As filed with the Securities and Exchange Commission on January 2, 2014
Registration No. 333-192778
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No.
1
To
FORM S-4
REGISTRATION STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
Platform Specialty Products Corporation
(Exact Name of Registrant as Specified in Its Charter)
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The British Virgin Islands*
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2890
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37-1744899
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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5200 Blue Lagoon Drive, Suite 855
Miami, FL 33126
(203)
575-5700
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Frank Monteiro
5200 Blue
Lagoon Drive, Suite 855
Miami, FL 33126
Phone: (203) 575-5700 /Fax: (203) 575-7970
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
Donn
Beloff, Esq.
Kara L. MacCullough, Esq.
Greenberg Traurig, P.A.
401 East Las Olas Boulevard, Suite 2000
Fort Lauderdale, FL 33301
Phone: (954) 765-0500/Fax: (954) 765-1477
Approximate date of
commencement of proposed sale to the public:
From time to time after the effective date of this registration statement.
If the securities being
registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box
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If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
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If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
x
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(Do not check if a smaller reporting company)
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Smaller reporting company
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Calculation of Registration Fee
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Title of each class of
securities to be registered
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Amount
to be
registered
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Proposed
maximum
offering
price
per unit
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Proposed
maximum
aggregate
offering price
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Amount of
registration fee
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Common Stock, par value $0.01 per share
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132,913,266(1)
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$10.46(2)
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$1,
390,272,762.36(2)
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$179,067.13
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Warrants
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48,742,662
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$0.18(3)
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$8,
773,679.16(3)
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$1,130.50
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Series A Preferred Stock
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2,000,000
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— (4)
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—
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$—
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Total
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$1,399,046,441.52
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$180,197.63(5)
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*
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This registration statement is being filed in connection with a domestication under Section 388 of the General Corporation Law of the State of Delaware and a discontinuance under Section 184 of the BVI
Business Companies Act, 2004 (as amended), pursuant to which the Registrant’s jurisdiction of incorporation will be changed from the British Virgin Islands to the State of Delaware.
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(1)
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The shares to be registered include (1) up to 1,933,636 shares of common stock of Platform Specialty Products Corporation to the MacDermid, Incorporated Profit Sharing and Employee Savings Plan in exchange for
common and preferred stock of MacDermid, Incorporated held by such Plan, (2) 103,576,300 shares of common stock issuable upon the domestication in exchange of the Registrant’s ordinary shares, (3) 2,000,000 shares of common stock
issuable upon conversion of the Registrant’s outstanding Series A Preferred Stock subsequent to the domestication, (4) 8,905,776 shares of common stock issuable upon conversion of the outstanding Platform Delaware Holdings, Inc. common stock
which is convertible into the Registrant’s common stock at the option of the holder at any time after the earlier of October 31, 2014 or a change of control of Platform, and (5) 16,497,554 shares of common stock issuable upon exercise of the
Registrant’s outstanding warrants and options subsequent to the domestication.
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(2)
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Estimated solely for the purpose of calculating the registration fee, based on the closing price of the ordinary shares of Platform Acquisition Holdings Limited on the London Stock Exchange (the “LSE”) on
October 10, 2013 ($10.46 per share), which is the date such ordinary shares stopped trading on the LSE, in accordance with Rule 457(f)(1).
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(3)
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Estimated solely for the purpose of calculating the registration fee, based on the closing price of the warrants of Platform Acquisition Holdings Limited on the LSE on October 10, 2013 ($0.18 per share), which is
the date such warrants stopped trading on the LSE, in accordance with Rule 457(f)(1).
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(4)
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No additional fee due pursuant to Rule 457(i).
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(5)
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Of this amount, $179,718 was previously paid.
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The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED [
—
], 2013
PROSPECTUS
PLATFORM
SPECIALTY PRODUCTS CORPORATION
Shares of Common Stock
Warrants
Series A
Preferred Stock
DOMESTICATION IN DELAWARE
On
October 31, 2013, we indirectly acquired substantially all of the equity of, MacDermid Holdings, LLC (“MacDermid Holdings”), which owns approximately 97% of MacDermid, Incorporated, a Delaware Corporation (“MacDermid”). As a
result, we became a holding company for the MacDermid business.
This prospectus relates to our proposal to change our jurisdiction of
incorporation by discontinuing from the British Virgin Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”). Platform Specialty Products Corporation is
incorporated with limited liability under the laws of the British Virgin Islands under the BVI Business Companies Act, 2004, as amended (the “BVI Companies Act”). To effect the Domestication, we will, upon the final approval of our Board
of Directors, file a notice of continuation out of the British Virgin Islands with the British Virgin Islands Registrar of Corporate Affairs (we refer to the British Virgin Islands entity prior to the domestication as “Platform BVI”) and
file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which we will be domesticated and continue as a Delaware corporation (we refer to the domesticated Delaware
entity as “Platform Delaware”). On the effective date of the Domestication, each of our currently issued and outstanding ordinary shares will automatically convert in connection with the Domestication, on a one-for-one basis, into shares
of Platform Delaware common stock. Under British Virgin Islands law and our current governing documents, we do not need shareholder approval of the Domestication, and our shareholders do not have statutory dissenters’ rights of appraisal as a
result of the Domestication.
This prospectus also relates to the issuance of up to 1,933,636 shares of our common stock to the MacDermid,
Incorporated Profit Sharing and Employee Savings Plan (the “Plan”) in exchange for common stock and preferred stock of MacDermid, an indirect subsidiary of Platform BVI, held by the Plan pursuant to an Exchange Agreement entered into on
October 25, 2013 by and between us and the Plan fiduciaries (the “401(k) Exchange”). As of October 31, 2013, the Plan owned the remaining approximately 3% of outstanding stock of MacDermid, with an aggregate value of approximately $21.3
million, which will be exchanged for cash or shares of Platform common stock, par value $0.01 per share (“Platform Common Stock”) at the election of the Plan participants. Given that the Plan does not hold shares of Platform BVI, in
connection with the MacDermid Holdings Acquisition, we and the Plan fiduciaries entered into the Exchange Agreement to enable the exchange of the Plan shares for shares of Platform Delaware following the Domestication. If you are a Plan participant,
you may elect to receive the value of the MacDermid stock that you hold in the Plan in
either
cash or, to the extent that this registration statement has been declared effective prior to April 29, 2014, shares of Platform Common Stock.
If you elect to receive shares of Platform Common Stock, each such share will be valued at $11.00 per share, and to the extent that the average daily closing price of our common stock for the five days preceding the closing date of the 401(k)
Exchange is below $11.00 per share, you will also receive cash equal to the difference. Neither the value or the number of the shares of Platform Common Stock nor the cash consideration, as the case may be, to be received by the Plan participants
will be impacted if the average daily closing price for your Platform Common Stock for the five trading days immediately prior to the closing date of the 401(k) Exchange is above $11.00 per share.
You will have 20 business days from the date on which this prospectus is first sent or mailed to the Plan participants to make your election. We
expect that the exchange offer will take place 3 business days after the expiration of this 20-day period.
We are not asking you for a
proxy and you are requested not to send us a proxy. No shareholder action is required to effect the Domestication. See “The Domestication—No Vote or Dissenters’ Rights of Appraisal in the Domestication.”
We intend to list our common stock on the New York Stock Exchange (the “NYSE”) under the ticker symbol “PAH”. We expect that
our warrants will be traded on the Over-the-Counter Bulletin Board.
We are an
“emerging growth company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves risks. See
“
Risk Factors
” beginning on page 9 of this prospectus.
Neither the
Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
This prospectus will not be filed with the British Virgin Islands Registrar of Corporate Affairs. Neither the British Virgin Islands
Financial Services Commission nor the British Virgin Islands Registrar of Corporate Affairs accepts any responsibility for Platform Delaware’s financial soundness or the correctness of any of the statements made or opinions expressed in this
prospectus.
Prospectus dated ,
2014
TABLE OF CONTENTS
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No person has been authorized to give any information or make any representation concerning us or
the Domestication (other than as contained in this prospectus) and, if any such other information or representation is given or made, you should not rely on it as having been authorized by us. You should not assume that the information contained in
this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of the incorporated document, as applicable.
Terms Used in This Prospectus
Unless the
context otherwise requires, in this prospectus, the terms “the Company,” “Platform,” “we,” “us” and “our” refer to Platform Specialty Products Corporation (and its consolidated subsidiaries as a
combined entity) as it currently exists under British Virgin Islands law and will continue under Delaware law after the Domestication, and the terms “Platform BVI” and “Platform Delaware” refer to the Company prior to and after
the Domestication, respectively.
Trademarks and Trade Names
This prospectus contains some of our trademarks and trade names. See “Business—Patents, Trademarks and Proprietary Products.”
All other trademarks or trade names of any other company appearing in this prospectus belong to their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the
®
and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
Industry and Market Data
We
obtained the industry, market and competitive position data described or referred to throughout this prospectus from our own internal estimates and research as well as from industry and general publications and research, surveys and studies
conducted by third parties. While we believe our internal company estimates and research are reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source.
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Summary
This summary provides an overview of selected information regarding our operations on a consolidated basis, including the operations of MacDermid that we
acquired on October 31, 2013. Because this is only a summary, it may not contain all of the information that may be important to you in understanding (i) the exchange of capital stock of MacDermid for our common stock and (ii) the Domestication. You
should carefully read this entire prospectus, including the section entitled “Risk Factors.” See the section of this prospectus entitled “Where You Can Find More Information.”
Overview
We were incorporated
with limited liability under the laws of the British Virgin Islands under the BVI Companies Act on April 23, 2013 under the name Platform Acquisition Holdings Limited. Platform was created for the purpose of acquiring a target company or business
with an anticipated enterprise value of between $750 million and $2.5 billion. Effective October 31, 2013, we changed our name to Platform Specialty Products Corporation.
On October 31, 2013, we completed the acquisition of substantially all of MacDermid pursuant to a Business Combination Agreement and Plan of
Merger (collectively the “BCA”) in which we indirectly acquired substantially all of the equity of MacDermid Holdings which owns approximately 97% of the outstanding shares of MacDermid (the “MacDermid Holdings Acquisition”).
The total consideration for the equity acquired in the MacDermid Holdings Acquisition and the MacDermid Plan Shares to be acquired upon
completion of the 401(k) Exchange will be approximately $1.8 billion (including the assumption of approximately $756 million of indebtedness), subject to a post-closing working capital adjustment, plus (i) up to $100 million of contingent
consideration tied to achievement of EBITDA and stock trading price performance metrics over a seven-year period following the closing of the acquisition and (ii) an interest in certain MacDermid pending litigation.
In connection with the acquisition of MacDermid, on October 25, 2013, we entered into an Exchange Agreement with the Plan fiduciaries pursuant
to which we agreed to acquire, and the Plan agreed to exchange, the remaining approximately 3% of MacDermid equity interests (the “MacDermid Plan Shares”) not already held by MacDermid Holdings. The MacDermid Plan Shares represent $21.3
million of the total consideration. The MacDermid Plan Shares will be exchanged by us, following the effectiveness of the registration statement of which this prospectus is a part, for (i) cash and/or (ii) shares of Platform Common Stock. The
aggregate amount of cash and/or shares of Platform Common Stock will be based on the election of each individual Plan participant who can elect to receive either cash or shares of Platform Common Stock.
Our Business
We are a global
producer of high technology specialty chemical products and provider of technical services. Our business involves the manufacture of a broad range of specialty chemicals, which we create by blending raw materials, and the incorporation of these
chemicals into multi-step technological processes. These specialty chemicals and processes together encompass the products we sell to our customers in the electronics, metal and plastic plating, graphic arts, and offshore oil production and drilling
industries. We refer to our products as “dynamic chemistries” due to their delicate chemical compositions, which are frequently altered during customer use. Our dynamic chemistries are used in a wide variety of attractive niche markets. We
manage and report our business in two operating segments: a Performance Materials segment and a Graphic Solutions segment.
We sell our
products into three geographic regions: Asia, Europe and the Americas. Because our Performance Materials segment utilizes shared facilities and administrative resources and offers products that are
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distinct from those within our Graphic Solutions segment, we make decisions about how to manage our operations by reference to each segment and not with respect to the underlying products or
geographic regions that comprise each segment.
Performance Materials
Our Performance Materials segment manufactures and markets dynamic chemistry solutions that are used in the electronics, automotive and oil and
gas production and drilling industries. We operate in Europe, the Americas and Asia. Our products include surface and coating materials and water-based hydraulic control fluids. In conjunction with the sale of these products, we provide extensive
technical service and support to ensure superior performance of their application.
Graphic Solutions
Our Graphic Solutions segment primarily produces and markets photopolymers through an extensive line of flexographic plates that are used in
the commercial packaging and printing industries. Our operations in the Graphic Solutions segment are predominately in the Americas and Europe.
Corporate Information
Our
principal executive offices are located at 5200 Blue Lagoon Drive, Suite 855, Miami, FL 33126 and our telephone number is (203) 575-5700.
The
Domestication
We intend to change our jurisdiction of incorporation from the British Virgin Islands to the State of Delaware, and
we refer to this change as the “Domestication.” We will affect the Domestication by filing with the Secretary of State of the State of Delaware a certificate of corporate domestication and a certificate of incorporation of Platform
Delaware, and by filing with the British Virgin Islands Registrar of Corporate Affairs a notice of continuation out of the British Virgin Islands and certified copies of the certificates filed in Delaware. The Domestication and the certificate of
incorporation of Platform Delaware were approved by our Board of Directors in connection with our acquisition of MacDermid, and no action of our shareholders is required to effect the Domestication. We anticipate that the Domestication will become
effective shortly after the effectiveness of the registration statement of which this prospectus forms a part (we refer to this date as the “Effective Time”). See “Description of Capital Stock; Comparison of Rights—Effective
Time”. Platform BVI has not received, and is not required by British Virgin Islands law to receive, approval of a plan of arrangement in the British Virgin Islands, and no plan of arrangement is contemplated.
Comparison of Shareholder Rights
The Domestication will change our jurisdiction of incorporation from the British Virgin Islands to the State of Delaware and, as a result, our
organizational documents will change and will be governed by Delaware law rather than British Virgin Islands law. Those new organizational documents and Delaware law contain provisions that may differ in certain respects from those in our current
organizational documents and British Virgin Islands law. For a more detailed description of how the new organizational documents and Delaware law may differ from our current organizational documents and British Virgin Islands law, please see
“Description of Capital Stock; Comparison of Rights—Comparison of Rights” below. Our business, assets and liabilities on a consolidated basis, as well as our executive officers, principal business locations and fiscal year, will not
change as a result of the Domestication.
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The most significant differences between our current organizational documents and British
Virgin Islands law and the new organizational documents and Delaware law are as follows:
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Delaware law requires that all amendments to the certificate of incorporation of Platform Delaware must be approved by the Board of Directors and by the stockholders, while amendments to the Amended and Restated
Memorandum and Articles of Association of Platform BVI may be made by resolutions of the directors (in limited circumstances) or by the holders of ordinary shares;
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Delaware law prohibits the repurchase of shares of Platform Delaware when its capital is impaired or would become impaired by the repurchase, while there are no capital limitations in the BVI Companies Act;
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The Platform Delaware certificate of incorporation prohibits the common stockholders of Platform Delaware from acting by written consent, while the Platform BVI Amended and Restated Memorandum and Articles of
Association permit shareholder action by written consent;
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The Platform Delaware by-laws require stockholders desiring to bring a matter before an annual meeting of stockholders or to nominate a candidate for election as director to provide notice to Platform Delaware within
certain time frames, while the Platform BVI organizational documents do not contain similar notice requirements;
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The Platform Delaware by-laws do not permit the stockholders of Platform Delaware to call meetings of stockholders under any circumstances, while the shareholders holding 30% of the voting rights in respect of the
matter for which the meeting is called may require the directors to call a meeting of shareholders of Platform BVI;
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Under Delaware law, only the stockholders may remove directors, while under British Virgin Islands law, a majority of the directors may remove a fellow director;
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Under the Platform Delaware certificate of incorporation and by-laws, vacancies and unfilled directorships may be filled solely by the remaining directors, while under the Platform BVI Amended and Restated Memorandum
and Articles of Association vacancies may be filled by either the directors or the shareholders;
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Under Delaware law, directors may not act by proxy, while under British Virgin Islands law, directors may appoint another director or person to vote in his place, exercise his other rights as director, and perform his
duties as director;
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Under Delaware law, a sale of all or substantially all of the assets of Platform Delaware requires stockholder approval, while the Platform BVI Amended and Restated Memorandum and Articles of Association eliminate the
shareholder vote otherwise required by the British Virgin Islands laws for a sale of more than 50% of the assets of Platform BVI;
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Under Delaware law, stockholders may dissent and obtain the fair value of their shares in connection with certain corporate actions, while British Virgin Islands law provides no similar right to shareholders; and
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Under Delaware law, “business combinations” with “interested stockholders” are prohibited for a certain period of time absent certain requirements, while British Virgin Islands law provides no
similar prohibition.
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Share Conversion
We are currently authorized to issue an unlimited number of no par value shares which may be either ordinary shares or preferred shares. As of
December 30, 2013, there were 103,576,300 ordinary shares of Platform issued and outstanding, and 2,000,000 Founder Preferred Shares issued and outstanding. In addition, as of December 30, 2013, there were issued and outstanding (i)
48,742,662 warrants exercisable to purchase 16,247,554
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Platform ordinary shares at an exercise price of $11.50 per share and (ii) 250,000 options to purchase Platform ordinary shares, all of which are fully vested. In addition, at any time after the
earlier of October 31, 2014 or a change of control of Platform, we will be obligated to issue up to 8,905,776 shares of our common stock in exchange for shares of common stock of Platform Delaware Holdings, Inc., a Delaware subsidiary of
Platform (“PDH”), on a one-for-one basis, at the option of the holder.
We may also be obligated to issue additional shares of
Platform Common Stock as a dividend on our Founder Preferred Shares. See “Description of Capital Stock; Comparison of Rights—Shares Reserved for Future Issuances.” In connection with the Domestication, each ordinary share of Platform
BVI that is issued and outstanding immediately prior to the Effective Time will automatically convert into one share of common stock of Platform Delaware. Similarly, outstanding options, warrants and other rights to acquire Platform BVI shares will
become options, warrants or rights to acquire the corresponding shares of stock of Platform Delaware. It will not be necessary for shareholders of Platform BVI who currently hold share certificates to exchange their existing share certificates for
certificates of shares of common stock of Platform Delaware in connection with the Domestication. See “The Domestication—Domestication Share Conversion” below.
In connection with the Domestication, each Founder Preferred Share that is issued and outstanding immediately prior to the Effective Time will
be converted into one share of Series A Preferred Stock of Platform Delaware. The Series A Preferred Stock will be automatically converted into shares of Platform Delaware common stock on a one-for-one basis upon the occurrence of certain events.
See “Description of Capital Stock; Comparison of Rights—Series A Preferred Stock.”
Reasons for the Domestication
Our Board of Directors believes that the Domestication will, among other things:
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provide legal, administrative and other similar efficiencies;
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relocate our jurisdiction of organization to one that is the choice of domicile for many publicly traded corporations, as there is an abundance of case law to assist in interpreting the General Corporation Law of the
State of Delaware (the “DGCL”), and the Delaware legislature frequently updates the DGCL to reflect current technology and legal trends; and
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provide a more favorable corporate environment which will help us compete more effectively with other publicly traded companies in raising capital and in attracting and retaining skilled, experienced personnel.
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Risk Factors
An investment in our common stock will involve risks. Please review the section entitled “Risk Factors” beginning on page 6 of this
prospectus.
Material U.S. Federal Income Tax Consequences of the Domestication
See “Material U.S. Federal Income Tax Consequences of the Domestication” for important information regarding U.S. federal income tax
consequences relating to (A) the Domestication and (B) the ownership and disposition of Platform Common Stock. Platform believes that a domestication of Platform BVI occurred on the date of the MacDermid Holdings Acquisition as a result of
the transaction being treated as an “inversion” for federal income tax purposes (See “Material U.S. Federal Income Tax Consequences—Inversion”). However, the IRS may conclude that the domestication of Platform BVI for
federal income tax purposes did not occur on the date of the MacDermid Holdings Acquisition, but on the actual date of the Domestication.
4
In the case of a domestication of a foreign corporation such as Platform BVI (regardless of
whether it occurs on the date of MacDermid Holdings Acquisition or the Domestication), a U.S. Holder (as defined in “Material U.S. Federal Income Tax Consequences”) who on the day that Platform BVI becomes a U.S. corporation for federal
income tax purposes beneficially owns (directly, indirectly or constructively) Platform stock with a fair market value of $50,000 or more, but less than 10% of the total combined voting power of all classes of Platform BVI stock entitled to vote,
generally will recognize gain (but not loss) on the exchange of its Platform BVI stock for Platform Common Stock in a fully taxable transaction, unless such U.S. Holder elects in accordance with applicable Treasury regulations to include in income
the “all earnings and profits” amount attributable to its Platform BVI stock. The U.S. federal income tax consequences of the Domestication are complex, and the foregoing is qualified in its entirety by the section below entitled
“Material U.S. Federal Income Tax Consequences.”
No Vote or Dissenters Rights of Appraisal in the Domestication
Under British Virgin Islands law and the Amended and Restated Memorandum and Articles of Association of Platform BVI, we do not need
shareholder approval of the Domestication, and our shareholders do not have statutory dissenters’ rights of appraisal or any other appraisal rights as a result of the Domestication. See “The Domestication—No Vote or Dissenters’
Rights of Appraisal in the Domestication.”
The 401(k) Exchange
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Common stock offered by us
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1,933,636 shares(1)
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Common stock to be outstanding after this offering
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105,509,936 shares(2)
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Use of proceeds
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We will not receive any cash proceeds from the 401(k) Exchange.
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(1)
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Assumes that Plan participants holding all outstanding MacDermid Plan Shares elect to receive shares of Platform Common Stock in the 401(k) Exchange. As of the closing of the Merger, the MacDermid Plan Shares had an
aggregate value of $21,207,006, subject to adjustment as set forth in the BCA.
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(2)
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Assumes that all Plan participants elect to receive shares of Platform Common Stock. Does not include (i) up to 8,905,776 shares of our common stock issuable in exchange for shares of PDH common stock, at the option of
the holder, at any time after the earlier of October 31, 2014 or a change of control of Platform, (ii) 2,000,000 shares issuable upon the conversion of the Founder Preferred Shares, (iii) 16,247,554 shares issuable upon the exercise of the
Platform Warrants, (iv) 250,000 shares issuable upon the exercise of the outstanding options and (v) shares issuable as dividends pursuant to the terms of our Founder Preferred Shares.
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5
Organizational Structure
The following chart shows the organizational structure of Platform as of October 31, 2013 immediately following the closing of the
MacDermid Holdings Acquisition.
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The following chart shows the anticipated organizational structure of Platform immediately
following the Domestication.
The following chart shows the anticipated organizational structure of Platform immediately following the
401(k) Exchange.
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(1)
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In connection with the MacDermid Holdings Acquisition, we created PDH. PDH, in turn, formed Platform Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”). Merger Sub merged with and into
MacDermid Holdings, with MacDermid Holdings surviving as a wholly-owned subsidiary of PDH (the “Merger”).
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(2)
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Prior to the consummation of the Merger, certain members of MacDermid Holdings were offered the opportunity to exchange their equity interests in MacDermid Holdings for common stock in PDH and a proportionate share of
(i) a contingent purchase price worth up to $100 million upon the achievement of certain EBITDA and stock price thresholds during the seven-year period after the Merger (the “CPP”) and (ii) an interest in certain pending litigation (the
“CLP” and together with the CPP, the “PDH Stock Consideration”). Holders of approximately 14% of the equity interests in MacDermid Holdings elected to receive PDH Stock Consideration (such holders, “Retaining MacDermid
Holdings Holders”). The remaining 86% of MacDermid Holdings equity interests were exchanged in the Merger for cash and their proportionate share of the CLP. As a result, Platform BVI has an 86% controlling interest in PDH, which in turn
indirectly owns approximately 97% of MacDermid prior to the 401(k) Exchange and would own 100% thereafter. The remaining 14% of PDH is controlled by the Retaining MacDermid Holdings Holders. Holders of PDH common stock have the right to exchange
such shares for shares of Platform ordinary shares or common stock, as the case may be, on a one-for-one basis, at any time after the earlier of October 31, 2014 or a change of control of Platform.
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(3)
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The Plan’s interests consist of 1,514,371.01 shares of common stock of MacDermid, no par value, and 1,469 shares of 9.5% Series B Cumulative Compounding Preferred Stock of MacDermid, no par value.
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Risk Factors
Any investment in our securities involves a high degree of risk, including the risks described below. If any of the following risks
actually occur, our business, financial condition and results of operations could suffer. As a result, the trading price of our shares could decline, perhaps significantly, and you could lose all or part of your investment. The risks discussed below
also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. See the section entitled “Information Regarding Forward-Looking Statements.”
Risks Related to Our Business and Industry
Our
business and results of operations could be adversely affected if we fail to protect our intellectual property rights.
Our success
depends to a significant degree upon our ability to protect and preserve our intellectual property rights and the rights to our proprietary processes, methods, compounds and other technology. Failure to protect our existing intellectual property
rights may result in the loss of valuable technologies or in our having to pay other companies for infringing on their intellectual property rights. We rely on confidentiality agreements and patent, trade secret, trademark and copyright law as well
as judicial enforcement of all of the foregoing to protect such technologies and intellectual property rights. In addition, some of our technologies are not covered by any patent or patent application.
We may be unable to prevent third parties from using our intellectual property and other proprietary information without our authorization or
from independently developing intellectual property and other proprietary information that is similar to ours, particularly in countries where the laws do not protect our proprietary rights to the same degree as in the United States. The use of our
intellectual property and other proprietary information by others could reduce or eliminate any competitive advantages we have developed, cause us to lose sales or otherwise harm our business. If it becomes necessary for us to litigate to protect
these rights, any proceedings could be burdensome and costly, and we may not prevail.
Our patents also may not provide us with any
competitive advantage and may be challenged by third parties. Further, our competitors may attempt to design around our patents. Our competitors may also already hold or have applied for patents in the United States or abroad that, if enforced or
issued, could prevail over our patent rights or otherwise limit our ability to manufacture or sell one or more of our products in the United States or abroad. With respect to our pending patent applications, we may not be successful in securing
patents for these claims. Our failure to secure these patents may limit our ability to protect inventions that these applications were intended to cover. In addition, the expiration of a patent can result in increased competition with consequent
erosion of profit margins.
Competitors or other parties may, from time to time, assert issued patents or other intellectual property
rights against us. If we are legally determined to infringe or violate the intellectual property rights of another party, we may have to pay damages, stop the infringing use, or attempt to obtain a license agreement with the owner of such
intellectual property. Further, even if we are successful in defending our rights, such litigation could be burdensome and costly.
In
some cases, we rely upon unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets to develop and maintain our competitive position. While we generally will enter into confidentiality agreements with
our employees and third parties to protect our intellectual property, our confidentiality agreements could be breached and may not provide meaningful protection for our trade secrets or proprietary manufacturing expertise. In addition, adequate
remedies may not be available in the event of unauthorized use or disclosure of our trade secrets or manufacturing expertise. Violations by others of our confidentiality agreements and the loss of employees who have specialized knowledge and
expertise could harm our competitive position and cause our sales and operating results to decline as a result of increased competition.
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In addition, we rely on both registered and unregistered trademarks to protect our name and
brands. Failure by us to adequately maintain the quality of our products and services associated with our trademarks or any loss to the distinctiveness of our trademarks may cause us to lose certain trademark protection, which could result in the
loss of goodwill and brand recognition in relation to our name and products. In addition, successful third-party challenges to the use of any of our trademarks may require us to rebrand our business or certain products or services associated
therewith.
The failure of our patents, applicable intellectual property law or our confidentiality agreements to protect our intellectual
property and other proprietary information, including our processes, apparatuses, technology, trade secrets, trade names and proprietary manufacturing expertise, methods and compounds, or if we are unsuccessful in our judicial enforcement
proceedings, could have a material adverse effect on our competitive advantages and could have a material adverse effect on our business, results of operations and share price.
We may experience claims that our products infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent
us from selling our products.
We seek to improve our business processes and develop new products and applications. Many of our
competitors have a substantial amount of intellectual property that we must continually monitor to avoid infringement. We cannot guarantee that we will not experience claims that our processes and products infringe issued patents (whether present or
future) or other intellectual property rights belonging to others. For example, we are currently a defendant in a patent infringement claim, which has been vigorously opposed by us, relating to technology that is important to us, although we do not
expect this claim to have a material adverse effect on our business, financial conditions, results of operations or reputation. From time to time, we oppose patent applications that we consider overbroad or otherwise invalid in order to maintain the
ability to operate freely in our various business lines without the risk of being sued for patent infringement. If, however, patents are subsequently issued on any such applications by other parties, or if patents belonging to others already exist
that cover our products, processes or technologies, we could experience claims for infringement or have to take other remedial or curative actions to continue our manufacturing and sales activities with respect to one or more products. Such actions
could include payment of damages, stopping the use, obtaining licenses from these parties or substantially re-engineering our products or processes in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable
terms, or at all, or be able to re-engineer our products successfully. Moreover, if we are sued for infringement and lose, we could be required to pay substantial damages or be enjoined from using or selling the infringing products or technology.
Further, intellectual property litigation is expensive and time-consuming, regardless of the merits of any claim, and could divert our management’s attention from operating our business.
Our relationship with our employees could deteriorate, and certain key employees could leave the Company, which could adversely affect our business and
our results of operations.
Our business involves complex operations and therefore demands a management team and employee workforce
that is knowledgeable and expert in many areas necessary for our operations. As a company focused on manufacturing and highly technical customer service, we rely on our ability to attract and retain skilled employees, including our specialized
research and development and sales and service personnel, to maintain our efficient production processes, to drive innovation in our product offerings and to maintain our deep customer relationships. As of September 30, 2013, MacDermid employed
approximately 2,000 full-time employees, approximately 1,000 of whom were members of its research and development and sales and service teams. The departure of a significant number of our highly skilled employees or of one or more employees who hold
key regional management positions could have an adverse impact on our operations, including as a result of customers choosing to follow a regional manager to one of our competitors.
In addition, many of our full-time employees are employed outside the United States. In certain jurisdictions where we operate, particularly,
Brazil, France, Germany Italy, and Japan, labor and employment laws are relatively stringent and, in many cases, grant significant job protection to certain employees, including rights on termination
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of employment. In addition, in certain countries where we operate, our employees are members of unions or are represented by a works council as required by law. We are often required to consult
and seek the consent or advice of these unions and/or works councils. These laws, coupled with the requirement to consult with the relevant unions or works councils, could adversely affect our flexibility in managing costs and responding to market
changes and could limit our ability to access the skilled employees on which our business depends.
The due diligence undertaken in connection with
our acquisition of MacDermid may not have revealed all relevant considerations or liabilities of MacDermid, which could have a material adverse effect on our financial condition or results of operations.
There can be no assurance that the due diligence undertaken by us in connection with our acquisition of MacDermid has revealed all relevant
facts that may be necessary to evaluate such acquisition. Furthermore, the information provided during due diligence may have been incomplete, inadequate or inaccurate. As part of the due diligence process, we have also made subjective judgments
regarding the results of operations, financial condition and prospects of MacDermid. If the due diligence investigation has failed to correctly identify material issues and liabilities that may be present in MacDermid, or if we consider any
identified material risks to be commercially acceptable relative to the opportunity, we may incur substantial impairment charges or other losses following our acquisition of MacDermid. In addition, we may be subject to significant, previously
undisclosed liabilities of MacDermid that were not identified during due diligence and which could contribute to poor operational performance and have a material adverse effect on our financial condition and results of operations.
Conditions in the global economy may directly adversely affect our net sales, gross profit and financial condition and may result in delays or
reductions in our spending that could have a material adverse effect on our results of operations, prospects and share price.
Our
products are sold in industries that are sensitive to changes in general economic conditions, including the metals and plastics finishings, electronics, oil production and drilling and graphic arts industries. Accordingly, our net sales, gross
profit and financial condition depend significantly on general economic conditions and the demand for our specialty chemical products and services in the markets in which we compete. Delays or reductions in our customers’ chemical products
purchasing that result from economic downturns would reduce demand for our products and services and could, consequently, have a material adverse effect on our results of operations, prospects and share price.
Our net sales and gross profit have varied depending on our product, customer and geographic mix for any given period, which makes it difficult to
forecast future operating results.
Our net sales and gross profit vary among our products and services, and customer groups and
markets, and therefore may be different in future periods from historic or current periods. Overall gross profit margins in any given period are dependent in large part on the product, customer and geographic mix reflected in that period’s net
sales. Market trends, competitive pressures, commoditization of products, increased component or shipping costs, regulatory conditions and other factors may result in reductions in revenue or pressure on the gross profit margins of certain segments
in a given period. Given the nature of our business, the impact of these factors on our business and results of operations will likely vary from period to period and from product to product. For example, a change in market trends that results in a
decline in demand for products or businesses that are then high margin will have a disproportionately greater adverse effect on our profits for that period. The varying nature of our product, customer and geographic mix between periods therefore has
materially impacted our net sales and gross profit between periods during certain recessionary times and may lead to difficulties in measuring the potential impact of market, regulatory and other factors on our business. As a result, we may be
challenged in our ability to forecast our future operating results. Further, business acquisitions can compound the difficulty in making comparisons between prior, current and future periods because acquisitions and divestitures, which are not
ordinary course events, also affect our gross profit margins and our overall operating results.
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We face intense competition, and our failure to compete successfully may have an adverse effect on our net
sales, gross profit and financial condition.
Our industry is highly competitive, and most of our product lines compete against
product lines from at least two competitors. We encounter competition from numerous and varied competitors in all areas of our business; however, our most significant competitors are Atotech (a division of Total S.A.), DuPont, Enthone (an Alent plc
company) and Rohm and Haas (a division of Dow Chemical). Further, in our Performance Materials segment, our products compete not only with similar products manufactured by our competitors, but also against a variety of chemical and non-chemical
alternatives provided by our competitors. Industry consolidation may result in larger, more homogeneous and potentially stronger competitors in the markets in which we compete.
We compete primarily on the basis of quality, technology, performance, reliability, brand, reputation, range of products and services, and
service and support. We expect our competitors to continue to develop and introduce new products and to enhance their existing products, which could cause a decline in market acceptance of our products. Our competitors may also improve their
manufacturing processes or expand their manufacturing capacity, which could make it more difficult or expensive for us to compete successfully. In addition, our competitors could enter into exclusive arrangements with our existing or potential
customers or suppliers, which could limit our ability, or make it significantly more expensive, to acquire necessary raw materials or to generate sales.
Some of our competitors may have greater financial, technical and marketing resources than we do and may be able to devote greater resources
to promoting and selling certain products. Unlike many of our competitors who specialize in a single or limited number of product lines, we have a portfolio of businesses and must allocate resources across those businesses. As a result, we may
invest less in certain areas of our business than our competitors invest in competing businesses, and our competitors may therefore have greater financial, technical and marketing resources available to them with respect to those businesses.
Some of our competitors may also incur fewer expenses than we do in creating, marketing and selling certain products and may face fewer risks
in introducing new products to the market. This circumstance results from the nature of our business model, which is based on providing innovative and high quality products and therefore may require that we spend a proportionately greater amount on
research and development than some of our competitors. If our pricing and other factors are not sufficiently competitive, or if there is an adverse reaction to our product decisions, we may lose market share in certain areas, which could adversely
affect our net sales, gross profit and our prospects. Further, because many of our competitors are small divisions of large, international businesses, these competitors may have access to greater resources then we do and may therefore be better able
to withstand a change in conditions within our industry and throughout the economy as a whole.
If we do not compete successfully by
developing and deploying new cost effective products, processes and technologies on a timely basis and by adapting to changes in our industry and the global economy, our net sales, gross profit and financial condition could be adversely affected.
Our substantial international operations subject us to risks not faced by domestic competitors, including unfavorable political, regulatory, labor,
tax and economic conditions in other countries that could adversely affect our business, financial condition and results of operations.
Currently, we operate, or others operate on our behalf, facilities in 24 countries, in addition to our operations in the United States. We
expect sales from international markets to represent an increasing portion of our net sales. Accordingly, our business is subject to risks related to the different legal, political, social and regulatory requirements and economic conditions of many
jurisdictions. Risks inherent in our international operations include the following:
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agreements and intellectual property rights may be difficult to enforce and receivables difficult to collect through a foreign country’s legal system;
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foreign customers may have increased credit risk and different financial conditions, which may necessitate longer payment cycles or result in increased bad debt write-offs or additions to reserves related to our foreign
receivables;
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foreign countries may impose additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade or investment, including currency exchange controls;
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foreign exchange controls may delay, restrict or prohibit the repatriation of funds, and any restrictions on the repatriation of funds may result in adverse tax consequences and tax inefficiencies;
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U.S. export licenses may be difficult to obtain;
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there may be delays and interruptions in transportation of our products;
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fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. Dollars of products and services provided by us in markets where payment for our products and services is made
in currencies other than the U.S. Dollar;
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general economic conditions in the countries in which we operate, including fluctuations in gross domestic product, interest rates, market demand, labor costs and other factors beyond our control, could have an adverse
effect on our net sales in those countries;
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our results of operations in a particular country could be affected by political or economic instability on a country-specific or global level from various causes, including the possibility of hyperinflationary
conditions, natural disasters and terrorist activities and the response to such conditions and events;
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we may experience difficulties in staffing and managing multi-national operations, including the possibility of labor disputes abroad;
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unexpected adverse changes in foreign laws or regulatory requirements may occur, including environmental, health and safety laws (such as the European Union’s REACH regulations) and laws and regulations affecting
export and import duties and quotas;
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compliance with a variety of foreign laws and regulations may be difficult;
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we may be subject to the risks of divergent business expectations resulting from cultural incompatibility; and
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overlap of different tax regimes may subject us to additional taxes.
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Our business in emerging
markets requires us to respond to rapid changes in market conditions in these countries. Our overall success as a global business depends, in part, upon our ability to succeed in different legal, regulatory, economic, social and political
conditions. We cannot assure you that we will succeed in developing and implementing policies and strategies which will be effective in each location where we do business. Furthermore, any of the foregoing factors or any combination thereof could
have a material adverse effect on our business, financial condition and results of operations.
We have made investments in and are expanding our
business into emerging markets and regions, which exposes us to certain risks.
As the regional sales mix in the Performance
Materials segment has shifted from more industrialized nations towards emerging markets, we have increased our presence in emerging markets, including Greater China, Southeast Asia and South America, by investing significantly in these regions. For
example, we have developed state-of-the-art facilities in Suzhou, China, and São Paulo, Brazil to better serve our customers and we remain focused on further increasing our presence in these markets. Furthermore, sales into Asia (excluding
the non-emerging markets of Australia, Singapore, Hong Kong and Japan) and Brazil represented 22.9% and 25% of all net sales for the year ended December 31, 2012 and the nine months ended September 30, 2013, respectively.
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Our operations in these markets may be subject to a variety of risks including economies that may be dependent on only a few products and therefore subject to significant fluctuations, consumers
with limited or fluctuating disposable income and discretionary spending on which the end users of our products depend, weak legal systems which may affect our ability to enforce our intellectual property and contractual rights, exchange controls,
unstable governments and privatization, changes in customs or tax regimes, or other government actions affecting the flow of goods and currency. Accordingly, changes in any of these areas may have significant negative impacts on our financial
condition and operating results.
We are exposed to fluctuations in foreign exchange rates, which may adversely affect our operating results and may
significantly affect the comparability of our results between financial periods.
The results of operations and financial condition
of each of our foreign operating subsidiaries are reported in the relevant local currency and then translated to U.S. Dollars for inclusion in our consolidated financial statements. Exchange rates between these currencies and the U.S. Dollar in
recent years have fluctuated significantly and are likely to continue to do so in the future. For the year ended December 31, 2012, an average of approximately 67% of our pro forma net sales were denominated in currencies other than the U.S. Dollar
and, for the nine months ended September 30, 2013, an average of approximately 67% of our pro forma net sales were also so denominated. These foreign currencies included predominantly the Euro, British Pound Sterling, Hong Kong Dollar, Chinese Yuan,
Japanese Yen and Brazilian Real. A depreciation of these currencies against the U.S. Dollar will decrease the U.S. Dollar equivalent of the amounts derived from operations reported in these foreign currencies and an appreciation of these currencies
will result in a corresponding increase in such amounts. From time to time we may engage in exchange rate hedging activities in an effort to mitigate the impact of exchange rate fluctuations. We cannot, however, assure you that this arrangement or
any other exchange rate hedging arrangements we may enter into from time to time will be effective. If our hedging activities are not effective or if additional hedging transactions are not available, changes in currency exchange rates may have a
more significant impact on our results of operations.
Because we do not manage our foreign currency exposure in a manner that would
eliminate the effects of changes in foreign exchange rates on our net sales, cash flows and fair values of assets and liabilities, our financial performance can be positively or negatively impacted by changes in foreign exchange rates in any given
reporting period.
Besides currency translation risks, we incur currency transaction risk whenever one of our operating subsidiaries
enters into either a purchase or a sales transaction using a different currency from the currency in which it records revenues. Given the volatility of exchange rates, we cannot assure you that we will be able to effectively manage our currency
transaction or translation risks or that any volatility in currency exchange rates will not have an adverse effect on our financial condition or results of operations.
Failure to comply with the Foreign Corrupt Practices Act, or FCPA, and other similar anti-corruption laws, could subject us to penalties and damage our
reputation.
We are subject to the FCPA, which generally prohibits U.S. companies and their intermediaries from making corrupt
payments to foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment, and requires companies to maintain certain policies and procedures. Certain of the jurisdictions in which we conduct business
are at a heightened risk for corruption, extortion, bribery, pay-offs, theft and other fraudulent practices. Under the FCPA, U.S. companies may be held liable for actions taken by their strategic or local partners or representatives. If we, or our
intermediaries, fail to comply with the requirements of the FCPA, or similar laws of other countries, governmental authorities in the United States or elsewhere, as applicable, could seek to impose civil and/or criminal penalties, which could damage
our reputation and have a material adverse effect on our business, financial condition and results of operations.
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Changes in our customers’ products and processes can reduce the demand for our specialty chemicals.
Our specialty chemicals are used for a broad range of applications by our customers. Changes, including technological changes, in
our customers’ products or processes may make our specialty chemicals unnecessary, which would reduce the demand for those chemicals. We have had, and may continue to have, customers that find alternative materials or processes and therefore no
longer require our products.
We generally do not have long-term contracts with the customers in our Performance Materials segment.
With some exceptions, our relationships with the customers in our Performance Materials segment are based primarily upon individual sales
orders. As such, our customers in the businesses that comprise our Performance Materials segment could cease buying our products from us at any time, for any reason, with little or no recourse. If multiple customers, or a material customer, within
those businesses elected not to purchase products from us, our business prospects, financial condition and results of operations could be adversely affected.
The loss of certain customers or independent, third-party distributors in either our Performance materials or Graphic Solutions segment could adversely
affect our overall sales and profitability.
In both our Performance Materials and our Graphic Solutions segment, we have customers
and independent, third-party distributors, the loss of which could have a material adverse effect on our results of operations for the affected earnings periods. The principal products purchased by such customers are surface finishing chemicals in
our Performance Materials segment and solid sheet printing elements in our Graphic Solutions segment.
Our net sales, gross profit and financial
condition could be reduced by decreases in the average selling prices of products in the specialty chemicals industry.
Decreases
in the average selling prices of our products may have a material adverse effect on our net sales, gross profit and financial condition. Our ability to maintain or increase our gross profit margin will continue to be dependent, in large part, upon
our ability to offset decreases in average selling prices by improving production efficiency or by shifting to higher margin chemical products. In the past, MacDermid has elected to discontinue selling certain products as a result of sustained
material decreases in the selling price of its products and its inability to effectively offset such decrease through shifts in operations. If we are unable to respond effectively to decreases in the average selling prices of our products in the
future, our net sales, gross profit and financial condition could be materially and adversely affected. Further, while we may elect to discontinue businesses that are significantly affected by such price decreases, we cannot assure you that any such
discontinuation will mitigate the related declines in our financial condition.
Increases in costs or reductions in the supplies of specialty and
commodity chemicals we use in our manufacturing process could materially and adversely affect our results of operations.
We use a
variety of specialty and commodity chemicals in our manufacturing processes. Our manufacturing operations depend upon obtaining adequate supplies of raw materials on a timely basis. We typically purchase our major raw materials on a contract or as
needed basis from outside sources. The availability and prices of raw materials may be subject to curtailment or change due to, among other things, the financial stability of our suppliers, suppliers’ allocations to other purchasers,
interruptions in production by suppliers, new laws or regulations, changes in exchange rates and worldwide price levels. Further, in some cases, we are limited in our ability to purchase certain raw materials from other suppliers by our supply
agreements which contain certain minimum purchase requirements. Additionally, we cannot assure you that, as our supply contracts expire, we will be able to renew them or, or if they are terminated, that we will be able to obtain replacement supply
agreements on terms favorable to us. Our results of operations could be adversely affected if we are unable to obtain adequate supplies of raw materials in a timely manner or if the costs of raw materials increase significantly.
From time to time, suppliers may extend lead times, limit supplies or increase prices due to capacity constraints or other factors. In
addition, some of the raw materials that we use are derived from petrochemical-based
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feedstocks, and there have been historical periods of rapid and significant upward and downward movements in the prices of these feedstocks. We cannot always pass on these price increases to our
customers due to competitive pricing pressure, and, even when we have been able to do so
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there has historically been a time delay between increased raw material prices and our ability to increase the prices of our products. Any limitation
on, or delay in, our ability to pass on any price increases could have an adverse effect on our results of operations.
We may incur material costs
relating to environmental and health and safety requirements or liabilities.
As a manufacturer and distributor of specialty
chemicals and systems, we are subject to extensive U.S. and foreign laws and regulations relating to environmental protection and worker health and safety, including those governing discharges of pollutants into the air and water, the management and
disposal of hazardous substances and wastes, the cleanup of contaminated properties and occupational safety and health matters. We could incur significant costs, including cleanup costs, fines and sanctions and third-party claims for property or
natural resource damage or personal injuries as a result of past or future violations of, or liabilities under, such laws and regulations.
Liability under some environmental laws relating to contaminated sites can be imposed retroactively, regardless of fault or the legality of
the activities that gave rise to the contamination. Some of our manufacturing facilities have an extended history of chemical manufacturing operations or other industrial activities, and contaminants have been detected at some of our sites and
offsite disposal locations. We are actively remediating certain of these properties. As of September 30, 2013, on a pro forma basis, we had reserved $2.2 million (excluding asset retirement obligations) for various environmental matters. Ultimate
environmental costs are difficult to predict and may vary from current estimates and reserves, and the discovery of additional contaminants at these or other sites, or the imposition of additional cleanup obligations at these or other sites, or
third-party claims relating thereto, could result in significant additional costs.
In addition, MacDermid in the past has incurred, and
will in the future incur, significant costs and capital expenditures in complying with environmental, health and safety laws and regulations. Future events, such as changes in or more rigorous enforcement of environmental laws and regulations, could
require us to make additional expenditures, modify or curtail our operations or install pollution control equipment.
Global climate change
legislation could negatively impact our results of operations or limit our ability to operate our business.
We operate production
facilities in several countries. In many of the countries in which we operate, legislation has been passed, or proposed legislation is being considered, to limit greenhouse gases through various means, including emissions credits. Greenhouse gas
regulation in the jurisdictions in which we operate could negatively impact our future results from operations through increased costs of production. We may be unable to pass such increased costs on to our customers, which may decrease our gross
profit and results of operations. In addition, the potential impact of climate change regulation on our customers is highly uncertain and may also adversely affect our business.
We may be unable to respond effectively to technological changes in our industry, which could reduce the demand for our products and adversely affect
our results of operations.
Our future business success will depend upon our ability to maintain and enhance our technological
capabilities, develop and market products and applications that meet changing customer needs and successfully anticipate or respond to technological changes on a cost effective and timely basis. Our inability to anticipate, respond to or utilize
changing technologies could have an adverse effect on our business, financial condition or results of operations.
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Our substantial indebtedness may adversely affect our cash flow and our ability to operate our business and
fulfill our obligations under our indebtedness.
As of October 31, 2013, after closing of the MacDermid Holdings Acquisition, on a
consolidated basis, we had $751.3 million in principal amount of debt outstanding under our First Lien Credit Facility.
Our substantial
indebtedness could have important consequences to you. For example, it could:
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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends,
research and development efforts and other general corporate purposes;
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increase the amount of our interest expense, because our borrowings are at variable rates of interest, which, if interest rates increase, would result in higher interest expense;
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increase our vulnerability to general adverse economic and industry conditions;
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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limit our ability to make strategic acquisitions, introduce new technologies or exploit business opportunities; and
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place us at a competitive disadvantage compared to our competitors that have less indebtedness.
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In addition, the credit agreement governing the Credit Facilities contains covenants that restrict our operations. These covenants restrict,
among other things, our ability to incur additional debt, grant liens, pay cash dividends, enter new lines of business, redeem our ordinary shares, make certain investments and engage in certain merger, consolidation or asset sale transactions.
These restrictions could limit our ability to plan for or react to market conditions, meet extraordinary capital needs or otherwise take actions that we believe are in the best interest of the Company. Further, a failure by us to comply with any of
these covenants and restrictions could result in an event of default that, if not waived or cured, could result in the acceleration of all or a substantial portion of the outstanding indebtedness thereunder.
Our ability to borrow under our revolving credit facility depends on our level of indebtedness and our financial performance, and any deterioration in
our results of operations or increase in our indebtedness could therefore have a material adverse effect on our liquidity.
Deterioration in our results of operations or an increase in our indebtedness may limit our access to borrowings under the revolving credit
facility that is part of our Credit Facilities (the “Revolving Credit Facility”). Under the terms of the credit agreement governing the Credit Facilities, if the Company’s borrowings under the revolving credit facility exceed $12.5
million in the aggregate as of the last day of any fiscal quarter, we must maintain a 6.5 to 1.0 ratio of (x) consolidated indebtedness served by a first lien minus unrestricted cash and cash equivalents to (y) consolidated EBITDA for the
four most recent fiscal quarters, subject to a right to cure.
Our ability to comply with these financial maintenance covenants depends,
in part, on our financial performance and may be affected by events beyond our control. Any material deviations from our operating forecasts could require us to seek waivers or amendments of these covenants, alternative sources of financing or
reductions in expenditures. We may not be able to obtain such waivers, amendments or alternative financings, or if we obtain them, they may not be on terms favorable to us.
Despite the restrictions set forth in the agreements governing our existing indebtedness, we may be able to incur substantial additional
indebtedness in the future. Increases in the aggregate amount of our indebtedness may also result in our being unable to comply with the financial maintenance covenants, and our inability to borrow under our Revolving Credit Facility as a result of
such non-compliance could have an adverse effect on our cash flow and liquidity.
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Chemical manufacturing is inherently hazardous and could result in accidents that disrupt our operations or
expose us to significant losses or liabilities.
The hazards associated with chemical manufacturing and the related storage and
transportation of raw materials, products and wastes are inherent in our operations. These hazards could lead to an interruption or suspension of operations and have a material adverse effect on the productivity and profitability of a particular
manufacturing facility or on our business as a whole. These potential risks include:
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pipeline and storage tank leaks and ruptures;
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inclement weather and natural disasters;
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transportation interruptions; and
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chemical spills and other discharges or releases of toxic or hazardous substances or gases.
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These hazards may result in personal injury and loss of life, damage to property and contamination of the environment, which may result in a
suspension of operations and the imposition of civil or criminal fines, penalties and other sanctions, cleanup costs and claims by governmental entities or third parties. We are dependent on the continued operation of our production facilities, and
the loss or shutdown of operations over an extended period at our Morristown, Tennessee facility, which is our only Graphic Solutions segment sheet production facility, or any of our other major operating facilities could have a material adverse
effect on our financial condition and results of operations.
Our offshore industry products are subject to the hazards inherent in the offshore oil
production and drilling industry, and we may incur substantial liabilities or losses as a result of these hazards.
We produce
water-based hydraulic control fluids for major oil companies and drilling contractors to be used for potentially hazardous offshore deep water production and drilling applications. Offshore deep water oil production and drilling are subject to
hazards that include blowouts, explosions, fires, collisions, capsizing, sinking and damage or loss to pipeline, subsea or other facilities from severe weather conditions. These hazards could result in personal injury and loss of life, severe damage
to or destruction of property and equipment, pollution or environmental damage and suspension of operations. A catastrophic occurrence at a location where our products are used may expose us to substantial liability for personal injury, wrongful
death, product liability or commercial claims. To the extent available, we maintain insurance coverage that we believe is customary in our industry. Such insurance does not, however, provide coverage for all liabilities, and we cannot assure you
that our insurance coverage will be adequate to cover claims that may arise or that we will be able to maintain adequate insurance at rates we consider reasonable. The occurrence of a significant offshore deep water oil production or drilling event
that results in liability to us that is not fully insured could materially and adversely affect our results of operations and financial condition.
We are not insured against all potential risks.
To the extent available, we maintain insurance coverage that we believe is customary in our industry. Such insurance does not, however, provide
coverage for all liabilities, including certain hazards incidental to our business, and we cannot assure you that our insurance coverage will be adequate to cover claims that may arise or that we will be able to maintain adequate insurance at rates
we consider reasonable. For example, the
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occurrence of a significant offshore deep water oil production or drilling event, or a significant business interruption in the operation of one or more of our facilities, could result in
liability to us that is not insured and therefore could materially and adversely affect our results of operations and financial condition. In addition, our products are used in or integrated with many high-risk end products and therefore if such
products were involved in a disaster or catastrophic accident, we could be involved in litigation arising out of such incidents and susceptible to significant expenses or losses.
Compliance with government regulations, or penalties for non-compliance, could prevent or increase the cost of the development, distribution and sale of
our products.
We, our business, our products and our customers’ products are subject to regulation by many U.S. and non-U.S.
supranational, national, federal, state and local governmental authorities. These regulations include customs, imports and international trade laws, export control, antitrust laws, environmental requirements and zoning and occupancy laws that
regulate manufacturers generally or govern the importation, promotion and sale of our products, the operation of our factories and warehouse facilities and our relationship with our customers, suppliers and competitors. Our products and
manufacturing processes are also subject to ongoing reviews by certain governmental authorities.
New laws and regulations may be
introduced, or existing laws and regulations may be changed or may become subject to new interpretations, which could result in additional compliance costs, seizures, confiscations, recalls, monetary fines or delays that could affect us or our
customers. These effects could prevent or inhibit the development, distribution and sale of our products and may harm our reputation. In addition, changes in foreign governmental, federal and state minimum wage laws and other laws relating to
employee benefits could cause us to incur additional wage and benefit costs, which could negatively impact our profitability. Further, if any of the regulations to which we are subject were violated by our management, employees, suppliers, buying
agents or trading companies, the costs of certain goods could increase, or we could experience delays in shipments of our goods, be subject to fines or penalties, or suffer reputational harm, which could reduce demand for our products, hurt our
business and negatively impact our results of operations and share price.
Further, in some circumstances, before we may sell some of our
products, governmental authorities must approve these products, our manufacturing processes and facilities. In order to obtain regulatory approval of certain new products, we must, among other things, demonstrate to the relevant authority that the
product is safe and effective for its intended uses and that we are capable of manufacturing the product in accordance with current regulations. The approval process can be costly, time consuming and subject to unanticipated and significant delays.
We cannot assure you that approvals will be granted to us on a timely basis, or at all. Any delay in obtaining, or any failure to obtain
or maintain, these approvals would adversely affect our ability to introduce new products and to generate revenue from those products.
We are
exposed to intangible asset risk.
We have recorded intangible assets, including goodwill in connection with our MacDermid Holdings
Acquisition. Such valuation amounts are preliminary and will be updated with a third party valuation report in conjunction with purchase accounting. Goodwill represents the excess of the purchase price over the fair value of the identifiable net
assets of an acquired business. We do not amortize goodwill and other intangible assets that have indefinite useful lives; rather, goodwill and other intangible assets with indefinite useful lives are tested for impairment periodically.
Indefinite-lived intangible assets are reviewed for potential impairment on an annual basis by comparing the estimated fair value of the indefinite-lived intangible assets to their carrying value. Goodwill will be tested for impairment at the
reporting unit level annually, or when events or changes in circumstances indicate that goodwill might be impaired.
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Obligations and expenses related to our defined benefit pension plans and other postretirement benefit
plans could negatively affect our financial condition and results of operations.
We have defined benefit pension plans and other
postretirement benefit plans in the United States and a number of other countries. Changes in the market value of plan assets, investment returns, discount rates, mortality rates, regulations and the rate of increase in compensation levels may
affect the funded status of our plans and could cause volatility in the net periodic benefit cost, future funding requirements of the plans and the funded status of the plans. As of December 31, 2012, MacDermid’s U.S. pension plans were
underfunded by approximately $41.7 million and its U.S. post-retirement benefits plans were underfunded by approximately $6.8 million. A significant increase in our obligations or future funding requirements could have a negative impact on our
results of operations and cash flows for a particular period and on our financial condition.
We may not be able to consummate future acquisitions
or successfully integrate acquisitions into our business, which could result in unanticipated expenses and losses.
Part of our
strategy is to grow through acquisitions. Consummating acquisitions of related businesses, or our failure to integrate such businesses successfully into our existing businesses, could result in unanticipated expenses and losses. Furthermore, we may
not be able to realize any of the anticipated benefits from the acquisitions.
In connection with potential future acquisitions, the
process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of
existing operations. Some of the risks associated with acquisitions include:
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unexpected losses of key employees or customers of the acquired company;
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conforming the acquired company’s standards, processes, procedures and controls with our operations;
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coordinating new product and process development;
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hiring additional management and other critical personnel;
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negotiating with labor unions; and
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increasing the scope, geographic diversity and complexity of our operations.
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In addition, we
may encounter unforeseen obstacles or costs in the integration of businesses we may acquire. Also, the presence of one or more material liabilities of an acquired company that are unknown to us at the time of acquisition may have a material adverse
effect on our financial condition or results of operations.
Business disruptions could seriously harm our net sales and increase our costs and
expenses.
Our worldwide operations could be subject to extraordinary events, including natural disasters, political disruptions,
terrorist attacks, acts of war and other business disruptions, which could seriously harm our net sales and increase our costs and expenses. Some areas, including parts of the East Coast and Midwest of the United States, have previously experienced,
and may in the future experience, major power shortages and blackouts, significant floods and strong tornadoes and other storms. These blackouts, floods and storms could cause disruptions to our operations or the operations of our suppliers,
distributors, resellers or customers. Similar losses and interruptions could also be caused by earthquakes, telecommunications failures, water shortages, tsunamis, typhoons, fires, extreme weather conditions, medical epidemics and other natural or
manmade disasters for which we are predominantly self-insured.
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Productivity initiatives aimed at making our company more profitable and our operations more efficient are
part of our strategy. We may not realize all of the anticipated benefits from the implementation of such productivity initiatives.
Our initiatives may reduce our workforce in our manufacturing, research and development, selling and technical and general and administrative
functions. We cannot assure you that the assumptions underlying our decisions as to which reductions and eliminations to make as part of these operational restructuring initiatives will prove to be correct and, accordingly, we may determine that we
have reduced or eliminated resources that are necessary to, or desirable for, our business. Any reduction or elimination of resources made in error could adversely affect our ability to operate or grow our business and may negatively impact our
results of operations. Further, we may not realize all of the anticipated benefits from productivity initiatives in which we may engage in the future.
We are subject to litigation that could have an adverse effect upon our business, financial condition or results of operations.
We are a defendant in numerous lawsuits that result from, and are incidental to, the conduct of our business. These suits concern issues
including product liability, contract disputes, labor-related matters, patent infringement, environmental proceedings, property damage and personal injury matters. For example, we are currently a defendant in a patent infringement claim, which has
been vigorously opposed by us, relating to technology that is important to us, although we do not expect this claim to have a material adverse effect on our business, financial conditions, results of operations or reputation. The ultimate resolution
of such claims, proceedings, and lawsuits is inherently unpredictable and, as a result, our estimates of liability, if any, are subject to change and actual results may materially differ from our estimates. If there is an unfavorable resolution of a
matter, our reputation may be harmed and there could be a material adverse effect on our business, financial condition or results of operations. Moreover, we cannot assure you that we will have any or adequate insurance coverage to protect us from
any adverse resolution.
We may be liable for damages based on product liability claims brought against our customers in our end use markets, and
any successful claim for damages could have a material adverse effect on our financial condition or results of operations.
Many of
our products provide critical performance attributes to our customers’ products that are sold to consumers who could potentially bring product liability suits related to such products. Our sale of these products therefore involves the risk of
product liability claims. If a person were to bring a product liability suit against one of our customers, this customer may attempt to seek contribution from us. A person may also bring a product liability claim directly against us. A successful
product liability claim or series of claims against us in excess of our insurance coverage for payments, for which we are not otherwise indemnified, could have a material adverse effect on our financial condition or results of operations. While we
endeavor to protect ourselves from such claims and exposures in our contractual negotiations, we cannot assure you that our efforts in this regard will ultimately protect us from any such claims.
We will face new challenges, increased costs and administrative responsibilities as an independent public company, particularly after we are no longer
an “emerging growth company”.
As a publicly traded company with listed equity securities, we will need to comply with
certain laws, regulations and requirements, including certain provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), certain regulations of the Securities and Exchange Commission (the “SEC”) and certain of the NYSE
requirements applicable to public companies. Complying with these statutes, regulations and requirements will occupy a significant amount of the time of our Board and management and will significantly increase our costs and expenses.
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We will need to:
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institute a more comprehensive compliance framework;
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update, evaluate and maintain a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC;
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prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;
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revise our existing internal policies, such as those relating to disclosure controls and procedures and insider trading;
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comply with SEC rules and guidelines requiring registrants to provide their financial statements in interactive data format using eXtensible Business Reporting Language (“XBRL”);
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involve and retain to a greater degree outside counsel and accountants in the above activities; and
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enhance our investor relations function.
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However, for as long as we are an “emerging
growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we are permitted to, and intend to, take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies.” We are an emerging growth company until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or more, (ii) the last
day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion
in non-convertible debt or (iv) the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws. For so long as we remain an emerging growth company, we will not be required to:
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have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of Sarbanes-Oxley;
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comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing
additional information about the audit and the financial statements (auditor discussion and analysis); and
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submit certain executive compensation matters to shareholders advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding shareholder vote to approve
compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and
certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and
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include detailed compensation discussion and analysis in our filings under the Exchange Act of 1934, as amended (the “Exchange Act”), and instead may provide a reduced level of disclosure concerning executive
compensation.
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Although we intend to rely on the exemptions provided in the JOBS Act, the exact implications of the JOBS Act
for us are still subject to interpretations and guidance by the SEC and other regulatory agencies. In addition, as our business grows, we may no longer satisfy the conditions of an emerging growth company. We are currently evaluating and monitoring
developments with respect to these new rules, and we cannot assure you that we will be able to take advantage of all of the benefits from the JOBS Act. In addition, we also expect that being a public company subject to these rules and regulations
will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs
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to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our Board, particularly to serve on our audit
committee.
Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002
could have a material adverse effect on our business and share price.
As a publicly traded company, we will be required to
document and test our internal control procedures in order to satisfy the requirements of Section 404 of Sarbanes-Oxley, which will require, beginning with our Annual Report on Form 10-K for the year ending December 31, 2014, annual management
assessments of the effectiveness of our internal control over financial reporting. Additionally, as of the later of the filing of such Annual Report and the date we are no longer an “emerging growth company” as defined in the JOBS Act,
Section 404 of Sarbanes-Oxley will require a report by our independent registered public accounting firm that addresses the effectiveness of our internal control over financial reporting. We will remain an “emerging growth company” for up
to five years, although we would cease to be an “emerging growth company” as of December 31 of a particular year if (1) we had gross revenue of $1 billion or more in such year, (2) the market value of our ordinary shares that is held by
non-affiliates exceeds $700 million as of June 30 in such year or (3) at any point in such year, we would have issued more than $1 billion of non-convertible debt during the three-year period prior thereto. During the course of our testing, we may
identify deficiencies that we may not be able to remediate in time to meet our deadline for compliance with Section 404.
Testing and
maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. We also expect the regulations to increase our legal and financial compliance costs, make it more
difficult to attract and retain qualified executive officers and members of our Board, particularly to serve on our audit committee, and make some activities more difficult, time consuming and costly. We may not be able to conclude on an ongoing
basis that we have effective internal control over financial reporting in accordance with Section 404 and, when applicable to us, our independent registered public accounting firm may not be able or willing to issue an unqualified report on the
effectiveness of our internal control over financial reporting. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation
actions or their effect on our operations because there is presently no precedent available by which to measure compliance adequacy.
We are an
“emerging growth company” and our election to delay adoption of new or revised accounting standards applicable to public companies may result in our financial statements not being comparable to those of other public companies. As a result
of this and other reduced disclosure and governance requirements applicable to “emerging growth companies”, our ordinary shares may be less attractive to investors.
In addition to taking advantage of certain exemptions from various reporting requirements listed above, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (as amended, the “Securities Act”) for complying with new or revised
accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption of new or
revised accounting standards, and as a result, we may choose not to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies other than “emerging growth
companies”. As a result of such election, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates of such new or revised accounting standards. We cannot predict if
investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less attractive trading market for our common stock and our stock
price may be more volatile.
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Risks Relating to Our Common Stock
There is currently no public trading market for our common stock and an active trading market for our common stock may not develop.
There is currently no public or other market for shares of our common stock. Although our ordinary shares were initially listed for trading on
the London Stock Exchange, trading of our ordinary shares was suspended upon announcement of our agreement to acquire MacDermid. We do not currently anticipate that trading of our ordinary shares on the London Stock Exchange will resume. Although we
intend to apply for listing on the NYSE following our Domestication, we may never become listed on the NYSE, or any other exchange, a liquid trading market for our common stock may not develop.
Even if following the Domestication our common stock becomes listed on the NYSE, we cannot predict the extent to which investor interest in
Platform will lead to the development of an active trading market on the NYSE or how liquid that market might become. An active public market for our common stock may not develop or be sustained. If an active public market does not develop or is not
sustained, it may be difficult for you to sell your shares of common stock at a price that is attractive to you, or at all.
We have numerous equity
instruments outstanding that would require us to issue additional shares of common stock. Therefore, you may experience significant dilution of your ownership interests and the future issuance of additional shares of our common stock, or the
anticipation of such issuances, could have an adverse effect on our stock price.
We currently have outstanding numerous equity
instruments outstanding that would require us to issue additional shares of common stock for no or a fixed amount of additional consideration. Specifically as of December 30, 2013 we had outstanding the following:
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2,000,000 shares of Founder Preferred Shares, which will be convertible into shares of our common stock, on a one-for-one basis, at any time at the option of the holder;
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48,742,662 warrants, which will be exercisable for 16,247,554 shares of our common stock at $11.50 per share;
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8,905,776 exchange rights which will require us to issue shares of our common stock for shares of PDH common stock at the option of the holder, on a one-for-one basis, at any time after the earlier of October 31,
2014 or a change of control of Platform; and
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250,000 options which are exercisable to purchase share of our Common Stock, on a one-for-one basis, at any time at the option of the holder.
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In addition, commencing as of October 31, 2013, we will be obligated to pay dividends on our 2,000,000 outstanding Founder Preferred
Shares (or the Series A Preferred Stock into which they will be converted in the Domestication) based on the market price of our common stock if such market price exceeds certain trading price minimums. These dividends are solely payable in shares
of our common stock. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with future acquisitions, future issuances of our securities for capital
raising purposes or for other business purposes. Future sales of substantial amounts of our common stock, or the perception that sales could occur, could have a material adverse effect on the price of our common stock.
We may issue preferred stock in the future, and the terms of the preferred stock may reduce the value of our common stock.
Our Board of Directors is authorized to create and issue one or more additional series of preferred stock, and, with respect to each series, to
determine number of shares constituting the series and the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions thereof, which may include
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dividend rights, conversion or exchange rights, voting rights, redemption rights and terms and liquidation preferences, without stockholder approval. If we create and issue one or more additional
series of preferred stock, it could affect your rights or reduce the value of our outstanding common stock. Our Board of Directors could, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect
the voting power of the holders of our common stock and which could have certain anti-takeover effects.
We cannot assure you that we will declare
dividends or have the available cash to make dividend payments.
To the extent we intend to pay dividends on the common stock, we
will pay such dividends at such times (if any) and in such amounts (if any) as the Board determines appropriate and in accordance with applicable law. Payments of such dividends will be dependent on the availability of any dividends or other
distributions from MacDermid and its subsidiaries to us. We can therefore give no assurance that we will be able to pay dividends going forward or as to the amount of such dividends, if any.
We operate as a holding company and our principal source of operating cash will be income received from our subsidiaries.
We have a holding company structure and do not have any material assets or operations other than ownership of equity interests of our
subsidiaries. Our operations are conducted almost entirely through our subsidiaries, and our ability to generate cash to meet our obligations or to pay dividends is highly dependent on the earnings of, and receipt of funds from, our subsidiaries
through dividends or intercompany loans. As a result, we are dependent on the income generated by our subsidiaries to meet our expenses and operating cash requirements. The amount of distributions and dividends, if any, which may be paid from
MacDermid and its subsidiaries to us will depend on many factors, including MacDermid’s results of operations and financial condition, limits on dividends under applicable law, its constitutional documents, documents governing any indebtedness
of Platform or MacDermid, and other factors which may be outside the control of Platform. If our subsidiaries are unable to generate sufficient cash flow, the Company may be unable to pay its expenses or make distributions and dividends on the
ordinary shares.
Risks Relating to the Change in Our Place of Incorporation
The Domestication may result in adverse tax consequences for you.
Platform BVI believes that at the time of the Merger, Platform BVI became a domestic corporation for federal income tax purposes as a result of
an inversion transaction. See the description of the inversion transaction in “Material U.S. Federal Income Tax Consequences of the Merger and the Domestication—Inversion.” If you are a U.S. holder (as defined in “Material U.S.
Federal Income Tax Consequences of the Merger and the Domestication” below) of Platform ordinary shares or warrants, you may be subject to U.S. federal income tax as a result of the Merger unless you made a timely election on your filing with
the Internal Revenue Service (“IRS”) as described below. If you are a non-U.S. holder (as defined in “Material U.S. Federal Income Tax Consequences of the Domestication”) of Platform ordinary shares or warrants, you may become
subject to withholding tax on any dividends paid on the ordinary shares of Platform BVI or the common stock of Platform Delaware subsequent to the Merger.
If the IRS determines that Platform BVI did not become a domestic corporation as of the date of the Merger, the discussion in the preceding
paragraph would be applicable with respect to the Domestication.
If you are a U.S. holder who owns $50,000 or more of Platform ordinary
shares, but less than 10% of the total combined voting power of all classes of our shares entitled to vote at general meetings of the Company at the time Platform BVI became (or becomes) taxable as a domestic corporation, you must generally
recognize gain (but not loss) with respect to such common stock of Platform Delaware, even if you continue to hold your stock and have not received any cash as a result of the Merger or Domestication. As an alternative to
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recognizing gain, however, such U.S. holder may elect to include in income the “all earnings and profits amount,” as the term is defined in Treasury Regulation Section 1.367(b)-2(d),
attributable to its ordinary shares in Platform BVI. The income so included pursuant to this election generally is treated as dividend income. We do not expect that Platform BVI’s cumulative earnings and profits will be greater than zero
through the Merger or the Effective Time, as the case may be. Therefore, the making of an election to include the person’s share of the “all earnings and profits amount” into income as a dividend generally would be advantageous to
U.S. holders who would otherwise recognize gain with respect to the Platform BVI becoming a domestic corporation.
WE STRONGLY URGE EACH SUCH U.S.
HOLDER TO READ CAREFULLY OUR DESCRIPTIONS OF THE ELECTION IN “MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DOMESTICATION”, STARTING ON PAGE 109 OF THIS PROSPECTUS, AS WELL AS TO CONSULT ITS OWN TAX ADVISOR
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If a U.S. holder owns Platform ordinary shares with 10% or more of the total combined voting power of all classes of our shares entitled to
vote at general meetings of the Company at the Effective Time, such U.S. holder will be required to pay taxes on a deemed dividend equal to the “all earnings and profits amount” attributable to its ordinary shares in Platform BVI, whose
cumulative earnings and profits, as noted above, are not expected to be greater than zero through the date of the Merger or the Effective Time, as the case may be. A U.S. holder’s ownership of Platform BVI warrants will be taken into account in
determining whether such U.S. holder owns 10% or more of the total combined voting power of all classes of our shares. Complex attribution rules apply in determining whether a U.S. holder owns 10% or more of the total combined voting power of all
classes of our shares for U.S. federal tax purposes.
EACH U.S. HOLDER IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR.
Additionally, the Domestication will cause non-U.S. holders to become subject to U.S. withholding taxes on any dividends or other payments in
respect of the shares of capital stock of Platform Delaware after the Domestication.
For a more detailed description of the material U.S.
federal income tax consequences associated with the Domestication, please read “Material U.S. Federal Income Tax Consequences of the Domestication” starting on page 109 of this prospectus.
WE STRONGLY URGE YOU TO CONSULT WITH YOUR OWN
TAX ADVISOR.
Currently, we are governed by British Virgin Islands law but upon effectiveness of the Domestication, we will be governed by
Delaware law, which has anti-takeover implications.
Upon effectiveness of the Domestication, our organizational documents will
change and we and our organizational documents will be governed by Delaware law rather than British Virgin Islands law. The application of Delaware law to us as a result of the Domestication may have the effect of deterring hostile takeover attempts
or a change in control. Section 203 of the DGCL restricts certain “business combinations” with “interested stockholders” for three years following the date that a person becomes an interested stockholder unless: (1) the
“business combination” or the transaction which caused the person or entity to become an interested stockholder is approved by the Board of Directors prior to such business combination or transactions; (2) upon the completion of the
transaction in which the person or entity becomes an “interested stockholder,” such interested stockholder holds at least 85% of the voting stock of Platform Delaware not including (x) shares held by officers and directors and
(y) shares held by employee benefit plans under certain circumstances; or (3) at or after the person or entity becomes an “interested stockholder,” the “business combination” is approved by the Board of Directors and
holders of at least 66 2/3% of the outstanding voting stock, excluding shares held by such interested stockholder. A Delaware corporation may elect not to be governed by Section 203. Platform Delaware has not made such an election. For a
detailed description of how the organizational documents of Platform Delaware and Delaware law may differ from our current organizational documents and British Virgin Islands law, please see “Description of Capital Stock; Comparison of Rights -
Comparison of Rights” below.
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Information Regarding Forward-Looking Statements
This prospectus contains “forward-looking statements”. These statements concern expectations, beliefs, projections, plans and
strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Forward-looking statements included in this prospectus include:
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Our beliefs regarding the benefits of the Domestication;
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Our belief that a majority of our operations hold strong positions in the product markets they serve;
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Our expectation that sales from international markets will represent an increasing portion of our net sales;
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Our beliefs regarding our ability to build our core businesses, successfully enter new markets, selectively pursue strategic acquisitions and capitalize on future growth opportunities;
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Our intent to improve revenue growth over the longer term;
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Our belief that our proprietary technology, extensive industry experience and customer service-focused business model is difficult for competitors to replicate;
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Our belief that our cash conversion rate (the proportion of our profits converted into cash flow) is higher than a majority of the companies in our sector;
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Our estimates regarding the annual cost cash savings resulting from headcount reductions;
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Our beliefs regarding the sufficiency of our liquidity and capital resources to meet our working capital needs, capital expenditures and other business requirements for the next twelve months;
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Our estimates regarding future cash capital expenditures, including expenditures relating to investment and expansion plans relating to product development and sales and environmental, health and safety capital
expenditures;
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•
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Our belief that we will not be materially affected by environmental remediation costs or any related costs at certain contaminated manufacturing sites;
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•
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Our belief that the resolution of various legal proceeding pending against us, to the extent not covered by insurance, will not have a material adverse effect on our liquidity;
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Our belief is that we have customary levels of insurance for a company of our size in our industry;
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Our expectation that our customary off-balance sheet arrangements will not have a current or future material impact on our financial condition;
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Our expectation that recent accounting pronouncements will not have a material impact on our financial statements; and
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•
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Our belief that our exposure to counterparty risk is immaterial.
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These forward-looking
statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could
cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the
actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:
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•
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conditions in the global economy;
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•
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the variability of our operating results between periods and the resulting difficulty in forecasting future operating results;
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27
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•
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the need for increased spending on capital expenditures to meet customer demand and pursue growth opportunities;
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•
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our ability to compete successfully within our industry;
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our substantial international operations;
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fluctuations in foreign currency exchange rates;
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•
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changes in our customers’ products and processes;
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•
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the fact that we do not enter into long-term contracts with certain of our customers and the potential loss of those customers;
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•
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decreases in the average selling prices of products in our industry;
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•
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increases in the cost, or reductions in the supply, of the specialty and commodity chemicals used in our manufacturing processes;
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•
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costs related to compliance with health, safety and environmental laws and regulations, including global climate change legislation;
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•
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our ability to maintain and enhance our technological capabilities and to respond effectively to technological changes in our industry;
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our substantial level of indebtedness and the effect of restrictions on our operations set forth in the documents that govern such indebtedness;
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our compliance with certain financial maintenance covenants in our revolving credit facility and the effect on our liquidity of any failure to comply with such covenants;
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our ability to protect our intellectual property, on which our business is substantially dependent, and our success in avoiding infringing the intellectual property rights of others;
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•
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acquisitions of other businesses and our ability to integrate acquired operations into our operations;
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•
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the inherently hazardous nature of chemical manufacturing and the offshore oil production and drilling industry;
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•
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the costs of complying with government regulations and obtaining regulatory approval of our products;
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risks related to the evaluation of our intangible asset values and the possibility of write-downs;
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the loss of the services of key personnel;
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our relationship with our employees;
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•
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disruptions in our operations or the operations of our suppliers, distributors, resellers or customers as a result of extraordinary events;
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•
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our ability to realize a benefit from our productivity initiatives; and
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•
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our role as a defendant in litigation that results from our business, including costs related to any damages we may be required to pay as a result of product liability claims brought against our customers.
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Each of the forward-looking statements included in this prospectus speak only as of the date on which that statement is
made. We will not update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement was made.
28
Capitalization
The following table sets forth our cash and cash equivalents and capitalization as of October 31, 2013 and as adjusted to give effect to the
consummation of the 401(k) Exchange.
You should read this table in conjunction with “
Selected Consolidated Financial
Information
”, “
Management’s Discussion and Analysis of Financial Condition and Results of Operations
” and the audited and unaudited financial statements and related notes included elsewhere in this prospectus.
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As of October 31, 2013
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Actual
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As Adjusted(1)
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(in millions, except per share data)
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(unaudited)
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Cash and cash equivalents
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$
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87.7
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$
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87.7
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Debt:
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Credit Facilities(1)
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$
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753.1
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$
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753.1
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Other bank facilities
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$
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1.0
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$
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1.0
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Total debt
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$
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754.1
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$
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754.1
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Stockholders’ equity:
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Ordinary shares (no par value)(2)
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$
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—
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$
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—
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Preferred shares (no par value)(3)
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—
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—
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Additional paid in capital(4)
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1,202.9
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1,224.2
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Non-controlling interest(5)
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100.0
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100.0
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Retained deficit
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(212.3
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)
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(212.3
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)
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Total stockholders’ equity
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$
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1,090.6
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$
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1,111.8
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Total capitalization
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$
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1,844.7
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$
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1,865.9
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(1)
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As of October 31, 2013, there was $753.1 million of indebtedness outstanding under the first lien credit facility of MacDermid. We became a co-borrower under that facility in connection with the acquisition of
MacDermid. See “Platform Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financing Activities.”
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(2)
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Does not include (i) up to 8,905,776 shares of our common stock issuable in exchange for shares of PDH common stock at the option of the holder, at any time after the earlier of October 31, 2014 or a change of
control of Platform, (ii) 2,000,000 shares issuable upon the conversion of the Founder Preferred Shares, (iii) 16,247,554 shares issuable upon the exercise of the Platform Warrants, (iv) and 250,000 shares issuable upon the exercise of the
outstanding options and (v) shares issuable as dividends pursuant to the terms of our Founder Preferred Shares.
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(3)
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In connection with our Domestication, the 2,000,000 outstanding Founder Preferred Shares will be converted into 2,000,000 shares of Series A Preferred Stock which, as of October 31, 2013, entitles holders to
receive an annual dividend based on the market price of our common stock if such market price exceeds certain trading price minimums. See “Description of Capital Stock; Comparison of Rights—Shares Reserved for Future Issuances.” Upon
the closing of the acquisition, an adjustment was made to the balance sheet reflecting Platform’s recording of a one-time, non-cash expense estimated to be approximately $166 million, which represents the fair value of the founder preferred
dividend rights at that time. This is a preliminary estimate of the expense to be recorded. Future dividends (if any) payable in Platform ordinary shares will be recorded in stockholders’ equity.
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(4)
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Adjusted to include 1,933,636 shares issuable in connection with the 401(k) Exchange at $11 per share ($21.3 million).
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(5)
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Represents the 8,905,776 shares of PDH common stock that are held by the Retaining MacDermid Holdings Holders.
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29
Market Prices and Dividend Information
Ordinary Shares
Our ordinary
shares are listed for trading on the London Stock Exchange under the symbol “PAH” in U.S. dollars. Our shares began trading on the London Stock Exchange on May 17, 2013 and were traded until October 10, 2013 when trading was halted due to
the announcement of the then-pending MacDermid Holdings Acquisition. The following table sets forth the quarterly range of high and low reported sale prices of our ordinary shares as reported on the London Stock Exchange for the periods indicated:
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Period
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High
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Low
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|
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Second Quarter 2013 (May 17, 2013 to June 30, 2013)
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$
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11.00
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$
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10.05
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Third Quarter 2013
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$
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10.80
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$
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10.13
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Fourth Quarter 2013 (through October 10, 2013)
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$
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10.60
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$
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10.46
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As of December 30, 2013, we had 422 record holders of our ordinary shares. We have not declared or paid any
dividends on our ordinary shares in the past two fiscal years, and have no current plans to pay dividends on our ordinary shares. We intend to list our common stock on the New York Stock Exchange (the “NYSE”) under the ticker symbol
“PAH”.
MacDermid common stock ceased trading on the NYSE in 2007 and has not been publicly traded since.
Warrants
Our warrants are listed
for trading on the London Stock Exchange under the symbol “PAHW” in U.S. dollars. Our warrants began trading on the London Stock Exchange on July 2, 2013 and were traded until October 10, 2013 when trading was halted due to the
announcement of the then-pending MacDermid Holdings Acquisition. The following table sets forth the quarterly range of high and low reported sale prices of our warrants as reported on the London Stock Exchange for the periods indicated:
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Period
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High
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|
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Low
|
|
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Third Quarter 2013 (July 2, 2013 to September 30, 2013)
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$
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0.30
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$
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0.15
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Fourth Quarter 2013 (through October 10, 2013)
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$
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0.18
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$
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0.18
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As of December 30, 2013 there were 48,742,662 Platform Warrants, exercisable for Platform ordinary shares
(with each three warrants entitling the holder to subscribe for one Ordinary Share). As of December 30, 2013, we had 32 record holders of our warrants. We expect that our warrants will be traded on the Over-the-Counter Bulletin Board.
30
The Exchange Agreement
The following is a brief summary of the material provisions of the Exchange Agreement dated as of October 25, 2013, a copy of which is
attached as Appendix D to this prospectus. This summary may not contain all of the information about the Exchange Agreement that may be important to you. We urge all participants in the MacDermid, Incorporated Profit Sharing and Employee Savings
Plan, which we refer to as the
“Plan
”, to read the Exchange Agreement, as well as the Indication of Interest Notice attached that accompanies this prospectus, in their entirety for a more complete description of the terms and
conditions of the exchange.
General
On October 25, 2013, Platform entered into an Exchange Agreement with the Plan fiduciaries pursuant to which Platform agreed to acquire all of
the MacDermid Plan Shares held in trust for the Plan participants, consisting of 1,514,371.01 shares of common stock of MacDermid, no par value (the “Plan Owned MacDermid Common Stock”), and 1,469 shares of 9.5% Series B Cumulative
Compounding Preferred Stock of MacDermid, no par value (the “Plan Owned MacDermid Preferred Stock”). Pursuant to the Exchange Agreement, Platform agreed to exchange cash and/or, subject to the terms and conditions set forth therein,
Platform Common Stock for the MacDermid Plan Shares. The MacDermid Plan Shares are held in trust by The Charles Schwab Trust Company Custodian for MacDermid Inc. PS and ESOP Plan, the trustee of the Plan (the “Trustee”).
401(k) Exchange Election
No later than five business days following the effective date of this registration statement, the Plan fiduciaries or the Trustee will send the
Indication of Interest Notice, along with a copy of the prospectus that forms a part of this registration statement, to all Plan participants. Plan participants will be able to make either a stock or cash election with respect to the MacDermid Plan
Shares beneficially owned by such Plan participant by filling out the Indication of Interest Notice and returning it to the Plan fiduciaries or Trustee. Each Plan participant will have 20 business days from the date such materials are first sent or
mailed to make their election. We refer to this time period as the “Indication of Interest Period.” Plan participants may change their election during the Indication of Interest Period. If no election is made or received, the Plan
fiduciaries will cause the Trustee to make a cash election on behalf of such Plan participant.
Timing of the 401(k) Exchange
We expect the 401(k) Exchange to take place three business days after the closing of the Indication of Interest Period. However, Platform and
the Plan fiduciaries may agree in writing to another date. We refer to this date as the “Exchange Agreement Closing Date.”
Exchange Consideration
The exchange consideration for the MacDermid Plan Shares will be paid to the Trustee for the benefit of the Plan participants and continue to
be held in trust pursuant to the Plan following the 401(k) Exchange. Plan participants will not directly receive any cash or stock consideration.
If this registration statement has been declared effective, then upon expiration of the Indication of Interest Period, we shall pay or deliver
the following consideration to the Trustee for the benefit of the Plan participants:
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•
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In exchange for the aggregate Plan Owned MacDermid Preferred Stock for which Plan participants have made a cash election (or no election) pursuant to the Indication of Interest Notice, a cash payment (the “Plan
Preferred Stock Cash Election Consideration”) equal to the product of (x) the Company Preferred Stock Value Per Share (as defined below)
multiplied by
(y) the number of shares of Plan Owned MacDermid Preferred Stock for which a cash
election (or no election) has been made;
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31
|
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•
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In exchange for the aggregate Plan Owned MacDermid Common Stock for which Plan participants have made a cash election (or no election) pursuant to the Indication of Interest Notice, a cash payment (the “Plan Common
Stock Cash Election Consideration”) equal to the product of (x) the Company Common Stock Value Per Share (as defined below)
multiplied by
(y) the number of shares of Plan Owned MacDermid Common Stock for which a cash election (or no
election) has been made;
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•
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In exchange for the aggregate Plan Owned MacDermid Preferred Stock and Plan Owned MacDermid Common Stock for which Plan participants have made a valid stock election pursuant to the Indication of Interest Notice, a
number of shares of Platform Common Stock equal to the quotient of:
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•
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(x) the sum of (1) the product of (a) the Company Preferred Stock Value Per Share (as defined below)
multiplied by
(b) the number of shares of Plan Owned MacDermid Preferred Stock for which a valid stock election
has been made
plus
(2) the product of (a) the Company Common Stock Value Per Share (as defined below)
multiplied by
(b) the number of shares of Plan Owned MacDermid Common Stock for which a valid stock election has been made;
divided by
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provided, however, that if the average daily closing price per share of Platform
Common Stock on the NYSE (or other exchange on which such equity securities are then publicly traded) for the five consecutive trading days ending on the trading day immediately prior to the Exchange Agreement Closing Date (the “Trading
Price”) shall be below $11.00, then Platform shall also deliver a cash payment (the “Plan Stock Election Cash Make-Whole Consideration”) equal to the product of (A) the difference between $11.00 and the Trading Price
multiplied
by
(B) the number of shares of Platform Common Stock delivered.
If this registration statement has not been declared effective, then
we shall pay cash equal to the sum of (the “Aggregate Cash Consideration”): (x) the Plan Preferred Stock Cash Election Consideration; (y) the Plan Common Stock Cash Election Consideration and (z) the Plan Stock Election Cash Make-Whole
Consideration, if any.
The Exchange Agreement generally defines:
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|
•
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“Company Preferred Stock Value Per Share” as an amount equal to the quotient of (x) the amount of the preference value attributable to the Plan Owned MacDermid Preferred Stock (such amount to be determined in
accordance with the MacDermid Certificate of Incorporation, in effect immediately prior to the closing of the Merger, assuming MacDermid had been liquidated at12:01 a.m. New York time on the closing date of the Merger (such time, the
“Measurement Time”)
divided by
(y) the number of shares of Plan Owned MacDermid Preferred Stock;
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|
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•
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“Company Common Stock Value Per Share” as an amount equal to the sum of (x) the amount each share of MacDermid common stock, no par value, outstanding immediately prior to the closing of the Merger (which we
refer to as the “MacDermid Common Stock”) would be entitled to receive under the MacDermid Certificate of Incorporation, in effect on such date, assuming MacDermid had been liquidated at the Measurement Time and the net value available for
distribution to the MacDermid Class A Stock, no par value, and the MacDermid Common Stock were equal to the MacDermid Equity Value (as defined below)
plus
(y) an amount equal to $0.13 per share
plus
$0.39 per share; and
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|
|
•
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“MacDermid Equity Value” as an amount equal to the sum of (x) $1,800,000,000.00
plus
(y) the closing adjustment amount (which may be positive or negative) determined in accordance with the BCA
plus
(z) the final adjustment amount (which may be positive or negative) determined in accordance with the BCA
minus
(a)
the amount of the preference value attributable to all shares of MacDermid’s Series B 9.5% Cumulative
Compounding Preferred Stock, no par value, outstanding immediately prior to the closing of the Merger (such amount to be determined in accordance with the MacDermid Certificate of Incorporation, in effect immediately prior to the closing of the
Merger, assuming MacDermid had been liquidated at the Measurement Time.
