.20. 3.21 Certain Contracts. (a) Schedule 3.21(a) lists the following contracts to which Seller or any of its Subsidiaries is a party: (i) any Contract concerning noncompetition, (ii) any Contract between Seller and any of its Affiliates or Subsidiaries, (iii) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other plan or arrangement for the benefit of its current or former directors, officers, and employees, (iv) any powers of attorney executed on behalf of Seller or any of its Subsidiaries, (v) any Contract under which any of them has advanced or loaned any amount to any of its directors, officers, and employees outside the Ordinary Course, (vi) any Contract under which the consequences of a default or termination reasonably could be expected to have a Material Adverse Effect on Seller; (vii) any instrument or Contract whereby Seller or any of its Subsidiaries indemnifies or guarantees any loss or Liability which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Seller; (viii) any Contract under which Seller or any of its Subsidiaries could have Liabilities or obligations in the future relating to the acquisition or disposition of material assets by way of merger, consolidation, purchase, sale or otherwise, or granting to any Person a right at such person's option to purchase or acquire any material asset or property of Seller or any interest therein (not including dispositions of inventory in the Ordinary Course); and (ix) any other Contract (or group of related contracts) the performance of which involves consideration in excess of $250,000. (b) To Seller's knowledge, the Grace Agreement is the valid and legally binding obligation of the parties thereto, is enforceable in accordance with its terms and conditions, and has not been amended or modified in any manner that would affect the rights of Seller or any of its Subsidiaries under Sections 14.05 thereof. To Seller's knowledge, there are no existing facts or circumstances which give Seller any reason to believe that the Selling Companies (as defined in the Grace Agreement) would not satisfy their obligation to indemnify Seller and the other members of the Buyer Group (as defined in the Grace Agreement) in accordance with the terms of Section 14.05 of the Grace Agreement. A-27 28 (c) To Seller's knowledge, the Seller Stockholder Agreement is the valid and legally binding obligation of the parties thereto, is enforceable in accordance with its terms and conditions, and has not been amended or modified in any manner that would affect the rights of Seller or CVC thereunder. 3.22 Absence of Improper Payments. Neither Seller nor any of its Subsidiaries (a) has made any contributions, payments or gifts of its property to or for the private use of any governmental official, employee or agent where either the payment or the purpose of such contribution, payments or gift is illegal under the laws of the United States, any state thereof or any other jurisdiction (foreign or domestic); (b) has established or maintained any unrecorded fund or asset for any purpose, or has made any false or artificial entries on its books or records for any reason; (c) has made any payments to any Person with the intention or understanding that any part of such payment was to be used for any other purpose other than that described in the documents supporting the payment; or (d) has made any contribution, or has reimbursed any political gift or contribution made by any other Person, to candidates for public office, whether Federal, state or local, where such contribution would be in violation of applicable law. 3.23 Insurance. Seller and its Subsidiaries maintain insurance policies, self-insurance programs and other forms of insurance in such amounts, with such deductibles and retained amounts, and against such risks and losses, as are reasonable for the conduct of the business of Seller and its Subsidiaries in the Ordinary Course as conducted on the date hereof. Schedule 3.23 lists all such insurance policies, self-insurance programs and other forms of insurance maintained on the date hereof by or on behalf of Seller or any of its Subsidiaries. 3.24 Employees. To Seller's knowledge, no executive officer, or group of employees, has any plans to terminate employment with Seller or any of its Subsidiaries. Except as disclosed on Schedule 3.24, neither Seller nor any of its Subsidiaries: (i) is a party to or bound by any collective bargaining agreement, nor has any of them experienced any strikes, grievances, claims of unfair labor practices, or other collective bargaining disputes; or (ii) has committed any unfair labor practice. 3.25 Disclosure. No representation or warranty of Seller contained in this Agreement or any schedule, attachment or exhibit hereto, and no statement contained herein or in any certificate or document furnished to Buyer pursuant to the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading. SECTION 4. CVC Representations and Warranties. CVC represents and warrants to Buyer and Merger Sub that the statements contained in this Section 4 are correct and complete as of the date of this Agreement. The representations and warranties which follow are deemed to be repeated on the Closing Date. 4.1 Organization and Corporate Power. CVC is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, and has the power and authority necessary to enter into and perform its obligations under this Agreement. 4.2 Authorization of Merger. This Agreement has been duly authorized, executed and delivered by CVC and constitutes the valid and legally binding obligation of CVC, enforceable in accordance with its terms and conditions. A-28 29 4.3 Noncontravention. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which CVC is subject or any provision of the charter or bylaws of CVC or (ii) conflict with, result in a breach of, constitute a default (or any event which, with notice or lapse of time, or both, would constitute a default) under, result in the acceleration of, create in any party a put right or repurchase obligation or the right to accelerate, terminate, modify or cancel, create any Security Interest or require any notice, under any Contract to which CVC is a party or by which it is bound or to which any of its assets is subject. Other than in connection with the provisions of the HSRA, CVC is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or other Person in order for Seller to consummate the Merger. 4.4 Agency Agreement. The Agency Agreement has been duly authorized by CVC, and as of the Closing, will have been duly executed and delivered by CVC, and will constitute the valid and legally binding obligation of CVC and each other Seller Stockholder, enforceable in accordance with its terms and conditions. 4.5 CVC Shares. CVC beneficially owns and has the sole and unrestricted voting power with respect to the number of Seller Shares indicated opposite CVC's name on Schedule 3.4 (together with any other Seller Shares of which CVC acquires beneficial ownership and sole voting power during the term of this Agreement, the "CVC Shares"), it being understood that the Class B Seller Common Shares are generally non-voting. CVC owns the CVC Shares free and clear of any liens, claims, charges or other encumbrances or restrictions of any kind whatsoever, other than pursuant to the Securities Act, the Exchange Act, or the Seller Stockholder Agreement. 4.6 Securities Law Issues. (a) CVC has received and had an opportunity to review Buyer's 1998 Annual Report to Stockholders, Buyer's Annual Report on Form 10-K for the fiscal year ended March 31, 1998 and Buyer's definitive proxy statement for its 1998 Annual Meeting of Stockholders, and CVC is aware of and has access to all other Buyer Public Reports and other filings by Buyer with the SEC since March 31, 1998. (b) CVC is familiar with Rule 145 of the Securities Act and understands and agrees that (i) the resale limitations imposed thereby will be applicable to all Seller Affiliates, including CVC, and (ii) any stock certificate evidencing the Buyer Shares issued to a Seller Affiliate may have the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), (II) IN CONFORMITY WITH THE VOLUME AND OTHER LIMITATIONS OF RULE 145 OF THE ACT, EVIDENCED BY A LETTER OF REPRESENTATION IN A FORM REASONABLY SATISFACTORY TO THE CORPORATION, OR (III) IN A TRANSACTION WHICH, IN THE OPINION OF INDEPENDENT COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION OR AS DESCRIBED IN A "NO ACTION" OR INTERPRETIVE LETTER FROM THE STAFF A-29 30 OF THE SECURITIES AND EXCHANGE COMMISSION, IS NOT REQUIRED TO BE REGISTERED UNDER THE ACT. 4.7 Tax-Free Reorganization. CVC has not taken, to its knowledge, any action that would or reasonably could be expected to cause the Merger to fail to qualify as a "reorganization" within the meaning of Section 368 of the Code. 4.8 Pooling of Interest Treatment. CVC has not taken, to its knowledge, any action that would or reasonably could be expected to cause the Merger to fail to qualify for "pooling of interests" accounting treatment under Accounting Principles Board Opinion No. 16. 4.9 Disclosure. No representation or warranty of CVC contained in this Agreement or any schedule, attachment or exhibit hereto, and no statement contained herein or in any certificate or document furnished to Buyer pursuant to the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading. SECTION 5. Representations and Warranties of Buyer and Merger Sub. Each of Buyer and Merger Sub represents and warrants to Seller and each Seller Stockholder that the statements contained in this Section 5 are correct and complete as of the date of this Agreement. The representations and warranties which follow are deemed to be repeated on the Closing Date. 5.1 Organization, Qualification, and Corporate Power. Each of Buyer and its Subsidiaries is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation. Each of Buyer and its Subsidiaries is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where the absence of such qualification would have a Material Adverse Effect on Buyer and its Subsidiaries. Each of Buyer and its Subsidiaries has the corporate power and authority necessary to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. Buyer has delivered to Seller a true and complete copy of its certificate of incorporation and by-laws as in effect on the date hereof. 5.2 Authorization of Merger. Each of Buyer and Merger Sub has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder subject to Buyer Stockholder Approval. This Agreement has been duly executed and delivered on behalf of each of Buyer and Merger Sub, and constitutes the valid and legally binding obligation of Buyer and Merger Sub, enforceable and in effect in accordance with its terms and conditions. The only further corporate action of Buyer required to consummate the Merger is Buyer Stockholder Approval. 5.3 Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which either Buyer or its Subsidiaries is subject or any provision of the charter or bylaws of either Buyer or any of its Subsidiaries or (ii) conflict with, result in a breach of, constitute a default (or any event which, with notice or lapse of time, or both, would constitute a default) under, result in the acceleration of, create in any party a put right or repurchase obligation or the right to accelerate, terminate, modify or cancel, create any Security Interest or require any notice under, any material Contract to which either of Buyer or any of its Subsidiaries is a A-30 31 party or by which it is bound or to which any of its material assets is subject, except for any such matters identified on Schedule 5.3. Other than in connection with the provisions of the HSRA, the federal and state securities laws and the NYSE Rule, neither Buyer nor any of its Subsidiaries needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or other Person in order for the Parties to consummate the Merger, except as set forth on Schedule 5.3. 5.4 Capitalization. The authorized capital stock of Buyer consists of 77,000,000 shares of capital stock, consisting of 75,000,000 of common stock, no par value per share, of which 25,136,349 shares are issued and outstanding as of the date of this Agreement, and 2,000,000 shares of serial preferred stock, none of which is outstanding. Except as set forth on Schedule 5.4, neither Buyer nor any of its Subsidiaries has (i) any shares of common stock or preferred stock reserved for issuance, or (ii) any Contract to which Buyer or any of its Subsidiaries or, to Buyer's knowledge, any Affiliate of Buyer is a party or subject relating to its capital stock or otherwise representing a right to receive any of its capital stock, nor are there any pending or, to Buyer's knowledge, threatened claims or demands for, a direct or indirect equity interest in Buyer or any Subsidiary, including, without limitation, stock appreciation, phantom stock, profit participation or similar rights. All of the issued and outstanding shares of Buyer Common Stock have been duly authorized, validly issued, are fully paid and are nonassessable. All Buyer Shares have been duly authorized and, upon consummation of the Merger, will be validly issued, fully paid and nonassessable. Notwithstanding the foregoing, Seller acknowledges that, after the date hereof and prior to the Effective Time, Buyer may issue additional shares of Buyer Common Stock. The authorized capital stock of the Merger Sub is owned in its entirety by Buyer. 5.5 SEC Filings. Buyer has made all filings with the SEC that it has been required to make since December 31, 1995 under the Securities Act and the Exchange Act (including any exhibits and amendments thereto). Each such filing complied with the Securities Act and the Securities Exchange Act in all material respects when filed. No such filing, when filed, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. 5.6 Financial Statements. Buyer has filed an Annual Report on Form 10-K for the fiscal year ended March 31, 1998 and a Quarterly Report on Form 10-Q for each of the fiscal quarters ended June 30, 1998 and September 30, 1998 (together the "Buyer Public Reports"). The financial statements included in Buyer Public Reports have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby unless noted therein, present fairly the financial condition of Buyer and its Subsidiaries as of the indicated dates and the results of operations of Buyer and its Subsidiaries for the indicated periods, are consistent with the books and records of Buyer and its Subsidiaries, and comply in all material respects with the provisions of Regulations S-K and S-X of the Securities Act. Attached as Schedule 5.6 are the unaudited consolidated balance sheet, income statement and cash-flow statement of Buyer and its Subsidiaries as of and for the three and nine-month periods ended December 31, 1998, which have been prepared in accordance with GAAP on a basis consistent with Buyer Public Reports with the exception of footnotes, present fairly the financial condition of Buyer and its Subsidiaries as of the indicated dates and the results of operations of Buyer and its Subsidiaries for the indicated periods, and are consistent with the books and records of Buyer and its Subsidiaries. A-31 32 5.7 Litigation. There are no judgments, decrees, lawsuits, actions, proceedings, claims, complaints, injunctions, orders or investigations by or before any Governmental Entity pending or, to Buyer's knowledge, threatened against Buyer or its Subsidiaries seeking to enjoin any aspect of the Merger. To Buyer's knowledge, there are no existing facts or circumstances which give any reason to believe that any such action, suit, proceeding, hearing or investigation may be brought or threatened against Buyer or any of its Subsidiaries. 