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32
Conditions to Stock Election
The Exchange Agreement contains certain conditions to Platform’s delivery of the Platform shares of common stock. In certain cases, even
if a Plan participant has made a valid stock election, if the Exchange Agreement is terminated by Platform, Platform shall have the right to purchase all of the MacDermid Plan Shares for the Aggregate Cash Consideration as if a cash election had
been made with respect to all the MacDermid Plan Shares.
Termination Rights
We can terminate the Exchange Agreement only if (1) the Plan Fiduciaries’ representations and warranties were not true and correct as
of the date of the Exchange Agreement or as of the Closing Date, (2) the Plan Fiduciaries shall not have performed or complied, in all material respects, with all agreements and covenants set forth in the Exchange Agreement or (3) the
outside date of June 30, 2014 has been reached without a closing having occurred (which would only be the case if either (1) or (2) above was true or the parties had agreed not to set a closing date). The failure to have the
registration statement declared effective or the failure to have the Platform Common Stock approved for listing on the NYSE are not bases for terminating the Exchange Agreement. The only impact of either of these two occurrences is that we will have
the right to purchase the MacDermid common and preferred stock for cash even if some or all of the Plan participants have made a valid stock election (the amount of the consideration will not change).
33
The Domestication
General
Platform will effect the
Domestication by filing with the Secretary of State of the State of Delaware a certificate of corporate domestication and a certificate of incorporation of Platform Delaware, and by filing with the British Virgin Islands Registrar of Corporate
Affairs a notice of continuation out of the British Virgin Islands and certified copies of the certificates filed in Delaware. The Domestication and the certificate of incorporation of Platform Delaware were approved by our Board of Directors, and
no action of our shareholders is required to effect the Domestication. Under British Virgin Islands law and Delaware law, the Domestication is deemed effective upon the filing of the certificate of corporate domestication and the certificate of
incorporation with the Secretary of State of the State of Delaware. In addition, Platform must file with the British Virgin Islands Registrar of Corporate Affairs certified copies of the certificates filed with the Secretary of State of the State of
Delaware within 30 days of the date of their issuance by the Secretary of State of the State of Delaware. Upon making this filing in the British Virgin Islands, the British Virgin Islands Registrar of Corporate Affairs will issue a certificate of
discontinuance and, at that time, we shall cease to be registered as a company in the British Virgin Islands. We intend to file the certified copies of the certificates filed with the Secretary of State of the State of Delaware with the British
Virgin Islands Registrar of Corporate Affairs on the same day such certified copies are issued by the Secretary of State of the State of Delaware. Platform BVI has not received, and is not required by British Virgin Islands law to receive, approval
of a plan of arrangement in the British Virgin Islands, and no plan of arrangement is contemplated.
In connection with the Domestication,
Platform Delaware’s Board of Directors will adopt new by-laws, which, together with the new certificate of incorporation filed with the Secretary of State of the State of Delaware, will be the organizational documents of Platform Delaware from
and after the Domestication.
Background and Reasons for the Domestication
In connection with the MacDermid Holdings Acquisition, our Board of Directors approved the domestication of Platform from the British Virgin
Islands to the State of Delaware in connection with the registration of the shares of common stock of Platform Delaware with the SEC. Our Board of Directors believes that the Domestication will, among other things:
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•
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provide legal, administrative and other similar efficiencies;
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•
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relocate our jurisdiction of organization to one that is the choice of domicile for many publicly traded corporations, as there is an abundance of case law to assist in interpreting the DGCL, and the Delaware
legislature frequently updates the DGCL to reflect current technology and legal trends; and
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•
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provide a more favorable corporate environment which will help us compete more effectively with other publicly traded companies in raising capital and in attracting and retaining skilled, experienced personnel.
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For many years, Delaware has been a leader in adopting, implementing and interpreting comprehensive and flexible corporate
laws that are responsive to the legal and business needs of corporations.
Effects of the Domestication
The BVI Companies Act permits a British Virgin Islands company to discontinue from the British Virgin Islands and continue in an appointed
jurisdiction (which includes Delaware) as if it had been incorporated under the laws of that other jurisdiction. The BVI Companies Act and our memorandum and articles of association authorize our Board of Directors to continue Platform BVI in a
jurisdiction outside of the British Virgin Islands (in this case, Delaware) without a shareholder vote. Consequently, we are not asking for your vote or soliciting proxies with respect to the Domestication. The BVI Companies Act does not provide
shareholders with statutory rights of appraisal in relation to a discontinuance under the BVI Companies Act.
34
Section 388 of the DGCL provides that an entity organized in a country outside the United States
may become domesticated as a corporation in Delaware by filing in Delaware a certificate of incorporation and a certificate of corporate domestication stating, among other things, that the domestication has been approved as provided in the
organizational documents of the non-U.S. entity or applicable non-Delaware law, as appropriate. Section 388 of the DGCL provides that prior to the filing of a certificate of corporate domestication with the Secretary of State of the State of
Delaware, the domestication and the certificate of incorporation to be filed with the Secretary of State of the State of Delaware must be approved in the manner provided for by the document, instrument, agreement or other writing, as the case may
be, governing the internal affairs of the non-U.S. entity and the conduct of its business or by applicable non-Delaware law, as appropriate. Section 388 of the DGCL does not provide any other approval requirements for a domestication. The DGCL does
not provide stockholders with statutory rights of appraisal in connection with a domestication under Section 388.
Under Section 184 of
the BVI Companies Act, Platform BVI will cease to be a company incorporated under the BVI Companies Act and will continue as a company incorporated under the laws of Delaware. Similarly, Section 388 of the DGCL provides that, upon domesticating in
Delaware:
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•
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Platform Delaware shall be deemed to be the same entity as Platform BVI, and the domestication shall constitute a continuation of the existence of Platform BVI in the form of Platform Delaware;
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•
|
|
all rights, privileges and powers, as well as all property, of Platform BVI shall remain vested in Platform Delaware;
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•
|
|
all debts, liabilities and duties of Platform BVI shall remain attached to Platform Delaware and may be enforced against Platform Delaware to the same extent as if originally incurred by it; and
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•
|
|
unless otherwise agreed to or otherwise required under applicable British Virgin Islands law, the domestication shall not be deemed a dissolution of Platform BVI.
|
No Change in Business, Locations, Fiscal Year or Employee Plans
The Domestication will effect a change in our jurisdiction of incorporation, and other changes of a legal nature, including changes in our
organizational documents, which are described in this prospectus. The business, assets and liabilities of Platform and its subsidiaries on a consolidated basis, as well as our principal locations and fiscal year, will be the same upon effectiveness
of the Domestication as they are prior to the Domestication.
Upon effectiveness of the Domestication, all of our obligations will
continue as outstanding and enforceable obligations of Platform Delaware.
All Platform BVI employee benefit plans and agreements will be
continued by Platform Delaware. We expect to amend any and all of our share-based benefit plans in accordance with their terms as may be necessary to provide that Platform Delaware common stock will be issued upon the exercise of any options or the
payment of any other share-based awards granted under the plans, and otherwise to reflect appropriately the substitution of Platform Delaware common stock for Platform ordinary shares in connection with the plans, from and after the effectiveness of
the Domestication.
Our Management and Our Board of Directors
Our executive officers will be the executive officers of Platform Delaware from and after the effectiveness of the Domestication. Our current
executive officers are Daniel H. Leever (Chief Executive Officer) and Frank J. Monteiro (Chief Financial Officer).
Our directors before
the effectiveness of the Domestication will be the directors of Platform Delaware from and after the effectiveness of the Domestication. The composition of our Board of Directors changed upon the consummation of the MacDermid Holdings Acquisition.
Our current directors are Martin Franklin, Daniel H. Leever, Ian G. H. Ashken, Nicolas Berggruen, Michael F. Goss, Ryan Israel and E. Stanley O’Neal. Mr. Franklin
35
is our Chairman. Upon the consummation of the MacDermid Holdings Acquisition, Alun Cathcart, Paul Myners and Alain Minc stepped down from our Board of Directors and Ian G.H. Ashken, Michael F.
Goss, Ryan Israel, Daniel H. Leever and E. Stanley O’Neal joined our Board of Directors. See “Management and Corporate Governance—Board of Directors.”
Domestication Share Conversion
In
connection with the Domestication, our currently issued and outstanding ordinary shares will automatically convert, on a one-for-one basis, into shares of Platform Delaware common stock. Consequently, at the Effective Time, each holder of a Platform
ordinary share will instead hold a share of Platform Delaware common stock representing the same proportional equity interest in Platform Delaware as that shareholder held in Platform BVI immediately prior to the Effective Time. The number of shares
of Platform Delaware common stock outstanding immediately after the Effective Time will be the same as the number of ordinary shares of Platform BVI outstanding immediately prior to the Effective Time.
Platform Delaware does not intend to issue new stock certificates to Platform Delaware stockholders who currently hold any of our share
certificates in connection with the Domestication. A shareholder who currently holds any of our share certificates will receive a new stock certificate upon request pursuant to Section 158 of the DGCL or upon any future transaction in Platform
Delaware common stock that requires the transfer agent to issue stock certificates in exchange for existing share certificates. It is not necessary for shareholders of Platform BVI to exchange their existing share certificates for share certificates
of Platform Delaware in connection with the Domestication. Until surrendered and exchanged, each certificate evidencing Platform ordinary shares will be deemed for all purposes of the Company to evidence the identical number of shares of Platform
Delaware common stock. Holders of uncertificated ordinary shares of Platform BVI immediately prior to the effectiveness of the Domestication will continue as holders of uncertificated common stock of Platform Delaware upon effectiveness of the
Domestication.
Similarly, outstanding options and warrants to acquire Platform ordinary shares will become options or warrants to acquire
common stock of Platform Delaware. Platform Delaware will not issue new options or warrants to acquire Platform Delaware common stock until such future transaction that requires the issuance of options or warrants to acquire Platform Delaware common
stock in exchange for existing options or warrants to acquire Platform ordinary shares. Until surrendered and exchanged, each option or warrant to acquire Platform ordinary shares will be deemed for all purposes of the Company to evidence an option
or warrant to acquire the identical number of shares of Platform Delaware common stock.
Comparison of Shareholder Rights
The Domestication will change our jurisdiction of incorporation from the British Virgin Islands to the State of Delaware and, as a result, our
organizational documents will change and will be governed by Delaware law rather than British Virgin Islands law. Those new organizational documents and Delaware law contain provisions that may differ in certain respects from those in our current
organizational documents and British Virgin Islands law. For a more detailed description of how the new organizational documents and Delaware law may differ from our current organizational documents and British Virgin Islands law, please see
“Description of Capital Stock; Comparison of Rights—Comparison of Rights” below. Our business, assets and liabilities on a consolidated basis, as well as our executive officers, principal business locations and fiscal year, will not
change as a result of the Domestication.
The most significant differences between our current organizational documents and British Virgin
Islands law and the new organizational documents and Delaware law are as follows:
|
|
•
|
|
Delaware law requires that all amendments to the certificate of incorporation of Platform Delaware must be approved by the Board of Directors and by the stockholders, while amendments to the Amended and Restated
Memorandum and Articles of Association of Platform BVI may be made by resolutions of the directors (in limited circumstances) or by the holders of ordinary shares;
|
36
|
|
•
|
|
Delaware law prohibits the repurchase of shares of Platform Delaware when its capital is impaired or would become impaired by the repurchase, while there are no capital limitations in the BVI Companies Act;
|
|
|
•
|
|
The Platform Delaware certificate of incorporation prohibits the common stockholders of Platform Delaware from acting by written consent, while the Platform BVI Amended and Restated Memorandum and Articles of
Association permit shareholder action by written consent;
|
|
|
•
|
|
The Platform Delaware by-laws require stockholders desiring to bring a matter before an annual meeting of stockholders or to nominate a candidate for election as director to provide notice to Platform Delaware within
certain time frames, while the Platform BVI organizational documents do not contain similar notice requirements;
|
|
|
•
|
|
The Platform Delaware by-laws do not permit the stockholders of Platform Delaware to call meetings of stockholders under any circumstances, while the shareholders holding 30% of the voting rights in respect of the
matter for which the meeting is called may require the directors to call a meeting of shareholders of Platform BVI;
|
|
|
•
|
|
Under Delaware law, only the stockholders may remove directors, while under British Virgin Islands law, a majority of the directors may remove a fellow director;
|
|
|
•
|
|
Under the Platform Delaware certificate of incorporation and by-laws, vacancies and unfilled directorships may be filled solely by the remaining directors, while under the Platform BVI Amended and Restated Memorandum
and Articles of Association vacancies may be filled by either the directors or the shareholders;
|
|
|
•
|
|
Under Delaware law, directors may not act by proxy, while under British Virgin Islands law, directors may appoint another director or person to vote in his place, exercise his other rights as director, and perform his
duties as director;
|
|
|
•
|
|
Under Delaware law, a sale of all or substantially all of the assets of Platform Delaware requires stockholder approval, while the Platform BVI Amended and Restated Memorandum and Articles of Association eliminate the
shareholder vote otherwise required by the British Virgin Islands laws for a sale of more than 50% of the assets of Platform BVI;
|
|
|
•
|
|
Under Delaware law, stockholders may dissent and obtain the fair value of their shares in connection with certain corporate actions, while British Virgin Islands law provides no similar right to shareholders; and
|
|
|
•
|
|
Under Delaware law, “business combinations” with “interested stockholders” are prohibited for a certain period of time absent certain requirements, while British Virgin Islands law provides no
similar prohibition.
|
No Vote or Dissenters’ Rights of Appraisal in the Domestication
Under the BVI Companies Act and our memorandum and articles of association, shareholder approval of the Domestication is not required, and our
shareholders do not have statutory rights of appraisal or any other appraisal rights of their shares as a result of the Domestication. Nor does Delaware law provide for any such rights. We are not asking you for a proxy and you are requested not to
send us a proxy. No shareholder vote or action is required to effect the Domestication.
37
Platform Selected Consolidated Financial Information
The selected consolidated historical data for the period from
Inception (April
23, 2013) to
September 30, 2013 and as
of
September 30, 2013 has been derived from the
unaudited financial statements of Platform which are included elsewhere in this prospectus. The selected financial information should be read in conjunction with the financial statements
and supplementary data and “Platform’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this prospectus.
|
|
|
|
|
|
|
Statement of Operations Data
|
|
Period from
Inception
(April 23, 2013) to
September 30, 2013
|
|
|
(amounts in thousands)
|
|
|
|
|
Net sales/operating revenues
|
|
$
|
0
|
|
|
Loss from operations
|
|
|
(4,912
|
)
|
|
Other Income
|
|
|
122
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,790
|
)
|
|
|
|
|
|
|
|
Weighted average shares used in computing basic and diluted loss per share
|
|
|
88,530
|
|
|
Net loss per share applicable to ordinary stockholders—basic and diluted
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data
|
|
As of June 30,
2013
|
|
|
As of September 30,
2013
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
881,449
|
|
|
$
|
880,750
|
|
|
Total liabilities
|
|
$
|
262
|
|
|
$
|
4,175
|
|
|
Total stockholders’ equity
|
|
$
|
881,187
|
|
|
$
|
876,575
|
|
Platform has not declared any dividends on its ordinary shares since its incorporation and does not anticipate that it will do
so in the foreseeable future. In connection with the Domestication, the 2,000,000 outstanding Founder Preferred Shares will be converted into 2,000,000 shares of Series A Preferred Stock of Platform Delaware which, as of October 31, 2013,
entitle holders to receive an annual dividend based on the market price of Platform Common Stock if such market price exceeds certain trading price minimums. See Description of Capital Stock—Shares Issuable as Dividends on Series A Preferred
Stock.”
The official currency of the British Virgin Islands is the U.S. dollar and therefore disclosure of the exchange rate between the British
Virgin Islands and the U.S. is not applicable.
38
Platform Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following is a discussion of Platform’s financial condition and results of operations
from April
23, 2013 (inception) to
September 30, 2013. We did not own MacDermid during
this period. Consequently, these results may not be indicative of the results that we would expect
to recognize for periods after the closing of the MacDermid Holdings Acquisition. This discussion should be read in conjunction with the information contained in our audited and unaudited financial statements and the notes thereto included in this
prospectus.
As used in this Management’s Discussion and Analysis of the Financial Condition and Results of Operations, unless
otherwise stated, the words “we”, “our” and “us” refer collectively to Platform prior to the MacDermid Holdings Acquisition.
Overview
We were a development stage
company, formed on April 23, 2013 for the purpose of acquiring a target company or business with an anticipated enterprise value of between $750 million and $2.5 billion.
On October 31, 2013, we completed our acquisition of substantially all of the outstanding equity of MacDermid, a global provider of high
value-added specialty chemicals, for approximately $1.8 billion (including the assumption of approximately $756 million of indebtedness), subject to a post-closing working capital adjustment, plus (i) up to $100 million of contingent consideration
tied to achievement of EBITDA and stock trading price performance metrics over a seven-year period following the closing of the acquisition and (ii) an interest in certain MacDermid pending litigation.
At the closing of the acquisition, we paid approximately $925 million in cash and delivered approximately $100 million of new equity in the
Merger. The equity issued consists of shares of a wholly-owned subsidiary of Platform that may be exchanged for shares of Platform in one year. We funded the cash portion of the purchase price and related transaction expenses with a combination of
cash on hand and approximately $145 million of proceeds from an initial closing of a Platform warrant exchange offer. The Platform warrant exchange offer was an offer to permit holders of our warrants to exchange up to half of their outstanding
warrants at a ratio of three (3) warrants plus $10.50 per share for one of our ordinary shares. The remaining portion of the purchase price (approximately $20 million) will be paid in cash or stock following completion of post-closing adjustments to
the purchase price.
We intend to domesticate into Delaware from the British Virgin Islands. We also intend to apply to the NYSE for the
listing of our common stock. It is currently anticipated that the listing of our ordinary shares and warrants on the London Stock Exchange will be cancelled at or around the time the listing on the NYSE is achieved. Our listing on the London Stock
Exchange will remain suspended until such cancellation takes effect. Prior to the acquisition, we had no revenue. During the nine months ended September 30, 2013, we had losses relating to formation and administrative costs and approximately
$4.0 million of diligence costs related to the acquisition of MacDermid. We had no other operations other than the active solicitation of a target business with which to complete a business combination. We relied upon the sale of our ordinary
and preferred shares to fund our limited acquisition-related operations.
On April 25, 2013, we issued two preferred shares, one to each
of Mariposa Acquisition, LLC and Berggruen Acquisition Holdings, IV, Ltd. (collectively, the “Founder Entities”) for $20, and in connection with the initial public offering on May 22, 2013, the Founder Entities purchased an additional
1,999,998 preferred shares (no par value) for $19,999,980 (the “Founder Preferred Shares”). Beginning in 2014, if the average stock price of our ordinary shares exceeds $11.50 per share for the last ten (10) days of the calendar year, the
holders of Founder Preferred Shares will receive a dividend in the form of Platform ordinary shares equal to 20% of the appreciation of the market price of Platform ordinary shares issued to holders of Platform ordinary shares in the initial public
offering. In the first year, if a dividend is payable, the dividend amount will be calculated at the end
39
of each calendar year based on the appreciated stock price as determined above (the “Dividend Price”) compared to the initial public offering price of $10.00 per Platform ordinary
share. In subsequent years, the dividend amount will be calculated based on the appreciated stock price compared to the highest Dividend Price previously used in calculating the Founder Preferred Share dividends. Dividends are paid for the term the
Founder Preferred Shares are outstanding. The Founder Preferred Shares will be automatically converted into Platform ordinary shares on a one-for-one basis (1) in the event of a change of control of Platform following the MacDermid Holdings
Acquisition or (2) upon the last day of the seventh full financial year following such acquisition, being December 31, 2020. The life of the preferred can be extended up to 3 years at the request of the Founder Entities and with the consent of the
Board. Each Founder Preferred Share is convertible into one Platform ordinary share at the option of the holder and has certain voting rights.
Upon the closing of the acquisition, an adjustment was made to the balance sheet reflecting Platform’s recording of a one-time, non-cash
expense estimated to be approximately $166 million, which represents the fair value of the founder preferred dividend rights at that time. This is a preliminary estimate of the expense to be recorded. Future dividends (if any) payable in
Platform ordinary shares, will be recorded in stockholders equity.
In connection with the initial public offering on May 22, 2013, we
issued 88,500,000 of our ordinary shares (no par value) for gross proceeds of $885,000,000. In addition, on May 22, 2013, we issued 29,500 of our ordinary shares to non-founder directors for $10.00 per share. Each Platform ordinary share has voting
rights and winding-up rights.
Each of the 2,000,000 Founder Preferred Shares, 88,500,000 Platform ordinary shares issued with the initial
public offering as well as the 29,500 Platform ordinary shares issued to the non-founder directors was issued with a Platform warrant (90,529,500 warrants in aggregate), entitling the holder of each Platform warrant to purchase 1/3 of a Platform
ordinary share with a strike price of $11.50 per Platform ordinary share. Each Platform warrant is exercisable until three (3) years from the date of an acquisition, unless mandatorily redeemed by us. The Platform warrants are mandatorily redeemable
by us at a price of $0.01 per warrant should the average market price of a Platform ordinary share exceed $18.00 for ten (10) consecutive trading days. During November 2013, we completed a warrant exchange offer in which we received approximately
$145 million of proceeds in exchange for approximately 42.6 million warrants and issued 14,224,184 ordinary shares (which includes an additional 761,904 ordinary shares issued in connection with the closing of the warrant exchange offer). As of
December 1, 2013, there were approximately 48.7 million warrants outstanding representing approximately 16.2 million ordinary shares equivalents. See “Note 7 to the Financial Statements—Subsequent Events.”
Following the initial public offering, we invested approximately $867.0 million in United States Treasury Bills. As of September 30, 2013, we
held a total of $516 million in United States Treasury Bills ($336 million of which is recorded as a cash equivalent because at the time of purchase, the maturity was less than three months) and approximately $364 million in cash.
Results of Operations
Our entire
activity from inception to the closing of our initial public offering in May 2013 was the preparation for the acquisition of a target company or business with an anticipated enterprise value of between $750 million and $2.5 billion. Since the
initial public offering, our activity has been limited to the evaluation of business combination candidates and the issuance of stock based compensation to our non-founder directors. We will not be generating any operating revenues until the closing
and completion of our initial business combination. We expect to generate small amounts of non-operating income in the form of unrealized and realized gains on marketable securities and interest income on cash and cash
equivalents. Unrealized and realized gains on marketable securities and interest income are not expected to be significant in view of current low interest rates on risk-free investments (treasury securities). We expect to incur increased
expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance).
40
For the period from April 23, 2013 (inception) through September 30, 2013, we had net losses of
approximately $4.8 million which consist of formation and operating costs, stock based compensation and approximately $4.0 million of costs related to the acquisition of MacDermid. We incurred offering costs of approximately $24.1
million with regard to the initial public offering, which were recorded as a component of stockholders’ equity as of September 30, 2013.
Liquidity and Capital Resources
As of
September 30, 2013, we hold a total of $516.0 million in United States Treasury Bills ($336 million of which is recorded as a cash equivalent because at the time of purchase, the maturity was less than three months) and approximately $364 million in
cash. Working capital was $876.6 million as of September 30, 2013, primarily due to the initial public offering in which we raised aggregate net proceeds of $881.2 million through the issuance of Founder Preferred Shares and Platform ordinary
shares.
The following is a summary of our cash flows provided by (used in) operating, investing and financing activities during the
periods indicated ($ in thousands):
|
|
|
|
|
|
|
|
|
Period from Inception
(April 23, 2013) to
September 30, 2013
|
|
|
Cash at the beginning of the period
|
|
$
|
—
|
|
|
Cash used in operating activities
|
|
|
(719
|
)
|
|
Cash used in investing activities
|
|
|
(179,957
|
)
|
|
Cash provided by financing activities
|
|
|
881,218
|
|
|
|
|
|
|
|
|
Cash at the end of the period
|
|
$
|
700,542
|
|
|
|
|
|
|
|
Operating Activities
During the period ended September 30, 2013, our operating activities consisted of start-up costs, general and administrative costs and
diligence costs related to the acquisition of MacDermid
Investing Activities
During the period ended September 30, 2013, our investing activities related to the purchase of $359.9 million, and redemption of $179.9
million, in United States Treasury Bills.
Financing Activities
During the period ended September 30, 2013, our financing activities consisted of the initial public offering in which we raised net proceeds
of $881.2 million through the issuance of Founder Preferred and Platform ordinary shares. Substantially all of the cash raised through the issuance of Founder Preferred Shares and Platform ordinary shares was used to acquire the equity interests of
MacDermid.
In conjunction with the acquisition of MacDermid and related assumption of MacDermid indebtedness, we became a co-borrower on
MacDermid’s $50 million revolving credit facility. A portion of the revolving credit facility not in excess of $15.0 million is available for the issuance of letters of credit. As of October 31, 2013 there was $751.3 million of
indebtedness outstanding under the first lien credit facility which will also be assumed in conjunction with the acquisition of MacDermid. The revolving credit facility and first lien credit facility are hereinafter referred to as the
“Credit Facilities.”
Platform has unconditionally guaranteed all obligations under the Credit Facilities. The Credit Facilities
contain various covenants including limitations on additional indebtedness, dividends and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on
41
liens, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions and dispositions. Pursuant to the terms of the credit agreement,
if the Company’s outstandings under the revolving credit facility exceed $12.5 million in the aggregate as of the last day of any fiscal quarter, we must maintain a 6.5 to 1.0 ratio of (x) consolidated indebtedness secured by a first lien
minus unrestricted cash and cash equivalents of the Borrowers and Guarantors under the facility to (y) consolidated EBITDA for the four most recent fiscal quarters, subject to a right to cure. As of October 31, 2013, the borrowings under the
revolving credit facility, consisting solely of stand-by letters of credit outstanding, were $3.8 million.
Off-Balance Sheet Transactions
We are not party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal
business operations.
Recently Issued Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial
position or cash flows.
Contractual Obligations and Commitments
There were no material contractual obligations and commitments as of September 30, 2013.
Jumpstart Our Business Startups Act of 2012
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We are electing to delay such adoption of new or revised accounting standards, and as a result, we may choose not to comply with new or revised accounting standards on the relevant dates on which adoption
of such standards is required for other public companies. Additionally, we are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act.
Significant Accounting Policies
Our
significant accounting policies are more fully described in Note 2 to the Financial Statements. As disclosed in Note 2, the preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”)
requires management to make estimates and assumptions that impact the reported amounts and accompanying disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and also assumptions upon which
accounting estimates are based. We apply judgment based on our understanding and analysis of the relevant circumstances to reach these decisions. By their nature, these judgments are subject to an inherent degree of uncertainty. Accordingly, actual
results could differ significantly from the estimates applied.
Accounting and Reporting by Development Stage Enterprises
We are considered to be a development stage company and, as such, our financial statements are prepared in accordance with the Accounting
Standards Codification (“ASC”) Topic 915 “Development Stage Entities.” We are subject to the risks associated with development stage companies.
42
Cash and Cash Equivalents
The fair value of cash and cash equivalents approximates the carrying amount. We consider all highly liquid investments purchased with a
maturity of three months or less from the date of purchase to be cash equivalents. While cash held by financial institutions may at times exceed federally insured limits, we believe that no material credit or market risk exposure exists due to the
high quality of the institutions. We have not experienced any losses on such accounts.
Stock-based Compensation
We expense stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture
rates, if any. Compensation cost is determined using the Black-Scholes option pricing model to estimate the fair value of the awards at the grant date. An offsetting increase to stockholders’ equity is recorded equal to the amount of the
compensation expense charge. The assumptions used in calculating the fair value of stock-based awards represent our best estimates and involve inherent uncertainties and the application of judgment. The amount of the compensation expense is based on
the estimated fair value of the awards of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. On May 17, 2013, we issued an aggregate of 250,000 options to its non-founder
directors. The expense related to this issuance is included in stock-based compensation expense in the accompanying Statement of Operations.
Earnings
per Share
Basic earnings (loss) per ordinary share excludes dilution and is computed by dividing net income (loss) by the weighted
average number of ordinary shares outstanding during the period. Diluted earnings per ordinary share reflect the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary
shares or resulted in the issuance of ordinary shares that then shared in the earnings of the entity. Since we have only incurred losses, basic and diluted losses per share are the same. The amount of potentially dilutive securities excluded from
the calculation at September 30, 2013 was 30,176,500 ordinary shares underlying warrants (or 90,529,500 warrants, each entitling the holder to purchase 1/3 of an ordinary share), 2,000,000 preferred shares (convertible into ordinary shares on a
1-for-1 basis) and options to purchase 250,000 ordinary shares.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740”), which provides for deferred taxes
using an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. We determine our deferred tax assets and
liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances
are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
We account for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, we recognize the tax
benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as
consideration of the available facts and circumstances. We do not have any significant uncertain tax positions.
Investment in Marketable Securities
Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet
date. Marketable securities are classified as trading securities with all unrealized gains and losses on our investment portfolio recorded through the Statement of Operations.
43
Fair Value Measurement
We record cash equivalents and marketable securities at fair value. Accounting Standards Codification (“ASC”) Topic 820, Fair Value
Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The
hierarchy consists of three levels:
|
|
•
|
|
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.
|
|
|
•
|
|
Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full
term of the asset or liability.
|
|
|
•
|
|
Level 3—Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or
liability at the measurement date.
|
We used Level 1 fair value hierarchy assumptions to measure the fair value of all of its
cash and cash equivalents and marketable securities as of September 30, 2013.
Quantitative and Qualitative Disclosures About Market Risk
As of September 30, 2013, we were not subject to any material market or interest rate risk. Following the consummation of the our initial
public offering, the net proceeds of our initial public offering, have been invested in U.S. government treasury securities with a maturity of 180 days or less. Due to the short-term nature of these investments, we believe there will be no
associated material exposure to interest rate risk.
44
MacDermid Selected Consolidated Financial Information
The selected consolidated historical data for the years ended December 31, 2012 and 2011 and as of December 31, 2012 and
December 31, 2011 have been derived from the audited consolidated financial statements of MacDermid, Incorporated, which are included elsewhere in this prospectus. The selected consolidated historical financial data for the nine months ended
September 30, 2013 and 2012 and as of September 30, 2013 and 2012 have been derived from the unaudited consolidated financial statements of MacDermid, Incorporated, which are included elsewhere in this prospectus. The unaudited financial statements
have been prepared on the same basis as the audited financial statements and, in the opinion of our management, include all adjustments, including normal recurring adjustments, necessary for a fair presentation in all material respects of the
information set forth therein. Results of operations for the interim periods are not necessarily indicative of the results that might be expected for any other interim period or for an entire year. The selected financial information should be read
in conjunction with the financial statements and supplementary data and “MacDermid Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data:
(amounts in thousands)
|
|
Year ended
December 31,
|
|
|
Nine months ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
Net sales
|
|
$
|
731,220
|
|
|
$
|
728,773
|
|
|
$
|
560,557
|
|
|
$
|
548,825
|
|
|
Cost of sales
|
|
$
|
376,166
|
|
|
$
|
388,298
|
|
|
$
|
271,730
|
|
|
$
|
282,539
|
|
|
Gross profit
|
|
$
|
355,054
|
|
|
$
|
340,475
|
|
|
$
|
288,827
|
|
|
$
|
266,286
|
|
|
Operating profit
|
|
$
|
115,097
|
|
|
$
|
55,948
|
|
|
$
|
105,028
|
|
|
$
|
86,260
|
|
|
Income (loss) from continuing operations before income taxes, non-controlling interest and accumulated payment-in-kind dividend on
cumulative preferred shares
|
|
$
|
70,939
|
|
|
$
|
11,306
|
|
|
$
|
45,141
|
|
|
$
|
57,732
|
|
|
Income tax (expense)
|
|
$
|
(24,673
|
)
|
|
$
|
(9,953
|
)
|
|
$
|
(20,932
|
)
|
|
$
|
(17,056
|
)
|
|
Net income
|
|
$
|
46,266
|
|
|
$
|
1,353
|
|
|
$
|
24,209
|
|
|
$
|
40,676
|
|
|
Less net income attributable to the non-controlling interest
|
|
$
|
(289
|
)
|
|
$
|
(366
|
)
|
|
$
|
(319
|
)
|
|
$
|
(243
|
)
|
|
Net income attributable to MacDermid, Incorporated
|
|
$
|
45,977
|
|
|
$
|
987
|
|
|
$
|
23,890
|
|
|
$
|
40,433
|
|
|
Accrued payment-in-kind dividend on cumulative preferred shares
|
|
$
|
(44,605
|
)
|
|
$
|
(40,847
|
)
|
|
$
|
(22,100
|
)
|
|
$
|
(33,096
|
)
|
|
Net income (loss) attributable to common shares
|
|
$
|
1,372
|
|
|
$
|
(39,860
|
)
|
|
$
|
1,790
|
|
|
$
|
7,337
|
|
|
|
|
|
|
Balance Sheet Data:
(amounts in thousands)
|
|
Year ended
December 31,
|
|
|
Nine months ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
Cash and cash equivalents
|
|
|
143,351
|
|
|
|
113,452
|
|
|
|
65,201
|
|
|
|
137,570
|
|
|
Total assets
|
|
|
1,233,917
|
|
|
|
1,221,418
|
|
|
|
1,144,272
|
|
|
|
1,248,017
|
|
|
Total debt and capital lease obligations
|
|
|
720,640
|
|
|
|
744,372
|
|
|
|
1,110,096
|
|
|
|
719,320
|
|
|
Total equity (deficit)
|
|
|
272,437
|
|
|
|
241,806
|
|
|
|
(209,970
|
)
|
|
|
280,089
|
|
|
Cash dividends declared per common share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
45
MacDermid Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following is a discussion of MacDermid’s financial condition and results of
operations for the years ended December
31, 2011 and 2012 and for the
nine months ended
September 30, 2012 and 2013. We did not own MacDermid during any of these periods. Consequently,
these results may not be indicative of the results that we would expect to recognize for periods after the closing of the MacDermid Holdings Acquisition. This discussion should be read in conjunction with the information contained in
MacDermid’s consolidated financial statements and the notes thereto included in this prospectus.
Overview
MacDermid manages and reports its business in two operating segments: a Performance Materials segment and a Graphic Solutions segment. In the
fiscal year ended December 31, 2012, the Performance Materials and Graphic Solutions segments generated net sales of $559.5 million and $171.7 million, respectively. For the nine months ended September 30, 2013, the Performance Materials and Graphic
Solutions segments generated net sale of $429.4 million and $131.1 million, respectively.
MacDermid sells its products into three
geographic regions: Asia, Europe and the Americas. Because the Performance Materials segment utilizes shared facilities and administrative resources and offers products that are distinct from those within the Graphic Solutions segment, MacDermid
makes decisions about how to manage its operations by reference to each segment and not with respect to the underlying products or geographic regions that comprise each segment.
Performance Materials
The
Performance Materials segment manufactures and markets dynamic chemistry solutions that are used in the electronics, automotive and oil and gas production and drilling industries. MacDermid operates in Europe, the Americas and Asia. MacDermid’s
products include surface and coating materials and water-based hydraulic control fluids. In conjunction with the sale of these products, MacDermid provides extensive technical service and support to ensure superior performance of their application.
Graphic Solutions
The
Graphic Solutions segment primarily produces and markets photopolymers through an extensive line of flexographic plates that are used in the commercial packaging and printing industries. Sales in the Graphic Solutions segment are predominately in
the Americas and Europe.
Global Economic and Industry Conditions
MacDermid products are sold in industries that it believes are sensitive to changes in general economic conditions. Accordingly, net sales,
gross profit and financial condition depend significantly on general economic conditions and the impact of these conditions on demand for MacDermid’s dynamic chemistries and services in the markets in which MacDermid competes. The MacDermid
business is particularly impacted by demand for chemistry products utilized in the automotive, printed circuit board, offshore oil production and commercial packaging industries.
The MacDermid business is also significantly influenced by trends and characteristics in the specialty chemical industry and the printing
industry. MacDermid believes that these industries are cyclical and subject to constant and rapid technological change, product obsolescence, price erosion, evolving standards, short product life-cycles, raw material price fluctuations and changes
in product supply and demand.
The specialty chemical industry is currently being affected by globalization and a shift in customers’
businesses out of traditional geographic markets and into high-growth, emerging markets.
46
The printing industry is currently shrinking, which is reflected in the newspaper closures and
consolidations that have occurred during the past three years. The newspapers are also reducing capital spending due to outsourcing their production. As a result, sales of newspaper plates, which represented 26.8% of the Graphic Solutions segment
sales for year ended December 31, 2012, has been adversely impacted by these trends. This adverse impact has been offset by the double digit growth in the consumer packaging market, which typically commands higher margins.
Net sales in future periods will depend, among other factors, upon a continued general improvement in global economic conditions,
MacDermid’s ability to meet unscheduled or temporary changes in demand, and MacDermid’s ability to penetrate new markets with strategic product initiatives in specific targeted markets.
Foreign Currency Exposure
For the years
ended December 31, 2012 and 2011, approximately 67% and 69%, respectively, of MacDermid’s net sales were denominated in currencies other than the U.S. Dollar. For each of the nine month periods ended September 30, 2013 and 2012, approximately
67% of net sales were denominated in currencies other than the U.S. Dollar—predominantly the Euro, British Pound Sterling, Hong Kong Dollar, Chinese Yuan, Japanese Yen and Brazilian Real. MacDermid does not manage its foreign currency exposure
in a manner that eliminates the effects of changes in foreign exchange rates on its net sales, cash flows or the fair values of its assets and liabilities. Therefore, MacDermid’s financial performance is positively or negatively impacted by
changes in foreign exchange rates in any given reporting period. For most currencies, MacDermid is a net receiver of the foreign currency and therefore benefit from a weaker U.S. Dollar and are adversely affected by a stronger U.S. Dollar relative
to the foreign currency.
For the year ended December 31, 2012, net sales were negatively impacted as the U.S. Dollar strengthened against
the Euro, British Pound Sterling and Brazil Real when compared to 2011. However, the absolute impact on 2012 net sales was not material.
Selected
Statement of Operations Items
Net Sales
Revenue is generated from the sale of specialty chemicals products and processes to customers. Net sales represent revenues generated by
MacDermid’s total sales offset by the effect of any rebates and credits for products that are returned. MacDermid recognizes revenue, including freight charged to customers, when its products are shipped to or received by customers in
accordance with the terms of the applicable sales agreement, when title and risk of loss have been transferred, collectability is probable and pricing is fixed or determinable. Sales arrangements may include right of inspection, acceptance
provisions and transfer of title, in which case revenue is deferred until these provisions are satisfied.
Cost of Sales
Cost of sales consists primarily of raw material costs and related purchasing and receiving costs used in the manufacturing process, direct
salary and wages and related fringe benefits, packaging costs, shipping and handling costs, plant overhead and other costs associated with the manufacture and distribution of MacDermid products.
Gross Profit
MacDermid’s
gross profit is significantly influenced by its raw material prices and its absorption rate. The absorption rate refers only to manufacturing facilities and is based on the capacity of the manufacturing facilities. As absorption rates increase,
there is more operating leverage because fixed manufacturing costs are spread over higher output. MacDermid’s profit margins are also significantly influenced by raw material costs. MacDermid’s
47
gross profit margins have improved by approximately 12.2% since the first quarter of 2011 to approximately 52.5% in the third quarter of 2013 due in large part to its operational restructuring
programs and a change in its product mix to emphasize the sales of higher margin products.
Selling, Technical and Administrative Expenses
Selling, technical and administrative expenses consist primarily of personnel and travel costs, advertising and marketing
expenses, administrative expenses associated with accounting, finance, legal, human resources and risk management and overhead associated with these functions. Selling expenses consist primarily of compensation and associated costs for sales and
marketing personnel, costs of advertising, trade shows and corporate marketing. Technical expenses consist primarily of compensation and associated costs for technical support personnel who support MacDermid products. General and administrative
expense consists primarily of compensation and associated costs for executive management, finance, legal and other administrative personnel, outside professional fees and other corporate expenses.
Research and Development Expenses
Research and development expenses are expensed as incurred and include the cost of activities attributable to development and pre-production
efforts associated with designing, developing and testing new or significantly enhanced products or process and packaging technology. These costs consist primarily of compensation and associated costs for MacDermid engineers engaged in the design
and development of MacDermid products and technologies.
Other Operating Expenses
Amortization expense reflects the charges incurred to amortize MacDermid’s finite-lived intangible assets, such as developed technology
and customer lists, which are amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of the assets are currently ten years for developed technology and range between three and 21 years for customer lists.
MacDermid’s operational restructuring expenses are related to the series of operational restructuring initiatives described above
that it undertook beginning in 2008 as a result of the downturn in global economic conditions. As of September 30, 2013, with the exception of finalizing some operational restructuring programs in the Performance Materials segment in Europe and
Graphic Solutions segment in the Americas, MacDermid has completed the majority of these operational restructuring actions.
MacDermid
does not amortize goodwill or other intangible assets that have indefinite useful lives; rather, goodwill and other intangible assets with indefinite lives are tested for impairment. Expenses for impairment charges are related to the write down of
goodwill balances and to intangible assets balances.
Other Income (Expense)
MacDermid’s interest income reflects the interest received on investments, including those other than cash that are held on a short- and
long-term maturity basis. Interest expense reflects the interest MacDermid pays on its outstanding indebtedness. Miscellaneous (expense) income results primarily from currency-related gains and losses that relate to indebtedness that is denominated
in currencies other than the U.S. Dollar, as discussed above.
48
Results of Operations
The following table summarizes certain information relating to MacDermid’s operating results that has been derived from MacDermid’s
consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data:
|
|
Year ended
December 31,
|
|
|
Nine months ended
September 30,
|
|
|
(amounts in thousands)
|
|
2012
|
|
|
2011
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
Net sales
|
|
$
|
731,220
|
|
|
$
|
728,773
|
|
|
$
|
560,557
|
|
|
$
|
548,825
|
|
|
Cost of sales
|
|
|
376,166
|
|
|
|
388,298
|
|
|
|
271,730
|
|
|
|
282,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
355,054
|
|
|
|
340,475
|
|
|
|
288,827
|
|
|
|
266,286
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, technical and administrative
|
|
|
187,514
|
|
|
|
185,649
|
|
|
|
143,854
|
|
|
|
140,173
|
|
|
Research and development
|
|
|
25,051
|
|
|
|
22,966
|
|
|
|
17,504
|
|
|
|
19,145
|
|
|
Amortization
|
|
|
27,100
|
|
|
|
28,578
|
|
|
|
20,124
|
|
|
|
20,292
|
|
|
Restructuring(1)
|
|
|
292
|
|
|
|
896
|
|
|
|
1,890
|
|
|
|
416
|
|
|
Impairment charges(2)
|
|
|
—
|
|
|
|
46,438
|
|
|
|
427
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
239,957
|
|
|
|
284,527
|
|
|
|
183,799
|
|
|
|
180,026
|
|
|
Operating profit (loss)
|
|
|
115,097
|
|
|
|
55,948
|
|
|
|
105,028
|
|
|
|
86,260
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
532
|
|
|
|
500
|
|
|
|
304
|
|
|
|
392
|
|
|
Interest expense
|
|
|
(49,671
|
)
|
|
|
(54,554
|
)
|
|
|
(40,998
|
)
|
|
|
(38,012
|
)
|
|
Miscellaneous income (expense)(3)
|
|
|
4,981
|
|
|
|
9,412
|
|
|
|
(405
|
)
|
|
|
9,092
|
|
|
Loss on extinguishment of debt(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
(18,788
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes, non-controlling interest and accumulated payment-in-kind dividend on
cumulative preferred shares
|
|
|
70,939
|
|
|
|
11,306
|
|
|
|
45,141
|
|
|
|
57,732
|
|
|
Income tax (expense)
|
|
|
(24,673
|
)
|
|
|
(9,953
|
)
|
|
|
(20,932
|
)
|
|
|
(17,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
46,266
|
|
|
|
1,353
|
|
|
|
24,209
|
|
|
|
40,676
|
|
|
Less net income attributable to the non-controlling interest
|
|
|
(289
|
)
|
|
|
(366
|
)
|
|
|
(319
|
)
|
|
|
(243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to MacDermid, Incorporated
|
|
$
|
45,977
|
|
|
$
|
987
|
|
|
$
|
23,890
|
|
|
$
|
40,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued payment-in-kind dividend on cumulative preferred shares
|
|
$
|
(44,605
|
)
|
|
$
|
(40,847
|
)
|
|
$
|
(22,100
|
)
|
|
$
|
(33,096
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shares
|
|
$
|
1,372
|
|
|
$
|
(39,860
|
)
|
|
$
|
1,790
|
|
|
$
|
7,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Charges in the nine months ended September 30, 2013 and 2012 and the years ended December 31, 2012 and 2011 relate to amounts recorded in connection with MacDermid’s operational restructuring initiatives.
|
|
(2)
|
In 2011, MacDermid recorded impairment charges of $46.4 million related to a write down of customer list intangible assets to their estimated fair value as determined in accordance with ASC 360. In the second quarter of
2013, MacDermid recorded an impairment charge of $0.4M related to a write down of an indefinite-lived purchased intangible asset to its estimated fair value as determined in accordance with ASC 350. For a detailed description of these impairment
charges, see the discussion under the headings “Impairment Charges” below and Note 5 to MacDermid’s audited financial statements and Note 6 to MacDermid’s unaudited financial statements included this registration statement.
|
|
(3)
|
Represents remeasurement (gain) loss on foreign denominated debt as a result of changes in foreign exchange rates.
|
|
(4)
|
Represents loss on extinguishment of debt in connection with the debt refinancing transaction in June 2013.
|
49
Nine Months Ended September 30, 2013 Compared to the Nine Months Ended September 30, 2012
Net Sales
MacDermid’s net
sales of $560.6 million for the nine months ended September 30, 2013 increased by $11.7 million, or 2.1%, compared to the same period in 2012. Net sales for the nine months ended September 30, 2013 were negatively impacted by $6.9 million due to the
increase in value of the U.S. Dollar during the nine months ended September 30, 2013 compared to the same period in 2012. MacDermid believes that net sales of products that it has identified as new products, which represent opportunities to enter
markets adjacent to those it currently serves, was $57.3 million for the nine months ended September 30, 2013, compared to $46.6 million for the same period in 2012. MacDermid not only periodically introduces new products to market, but also
continuously modifies its existing products, often at the request of, or in collaboration with, its customers. The impact of new product sales is a recurring factor to MacDermid’s results of operations.
The Performance Materials segment had higher net sales for the nine months ended September 30, 2013 of $7.9 million, or 1.9%, compared to the
same period in 2012, primarily attributable to an increase of $2.9 million, or 4.6%, in net sales of offshore industry products due primarily to higher worldwide demand, an increase of $1.5 million, or 0.6%, in net sales of industrial products
primarily related to increased automotive sales in the United States and an increase of $3.5 million, or 3.1% in net sales of electronics industry products primarily in Asia.
The Graphic Solutions segment had higher net sales for the nine months ended September, 2013 of $3.8 million, or 3.0%, compared to the same
period in 2012 due to higher sales of new products and market share gains in the Graphic Solutions segment.
For the nine month period
ended September 30, 2013, net sales in the Performance Materials segment increased $4.4 million, or 3.3%, in the Americas due to higher demand for offshore and industrial products as discussed above. In Asia, sales in the Performance Materials
segment increased by $3.3 million, or 2.3%, for the nine months ended September 30, 2013 compared to the same period in 2012 due to higher sales in Asia of electronics industry products. In Europe, sales in the Performance Materials segment
increased by $0.5 million, or 0.1%, for the nine months ended September 30, 2013 compared to the same period in 2012 due to slightly higher sales volume throughout Europe.
The Graphic Solutions segment in the Americas reported higher net sales levels for the nine months ended September 30,
2013—$3.0 million, or 4.3%—compared to the same period in 2012 due to stronger customer demand for digital printing sheets and higher sales volume of newer products. This increase primarily reflects continued gains in market share as
a result of customers switching to MacDermid’s LUX
®
process, a platemaking process which enables certain types of printers to increase print quality and efficiency. In Europe, the Graphic
Solutions segment experienced stronger net sales for the nine months ended September 30, 2013 of $2.0 million, or 4.6%, compared to the same period in 2012 due to continued market share gains from new product sales. In Asia, the Graphic Solutions
segment reported lower sales of $1.2 million, or 8.7%, for the nine months ended September 30, 2013 compared to the same period in 2012 due to lower sales of non-proprietary products. Changes in the average selling prices of MacDermid products did
not have a material impact on net sales for the nine months ended September 30, 2013 compared to the same period in 2012.
Gross Profit
For the nine months ended September 30, 2013, gross profit increased $22.5 million, or 8.5%, compared to the same period in 2012 primarily
attributable to higher sales levels of high margin products. Gross profit for the nine months ended September 30, 2012 was negatively impacted by $2.2 million due to the increase in value of the U.S. Dollar during the nine months ended September 30,
2013 compared to the same period in 2012. As a percentage of net sales, gross profit for the nine months ended September 30, 2013 was 51.5%, as compared to 48.5% for the same period in 2012. Changes in MacDermid’s product mix and the average
selling prices of MacDermid products did not have a material impact on gross profit for the nine months ended September 30, 2013 compared to the same period in 2012.
50
Selling, Technical and Administrative Expenses
Selling, technical and administrative expenses increased $3.7 million, or 2.6%, for the nine months ended September 30, 2013 compared to the
same period in 2012 primarily as the result of higher selling expenses associated with higher sales, an increase in corporate expenses (including bonus expense) and an increase in salary expenses. As a percentage of net sales, selling, technical and
administrative expenses were 25.7% for the nine months ended September 30, 2013, compared to 25.5% for the same period in 2012.
Research and
Development Expenses
Research and development expenses for the nine months ended September 30, 2013 decreased $1.6 million, or
8.6%, from the same period in 2012 primarily due to additional investments made to support certain strategic projects in 2012. As a percentage of net sales, research and development expenses were 3.1% for the nine months ended September 30, 2013, as
compared to 3.5% for the same period in 2012.
Amortization Expenses for Finite-Lived Purchased Intangible Assets
Amortization expenses for finite-lived purchased intangible assets related to developed technology and customer lists for the nine months ended
September 30, 2013 decreased by $0.2 million, or -0.8%, compared to the same period in 2012 primarily due to the decreased value of the British Pound Sterling and the Euro compared to the U.S. Dollar, which slightly decreased the reported
amount of amortization expense for the nine months ended September 30, 2013 compared to the same period in 2012.
Operational Restructuring Expenses
During the nine months ended September 30, 2013, MacDermid recorded $1.9 million of restructuring expense, of which $1.7 million
related to the elimination of forty-seven positions in the Graphic Solutions segment in the Americas, $0.1 million related to the elimination of four positions in the Performance Materials segment in the Americas and $0.1 million related to the
elimination of two positions in the Performance Materials segment in Asia. As of September 30, 2013, MacDermid has accrued restructuring costs of $0.9 million that are anticipated to be paid out by December 31, 2013. MacDermid anticipates that these
headcount reductions will have annual cash cost savings of approximately $3.4 million going forward. Actual cash cost savings to be realized depend on the timing of payments and many other factors, some of which are beyond MacDermid’s control,
and could differ materially from its estimates. MacDermid anticipates recognizing the estimated cash cost savings once all payments have been finalized related to these restructuring initiatives.
Impairment Charges
During the
nine months ended September 30, 2013, MacDermid recorded an impairment charge related to an indefinite-lived purchased intangible asset in the Graphic Solutions segment, based upon MacDermid’s annual impairment review. MacDermid’s
management concluded that the estimated direct cash flows associated with the applicable intangible assets using a “relief from royalty” methodology associated with revenues projected to be generated from this intangible asset was less
than the carrying value of the intangible assets. Because of lower net sales, primarily from newspaper sales within the Graphic Solutions segment, MacDermid experienced lower estimated cash flows utilized in the “relief from royalty”
methodology. Impairment analysis of indefinite-lived purchased intangible assets indicated that a Graphic Solutions segment’s trade name was therefore impaired by $0.4 million, and MacDermid accordingly recorded an impairment charge of $0.4
million related to this trade name during the nine months ended September 30, 2013. After recording this impairment charge, the value of the Graphic Solutions segment’s trade name was $3.9 million.
The primary driver of this impairment charge related to indefinite-lived purchased intangible assets was lower net sales levels of newspaper
products in the Graphic Solutions segment in the Americas because of the consolidation and decline of printed newspapers in the United States.
51
During the nine months ended September 30, 2012, there were no impairment charges recorded.
Interest Expense
Interest expense
for the nine months ended September 30, 2013 increased by $3.0 million, or 7.9%, compared to the same period in 2012 due to higher debt balances outstanding during the nine months ended September 30, 2013 compared to the same period in 2012.
Miscellaneous (Expense) Income
Miscellaneous expense for the nine months ended September 30, 2013 was $(0.4) million compared to the $9.1 million of miscellaneous income
recorded during the same period in 2012, a decrease due primarily to a remeasurement charge on Euro denominated debt. For the nine months ended September 30, 2013, MacDermid recorded a remeasurement gain of $1.1 million on Euro denominated debt, due
to the fluctuation of the Euro compared to the U.S. Dollar. For the nine months ended September 30, 2012, MacDermid recorded a remeasurement gain of $1.1 million on Euro denominated debt, due to the fluctuation of the Euro compared to the U.S.
Dollar. The change in the value of the Euro to the U.S. Dollar from December 31, 2012 to September 30, 2013 was a decrease of 1.4%. During the first quarter of 2013, MacDermid recorded a gain of $4.1 million on Euro denominated debt as the value of
the Euro decreased by 2.9% against the U.S. Dollar. During the second quarter of 2013 MacDermid recorded a loss of $3.0 million on Euro denominated debt as the value of the Euro increased by 1.5% against the U.S. Dollar. During the third quarter of
2013 MacDermid did not record any amount as a gain or loss on Euro denominated debt because it was paid off in June 2013. During the first quarter of 2012 MacDermid recorded a loss of $4.4 million on Euro denominated debt as the value of the Euro
increased by 3.0% against the U.S. Dollar. During the second quarter of 2012 MacDermid recorded a gain of $7.7 million on Euro denominated debt as the value of the Euro decreased by 5.1% against the U.S. Dollar. During the third quarter of 2012
MacDermid recorded a loss of $2.2 million on Euro denominated debt as the value of the Euro increased by 1.6% against the U.S. Dollar. For the nine months ended September 30, 2012, MacDermid recorded a remeasurement gain of $8.4 million on foreign
denominated intercompany loans compared to no remeasurement gain for the same period in 2013. For the nine months ended September 30, 2013, MacDermid recorded a loss on settled foreign currency hedges of $0.4 million compared to a loss of $0.1
million for the same period in 2012. For the nine months ended September 30, 2013, MacDermid recorded $1.2 million of foreign exchange losses compared to $0.6 million of foreign exchange losses for the same period in 2012.
Loss on Extinguishment of Debt
During the nine months ended September 30, 2013, MacDermid recorded a loss of $18.8 million related to refinancing Tranche B and Tranche C term
loans and Senior Subordinated Notes. This amount consisted of $12.5 million of call premiums on the Senior Subordinated Notes and $6.3 million of net write-offs of deferred financing fees related to the extinguished debt. During the nine months
ended September 30, 2012 MacDermid did not record any loss on extinguishment of debt.
Income Tax Expense
For the nine months ended September 30, 2013 and 2012, MacDermid’s effective tax rate was 46.4% and 29.5%, respectively. The difference
from the statutory tax rate to the reported tax rate in the nine months ended September 30, 2013 was a result of the earnings mix of MacDermid’s entities within taxing jurisdictions and the loss incurred on the extinguishment of debt. The loss
on the extinguishment of debt is treated as a discrete item in determining MacDermid’s estimated annual tax rate. The discrete items for loss on extinguishment of debt did not result in a tax charge or benefit for the nine months ended
September 30, 2013 because MacDermid maintains a valuation allowance against certain deferred tax assets. The difference from the statutory tax rate to the reported tax rate for the nine months ended September 30, 2012 was a result of the
earnings mix of MacDermid’s entities within taxing jurisdictions and foreign exchange losses. Foreign exchange losses are considered discrete items because of the difficulty in estimating their full-year impact on MacDermid’s estimated
annual tax rate.
52
Foreign exchange gains and losses are considered discrete items because of the difficulty in
estimating their full-year impact on the estimated annual tax rate. Foreign exchange gains decreased by $9.0 million for the nine months ended September 30, 2013 compared to the same period in 2012, resulting in an overall loss of $0 for the nine
months ended September 30, 2013. The loss on extinguishment of debt is a discrete item as it is a significant, unusual and infrequent item. The loss on extinguishment of debt was $18.8 million for the nine months ended September 30, 2013 versus $0
for the same period in 2012. Foreign exchange gain/loss will occur in the future, although it is extremely difficult to estimate the amount of the future impact. The loss on extinguishment of debt is not expected to occur again in the future.
Accrued payment-in-kind dividend on cumulative preferred shares
For the nine months ended September 30, 2013, MacDermid’s accrued payment-in-kind dividend on cumulative preferred shares was $11.0
million lower for the nine months ended September 30, 2013 compared to the same period in 2012 due to the paying off the cumulative dividend and redemption of its cumulative preferred shares in June 2013. The cumulative preferred shares accrue
a 9.5% cumulative payment in kind dividend compounded quarterly.
Segment Reporting
The following discussion breaks down MacDermid’s net sales and operating profit by operating segment for the nine months ended September
30, 2013 compared to the same period in 2012.
Performance Materials—
Net sales increased by $7.9 million, or 1.9%, for the
nine months ended September 30, 2013 as compared to the same period in 2012, and were negatively impacted by $6.4 million due to the increase in value of the U.S. Dollar during the nine months September 30, 2013 compared to the same period in 2012.
The Americas operations experienced the highest net sales growth among the geographic regions in the Performance Materials segment for the nine months ended September 30, 2013 of $4.4 million, or 3.3%, due to an increase in sales of offshore
industry products and higher sales of industrial automotive products in the United States. In Europe, the Performance Materials segment had higher sales of $0.2 million, or 0.1%, for industrial products sold in Europe. The Performance Materials
segment in Asia had higher sales of $3.3 million, or 2.3%, for the nine months ended September 30, 2013 compared to the same period in 2012 due primarily to higher industry electronic products in Asia.
Operating profit for the Performance Materials segment for the nine months ended September 30, 2013 increased by $14.5 million, or 23.0%, as
compared to the same period in 2012. This increase is primarily attributable to higher sales of offshore industry products and higher margins on industrial products sold in the United States and electronics industry products sold in Asia. Operating
profit for industrial products was negatively impacted by $1.5 million for the nine months ended September 30, 2013 due to the increase in value of the U.S. Dollar during the nine months ended September 30, 2013 compared to the same period in 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months ended
September 30,
|
|
|
2013
to 2012
% Change
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
Favorable
|
|
|
Performance Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
429,446
|
|
|
$
|
421,541
|
|
|
|
1.9
|
%
|
|
Operating profit
|
|
$
|
77,660
|
|
|
$
|
63,136
|
|
|
|
23.0
|
%
|
53
Graphic Solutions—
Net sales increased by $3.8 million, or 3.0%, for the nine months
ended September 30, 2013 as compared to the same period in 2012, and were negatively impacted by $0.5 million due to the increase in value of the U.S. Dollar. The Graphic Solutions segment in the Americas reported higher net sales levels for the
nine months ended September 30, 2013 of $3.0 million, or 4.3%, compared to the same period in 2012 due to stronger customer demand for digital printing sheets and the continued sales levels of new products. This increase primarily reflects a gain in
market share as a result of customers switching to MacDermid’s LUX
®
process. In Europe, the Graphic Solutions segment had higher net sales for the nine months ended September 30, 2013 of
$2.0 million, or 4.6%, compared to the same period in 2012 due to market share gains from new product sales.
Operating profit for
the Graphic Solutions segment for the nine months ended September 30, 2013 was $4.2 million, or 18.4%, higher than the same period in 2012, an increase primarily due to the increase in net sales in the Graphic Solutions segment in the Americas and
Europe, as discussed above, and the continued market share gains related to new and higher margin products.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months ended
September 30,
|
|
|
2013
to 2012
% Change
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
Favorable
|
|
|
Graphic Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
131,111
|
|
|
$
|
127,284
|
|
|
|
3.0
|
%
|
|
Operating profit
|
|
$
|
27,368
|
|
|
$
|
23,124
|
|
|
|
18.4
|
%
|
Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Net Sales
Net sales of $731.2
million for the year ended December 31, 2012 increased by $2.4 million, or 0.3%, compared to the same period in 2011. Net sales for the year ended December 31, 2011 were negatively impacted by $18.6 million due to the increase in value of the U.S.
Dollar during the year ended December 31, 2012 compared to the same period in 2011. MacDermid believes that net sales of products that it has identified as new products, which represent opportunities to enter markets adjacent to those it currently
serves, was $66.7 million for the year ended December 31, 2012, compared to $56.0 million for the same period in 2011. MacDermid not only periodically introduces new products to market, but also continuously modifies its existing products, often at
the request of, or in collaboration with, its customers. The impact of new product sales is a recurring factor to MacDermid’s results of operations.
The Performance Materials segment had lower net sales for the year ended December 31, 2012 of $9.1 million, or 1.6%, compared to the same
period in 2011. This decrease was attributable to an increase of $17.2 million, or 25.2%, in net sales of offshore industry products due primarily to higher worldwide demand for offshore fluids, offset by a decrease of $15.3 million, or 4.5%, in net
sales of industrial products due to a stronger U.S. Dollar against the Euro and Britain Pound Sterling and lower automotive sales in Brazil and Europe and a decrease of $10.9 million, or 6.8%, in net sales of electronics industry products
attributable to lower product sales in China and product migration in Asia during 2012. The Graphic Solutions segment had higher net sales for the year ended December 31, 2012 of $11.5 million, or 7.2%, compared to the same period in 2011 due to
higher sales of new products and market share gains in the Graphic Solutions segment.
For the year ended December 31, 2012, net sales in
the Performance Materials segment increased by $14.1 million, or 8.6%, in the Americas due to higher demand for offshore industry products as discussed above. In Asia, net sales in the Performance Materials segment decreased by $12.1 million, or
6.0%, for the year ended December 31, 2012 compared to the same period in 2011 due to lower sales in Japan as economic conditions in Japan decreased demand for electronics and MacDermid’s strategic decision in 2011 to cease selling low margin
products in Asia negatively impacted sales in 2012. In Europe, net sales in the Performance Materials segment
54
decreased by $11.1 million, or 5.5%, for the year ended December 31, 2012 compared to the same period in 2011 due to a stronger U.S. Dollar which increased by 7.7% against the Euro and 1.1%
against the British Pound Sterling. On a constant dollar basis the Performance Materials segment in Europe experienced modest growth from the year ended December 31, 2011 to the year ended December 31, 2012.
The Graphic Solutions segment in the Americas reported higher net sales levels for the year ended December 31, 2012 of $9.0 million, or 10.2%,
compared to the same period in 2011 due to stronger customer demand for digital printing sheets and the introduction of new products. This increase primarily reflects a gain in market share as a result of customers switching to MacDermid’s LUX
®
process. The Graphic Solutions segment in Europe had higher net sales for the year ended December 31, 2012 of $2.6 million, or 4.6%, compared to the same period in 2011 due to market share gains
from new product sales. Changes in MacDermid’s product mix and the average selling prices of products did not have a material impact on net sales for the year ended December 31, 2012 compared to the same period in 2011.
Gross Profit
For the year ended
December 31, 2012, gross profit increased $14.6 million, or 4.3%, compared to the same period in 2011 primarily attributable to MacDermid’s decision in 2011 to cease selling low margin products in Asia and higher sales levels of high margin
products in 2012. Gross profit for the year ended December 31, 2011 was negatively impacted by $9.7 million due to the increase in value of the U.S. Dollar during the year ended December 31, 2012 compared to the same period in 2011. As a percentage
of net sales, gross profit for the year ended December 31, 2012 was 48.6%, as compared to 46.7% for the same period in 2011. Changes in the product mix and the average selling prices of products did not have a material impact on gross profit for the
year ended December 31, 2012 compared to the same period in 2011.
Selling, Technical and Administrative Expenses
Selling, technical and administrative expenses increased $1.9 million, or 1.0%, for the year ended December 31, 2012 compared to the same
period in 2011 primarily as the result of higher selling expenses associated with higher sales and an increase in salary expenses. As a percentage of net sales, selling, technical and administrative expenses were 25.6% for the year ended December
31, 2012, compared to 25.5% for the same period in 2011 primarily due to the increase in net sales.
Research and Development Expenses
Research and development expenses for the year ended December 31, 2012 increased $2.1 million, or 9.1%, from the same period in 2011 primarily
due to additional investments made to support certain strategic projects. As a percentage of net sales, research and development expenses were 3.4% for the year ended December 31, 2012, as compared to 3.2% for the same period in 2011, an increase
due to higher salary expense.
Amortization Expenses for Finite-Lived Purchased Intangible Assets
Amortization expenses for finite-lived purchased intangible assets related to developed technology and customer lists for the year ended
December 31, 2012 decreased by $1.5 million, or 5.2%, compared to the same period in 2011 due to the $46.1 million impairment charge related to a portion of customer list intangible assets in the Performance Materials Asia reporting unit recorded in
2011 and a portion of customer list intangible assets being fully amortized in 2011.
Operational Restructuring Expenses
During the year ended December 31, 2012, MacDermid recorded $0.3 million of restructuring expenses. MacDermid recorded $0.3 million related to
the elimination of four positions in the Performance Materials
55
segment in Europe, $0.1 million related to the elimination of seven positions in the Performance Materials segment in Asia and $0.1 million related to the elimination of two positions in the
Graphic Solutions segment in the Americas. Also, MacDermid reversed $(0.1) million related to accrued other for estimated lease termination costs and $(0.1) million related to accrued other for legal and other costs that were no longer required in
the Performance Materials segment in Europe as the amounts were no longer due. As of December 31, 2012, MacDermid has accrued restructuring costs of $0.6 million that are anticipated to be paid out within the next twelve months. MacDermid
anticipates that these headcount reductions will have annual cash savings of approximately $0.3 million going forward. Actual cash cost savings to be realized depend on the timing of payments and many other factors, some of which are beyond
MacDermid’s control, and could differ materially from out estimates. MacDermid anticipates recognizing the estimated cash cost savings once all payments have been finalized related to these restructuring initiatives in MacDermid’s results
of operations and cash flows.
During the year ended December 31, 2011, MacDermid recorded $0.9 million of operational restructuring
expenses. MacDermid recorded $0.9 million related to the elimination of four positions in the Performance Materials segment in Europe and $0.2 million related to the elimination of seven positions in the Performance Materials segment in Asia.
MacDermid also reversed $(0.2) million of operational restructuring charges related to accrued benefits in the Performance Materials segment as the amounts were no longer due to employees and for estimated legal costs that were no longer required.
MacDermid believes it has recognized $0.5 million, the full amount of the anticipated annual cost savings related to 2011 headcount reductions, in MacDermid’s results of operations for the year ended December 31, 2012.
Impairment Charges
During the
year ended December 31, 2012, there were no impairment charges recorded.
During 2011, MacDermid recorded $46.4 million of impairment
charges related to a write down of the customer list intangible assets in the Performance Materials segment in Asia to their estimated fair values. MacDermid concluded that certain indicators were present suggesting a potential impairment of the
customer list intangible assets of the Performance Materials segment in Asia. The indicators of this potential impairment included:
|
|
•
|
|
Recent reductions in gross profit margins of certain products;
|
|
|
•
|
|
Increases in raw material prices used in manufacturing process that were difficult to pass along to customers;
|
|
|
•
|
|
Increased pricing pressure for certain products from competitors; and
|
|
|
•
|
|
Customers’ reluctance to accept product price increases and MacDermid’s reluctance to continue selling certain products, which require technical support, at low margin levels.
|
Based upon the above indicators MacDermid evaluated customer list intangible assets for potential impairment. In accordance with ASC 360, a
long-lived asset (asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that a long-lived asset (asset group) may not be recoverable. Under ASC 360, impairment is defined as the condition that exists
when the carrying amounts of a long-lived asset (asset group) exceeds its fair value. MacDermid utilized an “income approach” method to test the Performance Materials Asia customer list intangible assets for impairment. In step one of the
testing, MacDermid compared the carrying amounts of the Performance Materials Asia customer list intangible assets to the undiscounted cash flows expected to be generated from the use and eventual disposition of the customer list intangible assets
over their remaining useful lives. Four of the end markets served by the products in the Performance Materials Asia reporting unit passed the first step of the testing procedures, with significant headroom. Two of the end markets served by the
products in the Performance Materials Asia reporting unit failed the first step of the testing procedures; therefore, MacDermid performed the second step of impairment testing. In the second step of the testing procedures, the
56
estimated fair value of the Performance Materials Asia customer list intangible assets was determined by estimating the after-tax cash flows attributable to the assets and then discounting these
cash flows to a present value using a risk-adjusted discount rate. The cash flow model utilized in the customer list intangible asset impairment test involves significant judgments related to future growth rates, discount rates and tax rates, among
other considerations. The step-two testing procedures indicated that the Performance Materials Asia customer list intangible assets relating to the products serving two of the industry end markets were impaired because the carrying value of these
assets exceeded their estimated fair value by $46.4 million.
Interest Expense
Interest expense for the year ended December 31, 2012 decreased by $4.9 million, or 9.0%, compared to the same period in 2011 due to lower
outstanding debt balances.
Miscellaneous Income
Miscellaneous income for the year ended December 31, 2012 was $5.0 million compared to the $9.4 million of miscellaneous income recorded during
the same period in 2011, a decrease due primarily to a remeasurement charge on Euro denominated debt. For the year ended December 31, 2012, MacDermid recorded a remeasurement loss of $2.7 million on Euro denominated debt, due to a 1.8% increase in
the value of the Euro against the U.S. Dollar, although the Euro was even stronger against the U.S. Dollar for the first and fourth quarters of 2012. Specifically, the Euro appreciated in value against the U.S. Dollar by 3.0% during the period from
December 31, 2011 to March 31, 2012 and by 2.6% during the period from September 30, 2012 to December 31, 2012. For the year ended December 31, 2011, MacDermid recorded a remeasurement gain of $4.1 million on Euro denominated debt as the Euro
decreased in value by 3.1% against the U.S. Dollar from December 31, 2010 to December 31, 2011. For the year ended December 31, 2012, MacDermid recorded a remeasurement gain of $8.4 million on foreign denominated intercompany loans compared to a
remeasurement gain of $5.1 million recorded for the same period in 2011. For the year ended December 31, 2012, MacDermid recorded a gain on settled foreign currency hedges of $0.1 million compared to a gain of $0.6 million for the same period in
2011. For the year ended December 31, 2012, MacDermid recorded $1.1 million of foreign exchange losses compared to $0.2 million of foreign exchange losses for the same period in 2011.
Income Tax Expense
For the year
ended December 31, 2012, MacDermid’s effective tax rate was 34.8% compared to 88.0% for the same period in 2011. MacDermid is a U.S. based company with a statutory income tax rate of 35%. However, MacDermid operates in 24 foreign countries,
which have tax rates that are different from the U.S. statutory tax rate. MacDermid’s 2012 and 2011 annual effective tax rates differed from the U.S. statutory rate of 35% in 2012 and 2011 due to: (1) the imposition of taxes in different tax
jurisdictions combined with the earnings mix in these taxing jurisdictions, (2) the impact of tax rate changes in certain taxing jurisdictions during 2012 which resulted in a change to accumulated deferred tax balances and a tax benefit to the 2012
and 2011 tax rates, (3) the effect of tax reserves and (4) the effect of valuation allowances. The foreign tax rate differential is a benefit of $11.6 million and $1.5 million in 2012 and 2011, respectively, a result of different tax rates applied
to foreign pre-tax income as well as the impact of repatriating income from overseas locations, net of allowed foreign tax credits. There were several tax rate changes instituted in 2012 and 2011 which resulted in a tax benefit of $1.0 million and
$0.9 million, respectively. MacDermid also recognized a tax charge of $5.7 million for tax reserves which were recorded in 2012. For the year ended December 31, 2012, MacDermid had a charge of $6.9 million for increases to valuation allowances,
compared to $6.7 million in the same period in 2011. For the year ended December 31, 2011, MacDermid had a deferred tax charge of $1.2 million for foreign earnings that may be repatriated in the future. Each one of these factors impacting
MacDermid’s 2012 and 2011 effective tax rates will likely also impact the tax rate in the future, although it is extremely difficult to estimate the amount of their future impact.
57
Segment Reporting
The following discussion breaks down MacDermid’s net sales and operating profit by operating segment for the year ended December 31, 2012
compared to the same period in 2011.
Performance Materials—
Net sales decreased by $9.1 million, or 1.6%, for the year
ended December 31, 2012 as compared to the same period in 2011, and were negatively impacted by $14.8 million due to the increase in value of the U.S. Dollar during the year ended December 31, 2012 compared to the same period in 2011. Our Americas
operations experienced the highest net sales growth among the geographic regions in our Performance Materials segment for the year ended December 31, 2012 of $14.1 million, or 8.6%, due to an increase in our sales of offshore industry products. In
Europe, our Performance Materials segment had lower sales of $11.1 million, or 5.5%, due to a stronger U.S. Dollar against the Euro and British Pound Sterling as discussed above. Our Performance Materials segment in Asia had lower sales of $12.1
million, or 6.0%, for the year ended December 31, 2012 compared to the year ended December 31, 2011 due to lower sales in China as a result of our strategic decision in 2011 to cease selling low margin products in Asia which negatively impacted
sales in 2012 and the sale of our Australian and New Zealand industrial operations in 2011, which negatively impacted 2012 sales by approximately $6.8 million. Overall our sales in our offshore products increased by 25.5% from the year ended
December 31, 2011 compared to same period in 2012 within our Performance Materials segment while our sales in our industrial and electronics products decreased by 4.5% and 6.8% from the year ended December 31, 2011 compared to the same period in
2012 within our Performance Materials segment.
Operating profit for the Performance Materials segment for the year ended December 31,
2012 increased by $51.8 million, or 170.7%, as compared to the same period in 2011. This increase is primarily attributable to the $46.4 million of impairment charges related to a write down of the customer list intangible assets in the Performance
Materials segment in Asia recorded during the year ended December 31, 2011 and the decision in 2011 to cease selling low margin products in Asia. The Performance Materials segment operating profit was positively impacted by $2.3 million for the year
ended December 31, 2012 due to the increase in value of the U.S. Dollar during the year ended December 31, 2012 compared to the same period in 2011 related to customer list intangible asset impairment charges recorded in Asia.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31,
|
|
|
2012
to 2011
% Change
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
Favorable
(Unfavorable)
|
|
|
Performance Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
559,520
|
|
|
$
|
568,578
|
|
|
|
-1.6
|
%
|
|
Operating profit
|
|
$
|
82,101
|
|
|
$
|
30,331
|
|
|
|
170.7
|
%
|
Graphic Solutions—
Net sales increased by $11.5 million, or 7.2%, for the year ended December 31,
2012 as compared to the same period in 2011, and were negatively impacted by $3.8 million due to the increase in value of the U.S. Dollar. The Graphic Solutions segment in the Americas reported higher net sales levels for the year ended December 31,
2012 of $9.0 million, or 10.2%, compared to the same period in 2011 due to stronger customer demand for digital printing sheets and the introduction of new products. This increase primarily reflects a gain in market share as a result of customers
switching to MacDermid’s LUX
®
process. The Graphic Solutions segment in Europe had higher net sales for the year ended December 31, 2012 of $2.6 million, or 4.6%, compared to the same
period in 2011 due to market share gains from new product sales.
58
Operating profit for the Graphic Solutions segment for the year ended December 31, 2012 was $7.4
million, or 28.8%, higher than the same period in 2011, an increase primarily due to the increase in net sales in the Graphic Solutions segment in the Americas and Europe, as discussed above, and the introduction of higher margin products in 2011 in
those operations which carried into the full year of 2012. The Graphic Solutions segment operating profit for the year ended December 31, 2012 was negatively impacted by $1.1 million due to the increase in value of the U.S. Dollar during the year
ended December 31, 2012 compared to the same period in 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31,
|
|
|
2012
to 2011
% Change
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
Favorable
|
|
|
Graphic Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
171,700
|
|
|
$
|
160,195
|
|
|
|
7.2
|
%
|
|
Operating profit
|
|
$
|
32,996
|
|
|
$
|
25,617
|
|
|
|
28.8
|
%
|
Operational Restructuring
MacDermid has executed a series of operational restructuring initiatives to streamline its cost structure and consolidate its global
manufacturing activities. These actions have reduced the workforce in its manufacturing, research and development and sales, technical and administrative functions.
At each reporting date, MacDermid evaluates accruals for operational restructuring activities, which consist primarily of termination benefits
(principally severance payments), to ensure that accruals are still appropriate. In certain circumstances, accruals are no longer required because of efficiencies in carrying out the initiative or because employees previously identified for
separation resigned unexpectedly and did not receive severance or were redeployed due to circumstances not foreseen when the original plans were initiated. MacDermid reverses accruals to operational restructuring expense when it is determined they
are no longer required.
The following table displays the activity from December 31, 2012 to September 30, 2013 of costs related to
MacDermid’s operational restructuring initiatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31,
2012
|
|
|
Nine months ended
September 30, 2013
|
|
|
As of September 30, 2013
|
|
|
|
|
Charges to
Expense
|
|
|
Cash
Payments
|
|
|
Non-Cash
adjustments
|
|
|
Total costs
and
adjustments
|
|
|
Total
expected
costs &
adjustments
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graphic Solutions Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
$
|
—
|
|
|
$
|
1,668
|
|
|
$
|
(1,442
|
)
|
|
$
|
—
|
|
|
$
|
226
|
|
|
$
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Graphic Solutions Segment
|
|
|
—
|
|
|
|
1,668
|
|
|
|
(1,442
|
)
|
|
|
—
|
|
|
|
226
|
|
|
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
|
616
|
|
|
|
222
|
|
|
|
(224
|
)
|
|
|
18
|
|
|
|
16
|
|
|
|
632
|
|
|
Other
|
|
|
16
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Performance Materials Segment
|
|
|
632
|
|
|
|
222
|
|
|
|
(228
|
)
|
|
|
18
|
|
|
|
12
|
|
|
|
644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
632
|
|
|
$
|
1,890
|
|
|
$
|
(1,670
|
)
|
|
$
|
18
|
|
|
$
|
238
|
|
|
$
|
870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The $1.7 million of cash payments set forth above reflects cash payments made to employees separated as part
of MacDermid’s operational restructuring programs from 2013. As of September 30, 2013, MacDermid had accrued operational restructuring costs of $0.9 million that are anticipated to be paid out within the succeeding six months.
59
Liquidity and Capital Resources
MacDermid’s primary source of liquidity is cash generated from operations. MacDermid’s primary uses of cash are raw material
purchases, salary expense, capital expenditures and debt service obligations. MacDermid believes that its cash and cash equivalent balance and cash generated from operations will be sufficient to meet its working capital needs, capital expenditures
and other business requirements for at least the next twelve months. From time to time there are various legal proceedings pending against MacDermid; however, MacDermid believes that the resolution of these claims, to the extent not covered by
insurance, will not, individually or in the aggregate, have a material adverse effect on its liquidity. At September 30, 2013, MacDermid had $65.2 million in cash and cash equivalents.
Although MacDermid has not historically done so, if appropriate, it may borrow cash under the Revolving Credit Facility which, at September
30, 2013, had approximately $46.1 million of availability. While MacDermid believes it has sufficient liquidity and capital resources to meet its current operating requirements, if cash flows from operations are less than expected or it requires
funds to pursue additional expansion activities that it may elect to pursue, it may need to incur additional debt, issue additional equity securities or sell or monetize existing assets. MacDermid cannot, however, assure you that future funding will
be available on terms favorable to it or at all. The restrictions in its existing debt instruments may also limit its ability to incur additional debt or sell assets; however, MacDermid is currently able to borrow up to the entire amount of its
availability under the Revolving Credit Facility despite these restrictions.
Of MacDermid’s $65.2 million of cash and cash
equivalents at September 30, 2013, $45.7 million was held by its foreign subsidiaries. The majority of the cash held by foreign subsidiaries is generally available for the ongoing needs of its operations. The laws of certain countries may limit
MacDermid’s ability to utilize cash resources held in those countries for operations in other countries. However, these laws are not likely to impact its liquidity in any material way. The operations of each foreign subsidiary generally fund
such subsidiary’s capital requirements. In the event that other foreign operations or operations within the United States require additional cash, MacDermid may transfer cash between and among subsidiaries as needed so long as such transfers
are in accordance with law. As of September 30, 2013, MacDermid had the ability to repatriate $25.5 million of cash at MacDermid’s discretion from the foreign subsidiaries and branches while the remaining balance of $20.2 million was held at
subsidiaries in which earnings are considered permanently reinvested. Repatriation of some of these funds could be subject to delay and could have potential tax consequences, principally with respect to withholding taxes paid in foreign
jurisdictions. If cash is repatriated from jurisdictions in which earnings are considered permanently reinvested MacDermid will be required to accrue and pay U.S. income taxes on such repatriations. As of December 31, 2012, MacDermid’s
foreign subsidiaries held $31.2 million of its total cash and cash equivalents balance of $143.4 million.
As market conditions warrant,
MacDermid may from time to time repurchase debt securities issued in privately negotiated or open-market transactions, by tender offer or otherwise, or issue new debt in order to refinance or prepay amounts outstanding under the Credit Facilities or
for other permitted purposes.
Operating Activities
MacDermid generated cash flows from operating activities of $64.4 million for the nine months ended September 30, 2013, compared to $59.0
million for the same period in 2012. This increase was primarily attributable to a decrease in earnings of $(16.5) million, a decrease in depreciation expense of $(2.0) million, a decrease of $(1.1) million due to lower bad debt expense, a $8.4
million increase in remeasurement charges on foreign denominated debt based upon the exchange rate of the U.S. Dollar to the Euro, an increase of $18.8 million related to the loss on extinguishment of debt not present in the same period in 2012, an
increase of $1.5 million due to higher restructuring charges, an increase of deferred income taxes of $10.2 million due to change in the deferred tax balances associated with the Euro denominated debt, an increase of accounts receivable of $3.0
million due to higher sales levels, an increase in income tax balances of $(5.2) million due to recording
60
higher income taxes payable based upon earnings offset by slightly lower income tax payments, and an increase in accrued expenses of $(11.3) million due primarily to lower accrued interest
payables balance at September 30, 2013 due to the payoff of the Senior Subordinated Notes in June 2013.
MacDermid generated cash
flows from operating activities of $75.2 million for the year ended December 31, 2012, compared to $49.7 million for the same period in 2011. The increase in cash flow provided by operations, for the year ended December 31, 2012 was primarily
attributable to an increase in earnings of $44.9 million, a decrease of $(46.4) million in impairment charges, a $3.5 million increase in remeasurement charges on foreign denominated debt related to the remeasurement charges MacDermid records on
foreign denominated debt based upon the exchange rate of the U.S. Dollar to the Euro, an increase of deferred income taxes of $7.6 million primarily due to a change in the deferred tax balances associated with the Euro denominated debt and the $46.4
million of impairment charges related to a write down of customer list intangible assets, a decrease in accounts receivable of $(4.5) million, an increase in accounts payable of $6.8 million attributable to higher inventory levels, a $9.1 million
increase in accrued expenses due to higher bonus payments and a $5.3 million increase in income tax balances due to recording higher income taxes payable based upon earnings and higher income tax payments.
MacDermid reviews accounts receivable on a consolidated basis on a business-by-business level. These quarterly reviews focus primarily on the
seasonality and collectability of accounts receivable. As a result of these reviews, MacDermid determined that the composition of accounts receivable did not change in any material respect during (1) the nine months ended September 30, 2013,
compared to the same period in 2012 or (2) the year ended December 31, 2012 compared to the year ended December 31, 2011. MacDermid’s management uses days sales outstanding (“DSO”) to measure how efficiently MacDermid manages the
billing and collection of accounts receivable. MacDermid calculates DSO by dividing the product of 360 and its accounts receivable balance by its annualized net sales. At September 30, 2013 and December 31, 2012, DSO was 69 days and 68 days,
respectively.
The primary components of MacDermid’s inventory are finished goods, raw materials and supplies and equipment.
MacDermid reviews its inventories quarterly on a consolidated basis on a business-by-business level for obsolescence and to evaluate the appropriateness of the composition of its inventory at any given time. MacDermid’s management uses days in
inventory (“DII”) to calculate its efficiency at realizing inventories. MacDermid calculates DII by dividing the product of 360 and its inventory balance, net of reserves, by its annualized cost of sales, excluding any intercompany sales.
At September 30, 2013 and December 31, 2012, DII was 80 days and 73 days, respectively. Its products generally have shelf lives that exceed one year.
Investing Activities
Net cash
flows (used in) investing activities for the nine months ended September 30, 2013 was $(6.1) million compared to $(10.4) million for the same period in 2012. The increase was attributable to the acquisition payments for a company in Brazil that
closed in the nine months ended September 30, 2012 for approximately $(3.7) million, $1.8 million of proceeds from the sale of an asset group during the nine months ended September 30, 2013 and $(1.7) million of higher capital expenditures
during the nine months ended September 30, 2013 compared to the same period in 2012.
Net cash flows (used in) investing activities
for the year ended December 31, 2012 was $(18.3) million compared to $(3.5) million for the same period in 2011. The decrease of $14.8 million was attributable to $13.4 million of capital expenditures and $5.0 million related to the acquisition of a
company in Brazil during the year ended December 31, 2012 compared to $3.3 million of proceeds from the sale of business units, $0.3 million of proceeds from the sale of assets, capital expenditures of $(8.7) million, the purchase of equity
securities of $(0.8) million and the redemption of a certificate of deposit of $2.5 million during the year ended December 31, 2011.
61
Financing Activities
Net cash flows (used in) financing activities for the nine months ended September 30, 2013 was $(136.1) million compared to $(24.8) million for
the same period in 2012, an increase of ($111.3) million due primarily to the debt refinancing transaction which occurred in June 2013. During the nine months ended September 30, 2013 MacDermid borrowed $1,109.5 million, net of debt discounts of
$5.5 million. The funds that MacDermid borrowed were used to 1) pay off its Tranche B and Tranche C terms loans of $345.2 million, 2) pay off its Senior Subordinated Notes of $355.4 million, 3) pay a $14.7 million call premium payment on the Senior
Subordinated Notes, 4) pay a dividend payment on the Series A preferred stock of $229.8 million, 5) repurchase $270.2 million of the outstanding Series A preferred stock and 6) pay $13.6 million of financing costs. During the nine months ended
September 30, 2013, MacDermid made a $17.1 million mandatory excess cash flow payment based upon its 2012 operating results compared to a $14.6 million mandatory excess cash flow payment based upon its 2011 operating results made during the same
time period in 2012.
Net cash flows (used in) financing activities for the year ended December 31, 2012 was $(27.2) million compared to
$(37.8) million for the same period in 2011, a decrease of $10.6 million due to $(10.9) million in lower payments of long-term debt made during the year ended December 31, 2012 compared to the same period in 2011. The decrease in long-term debt
payments was due to a $14.6 million mandatory excess cash flow payment based upon MacDermid’s 2011 operating results made during the first quarter of 2012, compared to a $24.2 million mandatory excess cash flow payment based upon
MacDermid’s 2010 operating results made during the same time period in 2011. MacDermid also had a decrease in short term borrowings of $(1.3) million for the year ended December 31, 2012 compared to the same period in 2011, offset by lower
proceeds from capital leases of $1.1 million for the year ended December 31, 2012 compared to the same period in 2011.
Credit Facilities, Japanese
Debt and Senior Subordinated Notes
As of September 30, 2013, the Credit Facilities consist of (1) the $755.0 million first lien
credit facility, (2) the $360.0 million second lien credit facility and (3) the $50.0 million Revolving Credit Facility. A portion of the Revolving Credit Facility not in excess of $15.0 million is available for the issuance of letters of
credit. Separate and apart from the Credit Facilities, MacDermid also had Japanese senior secured bank debt denominated in Japanese Yen. Upon consummation of the MacDermid Holdings Acquisition, MacDermid had approximately $751.3 million of
indebtedness outstanding under the first lien credit facility.
As of September 30, 2013, MacDermid had $751.3 million of indebtedness
outstanding under the first lien credit facility, $356.6 million of indebtedness outstanding under the second lien credit facility and $1.2 million of Japanese debt. During the years ended December 31, 2012 and 2011 and the nine months ended
September 30, 2013, there were no borrowings under the $50.0 million Revolving Credit Facility. MacDermid had letters of credit outstanding of $3.8 million at September 30, 2013. The letters of credit reduce the borrowings available under the
Revolving Credit Facility.
The borrower under the Credit Facilities and the issuer of the Senior Subordinated Notes is MacDermid. Upon
consummation of the MacDermid Holdings Acquisition, Platform became a co-borrower on all obligations under the Credit Facilities. Each of the notes representing MacDermid’s Japanese debt is secured by the assets of MacDermid Japan.
The Credit Facilities contain various covenants including limitations on additional indebtedness, dividends and other distributions, entry
into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions and
dispositions. In addition, the Revolving Credit Facility requires us to comply with certain financial covenants, including consolidated leverage and interest coverage ratios and limitations on capital expenditures if MacDermid’s funding under
the Revolving Credit Facility exceeds $12.5 million at any fiscal quarter end. As of September 30, 2013 and December 31, 2012, MacDermid was in compliance with the debt covenants contained in the Credit Facilities and the Senior Subordinated Notes.
62
Recent Developments
In connection with the MacDermid Holdings Acquisition, on October 31, 2013 MacDermid entered into Amendment No. 1 to the First Lien Credit
Agreement (the “Amended and Restated First Lien Credit Facility”) and MacDermid paid $373.0 million in connection with the repayment of the $360.0 million in principal on the second lien credit facility. Pursuant to the Amended and
Restated First Lien Credit Facility, (1) the change of control provision was amended to permit Platform to become a co-borrower on all obligations under the $50.0 million Revolving Credit Facility and the $751.3 million of indebtedness outstanding
under the $755.0 million first lien credit facility (together, the “First Lien Facilities”); (2) Barclays Bank PLC replaced Credit Suisse AG as collateral agent, administrative agent and L/C issuer; and (3) the negative and affirmative
covenants contained therein were modified to reflect the pro forma corporate structure, but are otherwise substantially similar to those originally contained in the first lien credit agreement. The terms relating to the incremental facility,
maturity, indicative margin, LIBOR floor, ranking, guarantors, mandatory prepayments and financial covenants remained unmodified by the amendment.
In connection with the repayment of the second lien credit facility, MacDermid expects to record a $8.6 million loss on extinguishment of
debt, and in connection with the amendment to the Amended and Restated First Lien Credit Facility, MacDermid expects to pay approximately $8.0 million in amendment and breakage fees.
Contractual Obligations and Commitments
MacDermid owns most of its major manufacturing facilities, but it does lease certain office, manufacturing factories and warehouse space and
land, as well as other equipment primarily under non-cancelable operating leases.
Summarized in the table below are MacDermid’s
obligations and commitments to make future payments in connection with debt and minimum lease payment obligations (net of minimum sublease income) as of September 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Due by Period
|
|
|
Total
|
|
|
(amounts in thousands)
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018 and
Thereafter
|
|
|
|
Debt obligations (including short-term debt)(1)
|
|
$
|
363,109
|
|
|
$
|
7,550
|
|
|
$
|
7,550
|
|
|
$
|
7,550
|
|
|
$
|
7,550
|
|
|
$
|
721,026
|
|
|
$
|
1,114,335
|
|
|
Capital lease obligations(2)
|
|
|
99
|
|
|
|
436
|
|
|
|
306
|
|
|
|
151
|
|
|
|
7
|
|
|
|
—
|
|
|
|
999
|
|
|
Operating leases(3)
|
|
|
2,691
|
|
|
|
7,192
|
|
|
|
4,881
|
|
|
|
3,506
|
|
|
|
2,872
|
|
|
|
19,428
|
|
|
|
40,570
|
|
|
Interest payments(4)
|
|
|
7,535
|
|
|
|
29,927
|
|
|
|
29,609
|
|
|
|
29,298
|
|
|
|
28,992
|
|
|
|
69,286
|
|
|
|
194,647
|
|
|
Expected pension funding payments(5)
|
|
|
3,248
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
—
|
|
|
|
15,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash contractual obligations
|
|
$
|
376,682
|
|
|
$
|
48,105
|
|
|
$
|
45,346
|
|
|
$
|
43,505
|
|
|
$
|
42,421
|
|
|
|
809,740
|
|
|
$
|
1,365,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects the principal payments on the Credit Facilities and the Senior Subordinated Notes and Japanese debt. September 30, 2013 exchange rates were utilized to estimate U.S. Dollar payments for Japanese debt
interest payments. Assumes payoff of second lien secured credit facility at acquisition closing date.
|
|
(2)
|
Excludes interest on capital lease obligations of $0.1 million at September 30, 2013.
|
|
(3)
|
Amounts are net of sublease income on operating leases of approximately $0.1 million in 2014 and $0.1 million in 2015.
|
|
(4)
|
Amounts are based on currently applicable interest rates in the case of variable interest rate debt. September 30, 2013 exchange rates were utilized to estimate U.S. Dollar payments for Japanese debt interest
payments.
|
|
(5)
|
Amounts are based upon MacDermid’s expected future pension funding payments in the U.S. and the United Kingdom for 2013 through 2016. As the funded status of MacDermid’s pension plans in the U.S. and the
United Kingdom will vary, obligations for expected pension funding payments after 2017 cannot be reasonably estimated and are not included in the table.
|
63
Capital Expenditures
From September 30, 2013 through the end of 2013, MacDermid expects to spend approximately $5.5 million related to its capital expenditures
using cash generated from its operations and cash on hand. The general purposes of its capital expenditures are to support its investment and expansion plans relating to product development and sales and to ensure compliance with environmental
health and safety laws and initiatives. MacDermid estimates that it spends approximately $1.0 million annually on environmental, health and safety capital expenditures. MacDermid does not expect this amount to increase materially in the future.
Off-Balance Sheet Arrangements
MacDermid
uses customary off-balance sheet arrangements, such as operating leases and letters of credit, to finance our business. None of these arrangements has or is reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Significant Accounting Policies and Critical Estimates
Our significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. As disclosed in Note 1, the
preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that impact the reported amounts and accompanying disclosures. Such
decisions include the selection of the appropriate accounting principles to be applied and also assumptions upon which accounting estimates are based. MacDermid applies judgment based on its understanding and analysis of the relevant circumstances
to reach these decisions. By their nature, these judgments are subject to an inherent degree of uncertainty. Accordingly, actual results could differ significantly from the estimates applied.
Those areas requiring the greatest degree of management judgment or deemed most critical to our financial reporting involve:
The Periodic Assessment of Potential Impairment of Goodwill
Goodwill is tested for impairment at the reporting unit level annually, or when events or changes in circumstances indicate that goodwill might
be impaired. We test goodwill for impairment at our reporting unit level in accordance with ASC 350-20 “Intangibles—Goodwill and Other”. Our reporting units are determined based upon our organizational structure in place at that date
of the goodwill impairment test. There were no changes in MacDermid’s reporting units for the years ended December 31, 2012 and 2011 and the nine months ended September 30, 2013 and 2012. MacDermid’s evaluation of potential
impairment of goodwill did not change for the years ended December 31, 2012 and 2011 and the nine months ended September 30, 2013 and 2012. For goodwill, a two-step impairment test is performed at the reporting unit level. In the first
step of impairment testing, the fair value of each reporting unit is compared to its carrying value. The fair value of each reporting unit is determined based on the present value of discounted future cash flows. The discounted cash flows are
prepared based upon cash flows at the reporting unit level for the twelve months ended preceding the date of impairment testing. The cash flows utilized in goodwill impairment testing differ from actual consolidated cash flows due to exclusion of
non-recurring charges. The cash flow model utilized in the goodwill impairment test involves significant judgments related to future growth rates, discount rates and tax rates, among other considerations. If the fair value of a reporting unit
exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to that reporting unit exceeds the fair value of that
reporting unit, then the second step of the impairment test must be performed to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of the reporting unit’s goodwill exceeds its implied fair value, an
impairment charge is recorded equal to the difference. For the annual impairment testing related to goodwill performed on April 1, 2011, 2012
64
and 2013, respectively, no reporting units had lower estimated fair values than carrying values in the first step of goodwill impairment evaluation; therefore no further testing was performed and
no goodwill impairment charges were recorded. There were no other events or changes in circumstances indicated that goodwill might be impaired.
As of April 1, 2013, MacDermid had four reporting units that have been allocated goodwill. As of April 1, 2013, no reporting units
had lower estimated fair values than carrying values in the first step of the goodwill impairment evaluation; therefore no further testing was performed and no goodwill impairment charges were recorded. As of April 1, 2013, the estimated fair
value of all of the reporting units substantially exceeded their carrying value. The estimated discounted cash flows utilized in MacDermid’s April 1, 2013 goodwill impairment testing procedures were prepared based upon the cash flows at
the reporting unit level for the 12 months preceding the date of the impairment testing. The cash flows utilized in the goodwill impairment testing differ from the actual consolidated cash flows due to exclusion of non-recurring charges utilized in
the cash flows.
As of April 1, 2012, MacDermid had four reporting units that have been allocated goodwill. As of April 1, 2012,
no reporting units had lower estimated fair values than carrying values in the first step of the goodwill impairment evaluation; therefore no further testing was performed and no goodwill impairment charges were recorded. As of April 1, 2012,
the estimated fair value of all of the reporting units substantially exceeded their carrying value. The estimated discounted cash flows utilized in MacDermid’s April 1, 2012 goodwill impairment testing procedures were prepared based upon
the cash flows at the reporting unit level for the 12 months preceding the date of the impairment testing. The cash flows utilized in the goodwill impairment testing differ from the actual consolidated cash flows due to exclusion of non-recurring
charges utilized in the cash flows.
The Periodic Assessment of Potential Impairment of Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets (including MacDermid’s tradenames) are reviewed for potential impairment on an annual basis by
comparing the estimated fair value of the indefinite-lived purchased intangible assets to the carrying value. MacDermid also tests for impairment when events or circumstances indicate that these identifiable intangible assets may be impaired. An
impairment charge is recognized when the estimated fair value of an indefinite-lived intangible asset is less than the carrying value. Indefinite-lived intangible assets are reviewed for impairment at the reportable business unit level for which
identifiable revenues are reported. MacDermid tests its corporate tradename for impairment at the consolidated level because it is operated as a single asset and relies upon its consolidated financial results and consolidated cash flows.
MacDermid’s other tradenames are not combined for impairment testing because they generate cash flows independently and are reviewed at the level each such tradename is recorded.
MacDermid determines the fair value of its indefinite-lived intangible assets (other than tradenames) in accordance with ASC Topic 820,
“
Fair Value Measurements and Disclosures
”
.
MacDermid’s impairment evaluation of identifiable intangible assets and property, plant and equipment includes an analysis of estimated future undiscounted net cash flows
expected to be generated by the assets over their remaining estimated useful lives. If the estimated future undiscounted net cash flows are insufficient to recover the carrying value of the assets over the remaining estimated useful lives, MacDermid
records an impairment charge in the amount by which the carrying value of the assets exceeds the fair value. MacDermid determines fair value based on either market quotes, if available, or estimated discounted cash flows using a discount rate
commensurate with the risk inherent in MacDermid’s current business model for the specific asset being valued.
65
MacDermid use the “relief from royalty” method to value its trade name intangible
assets. The primary assumptions in these calculations are MacDermid’s net sales projections, growth rates and the weighted average cost of capital (“WACC”) that MacDermid applies to determine the present value of these cash flows. The
WACC MacDermid utilizes is based upon comparable industry averages. MacDermid then applies a royalty rate to the projected net sales. The royalty rate is based on market royalty rates and royalties MacDermid pays to outside parties. The resulting
royalty savings are reduced by income taxes resulting from the annual royalty savings at a market participant corporate income tax rate to arrive at the after-tax royalty savings associated with owning the trade names. Finally, the present value of
the estimated annual after-tax royalty savings for each year is used to estimate the fair value of the trade names. Assumptions concerning net sales are impacted by global and local economic conditions in the various markets MacDermid serves as well
as uncertainties related to sales growth, economic growth, future product development and cost estimates.
The Periodic Assessment of Potential
Impairment of Finite-Lived Intangible Assets
Finite-lived intangible assets such as developed technology and customer lists are
amortized on a straight-line basis over their estimated useful lives, which are currently ten years for developed technology and range between three and 21 years for customer lists. If circumstances require a long-lived asset group to be tested for
possible impairment, MacDermid first determines whether the estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of
the asset. When an impairment is identified, the carrying amount of the asset is reduced to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, based on comparable market values.
The valuations of customer lists and developed technology intangible assets are based on estimated undiscounted cash flows, which incorporate
long-term net sales projections as a key assumption. The long-term net sales projections utilized in the valuation of customer lists and developed technology intangible assets are based upon current customers, new strategic products and potential
sales growth based on historical experience and current expectations. The undiscounted net cash flows expected to be generated by the customer lists and developed technology intangible assets are then compared to their respective carry values to
determine if impairment exists.
The Analysis and Evaluation of Income Taxes
MacDermid recognizes deferred tax assets and liabilities based on the differences between the financial statement bases and the tax bases of
assets, liabilities, net operating losses and tax credit carry-forwards. A valuation allowance is required to be recognized to reduce the recorded deferred tax asset to the amount that will more likely than not be realized. In assessing whether
deferred tax assets will be realized, MacDermid considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income by jurisdiction during the periods in which those temporary differences become deductible, including foreign source income for U.S. federal tax purposes and state taxable income, to determine potential utilization of state
and foreign net operating losses, foreign tax credit, research and development credits and state tax credit carry forwards. MacDermid considers the scheduled reversal of deferred tax liabilities, projected future taxable income, tax planning
strategies and expiration dates of certain deferred tax assets in making this assessment.
Valuation allowances reflect MacDermid’s
assessment that it is more likely than not that certain deferred tax assets for state and foreign net operating losses, foreign tax credits, research and development credits and state tax credit carry-forwards will not be realized. The assessment of
the need for a valuation allowance requires management to make estimates and assumptions about future earnings, reversal of existing temporary differences and available tax planning strategies. If actual experience differs from these estimates and
assumptions, the recorded deferred tax asset may not be fully realized resulting in an increase to income tax expense in MacDermid’s results of operations. As of December 31, 2012, valuation allowances of $41.4 million have been recorded.
66
MacDermid is subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant
judgment is required in evaluating its uncertain tax positions and determining its provision for income taxes. The first step in evaluating the tax position for recognition is to determine the amount of evidence that supports a favorable conclusion
for the tax position upon audit. In order to recognize the tax position, MacDermid must determine whether it is more likely than not that the position is sustainable. The next requirement is to measure the tax benefit as the largest amount that has
a more than 50% chance of being realized upon final settlement. As of December 31, 2012, MacDermid had reserves of approximately $22.8 million for taxes, interest and penalties that may become due in later years as a result of future tax audits.
These reserves are associated with potential transfer pricing issues, tax residency issues, deductibility of interest expense in various jurisdictions and certain foreign tax reporting income issues.
Determination of the Various Assumptions Employed in the Valuation of Employee Benefits and Pension Obligations
Amounts recognized in the Consolidated Financial Statements related to pension and other postretirement benefits are determined from actuarial
valuations. Inherent in such valuations are assumptions including expected return on plan assets, discount rates at which the liabilities could be settled, rates of increase in future compensation levels, mortality rates and health care cost trend
rates. These assumptions are updated annually and are disclosed in Note 9 to the Consolidated Financial Statements. In accordance with GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and,
therefore, affect expense recognized and obligations recorded in future periods.
MacDermid considers a number of factors in determining
and selecting assumptions for the overall expected long-term rate of return on plan assets. MacDermid considers the historical long-term return experience of its assets, the current and expected allocation of its plan assets, and expected long-term
rates of return. MacDermid derives these expected long-term rates of return with the assistance of its investment advisors. MacDermid bases its expected allocation of plan assets on a diversified portfolio consisting of domestic and international
equity securities, fixed income, real estate, and alternative asset classes. The measurement date used to determine pension and other postretirement benefits is December 31st, at which time the minimum contribution level for the following year is
determined.
With respect to U.S. plans, MacDermid’s investment policies incorporate an asset allocation strategy that emphasizes the
long-term growth of capital and acceptable asset volatility as long as it is consistent with the volatility of the relevant market indexes. The investment policies attempt to achieve a mix of approximately 75% of plan investments for long-term
growth and 25% for near-term benefit payments. MacDermid believes this strategy is consistent with the long-term nature of plan liabilities and ultimate cash needs of the plans. Plan assets consist primarily of corporate bond mutual funds, limited
partnership interests, listed stocks and cash. The corporate bond mutual funds held by the pension plan include primarily corporate bonds from companies from diversified industries located in the U.S. The listed stocks are investments in large-cap
and mid-cap companies located in the U.S. The assets from the limited partnership investments primarily include listed stocks located in the U.S. The weighted average asset allocation of the Pension Plan was 17% equity securities, 61% limited
partnership interests and managed equity funds, 14% bond mutual fund holdings and 8% cash at December 31, 2012. Return on asset (“ROA”) assumptions are determined annually based on a review of the asset mix as well as individual ROA
performances, benchmarked against indexes such as the S&P 500 Index and the Russell 2000 Index. In determining an assumed rate of return on plan assets, MacDermid considers past performance and economic forecasts for the types of investments
held by the Pension Plan. The asset allocation strategy and ROA assumptions for the non-U.S. plans are determined based on similar set of criteria adapted for local investments, inflation rates and in certain cases specific government requirements.
67
Recent Accounting Pronouncements
In March 2013, the Financial Accounting Standard Board (the “FASB”) issued ASU No. 2013-05
Foreign Currency Matters (Topic 830):
Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity
which resolves diversity in practice regarding the
release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investments in a foreign entity. In addition, the standard resolves diversity in practice for the treatment of business combinations
achieved in stages involving a foreign entity. The guidance is effective prospectively for fiscal years and interim periods beginning after December 15, 2013. MacDermid does not anticipate the adoption of this new ASU to have a material impact on
its financial statements.
On July 17, 2013, the FASB issued ASU No. 2013-10
Derivatives and Hedging (Topic 815): Inclusion of the Fed
Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes
which permits the use of the Fed Funds Effective Swap Rate (OIS) as an acceptable benchmark interest rate for hedge accounting
purposes in addition to U.S. Treasury rates and the LIBOR swap rate. This ASU was effective upon issuance and should be applied prospectively for qualifying new or redesignated hedging relationships entered into. MacDermid does not anticipate the
adoption of this new ASU to have a material impact on its financial statements.
In June 2013, the FASB issued ASU No. 2013-11 I
ncome
Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
which requires standard presentation of an unrecognized tax benefit when a
carryforward related to net operating losses or tax credits exist. The guidance is effective prospectively for fiscal years and interim periods beginning after December 15, 2013, with early adoption permitted. MacDermid adopted this new ASU in the
nine months ended September 30, 2013. The adoption of this ASU did not have a material impact on MacDermid’s financial statements.
On February 5, 2013, the FASB issued ASU 2013-02,
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
(ASU
2013-02), which adds additional disclosure requirements for items reclassified out of accumulated other comprehensive income. MacDermid adopted the amendments in this ASU effective January 1, 2013, and the initial adoption of the amendments in this
ASU concerns presentation and disclosure only and did not have a significant impact on its consolidated financial statements.
Qualitative and
Quantitative Disclosures About Market Risk
Foreign Currency Risk
MacDermid conducted a significant portion of its business in currencies other than the U.S. Dollar, the currency in which its consolidated
financial statements are reported. Generally, each of its operations utilizes the local currency of the operation as its functional currency—the currency in which it incurs operating expenses and collects accounts receivable. MacDermid’s
business is exposed to foreign currency risk primarily from changes in the exchange rate between the U.S. Dollar and the following currencies: the Euro, British Pound Sterling, Hong Kong Dollar, Chinese Yuan, Japanese Yen and Brazilian Real. As a
result, MacDermid’s operating results could be affected by foreign currency exchange rate volatility relative to the U.S. Dollar.
Generally, MacDermid has not utilized foreign currency hedges to mitigate exchange rate changes between the U.S. Dollar and the foreign
currencies of its operations other than with respect to the British Pound Sterling. However, approximately 25% of the net sales of its Autotype foreign subsidiary, which is based in the United Kingdom and utilizes the British Pound Sterling as its
functional currency, are denominated in U.S. Dollars. For that reason, MacDermid utilizes foreign currency hedges between the British Pound Sterling and the U.S. Dollar to help mitigate the risk of a stronger British Pound Sterling for its Autotype
foreign subsidiary. To hedge against the risk of a stronger British Pound Sterling with respect to its Autotype foreign subsidiary, in 2012 and 2011, MacDermid contracted with a financial institution to deliver U.S. Dollars at a fixed British Pound
Sterling rate
68
and to receive British Pound Sterling in exchange for the U.S. Dollar. MacDermid did not pay up-front premiums to obtain the hedge. As of September 30, 2013, the aggregate U.S. Dollar notional
amount of foreign currency forward contracts, designated as hedges, was $13.5 million. These contracts were all denominated in British Pound Sterling. The fair value of the foreign currency forward contract at September 30, 2013, was a $0.1 million
short term asset.
MacDermid’s policy prohibits it from speculating in financial instruments for profit on exchange rate price
fluctuations, from trading in currencies for which there are no underlying exposures, and from entering into trades for any currency to intentionally increase the underlying exposure.
Interest Rate Risk
MacDermid is also
exposed to interest rate risk associated with its cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, long-term debt, and other financing commitments. At September 30, 2013, MacDermid had cash and cash
equivalents of $65.2 million. Included in this amount is $18.5 million of cash included in money market accounts which pays MacDermid interest income. A 100 basis point increase in the interest rate MacDermid earns on its money market accounts would
have an approximate $0.2 million positive impact on our interest income. At September 30, 2013, MacDermid had total debt of $1,110.1 million including $1,107.9 million of variable interest rate debt based on 1-month LIBOR. MacDermid’s remaining
variable interest rate debt is subject to interest rate risk, because its interest payments will fluctuate as the underlying interest rates change from market changes. A 100 basis point increase in LIBOR rates would result in a higher interest
expense of approximately $11.1 million annually.
Counterparty Risk
Outstanding financial derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements.
The credit exposure related to these financial instruments is represented by the fair value of contracts with an obligation fair value as of September 30, 2013. On a periodic basis, MacDermid reviews the credit ratings of its counterparties and
adjusts its exposure as deemed appropriate. As of September 30, 2013, MacDermid believes that its exposure to counterparty risk is immaterial.
69
Unaudited Pro Forma Financial Information
On October 31, 2013, we completed our acquisition of substantially all of the outstanding equity of MacDermid, a global provider of high
value-added specialty chemicals, for approximately $1.8 billion (including the assumption of approximately $756 million of indebtedness), subject to a post-closing working capital adjustment, plus (i) up to $100 million of contingent consideration
tied to achievement of EBITDA and stock trading price performance metrics over a seven-year period following the closing of the acquisition and (ii) an interest in certain MacDermid pending litigation.
At the closing of the transaction, we paid $925 million in cash and delivered approximately $100 million of new equity in the Merger. The
equity issued consisted of shares of a wholly owned subsidiary of Platform that may be exchanged for shares of Platform in one year. We funded the cash portion of the purchase price and related transaction expenses with a combination of cash on hand
and approximately $145 million of proceeds from an initial closing of a warrant exchange offer. The remaining portion of the purchase price (approximately $20 million) will be paid in cash or stock following the completion of post-closing
adjustments to the purchase price.
The following unaudited pro forma condensed consolidated financial statements reflect preliminary
adjustments to our September 30, 2013 balance sheet, as well as to MacDermid’s historical financial position. The unaudited pro forma condensed consolidated balance sheet gives effect to our MacDermid Holdings Acquisition, as if it had occurred
on September 30, 2013. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012 give effect to the MacDermid Holdings Acquisition as if these events
occurred on January 1, 2012.
The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2013 has been
derived from the application of pro forma adjustments to our unaudited balance sheet as of September 30, 2013, as well as to the unaudited historical consolidated balance sheet MacDermid, which is included elsewhere in this prospectus. The following
unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2013 and for the year ended December 31, 2012 have been derived from the application of pro forma adjustments to the historical consolidated
statements of operations of MacDermid, which are included elsewhere in this prospectus. We had no operations during 2012 or from January 1, 2013 through April 23, 2013. The unaudited pro forma condensed consolidated financial information presented
below should be read in conjunction with the “Platform Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “MacDermid Management’s Discussion and Analysis of Financial Condition and
Results of Operations.” MacDermid’s consolidated annual and interim financial statements and corresponding notes and our financial statements and corresponding notes as of September 30, 2013 and for the period from April 23, 2013 (date of
inception) to September 30, 2013 included elsewhere in this prospectus.
The pro forma adjustments are described in the accompanying notes
and include the following:
|
|
•
|
|
The preliminary allocation of the purchase price to the MacDermid balance sheet as shown below;
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
Other current assets
|
|
$
|
286
|
|
|
Identifiable intangible assets
|
|
|
832
|
|
|
Goodwill
|
|
|
1,130
|
|
|
Property, plant and equipment, net
|
|
|
99
|
|
|
Other long-term assets
|
|
|
32
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,379
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
108
|
|
|
Long-term liabilities, including deferred tax liability
|
|
|
423
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
531
|
|
|
|
|
|
|
|
|
Total Consideration
|
|
$
|
1,848
|
|
70
|
|
•
|
|
The completion of the acquisition of MacDermid;
|
|
|
•
|
|
The initial closing of the exchange of approximately 42 million Platform warrants and approximately $145 million of cash for approximately 14 million of Platform ordinary shares (the “Platform Warrant
Exchange Offer”). The proceeds from the Platform Warrant Exchange Offer were used to fund a portion of the cash consideration for the MacDermid Holdings Acquisition;
|
|
|
•
|
|
The delivery of approximately 9 million ordinary share equivalents to fund the equity portion of the consideration (exchange rights for shareholders of MacDermid who elected to receive equity in lieu of cash
consideration);
|
|
|
•
|
|
The changes to Platform’s equity capitalization. Platform has an unlimited number of authorized preferred and ordinary shares. Set forth below is a table detailing the actual and pro forma shares issued as of
September 30, 2013 after giving effect to the Acquisition:
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Actual
|
|
|
Pro Forma
|
|
|
Ordinary shares issued and outstanding
|
|
|
88
|
|
|
|
102
|
|
|
|
•
|
|
The preliminary estimate of the fair valuation and recording as a liability of the contingent consideration received by the sellers in conjunction with the MacDermid Holdings Acquisition;
|
|
|
•
|
|
The amendment to and assumption of MacDermid’s first lien credit facility; and
|
|
|
•
|
|
An adjustment to the balance sheet reflecting Platform’s recording of a one-time, non-cash expense estimated to be approximately $166 million upon the closing of the acquisition, which represents the fair value of
the founder preferred dividend rights at that time. This is a preliminary estimate of the expense to be recorded. As this will not have an ongoing impact to the income statement, it is not presented as a dollar adjustment in pro forma statements of
operations below. Future dividends (if any) payable in Platform ordinary shares, will be recorded in equity.
|
Pro forma
adjustments to historical financial information are subject to assumptions described in the following notes. We believe that these assumptions and adjustments are reasonable and appropriate under the circumstances and are factually supported based
on information currently available.
The unaudited pro forma condensed consolidated financial information reflects all adjustments that,
in the opinion of our management, are necessary to present, for comparative and informational purposes only, our condensed consolidated financial position as of September 30, 2013 as if the MacDermid Holdings Acquisition had occurred as of such
date, and the consolidated results of operations for the year ended December 31, 2012 and the nine months ended September 30, 2013, as if the MacDermid Holdings Acquisition had occurred on January 1, 2012. The unaudited pro forma condensed
consolidated financial information is not intended to represent or be indicative of what our financial condition or results of operations would have been had the MacDermid Holdings Acquisition occurred on the dates indicated. The unaudited pro forma
condensed consolidated financial information also should not be considered indicative of our future consolidated financial condition or consolidated results of operations.
71
PLATFORM SPECIALTY PRODUCTS CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET AS OF SEPTEMBER 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ Millions)
|
|
Platform
(Historical)
|
|
|
MacDermid
(Historical)
|
|
|
Adjustments
|
|
|
|
|
Pro Forma
Consolidated
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
701
|
|
|
$
|
65
|
|
|
$
|
145
|
|
|
A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180
|
|
|
B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(54
|
)
|
|
C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(925
|
)
|
|
D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(36
|
)
|
|
E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
F
|
|
|
74
|
|
|
Marketable securities
|
|
|
180
|
|
|
|
—
|
|
|
|
(180
|
)
|
|
B
|
|
|
—
|
|
|
Inventories
|
|
|
—
|
|
|
|
79
|
|
|
|
35
|
|
|
G
|
|
|
114
|
|
|
Accounts receivable
|
|
|
—
|
|
|
|
144
|
|
|
|
|
|
|
|
|
|
144
|
|
|
Other current assets
|
|
|
—
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
881
|
|
|
$
|
305
|
|
|
$
|
(837
|
)
|
|
|
|
$
|
349
|
|
|
Long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangibles
|
|
$
|
—
|
|
|
$
|
703
|
|
|
$
|
(703
|
)
|
|
H
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
832
|
|
|
I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
843
|
|
|
J
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287
|
|
|
K
|
|
$
|
1,962
|
|
|
Property and equipment, net
|
|
|
—
|
|
|
|
99
|
|
|
|
|
|
|
|
|
|
99
|
|
|
Other long-term assets
|
|
|
|
|
|
|
37
|
|
|
|
(5
|
)
|
|
L
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
F
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term assets
|
|
$
|
—
|
|
|
$
|
839
|
|
|
$
|
1,256
|
|
|
|
|
$
|
2,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
881
|
|
|
$
|
1,144
|
|
|
$
|
419
|
|
|
|
|
$
|
2,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt and capital leases
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
M
|
|
$
|
9
|
|
|
Accounts payable, accrued expenses and other
|
|
|
4
|
|
|
|
108
|
|
|
|
21
|
|
|
N
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
4
|
|
|
$
|
117
|
|
|
$
|
21
|
|
|
|
|
$
|
142
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and capital lease obligations
|
|
$
|
—
|
|
|
$
|
1,101
|
|
|
$
|
(356
|
)
|
|
M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
O
|
|
|
741
|
|
|
Other long-term liabilities
|
|
|
—
|
|
|
|
136
|
|
|
|
287
|
|
|
K
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
P
|
|
|
471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
$
|
—
|
|
|
$
|
1,237
|
|
|
$
|
(25
|
)
|
|
|
|
$
|
1,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
$
|
4
|
|
|
$
|
1,354
|
|
|
$
|
(4
|
)
|
|
|
|
$
|
1,354
|
|
|
Preferred shares
|
|
|
—
|
|
|
|
46
|
|
|
|
(46
|
)
|
|
Q
|
|
|
—
|
|
|
Ordinary shares
|
|
|
—
|
|
|
|
49
|
|
|
|
(49
|
)
|
|
Q
|
|
|
—
|
|
|
Additional paid in capital
|
|
|
882
|
|
|
|
2
|
|
|
|
145
|
|
|
A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
Q
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166
|
|
|
R
|
|
|
1,193
|
|
|
Retained earnings (deficit)
|
|
|
(5
|
)
|
|
|
(271
|
)
|
|
|
(36
|
)
|
|
E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
271
|
|
|
Q
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
O
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
S
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(166
|
)
|
|
R
|
|
|
(103
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
|
|
|
(36
|
)
|
|
|
36
|
|
|
Q
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS’ EQUITY(DEFICIT)
|
|
$
|
877
|
|
|
$
|
(210
|
)
|
|
$
|
423
|
|
|
|
|
$
|
1,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
881
|
|
|
$
|
1,144
|
|
|
$
|
419
|
|
|
|
|
$
|
2,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Historical Platform amounts included in the audited income statement of Platform reflect operations for the period from April 23, 2013 (date of inception) through September 30, 2013.
|
72
PLATFORM SPECIALTY PRODUCTS CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ thousands, except per share amounts)
|
|
Platform(1)
(Historical)
|
|
|
MacDermid
(Historical)
|
|
|
Adjustments
|
|
|
|
|
Pro Forma
Consolidated
|
|
|
|
|
Revenue
|
|
$
|
—
|
|
|
$
|
560,557
|
|
|
$
|
—
|
|
|
|
|
$
|
560,557
|
|
|
|
|
Cost of sales
|
|
|
—
|
|
|
|
271,730
|
|
|
|
—
|
|
|
|
|
|
271,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
—
|
|
|
|
288,827
|
|
|
|
—
|
|
|
|
|
|
288,827
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
4,912
|
|
|
|
143,854
|
|
|
|
(195
|
)
|
|
T
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,175
|
)
|
|
U
|
|
|
144,396
|
|
|
|
|
Research and development
|
|
|
—
|
|
|
|
17,504
|
|
|
|
|
|
|
|
|
|
17,504
|
|
|
|
|
Amortization
|
|
|
—
|
|
|
|
20,124
|
|
|
|
(20,124
|
)
|
|
V
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,600
|
|
|
W
|
|
|
42,600
|
|
|
|
|
Restructuring
|
|
|
|
|
|
|
1,890
|
|
|
|
—
|
|
|
|
|
|
1,890
|
|
|
|
|
Impairment Charge
|
|
|
—
|
|
|
|
427
|
|
|
|
—
|
|
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expense
|
|
|
4,912
|
|
|
|
183,799
|
|
|
|
18,106
|
|
|
|
|
|
206,817
|
|
|
|
|
Operating income
|
|
|
(4,912
|
)
|
|
|
105,028
|
|
|
|
(18,106
|
)
|
|
|
|
|
82,010
|
|
|
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense)
|
|
|
—
|
|
|
|
(40,998
|
)
|
|
|
40,998
|
|
|
X
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23,403
|
)
|
|
Y
|
|
|
(23,403
|
)
|
|
|
|
Interest income
|
|
|
80
|
|
|
|
304
|
|
|
|
—
|
|
|
|
|
|
384
|
|
|
|
|
Other income
|
|
|
42
|
|
|
|
(405
|
)
|
|
|
—
|
|
|
|
|
|
(363
|
)
|
|
|
|
Loss on extinguishment of debt
|
|
|
—
|
|
|
|
(18,788
|
)
|
|
|
—
|
|
|
|
|
|
(18,788
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
122
|
|
|
|
(59,887
|
)
|
|
|
17,595
|
|
|
|
|
|
(42,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
|
|
|
(4,790
|
)
|
|
|
45,141
|
|
|
|
(511
|
)
|
|
|
|
|
39,840
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
20,932
|
|
|
|
(414
|
)
|
|
Z
|
|
|
20,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(4,790
|
)
|
|
|
24,209
|
|
|
|
(97
|
)
|
|
A
|
|
|
19,322
|
|
|
|
|
Net income attributable to non-controlling interest
|
|
|
—
|
|
|
|
(319
|
)
|
|
|
(1,333
|
)
|
|
A
|
|
|
(1,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to the Company
|
|
|
(4,790
|
)
|
|
|
23,890
|
|
|
|
(1,430
|
)
|
|
B
|
|
|
17,670
|
|
|
|
|
Accrued payment-in-kind dividend on cumulative preferred shares
|
|
|
—
|
|
|
|
(22,100
|
)
|
|
|
22,100
|
|
|
B
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to ordinary shareholders
|
|
$
|
(4,790
|
)
|
|
$
|
1,790
|
|
|
$
|
20,670
|
|
|
|
|
$
|
17,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
$
|
(0.05
|
)
|
|
|
n/a
|
|
|
|
—
|
|
|
|
|
$
|
0.17
|
|
|
|
|
Earnings per share—diluted
|
|
$
|
(0.05
|
)
|
|
|
n/a
|
|
|
|
|
|
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
(shares in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted shares outstanding—basic
|
|
|
89
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
102
|
|
|
CC
|
|
Weighted shares outstanding—diluted
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129
|
|
|
DD
|
|
(1)
|
Historical Platform amounts included in the unaudited income statement of Platform reflect operations for the period from April 23, 2013 (date of inception) through September 30, 2013.
|
73
PLATFORM SPECIALTY PRODUCTS CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ thousands, except per share amounts)
|
|
Platform(1)
(Historical)
|
|
|
MacDermid
(Historical)
|
|
|
Pro Forma
Adjustments
|
|
|
|
|
Pro Forma
Consolidated
|
|
|
|
|
Revenue
|
|
$
|
—
|
|
|
$
|
731,220
|
|
|
|
|
|
|
|
|
$
|
731,220
|
|
|
|
|
Cost of sales
|
|
|
—
|
|
|
|
376,166
|
|
|
|
|
|
|
|
|
|
376,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
—
|
|
|
|
355,054
|
|
|
|
|
|
|
|
|
|
355,054
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
—
|
|
|
|
187,514
|
|
|
|
(162
|
)
|
|
T
|
|
|
187,352
|
|
|
|
|
Research and development
|
|
|
—
|
|
|
|
25,051
|
|
|
|
|
|
|
|
|
|
25,051
|
|
|
|
|
Amortization
|
|
|
—
|
|
|
|
27,100
|
|
|
|
(27,100
|
)
|
|
V
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,800
|
|
|
W
|
|
|
56,800
|
|
|
|
|
Restructuring
|
|
|
—
|
|
|
|
292
|
|
|
|
|
|
|
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expense
|
|
|
—
|
|
|
|
239,957
|
|
|
|
29,538
|
|
|
|
|
|
269,495
|
|
|
|
|
Operating income
|
|
|
—
|
|
|
|
115,097
|
|
|
|
(29,538
|
)
|
|
|
|
|
85,559
|
|
|
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense)
|
|
|
—
|
|
|
|
(49,671
|
)
|
|
|
49,671
|
|
|
X
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33,764
|
)
|
|
Y
|
|
|
(33,764
|
)
|
|
|
|
Interest income
|
|
|
—
|
|
|
|
532
|
|
|
|
|
|
|
|
|
|
532
|
|
|
|
|
Other income
|
|
|
|
|
|
|
4,981
|
|
|
|
|
|
|
|
|
|
4,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
—
|
|
|
|
(44,158
|
)
|
|
|
15,907
|
|
|
|
|
|
(28,251
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
|
|
|
—
|
|
|
|
70,939
|
|
|
|
(13,631
|
)
|
|
|
|
|
57,308
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
24,673
|
|
|
|
(3,146
|
)
|
|
Z
|
|
|
21,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
—
|
|
|
|
46,266
|
|
|
|
(10,485
|
)
|
|
A
|
|
|
35,781
|
|
|
|
|
Net income attributable to non-controlling interest
|
|
|
—
|
|
|
|
(289
|
)
|
|
|
(2,469
|
)
|
|
A
|
|
|
(2,758
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to the Company
|
|
|
—
|
|
|
|
45,977
|
|
|
|
(12,954
|
)
|
|
B
|
|
|
33,023
|
|
|
|
|
Accrued payment-in-kind dividend on cumulative preferred shares
|
|
|
—
|
|
|
|
(44,605
|
)
|
|
|
44,605
|
|
|
B
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders
|
|
$
|
—
|
|
|
$
|
1,372
|
|
|
$
|
31,651
|
|
|
|
|
$
|
33,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
$
|
0.32
|
|
|
|
|
Earnings per share—diluted
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
(shares in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—diluted
|
|
$
|
(0.05
|
)
|
|
|
n/a
|
|
|
|
—
|
|
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
(shares in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted shares outstanding—basic
|
|
|
89
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
102
|
|
|
CC
|
|
Weighted shares outstanding—diluted
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129
|
|
|
DD
|
|
(1)
|
Historical Platform amounts included in the unaudited income statement of Platform reflect operations for the period from April 23, 2013 (date of inception) through September 30, 2013.
|
74
|
A.
|
Adjustment to reflect the issuance of approximately 14 million ordinary shares upon completion of the Platform Warrant Exchange Offer and the related purchase of shares by certain directors at $10.50 per share. The
proceeds from the Platform Warrant Exchange Offer were used to fund a portion of the cash consideration for the acquisition of MacDermid.
|
|
B.
|
Adjustment to reflect the liquidation of all of the marketable securities owned by Platform, the proceeds of which were used to fund a portion of the cash consideration for the acquisition of MacDermid. At the time of
the Closing, all of Platform’s marketable securities were, in fact, liquidated to fund the cash portion of the purchase price of MacDermid.
|
|
C.
|
Adjustment to reflect the amount of cash retained by the sellers in conjunction with the acquisition of MacDermid which required the sellers to leave $11 million of cash on the balance sheet of MacDermid. As of
September 30, 2013, the adjustment amount of $54 million is calculated as total cash on hand at MacDermid of $65 million less required amount to be retained on MacDermid’s balance sheet at closing of $11 million.
|
|
D.
|
Adjustment to reflect the cash paid by Platform to the sellers as part of the consideration for the acquisition of MacDermid.
|
|
E.
|
Adjustment to reflect the estimated transaction costs incurred in conjunction with the acquisition of MacDermid, including but not limited to financial advisory fees, attorney’s fees and accountants fees. These
costs will be expenses in the statement of operations when incurred and are shown as a cash adjustment in this pro forma balance sheet as if they were already incurred as of September 30, 2013.
|
|
F.
|
Adjustment to reflect deferred financing fees incurred in conjunction with the amendment to MacDermid’s first lien debt.
|
|
G.
|
Adjustment to reflect the preliminary estimate of the profit in inventory asset step up amount as of September 30, 2013.
|
|
H.
|
Adjustment to reflect the elimination of the goodwill and intangibles at MacDermid at the time of the acquisition of MacDermid.
|
|
I.
|
Adjustment to reflect the preliminary estimated fair value of the intangible assets of MacDermid as of the closing date:
|
|
|
|
|
|
|
|
Intangible asset
|
|
($ in millions)
|
|
|
Trade names-indefinite lives
|
|
|
80
|
|
|
Trade names-definite lives (15 years)
|
|
|
2
|
|
|
Technology (10 years)
|
|
|
200
|
|
|
Customer relationships (15 years)
|
|
|
550
|
|
|
J.
|
Adjustment to reflect the preliminary estimated goodwill associated with the MacDermid Holdings Acquisition before setting up deferred tax liabilities (see note K below). Such amount was calculated as the difference
between the estimated fair value of the tangible and intangible net assets ($1,005 million) excluding the deferred tax liability calculated in Note K and the total consideration paid for MacDermid ($1,848 million).
|
|
K.
|
Adjustment to reflect the estimated deferred tax liability associated with the preliminary step up to intangible assets of $972 million (the sum of adjustments H, I and J above) at an estimated worldwide statutory tax
rate of 29.5%. The estimated worldwide statutory tax rate was calculated using the estimated income tax rates applicable to the jurisdictions in which the intangible assets are expected to be recorded.
|
|
L.
|
Adjustment to reflect the write off of the deferred financing fees recorded by MacDermid in conjunction with its second lien term debt which was paid down at closing. See note M.
|
|
M.
|
Adjustment to reflect the amount of debt paid down at closing prior to the acquisition of MacDermid as a condition to the closing.
|
|
N.
|
Adjustment to reflect the purchase consideration to be paid to MacDermid’s 401(k) plan in exchange for outstanding shares of MacDermid upon effectiveness of the registration statement. Such consideration may be
paid in stock or in cash at the election of each Plan participant.
|
|
O.
|
Adjustment to reflect a preliminary estimate of the original issue discount to be recorded at fair value in conjunction with the first lien debt. Such
estimate was calculated as 0.5% of the gross amount of first lien
|
75
|
|
debt assumed on October 31
st
based upon the trading market value of the MacDermid debt on the over-the-counter debt markets in which
MacDermid’s lenders participate.
|
|
P.
|
Adjustment to reflect the estimated fair value of the contingent consideration issued to the sellers, tied to certain EBITDA and stock trading price performance metrics over a seven-year period following the closing of
the acquisition of MacDermid. Such fair value was based on a discounted future cash flow analysis and comparable companies’ market valuation.
|
|
Q.
|
Adjustment to eliminate all of the equity of MacDermid.
|
|
R.
|
Adjustment to reflect Platform’s recording of a one-time, non-cash expense estimated to be approximately $166 million upon the closing of the acquisition, which represents the fair value of the founder
preferred dividend rights at that time. This is a preliminary estimate of the expense to be recorded. As this will not have an ongoing impact to the income statement, it is not presented as a dollar adjustment in the pro forma statements of
operations. This estimate was calculated using a monte carlo simulation that simulates the daily price of shares over the potential dividend period with an estimate of volatility and interest to arrive at an estimated fair value of future dividend
payments as of October 31, 2013.
|
|
S.
|
Adjustment to reflect the equity-based consideration delivered to the sellers at closing. Such equity represents an ownership in a subsidiary of Platform and accordingly will be treated as a non-controlling interest
until such time as it is exchanged for Platform ordinary shares.
|
|
T.
|
Adjustment to eliminate stock based compensation for awards at MacDermid that vest upon closing of the acquisition.
|
|
U.
|
Adjustment to eliminate non-recurring MacDermid acquisition related expenses recorded during the period ended September 30, 2013.
|
|
V.
|
Adjustment to eliminate recorded amortization expenses on MacDermid’s intangible assets
|
|
W.
|
Adjustment to reflect amortization expense to be recorded in conjunction with the estimated fair value of the intangible assets of MacDermid as of the closing date based on a preliminary outside valuation by a third
party obtained by Platform prior to closing and broken down as follows:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
Asset
|
|
Estimated
Fair Value
|
|
|
Annual
amortization
|
|
|
Trade names-indefinite lives
|
|
$
|
80,000
|
|
|
$
|
—
|
|
|
Trade names-definite lives (15 years)
|
|
$
|
2,000
|
|
|
$
|
133
|
|
|
Technology (10 years)
|
|
$
|
200,000
|
|
|
$
|
20,000
|
|
|
Customer relationships (15 years)
|
|
$
|
550,000
|
|
|
$
|
36,667
|
|
|
|
Annual amortization is calculated as Estimated Fair Value divided by the estimated life of the related asset,
|
|
X.
|
Adjustment to eliminate recorded interest expense at MacDermid for indebtedness not assumed at closing.
|
|
Y.
|
Adjustment to record interest expense related to indebtedness assumed comprised of the following:
|
|
|
•
|
|
Interest on the first lien debt of $753 million at a rate of approximately 4% based on the terms of the credit agreement. Such interest rate is based on an applicable margin of 3% applied to a LIBOR floor of 1% and is
variable in nature. The pre-tax effect of a 1/8% change effective interest rate would be $0.9 million annually.
|
|
|
•
|
|
Amortization of the estimated original issue discount of approximately $4 million (see note O) over the 5-year life of the loan.
|
|
|
•
|
|
Amortization of deferred financing fees of $9 million for the first lien term debt over the five year life of the loan.
|
|
|
•
|
|
Interest on other assumed indebtedness ($44,000 of interest annually)
|
|
Z.
|
Adjustment to reflect income tax expense related to the earnings (loss) before taxes generated by the pro forma adjustments based upon the estimated
applicable statutory tax rates. The Company’s estimated United States statutory tax rate of 35% was applied to interest expense in the United States, where the debt resides. The Company’s estimated worldwide statutory tax rate of
29.5% was applied to stock compensation
|
76
|
|
and intangible asset related adjustments, based upon the estimated income tax rates applicable to the jurisdictions where the adjustments are expected to be recorded. No income tax expense
adjustment was applied to the non-recurring MacDermid acquisition related expense due to the fact that they are being eliminated from the Company’s results in which no income taxes are paid or applied.
|
|
AA.
|
Adjustment to reflect the non-controlling interest represented by equity interests in a subsidiary of Platform provided as a portion of the consideration of the acquisition. Such equity interest represents approximately
7% of Platform multiplied by the pro forma combined net income before such adjustment.
|
|
BB.
|
Adjustment to reflect the elimination of dividends paid to sellers for an equity interest which has been repaid and eliminated in conjunction with the acquisition of MacDermid.
|
|
CC.
|
Represents the number of Platform ordinary shares outstanding at the closing consisting of 88.5 million ordinary shares outstanding before the closing and approximately 14 million shares issued in the Platform
Warrant Exchange Offer, the proceeds of which were used to fund a portion of the cash consideration for the acquisition of MacDermid.
|
|
DD.
|
Represents the Platform ordinary shares outstanding plus (i) 250,000 options outstanding; (ii) approximately 9 million ordinary share equivalents based upon the $100 million of equity interests delivered in
connection with the Merger; (iii) 2 million ordinary share equivalents for convertible preferred shares outstanding; and (iv) 16 million ordinary share equivalents issuable upon conversion of the remaining Platform warrants outstanding.
|
77
Business
Overview
We were incorporated with
limited liability under the laws of the British Virgin Islands under the BVI Companies Act on April 23, 2013 under the name Platform Acquisition Holdings Limited. Platform was created for the purpose of acquiring a target company or business with an
anticipated enterprise value of between $750 million and $2.5 billion. Effective October 31, 2013, we changed our name to Platform Specialty Products Corporation.
On October 31, 2013, we consummated the transactions contemplated by the Business Combination Agreement and Plan of Merger (the
“BCA”) pursuant to which we indirectly acquired substantially all of the equity of MacDermid Holdings, LLC (“MacDermid Holdings”) which owns approximately 97% of the outstanding shares of MacDermid, Incorporated
(“MacDermid”).
On October 25, 2013, we entered into an Exchange Agreement with the Plan fiduciaries pursuant to which we agreed
to acquire, and the Plan agreed to exchange, the remaining approximately 3% of MacDermid equity interests not already held by MacDermid Holdings. The Plan’s interests consist of 1,514,371.01 shares of common stock of MacDermid, no par value,
and 1,469 shares of 9.5% Series B Cumulative Compounding Preferred Stock of MacDermid, no par value (the “MacDermid Plan Shares”) with an aggregate value of $21,070,006. The MacDermid Plan Shares will be exchanged for (i) cash and/or (ii)
to the extent that this registration statement has been declared effective prior to April 29, 2014, shares of Platform Common Stock. The aggregate amount of cash and/or shares of Platform Common Stock will be based on the election of each individual
Plan participant who can elect to receive either cash or shares of Platform Common Stock.
Our Business
We are a global producer of high technology specialty chemical products and provider of technical services. Our business involves the
manufacture of a broad range of specialty chemicals, which we create by blending raw materials, and the incorporation of these chemicals into multi-step technological processes. These specialty chemicals and processes together encompass the products
we sell to our customers in the electronics, metal and plastic plating, graphic arts, and offshore oil production and drilling industries. We refer to our products as “dynamic chemistries” due to their delicate chemical compositions, which
are frequently altered during customer use. Our dynamic chemistries are used in a wide variety of attractive niche markets and, based on our pro forma 2012 net sales, we believe that the majority of our operations hold strong positions in the
product markets they serve.
We generate revenue through the manufacture and sale of our dynamic chemistries and by providing highly
technical post-sale service to our customers through our extensive global network of specially trained service personnel. Our personnel work closely with our customers to ensure that the chemical composition and function of our dynamic chemistries
are maintained as intended. As an example, a customer will engage us to manufacture and sell a product consisting of a process composed of eight successive chemical baths, each of which is made up of our specialty chemicals, in order to enhance the
overall performance of that customer’s circuit boards. In addition to providing such product, a member of our professional service team would visit the customer’s manufacturing facilities on a regular basis post-sale to ensure that the
process sold maintains the correct chemical balance and can be used effectively in the manner and for the purpose desired.
We have more
than 3,500 customers worldwide. Among these customers are some of the world’s preeminent companies, such as LG, Molex, Samsung, FIAT, Ford, GM, Stanley Black & Decker and major companies in the offshore oil and gas industries. We
believe that we are able to service these customers and that we will attract new customers successfully through a global network of 14 manufacturing sites, 21 technical service facilities, including 8 research centers, a direct sales force in 24
countries and through our several distribution partners in an additional ten countries. Our international reach, coupled with our local presence, enables us to meet the global and local needs of our customers.
78
We leverage our close customer relationships to execute our growth strategies by working with our
customers to identify opportunities for new products, which we develop by drawing upon our significant intellectual property portfolio and technical expertise. We believe that our customers place significant value on the “MacDermid” brand,
which has been developed through innovation, product leadership and customer service. In order to ensure that we are able to continue to provide innovative products and highly technical service to our customers, we place a premium on maintaining a
highly specialized and qualified employee base. As of October 31, 2013, we employed approximately 2,000 full-time employees, including approximately 1,000 research and development chemists and experienced technical service and sales personnel.
The diversity of our materials and suppliers, our end markets, products, product applications, customer base and the range of geographic
regions in which we operate helps to mitigate the effects of any adverse event affecting a particular raw material or a specific end market or region. In many of the regions in which we operate, we are able to increase our prices in response to
increases in our costs.
While our dynamic chemistries typically represent only a small portion of our customers’ costs, they are
critical to our customers’ manufacturing processes and overall product performance. Further, operational risks and switching costs make it difficult for our customers to change suppliers and allow us to retain customers and maintain our market
positions. For the year ended December 31, 2012, we generated, on a pro forma basis, net sales, operating profit and net income attributable to MacDermid of $731.2 million, $115.1 million and $46.0 million, respectively, and for the nine months
ended September 30, 2013, we generated, on a pro forma basis, net sales, operating profit and net income attributable to MacDermid of $560.6 million, $105.0 million and $23.9 million, respectively. Our capital expenditures for the year ended
December 31, 2012 and nine months ended September 30, 2013, on a pro forma basis, were $13.4 million and $7.4 million, respectively, accounting for 1.8% and 1.3%, respectively, of our net sales during the corresponding period.
We believe our business is currently benefiting from global growth trends in many of our end markets, including the increasing use of
electronic devices such as mobile phones and computers, growth in worldwide automotive production and increasing oil production from offshore, sub-sea wells. We also believe that we are effectively expanding the existing market for our dynamic
chemistries by developing new applications within the electronics, general industrial and automotive, graphic arts and offshore oil production and drilling markets. These new applications include: surface coatings for solar panels, plated antennas
for smart mobile devices, flexographic plates for printing consumer packaging materials, decorative components for automobile interiors and control system fluids used to prevent oil from seeping from ocean floor valves.
We report our business in two operating segments: a Performance Materials segment and a Graphic Solutions segment. In the fiscal year ended
December 31, 2012, our Performance Materials and Graphic Solutions segments generated, on a pro forma basis, net sales of $559.5 million and $171.7 million, respectively. For the nine months ended September 30, 2013, our Performance Materials and
Graphic Solutions segments generated, on a pro forma basis, net sales of $429.4 million and $131.1 million, respectively, on a pro forma basis. We sell our products into three geographic regions: Asia, Europe and the Americas.
Performance Materials—
Our Performance Materials segment manufactures and markets dynamic chemistry solutions that are used in the
electronics, automotive and oil and gas production and drilling industries. We operate in Europe, the Americas and Asia. Our products include surface and coating materials and water-based hydraulic control fluids. In conjunction with the sale of
these products, we provide extensive technical service and support to ensure superior performance of their application. The regional sales mix in this segment has shifted over the past several years from more industrialized nations towards emerging
markets, such as Asia and South America, To better serve customers in these markets, we have developed state-of-the-art facilities in Suzhou, China, and São Paulo, Brazil. We have over 600 personnel and three manufacturing facilities in Asia
and remain focused on further increasing our presence in the region.
79
Our Performance Materials segment utilizes shared manufacturing facilities and administrative
resources to provide specialty chemicals to three industries:
Industrial.
We believe that we are one of the worldwide
leaders in industrial metal and plastic finishing chemistries based on our pro forma 2012 net sales. In this industry, our dynamic chemistries are used for finishing, cleaning and providing surface coatings for a broad range of metal and non-metal
surfaces. These coatings may have functional uses, such as improving wear and tear or providing corrosion resistance for appliance parts, or decorative uses, such as providing gloss finishes to components used in automotive interiors. As of December
31, 2012, MacDermid manufactured more than 1,000 chemical compounds for these surface coating applications, including cleaning, activating, polishing, electro and electroless plating, phosphatizing, stripping and coating, anti-tarnishing and rust
inhibiting for metal and plastic surfaces. Electroless plating is a method of plating metals onto a variety of base materials using chemical reduction without the application of electrical power. Electro plating, in contrast, involves plating metals
with the use of an electrical current. Phosphatizing is the application of phosphates, such as iron and zinc, to prevent corrosion of steel surfaces. Our industrial customer base is highly fragmented and includes customers in the following end
markets: automotive parts, industrial parts, transportation equipment, electronics equipment and appliances and plumbing goods. We believe our growth in this industry will be primarily driven by increased world-wide automobile production and demand
for appliances, computers and general engineering hardware.
Electronics.
We believe we are one of the leading global
suppliers of chemical compounds to the printed circuit board fabrication industry based on our 2012 pro forma net sales. In this industry, we design and formulate a complete line of proprietary “wet” dynamic chemistries that our customers
use to process the surface of the printed circuit boards and other electronic components they manufacture. Our product portfolio in this business is focused on niches such as final finishes, through hole metallization and circuit formation, in which
we are a small cost to the overall finished product, but a critical component for maintaining the products’ performance. We believe our growth in this industry will be driven by demand in telecommunication, wireless devices and computers, and
the increasing use of electronics in automobiles. Our customer base includes customers in the following end markets: computers, telecommunications, wireless devices, audio visual, automotive and office equipment.
Offshore.
We produce water-based hydraulic control fluids for major oil companies and drilling contractors for offshore deep
water production and drilling applications. Production fluids are used in the control systems that open and close critical valves for the deep water oil extraction and transportation process. Drilling fluids are used in control systems to operate
valves on the ocean floor. Our current customer base is primarily in the production area of this business. We believe there is significant growth potential for this business as the oil and gas industry continues to grow and as oil is produced from
new offshore, sub-sea wells.
Graphic Solutions—
Our Graphic Solutions segment primarily produces and markets photopolymers
through an extensive line of flexographic plates that are used in the commercial packaging and printing industries. We manufacture photopolymers used to produce printing plates for transferring images onto commercial packaging, including packaging
for consumer food products, pet food bags, corrugated boxes, labels and beverage containers. In addition, we also produce photopolymer printing plates for the flexographic and letterpress newspaper and publications markets. Our products are used to
improve print quality and printing productivity. Flexography is a printing process that utilizes flexible printing plates made of rubber or other flexible plastics. Photopolymers are molecules that change properties upon exposure to light. Our
business mix in this segment is focused on high innovation, higher cash flow businesses by offering new products. We believe growth in this segment will be driven by consumer demand and advertising.
Both of our operating segments include significant foreign operations. There are certain risks attendant to our foreign operations, including
the following:
|
|
•
|
|
enforcing agreements and our intellectual property rights may be more difficult in foreign jurisdictions;
|
|
|
•
|
|
the imposition of taxes, tariffs and other restrictions on foreign trade or investment could impact our ability to operate or make operations more expensive;
|
80
|
|
•
|
|
delays and interruptions inherent in foreign travel may impact the transportation of our products;
|
|
|
•
|
|
fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. Dollars of our foreign operations;
|
|
|
•
|
|
general economic conditions in the foreign countries in which we operate may impact the profitability of our foreign operations;
|
|
|
•
|
|
political or economic instability on a country-specific or global level may impact our ability to operate;
|
|
|
•
|
|
we may encounter difficulties in staffing and managing multi-national operations, including the possibility of labor disputes;
|
|
|
•
|
|
we may be subject to possible adverse changes in foreign laws or regulatory requirements and may experience difficulties in complying with the variety of foreign laws and regulations; and
|
|
|
•
|
|
we may be subject to the risks of divergent business expectations resulting from cultural incompatibility.
|
For more information regarding the risks attendant to our foreign operations, see
“Risk Factors—Risks Related to Our Business and
Industry—Our substantial international operations subject us to risks not faced by domestic competitors, including unfavorable political, regulatory, labor, tax and economic conditions in other countries that could adversely affect our
business, financial condition and results of operations
.
”
For financial information about our segments, see Note
20 to the MacDermid audited financial statements for the years ended December 31, 2012 and 2011 and Note 18 to the MacDermid unaudited financial statements for the nine months ended September 30, 2013 and 2012 included in this registration
statement. For financial information about the geographic areas in which we operate, see Note 20 to the MacDermid audited financial statements for the years ended December 31, 2012 and 2011 included in this registration statement.
Our Competitive Strengths
We believe
that the following are our key competitive strengths:
Strong Market Position in Attractive Niche Markets.
We believe, based
on our 2012 pro forma net sales, that we are one of the leaders in each of the product markets that we serve. We believe that the combination of our global presence, innovative technology, process know-how, strong commitment to research and
development, dedication to customer service and broad range of proprietary products distinguishes us from our competitors, allowing us to maintain our strong market share positions. Furthermore, we believe the diversity of the niche markets we serve
will enable us to continue our growth throughout economic cycles and mitigate the impact of a downturn in any single market.
Proprietary Technology and Service Oriented Business Model.
Our commitment to technological innovation and our extensive
intellectual property portfolio of over 750 issued patents enables us to develop our cutting-edge products. In order to continue to provide innovative products and highly technical service to our customers, we place a premium on maintaining a
specialized and qualified employee base. Our global sales and service personnel possess extensive knowledge of and experience in our local markets. For instance, our technical management team serving our Asian markets has, on average, over 20 years
of experience, including decades of joint product development with our key customers located in the greater China region. We believe that our proprietary technology, extensive industry experience and customer service-focused business model are
difficult for our competitors to replicate. As a result, and in order to avoid the transition risks that go along with switching suppliers, customers may elect not to switch from our products to those of our competitors. Switching suppliers
generally may not make sense for our customers from a cost-benefit standpoint: the cost of our products is low relative to the potential cost savings, as switching expenses (including conducting expensive trials to ensure quality assurance and
compliance with regulatory requirements, industry standards and internal protocols) can be significant.
81
The key role our products play in improving the efficacy of our customers’ manufacturing
processes and reducing their total costs, combined with our extensive experience in local markets, our focus on highly technical customer service and the significant customer switching risks and costs inherent in our industry, have enabled us to
establish and maintain our long-term customer relationships. We leverage these close relationships to identify opportunities for new products and position our portfolio of products within the ever-changing business environment.
Customer, Product, Application, End-Market and Geographic Diversity.
We offer a broad range of products and services to diverse
end markets, ranging from electronics to printing to offshore oil drilling. We have more than 3,500 customers globally. No single customer accounted for more than 3% of our 2012 pro forma net sales. We have a significant presence in the rapidly
growing Asian and Brazilian markets, with over $260 million in 2012 pro forma net sales to customers in those regions. In addition, each of our product lines serves numerous and often unrelated end markets. Our customer, product and geographic
diversity help to mitigate the effects of any adverse event affecting a specific industry, end market or region.
Limited Raw
Material Concentration and Low Exposure to Energy Prices.
We use in excess of 1,000 chemicals as raw materials in the manufacture of our proprietary products. No single raw material represented more than 4% of our 2012 pro forma cost of
sales. Further, the raw materials that are of greatest importance to our global operations are, in most cases, obtainable from multiple sources worldwide. In addition, energy costs, which have historically been volatile, only represented
approximately 2% of our 2010 pro forma cost of sales.
Our Business Strategy
We intend to continue to grow our business, improve profitability and strengthen our balance sheet by pursuing the following integrated
strategies:
Build Our Core Businesses.
We believe that we can capitalize on our technical capabilities, sophisticated
process know-how, strong customer relationships and deep industry knowledge to enhance growth.
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Extend Product Breadth: We intend to extend many of our product offerings through the development of new applications for our existing products in our existing markets. For example, we are extending our capabilities for
films used in in-mold decoration for high-end automotive interiors, exteriors and other applications. We are also leveraging our capabilities in plating technology in printed circuits and automotive applications to meet the emerging technological
and environmental needs of our customers.
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•
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Continue to Grow Internationally with Our Customers: We intend to continue to grow internationally by expanding our product sales to our existing multinational customers as they penetrate emerging regions. We continue
to make investments, especially in technical staff, in high-growth markets such as the greater China region and Brazil in order to better serve our customers.
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Leverage our Capabilities to Grow into New Markets and Applications.
Building on our core competencies in product innovation,
applications development and technical services, we intend to expand into new high-growth markets and expand upon our existing technologies to develop new products for new applications in markets that are adjacent to those we currently serve.
Examples of our initiatives include:
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Plating for Molded Interconnect Devices: Molded interconnect devices are devices made with injection-molded parts that integrate mechanical and electrical functions into a single piece. We are extending our
“plating on plastics” technology into antenna manufacturing for smartphones. We believe that our technology results in a higher manufacturing yield and lower cost to our customers.
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Light-Emitting Diode (“LED”) Lighting Market: We are developing products for thermal management systems and using silver as a wire-bondable and reflective finish option to enhance energy conversion into light.
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•
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High Value PET Recycling: As worldwide demand for recycled polyethylene terephthalate (“PET”) grows, we are leveraging our strong position in Europe for specialized cleaners and defoamers that are used in
recycling plastic products made of PET to expand that business globally, especially in emerging markets such as Asia and South America. Our specialized cleaners and defoamers enable recycled PET to be used in higher value applications such as bottle
resin.
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•
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Digital Flexographic Printing: We have developed an innovative LUX
®
process, which uses a flat top dot processing technology that significantly increases the
quality and consistency of the printed image from a flexographic printing plate in a manner that is more efficient and cost effective for our customers. The LUX
®
process is a proprietary
process we developed that changes the form of the dots on printing plates and enables printing with higher definition and fidelity.
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Maintain Our Technology Leadership Position.
We believe that our focused commitment to technology and research and development
will result in future success in our product innovation and applications development. Because the highly technical service we provide to our customers is an integral part of their successful use of our products, our service personnel become closely
acquainted, and develop deep relationships, with our customers. These close customer relationships enable us to identify and forecast the needs of our customers and draw upon our intellectual property portfolio and expertise in technology research
and development to create new products and successfully position our portfolio of products within the ever-changing business environment.
Continue to Pursue Operational Efficiencies.
We consistently focus on opportunities to reduce operating expenses through
facility optimization, product and raw material rationalization and by maintaining a relatively low fixed cost structure that supports our growth strategy. We believe our operational restructuring initiatives were primarily responsible for an
increase in our gross profit margin percentage, on a pro forma basis, from 46.7% for the year ended December 31, 2011 to 48.6% for the year ended December 31, 2012, representing a 4.1% increase.
Focus on Human Capital.
The success of our business depends on our ability to continue to capitalize on our technical
capabilities, unique process know-how, strong customer relationships and industry knowledge. Our technical expertise and history of innovation demonstrated by the MacDermid employees we acquired in the acquisition of MacDermid reflect the
specialized and highly skilled nature of our research and development personnel. Our strong customer relationships and familiarity with our local markets result from the work of our highly talented and experienced sales and service personnel. As
such, we intend to focus on attracting, retaining and developing the best human talent across all levels of our organization, which is key to our ability to successfully operate and grow our business.
Our Products
We review our portfolio of
products quarterly to identify and replace low margin products with high margin products. Accordingly, our product mix may frequently change depending upon customer demand and the cost and selling prices related to any given product. In our
Performance Materials segment, we offer various products to the electronics, industrial and offshore end markets.
As of September 30,
2013, the following products were among those offered by MacDermid to customers in the Performance Materials segment:
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Plating products, which are used to plate holes drilled through printed circuit boards to connect opposite sides of the board and to connect the different layers of multi-layer printed circuit boards;
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Final finishes, which are used on printed circuit boards to preserve the solderability of the finished boards;
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Circuit formation products, which are an assortment of products to promote adhesion and form circuit patterns; and
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•
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Oxides, which are conversion coatings used in the fabrication of multilayer circuit boards.
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Pre-treatment and cleaning solutions, which are applied to prepare the surfaces of a wide variety of industrial products for additional treatment. We have a complete line of aqueous and semi-aqueous pre-treatment and
cleaning products, which are more environmentally friendly than the solvents they replace;
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•
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Functional conversion coatings, which are applied to metals to enhance corrosion resistance and paint adhesion in a wide spectrum of industrial applications where heavy duty usage and exposure to unfavorable
environments are anticipated. Our products plate various parts that are used in automotive and aerospace equipment, appliances, computer hard disks and other electronic products;
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Electroless nickel, which is applied to a variety of metal and plastic surfaces to enhance corrosion resistance, wear resistance, solderability and to repair worn or over-machined surfaces in a variety of applications.
MacDermid was among the earliest developers of electroless nickel products, which are safer and more environmentally friendly than the products they replace;
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Decorative plating products, which can be used on all surface conditions to provide mirror-like finishes on steel, alloys or plastic in a more environmentally friendly manner. We offer an extensive range of quality
decorative plating processes used in the plating of appliances, plumbing goods and automotive trim; and
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•
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Hard-coated films for the membrane switch and touch screen markets.
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Production fluids which are water-based hydraulic control fluids used in subsea production control systems to operate valves for the deep water oil extraction and transportation process; and
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Drilling fluids, which are water-based hydraulic control fluids used in subsea control systems to operate valves for drilling rigs on the ocean floor.
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As of September 30, 2013, the following products were among those offered by MacDermid to customers in the Graphic Solutions segment:
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•
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Solid sheet printing elements, which are digital and analog printing sheets used in the flexographic printing and platemaking processes. Our extensive line of flexographic plates are used in the commercial packaging and
letterpress newspaper and publication industries;
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•
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Liquid products, which are liquid photopolymers used to produce printing plates for transferring images onto commercial packaging; and
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•
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Printing equipment, which are thermal plate processing systems that allow press-ready printing plates to be created without solvents.
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Customers and Classes of Products
:
We believe that our business is not materially dependent
upon a single customer. However, although we have a diverse customer base and no customer or distributor constitutes 10% or more of our consolidated pro forma net sales, we do have customers and independent, third-party distributors, the loss of
which could have a material adverse effect on results of operations for the affected earnings periods. Both our Performance Materials segment and our Graphic Solutions segment are dependent on such customers and distributors. The principal products
purchased by such customers are surface finishing chemicals in our Performance Materials segment and solid sheet printing elements in our Graphic Solutions segment. No material part of our business is subject to renegotiation or termination at the
election of a governmental unit.
Within our two general types of products, as of September 30, 2013, MacDermid sold approximately 76
classes of products. Three of classes of products, each within our Performance Materials segment, each represent 10% or more of our net sales. Net sales of our class of functional products, which is comprised of approximately 25 different products
designed to improve the corrosion resistance and/or functionality of the surfaces they are used to treat, approximated 28% and 28%, respectively, of our consolidated pro forma net sales for the years
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ended December 31, 2012 and 2011. Net sales of our class of decorative products, which is comprised of approximately 30 different products designed to enhance the appearance of the surfaces they
treat, approximated 11% and 12%, respectively, of our consolidated pro forma net sales for the years ended December 31, 2012 and 2011. Net sales of our class of metallization products, which is comprised of six different products used to plate
electronic components onto the surfaces they treat, approximated 14% and 15%, respectively, of our consolidated pro forma net sales for the years ended December 31, 2012 and 2011.
Proprietary sales are generated from manufactured chemical compounds produced from our own research and development laboratories and
manufacturing facilities. In many cases, these products are protected with patents or trademarks. Proprietary products have higher gross margins than non-proprietary products, and are perceived by our management to be more critical to our overall
performance.
Methods for selling and marketing our proprietary products vary slightly by geographic region. In total, we generate
business through the efforts of sales and service personnel and regional distributors and manufacturing representatives. In the Americas, approximately 290 sales and service personnel market our entire line of proprietary products. In certain areas
of the United States, distributors and manufacturing representatives also sell and service many of our products. We market certain of our products through wholly owned subsidiaries in Canada and Mexico, and through 95% ownership of our operations in
Brazil. In Europe, approximately 340 sales and service representatives, who are employed by our wholly owned subsidiaries located in Belgium, Czech Republic, France, Germany, Great Britain, Italy, Luxembourg, the Netherlands, Spain and Sweden,
market our proprietary products. In the Asia-Pacific region, our local subsidiaries employ more than 420 sales and service representatives to market our proprietary products through either wholly owned subsidiaries or branches in Australia, mainland
China, Hong Kong, India, Japan, Singapore, South Korea and Taiwan. In addition to the countries where we have wholly owned subsidiaries, some of our proprietary chemicals are sold in other countries throughout Asia, Europe and South America through
distributors. Such resale items are marketed in conjunction with and as an aid to the sale of proprietary chemicals.
Revenue from product
sales, including freight charged to customers, is recorded upon shipment to the customer if the collection of the resulting receivable is probable. Our stated shipping terms are customarily FOB shipping point and do not include customer inspection
or acceptance provisions. Equipment sales arrangements may include right of inspection or acceptance provisions in which case revenue is deferred until these provisions have been satisfied. If circumstances arise where title has not passed, or
revenue is not earned, we defer revenue recognition in accordance with criteria set forth in Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements
and Staff Accounting Bulletin No. 104,
Revenue
Recognition
.
There is no material portion of our business that is subject to seasonality.
Research and Development
Research in
connection with proprietary products is performed principally in the United States, Great Britain, Japan and China. MacDermid spent approximately $25.0 million during fiscal year 2012 and $23.0 million during fiscal year 2011 on research and
development activities. Substantially all research and development activities were performed internally.
Patents, Trademarks and Proprietary Products
We own more than 750 domestic and foreign patents. The patents we hold are important to our business and have remaining lives of
varying duration. Although certain of these patents are becoming increasingly more important to our business, we believe that our ability to provide technical and testing services to customers, and to meet our customers’ rapid delivery
requirements of our customers is equally, if not, more important. No specific group or groups of intellectual property rights are material to our business. However, we have many proprietary products which are not covered by patents and which are
responsible for a large component of our
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total sales. Further, we hold a number of domestic and foreign trade names and trademark registrations and applications for registration which we consider to be of value in identifying the
MacDermid business and our products. We do not hold nor have we granted any franchises or concessions.
Government and Environmental Regulation
We are subject to numerous federal, state and local laws and regulations in the countries in which we operate, including tax and other
laws that govern the way we conduct our business. However, no portion of our business is subject to re-negotiation of profits or termination of contracts or subcontracts at the election of the governments in the countries in which we operate.
We are subject to the FCPA, which prohibits companies and their intermediaries from making payments in violation of law to non-U.S. government
officials for the purpose of obtaining or retaining business or securing any other improper advantage. Our reliance on independent distributors to sell some of our proprietary chemicals internationally demands a high degree of vigilance in
maintaining our policy against participation in corrupt activity, because these distributors could be deemed to be our agents, and we could be held responsible for their actions. Other U.S. companies have faced criminal penalties under the FCPA for
allowing their agents to deviate from appropriate practices in doing business with these individuals. We are also subject to similar anti-bribery laws in the jurisdictions in which we operate, including the United Kingdom’s Bribery Act of 2010,
which went into effect in the third quarter of 2011, which also prohibits commercial bribery and makes it a crime for companies to fail to prevent bribery. These laws are complex and far-reaching in nature, and, as a result, we cannot assure you
that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof. Any violations of these laws, or allegations of such violations, could
disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on our business, prospects, financial condition, or results of
operations. In recent years, several jurisdictions have enhanced their laws and regulations in this area, increased their enforcement activities, and increased the level of cross-border coordination and information sharing. We could also suffer
severe penalties, including criminal and civil penalties, disgorgement, and other remedial measures.
We maintain the Business Conduct and
Ethics Policy (the “Policy”) which was approved by Platform’s board of directors and is promulgated by MacDermid’s CEO and General Counsel. The Policy covers compliance with the FCPA and similar anti-corruption laws, as well as
other legal areas applicable to our operations. We provide compliance training to our employees in an effort to raise awareness, foster compliance and set an expectation of compliance at all levels within the company. The Policy establishes a duty
to report non-compliance and provides avenues for making such reports, including a reporting hotline. We also maintain a system for auditing compliance with applicable laws.
As a manufacturer and distributor of specialty chemicals and systems, we are subject to extensive U.S. and foreign laws and regulations
relating to environmental protection and worker health and safety, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated properties and
occupational safety and health matters. We have and may in the future incur significant costs, including cleanup costs, fines and sanctions and third-party claims for property or natural resource damage or personal injuries as a result of past or
future violations of, or liabilities under, such laws and regulations.
Domestic and international laws regulate the production and
marketing of chemical substances. Almost every country has its own legal procedures for registration and import. Of these, the laws and regulations in the European Union, the United States (Toxic Substances Control Act), Brazil, the United Kingdom,
China and Taiwan are the most significant to our business. Additionally, other laws and regulations may also limit our expansion into other countries. Chemicals that are not included on one or more of these, or any other country’s chemical
inventory lists, can usually be registered and imported, but may first require additional testing or submission of additional administrative information.
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The European Commission enacted a regulatory system in 2006, known as Registration, Evaluation,
Authorization and Restriction of Chemical substances (“REACH”), which requires manufacturers, importers and consumers of certain chemicals to register these chemicals and evaluate their potential impact on human health and the environment.
As REACH matures, significant market restrictions could be imposed on the current and future uses of chemical products that we use as raw materials or that we sell as finished products in the European Union. Other countries may also enact similar
regulations.
In response to increased government attention to environmental matters worldwide, we continue to develop proprietary
products designed to reduce the discharge of pollutant materials into the environment and eliminate the use of certain targeted raw materials while enhancing the efficiency of customer chemical processes.
In addition, many of our full-time employees are employed outside the United States. In certain jurisdictions where we operate, particularly,
Brazil, France, Germany Italy, and Japan, labor and employment laws are relatively stringent and, in many cases, grant significant job protection to certain employees, including rights on termination of employment. In addition, in certain countries
where we operate, our employees are members of unions or are represented by a works council as required by law. We are often required to consult and seek the consent or advice of these unions and/or works councils. These laws, coupled with the
requirement to consult with the relevant unions or works councils, could adversely affect our flexibility in managing costs and responding to market changes and could limit our ability to access the skilled employees on which our business depends.
Competitive Environment
We provide
a broad line of proprietary chemical compounds and supporting services. Broadly speaking, we compete in the specialty chemicals market. On a more narrow scale, we compete in markets for specialty chemicals for electronic applications, general metal
and plastic finishing, printing and oil exploration and production.
We have many competitors in some proprietary product areas. Some of
our competitors may have greater financial, technical and marketing resources than we do and may be able to devote greater resources to promoting and selling certain products. Some large competitors operate globally, as we do, but most operate only
locally or regionally. Our Performance Materials segment has eight primary worldwide competitors, the primary of which are Atotech, Alent and Dow Chemical. Within our Graphic Solutions segment, we have three main competitors, DuPont, Flint Group and
Asahi.
We compete primarily on the basis of quality, technology, performance, reliability, brand, reputation, range of products and
services, and service and support. We maintain extensive support, technical and testing services for our customers, and are continuously developing new products. We believe that our combined abilities to manufacture, sell, service and develop new
products and applications, enable us to compete successfully both locally and internationally.
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Properties
We operate manufacturing facilities, laboratory and warehouse and sales offices throughout the world. As of December 31, 2012, MacDermid owned
15 facilities and leased 42 facilities. We believe that our facilities are adequate to meet our current requirements. The following table lists our principal active facilities by segment and gives a brief description of the activities performed at
each facility:
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Location
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Principal Use
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Ownership status
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Corporate & other support functions
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Denver, Colorado
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Corporate offices
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Owned*
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Waterbury, Connecticut
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Performance Materials and Graphic Solutions segment administration offices, marketing offices, corporate service, customer support and research laboratories
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Owned*
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Performance Materials segment
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Ferndale, Michigan
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Factory, warehouse and offices
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Owned*
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New Hudson, Michigan
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Laboratories and offices
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Owned*
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Pasadena, Texas
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Factory, warehouse and offices
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Owned*
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São Paulo, Brazil
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Factory, warehouse and offices
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Leased
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Hsin Chu, Taiwan
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Factory, warehouse, laboratories and offices
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Owned
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Panyu, China
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Factory, warehouse, laboratories and offices
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Owned
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Suzhou, China
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Factory, laboratories and offices
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Owned
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Sungnam-City, South Korea
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Warehouse and offices
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Leased
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Singapore
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Warehouse and offices
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Leased
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Hong Kong
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Warehouse and offices
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Leased
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Kawasaki, Japan
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Laboratories and offices
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Leased
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Birmingham, United Kingdom
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Factory, warehouse, laboratories and offices
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Leased
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Wigan, United Kingdom
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Factory, warehouse and offices
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Owned
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Wantage, United Kingdom
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Factory, warehouse, laboratories and offices
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Leased
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Novara, Italy
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Factory, warehouse, laboratory and offices
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Owned
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Frost, Germany
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Warehouse and offices
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Leased
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Barcelona, Spain
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Warehouse, laboratory and offices
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Owned
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Graphic Solutions segment
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Morristown, Tennessee
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Factory, warehouse, laboratory and offices
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Owned*
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Atlanta, Georgia
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Offices and laboratories
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Owned*
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San Marcos, California
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Factory, warehouse, laboratory and offices
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Owned*
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Middletown, Delaware
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Factory, warehouse and offices
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Owned*
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Cernay, France
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Warehouse and offices
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Leased
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Melbourne, Australia
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Factory, warehouse and offices
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Leased
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*
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Subject to a mortgage granted to secure our obligations under the Credit Facilities.
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We
believe that all of our facilities and equipment are in good condition, are well maintained and are adequate for our present operations.
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Insurance
Our belief is that we have customary levels of insurance for a company of our size in our industry. Our insurance policies are subject to
deductibles and limits. We have property coverage with a limit of $150.0 million, domestic employee benefits coverage with a limit of $2.0 million and cargo transport liability with a limit of $1.5 million. We also maintain other types of insurance,
such as aviation products liability, automobile, and general liability insurance.
We maintain insurance coverage at levels that we
believe to be reasonable. However, we are not fully insured against all potential hazards incident to our business. Additionally, we may incur losses beyond the limits of, or outside the coverage of, our insurance. We maintain full replacement value
insurance coverage for property damage to a majority our facilities and business interruption insurance. Nevertheless, a significant business interruption in the operation of one or more of our facilities could have a material adverse effect on our
business. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage.
Employees
We employ individuals in 24
countries. As of October 31, 2013, we employed approximately 2,000 full-time employees, including approximately 1,000 research and development chemists and experienced technical service and sales personnel.
Legal Proceedings
In the ordinary course
of our business, we are subject to periodic lawsuits, investigations and claims, including, but not limited to, product liability claims, contractual disputes, premises claims and employment and environmental, health, and safety matters. Although we
cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe any currently pending legal proceeding to which we are a party will have a material adverse effect on our business,
prospects, financial condition, cash flows and results of operations.
We are a manufacturer and distributor of specialty chemical
products, and are therefore exposed to the risk of liability or claims with respect to environmental cleanup or other matters, including those in connection with the disposal or releases of hazardous materials. We have received notices of
violation with respect to instances of non-compliance with environmental laws. A number of our facilities and former facilities have been environmentally impacted from historic operations and some of our facilities are in the process of being
investigated and remediated. See Note 17 to the MacDermid audited financial statements for the years ended December 31, 2012 and 2011. We or our affiliates have been named as a potentially responsible party in numerous superfund sites due to
historic operations. Asbestos and other hazardous substances are or may be present at our facilities. We are subject to extensive domestic and foreign laws and regulations relating to environmental protection and worker health and safety, including
those governing discharges of pollutants into soil, air and water, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated properties. We have incurred, and will continue to incur, costs and capital
expenditures in complying with these laws and regulations. Additional costs could be incurred, including cleanup costs, fines, sanctions, and third-party claims, as a result of violations of or liabilities under environmental laws. As of
September 30, 2013, on a pro forma basis, we had reserved $2.2 million (excluding asset retirement obligations) for various environmental matters.
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Management and Corporate Governance
Board of Directors
Upon consummation of
the Domestication, our Delaware by-laws will permit our Board of Directors to set the size of the Board at not less than 1 director. Our Board of Directors currently consists of seven directors. For the size and scope of our business and operations,
we believe a board of approximately this size is appropriate as it is small enough to allow for effective communication among the members but large enough so that we get a diverse set of perspectives and experiences around our board room. Our
by-laws provide that, in uncontested elections, directors will be elected by a majority of the votes cast, and in contested elections, directors will be elected by a plurality of the votes cast.
Upon consummation of the Domestication, each director on our Board of Directors will serve a one-year term or until their successor has been
duly elected and qualified, subject to their earlier death, resignation, disqualification or removal. Pursuant to the DGCL and our by-laws, in general, any vacancies on our Board of Directors resulting from death, retirement, resignation,
disqualification, removal or other cause may be filled only by an affirmative vote of a majority of the remaining directors then in office, although less than a quorum, or by a sole remaining director. Our current directors are as follows:
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Name
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Age
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Martin E. Franklin*
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49
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Daniel H. Leever
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65
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Ian G. H. Ashken
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53
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Nicolas Berggruen
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52
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Michael F. Goss
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53
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Ryan Israel
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28
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E. Stanley O’Neal
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62
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Upon the consummation of the MacDermid Holdings Acquisition, Paul Myners,
Alun Cathcart and Alain Minc stepped down from our Board of Directors and Ian G. H. Ashken, Michael F. Goss, Ryan Israel, Daniel H. Leever and E. Stanley O’Neal joined our Board of Directors.
We believe that each of our directors possesses the experience, skills and qualities to fully perform his duties as a director and contribute
to our success. Our directors were nominated because each is of high ethical character, highly accomplished in his field with superior credentials and recognition, has a reputation, both personal and professional, that is consistent with
Platform’s image and reputation, has the ability to exercise sound business judgment, and is able to dedicate sufficient time to fulfilling his obligations as a director. Our directors as a group complement each other and each of their
respective experiences, skills and qualities so that collectively the Board operates in an effective, collegial and responsive manner. Each director’s principal occupation and other pertinent information about particular experience,
qualifications, attributes and skills that led the Board to conclude that such person should serve as a director, appears on the following pages.
Martin E. Franklin
has served as a director of Platform since April 28, 2013, and has served as Chairman since the completion of the
MacDermid Holdings Acquisition on October 31, 2013. Mr. Franklin is the founder and executive chairman of Jarden Corporation, a broad-based consumer products company. Mr. Franklin was appointed to Jarden’s board of directors in June 2001 and
served as Jarden’s chairman and chief executive officer from September 2001 until June 2011, at which time he began service as executive chairman. Mr. Franklin has experience serving on the boards of private and public companies. Mr. Franklin
served on the Board of Directors of Justice Holdings Limited (“Justice”) from February 2011 until its business combination with Burger King Worldwide, Inc. in June 2012, and continues to serve on the board of Burger King Worldwide, Inc.
and is a
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member of its audit committee. Mr. Franklin also served on the Board of Directors of Kenneth Cole Productions, Inc. from July 2005 to December 2011. He also served on the Board of Directors of
Liberty Acquisition Holdings Corp. (“LAHC”) from June 2007 until its business combination with Grupo Prisa in November 2010, and continued to serve on the board of Grupo Prisa until December 2013. Mr. Franklin also served on the board of
Liberty Acquisition Holdings (International) Company, a Cayman Islands company (“LAHIC”), from January 2008 until its acquisition of Phoenix Group Holdings (formerly known as Pearl Group) in September 2009 and Freedom Acquisition Holdings,
Inc. (“Freedom”) from June 2006 until its acquisition of GLG Partners in November 2007 and continued to serve on the board of GLG Partners until it was acquired by the Man Group plc in October 2010. Mr. Franklin also was a director and
trustee of a number of private companies and charitable institutions. Mr. Franklin graduated from the University of Pennsylvania in 1986 with a degree in political science.
We believe Mr. Franklin’s qualifications to serve on our Board of Directors include his leadership, extensive experience as a member of
other corporate boards and his knowledge of public companies.
Daniel H. Leever
has served as a director of Platform since the
MacDermid Holdings Acquisition on October 31, 2013. Mr. Leever is currently the Chief Executive Officer and Vice Chairman of Platform. Mr. Leever served as Chief Executive Officer of MacDermid from 1990 to 2013. From 1998 to 2013, Mr. Leever served
as Chairman of the Board of Directors of MacDermid. From 1989 to 1990, Mr. Leever served as Senior Vice President and Chief Operating Officer of MacDermid. Mr. Leever initially joined MacDermid as an employee in 1982. Mr. Leever attended
undergraduate school at Kansas State University and the graduate school at the University of New Haven School of Business.
We believe Mr.
Leever’s qualifications to serve on our Board of Directors include his extensive knowledge of MacDermid and his years of leadership at MacDermid.
Ian G. H. Ashken
has served as a director of Platform since the MacDermid Holdings Acquisition on October 31, 2013. Mr. Ashken
co-founded Jarden Corporation and serves as its Vice Chairman and Chief Financial Officer. Until February 15, 2007, Mr. Ashken was also Secretary of Jarden Corporation. Mr. Ashken was appointed to Jarden Corporation’s Board of Directors on June
25, 2001 and became its Vice Chairman, Chief Financial Officer and Secretary effective September 24, 2001. Mr. Ashken is also a principal and executive officer of a number of private investment entities. Mr. Ashken also served as the Vice Chairman
and/or Chief Financial Officer of three public companies, Benson Eyecare Corporation, Lumen Technologies, Inc. and Bollé Inc. between 1992 and 2000. Mr. Ashken also served as a director of Phoenix Group Holdings from 2009 to May 2013. During
the last five years, Mr. Ashken also previously served as a director of one other public company, GLG Partners, Inc. Mr. Ashken graduated from the University of Newcastle.
We believe Mr. Ashken’s qualifications to serve on our Board of Directors include his executive experience, service on other corporate
boards and his knowledge of public companies.
Nicolas Berggruen
has served as a director of Platform since April 28, 2013. Mr.