5.8 Absence of Certain Developments. (a) Except as disclosed in Schedule 5.8(a), since March 31, 1998 no event has occurred which has had or reasonably could be expected to have a Material Adverse Effect on Buyer. (b) Except as disclosed in Schedule 5.8(b) or the Financial Statements, and except for this Agreement and the Merger, since March 31, 1998, each of Buyer and its Subsidiaries has been operated in the Ordinary Course. 5.9 Taxes. (a) Except as set forth on Schedule 5.9(a), all Taxes owed by Buyer and each of its Tax Affiliates, whether or not shown on any Tax Return, have been timely paid or are not yet due and payable. (b) Except as set forth on Schedule 5.9(b): (i) neither Buyer nor any of its Subsidiaries (A) is or has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group of the common parent of which was Buyer) or (B) has any Liability for the Taxes of any Person (other than Buyer and its Subsidiaries) under Treas. Reg. sec.1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract, or otherwise; (ii) Buyer and each of its Tax Affiliates has complied with all applicable laws, rules and regulations relating to the payment and withholding of Taxes and has timely and properly withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws; (iii) there are no liens for Taxes on any assets of Buyer or any of its Tax Affiliates except liens for Taxes not yet due. (iv) neither Buyer nor any of its Tax Affiliates is a party to or bound by any Tax indemnification, Tax allocation or Tax sharing agreement with any Person or has any current or potential contractual obligation to indemnify any other Person with respect to Taxes; and (v) Buyer and each of its Subsidiaries has established and until the Effective Time will maintain on its books and records reserves adequate to pay all Taxes accrued but not yet due and payable in accordance with GAAP, and such reserves are reflected on the Financial Statements to the extent required. Neither Buyer nor any of its Subsidiaries is a party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payment" within the meaning of Section 280G of the Code, or in the payment of compensation that is not fully deductible pursuant to Section 162(m) of the Code, as a result of the Merger. A-32 33 5.10 Environmental, Health, and Safety Matters. Except as set forth on Schedule 5.10, (i) Buyer has complied with, and is in compliance with, the Environmental, Health, and Safety Requirements, in all material respects, (ii) without limiting the generality of the foregoing, Buyer has obtained and complied with, and is in compliance with, in all material respects, all permits, licenses and other authorizations that are required pursuant to the Environmental, Health, and Safety Requirements for the occupation of their facilities and the operation of their business, (iii) Buyer has not received any notice regarding any actual or alleged material violation of Environmental, Health, and Safety Requirements, or any material Liability or potential Liability arising under the Environmental, Health, and Safety Requirements (including any investigatory, remedial or corrective obligations) (iv) Buyer has not treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any Hazardous Material or owned or operated any property or facility (and no such property or facility is contaminated by any Hazardous Material) in a manner that has given or reasonably could be expected to give rise to any material Liability, including Liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Solid Waste Disposal Act, as amended, or any other Environmental, Health, and Safety Requirements, and (v) Buyer has not, either expressly or by operation of law, assumed, undertaken or otherwise become subject to any material Liability of any other Person relating to Environmental, Health, and Safety Requirements. 5.11 Employee Benefit Plans. (a) All contributions or other amounts payable by Buyer or any ERISA Affiliate as of the Effective Time with respect to each Benefit Plan in respect of current or prior plan years have been paid or accrued in accordance with GAAP, Section 302 of ERISA and Section 412 of the Code, and there is no accumulated funding deficiency with respect to any Benefit Plan. The present value of accrued benefits under each Benefit Plan which is an employee pension benefit plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such Benefit Plan's actuary with respect to such Benefit Plan, did not, as of its latest valuation date, exceed the then current value of the assets of such Benefit Plan allocable to such accrued benefits. (b) To the extent applicable, each Benefit Plan (and its related trust) is maintained and administered in material compliance in all respects with the applicable provisions of ERISA, the Code and any other laws. Each Benefit Plan (and its related trust) which is maintained, administered, reported or contributed to as if qualified under Sections 401(a) or 501(a) of the Code is so qualified and has received a favorable determination letter from the Internal Revenue Service that it is so qualified. Each Benefit Plan (and its related trust) may, by its terms, be amended or terminated, in whole or in part, at any time and from time to time by Buyer (or, as applicable, any ERISA Affiliate) without penalty or cost. (c) No Liability to the Pension Benefit Guaranty Corporation (the "PBGC") (except for routine payment of premiums) has been incurred with respect to any Benefit Plan that is subject to Title IV of ERISA (and no fact or circumstance exists which could give rise to any such liability), no reportable event within the meaning of Section 4043 of ERISA has occurred with respect to any such Benefit Plan, the PBGC has not commenced proceedings for the termination of any Benefit Plan or the appointment of a trustee with respect to any Benefit Plan, and no fact or circumstance exists which can be expected to A-33 34 cause the PBGC to commence any proceedings under Title IV of ERISA or otherwise with respect to any Benefit Plan. None of the assets of Seller or any ERISA Affiliate is the subject of any Security Interest arising under Section 302 of ERISA or Section 412 of the Code, and no facts or circumstances exist which could give rise to such Security Interest. Neither Buyer nor any ERISA Affiliate has been required to post any security under Section 307 of ERISA or Section 401(a) of the Code, and no facts or circumstances exist which could give rise to such posting of security. (d) Neither Buyer nor any ERISA Affiliate has engaged in a transaction in connection with which Buyer or any ERISA Affiliate, or any other Person or entity, could be subject to a material Liability under ERISA, or the Code, including, without limitation, liability under Section 409 of ERISA or a civil penalty assessable pursuant to Section 502 of ERISA or a tax imposed pursuant to Section 4975 of the Code, and no event has occurred and no condition exists with respect to any Benefit Plan that could subject Buyer or any ERISA Affiliate to any tax, fine or penalty imposed by the Code or ERISA. 5.12 Broker's Fee. None of Buyer and its Subsidiaries has any Liability or obligation to pay any fees or commissions to any broker, finder, or similar agent with respect to the transactions contemplated by this Agreement. 5.13 Tax-Free Reorganization Representations. To Buyer's knowledge, it has not taken any action that would or reasonably could be expected to cause the Merger to fail to qualify as a "reorganization" within the meaning of Section 368 of the Code, and does not intend to take any such action. Without limiting the generality of the immediately preceding sentence: (a) Except with respect to the payment of cash in lieu of fractional share interests pursuant to Section 2.4(g), neither Buyer nor any related Person (within the meaning of Treas. Reg. sec.1.368-1(e)(3)) has any plan or intention to reacquire any of the Buyer Shares that will be issued in the Merger pursuant to either Buyer Warrant. (b) There is no intercorporate indebtedness existing between Buyer and Seller that was issued, acquired or will be settled at a discount. (c) Neither Buyer nor Merger Sub is an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. (d) Merger Sub will have no liabilities that will be assumed by or transferred to Seller in the Merger. (e) Prior to and through the Effective Time of the Merger, Buyer will be in control of Merger Sub within the meaning of Section 368(c) of the Code. (f) Buyer has no plan or intention to: (i) liquidate the Surviving Corporation, (ii) merge the Surviving Corporation with and into another corporation other than Merger Sub, (iii) sell or otherwise dispose of the Seller Shares, or (iv) cause the Surviving Corporation to sell or otherwise dispose of any of its assets, except for dispositions made in the ordinary course of business or transfers described in Section 368(a)(2)(C) of the Code. (g) Neither Buyer nor any related Person (within the meaning of Treas. Reg. sec.1.368-1(e)(3)) has acquired or will acquire any Seller Shares in anticipation of the Merger. (h) Buyer does not own, and has not owned during the past five years, any Seller Shares. A-34 35 (i) The Merger will be effected for a bona fide business purpose. (j) None of the Buyer Shares received by any stockholder/employee of Seller pursuant to the Merger are, or will be, separate consideration for, or allocable to, any employment, consulting or similar arrangement. The compensation paid to any stockholder/employee of Seller pursuant to any such employment, consulting or similar arrangement (including any covenant not to compete) is or will be for services actually rendered and performed (or not competing), and will be commensurate with amounts paid to third parties bargaining at arms length for similar services. (k) Buyer has no plan or intention to cause the Surviving Corporation to issue Seller Shares after the Merger that would result in Buyer losing control of the Surviving Corporation within the meaning of Section 368(c) of the Code. (l) Buyer presently intends that after the Merger it will cause the Surviving Corporation to continue the historic business of Seller and/or to use a significant portion of Seller's business assets in a business. 5.14 Pooling of Interest Treatment. To Buyer's knowledge, it has not taken any action that would or reasonably could be expected to cause the Merger to fail to qualify for "pooling of interests" accounting treatment under Accounting Principles Board Opinion No. 16. 5.15 Disclosure. No representation or warranty of Buyer contained in this Agreement or any schedule, attachment or exhibit hereto, and no statement contained herein or in any certificate or document furnished to Buyer pursuant to the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading. SECTION 6. Covenants. The Parties agree as follows with respect to the period from and after the execution of this Agreement. 6.1 General. Each of the Parties will use all commercially reasonable efforts to take all action and to do all things necessary, proper, and advisable in order to consummate and make effective the Merger as soon as practicable after the date of this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 7). Each party will give any notices for which it is responsible by law or under this or any other contract (and will cause each of its Subsidiaries to give any notices) to any third parties, and will use all commercially reasonable efforts to obtain (and will cause each of its Subsidiaries to use all commercially reasonable efforts to obtain) any third party consents, necessary to the consummation of the Merger, including any consents, waivers, amendment or other action. 6.2 Joint Proxy Statement -- Prospectus and S-4 Registration Statement; Stockholder Approval; NYSE Listing. (a) Buyer shall promptly prepare and file with the SEC the Joint Proxy Statement -- Prospectus (including the preliminary form thereof), and shall thereafter prepare and file with the SEC a registration statement on Form S-4 (the "S-4 Registration Statement"), in which the Joint Proxy Statement -- Prospectus will be included as a prospectus. Buyer and Seller shall use all commercially reasonable efforts to file the preliminary form of the Joint Proxy Statement -- Prospectus with the SEC within twenty (20) Business Days after the date of this Agreement. Buyer's Representatives shall have principal responsibility for A-35 36 preparing the Joint Proxy Statement -- Prospectus. Each of Buyer and Seller shall use all commercially reasonable efforts to have the S-4 Registration Statement declared effective under the Securities Act as promptly as practicable after the initial filing of the preliminary form of Joint Proxy Statement -- Prospectus. Buyer shall use all commercially reasonable efforts to obtain all necessary state securities law or "Blue Sky" permits and approvals required for Buyer and Seller to carry out the transactions contemplated by this Agreement and Seller shall furnish all information concerning Seller and the holders of Seller Shares as may be reasonably requested in connection with any such action. Buyer shall promptly notify Seller and CVC of the receipt by it of any comments of the SEC or state securities laws regulators and will promptly supply Seller and CVC with copies of all correspondence between it or its Representatives, on the one hand, and the SEC or state securities law regulators, on the other hand, regarding the Joint Proxy Statement -- Prospectus, the S-4 Registration Statement or such "Blue Sky" permits and approvals. (b) Each Party shall, promptly upon request, furnish each other Party with all information concerning itself, its Subsidiaries, Representatives, stockholders, Affiliates and such other matters as may be reasonably necessary or advisable in connection with the Joint Proxy Statement -- Prospectus, the S-4 Registration Statement or any other statement, filing, notice or application made by or on behalf of Buyer, Seller or any of their respective subsidiaries to any Governmental Entity in connection with the Joint Proxy Statement -- Prospectus, the S-4 Registration Statement or the "Blue Sky" permits and approvals. Seller shall use all commercially reasonable efforts to cause the following items to be delivered to Buyer within ten (10) Business Days after the date of this Agreement: (x) Seller's audited consolidated balance sheets as of December 31, 1998 and 1997 and its audited statements of income, cash-flow and shareholders' equity for each of the years in the three-year period ended December 31, 1998, and the report of PricewaterhouseCoopers, LLP with respect thereto, and (y) Seller's discussion and analysis of Seller's financial condition as of December 31, 1998 and 1997 and its results of operations for fiscal 1998 and 1997 prepared in accordance with the requirements of Item 303 of SEC Regulation S-K. (c) Except as expressly provided in the immediately following sentence, the Joint Proxy Statement -- Prospectus shall contain a recommendation by each of the Buyer Board of Directors and the Seller Board of Directors in favor of the approval of this Agreement. Notwithstanding the immediately preceding sentence, nothing in this Section 6.2 shall be construed to require any director of Buyer to take any action or permit any event otherwise required under this Section 6.2 to the extent that the Buyer Board of Directors or such director shall conclude in good faith, based upon the written advice of counsel, that such action is prohibited or inadvisable in order for the Buyer Board of Directors or such director to act in a manner that is consistent with its or his fiduciary obligations under applicable laws. (d) Buyer and Seller shall cause the Joint Proxy Statement -- Prospectus to be mailed to their respective stockholders as promptly as practicable after the S-4 Registration Statement is declared effective under the Securities Act, and in any event Seller shall cause the Joint Proxy Statement -- Prospectus to be mailed to the Seller