Berggruen founded what became Berggruen Holdings Ltd in 1984 to act as the direct investment vehicle of what became the Nicolas Berggruen Charitable Trust. Mr. Berggruen has served as the chairman of Berggruen Holdings Ltd since its inception. Mr.
Berggruen is also founder of the Berggruen Institute on Governance, an independent, nonpartisan think tank. Mr. Berggruen has experience serving on the boards of private and public companies. He served on the board of directors of Justice from
February 2011 until its business combination with Burger King Worldwide, Inc. in June 2012. Mr. Berggruen also served on the board of directors of LAHC from June 2007 until its business combination with Grupo Prisa, Spain’s largest media
conglomerate, in November 2010, and continues to serve on the board of Grupo Prisa. Mr. Berggruen served on the Board of Directors of LAHIC from January 2008 until its acquisition of Phoenix Group Holdings (formerly known as Pearl Group) in
September 2009, and Freedom from June 2006 until its acquisition of GLG Partners in November 2007 and continued to serve on the board of GLG Partners until February 2009. Mr. Berggruen studied at l’Ecole Alsacienne before attending Le Rosey in
Switzerland and obtained his B.S. in finance and international business from New York University.
91
We believe Mr. Berggruen’s qualifications to serve on our Board of Directors include his
leadership, service on other corporate boards and financial management expertise.
Michael F
.
Goss
has served
as a director of Platform since the MacDermid Holdings Acquisition on October 31, 2013. Mr. Goss joined Bain Capital in 2001 as Managing Director and Chief Financial Officer until 2011. In 2004, he was also named Chief Operating Officer, a role he
held until 2011. He currently serves, since 2012, as Managing Director and Head of Global Investor Relations of Bain Capital with responsibility for capital raising activities and client relationship matters. Prior to joining Bain Capital, Mr. Goss
was Executive Vice President and Chief Financial Officer of Digitas Inc., a global internet professional services firm, which he helped take public in March 2000. Prior to joining Digitas Inc., Mr. Goss was Executive Vice President and Chief
Financial Officer, and a member of the board of directors of Playtex Products, Inc. Mr. Goss graduated from Kansas State University in 1981 with a BS in economics and received an MBA with Distinction from Harvard Business School in 1986.
We believe Mr. Goss’s qualifications to serve on our Board of Directors include his leadership, executive experience, service on other
corporate boards and financial management expertise.
Ryan Israel
has served as a director of Platform since the completion of the
MacDermid Holdings Acquisition on October 31, 2013. Mr. Israel is currently a partner at Pershing Square Capital Management, L.P., a research intensive, fundamental value based investment firm based in New York City. Mr. Israel joined Pershing
Square in March 2009, and is responsible for identifying, analyzing and monitoring current and prospective investment opportunities across a variety of industries. Before joining Pershing Square, from July 2007 to March 2009, Mr. Israel was an
investment banker in the technology, media and telecom division at Goldman Sachs. Mr. Israel attended the Wharton School at the University of Pennsylvania, where he received a B.S. in Economics, with concentrations in Finance and Accounting.
We believe Mr. Israel’s qualifications to serve on our Board of Directors include his extensive experience in business and management,
including his experience identifying and analyzing potential investment opportunities.
E. Stanley O’Neal
has served as a
director of Platform since MacDermid Holdings Acquisition on October 31, 2013. Mr. O’Neal served as Chairman of the Board and Chief Executive Officer of Merrill Lynch & Co., Inc. until October 2007. He became Chief Executive
Officer of Merrill Lynch in 2002 and was elected Chairman of the Board in 2003. Mr. O’Neal was employed with Merrill Lynch for 21 years, serving as President and Chief Operating Officer from July 2001 to December 2002; President of U.S. Private
Client from February 2000 to July 2001; Chief Financial Officer from 1998 to 2000 and Executive Vice President and Co-head of Global Markets and Investment Banking from 1997 to 1998. Mr. O’Neal has served as a director of Alcoa, an aluminum
manufacturing company, since January 2008 and is a member of its audit and governance committees. Mr. O’Neal was a director of General Motors Corporation from 2001 to 2006, and a director of American Beacon Advisors, Inc. (investment advisor
registered with the SEC) from 2009 to September 2012. Mr. O’Neal graduated from Kettering University in 1974 with a degree in industrial administration and received his MBA from Harvard Business School in 1978.
We believe Mr. O’Neal’s qualifications to serve on our Board of Directors include his leadership, executive experience, service on
other corporate boards and financial management expertise.
92
Corporate Governance
Corporate Governance Guidelines
Our Board of Directors is responsible for overseeing the management of our company. The Board has adopted a Board of Directors Governance
Principles and Code of Conduct (“Governance Principles”) which set forth our governance principles relating to, among other things:
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director qualifications and responsibilities;
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•
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board structure and meetings;
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•
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management succession; and
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•
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the performance evaluation of our Board and chief executive officer.
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Our Governance
Principles are available in the investor relations section of our website at www.platformspecialtyproducts.com.
Director Independence
The composition of the Board and its committees will be subject to the independence standards set forth under the NYSE corporate governance
listing standards as well as the Governance Principles which have been adopted by the Board. Under the NYSE corporate governance listing standards, a director qualifies as independent if the Board affirmatively determines that the director has no
material relationship with us. While the focus of the inquiry is independence from management, the Board is required to broadly consider all relevant facts and circumstances in making an independence determination. In making each of these
independence determinations, the Board has considered all of the information provided by each director in response to detailed inquiries concerning his or her independence and any direct or indirect business, family, employment, transactional or
other relationship or affiliation of such director with us.
Based on information provided by each director concerning his background,
employment, and affiliations, we believe that each of Ian G. H. Ashken, Nicolas Berggruen, Michael F. Goss, Ryan Israel and E. Stanley O’Neal are “independent” as that term is defined under the applicable rules and regulations of the
SEC and the corporate governance listing standards of the NYSE.
Board Committees
On October 31, 2013, the Board established three standing committees: the Audit Committee, the Compensation Committee and the Nominating
and Policies Committee. Copies of the committee charters of each of the Audit Committee, the Compensation Committee and the Nominating and Policies Committee setting forth the responsibilities of the committees can be found under the investor
relations section of our website at www.platformspecialtyproducts.com, and such information is also available in print to any stockholder who requests it through our investor relations department. We will periodically review and revise the committee
charters. A summary of the composition of each committee as it will be constituted upon the effectiveness of the registration statement of which this prospectus is a part.
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Name
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Audit Committee
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Compensation Committee
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Nominating and
Policies Committee
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Ian G. H. Ashken
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X
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X
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Nicolas Berggruen
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X
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X*
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Michael F. Goss
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X*
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Ryan Israel
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X
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X
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X
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E. Stanley O’Neal
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X*
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*
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Denotes Chairman of applicable Committee
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93
Audit Committee
On December 16, 2013, our Board adopted a written Audit Committee Charter that governs the responsibilities of the Audit Committee. The Audit
Committee is responsible for, among other things:
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overseeing preparation of our financial statements, the financial reporting process and our compliance with legal and regulatory matters;
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•
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appointing and overseeing the work of our independent auditor;
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•
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preapproving all auditing services and permitted non-auditing services to be performed for us by our independent auditor and approving the fees associated with such work;
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•
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approving the scope of the annual audit;
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•
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reviewing interim and year-end financial statements;
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•
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overseeing our internal audit function, reviewing any significant reports to management arising from such internal audit function and reporting to the Board; and
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•
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preparing the audit committee report that the SEC requires in our annual proxy statement.
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The
Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel for this purpose where appropriate. Under procedures adopted by the Audit Committee, the Audit Committee reviews
and pre-approves all audit and non-audit services performed by our independent accountant.
We have reviewed the background, experience,
and independence of the Audit Committee members and based on this review, we have determined that each member of the Audit Committee:
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meets the independence requirements of the NYSE’s corporate governance listing standards;
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meets the enhanced independence standards for audit committee members required by the SEC; and
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•
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is financially literate, knowledgeable and qualified to review financial statements.
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In addition, the Board
has determined that each of Messrs. Ashken and Goss qualifies as an “audit committee financial expert” under the SEC rules.
Compensation
Committee
On December 16, 2013, our Board adopted a written Compensation Committee Charter that governs the responsibilities of
the Compensation Committee. The Compensation Committee is responsible for, among other things:
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assisting the Board in developing and evaluating potential candidates for executive positions;
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•
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reviewing and approving corporate goals and objectives with respect to compensation for the Chief Executive Officer;
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•
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making recommendations to the Board with respect to compensation of other executive officers and providing oversight of management’s decisions concerning the performance and compensation of such executive officers;
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•
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reviewing on a periodic basis compensation and benefits paid to directors;
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•
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reviewing our incentive compensation and other stock-based plans and recommending changes in such plans to the Board of Directors as needed; and
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•
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preparing a compensation committee report on executive compensation as required by the SEC to be included in our annual proxy statement.
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94
We have reviewed the background, experience and independence of the Compensation Committee
members and based on this review, we have determined that each member of the Compensation Committee:
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meets the independence requirements of the NYSE’s corporate governance listing standards;
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is an “outside director” pursuant to the criteria established by the Internal Revenue Services; and
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meets the enhanced independence standards for Compensation Committee members established by the SEC.
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Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee who presently serve or in the past year have served on the Compensation Committee has
interlocking relationships as defined by the SEC or had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related party transactions.
Nominating and Policies Committee
On December 16, 2013, our Board adopted a written Nominating and Policies Committee Charter that governs the responsibilities of the Nominating
and Policies Committee. The Nominating and Policies Committee is responsible for, among other things:
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assisting our Board in identifying prospective director nominees and recommending nominees for each annual meeting of shareholders to our Board;
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leading the search for individuals qualified to become members of the Board and selecting director nominees to be presented for stockholder approval at our annual meetings;
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reviewing the Board’s committee structure and recommending to the Board for approval directors to serve as members of each committee;
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developing and recommending to the Board for approval a set of corporate governance guidelines and generally advising the Board on corporate governance matters;
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•
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reviewing such corporate governance guidelines on a periodic basis and recommending changes as necessary; and
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•
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reviewing director nominations submitted by stockholders.
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The Nominating and Policies
Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more Nominating and Policies Committee members or subcommittees. In making nominations, the Nominating and Policies Committee is required to submit
candidates who have the highest personal and professional integrity, who have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term
interests of the stockholders. In evaluating nominees, the Nominating and Policies Committee is required to take into consideration the following attributes, which are desirable for a member of the Board: leadership, independence, interpersonal
skills, financial acumen, business experiences, industry knowledge and diversity of viewpoints.
We have reviewed the background,
experience and independence of the Nominating and Corporate Policies Committee members and based on this review, we have determined that each member of the Nominating and Corporate Policies Committee meets the independence requirements of the
NYSE’s corporate governance listing standards and SEC rules and regulations.
Business Conduct and Ethics Policy
On December 16, 2013, our Board adopted a written Business Conduct and Ethics Policy (“Ethics Policy”) that establishes the standards
of ethical conduct applicable to all our directors, officers, and employees. The Ethics Policy
95
addresses, among other things, competition and fair dealing, conflicts of interest, financial matters and external reporting, company funds and assets, confidentiality and corporate opportunity
requirements, and the process for reporting violations of the Ethics Policy, employee misconduct, conflicts of interest or other violations. A copy of our Ethics Policy is publicly available in the investor relations section of our website at
www.platformspecialtyproducts.com. Any waiver of our Ethics Policy with respect to our chief executive officer, chief financial officer, controller or persons performing similar functions may only be authorized by our Board of Directors and will be
disclosed on our website as promptly as practicable, as may be required under applicable SEC and NYSE rules.
Executive Officers
Set forth below is certain information relating to our, and/or MacDermid’s, current executive officers and key
employees. Biographical information with respect to Mr. Leever is set forth above under “—
Board of Directors
”.
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Name
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Age
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Title
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Daniel H. Leever
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65
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Chief Executive Officer and Vice Chairman of Platform
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Frank J. Monteiro
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43
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Chief Financial Officer
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John L. Cordani
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50
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Secretary of Platform and General Counsel of MacDermid
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Frank J. Monteiro:
Mr. Monteiro has served as the Chief Financial Officer of Platform since the
MacDermid Holdings Acquisition on October 31, 2013. Mr. Monteiro served as the Senior Vice President and Chief Financial Officer of MacDermid from February 2010 to October 31, 2013. From April 2007 until February 2010, Mr. Monteiro served as Vice
President of Finance and Treasurer of MacDermid. Mr. Monteiro joined the MacDermid business in June 1998 and, from June 1998 to April 2007, served in the positions of General Accounting Manager, Domestic Accounting Manager and Assistant Controller
of Industrial Americas operations, and as Assistant Treasurer and Risk Manager of MacDermid. Mr. Monteiro received a Bachelor of Science in Accountancy from Bentley University.
John L. Cordani:
Mr. Cordani has served as the General Counsel of MacDermid from 1993, other than during the period from May 2000 to
March 2002, when he worked as a partner at Carmody & Torrance LLP, and Secretary of Platform since the MacDermid Holdings Acquisition on October 31, 2013. From 1989 until 1992, Mr. Cordani served as IP Manager of MacDermid,
Incorporated. Having joined MacDermid in 1986, Mr. Cordani served as a Researcher for the company from 1986 until 1989. Mr. Cordani also works, and has since 2001, as an Adjunct Professor of Law at Quinnipiac University Law School.
Mr. Cordani received a Juris Doctor from Quinnipiac University Law School, a Master of Science in Materials Science from Rensselaer Polytech, and a Bachelor of Science in Chemical Engineering from Texas A&M University.
96
Executive Compensation
Introduction
Platform did not have any
executive officers prior to the completion of the MacDermid Holdings Acquisition.
Summary Compensation Table
The following table summarizes the compensation from MacDermid to each of the named executive officers of MacDermid for the fiscal years ended
December 31, 2012 and 2011. The MacDermid board of directors was responsible for all decisions regarding such compensation.
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Name and Principal Position
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Year
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Salary
($)(1)
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Stock
Awards
($)(2)
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Non-Equity
Incentive Plan
Compensation
($)(3)
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All Other
Compensation
($)(4)
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Total
($)
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Daniel H. Leever
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2012
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818,750
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43,416
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825,000
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3,564
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1,690,730
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Chief Executive Officer
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2011
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793,750
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43,416
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480,000
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3,564
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1,320,730
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Frank J. Monteiro
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2012
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293,475
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12,529
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200,000
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541
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506,545
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Senior Vice President and Chief Financial Officer
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2011
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269,750
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12,529
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95,550
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541
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378,370
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John L. Cordani
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2012
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309,700
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3,685
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114,060
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810
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428,255
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Vice President, Corporate Secretary and General Counsel
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2011
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302,525
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3,685
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68,400
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810
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375,420
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(1)
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Amounts disclosed in this column represent annual base salary, and include adjustments to the named executive officers’ base salaries made by the MacDermid board of directors at its February 2012 and February 2011
meeting, respectively. These adjustments were applied retroactively to January 2012 and January 2011, respectively. These amounts were not reduced to reflect the named executive officers’ elections to defer receipt of salary under the Plan.
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(2)
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Amounts represent the fair value of stock awards made to the named executive officers by the MacDermid Holdings Board. For information relating to the assumptions made in determining the fair value of the stock, see
Note 8 to MacDermid’s audited financial statements included in this prospectus.
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(3)
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A discussion of the terms of the non-equity incentive plan is set forth below.
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(4)
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Amounts disclosed in this column represent premiums paid on behalf of the named executive officers for a company-sponsored life insurance program. In addition, during 2011 and 2012 Mr. Leever was, on occasion,
accompanied by family members when flying on business in the aircraft leased by MacDermid. MacDermid did not incur any additional costs associated with this perquisite.
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Narrative Disclosure to Summary Compensation Table
The following describes material features of the MacDermid compensation disclosed in the Summary Compensation Table. After the consummation of
the MacDermid Acquisition, our current Platform Compensation Committee became responsible for developing and overseeing our executive compensation policies, program and decisions.
Non-Equity Incentive Plan
For 2011 and
2012, MacDermid had an annual performance-based compensation plan (the “MacDermid Performance Compensation Plan”) in which each of the named executive officers participated. Under the MacDermid Performance Compensation Plan, each of the
named executive officers was eligible to receive annual performance-based cash compensation equal to a percentage of their annual salary. Whether an individual received such cash compensation depended upon whether various financial performance and
corporate performance metrics tied to each individual’s responsibilities were satisfied and whether certain strategic projects were completed.
97
To be considered for annual performance-based cash compensation, MacDermid had to first meet the
predetermined threshold level for consolidated EBITDA, or no annual performance-based compensation would be granted to participants.
For
2011 and 2012, if the “threshold” level was reached, each of Messrs. Leever, Monteiro and Cordani became eligible for annual performance-based compensation equal to 20%, 20% and 10% % of his salary, respectively. If the
“target” level of was reached, each of Messrs. Leever, Monteiro and Cordani became eligible for annual performance-based cash compensation equal to 100%, 50% and 35% of his salary, respectively. If the “stretch” level of was
reached, each of Messrs. Leever, Monteiro and Cordani became eligible for annual performance-based cash compensation equal to 200%, 75% and 50% of his salary, respectively.
For 2011, the consolidated threshold level was $151 million, the target level was $155 million and the stretch level was a $161 million. For
2012, the consolidated threshold level was $153 million, the target level was $162 million and the stretch level was a $170 million. For 2011 and 2012, MacDermid achieved consolidated EBITDA of $153.0 million in 2011, between threshold and target
level, and $162.4 million in 2012, the target level.
Mr. Leever then recommended each individual’s compensation (other than his own)
based upon an evaluation of each individual’s overall performance and contributions over the prior year with respect to satisfying corporate performance metrics (e.g., corporate year-end tax rate, etc.) and completing strategic projects. Mr.
Leever’s recommendations were reviewed by the MacDermid board of directors, which retained final discretion in determining the amount of any compensation actually paid.
As a result, a payout of compensation of $400,000 and $825,000 for Mr. Leever, $95,550 and $200,000 for Mr. Monteiro and $68,400 and $114,060
for Mr. Cordani was awarded in 2011 and 2012, respectively.
2012 Outstanding Equity Awards of MacDermid at Fiscal Year End
The following table sets forth information concerning our named executive officers’ outstanding equity awards as of December 31, 2012.
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Name
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Number of
Shares or
Units of Stock
That
Have Not
Vested(1)
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Market Value
of Shares or
Units of Stock
That Have
Not Vested(2)
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Daniel H. Leever
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121,600
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$
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86,832
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Frank J. Monteiro
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37,400
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$
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25,058
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John L. Cordani
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11,000
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$
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7,370
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(1)
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Amounts disclosed in this column relate to memberships interests in MacDermid Holdings held by the named executive officers. Upon completion of the MacDermid Holdings Acquisition, these membership interests in MacDermid
Holdings were contributed to a newly-formed entity.
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(2)
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The amounts in this column represent the market value of memberships interest in MacDermid Holdings held by the named executive officers. Upon completion of the MacDermid Holdings Acquisition, these membership interests
in MacDermid Holdings were contributed to a newly-formed entity.
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Each of Messrs. Leever, Monteiro and Cordani has a
severance agreement with the Company. If Mr. Leever is terminated without cause at any time, he will be paid severance equal to two years base salary, based upon the then most recent one year period, and two years’ target bonus based upon
the then current and applicable bonus plan.
If either of Messrs. Monteiro or Cordani is terminated without cause within two years
following the MacDermid Holdings Acquisition, he will be paid severance equal to two years’ base salary and cash bonus, based upon the then most recent two year period.
98
Director Compensation Policy
From April 23, 2013 until October 31, 2013, we paid our non-founder directors an annual fee of $85,000, paid in advance, and our chairman an
annual fee of $125,000, paid in advance. Paul Myners, our former Chairman, was paid compensation for his services as Chairman.
Upon our
inception Mr. Myners was granted a five year option to acquire 100,000 ordinary shares and each of Alun Cathcart and Alan Minc was granted a five year option to acquire 75,000 ordinary shares. See “Related Party Transactions—Option
Deeds.”
Commencing as of October 31, 2013, we will pay to all non-executive directors an annual fee of $50,000, paid quarterly.
Members of any of our Committees are entitled to an additional annual fee of $2,000. The chairman of our Audit Committee is entitled to an additional $10,000 annual fee, and each of the chairmen of our Compensation Committee and Nominating and
Corporate Policies Committee is entitled to an additional $7,500 annual fee. In addition, all non-executive directors will be granted annually a number of restricted shares of Platform Common Stock equal to $100,000 at the date of issue. The
restricted shares will vest on the date of the following year’s annual meeting or not later than 13 months from the date of issuance.
Messrs. Goss and O’Neal will be paid compensation for their respective services on our Board. For their initial term as directors, each
of Messrs. Ashken, Berggruen, Franklin and Israel has elected to waive all compensation for service as a director. Neither Mr. Berggruen nor Mr. Franklin who served as our Founder Directors nor Mr. Leever who serves as our Chief Executive Officer is
entitled to receive any additional compensation for their services as a director. Fees are payable quarterly in arrears. In addition, all of the Directors are entitled to be reimbursed by Platform for travel, hotel and other expenses incurred by
them in the course of their directors’ duties relating to Platform.
2013 Incentive Compensation Plan
On October 31, 2013, our Board of Directors approved the Platform Specialty Products Corporation 2013 Incentive Compensation Plan, and on
December 16, 2013 our Board approved the Amended and Restated Platform Specialty Products Corporation 2013 Incentive Compensation Plan hereinafter referred to as our “2013 Plan,” and will submit it to our stockholders for approval within
twelve (12) months. The purpose of our 2013 Plan is to assist our Company and its subsidiaries and other designated affiliates, which we refer to as “Related Entities”, in attracting, motivating, retaining and rewarding high-quality
executives and other employees, officers, directors, consultants and other persons who provide services to our Company or its Related Entities, by enabling such persons to acquire or increase a proprietary interest in our Company in order to
strengthen the mutuality of interests between such persons and our Company’s stockholders, and providing such persons with long term performance incentives to expend their maximum efforts in the creation of shareholder value.
Administration.
Our 2013 Plan is to be administered by a committee designated by our Board of Directors consisting of not less than two
directors, hereinafter referred to as the ‘‘Committee”; provided, however, that except as otherwise expressly provided in the Plan, our Board of Directors may exercise any power or authority granted to the Committee under our 2013
Plan. From and after the date on which we are a publicly held corporation (as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)), the Committee will consist solely of independent directors, each of
whom is intended to be, to the extent required by Rule 16b-3 under the Exchange Act, a non-employee director and will, at such times as we are subject to Section 162(m) of the Code and intend for awards to be treated as performance-based
compensation for purposes of Section 162(m), qualify as an outside director for purposes of Section 162(m) of the Code.
Subject to the
terms of our 2013 Plan, the Committee is authorized to select eligible persons to receive awards, determine the type, number and other terms and conditions of, and all other matters relating to, awards, prescribe award agreements (which need not be
identical for each participant), and the rules and regulations for the administration of the 2013 Plan, construe and interpret the 2013 Plan and award agreements, and correct defects, supply omissions or reconcile inconsistencies therein, and make
all other decisions and determinations as the Committee may deem necessary or advisable for the administration of our 2013 Plan.
99
Eligibility.
The persons eligible to receive awards under our 2013 Plan are the officers,
directors, employees, consultants and other persons who provide services to our Company or any Related Entity. An employee on leave of absence may be considered as still in the employ of our Company or a Related Entity for purposes of eligibility
for participation in our 2013 Plan.
Types of Awards.
Our 2013 Plan provides for the issuance of stock options, stock appreciation
rights, or SARs, restricted stock, restricted stock units, dividend equivalents, bonus stock and awards in lieu of cash compensation, other stock-based awards and performance awards. Performance awards may be based on the achievement of certain
business or personal criteria or goals, as determined by the Committee.
Shares Available for Awards; Annual
Per-Person
Limitations.
The total number of ordinary shares of our Company that may be subject to the granting of awards under our 2013 Plan is equal to 15,500,000 shares, of which 15,145,950 are currently
available. The foregoing limit shall be increased by the number of shares with respect to which awards granted under our 2013 Plan are forfeited, expire or otherwise terminate without issuance of shares, or that are settled for cash or otherwise do
not result in the issuance of shares. Awards issued in substitution for awards previously granted by a company acquired by our Company or a Related Entity, or with which our Company or any Related Entity combines, do not reduce the limit on grants
of awards under our 2013 Plan.
In addition, our 2013 Plan imposes individual limitations on the amount of certain awards. Under these
limitations, during any 12-month period, the number of stock options and stock appreciation rights granted to any one participant under the 2013 Plan may not exceed 3,100,000 ordinary shares, and the number of shares of restricted stock, restricted
stock units, performance shares and other stock based-awards granted to any one participant under the 2013 Plan may not exceed 3,100,000 ordinary shares, in each case subject to adjustment in certain circumstances. The maximum amount that may be
paid out as performance units in any 12-month period is $2,000,000 (pro-rated for any period less than 12 months), and with respect to any performance period longer than 12 months, the maximum amount is $4,000,000.
The Committee is authorized to adjust the limitations described in the two preceding paragraphs and is authorized to adjust outstanding awards
(including adjustments to exercise prices of options and other affected terms of awards) in the event that a dividend or other distribution (whether in cash, ordinary shares or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange or other similar corporate transaction or event affects the ordinary shares so that an adjustment is appropriate. The Committee is also authorized to adjust
performance conditions and other terms of awards in response to these kinds of events or in response to changes in applicable laws, regulations or accounting principles.
Description of Awards
Stock Options
and Stock Appreciation Rights
. The Committee is authorized to grant stock options, including both incentive stock options, which can result in potentially favorable tax treatment to the participant, and
non-qualified
stock options, and stock appreciation rights entitling the participant to receive the amount by which the fair market value of an ordinary share on the date of exercise exceeds the grant price of
the stock appreciation right. The exercise price per share subject to an option and the grant price of a stock appreciation right are determined by the Committee, but must not be less than the fair market value of an ordinary share on the date of
grant. For purposes of the 2013 Plan, the term “fair market value” means the fair market value of an ordinary share or other property as determined by the Committee or under procedures established by the Committee. Unless otherwise
determined by the Committee, the fair market value of an ordinary share as of any given date shall be the closing sales price per ordinary share of the Company as reported on the principal stock exchange or market on which the ordinary shares are
traded on the date as of which such value is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported. The maximum term of each option or stock appreciation right, the times at which each
option or stock appreciation right will be exercisable, and provisions requiring forfeiture of unexercised options or stock appreciation rights at or following termination
100
of employment or other service generally are fixed by the Committee, except that no option or stock appreciation right may have a term exceeding ten years. Methods of exercise and settlement and
other terms of the stock appreciation right are determined by the Committee. The Committee, thus, may permit the exercise price of options awarded under the Plan to be paid in cash, shares (including the withholding of shares otherwise deliverable
pursuant to the award), other awards or other property (including loans to participants). Options may be exercised by payment of the exercise price in cash, ordinary shares or other property having a fair market value equal to the exercise price, as
the Committee may determine from time to time.
Restricted Stock and Restricted Stock Units
. The Committee is authorized to grant
restricted stock and restricted stock units. Restricted stock is a grant of ordinary shares which may not be sold or disposed of, and which shall be subject to such risks of forfeiture and other restrictions as the Committee may impose. A
participant granted restricted stock generally has all of the rights of a stockholder of the Company, unless otherwise determined by the Committee. An award of restricted stock units confers upon a participant the right to receive ordinary shares,
cash equal to the fair market value of a specified number of ordinary shares, or a combination thereof, as determined by the Committee, at the end of a specified deferral period, subject to such risks of forfeiture and other restrictions as the
Committee may impose. Prior to settlement, an award of restricted stock units carries no voting or dividend rights or other rights associated with share ownership, although dividend equivalents may be granted, as discussed below.
Dividend Equivalents
. The Committee is authorized to grant dividend equivalents conferring on participants the right to receive,
currently or on a deferred basis, cash, ordinary shares, other awards or other property equal in value to dividends paid on a specific number of ordinary shares or other periodic payments. Dividend equivalents may be granted alone or in connection
with another award, may be paid currently or on a deferred basis and, if deferred, may be deemed to have been reinvested in additional ordinary shares, awards or otherwise as specified by the Committee.
Bonus Stock and Awards in Lieu of Cash Obligations.
The Committee is authorized to grant ordinary shares as a bonus free of
restrictions, or to grant ordinary shares or other awards in lieu of Company obligations to pay cash under our 2013 Plan or other plans or compensatory arrangements, subject to such terms as the Committee may specify.
Other
Stock-Based
Awards.
The Committee is authorized to grant awards that are denominated or
payable in, valued by reference to, or otherwise based on or related to shares of Common Stock. The Committee determines the terms and conditions of such awards.
Performance Awards
. The Committee is authorized to grant performance awards to participants on terms and conditions established by the
Committee. The performance criteria to be achieved during any performance period and the length of the performance period is determined by the Committee upon the grant of the performance award; provided however, that a performance period cannot be
shorter than 12 months or longer than 5 years. Performance awards may be valued by reference to a designated number of ordinary shares (in which case they are referred to as performance shares) or by reference to a designated amount of property
including cash (in which case they are referred to as performance units). Performance awards may be settled by delivery of cash, shares or other property, or any combination thereof, as determined by the Committee. Performance awards granted to
persons whom the Committee expects will, for the year in which a deduction arises, be “covered employees” (as defined below) will, if and to the extent intended by the Committee, be subject to provisions that should qualify such awards as
“performance-based
compensation” not subject to the limitation on tax deductibility by the Company under Section 162(m) of the Code. For purposes of Section 162(m), the term “covered employee”
means the Company’s chief executive officer and each other person whose compensation is required to be disclosed in the Company’s filings with the SEC by reason of that person being among the three highest compensated officers of the
Company as of the end of a taxable year (other than the chief financial offer). If and to the extent required under Section 162(m) of the Code, any power or authority relating to a performance award intended to qualify under Section 162(m) of the
Code is to be exercised by the Committee and not our Board of Directors.
101
If and to the extent that the Committee determines that these provisions of the 2013 Plan are to be applicable to
any award, one or more of the following business criteria for the Company, on a consolidated basis, and/or for Related Entities, or for business or geographical units of the Company and/or a Related Entity (except with respect to the total
shareholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for awards under the 2013 Plan: (1) earnings per share; (2) revenues or margins; (3) cash flow; (4) operating
margin; (5) return on assets, net assets, investment, capital, operating revenue or equity; (6) economic value added; (7) direct contribution; (8) income; net income; pretax earnings; earnings before interest and taxes; earnings
before interest, taxes, depreciation and amortization; earnings after interest expense and before extraordinary or special items; operating income; net operating income; income before interest income or expense, unusual items and income taxes,
local, state or federal and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (9) working capital or working capital management, including inventory turnover and days sales outstanding;
(10) management of fixed costs or variable costs; (11) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or
divestitures; (12) total shareholder return; (13) debt reduction; (14) market share; (15) entry into new markets, either geographically or by business unit; (16) customer retention and satisfaction; (17) strategic plan development and
implementation, including turnaround plans; and (18) fair market value of an ordinary share. Any of the above goals may be determined on an absolute or relative basis (e.g. growth in earnings per share) or as compared to the performance of a
published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to the Company. The Committee shall exclude the impact of an
event or occurrence, or otherwise make adjustments to the performance goals, which the Committee determines should appropriately be excluded, or made to avoid unanticipated results or to otherwise insure that the results are determined in a manner
consistent with the intention of the Committee at the time it established the goals, including, without limitation, exclusions or adjustments for (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring
charges, (ii) a change in accounting standards required by generally accepted accounting principles or (iii) such other exclusions or adjustments that the Committee specifies at the time an award is granted.
The Committee may, in its discretion, determine that the amount payable as a performance award will be reduced from the amount of any
potential award.
Other Terms of Awards.
Awards may be settled in the form of cash, ordinary shares, other Awards or other
property, in the discretion of the Committee. The Committee may require or permit participants to defer the settlement of all or part of an Award in accordance with such terms and conditions as the Committee may establish, including payment or
crediting of interest or dividend equivalents on deferred amounts, and the crediting of earnings, gains and losses based on deemed investment of deferred amounts in specified investment vehicles. The Committee may condition any payment relating to
an award on the withholding of taxes and may provide that a portion of any ordinary shares or other property to be distributed will be withheld (or previously acquired ordinary shares or other property be surrendered by the participant) to satisfy
withholding and other tax obligations. Awards granted under our 2013 Plan generally may not be pledged or otherwise encumbered and are not transferable except by will or by the laws of descent and distribution, or to a designated beneficiary upon
the participant’s death, except that the Committee may, in its discretion, permit transfers for estate planning or other purposes subject to any applicable restrictions under Rule
16b-3.
Awards under our 2013 Plan are generally granted without a requirement that the participant pay consideration in the form of cash or property for the grant
(as distinguished from the exercise), except to the extent required by law. The Committee may, however, grant awards in exchange for other awards under our 2013 Plan, awards under other Company plans, or other rights to payment from our Company, and
may grant awards in addition to and in tandem with such other awards, rights or other awards.
Acceleration of Vesting; Change in
Control.
The Committee may, in its discretion, accelerate the exercisability, the lapsing of restrictions or the expiration of deferral or vesting periods of any award, and such accelerated exercisability, lapse, expiration and, if so provided
in the award agreement or otherwise determined
102
by the Committee, vesting shall occur in the case of a “change in control” of our Company, as defined in our 2013 Plan. In addition, the Committee may provide in an award agreement that
the performance goals relating to any performance award will be deemed to have been met upon the occurrence of any “change in control.”
Amendment and Termination.
Our Board of Directors may amend, alter, suspend, discontinue or terminate our 2013 Plan or the
Committee’s authority to grant awards without further stockholder approval, except stockholder approval must be obtained for any amendment or alteration if such approval is required by law or regulation or under the rules of any stock exchange
or quotation system on which our ordinary shares are then listed or quoted. Thus, stockholder approval may not necessarily be required for every amendment to our 2013 Plan. Our 2013 Plan will terminate at the earliest of (a) such time as no ordinary
shares remain available for issuance under our 2013 Plan, (b) termination of our 2013 Plan by our Board of Directors, or (c) the tenth anniversary of the effective date of the 2013 Plan. Awards outstanding upon expiration of our 2013 Plan shall
remain in effect until they have been exercised or terminated, or have expired.
103
Related Party Transactions
From April 23, 2013 (Platform’s date of incorporation) through the date of this prospectus, we have not entered into any related party
transactions other than as set forth below:
Placing Agreement
We entered into a Placing Agreement dated May 17, 2013 (the “Placing Agreement”) among Platform, Nicolas Berggruen, Martin E.
Franklin, Paul Myners, Alun Cathcart, Alain Minc, and each of the Founder Entities, and Barclays Bank PLC and Citigroup Global Markets Limited (together, the “Placing Agents”), in connection with our May 2013 public offering, pursuant to
which the Placing Agents procured subscribers for Platform BVI’s ordinary shares (with matching warrants), other than the ordinary shares that were subscribed for by the Founder Entities. Under the Placing Agreement, each of the Directors and
the Founder Entities agreed that they would not, without the prior written consent of the Placing Agents, offer, sell, contract to sell, pledge or otherwise dispose of any ordinary shares or warrants (or any preferred shares in the case of Founder
Entities) which they held directly or indirectly in the Company, for a period commencing on the date of the Placing Agreement and ending one year after the completion of the MacDermid Holdings Acquisition.
Retaining Holder Securityholders’ Agreement
Immediately prior to the closing of the MacDermid Holdings Acquisition, each Retaining Holder, including Messrs. Leever, Monteiro and Cordani,
executed a Retaining Holder Securityholders’ Agreement (a “RHSA”) with us pursuant to which they agreed to exchange their respective interests in MacDermid Holdings for shares of common stock of our subsidiary Platform Delaware
Holdings, Inc., (the “PDH Common Stock”), at an exchange rate of $11.00 per share plus, with respect to the common, class A and class B unit equity interests of MacDermid Holdings held by the Retaining Holder (i) a proportionate share of a
contingent interest in certain pending litigation (the “CLP”) as further described in the BCA, and (ii) a proportionate share of up to $100 million of contingent purchase price payable upon the attainment of certain EBITDA and stock
trading price performance metrics during the seven-year period following the Closing Date (the “CPP”). Immediately prior to the closing of the Merger, members of MacDermid management and certain affiliates, including each of Messrs.
Leever, Monteiro and Cordani, contributed all or a portion of their MacDermid Holdings interests to Tartan Holdings, LLC, a newly-formed Delaware limited liability company (“Tartan”), and Tartan agreed to receive the PDH Stock
Consideration in exchange for such MacDermid Holdings equity interests.
Pursuant to the terms of each RHSA, each Retaining Holder agreed
to not, without our prior consent, (1) sell, assign, transfer (including by operation of law), incur any liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or
arrangements or other restrictions on title or transfer of any nature whatsoever, dispose of or otherwise encumber any shares of PDH Common Stock received or enter into any agreement that would have a similar effect or (2) deposit any of such shares
of PDH Common Stock into a voting trust or enter into a voting agreement or arrangement or grant any proxy or power of attorney with respect thereto that is inconsistent with the RHSA for a period of four years from the closing of the MacDermid
Holdings Acquisition, other than to (i) the spouse or former spouse of such holder pursuant to a domestic relations order or similar court order upon the divorce of the holder and his or her spouse and (ii) the holder’s executors,
administrators or testamentary trustees upon the death of holder; provided that, in each case, (A) such transfer does not violate any federal or state securities laws and (B) the respective transferee shall, as a condition to such transfer, agree in
writing to be bound by the terms and conditions of the RHSA. These restrictions shall lapse with respect to 25% of the total shares of PDH Common Stock initially received by such Retaining Holder on each of the first through fourth anniversaries of
the closing of the MacDermid Holdings Acquisition.
Each RHSA also provides that after the earlier of (i) October 31, 2014 or
(ii) a Change of Control, the shares of PDH Common Stock will be exchangeable, at the option of the holder, into Platform Common Stock, on a
104
one-for-one basis (subject to adjustment). The RHSA defines “Change of Control” as (a) a merger or consolidation of Platform with another entity where Platform is not the surviving
entity and where immediately after the merger or consolidation Platform’s stockholders immediately prior to the merger or consolidation hold less than 50% of the voting stock of the surviving entity, or (b) the sale of all or substantially all
of Platform’s and its subsidiaries’ assets to a third party if, immediately following such sale, Platform’s stockholders hold less than 50% of the stock of said third party. Pursuant to the RHSA, we have agreed to file with the SEC a
registration statement registering the resale of Platform Common Stock issuable upon exchange of the PDH Common Stock promptly after the completion of Platform’s domestication into Delaware. We have agreed to use our commercially reasonable
efforts to have any registration statement filed declared effective as soon as practicable after the filing thereof and to keep such registration statement continuously effective until the earlier of (a) the date on which all of such Retaining
Holder’s shares of Platform Common Stock have been sold, and (b) the date on which all of such Retaining Holder’s shares of Platform Common Stock may be sold pursuant to Rule 144 (without volume or other restrictions).
Registration Rights Agreement
On
November 7, 2013, we entered into a registration rights agreement with Pershing Square Capital Management, L.P., the beneficial owner of approximately 31.0% of our outstanding shares. Those shares were acquired by Pershing Square in our initial
public offering and the warrant exchange offer.
Pursuant to the agreement, for so long as any of the included funds managed by Pershing
Square holds any Platform shares, Platform agreed to cooperate with such holders’ reasonable requests to facilitate any proposed sale of shares by the requesting holder(s) in accordance with the provisions of Rule 144 promulgated under the
Securities Act or any successor rule (“Rule 144”), including, without limitation, by complying with the current public information requirements of Rule 144 and providing opinions of counsel, to the extent required. Additionally, Platform
agreed that promptly after becoming eligible to utilize a Form S-3 registration statement, Platform will file with the SEC a registration statement on Form S-3 registering (among other securities) the resale of the Platform shares held by the
holders and use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after its filing. Platform’s obligations under the registration rights agreement shall terminate on the earlier of
(i) the date on which all of a holder’s shares have been sold, and (ii) the date on which all of a holder’s shares may be sold pursuant to Rule 144 without volume or other restrictions.
Advisory Services Agreement
On
October 31, 2013, Platform Specialty Products Corporation entered into an Advisory Services Agreement with Mariposa Capital, LLC, an affiliate of Martin Franklin and Mariposa Acquisition, LLC. Under this agreement, Mariposa Capital, LLC will provide
certain services (e.g., corporate development and advisory services, advisory servies with respect to mergers and acquisitions, investor relation serves, strategic planning advisory services, strategic treasury advisory services and such other
services relating to Platform Specialty Products Corporation as may from time to time be mutually agreed). In connection with these services, Mariposa Capital, LCC will be entitled to receive an annual fee equal to $2,000,000, payable in quarterly
installments. This agreement will terminate on October 31, 2014 and will be automatically renewed for successive one-year terms unless either party notifies the other party in writing of its intention not to renew this agreement no later than 90
days prior to the expiration of the term. This agreement may only be terminated by Platform upon a vote of a majority of our directors. In the event that this agreement is terminated by Platform, the effective date of the termination will be six
months following the expiration of the initial term or a renewal term, as the case may be.
Bridge Loan
On August 28, 2013, MacDermid granted a bridge loan to Frank Monteiro in connection with his relocation and purchase of a new home. The
principal amount of the loan was $275,000 and the agreed interest rate was prime plus 1.0%. All principal and interest on the loan was to become due on the date Mr. Monteiro’s existing home was sold. The principal amount of the loan and the
accrued interest of $2,081.34 was repaid in full on October 31, 2013, in advance of the due date.
105
Option Deeds
On May 17, 2013, Platform entered into Options Deeds with the Non-Founder Directors. Mr. Myners, our former Chairman, was granted a five-year
option to acquire 100,000 ordinary shares and each of the other Non-Founder Directors was granted a five-year option to acquire 75,000 ordinary shares, all at an exercise price of $11.50 per ordinary share (subject to adjustment in accordance with
their respective Option Deeds).
Additional Stock Issuances to Our Founder Entities and Certain Directors
On November 6, 2013, in connection with the closing of the warrant exchange offer, we issued and sold 190,476 ordinary shares at $10.50
per share to each of Mariposa Acquisition, LLC, Berggruen Acquisition Holdings IV, Ltd., E. Stanley O’Neal and Michael Goss (one-half of which were issued to a family trust).
Policy Concerning Related Party Transactions
The Board of Directors has determined that the Audit Committee is best suited to review and approve or ratify transactions with related
persons, in accordance with the policy set forth in the Audit Committee Charter. Such review will apply to any transaction or series of related transactions or any material amendment to any such transaction involving a related person and the Company
or any subsidiary of the Company. For purposes of the policy, “related persons” will consist of executive officers, directors, director nominees, any stockholder beneficially owning more than 5% of the issued and outstanding common stock,
and immediate family members of any such persons. In reviewing related person transactions, the Audit Committee will take into account all factors that it deems appropriate, including whether the transaction is on terms no less favorable than terms
generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. No member of the Audit Committee will be permitted to participate in any review,
consideration or approval of any related person transaction in which the director or any of his immediate family member is the related person.
106
Beneficial Ownership
The following table sets forth certain information regarding (1) all shareholders known by the Company to be the beneficial owners of
more than 5% of the Company’s issued and outstanding ordinary shares and (2) each director, each named executive officer and all directors and named executive officers as a group, together with the approximate percentages of issued
and outstanding ordinary shares owned by each of them. Percentages are calculated based upon shares issued and outstanding plus shares which the holder has the right to acquire under share options exercisable within 60 days. Unless otherwise
indicated, amounts are as of December 30, 2013 and each of the shareholders has sole voting and investment power with respect to the ordinary shares beneficially owned, subject to community property laws where applicable. As of December 30, 2013, we
had 103,576,300 Platform ordinary shares issued and outstanding.
Unless otherwise indicated, the address of each person named in the
table below is c/o Platform Specialty Products Corporation, 5200 Blue Lagoon Drive, Suite 855, Miami, FL 33126.
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Ordinary shares
beneficially owned prior
to the 401(k) Exchange
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Ordinary shares beneficially
owned following the
401(k) Exchange
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Beneficial Owner
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Number
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%
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Number(1)
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%
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5% Shareholders:
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Berggruen Acquisition Holdings IV Ltd.(2)
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6,457,142
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(3)
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6.1
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6,457,142
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(3)
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6.0
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Mariposa Acquisition, LLC
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7,257,142
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(4)
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6.9
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7,257,142
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(4)
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6.8
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Pershing Square Capital Management, L.P.(5)
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33,333,332
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(6)
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30.9
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33,333,332
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(6)
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30.4
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Named Executive Officers and Directors:
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Nicolas Berggruen(3)
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—
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—
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—
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—
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Martin E. Franklin
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7,257,142
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(4)
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6.9
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7,257,142
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(4)
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6.8
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Daniel H. Leever(7)
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—
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—
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891,221
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*
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Frank Monteiro(7)
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2,000
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—
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289,764
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*
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Ian G. H. Ashken
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—
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—
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—
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—
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Michael F. Goss
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190,476
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(8)
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*
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190,476
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(8)
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*
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Ryan Israel
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—
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—
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—
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—
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E. Stanley O’Neal
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190,476
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*
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190,476
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*
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All named executive officers and directors as a group
(8 persons)(9):
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7,640,094
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7.2
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8,819,079
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8.2
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*
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Represents beneficial ownership of less than one percent (1%) of our outstanding ordinary shares.
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(1)
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Assumes the issuance of 1,933,636 shares of Platform Common Stock, the maximum amount of shares offered in the 401(k) Exchange.
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(2)
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The address of Berggruen Acquisition Holdings IV Ltd. is c/o Berggruen Holdings Inc., 1114 Avenue of the Americas, 41st Floor, New York, NY 10036.
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(3)
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This number includes (i) 4,733,808 Platform ordinary shares, (ii) 940,000 Platform ordinary shares issuable upon conversion of Founder Preferred
Shares, which are convertible at any time at the option of the holder into Platform ordinary shares on a one-for-one basis, and (iii) 783,334 Platform ordinary shares underlying 2,350,004 Platform Warrants, which are exercisable at any time at the
option of the holder at a rate of three Platform Warrants for one Platform ordinary share. These shares are held by Berggruen Acquisition Holdings IV Ltd., a British Virgin Islands business company. Mr. Berggruen is the president and one of three
directors of Berggruen Acquisition Holdings IV Ltd. Berggruen Acquisition Holdings IV Ltd. is the direct subsidiary of Berggruen Holdings Ltd, a British Virgin Islands business company. All of the shares of Berggruen Holdings Ltd. are owned by the
Nicolas Berggruen Charitable Trust, a British Virgin Islands trust. The trustee of the Nicolas Berggruen Charitable Trust is Maitland Trustees Limited, a British Virgin Islands corporation acting as an institutional trustee in the ordinary course of
business without the purpose or effect of changing or influencing control of Platform. Mr. Berggruen does not have any pecuniary or beneficial ownership of such shares.
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(4)
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This number includes (i) 5,313,809 Platform ordinary shares, (ii) 1,060,000 Platform ordinary shares issuable upon conversion of Founder Preferred Shares, which are convertible at any time at the option of the holder
into Platform ordinary shares on a one-for-one basis, and (iii) 883,333 Platform ordinary shares underlying 2,650,001 Platform Warrants, which are exercisable at any time at the option of the holder at a rate of three Platform Warrants for one
Platform ordinary share. These shares are held by Mariposa Acquisition, LLC. Martin E. Franklin holds sole voting and investment power over such shares. Martin E. Franklin disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest therein.
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(5)
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The address of Pershing Square Capital Management is 888 Seventh Avenue, 42
nd
Floor, New York, New York, 10019.
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(6)
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Based on a notification made by Pershing Square Capital Management, L.P. with the London Stock Exchange on November 6, 2013. This number includes (i) 29,166,665 Platform ordinary shares and (ii) 4,166,667 Platform
ordinary shares underlying 12,500,001 Platform Warrants, which are exercisable at any time at the option of the holder at a rate of three Platform Warrants for one Platform ordinary share. These shares are held as follows: Pershing Square, L.P.
holds 10,017,112 ordinary shares and 4,293,048 warrants exercisable for 1,431,016 ordinary shares. Pershing Square International, Ltd. holds 12,709,242 ordinary shares and 5,446,818 warrants exercisable for 1,815,606 ordinary
shares. Pershing Square Holdings, Ltd. holds 6,237,439 ordinary shares and 2,673,189 warrants exercisable for 891,063 ordinary shares. Pershing Square II, L.P. holds 202,872 ordinary shares and 86,946 warrants exercisable for 28,982
ordinary shares.
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(7)
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Does not include shares of our common stock issuable in exchange for shares of PDH common stock, at the option of the holder, at any time after the earlier of October 31, 2014 or a change of control of Platform.
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(8)
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Includes 95,238 Platform ordinary shares held by The Michael F Goss 2012 GST Non-Exempt Irrevocable Family Trust, Michael F Goss & R Bradford Malt Trustees U/Inst Dtd 9/27/2012.
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(9)
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This amount includes an aggregate of 1,943,333 Platform ordinary shares issuable upon conversion of Founder Preferred Shares or exercise of Platform Warrants.
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Description of Capital
Stock; Comparison of Rights
The following description of the Platform
Delaware capital stock (common and preferred) reflects our capital stock as it will exist from and after the Effective Time, as governed by our new certificate of incorporation and by-laws and by Delaware law. We also identify the material
differences between the current rights of shareholders of Platform BVI, a BVI limited liability entity, and the rights that the stockholders of Platform Delaware will have once Platform is a Delaware corporation. These descriptions are a summary
only. We urge you to read the forms of the new certificate of incorporation and by-laws of Platform Delaware in their entirety, which are attached as Appendix B and Appendix C, respectively, to this prospectus.
General
We currently are a BVI Business
Company incorporated under the laws of the British Virgin Islands and are registered with the Registrar of Corporate Affairs of the British Virgin Islands under registration number 1771302. We were incorporated in the British Virgin Islands on April
23, 2013 under the name Platform Acquisition Holdings Limited, and we changed our name to Platform Specialty Products Corporation in connection with the MacDermid Holdings Acquisition.
Authorized Share Capital
Until the
Effective Time, Platform will not have any Delaware capital stock and will not exist as a Delaware entity. Upon effectiveness of the Domestication, Platform Delaware’s authorized capital stock will consist of 200,000,000 shares of common
stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share, of which 2,000,000 will be designated Series A Preferred Stock (the “Series A Preferred Stock”).
As of December 30, 2013, Platform BVI had reserved 15,145,900 of its 200,000,000 authorized ordinary shares for issuance under its existing
share-based compensation and other benefit plans, subject to increase in accordance with the terms of such plans, and upon effectiveness of the Domestication, Platform Delaware will reserve a similar number of its 200,000,000 authorized shares of
common stock for such issuances.
Common Stock
Voting
.
Each holder of Platform Delaware common stock will generally be entitled to one vote for each share of common stock owned
of record on all matters submitted to a vote of stockholders of Platform Delaware. Except as otherwise required by law, holders of common stock (as well as holders of any preferred stock entitled to vote with the common stockholders) will generally
vote together as a single class on all matters presented to the stockholders for their vote or approval, including the election of directors. There will be no cumulative voting rights with respect to the election of directors or any other
matters.
Dividends and distributions
. Subject to applicable law and the rights, if any, of the holders of any series of
preferred stock of Platform Delaware then outstanding, the holders of Platform Delaware common stock will have the right to receive dividends and distributions, whether payable in cash or otherwise, as may be declared from time to time by its Board
of Directors, from legally available funds.
Liquidation, dissolution or winding up
.
Subject to applicable law and
the rights, if any, of the holders of any series of preferred stock of Platform Delaware then outstanding, in the event of the liquidation, dissolution or winding-up of Platform Delaware, holders of its common stock will be entitled to share ratably
in proportion to the number of shares of common stock held by them in the assets available for distribution after payment or reasonable provision for the payment of all creditors.
Redemption, conversion or preemptive rights
.
Holders of Platform Delaware common stock have no redemption rights, conversion
rights or preemptive rights to purchase or subscribe for Platform Delaware securities.
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Other provisions
. There will be no redemption provisions or sinking fund provisions
applicable to the common stock of Platform Delaware.
The rights, preferences, and privileges of the holders of the Platform
Delaware common stock will be subject to, and may be adversely affected by, the rights, preferences and privileges of the holders of any series of preferred stock of Platform Delaware.
Shares Reserved For Future Issuances
Outstanding Warrants.
As of December 30, 2013, there were 48,742,662 Platform Warrants, exercisable for subscription rights for Platform
ordinary shares (with each three warrants entitling the holder to subscribe for one ordinary share). The Platform Warrants were issued pursuant to that Warrant Instrument executed by Platform on May 17, 2013 (as supplemented, the “Platform
Warrant Instrument”). Each Platform Warrant entitles the registered holder (a “Platform Warrantholder”) to subscribe for one-third of a Platform ordinary share upon exercise at a price of $11.50 per whole Platform ordinary share
(subject to any prior adjustment in accordance with the terms and conditions set out in the Platform Warrant Instrument and discussed below) at any time during the Subscription Period (described below).
Any outstanding Platform Warrants are exercisable until 5:00 p.m. London time on October 31, 2016 (provided that if such day is not a trading
day, the trading day immediately following such day), unless earlier redeemed in accordance with the Platform Warrant Instrument and as described below (the “Subscription Period”), provided in each case that there is an effective
registration statement covering the Platform ordinary shares (or, from and after the Domestication, Platform Common Stock) underlying the Platform Warrants in effect. Subject to any such prior adjustment, each Platform Warrantholder will be required
to hold and validly exercise three Platform Warrants in order to receive one Platform ordinary share.
The Platform Warrants will expire
at the end of the Subscription Period described above or earlier upon redemption. Platform may call the Platform Warrants for redemption:
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in whole but not in part,
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at a price of $0.01 per Platform Warrant,
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•
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upon not less than 20 days’ prior written notice of redemption to each Platform Warrantholder,
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if, and only if, the reported last sale price of the Platform ordinary shares equals or exceeds $18.00 per share for any 10 consecutive trading days.
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The Platform Warrants are subject to mandatory redemption at any time prior to the end of the Subscription Period, at a price of $0.01 per
Platform Warrant if at any time the daily average closing price per Platform ordinary share equals or exceeds $18.00 (subject to any prior adjustment in accordance with the terms and conditions set out in the Platform Warrant Instrument) for a
period of ten consecutive trading days.
The right to exercise will be forfeited unless the Platform Warrants are exercised prior to the
date specified in the notice of redemption. On and after the redemption date, a record holder of a Platform Warrant will have no further rights except to receive the redemption price for such holder’s Platform Warrant upon surrender of such
Platform Warrant. The redemption criteria for the Platform Warrants have been established at a price which is intended to provide Platform Warrantholders a reasonable premium to the initial exercise price and provide a sufficient differential
between the then-prevailing Platform ordinary shares price and the Platform Warrant exercise price so that if the stock price declines as a result of the redemption call, the redemption will not be expected to cause the stock price to drop below the
exercise price of the Platform Warrants.
The exercise price and number of ordinary shares issuable on exercise of the warrants may be
adjusted in certain circumstances including in the event of a stock dividend or distribution, recapitalization, reorganization, merger or consolidation. However, the Platform Warrants will not be adjusted for issuances of the Platform ordinary
shares at a price below the Platform Warrant exercise prices.
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Subject to the terms and conditions of the Platform Warrant Instrument, each Platform Warrant
will be transferable by an instrument of transfer in any usual or common form, or in any other form which may be approved by the Board of Directors. No transfer of any Platform Warrant to any person will be registered without the consent of Platform
if it would constitute a transfer to a Prohibited Person. Additionally, the Platform Warrants will only be exercisable by persons who represent, amongst other things, that they (i) are qualified institutional buyers or (ii) are outside the United
States and not a U.S. person (or acting for the account or benefit of a U.S. person), and are acquiring Platform ordinary shares upon the exercise of the Platform Warrants in reliance on an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
The Platform Warrants may be exercised upon surrender of the warrant certificate on or
prior to the expiration of the Subscription Period at the offices of the warrant agent, with the subscription notice form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise
price, by certified or official bank check payable to Platform, for the number of Platform Warrants being exercised. The Platform Warrantholders do not have the rights or privileges of holders of Platform ordinary shares and any voting rights until
they exercise their warrants and receive Platform ordinary shares. After the issuance of Platform ordinary shares upon exercise of the Platform Warrants, each holder will be entitled to one vote for each share held of record on all matters to be
voted on by shareholders.
No Platform Warrants will be exercisable and Platform will not be obligated to issue Platform ordinary shares
unless at the time a holder seeks to exercise such Platform Warrant, a prospectus relating to the Platform ordinary shares issuable upon exercise of the Platform Warrants is current and the Platform ordinary shares have been registered or qualified
or deemed to be exempt from the registration requirements under the Securities Act and securities laws of the state of residence of the holder of the Platform Warrants.
No fractional shares will be issued upon exercise of the Platform Warrants. Accordingly, no Platform Warrants are exercisable unless a
sufficient number of Platform Warrants are exercised to equal a whole number of Platform ordinary shares issued upon such exercise. In addition, no fraction of a Platform Warrant will be issued or returned to the Platform Warrantholder following
exercise and any such fraction, determined after aggregation of all Platform Warrants being exercised, will lapse and be cancelled.
Shares Issuable Upon Exchange of PDH Common Stock
.
At any time after the earlier of October 31, 2014 or a change of control of
Platform, we will be obligated to issue up to 8,905,776 shares of our common stock in exchange for shares of common stock of PDH, on a one-for-one basis.
Shares Issuable as Dividends on Series A Preferred Stock
.
In connection with the Domestication, the 2,000,000 outstanding
Founder Preferred Shares will be converted into 2,000,000 shares of Series A Preferred Stock of Platform Delaware which, as of October 31, 2013, entitle holders to receive an annual dividend based on the market price of Platform Common Stock if such
market price exceeds certain trading price minimums. This dividend is solely payable in shares of Platform Common Stock. In addition, the Founder Preferred Shares or Series A Preferred Stock, as the case may be, are convertible into ordinary shares
or, from and after the Domestication, Platform Common Stock, on a one-for-one basis.
Preferred Stock
Blank Check Preferred
.
Under the new Platform Delaware certificate of incorporation, our Board of Directors will be authorized by
resolution to create and issue one or more series of preferred stock of Platform Delaware, and, with respect to each series, to determine the number of shares constituting the series and the designations and the powers, preferences and rights, and
the qualifications, limitations and restrictions thereof, which may include dividend rights, conversion or exchange rights, voting rights, redemption rights and terms and liquidation preferences, without stockholder approval. Our Board of Directors
may therefore create and issue one or more series of preferred stock with voting and other rights that could adversely affect the voting power of the
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holders of our common stock and which could have certain anti-takeover effects. Before Platform Delaware may issue any series of preferred stock, its Board of Directors will be required to adopt
resolutions creating and designating such series of preferred stock.
Series A Preferred Stock
. Prior to the Domestication,
Platform had 2,000,000 Founder Preferred Shares outstanding. In connection with the Domestication, each Founder Preferred Share will be converted into one share of Series A Preferred Stock of Platform Delaware. The special rights, preferences and
privileges of the Series A Preferred Stock are set forth in the form of the new certificate of incorporation attached to this prospectus.
Dividends
. Subject to applicable law and the rights, if any, of any series of preferred stock of Platform Delaware ranking senior to
the Series A Preferred Stock as to dividends, at any time subsequent to the consummation of the MacDermid Holdings Acquisition, if the average closing price per share of common stock is $11.50 (subject to adjustment in accordance with the
certificate of incorporation) or more for ten consecutive trading days, the holders of the Series A Preferred Stock will be entitled to receive, in respect of each calendar year (or period commencing on November 1, 2013 and ending on December 31,
2013) (each a “Dividend Year”), a cumulative annual dividend amount (the “Annual Dividend Amount”), which is calculated as follows:
A X B, where:
A = an amount
equal to 20% of the increase (if any) in the value of a share of Platform Delaware common stock, such increase calculated as being the difference between (i) the Average Price (as defined in the Platform Delaware certificate of incorporation) per
share of Platform Delaware common stock or Platform ordinary shares, as the case may be, over the last ten days of the relevant calendar year for such annual dividend (the “Dividend Price”) and (ii) (x) if no Annual Dividend Amount has
previously been paid, a price of $10.00 per share of Platform Delaware common stock, or (y) if an Annual Dividend Amount has previously been paid, the highest Dividend Price for any prior Dividend Year (provided in each case such amount is subject
to such adjustment either as the Board of Directors in its absolute discretion determine to be fair and reasonable in the event of a subdivision, combination or similar reclassification or recapitalization of the outstanding Platform Delaware common
stock or otherwise as determined in accordance with the certificate of incorporation, in each case without a corresponding subdivision, combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred
Stock); and
B = a number of shares of Platform Delaware common stock equal to such number of shares of Platform ordinary shares as was in
issue on May 17, 2013 plus the number of Platform ordinary shares issuable upon automatic conversion of the Founder Preferred Shares in accordance with the Platform BVI Articles (as defined below) of Platform BVI as if converted on May 17, 2013,
which such amount is subject to such adjustment either as the Board of Directors in its absolute discretion determine to be fair and reasonable in the event of a subdivision, combination or similar reclassification or recapitalization of the
outstanding Platform Delaware common stock or otherwise as determined in accordance with the certificate of incorporation, in each case without a corresponding subdivision, combination or similar reclassification or recapitalization of the
outstanding shares of Series A Preferred Stock.
Each Annual Dividend Amount shall be divided between the holders pro rata to the number
of Series A Preferred Stock held by them on the relevant Dividend Date (as defined in the Platform Delaware certificate of incorporation). The Annual Dividend Amount will be paid no later than ten trading days from the Dividend Date by the issue to
each holder of Series A Preferred Stock of such number of shares of common stock as is equal to the pro rata amount of the Annual Dividend Amount to which they are entitled divided by the average closing price per share of Platform Delaware common
stock on the relevant Dividend Date.
Conversion
Automatic Conversion
. The Series A Preferred Stock will be automatically converted (the “Automatic Conversion”) into shares of
Platform Delaware common stock on a one-for-one basis (subject to adjustment in
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accordance with the Platform Delaware certificate of incorporation) (i) in the event of a Change of Control (as defined in the Platform Delaware certificate of incorporation) or (ii) upon the
last day of the seventh full financial year of Platform Delaware following October 31, 2013, or the last day of such subsequent financial year of Platform Delaware (not exceeding the tenth full financial year of the Company following October 31,
2013) as agreed between the holders of a majority of the Series A Preferred Stock and a majority of the Platform Delaware independent directors in accordance with the certificate of incorporation, as described below (or if either such date is not a
trading day, the first trading day immediately following such date). In the event of any Automatic Conversion, the Annual Dividend Amount shall be payable for such shortened Dividend Year on the trading day immediately prior to such conversion.
Upon notice in writing from the holders of a majority of the Series A Preferred Stock to Platform Delaware to be received not less
than ten business days prior to the last day of the seventh full financial year of Platform Delaware after October 31, 2013, such holder(s) may request that the date of automatic conversion be deferred to the last day of the eighth full financial
year of Platform Delaware following October 31. 2013. If a majority of the independent directors determine in their discretion to defer the relevant date of Automatic Conversion as requested then (i) the date of Automatic Conversion shall be such
deferred date; and (ii) the holders of a majority of the Series A Preferred Stock will have the right to make a further request in writing no later than ten business days prior to the last day of the eighth full financial year of Platform Delaware
following October 31, 2013 for the deferral of the relevant date of Automatic Conversion by a further year. In the event a majority of the Platform Delaware independent directors approve any such further request for a deferral of the relevant date
of Automatic Conversion then (i) the date of Automatic Conversion shall be such deferred date and (ii) the holders of a majority of Series A Preferred Stock will have the right to make one further request on the same basis as referenced above no
later than ten business days prior to the last day of the ninth full financial year of Platform Delaware following October 31, 2013 for the deferral of the relevant date of Automatic Conversion by a further year. In the event that a majority of the
Platform Delaware independent directors approve any such further request for a deferral of the relevant date of Automatic Conversion then the date of Automatic Conversion shall be such deferred date. In no circumstances shall the date of Automatic
Conversion be deferred beyond the last day of the tenth full financial year of Platform Delaware following October 31, 2013 (or, if such date is not a trading day, on the first trading day immediately following such date).
Optional Conversion
. A holder of Series A Preferred Stock may require some or all of his, her or its Series A Preferred Stock to be
converted (the “Optional Conversion”) into an equal number of shares of Platform Delaware common stock (subject to adjustment in accordance with the certificate of incorporation) by written notice to Platform Delaware, and in such
circumstances those Series A Preferred Stock the subject of such conversion request shall be converted into shares of Platform Delaware common stock five trading days after receipt by Platform Delaware of the written notice. In the event of an
Optional Conversion, no Annual Dividend Amount shall be payable in respect of those Series A Preferred Stock for the Dividend Year in which the date of the Optional Conversion. A holder of Series A Preferred Stock may exercise its rights
independently of the other holders of Series A Preferred Stock.
Voting Rights
. The Series A Preferred Stock do not carry
voting rights except in respect of any amendment to the certificate of incorporation that alters or changes the rights, preferences or privileges of the Series A Preferred Stock.
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Comparison of Rights
The rights of Platform BVI’s shareholders are currently governed by the BVI Companies Act, Platform BVI’s Amended and Restated
Memorandum and Articles of Association (the “Platform BVI Articles”). At the Effective Time, the shareholders of Platform BVI holding ordinary shares will automatically receive shares of common stock of Platform Delaware. Accordingly,
after the Domestication, the rights of the holders of common stock will be governed by Delaware law and Platform Delaware’s certificate of incorporation and by-laws.
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Provision
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Platform BVI
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Platform Delaware
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Authorized Capital
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Unlimited number of ordinary shares and preferred shares, no par value per share.
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200,000,000 shares of common stock, $0.01 par value per share, and 5,000,000 shares of preferred stock, $0.01 par value per share, of which shares of preferred stock, 2,000,000 shares have been designated as Series A Preferred
Stock.
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Preferred (Preference) Shares
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Directors issue one or more classes of preferred shares with preferences and other designations as they determine, in accordance with the BVI Companies Act and the Platform BVI Articles. This action requires an amendment to the
memorandum and articles of association.
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As permitted (but not required) by Delaware law, the Platform Delaware certificate of incorporation empowers the Board of Directors to, by resolution, create and issue one or more series of preferred stock and, with respect to such
series, determine the number of shares constituting the series and the designations and the powers, preferences and rights, and the qualifications and limitations thereof.
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Pursuant to the Platform BVI Articles, directors may issue preferred shares only as Founder Preferred Shares
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Amendments to Organizational Documents (i.e., Articles of Incorporation, by-laws, Memorandum and Articles of Association)
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Amendments to the memorandum and articles of association may be made by resolution of the directors (in limited circumstances) or by the shareholders (holders of ordinary shares), provided that in the case of amendment by directors
such amendment doesn’t materially prejudice the rights of the holders of any class of shares as set out in the memorandum, unless the shareholders of the affected class consent in accordance with the Platform BVI Articles.(1)
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Pursuant to Delaware law, amendments to the certificate of incorporation must be approved by the Board of Directors and by the holders of at least a majority of the outstanding stock entitled to vote on the amendment, and if
applicable, by the holders of at least a majority of the outstanding stock of each class or series entitled to vote on the amendment as a class or series. As permitted by Delaware law, the Platform Delaware by-laws require the vote of the holders of
at least two-thirds of the outstanding stock entitled to
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Provision
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Platform BVI
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Platform Delaware
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vote to amend the by-laws (rather than the majority of quorum otherwise provided by Delaware law). As permitted (but not required) by Delaware law, the Platform Delaware certificate of incorporation also confers upon the Board of
Directors the power to amend the by-laws.
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Changes in the class rights of shareholders as set forth in the Platform BVI Articles require approval of at least 75% of the shareholders of that particular class.
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Any amendment to the certificate of incorporation that alters or changes the rights, preferences or privileges of the Series A Preferred Stock requires the approval of the Board of Directors and the holders of at least 75% of the
outstanding Series A Preferred Stock (rather than the holders of at least a majority of the outstanding Series A Preferred Stock otherwise provided by Delaware law).
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Voting Rights
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Each ordinary share has one vote for each share. Each Founder Preferred Share has no vote on any matter other than amendments to the Platform BVI Articles and approval of mergers, consolidations and acquisitions.
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Common stock: one share, one vote on all matters before the holders of the common stock.
Series A Preferred Stock: no voting rights except in respect of amendment to certificate
of incorporation that alters or changes the rights, preferences or privileges of the Series A Preferred Stock, which amendment requires the approval of the Board of Directors and the holders of at least 75% of the outstanding Series A Preferred
Stock (rather than the holders of at least a majority of the outstanding Series A Preferred Stock otherwise provided by Delaware law).
Other series of preferred stock may have voting rights as assigned to them by the Board of Directors; other classes of capital stock or the holders of bonds,
debentures and other obligations may have voting rights as approved by the Board of Directors and the stockholders.
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Provision
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Platform BVI
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Platform Delaware
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Directors elected by a resolution of directors to fill a vacancy or appoint an additional director or a vote of shareholders.
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The Platform Delaware by-laws provide that directors elected by majority of the votes cast, and in contested elections, directors elected by plurality of the votes cast (rather than the plurality of votes otherwise provided by
Delaware law). All other matters by the holders of at least a majority of issued and outstanding shares entitled to vote unless otherwise specified by the Platform Delaware certificate of incorporation or bylaws, Delaware law or the rules or
regulations of an exchange upon which the securities of Platform Delaware are listed.
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Redemption of Equity; Treasury Shares
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Shares may be repurchased as determined by the board subject to shareholder consent. There are no capital limitations in the BVI Companies Act. The company may hold or sell treasury shares.
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Pursuant to Delaware law, shares may be repurchased or otherwise acquired, provided the capital of the company will not be impaired by the acquisition. Pursuant to Delaware law, the company may hold or sell treasury
shares.
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Stockholder/Shareholder Written Consent
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Any action required to be taken by meeting of shareholders may be taken without meeting if consent is in writing and is signed by a majority of the shareholders entitled to vote if permitted by the articles of association. The
Platform BVI Articles provide for such consent in writing.
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The Platform Delaware certificate of incorporation provides that no action required or permitted to be taken by stockholders at any meeting of stockholders may be effected by written consent (thereby eliminating the ability of
common stockholders to act by written consent otherwise available under Delaware law), except that holders of Series A Preferred Stock may act by written consent with respect to any amendment to the certificate of incorporation that alters or
changes the rights, preferences or privileges of the Series A Preferred Stock.
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Notice Requirements for Stockholder/Shareholder Nominations and Other Proposals
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To bring a matter before a meeting or to nominate a candidate for director, 10 days’ written notice must be given by the company to the shareholders.
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As permitted, but not required by, Delaware law, the Platform Delaware by-laws provide that in general, to bring a matter before an annual meeting or to nominate a candidate for director, a stockholder must give notice of the
proposed matter or nomination not
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Provision
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Platform BVI
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Platform Delaware
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less than 90 days and not more than 120 days prior to the first anniversary of the preceding year’s annual meeting. In the event that the date of the annual meeting is more than 30 days before or more than 70 days after such
anniversary date, notice must be delivered not less than 90 days and not more than 120 days prior to such annual meeting or the 10
th
day following the day on which public announcement of the date
of such meeting is first made by Platform Delaware.
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Meeting of Stockholder/Shareholder—Notice
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BVI Companies Act permits as few as 7 days’ notice. Under the Platform BVI Articles, not less than 10 days’ notice is required; no maximum limit.
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As required by Delaware law, the Platform Delaware by-laws require not less than 10 days’ or more than 60 days’ notice, unless the DGCL provides for a different period.
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Meeting of Stockholder/Shareholders—Call of Meeting
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Meetings may be called by the directors and shall be called by the directors upon requisition by shareholders holding 30 percent of the voting rights in respect of the matter for which the meeting is requested. The Platform BVI
Articles require an annual meeting of the shareholders for the election of directors to be called by the directors. Pursuant to the Platform BVI Articles, a meeting of the shareholders may be called by shorter notice if shareholders holding at least
90% of total voting rights on all matters to be considered at the meeting have waived notice of the meeting.
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The Platform Delaware by-laws provide that (i) regular annual meetings shall be called by the Board of Directors and (ii) special meetings may be called only by the Board of Directors or the chief executive officer.
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Meeting of Stockholders/Shareholders—Quorum
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Quorum is as designated in the memorandum and articles of association. Quorum in the Platform BVI Articles is one shareholder. Meeting may be adjourned for such time as directors determine.
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Pursuant to Delaware law, the certificate of incorporation or by-laws may specify the number to constitute a quorum but in no event shall a
quorum consist of less than one-third of shares entitled to vote at a meeting.
Under
the Platform Delaware
by-laws,
quorum is a majority of the capital stock issued and
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Provision
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Platform BVI
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Platform Delaware
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outstanding and entitled to vote at meeting and a meeting may be adjourned for up to 30 days without additional notice to stockholders.
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Meeting of Stockholders/Shareholders—Record Date
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As fixed by the directors.
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Pursuant to Delaware law, the record date for meetings of stockholders is (i) as fixed by the Board of Directors, but may not be more than 60 days nor less than 10 days before the date of such meeting of stockholders and (ii) if not
fixed by the Board of Directors, the day before notice of meeting is given.
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Directors—Election/Appointment
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By the shareholders as entitled by their terms, including the holders of ordinary shares. Directors may also appoint a director to fill vacancy or as an additional director.
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Pursuant to Delaware law, directors are elected annually by the stockholders entitled to vote, including the holders of common stock.
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Directors—Term
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Term fixed by resolution of shareholders or directors; if no term fixed at appointment, indefinitely.
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Pursuant to Delaware law, directors serve for annual terms.
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Directors—Removal
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By resolution of the shareholders or a resolution of directors.
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Pursuant to Delaware law, directors may be removed by the stockholders with or without cause.
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Directors—Vacancy
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May be filled by a majority vote of shareholders or a majority of the directors.
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Under Platform Delaware’s certificate of incorporation and by-laws, vacancies and newly created directorships shall be filled solely by majority of remaining directors although less than a quorum or the sole remaining director
(rather than also by the stockholders).
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Directors—Number
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Board must consist of at least one director. Maximum number of directors can be changed by amendment to the Platform BVI Articles. The Platform BVI Articles provide that there shall be not less than one director, with no
maximum.
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As determined by Board of Directors, but not less than one, as provided in the Platform Delaware by-laws. Under Delaware law, the number of directors may be fixed by the amendment to the by-laws or certificate of incorporation and
if fixed by the certificate of incorporation, the number may be changed only by amendment to the certificate of incorporation.
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Provision
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Platform BVI
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Platform Delaware
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Directors—Quorum and Vote Requirements
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As fixed by the directors with a minimum of two, except if there is only one director then a quorum will be one.
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As permitted by Delaware law, the Platform Delaware by-laws provide that, a majority of the entire Board of Directors shall constitute a quorum (rather than the one-third of the directors permitted by Delaware law). Pursuant to
Delaware law, the affirmative vote of a majority of directors present at a meeting at which there is a quorum constitutes action by the Board of Directors.
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Directors—Managing Director
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Provision for the board to select one or more officers to be managing director.
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Not applicable.
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Director—Alternates
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Directors may appoint another director or person to attend and vote in his place at any meeting of the directors and perform the duties and functions and exercise the rights of such appointing director.
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Under Delaware law, directors may not act by proxy.
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Directors and Officers—Fiduciary Duties
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In summary, under British Virgin Islands law, directors and officers owe the following fiduciary duties:
Duty to act in good faith in what the directors believe to be in the best interests of the
company as a whole;
• Duty to exercise powers for the purposes for which those powers were conferred and not for a
collateral purpose;
• Directors should not improperly fetter the exercise of future discretion;
• Duty to exercise powers
fairly as between different groups of shareholders;
• Duty not to put himself in a position of conflict between their duty to the company and their
personal interests; and
• Duty to exercise independent judgment.
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Under Delaware law:
• Directors and officers must act in good faith, with due care, and in the best interest of the
corporation and all of its stockholders.
• Directors and officers must refrain from self-dealing, usurping corporate opportunities and
receiving improper personal benefits.
• Decisions made by directors and officers on an informed basis, in good faith and in the honest
belief that the action was taken in the best interest of the corporation and its stockholders will be protected by the “business judgment rule.”
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Provision
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Platform BVI
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Platform Delaware
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In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to
act as “a reasonably diligent person” having both:
• the general knowledge, skill and experience that may reasonably be expected of a person
carrying out the same functions as are carried out by that director in relation to the company, and
• the general knowledge, skill and experience that that director has.
As set out above, directors have a duty not to put themselves in a position of conflict
and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of his position. However, in some instances a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is
full disclosure by the directors. This can be done by way of permission granted in the memorandum and articles or alternatively by shareholder approval at general meetings.
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Director—Indemnification; Indemnification Insurance
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A summary of indemnification of officers and directors under the BVI Companies Act and the Platform BVI Articles is discussed below following
this table of comparison.
A company may purchase insurance in relation to any person
who is or was a director or officer of the company, including a liquidator of the company.
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A summary of indemnification of officers and directors under the DGCL and the Platform Delaware Documents is discussed below following this
table of comparison.
Pursuant to Delaware law, a company may purchase insurance in
relation to any person who is or was a director or officer of the corporation.
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Provision
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Platform BVI
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Platform Delaware
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Sale of Assets
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Under the BVI Companies Act, the sale of more than 50% of the assets of the company not otherwise in the ordinary course of business requires approval by a majority of the ordinary shares at a meeting at which a quorum is present (a
quorum being 50% of the votes of the outstanding voting shares), unless disapplied. The Platform BVI Articles disapplied this requirement.
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Pursuant to Delaware law, the sale of all or substantially all the assets of the company requires approval by the Board of Directors and stockholders holding at least a majority of the outstanding shares entitled to vote
thereon.
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Compulsory Acquisition
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Under the BVI Companies Act, subject to any limitations in a company’s memorandum and articles, shareholders holding 90% of the votes of the outstanding shares entitled to vote, and shareholders holding 90% of the votes of the
outstanding shares of each class of shares entitled to vote, may give a written instruction to the company directing the company to redeem the shares held by the remaining shareholders.
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Under DGCL Section 253, in a process known as a “short form” merger, a corporation that owns at least 90% of the outstanding shares of each class of stock of another corporation may either merge the other corporation into
itself and assume all of its obligations or merge itself into the other corporation by executing, acknowledging and filing with the Secretary of State of the State of Delaware a certificate of such ownership and merger setting forth a copy of the
resolution of its Board of Directors authorizing such merger. If the parent corporation is a Delaware corporation that is not the surviving corporation, the merger also must be approved by a majority of the outstanding stock of the parent
corporation entitled to vote thereon. If the parent corporation does not own all of the stock of the subsidiary corporation immediately prior to the merger, the minority stockholders of the subsidiary corporation party to the merger may have
appraisal rights as set forth in Section 262 of the DGCL.
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Dissolution/Winding Up
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Not applicable.
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Under the DGCL, the dissolution of a corporation requires either (1) the approval of the Board of Directors and at least a majority of the outstanding stock entitled to
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Provision
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Platform BVI
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Platform Delaware
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vote thereon or (2) the approval of all of the stockholders entitled to vote thereon.
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Dissenters’/Appraisal Rights
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Not applicable.
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Under the DGCL, a stockholder may dissent and obtain fair value of shares in connection with certain corporate actions. A summary of the material portions of those provisions is reproduced below following this table of
comparison.
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Stockholders’/Shareholders’ Derivative Actions
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Generally speaking, the company is the proper plaintiff in any action. Derivative actions brought by one or more of the registered
shareholders may only be brought with the leave of the Supreme Court where the following circumstances apply:
• Those who control the company have refused a request by the shareholders to move the company
to bring the action;
• Those who control the company have refused to do so for improper reasons such that they are
perpetrating a “fraud on the minority” (this is a legal concept and is different to “fraud” in the sense of dishonesty);
• a company is acting or proposing to act illegally or beyond the scope of its authority;
• the act complained of,
although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; or
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Pursuant to Delaware law, in any derivative suit instituted by a stockholder of a corporation, it shall be averred in the complaint that the
plaintiff was a stockholder of the corporation at the time of the transaction of which he complains or that such stockholder’s stock thereafter devolved upon such stockholder by operation of law.
Pursuant to Delaware law, the complaint shall set forth with particularity the efforts of
the plaintiff to obtain action by the Board of Directors (“demand refusal”) or the reasons for not making such effort (“demand excusal”).
Such action shall not be dismissed or compromised without the approval of the court.
In general, the stockholders maintain stock ownership through the pendency of the derivative
suit.
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Provision
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Platform BVI
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Platform Delaware
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• the individual rights of the plaintiff shareholder have been infringed or
are about to be infringed.
Once a shareholder has relinquished his, her or its shares
(whether by redemption or otherwise), it is generally the case that they could no longer bring a derivative action as they would no longer be a registered shareholders.
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Anti-Takeover Provisions
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Not applicable.
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Section 203 of the DGCL generally prohibits “business combinations,” including mergers, sales and leases of assets, issuances of
securities and similar transactions by a corporation with an “interested stockholder” who beneficially owns 15% or more of a corporation’s voting stock, within three years after the person or entity becomes an interested stockholder,
unless:
• the business
combination or the transaction which caused the person or entity to become an interested stockholder is approved by the Board of Directors prior to the business combination or the transaction;
• upon the completion of
the transaction in which the person or entity becomes an interested stockholder, the interested stockholder holds at least 85% of the voting stock of the corporation not including (a) shares held by officers and directors and (b) shares held by
employee benefit plans under certain circumstances; or
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Provision
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Platform BVI
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Platform Delaware
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• at or after the person or entity becomes an interested stockholder, the
business combination is approved by the Board of Directors and holders of at least 66 2/3% of the outstanding voting stock, excluding shares held by the interested stockholder.
A Delaware corporation may elect not to be governed by Section 203. Platform Delaware has
not made such an election.
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(1)
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The Platform BVI Articles and the BVI Companies Act permit the Board of Directors to amend the Platform BVI Articles, except that the BVI Companies Act prohibits the Board of Directors from restricting the rights or
powers of the shareholders to amend the Platform BVI Articles, or changing the percentage of shareholders required to pass a resolution to amend the memorandum or articles. This power, unlike Delaware law, gives the board a wide discretion in
changing many provisions of the memorandum and articles of association without shareholder approval.
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Delaware Anti-Takeover Laws and the
New Platform Delaware Certificate of Incorporation and by-laws
The new Platform Delaware certificate of incorporation and by-laws will
contain provisions that may prevent or discourage a third party from acquiring Platform Delaware, even if the acquisition would be beneficial to its stockholders. Upon effectiveness of the Domestication, the Board of Directors of Platform Delaware
also will have the authority to fix the rights, powers and preferences of shares of one or more series of preferred stock of Platform Delaware and to issue such shares without a stockholder vote.
Upon effectiveness of the Domestication, Platform Delaware will also be subject to Section 203 of the DGCL. Section 203 prohibits Platform
Delaware from engaging in any business combination (as defined in Section 203) with an “interested stockholder” for a period of three years subsequent to the time that the stockholder became an interested stockholder unless:
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•
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prior to such time, the corporation’s Board of Directors approve either the business combination or the transaction in which the stockholder became an interested stockholder;
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•
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upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the outstanding voting stock (with certain exclusions); or
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•
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at or after the person becomes an interested stockholder, the business combination is approved by the corporation’s Board of Directors and authorized by a vote of at least 66 2/3% of the outstanding voting stock of
the corporation not owned by the interested stockholder.
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For purposes of Section 203, an “interested stockholder”
is defined as an entity or person (other than the corporation and any direct or indirect majority-owned subsidiary of the corporation) beneficially owning 15% or more of the outstanding voting stock of the corporation, based on voting power, and any
entity or person affiliated with or controlling or controlled by such an entity or person.
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A “business combination” includes mergers, asset sales and other transactions resulting
in financial benefit to a stockholder. Section 203 could prohibit or delay mergers or other takeover or change of control attempts with respect to us and, accordingly, may discourage attempts that might result in a premium over the market price for
the shares held by stockholders.
Such provisions may have the effect of deterring hostile takeovers or delaying changes in control of
management of Platform Delaware.
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Material U.S. Federal Income Tax Consequences of the Merger and the
Domestication
Subject to the qualifications, assumptions and limitations in the opinion attached as Exhibit 8.1, the statements of
law and legal conclusions set forth below represent the opinion of Greenberg Traurig, P.A.
This section describes (A) the material U.S.
federal income tax consequences of the Merger and the Domestication to a U.S. Holder (as defined below) of Platform ordinary shares and (B) the material U.S. federal income tax considerations relating to the ownership and disposition of a share
of Platform Delaware common stock by a non-U.S. Holder (as defined below) after the Merger and the Domestication. This section applies only to holders that hold Platform ordinary shares or Platform Delaware common stock, as applicable, as capital
assets for U.S. federal income tax purposes (generally, property held for investment). This section is general in nature and does not discuss all aspects of U.S. federal income taxation that might be relevant to a particular holder in light of its
personal investment circumstances or status, nor does it address tax considerations applicable to a holder that is a member of a special class of holders subject to special rules, including:
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•
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a dealer in securities;
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•
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a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;
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•
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a tax-exempt organization;
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•
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a life insurance company, real estate investment trust or regulated investment company;
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•
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a person liable for alternative minimum tax;
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•
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a person that actually or constructively owns 10% or more of Platform voting stock (except as specifically provided below);
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•
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a partnership or other pass-through entity for U.S. federal income tax purposes, or a beneficial owner of a partnership or other pass-through entity;
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•
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a person that holds Platform ordinary shares or Platform Delaware common stock as part of a straddle or a hedging or conversion transaction;
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•
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a U.S. holder whose functional currency is not the U.S. dollar;
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•
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a person that received Platform ordinary shares or Platform Delaware common stock as compensation for services;
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•
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a controlled foreign corporation; or
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•
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a passive foreign investment company.
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This section is based on the U.S. Internal Revenue Code
of 1986, as amended (the “Code”), its legislative history, existing and proposed Treasury regulations promulgated under the Code, published rulings by the U.S. Internal Revenue Service (“IRS”) and court decisions, all as of the
date hereof. These laws are subject to change, possibly on a retroactive basis. This discussion does not address U.S. federal tax laws other than those pertaining to U.S. federal income taxation (such as estate or gift tax laws or the recently
enacted Medicare tax on investment income), nor does it address any aspects of U.S. state or local or non-U.S. taxation.
We have not and
do not intend to seek any rulings from the IRS regarding the Merger or the Domestication. The Domestication will be effected in part under the applicable provisions of British Virgin Islands law which are not identical to analogous provisions of
U.S. corporate law. There is no assurance that the IRS will not take positions concerning the tax consequences of the Merger and/or the Domestication that are different from those discussed below, or that any such different positions would not be
sustained by a court.
If a partnership (including for this purpose any entity so characterized for U.S. federal income tax purposes)
holds Platform ordinary shares, the tax treatment of such partnership and a person treated as a partner of such partnership generally will depend on the status of the partner and the activities of the partnership.
126
Partnerships holding Platform ordinary shares and persons that are treated as partners of such
partnerships should consult their own tax advisors as to the particular U.S. federal income tax consequences of the Merger and the Domestication and holding or disposing of Platform ordinary shares.
This summary does not address the U.S. federal income tax consequences of transactions effectuated prior or subsequent to, or concurrently
with, the Domestication (whether or not any such transactions are undertaken in connection with the Domestication) including, without limitation, the exercise of an option to acquire Platform ordinary shares or other right to acquire Platform
ordinary shares; or (ii) the consequences of the Merger to shareholders of MacDermid.
THE FOLLOWING IS FOR INFORMATIONAL PURPOSES ONLY
AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE. SHAREHOLDERS SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE MERGER AND THE DOMESTICATION AND CONSIDERATIONS RELATING TO THE OWNERSHIP AND POSSIBLE DISPOSITION
OF PLATFORM DELAWARE COMMON STOCK, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE, AND LOCAL AND NON-U.S. TAX LAWS.
U.S. HOLDERS
The following describes the material U.S. federal income tax consequences of the Merger or the Domestication, as the case may be, to a U.S.
Holder. For purposes of this discussion, a U.S. Holder means a beneficial owner of a Platform ordinary share that is, for U.S. federal income tax purposes:
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•
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an individual who is a citizen or resident of the United States;
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•
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a corporation created or organized in or under the laws of the U.S. or any state thereof (including the District of Columbia);
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•
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an estate whose income is subject to U.S. federal income tax regardless of its source; or
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•
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a trust if (1) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust; or (2) the trust has a
valid election in effect under applicable Treasury regulations to be treated as a U.S. person.
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Assumptions
This summary is based upon certain understandings and assumptions with respect to the business, assets and shareholders of Platform BVI,
including that Platform BVI is not, nor at any time has been, a “controlled foreign corporation” as defined in Section 957 of the Code (“CFC”). Platform believes that it is not and has never been a CFC. In the event that one or
more of such understandings or assumptions proves to be inaccurate, the following summary may not apply and material adverse U.S. federal income tax consequences may result to U.S. Holders.