Stockholders no later than the third (3rd) Business Day after the Joint Proxy Statement -- Prospectus is mailed to Buyer stockholders. Notwithstanding any other provision in this Agreement, Seller shall use its best efforts to obtain Seller Stockholder Approval not later than the first Business Day that is at least twenty (20) calendar days after the Joint Proxy Statement -- Prospectus is mailed to the Seller Stockholders. A-36 37 (e) Seller represents and warrants to Buyer that, as of the date the Joint Proxy Statement -- Prospectus is issued and as of the date of each of Seller Stockholder Approval and the Buyer Special Meeting, the Joint Proxy Statement -- Prospectus will not contain any untrue statement of a material fact regarding Seller or any of its Subsidiaries or omit to state any material fact regarding Seller or any of its Subsidiaries necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, it being understood that Seller is making no representation or warranty with respect to information set forth in the Joint Proxy Statement -- Prospectus concerning Buyer or the Buyer Special Meeting. Seller will promptly advise Buyer in writing if, at any time prior to the date of Seller Stockholder Approval or the date of the Buyer Special Meeting, it shall obtain knowledge of any facts that might make it necessary or appropriate to amend or supplement the Joint Proxy Statement -- Prospectus in order to make the statements regarding Seller or any of its Subsidiaries contained therein not misleading or to comply with applicable law and agrees to correct any statements that are or have become misleading. (f) Buyer represents and warrants to Seller that as of the date the Joint Proxy Statement -- Prospectus is issued and as of the date of each of Seller Stockholder Approval and the Buyer Special Meeting, the S-4 Registration Statement and the Joint Proxy Statement -- Prospectus will comply as to form in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and the rules and regulations of the SEC thereunder, and will not at any such time contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, except that no representation or warranty is made with respect to information set forth in the Joint Proxy Statement -- Prospectus concerning Seller or the terms of Seller Stockholder Approval. Buyer will promptly advise Seller in writing if, at any time prior to the Seller Stockholder Approval, Buyer shall obtain knowledge of any facts that might make it necessary or appropriate to amend or supplement the S-4 Registration Statement or the Joint Proxy Statement -- Prospectus in order to make the statements contained or incorporated by reference therein not misleading or to comply with applicable law and agrees to correct any statements that are or have become misleading. (g) Seller shall use all commercially reasonable efforts to cause to be delivered to Buyer letters from its independent accountants dated the date on which the S-4 Registration Statement or last amendment thereto shall become effective, and dated the Closing Date, and addressed to Buyer and Seller, with respect to Seller's consolidated financial position and the results of operations, which letters shall be based on SAS 72 and certain agreed-upon procedures, which procedures shall be consistent with applicable professional standards for letters delivered by independent accountants in connection with comparable transactions, and each in form and substance which is reasonably satisfactory to Buyer. (h) Seller and CVC shall use all commercially reasonable efforts to cause each Seller Affiliate to deliver to Buyer within fifteen (15) Business Days after the date of this Agreement an executed copy of the Seller Affiliate Agreement in the form of Exhibit D. Within sixty (60) days after the end of the first fiscal quarter of Buyer ending at least thirty (30) days after the Effective Time, Buyer shall publish results including at least thirty (30) days of combined operations of Buyer and Seller as referred to in Seller Affiliates Agreement as contemplated by and in accordance with SEC Accounting Series Release No. 135. A-37 38 (i) Buyer shall identify, after consultation with counsel, all persons who, at the time of the Buyer Special Meeting, it believes may be deemed to be "affiliates" of Buyer, as that term is defined for purposes of paragraphs (c) and (d) of Rule 145 under the Securities Act and/or as used in and for purposes of Accounting Series Releases 130 and 135, as amended, of the SEC (the "Buyer Affiliates"). Buyer shall use all commercially reasonable efforts to provide to each Buyer Affiliate, at least forty (40) days prior to the Effective Time, written notice regarding the applicable restrictions in Rule 145 and the ramifications of the SEC interpretative positions in Accounting Series Releases 130 and 135, as amended. (j) Buyer shall use all commercially reasonable efforts to cause the Buyer Shares that will be issued to the Seller Stockholders upon consummation of the Merger, and the Warrant Shares that will be issued upon the exercise of the Buyer Warrants, to be authorized for listing on the NYSE, subject to official notice of listing, prior to the Closing. 6.3 Other Regulatory Matters and Approvals. Each of the Parties will (and will cause each of its Subsidiaries to) give any notices to, make any filings with, and use all commercially reasonable efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to in Sections 3.3 and 5.3. Without limiting the scope of the immediately preceding sentence, Buyer and Seller will as promptly as practicable, but in no event later than fifteen (15) Business Days following the date of this Agreement, each file any Notification and Report Forms or other form or report and related material that the Parties may be required to file with the Federal Trade Commission ("FTC") and the Antitrust Division of the United States Department of Justice ("DOJ") under the HSRA or with any other Governmental Entity under the laws of any foreign jurisdiction. Any such notification and report form and supplemental information will be in substantial compliance with the requirements of the HSRA. Each of Buyer and Seller shall furnish to the other such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing or submission which is necessary under the HSRA. Buyer and Seller shall keep each other apprised of the status of any communications with, and inquiries or requests for additional information from, the FTC and the DOJ and shall respond promptly with any such inquiry or request. Buyer and Seller will use all commercially reasonable efforts to obtain an early termination of any applicable waiting period, and will make any further filings pursuant thereto that may be necessary, proper, or advisable. 6.4 Seller's Interim Operation of Business. Prior to the Closing, except as otherwise expressly provided herein, Seller shall, and shall cause its Subsidiaries to: (a) except as contemplated by this Agreement, operate only in the Ordinary Course; (b) use all commercially reasonable efforts to keep in full force and effect its corporate existence and all material rights, franchises, Proprietary Rights and goodwill relating or obtaining to its business; (c) use reasonable efforts to retain its employees and preserve its present relationships with customers, suppliers, contractors, distributors and such employees; (d) perform in all material respects all of its obligations under all Contracts to which it is a party or by which it or its properties or assets may be bound and not enter into, assume, create, renew, amend or terminate, or give notice of a proposed renewal, amendment or termination of, (i) any Contract for goods, services or office A-38 39 space to which Seller or any of its Subsidiaries is (or would thereby be) a party or by which Seller or any of its Subsidiaries or any of their properties are (or would thereby be) bound, excepting only Contracts made in the Ordinary Course or under which the aggregate payments by either party over the term of the Contract do not exceed $100,000, (ii) any Contract the benefits of which (to either party) will accrue or be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of the Merger (either alone or upon the occurrence of any additional acts or events) or the value of any of the benefits under which will be calculated on the basis of the Merger or any portion or aspect of either (including any so-called retention or similar bonuses), (iii) any Contract relating to non-competition, or (iv) any Contract that materially restricts the conduct of any line of business by Seller or any of its Subsidiaries; (e) not make any single capital expenditure exceeding $2,000,000 or any capital expenditures exceeding $3,000,000 in the aggregate; provided, however, that with Buyer's prior written consent, which consent may not be unreasonably withheld, conditioned or delayed, Seller's aggregate capital expenditures during the term of this Agreement may exceed $3,000,000 but not more than $7,000,000; (f) not enter into any new line of business; (g) not enter into, renew or amend any agreement relating to employment, salary continuation, severance, consulting, collective bargaining or otherwise relating to the provision of personal services or payment therefor; not institute, amend or terminate any Benefit Plan; not terminate any group health plan that covers, as of the date of this Agreement, current or former employees of Seller, any of its Subsidiaries or any ERISA Affiliate or their beneficiaries; not enter into, renew or amend any agreement that, upon the consummation of the Merger, will result in any payment (whether of severance pay or otherwise) becoming due from Buyer, the Surviving Corporation, or any of their Subsidiaries, to any officer or employee of Seller or any of its Subsidiaries; not pay any pension or retirement allowance to any Person not required by an existing plan or agreement; not increase in any manner the compensation or fringe benefits of, or pay any bonus to, any officer, director or employee except (i) as set forth on Schedule 6.4(g) or (ii) customary annual (or less frequent) increases in the wages or salaries of employees and customary annual (or less frequent) bonuses to employees, in each case substantially consistent with past practice and which on an annualized basis do not increase the aggregate personnel costs for all employees by more than six percent (6.0%) over the levels in effect as of December 31, 1998; or not increase any other direct or indirect compensation or employee benefit for or to any of its officers, directors or employees; (h) prepare and file, on a timely basis, all Tax Returns and other Tax reports, filings and amendments thereto required to be filed by it; (i) deliver to Buyer, within fifteen (15) days of each month end from the date hereof through the Closing Date, Seller's consolidated unaudited balance sheets, income statements and cash flow statements as of and for the immediately preceding month, all consistent with the applicable requirements of Section 3.6; (j) not declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its outstanding capital stock, except for cash dividends in the Ordinary Course on the Seller Preferred Shares in accordance with the terms of Seller's Certificate of Incorporation; A-39 40 (k) not issue, sell, grant, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or option to acquire, any such shares, voting securities or convertible securities, or take any action that would make the representations and warranties set forth in Section 3.4 as applicable not true and correct in all material respects; (l) not amend its Certificate of Incorporation or By-laws or other comparable charter or organizational documents; (m) not acquire by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof (or any interest therein), or form any subsidiary or solicit or negotiate any Acquisition Proposal with respect to any other Person; (n) not change its accounting policies in any material respect, except as required by GAAP; (o) pay their own expenses in connection with the Merger and, at Seller's discretion, pay any expense CVC reasonably incurs in connection with the Merger; and (p) not authorize or enter into any agreement or commitment to take any action inconsistent with any of the foregoing. Further, prior to the Closing, without the prior written consent of Buyer or as otherwise expressly provided herein, Seller will not, and will not permit any of its Subsidiaries, to enter into any Contract or take any other action which, if entered into or taken prior to the date of this Agreement, would cause any representation or warranty of Seller to be untrue in any respect or be required to be disclosed on any Schedule; or take any action that is intended or may reasonably be expected to result in any of the conditions to the Merger as set forth in Section 7 not being satisfied or in a violation of this Agreement; or take or omit to be taken any action which reasonably could be expected to have a Material Adverse Effect on Seller. 6.5 Covenants of Buyer. Prior to the Closing, except as otherwise expressly provided for herein, Buyer shall, and shall cause its Subsidiaries to: (a) not take any action that is intended or may reasonably be expected to result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect, or in any of the conditions to the Merger set forth in Sections 7.2 not being satisfied or in a violation of any provision of this Agreement, except, in every case, as may be required by applicable law; (b) not take any other action that would materially impede the ability of Buyer to obtain the requisite regulatory approvals or otherwise materially adversely affect Buyer's ability to consummate the transactions contemplated by this Agreement; (c) not declare or pay any dividend on, or make any other distributions in respect of, Buyer Common Stock except for dividends in the Ordinary Course and dividends or distributions in Buyer Common Stock; (d) not issue any shares of Buyer Common Stock in connection with Buyer acquiring directly or indirectly the stock or assets of any other Person, except with the prior consent of Seller, which consent may not be unreasonably withheld, conditioned or delayed; A-40 41 (e) not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person unless such Person shall expressly assume the obligations of Buyer hereunder; (f) pay their own expenses in connection with the Merger; and (g) not authorize or enter into any agreement or commitment to take any action inconsistent with any of the foregoing. Further, prior to the Closing, without the prior written consent of Seller or as otherwise expressly provided for herein, Buyer will not, and will not permit any of its Subsidiaries, to enter into any Contract or take any other action which, if entered into or taken prior to the date of this Agreement, would cause any representation or warranty of Buyer to be untrue in any respect or be required to be disclosed on any Schedule; or take any action that is intended or may reasonably be expected to result in any of the conditions to the Merger as set forth in Section 7 or in a violation of this Agreement. 