Inversion
In connection with the
Merger, Platform BVI may be treated as an “inverted corporation” and, therefore, would be treated for federal income tax purposes as a U.S. domestic corporation thereafter, notwithstanding that it remains a BVI corporation. The
determination of whether Platform BVI is a domestic corporation because it has become an inverted corporation depends on the ownership of Platform ordinary shares for purposes of the inversion test set out in the Code. If 80% or more of the Platform
ordinary shares are held by persons who received the shares in connection by reason of their direct or indirect ownership of MacDermid shares, Platform BVI will be treated as an inverted corporation. For this purpose, persons who acquired Platform
ordinary shares in connection with Platform BVI’s initial public offering (“IPO”) would not be treated as shareholders if the IPO were deemed related to the acquisition of MacDermid. It is unclear whether the IPO would be treated as
related to the Merger for this purpose. The IRS has not issued any guidance on how to apply this provision nor is there
127
any authority addressing the issue which is directly on point. If persons who acquired Platform ordinary shares in the IPO are not treated as shareholders for purposes of the inversion rules,
Platform would be treated as a U.S. domestic corporation upon the closing of the Merger.
Platform BVI believes that it became a U.S.
domestic corporation for federal income tax purposes as of the date of the Merger. There is no assurance that the IRS will agree with this position.
The U.S. federal income tax characterization described below of Platform BVI becoming a domestic corporation, and the U.S. federal income tax
consequences of holding stock in a domestic corporation will generally be the same regardless of whether Platform BVI becomes a U.S. domestic corporation as a result of the Merger or the Domestication, as the case may be. Based upon Platform’s
determination that it became a U.S. domestic corporation on the date of the Merger, the provisions of Section 368(a)(1)(F) and Section 367 of the Code and other matters described below would be applicable on the date of the Merger. If the IRS
determines an inversion did not occur in connection with the Merger, then the provisions of Section 368(a)(1)(F) and Section 367 of the Code and other matters described below would be applicable on the date of the Domestication, not on the date of
the Merger.
U.S. Federal Income Tax Characterization of the Merger and the Domestication
Under Section 368(a)(1)(F) of the Code, a reorganization (an “F Reorganization”) is a “mere change in identity, form, or place
of organization of one corporation, however effected.” To qualify as an F reorganization, a transaction must satisfy three requirements: (i) it must involve only one operating corporation; (ii) there must be no change in the shareholders of the
corporation; and (iii) there must be no change in the assets of a corporation. Based on Rev. Rul. 96-29, 1996-1 C.B. 50, the proper time for testing these requirements is immediately before and immediately after the purported F reorganization,
without regard to other aspects of a larger transaction that may follow that step. Based upon the foregoing, the requirements for an F reorganization will be satisfied, and the Merger and the Domestication, as the case may be, should each constitute
an F reorganization. Therefore, U.S. Holders will not recognize taxable gain or loss as a result of the Merger or the Domestication for U.S. federal income tax purposes, except as explained below under the caption headings “—Effect of
Section 367.”
Basis and Holding Period Considerations
If each of the Merger and the Domestication, respectively, qualifies as an F Reorganization, then the tax basis of a Platform ordinary share
deemed received in the Merger and the Platform Delaware common stock received by a U.S. Holder in the Domestication, as the case may be, will equal the U.S. Holder’s tax basis in the Platform ordinary share surrendered in exchange therefor,
increased by any amount included in the income of such U.S. Holder as a result of Section 367 of the Code. See the discussion under “—Effect of Section 367” below. The holding period for the Platform ordinary shares received deemed
received in the Merger and the Platform Delaware common stock received by a U.S. Holder in the Domestication will include such holder’s holding period for the Platform ordinary share surrendered in exchange therefor.
Effect of Section 367
Section 367
of the Code applies to certain non-recognition transactions involving foreign corporations, including a domestication of a foreign corporation in an F Reorganization. When it applies, Section 367 imposes income tax on certain United States persons
in connection with transactions that would otherwise be tax-free. Based on Platform BVI’s determination to treat itself as a domestic corporation as of the date of the Merger, Section 367(b) will generally apply to U.S. Holders of Platform
ordinary shares at the time of the Merger, not at the time of the Domestication. If the IRS determines that Platform BVI did not become a domestic corporation on the date of the Merger, Section 367(b) would apply upon the Domestication.
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A.
U.S.
|
Holders of more than 10 percent or more of the Platform ordinary shares
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A U.S. Holder
who on the day of the Merger beneficially owns (directly, indirectly or constructively) 10% or more of the total combined voting power of all classes of Platform BVI stock entitled to vote (a “U.S. Shareholder”) must include in income as a
dividend the “all earnings and profits amount” attributable to the Platform stock it directly owns, within the meaning of Treasury Regulation Section 1.367(b)-2(d). A U.S. Holder’s ownership of stock options will be taken into account
in determining whether such holder owns 10% or more of the total combined voting power of all classes of stock. Complex attribution rules apply in determining whether a U.S. Holder owns 10% or more of the total combined voting power of all classes
of Platform stock entitled to vote for U.S. federal income tax purposes.
A U.S. Shareholder’s all earnings and profits amount with
respect to its Platform ordinary shares is the net positive earnings and profits of the corporation (as determined under Treasury Regulation Section 1.367(b)-2(d)(2)) attributable to the shares (as determined under Treasury Regulation Section
1.367(b)-2(d)(3)) but without regard to any gain that would be realized on a sale or exchange of such shares. Treasury Regulation Section 1.367(b)-2(d)(3) provides that the all earnings and profits amount attributable to a shareholder’s stock
is determined according to the principles of Section 1248 of the Code. In general, Section 1248 of the Code and the Treasury regulations thereunder provide that the amount of earnings and profits attributable to a block of stock in a foreign
corporation is the ratably allocated portion of the foreign corporation’s earnings and profits generated during the period the shareholder held the block of stock.
Accordingly, under Treasury Regulation Section 1.367(b)-3(b)(3), a U.S. Shareholder should be required to include in income as a deemed
dividend the all earnings and profits amount (as defined in Treasury Regulation Section 1.367(b)-2(d)) with respect to its Platform stock. Since the determination of the all earnings and profits amount requires an analysis by a tax accountant of the
earnings and profits of Platform since its incorporation, Platform will engage an independent certified public accounting firm to perform this analysis. Based on its own expectation of its projected earnings and profits through the Merger, Platform
does not expect that its cumulative earnings and profits will be greater than zero through the date of the Merger. If Platform’s cumulative earnings and profits through the date of the Merger are not greater than zero, then a U.S. Shareholder
should not be required to include in gross income an all earnings and profits amount with respect to its Platform ordinary shares.
However, it is possible that the amount of Platform’s earnings and profits could be greater than expected through the date of the Merger
or could be adjusted as a result of an IRS examination. The determination of Platform’s earnings and profits is a complex determination and may be impacted by numerous factors, including the change of its functional currency in connection with
the Merger. Therefore, it is possible that one or more of these factors may cause Platform to have positive earnings and profits through the date of the Merger. As a result, depending upon the period in which such a U.S. Shareholder held its
Platform ordinary shares, such U.S. Shareholder could be required to include its earnings and profits amount in income as a deemed dividend under Treasury Regulation Section 1.367(b)-3(b)(3) as a result of the Merger.
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B.
U.S.
|
Holders That Own Less Than 10 Percent of Platform
|
A U.S. Holder who on the date of the
Merger beneficially owns (directly, indirectly or constructively) Platform ordinary shares with a fair market value of $50,000 or more but less than 10% of the total combined voting power of all classes of Platform stock entitled to vote may elect
to recognize gain with respect to the deemed receipt of Platform ordinary shares in the Merger or, in the alternative, recognize the “all earnings and profits” amount as described below.
Unless a U.S. Holder makes the “all earnings and profits” election as described below, such holder generally must recognize gain
(but not loss) with respect to the deemed receipt of Platform ordinary shares in the Merger. Any such gain should be equal to the excess of the fair market value of the Platform ordinary shares received
129
over the U.S. Holder’s adjusted basis in the Platform ordinary shares deemed to be surrendered in exchange therefor. Such gain should be capital gain, and should be long-term capital gain if
the holder held the Platform ordinary shares for longer than one year. Long-term capital gains of non-corporate taxpayers are subject to a maximum U.S. federal income tax rate of 20%.
In lieu of recognizing any gain as described in the preceding paragraph, a U.S. Holder may elect to include in income the all earnings and
profits amount attributable to its Platform ordinary shares under Section 367(b). There are, however, strict conditions for making this election. This election must comply with applicable Treasury regulations and generally must include, among other
things: (i) a statement that the transaction is a Section 367(b) exchange; (ii) a complete description of the transaction, (iii) a description of any stock, securities or other consideration transferred or received in the transaction, (iv) a
statement describing the amounts required to be taken into account for U.S. federal income tax purposes, (v) a statement that the U.S. Holder is making the election that includes (A) a copy of the information that the U.S. Holder received from
Platform establishing and substantiating the U.S. Holder’s all earnings and profits amount with respect to the U.S. Holder’s Platform ordinary shares, and (B) a representation that the U.S. Holder has notified Platform (or Platform
Delaware) that the U.S. Holder is making the election, and (vi) certain other information required to be furnished with the U.S. Holder’s tax return or otherwise furnished pursuant to the Code or the Treasury regulations thereunder. In
addition, the election must be attached by the U.S. Holder to its timely filed U.S. federal income tax return for the year of the Merger and the U.S. Holder must send notice to Platform of the election no later than the date such tax return is
filed. In connection with this election, Platform intends to provide each U.S. Holder eligible to make such an election with information regarding Platform’s earnings and profits upon request.
Platform BVI does not expect that its cumulative earnings and profits will be greater than zero through the date of the Merger and if that
proves to be the case, U.S. Holders who make this election should generally not have an income inclusion under Section 367(b) provided the U.S. Holder properly executes the election and complies with the applicable notice requirements. Thus, it is
expected that the making of any election to include the all earnings and profits amount in income as a dividend would generally be advantageous to a U.S. Holder who would otherwise recognize gain with respect to its Platform ordinary shares in the
Merger. However, as noted above, if it were determined that Platform had positive earnings and profits through the date of the Merger, a U.S. Holder that makes the election described herein could have an all earnings and profits amount with respect
to its Platform ordinary shares, and thus could be required to include that amount in income as a deemed dividend as a result of the Merger.
U.S. HOLDERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING WHEN AND WHETHER TO MAKE THIS ELECTION AND, IF THE ELECTION IS
DETERMINED TO BE ADVISABLE, THE APPROPRIATE FILING REQUIREMENTS WITH RESPECT TO THIS ELECTION.
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C.
U.S.
|
Holders that Own Platform Ordinary Shares with a Fair Market Value Less Than $50,000
|
A
U.S. Holder who on the date of the Merger owns (or is considered to own) stock of Platform with a fair market value less than $50,000 should not be required to recognize any gain or loss under Section 367 of the Code in connection with the Merger,
and generally should not be required to include any part of the all earnings and profits amount in income (the “de minimis exception”).
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D.
Shareholder
|
Basis in and Holding Period for Platform Delaware
common stock
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For a discussion
of a U.S. Holder’s tax basis and holding period in Platform Delaware common stock received in the Domestication, see above under “—U.S. Federal Income Tax Characterization of the Domestication—Basis and Holding Period
Considerations.”
U.S. HOLDERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE TIMING OF THE APPLICABILITY AND THE
CONSEQUENCES OF SECTION 367(B) IN THE CASE OF THE MERGER AND THE DOMESTICATION.
130
NON-U.S. HOLDERS
The following describes certain U.S federal income tax considerations relating to the ownership and disposition of a Platform ordinary share
after the Merger and a share of Platform Delaware common stock by a non-U.S. Holder after the Domestication. For purposes of this discussion, a non-U.S. Holder means a beneficial owner of a share of Platform Delaware common stock that is, for U.S.
federal income tax purposes:
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|
•
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a nonresident alien individual,
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•
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a foreign corporation, or
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•
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a foreign estate or trust.
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Dividends
As discussed under the section entitled “Risk Factors” above, Platform Delaware does not anticipate paying dividends. In the event
that Platform BVI or Platform Delaware does make a distribution of cash or property with respect to Platform ordinary shares or Platform Delaware common stock, respectively, any such distribution will be treated as a dividend for U.S. federal income
tax purposes to the extent paid from the Platform BVI’s or Platform Delaware’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Dividends paid to a non-U.S. Holder generally will be
subject to withholding tax at a 30% rate or a reduced rate specified by an applicable income tax treaty. In order to obtain a reduced rate of withholding, a non-U.S. holder generally will be required to provide to Platform BVI or Platform Delaware
an IRS Form W-8BEN (or other applicable documentation) certifying its entitlement to benefits under the treaty.
The withholding tax does
not apply to dividends paid to a non-U.S. Holder that provides an IRS
Form W-8ECI,
certifying that the dividends are effectively connected with the non-U.S. Holder’s conduct of a trade or business
within the United States. Instead, the effectively connected dividends will be subject to U.S. tax on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons (subject to an applicable income tax-treaty
providing otherwise). A foreign corporation receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).
If a non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty, the non-U.S. Holder may obtain a
refund of any amounts withheld in excess of that rate by timely filing a refund claim with the IRS.
If the amount of a distribution paid
by Platform BVI or Platform Delaware on a Platform ordinary share or a share of Platform Delaware common stock to a non-U.S. Holder exceeds Platform or Platform Delaware’s current and accumulated earnings and profits, as the case may be, such
excess will be treated first as a tax-free return of capital to the extent of the non-U.S. Holder’s adjusted tax basis in such share, and thereafter as capital gain from a sale or other disposition of such share that is taxed as described below
under the heading “—Sale or Other Disposition of a Platform Ordinary Shares or Platform Delaware Common Stock.”
Sale or Other
Disposition of Platform Ordinary Shares or Platform Delaware Common Stock
A non-U.S. Holder generally will not be subject to U.S.
federal income tax on gain realized on a sale or other disposition of a Platform ordinary share or a share of Platform Delaware common stock unless:
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|
(i)
|
the non-U.S. Holder is an individual who was present in the United States for 183 days or more in the taxable year of the disposition and other requirements are met,
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(ii)
|
the gain is effectively connected with a trade or business of the non-U.S. Holder in the United States, subject to an applicable treaty providing
otherwise (in this case, the gain will be subject to U.S. tax on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons (subject to
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131
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an applicable income tax-treaty providing otherwise) and, if the non-U.S. Holder is a corporation, an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate)
may also apply), or
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(iii)
|
Platform BVI or Platform Delaware is or has been a U.S. real property holding corporation at any time within the five-year period preceding the disposition or the non-U.S. Holder’s holding period, whichever period
is shorter, and either (A) the Platform ordinary shares or the Platform Delaware common stock have ceased to be regularly traded on an established securities market or (B) the non-U.S. Holder has owned or is deemed to have owned, at any time within
the five-year period preceding the disposition or the non-U.S. Holder’s holding period, whichever period is shorter, more than 5% of the Platform Delaware’s common stock.
|
Platform BVI has not been and is not, and Platform Delaware does not anticipate becoming, a U.S. real property holding corporation for U.S.
federal income tax purposes. However, the determination of whether a corporation is a U.S. real property holding corporation is primarily factual and there can be no assurance whether such facts will not change or whether the IRS or a court will
agree with our determination.
Information Reporting Requirements and Backup Withholding
Information returns will be filed with the IRS in connection with payments of dividends on and the proceeds from a sale or other disposition of
Platform ordinary shares or Platform Delaware common stock. A non-U.S. Holder may have to comply with certification procedures to establish that it is not a United States person or otherwise establish an exemption in order to avoid information
reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty will satisfy the certification requirements necessary to avoid the backup withholding as well. The amount of
any backup withholding from a payment to a non-U.S. Holder will be allowed as a credit against such non-U.S. Holder’s U.S. federal income tax liability and may entitle such non-U.S. Holder to a refund, provided that the required information is
furnished to the IRS in a timely manner.
Under U.S. federal income tax and U.S. Treasury Regulations, certain categories of U.S. holders
must file information returns with respect to their investment in, or involvement in, a foreign corporation. U.S. Holders are urged to consult with their own tax advisors concerning such reporting requirements.
Withholding on Payments to Foreign Financial Institutions and Foreign Non-financial Institutions
The Code generally will impose a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a disposition of our common stock
paid to a “foreign financial institution” (as specifically defined for this purpose) unless such institution enters into an agreement with the U.S. government to, among other things, withhold on “withholdable payments” (which
includes interest and dividends from U.S. sources and gains from the disposition of assets that produce interest and dividends) and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such
institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). The legislation also will generally impose a U.S. federal withholding tax of 30% on
dividends to, and the gross proceeds of a disposition of a Platform ordinary share or a Platform Delaware common stock by a non-financial foreign entity unless such entity provides the withholding agent with either a certification that it does not
have any substantial direct or indirect U.S. owners or provides certain information regarding direct and indirect U.S. owners of the entity. Under certain transition rules, any obligation under this legislation to withhold with respect to dividends
on our common stock will not begin until July 1, 2014 and with respect to gross proceeds of a sale or other disposition of our common stock will not begin until January 1, 2017. Under certain circumstances, a non-U.S. holder might be eligible for
refunds or credits of such taxes. Holders are encouraged to consult with their own tax advisors regarding the possible implications of the legislation on their investment in Platform Delaware common stock.
132
THIS SECTION IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED
TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY PARTICULAR SHAREHOLDER. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE DESCRIBED TRANSACTIONS IN THEIR PARTICULAR CIRCUMSTANCES.
133
Securities Act Restrictions On Resale Of Platform Delaware Common
Stock
At the Effective Time, the outstanding shares of common and preferred stock of Platform Delaware will have been registered
under the Securities Act, and holders of shares of such stock who are not affiliates of the Company may freely resell their stock under the Securities Act. Holders of such shares of such stock who are affiliates of the Company, however, will not be
permitted to resell their shares unless an exemption from registration under the Securities Act, such as Rule 144 thereunder, is available. In general, Rule 144 will permit an affiliate of the Company to resell shares of stock received in connection
with the Domestication only if certain requirements are met. Among other things, the affiliate of the Company may not sell shares of any class (including any shares of that class otherwise acquired) in an amount that, during any three-month period,
exceeds 1% of the outstanding shares of that class (or, solely in the case of the common stock, the average weekly trading volume of the stock on the NYSE during the four calendar weeks preceding the filing of the notice referenced below, if
greater). In addition, all such resales must be made in unsolicited brokers’ transactions, the Company must have filed all periodic reports it was required to file under the Exchange Act within the year preceding the resale and (depending on
the amount being resold), the affiliate of the Company must have filed a notice of sale on Form 144 with the SEC. For this purpose, an “affiliate” of the Company is any person who controls, is controlled by or is under common control with
the Company.
Accounting Treatment of the Domestication
There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of Platform BVI as a result of
Domestication. The consolidated business, capitalization, assets, liabilities and financial statements of Platform Delaware immediately following the Domestication will be the same as those of Platform BVI immediately prior to thereto.
Validity of the Capital Stock
The validity of the shares common stock of Platform Delaware into which the outstanding ordinary shares of Platform BVI will be converted in
connection with the Domestication will be passed upon for Platform Delaware by Greenberg Traurig, P.A.
Tax
Matters
The opinion that the Domestication will constitute a reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code has been passed upon by Greenberg Traurig, P.A.
Change in Platform’s Certifying
Accountant
(a) Previous independent registered public accounting firm
On October 31, 2013, PricewaterhouseCoopers LLP (United Kingdom) has stated the intention to resign as the independent registered public
accounting firm for Platform Acquisition Holdings Limited. Neither our Board of Directors nor our Audit Committee recommended or approved that we change accountants prior to this decision by PricewaterhouseCoopers LLP (United Kingdom).
Such resignation will become effective upon completion by PricewaterhouseCoopers LLP (United Kingdom) of its procedures on the financial
statements of Platform Acquisition Holdings Limited as of and for quarter ended September 30, 2013 and be simultaneous with the cancellation of the listing of shares on the London Stock Exchange.
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(ii)
|
The report of PricewaterhouseCoopers LLP (United Kingdom) on the financial statements for the period from April 23, 2013 (date of inception) to June 30, 2013 contained no adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting principle.
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134
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(iii)
|
During the period from April 23, 2013 (date of inception) to June 30, 2013 and the subsequent interim period through October 31, 2013, there have been no disagreements with PricewaterhouseCoopers LLP (United Kingdom) on
any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of PricewaterhouseCoopers LLP (United Kingdom) would have caused them to make
reference thereto in their reports on the financial statements for such years.
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|
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(iv)
|
During the period from April 23, 2013 (date of inception) to June 30, 2013 and the subsequent interim period through October 31, 2013, there have been no reportable events (as defined in
S-K 304(a)(1)(v)).
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|
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(v)
|
The Registrant has requested that PricewaterhouseCoopers LLP (United Kingdom) furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter, dated
November 4, 2013, is filed as Exhibit 16 to this registration statement on Form S-4.
|
(b) New independent registered
public accounting firm
|
|
(i)
|
The Registrant engaged PricewaterhouseCoopers (US) as its new independent registered public accounting firm as of December 10, 2013. During the period from April 23, 2013 (date of inception) to June 30, 2013
and the subsequent interim period through December 10, 2013, the Registrant has not consulted with PricewaterhouseCoopers (US) regarding either (i) the application of accounting principles to a specified transaction, either completed or
proposed; or the type of audit opinion that might be rendered on the Registrant's financial statements, and neither a written report was provided to the Registrant or oral advice was provided that PricewaterhouseCoopers (US) concluded was an
important factor considered by the Registrant in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in S-K 304(a)(1)(iv) and
the related instructions to S-K 304, or a reportable event, as that term is defined in S-K 304(a)(1)(v).
|
Experts
The financial statements of Platform Acquisition Holdings Limited as of June 30, 2013 and for the period from April 23,
2013 to June 30, 2013 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of MacDermid, Incorporated and subsidiaries as of December 31, 2012 and 2011, and for
each of the years in the two-year period ended December 31, 2012, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
Where You Can Find More Information
We have filed with the SEC the Registration Statement on Form S-4 (the “Registration Statement”) under the Securities Act
with respect to the Domestication and the 401(k) Exchange. This prospectus, which constitutes part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto.
For further information about us, the 401(k) Exchange and the Domestication, we refer you to the Registration Statement and the exhibits and schedules filed as a part of the Registration Statement. Statements contained in this prospectus as to the
contents of any contract or other document referred to are not necessarily complete. If a contract or document has been filed as an exhibit to the
135
Registration Statement, we refer you to the copy of the contract or document that has been filed as an exhibit to the Registration Statement, each statement about such contract or document being
qualified in all respects by such reference.
A copy of the Registration Statement, including the exhibits and schedules thereto, may be
read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an
Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is
www.sec.gov
. Our reports and any other information that we have filed or
may in the future file with the SEC are not incorporated by reference into, and do not constitute a part of, this prospectus or the Registration Statement.
We will become subject to the full informational requirements of the Exchange Act. We will fulfill our obligations with respect to such
requirements by filing periodic reports and other information with the SEC. We intend to furnish our shareholders with annual reports containing consolidated financial statements certified by an independent public accounting firm.
136
INDEX TO FINANCIAL STATEMENTS
1. PLATFORM SPECIALTY PRODUCTS CORPORATION F/K/A PLATFORM ACQUISITION HOLDINGS LIMITED
(A Development Stage Company)
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Financial Statements
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Audited Financial Statements for the Period from April 23, 2013 (Inception) through June 30, 2013
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Report of Independent Registered Public Accounting Firm
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F-3
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Balance Sheet as of June 30, 2013
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F-4
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Statement of Operations for the Period from April 23, 2013 (Inception) through June 30,
2013
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F-5
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Statement of Stockholders’ Equity for the Period from April 23, 2013 (Inception) through June
30, 2013
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F-6
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Statement of Cash Flow for the Period from April 23, 2013 (Inception) through June 30,
2013
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F-7
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Notes to Financial Statements for the Period from April 23, 2013 (Inception) through June 30,
2013
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F-8
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Unaudited Interim Financial Statements as of and for the period ended September 30, 2013
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Balance Sheet as of September 30, 2013
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F-14
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Statement of Operations for the Period from April 23, 2013 (Inception) through September 30,
2013
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F-15
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Statement of Stockholders’ Equity for the Period from April
23, 2013 (Inception) through September 30, 2013
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F-16
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Statement of Cash Flow for the Period from April 23, 2013 (Inception) through September 30,
2013
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F-17
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Notes to Financial Statements for the Period from April 23, 2013 (Inception) through September
30, 2013
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F-18
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MacDermid, Incorporated and Subsidiaries
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Consolidated Financial Statements
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Audited Financial Statements for the Years Ended December 31, 2012 and 2011
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Report of Independent Registered Public Accounting Firm
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F-24
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Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011
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F-25
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Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2012 and
2011
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F-26
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Consolidated Balance Sheets as of December 31, 2012 and 2011
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F-27
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Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011
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F-28
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Consolidated Statement of Changes in Stockholders’ Equity for the Years Ended December
31, 2012 and 2011
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F-29
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Notes to Financial Statements for the Years Ended December 31, 2012 and 2011
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F-30
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F-1
F-2
Report of Independent Registered Public Accounting Firm
To Board of Directors and Shareholders of Platform Acquisition Holdings Limited
In our opinion, the accompanying balance sheet and the related statement of operations, of stockholders’ equity, and of cash flows present fairly, in all
material respects, the financial position of Platform Acquisition Holdings Limited (a development stage company) at June 30 2013, and the results of its operations and its cash flows from the period of April 23 2013 (date of inception) to June 30
2013 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers
LLP
October 30, 2013
London, United Kingdom
F-3
PLATFORM ACQUISITION HOLDINGS LIMITED
(A Development Stage Company)
BALANCE SHEET
(in thousands)
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June 30, 2013
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ASSETS
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Current assets:
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Cash and cash equivalents
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|
$
|
521,230
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Marketable securities at fair value
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359,955
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Other current assets
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264
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Total current assets
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881,449
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Total assets
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$
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881,449
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LIABILITIES AND STOCKHOLDERS' EQUITY
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|
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Current liabilities:
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Accounts payable and accrued expenses
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|
$
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262
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Total current liabilities
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262
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Total liabilities
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262
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Commitments and contingencies
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STOCKHOLDERS’ EQUITY
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Preferred shares, no par value, unlimited shares authorized; 2,000 issued and outstanding
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—
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Ordinary shares, no par value, unlimited shares authorized; 88,529.5 issued and outstanding
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—
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Additional-paid-in capital
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881,267
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Deficit accumulated during the development stage
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(80
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)
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Total stockholders’ equity
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881,187
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$
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881,449
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See accompanying notes to financial statements
F-4
PLATFORM ACQUISITION HOLDINGS LIMITED
(A Development Stage Company)
STATEMENT OF OPERATIONS
(in
thousands, except per share data)
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Period from
Inception
(April 23, 2013) to
June 30, 2013
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Operating costs and expenses:
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General and administration
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$
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70
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Stock-based compensation expense
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49
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Total operating costs and expenses
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119
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Loss from operations
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(119
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)
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Other income:
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Interest income from cash and marketable securities
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17
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Unrealized gain on cash equivalents and marketable securities
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22
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Total other income
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39
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Net loss
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$
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(80
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)
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Weighted average shares used in computing basic and diluted loss per share
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88,529.5
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Net loss per share applicable to ordinary stockholders—basic and diluted
|
|
$
|
(0.00
|
)
|
See accompanying notes to financial statements
F-5
PLATFORM ACQUISITION HOLDINGS LIMITED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS’ EQUITY
(in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Stockholders'
Equity
|
|
|
Total stockholders’ equity as of April 23, 2013
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Issuance of 2 preferred shares @$10.00 per share on April 25, 2013
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of 1,999,998 preferred shares @$10.00 per share with matching warrants on May 22, 2013 along with 2 matching warrants matching
with previously issued preferred shares
|
|
|
1,999,998
|
|
|
|
—
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
20,000
|
|
|
Issuance of 88,529,500 ordinary @$10.00 per share with matching warrants on May 22, 2013
|
|
|
—
|
|
|
|
88,529,500
|
|
|
|
885,296
|
|
|
|
—
|
|
|
|
885,296
|
|
|
Equity offering cost
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,078
|
)
|
|
|
—
|
|
|
|
(24,078
|
)
|
|
Stock-based compensation—option deeds
|
|
|
—
|
|
|
|
—
|
|
|
|
49
|
|
|
|
—
|
|
|
|
49
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(80
|
)
|
|
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity as of June 30, 2013
|
|
|
2,000,000
|
|
|
|
88,529,500
|
|
|
$
|
881,267
|
|
|
$
|
(80
|
)
|
|
$
|
881,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-6
PLATFORM ACQUISITION HOLDINGS LIMITED
(A Development Stage Company)
STATEMENT OF CASH FLOW
(in
thousands)
|
|
|
|
|
|
|
|
|
Period from Inception
(April 23, 2013) to
June 30, 2013
|
|
|
Cash Flows from operating activities:
|
|
|
|
|
|
Net loss
|
|
$
|
(80
|
)
|
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
|
Unrealized gain on marketable securities
|
|
|
(22
|
)
|
|
Stock-based compensation costs
|
|
|
49
|
|
|
Increase (decrease) in cash resulting from changes in assets and liabilities:
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(264
|
)
|
|
Accounts payable and accrued expenses
|
|
|
262
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of marketable securities
|
|
|
(359,933
|
)
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(359,933
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of promissory notes
|
|
|
200
|
|
|
Repayment of promissory notes
|
|
|
(200
|
)
|
|
Proceeds from issuance preferred shares, net
|
|
|
20,000
|
|
|
Proceeds from issuance ordinary shares, net
|
|
|
861,218
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
881,218
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
521,230
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
521,230
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-7
PLATFORM ACQUISITION HOLDINGS LIMITED
(A Development Stage Company)
Notes to Financial Statements
For the Period from April 23, 2013 (Inception) through June 30, 2013
Platform Acquisition Holdings Limited (“Platform” or the
“Company”) was incorporated with limited liability under the laws of the British Virgin Islands under the BVI Companies Act on April 23, 2013. Platform was created for the purpose of acquiring a target company or business with an
anticipated enterprise value of between $750 million and $2.5 billion. Platform’s name will be changed in conjunction with its planned acquisition of MacDermid, Incorporated on October 31, 2013 (See Note 7—Subsequent Events)
|
NOTE 2
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
The Company is considered to be a development stage company and, as such, the Company’s financial statements are prepared in accordance
with the Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities.” The Company is subject to the risks associated with development stage companies.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Cash and Cash Equivalents
The fair value of cash and cash equivalents approximates the carrying amount. The Company considers all highly liquid investments purchased
with a maturity of three months or less from the date of purchase to be cash equivalents. While cash held by financial institutions may at times exceed federally insured limits, the Company believes that no material credit or market risk exposure
exists due to the high quality of the institutions. The Company has not experienced any losses on such accounts.
Stock-based
Compensation
The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date
fair value of the awards and forfeiture rates, if any. Compensation cost is determined using the Black-Scholes option pricing model to estimate the fair value of the awards at the grant date. An offsetting increase to stockholders’ equity is
recorded equal to the amount of the compensation expense charge.
The assumptions used in calculating the fair value of stock-based awards
represent the Company’s best estimates and involve inherent uncertainties and the application of judgment.
The amount of the
compensation expense is based on the estimated fair value of the awards of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. On May 17, 2013, the Company issued and aggregate of
250,000 options to its non-founder directors. The expense related to this issuance is included in stock-based compensation expense in the accompanying Statement of Operations.
F-8
Earnings per Share
Basic earnings (loss) per ordinary share excludes dilution and is computed by dividing net income (loss) by the weighted average number of
ordinary shares outstanding during the period. Diluted earnings per ordinary share reflect the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted
in the issuance of ordinary shares that then shared in the earnings of the entity. Since the Company has only incurred losses, basic and diluted losses per share are the same. The amount of potentially dilutive securities excluded from the
calculation at June 30, 2013 was 30,176,500 ordinary shares underlying warrants (or 90,529,500 warrants, each entitling the holder to purchase 1/3 of an ordinary share), 2,000,000 preferred shares (convertible into ordinary shares on a 1-for-1
basis) and options to purchase 250,000 ordinary shares.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740”), which provides for deferred taxes
using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its
deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to
reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company
recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax
position as well as consideration of the available facts and circumstances. The Company does not have any significant uncertain tax positions.
As a British Virgin Islands limited liability company, the Company is not subject to any income, withholding or capital gains taxes.
Investment in Marketable Securities
Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date.
Marketable securities are classified as trading securities with all unrealized gains and losses on the Company's investment portfolio recorded through the Statement of Operations.
Fair Value Measurement
The Company records cash equivalents and marketable securities at fair value. Accounting Standards Codification (“ASC”) Topic 820,
Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions
(unobservable inputs). The hierarchy consists of three levels:
|
|
•
|
|
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.
|
|
|
•
|
|
Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full
term of the asset or liability.
|
|
|
•
|
|
Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity
for the asset or liability at the measurement date.
|
F-9
The Company used Level 1 fair value hierarchy assumptions to measure the fair value of all of its
cash and cash equivalents and marketable securities as of June 30, 2013.
Recently Issued Accounting Standards
The Company does not believe that the adoption of any recently issued, but not yet effective, accounting standards will have a material impact
on its financial position and results of operations.
|
NOTE 3
|
STOCKHOLDERS’ EQUITY
|
Founder Preferred Shares
On April 25, 2013, the Company issued two preferred shares, one to each of the founder entities (“Founders”) for $20. In connection
with the initial public offering on May 22, 2013, the Founders purchased an additional 1,999,998 preferred shares (“Preferred” shares or stock; no par value) for $19,999,980. Beginning in 2014, assuming an acquisition has been completed,
if the average stock price of the ordinary shares exceeds $11.50 per share for the last 10 days of the calendar year, the holders of the Preferred stock receive a dividend in the form of ordinary shares equal to 20% of the appreciation of the market
price of ordinary shares issued to ordinary shareholders in the initial offering. In the first year a dividend is payable (if any), the dividend amount will be calculated at the end of each calendar year based on the appreciated stock price as
determined above (the “Dividend Price) compared to the initial offering price of $10 per ordinary share. In subsequent years, the dividend amount will be calculated based on the appreciated stock price compared to the highest Dividend Price
previously used in calculating the Preferred stock dividends. Dividends are paid for the term the Preferred stock is outstanding. The Preferred shares will be automatically converted into ordinary shares on a one for one basis (i) in the event of a
Change of Control of the Company following an acquisition or (ii) upon the last day of the seventh full financial year following acquisition, being December 31, 2020 assuming an acquisition has been completed in 2013. Each Preferred share is
convertible into one ordinary share at the option of the holder until December 31, 2020 and has certain voting rights.
At the time of the
acquisition, the estimated fair value of the Preferred dividends until the end of the dividend earning period (ie until December 31, 2020) will be calculated and recorded as a one-time charge to the income statement. In future periods, on payment of
Preferred dividends, additional paid in capital and a corresponding entry in retained earnings will be recorded directly in stockholders equity.
Ordinary Shares
In connection with the initial offering on May 22, 2013, the Company issued 88,500,000 ordinary shares (no par value) for gross proceeds of
$885,000,000. Also, on May 22, 2013, the Company issued an aggregate of 29,500 ordinary shares to non-founder directors for $10 per share. Each ordinary share has voting rights and winding-up rights.
Warrants
Each of
the 2,000,000 Preferred shares, 88,500,000 Ordinary shares issued with the initial offering as well as the 29,500 Ordinary shares issued to the non-founder directors was issued with a warrant (90,529,500 warrants in aggregate), entitling the holder
of each warrant to purchase 1/3 of an ordinary share with a strike price of $11.50 per ordinary share. Each warrant is exercisable until three years from the date of an acquisition, unless mandatorily redeemed by the Company. The warrants are
mandatorily redeemable by the Company at a price of $0.01 should the average market price of an ordinary share exceed $18.00 for 10 consecutive trading days. Refer to Note 7—Subsequent events.
|
NOTE 4
|
COMMITMENTS AND CONTINGENCIES
|
The Company may be subject to lawsuits or claims as a
result of the proposed business combination. As of October 30, 2013, there were no known or threatened lawsuits or unasserted claims.
F-10
|
NOTE 5
|
MARKETABLE SECURITIES
|
The Company’s investment in marketable securities consists
of U.S. Treasury Bills.
As of June 30, 2013 all of the Company’s marketable securities were classified as trading securities. The
change in the unrealized gains on these investments are included in the Statement of Operations. Trading securities are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Gross
Unrealized
Gain
|
|
|
Gross
Unrealized
Loss
|
|
|
Net
Unrealized
Gain
|
|
|
Fair Value
|
|
|
As of June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bills
|
|
$
|
359,933
|
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
359,955
|
|
As of June 30, 2013, the Company had $22,000 of unrealized gains related to the Company's investment portfolio
recorded in the Statement of Operations.
|
NOTE 6
|
STOCK-BASED COMPENSATION
|
On May 17, 2013, the Company issued an aggregate 250,000
option deeds to its non-founder Directors. The exercise price of each options is $11.50 and the option deeds expire in five years from the date of completion of acquisition and vest on completion of acquisition.
The Company estimates the fair value of stock option grants using a Black-Scholes option pricing. In applying this model, the Company uses the
following assumptions:
|
|
•
|
|
Risk-Free Interest Rate:
The Company determined the risk-free interest rate equivalent to the expected term based on the U.S. Treasury constant maturity rate.
|
|
|
•
|
|
Expected Volatility:
The Company determined its future stock price volatility based on the average historical stock price volatility of comparable peer companies.
|
|
|
•
|
|
Expected Term:
The Company determined the expected term equal to the life of the contract.
|
|
|
•
|
|
Expected Dividend Rate:
The Company has not paid and does not anticipate paying any cash dividends in the near future.
|
The fair value of each option award was estimated on the grant date using the Black Scholes option-pricing model and expensed under the
straight line method over the vesting period. The following assumptions were used:
|
|
|
|
|
|
|
Stock option plans
|
|
June 30, 2013
|
|
|
Exercise price
|
|
$
|
11.50
|
|
|
Expected stock price volatility
|
|
|
18.49
|
%
|
|
Risk-free rate of interest
|
|
|
0.37
|
%
|
|
Expected life of options
|
|
|
5.0 years
|
|
Stock-based compensation expense from option deeds was approximately $49,000 for the period from inception (April 23, 2013) to
June 30, 2013. The options vest on the date of completion of an acquisition, which is estimated to be by December 31, 2013 and accordingly, the total value of the options at issuance are amortized over the period from inception to December 31, 2013.
Unrecognized stock-based compensation from option agreements totals $198,865 as of June 30, 2013 and shall be recognized during the period from July 1, 2013 through December 31, 2013 on a straight line basis.
F-11
The following table summarizes stock option activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Total
Weighted
Average
Intrinsic
Value
|
|
|
Weighted
Average
Remaining
Contractual
Life (in years)
|
|
|
Outstanding at April 23, 2013
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options forfeited
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options cancelled
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2013
|
|
|
250,000
|
|
|
$
|
11.50
|
|
|
$
|
—
|
|
|
|
4.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options expected to vest
|
|
|
250,000
|
|
|
$
|
11.50
|
|
|
$
|
—
|
|
|
|
4.88
|
|
|
Options vested and exercisable
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
On October 10, 2013, the Company entered into an agreement to acquire
substantially all of the outstanding equity of MacDermid, Incorporated (“MacDermid”), a global provider of high value-added specialty chemicals for $1.8 billion (including the assumption of approximately $756 million of indebtedness) plus
up to $100 million of contingent consideration tied to certain EBITDA and stock trading price performance metrics over a seven year period following the closing of the acquisition.
At the closing of the transaction, the Company estimates it will pay approximately $925 million in cash and issue approximately $100 million of
new equity to the sellers. The equity to be issued consists of shares of a wholly owned subsidiary of Platform that may be exchanged for shares of Platform in one year. The Company will fund the cash portion of the purchase price and
related transaction expenses with a combination of cash on hand and an anticipated approximately $145 million of proceeds from an initial closing of a warrant exchange offer. The remaining portion of the purchase price will be paid in cash or stock
following the completion of post-closing adjustments to the purchase price. The warrant exchange offer was an offer to issue ordinary shares of the Company in exchange for $10.50 and 3 warrants, up to a maximum of half of the warrants
outstanding.
In conjunction with the assumption of MacDermid indebtedness, the Company will become a co-borrower on MacDermid’s $50
million revolving credit facility. A portion of the revolving credit facility not in excess of $15.0 million is available for the issuance of letters of credit. It is anticipated that upon consummation of the MacDermid acquisition, there will be
$753.1 million of indebtedness outstanding under the first lien credit facility which will also be assumed in conjunction with the Acquisition. The revolving credit facility and first lien credit facility are hereinafter referred to as the
“Credit Facilities.”
Platform will unconditionally guarantee all obligations under the Credit Facilities. The Credit Facilities
contain various covenants including limitations on additional indebtedness, dividends and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens, transactions
with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions and dispositions. In addition, the revolving credit facility will require the Company to comply with certain financial covenants, including
consolidated leverage and interest coverage ratios and limitations on capital expenditures if funding under the revolving credit facility exceeds $12.5 million for ten or more consecutive days in any fiscal quarter. As of October 30, 2013, the
borrowings under the revolving credit facility, consisting solely of stand-by letters of credit outstanding, were $3.8 million.
F-12
The Company intends to re-domicile to Delaware from the British Virgin Islands. The Company also
intends to apply to the New York Stock Exchange for the listing of its common stock. It is currently anticipated that the Company’s listing of ordinary shares and warrants on the London Stock Exchange will be cancelled at or around the time the
New York Stock Exchange listing is achieved. The Company’s listing on the London Stock Exchange will remain suspended until such cancellation takes effect.
The Company has performed an evaluation of subsequent events through October 30, 2013, which is the date the financial statements were
issued.
F-13
PLATFORM SPECIALTY PRODUCTS CORPORATION
(A Development Stage Company)
UNAUDITED BALANCE SHEET
(in
thousands)
|
|
|
|
|
|
|
|
|
September 30, 2013
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
700,542
|
|
|
Marketable securities at fair value
|
|
|
179,999
|
|
|
Other current assets
|
|
|
209
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
880,750
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
880,750
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
4,175
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
4,175
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,175
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Preferred shares, no par value, unlimited shares authorized; 2,000 issued and outstanding
|
|
|
—
|
|
|
Ordinary shares, no par value, unlimited shares authorized; 88,529.5 issued and outstanding
|
|
|
—
|
|
|
Additional-paid-in capital
|
|
|
881,365
|
|
|
Deficit accumulated during the development stage
|
|
|
(4,790
|
)
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
876,575
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
880,750
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-14
PLATFORM SPECIALTY PRODUCTS CORPORATION
(A Development Stage Company)
UNAUDITED STATEMENT OF OPERATIONS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
Period from
April 23, 2013
(Inception) to
September 30, 2013
(Unaudited)
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
General and administration
|
|
$
|
304
|
|
|
Acquisition costs
|
|
|
4,460
|
|
|
Stock-based compensation expense
|
|
|
148
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
|
|
|
Loss from operations
|
|
|
(4,912
|
)
|
|
Other income:
|
|
|
|
|
|
Interest income from cash and marketable securities
|
|
|
80
|
|
|
Unrealized gain on cash equivalents and marketable securities
|
|
|
42
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
122
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,790
|
)
|
|
|
|
|
|
|
|
Weighted average shares used in computing basic and diluted loss per share
|
|
|
88,529.5
|
|
|
|
|
|
Net loss per share applicable to ordinary stockholders—basic and diluted
|
|
$
|
(0.05
|
)
|
See accompanying notes to financial statements
F-15
PLATFORM SPECIALTY PRODUCTS CORPORATION
(A Development Stage Company)
UNAUDITED STATEMENT OF STOCKHOLDERS’ EQUITY
(in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Stockholders’
Equity
|
|
|
Total stockholders’ equity as of April 23, 2013
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Issuance of 2 preferred shares @$10.00 per share on April 25, 2013
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of 1,999,998 preferred shares @$10.00 per share with matching warrants on May 22, 2013 along with 2 matching warrants
matching with previously issued preferred shares
|
|
|
1,999,998
|
|
|
|
—
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
20,000
|
|
|
Issuance of 88,529,500 ordinary @$10.00 per share with matching warrants on May 22, 2013
|
|
|
—
|
|
|
|
88,529,500
|
|
|
|
885,296
|
|
|
|
—
|
|
|
|
885,296
|
|
|
Equity offering cost
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,078
|
)
|
|
|
—
|
|
|
|
(24,078
|
)
|
|
Stock-based compensation—option deeds
|
|
|
—
|
|
|
|
—
|
|
|
|
147
|
|
|
|
—
|
|
|
|
147
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,790
|
)
|
|
|
(4,790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity as of September 30, 2013
|
|
|
2,000,000
|
|
|
|
88,529,500
|
|
|
$
|
881,365
|
|
|
$
|
(4,790
|
)
|
|
$
|
876,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-16
PLATFORM SPECIALTY PRODUCTS CORPORATION
(A Development Stage Company)
UNAUDITED STATEMENT OF CASH FLOW
(in thousands)
|
|
|
|
|
|
|
|
|
Period from
Inception
(April 23, 2013) to
September 30, 2013
(Unaudited)
|
|
|
Cash Flows from operating activities:
|
|
|
|
|
|
Net loss
|
|
$
|
(4,790
|
)
|
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
|
Unrealized gain on marketable securities
|
|
|
(42
|
)
|
|
Stock-based compensation costs
|
|
|
147
|
|
|
Increase (decrease) in cash resulting from changes in assets and liabilities:
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(209
|
)
|
|
Accounts payable and accrued expenses
|
|
|
4,175
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(719
|
)
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of marketable securities
|
|
|
(359,934
|
)
|
|
Redemption of marketable securities (excluding realized gain)
|
|
|
179,975
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(179,957
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of promissory notes
|
|
|
200
|
|
|
Repayment of promissory notes
|
|
|
(200
|
)
|
|
Proceeds from issuance preferred shares, net
|
|
|
20,000
|
|
|
Proceeds from issuance ordinary shares, net
|
|
|
861,218
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
881,218
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
700,542
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
700,542
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-17
PLATFORM SPECIALTY PRODUCTS CORPORATION
(A Development Stage Company)
Notes to Unaudited Financial Statements
For the Period from April 23, 2013 (Inception) through September 30, 2013
(Unaudited)
Platform Specialty Products Corporation (“Platform” or the
“Company”) was incorporated with limited liability under the laws of the British Virgin Islands under the BVI Companies Act on April 23, 2013. Platform was created for the purpose of acquiring a target company or business with an
anticipated enterprise value of between $750 million and $2.5 billion. On October 31, 2013 Platform completed its acquisition of MacDermid, Incorporated and changed its name from Platform Acquisition Holdings Limited (See Note 7—Subsequent
Events)
|
NOTE 2
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
The Company is considered to be a development stage company and, as such, the Company’s financial statements are prepared in accordance
with the Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities.” The Company is subject to the risks associated with development stage companies.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Cash and Cash Equivalents
The fair value of cash and cash equivalents approximates the carrying amount. The Company considers all highly liquid investments purchased
with a maturity of three months or less from the date of purchase to be cash equivalents. While cash held by financial institutions may at times exceed federally insured limits, the Company believes that no material credit or market risk exposure
exists due to the high quality of the institutions. The Company has not experienced any losses on such accounts.
Stock-based
Compensation
The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date
fair value of the awards and forfeiture rates, if any. Compensation cost is determined using the Black-Scholes option pricing model to estimate the fair value of the awards at the grant date. An offsetting increase to stockholders’ equity is
recorded equal to the amount of the compensation expense charge.
The assumptions used in calculating the fair value of stock-based awards
represent the Company’s best estimates and involve inherent uncertainties and the application of judgment.
F-18
The amount of the compensation expense is based on the estimated fair value of the awards of the
consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. On May 17, 2013, the Company issued and aggregate of 250,000 options to its non-founder directors. The expense related to this
issuance is included in stock-based compensation expense in the accompanying Statement of Operations.
Earnings per Share
Basic earnings (loss) per ordinary share excludes dilution and is computed by dividing net income (loss) by the weighted average
number of ordinary shares outstanding during the period. Diluted earnings per ordinary share reflect the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares
or resulted in the issuance of ordinary shares that then shared in the earnings of the entity. Since the Company has only incurred losses, basic and diluted losses per share are the same. The amount of potentially dilutive securities excluded from
the calculation at September 30, 2013 was 30,176,500 ordinary shares underlying warrants (or 90,529,500 warrants, each entitling the holder to purchase 1/3 of an ordinary share), 2,000,000 preferred shares (convertible into ordinary shares on a
1-for-1 basis) and options to purchase 250,000 ordinary shares.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740”), which provides for deferred taxes
using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its
deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to
reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company
recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax
position as well as consideration of the available facts and circumstances. The Company does not have any significant uncertain tax positions.
As a British Virgin Islands limited liability company, the Company is not subject to any income, withholding or capital gains taxes.
Investment in Marketable Securities
Marketable securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date.
Marketable securities are classified as trading securities with all unrealized gains and losses on the Company's investment portfolio recorded through the Statement of Operations.
F-19
Fair Value Measurement
The Company records cash equivalents and marketable securities at fair value. Accounting Standards Codification (“ASC”) Topic 820,
Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions
(unobservable inputs). The hierarchy consists of three levels:
|
|
•
|
|
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.
|
|
|
•
|
|
Level 2— Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full
term of the asset or liability.
|
|
|
•
|
|
Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity
for the asset or liability at the measurement date.
|
The Company used Level 1 fair value hierarchy assumptions to measure the
fair value of all of its cash and cash equivalents and marketable securities as of September 30, 2013.
Recently Issued
Accounting Standards
The Company does not believe that the adoption of any recently issued, but not yet effective, accounting
standards will have a material impact on its financial position and results of operations.
|
NOTE 3
|
STOCKHOLDERS’ EQUITY
|
Founder Preferred Shares
On April 25, 2013, the Company issued two preferred shares, one to each of the founder entities (“Founders”) for $20. In
connection with the initial public offering on May 22, 2013, the Founders purchased an additional 1,999,998 preferred shares (“Preferred” shares or stock; no par value) for $19,999,980. Beginning in 2014, if the average stock price of
the ordinary shares exceeds $11.50 per share for the last 10 days of the calendar year, the holders of the Preferred stock receive a dividend in the form of ordinary shares equal to 20% of the appreciation of the market price of ordinary shares
issued to ordinary shareholders in the initial offering. In the first year a dividend is payable (if any), the dividend amount will be calculated at the end of each calendar year based on the appreciated stock price as determined above (the
“Dividend Price) compared to the initial offering price of $10 per ordinary share. In subsequent years, the dividend amount will be calculated based on the appreciated stock price compared to the highest Dividend Price previously used in
calculating the Preferred stock dividends. Dividends are paid for the term the Preferred stock is outstanding. The Preferred shares will be automatically converted into ordinary shares on a one for one basis (i) in the event of a Change of
Control of the Company following an acquisition or (ii) upon the last day of the seventh full financial year following acquisition, being December 31, 2020 assuming an acquisition has been completed in 2013. Each Preferred share is
convertible into one ordinary share at the option of the holder until December 31, 2020 and has certain voting rights.
At the time of
the acquisition, the estimated fair value of the Preferred dividends until the end of the dividend earning period (ie until December 31, 2020) will be calculated and recorded as a one-time charge to the income statement. In future periods, on
payment of Preferred dividends, additional paid in capital and a corresponding entry in retained earnings will be recorded directly in stockholders equity.
Ordinary Shares
In connection with the initial offering on May 22, 2013, the Company issued 88,500,000 ordinary shares (no par value) for gross proceeds
of $885,000,000. Also, on May 22, 2013, the Company issued an aggregate of 29,500 ordinary shares to non-founder directors for $10 per share. Each ordinary share has voting rights and winding-up rights.
F-20
Warrants
Each of the 2,000,000 Preferred shares, 88,500,000 Ordinary shares issued with the initial offering as well as the 29,500 Ordinary shares
issued to the non-founder directors was issued with a warrant (90,529,500 warrants in aggregate), entitling the holder of each warrant to purchase 1/3 of an ordinary share with a strike price of $11.50 per ordinary share. Each warrant is exercisable
until three years from the date of an acquisition, unless mandatorily redeemed by the Company. The warrants are mandatorily redeemable by the Company at a price of $0.01 should the average market price of an ordinary share exceed $18.00 for 10
consecutive trading days. Refer to Note 7—Subsequent events.
|
NOTE 4
|
COMMITMENTS AND CONTINGENCIES
|
The Company may be subject to lawsuits or claims as a
result of the proposed business combination. There are no known or threatened lawsuits or unasserted claims.
|
NOTE 5
|
MARKETABLE SECURITIES
|
The Company’s investment in marketable securities consists
of U.S. Treasury Bills.
As of September 30, 2013 all of the Company’s marketable securities were classified as trading
securities. The change in the unrealized gains on these investments are included in the Statement of Operations. Trading securities are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Gross
Unrealized
Gain
|
|
|
Gross
Unrealized
Loss
|
|
|
Net
Unrealized
Gain
|
|
|
Fair Value
|
|
|
As of September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bills
|
|
$
|
179,957
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
179,999
|
|
As of September 30, 2013, the Company had $42,000 of unrealized gains related to the Company's investment
portfolio recorded in the Statement of Operations.
|
NOTE 6
|
STOCK-BASED COMPENSATION
|
On May 17, 2013, the Company issued an aggregate 250,000
option deeds to its non-founder Directors. The exercise price of each options is $11.50 and the option deeds expire in five years from the date of completion of acquisition and vest on completion of acquisition.
The Company estimates the fair value of stock option grants using a Black-Scholes option pricing. In applying this model, the Company uses the
following assumptions:
|
|
•
|
|
Risk-Free Interest Rate
: The Company determined the risk-free interest rate equivalent to the expected term based on the U.S. Treasury constant maturity rate.
|
|
|
•
|
|
Expected Volatility
: The Company determined its future stock price volatility based on the average historical stock price volatility of comparable peer companies.
|
|
|
•
|
|
Expected Term
: The Company determined the expected term equal to the life of the contract.
|
|
|
•
|
|
Expected Dividend Rate
: The Company has not paid and does not anticipate paying any cash dividends in the near future.
|
F-21
The fair value of each option award was estimated on the grant date using the Black Scholes
option-pricing model and expensed under the straight line method over the vesting period. The following assumptions were used:
|
|
|
|
|
|
|
Stock option plans
|
|
June 30, 2013
|
|
|
Exercise price
|
|
$
|
11.50
|
|
|
Expected stock price volatility
|
|
|
18.49
|
%
|
|
Risk-free rate of interest
|
|
|
0.37
|
%
|
|
Expected life of options
|
|
|
5.0 years
|
|
Stock-based compensation expense from option deeds was approximately $147,000 for the period from inception (April 23, 2013)
to September 30, 2013. The options vest on the date of completion of an acquisition which occurred on October 31, 2013 (See Note 7—Subsequent Events). Unrecognized
stock-based
compensation from
option agreements totals approximately $100,000 as of September 30, 2013 and shall be fully recognized as October 31, 2013.
The
following table summarizes stock option activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Total
Weighted
Average
Intrinsic
Value
|
|
|
Weighted
Average
Remaining
Contractual
Life (in years)
|
|
|
Outstanding at April 23, 2013
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options forfeited
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options cancelled
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2013
|
|
|
250,000
|
|
|
$
|
11.50
|
|
|
$
|
—
|
|
|
|
4.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options expected to vest
|
|
|
250,000
|
|
|
$
|
11.50
|
|
|
$
|
—
|
|
|
|
4.88
|
|
|
Options vested and exercisable
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
On October 31, 2013, the Company completed its acquisition of
substantially all of the outstanding equity of MacDermid, Incorporated (“MacDermid”), a global provider of high value-added specialty chemicals for $1.8 billion (including the assumption of approximately $756 million of indebtedness) plus
up to $100 million of contingent consideration tied to certain EBITDA and stock trading price performance metrics over a seven year period following the closing of the acquisition.
At the closing of the transaction, the Company paid approximately $925 million in cash and delivered approximately $100 million of new equity
to the sellers. The equity consisted of shares of a wholly owned subsidiary of Platform that may be exchanged for shares of Platform in one year. The Company funded the cash portion of the purchase price and related transaction expenses with a
combination of cash on hand and approximately $145 million of proceeds from the closing of a warrant exchange offer. The remaining portion of the purchase price will be paid in cash or stock following the completion of post-closing adjustments to
the purchase price. The warrant exchange offer was an offer to issue ordinary shares of the Company in exchange for $10.50 and 3 warrants, up to a maximum of half of the warrants outstanding. In conjunction with the warrant exchange offer not being
fully subscribed, in November 2013, the Company issued 380,952 shares at $10.50 per share to the Founders and issued 190,476 shares each to two of its independent directors at $10.50 per share. An additional 466,666 ordinary shares were issued in
November 2013 in connection with the exercise of 1,399,998 warrants at an exercise price of $11.50 per ordinary share.
F-22
In conjunction with the assumption of MacDermid indebtedness, the Company became a co-borrower on
MacDermid’s $50 million revolving credit facility. A portion of the revolving credit facility not in excess of $15.0 million is available for the issuance of letters of credit. As of October 31, 2013, there was $753.1 million of
indebtedness outstanding under the first lien credit facility which was assumed in conjunction with the Acquisition. The revolving credit facility and first lien credit facility are hereinafter referred to as the “Credit Facilities.”
Platform unconditionally guaranteed all obligations under the Credit Facilities. The Credit Facilities contain various covenants including
limitations on additional indebtedness, dividends and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens, transactions with affiliates, amendments to
organizational documents, accounting changes, sale and leaseback transactions and dispositions. In addition, the revolving credit facility requires the Company to comply with certain financial covenants, including consolidated leverage and interest
coverage ratios and limitations on capital expenditures if funding under the revolving credit facility exceeds $12.5 million for ten or more consecutive days in any fiscal quarter. As of October 31, 2013, the borrowings under the revolving
credit facility, consisting solely of stand-by letters of credit outstanding, were $3.8 million.
The Company intends to re-domicile to
Delaware from the British Virgin Islands. The Company also intends to apply to the New York Stock Exchange for the listing of its common stock. It is currently anticipated that the Company’s listing of ordinary shares and warrants on the London
Stock Exchange will be cancelled at or around the time the New York Stock Exchange listing is achieved. The Company’s listing on the London Stock Exchange will remain suspended until such cancellation takes effect.
As of the closing of the acquisition of MacDermid, Platform will record a one-time, non-cash expense preliminarily estimated to be
approximately $166 million, which represents the fair value of the Founder preferred dividend rights at that time.
The Company has
performed an evaluation of subsequent events through December 11, 2013, which is the date these financial statements were issued.
F-23
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
MacDermid, Incorporated:
We have audited the accompanying consolidated balance sheets of MacDermid, Incorporated and subsidiaries (the “Company”) as of
December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2012. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of MacDermid, Incorporated and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2012, in conformity with
U.S. generally accepted accounting principles.
(signed) KPMG LLP
Hartford, Connecticut
March 6, 2013
F-24
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands
)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Net sales
|
|
$
|
731,220
|
|
|
$
|
728,773
|
|
|
Cost of sales
|
|
|
376,166
|
|
|
|
388,298
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
355,054
|
|
|
|
340,475
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, technical and administrative
|
|
|
187,514
|
|
|
|
185,649
|
|
|
Research and development
|
|
|
25,051
|
|
|
|
22,966
|
|
|
Amortization
|
|
|
27,100
|
|
|
|
28,578
|
|
|
Restructuring
|
|
|
292
|
|
|
|
896
|
|
|
Impairment charges
|
|
|
—
|
|
|
|
46,438
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
239,957
|
|
|
|
284,527
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
115,097
|
|
|
|
55,948
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
532
|
|
|
|
500
|
|
|
Interest expense
|
|
|
(49,671
|
)
|
|
|
(54,554
|
)
|
|
Miscellaneous income
|
|
|
4,981
|
|
|
|
9,412
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations before income taxes, non-controlling interest and accumulated payment-in-kind dividends on cumulative preferred
shares
|
|
|
70,939
|
|
|
|
11,306
|
|
|
Income tax (expense)
|
|
|
(24,673
|
)
|
|
|
(9,953
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
46,266
|
|
|
|
1,353
|
|
|
Less net income attributable to the non-controlling interest
|
|
|
(289
|
)
|
|
|
(366
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to MacDermid, Incorporated
|
|
|
45,977
|
|
|
|
987
|
|
|
Accrued payment-in-kind dividend on cumulative preferred shares
|
|
|
(44,605
|
)
|
|
|
(40,847
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shares
|
|
$
|
1,372
|
|
|
$
|
(39,860
|
)
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-25
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(
In thousands
)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Net income
|
|
$
|
46,266
|
|
|
$
|
1,353
|
|
|
Foreign currency translation (loss) gain
|
|
|
(6,232
|
)
|
|
|
(5,683
|
)
|
|
Pension and postretirement benefit plans
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss and prior service credits
|
|
|
767
|
|
|
|
90
|
|
|
Current year change
|
|
|
(17,420
|
)
|
|
|
(22,781
|
)
|
|
Unrealized gain (loss) on available for sale equity investments
|
|
|
|
|
|
|
|
|
|
Change in fair value
|
|
|
290
|
|
|
|
(153
|
)
|
|
Unrealized gain (loss) on derivatives valuation
|
|
|
|
|
|
|
|
|
|
Change in fair value
|
|
|
2,906
|
|
|
|
2,958
|
|
|
Reclassification into earnings
|
|
|
141
|
|
|
|
527
|
|
|
Income tax benefit (expense) on comprehensive income (loss)
|
|
|
4,247
|
|
|
|
6,085
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
30,965
|
|
|
|
(17,604
|
)
|
|
Comprehensive income attributable to the non-controlling interest
|
|
|
(289
|
)
|
|
|
(366
|
)
|
|
Foreign currency translation adjustments attributable to the non-controlling interest
|
|
|
(10
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to MacDermid, Incorporated
|
|
$
|
30,666
|
|
|
$
|
(17,970
|
)
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-26
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands
, except share and per share amounts
)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
143,351
|
|
|
$
|
113,452
|
|
|
Accounts receivable, net of allowance for doubtful receivables of $8,831 and $8,730, respectively
|
|
|
138,970
|
|
|
|
134,584
|
|
|
Inventories, net
|
|
|
76,093
|
|
|
|
75,186
|
|
|
Prepaid expenses and other current assets
|
|
|
10,946
|
|
|
|
12,048
|
|
|
Deferred income taxes
|
|
|
5,169
|
|
|
|
6,116
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
374,529
|
|
|
|
341,386
|
|
|
Property, plant and equipment, net of accumulated depreciation of $89,118 and $76,216, respectively
|
|
|
100,391
|
|
|
|
96,916
|
|
|
Goodwill
|
|
|
476,232
|
|
|
|
474,581
|
|
|
Intangibles, net of accumulated amortization of $167,261 and $139,427, respectively
|
|
|
251,772
|
|
|
|
274,105
|
|
|
Deferred income taxes
|
|
|
1,812
|
|
|
|
2,387
|
|
|
Other assets
|
|
|
29,181
|
|
|
|
32,043
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,233,917
|
|
|
$
|
1,221,418
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
53,416
|
|
|
$
|
49,481
|
|
|
Accrued compensation
|
|
|
14,289
|
|
|
|
14,372
|
|
|
Accrued interest
|
|
|
6,985
|
|
|
|
6,958
|
|
|
Accrued income taxes payable
|
|
|
4,443
|
|
|
|
6,398
|
|
|
Accrued expenses
|
|
|
10,393
|
|
|
|
9,641
|
|
|
Current installments of long-term debt and capital lease obligations
|
|
|
26,819
|
|
|
|
26,141
|
|
|
Other current liabilities
|
|
|
11,801
|
|
|
|
13,915
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
128,146
|
|
|
|
126,906
|
|
|
Long-term debt and capital lease obligations
|
|
|
693,821
|
|
|
|
718,231
|
|
|
Retirement benefits, less current portion
|
|
|
54,207
|
|
|
|
40,902
|
|
|
Deferred income taxes
|
|
|
49,411
|
|
|
|
62,835
|
|
|
Other long-term liabilities
|
|
|
35,895
|
|
|
|
30,738
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
961,480
|
|
|
|
979,612
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
Cumulative preferred shares, 316,000 shares authorized and issued, 315,144 shares and 315,264 shares outstanding at December 31,
2012 and 2011, respectively, including cumulative dividends of $209,027 and $164,449 at December 31, 2012 and 2011, respectively
|
|
|
525,027
|
|
|
|
480,449
|
|
|
Common shares, 50,000,000 shares authorized and issued, 49,582,936 shares and 49,732,194 shares outstanding at December 31, 2012
and 2011, respectively
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Class A Junior shares, 2,150,000 shares authorized and issued, 1,880,192 vested shares and 1,571,225 vested shares outstanding at
December 31, 2012 and 2011, respectively
|
|
|
—
|
|
|
|
—
|
|
|
Class B Junior shares, 1,620,000 shares authorized, 411,576 vested shares and 249,388 vested shares outstanding at December 31,
2012 and 2011, respectively
|
|
|
—
|
|
|
|
—
|
|
|
Additional paid-in capital
|
|
|
2,318
|
|
|
|
2,156
|
|
|
Accumulated deficit
|
|
|
(273,086
|
)
|
|
|
(274,458
|
)
|
|
Accumulated other comprehensive (loss) income
|
|
|
(30,270
|
)
|
|
|
(14,959
|
)
|
|
Common and preferred shares in treasury, 856 preferred shares and 417,064 common shares at December 31, 2012, and 736 preferred shares
and 267,806 common shares at December 31, 2011 at cost, respectively
|
|
|
(1,264
|
)
|
|
|
(994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ equity
|
|
|
272,725
|
|
|
|
242,194
|
|
|
(Deficit) in non-controlling interest
|
|
|
(288
|
)
|
|
|
(388
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
272,437
|
|
|
|
241,806
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
1,233,917
|
|
|
$
|
1,221,418
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-27
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(
In thousands
)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
46,266
|
|
|
$
|
1,353
|
|
|
Adjustments to reconcile net income from operations to net cash flows provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
15,093
|
|
|
|
18,167
|
|
|
Amortization
|
|
|
27,100
|
|
|
|
28,578
|
|
|
Provision for bad debts
|
|
|
1,694
|
|
|
|
1,995
|
|
|
Deferred income taxes
|
|
|
(8,364
|
)
|
|
|
(16,010
|
)
|
|
Write off of deferred financing costs
|
|
|
226
|
|
|
|
506
|
|
|
Equity compensation expense
|
|
|
162
|
|
|
|
727
|
|
|
Remeasurement (gains) on foreign denominated debt
|
|
|
(5,702
|
)
|
|
|
(9,156
|
)
|
|
Gain on disposition of fixed assets
|
|
|
(92
|
)
|
|
|
(157
|
)
|
|
Impairment charges
|
|
|
—
|
|
|
|
46,438
|
|
|
Restructuring charges
|
|
|
292
|
|
|
|
896
|
|
|
Amortization of deferred financing fees
|
|
|
3,917
|
|
|
|
3,802
|
|
|
Loss on sale of business units
|
|
|
—
|
|
|
|
1,237
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase) in accounts receivable
|
|
|
(4,912
|
)
|
|
|
(401
|
)
|
|
Decrease (increase) in inventories
|
|
|
789
|
|
|
|
1,481
|
|
|
Decrease (increase) in prepaid expenses
|
|
|
1,451
|
|
|
|
(734
|
)
|
|
(Increase) decrease in equipment at customers
|
|
|
(1,999
|
)
|
|
|
(1,074
|
)
|
|
Increase (decrease) in accounts payable
|
|
|
3,274
|
|
|
|
(3,498
|
)
|
|
(Decrease) in accrued expenses
|
|
|
(3,603
|
)
|
|
|
(12,743
|
)
|
|
(Decrease) in long term assets
|
|
|
(1,550
|
)
|
|
|
(10,977
|
)
|
|
Increase (decrease) increase in income tax balances
|
|
|
3,315
|
|
|
|
(2,011
|
)
|
|
Other, net
|
|
|
(2,181
|
)
|
|
|
1,327
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows provided by operating activities
|
|
|
75,176
|
|
|
|
49,746
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(13,399
|
)
|
|
|
(8,741
|
)
|
|
Proceeds from disposition of fixed assets
|
|
|
140
|
|
|
|
261
|
|
|
Redemption (purchase) of certificate of deposit
|
|
|
—
|
|
|
|
2,516
|
|
|
Proceeds from sale of business units
|
|
|
—
|
|
|
|
3,267
|
|
|
Business acquired
|
|
|
(5,059
|
)
|
|
|
—
|
|
|
Purchases of equity securities
|
|
|
(57
|
)
|
|
|
(757
|
)
|
|
Proceeds from sale of equity investments
|
|
|
98
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows (used in) investing activities
|
|
|
(18,277
|
)
|
|
|
(3,454
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Short term (repayments) borrowings
|
|
|
(48
|
)
|
|
|
(1,308
|
)
|
|
Proceeds from capital leases
|
|
|
172
|
|
|
|
1,283
|
|
|
Repayments of borrowings
|
|
|
(26,092
|
)
|
|
|
(36,983
|
)
|
|
Dividends paid to non-controlling interest partner
|
|
|
(677
|
)
|
|
|
(614
|
)
|
|
Sale of noncontrolling interest in subsidiary
|
|
|
31
|
|
|
|
—
|
|
|
Issuance of treasury shares
|
|
|
—
|
|
|
|
100
|
|
|
Dividend paid on preferred stock
|
|
|
(27
|
)
|
|
|
—
|
|
|
Repurchase of treasury shares
|
|
|
(270
|
)
|
|
|
(12
|
)
|
|
Payment of financing fees
|
|
|
(321
|
)
|
|
|
(264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities
|
|
|
(27,232
|
)
|
|
|
(37,798
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
232
|
|
|
|
(1,782
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
29,899
|
|
|
|
6,712
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
113,452
|
|
|
|
106,740
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
143,351
|
|
|
|
113,452
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
45,235
|
|
|
|
50,040
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
|
27,144
|
|
|
|
25,878
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-28
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF
CHANGES IN STOCKHOLDERS’ EQUITY
(
In thousands
, except share and per share amounts
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MacDermid Shareholders
|
|
|
|
|
|
|
|
|
|
|
Cumulative
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Class A
Junior
Shares
|
|
|
Class B
Junior
Shares
|
|
|
Additional
paid-in
capital
|
|
|
Accumulated
deficit
|
|
|
Accumulated
other
comprehensive
income (loss)
|
|
|
Treasury
Shares
|
|
|
Total
MacDermid
Shareholder
Equity
|
|
|
Non-
controlling
interest
|
|
|
Total
equity
|
|
|
Balance at January 1, 2011
|
|
$
|
439,602
|
|
|
$
|
50,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,429
|
|
|
$
|
(234,598
|
)
|
|
$
|
3,998
|
|
|
$
|
(1,082
|
)
|
|
$
|
259,349
|
|
|
$
|
(140
|
)
|
|
$
|
259,209
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
987
|
|
|
|
—
|
|
|
|
—
|
|
|
|
987
|
|
|
|
366
|
|
|
|
1,353
|
|
|
Equity compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
727
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
727
|
|
|
|
—
|
|
|
|
727
|
|
|
Accrual of paid in kind dividend on cumulative preferred shares
|
|
|
40,847
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(40,847
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Foreign currency translation adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,683
|
)
|
|
|
—
|
|
|
|
(5,683
|
)
|
|
|
—
|
|
|
|
(5,683
|
)
|
|
Pension and postretirement plans, net of tax benefit of $7,251
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(15,440
|
)
|
|
|
—
|
|
|
|
(15,440
|
)
|
|
|
—
|
|
|
|
(15,440
|
)
|
|
Derivatives valuation, net of tax expense of $1,220
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,265
|
|
|
|
—
|
|
|
|
2,265
|
|
|
|
—
|
|
|
|
2,265
|
|
|
Shares issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100
|
|
|
|
100
|
|
|
|
—
|
|
|
|
100
|
|
|
Shares repurchased
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
|
—
|
|
|
|
(12
|
)
|
|
Unrealized loss on available for sale equity securities, net of tax benefit of $54
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(99
|
)
|
|
|
—
|
|
|
|
(99
|
)
|
|
|
—
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend paid to noncontrolling interest partner
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(614
|
)
|
|
|
(614
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
$
|
480,449
|
|
|
$
|
50,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,156
|
|
|
$
|
(274,458
|
)
|
|
$
|
(14,959
|
)
|
|
$
|
(994
|
)
|
|
$
|
242,194
|
|
|
$
|
(388
|
)
|
|
$
|
241,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45,977
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45,977
|
|
|
|
289
|
|
|
|
46,266
|
|
|
Equity compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
162
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
162
|
|
|
|
—
|
|
|
|
162
|
|
|
Accrual of paid in kind dividend on cumulative preferred shares
|
|
|
44,605
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(44,605
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Foreign currency translation adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,242
|
)
|
|
|
—
|
|
|
|
(6,242
|
)
|
|
|
10
|
|
|
|
(6,232
|
)
|
|
Pension and postretirement plans, net of tax benefit of $5,415
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11,238
|
)
|
|
|
—
|
|
|
|
(11,238
|
)
|
|
|
—
|
|
|
|
(11,238
|
)
|
|
Derivatives valuation, net of tax expense of $1,067
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,980
|
|
|
|
—
|
|
|
|
1,980
|
|
|
|
—
|
|
|
|
1,980
|
|
|
Shares repurchased
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(270
|
)
|
|
|
(270
|
)
|
|
|
—
|
|
|
|
(270
|
)
|
|
Unrealized gain on available for sale equity securities, net of tax expense of $101
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
189
|
|
|
|
—
|
|
|
|
189
|
|
|
|
—
|
|
|
|
189
|
|
|
Dividend paid to non-controlling interest partner
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(677
|
)
|
|
|
(677
|
)
|
|
Dividend paid on preferred stock
|
|
|
(27
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(27
|
)
|
|
|
—
|
|
|
|
(27
|
)
|
|
Assignment of value for non controlling interest in business acquisition
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
447
|
|
|
|
447
|
|
|
Sale of noncontrolling interest in subsidiary
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
$
|
525,027
|
|
|
$
|
50,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,318
|
|
|
$
|
(273,086
|
)
|
|
$
|
(30,270
|
)
|
|
$
|
(1,264
|
)
|
|
$
|
272,725
|
|
|
$
|
(288
|
)
|
|
$
|
272,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-29
|
1.
|
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Business
Description
—MacDermid, Incorporated and its subsidiaries (collectively, “MacDermid” or “the Company”) was established in Waterbury, Connecticut, in 1922. The terms “MacDermid” or “the Company” shall,
unless the context otherwise requires, be deemed to include the consolidated entity. MacDermid Holdings, LLC, is a Delaware limited liability company organized as a holding company with the sole purpose of being the primary shareholder of its
consolidated operating subsidiary MacDermid. MacDermid Holdings, LLC has no business operations or material assets or liabilities other than its ownership interest of 96.9% of the ordinary shares and 96.7% of the preferred stock in MacDermid as of
December 31, 2012. Participants of the MacDermid, Incorporated Profit Sharing and Employee Savings Plan (the “Savings Plan”) owned 3.1% of the ordinary shares and 3.3% of the preferred stock in MacDermid as of December 31, 2012. These
shares have substantially the same terms as the MacDermid Holdings, LLC common and preferred units. The Company develops, produces and markets a broad line of specialty chemical and printing products that are used worldwide. These products are
supplied to the metal and plastic finishing markets (for automotive and other applications), the electronics industry (to create electrical patterns on circuit boards), the offshore oil and gas markets (for oil production) and to the commercial
printing and packaging industries (for image transfer applications). The Company’s products are delivered primarily to customers directly or secondarily through distributors.
Merger Transaction
—On April 12, 2007, Daniel H. Leever, MacDermid’s Chairman and Chief Executive Officer, together with Court
Square Capital Partners II LP (“Court Square or CSC”), a related party, Weston Presidio, a related party and certain other members of the Company’s management acquired the ordinary shares of predecessor MacDermid, Incorporated
(“predecessor”). See Note 2 below for further information. The accompanying financial statements include the accounts of the surviving Company.
Principles of Consolidation
—The accompanying consolidated financial statements include the accounts of MacDermid and all of its
majority-owned domestic and foreign subsidiaries. All intercompany accounts and transactions were eliminated in consolidation.
Use of
Estimates
—In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), Company management must undertake decisions that impact the
reported amounts and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and also assumptions upon which accounting estimates are based. The Company applies judgment based on its
understanding and analysis of the relevant circumstances to reach these decisions. By their nature, these judgments are subject to an inherent degree of uncertainty. Accordingly, actual results could differ significantly from the estimates applied.
Significant items subject to such estimates and assumptions include the useful lives of fixed assets; allowances for doubtful accounts and sales returns, deferred tax assets, inventory, inventory valuation,
share-based
compensation, reserves for employee benefit obligations, environmental liabilities, income tax uncertainties and other contingencies.
Cash and Cash Equivalents
—For the purpose of the Consolidated Statements of Cash Flows, MacDermid considers all highly liquid
instruments purchased with an initial maturity of three months or less to be cash equivalents.
Credit Risk
Management
—MacDermid’s products are sold primarily to the automotive, electronics and printing industries. This level of concentration exposes the Company to certain collection risks which are subject to a variety of factors, including
economic and technological change within these industries. As is common industry practice, MacDermid generally does not require collateral or other security as a condition of sale, rather relying on credit approval, balance limitation and monitoring
procedures to control credit risk on trade accounts receivable. The Company establishes reserves against possible uncollectible amounts based on historical experience and specific knowledge regarding customers’ ability to pay.
Derivatives
—The Company used an interest rate swap and an interest rate collar to manage risks associated with changes in interest
rates. The Company entered into the interest rate swap and an interest rate collar to
F-30
hedge against the effect of changes in interest rates on floating rate debt. These transactions were designed as cash flow hedges. The Company also uses forward and option contracts to manage
risks generally associated with foreign exchange rate volatility. Company management will enter into foreign exchange forward and option contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign
currencies. These transactions are designated as cash flow hedges. When these contracts are settled, the associated difference between the settlement amount and contracted amount is recognized in earnings.
The Company accounts for each hedge instrument as either an asset or liability measured at its fair value in the Consolidated Balance Sheets,
with changes in the fair value of qualifying hedges recorded in accumulated other comprehensive income (loss), a component of stockholders’ equity. The Company records the changes in a derivative’s fair value in earnings unless specific
accounting criteria related to hedging are met. The Company formally documents, designates and assesses the effectiveness of transactions that receive hedge accounting treatment. Currently, all of the Company’s cash flow hedge contracts are
deemed effective. The settlement of these derivatives will result in reclassifications from accumulated other comprehensive (loss) income to earnings in the period during which the hedged transactions affect earnings.
While the Company expects that its derivative instruments will continue to meet the conditions for hedge accounting, if the hedges did not
qualify as highly effective or if the Company did not believe that forecasted transactions would occur, the changes in the fair value of the derivatives designated as hedges would be reflected immediately in earnings.
Inventories
—Inventories are stated at the lower of average cost or market. The Company regularly reviews inventories for
obsolescence and calculates a reserve based on historical write-offs, customer demand, product evolution, usage rates and quantities of stock on hand. Inventory in excess of estimated usage requirements is written down to its estimated net
realizable value.
Property, Plant and Equipment
—Property, plant and equipment are stated at cost less accumulated
depreciation. MacDermid records depreciation on a straight-line basis over the estimated useful life of each asset. Estimated useful lives by asset class are as follows:
|
|
|
|
|
Furniture, fixtures, automobiles, computers, etc
|
|
3 to 5 years
|
|
Machinery and equipment
|
|
5 to 15 years
|
|
Buildings
|
|
20 years
|
|
Building improvements
|
|
15 to 20 years
|
|
Leasehold improvements
|
|
lesser of useful life or lease life
|
Maintenance and repair costs are charged directly to expense; renewals and betterments which significantly
extend the useful life of the asset are capitalized. Costs and accumulated depreciation on assets, retired or disposed of, are removed from the accounts and any resulting gains or losses are recorded to earnings in the period of disposal.
Goodwill and Indefinite-Lived Purchased Intangible Assets
—Goodwill represents the excess of the purchase price over the fair value
of the identifiable net assets of an acquired business. The Company does not amortize goodwill and other intangible assets that have indefinite useful lives; rather, goodwill and other intangible assets with indefinite lives are tested for
impairment. Goodwill is tested for impairment at the reporting unit level annually, or when events or changes in circumstances indicate that goodwill might be impaired. The Company’s annual test for goodwill impairment is performed as of
April
1
st
, utilizing a two-step impairment test procedure for each of our reporting units. In the first step of impairment testing, the fair
value of each reporting unit is compared to its carrying value. The fair value of a reporting unit is determined based on the present value of estimated discounted future cash flows. If the fair value of the reporting unit exceeds the carrying value
of the net assets assigned to that reporting unit, goodwill is not impaired, and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the second
F-31
step of the impairment test must be performed to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its
implied fair value, an impairment loss is recorded equal to the difference.
Indefinite-lived intangible assets are reviewed for potential
impairment on an annual basis, or when events or changes in circumstances indicate that indefinite-lived intangible assets might be impaired. Indefinite-lived intangible assets are reviewed for impairment at the reportable business unit level for
which identifiable revenues are reported. The Company’s annual test for indefinite-lived intangible assets impairment is performed as of April
1
st
. Indefinite-lived intangible assets are reviewed for impairment by comparing the estimated fair value of the indefinite-lived purchased intangible assets to the carrying value. The estimated fair
value of these intangible assets is determined using the “relief from royalty” approach. An impairment loss is recognized when the estimated fair value of an indefinite-lived intangible asset is less than the carrying value.
Long-lived Assets Including Finite-Lived Purchased Intangible Asset
—Finite-lived intangible assets such as developed technology
and customer lists are amortized on a straight-line basis over their estimated useful lives, which are currently ten years for developed technology and range between three and twenty one years for customer lists. The Company evaluates long-lived
assets, such as property, plant and equipment and purchased intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. If circumstances require a
long-lived asset group to be tested for possible impairment, the Company first determines if the estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any,
are less than the carrying value of the asset. When an impairment is identified, the carrying amount of the asset is reduced to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable
market values.
Asset Retirement Obligations
—MacDermid records the fair value of legal obligations associated with the
retirement of tangible long-lived assets in the period in which they are determined to exist, if a reasonable estimate of fair value can be made. Upon initial recognition of a liability, the Company capitalizes the cost of the asset retirement
obligation by increasing the carrying amount of the related long-lived asset. Over time, the liability is increased for changes in its present value and the capitalized cost is depreciated over the useful life of the related asset.
Employee Benefits
—MacDermid sponsors a variety of employee benefit programs, some of which are non-contributory. The accounting
policies used to account for these plans are as follows:
Retirement
—MacDermid provides non-contributory defined benefit plans
to domestic and certain foreign employees. The projected unit credit actuarial method is used for financial reporting purposes. The Company recognizes the funded status; the difference between the fair value of the plan assets and the projected
benefit obligation (pension plans) or the accumulated postretirement benefit obligation (other postretirement plan) in its Consolidated Balance Sheets. The Company’s funding policy for qualified plans is consistent with federal or other local
regulations and customarily equals the amount deductible for federal and local income tax purposes. Foreign subsidiaries contribute to other plans, which may be administered privately or by government agencies in accordance with local regulations.
MacDermid also provides the defined contribution Savings Plan (401(a), (k) and 501(a)) for substantially all domestic employees. MacDermid may make discretionary contributions to the Savings Plan, but there were no discretionary contributions made
to the Savings Plan during the years ended December 31, 2012 and 2011.
Post-retirement
—MacDermid currently accrues for
post-retirement health care benefits for U.S. employees hired prior to April 1, 1997. The post-retirement health care plan is unfunded.
Post-employment
—MacDermid currently accrues for post-employment disability benefits to United Kingdom (“U.K.”) employees
meeting specified service requirements. The post-employment benefits plan is unfunded.
F-32
Financial Instruments
—The Company’s financial instruments consist primarily of
cash and cash equivalents, accounts receivable, investments, accounts payable and current and long-term debt. The Company believes that the carrying value of the cash and cash equivalents, accounts receivable and accounts payable are representative
of their respective fair values. Available for sale equity investments are carried at fair value with net unrealized gains or losses reported as a component of accumulated other comprehensive (loss) income. See Note 13 for the fair value of the
Company’s financial instruments.
Foreign Operations
—The assets and liabilities of MacDermid’s foreign subsidiaries
are translated into U.S. dollars using foreign currency exchange rates prevailing as of the balance sheet dates. Revenue and expense accounts are translated at weighted-average foreign currency exchange rates for the periods presented. Cumulative
currency translation adjustments are included in accumulated other comprehensive income (loss) in the stockholders’ equity section of the Consolidated Balance Sheets. Gains and losses realized from foreign currency transactions are included in
miscellaneous income (expense) in the Consolidated Statements of Operations.
Revenue Recognition
—MacDermid recognizes
revenue, including freight charged to customers, when the earnings process is complete. This occurs when products are shipped to or received by the customer in accordance with the terms of the agreement, title and risk of loss have been transferred,
collectability is probable and pricing is fixed or determinable. Shipping terms are customarily “FOB shipping point” and do not include right of inspection or acceptance provisions. Equipment sales arrangements may include right of
inspection or acceptance provisions, in which case revenue is deferred until these provisions are satisfied.
Cost of
Sales
—Cost of sales consists primarily of raw material costs and related purchasing and receiving costs used in the manufacturing process, direct salary and wages and related fringe benefits, packaging costs, shipping and handling costs,
plant overhead and other costs associated with the manufacture and distribution of MacDermid’s products.
Selling, technical and
administrative expenses
—Selling, technical and administrative expenses consist primarily of personnel and travel costs, advertising and marketing expenses, administrative expenses associated with accounting, finance, legal, human resource,
risk management and overhead associated with these functions.
Research and development
—Research and development costs are
expensed as incurred.
Amortization
—Amortization expense represents the expense of finite-lived intangible assets expensed
over a straight-line basis based upon their estimated useful lives. As of December 31, 2012, the net carrying amount of the Company’s customer list intangible assets with differing useful lives are as follows:
|
|
|
|
|
|
|
Non-compete agreement (useful life of one year)
|
|
$
|
22
|
|
|
License agreement (useful life of five years)
|
|
$
|
96
|
|
|
Developed technology (useful lives of ten years)
|
|
$
|
35,877
|
|
|
Customer list intangible assets (useful lives of three to nine years)
|
|
$
|
16,301
|
|
|
Customer list intangible assets (useful lives of 12 to 13 years)
|
|
$
|
28,216
|
|
|
Customer list intangible assets (useful lives of 20 to 21 years)
|
|
$
|
112,843
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
193,355
|
|
|
|
|
|
|
|
Income Taxes
–The provision for income taxes includes federal, foreign, state and local income
taxes currently payable by the Company. Deferred income taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax basis of assets and liabilities. Deferred taxes are not provided on
the undistributed earnings of subsidiaries operating outside the United States of America (“U.S.”) that are determined to be permanently reinvested.
F-33
Equity-based Compensation Plans
—MacDermid granted Class A Junior Shares (“A
Shares”) to employees who invested funds in the Company. The A Shares are accounted for by using the fair value method of accounting for all equity-based compensation. The resulting expense is amortized over the period in which the A Shares
vest. MacDermid granted Class B Junior Performance Shares (“B Shares”) to senior management employees in 2008. The B Shares are accounted for by using the fair value method of accounting for all equity-based compensation. The resulting
expense is amortized over the period in which the B Shares vest. See Note 8 for further information regarding the Company’s equity compensation plans.
New Accounting Standards
—In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement.” This ASU clarifies
the concepts related to highest and best use and valuation premise, blockage factors and other premiums and discounts, the fair value measurement of financial instruments held in a portfolio and of those instruments classified as a component of
shareowners’ equity. The guidance includes enhanced disclosure requirements about recurring Level 3 fair value measurements, the use of nonfinancial assets, and the level in the fair value hierarchy of assets and liabilities not recorded at
fair value. The provisions of this ASU are effective prospectively for interim and annual periods beginning on or after December 15, 2011. The Company adopted the amendments in this ASU effective January 1, 2012, and the initial adoption
of the amendments in this ASU did not have a significant impact on the Company’s consolidated financial statements.
In June 2011,
the FASB issued ASU No. 2011-05, “Comprehensive Income.” This ASU intends to enhance comparability and transparency of other comprehensive income components. The guidance provides an option to present total comprehensive income, the
components of net income and the components of other comprehensive income in a single continuous statement or two separate but consecutive statements. This ASU eliminates the option to present other comprehensive income components as part of the
statement of changes in shareholders’ equity. The provisions of this ASU will be applied retrospectively for interim and annual periods beginning after December 15, 2011. Early application is permitted. The Company adopted the amendments
in this ASU in the fourth quarter of 2011. Since this standard impacts presentation and disclosure requirements only, the adoption of the amendments in this ASU did not have a significant impact on the Company’s consolidated results of
operations or financial condition.
In September 2011, the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment”.
This ASU allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under this new ASU, if a company chooses the qualitative method, an entity would
not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The provisions of this ASU are
effective prospectively for interim and annual impairment tests performed for fiscal years beginning after December 15, 2011. Early application is permitted. The Company adopted the amendments in this ASU effective January 1, 2012,
and the initial adoption of the amendments in this ASU did not have a significant impact on the Company’s consolidated financial statements.