6.6 Access. (a) Seller shall make available to Buyer all information regarding Seller that Buyer reasonably may request and shall authorize all reasonable visits to Seller's premises to make such investigations of the business, properties, books and records of Seller and its Subsidiaries (including without limitation Phase I and Phase II environmental assessments and other environmental due diligence) as Buyer reasonably may request. Buyer agrees to coordinate closely all such activities with Seller's President or Chief Financial Officer and to conduct any such inquiries with appropriate discretion and sensitivity to Seller's relationships with its employees, customers and suppliers. (b) Upon reasonable notice, Buyer shall, within a reasonable period of time prior to the Closing, afford Seller and its officers, employees, counsel, accountants and other authorized Representatives, such access as is reasonably necessary to confirm that the representations and warranties of Buyer made herein are true and correct in all material respects. Buyer shall furnish promptly to Seller a copy of each application, report, schedule, correspondence and other document filed by Buyer with or received by Buyer from any Governmental Entity in connection with the transactions contemplated hereunder, and Buyer agrees to notify Seller by telephone within twenty-four (24) hours of receipt of any adverse oral communication from any Governmental Entity regarding the outcome of any regulatory applications required in connection with the Merger. (c) Nothing in this Section 6.6 shall require any Party or any of its Subsidiaries to provide access to or to disclose information where such access or disclosure would jeopardize the attorney-client privilege of the Person in possession or control of such information or would contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The Parties will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the immediately preceding sentence apply. (d) Each Party acknowledges that certain of the information made available to it pursuant to this Section 6.6 and otherwise in connection with the Merger may be confidential, proprietary or otherwise nonpublic, and each Party agrees, for itself and for each of its Representatives, that it (i) shall hold in confidence all confidential information received by it from or with regard to the other Party ("Confidential Information") subject to the terms of this Section 6.6, (ii) shall disclose such Confidential Information only to those of its Representatives and, in the case of Buyer, its current or prospective lenders, and other sources of capital, in each case having a need to know the same for purposes of evaluating, negotiating or implementing financing for Buyer, and (iii) shall inform each A-41 42 Representative or current or prospective lender or investor to whom Confidential Information is disclosed that such information is confidential and direct such Representative or current or prospective lender or investor not to disclose the same. Each Party shall remain responsible for any disclosure of Confidential Information by any of its Representatives or current or prospective lender or investors. Each Party further agrees that, upon the request of the other Party given following the termination of this Agreement for any reason, the receiving Party and each of its Representatives either shall return to the requesting Party all Confidential Information received by the receiving Party and its Representatives (including all compilations, analyses or other documents prepared by it that contain Confidential Information) or shall certify that the same has been destroyed. As used herein, Confidential Information shall not include (i) information that is or becomes generally available to the public other than as a result of a breach of this Agreement, (ii) information that the receiving Party demonstrates was known to it on a non-confidential basis prior to receiving such information from the other Party, (iii) information that the receiving Party develops independently without relying on Confidential Information, and (iv) information that becomes available to the receiving Party on a non-confidential basis from another source if the source was not known to or not reasonably believed by the receiving Party to be subject to any prohibition against disclosing such information. 6.7 Notice of Developments. Each Party shall promptly advise the other Party of any change or event having a Material Adverse Effect on it or its ability to perform its obligations under this Agreement or which it believes would or may be reasonably likely to cause or constitute a material breach of any of its representations, warranties or covenants contained herein or to preclude the satisfaction of one or more of the conditions set forth in Section 7; provided, however, that any such disclosure shall not have any effect for the purpose of determining the accuracy of any representation or warranty when made, for determining satisfaction of the conditions set forth in Section 7, or for determining the compliance by Seller with any other provision of this Agreement. 6.8 Acquisition Proposals. Seller shall not, and it shall not authorize or permit any of its Subsidiaries, officers, directors, employees, Affiliates, stockholders or any Representative retained by Seller or its Subsidiaries, directly or indirectly, to (i) solicit, initiate or knowingly encourage or induce the making of any Acquisition Proposal, (ii) negotiate with any third party with respect to any Acquisition Proposal, (iii) endorse or recommend the Acquisition Proposal of any Person other than the Buyer or any of its Subsidiaries or (iv) enter into any Contract with any third party with the intent to effect any Acquisition Proposal. 6.9 Board of Directors. CVC shall have the right to designate one (1) director to serve on Buyer's Board of Directors from and after the Effective Time, and Buyer's Board of Directors shall take all such action reasonably necessary to cause and maintain such designation, so long as at all times from and after the Effective Time each of the following conditions is satisfied: (i) CVC owns shares of Buyer Common Stock constituting forty percent (40.0%) or more of the total number of Buyer Shares issued to CVC in the Merger (as adjusted for any Recapitalization) and (ii) CVC owns shares of Buyer Common Stock constituting two percent (2.0%) or more of the shares of Buyer Common Stock outstanding from time to time. A condition to the election of the CVC designee is the agreement of such designee to resign at the request of Buyer's Board of Directors if the either of the conditions set forth in the immediately preceding sentence is not satisfied. Buyer shall use all commercially reasonable efforts to maintain directors' and officers' liability insurance covering the CVC director designee, and in no event shall such A-42 43 directors' and officers' liability insurance applicable to the CVC director designee be less favorable than the directors' and officers' liability insurance covering Buyer's directors generally. Buyer shall reimburse such designee for any reasonable out-of-pocket expenses incurred in connection with his or her position on the Board of Directors in accordance with Buyer's customary practices and shall pay such designees any fees or other compensation comparable to other non-executive directors of Buyer. 6.10 Financing. Buyer shall use all commercially reasonable efforts to obtain, on terms satisfactory to Buyer, debt financing on or prior to the Closing Date in an amount not less than the amount required to refinance all financial indebtedness of Seller and its Subsidiaries under the Credit Agreements, the Senior Credit Notes and the 10% PIK Subordinated Notes and to provide for the ordinary working capital needs of Seller and its Subsidiaries. Buyer shall deliver to Seller true and correct copies of the fully executed and delivered definitive financing agreements with respect thereto on or before the Closing Date. Buyer shall use all commercially reasonable efforts to cause it and its Subsidiaries to satisfy on or before the Closing Date all requirements of the definitive financing agreements which are conditions to closing the transactions constituting the financing and to drawing the cash proceeds thereunder. Seller and its Subsidiaries shall use all commercially reasonable efforts to cooperate with Buyer to facilitate such financing. 6.11 Press Releases and Public Announcements. Other than required by this Agreement, no Party shall issue any press release or make any public announcement (including filings with the SEC or NYSE) prior to the Effective Time and relating to the subject matter of this Agreement without the prior written approval of the other Parties; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use all commercially reasonable efforts to advise the other Parties prior to making the disclosure). 6.12 Covenants of CVC. (a) Prior to the Closing, without the prior written consent of Buyer or as otherwise expressly provided herein, CVC will not, and will not permit any of its Affiliates to, enter into any Contract or take any other action which, if entered into or taken prior to the date of this Agreement, would cause any representation or warranty of Seller or CVC in Article 3 or Article 4 to be untrue in any respect or be required to be disclosed on any Schedule; or take any action that is intended or may reasonably be expected to result in any of the conditions to the Merger as set forth in Section 7 not being satisfied or in a violation of this Agreement; or take or omit to be taken any action which reasonably could be expected to have a Material Adverse Effect on Seller. (b) CVC shall use its best efforts to cause Seller to obtain Seller Shareholder Approval and to cause the condition set forth in Section 7.2(g) to be satisfied, including, with respect to Section 7.2(g), enforcing to the extent necessary the waiver of dissenter's rights provided in the Seller Stockholder Agreement. Without limiting the scope of the immediately preceding sentence, so long as this Agreement has not been terminated in accordance with the terms CVC shall vote or cause to be voted all of the CVC Shares that are Seller Voting Shares and that are owned by CVC as of the record date for Seller Stockholder Approval, for the approval of this Agreement, and shall vote, or cause to be voted, all such CVC Shares against the approval of any Acquisition Proposal providing for a merger, acquisition, consolidation, sale of a material amount of assets or other business combination of Seller or any of its Subsidiaries with any Person other than Buyer or any of its Subsidiaries. A-43 44 (c) So long as this Agreement has not been terminated in accordance with the terms hereof, CVC will not sell, assign, transfer or otherwise dispose of (including, without limitation, by the creation of a Security Interest), or permit to be sold, assigned, transferred or otherwise disposed of, any of the CVC Shares, whether such CVC Shares are held on the date of this Agreement or are subsequently acquired, whether pursuant to the exercise of stock options or otherwise, except (i) transfers by operation of law (in which case this Agreement shall bind the transferee), and (ii) as Buyer may otherwise agree in its sole discretion. (d) CVC agrees that, so long as this Agreement has not been terminated in accordance with the terms hereof, CVC shall, and shall instruct each of its Representatives and Affiliates to, cease and refrain from any and all activities, discussions, negotiations, providing any information with respect to, or other actions with any Person other than Buyer or any of its Subsidiaries or any of their respective Representatives with respect to any Acquisition Proposal other than the Merger. (e) From the date that is thirty (30) days prior to the Effective Time, CVC will not sell, transfer or otherwise dispose of, or reduce the risk of ownership with respect to, any CVC Share and will not sell, transfer or otherwise dispose of, or reduce the risk of ownership with respect to, any Buyer Shares received by CVC in the Merger or other shares of Buyer Common Stock until after such time as 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 other public filing or announcement which includes the results of at least thirty (30) days of combined operations as contemplated by and in accordance with SEC Accounting Series Release No. 135. SECTION 7. Conditions to Closing. 7.1 Joint Conditions to Obligations of Buyer, Merger Sub and Seller. The obligations of Buyer and Seller to consummate the Merger are subject to the satisfaction of each of the following conditions: (a) Buyer Stockholder Approval and Seller Stockholder Approval shall have been obtained. (b) All necessary approvals of any Governmental Entity required for the consummation of the Merger shall have been obtained and shall remain in full force and effect; all statutory or other required waiting periods in respect thereof shall have expired; and no approval of any Governmental Entity shall have imposed any condition or requirement which, in the reasonable opinion of Buyer, would so materially adversely affect the economic or business benefits to Buyer of the Merger so as to render inadvisable the consummation thereof. (c) The S-4 Registration Statement shall have become effective under the Securities Act, no stop order suspending its effectiveness shall have been issued, and no proceedings for that purpose shall have been initiated or shall be threatened by the SEC. (d) The Buyer Shares that will be issued to the Seller Stockholders upon consummation of the Merger, and the Warrant Shares that will be issued upon the exercise of the Buyer Warrants, shall have been authorized for listing on the NYSE subject to official notice of listing. A-44 45 (e) There shall be no claim, action, suit, investigation or other proceeding pending or overtly threatened before any court or other Governmental Entity wherein an unfavorable judgment, order, decree, ruling, charge or injunction has been issued, or reasonably could be expected to be issued, which would (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, or (iii) present a substantial risk of the obtaining of material damages from Seller or Buyer or their respective officers or directors in connection therewith. 7.2 Conditions to Obligations of Buyer and Merger Sub. The obligations of Buyer and the Merger Sub to consummate the transactions to be performed by them in connection with the Closing are subject to satisfaction of the following conditions. (a) the representations and warranties set forth in Section 3 and Section 4 shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date; (b) Seller shall have performed and complied with all of its agreements and covenants hereunder through the Closing; (c) there shall have been no event having a Material Adverse Effect on Seller; (d) Seller shall have delivered to Buyer and Merger Sub a certificate signed by its Chief Executive Officer and its Chief Financial Officer to the effect that each of the conditions specified above in Section 7.1 and 7.2 (a)-(c) is satisfied in all respects, provided, that such certificate need not address Section 4 of this Agreement; (e) CVC shall have delivered to Buyer and Merger Sub a certificate to the effect that the representations and warranties in Section 4 are true and correct in all material respects as of the date of this Agreement and as of the Closing Date; that CVC has complied with the agreements and covenants applicable to it; and that the condition in Section 7.1(e) has been satisfied as it pertains to CVC; (f) Buyer shall have obtained the proceeds of the financing necessary to provide debt financing of an amount not less than the amount required to refinance all financial indebtedness of Seller and its Subsidiaries under the Credit Agreement, the Senior Subordinated Credit Note and the 10% PIK Subordinated Notes and to provide for the ordinary working capital needs of Seller and its Subsidiaries, in each case on terms and conditions reasonably satisfactory to Buyer, and Buyer shall have received in form and substance reasonably satisfactory to it such releases, discharges and other similar instruments as it may reasonably request to confirm that all creditors under such lending arrangements have released all Security Interests encumbering or otherwise affecting the assets of Seller or any of its Subsidiaries. (g) The total number of Buyer Shares that potentially may not be issued in the Merger as a consequence of one or more Seller Stockholders having the right, as of the Closing, to exercise dissenter's rights under the DGCL shall not exceed Three Hundred Eighty-Five Thousand (385,000). (h) Buyer shall have received letters, in form and substance acceptable to it, from KPMG Peat Marwick LLP and PricewaterhouseCoopers, LLP, dated the Closing Date, substantially to the effect that, on the basis of a review of the Agreement and the Merger contemplated hereby, in such accountants' unqualified opinion, Accounting Principles Board Opinion No. 16 provides that the Merger may be accounted for as a pooling of interests. A-45 46 (i) Buyer shall have received an opinion, dated as of the Closing Date, from its counsel, Nutter, McClennen & Fish, LLP or other counsel acceptable to Buyer, substantially to the effect that, on the basis of facts and representations set forth therein, or set forth in writing elsewhere and referred to therein, for federal income tax purposes the Merger constitutes a reorganization within the meaning of Section 368(a) of the Code. (j) each of Buyer and the Merger Sub shall have received from counsel to Seller opinions as to corporate matters dated as of the Closing Date and addressed to, and in form and substance reasonably satisfactory to, each of Buyer and the Merger Sub; (k) Seller and each Seller Affiliate shall have terminated, to the extent requested by Buyer, the Seller Stockholder Agreement and any and all other similar agreements or arrangements, to which Seller or any Seller Affiliate is a party; (l) CVC, the Management Representative, all other Seller Stockholders (other than Seller Stockholders who have perfected dissenter's rights) and the holder of the CMP Warrant shall have entered into the Agency Agreement; (m) CVC and the Management Representative, in their individual capacities and as agents for the holders of Seller Common Shares and the CMP Warrant, shall have entered into an Escrow Agreement with Buyer and Escrow Agent; (n) Each Seller Affiliate shall have executed and delivered to Buyer the Seller Affiliate Agreement; (o) Each of David R. Beckerman and any other Seller employee who owns a stock or other ownership interest in any Subsidiary of Seller shall have executed and delivered to Buyer an instrument in form and substance reasonably acceptable to Buyer whereby such Person will transfer or agree to transfer, to any Person reasonably designated by Buyer, any and all stock or other ownership interest he or she may have in any Subsidiary of Seller; and (p) Without limiting the scope of any other provision of this Section 7.2 and except for the CMP Warrant, there shall be, as of the Closing, no Contract of any character to which Seller or any of its Subsidiaries is a party or subject representing an option, warrant, right call or similar right to receive or acquire any capital stock of Seller or any of its Subsidiaries, nor shall there be, as of the Closing, any pending or, to Seller's knowledge, threatened any claim or demand for, a direct or indirect equity interest in Seller or any Subsidiary, including, without limitation, any option, warrant, right or call or any stock appreciation, phantom stock, profit participation or similar rights. 7.3 Conditions to Obligations of Seller. The obligation of Seller and Seller Stockholders to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions. (a) the representations and warranties set forth in Section 5 shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date; (b) each of Buyer and the Merger Sub shall have performed and complied with all of its covenants hereunder through the Closing; A-46 47 (c) each of Buyer and the Merger Sub shall have delivered to Seller a certificate to the effect that each of the conditions specified in Section 7.1 and 7.3(a)-(b) is satisfied in all respects; (d) Seller shall have received a letter, in form and substance acceptable to it, from PricewaterhouseCoopers, LLP, dated the Closing Date, substantially to the effect that, on the basis of a review of the Agreement and the Merger contemplated hereby, in such accountants' unqualified opinion, Accounting Principles Board Opinion No. 16 provides that the Merger may be accounted for as a pooling of interests. (e) Seller shall have received from counsel to Buyer and the Merger Sub opinions as to corporate matters dated as of the Closing Date and addressed to, and in form and substance reasonably satisfactory to, Seller; (f) Seller shall have received an opinion, dated as of the Closing Date, from its counsel, Kirkland & Ellis or other counsel acceptable to Seller, substantially to the effect that, on the basis of facts and representations set forth therein, or set forth in writing elsewhere and referred to therein, for federal income tax purposes the Merger constitutes a reorganization within the meaning of Section 368(a) of the Code. (g) Buyer shall have taken all steps necessary to cause to be elected, effective not later than the Effective Time, the Person designated by CVC pursuant to Section 6.9; (h) Buyer shall have refinanced not later than the Effective Time all financial indebtedness of Seller and its Subsidiaries under the Credit Agreement, the Senior Subordinated Credit Note and the 10% PIK Subordinated Notes; and (i) Buyer shall have executed and delivered to CVC the Registration Rights Agreement. SECTION 8. Indemnification. 8.1 Agreements to Indemnify. (a) As used in this Section 8: (i) "Damages" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and attorneys' fees and expenses, and including costs of environmental investigations and/or cleanups ordered by federal, state, local, or foreign governments (or any agencies thereof). (ii) "Indemnifying Party" means the party obligated to provide indemnification under Sections 8.1(b), (c) or (d). (iii) "Indemnified Party" shall mean a party entitled to indemnification under Sections 8.1(b), (c), or (d). (b) On the terms and subject to the limitations set forth in this Section 8 and the Escrow Agreement, the Escrow Agent, solely on behalf of the Persons receiving Buyer Shares in connection with the Merger and the holder of the Escrow Warrant, and not individually, shall indemnify, defend and hold harmless Buyer and its Subsidiaries and their Representatives from and against any and all Damages incurred in connection with or arising out of or resulting from or incident to (i) any breach of any warranty, or the A-47 48 inaccuracy of any representation made by Seller in or pursuant to this Agreement, or (ii) any breach of any other covenant or agreement made by Seller in or pursuant to this Agreement. (c) On the terms and subject to the limitations set forth in this Section 8, Buyer shall indemnify, defend and hold harmless Seller and the Seller Stockholders and their respective Subsidiaries and Representatives from and against any and all Damages incurred in connection with or arising out of or resulting from or incident to (i) any breach of any or warranty, or the inaccuracy of any representation, made by Buyer in or pursuant to this Agreement, or (ii) the breach of any other covenant or agreement made by Buyer in or pursuant to this Agreement. (d) On the terms and subject to the limitations set forth in this Section 8 and the Escrow Agreement, the Escrow Agent, solely on behalf of CVC, and not individually, shall indemnify, defend and hold harmless Buyer and its Subsidiaries and their respective Representatives from and against any and all Damages incurred in connection with or arising out of or resulting from or incident to (i) any breach of any or warranty, or the inaccuracy of any representation, made by CVC in or pursuant to this Agreement, or (ii) the breach of any other covenant or agreement made by CVC in or pursuant to this Agreement. (e) Any payment made by the Escrow Agent on behalf of CVC or any other Seller Stockholder pursuant to the indemnification obligations provided for in this Section 8 shall constitute a reduction in the consideration paid by Buyer in the Merger. Any payment made by Buyer pursuant to the indemnification obligations provided for in this Section 8 shall constitute an addition to the consideration paid by Buyer. 8.2 Limitations on Indemnification. (a) None of the parties hereto shall be liable to the other pursuant to the indemnification provisions of Sections 8.1(b), (c) or (d) unless it receives notice from the other party of its claim for indemnification hereunder within twelve (12) months after the Closing Date; or in the case of the representations of Seller set forth in Sections 3.6 and 3.9 and of Buyer under Sections 5.6 and 5.9 as to which the notice must be received by the later of (x) twelve (12) months after the Closing Date or (y) by April 30, 2000 or such later date as the audit of Buyer's financial statements for the year ended March 31, 2000 is complete. (b) Indemnification payments due under Sections 8.1 shall be reduced by (i) any insurance proceeds received by the Indemnified Party with respect to those Damages which relate to the indemnity claim and which proceeds are received under an insurance policy of Seller or any of its Subsidiaries in effect as of the date of this Agreement; provided that this Section 8.2(b) shall not obligate Buyer or any of its Subsidiaries to obtain any insurance coverage or, if already obtained, to maintain the effectiveness of such insurance or to make any claim thereunder; and (ii) the amount of any Tax savings realized by the indemnified party with respect to those Damages which relate to the indemnity claim (net of any increased Tax Liability which may result from the receipt of an indemnity payment under Sections 8.1(b), 8.1(c) or 8.1(d)); provided that future Tax deductions and Tax Liability will be discounted at the prime rate of interest reported in the Wall Street Journal at the time the indemnification payment pursuant to this Section 8 is made. (c) Pursuant to claims for indemnification of the type referred to in Sections 8.1(b), 8.1(c) or 8.1(d), an Indemnifying Party shall only be liable to an Indemnified Party to the A-48 49 extent the aggregate amount of such claims by the Indemnified Party for indemnification exceeds Two Million Dollars ($2,000,000) in the aggregate (the "Indemnity Threshold"), whereupon only the amount of such claims in excess of the Indemnity Threshold shall be recoverable in accordance with the terms hereof. For purposes of the applying the Indemnity Threshold to Seller Stockholder claims under Section 8.1(c), all Seller Stockholders shall be treated as a single Indemnified Party. (d) If the Merger has occurred, (i) the aggregate liability of the Seller Stockholders for any and all Damages arising from indemnification claims under Section 8.1(b) shall not exceed the value of the Escrow Fund (as defined in the Escrow Agreement), (ii) the aggregate liability of Buyer for any and all Damages arising from indemnification claims under Section 8.1(c) shall not exceed the aggregate Current Market Price of the Escrow Shares as of the Closing Date, and (iii) the liability of CVC for any and all Damages arising from indemnification claims under Section 8.1(b) or Section 8.1(d), in the aggregate, shall not exceed the value of Escrow Account (as defined in the Escrow Agreement) of CVC and each Escrow Account Beneficiary, if any, who is a successor or assignee of CVC under the Escrow Agreement. (e) If the Merger has occurred, any indemnification payment owed by Buyer pursuant to Section 8.1(c) shall be payable solely in additional shares of Buyer Common Stock with the value of such shares being deemed to be equal to the Current Market Price of Buyer Common Stock as of the Closing Date. (f) The indemnification provided for in this Section 8 shall be the sole and exclusive remedy of Buyer, Merger Sub, Seller, the Seller Stockholders and CMP, for any and all Damages incurred in connection with or arising out of or resulting from or incident to any breach of any warranty, or the inaccuracy of any representation made any Party in or pursuant to this Agreement, or any breach of any other covenant or agreement made by any Party in or pursuant to this Agreement or otherwise related to or arising out of the Merger. Without limiting the scope of the immediately preceding sentence, except as expressly set forth in this Section 8 and subject only to the occurrence of the Effective Time, each Party does hereby irrevocably and absolutely waive and release, to the fullest extent permitted under law, any and all claims, demands, damages, debts, liabilities, accounts, reckonings, obligations, costs, expenses, liens, actions and causes of action of every kind and nature whatsoever, which it/he now has, own or holds, or at any time heretofore ever had, owned or held, or could, shall or may hereafter have, own or hold, whether now known or unknown, suspected or unsuspected, against any other Party or other Seller Stockholder incurred in connection with or arising out of or resulting from or incident to any breach of any warranty or the inaccuracy of any Party in or pursuant to this Agreement or any breach of any other covenant or agreement made by any Party in or pursuant to this Agreement or otherwise related to or arising out of this Agreement or the Merger. 8.3 Method of Asserting and Resolving Claims. (a) All claims for indemnification by Buyer pursuant to Section 8.1(b) shall be made and resolved in accordance with the provisions of the Escrow Agreement. (b) Any claim for indemnification pursuant to Section 8.1(c) or (d), shall be made and resolved in accordance with this Section 8.3. A Person seeking indemnification shall, prior to the Termination Date, give written notice of such claim (a "Claim Notice") to the proposed Indemnifying Party. In the case of Claim Notice seeking indemnification pursuant to Section 8.1(c), the Claim Notice shall be given by CVC. Each Claim Notice A-49 50 shall state the amount of claimed Damages and the basis for such claim. Within thirty (30) days after delivery of a Claim Notice, the proposed Indemnifying Party shall provide a written response (the "Response Notice") to the Person who gave the Claim Notice. If no Response Notice is delivered within such thirty (30) day period, the proposed Indemnifying Party shall be deemed to have waived its right to dispute such claim for indemnification. Buyer, on the one hand, and Seller or CVC, on the other hand, shall use good faith efforts to resolve any disputed indemnification claim. If the matter is not resolved within fifteen (15) days of the delivery of the Response Notice, either Party 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 fifteen (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 forty-five (45) days of delivery of 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 sixty (60) days after the appointment of the last arbitrator. The arbitrators' decision shall relate solely to whether the proposed Indemnified Party is entitled to receive the claimed Damages (or a portion thereof) pursuant to the applicable terms of this Agreement. The final decision of the majority of the arbitrators shall be furnished to Seller or CVC, as applicable, and Buyer in writing and shall constitute a conclusive, final and nonappealable determination of the issue in question, binding upon Seller or CVC, as applicable, Buyer and all Seller Stockholders, as applicable, and their successors and assigns. Such decision may be used in a court of law only for the purpose of seeking enforcement of the arbitrators' award. (c) The Indemnified Party shall give prompt written notification to the Indemnifying Party of the commencement of any action, suit or proceeding relating to a third party claim for which indemnification pursuant to this Section 8 may be sought. Within twenty (20) Business Days after delivery of such notification, the Indemnifying Party (which for purposes of this Section 8.3(c) shall mean Seller or, if the merger has occurred, CVC, as agent for the Seller Stockholders, in the case of a claim pursuant to Section 8.1(c)) may, upon written notice thereof to the Indemnified Party, assume control of the defense of such action, suit or proceeding with counsel reasonably satisfactory to the Indemnified Party, provided the Indemnifying Party acknowledges in writing to the Indemnified Party that any Damages that may be assessed against the Indemnified Party in connection with such action, suit or proceeding constitute Damages for which the Indemnified Party shall be entitled to indemnification pursuant to this Section 8. If the Indemnifying Party does not so assume control of such defense, the Indemnified Party shall control such defense. The Person not controlling such defense may participate therein at its own expense. The Person controlling such defense shall keep the other Person (i.e., the Indemnified Party or the Indemnifying Party, as the case may be) advised of the status of such action, suit or proceeding and the defense thereof and shall consider in good faith recommendations made by the other Party with respect thereto. The Indemnified Party shall not agree to any settlement of such action, suit or proceeding without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld. The Indemnifying Party A-50 51 shall not agree to any settlement of such action, suit or proceeding without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld. SECTION 9. Termination and Its Consequences. 