In July 2012, the FASB issued ASU No. 2012-02,
Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived
Intangible Assets for Impairment
. The guidance in this ASU is intended to reduce complexity and costs of the annual impairment tests for indefinite-lived intangible assets by providing entities with the option of performing a qualitative
assessment to determine whether further impairment testing is necessary. The amendments in this ASU include examples of events and circumstances that might indicate that an asset’s fair value is less than its carrying value. The amendments in
this ASU are effective for annual and interim indefinite-lived intangible assets impairment tests performed for fiscal years beginning after September 15, 2012 with early adoption permitted. The Company does not expect the adoption of the
amendments in this ASU to have a significant impact on the Company’s consolidated financial statements.
F-34
|
2.
|
MERGER AND CHANGE IN BASIS OF ACCOUNTING
|
On April 12, 2007, MacDermid completed a
management led leveraged buyout of the predecessor company. This transaction resulted in MacDermid having an entirely new and significantly different capital structure. Subsequent to the transaction date of April 12, 2007, the Company recorded
purchase adjustments related to the Company’s balances of land, buildings, equipment, goodwill and intangible assets based on the fair value at the time of the transaction and with the assistance of an outside valuation firm.
|
3.
|
ACQUISITION OF BUSINESS
|
During the quarter ended March 31, 2012, the Company acquired
95% of the stock of a chemical business located in Brazil. This business was acquired to complement the service and product offerings within Brazil and its balance sheet and results of operations have been integrated into the Performance Materials
segment. The total purchase price was approximately $8,877. At December 31, 2012, approximately $2,783 remains payable to the former owners of the acquired business. The payable represents the estimated fair value of contingent consideration
expected to be payable in the event that the acquired business achieves specific performance metrics over the next year. Assets and liabilities of the acquired business were included in the consolidated balance sheets as of December 31, 2012 based
on their estimated fair value on the date of acquisition as determined in a purchase price allocation, using available information and making assumptions MacDermid believes are reasonable. The Company’s allocation of purchase price for this
acquisitions included current assets of approximately $2,035, property, plant and equipment of approximately $1,884, goodwill of approximately $1,940 and intangible assets of $3,018. The total amount of goodwill that is expected to be deductible for
tax purposes is $0. Of the $3,018 of acquired intangible assets, $467 was assigned to registered trademarks that are not subject to amortization. The remaining $2,551 of acquired intangible assets has a weighted-average useful life of approximately
six years. The intangible assets that make up that amount include customer lists of $2,095 (seven year useful life), licensing agreement of $142 (five year useful life), and non-compete agreement assets of $314 (one year useful life).
The Company recorded impairment losses to goodwill, intangibles and
property, plant, and equipment as summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Goodwill
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Graphic Solutions
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total goodwill impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
—
|
|
|
|
46,438
|
|
|
Graphic Solutions
|
|
|
—
|
|
|
|
—
|
|
|
Corporate
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other intangible asset impairment
|
|
|
—
|
|
|
|
46,438
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
—
|
|
|
|
—
|
|
|
Graphic Solutions
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total asset impairment charges
|
|
$
|
—
|
|
|
$
|
46,438
|
|
|
|
|
|
|
|
|
|
|
|
F-35
2012
In
2012, there was no impairment of goodwill, intangible or property, plant and equipment assets.
2011
During the year ended December 31, 2011, the Company recorded $46,438 of impairment charges related to a write down of customer list intangible
assets in its Performance Materials Asia reporting unit to their estimated fair values. During the third quarter of 2011, the Company concluded that certain indicators were present suggesting a potential impairment of the customer list intangible
assets of the Performance Materials Asia reporting unit. The indicators of this potential impairment included:
|
|
•
|
|
Recent reductions in gross profit margins of certain products;
|
|
|
•
|
|
Increases in raw material prices used in our manufacturing process that were difficult to pass along to customers;
|
|
|
•
|
|
Increased pricing pressure for certain of our products from competitors and Customers reluctance to accept product price increases and our reluctance to continue selling certain products, which require technical
support, at low margin levels
|
Based upon the above indicators the Company evaluated its customer list intangible assets for
potential impairment in the third quarter of 2011. The Company utilized an “income approach” method to test the Performance Materials Asia customer list intangible assets for impairment. In step one of the impairment testing, the Company
compared the carrying amounts of the Performance Materials Asia customer list intangible assets to the undiscounted cash flows expected to be generated from the use and eventual disposition of the customer list intangible assets over their remaining
useful lives. Four of the Company’s businesses in the Performance Materials Asia reporting unit passed the first step of our testing procedures, with significant headroom. Two of the Company’s businesses in the Performance Materials Asia
reporting unit failed the first step of the testing procedures; therefore, the Company performed the second step of its impairment testing procedures. In the second step of the testing procedures, the estimated fair value of the Performance
Materials Asia customer list intangible assets was determined by estimating the after-tax cash flows attributable the assets and then discounting these cash flows to their present values using a risk-adjusted discount rate. The cash flow model
utilized in the customer list intangible asset impairment test involves significant judgments related to future growth rates, discount rates and tax rates, among other considerations. The Company’s step two testing procedures indicated that
customer list intangible assets of two of its businesses in the Performance Materials Asia reporting unit were impaired because the carrying value of these assets exceeded their estimated fair value by $46,438.
In 2011, there was no impairment of goodwill or property, plant and equipment assets.
The major components of inventory were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Finished goods
|
|
$
|
46,820
|
|
|
$
|
46,142
|
|
|
Raw materials and supplies
|
|
|
27,657
|
|
|
|
26,535
|
|
|
Equipment
|
|
|
1,616
|
|
|
|
2,509
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventory, net
|
|
$
|
76,093
|
|
|
$
|
75,186
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012 and 2011, the reserve for inventory was $9,326 and $9,611, respectively.
F-36
|
6.
|
PROPERTY, PLANT AND EQUIPMENT
|
The major components of property, plant and equipment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Land and improvements
|
|
$
|
27,129
|
|
|
$
|
23,900
|
|
|
Buildings and improvements
|
|
|
63,979
|
|
|
|
61,394
|
|
|
Machinery, equipment and fixtures
|
|
|
98,401
|
|
|
|
87,838
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
189,509
|
|
|
|
173,132
|
|
|
Less accumulated depreciation
|
|
|
(89,118
|
)
|
|
|
(76,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment, net
|
|
$
|
100,391
|
|
|
$
|
96,916
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2012 and 2011, the Company recorded depreciation expense of $15,093 and $18,167,
respectively.
|
7.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
The following table presents goodwill allocated to the reportable
segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable Segment
|
|
|
Total
|
|
|
|
|
Performance
Materials
|
|
|
Graphic Solutions
|
|
|
|
Balance as of January 1, 2011
|
|
$
|
449,003
|
|
|
|
28,480
|
|
|
|
477,483
|
|
|
Foreign currency adjustments
|
|
|
2,402
|
|
|
|
—
|
|
|
|
2,402
|
|
|
Revisions
|
|
|
(5,304
|
)
|
|
|
—
|
|
|
|
(5,304
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill balance at December 31, 2011
|
|
|
446,101
|
|
|
$
|
28,480
|
|
|
$
|
474,581
|
|
|
Foreign currency adjustments
|
|
|
(289
|
)
|
|
|
—
|
|
|
|
(289
|
)
|
|
Additions due to business acquisition
|
|
|
1,940
|
|
|
|
—
|
|
|
|
1,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill balance at December 31, 2012
|
|
$
|
447,752
|
|
|
$
|
28,480
|
|
|
$
|
476,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated goodwill impairment related to the Performance Materials reporting segment as of December 31, 2012 and 2011 was
$57,515.
Intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|
|
Customer lists
|
|
$
|
276,480
|
|
|
$
|
(119,120
|
)
|
|
$
|
157,360
|
|
|
$
|
272,336
|
|
|
$
|
(100,129
|
)
|
|
$
|
172,207
|
|
|
Developed technology
|
|
|
83,760
|
|
|
|
(47,883
|
)
|
|
|
35,877
|
|
|
|
83,318
|
|
|
|
(39,298
|
)
|
|
|
44,020
|
|
|
License agreement
|
|
|
117
|
|
|
|
(21
|
)
|
|
|
96
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Non-compete agreement
|
|
|
259
|
|
|
|
(237
|
)
|
|
|
22
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Trade names
|
|
|
58,417
|
|
|
|
—
|
|
|
|
58,417
|
|
|
|
57,878
|
|
|
|
—
|
|
|
|
57,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
419,033
|
|
|
$
|
(167,261
|
)
|
|
$
|
251,772
|
|
|
$
|
413,532
|
|
|
$
|
(139,427
|
)
|
|
$
|
274,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2012 and 2011, the Company recorded amortization expense on intangible assets of $27,100 and
$28,578, respectively.
F-37
Estimated future amortization of intangible assets is as follows:
|
|
|
|
|
|
|
Year end
|
|
|
|
|
2012
|
|
$
|
27,072
|
|
|
2013
|
|
|
27,050
|
|
|
2014
|
|
|
22,689
|
|
|
2015
|
|
|
20,767
|
|
|
2016
|
|
|
14,665
|
|
|
Thereafter
|
|
|
81,112
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
193,355
|
|
|
|
|
|
|
|
|
8.
|
EQUITY COMPENSATION PLANS
|
On April 13, 2007, MacDermid authorized and issued
2,150,000 A Shares to employees who purchased both preferred and common shares of MacDermid, Incorporated as part of a $7,000 management buy-in of both preferred and common shares of MacDermid, Incorporated at the time of the Merger. Under the
existing terms of the A Shares, vesting of the A Shares occurs evenly over a five year period and requires continued employment. Forfeited A Shares can be reissued at the Board of Directors’ discretion. Holders of the A Shares are not entitled
to any dividends at the time that they vest. However, holders of vested A Shares are entitled to distributions if declared by the board of directors of MacDermid Holdings, LLC. Any such distributions, when declared, would be paid in the order of
priority specified in the MacDermid Holdings, LLC operating agreement. Redemption value of the A Shares is based on a sliding formula which takes into account the final valuation of MacDermid at a “liquidity event”, such as an initial
public offering or sale of the Company. At the point of the liquidity event, the A Shares will be liquidated in their order of priority or seniority, as compared to each of the Company’s debt and equity instruments. If during the liquidity
event, there are not enough proceeds to redeem the Company’s debt and equity instruments with senior claims, then the A Shares may potentially have a $0 value.
The A Shares were valued at $1.00 per share for equity compensation expense purposes. The Company determined the estimated fair value of the A
Shares as of the date of grant based upon the issuance price of the ordinary shares in connection with the Merger, which was determined based on various factors including the lack of liquidity of the ordinary shares, the general and industry
specific economic outlook and the relative rights of the holders of capital stock of the Company and MacDermid Holdings, LLC to receive assets of the Company upon a liquidation event. A key assumption in determining the value of the A Shares was
that the Company would attain the performance metrics required for full vesting of the B Shares because the number of B Shares vested at the time of any liquidation event would impact the amount of assets available for distribution to the
A Shares upon such liquidation event. None of the specific terms of the A Shares, other than their vesting terms and the rights of the holders of the A Shares in a liquidation event relative to the rights of the holders of the common shares,
preferred shares and B Shares, impact the fair value of the A Shares. The issuance of the A Shares was designed to compensate certain of the Company’s employees for their long-term commitment to the Company and, in a liquidation event, to
permit employees to share in the value of equity in the Company.
As the A Shares vest, the Company records equity based compensation
expense and the number of vested A Shares reflected on the balance sheet is increased. For the years ended December 31, 2012 and 2011, the Company recorded equity based compensation expense of $65 and $390, respectively, based upon the
vesting of the A Shares. The Company did not receive any funds upon the vesting of the A Shares. The total intrinsic value of A Shares exercised for the years ended December 31, 2012 and 2011, was $0. As of December 31, 2012 and 2011,
there was $11 and $155, respectively, of unrecognized compensation cost related to the A Shares, which is expected to be recognized over a weighted average remaining period of approximately 0.9 years. As of December 31, 2012 and 2011, there were
1,880,192 and 1,571,225 vested A Shares, respectively.
F-38
The following table presents the activity in the non-vested A Shares:
|
|
|
|
|
|
|
|
|
|
|
A Shares:
|
|
A Shares
|
|
|
Weighted Average
Grant Date Fair Value
|
|
|
Outstanding non-vested balance at January 1, 2011
|
|
|
787,505
|
|
|
$
|
1.00
|
|
|
Changes during the period:
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(945
|
)
|
|
|
|
|
|
Vested
|
|
|
(393,755
|
)
|
|
|
|
|
|
Granted
|
|
|
10,000
|
|
|
|
|
|
|
Outstanding non-vested balance at December 31, 2011
|
|
|
402,805
|
|
|
$
|
1.00
|
|
|
Changes during the period:
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(64,621
|
)
|
|
|
|
|
|
Vested
|
|
|
(319,586
|
)
|
|
|
|
|
|
Granted
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding non-vested balance at December 31, 2012
|
|
|
18,598
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
On April 13, 2007, MacDermid authorized 1,620,000 B Shares for issuance. In May 2008, the Company issued
1,364,000 B Shares. The B Shares carry a vesting period of one to four years as well as performance requirements when issued. The Company’s Board of Directors issued the B Shares as a future compensation tool, using a valuation based method,
during their annual Compensation and Equity meeting, held at the time of the financial review for the previous fiscal year’s earnings. The Company’s Board of Directors has no further obligation to issue B Shares to any employee of the
Company and further issuance of B Shares is at the discretion of the Company’s Board of Directors.
The B Shares were adjusted by
resolution of the Board on February 28, 2011, subject to MacDermid Holdings, LLC member consent, to take into account the divestitures and acquisitions by the Company since 2007 and the difficult global economic conditions that occurred in 2009.
MacDermid Holdings, LLC member consent was completed on April 4, 2011. The change resulted in the reinstatement of shares previously forfeited under the former performance metrics. As a result of the modification of the performance metrics, the
estimated fair value of the awards was determined at the date of modification. At the date of modification, the Company considered numerous objective and subjective factors, including liquidation scenarios and their respective dates and
probabilities based upon management’s best estimates. As a result of the analysis, the estimated fair value at the date of modification was approximately $842. The Company determined the estimated fair value of the B Shares as of the
modification date to be $0.67 per share based upon a stock valuation model of the Company’s ordinary shares on the modification date of the B Shares. The stock valuation model that the Company utilized and that was used to estimate the fair
value of the B Shares considered a number of factors including operating and financial performance, the lack of liquidity of the Company’s ordinary shares and the relative rights of the holders of capital stock of the Company and MacDermid
Holdings, LLC to receive assets of the Company upon a liquidation event. The key assumptions and estimates in determining the value of the B Shares were (1) the assumption that the Company would attain the modified performance metrics required for
full vesting of the B Shares and (2) the estimation of the fair value of the Company’s ordinary shares on the modification date of the B Shares. None of the specific terms of the B Shares, other than their vesting terms and the rights of the
holders of the B Shares in a liquidation event relative to the rights of the holders of the common shares, preferred shares and A Shares, impact the fair value of the B Shares. The issuance of the B Shares was designed to compensate certain of the
Company’s employees for their long-term commitment to the Company, motivate sustained increases in the Company’s financial performance and, in a liquidation event, permit employees to share in the value of equity in the Company.
The B Shares will vest ratably on each of March 31, 2011, 2012, 2013, 2014 and 2015 (each, a “Vesting Date”) if the Company attains
the modified performance metrics with respect to the calendar year immediately prior to the year of the applicable Vesting Date (a “Performance Vesting Target”). The B Shares can also be adjusted from time to time with the approval of
Court Square to take into consideration any divestitures or acquisitions by the Company occurring during such year (a “Modified Performance Vesting Target”). If the
F-39
Company does not attain the Performance Vesting Target for any of calendar years 2010, 2011, 2012 or 2013, but does attain the Performance Vesting Target for the immediately subsequent calendar
year, then, such prior year’s Performance Vesting Target shall be deemed satisfied and such ratable portion of the B Shares that did not vest with respect to the prior calendar year shall vest on the Vesting Date for the then applicable period
or upon a change of control (as defined in the MacDermid Holdings, LLC operating agreement), subject to holders of the Company’s preferred shares, common shares and A Shares having received certain threshold amounts in connection with the
change of control. If the B Shares have not vested upon the earlier of March 31, 2015 or the date of the consummation of the change of control, any B Shares that have not vested shall be forfeited to the Company and shall cease to be outstanding.
Holders of the B Shares are not entitled to any dividends at the time that they vest. However, holders of vested B Shares are entitled to distributions if declared by the board of directors of MacDermid Holdings, LLC. Any such distributions, when
declared, would be paid in the order of priority specified in the MacDermid Holdings, LLC operating agreement.
The Performance Vesting
Targets required for ratable vesting of the B Shares on the applicable Vesting Date are (1) EBITDA (as defined in the MacDermid Holdings, LLC operating agreement) for calendar year 2011 of at least $150 million; (2) EBITDA for calendar year 2012 of
at least $162 million; (3) EBITDA for calendar year 2013 of at least $172 million; and (4) EBITDA for calendar year 2014 of at least $185 million.
As the B Shares vest, the Company records equity based compensation expense and the number of vested B Shares reflected on the balance
sheet is increased. During 2011, under the modified performance metrics noted above, 20% of the B Shares vested based upon the Company’s operating results of 2010. Additionally, the Company’s EBITDA for calendar year 2011 exceeded $150
million. As a result, stock compensation expense related to the vesting of the B Shares was $337 for the year ended December 31, 2011. The Company’s EBITDA for calendar year 2012 exceeded $162 million. As a result, stock compensation expense
related to the vesting of the B Shares was $97 for the year ended December 31, 2012. The Company did not receive any funds upon the vesting of the B Shares. As of December 31, 2012, there was potentially $280 of unrecognized compensation cost
related to the B Shares, which would be recorded if the performance metrics are achieved. If the performance metrics are achieved each year for the years 2013 and 2014, stock based compensation of $140 would be recognized each year. As of December
31, 2012 and 2011, there were 411,576 and 249,388 vested B Shares, respectively.
The A Shares and B Shares have no redemption value as of
December 31, 2012 or December 31, 2011, as the redemption value of each is contingent upon liquidation or dissolution of MacDermid Holdings, LLC, as described in the operating agreement governing that entity.
The following table presents the activity in the non-vested B Shares:
|
|
|
|
|
|
|
|
|
|
|
B Shares:
|
|
B Shares
|
|
|
Weighted
Average Grant
Date Fair Value
|
|
|
Nonvested balance at January 1, 2011
|
|
|
757,140
|
|
|
|
—
|
|
|
Changes during the period:
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
Canceled
|
|
|
—
|
|
|
|
—
|
|
|
Reinstated
|
|
|
489,800
|
|
|
$
|
0.67
|
|
|
Vested
|
|
|
(249,388
|
)
|
|
|
—
|
|
|
Granted
|
|
|
10,000
|
|
|
|
—
|
|
|
Nonvested balance at December 31, 2011
|
|
|
1,007,552
|
|
|
|
—
|
|
|
|
|
|
|
Changes during the period:
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(121,800
|
)
|
|
|
—
|
|
|
Vested
|
|
|
(232,688
|
)
|
|
|
—
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested balance at December 31, 2012
|
|
|
653,064
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
F-40
|
9.
|
PENSION, POST-RETIREMENT AND POST-EMPLOYMENT PLANS
|
The Company has multiple deferred
compensation arrangements, which are described below. The Company has defined benefit pension plans for certain domestic and foreign employees, a supplemental executive retirement plan (“SERP”) for executive officers and a post-employment
benefits program for certain domestic employees. Aggregate amounts charged to earnings for these plans for the years ended December 31, 2012 and 2011 was $3,209 and $1,873, respectively.
Domestic Defined Benefit Pension Plan
The Company has a non-contributory domestic defined benefit pension plan (“Pension Plan”), which provides retirement benefits based
upon years of service and compensation levels. At December 31, 2012 and 2011, the projected benefit obligation for the Pension Plan was $137,078 and $116,922, respectively. The measurement date used to determine pension and other postretirement
benefits is December 31st, at which time the minimum contribution level for the following year is determined. The Company expects to contribute pension funding requirements of $3,000 in 2013 and approximately $3,000 each of the four years
thereafter.
The Company’s investment policies incorporate an asset allocation strategy that emphasizes the long-term growth of
capital and acceptable asset volatility as long as it is consistent with the volatility of the relevant market indexes. The investment policies attempt to achieve a mix of approximately 75% of plan investments for long-term growth and 25% for
near-term benefit payments. The Company believes this strategy is consistent with the long-term nature of plan liabilities and ultimate cash needs of the plans. Plan assets consist primarily of corporate bond mutual funds, limited partnership
interests, listed stocks and cash. The corporate bond mutual funds held by the Pension Plan include primarily corporate bonds from companies from diversified industries located in the U.S. The listed stocks are investments in large-cap and mid-cap
companies located in the U.S. The assets from the private investment partnership funds primarily include listed stocks located in the U.S. The weighted average asset allocation of the Pension Plan was 17% equity securities, 61% limited partnership
interests and managed equity funds, 14% bond mutual fund holdings and 8% cash at December 31, 2012.
An investment committee, appointed by
the Board of Directors, manages Pension Plan assets in accordance with the Company’s investment policies. The investment committee meets at least four times per year to assess risk factors, rates of return, investment managers and asset
allocation limitations as prescribed by the committee’s investment policy statement. Return on asset (“ROA”) assumptions are determined annually based on a review of the asset mix as well as individual ROA performances, benchmarked
against indexes such as the S&P 500 Index and the Russell 2000 Index. In determining an assumed rate of return on plan assets, the Company considers past performance and economic forecasts for the types of investments held by the Pension Plan.
Actual pension expense and future contributions required to fund the Pension Plan will depend on future investment performance, changes
in future discount rates, the level of contributions the Company makes and various other factors related to the populations participating in the pension plan. The Company will continue to evaluate all of the actuarial assumptions, on an annual
basis, including the expected long-term rate of return on assets and discount rate, and will adjust the assumptions as necessary to ensure proper funding levels are maintained for the Pension Plan and that it can meet its long-term retirement
obligations.
Supplemental Executive Retirement Plan
The Company sponsors an unfunded Supplemental Executive Retirement Plan (“SERP”) for certain executive officers. The SERP is a
non-qualified plan and entitles executive officers to the difference between the benefits actually paid to them and the benefits they would have received under the Defined Benefit Domestic Pension Plan were it not for certain restrictions imposed by
the Internal Revenue Service Code, which relate to the amount of benefits payable under the SERP and the amount of annual compensation which may be taken into
F-41
account in determining benefits under the SERP. Covered compensation under the SERP includes an employee’s annual salary and bonus. At December 31, 2012 and 2011, the projected benefit
obligation was $7,276 and $4,537, respectively.
Foreign Pension Plans
MacDermid has retirement and death benefit plans (the “U.K. Pension Plan”) covering employees in the U.K. The U.K. Pension Plan is
comprised of a defined benefit plan and a defined contribution plan. The defined benefit plan is closed to new entrants and existing active members ceased accruing any further benefits exclusive of adjustments for an inflation factor. The defined
contribution plan is structured whereby the Company contributes an amount equal to a specified percentage of each employee’s contribution up to an annual maximum Company contribution per participant. The Company’s expense for matching
contribution was $560 and $526, respectively for the years ended December 31, 2012 and 2011.
The projected benefit obligation of the U.K.
Pension Plan was $68,564 and $61,804 at December 31, 2012 and 2011, respectively. The measurement date used to determine pension and other postretirement benefits is December 31st, at which time the minimum contribution level for the following year
is determined. The Company anticipates contribution pension funding requirements of approximately $4,874 in 2013 and $3,249 each of the four years thereafter. The plans’ assets consist primarily of pooled funds that invest in bonds, listed
stocks and property.
The weighted-average asset allocation of the U.K. Pension Plan as of December 31, 2012 was 31% pooled bond funds, 7%
pooled funds invested in real estate and 54% pooled equity funds and 8% cash. An independent trustee committee, appointed by both Company management and the employees in the U.K. Pension Plan, meets to assess risk factors, rates of return, and the
asset allocation limitations as prescribed by the committee’s investment policy statement. In addition, an annual review is conducted to ensure both (a) that proper funding levels are maintained for the plan; and (b) that the plan can meet its
long-term retirement obligations.
The Company also has retirement and death benefit plans covering employees in Taiwan and former
employees located in Germany. The Company also has longevity plans covering employees in France. The plans covering employees in Taiwan, Germany and France are not significant individually or in the aggregate to the overall consolidated financial
statements. Information for these plans, along with the U.K. Pension Plan previously mentioned, is included in the accompanying tables of pension benefits below in the “Foreign” labeled columns.
Certain other MacDermid foreign subsidiaries maintain benefit plans that are consistent with statutory practices but do not meet the criteria
for accounting rules under defined benefit plans under ASC 715-30 Compensation—Retirement Benefits—Defined Benefit Plans—Pensions. These benefit plans had obligation balances of $3,741 ($43 of short-term liabilities and $3,698 of
long-term liabilities) and $3,433 ($51 of short-term liabilities and $3,382 of long-term liabilities) as of December 31, 2012 and 2011, respectively, which are included in Other Current Liabilities and Retirement Benefits on the Consolidated Balance
Sheets and are excluded from the accompanying tables of pension benefits.
Domestic Defined Benefit Post-Retirement Medical and Dental Plan
The Company sponsors a defined benefit post-retirement medical and dental plan that covers all of its domestic full-time employees, hired prior
to April 1, 1997, who retire after age fifty-five, with at least ten to twenty years of service (depending upon the date of hire).
In
2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively, the “Health Care Acts”) were approved in the U.S. The Health Care Acts include several provisions that may affect a
company’s postretirement benefit plans. The Company has evaluated the effects of the Health Care Acts for 2010 and has concluded that there was no current impact on the Company’s domestic defined benefit post-retirement medical and dental
plans.
F-42
Eligible employees receive a subsidy from the Company towards the purchase of their retiree
medical benefits. The subsidy level is based on the date of retirement from MacDermid. The annual increase in the Company’s costs for post-retirement medical benefits is subject to a limit of 5% for those retiring prior to March 31, 1989 and 3%
for those retiring after April 1, 1989. Retirees will be required to contribute to the plan costs in excess of their respective Company limits stated above in addition to their other required contributions.
The projected benefit obligation for the post-retirement plan at December 31, 2012 was comprised of 34% retirees, 21% fully eligible active
participants and 45% other active participants. As described above, the annual increase in healthcare cost to MacDermid is subject to a defined limit of 3% or 5% for post-retirement medical benefits, based on the date of retirement; therefore, the
healthcare trend rate assumption has no effect on the amounts reported. There is no assumed rate increase for dental benefits because it is a scheduled plan.
Foreign Defined Benefit Post-Retirement Medical Plan
The Company has recorded the impact of a government sponsored defined benefit post-retirement medical plan that covers certain employees
located in Brazil. This plan was mandated by the Brazilian government in 2012 and the Company recorded the liability related to this plan during the year ended December 31, 2012.
Domestic Defined Benefit Post-Employment Compensation Plan
The Company sponsors a defined benefit post-employment compensation continuation plan that covers all full-time domestic employees. Employees
who have completed at least six months of service, and become permanently disabled and are unable to return to work, are eligible to receive a benefit under the plan. The benefit may range from one week to a maximum of six months of compensation.
The estimated ongoing after-tax annual cost is not material to the overall consolidated financial statements.
The components of net
periodic benefit cost of the pension, SERP and postretirement benefit plans with respect to the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
Pension & SERP Benefits:
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Net periodic benefit expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
3,647
|
|
|
$
|
678
|
|
|
$
|
2,982
|
|
|
$
|
654
|
|
|
Interest cost on the projected benefit obligation
|
|
|
6,096
|
|
|
|
3,096
|
|
|
|
5,806
|
|
|
|
3,262
|
|
|
Expected return on plan assets
|
|
|
(7,330
|
)
|
|
|
(4,478
|
)
|
|
|
(7,104
|
)
|
|
|
(4,314
|
)
|
|
Other adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Amortization of prior service cost
|
|
|
93
|
|
|
|
—
|
|
|
|
54
|
|
|
|
—
|
|
|
Amortization of net loss
|
|
|
601
|
|
|
|
508
|
|
|
|
(54
|
)
|
|
|
90
|
|
|
Cost of special event
|
|
|
—
|
|
|
|
68
|
|
|
|
—
|
|
|
|
—
|
|
|
Settlement (gain)/loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (benefit)
|
|
$
|
3,107
|
|
|
$
|
(128
|
)
|
|
$
|
1,684
|
|
|
$
|
(308
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
Postretirement medical benefits:
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Net periodic benefit expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
99
|
|
|
$
|
—
|
|
|
Interest cost on the projected benefit obligation
|
|
|
305
|
|
|
|
—
|
|
|
|
398
|
|
|
|
—
|
|
|
Amortization of prior service cost
|
|
|
(140
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
230
|
|
|
$
|
—
|
|
|
$
|
497
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-43
Other changes in plan assets and benefit obligations recognized in other comprehensive income
(loss) in 2012 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2012
|
|
|
|
|
Pension
|
|
|
Postretirement Medical
Benefits
|
|
|
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Total
|
|
|
Current year actuarial (loss)
|
|
$
|
(14,830
|
)
|
|
$
|
(1,792
|
)
|
|
$
|
(780
|
)
|
|
$
|
—
|
|
|
$
|
(17,402
|
)
|
|
Amortization of prior service credits
|
|
|
93
|
|
|
|
—
|
|
|
|
(139
|
)
|
|
|
(364
|
)
|
|
|
(410
|
)
|
|
Amortization of actuarial loss
|
|
|
601
|
|
|
|
576
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,177
|
|
|
Translation adjustment
|
|
|
—
|
|
|
|
(701
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in other comprehensive income (loss) (pre tax)
|
|
$
|
(14,136
|
)
|
|
$
|
(1,917
|
)
|
|
$
|
(919
|
)
|
|
$
|
(364
|
)
|
|
$
|
(17,336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company expects to recognize $2,259 of net actuarial loss and $18 of net prior service credit as a
component of net periodic pension cost in 2013 for its defined benefit plans.
The following tables set forth the components of the
pension and SERP with respect to the Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension & SERP Benefits
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Change in Projected Benefit Obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year balance
|
|
$
|
121,459
|
|
|
$
|
67,609
|
|
|
$
|
103,749
|
|
|
$
|
63,323
|
|
|
Service cost
|
|
|
3,647
|
|
|
|
678
|
|
|
|
2,982
|
|
|
|
654
|
|
|
Interest cost
|
|
|
6,096
|
|
|
|
3,096
|
|
|
|
5,806
|
|
|
|
3,262
|
|
|
Actuarial loss/(gain) due to assumption change
|
|
|
15,436
|
|
|
|
3,871
|
|
|
|
9,440
|
|
|
|
4,196
|
|
|
Actuarial loss/(gain) due to plan experience
|
|
|
1,492
|
|
|
|
530
|
|
|
|
2,582
|
|
|
|
(129
|
)
|
|
Benefits and expenses paid
|
|
|
(3,776
|
)
|
|
|
(3,570
|
)
|
|
|
(3,544
|
)
|
|
|
(3,124
|
)
|
|
Amendments
|
|
|
—
|
|
|
|
—
|
|
|
|
444
|
|
|
|
—
|
|
|
Settlement
|
|
|
—
|
|
|
|
(347
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Translation adjustment
|
|
|
—
|
|
|
|
3,129
|
|
|
|
—
|
|
|
|
(573
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year balance
|
|
$
|
144,354
|
|
|
$
|
74,996
|
|
|
$
|
121,459
|
|
|
$
|
67,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension & SERP Benefits
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Change in Fair Value of Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year balance
|
|
$
|
90,988
|
|
|
$
|
68,094
|
|
|
$
|
85,909
|
|
|
$
|
65,209
|
|
|
Actual return on plan assets, net of expenses
|
|
|
9,428
|
|
|
|
6,668
|
|
|
|
2,623
|
|
|
|
709
|
|
|
Employer contributions
|
|
|
6,000
|
|
|
|
5,086
|
|
|
|
6,000
|
|
|
|
5,260
|
|
|
Benefits paid
|
|
|
(3,776
|
)
|
|
|
(3,152
|
)
|
|
|
(3,544
|
)
|
|
|
(2,688
|
)
|
|
Settlement
|
|
|
—
|
|
|
|
(347
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Translation adjustment
|
|
|
—
|
|
|
|
3,290
|
|
|
|
—
|
|
|
|
(396
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year balance
|
|
$
|
102,640
|
|
|
$
|
79,639
|
|
|
$
|
90,988
|
|
|
$
|
68,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded Status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets
|
|
$
|
102,640
|
|
|
$
|
79,639
|
|
|
$
|
90,988
|
|
|
$
|
68,094
|
|
|
Benefit obligations
|
|
$
|
(144,354
|
)
|
|
$
|
(74,996
|
)
|
|
$
|
(121,459
|
)
|
|
$
|
(67,609
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status of plan
|
|
$
|
(41,714
|
)
|
|
$
|
4,643
|
|
|
$
|
(30,471
|
)
|
|
$
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-44
The following tables set forth the components of the post-retirement medical benefit plans with respect to the
Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Medical Benefits
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Change in Projected Benefit Obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year balance
|
|
$
|
6,028
|
|
|
$
|
—
|
|
|
$
|
7,168
|
|
|
$
|
—
|
|
|
Service cost
|
|
|
65
|
|
|
|
—
|
|
|
|
99
|
|
|
|
—
|
|
|
Interest cost
|
|
|
305
|
|
|
|
—
|
|
|
|
398
|
|
|
|
—
|
|
|
Employee contributions
|
|
|
271
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Actuarial loss/(gain) due to assumption change
|
|
|
625
|
|
|
|
—
|
|
|
|
(458
|
)
|
|
|
—
|
|
|
Actuarial loss/(gain) due to plan experience
|
|
|
155
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
364
|
|
|
|
—
|
|
|
|
—
|
|
|
Benefits and expenses paid
|
|
|
(635
|
)
|
|
|
—
|
|
|
|
(435
|
)
|
|
|
—
|
|
|
Amendments
|
|
|
—
|
|
|
|
—
|
|
|
|
(742
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year balance
|
|
$
|
6,814
|
|
|
$
|
364
|
|
|
$
|
6,028
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Medical Benefits
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Change in Fair Value of Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year balance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Employer contributions
|
|
|
364
|
|
|
|
—
|
|
|
|
435
|
|
|
|
—
|
|
|
Employee contributions
|
|
|
271
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Benefits paid
|
|
|
(635
|
)
|
|
|
—
|
|
|
|
(435
|
)
|
|
|
—
|
|
|
End of year balance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Funded Status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Benefit obligations
|
|
$
|
(6,814
|
)
|
|
$
|
(364
|
)
|
|
$
|
(6,028
|
)
|
|
$
|
—
|
|
|
Funded status of plan
|
|
$
|
(6,814
|
)
|
|
$
|
(364
|
)
|
|
$
|
(6,028
|
)
|
|
$
|
—
|
|
Amounts included in the balance sheet categories consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Prepaid pension assets
|
|
|
|
|
|
|
|
|
|
Foreign pension
|
|
|
9,261
|
|
|
|
4,506
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long term assets
|
|
$
|
9,261
|
|
|
$
|
4,506
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities
|
|
|
|
|
|
|
|
|
|
Domestic pension
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
3,000
|
|
|
$
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement benefits, less current portion
|
|
|
|
|
|
|
|
|
|
Domestic pension & SERP
|
|
|
38,714
|
|
|
|
27,471
|
|
|
Foreign pension
|
|
|
4,618
|
|
|
|
4,021
|
|
|
Domestic postretirement medical benefits
|
|
|
6,814
|
|
|
|
6,028
|
|
|
Foreign postretirement medical benefits
|
|
|
364
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
$
|
50,510
|
|
|
$
|
37,520
|
|
|
|
|
|
|
|
|
|
|
|
F-45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension & SERP Benefits
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Amounts Recognized in the Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement benefit (liability) asset
|
|
$
|
(41,714
|
)
|
|
$
|
4,643
|
|
|
$
|
(30,471
|
)
|
|
$
|
485
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
35,667
|
|
|
|
16,924
|
|
|
|
21,531
|
|
|
|
15,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(6,047
|
)
|
|
$
|
21,567
|
|
|
$
|
(8,940
|
)
|
|
$
|
15,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Medical Benefits
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Amounts Recognized in the Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement benefit (liability) asset
|
|
$
|
(6,814
|
)
|
|
$
|
(364
|
)
|
|
$
|
(6,028
|
)
|
|
$
|
—
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(308
|
)
|
|
|
364
|
|
|
|
(1,227
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(7,122
|
)
|
|
$
|
—
|
|
|
$
|
(7,255
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in other comprehensive income (loss) consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension & SERP Benefits
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Net actuarial (loss) gain
|
|
$
|
(35,004
|
)
|
|
$
|
(16,924
|
)
|
|
$
|
(20,775
|
)
|
|
$
|
(15,007
|
)
|
|
Prior service (costs) credits
|
|
|
(663
|
)
|
|
|
—
|
|
|
|
(756
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(35,667
|
)
|
|
$
|
(16,924
|
)
|
|
$
|
(21,531
|
)
|
|
$
|
(15,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Medical Benefits
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Net actuarial (loss) gain
|
|
$
|
295
|
|
|
$
|
—
|
|
|
$
|
485
|
|
|
$
|
—
|
|
|
Prior service (costs) credits
|
|
|
(602
|
)
|
|
|
364
|
|
|
|
742
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(307
|
)
|
|
$
|
364
|
|
|
$
|
1,227
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension & SERP Benefits
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Weighted average assumptions used to measure benefit obligations at December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
4.4
|
%
|
|
|
4.2
|
%
|
|
|
5.2
|
%
|
|
|
4.6
|
%
|
|
Rate of compensation increase
|
|
|
4.0
|
%
|
|
|
3.4
|
%
|
|
|
4.0
|
%
|
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Medical Benefits
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Weighted average assumptions used to measure benefit obligations at December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
4.7
|
%
|
|
|
10.8
|
%
|
|
|
5.2
|
%
|
|
|
N/A
|
|
|
Rate of compensation increase
|
|
|
**
|
|
|
|
**
|
|
|
|
**
|
|
|
|
**
|
|
|
**
|
Not a meaningful statistic.
|
F-46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
Pension & SERP Benefits
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Weighted average assumptions used to determine expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.2
|
%
|
|
|
4.6
|
%
|
|
|
5.7
|
%
|
|
|
5.1
|
%
|
|
Rate of compensation increase
|
|
|
4.0
|
%
|
|
|
3.4
|
%
|
|
|
4.0
|
%
|
|
|
3.4
|
%
|
|
Long-term rate of return on assets
|
|
|
7.8
|
%
|
|
|
6.5
|
%
|
|
|
8.0
|
%
|
|
|
7.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
Postretirement Medical Benefits
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Weighted average assumptions used to determine expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.2
|
%
|
|
|
10.8
|
%
|
|
|
5.7
|
%
|
|
|
N/A
|
|
|
Rate of compensation increase
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
Long-term rate of return on assets
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
The major categories of assets in the Company’s various pension plans as of December 31, 2012 and 2011
are presented in the following table. Assets are segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (see Note 13—Fair Value Measurements). The Company’s postretirement plan
is unfunded.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
|
|
December 31,
2012
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant other
observable inputs
(Level 2)
|
|
|
Significant
unobservable inputs
(Level 3)
|
|
|
Asset Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic equities
|
|
$
|
17,523
|
|
|
$
|
17,523
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Pooled funds holding global equity securities
|
|
|
42,361
|
|
|
|
—
|
|
|
|
42,361
|
|
|
|
—
|
|
|
Pooled funds holding global fixed income securities
|
|
|
24,285
|
|
|
|
—
|
|
|
|
24,285
|
|
|
|
—
|
|
|
Pooled funds holding property in the United Kingdom(a)
|
|
|
5,376
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,376
|
|
|
Mutual funds holding U.S. Treasury Securities
|
|
|
11,774
|
|
|
|
11,774
|
|
|
|
—
|
|
|
|
—
|
|
|
Fixed income mutual funds holding domestic securities
|
|
|
3,005
|
|
|
|
3,005
|
|
|
|
—
|
|
|
|
—
|
|
|
Limited partnership interests(b)
|
|
|
62,356
|
|
|
|
—
|
|
|
|
62,356
|
|
|
|
—
|
|
|
Designated benefit fund(c)
|
|
|
1,815
|
|
|
|
—
|
|
|
|
1,815
|
|
|
|
—
|
|
|
Cash and cash equivalents
|
|
|
13,784
|
|
|
|
13,784
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
182,279
|
|
|
$
|
46,086
|
|
|
$
|
130,817
|
|
|
$
|
5,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
|
|
December 31,
2011
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant other
observable inputs
(Level 2)
|
|
|
Significant
unobservable inputs
(Level 3)
|
|
|
Asset Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic equities
|
|
$
|
15,996
|
|
|
$
|
15,996
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Global equity securities
|
|
|
4,551
|
|
|
|
4,551
|
|
|
|
—
|
|
|
|
—
|
|
|
Pooled funds holding global equity securities
|
|
|
32,267
|
|
|
|
—
|
|
|
|
32,267
|
|
|
|
—
|
|
|
Pooled funds holding global fixed income securities
|
|
|
26,182
|
|
|
|
—
|
|
|
|
26,182
|
|
|
|
—
|
|
|
Pooled funds holding property in the United Kingdom(a)
|
|
|
5,298
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,298
|
|
|
Mutual funds holding U.S. Treasury Securities
|
|
|
11,687
|
|
|
|
11,687
|
|
|
|
—
|
|
|
|
—
|
|
|
Limited partnership interests(b)
|
|
|
55,022
|
|
|
|
—
|
|
|
|
55,022
|
|
|
|
—
|
|
|
Designated benefit fund(c)
|
|
|
1,785
|
|
|
|
—
|
|
|
|
1,785
|
|
|
|
—
|
|
|
Cash and cash equivalents
|
|
|
6,294
|
|
|
|
6,294
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
159,082
|
|
|
$
|
38,528
|
|
|
$
|
115,256
|
|
|
$
|
5,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
This category represents investments in real estate directly held by the pooled funds.
|
|
(b)
|
This category represents limited partner investments with general partners that invest in debt and equity securities.
|
|
(c)
|
This category includes assets held in a fund with the Bank of Taiwan as prescribed by the Taiwan government in accordance with local statutory rules.
|
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2012 due to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Beginning balance, December 31, 2011
|
|
$
|
5,298
|
|
|
$
|
5,296
|
|
|
Unrealized gains relating to instruments still held in the reporting period
|
|
|
342
|
|
|
|
331
|
|
|
Purchases
|
|
|
—
|
|
|
|
—
|
|
|
Sales
|
|
|
(264
|
)
|
|
|
(329
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
5,376
|
|
|
$
|
5,298
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s retirement plan assets are reported at fair value. Level 1 assets include investments in
publicly traded equity securities and mutual funds. These securities (or the underlying investments of the funds) are actively traded and valued using quoted prices for identical securities from the market exchanges. Level 2 assets consist of global
fixed-income securities, limited partnership interests and commingled funds that are not actively traded or whose underlying investments are valued using observable marketplace inputs. The fair value of plan assets invested in fixed-income
securities is generally determined using market approach pricing methodology, where observable prices are obtained by market transactions involving identical or comparable securities of issuers with similar credit ratings. Plan assets that are
invested in limited partnership interests and commingled funds are valued using a unit price or net asset value (NAV) that is based on the underlying investments of the fund. Level 3 assets include investments in pooled funds holding property in the
United Kingdom which are valued on a weekly basis using discounted cash flow models which consider long-term lease estimates, future rental receipts and estimated residual values. Valuation estimates are supplemented by third-party appraisals on a
monthly basis.
F-48
As of December 31, 2012, expected future benefit payments related to the Corporation’s
defined benefit plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year End
|
|
Domestic
|
|
|
Foreign
|
|
|
Postretirement
Benefits
|
|
|
Total
|
|
|
2013
|
|
$
|
4,225
|
|
|
$
|
3,491
|
|
|
$
|
383
|
|
|
$
|
8,099
|
|
|
2014
|
|
|
8,397
|
|
|
|
3,644
|
|
|
|
395
|
|
|
|
12,436
|
|
|
2015
|
|
|
5,679
|
|
|
|
3,741
|
|
|
|
403
|
|
|
|
9,823
|
|
|
2016
|
|
|
5,196
|
|
|
|
3,830
|
|
|
|
401
|
|
|
|
9,427
|
|
|
2017
|
|
|
5,475
|
|
|
|
3,951
|
|
|
|
410
|
|
|
|
9,836
|
|
|
Thereafter
|
|
|
34,455
|
|
|
|
21,478
|
|
|
|
1,971
|
|
|
|
57,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
63,427
|
|
|
$
|
40,135
|
|
|
$
|
3,963
|
|
|
$
|
107,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) is allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Income tax expense
|
|
$
|
24,673
|
|
|
$
|
9,953
|
|
|
Stockholders’ equity for the tax effects of pension and postretirement benefit plans and hedging activities
|
|
|
(4,247
|
)
|
|
|
(6,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20,426
|
|
|
$
|
3,868
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) attributable to income from continuing operations consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
1,839
|
|
|
$
|
(4,221
|
)
|
|
State and local
|
|
|
473
|
|
|
|
324
|
|
|
Foreign
|
|
|
30,725
|
|
|
|
29,860
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
33,037
|
|
|
|
25,963
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(4,937
|
)
|
|
|
3,459
|
|
|
State and local
|
|
|
100
|
|
|
|
(615
|
)
|
|
Foreign
|
|
|
(3,527
|
)
|
|
|
(18,854
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
(8,364
|
)
|
|
|
(16,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
24,673
|
|
|
$
|
9,953
|
|
|
|
|
|
|
|
|
|
|
|
F-49
Income tax expense (benefit) attributable to continuing operations differed from the amounts
computed by applying the U.S. Federal statutory tax rates to pretax income, as a result of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
U.S. Federal statutory tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Taxes computed at U.S. statutory rate
|
|
$
|
24,829
|
|
|
$
|
3,957
|
|
|
State income taxes, net of Federal benefit
|
|
|
(459
|
)
|
|
|
(702
|
)
|
|
Foreign tax rate differential
|
|
|
(11,613
|
)
|
|
|
(1,469
|
)
|
|
Net change in reserve
|
|
|
5,724
|
|
|
|
(27
|
)
|
|
Change in valuation allowances
|
|
|
6,915
|
|
|
|
6,674
|
|
|
Provision for tax on undistributed foreign earnings
|
|
|
204
|
|
|
|
(260
|
)
|
|
Change in tax rate
|
|
|
(1,054
|
)
|
|
|
(847
|
)
|
|
Foreign exchange impact on provision
|
|
|
100
|
|
|
|
1,193
|
|
|
Other, net
|
|
|
27
|
|
|
|
1,434
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual income taxes
|
|
$
|
24,673
|
|
|
$
|
9,953
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
34.78
|
%
|
|
|
88.02
|
%
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2012 and 2011, earnings from continuing operations before income taxes
included foreign earnings of $107,785 and $56,669, respectively. A significant portion of the Company’s pre-tax income and income tax expense are derived from foreign operations. The Company’s foreign effective tax rate for the years ended
December 31, 2012 and 2011 was 25.2% and 19.4%. The Company’s foreign effective tax rate is impacted by various factors, such as earnings mix, changes in enacted tax rates, changes in valuation allowance, global tax planning initiatives
and foreign tax incentives.
F-50
MacDermid has not recognized a deferred tax liability for U.S. taxes on the portion of the
undistributed earnings of foreign subsidiaries that arose in 2012 and prior years that the Company does not expect to repatriate in the foreseeable future. A deferred tax liability will be recognized when the Company expects to recover those
earnings in a taxable transaction, such as the receipt of dividends or sale of the investment, net of foreign tax credits. A determination of the deferred tax liability related to the undistributed earnings of foreign subsidiaries that are
permanently reinvested is not practical. The undistributed earnings of those subsidiaries were $127,001 and $112,552 at December 31, 2012 and 2011, respectively. The tax effects of temporary differences that give rise to significant portions of the
deferred tax assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Accounts receivable, primarily due to allowance for doubtful accounts
|
|
$
|
1,313
|
|
|
$
|
1,295
|
|
|
Inventories
|
|
|
2,414
|
|
|
|
2,350
|
|
|
Accrued liabilities
|
|
|
1,617
|
|
|
|
1,748
|
|
|
Employee benefits
|
|
|
18,910
|
|
|
|
14,566
|
|
|
Capitalized research and development costs
|
|
|
13,267
|
|
|
|
12,393
|
|
|
Foreign tax credits
|
|
|
29,234
|
|
|
|
24,450
|
|
|
Net operating losses
|
|
|
12,783
|
|
|
|
12,420
|
|
|
State tax credits
|
|
|
1,311
|
|
|
|
1,183
|
|
|
Unrealized foreign exchange gain/loss
|
|
|
23
|
|
|
|
193
|
|
|
Research and development credits
|
|
|
6,794
|
|
|
|
5,844
|
|
|
Alternative minimum tax credits
|
|
|
2,202
|
|
|
|
2,342
|
|
|
Deferred financing
|
|
|
—
|
|
|
|
786
|
|
|
Other
|
|
|
5,171
|
|
|
|
5,696
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
95,039
|
|
|
|
85,266
|
|
|
Valuation allowance
|
|
|
(41,446
|
)
|
|
|
(34,531
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets
|
|
|
53,593
|
|
|
|
50,735
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Plant and equipment, primarily due to depreciation
|
|
|
882
|
|
|
|
4,727
|
|
|
Goodwill and intangibles
|
|
|
73,962
|
|
|
|
78,483
|
|
|
Undistributed foreign earnings
|
|
|
6,185
|
|
|
|
5,915
|
|
|
Partnership basis difference
|
|
|
11,585
|
|
|
|
12,304
|
|
|
Unrealized foreign exchange gain/loss
|
|
|
792
|
|
|
|
1,819
|
|
|
Other
|
|
|
2,617
|
|
|
|
1,819
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax liabilities
|
|
|
96,023
|
|
|
|
105,067
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability
|
|
$
|
42,430
|
|
|
$
|
54,332
|
|
|
|
|
|
|
|
|
|
|
|
The net tax effects of temporary differences that give rise to significant portions of the net deferred tax asset and
liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Net current deferred tax asset
|
|
$
|
5,169
|
|
|
$
|
6,116
|
|
|
Net noncurrent deferred tax asset
|
|
|
1,812
|
|
|
|
2,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,981
|
|
|
|
8,503
|
|
|
Net noncurrent deferred tax liability
|
|
|
49,411
|
|
|
|
62,835
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net deferred tax liability
|
|
$
|
42,430
|
|
|
$
|
54,332
|
|
|
|
|
|
|
|
|
|
|
|
F-51
In assessing whether deferred tax assets will be realized, the Company considers whether it is
more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, tax planning strategies and expiration dates of certain deferred tax assets in making this assessment. Based
upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company believes it is more likely than not that the benefits of those deductible differences
will be realized, net of existing valuation allowances at December 31, 2012.
The valuation allowance for deferred tax assets was $ 41,446
and $34,531 at December 31, 2012 and 2011, respectively.
At December 31, 2012, MacDermid had state and foreign net operating losses of
approximately $15,518 and $10,762 respectively, which were available for carry-forward. The majority of the state net operating loss carry-forwards expire during the years 2016 and 2025. The state net operating loss carry-forwards result in a
deferred tax asset of $10,088 net of federal tax. A full valuation allowance has been provided against the deferred tax asset because it is more likely than not that it will not be utilized based on the Company’s domestic operations and
structure. The majority of the foreign net operating loss carry-forwards expire during the years 2016 through 2029, with some being unlimited in utilization. This results in a deferred tax asset of $ 2,695. A valuation allowance of $473 has been
provided against the deferred tax assets associated with certain foreign net operating loss carry-forwards because the recent results of the business units associated with the loss carry-forwards indicate that it is more likely than not that the
benefits from the net operating loss carry-forwards will not be realized. A valuation allowance of $502 has been provided against the deferred tax asset for interest benefit recorded at a foreign subsidiary where it is more likely than not that the
recognition of the benefit will not be realized.
In addition, at December 31, 2012, the Company has approximately $29,234, $6,794, $2,202
and $1,311 of foreign tax credits, research and development credits, alternative minimum tax credits and state tax credits (net of federal tax), respectively, that are available for carryforward. These carry-forward periods range from ten years to
an unlimited period of time. A valuation allowance of $22,641, $6,431 and $1,311 is provided for foreign tax credits, research and development credits and state tax credits, respectively, that the Company believes the benefits from the credits will
not be realized.
The United Kingdom and Sweden enacted tax rate changes during 2012. The total impact of the lower rates resulted in a
decrease to deferred taxes of $1,160. MacDermid also changed the state tax rate applied to U.S. temporary items for one of its subsidiaries as well as the rate applied to certain deferred tax liabilities. This rate change has resulted in a decrease
to the net deferred tax liabilities of $106. The total impact due to the change in tax rates is $1,054.
MacDermid was a beneficiary of a tax holiday
in China which expired at December 31, 2011. The aggregate effect on income tax expense in 2011 as a result of the tax holiday was a benefit of approximately $1,751.
F-52
Tax Uncertainties
—A reconciliation of the beginning and ending unrecognized tax
benefits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2012
|
|
|
December 31,
2011
|
|
|
Unrecognized tax benefits at beginning of period
|
|
$
|
18,833
|
|
|
$
|
22,502
|
|
|
Additions based on current year tax positions
|
|
|
2,308
|
|
|
|
3,716
|
|
|
Additions (reductions) based upon prior year tax positions
|
|
|
1,748
|
|
|
|
(3,881
|
)
|
|
(Reductions) for settlements and payments
|
|
|
—
|
|
|
|
(3,504
|
)
|
|
Reductions due to closed statutes
|
|
|
(130
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Unrecognized Tax benefits at end of period
|
|
$
|
22,759
|
|
|
$
|
18,833
|
|
|
|
|
|
|
|
|
|
|
|
The Company has $22,759 of total unrecognized tax benefits as of December 31, 2012, of which $15,803, if
recognized, would impact the Company’s effective tax rate. The Company estimates that $41 of the total unrecognized benefits will reverse within the next twelve months.
The Company recognizes interest and/or penalties related to income tax matters as part of income tax expense. The Company has approximately
$3,972 and $2,174 accrued for interest and penalties as of December 31, 2012 and 2011, respectively. Changes in these balances are recorded in income tax expense or as a reduction of the balance for payments made. The Company made no payments in
2012.
MacDermid, Inc. and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign
jurisdictions. The Company has closed all U.S. federal tax matters for years through 2005. Federal income tax returns for 2006 through 2012 are currently open to examination although no audits are ongoing. The Company is undergoing an audit in the
United Kingdom for the 2009 tax year. The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months.
As of December 31, 2012 the following tax years remained subject to examination by the major tax jurisdiction indicated:
|
|
|
|
|
Major Jurisdiction
|
|
Open Years
|
|
Brazil
|
|
2008 through 2012
|
|
China
|
|
2009 through 2012
|
|
France
|
|
2010 through 2012
|
|
Germany
|
|
2008 through 2012
|
|
Italy
|
|
2008 through 2012
|
|
Japan
|
|
2012
|
|
Netherlands
|
|
2007 through 2012
|
|
Singapore
|
|
2008 through 2012
|
|
United Kingdom
|
|
2009 through 2012
|
|
United States
|
|
2006 through 2012
|
F-53
|
11.
|
DEBT AND CAPITAL LEASES
|
MacDermid’s debt and capital lease obligations consisted
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Borrowings under lines of credit
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior secured credit facility, tranche B due 2014, LIBOR plus 2.00%, weighted average interest rate of 2.29% and 2.27%,
respectively
|
|
|
217,656
|
|
|
|
229,982
|
|
|
Senior secured credit facility, tranche C due 2014, EURIBOR plus 2.25%, weighted average interest rate of 2.64% and 3.41%,
respectively
|
|
|
147,337
|
|
|
|
153,115
|
|
|
Senior subordinated notes due 2017, 9.50% interest rate
|
|
|
350,000
|
|
|
|
350,000
|
|
|
Japanese senior secured bank debt, due in 2012 and 2014, weighted average interest rate of 1.90% and 1.85%, respectively
|
|
|
4,698
|
|
|
|
10,108
|
|
|
Other
|
|
|
949
|
|
|
|
1,167
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt and capital lease obligations
|
|
|
720,640
|
|
|
|
744,372
|
|
|
Less: current portion debt and capital lease obligations
|
|
|
(26,819
|
)
|
|
|
(26,141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt and capital lease obligations
|
|
$
|
693,821
|
|
|
$
|
718,231
|
|
|
|
|
|
|
|
|
|
|
|
Minimum future principal payments on short-term debt, long-term debt and capital leases are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year End
|
|
Capital leases
|
|
|
Long-term debt
|
|
|
Total
|
|
|
2013
|
|
$
|
364
|
|
|
$
|
26,455
|
|
|
$
|
26,819
|
|
|
2014
|
|
|
334
|
|
|
|
343,236
|
|
|
|
343,570
|
|
|
2015
|
|
|
201
|
|
|
|
—
|
|
|
|
201
|
|
|
2016
|
|
|
44
|
|
|
|
—
|
|
|
|
44
|
|
|
2017
|
|
|
6
|
|
|
|
350,000
|
|
|
|
350,006
|
|
|
Thereafter
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
949
|
|
|
$
|
719,691
|
|
|
$
|
720,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Credit Facility
On April 12, 2007, the Company closed three senior secured credit facilities consisting of (i) a $360,000 tranche B term loan credit facility
denominated in U.S. Dollars (“tranche B”), (ii) a $250,000 tranche C term loan credit facility denominated in Euros (“tranche C”) and (iii) a $50,000 revolving credit facility denominated in U.S. Dollars. The loans under the
tranche B facility and the revolving credit facility bear interest at the LIBOR based rate, 0.21% at December 31, 2012, plus 2.00% or an alternate base rate at the Company’s option. The Company has chosen the LIBOR based rate. The loans under
the tranche C credit facility bear interest at EUROBOR, 0.06% at December 31, 2012, plus 2.25%. Under the tranche B and C term loans the Company is required to make quarterly interest and principal payments and the tranche B and C term loans which
mature in 2014.
During the year ended December 31, 2012, $3,600 and $5,066 of principal and interest payments, respectively, were made on
the tranche B term loan and $2,606 and $3,878 of principal and interest payments, respectively, were made on the tranche C loan. During the year ended December 31, 2011 $3,600 and $5,316 of principal and interest payments, respectively, were made on
the tranche B term loan and $2,756 and $5,750 of principal and interest payments, respectively, were made on the tranche C loan.
During
the year ended December 31, 2012, the Company recorded $2,966 of other expense related to the remeasurement loss on the foreign denominated tranche C term loan. During the year ended December 31, 2011, the Company recorded $4,736 of other income
related to the remeasurement gain on the foreign denominated
F-54
tranche C term loan. During the year ended December 31, 2012, the realized portion of the remeasurement gain on the foreign denominated tranche C term loan was $256. During the year ended
December 31, 2011, the realized portion of the remeasurement loss on the foreign denominated tranche C term loan was $608.
In addition to
scheduled repayments, the tranche B and tranche C loans contain mandatory prepayment provisions, whereby the Company is required to reduce the outstanding principal amounts of these loans based on excess cash flow (as defined in the credit agreement
for the tranche B and tranche C loans) as of the most recent completed fiscal year. The Company has estimated that mandatory excess cash flow prepayment, based upon 2012 operating results, of $10,199 on the tranche B term loan and $6,904 on the
tranche C term loan. These prepayments are due by March 31, 2013 and are included in current installments of long-term obligations in the Consolidated Balance Sheet as of December 31, 2012. During the year ended December 31, 2012, the Company made a
mandatory excess cash flow prepayment, based on 2011 operating results, of $8,726 on the tranche B loan and $5,882 on the tranche C loan. During the year ended December 31, 2011, the Company made a mandatory excess cash flow prepayment, based on
2010 operating results, of $13,938 on the tranche B loan and $10,282 on the tranche C loan.
Following the Business Combination, the
Senior Secured Credit Facility will be guaranteed by Platform Acquisition Holdings Limited and is secured by 65% of the stock of the Company’s first tier foreign subsidiaries, subject to customary exceptions, exclusions and release mechanisms.
Revolving Credit Facility
As
discussed above, on April 12, 2007, the Company entered into a $50,000 revolving credit facility. In May 2012, the revolving credit facility was amended and extended. The revolving credit facility, as amended, will mature in April 2014. At December
31, 2012 and 2011, no balances were outstanding under the revolving credit facility. During the years ended December 31, 2012 and 2011, the Company paid commitment fees of $292 and $269, respectively, for the revolving credit facility.
MacDermid also has letters of credit outstanding of $3,874 and $3,874 at December 31, 2012 and 2011, respectively. The letters of credit
reduce the borrowings available under the revolving credit facility.
Senior Subordinated Notes
On April 12, 2007, the Company issued $350,000 of senior subordinated notes with a fixed interest rate of 9.50% at par. The senior subordinated
notes mature April 2017. Interest is payable semi-annually under the senior subordinated notes (October 15th and April 15th) and the principal amount is payable at maturity in 2017. During the years ended December 31, 2012 and 2011, no principal
payments were made on the senior subordinated notes.
During each of the years ended December 31, 2012 and 2011, $33,250 of interest
payments was made on the senior subordinated notes. The senior subordinated notes are guaranteed by the Company’s wholly owned domestic subsidiaries (“Guarantors”).
Japanese Senior Secured Bank Debt
On
February 26, 2007, the Company borrowed approximately $15,000 denominated in Japanese Yen in three separate notes. The first note of $8,397 had a maturity date of February 26, 2012 and a fixed interest rate of 1.37%. Under the first note,
interest and principal payments were due on a semi-annual basis. During 2009, this note was paid in full. The second note of $5,878, which is the first outstanding note, has a maturity date of March 26, 2014 and a fixed interest rate of 1.47%.
Under the second note, interest and principal payments are due on a semi-annual basis. The third note of $840, which was the second outstanding note, has a maturity date of March 27, 2012 and a fixed interest rate of 1.31%. The third note,
formerly the second outstanding note, was paid in full on March 27, 2012.
F-55
On May 7, 2007 the Company borrowed an additional $7,557 denominated in Japanese Yen. The May
2007 note had a maturity date of May 28, 2012 and a fixed interest rate of 1.41%. This note was paid in full on May 28, 2012.
On
September 26, 2007, the Company borrowed an additional $2,519 denominated in Japanese Yen. The September 2007 note has a maturity date of September 26, 2014 and a fixed interest rate of 1.47%. Interest and principal payments are due on a semi-annual
basis.
On October 1, 2009, the Company borrowed $5,569 denominated in Japanese Yen. This note has a maturity date of August 20,
2014, and a fixed interest rate of 2.40%. Under this note, interest and principal payments are due on a monthly basis.
On February 15,
2010, the Company borrowed $1,111 denominated in Japanese Yen. The note had a maturity date of March 31, 2010 and a fixed interest rate of 1.725% and was paid in full on March 31, 2010.
During the year ended December 31, 2012, $4,624 and $144 of principal and interest payments, respectively, were made on the Japanese senior
secured bank debt. During the year ended December 31, 2011, $5,935 and $245 of principal and interest payments, respectively, were made on the Japanese senior secured bank debt.
During the years ended December 31, 2012 and 2011, the Company recorded $0 of other expense and $35 of other expense, respectively, related to
the remeasurement gains/losses on the foreign denominated Japanese debt.
Capital Leases
During the years ended December 31, 2012 and 2011, the Company entered into equipment capital lease agreements totaling $172 and $1,283,
respectively. During the years ended December 31, 2012 and 2011, the Company entered into capital lease agreements totaling $257 and $0, respectively, that are considered non-cash investing capital leases. Interest rates on the capital leases range
from 4.3% to 10%. Payments on capital leases were $654 and $472 for the years ended December 31, 2012 and 2011, respectively.
Debt Covenants
The senior secured credit facility and senior subordinated notes contain various covenants including limitations on additional indebtedness,
dividends and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens, transactions with affiliates, amendments to organizational documents, accounting changes,
sale and leaseback transactions and dispositions. In addition, the revolving credit facility requires the Company to comply with certain financial covenants, including consolidated leverage, interest coverage ratios and limitations on capital
expenditures if the Company’s funding under the revolving credit facility exceeds $10,000 for ten or more consecutive days in any fiscal quarter. As of December 31, 2012, the Company was in compliance with the debt covenants contained in the
senior secured credit facility and senior subordinated notes.
Other Debt Facilities
MacDermid carries various short-term debt facilities worldwide which are used to fund short-term cash needs when the need arises. As of
December 31, 2012 and 2011, there was $0 and $0, respectively, outstanding under these other debt facilities. The Company also has various overdraft facilities available. The capacity under these overdraft facilities was $18,761 at December 31, 2012
and $22,762 at December 31, 2011. Some of these overdraft lines carry variable interest rates. As of December 31, 2012, MacDermid’s overdraft lines bore interest rates ranging from 1% to 6.3%.
F-56
|
12.
|
DERIVATIVE INSTRUMENTS
|
In the normal course of business, MacDermid is exposed to risks
such as changes in foreign currency exchange rates, interest rates and commodity prices. Derivative financial instruments, such as interest rate swaps are used to manage changes in market conditions related to debt obligations. All derivatives are
recognized on the consolidated balance sheets at fair value at the end of each year. The counterparty to the Company’s derivative agreements is a major international financial institution. The Company continually monitors its positions and the
credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties.
Interest Rates
In June 2007, the Company entered into an interest rate swap agreement (“swap”) to hedge interest rate fluctuation on the
Company’s tranche B term loan in the senior secured credit facility (see Note 11 above). The swap helped mitigate interest rate fluctuations on the Company’s floating rate U.S. dollar denominated debt. The swap was at a fixed rate of
5.40%, a notional amount of $170,000 and matured on June 30, 2010. The Company also entered into an interest rate collar agreement (“collar”) in June 2007. The collar helped protect the Company’s floating rate U.S. dollar denominated
debt. The collar had a floor of 5.20% and a ceiling of 6.25%, a notional amount of $100,000 and covered the period from June 30, 2010 through June 30, 2012.
Changes in the fair value of a derivative that is designated as and meets all the required criteria for a cash flow hedge are recorded in
accumulated other comprehensive income (loss) and reclassified into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to interest rate swap agreements are included in interest expense. As of December
31, 2012 and 2011, approximately $0 and $1,500 of unrealized losses, net of tax, respectively, related to the interest rate derivative instruments were included in accumulated other comprehensive income (loss) with a corresponding offset to both
current and long-term liabilities. There was hedge effectiveness of approximately $0 and $80, as of December 31, 2012 and 2011, respectively, included in other comprehensive income (“OCI”). For the years ended December 31, 2012 and 2011,
$(13) and $28, respectively, was recorded as other (expense) income in the statement of operations for hedge ineffectiveness. For the years ended December 31, 2012 and 2011, the Company recorded $1,462 of unrealized gains, net of tax and $2,707 of
unrealized gains, net of tax, to OCI, respectively.
During the years ended December 31, 2012 and 2011, the Company made payments of $0
and $0, respectively, related the difference between the swap rate of 5.40% and the actual interest rate on the Company’s floating rate U.S. dollar denominated debt.
During the years ended December 31, 2012 and 2011, the Company made payments of $2,364 and $4,949, respectively, related to the difference
between the interest rate collar agreement rate of 5.20% and the actual interest rate on the Company’s floating rate U.S. dollar denominated debt.
These payments were recorded as interest expense in the Consolidated Statement of Operations.
Foreign Currency
The Company conducts a
significant portion of its business in currencies other than the U.S. dollar, the currency in which the consolidated financial statements are reported. Correspondingly, the Company’s operating results could be affected by foreign currency
exchange rate volatility relative to the U.S. dollar. The Company’s Autotype subsidiary in the United Kingdom uses the Great Britain Pound (“GBP”) as its functional currency for paying labor and other operating costs, while
approximately 25 percent of its revenues are U.S. dollar denominated. To hedge against the risk of a stronger GBP, the Corporate Treasury Group contracted in 2012 and 2011, on behalf of the Autotype foreign subsidiary, with a financial institution
to deliver U.S. dollars at a fixed GBP rate and to receive GBP in exchange for the U.S. dollar. The Company did not pay up-front premiums to obtain the hedge.
F-57
While the Company has implemented certain strategies to mitigate risks related to the impact of
fluctuations in currency exchange rates, it cannot ensure that it will not recognize gains or losses from international transactions, as this is part of transacting business in an international environment. Not every exposure is or can be hedged
and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts for which actual results may differ from the original estimate. Failure to successfully hedge or anticipate currency risks properly could
adversely affect impact or benefit the Company’s consolidated operating results.
As of December 31, 2012, the aggregate U.S. dollar
notional amount of foreign currency forward contracts, designated as hedges, was $15,000. During the years ended December 31, 2012 and 2011, unrealized gains and (losses) of $518, net of tax and $(442), net of tax, respectively, were recorded to OCI
related to foreign currency hedges. During the years ended December 31, 2012 and 2011, the Company recorded realized gains of $128 and $555, respectively, in other income related to the settlement of hedged foreign exchange contracts.
The following table summarizes derivative instrument amounts as of December 31, 2012, by currency and the portion of the asset/liability that
settles within the next twelve months.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local Currency
Amount
|
|
|
U.S. Dollar
Amount
|
|
|
Percentage Settled
Within One Year
|
|
|
Dates Contracts are
Through
|
|
|
Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Britain Pound
|
|
£
|
3,153
|
|
|
$
|
5,000
|
|
|
|
100
|
%
|
|
|
March 26, 2013
|
|
|
Great Britain Pound
|
|
£
|
3,206
|
|
|
$
|
5,000
|
|
|
|
100
|
%
|
|
|
June 27, 2013
|
|
|
Great Britain Pound
|
|
£
|
3,082
|
|
|
$
|
5,000
|
|
|
|
100
|
%
|
|
|
September 25, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the fair value of derivative instruments reported in the Consolidated Balance
Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging
instruments:
|
|
Assets
Balance
Sheet
Location
|
|
|
December 31,
2012 U.S.
Dollar
Amount
|
|
|
December 31,
2011 U.S.
Dollar
Amount
|
|
|
Liabilities
Balance
Sheet
Location
|
|
|
December 31,
2012 U.S.
Dollar
Amount
|
|
|
December 31,
2011 U.S.
Dollar
Amount
|
|
|
Interest rate collar
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Other current
liabilities
|
|
|
$
|
—
|
|
|
$
|
2,234
|
|
|
Interest rate swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current
liabilities
|
|
|
|
—
|
|
|
|
—
|
|
|
Foreign exchange contracts
|
|
|
Other current
assets
|
|
|
|
336
|
|
|
|
—
|
|
|
|
Other current
liabilities
|
|
|
|
—
|
|
|
|
463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
2,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative contracts
|
|
|
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
2,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-58
The effect of derivative instruments on the Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Income (Loss) is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Cash Flow Derivative Instrument
|
|
Interest
rates
|
|
|
Foreign
Currency
|
|
|
Total
|
|
|
Interest
rates
|
|
|
Foreign
Currency
|
|
|
Total
|
|
|
Amount of gain (loss) recognized in OCI—effective portion
|
|
$
|
1,462
|
|
|
$
|
518
|
|
|
$
|
1,980
|
|
|
$
|
2,707
|
|
|
$
|
(442
|
)
|
|
$
|
2,265
|
|
|
|
|
|
|
|
|
|
|
Amount of net loss reclassified from accumulated OCI to Other income (expense)—effective portion
|
|
$
|
—
|
|
|
$
|
128
|
|
|
$
|
128
|
|
|
$
|
—
|
|
|
$
|
555
|
|
|
$
|
555
|
|
|
|
|
|
|
|
|
|
|
Amount of net (loss) gain reclassified from accumulated OCI to Other income
(expense)—ineffective portion
|
|
$
|
(13
|
)
|
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
28
|
|
An accumulated other comprehensive pre-tax gain of $336 related to the foreign exchange contracts is expected
to be reclassified into earnings within the next twelve months of December 31, 2012.
|
13.
|
FAIR VALUE MEASUREMENTS
|
The Company determines fair value measurements used in its
consolidated financial statements based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs, as determined by either the
principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company has used the most
advantageous market, which is the market in which the Company would receive the highest selling price for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous
market, transaction costs are only considered to determine which market is the most advantageous and these costs are then excluded when applying a fair value measurement.
Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy. The basis for fair value
measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.
The three levels of the fair value hierarchy are as follows:
|
|
•
|
|
Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
|
|
•
|
|
Level 2—quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in non-active markets; and model derived valuations whose inputs are observable or whose
significant valuation drivers are observable.
|
|
|
•
|
|
Level 3—significant inputs to the valuation model are unobservable and/or reflect the Company’s market assumptions.
|
F-59
The following table presents the Company’s financial instruments, assets and liabilities
that are measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
|
|
December 31,
2012
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant other
observable inputs
(Level 2)
|
|
|
Significant
unobservable inputs
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market accounts
|
|
$
|
110,867
|
|
|
$
|
110,867
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Available for sale equity securities
|
|
|
2,233
|
|
|
|
2,233
|
|
|
|
—
|
|
|
|
—
|
|
|
Derivatives
|
|
|
336
|
|
|
|
—
|
|
|
|
336
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
113,436
|
|
|
$
|
113,100
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
|
|
December 31,
2011
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant other
observable inputs
(Level 2)
|
|
|
Significant
unobservable inputs
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market accounts
|
|
$
|
87,365
|
|
|
$
|
87,365
|
|
|
|
—
|
|
|
|
—
|
|
|
Available for sale equity securities
|
|
|
1,941
|
|
|
|
1,941
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
89,306
|
|
|
$
|
89,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
$
|
2,697
|
|
|
$
|
—
|
|
|
$
|
2,697
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,697
|
|
|
$
|
—
|
|
|
$
|
2,697
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market accounts are included in cash and cash equivalents in the balance sheet. Available for sale
equity securities are included in other long term assets in the balance sheet.
Nonrecurring Fair Value Measurements
In accordance with the provisions of ASC Topic 360, “Property, Plant and Equipment”, certain customer list intangible assets with
carrying amounts of $51,138 in the Performance Materials Asia reporting unit were written down to their implied fair values of $4,700, resulting in intangible asset impairment charges of $46,438. These impairment charges were included in the results
from operations for the year ended December 31, 2011.
There were no write down of assets to implied fair value during the year ended
December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
Description
|
|
Year ended
December 31,
2011
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant
other
observable
inputs (Level 2)
|
|
|
Significant
unobservable
inputs (Level 3)
|
|
|
Total
(Losses)
|
|
|
Customer list intangible assets—Performance Materials Asia
|
|
$
|
4,700
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
4,700
|
|
|
$
|
(46,438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(46,438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-60
The following table presents the carrying value and estimated fair value of the Company’s
tranche B, tranche C and senior subordinated notes debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Carrying value
|
|
|
Fair Value
|
|
|
Carrying value
|
|
|
Fair Value
|
|
|
Tranche B, tranche C and senior subordinated notes debt including current portion
|
|
$
|
714,993
|
|
|
$
|
727,589
|
|
|
$
|
733,097
|
|
|
$
|
727,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The carrying value of the Company’s Japanese senior secured bank debt approximates fair value as of
December 31, 2012 and 2011.
The following methods and assumptions were used to estimate the fair value of each class of the
Company’s financial instruments, assets and liabilities:
Money market accounts
—The Company invests in various money
market funds which are managed by financial institutions. These money market funds are not publicly traded, but historically have been highly liquid. The fair value of the money market accounts is determined by the banks based upon the funds’
net asset values (“NAV”). All of the money market accounts currently permit daily investments and redemptions at $1.00 NAV.
Derivatives
—The fair value of derivatives are determined using pricing models based upon market observable inputs including
interest rate curves and both forward and spot prices for currencies. Derivative assets include foreign exchange contracts and derivative liabilities include an interest rate collar and foreign exchange contracts.
Available for sale equity securities
—Equity securities classified as available for sale are measured using quoted market prices at
the reporting date multiplied by the quantity held.
Tranche B, Tranche C and senior subordinated notes debt
—The Tranche B,
Tranche C and senior subordinated debt are measured using quoted market prices at the reporting date multiplied by the carrying amount of the related debt.
In connection with the Merger transaction described in Note 2
above, the Company issued 50,000,000 shares at $1.00 par value per share of common share. As of December 31, 2012 and 2011, there were 49,582,936 common shares and 49,732,194 common shares outstanding, respectively.
The Company also issued 316,000 shares at $1,000 par value per share of preferred shares. The preferred shares accrue a 9% cumulative payment
in kind dividend compounded quarterly. At December 31, 2012 and 2011, the amount of the cumulative payment in kind dividend was $209,027 and $164,449, respectively. At December 31, 2012 and 2011, there were 315,144 preferred shares and 315,264
preferred shares outstanding, respectively. The preferred shares are not redeemable and have no voting rights, covenants or restrictions. Upon the liquidation of the Company, the preferred shares would first receive, to the extent funds are
available, proceeds equal to the payment in kind dividend then the unreturned preferred share original cost, which is $1,000 per share. Then, the holders of the common shares will receive the unreturned common share original issue cost, which is
$1.00 per share. After, the holders of the common shares and junior shares shall be entitled to receive the remaining portion of the proceeds from liquidation. Additionally, no shareholder shall be liable for the debts, obligations or liabilities of
the Company.
F-61
Accumulated other comprehensive (loss) income consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Foreign currency translation adjustments
|
|
$
|
3,317
|
|
|
$
|
9,559
|
|
|
Pension and postretirement benefit plans, net of tax
|
|
|
(33,908
|
)
|
|
|
(22,670
|
)
|
|
Cash flow and foreign currency hedges—derivatives valuation, net of tax
|
|
|
217
|
|
|
|
(1,763
|
)
|
|
Investment securities, net of tax
|
|
|
104
|
|
|
|
(85
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated comprehensive (loss) income
|
|
$
|
(30,270
|
)
|
|
$
|
(14,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
15.
|
OPERATING LEASE COMMITMENTS
|
The Company conducts its operations in various leased
facilities under leases that are classified as operating leases for financial statement purposes. Certain leases provide for payment of real estate taxes, common area maintenance, insurance and certain other expenses. Lease terms may have escalating
rent provisions and rent holidays which are expensed on a straight-line basis over the term of the lease. The Company’s leases expire at various dates through 2047 for certain office and warehouse space, land, transportation, computer and other
equipment. Contingent rentals are paid for warehouse space on the basis of the monthly quantities of materials stored and for transportation and other equipment on the basis of mileage or usage. Total rental expense for leases for the years ended
December 31, 2012 and 2011 was $9,700 and $10,224, respectively. Of these amounts, $723 and $721 were contingent rentals. The fixed operating lease commitments detailed below assume that the Company continues the leases through their initial lease
terms.
Minimum future non-cancelable operating lease commitments are as follows:
|
|
|
|
|
|
|
2013
|
|
$
|
6,812
|
|
|
2014
|
|
|
5,510
|
|
|
2015
|
|
|
4,378
|
|
|
2016
|
|
|
3,346
|
|
|
2017
|
|
|
3,024
|
|
|
Thereafter
|
|
|
18,583
|
|
|
|
|
|
|
|
|
|
|
|
41,653
|
|
|
|
|
|
|
|
F-62
|
16.
|
MISCELLANEOUS INCOME (EXPENSE)
|
The major components of miscellaneous income (expense)
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Miscellaneous income:
|
|
|
|
|
|
|
|
|
|
Remeasurement gain on foreign denominated debt
|
|
$
|
—
|
|
|
$
|
4,093
|
|
|
Remeasurement gain on foreign denominated intercompany loans
|
|
|
8,430
|
|
|
|
5,063
|
|
|
Gain on settled foreign currency derivative
|
|
|
128
|
|
|
|
555
|
|
|
Gain on interest rate derivative
|
|
|
—
|
|
|
|
28
|
|
|
Other, net
|
|
|
393
|
|
|
|
403
|
|
|
|
|
|
|
|
|
|
|
|
|
Total miscellaneous income
|
|
$
|
8,951
|
|
|
$
|
10,142
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous expense:
|
|
|
|
|
|
|
|
|
|
Remeasurement loss on foreign denominated debt
|
|
$
|
(2,728
|
)
|
|
$
|
—
|
|
|
Loss on settled foreign currency derivative
|
|
|
—
|
|
|
|
—
|
|
|
Foreign exchange loss, net
|
|
|
(1,050
|
)
|
|
|
(208
|
)
|
|
Joint ventures
|
|
|
—
|
|
|
|
(287
|
)
|
|
Loss on interest rate derivative
|
|
|
(13
|
)
|
|
|
—
|
|
|
Other, net
|
|
|
(179
|
)
|
|
|
(235
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total miscellaneous expense
|
|
|
(3,970
|
)
|
|
|
(730
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net miscellaneous income
|
|
$
|
4,981
|
|
|
$
|
9,412
|
|
|
|
|
|
|
|
|
|
|
|
|
17.
|
CONTINGENCIES, ENVIRONMENTAL AND LEGAL MATTERS
|
Environmental Issues
MacDermid is a manufacturer and distributor of specialty chemical products, and is therefore exposed to the risk of liability or claims with
respect to environmental cleanup or other matters, including those in connection with the disposal of hazardous materials. The Company is subject to extensive domestic and foreign laws and regulations relating to environmental protection and worker
health and safety, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated properties. The Company has incurred, and will continue to
incur, costs and capital expenditures in complying with these laws and regulations. Additional costs could be incurred, including cleanup costs, fines, sanctions, and third-party claims, as a result of violations of or liabilities under
environmental laws.
Asset Retirement Obligations
The Company has recognized asset retirement obligations (“ARO’s”) for properties where the Company can make a reasonable
estimate of the future cost, including those obligations for which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. In identifying ARO’s, the Company considers
identification of legally enforceable obligations, estimate of potential settlement dates and the calculation of an appropriate discount rate to be used in calculating the fair value of the obligations. At December 31, 2012 and 2011, the Company has
accrued $2,283 and $2,497 respectively, for its ARO at manufacturing and administrative sites in the U.S., Europe and Japan. The ARO balances are included in the other long-term liabilities in the Consolidated Balance Sheets as of December 31,
2012 and 2011.
F-63
The changes in the carrying amount of the Company’s asset retirement obligations for the
year ended December 31, 2012 are as follows:
|
|
|
|
|
|
|
Asset retirement obligations, December 31, 2011
|
|
$
|
2,497
|
|
|
Additional obligations incurred
|
|
|
100
|
|
|
Settlements
|
|
|
(259
|
)
|
|
Accretion expense
|
|
|
227
|
|
|
Revisions
|
|
|
(200
|
)
|
|
Foreign currency adjustments
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
Asset retirement obligations, December 31, 2012
|
|
$
|
2,283
|
|
|
|
|
|
|
|
On an ongoing basis, management evaluates its estimates and assumptions; however, actual amounts could differ
from those based on such estimates and assumptions. Changes in the estimates during the period from January 1, 2012 through December 31, 2012 have not been significant.
Environmental Remediation
As of December
31, 2012 and 2011, $2,142 and $2,398, respectively, was reserved for various environmental matters. Ultimate costs may vary from current estimates and reserves, and the discovery of additional contaminants at these or other sites, or the imposition
of additional cleanup obligations, or third-party claims relating thereto, could result in additional costs. The environmental remediation liabilities are included in both other current liabilities and other long-term liabilities in the Consolidated
Balance Sheets at December 31, 2012 and 2011. The Company’s management has determined that any possible losses related to environmental remediation in addition to the amounts recorded as of December 31, 2012 and 2011 are not material.
The following summary provides some details regarding the Company’s environmental liabilities:
|
|
•
|
|
MacDermid is named as a potentially responsible party (“PRP”) at a Superfund site (Fike-Artel in Nitro, West Virginia), in which many other PRPs are also involved. With respect to this site, the Company has
entered into a cost sharing agreement that historically has resulted in costs of less than $10 per year for funding MacDermid’s share of the ongoing cleanup costs at the site. No reserve has been established for this cost sharing agreement,
because of the de minimus nature of the costs. The Company’s cost sharing percentage for this site is 0.2%. On October 31, 2005, the Environmental Protection Agency (“EPA”) notified the Company of alleged de minimus
responsibility for certain contamination at the Mercury Refining Site in New York. The Company has entered in a de minumus settlement agreement with the EPA regarding the Mercury Refining Site and has paid $3 in settlement of its liabilities. The
Company has also been named as a PRP at other sites within the U.S. As of December 31, 2012 and 2011, no liability amount was recorded by the Company as MacDermid has not been named as a PRP at these sites and due to the Company’s assessment
that exposure is not probable.
|
|
|
•
|
|
Some of the facilities associated with the Company have an extended history of chemical and industrial activity. These sites include certain sites such as the Kearny, New Jersey and Waukegan, Illinois sites, which were
associated with the Company’s December 1998 acquisition of W. Canning plc (“Canning”). With respect to the Kearny, New Jersey site, a Canning subsidiary withheld, under the agreement in respect of the Canning acquisition, a deferred
purchase price payment of approximately $1,600. In addition, a separate escrow fund of $2,000 has been established to fund remediation of the Kearny site. Clean-up costs at these sites are estimated to be between $2,000 and $5,000. The owners of the
Kearny, New Jersey site have primary responsibility for clean-up costs. Investigations into the extent of contamination at these sites are, however, ongoing. MacDermid is in the process of characterizing contamination at its Huntingdon Avenue,
Waterbury, Connecticut site, which was closed in 2003. As of December 31, 2012, $396 has been accrued for the estimated closure costs for this site.
|
F-64
Legal Proceedings
From time to time there are various legal proceedings pending against the Company. MacDermid considers all such proceedings to be ordinary
litigation incident to the nature of our business. Certain claims are covered by liability insurance. MacDermid believes that the resolution of these claims, to the extent not covered by insurance, will not individually or in the aggregate, have a
material adverse effect on its financial position or results of operations. To the extent reasonably estimable, reserves have been established regarding pending legal proceedings. As of December 31, 2012 and 2011, the Company has approximately
$1,041 and $2,089, respectively, of reserves for legal proceedings.
|
18.
|
RELATED PARTY TRANSACTIONS
|
For the years ending December 31, 2012 and 2011, the Company paid management
fees of $305 and $509, respectively, to Court Square. Three of MacDermid’s board members are employees of Court Square.
For the years ending
December 31, 2012 and 2011, the Company paid management fees to Weston Presidio of $116 and $70, respectively. Weston Presidio was owed $23 as of December 31, 2011 for a portion of its annual management fee.
|
19.
|
RESTRUCTURING ACTIVITIES
|
MacDermid continuously evaluates all operations to identify
opportunities to improve profitability by leveraging existing infrastructure to reduce operating costs and respond to overall economic conditions. MacDermid implemented certain consolidation actions during the years ended December 31, 2012 and 2011.
These actions are intended to better align the Company’s manufacturing capacity, eliminate excess capacity by lowering operating costs, and streamline the organizational structure for improved long-term profitability. The restructuring actions
consist of facility consolidations and closures and equipment write offs and employee terminations. The Company expects to incur incremental manufacturing inefficiency costs at the operating locations impacted by the restructuring actions during the
related restructuring implementation period. During 2009, the Company initiated restructuring and other cost-saving actions in order to streamline operations and improve efficiency and effectiveness in response to economic conditions within the
businesses that the Company served. The restructuring actions included a reduction of the Company’s global workforce, reduction of manufacturing capacity and inventory and equipment write offs at its locations worldwide. The restructuring plans
initiated in 2011 primarily related to the consolidation of certain back office functions in the Performance Materials Europe reporting unit. During the years ended December 31, 2012 and 2011, MacDermid recognized restructuring charges in the amount
of $292 and $896, respectively, related to employee severance and other charges.
During the year ended December 31, 2012, the Company
recorded $292 of restructuring expense. The Company recorded restructuring expense of $297 related to the elimination of four positions in the Performance Materials Europe business unit, $99 related to the elimination of seven positions in the
Performance Materials Asia business unit and $87 related to the elimination of two positions in the Graphic Solutions Americas business unit. Also, the Company reversed $(47) related to accrued other for estimated lease termination costs and $(124)
related to accrued other for legal and other costs that were no longer required in the Performance Materials Europe business unit as the amounts were no longer due. The Company reversed $(12) related to accrued benefits in the Graphic Solutions
Europe business unit as the amounts were no longer due to employees. Additionally, the Company reversed $(8) related to accrued other for restructuring liabilities for estimated legal costs that were no longer required in the Graphic Solutions
Europe business unit as the amounts were no longer due. As of December 31, 2012, the Company has accrued restructuring costs of $632 that are anticipated to be paid out within the succeeding twelve months.
During the year ended December 31, 2011, the Company recorded $896 of restructuring expense. The Company recorded $931 related to the
elimination of four positions in the Performance Materials Europe operations, $12 related to the elimination of one position in the Performance Materials Americas operations and
F-65
$180 related to the elimination of seven positions in the Performance Materials Asia operations. Additionally, the Company reversed $(163) related to accrued benefits in the Performance Materials
Europe operations and $(3) in the Performance Materials Americas operations as the amounts were no longer due to employees. The restructuring costs reversed during the year ended December 31, 2011 were accrued in prior years. Additionally, the
Company reversed $(61) related to accrued other for estimated legal costs that were no longer required. As of December 31, 2011, the Company has accrued restructuring costs of $1,247.