9.1 Termination of Agreement. (a) Buyer and Seller may terminate this Agreement by mutual written consent at any time prior to the Effective Time. (b) Either Buyer or Seller may terminate this Agreement by giving written notice to the other Party at any time prior to the Effective Time, if the Closing has not occurred on or before July 31, 1999 by reason of the failure of any condition precedent under Section 7.1, 7.2 or 7.3 hereof, unless the failure of the Closing to occur by such date shall be due to the failure of the Party seeking to terminate this Agreement to perform or observe the covenants and agreements of such Party set forth herein. (c) Either Buyer or Seller may terminate this Agreement by giving written notice to the other Party at any time prior to the Effective Time if any other Party has breached any material representation, warranty, covenant or agreement contained in this Agreement, which breach has not been cured within ten (10) Business Days of receiving notice thereof from the other Party or which breach, by its nature, cannot be cured prior to July 31, 1999, provided, however, that a Party may not terminate this Agreement pursuant to this Section 9.1(c) if such Party is then in breach of any material representation, warranty, covenant or agreement contained in this Agreement. (d) Buyer may terminate this Agreement at any time after Buyer Stockholder Approval is obtained if (i) Seller Stockholder Approval has not been obtained as of the effective date of such termination and (ii) each other condition precedent under Section 7.1 and 7.3 has been, or it is probable will be, satisfied on or before July 31, 1999. 9.2 Effect of Termination. In the event of termination of this Agreement by either Buyer or Seller as provided in Section 9.1, all rights and obligations of the Parties hereunder will terminate without any liability of any Party to any other Party, except (i) Sections 6.6(d) and 9.2 and the liability to pay the Termination Fee in accordance with Section 9.3, if applicable, will survive any termination of this Agreement and (ii) notwithstanding anything to the contrary contained in this Agreement, any termination of this Agreement will not relieve or release any Party from any liability or damages arising out of its breach of any provision of this Agreement. 9.3 Termination Fee. (a) If Buyer terminates this Agreement either (i) pursuant to Section 9.1(c) after the deadline for Seller Stockholder Approval specified in Section 6.2(d), if either Seller or CVC materially breached its covenant to use its best efforts to obtain Seller Stockholder Approval and as of the effective date of such termination Seller Stockholder Approval has not been obtained, or (ii) pursuant to Section 9.1(d), Seller shall, within three (3) Business Days after the effectiveness of such termination, pay to Buyer the Termination Fee in immediately available funds. (b) If Seller terminates this Agreement because of the failure to obtain Seller Stockholder Approval on or before July 31, 1999, Seller shall, prior to and as a A-51 52 precondition of the effectiveness of such termination, pay to Buyer the Termination Fee in immediately available funds. (c) The "Termination Fee" shall be equal to Five Million Dollars ($5,000,000). SECTION 10. Miscellaneous. 10.1 Representations and Survival. The Parties make no other representations or warranties to each other except as expressly set forth in this Agreement. Except as expressly provided in Section 8, none of the representations, warranties, and covenants of the Parties will survive the Effective Time. 10.2 No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns, except as expressly provided in Section 8 with respect to Buyer's obligation to indemnify the Seller Stockholders as represented through CVC. 10.3 Entire Agreement. This Agreement (including the Schedules) and other documents referenced herein as exhibits hereto constitute the entire agreement between the Parties and supersedes any prior understanding, agreement, or representation by or between the Parties, written or oral, to the extent they relate in any way to the subject matter, including without limitation those certain confidentiality agreements entered into prior to the date of this Agreement. 10.4 Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party. 10.5 Counterparts and Delivery. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. The delivery of a signature page of this Agreement by one Party to the each of the other Parties via facsimile transmission shall constitute the execution and delivery of this Agreement by the transmitting Party. 10.6 Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given two Business Days after it is sent either by certified mail or FedEx or similar overnight courier service, and addressed to the intended recipient as set forth below: A-52 53 If to Seller: Copy to (which shall not constitute notice): PTI, Inc. Kirkland & Ellis c/o Polyfibron Technologies, Inc. Citicorp Center 900 Middlesex Turnpike 153 East 53rd Street Billerica, MA 01821-3946 New York, NY 10022-4675 Fax: (508) 439-2105 Fax: (212) 446-4900 Attention: David R. Beckerman Attention: Kirk A. Radke, Esq. Chief Executive Officer If to Buyer or the Merger Sub: Copy to (which shall not constitute notice): MacDermid, Incorporated Nutter, McClennen & Fish, LLP 245 Freight Street One International Place Waterbury, CT 06702 Boston, MA 02110-2699 Fax: (203) 575-5630 Fax: (617) 973-9748 Attention: John L. Cordani, Esq. Attention: Michael E. Mooney, Esq. General Counsel and Secretary and Michael K. Krebs, Esq. If to CVC: Copy to (which shall not constitute notice): Citicorp Venture Capital, Ltd. Kirkland & Ellis 399 Park Avenue Citicorp Center New York, NY 10022 153 East 53rd Street Fax: (212) 888-2940 New York, NY 10022-4675 Attention: Joseph Silvestri Fax: (212) 446-4900 Attention: Kirk A. Radke, Esq.
Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice of the change in the manner herein set forth. 10.7 Governing Law. 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. 10.8 Consent to Jurisdiction. EACH PARTY 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 AGREEMENT, THE AGENCY AGREEMENT, THE ESCROW AGREEMENT, THE REGISTRATION RIGHTS AGREEMENT, THE SELLER AFFILIATE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY ANY OF THE FOREGOING. EACH PARTY HEREBY IRREVOCABLY AGREES, ON BEHALF OF ITSELF AND ON BEHALF OF SUCH PARTY'S SUCCESSORS AND PERMITTED ASSIGNS, THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN ANY SUCH A-53 54 COURT AND IRREVOCABLY WAIVES ANY OBJECTION SUCH PERSON 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. 10.9 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT THEY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE AGENCY AGREEMENT, THE ESCROW AGREEMENT, THE REGISTRATION RIGHTS AGREEMENT, THE SELLER AFFILIATE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY ANY OF THE FOREGOING. 10.10 Amendments and Waivers. The Parties may mutually amend any provision of this Agreement at any time prior to the Effective Time with the prior authorization of their respective boards of directors. No amendment or other modification of any provision of this Agreement and no waiver of any provision hereof or any right or benefit hereunder shall be valid unless the same shall be in writing and signed by each of the Parties. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 10.11 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context otherwise requires. The word "including" shall mean including without limitation. The terms "herein", "hereunder", and terms of similar import refer to this Agreement as a whole and not to the specific Section or Article in which they are used. The phrase "to the knowledge" of a Party (and phrases of similar import) shall mean to the actual knowledge, after reasonable inquiry, of the executive officers of the Party, as applicable. The Exhibits and Schedule identified in this Agreement are incorporated herein by reference and made a part hereof. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 10.12 Time is of the Essence; Computation of Time. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder shall fall upon a Saturday, Sunday, or any date on which banks in New York, New York are authorized to be closed, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a Business Day. 10.13 Specific Performance. Each of the Parties acknowledges that the rights created hereby are unique and recognizes and affirms that in the event of a breach of this Agreement irreparable harm would be caused, money damages may be inadequate and an aggrieved party may have no adequate remedy at law. Accordingly, each of the Parties agrees that the other Party shall have the right, in addition to any other rights and remedies existing in its favor at law or in equity, to enforce its rights and the obligations of the other party hereunder not only by an action or actions for damages but also by an A-54 55 action or actions for specific performance, injunctive and/or other equitable relief (without posting of bond or other security). [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] A-55 56 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. MACDERMID, INCORPORATED By: /s/ JOHN L. CORDANI ----------------------------------------- Name: John L. Cordani Title: Secretary MCD ACQUISITION CORP. By: /s/ JOHN L. CORDANI ----------------------------------------- Name: John L. Cordani Title: Vice President PTI, INC. By: /s/ DAVID R. BECKERMAN ----------------------------------------- Name: David R. Beckerman Title: President CITICORP VENTURE CAPITAL, LTD. By: /s/ JOSEPH M. SILVESTRI ----------------------------------------- Name: Joseph M. Silvestri Title: Vice President A-56 EX-99.3 4 FIRST AMENDMENT 1 EXHIBIT 3 APPENDIX B FIRST AMENDMENT THIS FIRST AMENDMENT (the "Amendment") is entered into as of July 27, 1999 by and among MacDermid, Incorporated, a Connecticut corporation ("Buyer"), MCD Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Buyer ("Merger Sub"), PTI, Inc., a Delaware corporation ("Seller"), and Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), to amend that certain Plan and Agreement of Merger entered into as of February 18, 1999 (as amended hereby, the "Merger Agreement"), by and among Buyer, Merger Sub, Seller and CVC. Buyer, Merger Sub, Seller and CVC are collectively referred to as the "Parties." Any capitalized term used in this Amendment and not otherwise defined shall have the meaning ascribed to that term in the Merger Agreement. WHEREAS, the Parties desire to extend the date on which the Parties may terminate the Merger Agreement and to effectuate certain other amendments to the Merger Agreement in accordance with the terms and conditions set forth herein. NOW THEREFORE, in consideration of the mutual agreements set forth herein and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged the Parties agree as follows: A. The Merger Agreement is hereby amended, effective as of the date hereof: 1. By deleting the section reference "2.4(e)" from Section 2.4(h) of the Merger Agreement and substituting in the place thereof section reference "2.4(e)(ii)." 2. By adding the following sentence to the end of Section 6.3 to the Merger Agreement: "The Parties shall use all commercially reasonable efforts, and will negotiate in good faith with each other and the FTC, to persuade the FTC to approve the Merger in exchange for a settlement with the FTC that is consistent in all material respects with the terms set forth on Schedule 6.3 to this Agreement and containing such other terms and conditions as the Parties and the FTC may agree; provided that nothing contained in this Agreement shall obligate Buyer to accept a settlement with the FTC that imposes any material term or condition that is (i) not expressly specified in Schedule 6.3 and (ii) unacceptable to Buyer in Buyer's reasonable discretion. Seller shall use all commercially reasonable efforts to negotiate and enter into a definitive agreement for the sale of the portion of its business described on Schedule 6.3 to a purchaser that Buyer and Seller reasonably believe will be acceptable to the FTC, which sale may be contingent on the completion of the Merger; and the other Parties shall use all commercially reasonable efforts to cooperate with Seller in negotiating such sale. A Party will be deemed to have satisfied its obligations under this Section to use all commercially reasonable efforts to obtain the FTC's approval of the Merger if the Party complies with its obligations under the two immediately preceding sentences. FTC approval that is conditioned upon a settlement on the terms described in Schedule 6.3 hereto shall not by itself be deemed to prevent the closing condition specified in Section 7.1(b) from being satisfied. 3. Seller's actions in entering into one or more agreements necessary for the sale of the portion of its business consistent with Section 6.3 and Schedule 6.3, and all actions by Seller and CVC reasonably necessary in connection therewith, shall not, individually or in the aggregate, (i) constitute a breach by either Seller or CVC of B-1 2 any of their respective obligations under Section 6.4 or Section 6.8 of the Merger Agreement or (ii) prevent the satisfaction of any of the closing conditions in Section 7.1, Section 7.2 or Section 7.3 of the Merger Agreement. 4. By deleting in its entirety Section 6.4(e) of the Merger Agreement and substituting in the place thereof the following: "(e) not make any single capital expenditure or series of capital expenditures during the term of this Agreement outside the Ordinary Course without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed." 5. By deleting in its entirety Section 6.4(i) of the Merger Agreement and substituting in the place thereof the following: "(i) deliver to Buyer, within fifteen (15) Business Days of each month end from the date hereof through the Closing Date, Seller's consolidated unaudited balance sheets, income statements and cash flow statements as of and for the immediately preceding month, all consistent with the applicable requirements of Section 3.6; 6. By deleting in its entirety Section 6.4(f) of the Merger Agreement and substituting in the place thereof the following: "(f) not enter into any new line of business without Buyer's consent, which consent shall not be unreasonably withheld, conditioned or delayed and shall be deemed to be given if Buyer does not respond to Seller in writing within ten (10) Business Days after receipt of a written request from Seller; 7. By deleting in its entirety Section 6.4(m) of the Merger Agreement and substituting in the place thereof the following: "(m) not, without Buyer's consent, which consent shall not be unreasonably withheld, conditioned or delayed and shall be deemed to be given if Buyer does not respond to Seller in writing within ten (10) Business Days after receipt of a written request from Seller, (i) acquire by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof (or any interest therein), or form any subsidiary or (ii) solicit or negotiate any Acquisition Proposal with respect to any other Person; provided, however, that Buyer shall have no obligation whatsoever to consent to any action by Seller or CVC regarding an Acquisition Proposal with respect to which Seller is the target company and which is not permitted under Section 6.8 of this Agreement; 8. By deleting all references to the date "July 31, 1999" from Section 9 of the Merger Agreement and substituting in the place thereof the date "September 30, 1999." 9. By correcting Seller's facsimile number by replacing the number "508-439-2105" from Section 10.6 of the Merger Agreement and substituting in the place thereof the facsimile number "978-439-2105." B-2 3 10. By adding the following names to Schedule 1 to the Merger Agreement: H. Theodore Miller, Jr. Kai Wenk-Wolff Thomas O. Gavin 11. By adding the following disclosure to paragraphs (xiii) and (xiv) of Schedule 3.8 to the Merger Agreement: "Stay bonuses for 6 SAP specialists (none of whom hold PTI stock) totalling $240,000 in the aggregate and to be paid after January 1, 2002 if the SAP specialist stays with PTI at least through January 1, 2002." 12. By deleting the disclosure to paragraph (xvi) of Schedule 3.8 to the Merger Agreement and substituting in the place thereof the following disclosure: "Pursuant to a Stock Purchase Agreement among Polyfibron Technologies ("Buyer"), Nippon Paint (USA) Inc. and Nippon Paint Co., Ltd. ("Seller") executed January 20, 1999, Buyer has consummated the transaction and purchased the stock of Supratech, Inc. Pursuant to a Letter of Intent between Polyfibron Technologies ("Buyer") and International Composites Corporation, Inc. ("Seller") executed December 16, 1998, Buyer has consummated the transaction and purchased the stock of International Composites Corporation, Inc." 13. By adding the following name to Schedule 3.11(A)(i) of the Merger Agreement under "Change of Control Contracts:" Kai Wenk-Wolff. 14. By adding the following name to Schedule 3.11(G) of the Merger Agreement under "Change of Control Contracts:" Kai Wenk-Wolff. 15. By deleting the disclosure "NAPP Quality Council (seven individuals)" in Schedule 3.11(G) of the Merger Agreement under "Severance Contracts/Stay Bonuses for NAPP" and substituting in the place thereof the following disclosure: "Two NAPP executives." 16. By adding the following contracts to Schedule 3.21(A)(ix) of the Merger Agreement: "Supply Contract with Precision Coating, Inc. for a three-year period providing for the supply of certain film products." "Sales Agreement with Lancaster Newspapers, Inc. for a three-year period providing for the sale of Polyfibron's Letterflex Platemaking materials." B. Each of the Parties represents to the other that (i) it has full corporate power and authority to execute and deliver this Amendment and to perform its obligations hereunder, (ii) the execution and delivery of this Amendment by such Party have been duly and validly approved its Board of Directors and no other corporate proceedings on the part of such Party are necessary in connection with this Amendment, except for shareholder approval of the Merger Agreement as amended hereby by the shareholders of Buyer and the holders of Seller voting common stock, and (iii) this Amendment has been duly and validly executed and delivered by such Party and constitutes a valid and binding obligation of such Party, enforceable against such Party in accordance with its terms. C. Each Party (an "Acknowledging Party") agrees that no action taken or omitted to be taken by any other Party and known to the Acknowledging Party through and including B-3 4 the date of this Amendment with respect to preparation and prosecution of either the Joint Proxy Statement-Prospectus or any submission to the FTC or DOJ in connection with the HSRA shall constitute a basis for any Acknowledging Party to claim that another Party has breached any of its obligation under the Agreement, including without limitation any obligation set forth in Section 6.1, Section 6.2 or Section 6.3 of the Merger Agreement. Each Acknowledging Party further agrees that no statement, claim or allegation made by any Governmental Entity (and known to the Acknowledging Party) in connection with SEC's review of the Joint Proxy Statement-Prospectus or the FTC's review of the Merger under the HSRA, including without limitation any allegation regarding the conduct of any Party unrelated to the Merger or the Merger Agreement or the conduct underlying or alleged to be underlying such statement, claim or allegation, and no response by a Party (and known to the Acknowledging Party) to any such statement, claim or allegation, shall constitute a basis for any Acknowledging Party to claim that another Party has breached any of its representations, warranties, covenants or agreements under the Merger Agreement. D. Except as expressly provided by this Amendment, the Merger Agreement remains in full force and effect, and except as expressly provided by this Amendment, this Amendment shall not constitute a modification or waiver of any other provision of the Merger Agreement. E. This Amendment may be executed in counterparts, all of which shall be considered one and the same instrument, each being deemed to constitute an original, and shall be effective when one or more counterparts have been signed by each Party and delivered to the other Parties, which delivery may be made by facsimile transmission. F. This Agreement shall be governed by, and interpreted in accordance with the laws of the State of Connecticut, without regard to any applicable conflicts of law. G. In the event of any inconsistency between the terms of this Amendment and the Merger Agreement, this Amendment shall govern. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] B-4 5 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed, under seal, in counterparts by their duly authorized officers, as of the date first above written. MACDERMID, INCORPORATED By: /s/ JOHN L. CORDANI --------------------------------------------- Name: John L. Cordani Title: Secretary MCD ACQUISITION CORP. By: /s/ JOHN L. CORDANI --------------------------------------------- Name: John L. Cordani Title: Vice President PTI, INC. By: /s/ DAVID R. BECKERMAN --------------------------------------------- Name: David R. Beckerman Title: President CITICORP VENTURE CAPITAL, LTD. By: /s/ JOSEPH M. SILVESTRI --------------------------------------------- Name: Joseph M. Silvestri Title: Vice President B-5 EX-99.4 5 SECOND AGREEMENT 1 EXHIBIT 4 EXECUTION VERSION SECOND AMENDMENT THIS SECOND AMENDMENT (the "Amendment") is entered into as of September 13, 1999 by and among MacDermid, Incorporated, a Connecticut corporation ("Buyer"), MCD Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Buyer ("Merger Sub"), PTI, Inc., a Delaware corporation ("Seller"), and Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), to amend that certain Plan and Agreement of Merger entered into as of February 18, 1999 and amended by the First Amendment thereto dated as of July 27, 1999 (as further amended hereby, the "Merger Agreement"), by and among Buyer, Merger Sub, Seller and CVC. Buyer, Merger Sub, Seller and CVC are collectively referred to as the "Parties." Any capitalized term used in this Amendment and not otherwise defined shall have the meaning ascribed to that term in the Merger Agreement. WHEREAS, the Parties desire to amend the Merger Agreement to, among other things, extend the date on which the Parties may terminate the Merger Agreement; NOW THEREFORE, in consideration of the mutual agreements set forth herein and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged the Parties agree as follows: A. The Merger Agreement is hereby amended, effective as of the date hereof: 1. By deleting all references to the date "September 30, 1999" from Section 9 of the Merger Agreement and substituting in the place thereof the date "October 29, 1999." B. Each of the Parties represents to the other that (i) it has full corporate power and authority to execute and deliver this Amendment and to perform its obligations hereunder, (ii) the execution and delivery of this Amendment by such Party have been duly and validly approved its Board of Directors and no other corporate proceedings on the part of such Party are necessary in connection with this Amendment, except for shareholder approval of the Merger Agreement as amended hereby by the shareholders of Buyer and the holders of Seller voting common stock, and (iii) this Amendment has been duly and validly executed and delivered by such Party and constitutes a valid and binding obligation of such Party, enforceable against such Party in accordance with its terms. C. Each Party (an "Acknowledging Party") agrees that no action taken or omitted to be taken by any other Party and known to the Acknowledging Party through and including the date of this Amendment with respect to preparation and prosecution of either the Joint Proxy Statement-Prospectus or any submission to the FTC or DOJ in connection with the HSRA shall constitute a basis for any Acknowledging Party to claim that another Party has breached any of its obligation under the Agreement, including without limitation any obligation set forth in Section 6.1, Section 6.2 or Section 6.3 of the Merger Agreement. Each Acknowledging Party further agrees that no statement, claim or allegation made by any Governmental Entity (and known to the 2 EXECUTION VERSION Acknowledging Party) in connection with SEC's review of the Joint Proxy Statement-Prospectus or the FTC's review of the Merger under the HSRA, including without limitation any allegation regarding the conduct of any Party unrelated to the Merger or the Merger Agreement or the conduct underlying or alleged to be underlying such statement, claim or allegation, and no response by a Party (and known to the Acknowledging Party) to any such statement, claim or allegation, shall constitute a basis for any Acknowledging Party to claim that another Party has breached any of its representations, warranties, covenants or agreements under the Merger Agreement. D. Except as expressly provided by this Amendment and the First Amendment, the Merger Agreement remains in full force and effect, and except as expressly provided by this Amendment, this Amendment shall not constitute a modification or waiver of any other provision of the Merger Agreement or the First Amendment. E. This Amendment may be executed in counterparts, all of which shall be considered one and the same instrument, each being deemed to constitute an original, and shall be effective when one or more counterparts have been signed by each Party and delivered to the other Parties, which delivery may be made by facsimile transmission. F. This Agreement shall be governed by, and interpreted in accordance with the laws of the State of Connecticut, without regard to any applicable conflicts of law. G. In the event of any inconsistency between the terms of this Amendment and the Merger Agreement or the First Amendment, this Amendment shall govern. [Remainder of Page Intentionally Left Blank] 2 3 EXECUTION VERSION IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed, under seal, in counterparts by their duly authorized officers, as of the date first above written. MACDERMID, INCORPORATED By: /s/ John L. Cordani ---------------------- Name: John L. Cordani Title: Secretary MCD ACQUISITION CORP. By: /s/ John L. Cordani --------------------- Name: John L. Cordani Title: Vice-President/Secretary PTI, INC. By: /s/ David R. Beckerman ----------------------- Name: David R. Beckerman Title: President/CEO CITICORP VENTURE CAPITAL, LTD. By: /s/ Joseph M. Silvestri ----------------------- Name: Joseph M. Silvestri Title: Vice President 3 EX-99.5 6 THIRD AMENDMENT 1 EXHIBIT 5 EXECUTION THIRD AMENDMENT THIS THIRD AMENDMENT (the "Amendment") is entered into as of October __, 1999 by and among MacDermid, Incorporated, a Connecticut corporation ("Buyer"), MCD Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Buyer ("Merger Sub"), PTI, Inc., a Delaware corporation ("Seller"), and Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), to amend that certain Plan and Agreement of Merger entered into as of February 18, 1999 and amended by the First Amendment thereto (the "First Amendment") dated as of July 27, 1999 and the Second Amendment thereto (the "Second Amendment") dated as of September 13, 1999 (as further amended hereby, the "Merger Agreement"), by and among Buyer, Merger Sub, Seller and CVC. Buyer, Merger Sub, Seller and CVC are collectively referred to as the "Parties." Any capitalized term used in this Amendment and not otherwise defined shall have the meaning ascribed to that term in the Merger Agreement. WHEREAS, the Parties desire to amend the Merger Agreement to, among other things, adjust the number of Buyer Shares issuable in connection with the Merger and to extend the date on which the Parties may terminate the Merger Agreement; NOW THEREFORE, in consideration of the mutual agreements set forth herein and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged the Parties agree as follows: A. The Merger Agreement is hereby amended, effective as of the date hereof: 1. By deleting Section 2.4(e) of the Merger Agreement in its entirety and substituting in the place thereof the following: (e) Conversion of Seller Shares. Subject to the provisions of Section 2.4(h), at and as of the Effective Time, (i) each holder of Seller Preferred Shares then outstanding shall by virtue of the Merger be entitled to receive that number of Buyer Shares, rounded to the nearest thousandth, equal to the quotient obtained by dividing (X) the aggregate liquidation value of the Preferred Shares held by such holder plus any and all accumulated and unpaid dividends thereon to but not including the Effective Time by (Y) the Current Market Price as of the Closing Date (the Buyer Shares delivered pursuant to this Section 2.4(e)(i) to all holders of Seller Preferred Shares being collectively referred to as the "Preferred Exchange Shares"); and (ii) each holder of Seller Common Shares then outstanding, other than any holder of Dissenting Shares, shall by virtue of the Merger be entitled to receive that number of Buyer Shares, rounded to the nearest thousandth, which is equal to the product of (X) the Seller Common Ratio applicable to such holder of Seller Common Shares multiplied by (Y) Seven Million (7,000,000) minus the aggregate number of the Preferred Exchange Shares. After the Closing, there shall be no transfers on the stock transfer books of Seller Shares which were issued and 1 2 EXECUTION outstanding at the Effective Time and converted pursuant to the provisions of this Section 2.4(e). After the Effective Time, holders of certificates of Seller Shares shall cease to be, and shall have no rights as, stockholders of Seller, other than to receive Buyer Shares into which such Seller Shares have been converted and, if applicable, fractional share payments pursuant to the provisions hereof. Schedule 2.4(e) to this Agreement illustrates the distribution pursuant to this Agreement of the Buyer Shares and the Buyer Warrants (including the Escrow Shares and the Escrow Warrant) among, respectively, the Seller Stockholders and holder of the CMP Warrant (which is the only option, warrant or similar right to acquire Seller Shares that is outstanding as of the date of this Agreement), assuming solely for purposes of that presentation that (i) there are no Dissenting Shares, (ii) there are no accrued and unpaid dividends on the Seller Preferred Shares as of the Closing Date, and (iii) the Current Market Price as of the Closing Date is equal to $33.375. 