The activity in the accrued restructuring was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2012
|
|
|
Total costs and
adjustments for
the year ending
December 31,
2012
|
|
|
Total costs as
of December 31,
2012
|
|
|
|
|
Balance
December 31,
2011
|
|
|
Charges to
Expense
|
|
|
Cash
payments
|
|
|
Non-cash
Adjustments
|
|
|
|
|
Graphic Packing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
$
|
12
|
|
|
$
|
75
|
|
|
$
|
(87
|
)
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
Site clean-up costs
|
|
|
8
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Graphic Packing
|
|
|
20
|
|
|
|
67
|
|
|
|
(87
|
)
|
|
|
—
|
|
|
|
(20
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
|
1,012
|
|
|
|
396
|
|
|
|
(814
|
)
|
|
|
22
|
|
|
|
(396
|
)
|
|
|
616
|
|
|
Other
|
|
|
215
|
|
|
|
(171
|
)
|
|
|
(28
|
)
|
|
|
—
|
|
|
|
(199
|
)
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Materials
|
|
|
1,227
|
|
|
|
225
|
|
|
|
(842
|
)
|
|
|
22
|
|
|
|
(595
|
)
|
|
|
632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total restructuring charges
|
|
$
|
1,247
|
|
|
$
|
292
|
|
|
$
|
(929
|
)
|
|
$
|
22
|
|
|
$
|
(615
|
)
|
|
$
|
632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2011
|
|
|
Total costs and
adjustments for
the year ending
December 31,
2011
|
|
|
Total costs as
of December 31,
2011
|
|
|
|
|
Balance
December 31,
2010
|
|
|
Charges to
Expense
|
|
|
Cash
payments
|
|
|
Non-cash
Adjustments
|
|
|
|
|
Graphic Packing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
(12
|
)
|
|
$
|
12
|
|
|
Site clean-up costs
|
|
|
10
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Graphic Packing
|
|
|
34
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(12
|
)
|
|
|
(14
|
)
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
|
1,912
|
|
|
|
957
|
|
|
|
(1,815
|
)
|
|
|
(42
|
)
|
|
|
(900
|
)
|
|
|
1,012
|
|
|
Other
|
|
|
442
|
|
|
|
(61
|
)
|
|
|
(171
|
)
|
|
|
5
|
|
|
|
(227
|
)
|
|
|
215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Materials
|
|
|
2,354
|
|
|
|
896
|
|
|
|
(1,986
|
)
|
|
|
(37
|
)
|
|
|
(1,127
|
)
|
|
|
1,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total restructuring charges
|
|
$
|
2,388
|
|
|
$
|
896
|
|
|
$
|
(1,988
|
)
|
|
$
|
(49
|
)
|
|
$
|
(1,141
|
)
|
|
$
|
1,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s operations consist of two business segments:
Performance Materials and Graphic Solutions. The segments represent businesses for which separate financial information is utilized by the chief operating decision maker (the “CODM”) in determining how to allocate resources and evaluate
performance. The businesses are managed in two segments primarily on homogeneity of products, technology, delivery channels and economic characteristics in addition to shared manufacturing facilities and back office services. Each of the
Company’s segments has its own President and no segments have been aggregated in our disclosure. Each of the segment Presidents report to the CODM.
F-66
The Performance Materials segment manufactures and markets dynamic chemistry solutions that are
used in the electronics, automotive and oil and gas production and drilling industries. Its products include surface and coating materials and water-based hydraulic control fluids. In conjunction with the sale of these products, we provide extensive
technical service and support to ensure superior performance of their application.
The Graphic Solutions segment primarily produces and
markets photopolymers through an extensive line of flexographic plates that are used in the commercial packaging and printing industries. The Company evaluates the performance of its operating segments based on net sales and operating profit.
Operating profit for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Operating profit for each segment includes an allocation of corporate costs such as corporate
salary and wages, equity compensation expense and legal costs.
Segment assets include cash, prepaid expenses, receivables, inventories,
capital assets, goodwill, intangibles, deferred taxes, other long term assets and intercompany balances. Segment assets exclude corporate assets, which consist of cash and cash equivalents, corporate property, plant and equipment, goodwill and other
intangible assets.
The following table gives financial information regarding each reportable segment’s results of operations for the
years ended December 31, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Net Sales:
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
|
|
|
|
|
|
|
External sales for the Performance Materials segment
|
|
$
|
559,520
|
|
|
$
|
568,578
|
|
|
Graphic Solutions
|
|
|
|
|
|
|
|
|
|
External sales for the Graphic Solutions segment
|
|
|
171,700
|
|
|
|
160,195
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated external sales
|
|
$
|
731,220
|
|
|
$
|
728,773
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
$
|
33,965
|
|
|
$
|
37,827
|
|
|
Graphic Solutions
|
|
|
8,228
|
|
|
|
8,918
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated depreciation and amortization
|
|
$
|
42,193
|
|
|
$
|
46,745
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
$
|
82,101
|
|
|
$
|
30,331
|
|
|
Graphic Solutions
|
|
|
32,996
|
|
|
|
25,617
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating profit
|
|
$
|
115,097
|
|
|
$
|
55,948
|
|
|
|
|
|
|
|
|
|
|
|
Total assets by reportable segment as of December 31, 2012 and 2011 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Performance Materials
|
|
$
|
971,907
|
|
|
$
|
968,572
|
|
|
Graphic Solutions
|
|
|
408,327
|
|
|
|
391,776
|
|
|
Corporate assets
|
|
|
147,161
|
|
|
|
125,235
|
|
|
Intercompany eliminations
|
|
|
(293,478
|
)
|
|
|
(264,165
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total assets
|
|
$
|
1,233,917
|
|
|
$
|
1,221,418
|
|
|
|
|
|
|
|
|
|
|
|
F-67
The following provides information for those countries that are 10 percent or more of the
specific category:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Net Sales*:
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
205,567
|
|
|
$
|
187,480
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Net Sales
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
115,160
|
|
|
|
113,129
|
|
|
China
|
|
|
66,294
|
|
|
|
72,763
|
|
|
Other countries
|
|
|
344,199
|
|
|
|
355,401
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Foreign Net Sales
|
|
|
525,653
|
|
|
|
541,293
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated sales
|
|
$
|
731,220
|
|
|
$
|
728,773
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Net sales are attributed to countries based on the country which generates the sale.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
39,818
|
|
|
$
|
36,640
|
|
|
Foreign Long-lived assets:
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
21,463
|
|
|
|
21,432
|
|
|
Italy
|
|
|
14,266
|
|
|
|
15,391
|
|
|
China
|
|
|
8,766
|
|
|
|
9,538
|
|
|
Other countries
|
|
|
16,078
|
|
|
|
13,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,573
|
|
|
|
60,276
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated long-lived assets
|
|
$
|
100,391
|
|
|
$
|
96,916
|
|
|
|
|
|
|
|
|
|
|
|
Within the Performance Materials segment, the Company has two primary categories of products. Industrial
products are materials used to improve the performance or look of a component of an industrial part or process and are classified into two sub categories: functional (designed to improve the corrosion resistance and/or functionality of surfaces) and
decorative (designed to enhance the appearance of surfaces). Electronic products are materials used to manufacture and improve the performance of circuit boards and similar electronic items. Such electronic products are classified as metallization
products. The Company's graphic solutions products are all photopolymers used in the commercial packaging and printing industries.
The
following table shows the Company's external party sales by product for the years ended December 31, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Industrial Group
|
|
$
|
411,091
|
|
|
$
|
409,251
|
|
|
Electronics Group
|
|
|
148,429
|
|
|
|
159,327
|
|
|
Graphic Solutions
|
|
|
171,700
|
|
|
|
160,195
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
731,220
|
|
|
$
|
728,773
|
|
|
|
|
|
|
|
|
|
|
|
|
21.
|
SALE OF BUSINESS UNITS
|
During the year ended December 31, 2011, the Company sold its
Performance Materials Australia and New Zealand business units for proceeds of $3,267. A loss on the disposal of these business units of $1,237 was recorded during the year ended December 31, 2011 and is included in selling, technical and
administrative expense in the statement of operations. The revenues and loss contributions of these business units for the years ended December 31, 2011 were not material.
F-68
The Company has evaluated subsequent events through March 6, 2013,
the date of these financial statements. There were no events or transactions during this evaluation that require recognition or disclosure in the financial statements.
F-69
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands
)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
September 30,
2013
|
|
|
September 30,
2012
|
|
|
Net sales
|
|
$
|
560,557
|
|
|
$
|
548,825
|
|
|
Cost of sales
|
|
|
271,730
|
|
|
|
282,539
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
288,827
|
|
|
|
266,286
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, technical and administrative
|
|
|
143,854
|
|
|
|
140,173
|
|
|
Research and development
|
|
|
17,504
|
|
|
|
19,145
|
|
|
Amortization
|
|
|
20,124
|
|
|
|
20,292
|
|
|
Restructuring
|
|
|
1,890
|
|
|
|
416
|
|
|
Impairment loss
|
|
|
427
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
183,799
|
|
|
|
180,026
|
|
|
|
|
|
|
Operating profit
|
|
|
105,028
|
|
|
|
86,260
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
304
|
|
|
|
392
|
|
|
Interest expense
|
|
|
(40,998
|
)
|
|
|
(38,012
|
)
|
|
Miscellaneous (expense) income, net
|
|
|
(405
|
)
|
|
|
9,092
|
|
|
Loss on extinguishment of debt
|
|
|
(18,788
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations before income taxes, non-controlling interest and accumulated payment-in-kind dividends on cumulative preferred
shares
|
|
|
45,141
|
|
|
|
57,732
|
|
|
Income tax expense
|
|
|
(20,932
|
)
|
|
|
(17,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
24,209
|
|
|
|
40,676
|
|
|
Less net income attributable to the non-controlling interest
|
|
|
(319
|
)
|
|
|
(243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to MacDermid, Incorporated
|
|
|
23,890
|
|
|
|
40,433
|
|
|
Accrued payment-in-kind dividend on cumulative preferred shares
|
|
|
(22,100
|
)
|
|
|
(33,096
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shares
|
|
$
|
1,790
|
|
|
$
|
7,337
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-70
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands
)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
September 30,
2013
|
|
|
September 30,
2012
|
|
|
Net income
|
|
$
|
24,209
|
|
|
$
|
40,676
|
|
|
Foreign currency translation (loss)
|
|
|
(6,164
|
)
|
|
|
(4,677
|
)
|
|
Unrealized gain (loss) on available for sale equity investments
|
|
|
|
|
|
|
|
|
|
Change in fair value
|
|
|
351
|
|
|
|
242
|
|
|
Reclassification into earnings
|
|
|
(192
|
)
|
|
|
—
|
|
|
Unrealized gain (loss) on derivatives valuation
|
|
|
|
|
|
|
|
|
|
Change in fair value
|
|
|
112
|
|
|
|
3,160
|
|
|
Reclassification into earnings
|
|
|
(372
|
)
|
|
|
(37
|
)
|
|
Income tax benefit (expense) on other comprehensive income
|
|
|
35
|
|
|
|
(1,177
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
17,979
|
|
|
|
38,187
|
|
|
Comprehensive income attributable to the non-controlling interest
|
|
|
(319
|
)
|
|
|
(243
|
)
|
|
Foreign currency translation gain attributable to the non-controlling interest
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to MacDermid, Incorporated
|
|
$
|
17,659
|
|
|
$
|
37,937
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-71
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2013
|
|
|
December 31,
2012
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
65,201
|
|
|
$
|
143,351
|
|
|
Accounts receivable, net of allowance for doubtful receivables of $9,624 and $8,831, respectively
|
|
|
144,372
|
|
|
|
138,970
|
|
|
Inventories, net
|
|
|
79,361
|
|
|
|
76,093
|
|
|
Prepaid expenses and other current assets
|
|
|
11,526
|
|
|
|
10,946
|
|
|
Deferred income taxes
|
|
|
5,449
|
|
|
|
5,169
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
305,909
|
|
|
|
374,529
|
|
|
Property, plant and equipment, net of accumulated depreciation of $96,661 and $89,118, respectively
|
|
|
99,179
|
|
|
|
100,391
|
|
|
Goodwill
|
|
|
471,560
|
|
|
|
476,232
|
|
|
Intangibles, net of accumulated amortization of $186,586 and $167,261, respectively
|
|
|
231,069
|
|
|
|
251,772
|
|
|
Deferred income taxes
|
|
|
1,416
|
|
|
|
1,812
|
|
|
Other assets
|
|
|
35,139
|
|
|
|
29,181
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,144,272
|
|
|
$
|
1,233,917
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
56,032
|
|
|
$
|
53,416
|
|
|
Accrued compensation
|
|
|
18,767
|
|
|
|
14,289
|
|
|
Accrued interest
|
|
|
229
|
|
|
|
6,985
|
|
|
Accrued income taxes payable
|
|
|
7,657
|
|
|
|
4,443
|
|
|
Accrued expenses
|
|
|
10,374
|
|
|
|
10,393
|
|
|
Current installments of long-term debt and capital lease obligations
|
|
|
9,306
|
|
|
|
26,819
|
|
|
Other current liabilities
|
|
|
14,547
|
|
|
|
11,801
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
116,912
|
|
|
|
128,146
|
|
|
Long-term debt and capital lease obligations
|
|
|
1,100,790
|
|
|
|
693,821
|
|
|
Retirement benefits, less current portion
|
|
|
55,938
|
|
|
|
54,207
|
|
|
Deferred income taxes
|
|
|
52,482
|
|
|
|
49,411
|
|
|
Other long-term liabilities
|
|
|
28,120
|
|
|
|
35,895
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
1,354,242
|
|
|
$
|
961,480
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
9.00% cumulative Series A preferred shares, 0 and 316,000 shares authorized and issued, 0 shares and 315,144 shares outstanding at
September 30, 2013 and December 31, 2012, respectively; cumulative dividends of $0 and $209,027 at September 30, 2013 and December 31, 2012, respectively ; 856 shares canceled
|
|
$
|
—
|
|
|
$
|
525,027
|
|
|
9.50% cumulative Series B preferred shares, 44,977 shares authorized and issued, 44,977 shares and 0 shares outstanding at September 30,
2013 and December 31, 2012, respectively, including cumulative dividends of $1,295 and $0 at September 30, 2013 and December 31, 2012, respectively
|
|
|
46,272
|
|
|
|
—
|
|
|
Common shares, 50,000,000 shares authorized and issued, 49,582,936 shares and 49,582,936 shares outstanding at September 30, 2013 and
December 31, 2012, respectively; 417,064 shares canceled
|
|
|
49,583
|
|
|
|
50,000
|
|
|
Class A Junior shares, 2,150,000 shares authorized and issued, 1,892,762 vested shares and 1,892,762 vested shares at September 30, 2013
and December 31, 2012, respectively; 257,238 shares canceled
|
|
|
—
|
|
|
|
—
|
|
|
Class B Junior shares, 1,620,000 shares authorized, 642,264 vested shares and 411,576 vested shares at September 30, 2013 and December
31, 2012, respectively; 563,360 shares canceled
|
|
|
—
|
|
|
|
—
|
|
|
Additional paid-in capital
|
|
|
2,427
|
|
|
|
2,318
|
|
|
Accumulated deficit
|
|
|
(271,296
|
)
|
|
|
(273,086
|
)
|
|
Accumulated other comprehensive (loss)
|
|
|
(36,500
|
)
|
|
|
(30,270
|
)
|
|
Common and preferred shares in treasury, 0 preferred shares and 0 common shares at September 30, 2013 and 856 preferred shares and
417,064 common shares at December 31, 2012, at cost, respectively
|
|
|
—
|
|
|
|
(1,264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ (deficit) equity
|
|
|
(209,514
|
)
|
|
|
272,725
|
|
|
(Deficit) in non-controlling interest
|
|
|
(456
|
)
|
|
|
(288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total (deficit) equity
|
|
|
(209,970
|
)
|
|
|
272,437
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and (deficit) equity
|
|
$
|
1,144,272
|
|
|
$
|
1,233,917
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-72
MACDERMID, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2013
|
|
|
Nine months ended
September 30, 2012
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
24,209
|
|
|
$
|
40,676
|
|
|
|
|
|
|
Adjustments to reconcile net income from operations to net cash flows provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
9,334
|
|
|
|
11,330
|
|
|
Amortization
|
|
|
20,124
|
|
|
|
20,292
|
|
|
Provision for bad debts
|
|
|
1,099
|
|
|
|
2,209
|
|
|
Deferred income taxes
|
|
|
3,192
|
|
|
|
(7,030
|
)
|
|
Write off of deferred financing costs
|
|
|
143
|
|
|
|
226
|
|
|
Equity compensation expense
|
|
|
109
|
|
|
|
195
|
|
|
Remeasurement (gains) on foreign denominated debt and intercompany loans
|
|
|
(1,137
|
)
|
|
|
(9,487
|
)
|
|
(Gain) on the disposition of fixed assets
|
|
|
(170
|
)
|
|
|
(80
|
)
|
|
(Gain) on sale of external investments
|
|
|
(145
|
)
|
|
|
—
|
|
|
Impairment loss
|
|
|
427
|
|
|
|
—
|
|
|
Restructuring charges
|
|
|
1,890
|
|
|
|
416
|
|
|
Amortization of deferred financing fees
|
|
|
2,556
|
|
|
|
2,926
|
|
|
(Gain) on sale of asset group
|
|
|
(422
|
)
|
|
|
—
|
|
|
Loss on extinguishment of debt
|
|
|
18,788
|
|
|
|
—
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase) in accounts receivables
|
|
|
(7,437
|
)
|
|
|
(10,473
|
)
|
|
(Increase) in inventories
|
|
|
(4,428
|
)
|
|
|
(4,659
|
)
|
|
(Increase) in prepaid expenses and other
|
|
|
(990
|
)
|
|
|
(605
|
)
|
|
(Increase) in equipment at customers
|
|
|
(677
|
)
|
|
|
(717
|
)
|
|
Increase in accounts payable
|
|
|
2,433
|
|
|
|
2,645
|
|
|
(Decrease) increase in accrued expenses
|
|
|
(273
|
)
|
|
|
11,050
|
|
|
(Decrease) increase in income tax balances
|
|
|
(2,945
|
)
|
|
|
2,215
|
|
|
Other, net
|
|
|
(1,289
|
)
|
|
|
(2,111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows provided by operating activities
|
|
|
64,391
|
|
|
|
59,018
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(7,168
|
)
|
|
|
(5,518
|
)
|
|
Proceeds from the sale of assets
|
|
|
296
|
|
|
|
121
|
|
|
Proceeds from the sale of an asset group
|
|
|
1,831
|
|
|
|
—
|
|
|
Business acquired
|
|
|
(1,369
|
)
|
|
|
(5,059
|
)
|
|
Purchase of equity investments
|
|
|
(472
|
)
|
|
|
(57
|
)
|
|
Proceeds from sale of equity investments
|
|
|
824
|
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows (used in) investing activities
|
|
|
(6,058
|
)
|
|
|
(10,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) from short-term borrowings
|
|
|
3
|
|
|
|
(48
|
)
|
|
Proceeds from issuance of long term debt, net of discounts and fees
|
|
|
1,109,513
|
|
|
|
—
|
|
|
Proceeds from capital leases
|
|
|
—
|
|
|
|
172
|
|
|
Repayments of long term debt and capital leases
|
|
|
(731,597
|
)
|
|
|
(24,020
|
)
|
|
Contribution of equity by non-controlling interest partner
|
|
|
17
|
|
|
|
31
|
|
|
Dividends paid to non-controlling interest partner
|
|
|
(505
|
)
|
|
|
(505
|
)
|
|
Payment of financing costs
|
|
|
(13,519
|
)
|
|
|
(321
|
)
|
|
Repurchase of treasury shares
|
|
|
—
|
|
|
|
(72
|
)
|
|
Repurchase of Series A preferred shares
|
|
|
(270,167
|
)
|
|
|
—
|
|
|
Payment of Series A preferred share accumulated dividends
|
|
|
(229,833
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows (used in) financing activities
|
|
|
(136,088
|
)
|
|
|
(24,763
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(395
|
)
|
|
|
278
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(78,150
|
)
|
|
|
24,118
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
143,351
|
|
|
|
113,452
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
65,201
|
|
|
$
|
137,570
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
44,936
|
|
|
$
|
26,295
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
18,304
|
|
|
$
|
19,805
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-73
MACDERMID INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
Series A
Preferred
Shares
|
|
|
Cumulative
Series B
Preferred
Shares
|
|
|
Common
Shares
|
|
|
Class A
Junior
Shares
|
|
|
Class B
Junior
Shares
|
|
|
Contributed
Capital
|
|
|
Accumulated
deficit
|
|
|
Accumulated
other
comprehensive
income (loss)
|
|
|
Treasury
Shares
|
|
|
Total
MacDermid
Shareholder
Equity
|
|
|
Non-
controlling
interest
|
|
|
Total
equity
(deficit)
|
|
|
Balance at December 31, 2012
|
|
$
|
525,027
|
|
|
$
|
—
|
|
|
$
|
50,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,318
|
|
|
$
|
(273,086
|
)
|
|
$
|
(30,270
|
)
|
|
$
|
(1,264
|
)
|
|
$
|
272,725
|
|
|
$
|
(288
|
)
|
|
$
|
272,437
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,890
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,890
|
|
|
|
319
|
|
|
|
24,209
|
|
|
Equity compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
109
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
109
|
|
|
|
—
|
|
|
|
109
|
|
|
Accrual of paid in kind dividend on cumulative preferred shares
|
|
|
20,805
|
|
|
|
1,295
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22,100
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Foreign currency translation adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,164
|
)
|
|
|
—
|
|
|
|
(6,164
|
)
|
|
|
1
|
|
|
|
(6,163
|
)
|
|
Derivatives valuation, net of tax expense of $91
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(169
|
)
|
|
|
—
|
|
|
|
(169
|
)
|
|
|
—
|
|
|
|
(169
|
)
|
|
Unrealized loss on available for sale equity securities, net of tax benefit of $56
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
103
|
|
|
|
—
|
|
|
|
103
|
|
|
|
—
|
|
|
|
103
|
|
|
Shares repurchased
|
|
|
(500,000
|
)
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
(500,008
|
)
|
|
|
—
|
|
|
|
(500,008
|
)
|
|
Shares exchanged
|
|
|
(44,977
|
)
|
|
|
44,977
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Shares canceled
|
|
|
(855
|
)
|
|
|
—
|
|
|
|
(417
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,272
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Dividend paid to non-controlling interest partner
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(505
|
)
|
|
|
(505
|
)
|
|
Assignment of value for non controlling interest in business acquisition
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2013
|
|
$
|
—
|
|
|
$
|
46,272
|
|
|
$
|
49,583
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,427
|
|
|
$
|
(271,296
|
)
|
|
$
|
(36,500
|
)
|
|
$
|
—
|
|
|
$
|
(209,514
|
)
|
|
$
|
(456
|
)
|
|
$
|
(209,970
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
F-74
MACDERMID, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The accompanying unaudited interim financial information has been prepared in accordance with the interim reporting
rules and regulations of the U.S. Securities and Exchange Commission and therefore does not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with
accounting principles generally accepted in the United States (“GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted. The preparation of financial
statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported
amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information and actual results could differ from those estimates.
In the opinion of MacDermid, Incorporated (together with its consolidated subsidiaries, “MacDermid” or the “Company”)
management, the accompanying unaudited consolidated financial statements of the interim periods presented contain all adjustments necessary to present fairly the financial position of MacDermid as of September 30, 2013 and December 31, 2012,
the results of operations for the nine months ended September 30, 2013 and 2012 and the statements of cash flows for the nine months ended September 30, 2013 and 2012. The results of operations for the nine months ended September 30, 2013, are not
necessarily indicative of the results that may be achieved for a full year and cannot be used to indicate financial performance for the entire year.
Within these interim financial statements, there are references to MacDermid Holdings, LLC. MacDermid Holdings, LLC, is a Delaware limited
liability company organized as a holding company with the sole purpose of being the primary shareholder of its consolidated operating subsidiary MacDermid. MacDermid Holdings, LLC has no business operations or material assets or liabilities other
than its ownership interest of 96.9% of the common stock and 96.7% of the preferred stock in MacDermid as of September 30, 2013. Participants of the MacDermid, Incorporated Profit Sharing and Employee Savings Plan (the “Savings Plan”)
owned 3.1% of the common stock and 3.3% of the preferred stock in MacDermid as of September 30, 2013.
2. NEW ACCOUNTING STANDARDS
In March 2013, the FASB issued ASU No. 2013-05
Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative
Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity
which resolves diversity in practice regarding the release of the cumulative translation
adjustment into net income when a parent either sells a part or all of its investments in a foreign entity. In addition, the standard resolves diversity in practice for the treatment of business combinations achieved in stages involving a foreign
entity. The guidance is effective prospectively for fiscal years and interim periods beginning after December 15, 2013. We do not anticipate the adoption of this new ASU to have a material impact on our financial statements.
In June 2013, the FASB issued ASU No. 2013-11
Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a
Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
which requires standard presentation of an unrecognized tax benefit when a carryforward related to net operating losses or tax credits exist. The guidance
is effective prospectively for fiscal years and interim periods beginning after December 15, 2013, with early adoption permitted. The Company adopted the provisions of this ASU during the nine months ended September 30, 2013. The adoption of
this ASU did not have a material impact on the Company’s financial statements.
F-75
On February 5, 2013, the FASB issued ASU 2013-02,
Reporting of Amounts
Reclassified Out of Accumulated Other Comprehensive Income
(ASU 2013-02), which adds additional disclosure requirements for items reclassified out of accumulated other comprehensive income. The Company adopted the amendments in this ASU
effective January 1, 2013, and the initial adoption of the amendments in this ASU concerns presentation and disclosure only and did not have a significant impact on the Company’s consolidated financial statements.
3. RECAPITALIZATION AND REFINANCING ARRANGEMENTS
On June 7, 2013, the Company completed a refinancing arrangement whereby the outstanding Tranche B term loan, Tranche C term loan, revolving
credit facility and senior subordinated notes payable were retired and replaced with two new senior secured credit facilities. The new senior secured credit facilities consist of (i) a $805,000 first lien credit facility allocated between a
$755,000 term loan denominated in U.S. Dollars (“first lien term loan”), a $25,000 revolving credit facility denominated in U.S. Dollars and $25,000 multi-currency revolving credit facility and (ii) a $360,000 second lien term loan
credit facility denominated in U.S. Dollars (“second lien term loan”). The first lien term loan and related revolving credit facilities accrue interest at the greater of 4.00% or LIBOR plus 3.00% and has quarterly principal payments of
$1,878. The revolving credit facility portion of the first lien term loan matures June 7, 2018. The first lien term loan matures June 7, 2020. The second lien term loan accrues interest at the greater of 7.75% or LIBOR plus 6.75% and matures
December 7, 2020. The first lien term loan was issued at a discount of $1,887 and the second lien term loan was issued at a discount of $3,600. The new senior secured credit facilities are guaranteed by MacDermid Holdings, LLC and certain of its
direct and indirect wholly owned domestic subsidiaries and is secured by the personal property now owned or hereafter acquired of MacDermid Holdings, LLC and certain of its direct and indirect wholly owned domestic subsidiaries and also 65% of the
stock of the Company’s first tier foreign subsidiaries, subject to customary exceptions, exclusions and release mechanisms. MacDermid Holdings, LLC, is a Delaware limited liability company organized as a holding company with the sole purpose of
being the primary shareholder of its consolidated subsidiary MacDermid.
MacDermid also has letters of credit outstanding of $3,774 at
September 30, 2013. The letters of credit reduce the borrowings available under the new revolving credit facility.
The recapitalization
and refinancing transactions sources and uses of cash are summarized below:
|
|
|
|
|
|
|
Sources:
|
|
|
|
|
|
First lien term loan
|
|
$
|
755,000
|
|
|
Second lien term loan
|
|
|
360,000
|
|
|
Cash
|
|
|
117,080
|
|
|
|
|
|
|
|
|
Total sources
|
|
$
|
1,232,080
|
|
|
|
|
|
|
|
|
Uses:
|
|
|
|
|
|
Retire Tranche B and Tranche C term loans and accrued interest
|
|
$
|
345,426
|
|
|
Retire senior subordinated notes, accrued interest and call premium
|
|
|
368,164
|
|
|
Redemption of Series A preferred stock and accumulated dividends
|
|
|
500,000
|
|
|
Fees and expenses
|
|
|
13,003
|
|
|
Discount on first lien term loan and second lien term loan
|
|
|
5,487
|
|
|
|
|
|
|
|
|
Total uses
|
|
$
|
1,232,080
|
|
|
|
|
|
|
|
As part of the refinancing, $100,481 of the senior subordinated notes were called but not tendered on June 7,
2013 but were paid on the tender date of July 8, 2013. As a result, $105,864 of the new debt proceeds from the refinance and recapitalization were escrowed to pay the outstanding called senior subordinated notes of $100,481, redemption premium
of $3,182 and accrued interest $2,201 through the tender date of July 8, 2013. The escrowed funds were paid to the holders of the remaining senior subordinated note holders on July 8, 2013.
F-76
The Company utilized $500,000 of the proceeds from the new term loans to complete a
recapitalization whereby the outstanding 9.00% cumulative Series A preferred shares and related accumulated payment in kind dividends were exchanged for cash and issuance of 9.50% cumulative Series B preferred shares. As a result, 44,977 shares of
9.00% cumulative Series B preferred stock were issued as part of the exchange and the 9.50% cumulative Series A preferred shares were retired, and payment of related accumulated payment in kind dividends.
During the nine months ended September 30, 2013 and in connection with the recapitalization and refinancing, the Company recorded a loss
of $18,788 on extinguishment of debt. This consisted of $12,539 of called bond retirement premiums and $6,249 of write-offs of deferred financing fees related to the extinguished debt.
In connection with the recapitalization and refinancing, the Company recorded $13,628 of deferred financing costs as an asset in the
consolidated balance sheet. This amount recorded on the consolidated balance sheet at September 30, 2013, is expected to be amortized into interest expense over the next seven years.
4. ACQUISITION OF BUSINESS
During the
quarter ended March 31, 2012, the Company acquired 95% of the stock of a chemical business located in Brazil. This business was acquired to complement the service and product offerings within Brazil and its balance sheet and results of
operations have been integrated into the Performance Materials segment. The total purchase price was approximately $8,877. At September 30, 2013, approximately $1,285 remains payable to the former owners of the acquired business. The payable
represents the estimated fair value of contingent consideration expected to be payable in the event that the acquired business achieves specific performance metrics over the next year. The Company’s allocation of purchase price for this
acquisition included current assets of approximately $1,642, property, plant and equipment of approximately $2,163, goodwill of approximately $2,054 and intangible assets of $3,018. The total amount of goodwill that is expected to be deductible for
tax purposes is $0. Of the $3,018 of acquired intangible assets, $467 was assigned to registered trademarks that are not subject to amortization. The remaining $2,551 of acquired intangible assets has a weighted-average useful life of approximately
six years. The intangible assets that make up that amount include customer lists of $2,095 (seven year useful life), a licensing agreement of $142 (five year useful life), and non-compete agreement assets of $314 (one year useful life).
5. GOODWILL AND OTHER INTANGIBLE ASSETS
The following table presents goodwill allocated to the reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable Segment
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
Graphic Solutions
|
|
|
Total
|
|
|
Balance as of December 31, 2012
|
|
$
|
447,752
|
|
|
$
|
28,480
|
|
|
$
|
476,232
|
|
|
Revision due to business acquisition
|
|
|
100
|
|
|
|
—
|
|
|
|
100
|
|
|
Foreign currency translation
|
|
|
(4,772
|
)
|
|
|
—
|
|
|
|
(4,772
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill balance at September 30, 2013
|
|
$
|
443,080
|
|
|
$
|
28,480
|
|
|
$
|
471,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated goodwill impairments related to the Performance Materials reporting segment as of
September 30, 2013 and December 31, 2012 was $57,515, respectively. There was no accumulated goodwill impairment for the Graphic Solutions reporting segment as of September 30, 2013 and December 31, 2012.
F-77
Intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
December 31, 2012
|
|
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
|
Customer lists
|
|
$
|
275,613
|
|
|
$
|
(132,172
|
)
|
|
$
|
143,441
|
|
|
$
|
276,480
|
|
|
$
|
(119,120
|
)
|
|
$
|
157,360
|
|
|
Developed technology
|
|
|
83,721
|
|
|
|
(54,139
|
)
|
|
|
29,582
|
|
|
|
83,760
|
|
|
|
(47,883
|
)
|
|
|
35,877
|
|
|
License agreement
|
|
|
108
|
|
|
|
(36
|
)
|
|
|
72
|
|
|
|
117
|
|
|
|
(21
|
)
|
|
|
96
|
|
|
Non-compete agreement
|
|
|
239
|
|
|
|
(239
|
)
|
|
|
—
|
|
|
|
259
|
|
|
|
(237
|
)
|
|
|
22
|
|
|
Tradenames
|
|
|
57,974
|
|
|
|
—
|
|
|
|
57,974
|
|
|
|
58,417
|
|
|
|
—
|
|
|
|
58,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
417,655
|
|
|
$
|
(186,586
|
)
|
|
$
|
231,069
|
|
|
$
|
419,033
|
|
|
$
|
(167,261
|
)
|
|
$
|
251,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2013, the Company recorded amortization expense on intangible assets of $20,124. For
the nine months ended September 30, 2012, the Company recorded amortization expense on intangible assets of $20,292. Amortization expense for intangible assets is expected to range from $27,015 to $14,637 over the next five years.
Customer lists assets are amortizable and are being amortized on a straight-line basis over the expected period of benefit of three to twenty
one years. Developed technology assets are being amortized on a straight-line basis over the expected period of benefit of ten years. License agreements are being amortized on a straight-line basis over the expected period of benefit of five years.
Non-compete agreement is being amortized on a straight-line basis over the expected period of benefit of one year. Trademarks assets are indefinite-lived intangible assets and are not amortizable.
Goodwill is tested for impairment at the reporting unit level annually, or when events or changes in circumstances indicate that goodwill
might be impaired. The Company’s annual test for goodwill impairment is performed as of April
1
st
. The Company performed a
qualitative assessment for goodwill impairment on its reporting units. The results of the qualitative goodwill impairment assessment indicated that step one of the two-step goodwill impairment review was required for two reporting units. In the
first step of impairment testing, the fair value of each reporting unit is compared to its carrying value. The fair value of a reporting unit is determined based on the present value of estimated discounted future cash flows. If the fair value of
the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair
value of the reporting unit, then the second step of the impairment test must be performed to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair
value, an impairment loss is recorded equal to the difference.
Indefinite-lived purchased intangible assets are reviewed for potential
impairment as of April
1
st
, on an annual basis, or when events or changes in circumstances indicate that indefinite-lived intangible
assets might be impaired. Indefinite-lived intangible assets are reviewed for impairment at the reporting unit level for which identifiable revenues are reported. Indefinite-lived intangible assets are reviewed for impairment by comparing the
estimated fair value of the indefinite-lived purchased intangible assets to the carrying value. The estimated fair value of these intangible assets is determined using the income approach. An impairment loss is recognized when the estimated fair
value of an indefinite-lived purchased intangible asset is less than the carrying value. Currently, the Company is not aware of any event that would have caused goodwill or intangible assets to become impaired.
Based upon the Company’s 2013 goodwill impairment testing performed as of April 1st, no goodwill impairment was required.
F-78
As of April 1, 2013, the Company reviewed its indefinite lived intangible assets for impairment.
The Company estimated the direct cash flows associated with the applicable intangible assets using a “relief from royalty” methodology associated with revenues projected to be generated from these intangible assets. This analysis indicated
that a certain trade name was impaired by $400. The Company recorded an impairment charge of $400 related to this trade name in the nine months ended September 30, 2013.
6. ASSET IMPAIRMENT CHARGES
During the second quarter of
2013, the carrying value of leasehold improvements at a certain business unit in the Performance Materials Asia business units was evaluated due a restructuring plan. The recoverability of these assets was measured in accordance with Impairment or
Disposal of Long-Lived Assets Subsection of ASC Subtopic 360-10. This evaluation indicated that the carrying values of certain equipment were not recoverable, as the expected undiscounted future cash flows to be generated by them were less than
their carrying values. The related impairment loss was measured based on the amount by which the asset carrying values exceeded fair value. The asset fair value was based on estimates of prices for similar assets. As a result of the above evaluation
under the requirements of ASC 360-10, the Company recorded a $27 asset impairment charge during the nine months ended September 30, 2013. The Company recorded no tax benefit related to this asset impairment charge in the nine months ended
September 30, 2013.
There were no asset impairment charges during the nine months ended September 30, 2012.
7. EQUITY COMPENSATION PLANS
On
April 13, 2007, MacDermid authorized and issued 2,150,000 A Shares to employees who purchased both preferred and common shares of MacDermid, Incorporated as part of a $7,000 management buy-in of both preferred and common shares of MacDermid,
Incorporated. Under the existing terms of the A Shares, vesting of the A Shares occurs evenly over a five year period and requires continued employment. Forfeited A Shares can be reissued at the Board of Directors’ discretion. Holders of the A
Shares are not entitled to any dividends at the time that they vest. However, holders of vested A Shares are entitled to distributions if declared by the board of directors of MacDermid Holdings, LLC. Any such distributions, when declared, would be
paid in the order of priority specified in the MacDermid Holdings, LLC operating agreement. Redemption value of the A Shares is based on a sliding formula which takes into account the final valuation of MacDermid at a “liquidity event”,
such as an initial public offering or sale of the Company. At the point of the liquidity event, the A Shares will be liquidated in their order of priority or seniority, as compared to each of the Company’s debt and equity instruments. If during
the liquidity event, there are not enough proceeds to redeem the Company’s debt and equity instruments with senior claims, then the A Shares may potentially have a $0 value.
The A Shares were valued at $1.00 per share for equity compensation expense purposes. The Company determined the estimated fair value of the A
Shares as of the date of grant based upon the issuance price of the common stock in connection with the Merger, which was determined based on various factors including the lack of liquidity of the common stock, the general and industry specific
economic outlook and the relative rights of the holders of capital stock of the Company and MacDermid Holdings, LLC to receive assets of the Company upon a liquidation event. A key assumption in determining the value of the A Shares was that the
Company would attain the performance metrics required for full vesting of the B Shares because the number of B Shares vested at the time of any liquidation event would impact the amount of assets available for distribution to the A Shares upon
such liquidation event. None of the specific terms of the A Shares, other than their vesting terms and the rights of the holders of the A Shares in a liquidation event relative to the rights of the holders of the common shares, preferred shares and
B Shares, impact the fair value of the A Shares. The issuance of the A Shares was designed to compensate certain of the Company’s employees for their long-term commitment to the Company and, in a liquidation event, to permit employees to
share in the value of equity in the Company.
As the A Shares vest, the Company records equity based compensation expense and the number
of vested A Shares reflected on the balance sheet is increased. For the nine months ended September 30, 2013, the
F-79
Company recorded equity based compensation expense of $8, based upon the vesting of the A Shares. For the nine months ended September 30, 2012, the Company recorded equity based compensation
expense of $103, based upon the vesting of the A Shares. The Company did not receive any funds upon the vesting of the A Shares. The total intrinsic value of A Shares exercised for the nine months ended September 30, 2013 and 2012, was $0. As
of September 30, 2013, there was $0, of unrecognized compensation cost related to the A Shares. As of September 30, 2013 and December 31, 2012, there were 1,884,192 and 1,880,192 vested A Shares, respectively.
The following table presents the activity in the A Shares:
|
|
|
|
|
|
|
|
|
|
|
A Shares:
|
|
A
Shares
|
|
|
Weighted Average
Grant Date
Fair Value
|
|
|
Outstanding non-vested balance at December 31, 2012
|
|
|
18,598
|
|
|
$
|
1.00
|
|
|
Changes during the period:
|
|
|
|
|
|
|
|
|
|
Vesting
|
|
|
(12,598
|
)
|
|
|
—
|
|
|
Forfeited
|
|
|
(6,000
|
)
|
|
|
—
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested balance at September 30, 2013
|
|
|
—
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
On April 13, 2007, MacDermid authorized 1,620,000 B Shares for issuance. In May 2008, the Company issued
1,364,000 B Shares. The B Shares carry a vesting period of one to four years as well as performance requirements when issued. The Company’s Board of Directors issued the B Shares as a future compensation tool, using a valuation based method,
during their annual Compensation and Equity meeting, held at the time of the financial review for the previous fiscal year’s earnings. The Company’s Board of Directors has no further obligation to issue B Shares to any employee of the
Company and further issuance of B Shares is at the discretion of the Company’s Board of Directors.
The B Shares were modified by resolution of the
Board on February 28, 2011, subject to MacDermid Holdings, LLC member consent, to take into account the divestitures and acquisitions undertaken by the Company since 2007 and the difficult global economic conditions that occurred in 2009. MacDermid
Holdings, LLC member consent was completed on April 4, 2011. The change resulted in the reinstatement of shares previously forfeited under the former performance metrics. As a result of the modification of the performance metrics, the estimated fair
value of the awards was determined at the date of modification. At the date of modification, the Company considered numerous objective and subjective factors, including liquidation scenarios and their respective dates and probabilities based upon
management’s best estimates. As a result of the analysis, the estimated fair value at the date of modification was approximately $842. The Company determined the estimated fair value of the B Shares as of the modification date to be $0.67 per
share based upon a stock valuation model of the Company’s common stock on the modification date of the B Shares. The stock valuation model that the Company utilized and that was used to estimate the fair value of the B Shares considered a
number of factors including operating and financial performance, the lack of liquidity of the Company’s common stock and the relative rights of the holders of capital stock of the Company and MacDermid Holdings, LLC to receive assets of the
Company upon a liquidation event. The key assumptions and estimates in determining the value of the B Shares were (1) the assumption that the Company would attain the modified performance metrics required for full vesting of the B Shares and (2) the
estimation of the fair value of the Company’s common stock on the modification date of the B Shares. None of the specific terms of the B Shares, other than their vesting terms and the rights of the holders of the B Shares in a liquidation event
relative to the rights of the holders of the common shares, preferred shares and A Shares, impact the fair value of the B Shares. The issuance of the B Shares was designed to compensate certain of the Company’s employees for their long-term
commitment to the Company, motivate sustained increases in the Company’s financial performance and, in a liquidation event, permit employees to share in the value of equity in the Company.
F-80
The B Shares vest ratably on each of March 31, 2011, 2012, 2013, 2014 and 2015 (each, a
“Vesting Date”) if the Company attains the modified performance metrics with respect to the calendar year immediately prior to the year of the applicable Vesting Date (a “Performance Vesting Target”). The B Shares can also be
adjusted from time to time with the approval of Court Square to take into consideration any divestitures or acquisitions by the Company occurring during such year (a “Modified Performance Vesting Target”). If the Company does not attain
the Performance Vesting Target for any of calendar years 2010, 2011, 2012 or 2013, but does attain the Performance Vesting Target for the immediately subsequent calendar year, then, such prior year’s Performance Vesting Target shall be deemed
satisfied and such ratable portion of the B Shares that did not vest with respect to the prior calendar year shall vest on the Vesting Date for the then applicable period or upon a change of control (as defined in the MacDermid Holdings, LLC
operating agreement), subject to holders of the Company’s preferred shares, common shares and A Shares having received certain threshold amounts in connection with the change of control. If the B Shares have not vested upon the earlier of March
31, 2015 or the date of the consummation of a change of control, any B Shares that have not vested shall be forfeited to the Company and shall cease to be outstanding. Holders of the B Shares are not entitled to any dividends at the time that they
vest. However, holders of vested B Shares are entitled to distributions if declared by the board of directors of MacDermid Holdings, LLC. Any such distributions, when declared, would be paid in the order of priority specified in the MacDermid
Holdings, LLC operating agreement.
The Performance Vesting Targets required for ratable vesting of the B Shares on the applicable Vesting
Date are (1) EBITDA (as defined in the MacDermid Holdings, LLC operating agreement) for calendar year 2010 of at least $137 million; (2) EBITDA for calendar year 2011 of at least $150 million; (3) EBITDA for calendar year 2012 of at least $162
million; (4) EBITDA for calendar year 2013 of at least $172 million; and (5) EBITDA for calendar year 2014 of at least $185 million.
As
the B Shares vest, the Company records equity based compensation expense and the number of vested B Shares reflected on the balance sheet is increased. The Company’s EBITDA for calendar year 2011 exceeded $150 million and as a result, 20% of
the B Shares vested on March 31, 2012. Additionally, the Company’s EBITDA for calendar year 2012 exceeded $162 million. As a result, 20% of the B Shares vested on March 31, 2013 for the achievement of the 2012 EBITDA performance metric,
bringing the total B Share vesting percentage to 60%. The Company did not receive any funds upon the vesting of the B Shares. As of September 30, 2013 and December 31, 2012, there were 642,264 and 411,576 vested B Shares, respectively
The A Shares and B Shares have no redemption value as of September 30, 2013 or December 31, 2012, as the redemption value of each is
contingent upon liquidation or dissolution of MacDermid Holdings, LLC, as described in the operating agreement governing that entity.
The
following table presents the activity in the non-vested B Shares:
|
|
|
|
|
|
|
|
|
|
|
B Shares:
|
|
B Shares
|
|
|
Weighted Average
Grant Date
Fair Value
|
|
|
Nonvested balance at December 31, 2012
|
|
|
653,064
|
|
|
$
|
0.67
|
|
|
Changes during the period:
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(8,000
|
)
|
|
|
—
|
|
|
Canceled
|
|
|
—
|
|
|
|
—
|
|
|
Vested
|
|
|
(230,688
|
)
|
|
|
0.67
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested balance at September 30, 2013
|
|
|
414,376
|
|
|
$
|
0.67
|
|
|
|
|
|
|
|
|
|
|
|
F-81
During the nine months ended September 30, 2013, compensation expense of $101 was recorded
related to the B Shares based on the Company’s management concluding that the achievement of the performance condition contained in the B Shares was probable. During the nine months ended September 30, 2012, compensation expense of $92 was
recorded related to the B Shares based on the Company’s management concluding that the achievement of the performance condition contained in the B Shares was probable. At September 30, 2013, there was $174 of unrecognized compensation cost
related to the B Shares, which is expected to be recognized as the performance metrics are achieved. If the performance metrics are achieved each year for the years from 2013 through 2014, stock based compensation of $139 would be recognized each
year.
On January 29, 2013, MacDermid authorized for issuance 5,000,000 Class C shares. The Class C Junior are allocated to three tranches
of 1,666,666 shares each and defined as Class C-1 Junior Shares, Class C-2 Junior Shares and Class C-3 Junior Shares (collectively “C Shares”). The Class C-1 Junior Shares vested upon the grant date of January 29, 2013. Class C-2 Junior
Shares vest on January 1, 2014 and the Class C-3 Junior Shares vest on January 1, 2015. The number of issued and awarded Class C Junior Shares was 4,890,000 shares or 1,630,000 shares each for the Class C-1 shares, Class C-2 shares and Class C-3
shares. The Company’s Board of Directors issued the C Shares as an incentive compensation tool, using a valuation based method, during their annual Compensation and Equity meeting, held at the time of the financial review. The Company’s
Board of Directors has no further obligation to issue C Shares to any employee of the Company and further issuance of C Shares is at the discretion of the Company’s Board of Directors. The Class C shares are measured based upon the performance
criteria in the operating agreement of MacDermid Holdings, LLC of estimated enterprise value of the Company. The Class C shares are to be paid in cash in accordance with the operating agreement of MacDermid Holdings, LLC upon a change in control,
liquidating event or initial public offering. The Class C shares are considered liability-classified and such awards recognize the fair value of the award ratably over the performance period; however, equity-classified awards only measure the fair
value at the grant date, whereas liability-classified awards measure the fair value at each reporting date, with changes in the fair value of the award cumulatively adjusted through compensation expense each period. During the nine months ended
September 30, 2013, $0 was recognized as compensation expense related to the C Shares as a change in control, liquidating event or initial public offering related to the Company (as defined in the MacDermid Holdings, LLC operating agreement) was not
probable. The estimated fair value of the Class C stock (all tranches) was approximately $9,030 at September 30, 2013.
8. INVENTORIES
The major components of inventory as of September 30, 2013 and December 31, 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
December 31, 2012
|
|
|
Finished goods
|
|
$
|
48,403
|
|
|
$
|
46,820
|
|
|
Raw materials and supplies
|
|
|
29,235
|
|
|
|
27,657
|
|
|
Equipment
|
|
|
1,723
|
|
|
|
1,616
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventory, net
|
|
$
|
79,361
|
|
|
$
|
76,093
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2013 and December 31, 2012, the reserve for inventory was $10,519 and $9,326,
respectively.
F-82
9. PENSION, POST-RETIREMENT AND POST-EMPLOYMENT PLANS
The following tables show the components of the net periodic pension benefit costs the Company incurred for the nine months ended September 30,
2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
September 30, 2013
|
|
|
For the nine months ended
September 30, 2012
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
3,234
|
|
|
$
|
522
|
|
|
$
|
2,598
|
|
|
$
|
498
|
|
|
Interest cost
|
|
|
4,695
|
|
|
|
2,304
|
|
|
|
4,614
|
|
|
|
2,277
|
|
|
Expected (return) on plan assets
|
|
|
(6,015
|
)
|
|
|
(3,849
|
)
|
|
|
(5,110
|
)
|
|
|
(3,294
|
)
|
|
Net prior service cost amortization
|
|
|
69
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net (gain)/loss amortization
|
|
|
1,515
|
|
|
|
405
|
|
|
|
705
|
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (income)
|
|
$
|
3,498
|
|
|
$
|
(618
|
)
|
|
$
|
2,807
|
|
|
$
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated net periodic benefit cost for domestic other postretirement benefits for the nine months ended
September 30, 2013 was $168. The estimated net periodic benefit cost for foreign other postretirement benefits for the nine months ended September 30, 2013 was $84.
The estimated net periodic benefit cost for domestic other postretirement benefits for the nine months ended September 30, 2012 was $171. The
estimated net periodic benefit cost for foreign other postretirement benefits for the nine months ended September 30, 2012 was $0.
The
Company is required to contribute $1,500 and $4,633, respectively, to MacDermid’s various domestic and foreign pension plans in fiscal 2013. For the nine months ended September 30, 2013, domestic and foreign pension plan contributions were
$2,250 and $2,546, respectively. The current portion of pension and postretirement benefit plans are included in other current liabilities in the Company’s balance sheets at September 30, 2013 and December 31, 2012.
10. INCOME TAXES
For the nine months
ended September 30, 2013 and 2012, the Company reported an income tax provision from continuing operations of $20,932 and $17,056, respectively. Foreign exchange gains and losses are treated as discrete items in determining the annual tax rate.
Foreign exchange gain and loss are discrete items as it is not possible to estimate their full year effect. During the nine months ended September 30, 2013 and 2012, the Company included discrete items for foreign exchange gains and (losses) of $0
and $9,036, respectively. The discrete items for foreign exchange loss resulted in a tax charge of $0 and $249, respectively, for the nine months ended September 30, 2013 and 2012. During the nine months ended September 30, 2013 the Company included
discrete items for loss on extinguishment of debt of ($18,788). The discrete items for loss on extinguishment of debt did not result in a tax charge or benefit for the nine months ended September 30, 2013.
The Company has net liabilities related to unrecognized tax benefits of $16,393 and $22,759 at September 30, 2013 and December 31, 2012
of which $16,393 and $15,803, if recognized, would impact the Company’s effective tax rate. The Company estimates that none of the total unrecognized benefits will reverse within the next twelve months. The Company adopted the rules set forth
by the ASU No. 2013-11
Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
during the nine months ended September 30, 2013. As a
result of the adoption of this ASU, the Company has presented the net liabilities related to unrecognized tax benefits in a net position which results in a reduction of the unrecognized tax benefits by $6,956 at September 30, 2013.
The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest and penalties are
included with the related liability for unrecognized tax benefits in our Consolidated Balance Sheet.
F-83
11. DEBT AND CAPITAL LEASES
MacDermid’s debt and capital lease obligations as of September 30, 2013 and December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2013
|
|
|
December 31,
2012
|
|
|
Borrowings under lines of credit
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien secured credit facility, due 2020, interest at the greater of 4.00% or LIBOR plus 3.00%, weighted average interest rate of
4.00% at September 30, 2013, respectively, net of discount of $1,798
|
|
|
751,315
|
|
|
|
—
|
|
|
Second lien secured credit facility, due 2020, interest at the greater of 7.75% or LIBOR plus 6.75%, weighted average interest rate of
7.75% at September 30, 2013, net of discount of $3,440
|
|
|
356,560
|
|
|
|
|
|
|
Senior secured credit facility, tranche B due 2014, LIBOR plus 2.00%, weighted average interest rate of 2.13% and 2.29%, respectively;
Credit facility paid in full June 7, 2013
|
|
|
—
|
|
|
|
217,656
|
|
|
Senior secured credit facility, tranche C due 2014, EURIBOR plus 2.25%, weighted average interest rate of 2.23% and 2.64%,
respectively; credit facility paid in full June 7, 2013
|
|
|
—
|
|
|
|
147,337
|
|
|
Called senior subordinated notes due 2017, 9.5% interest rate; paid in full July 8, 2013
|
|
|
—
|
|
|
|
350,000
|
|
|
Japanese senior secured bank debt, due in 2014, weighted average interest rate of 2.40% and 1.90%, respectively
|
|
|
1,222
|
|
|
|
4,698
|
|
|
Other
|
|
|
999
|
|
|
|
949
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt and capital lease obligations
|
|
|
1,110,096
|
|
|
|
720,640
|
|
|
Less: current portion debt and capital lease obligations
|
|
|
(9,306
|
)
|
|
|
(26,819
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt and capital lease obligations
|
|
$
|
1,100,790
|
|
|
$
|
693,821
|
|
|
|
|
|
|
|
|
|
|
|
Refinancing
On June 7, 2013, the Company completed a refinancing arrangement whereby the outstanding Tranche B term loan, Tranche C term loan, revolving
credit facility and senior subordinated notes payable were replaced with two new senior secured credit facilities. The new senior secured credit facilities consist of (i) a $805,000 first lien credit facility allocated between a $755,000 term
loan denominated in U.S. Dollars (“first lien term loan”), a $25,000 revolving credit facility denominated in U.S. Dollars and $25,000 multi-currency revolving credit facility and (ii) a $360,000 second lien term loan credit facility
denominated in U.S. Dollars (“second lien term loan”). The first lien term loan and related revolving credit facilities accrues and pays interest monthly at the greater of 4.00% or LIBOR plus 3.00% and has quarterly principal payments of
$1,878. The revolving credit facility portion of the first lien term loan matures June 7, 2018. The first lien term loan matures June 7, 2020. The second lien term loan accrues and pays interest monthly at the greater of 7.75% or LIBOR plus 6.75%,
requires no principal payments until maturity at December 7, 2020. The first lien term loan was issued at a discount of $1,887 and the second lien term loan was issued at a discount of $3,600. The new senior secured credit facilities are guaranteed
by MacDermid Holdings, LLC and certain of its direct and indirect wholly owned domestic subsidiaries and is secured by the personal property now owned or hereafter acquired of MacDermid Holdings, LLC and certain of its direct and indirect wholly
owned domestic subsidiaries and also 65% of the stock of the Company’s first tier foreign subsidiaries, subject to customary exceptions, exclusions and release mechanisms.
During the nine months ended September 30, 2013, interest payments of $9,647, were made on the first lien term loan. During the nine months
ended September 30, 2013, principal payments of $1,887 were made on the first lien term loan.
F-84
During the nine months ended September 30, 2013, interest payments of $8,913 were made on
the second lien term loan.
MacDermid also has letters of credit outstanding of $3,774 at September 30, 2013. The letters of credit reduce
the borrowings available under the new revolving credit facility.
Retired Senior Secured Credit Facility
On April 12, 2007, the Company closed three new senior secured credit facilities consisting of (i) a $360,000 tranche B term loan
credit facility denominated in U.S. Dollars (“tranche B”), (ii) a $250,000 tranche C term loan credit facility denominated in Euros (“tranche C”) and (iii) a $50,000 revolving credit facility denominated in U.S.
Dollars.
During the nine months ended September 30, 2013, interest payments of $2,054, were made on the tranche B term loan. During the
nine months ended September 30, 2013, interest payments of $1,454, were made on the tranche C term loan.
During the nine months ended
September 30, 2013, principal payments of $217,656, were made on the tranche B term loan. The tranche B principal payments for the nine months ended September 30, 2013 consist of a quarterly payment of $900, excess cash flow payment of $10,277 and
the retirement payoff of the outstanding balance of $206,479.
During the nine months ended September 30, 2013, principal payments of
$146,194, were made on the tranche C term loan. The principal payments for the nine months ended September 30, 2013 consist of a quarterly payment of $647, excess cash flow payment of $6,810 and the payoff of the outstanding balance of $138,737.
During the nine months ended September 30, 2013, the Company recorded $3,261 of other expense related to the remeasurement loss on
the foreign denominated tranche C term loan. During the nine months ended September 30, 2013, the realized portion of the remeasurement gain on the foreign denominated tranche C term loan was $4,398.
During the nine months ended September 30, 2012, principal and interest payments of $2,700 and $3,803, respectively, were made on the
tranche B term loan and $1,939 and $2,990 of principal and interest payments, respectively, were made on the tranche C term loan.
During
the nine months ended September 30, 2012, the Company recorded $817 of other income related to the remeasurement gain on the foreign denominated tranche C term loan. During the nine months ended September 30, 2012, the Company recorded
$240 of other income related to the remeasurement gain on the foreign denominated tranche C term loan.
In addition to scheduled
repayments, the tranche B and tranche C loans contain mandatory prepayment provisions, whereby the Company is required to reduce the outstanding principal amounts of these loans based on excess cash flow (as defined in the credit agreement for the
tranche B and tranche C loans) as of the most recent completed fiscal year. During the nine months ended September 30, 2012, the Company made a mandatory excess cash flow prepayment, based on 2011 operating results, of $8,727 on the tranche B loan
and $5,882 on the tranche C loan.
Retired Revolving Credit Facility
As discussed above, on April 12, 2007, the Company entered into a $50,000 revolving credit facility. In May 2012, revolving credit
facility was amended and extended and was retired on June 7, 2013 as part of the refinancing discussed above. There were no balances outstanding under the revolving credit facility on the retirement date or as of December 31, 2012. During the
nine months ended September 30, 2013 and 2012, the Company paid commitment fees of $118 and $152, respectively, for the revolving credit facility.
F-85
MacDermid also had letters of credit outstanding of $3,874 at December 31, 2012. The letters of
credit reduced the borrowings available under the revolving credit facility. Upon the retirement of this revolving credit facility, the outstanding letters of credit were reissued under the new revolving credit facility
Senior Subordinated Notes
On April 12,
2007, the Company issued $350,000 of senior subordinated notes with a fixed interest rate of 9.50% at par. As discussed above and as part of the refinance and recapitalization, the senior subordinated notes were called on June 7, 2013 and $249,519
of principal and a redemption premium of $9,357 were paid to retire the tendered senior subordinated notes. Additionally, $105,864 of the new debt proceeds from the refinance and recapitalization were escrowed to pay the outstanding called senior
subordinated notes of $100,481. Additionally, proceeds from the refinance were escrowed for a redemption premium of $3,182 on the called senior subordinated notes outstanding and accrued interest of $2,201 related to these called senior subordinated
notes. The escrowed funds were paid to the holders of the remaining senior subordinated note holders on July 8, 2013.
During the nine
months ended September 30, 2013, the Company made interest payments of $20,049 under the senior subordinated notes. During the nine months ended September 30, 2012, the Company made $16,625 of interest and $0 of principal payments under senior
subordinated notes.
Japanese Senior Secured Bank Debt
On February 26, 2007, the company borrowed approximately $15,000 denominated in Japanese Yen in three separate notes. The first note of
$8,397 had a maturity date of February 26, 2012, a fixed interest rate of 1.37% and was paid in full during 2009. The second note of $5,878 had a maturity date of March 26, 2014, a fixed interest rate of 1.47% and was paid in full
July 25, 2013. The third note of $840 had a maturity date of March 27, 2012, a fixed interest rate of 1.31% and was paid in full on March 27, 2012.
On May 7, 2007 the Company borrowed an additional $7,557, denominated in Japanese Yen. The May 2007 note had a maturity date of May 28,
2012, a fixed interest rate of 1.41% and was paid in full on May 28, 2012.
On September 26, 2007, the Company borrowed an additional
$2,519 denominated in Japanese Yen. The September 2007 note had a maturity date of September 26, 2014, a fixed interest rate of 1.42% and was paid in full on July 25, 2013.
On October 1, 2009, the Company borrowed $5,569 denominated in Japanese Yen. The October 2009 note has a maturity date of August 20,
2014 and a fixed interest rate of 2.40%. Under this note, interest and principal payments are due on a monthly basis.
During the nine
months ended September 30, 2013, the Company made principal and interest payments of $2,953 and $51, respectively, on Japanese senior secured bank debt.
During the nine months ended September 30, 2012, the Company made principal and interest payments of $4,258 and $128, respectively, on
Japanese senior secured bank debt.
Capital Leases
During the nine months ended September 30, 2013, the Company entered into equipment capital lease agreements totaling $393 with interest rates
from 6.9% to 8.9%. During the nine months ended September 30, 2012, the Company entered into equipment capital lease agreements totaling $172, with interest rates ranging from 4.3% to 10%.
Payments on capital leases for the nine months ended September 30, 2013 were $368. Payments on capital leases for the nine months ended
September 30, 2012 were $514.
F-86
Debt Covenants
The new senior secured credit facilities contain various covenants including restrictions on liens, limitations on additional indebtedness,
dividends and other distributions, entry into new lines of business, transactions with affiliates, use of loan proceeds, capital expenditures, restricted payments, amendments to organizational documents, accounting changes, sale and leaseback
transactions and dispositions. In addition, the new revolving credit facilities requires the Company to comply with certain financial covenants, including consolidated leverage, interest coverage ratios and limitations on capital expenditures if the
Company’s funding under the revolving credit facility exceeds $12,500 at the end of the fiscal quarter. As of September 30, 2013, the Company was in compliance with the debt covenants contained in the new senior secured credit facilities.
As of the retirement date of the former senior secured credit facilities and senior subordinated notes and December 31, 2012, the Company was
in compliance with the debt covenants contained in the senior secured credit facility and senior subordinated notes.
Other debt facilities
MacDermid carries various short-term debt facilities worldwide which are used to fund short-term cash needs as the need arises. As of September
30, 2013 and December 31, 2012, there was $0 and $0, respectively, outstanding under these other debt facilities. The Company also has various overdraft facilities available. At September 30, 2013 and December 31, 2012, the capacity under these
overdraft facilities was approximately $21,185 and $18,761, respectively. As of September 30, 2013, MacDermid’s overdraft lines bore interest rates ranging from 1.0% to 6.3%.
12. DERIVATIVE INSTRUMENTS
In the normal course of
business, MacDermid is exposed to risks such as changes in foreign currency exchange rates, interest rates and commodity prices. Derivative financial instruments, such as interest rate swaps are used to manage changes in market conditions related to
debt obligations. All derivatives are recognized on the consolidated balance sheets at fair value at the end of each year. The counterparty to the Company’s derivative agreements is a major international financial institution. The Company
continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties.
Interest Rates
In June 2007, the Company entered into an
interest rate collar agreement (“collar”) in June 2007. The collar helped protect the Company’s floating rate U.S. dollar denominated debt. The collar had a floor of 5.20% and a ceiling of 6.25%, a notional amount of $100,000 and
covered the period from June 30, 2010 through June 30, 2012.
Changes in the fair value of a derivative that is designated as and
meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive income (loss) and reclassified into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to the
interest rate collar agreement are included in interest expense. As of September 30, 2013 and December 31, 2012, there were no unrealized losses related to the interest rate derivative instruments as the interest rate collar agreement expired
June 30, 2012. During the nine months ended September 30, 2013, the Company recorded $0, in unrealized gains to other comprehensive income (loss) (“OCI”). During the nine months ended September 30, 2012, the Company recorded $1,462, in
unrealized gains to other comprehensive income (loss) (“OCI”). There was hedge effectiveness of approximately $0 and $0, as of September 30, 2013 and December 31, 2012, respectively, included in OCI. There was hedge ineffectiveness of
$0 for the nine months ended September 30, 2013. There was hedge ineffectiveness of $13, respectively, recorded as other expense in the statement of operations for the nine months ended September 30, 2012.
F-87
During nine months ended September 30, 2013, the Company made no payments related to the interest
rate collar agreement as the agreement expired June 30, 2012. During the nine months ended September 30, 2012, the Company made payments of $2,364, related to the difference between the interest rate collar agreement rate of 5.20% and the actual
interest rate on the Company’s floating rate U.S. dollar denominated debt.
Foreign Currency
The Company conducts a significant portion of its business in currencies other than the U.S. dollar, the currency in which the consolidated financial
statements are reported. Correspondingly, the Company’s operating results could be affected by foreign currency exchange rate volatility relative to the U.S. dollar. The Company’s Autotype subsidiary in the United Kingdom uses the Great
Britain Pound (“GBP”) as its functional currency for paying labor and other operating costs, while approximately 25 percent of its revenues are U.S. dollar denominated. To hedge against the risk of a stronger GBP, the Corporate Treasury
Group contracted in 2012 and 2013, on behalf of the Autotype foreign subsidiary, with a financial institution to deliver U.S. dollars at a fixed GBP rate and to receive GBP in exchange for the U.S. dollar. The Company did not pay up-front premiums
to obtain the hedge.
While the Company has implemented certain strategies to mitigate risks related to the impact of fluctuations in
currency exchange rates, it cannot ensure that it will not recognize gains or losses from international transactions, as this is part of transacting business in an international environment. Not every exposure is or can be hedged and, where hedges
are put in place based on expected foreign exchange exposure, they are based on forecasts for which actual results may differ from the original estimate. Failure to successfully hedge or anticipate currency risks properly could adversely affect
impact or benefit the Company’s consolidated operating results.
As of September 30, 2013, the aggregate United States dollar
notional amount of foreign currency forward contracts, designated as hedges, was $13,500. The Company uses the discounted period-end forward rates methodology to determine market value of its forward and option contracts.
During the nine months ended September 30, 2013, $(260) was recorded as unrealized (losses) to OCI related to hedged foreign currency exchange
contracts. During the nine months ended September 30, 2013, the Company recorded realized (loss) of $(372) in other income (expense) related to the settlement of hedged foreign exchange contracts.
During the nine months ended September 30, 2012, $568 was recorded as unrealized gains to OCI related to hedged foreign currency exchange
contracts. During the nine months ended September 30, 2012, ($50) was recorded as realized loss in other income (expense) related to the settlement of hedged foreign currency exchange contracts.
The following table summarizes derivative instrument amounts as of September 30, 2013, by currency and the portion of the asset that settles
within the next twelve months.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local Currency
Amount
|
|
|
U.S. Dollar
Amount
|
|
|
Percentage Settled
Within One Year
|
|
|
Dates Contracts are
Through
|
|
|
Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Britain Pound
|
|
£
|
2,485
|
|
|
$
|
4,000
|
|
|
|
100
|
%
|
|
|
December 30, 2013
|
|
|
Great Britain Pound
|
|
£
|
2,796
|
|
|
$
|
4,500
|
|
|
|
100
|
%
|
|
|
March 31, 2014
|
|
|
Great Britain Pound
|
|
£
|
3,107
|
|
|
$
|
5,000
|
|
|
|
100
|
%
|
|
|
June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-88
The following table summarizes the fair value of derivative instruments reported in the
Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
designated as
hedging
instruments:
|
|
Assets
Balance
Sheet
Location
|
|
|
September 30,
2013
U.S. Dollar
Amount
|
|
|
December 31,
2012
U.S. Dollar
Amount
|
|
|
Liabilities
Balance Sheet
Location
|
|
|
September 30,
2013
U.S. Dollar
Amount
|
|
|
December 31,
2012
U.S. Dollar
Amount
|
|
|
Foreign exchange contracts
|
|
|
Other currentassets
|
|
|
$
|
76
|
|
|
$
|
336
|
|
|
|
Other currentliabilities
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative contracts
|
|
|
|
|
|
$
|
76
|
|
|
$
|
336
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13. ACCUMULATED OTHER COMPREHENSIVE INCOME/ (LOSS)
Reclassifications out of accumulated other comprehensive income/ (loss) for the nine months ended September 30, 2013, was as follows (net of
tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
benefit plans
|
|
|
Foreign
currency
translation
|
|
|
Derivatives
|
|
|
Equity
securities
|
|
|
Total
|
|
|
Balance, January 1, 2013
|
|
$
|
(33,908
|
)
|
|
$
|
3,317
|
|
|
$
|
217
|
|
|
$
|
104
|
|
|
$
|
(30,270
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income before reclassifications
|
|
|
—
|
|
|
|
(6,164
|
)
|
|
|
(541
|
)
|
|
|
295
|
|
|
|
(6,410
|
)
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
372
|
|
|
|
(192
|
)
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net year-to-date other comprehensive (loss) income, net of tax benefit of $35
|
|
|
—
|
|
|
|
(6,164
|
)
|
|
|
(169
|
)
|
|
|
103
|
|
|
|
(6,230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2013
|
|
$
|
(33,908
|
)
|
|
$
|
(2,847
|
)
|
|
$
|
48
|
|
|
$
|
207
|
|
|
$
|
(36,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14. FAIR VALUE MEASUREMENTS
The Company determines fair value measurements used in its consolidated financial statements based upon the exit price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs, as determined by either the principal market or the most advantageous market. The principal market is the market with the
greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company has used the most advantageous market, which is the market in which the Company would receive the highest selling price
for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous market, transaction costs are only considered to determine which market is the most advantageous and these
costs are then excluded when applying a fair value measurement.
Inputs used in the valuation techniques to derive fair values are classified based on a
three-level hierarchy. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.
The three levels of the fair value hierarchy are as follows:
|
•
|
|
Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
F-89
|
•
|
|
Level 2—quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in non-active markets; and model derived valuations whose inputs are observable or whose
significant valuation drivers are observable.
|
|
•
|
|
Level 3—significant inputs to the valuation model are unobservable and/or reflect the Company’s market assumptions.
|
The following table presents the Company’s financial instruments, assets and liabilities that are measured at fair value on a recurring
basis as of September 30, 2013 and December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
|
|
September 30,
2013
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant other
observable
inputs (Level 2)
|
|
|
Significant
unobservable
inputs (Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market accounts
|
|
$
|
18,520
|
|
|
$
|
18,520
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Available for sale equity securities
|
|
|
2,151
|
|
|
|
2,151
|
|
|
|
—
|
|
|
|
—
|
|
|
Derivatives
|
|
|
76
|
|
|
|
—
|
|
|
|
76
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20,747
|
|
|
$
|
20,671
|
|
|
$
|
76
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
|
|
December 31,
2012
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant other
observable
inputs (Level 2)
|
|
|
Significant
unobservable
inputs (Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market accounts
|
|
$
|
110,867
|
|
|
$
|
110,867
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Available for sale equity securities
|
|
|
2,233
|
|
|
|
2,233
|
|
|
|
—
|
|
|
|
—
|
|
|
Derivatives
|
|
|
336
|
|
|
|
—
|
|
|
|
336
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
113,436
|
|
|
$
|
113,100
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market accounts are included in cash and cash equivalents in the balance sheet. Available for sale equity securities are
included in other long term assets in the balance sheet.
Nonrecurring Fair Value Measurements
In accordance with the provisions of ASC Topic 350, other intangible assets with carrying amounts of $4,300 in the Graphic Solutions Americas reporting unit
were written down to their implied fair values of $3,900, resulting in intangible asset impairment charges of $400. These impairment charges were included in the results from operations for the nine months ended September 30, 2013.
In accordance with the provisions of the Impairment or Disposal of Long-Lived Assets Subsection of ASC Subtopic 360-10, fixed assets with a
carrying amount of $27 were written down to their implied fair value of $0, resulting in an impairment charge of $27. The fixed asset impairment charge was included in the results from operations for the nine months September 30, 2013.
F-90
There were no write down of assets to implied fair value during the nine months ended September 30, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
Description
|
|
Year Ended
December 31,
2012
|
|
|
Quoted
prices in
active
markets
(Level 1)
|
|
|
Significant
other
observable
inputs
(Level 2)
|
|
|
Significant
unobservable
inputs
(Level 3)
|
|
|
Total
(Losses)
|
|
|
Other intangible assets—Graphic Solutions Americas
|
|
$
|
4,300
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
3,900
|
|
|
$
|
(400
|
)
|
|
Property, plant and equipment—Performance Materials Asia
|
|
|
27
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(427
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the carrying value and estimated fair value of the Company’s first lien, second lien,
tranche B, tranche C and Senior subordinated notes debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2013
|
|
|
December 31, 2012
|
|
|
|
|
Carrying value
|
|
|
Fair Value
|
|
|
Carrying value
|
|
|
Fair Value
|
|
|
First lien and second lien term loans, including current portion
|
|
$
|
1,107,875
|
|
|
$
|
1,116,713
|
|
|
$
|
—
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tranche B, tranche C and senior subordinated notes debt outstanding, including current portion
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
714,993
|
|
|
$
|
727,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The carrying value of the Company’s Japanese senior secured bank debt approximates fair value as of
September 30, 2013 and December 31, 2012.
The following methods and assumptions were used to estimate the fair value of each class
of the Company’s financial instruments, assets and liabilities:
Money market accounts
—The Company invests in various
money market funds which are managed by financial institutions. These money market funds are not publicly traded, but historically have been highly liquid. The fair value of the money market accounts is determined by the banks based upon the
funds’ net asset values (“NAV”). All of the money market accounts currently permit daily investments and redemptions at $1.00 NAV.
Derivatives
—The fair value of derivatives are determined using pricing models based upon market observable inputs including
interest rate curves and both forward and spot prices for currencies. Derivative assets include foreign exchange contracts and derivative liabilities include an interest rate collar and foreign exchange contracts.
Available for sale equity securities
—Equity securities classified as available for sale are measured using quoted market prices at
the reporting date multiplied by the quantity held.
First Lien, Second Lien, Tranche B, Tranche C and senior subordinated notes
debt
—The First Lien, Second Lien, Tranche B, Tranche C and senior subordinated debt are measured using quoted market prices at the reporting date multiplied by the carrying amount of the related debt.
During the nine months ended September 30, 2013 and 2012, there were no significant transfers of assets and liabilities between the fair value
categories Level 1 and Level 2.
F-91
15. MISCELLANEOUS INCOME (EXPENSE)
The major components of miscellaneous income (expense) for the nine months ended September 30, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
September 30,
2013
|
|
|
September 30,
2012
|
|
|
Miscellaneous income:
|
|
|
|
|
|
|
|
|
|
Gain on remeasurement of foreign denominated debt
|
|
$
|
1,137
|
|
|
$
|
1,057
|
|
|
Gain on remeasurement of foreign denominated intercompany loans
|
|
|
—
|
|
|
|
8,430
|
|
|
Other
|
|
|
99
|
|
|
|
341
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
$
|
1,236
|
|
|
$
|
9,828
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous expense:
|
|
|
|
|
|
|
|
|
|
Loss on settled foreign currency derivative
|
|
$
|
(372
|
)
|
|
$
|
(50
|
)
|
|
Foreign exchange loss
|
|
|
(1,249
|
)
|
|
|
(570
|
)
|
|
Other
|
|
|
(20
|
)
|
|
|
(103
|
)
|
|
Unrealized loss on interest rate derivative
|
|
|
—
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
|
(1,641
|
)
|
|
|
(736
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net other (expense) income
|
|
$
|
(405
|
)
|
|
$
|
9,092
|
|
|
|
|
|
|
|
|
|
|
|
16. RESTRUCTURING ACTIVITIES
MacDermid continuously evaluates all operations to identify opportunities to improve profitability by leveraging existing infrastructure to
reduce operating costs and respond to overall economic conditions. MacDermid implemented certain consolidation actions during the nine months ended September 30, 2013 and 2012. These actions are intended to better align the Company’s
manufacturing capacity, eliminate excess capacity by lowering operating costs, and streamline the organizational structure for improved long-term profitability. The restructuring actions consist of facility consolidations and closures and employee
terminations. The Company expects to incur incremental manufacturing inefficiency costs at the operating locations impacted by the restructuring actions during the related restructuring implementation period. The restructuring plans initiated in
2013 primarily related to the consolidation of manufacturing processes which affected a manufacturing facility in the Graphic Solutions Americas reporting unit. The restructuring plans initiated in 2012 primarily related to the consolidation of
certain back office functions in the Performance Materials Europe reporting unit. Restructuring charges totaled $1,890 and $416, respectively, during the nine months ended September 30, 2013 and 2012.
During the nine months ended September 30, 2013, the Company recorded $1,890 of restructuring expense. The Company recorded restructuring
expense of $1,668 related to the elimination of forty-seven positions in the Graphic Solutions Americas business unit. The Company recorded restructuring expense of $102 related to the elimination of four positions in the Performance Materials
Americas business unit, $55 related to the elimination of two positions in the Performance Materials Europe business unit and $65 related to the elimination of three positions in the Performance Materials Asia business unit. As of September 30,
2013, the Company has accrued restructuring costs of $870 that are anticipated to be paid out in the next twelve months.
During the nine
months ended September 30, 2012, the Company recorded $416 of restructuring expense. The Company reversed $(12) related to accrued benefits in the Graphic Solutions Europe business unit as the amounts were no longer due to employees. Additionally,
the Company reversed $(8) related to accrued other for estimated legal costs that were no longer required in the Graphic Solutions Europe business unit as the amounts were no longer due. The Company recorded restructuring expense of $297 related to
the elimination of four positions in the Performance Materials Europe business unit, $99 related to the elimination of seven positions in
F-92
the Performance Materials Asia business unit and $85 related to the elimination of two positions in the Graphic Solutions Americas business unit. Also, the Company reversed $(45) related to
accrued other for estimated lease termination costs that were no longer required in the Performance Materials Europe business unit as the amounts were no longer due.
The activity in the accrued restructuring was as follows for the nine month periods ended September 30, 2013 and 2012, by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
September 30,
2013
|
|
|
September 30,
2012
|
|
|
Severance and other benefits
|
|
$
|
1,890
|
|
|
$
|
469
|
|
|
Other
|
|
|
—
|
|
|
|
(53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total restructuring expense
|
|
$
|
1,890
|
|
|
$
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
September 30, 2013
|
|
|
Total costs and
adjustments for the
nine months ended
September 30, 2013
|
|
|
Totalcosts as of
September 30,
2013
|
|
|
|
|
Balance
December 31,
2012
|
|
|
Charges
to
Expense
|
|
|
Cash
payments
|
|
|
Non-cash
Adjustments
|
|
|
|
|
Graphic Solutions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
$
|
—
|
|
|
$
|
1,668
|
|
|
$
|
(1,442
|
)
|
|
$
|
—
|
|
|
$
|
226
|
|
|
$
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Graphic Solutions
|
|
|
—
|
|
|
|
1,668
|
|
|
|
(1,442
|
)
|
|
|
—
|
|
|
|
226
|
|
|
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
|
616
|
|
|
|
222
|
|
|
|
(224
|
)
|
|
|
18
|
|
|
|
16
|
|
|
|
632
|
|
|
Other
|
|
|
16
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Materials
|
|
|
632
|
|
|
|
222
|
|
|
|
(228
|
)
|
|
|
18
|
|
|
|
12
|
|
|
|
644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total restructuring charges
|
|
$
|
632
|
|
|
$
|
1,890
|
|
|
$
|
(1,670
|
)
|
|
$
|
18
|
|
|
$
|
238
|
|
|
$
|
870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
September 30, 2012
|
|
|
Total costs and
adjustments for the
nine months ended
September 30, 2012
|
|
|
Total costs as
of
September 30,
2012
|
|
|
|
|
Balance
December 31,
2011
|
|
|
Charges
to
Expense
|
|
|
Cash
payments
|
|
|
Non-cash
Adjustments
|
|
|
|
|
Graphic Solutions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
$
|
12
|
|
|
$
|
73
|
|
|
$
|
(85
|
)
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
Site clean-up costs
|
|
|
8
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Graphic Solutions
|
|
|
20
|
|
|
|
65
|
|
|
|
(85
|
)
|
|
|
—
|
|
|
|
(20
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other benefits
|
|
|
1,012
|
|
|
|
396
|
|
|
|
(814
|
)
|
|
|
6
|
|
|
|
(412
|
)
|
|
|
600
|
|
|
Other
|
|
|
215
|
|
|
|
(45
|
)
|
|
|
(28
|
)
|
|
|
(3
|
)
|
|
|
(76
|
)
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performance Materials
|
|
|
1,227
|
|
|
|
351
|
|
|
|
(842
|
)
|
|
|
3
|
|
|
|
(488
|
)
|
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total restructuring charges
|
|
$
|
1,247
|
|
|
$
|
416
|
|
|
$
|
(927
|
)
|
|
$
|
3
|
|
|
$
|
(508
|
)
|
|
$
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17. RELATED PARTY TRANSACTIONS
For the nine months ended September 30, 2013, the Company paid management fees of $305, to Court Square Capital Partners II LP (“Court
Square or CSC”). For the nine months ended September 30, 2012, the Company paid management fees of $204, to Court Square. Three of MacDermid’s board members are employees of Court Square.
F-93
For the nine months ended September 30, 2013, the Company paid management fees to Weston Presidio
of $70. For the nine months ended September 30, 2012, the Company paid management fees to Weston Presidio of $93.
On August 26,
2013, the Company loaned $275 to a MacDermid officer in exchange for a promissory note bearing prime rate plus 1% per annum. As collateral, the note was secured by real estate owned by the officer. The note along with accrued interest is
included in other current assets.
18. SEGMENT REPORTING
The Company operates on a worldwide basis, developing technological solutions using chemistry for the metal and plastic plating, electronic,
graphic arts and offshore production and drilling industries. The Company’s Performance Materials segment supplies technological solutions and chemistry used for finishing metals and non-metallic surfaces for automotive and other industrial
applications, electro-plating metal surfaces, etching and imagining to created electrical patterns on circuit boards for the electronic industry and offshore lubricants and cleaners for the offshore oil and gas markets. The Graphic Solutions segment
supplies flexographic plates for use in commercial printing and packaging industries and newspaper plates for the newspaper industry. The profitability of the Company’s reportable segments is evaluated by management based upon operating profit.
The operating profit for each reportable segment include corporate operating costs which are allocated based on the
relative burden each segment bears on those corporate operating costs. Transactions between the Company’s reportable segments are recorded on a basis similar to external transactions.
The following table gives relevant information regarding each segment's results of operations for the nine months ended September 30, 2013 and
2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
September 30,
2013
|
|
|
September 30,
2012
|
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
|
|
|
|
|
|
|
|
External sales for the segment
|
|
$
|
429,446
|
|
|
$
|
421,541
|
|
|
Graphic Solutions
|
|
|
|
|
|
|
|
|
|
External sales for the segment
|
|
|
131,111
|
|
|
|
127,284
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated external sales
|
|
$
|
560,557
|
|
|
$
|
548,825
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
$
|
23,796
|
|
|
$
|
25,561
|
|
|
Graphic Solutions
|
|
|
5,662
|
|
|
|
6,061
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated depreciation and amortization
|
|
$
|
29,458
|
|
|
$
|
31,622
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
|
|
|
|
|
|
Performance Materials
|
|
$
|
77,660
|
|
|
$
|
63,136
|
|
|
Graphic Solutions
|
|
|
27,368
|
|
|
|
23,124
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating profit
|
|
$
|
105,028
|
|
|
$
|
86,260
|
|
|
|
|
|
|
|
|
|
|
|
F-94
19. SUBSEQUENT EVENTS
On October 31, 2013, substantially all of the outstanding equity of the Company was acquired by Platform Acquisition Holdings
Limited (“Platform”) for $1.8 billion (including the assumption of approximately $753 million of indebtedness) plus up to $100 million of contingent consideration tied to certain EBITDA and stock trading price performance metrics over a
seven year period following the closing of the acquisition.
In conjunction with the assumption of the MacDermid
indebtedness, Platform also became a co-borrower on MacDermid’s $50 million revolving credit facility and unconditionally guaranteed all obligations under the first lien term debt and the revolving credit facility.
In conjunction with the acquisition, on October 31, 2013, the Company paid off the outstanding balance of the Second Lien
Secured Credit Facility and amended the first lien credit facility. Accordingly, the Company paid approximately $8.0 million of amendment fees and recorded a loss on extinguishment of debt of approximately $8.6 million.
In connection with the acquisition of the Company, the outstanding shares of the Company’s Class C shares vested and were
paid on November 1, 2013 in the amount of $9,030.
The Company has performed an evaluation of subsequent events through
December 11, 2013, which is the date the financial statements were issued.