2. By deleting Schedule 2.4(e) attached to the Merger Agreement in its entirety and substituting in the place thereof the Schedule 2.4(e) attached hereto. 3. By deleting Section 2.4(h) of the Merger Agreement in its entirety and substituting in the place thereof the following: (h) Escrow Shares. At the Closing, CVC and the Escrow Agent shall enter into the Escrow Agreement, which Escrow Agreement is intended to serve as an adjustment to the aggregate amount of consideration payable to the holders of Seller Common Shares and the CMP Warrant in connection with the Merger. At the Closing, there shall be withheld from each holder of Seller Common Shares a number of Buyer Shares (collectively, the "Escrow Shares") equal to the product, rounded to the nearest whole share, of (X) the number of Buyer Shares such holder would have otherwise received pursuant to Section 2.4(e) multiplied by (Y) the Escrow Ratio. The "Escrow Ratio" shall be the quotient obtained by dividing (X) One Hundred Twenty-Seven Thousand (127,000) by (Y) the arithmetic difference between Seven Million (7,000,000) and the aggregate number of the Preferred Exchange Shares. At the Closing, Buyer shall deposit with the Escrow Agent one or more stock certificates representing the Escrow Shares. 4. By deleting Section 2.5(a) of the Merger Agreement in its entirety and substituting in the place thereof the following: (a) Warrant Shares. As used in this Agreement, the term "Warrant Shares" means that number, rounded up to the nearest whole integer, which is equal to the product of (X) the Seller Common Ratio applicable to the CMP Warrant, treating 2 3 EXECUTION CMP as a holder of Seller Common Shares, multiplied by (Y) Seven Million (7,000,000) minus the aggregate number of the Preferred Exchange Shares. 5. By deleting Section 7.2(g) of the Merger Agreement in its entirety and substituting in the place thereof the following: (g) The total number of Buyer Shares that potentially may not be issued in the Merger as a consequence of one or more Seller Stockholders having the right, as of the Closing, to exercise dissenter's rights under the DGCL shall not exceed Three Hundred Eighty-Five Thousand (350,000). 6. By deleting all references to the date "October 29, 1999" from Section 9 of the Merger Agreement and substituting in the place thereof the date "December 15, 1999." B. Buyer and Seller shall use all commercially reasonable efforts to (a) prepare a revised Joint Proxy Statement-Prospectus or a supplement to the Joint Proxy Statement-Prospectus dated August 30, 1999, as Buyer with the advice of counsel shall determine (which documents are collectively referred to as the "Revised Proxy Statement") and (b) file the Revised Proxy Statement in one or more post-effective amendments (collectively, the "Post-Effective Amendment") to the S-4 Registration Statement (No. 333-86129) and have the Post-Effective Amendment declared effective under the Securities Act as promptly as practicable after the date of this Amendment. All references in the Merger Agreement to the "Joint Proxy Statement-Prospectus" and the "S-4 Registration Statement" shall include the "Revised Proxy Statement" and "Post-Effective Amendment," respectively, unless the context otherwise requires. Seller and, if required pursuant to the NYSE Rule, Buyer shall cause the Revised Proxy Statement to be mailed to their respective stockholders as promptly as practicable after the Post-Effective Amendment is declared effective under the Securities Act. All references in the Merger Agreement to "Seller Stockholder Approval" shall mean the affirmative vote, in favor of a proposal to approve the Merger Agreement as amended by this Amendment, at a meeting or by written consent after the effective date of the Post-Effective Amendment, of the holders of a majority of each class of Seller Voting Shares entitled to vote thereon in accordance with the certificate of incorporation and bylaws of Seller and Section 251(c) of the DGCL. To the extent Buyer is required pursuant to the NYSE Rule to resolicit Buyer Stockholder Approval, all references in the Merger Agreement to Buyer Stockholder Approval shall mean the affirmative vote, in favor of a proposal to approve the Merger Agreement as amended by this Amendment, at a meeting after the effective date of the Post-Effective Amendment, of the holders of a majority of the outstanding shares of Buyer Common Stock in accordance with the certificate of incorporation and bylaws of Buyer and Section 251(c) of the DGCL. 3 4 EXECUTION C. Except as expressly provided by this Amendment, the First Amendment and the Second Amendment, the Merger Agreement remains in full force and effect, and except as expressly provided by this Amendment, this Amendment shall not constitute a modification or waiver of any other provision of the Merger Agreement, the First Amendment or the Second Amendment. D. This Amendment may be executed in counterparts, all of which shall be considered one and the same instrument, each being deemed to constitute an original, and shall be effective when one or more counterparts have been signed by each Party and delivered to the other Parties, which delivery may be made by facsimile transmission. E. This Agreement shall be governed by, and interpreted in accordance with the laws of the State of Connecticut, without regard to any applicable conflicts of law. F. In the event of any inconsistency between the terms of this Amendment and the Merger Agreement, the First Amendment or Second Amendment, this Amendment shall govern. G. At the request of any Party, the Parties shall amend and restate the Merger Agreement in its entirety to reflect this Amendment and the First Amendment and Second Amendment. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4 5 EXECUTION IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed, under seal, in counterparts by their duly authorized officers, as of the date first above written. MACDERMID, INCORPORATED By:/s/ Daniel H. Leever ----------------------- Name: Daniel H. Leever Title: President MCD ACQUISITION CORP. By:/s/ John L. Cordani ----------------------- Name: John L. Cordani Title: Secretary PTI, INC. By:/s/ David R. Beckerman ----------------------- Name: David R. Beckerman Title: President/CEO CITICORP VENTURE CAPITAL, LTD. By:/s/ Joseph M. Silvestri ----------------------- Name: Joseph M. Silvestri Title: Vice President 5 EX-99.6 7 FOURTH AMENDMENT 1 EXHIBIT 6 EXECUTION VERSION FOURTH AMENDMENT THIS FOURTH AMENDMENT (the "Amendment") is entered into as of December 17, 1999 by and among MacDermid, Incorporated, a Connecticut corporation ("Buyer"), MCD Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Buyer ("Merger Sub"), PTI, Inc., a Delaware corporation ("Seller"), and Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), to amend that certain Plan and Agreement of Merger entered into as of February 18, 1999 and amended by the First Amendment thereto (the "First Amendment") dated as of July 27, 1999, the Second Amendment thereto (the "Second Amendment") dated as of September 13, 1999 and the Third Amendment thereto (the "Third Amendment") dated as of October 29, 1999 (as further amended hereby, the "Merger Agreement"), by and among Buyer, Merger Sub, Seller and CVC. Buyer, Merger Sub, Seller and CVC are collectively referred to as the "Parties." Any capitalized term used in this Amendment and not otherwise defined shall have the meaning ascribed to that term in the Merger Agreement. WHEREAS, the Parties desire to amend the Merger Agreement to, among other things, extend the date on which the Parties may terminate the Merger Agreement; NOW THEREFORE, in consideration of the mutual agreements set forth herein and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: A. The Merger Agreement is hereby amended, effective as of the date hereof: 1. By modifying Schedule 3.10(a) of the Agreement to add the additional items listed on the Supplemental Schedule 3.10(a) attached hereto. 2. By deleting all references to the date "December 15, 1999" from Section 9 of the Merger Agreement and substituting in the place thereof the date "December 28, 1999." B. Except as expressly provided by this Amendment, the First Amendment, the Second Amendment and the Third Amendment, the Merger Agreement remains in full force and effect, and except as expressly provided by this Amendment, this Amendment shall not constitute a modification or waiver of any other provision of the Merger Agreement, the First Amendment, the Second Amendment or the Third Amendment. C. This Amendment may be executed in counterparts, all of which shall be considered one and the same instrument, each being deemed to constitute an original, and shall be effective when one or more counterparts have been signed by each Party and delivered to the other Parties, which delivery may be made by facsimile transmission. D. This Agreement shall be governed by, and interpreted in accordance with the laws of, the State of Connecticut, without regard to any applicable conflicts of law. 2 EXECUTION VERSION E. In the event of any inconsistency between the terms of this Amendment and the Merger Agreement, the First Amendment, the Second Amendment or the Third Amendment, this Amendment shall govern. F. At the request of any Party, the Parties shall amend and restate the Merger Agreement in its entirety to reflect this Amendment and the First Amendment, Second Amendment and Third Amendment. [balance of page intentionally left blank] 2 3 EXECUTION VERSION IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed, under seal, in counterparts by their duly authorized officers, as of the date first above written. MACDERMID, INCORPORATED By:/s/ John L. Cordani ---------------------------------- Name: John L. Cordani Title: Secretary MCD ACQUISITION CORP. By:/s/ John L. Cordani ---------------------------------- Name: John L. Cordani Title: Vice-President/Secretary PTI, INC. By:/s/ David R. Beckerman ---------------------------------- Name: David R. Beckerman Title: President/CEO CITICORP VENTURE CAPITAL, LTD. By:/s/ Joseph M. Silvestri ---------------------------------- Name: Joseph M. Silvestri Title: Vice President 3 4 EXECUTION VERSION SUPPLEMENTAL SCHEDULE 3.10(a) Reference is made to the Plan and Agreement of Merger dated as of February 18, 1999 by and among MacDermid, Incorporated, MCD Acquisition Corp., PTI, Inc., and Citicorp Venture Capital, Ltd. (as amended, the "Merger Agreement"). The following items are deemed to be included as paragraphs 14 and 15 to Schedule 3.10(a) to the Merger Agreement: 14. A report issued by Harress Pickel Consult. dated May 4, 1999 with respect to Polyfibron Rollin, S.A., 1, Grand'Rue, Steinbach, France. 15. A report was issued by HRP Associates, Inc. dated May 1999 with respect to Polyfibron Technologies, Inc, 10 Harmony Street, Adams, MA. 3 EX-99.7 8 ESCROW AGREEMENT 1 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"), David Beckerman (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. 2 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 - ---------------------- (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. -2- 3 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. -3- 4 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 -4- 5 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. -5- 6 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 -6- 7 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 -7- 8 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 -8- 9 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, -9- 10 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 -10- 11 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 -11- 12 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: 245 Freight Street Waterbury, Connecticut 06702 Attention: John Cordani, Esq. If to CVC: Citicorp Venture Capital, Ltd. 399 Park Avenue New York, NY 10022 Attention: John Silvestri If to Management Representative: -12- 13 PTI, Inc. c/o Polyfibron Technologies, Inc. 900 Middlesex Turnpike Billerica, MA 01821-3946 If to Escrow Agent: State Street Bank and Trust Company Two International Place Boston, Massachusetts 02110 Attention: Corporate Trust Department, Fourth Floor Attention: Citicorp Venture Capital/ MacDermid Fax: 617-662-1463 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 #: 9903-990-1 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 -13- 14 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 -14- 15 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] -15- 16 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written. MACDERMID, INCORPORATED By: /s/ John L. Cordani ----------------------------- Title: Secretary CITICORP VENTURE CAPITAL, LTD., on its own behalf and as agent and attorney-in-fact for the Outside Stockholders By: /s/ Joseph M. Silvestri ----------------------------- Title: Vice President /s/ David R. Beckerman -------------------------------- David Beckerman, 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 Two International Place Boston, Massachusetts 02110 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., David Beckerman and MacDermid, 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 -17- 18 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, -18- 19 EXHIBIT B TO ESCROW AGREEMENT State Street Bank and Trust Company Two International Place Boston, Massachusetts 02110 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., David Beckerman and MacDermid, 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, -19- 20 SCHEDULE 1-A MANAGEMENT STOCKHOLDERS AND OUTSIDE STOCKHOLDERS 1. MANAGEMENT STOCKHOLDERS David R. Beckerman Gerard Loeb Thomas C. Weaver Edward T. Murphy Shojiro Makino Thomas O. Gavin John Rastetter Etienne Igersheim Hugues Serain Reto Buchli Michael M. Yang H. Theodore Miller Kai Wenk-Wolff Terence Smith Alan T. Michaud Douglas H. Rich Thomas W. Pietrocini 2. OUTSIDE STOCKHOLDERS CCT Partners I, L.P. Citicorp Mezzanine Partners, L.P. Bruce C. Bruckmann William T. Comfort, Jr./63 BR Partnership Richard M. Cashin Stephen C. Sherrill David F. Thomas Joseph M. Silvestri Harold O. Rosser Michael A. Delaney Thomas McWilliams Stephen Edwards James Urry Richard E. Mayberry Saleem Muqaddam Davie Howe -20- 21 Noelle C. Doumar John Weber David Kolb Robert N. Pokelwaldt Robert W. Pokelwaldt Ann P. McDowell James W. Stevens -21- 22 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 Bruce C. Bruckmann 2148 1.69 63 BR Partnership 794 0.625 Richard M. Cashin 794 0.625 Stephen C. Sherrill 794 0.625 David F. Thomas 794 0.625 Joseph M. Silvestri 726 0.571 Harold O. Rosser 545 0.429 Michael A. Delaney 363 0.286 Thomas McWilliams 363 0.286 Stephen Edwards 242 0.19 James Urry 242 0.19 Richard E. Mayberry 182 0.143 Saleem Muqaddam 182 0.143 David Howe 182 0.143 Noelle C. Doumar 121 0.095 John Weber 121 0.095 Robert W. Pokelwaldt 190 0.149 Ann P. MCDowell 190 0.149 David L. Kolb 379 0.298 James W. Stevens 379 0.298 David Beckerman 3791 2.986 Gerard Loeb 2527 1.989 Thomas Weaver 2022 1.592 Edward Murphy 1264 0.995 Shokiro Makino 1264 0.995 Thomas Gavin 1264 0.995 John Rastatter 1264 0.995 Etiennne Igersheim 1264 0.995 Hugues Serain 1264 0.995 Reto Buchli 505 0.397 Michael Yang 505 0.397 H. Theodore Miller 505 0.397 Kai WenkWolff 632 0.497 Terrence Smith 505 0.398 Allan Michaud 505 0.398 Douglas Rich 505 0.398 Thomas Pietrochinni 2527 1.99 TOTAL 127,000 99.985
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