F-95
APPENDIX A—PLATFORM BVI AMENDED AND
RESTATED MEMORANDUM AND ARTICLES
OF ASSOCIATION
TERRITORY OF THE BRITISH VIRGIN ISLANDS
THE BVI BUSINESS COMPANIES ACT 2004
MEMORANDUM OF ASSOCIATION
OF
PLATFORM SPECIALTY
PRODUCTS CORPORATION
a company limited by shares
|
1.1
|
The name of the Company is Platform Specialty Products Corporation.
|
|
2.1
|
The Company is a company limited by shares.
|
|
3
|
REGISTERED OFFICE AND REGISTERED AGENT
|
|
3.1
|
The first registered office of the Company is at Nemours Chambers, PO Box 3170, Road Town, Tortola, British Virgin Islands, the office of the first registered agent.
|
|
3.2
|
The first registered agent of the Company is Ogier Fiduciary Services (BVI) Limited of Nemours Chambers P.O. Box 3170, Road Town, Tortola, British Virgin Islands.
|
|
3.3
|
The Company may change its registered office or registered agent by a Resolution of Directors or a Resolution of Members. The change shall take effect upon the Registrar registering a notice of change filed under
section 92 of the Act.
|
|
4.1
|
The Company has, subject to the Act and any other British Virgin Islands legislation for the time being in force, irrespective of corporate benefit:
|
|
|
(a)
|
full capacity to carry on or undertake any business or activity, do any act or enter into any transaction; and
|
|
|
(b)
|
for the purposes of sub-paragraph (a), full rights, powers and privileges.
|
|
4.2
|
There are subject to Clause 4.1 no limitations on the business that the Company may carry on.
|
|
5
|
NUMBER AND CLASSES OF SHARES
|
|
5.1
|
The Company is authorised to issue an unlimited number of shares each of no par value which may be Ordinary Shares or Founder Preferred Shares.
|
|
6
|
DESIGNATIONS, POWERS, PREFERENCES OF SHARES
|
|
6.1
|
Ordinary Shares confer upon the holder:
|
|
|
(a)
|
the right to an equal share (with the holders of Founder Preferred Shares) in the distribution of the surplus assets of the Company on its liquidation as are attributable to the holders of Ordinary Shares in accordance
with the Articles;
|
A-1
|
|
(b)
|
subject to the right of the Founder Preferred Shares in accordance with Article 4 to receive any Annual Dividend Amount from time to time, rights to receive all amounts available for distribution and from time to time
to be distributed by way of dividend or otherwise at such time as the Directors shall determine (and in each case all amounts available for distribution to the holders of Ordinary Shares shall be distributed among the holders of Ordinary Shares pro
rata to the number of paid up Ordinary Shares held by each holder); and
|
|
|
(c)
|
in respect of each such Ordinary Share the right to receive notice of, attend and vote as a Member at any meeting of Members, except that each holder of Ordinary Shares does not have a right to vote on any Resolution of
Members as provided for by Article 42.1 (Merger and Consolidation) and Article 43 (Acquisition), and no right to receive notice of or attend any meeting of Members in respect thereof.
|
|
6.2
|
Founder Preferred Shares:
|
|
|
(a)
|
confer upon the holder the right to a share in the dividends payable in accordance with Article 4 of the Articles;
|
|
|
(b)
|
confer upon the holder no right to receive notice of, attend and vote at any meeting of Members, except that each Founder Preferred Share shall confer upon the holder the right to vote in relation to Clause 7.1 and
Article 44 (Amendment of Memorandum and Articles) and upon any Resolution of Members as required by Article 42.1 (Merger and Consolidation) and Article 43 (Acquisition), and the right to receive notice of and attend any meeting of the holders of
Founder Preferred Shares or meeting of Members, as the case may be, in respect thereof;
|
|
|
(c)
|
confer upon the holder the right to an equal share (with the holders of Ordinary Shares) in the distribution of the surplus assets of the Company on its liquidation as are attributable to the Founder Preferred Shares in
accordance with the Articles; and
|
|
|
(d)
|
are convertible into Ordinary Shares in the circumstances specified in Article 5.
|
|
6.3
|
The Directors may at their discretion by a Resolution of Directors redeem, purchase or otherwise acquire all or any of the shares in the Company, with the consent of the Member whose shares are to be redeemed, purchased
or otherwise acquired (unless the Company is permitted by any other provision in the Memorandum or the Articles to purchase, redeem or otherwise acquire the shares without such consent being obtained), subject to the Articles.
|
|
7.1
|
Subject to Clause 7.2, the rights attached to a class of shares as specified in Clauses 6.1 and 6.2 may only, whether or not the Company is being wound up, be varied with the consent in writing of the holders of not
less than 75 (seventy five) per cent. of the issued shares of that class, or by a resolution passed by the holders of not less than 75 (seventy five) per cent. of the issued shares of that class at a separate meeting of the holders of that class.
|
|
7.2
|
For the purposes of any consent required pursuant to Clause 7.1, the Directors may treat one or more classes of shares as forming one class if they consider that any proposed variation of the rights attached to each
such class of shares as specified in Clauses 6.1 and 6.2 would affect each such class in materially the same manner.
|
|
8.1
|
The Company shall issue registered shares only.
|
|
8.2
|
The Company is not authorised to issue bearer shares, convert registered shares to bearer shares or exchange registered shares for bearer shares.
|
A-2
|
9.1
|
A share may be transferred in accordance with the Articles.
|
|
10
|
AMENDMENT OF MEMORANDUM AND ARTICLES
|
|
10.1
|
The Company may amend its Memorandum or Articles by way of a Resolution of Members or in accordance with the Articles.
|
We, Ogier Fiduciary Services (BVI) Limited of Nemours Chambers, Road Town, Tortola, British Virgin Islands, for the purpose of incorporating a BVI business
company under the laws of the British Virgin Islands hereby sign this Memorandum of Association.
|
|
|
|
|
Dated: 23 April 2013
|
|
|
|
|
|
|
Incorporator
|
|
|
|
|
|
|
Sgd: Gareth Thomas
|
|
Sgd: Karen Fahie
|
|
|
|
|
Gareth Thomas
|
|
Karen Fahie
|
|
Authorised Signatory
|
|
Authorised Signatory
|
|
Ogier Fiduciary Services (BVI) Limited
|
|
Ogier Fiduciary Services (BVI) Limited
|
A-3
THE BVI BUSINESS COMPANIES ACT, 2004 (AS AMENDED)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
PLATFORM SPECIALTY
PRODUCTS CORPORATION
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
1
|
|
INTERPRETATION
|
|
|
A-6
|
|
|
|
|
|
|
2
|
|
SHARES
|
|
|
A-12
|
|
|
|
|
|
|
3
|
|
PRE-EMPTIVE RIGHTS
|
|
|
A-13
|
|
|
|
|
|
|
4
|
|
DIVIDEND RIGHTS OF FOUNDER PREFERRED SHARES
|
|
|
A-14
|
|
|
|
|
|
|
5
|
|
CONVERSION OF FOUNDER PREFERRED SHARES
|
|
|
A-15
|
|
|
|
|
|
|
6
|
|
DISCLOSURE REQUIREMENTS
|
|
|
A-17
|
|
|
|
|
|
|
7
|
|
CERTIFICATES
|
|
|
A-18
|
|
|
|
|
|
|
8
|
|
LIEN
|
|
|
A-18
|
|
|
|
|
|
|
9
|
|
CALLS IN RESPECT OF SHARES AND FORFEITURE
|
|
|
A-19
|
|
|
|
|
|
|
10
|
|
UNTRACED SHAREHOLDERS
|
|
|
A-20
|
|
|
|
|
|
|
11
|
|
TRANSFER OF SHARES
|
|
|
A-21
|
|
|
|
|
|
|
12
|
|
TRANSMISSION OF SHARES
|
|
|
A-22
|
|
|
|
|
|
|
13
|
|
COMPULSORY TRANSFER
|
|
|
A-22
|
|
|
|
|
|
|
14
|
|
ALTERATION OF SHARES
|
|
|
A-23
|
|
|
|
|
|
|
15
|
|
DISTRIBUTIONS
|
|
|
A-23
|
|
|
|
|
|
|
16
|
|
REDEMPTION OF SHARES AND TREASURY SHARES
|
|
|
A-25
|
|
|
|
|
|
|
17
|
|
MORTGAGES AND CHARGES OF SHARES
|
|
|
A-25
|
|
|
|
|
|
|
18
|
|
MEETINGS AND CONSENTS OF MEMBERS
|
|
|
A-26
|
|
|
|
|
|
|
19
|
|
PROCEEDINGS AT MEETINGS OF MEMBERS
|
|
|
A-27
|
|
|
|
|
|
|
20
|
|
VOTES OF MEMBERS
|
|
|
A-28
|
|
|
|
|
|
|
21
|
|
SQUEEZE OUT PROVISIONS
|
|
|
A-31
|
|
|
|
|
|
|
22
|
|
NUMBER OF DIRECTORS
|
|
|
A-31
|
|
|
|
|
|
|
23
|
|
ALTERNATE DIRECTORS
|
|
|
A-31
|
|
|
|
|
|
|
24
|
|
POWERS OF DIRECTORS
|
|
|
A-32
|
|
|
|
|
|
|
25
|
|
DELEGATION OF DIRECTORS’ POWERS
|
|
|
A-32
|
|
|
|
|
|
|
26
|
|
APPOINTMENT AND RETIREMENT OF DIRECTORS
|
|
|
A-33
|
|
|
|
|
|
|
27
|
|
DISQUALIFICATION AND REMOVAL OF DIRECTORS
|
|
|
A-34
|
|
A-4
|
|
|
|
|
|
|
|
|
28
|
|
DIRECTORS’ REMUNERATION AND EXPENSES
|
|
|
A-34
|
|
|
|
|
|
|
29
|
|
OFFICERS AND AGENTS
|
|
|
A-34
|
|
|
|
|
|
|
30
|
|
DIRECTORS’ INTERESTS
|
|
|
A-35
|
|
|
|
|
|
|
31
|
|
DIRECTORS’ GRATUITIES AND PENSIONS
|
|
|
A-35
|
|
|
|
|
|
|
32
|
|
PROCEEDINGS OF DIRECTORS
|
|
|
A-36
|
|
|
|
|
|
|
33
|
|
INDEMNIFICATION
|
|
|
A-37
|
|
|
|
|
|
|
34
|
|
RECORDS
|
|
|
A-37
|
|
|
|
|
|
|
35
|
|
REGISTERS OF CHARGES
|
|
|
A-39
|
|
|
|
|
|
|
36
|
|
CONTINUATION
|
|
|
A-39
|
|
|
|
|
|
|
37
|
|
SEAL
|
|
|
A-39
|
|
|
|
|
|
|
38
|
|
ACCOUNTS AND AUDIT
|
|
|
A-39
|
|
|
|
|
|
|
39
|
|
CAPITALISATION OF PROFITS
|
|
|
A-40
|
|
|
|
|
|
|
40
|
|
NOTICES
|
|
|
A-40
|
|
|
|
|
|
|
41
|
|
WINDING UP
|
|
|
A-42
|
|
|
|
|
|
|
42
|
|
MERGER AND CONSOLIDATION
|
|
|
A-43
|
|
|
|
|
|
|
43
|
|
ACQUISITION
|
|
|
A-43
|
|
|
|
|
|
|
44
|
|
AMENDMENT OF MEMORANDUM AND ARTICLES
|
|
|
A-44
|
|
|
|
|
|
|
45
|
|
RESOLUTIONS PRIOR TO ADMISSION
|
|
|
A-44
|
|
A-5
TERRITORY OF THE BRITISH VIRGIN ISLANDS
THE BVI BUSINESS COMPANIES ACT 2004
ARTICLES OF ASSOCIATION
OF
PLATFORM SPECIALTY
PRODUCTS CORPORATION
A COMPANY LIMITED BY SHARES
|
1.1
|
In these Articles and the attached Memorandum, the following words shall bear the following meanings if not inconsistent with the subject or context:
|
Acquisition
means an acquisition by the Company or by any subsidiary thereof (which may be in the form of a merger, capital stock
exchange, asset acquisition, stock purchase, scheme of arrangement, reorganisation or similar business combination) of an interest in an operating company or business, as contemplated by the Prospectus;
Act
means the BVI Business Companies Act, 2004 (as amended), and includes the regulations made under the Act;
acting in concert
shall be construed in accordance with the City Code on Takeovers and Mergers;
Admission
means admission of the Ordinary Shares to the standard segment of the Official List and to trading on the Main Market;
Annual Dividend Amount
means:
A x B
where:
A = an amount equal (as at the relevant Dividend Date) to 20 per cent. of the increase (if any) in the value of an Ordinary Share. Such
increase shall be calculated as being the difference between (i) the Dividend Price for that Dividend Year and (ii) (a) if no Annual Dividend Amount has previously been paid, a price of US$10.00 per Ordinary Share, or (b) if an
Annual Dividend Amount has previously been paid, the highest Dividend Price for any prior Dividend Year, provided that in each case such amount is subject to such adjustment either as the Directors in their absolute discretion determine to be fair
and reasonable in the event of a consolidation or sub-division of the Ordinary Shares in issue after the date of Admission or otherwise as determined in accordance with Article 5.5; and
B = a number of Ordinary Shares equal to such number of Ordinary Shares as was in issue on the date of Admission plus the number of Ordinary
Shares issuable upon automatic conversion of the Founder Preferred Shares in accordance with Article 5.1 as if converted on the date of Admission, which number is subject to such adjustment either as the Directors in their absolute discretion
determine to be fair and reasonable in the event of a consolidation or sub-division of the Ordinary Shares in issue after the date of Admission or otherwise as determined in accordance with Article 5.5;
Articles
means the articles of association of the Company as the same may be amended, supplemented or otherwise modified from time to
time;
Auditors
means the auditors from time to time of the Company;
Average Price
means for any security, as of any date: (i) in respect of Ordinary Shares, the mid-market closing price of the
Ordinary Shares on the London Stock Exchange as shown on Bloomberg; (ii) in
A-6
respect of any other security, the volume weighted average price for such security on the London Stock Exchange as reported by Bloomberg through its “Volume at Price” functions;
(iii) if the London Stock Exchange is not the principal securities exchange or trading market for that security, the volume weighted average price of that security on the principal securities exchange or trading market on which that security is
listed or traded as reported by Bloomberg through its “Volume at Price” functions; (iv) if the foregoing do not apply, the last closing trade price of that security in the over-the-counter market on the electronic bulletin board for
that security as reported by Bloomberg; or (v) if no last closing trade price is reported for that security by Bloomberg, the last closing ask price of that security as reported by Bloomberg. If the Average Price cannot be calculated for that
security on that date on any of the foregoing bases, the Average Price of that security on such date shall be the fair market value as mutually determined by the Company and the holders of the majority of outstanding Founder Preferred Shares (acting
reasonably);
Bloomberg
means Bloomberg Financial Markets;
Board
means a board of Directors at any time of the Company or the Directors present at a duly convened meeting of Directors at which a
quorum is present;
Business Day
means a day (except Saturday or Sunday) on which banks are open for business in London and the
British Virgin Islands;
BVI
means the territory of the British Virgin Islands;
Change of Control
means, following an Acquisition, the acquisition of Control of the Company by any person or party (or by any group of
persons or parties who are acting in concert);
Company
means Platform Specialty Products Corporation incorporated under the Act;
Control
means:
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(a)
|
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
|
|
|
(i)
|
cast, or control the casting of, more than 50 (fifty) per cent. of the maximum number of votes that might be cast at a meeting of Members; or
|
|
|
(ii)
|
appoint or remove all, or the majority, of the Directors or other equivalent officers of the Company; or
|
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|
(iii)
|
give directions with respect to the operating and financial policies of the Company with which the Directors or other equivalent officers of the Company are obliged to comply; and/or
|
|
|
(b)
|
the holding beneficially of more than 50 (fifty) per cent. of the issued shares of the Company (excluding any issued shares that carry no right to participate beyond a specified amount in a distribution of either
profits or capital),
|
but excluding in the case of each of (i) and (ii) above any such power or holding that arises
as a result of the issue of Ordinary Shares by the Company in connection with an Acquisition;
Conversion
Date
has the
meaning specified in Article 5.1;
Default Shares
has the meaning specified in Article 6.4;
Depositary
means Computershare Investor Services PLC, or such other custodian or other person (or a nominee for such custodian or other
person) appointed under contractual arrangements with the Company or other arrangements approved by the Board whereby such custodian or other person or nominee holds or is interested in shares of the Company or rights or interests in shares of the
Company and issues securities or other documents of title or otherwise evidencing the entitlement of the holder thereof to or to receive such shares, rights or interests, provided and to the extent that such arrangements have been approved by the
Board for the purpose of these Articles;
A-7
Director
means a director of the Company for the time being or, as the case may be, the
directors assembled as a Board or committee of such Board;
Disclosure Notice
has the meaning specified in Article 6.1;
Dividend Date
means in respect of a Dividend Year the last day of such Dividend Year;
Dividend Price
means the amount calculated by adding together the Average Price per Ordinary Share for each of the last ten consecutive
Trading Days in the relevant Dividend Year and dividing by ten;
Dividend Year
means the period commencing on the day immediately
after the date of completion of the Acquisition and ending on the last day of that Financial Year, and thereafter each subsequent Financial Year, except that:
|
|
(a)
|
in the event of the Company’s entry into liquidation, the relevant Dividend Year shall end on the Trading Day immediately prior to the date of commencement of liquidation; and
|
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|
(b)
|
in the event of an automatic conversion of the Founder Preferred Shares pursuant to Article 5.1, the relevant Dividend Year shall end on the Trading Day immediately prior to the Conversion Date;
|
Document
has the meaning set out in Article 40.1;
Dormant Company
means a company which does not engage in trade or otherwise carry on business in the ordinary course;
equity security
means a share (other than a bonus share) or a right to subscribe for, or to convert securities into, shares in the
Company;
ERISA
means the US Employee Retirement Income Security Act of 1974, as amended;
executed
includes any mode of execution;
Financial Year
means the financial year of the Company, being the 12 month (or shorter) period ending on 31 December in each year,
except in respect of the first financial year of the Company, which shall end on 31 December 2014, or such other financial year(s) (each of which may be a 12 month period or any longer or shorter period) as may be determined from time to time
by the Board and in accordance with any applicable laws and regulations;
Founder
means each of Nicolas Berggruen and Martin E.
Franklin;
Founder Preferred Share
means a convertible preferred share of no par value in the Company having the rights and being
subject to the restrictions specified in the Memorandum;
FCA
means the Financial Conduct Authority of the United Kingdom or any
successor;
holder, Member or shareholder
in relation to shares means the member recorded as a holder of a share in the
Company’s register of Members;
Independent Directors
means those Directors of the Board from time to time considered by the
Board to be independent for the purposes of the UK Corporate Governance Code (or any other appropriate corporate governance regime complied with by the Company from time to time) together with the chairman of the Board provided that such person was
independent on appointment for the purposes of the UK Corporate Governance Code (or any other appropriate corporate governance regime complied with by the Company from time to time);
Law
means every order in council, law, statutory instrument or regulation for the time being in force concerning companies incorporated
in the British Virgin Islands and affecting the Company (including, for the avoidance of doubt, the Act) in each case as amended, extended or replaced from time to time;
Listing Rules
means the listing rules of the UKLA as amended from time to time;
A-8
London Stock Exchange
means the London Stock Exchange plc;
Main Market
means the London Stock Exchange’s main market for listed securities (or, if the Ordinary Shares are not at the relevant
time traded on such market, the principal stock exchange or securities market on which the Ordinary Shares are then listed or traded or if the Ordinary Shares are at the relevant time listed or traded on more than one stock exchange or securities
market, the stock exchange or securities market on which the Directors, in their absolute discretion, determine that Ordinary Shares have the greatest liquidity);
Memorandum
means the memorandum of association of the Company, as the same may be amended, supplemented or otherwise modified from time
to time;
Office
means the registered office of the Company;
Official List
means the Official List maintained by the UKLA;
Ordinary Share
means an ordinary share of no par value in the Company having the rights and being subject to the restrictions specified
in the Memorandum;
paid up
in relation to shares means fully paid or credited as fully paid, but excludes partly paid shares;
Payment Date
means a day no later than ten Trading Days after the Dividend Date, except in respect of any Annual Dividend Amount
becoming due on the Trading Day immediately prior to the date of commencement of the Company’s liquidation, in which case the Payment Date shall be such Trading Day, and except in respect of any Annual Dividend Amount becoming due on account of
an automatic conversion immediately upon a Change of Control pursuant to Article 5.1(a), in which case the Payment Date shall be the Trading Day immediately after such event;
Plan
means (i) an
employee benefit plan
(within the meaning of Section 3(3) of ERISA) that is subject to Title I of
ERISA, (ii) a plan, individual retirement account or other arrangement that is subject to Section 4975 of the US Internal Revenue Code, (iii) entities whose underlying assets are considered to include
plan assets
of any such
plan, account or arrangement and (iv) any governmental plan, church plan or non-US plan that is subject to the laws or regulations similar to Title I of ERISA or section 4975 of the US Internal Revenue Code;
Prohibited Person
any person who by virtue of his holding or beneficial ownership of shares in the Company would or might in the opinion
of the Directors:
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(a)
|
give rise to an obligation on the Company to register as an investment company under the US Investment Company Act of 1940, as amended and related rules or any similar legislation;
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|
(b)
|
give rise to an obligation on the Company to register under the US Exchange Act of 1934, as amended or any similar legislation or result in the Company not being considered a “foreign private issuer” as such
term is defined in Rule 3b-4(c) under the US Exchange Act of 1934, as amended;
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|
(c)
|
result in a US Plan Investor holding shares in the Company; or
|
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|
(d)
|
create a material legal or regulatory issue for the Company under the US Bank Holding Company Act of 1956, as amended, or regulations or interpretations thereunder;
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Prospectus
means the prospectus issued by the Company in connection with Admission;
register of Members
has the meaning specified in Article 2.9;
Registrar
means the Registrar of Corporate Affairs of the British Virgin Islands;
Relevant System
means a computer-based system and procedures which enable title to units of a Security (including depositary interests)
to be evidenced and transferred without a written instrument, and which facilitate supplementary and incidental matters;
A-9
Resolution of Directors
means either:
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|
(a)
|
a resolution approved at a duly convened and constituted meeting of Directors or of a committee of Directors by the affirmative vote of a majority of the Directors present at the meeting who voted except that where a
Director is given more than one vote, he shall be counted by the number of votes he casts for the purpose of establishing a majority; or
|
|
|
(b)
|
a resolution consented to in writing by such number of Directors or such number of members of a committee of Directors as would have been required to approve a Resolution of Directors under (a) above;
|
Resolution of Members
means either:
|
|
(a)
|
a resolution approved at a duly convened and constituted meeting of the Members of the Company by the affirmative vote of a majority of the votes of the shares entitled to vote thereon which were present at the meeting
and were voted; or
|
|
|
(b)
|
a resolution consented to in writing by a majority of the votes of shares entitled to vote thereon;
|
Sale Share
has the meaning specified in Article 10.2;
Seal
means any seal which has been duly adopted as the common seal of the Company;
secretary
means the secretary of the Company or other person appointed to perform the duties of the secretary of the Company including a
joint, assistant or deputy secretary;
Securities
means shares and debt obligations of every kind of the Company, and including
without limitation options, warrants and rights to acquire shares or debt obligations;
Special Resolution of Members
means either:
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(a)
|
a resolution approved at a duly convened and constituted meeting of the Members of the Company by the affirmative vote of not less than 75 (seventy five) per cent. of the votes of the shares entitled to vote thereon
which were present at the meeting and were voted; or
|
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|
(b)
|
a resolution consented to in writing by not less than 75 (seventy five) per cent. of the votes of shares entitled to vote thereon;
|
Trading Day
means any day on which the Main Market (or such other applicable securities exchange or quotation system) is open for
business and on which the Ordinary Shares may be dealt in (other than a day on which the Main Market (or such other applicable securities exchange or quotation system) is scheduled to or does close prior to its regular weekday closing time);
Transfer Notice
has the meaning specified in Article 13.3;
Treasury Share
means a share that was previously issued but was repurchased, redeemed or otherwise acquired by the Company and not
cancelled;
UK Corporate Governance Code
means the UK Corporate Governance Code (or equivalent code) issued by the Financial
Reporting Council in the United Kingdom from time to time;
UKLA
means the FCA acting in its capacity as competent authority for the
purposes of admissions to the Official List;
US or United States
means the United States of America, its territories and
possessions, any state in the United States of America and District of Columbia;
US Internal Revenue Code
means the US Internal
Revenue Code of 1986, as amended;
US Person
means a person who is a
US person
within the meaning of Regulation S under the
US Securities Act;
A-10
US Plan Investor
means:
|
|
(a)
|
an
employee benefit plan
as defined in section 3(3) of ERISA (whether or not subject to the provisions of Title I of ERISA, but excluding plans maintained outside of the US that are described in
Section 4(b)(4) of ERISA);
|
|
|
(b)
|
a plan, individual retirement account or other arrangement that is described in Section 4975 of the US Internal Revenue Code, whether or not such plan, account or arrangement is subject to Section 4975 of the
US Internal Revenue Code;
|
|
|
(c)
|
an insurance company using general account assets, if such general account assets are deemed to include assets of any of the foregoing types of plans, accounts or arrangements for purposes of Title I of ERISA or
Section 4975 of the US Revenue Code; or
|
|
|
(d)
|
an entity which is deemed to hold the assets of any of the foregoing types of plans, accounts or arrangements that is subject to Title I of ERISA of Section 4975 of the US Internal Revenue Code;
|
US Securities Act
means the US Securities Act of 1933, as amended;
US$, USD
or
United States Dollars
means the currency of the United States; and
Winding-up Date
means the second anniversary of Admission.
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1.2
|
A reference to any law, statute or statutory provision shall, unless the context otherwise requires, be construed as a reference to such law, statute or statutory provision as the same may have been or may from time to
time be amended, modified, extended, consolidated, re-enacted or replaced and shall include any subordinated legislation or regulation made thereunder.
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|
1.3
|
Reference to
subsidiary
or
holding company
shall be construed in accordance with Section 4 of the Act.
|
|
1.4
|
Words denoting the singular include the plural and vice versa.
|
|
1.5
|
Words denoting a gender include every gender.
|
|
1.6
|
References to
persons
shall include firms, corporations, partnerships, associations and other bodies of persons, whether corporate or not.
|
|
1.7
|
The word
may
shall be construed as permissive and the word
shall
shall be construed as imperative.
|
|
1.8
|
The word
signed
shall include a signature or a representation of a signature affixed by mechanical means.
|
|
1.9
|
The words
in writing
shall mean written, facsimiled, or otherwise electronically transmitted or published in a readable form, printed, photographed or lithographed or represented by any other substitute for
writing or partly one or partly another.
|
|
1.10
|
References to something in
electronic form
shall include:
|
|
|
(a)
|
something partly in electronic form;
|
|
|
(b)
|
something, whether or not itself in electronic form:
|
|
|
(i)
|
made wholly or partly by electronic means; or
|
|
|
(ii)
|
made wholly or partly by means of something wholly or partly in electronic form.
|
|
1.11
|
The word
discretion
shall mean absolute discretion and the expression
as the Directors may determine
shall mean as the Directors in their absolute discretion may determine.
|
|
1.12
|
References to
notice
means a notice in writing unless otherwise specifically stated.
|
|
1.13
|
A reference to the Auditors or such other person confirming any matter shall be construed to mean confirmation of their opinion as to such matter whether qualified or not.
|
|
1.14
|
A reference to a Clause, unless the context requires otherwise, is a reference to a clause of the Memorandum and a reference to an Article, unless the context otherwise requires, is a reference to an Article of these
Articles.
|
A-11
|
1.15
|
Subject to the above provisions any words defined in the Act shall bear the same meaning in these Articles.
|
|
1.16
|
The headings in these Articles are intended for convenience only and shall not affect the construction of these Articles.
|
|
2.1
|
Shares and other Securities may be issued and options to acquire shares or other Securities may be granted at such times, to such persons, for such consideration and on such terms as the Directors may by Resolution of
Directors determine.
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|
2.2
|
The Company may issue fractions of shares and any such fractional shares shall rank pari passu in all respects with the other shares of the same class issued by the Company.
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|
2.3
|
The maximum permitted number of joint holders of shares shall be four and the Company shall not be required to enter the names of more than four joint holders in the register of Members of the Company.
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|
2.4
|
The Company may exercise the powers of paying commissions and in such an amount or at such a percentage rate as the Directors may determine. Subject to the provisions of the Act any such commission may be satisfied by
the payment of cash or by the allotment of paid up or partly paid shares or partly in one way and partly in the other. The Company may also on any issue of shares pay such brokerage as may be lawful.
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2.5
|
Subject to the Law, the Directors may permit the holding of shares of any class in uncertificated form (including in the form of depositary interests or similar interests, instruments or Securities) in such manner as
the Directors may determine from time to time.
|
|
2.6
|
Conversion of shares held in certificated form into shares held in uncertificated form, and vice versa, may be made in such manner as the Directors may, in their absolute discretion, think fit (subject always to any
applicable laws and regulations and the facilities and requirements of any Relevant System). The Company shall enter on the register of Members how many shares are held by each Member in uncertificated form and in certificated form and shall
maintain the register of Members in each case as is required by any applicable laws and regulations and the facilities and requirements of any Relevant System.
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|
2.7
|
The rights conferred upon the holders of any shares of any class issued with preferred, deferred or other rights shall not (unless otherwise expressly provided by the conditions of issue of such shares) be deemed to be
varied or abrogated by the creation or issue of further shares ranking pari passu therewith (excluding, for these purposes, the date from which such new shares shall rank for dividend) or in the case of Founder Preferred Shares (for the avoidance of
doubt) the creation or issue of Ordinary Shares, or by the exercise of any power under the disclosure provisions requiring Members to disclose an interest in the Company’s shares pursuant to Article 6, the reduction of capital on such shares,
the conversion of shares in accordance with these Articles, or by the purchase or redemption by the Company of its own shares or the sale of any shares held as Treasury Shares in accordance with the provisions of the Act.
|
|
2.8
|
No shares may be issued for a consideration other than money, unless a Resolution of Directors has been passed stating:
|
|
|
(a)
|
the amount to be credited for the issue of the shares;
|
|
|
(b)
|
their determination of the reasonable present cash value of the non-money consideration for the issue; and
|
|
|
(c)
|
that, in their opinion, the present cash value of the non-money consideration for the issue is not less than the amount to be credited for the issue of the shares.
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A-12
|
2.9
|
The Company shall keep a register (the
register of Members
) containing:
|
|
|
(a)
|
the names and addresses of the persons who hold shares;
|
|
|
(b)
|
the number of each class and series of shares held by each Member;
|
|
|
(c)
|
the date on which the name of each Member was entered in the register of Members; and
|
|
|
(d)
|
the date on which any person ceased to be a Member.
|
|
2.10
|
The register of Members may be in any such form as the Directors may approve, but if it is in magnetic, electronic or other data storage form, the Company must be able to produce legible evidence of its contents. Until
the Directors otherwise determine, the magnetic, electronic or other data storage form shall be the original register of Members.
|
|
2.11
|
A share is deemed to be issued when the name of the Member is entered in the register of Members.
|
|
2.12
|
Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and (except as otherwise provided by these Articles or by law) the Company shall not be bound by or recognise
(even when having notice thereof) any interest in any share other than an absolute right of the registered holder to the entirety of a share or fraction thereof.
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|
2.13
|
On a winding up of the Company the assets (if any) of the Company available for distribution to Members shall be distributed to the holders of Ordinary Shares and Founder Preferred Shares pro rata to the number of such
paid up shares held by each holder relative to the total number of issued and paid up Ordinary Shares as if such paid up Founder Preferred Shares had been converted into Ordinary Shares immediately prior to the winding-up.
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|
2.14
|
The Company may, subject to the provisions of the Act and of these Articles, issue warrants or grant options to subscribe for shares in the Company. Such warrants or options shall be issued upon such terms and subject
to such conditions as may be resolved upon by the Board.
|
|
3.1
|
Section 46 of the Act does not apply to the Company.
|
|
3.2
|
Subject to the other provisions of this Article 3, with effect following Admission the Company shall not issue any equity securities (and shall not sell any of them from treasury) to a person on any terms unless:
|
|
|
(a)
|
it has made an offer to each person who is a holder of equity securities of that class (other than the Company itself by virtue of it holding Treasury Shares) to issue to him on the same or more favourable terms a
proportion of those equity securities which is as nearly as practicable equal to the proportion in value held by the holders of the relevant class(es) of equity securities then in issue; and
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|
|
(b)
|
the period during which any such offer may be accepted by the relevant current holders has expired or the Company has received a notice of the acceptance or refusal of every offer so made from such holders.
|
|
3.3
|
Equity securities that the Company has offered to issue to a holder of equity securities in accordance with Article 3.2 may be issued to him, or anyone in whose favour he has renounced his right to their issue, without
contravening Article 3.2 above.
|
|
3.4
|
An offer under Article 3.2 shall be made to holders in writing in accordance with the notice provisions of these Articles.
|
|
3.5
|
Where equity securities are held by two or more persons jointly, an offer under Article 3.2 may be made to the joint holder first named in the register of Members in respect of those equity securities.
|
A-13
|
3.6
|
In the case of a holder’s death or bankruptcy, the offer must be made:
|
|
|
(a)
|
by sending it by post in a prepaid letter addressed to the persons claiming to be entitled to the equity securities in consequence of the death or bankruptcy by name, or by the title of the representatives of the
deceased, or trustee of the bankruptcy, or by any like description, at the address supplied for the purpose by those claiming; or
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|
|
(b)
|
until any such address has been so supplied giving the notice in any manner in which it would have been given if the death or bankruptcy has not occurred.
|
|
3.7
|
If the relevant holder in relation to an offer under Article 3.2 has no registered address in the United Kingdom or the British Virgin Islands for the service of notices on him the offer may be made by causing it or a
notice of where a copy may be obtained or inspected to be published in (i) at least one United Kingdom national daily newspaper and (ii) either one newspaper circulated widely in the British Virgin Islands or the BVI Gazette.
|
|
3.8
|
An offer pursuant to Article 3.2 must state a period of not less than 14 (fourteen) calendar days during which it may be accepted and the offer shall not be withdrawn before the end of that period.
|
|
3.9
|
The provisions of Article 3.2 shall not apply in relation to the issue of:
|
|
|
(b)
|
equity securities if they are, or are to be, wholly or partly paid up otherwise than in cash; and
|
|
|
(c)
|
equity securities which would apart from any renunciation or assignment of the right to their issue, be held under an employee share scheme.
|
|
3.10
|
Equity securities held by the Company as Treasury Shares are disregarded for the purpose of this Article 3 so that:
|
|
|
(a)
|
the Company is not treated as a person who holds equity securities; and
|
|
|
(b)
|
equity securities held as Treasury Shares are not treated as shares in issue of the Company.
|
|
3.11
|
Subject to the Act, the Directors may be given by virtue of a Special Resolution of Members the power to issue or sell from treasury equity securities of any class either generally or in respect of a specific issue or
sale and, on the passing of the resolution, the Directors shall have power to issue or sell from treasury pursuant to that authority, equity securities wholly for cash as if the provisions of Article 3.2 above do not apply to the issue or sale from
treasury and the authority granted by the Special Resolution of Members may be granted for such period of time as such resolution permits and such authority may be revoked by a further Special Resolution of Members. Notwithstanding that any such
resolution may have expired, the Directors may issue or sell from treasury equity securities in pursuance of an offer or agreement previously made by the Company, if the resolution enabled the Company to make an offer or agreement which would or
might require equity securities to be issued or sold from treasury after it expired.
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|
4
|
DIVIDEND RIGHTS OF FOUNDER PREFERRED SHARES
|
|
4.1
|
From such time after the Acquisition as the Average Price per Ordinary Share is US$11.50 (subject to such adjustment either as the Directors in their
absolute discretion determine to be fair and reasonable in the event of a consolidation or sub-division of the Ordinary Shares in issue after the date of Admission or otherwise as determined in accordance with Article 5.5) or more for ten
consecutive Trading Days, the holders of Founder Preferred Shares will be entitled to receive the Annual Dividend Amount in respect of each Dividend Year as calculated in accordance with these Articles. Each Annual Dividend Amount shall be divided
between the holders pro rata to the number of Founder Preferred Shares held by them on the relevant Dividend Date. The Annual Dividend Amount will be paid on the Payment Date by the issue to each holder of Founder Preferred Shares of such number of
whole Ordinary Shares as is equal to the pro rata amount of the Annual Dividend Amount to which they are entitled divided by the Average Price per
|
A-14
|
|
Ordinary Share on the relevant Dividend Date (provided that any fractional Ordinary Shares due to a holder resulting from such calculation shall not be issued and such holder shall be entitled to
be paid the nearest lower whole number of Ordinary Shares).
|
|
4.2
|
In the event of the Company entering liquidation, the Dividend Date for the relevant Dividend Year shall be the Trading Day immediately prior to the date of commencement of liquidation and accordingly an Annual Dividend
Amount shall be calculated as of such Dividend Date and be payable on the relevant Payment Date.
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|
4.3
|
In the event of an automatic conversion of Founder Preferred Shares occurring in accordance with Article 5.1, the Dividend Date for the relevant Dividend Year shall be the Trading Day immediately prior to the relevant
Conversion Date and accordingly an Annual Dividend Amount shall be calculated as of such Dividend Date and be payable on the relevant Payment Date.
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|
4.4
|
For the avoidance of doubt, any Annual Dividend Amount due in respect of a Dividend Year, including in accordance with Article 4.2 or 4.3, shall be payable in full and shall not be subject to prorating notwithstanding
any Dividend Year being longer or shorter than 12 months.
|
|
5
|
CONVERSION OF FOUNDER PREFERRED SHARES
|
|
5.1
|
Each Founder Preferred Share will be automatically converted into one Ordinary Share (subject to such adjustment either as the Directors in their absolute discretion determine to be fair and reasonable in the event of a
consolidation or sub-division of the Ordinary Shares in issue after the date of Admission or otherwise as determined in accordance with Article 5.5) upon the earliest of the following to occur:
|
|
|
(a)
|
immediately upon a Change of Control; or
|
|
|
(b)
|
immediately upon the last day of the seventh full Financial Year of the Company after completion of the Acquisition (or such subsequent date as determined in accordance with Article 5.2),
|
or, if either such date is not a Trading Day, on the first Trading Day immediately following such date (the
Conversion Date
)
.
|
5.2
|
Upon notice in writing from the holders of a majority of the Founder Preferred Shares to the Company to be received not less than ten Business Days prior to the last day of the seventh full Financial Year of the Company
after completion of the Acquisition, such holder(s) may request that the date of automatic conversion as specified in Article 5.1(b) above be deferred to the last day of the eighth full Financial Year of the Company following completion of the
Acquisition. If a majority of the Independent Directors determine in their discretion to defer the relevant Conversion Date as requested then (i) the date of automatic conversion as specified in Article 5.1(b) shall be such deferred date; and
(ii) the holders of a majority of the Founder Preferred Shares will have the right to make a further request in writing no later than ten Business Days prior to the last day of the eighth full Financial Year of the Company after completion of
the Acquisition for the deferral of the relevant Conversion Date by a further year. In the event a majority of the Independent Directors approve any such further request for a deferral of the relevant Conversion Date then (i) the date of
automatic conversion as specified in Article 5.1(b) shall be such deferred date and (ii) the holders of a majority of Founder Preferred Shares will have the right to make one further request on the same basis as referenced above no later than
ten Business Days prior to the last day of the ninth full Financial Year of the Company after completion of the Acquisition for the deferral of the relevant Conversion Date by a further year. In the event that a majority of the Independent Directors
approve any such further request for a deferral of the relevant Conversion Date then the date of automatic conversion as specified in Article 5.1(b) shall be such deferred date. In no circumstances shall the Conversion Date determined pursuant to
Article 5.1(b) and this Article 5.2 be deferred beyond the last day of the tenth full Financial Year of the Company after completion of the Acquisition (or, if either such date is not a Trading Day, on the first Trading Day immediately following
such date).
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5.3
|
A holder of Founder Preferred Shares may by notice in writing to the Company require the conversion of such number of that holder’s Founder
Preferred Shares as is specified in such notice (and, if such notice is
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A-15
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silent as to the number of Founder Preferred Shares, that holder shall be deemed to have required the conversion of all of his Founder Preferred Shares), into an equal number of Ordinary Shares
(subject to such adjustment either as the Directors in their absolute discretion determine to be fair and reasonable in the event of a consolidation or sub-division of the Ordinary Shares in issue after the date of Admission or otherwise as
determined in accordance with Article 5.5), and in such circumstances those Founder Preferred Shares the subject of such notice shall be converted five Trading Days following receipt of the notice by the Company. In the event of a conversion
pursuant to this Article 5.3, the holder whose Founder Preferred Shares are converted shall not be entitled to receive, in respect of the Founder Preferred Shares converted, the relevant pro rata amount of the Annual Dividend Amount which may have
been attributable to those Founder Preferred Shares in respect of the Dividend Year in which the date of conversion occurs.
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5.4
|
In the event of a conversion pursuant to Article 5.1 or Article 5.3:
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(a)
|
any share certificates relating to the converted shares shall be cancelled and the Company shall issue to the relevant Member new certificates in respect of the Ordinary Shares which have arisen on the conversion unless
the holder elects (or is deemed to have elected) to hold their new Ordinary Shares in uncertificated form;
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(b)
|
subject to the terms of these Articles, the Ordinary Shares arising on conversion shall be credited as paid up and shall rank pari passu with the outstanding Ordinary Shares of the Company in issue at the Conversion
Date, including as to dividends and other distributions declared, by reference to a record date falling after the Conversion Date; and
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(c)
|
where the Ordinary Shares (or any interests therein) are listed or traded on any stock exchange or securities market the Company shall use reasonable endeavours, including the issue of any prospectus, listing document
or similar as may be required, to procure that, upon conversion, the Ordinary Shares arising from such conversion (or any interests therein) are promptly admitted to such stock exchange or securities market (or where more than one, all of them) and
that any interests in the Ordinary Shares (including depositary interests) be capable of being transferred in a Relevant System.
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5.5
|
Notwithstanding any other provisions in these Articles, in any circumstances where:
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(a)
|
the Directors or the holders of a majority of the outstanding Founder Preferred Shares consider that an adjustment should be made to (1) any factor relevant for the calculation of the Annual Dividend Amount
(including the amount which the Average Price per Ordinary Share must meet or exceed for ten consecutive Trading Days in order for the right to an Annual Dividend Amount to commence (initially set at US$11.50)) or (2) the number of Ordinary
Shares into which the Founder Preferred Shares shall convert, whether following a consolidation or sub-division of the Ordinary Shares in issue after the date of Admission or otherwise; or
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(b)
|
the holders of a majority of the outstanding Founder Preferred Shares disagree with any adjustment as determined by the Directors,
|
the Directors will either (i) make such adjustment as is mutually determined by the Directors and the holders of the majority of the
outstanding Founder Preferred Shares (acting reasonably) or (ii) failing agreement within a reasonable time, will at the Company’s expense appoint the Auditors, or such other person as the Directors shall, acting reasonably, determine to
be an expert for such purpose, to determine as soon as practicable what adjustment (if any) is fair and reasonable. Upon determination in either case the adjustment (if any) will be made and will take effect in accordance with the
determination. The Auditors (or such other expert as may be appointed) shall be deemed to act as an expert and not an arbitrator and applicable laws relating to arbitration shall not apply, the determination of the Auditors (or such other
expert as may be appointed) shall be final and binding on all concerned and the Auditors (or such other expert as may be appointed) shall be given by the Company all such information and other assistance as they may reasonable require.
A-16
|
5.6
|
Conversion of the Founder Preferred Shares pursuant to this Article 5 shall be in such manner as may be determined by the Company, including, without limitation, by redemption of such shares and applying the proceeds in
the subscription for the applicable number of Ordinary Shares, by means of sub-division and/or consolidation and/or a combination of both (in which case, for the avoidance of doubt, the requisite sub-division and/or consolidation shall be effected
pursuant to the provisions of these Articles), by automatically converting the Founder Preferred Shares into Ordinary Shares or by redesignating any such Founder Preferred Shares as Ordinary Shares.
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6
|
DISCLOSURE REQUIREMENTS
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6.1
|
The Company may, by notice in writing (a
Disclosure Notice
) require a person whom the Company knows to be or has reasonable cause to believe is or, at any time during the 3 (three) years immediately preceding the
date on which the Disclosure Notice is issued, to have been interested in any shares:
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(a)
|
to confirm that fact or (as the case may be) to indicate whether or not it is the case; and
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(b)
|
to give such further information as may be required in accordance with Article 6.2.
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6.2
|
A Disclosure Notice may (without limitation) require the person to whom it is addressed:
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(a)
|
to give particulars of his status (including whether such person constitutes or is acting on behalf of or for the benefit of a Plan or is a US Person), domicile, nationality and residency;
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(b)
|
to give particulars of his own past or present interest in any shares (held by him at any time during the 3 (three) year period specified in Article 6.1);
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(c)
|
to disclose the identity of any other person who has a present interest in the shares held by him;
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(d)
|
where the interest is a present interest and any other interest in any shares subsisted during that 3 (three) year period at any time when his own interest subsisted, to give (so far as is within his knowledge) such
particulars with respect to that other interest as may be required by the Disclosure Notice; and
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(e)
|
where his interest is a past interest to give (so far as is within his knowledge) like particulars of the identity of the person who held that interest immediately upon his ceasing to hold it.
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6.3
|
Any Disclosure Notice shall require any information in response to such notice to be given within the prescribed period (which is 14 (fourteen) calendar days after service of the notice or 7 (seven) days if the shares
concerned represent 0.25 (nought point two five) per cent. or more in number of the issued shares of the relevant class) or such other reasonable period as the Directors may determine.
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6.4
|
If any Member is in default in supplying to the Company the information required by the Company within the prescribed period or such other reasonable period as the Directors determine, the Directors in their absolute
discretion may serve a direction notice on the Member. The direction notice may direct that in respect of the shares in respect of which the default has occurred (the
Default Shares
) the Member shall not be entitled to attend or vote in
meetings of Members or class meetings. Where the Default Shares represent at least 0.25 (nought point two five) per cent. in number of the class of shares concerned the direction notice may additionally direct that dividends on such shares will be
retained by the Company (without interest) and that no transfer of the Default Shares (other than a transfer authorised under the Articles) shall be registered until the default is rectified; or subject always to the rules of a Relevant System, the
Listing Rules and the requirements of the UKLA and the London Stock Exchange in respect of the Default Shares where the Directors have any grounds to believe that such Default Shares are held by or for the benefit of or by persons acting on behalf
of a Plan or a US Person, the Directors may in their discretion deem the default shares to be held by, or on behalf of or for the benefit of, a Plan or a US Person (as the Directors may determine) and that the provisions of Article 13 should apply
to such Default Shares.
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6.5
|
Where Default Shares in which a person appears to be interested are held by a Depositary, the provisions of this Article 6 shall be treated as applying only to those shares held by the Depositary in which such person
appears to be interested and not (insofar as such person’s apparent interest is concerned) to any other shares held by the Depositary.
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6.6
|
Where the Member on which a Disclosure Notice is served is a Depositary acting in its capacity as such, the obligations of the Depositary as a Member shall be limited to disclosing to the Company such information
relating to any person appearing to be interested in the shares held by it, as has been recorded by it pursuant to the arrangements entered into by the Company or approved by the Board pursuant to which it was appointed as a Depositary.
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7.1
|
The Company may (but shall not be obliged to) issue to a Member without payment one certificate for all the shares of each class held by him (and upon transferring a part of his holding of shares of any class to a
certificate for the balance of such holding) or several certificates each for one or more of his certificated shares upon payment, for every certificate after the first, of such reasonable sum as the Directors may determine. Every certificate shall
specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up or partly paid thereon. The Company shall not be bound to issue more than one certificate for certificated
shares held jointly by several persons and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.
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7.2
|
All forms of certificate for shares or any other form of security shall be issued in such manner as the Directors may determine which may include under the Seal, which may be affixed to or printed on it or in such other
manner as the Directors may approve, having regard to the terms of allotment or issue of shares, and shall be signed autographically unless there shall be in force a Resolution of Directors adopting some method of mechanical signature in which event
the signatures (if authorised by such resolution) may be appended by the method so adopted.
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7.3
|
If a share certificate is defaced, worn out, lost or destroyed it may be renewed on such terms (if any) as to evidence and indemnity and payment of the liability and expenses reasonably incurred by the Company in
investigating evidence as the Directors may determine but otherwise free of charge and (in the case of defacement or wearing out) on delivery up of the old certificate.
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7.4
|
Any Member receiving a certificate shall indemnify and hold the Company and its Directors and officers harmless from any loss or liability which it or they may incur by reason of any wrongful or fraudulent use or
representation made by any person by virtue of the possession thereof.
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7.5
|
No provision of these Articles shall apply so as to require the Company to issue a certificate to any person holding such shares in uncertificated form.
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7.6
|
Uncertificated shares of a class are not to be regarded as forming a separate class from certificated shares of that class.
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8.1
|
The Company shall have a first and paramount lien on every share (not being a paid up share) for all monies (whether presently payable or not) payable at a fixed time or called in respect of that share. The Directors
may at any time declare any share to be wholly or in part exempt from the provisions of this Article. The Company’s lien on a share shall extend to any amount payable in respect of it.
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8.2
|
The Company may sell in such manner as the Directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within 14 (fourteen) calendar
days after notice has been given to the holder of the share or to the person entitled to it by transmission or operation of the law, demanding payment and stating that if the notice is not complied with the shares may be sold.
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8.3
|
To give effect to a sale the Directors may authorise any person to execute an instrument of transfer of the shares sold to or in accordance with the directions of the purchaser. The title of the transferee to the shares
shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale.
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8.4
|
The net proceeds of the sale after payment of the costs shall be applied in payment of so much of the sum for which the lien exists as is presently payable and any residue shall (upon surrender to the Company for
cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale.
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9
|
CALLS IN RESPECT OF SHARES AND FORFEITURE
|
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9.1
|
Subject to the terms of allotment the Directors may make calls upon the Members in respect of any monies unpaid in respect of their shares and each Member shall (subject to receiving at least 14 (fourteen) calendar
days’ notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called in respect of his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company
of any sum due thereunder, be revoked in whole or part and payment of a call may be postponed in whole or part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in
respect whereof the call was made.
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9.2
|
A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed.
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9.3
|
The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.
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9.4
|
If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the calendar day it became due and payable until it is paid; either at
the rate fixed by the terms of allotment of the share or in the notice of the call or at such rate not exceeding 15 (fifteen) per cent. per annum as the Directors may determine. The Directors may waive payment of the interest wholly or in part.
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9.5
|
An amount payable in respect of a share on allotment or at any fixed date, whether in respect of the issue price or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid the
provisions of these Articles shall apply as if that amount had become due and payable by virtue of a call. The Company may accept from a Member the whole or a part of the amount remaining unpaid on any shares held by him although no part of that
amount has been called up.
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9.6
|
Subject to the terms of allotment, the Directors may make arrangements on the issue of shares to distinguish between Members as to the amounts and times of payment of calls in respect of their shares.
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9.7
|
If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than (14) fourteen calendar days’ notice requiring payment of the amount unpaid
together with any interest which may have accrued and any expenses which may have been incurred by the Company in respect thereof. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with
the shares in respect of which the call was made will be liable to be forfeited.
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9.8
|
If the notice is not complied with any share in respect of which it was given may at any time thereafter before the payment required by the notice has been made be forfeited by a resolution of the Directors and the
forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture.
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9.9
|
A forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such a manner as the Directors determine either to the person
who was before the forfeiture the holder or to any other person and at any time before sale re-allotment or other disposition the forfeiture may be cancelled on
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A-19
|
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such terms as the Directors think fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person the Directors may authorise some person to execute an instrument
of transfer of the share to that person.
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9.10
|
A person any of whose shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for any certificated shares forfeited but shall remain
liable to the Company for all monies which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those monies before the forfeiture or at such
rate as the Directors may determine from the date of forfeiture and all expenses until payment but the Directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or
for any consideration received on their disposal.
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9.11
|
A declaration under oath by a Director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the
share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the
consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share.
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10.1
|
The Company may sell the share of a Member or of a person entitled by transmission at the best price reasonably obtainable at the time of sale, if:
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|
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(a)
|
during a period of not less than 12 (twelve) years before the date of publication of the advertisements referred to in sub-paragraph (c) of this Article 10.1 (or, if published on two different dates, the first
date) (the relevant period) at least three cash dividends have become payable in respect of the share;
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(b)
|
throughout the relevant period no cheque payable on the share has been presented by the holder of, or the person entitled by transmission to, the share to the paying bank of the relevant cheque no payment made by the
Company by any other means permitted by Article 15.8 has been claimed or accepted and, so far as any Director of the Company at the end of the relevant period is then aware, the Company has not at any time during the relevant period received any
communication from the holder of, or person entitled by transmission to, the share;
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(c)
|
on expiry of the relevant period the Company has given notice of its intention to sell the share by advertisement in (i) a United Kingdom national daily newspaper (ii) either one newspaper circulated widely in
the British Virgin Islands or the BVI Gazette and (iii) a newspaper circulating in the area of the address of the holder of, or person entitled by transmission to, the share shown in the register of Members; and
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(d)
|
the Company has not, so far as the Board is aware, during a further period of three months after the date of the advertisements referred to in sub-paragraph (c) of this Article 10.1 (or the later advertisement if
the advertisements are published on different dates) and before the exercise of the power of sale received a communication from the holder of, or person entitled by transmission to, the share.
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10.2
|
Where a power of sale is exercisable over a share pursuant to Article 10.1 (a
Sale Share
), the Company may at the same time also sell any additional share issued in right of such Sale Share or in right of such an
additional share previously so issued provided that the requirements of sub-paragraphs (b) to (d) of Article 10.1 (as if the words “throughout the relevant period” were omitted from sub-paragraph (b) and the words “on
expiry of the relevant period” were omitted from sub-paragraph (c)) shall have been satisfied in relation to the additional share.
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10.3
|
To give effect to a sale pursuant to Article 10.1 and Article 10.2, the Board may authorise a person to transfer the share in the name and on behalf of the holder of, or person entitled by transmission to, the share, or
to cause the transfer of such share, to the purchaser or his nominee and in relation to an uncertificated share may require the operator of any Relevant System to convert the share into certificated form. The purchaser is not bound to see to the
application of the purchase money and the title of the transferee is not affected by an irregularity or invalidity in the proceedings connected with the sale of the share.
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10.4
|
The Company shall be indebted to the Member or other person entitled by transmission to the share for the net proceeds of sale and shall carry any amount received on sale to a separate account. The Company is deemed to
be a debtor and not a trustee in respect of that amount for the Member or other person. Any amount carried to the separate account may either be employed in the business of the Company or invested as the Board may think fit. No interest is payable
on that amount and the Company is not required to account for money earned on it.
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11.1
|
Subject to the Act and the terms of these Articles any Member may transfer all or any of his certificated shares by an instrument of transfer in any usual form or in any other form which the Directors may approve. The
Directors may, without assigning any reasons therefor, refuse to register the transfer of a certificated share (whether paid up or not) unless the instrument of transfer is lodged with the Company and is accompanied by any certificates for the
shares to which it relates and such other evidence as the Directors may require to show the right of the transferor to make the transfer.
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11.2
|
Subject to the Act, the Directors may accept such evidence of title of the transfer of uncertificated shares as they shall in their discretion determine. The Directors may permit shares (or interests in shares) held in
uncertificated form (including in the form of depositary interests or similar interests, instruments or Securities) to be transferred by means of a Relevant System of holding and transferring shares (or interests in shares) in uncertificated form in
such manner as the Directors may determine from time to time. The Directors shall, subject always to the Act and any other applicable laws and regulations and the facilities and requirements of any Relevant System concerned and these Articles, have
power to implement and/or approve any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of interests in shares in the Company in uncertificated form (including in the form of
depositary interests or similar interests, instruments or Securities), which may include arrangements restricting transfers, and to the extent such arrangements are so implemented, no provision of these Articles shall apply or have effect to the
extent that it is in any respect inconsistent (as determined by the Directors in their absolute discretion) with the holding or transfer thereof or the shares in the Company represented thereby. The Directors may from time to time take such actions
and do such things as they may, in their absolute discretion, think fit in relation to the operation of any such arrangements.
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11.3
|
If the Directors refuse to register a transfer of a share they shall, within two months after the date on which the instrument of transfer was lodged with the Company, send to the transferor and the transferee notice of
the refusal.
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11.4
|
No fee shall be charged for the registration of any instrument of transfer or, subject as otherwise herein provided, any other document relating to or affecting the title to any share.
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11.5
|
The Company shall be entitled to retain any instrument of transfer of a certificated share which is registered but any instrument of transfer which the Directors refuse to register shall be returned to the person
lodging it when notice of the refusal is given.
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11.6
|
No transfer of shares will be registered if, in the reasonable determination of the Directors, the transferee is or may be a Prohibited Person, or the transferee is or may be holding such shares on behalf of a
beneficial owner who is or may be a Prohibited Person.
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A-21
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12
|
TRANSMISSION OF SHARES
|
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12.1
|
If a Member dies, the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the
Company as having any title to his interest; but nothing herein contained shall release the estate of a deceased Member from any liability in respect of any share which had been jointly held by him.
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12.2
|
A person becoming entitled to a share in consequence of the death, bankruptcy or incapacity of a Member may, upon such evidence being produced as the Directors may properly require, elect either to become the holder of
the share or to make such transfer thereof as the deceased, bankrupt or incapacitated Member could have made. If he elects to become the holder he shall give notice to the Company to that effect. If he elects to transfer the share he shall execute
an instrument of transfer of the share to the transferee. All of the Articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the Member and the death,
bankruptcy or incapacity of the Member had not occurred.
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12.3
|
A person becoming entitled to a share in consequence of the death, bankruptcy or incapacity of a Member shall have the rights to which he would be entitled if he were the holder of the share except that he shall not
before being registered as the holder of the share be entitled in respect of it to attend or vote at any meeting of the Company or at any separate meeting of the holders of any class of shares in the Company.
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13.1
|
The Directors may require (to the extent permitted by the rules of any Relevant System where applicable) the transfer by lawful sale, by gift or otherwise as permitted by law of any shares that, in the reasonable
determination of the Directors, are or may be held or beneficially owned by a Prohibited Person to another person who is not a Prohibited Person (including, without limitation, an existing Member) qualified under these Articles to hold the shares.
In the event that the Member cannot locate a purchaser qualified to acquire and hold the shares within such reasonable time as the Directors may determine then the Company may seek to locate (but does not guarantee that it will locate) an eligible
purchaser of the shares and shall introduce the selling Member to such purchaser. If no purchaser of the shares is found by the selling Member or located by the Company before the time the Company requires the transfer to be made then the Member
shall be obligated to sell the shares at the highest price that any purchaser has offered and the Member agrees that the Company shall have no obligation to the Member to find the best price for the relevant shares.
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13.2
|
The Directors may, from time to time, require of a Member that such evidence be furnished to them or any other person in connection with establishing the eligibility of that Member to hold shares as provided in Article
13.1 above as they shall in their reasonable discretion deem sufficient.
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13.3
|
In the event that the Directors require the transfer of shares in accordance with Article 13.1 above the Directors will serve a notice (a
Transfer Notice
) on the relevant Member requiring such person within 28
(twenty eight) calendar days to transfer the applicable shares to another person who, in the sole and conclusive judgment of the Directors is not a Prohibited Person. On and after the date of such Transfer Notice, and until registration of a
transfer of the applicable shares to which it relates the rights and privileges attaching to the relevant shares will be suspended and not capable of exercise. To the extent permitted under any Relevant System, the Directors may instruct the
operator of such Relevant System to convert any uncertificated share which is subject to a Transfer Notice into certificated form.
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13.4
|
Members who do not comply with the terms of any Transfer Notice shall forfeit or be deemed to have forfeited their shares immediately. The Directors, the Company and the duly authorised agents of the Company, including,
without limitation, the registrar of the Company, shall not be liable to any Member or otherwise for any loss incurred by the Company as a result of any Prohibited Person breaching the compulsory transfer restrictions referred to herein and any
Member who breaches such restrictions is required under these Articles to indemnify the Company for any loss to the Company caused by such breach.
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13.5
|
Without limitation to any of their powers under Article 6 the Directors may at any time and from time to time call upon any Member by notice to provide them with such information and evidence as they shall reasonably
require in relation to such Member or beneficial owner which relates to or is connected with their holding of or interest in shares in the Company. In the event of any failure of the relevant Member to comply with the request contained in such
notice within a reasonable time as determined by the Directors in their sole and unfettered discretion, the Directors may proceed to avail themselves of the rights conferred on them under these Articles as though the relevant Member were a
Prohibited Person.
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14.1
|
Subject to the Act, the Company may, pursuant to a Resolution of Directors obtained at any time prior to an Acquisition, or by a Resolution of Members obtained at any time, undertake any action as is specified in
sub-paragraphs (a) to (f) below, at any time following such Resolution of Directors or Resolution of Members:
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|
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(a)
|
consolidate and divide all or any of its shares into a smaller number than its existing shares;
|
|
|
(b)
|
sub-divide its shares, or any of them, into shares of a larger number so, however, that in such sub-division the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same
as in the case of the share from which the reduced share is derived;
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(c)
|
cancel any shares which at the date of the passing of the resolution have not been taken up or agreed to be taken up by any person;
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(d)
|
convert all or any of its shares denominated in a particular currency or former currency into shares denominated in a different currency, the conversion being effected at the rate of exchange (calculated to not less
than three significant figures) current on the date of the resolution or on such other dates as may be specified therein;
|
|
|
(e)
|
where its shares are expressed in a particular currency or former currency, denominate or redenominate those shares, whether by expressing the amount in units or subdivisions of that currency or former currency, or
otherwise; and
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|
|
(f)
|
reduce any of the Company’s reserve accounts (including any share premium amount) in any manner.
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|
14.2
|
Whenever as a result of a consolidation of shares any Members would become entitled to fractions of a share, the Directors may, in their absolute discretion, on behalf of those Members, sell the shares representing the
fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those Members. The Directors may authorise some person to
execute an instrument of transfer of the shares to or in accordance with the directions of the purchaser. The transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any
irregularity in or invalidity of the proceedings in reference to the sale.
|
|
15.1
|
The Directors may, by a Resolution of Directors, authorise a distribution at a time and of an amount they think fit if they are satisfied, on reasonable grounds, that, immediately after the distribution, the value of
the Company’s assets will exceed its liabilities and the Company will be able to pay its debts as they fall due. For the avoidance of doubt, the requirements of this Article 15.1 shall not apply in respect of any issue of Ordinary Shares to the
holders of Founder Preferred Shares in satisfaction of any Annual Dividend Amount to which such holders are entitled pursuant to Article 4.1.
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|
15.2
|
Dividends may be paid in money, shares, or other property.
|
A-23
|
15.3
|
The Board may, before declaring any dividend, carry to reserve out of the profits of the Company (including any premiums received upon the issue of debenture or other securities of the Company) such sums as they think
proper as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in
the business of the Company or be invested in such investments as the Board may from time to time think fit. The Board may also without placing the same to reserve carry forward any profits which they may think prudent not to divide.
|
|
15.4
|
All dividends or other distributions (including but not limited to dividends or distributions declared and paid in accordance with Clauses 6.1 and 6.2 of the Memorandum and Articles 2.13 and 4.1) shall be declared and
paid only in respect of paid up shares and the holder of any share or shares not paid up as at the date such dividend is declared or such distribution is authorised shall not be entitled to such dividend or distribution. For the purposes of
calculating each holder’s pro rata share of any dividend or distribution paid, reference shall only be had to paid up shares (as at the date the dividend is declared or the distribution authorised) of the class or classes to which the dividend
or distribution relates. If any share is issued on terms providing that it shall rank for dividend or other distributions as from a particular date, that share shall rank for dividend or other distribution accordingly.
|
|
15.5
|
Any Resolution of Directors declaring a dividend or a distribution on a share may specify that the same shall be payable to the person registered as the holders of the shares at the close of business on a particular
date notwithstanding that it may be a date prior to that on which the resolution is passed and thereupon the dividend or distribution shall be payable to such persons in accordance with their respective holdings so registered, but without prejudice
to the rights inter se in respect of such dividend or distribution of transferors and transferees of any such shares.
|
|
15.6
|
Any Resolution of Directors declaring a dividend or other distribution may direct that it shall be satisfied wholly or partly by the distribution of assets, may authorise the issue fractional certificates, may fix the
value for distribution of any assets and may determine that cash shall be paid to any Member upon the footing of the value so fixed in order to adjust the rights of Members and may vest any assets in trustees.
|
|
15.7
|
Notice in writing of any dividend that may have been declared shall be given to each Member in accordance with Article 40 and all unclaimed dividends or other distributions may be invested or otherwise made use of by
the Directors for the benefit of the Company until claimed and the Company shall not be constituted a trustee thereof. All dividends unclaimed for 3 years after notice shall have been given to a Member may be forfeited by Resolution of Directors for
the benefit of the Company, and shall cease to remain owing by the Company.
|
|
15.8
|
Any dividend or other moneys payable in respect of a share may be paid by electronic transfer or cheque sent by post to the registered address (or in the case of a Depositary, subject to the approval of the Board, such
persons and addresses as the Depositary may require) of the person entitled or, if two or more persons are the holders of the share or are jointly entitled to it by reason of the death or bankruptcy of the holder, to the registered address of the
one of those persons who is first named in the register of Members or to such person and to such address as the person or persons entitled may in writing direct (and in default of which direction to that one of the persons jointly so entitled as the
Directors shall in their absolute discretion determine). Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque
shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. Every cheque is sent at the risk of the person
entitled to the payment. If payment is made by electronic transfer, the Company is not responsible for amounts lost or delayed in the course of making that payment.
|
|
15.9
|
The Directors may deduct from any dividend or distribution or other monies, payable to any Member on or in respect of a share, all sums of money (if any) presently payable by him to the Company on account of calls or
otherwise in relation to the shares.
|
A-24
|
15.10
|
No dividend or distribution or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share and no dividend shall be paid on Treasury
Shares.
|
|
15.11
|
If, in respect of a dividend or other distribution or other amount payable in respect of a share, on any one occasion:
|
|
|
(a)
|
a cheque is returned undelivered or left uncashed; or
|
|
|
(b)
|
an electronic transfer is not accepted,
|
and reasonable enquiries have failed to establish
another address or account of the person entitled to the payment, the Company is not obliged to send or transfer a dividend or other amount payable in respect of that share to that person until he notifies the Company of an address or account to be
used for that purpose. If the cheque is returned undelivered or left uncashed or transfer not accepted on two consecutive occasions, the Company may exercise this power without making any such enquiries.
|
16
|
REDEMPTION OF SHARES AND TREASURY SHARES
|
|
16.1
|
The Company may purchase, redeem or otherwise acquire and hold its own shares with the consent of the Member whose shares are to be purchased, redeemed or otherwise acquired.
|
|
16.2
|
The purchase, redemption or other acquisition by the Company of its own shares is deemed not to be a distribution where:
|
|
|
(a)
|
the Company purchases, redeems or otherwise acquires the shares pursuant to a right of a Member to have his shares redeemed or to have his shares exchanged for money or other property of the Company, or
|
|
|
(b)
|
the Company purchases, redeems or otherwise acquires the shares by virtue of the provisions of section 176 of the Act.
|
|
16.3
|
Sections 60, 61 and 62 of the Act shall not apply to the Company.
|
|
16.4
|
Shares that the Company purchases, redeems or otherwise acquires pursuant to this Article may be cancelled or held as Treasury Shares except to the extent that such shares are in excess of 50 (fifty) per cent. of the
issued shares of that class in which case they shall be cancelled but they shall be available for reissue.
|
|
16.5
|
All rights and obligations attaching to a Treasury Share are suspended and shall not be exercised by the Company while it holds the share as a Treasury Share.
|
|
16.6
|
Treasury Shares may be disposed of by the Company on such terms and conditions (not otherwise inconsistent with the Memorandum and Articles) as the Company may by Resolution of Directors determine.
|
|
16.7
|
Where shares are held by another body corporate of which the Company holds, directly or indirectly, shares having more than 50 (fifty) per cent. of the votes in the election of directors of the other body corporate, all
rights and obligations attaching to the shares held by the other body corporate are suspended and shall not be exercised by the other body corporate.
|
|
17
|
MORTGAGES AND CHARGES OF SHARES
|
|
17.1
|
A Member may by an instrument in writing mortgage or charge his shares.
|
|
17.2
|
There shall be entered in the register of Members at the written request of the Member:
|
|
|
(a)
|
a statement that the shares held by him are mortgaged or charged;
|
|
|
(b)
|
the name of the mortgagee or chargee; and
|
A-25
|
|
(c)
|
the date on which the particulars specified in sub-paragraphs (a) and (b) are entered in the register of Members.
|
|
17.3
|
Where particulars of a mortgage or charge are entered in the register of Members, such particulars may be cancelled:
|
|
|
(a)
|
with the written consent of the named mortgagee or chargee or anyone authorised to act on his behalf; or
|
|
|
(b)
|
upon evidence satisfactory to the Directors of the discharge of the liability secured by the mortgage or charge and the issue of such indemnities as the Directors shall consider necessary or desirable.
|
|
17.4
|
Whilst particulars of a mortgage or charge over shares are entered in the register of Members pursuant to this Article:
|
|
|
(a)
|
no transfer of any share the subject of those particulars shall be effected;
|
|
|
(b)
|
the Company may not purchase, redeem or otherwise acquire any such share; and
|
|
|
(c)
|
no replacement certificate shall be issued in respect of such shares,
|
without the written
consent of the named mortgagee or chargee.
|
18
|
MEETINGS AND CONSENTS OF MEMBERS
|
|
18.1
|
The Company shall hold the first annual general meeting within a period of 18 months following the date of an Acquisition. Not more than 15 months shall elapse between the date of one annual general meeting and the date
of the next, unless such period is extended, or such requirement is waived, by a Resolution of Members.
|
|
18.2
|
Any Director may convene meetings of the Members at such times and in such manner and places within or outside the British Virgin Islands as the Director considers necessary or desirable.
|
|
18.3
|
Upon the written request of Members entitled to exercise 30 (thirty) per cent. or more of the voting rights in respect of the matter for which the meeting is requested the Directors shall convene a meeting of Members.
|
|
18.4
|
The Director convening a meeting shall give not less than 10 (ten) calendar days’ written notice of a meeting of Members to:
|
|
|
(a)
|
those Members who are entitled to vote at the meeting; and
|
|
18.5
|
A meeting of Members held in contravention of the requirement to give notice is valid if Members holding at least 90 (ninety) per cent. of the total voting rights on all the matters to be considered at the meeting have
waived notice of the meeting and, for this purpose, the presence of a Member at the meeting shall constitute a waiver in relation to all the shares which that Member holds.
|
|
18.6
|
The inadvertent failure of a Director who convenes a meeting to give notice of a meeting to a Member or another Director, or the fact that a Member or another Director has not received notice, does not invalidate the
meeting.
|
|
18.7
|
If the Board, in its absolute discretion, considers that it is impractical or unreasonable for any reason to hold a meeting of Members at the time or place specified in the notice calling the meeting of Members, it may
move and/or postpone the meeting of Members to another time and/or place. Notice of the business to be transacted at such moved and/or postponed meeting is not required. The Board must take reasonable steps to ensure that Members trying to attend
the meeting of Members at the original time and/or place are informed of the new arrangements for the meeting of Members. Proxy forms can be delivered as specified in Article 20.10 until 48 (forty eight) hours before the rearranged meeting. Any
postponed and/or moved meeting may also be postponed and/or moved under this Article.
|
A-26
|
19
|
PROCEEDINGS AT MEETINGS OF MEMBERS
|
|
19.1
|
The quorum of any meeting of Members shall be one Member present in person or by proxy and entitled to vote.
|
|
19.2
|
A Member shall be deemed to be present at a meeting of Members if he participates by telephone or other electronic means and all Members participating in the meeting are able to hear or read what is said or communicated
by each other.
|
|
19.3
|
If a quorum is not present within half an hour from the time appointed for the meeting (or such longer period as the chairman of the meeting may think fit and allow), or if during a meeting such a quorum ceases to be
present, the meeting, if convened by or upon the requisition of Members, shall be dissolved. If otherwise convened, it shall stand adjourned to such day, time and place as the chairman may determine or as otherwise may be specified in the original
notice of meeting and, if at such adjourned meeting a quorum is not present within five minutes from the time appointed for the holding of the meeting, those Members present in person or by proxy shall be a quorum.
|
|
19.4
|
The chairman may invite any person to attend and speak at any meeting of Members of the Company where he considers this will assist in the deliberations of the meeting. The Directors may attend and speak at any meeting
of Members and at any separate meeting of the holders of any class or series of shares.
|
|
19.5
|
The notice of meeting may also specify a time (which shall not be more than 48 (forty eight) hours before the time fixed for the meeting) by which a person must be entered on the register of Members in order to have the
right to attend or vote at the meeting. Changes to entries on the register of Members after the time so specified in the notice shall be disregarded in determining the rights of any person to so attend or vote.
|
|
19.6
|
The Directors may determine that those persons who are entered on the register of Members at the close of business on a day determined by the Directors (which may not be more than 21 (twenty one) calendar days before
the date on which the notices of meeting were sent) shall be the persons who are entitled to receive notice.
|
|
19.7
|
The chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place. When a meeting is adjourned for 14 (fourteen) calendar days or more, at least 7 (seven) calendar
days’ notice shall be given specifying the day, time and place of the adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to give any such notice.
|
|
19.8
|
At any meeting of Members, the chairman (if any) of the Board or, if he is absent or unwilling, one of the other Directors who is appointed for that purpose by the Directors or (failing appointment by the Directors) by
the Members present, shall preside as chairman of the meeting. If none of the Directors are present or are present but unwilling to preside, the Members present and entitled to vote shall choose one of their number to preside as chairman of the
meeting.
|
|
19.9
|
At any meeting of the Members the chairman is responsible for deciding in such manner as he considers appropriate whether any resolution proposed has been carried or not and the result of his decision shall be announced
to the meeting and recorded in the minutes of the meeting. If the chairman has any doubt as to the outcome of the vote on a proposed resolution, he shall cause a poll to be taken of all votes cast upon such resolution. If the chairman fails to take
a poll then any Member present in person or by proxy who disputes the announcement by the chairman of the result of any vote may immediately following such announcement demand that a poll be taken and the chairman shall cause a poll to be taken. If
a poll is taken at any meeting, the result shall be announced to the meeting and recorded in the minutes of the meeting.
|
|
19.10
|
The demand for a poll may be withdrawn before the poll is taken but only with the consent of the chairman. A demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the
demand was made.
|
A-27
|
19.11
|
A poll shall be taken as the chairman directs and he may appoint scrutineers (who need not be Members) and fix a day, time and place for declaring the result of the poll. The result of the poll shall be deemed to be the
resolution of the meeting at which the poll was demanded.
|
|
19.12
|
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such day, time and place as the
chairman directs not being more than 30 (thirty) calendar days after the poll is demanded. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was
demanded. If a poll is demanded before the declaration of the result of a show of hands and the demand is duly withdrawn, the meeting shall continue as if the demand had not been made.
|
|
19.13
|
No notice need be given of a poll not taken forthwith if the day, time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least 7 (seven) calendar days’
notice shall be given specifying the day, time and place at which the poll is to be taken.
|
|
19.14
|
In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall not be entitled to a casting vote in addition to any other vote he may have.
|
|
19.15
|
The provisions of this Article 19 in relation to any meeting of Members shall apply equally to any separate meeting of a class of Members.
|
|
20.1
|
Subject to any rights or restrictions attached to any shares or class of shares and to the provisions of the Articles:
|
|
|
(a)
|
on a show of hands every Member who is present in person (or in the case of corporations, present by a duly authorised representative) or by proxy shall have one vote; and
|
|
|
(b)
|
on a poll every Member present in person (or in the case of corporations, present by a duly authorised representative) or by proxy shall have one vote for every share of which he is the holder.
|
|
20.2
|
The following applies where shares are jointly owned:
|
|
|
(a)
|
if two or more persons hold shares jointly each of them may be present in person or by proxy at a meeting of Members and may speak as a Member;
|
|
|
(b)
|
if only one of the joint owners is present in person or by proxy he may vote on behalf of all joint owners; and
|
|
|
(c)
|
if two or more of the joint owners are present in person or by proxy they must vote as one and in the event of disagreement between any of the joint owners of shares then the vote of the joint owner whose name appears
first (or earliest) in the register of Members in respect of the relevant shares shall be recorded as the vote attributable to the shares.
|
|
20.3
|
A Member in respect of whom an order has been made by any court having jurisdiction (whether in the British Virgin Islands or elsewhere) in matters concerning mental disorder may vote, whether by a show of hands or by a
poll, by his attorney, receiver or other person authorised in that behalf appointed by that court, and any such attorney, receiver or other person may vote by proxy. Evidence to the satisfaction of the Board of the authority of the person claiming
to exercise the right to vote shall be deposited at the office, or at such other place within the British Virgin Islands as is specified in accordance with these Articles for the deposit of instruments of proxy, before the time appointed for holding
the meeting or adjourned meeting or the holding of a poll at which the right to vote is to be exercised and in default the right to vote shall not be exercisable.
|
A-28
|
20.4
|
Unless the Directors otherwise decide, no Member shall be entitled to vote at any meeting of Members or at any separate meeting of the holders of any class of shares in the Company, either in person or by proxy, in
respect of any share held by him or to exercise rights as a holder of shares unless all calls and other sums presently payable by him in respect of shares of which he is the holder or one of the joint holders have been paid.
|
|
20.5
|
No Member shall, if the Directors so determine, be entitled in respect of any share held by him to attend or vote (either personally or by representative or by proxy) at any meeting of Members or separate class meeting
of the Company or to exercise any other right conferred by membership in relation to any such meeting if he or any other person appearing to be interested in such shares has failed to comply with a Disclosure Notice within 14 (fourteen) calendar
days, in a case where the shares in question represent at least 0.25 (nought point two five) per cent. of their class, or within 7 (seven) calendar days, in any other case, from the date of such Disclosure Notice. These restrictions will continue
until the information required by the notice is supplied to the Company or until the shares in question are transferred or sold in circumstances specified for this purpose in these Articles.
|
|
20.6
|
No objection shall be raised to the entitlement of any voter or to any person to vote as he did except at the meeting or adjourned meeting or poll at which the vote objected to is or may be tendered, and every vote not
disallowed at such meeting or poll shall be valid for all purposes. Any such objection made in due time shall be referred to the chairman of the meeting whose decision shall be final and conclusive.
|
|
20.7
|
On a poll, a person entitled to more than one vote need not if he votes, use all his votes or cast all votes he uses in the same way.
|
|
20.8
|
A Member may appoint another person as his proxy to exercise all or any of his rights to attend and to speak and vote at a meeting of the Company. A proxy need not be a Member. A Member may appoint more than one proxy
to attend on the same occasion, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him. When two or more valid but differing appointments of proxy are delivered or received for the same share
for use at the same meeting, the one which is last validly delivered or received (regardless of its date or the date of its execution) shall be treated as replacing and revoking the other or others as regards that share. If the Company is unable to
determine which appointment was last validly delivered or received, none of them shall be treated as valid in respect of that share.
|
|
20.9
|
The instrument appointing a proxy shall be in writing in any usual form (or in another form approved by the Board) under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a
corporation, either under its common seal or under the hand of an officer or attorney so authorised.
|
|
20.10
|
The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such power or authority shall be:
|
|
|
(a)
|
delivered to the Office or at such other place as is specified for that purpose in the notice of meeting or in the instrument of proxy issued by the Company not less than 48 (forty eight) hours before the time appointed
for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote;
|
|
|
(b)
|
given by email or any other electronic method to the address of the Company specified for that purpose in the notice of the meeting or in the instrument of proxy issued by the Company not less than 48 (forty eight)
hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote and subject to the need to deposit any power of attorney or other authority (if any) under which an instrument of proxy
is signed, an instrument so given shall be deemed to be duly deposited. However any power of attorney or other authority (if any) under which an instrument of proxy is executed, or a notarially certified copy of such power or authority, shall not be
given by email or any other electronic method;
|
A-29
|
|
(c)
|
in the case of a poll taken more than 48 hours after it is demanded, delivered as required by sub-paragraph (a) or (b) of this Article 20.10 not less than 24 (twenty four) hours before the time appointed for
the taking of the poll; or
|
|
|
(d)
|
in the case of a poll not taken immediately but taken not more than 48 (forty eight) hours after it was demanded, the time at which it was demanded,
|
and in default and unless the Board directs otherwise, the instrument of proxy shall not be treated as valid.
|
20.11
|
No instrument appointing a proxy shall be valid after the expiration of 12 months from the date named in it as the date of its execution, except at an adjourned meeting or on a poll demanded at a meeting or an adjourned
meeting in cases where the meeting was originally held within 12 months from such date. Notwithstanding this Article, the Directors may, at their discretion, accept the appointment of a proxy at any time prior to holding the meeting or adjourned
meeting at which the person named in the instrument proposes to vote.
|
|
20.12
|
Without limiting the foregoing, in relation to any shares which are held in uncertificated form, the Board may from time to time permit appointments of a proxy to be made by means of an uncertificated proxy instruction
and may in a similar manner permit supplements to, or amendments or revocations of, any such uncertificated proxy instruction to be made by like means. The Board may in addition prescribe the method of determining the time at which any such
uncertificated proxy instruction (and/or other instruction or notification) is to be treated as received by the Company or a participant acting on its behalf. The Board may treat any such uncertificated proxy instruction which purports to be or is
expressed to be sent on behalf of a holder of a share as sufficient evidence of the authority of the person sending that instruction to send it on behalf of that holder.
|
|
20.13
|
A vote given or poll demanded in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or insanity of the principal or the revocation or determination of the instrument of proxy or
of the authority under which the instrument of proxy was executed or the transfer of the share in respect of which the instrument of proxy is given, provided that no intimation in writing of such death, insanity, revocation or determination shall
have been received by the Company at the office or at such other place at which the instrument of proxy was duly deposited before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of
a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll.
|
|
20.14
|
Notwithstanding anything contained in these Articles, and subject to such being permissible under the Law, the Directors of the Company may elect to provide a facility for using electronic voting and polling by the
holders for any purpose deemed appropriate by the Directors, including without limitation, the polling of holders and electronic voting by holders at any meeting of Members.
|
|
20.15
|
Any vote given by proxy may be given by email or any other electronic method (including any instruction or message under a Relevant System) to the address of the Company or person nominated by the Company and specified
for that purpose in the notice of meeting or in the instrument of proxy issued by the Company (unless using a Relevant System in which case such message may be received by the Company’s agent) and, with the exception of votes cast using a
Relevant System subject to the need to deposit any power of attorney or other authority (if any) under which a vote given by proxy is made, a vote so given shall be deemed to be duly made. However, any power of attorney or other authority (if any)
under which a vote given by proxy is made, or a notarially certified copy of such power or authority, shall not be given by email or any other electronic method.
|
|
20.16
|
Subject to the specific provisions contained in this Article for the appointment of representatives of Members other than individuals the right of any individual to speak for or represent a Member shall be determined by
the law of the jurisdiction where, and by the documents by which, the Member is constituted or derives its existence. In case of doubt, the Directors may in good faith seek legal advice and unless and until a court of competent jurisdiction shall
otherwise rule, the Directors may rely and act upon such advice without incurring any liability to any Member or the Company.
|
A-30
|
20.17
|
Any corporation which is a Member may, by resolution of its Board or other governing body or officers authorised by such body, authorise such person or persons as it thinks fit to act as its representative at any
meeting of the Company or at any meeting of the holders of shares of any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise
if it were an individual Member. A corporation present at any meeting by such representative shall be deemed for the purposes of these Articles to be present in person.
|
|
20.18
|
The chairman of any meeting at which a vote is cast by proxy or on behalf of any Member other than an individual may at the meeting but not thereafter call for a notarially certified copy of such proxy or authority
which shall be produced within 7 (seven) calendar days of being so requested or the votes cast by such proxy or on behalf of such Member shall be disregarded.
|
|
20.19
|
An action that may be taken by the Members at a meeting may also be taken by a Resolution of Members consented to in writing, without the need for any prior notice. If any Resolution of Members is adopted otherwise than
by the unanimous written consent of all Members, a copy of such resolution shall forthwith be sent to all Members not consenting to such resolution. The consent may be in the form of counterparts, each counterpart being signed by one or more
Members. If the consent is in one or more counterparts, and the counterparts bear different dates, then the resolution shall take effect on the earliest date upon which Eligible Persons holding a sufficient number of votes of shares to constitute a
Resolution of Members have consented to the resolution by signed counterparts.
|
|
21
|
SQUEEZE OUT PROVISIONS
|
|
21.1
|
Section 176 of the Act shall not apply to the Company.
|
|
22.1
|
The first Directors shall be appointed by the first registered agent within 30 (thirty) calendar days of the incorporation of the Company and, thereafter, the Directors shall be elected by Resolution of Members or by
Resolution of Directors for such term as the Members or Directors, as applicable, determine.
|
|
22.2
|
No person shall be appointed as a Director unless he has consented in writing to act as a Director.
|
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22.3
|
The minimum number of Directors shall be one and there shall be no maximum number of Directors.
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|
23.1
|
Any Director (other than an alternate Director) may by notice sent to or deposited at the office or tabled at the meeting of the Board or in any other manner approved by the Board appoint any other Director or any other
person to be an alternate Director to attend and vote in his place at any meeting of the Directors at which he is not personally present or to undertake and perform such duties and functions and to exercise such rights as he would personally.
|
|
23.2
|
Any such appointment may be made generally or specifically or for any period or for any particular meeting and with and subject to any particular restrictions. An alternate Director need not be a Member.
|
|
23.3
|
A Director may by notice delivered to the office or tabled at a meeting of the Board revoke the appointment of his alternate Director and, subject to the provisions of this Article 23, appoint another person in his
place. If a Director ceases to hold the office of Director or if he dies, the appointment of his alternate Director automatically ceases. If a Director retires but is reappointed or deemed reappointed at the meeting at which his retirement takes
effect, a valid appointment of an alternate Director which was in force immediately before his retirement continues to operate after his reappointment as if he has not retired. The appointment of an alternate Director ceases on the happening of an
event which, if he were a Director otherwise appointed, would cause him to vacate office.
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23.4
|
Every alternate Director while he holds office as such shall be entitled:
|
|
|
(a)
|
if his appointor so directs the secretary to notice of meetings of the Directors and all committees of the Board of which his appointor is a member;
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|
|
(b)
|
to attend and to exercise (subject to any restrictions) all the rights and privileges of his appointor at all such meetings at which his appointor is not personally present; and
|
|
|
(c)
|
to sign written resolutions on behalf of his appointor.
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|
23.5
|
A Director acting as alternate Director has a separate vote at meetings of the Board and committees of the Board for each Director for whom he acts as alternate Director but he counts as only one for the purpose of
determining whether a quorum is present.
|
|
23.6
|
Without prejudice to Article 23.3 every alternate Director shall ipso facto vacate office if and when his appointment expires by effluxion of time.
|
|
23.7
|
Save as otherwise provided in these Articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the
agent of the Director appointing him.
|
|
24.1
|
The business and affairs of the Company shall be managed by, or under the direction or supervision of, the Directors. The Directors have all the powers necessary for managing, and for directing and supervising, the
business and affairs of the Company. The Directors may pay all expenses incurred preliminary to and in connection with the incorporation of the Company and may exercise all such powers of the Company as are not by the Act or by the Memorandum or the
Articles required to be exercised by the Members.
|
|
24.2
|
The continuing Directors may act notwithstanding any vacancy in their body.
|
|
24.3
|
Subject as hereinafter provided, the Directors may exercise all the powers of the Company to borrow or raise money (including the power to borrow for the purpose of redeeming shares) and secure any debt or obligation of
or binding on the Company in any manner including by the issue of debentures (perpetual or otherwise) and to secure the repayment of any money borrowed raised or owing by mortgage charge pledge or lien upon the whole or any part of the
Company’s undertaking property or assets (whether present or future) and also by a similar mortgage charge pledge or lien to secure and guarantee the performance of any obligation or liability undertaken by the Company or any third party.
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|
24.4
|
All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for moneys paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may
be, in such manner as shall from time to time be determined by Resolution of Directors.
|
|
24.5
|
Section 175 of the Act shall not apply to the Company.
|
|
25
|
DELEGATION OF DIRECTORS’ POWERS
|
|
25.1
|
The Directors may, by Resolution of Directors, designate one or more committees, each consisting of one or more Directors, and delegate one or more of their powers, including the power to affix the Seal, to the
committee. They may also delegate to any other Director (whether holding any other executive office or not) such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the
Directors may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the proceedings of a committee shall be governed by the Articles regulating the proceedings of
Directors so far as they are capable of applying and so far as the same are not superseded by any provisions in the Resolution of Directors establishing the committee, provided that it is not necessary to give notice of a meeting of that committee
to Directors other than the Director or Directors who form the committee.
|
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25.2
|
The Directors have no power to delegate to a committee of Directors any of the following powers:
|
|
|
(a)
|
to amend the Memorandum or the Articles;
|
|
|
(b)
|
to designate committees of Directors;
|
|
|
(c)
|
to delegate powers to a committee of Directors;
|
|
|
(d)
|
to appoint or remove Directors;
|
|
|
(e)
|
to appoint or remove an agent;
|
|
|
(f)
|
to approve a plan of merger, consolidation or arrangement;
|
|
|
(g)
|
to make a declaration of solvency or to approve a liquidation plan; or
|
|
|
(h)
|
to make a determination that the Company will immediately after a proposed distribution, satisfy the solvency test (as defined in the Act).
|
|
25.3
|
Articles 25.1 and 25.2 do not prevent a committee of Directors, where authorised by the Resolution of Directors appointing such committee or by a subsequent Resolution of Directors, from appointing a sub-committee and
delegating powers exercisable by the committee to the sub-committee.
|
|
25.4
|
The Directors may, by power of attorney signed by any one or more persons duly authorised, appoint any person either generally or in respect of any specific matter, to represent the Company, act in its name and execute
documents on its behalf.
|
|
26
|
APPOINTMENT AND RETIREMENT OF DIRECTORS
|
|
26.1
|
Subject to the Act and these Articles, the Directors shall have power from time to time, without sanction of the Members, to appoint any person to be a Director, either to fill a casual vacancy or as an additional
Director. A vacancy in relation to Directors occurs if a Director dies or otherwise ceases to hold office prior to the expiration of his term of office.
|
|
26.2
|
Subject to the Act and these Articles, the Members may by a Resolution of Members appoint any person as a Director and there shall be no requirement for the appointment of two or more Directors to be considered
separately.
|
|
26.3
|
A Director is appointed for such term as may be specified in the Resolution of Directors or Resolution of Members appointing him. Where the Directors appoint a person as Director to fill a vacancy, such replacement
Director may be appointed for any term as the Directors in their discretion determine.
|
|
26.4
|
Each Director holds office for the term, if any, fixed by the Resolution of Members or Resolution of Directors appointing or otherwise provided for in the relevant Director’s service agreement or letter of
appointment (if applicable), or until his earlier death, resignation or removal. If no term is fixed on the appointment of a Director, the Director serves indefinitely until his earlier death, resignation or removal.
|
|
26.5
|
A person must not be appointed a Director unless he has in writing consented to being a Director of the Company.
|
|
26.6
|
A Director may resign his office by giving written notice of his resignation to the Company and the resignation has effect from the date the notice is received by the Company at the office of its registered agent or
from such later date as may be specified in the notice, provided in both instances that such resignation is in accordance with the terms of the relevant Director’s service agreement or letter of appointment (if applicable). A Director shall
resign forthwith as a Director if he is, or becomes, disqualified from acting as a Director under the Act.
|
|
26.7
|
A Director is not required to hold a share as a qualification to office.
|
A-33
|
27
|
DISQUALIFICATION AND REMOVAL OF DIRECTORS
|
|
27.1
|
The office of a Director shall be vacated if:
|
|
|
(a)
|
he ceases to be a Director by virtue of any provision of the Law or he ceases to be eligible to be a Director or is disqualified in accordance with the Law; or
|
|
|
(b)
|
he becomes bankrupt or makes any arrangement or composition with his creditors generally or otherwise has any judgment executed on any of his assets; or
|
|
|
(c)
|
he becomes of unsound mind or incapable or an order is made by a court having jurisdiction (whether in the British Virgin Islands or elsewhere) in matters concerning mental disorder for his detention or for the
appointment of a receiver or other person to exercise powers with respect to his property or affairs; or
|
|
|
(d)
|
he is absent from meetings of Directors for a consecutive period of 12 months and the other Directors resolve that his office shall be vacated; or
|
|
|
(f)
|
he resigns his office by written notice to the Company; or
|
|
|
(g)
|
he is removed by a Resolution of Members passed at a meeting of Members called for the purposes of removing the Director or for purposes including the removal of the Director or by a written resolution passed by a
Special Resolution of Members; or
|
|
|
(h)
|
where there are more than two Directors, all the other Directors request him to resign in writing,
|
and for the purposes of this Article 27.1, Section 114 of the Act shall not apply.
|
28
|
DIRECTORS’ REMUNERATION AND EXPENSES
|
|
28.1
|
The Directors shall be remunerated for their services at such rate as the Directors shall determine.
|
|
28.2
|
The Directors may grant special remuneration to any Director who, being so called upon, shall be willing to render any special or extra services to the Company. Such special remuneration may be made payable to such
Director in addition to or in substitution for his ordinary remuneration as a Director and may be made payable by a lump sum or by way of salary or commission or by any or all of those models or otherwise.
|
|
28.3
|
The Directors may be paid:
|
|
|
(a)
|
all reasonable travelling, hotel and other out of pocket expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors or meetings of Members or separate
meetings of the holders of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties; and
|
|
|
(b)
|
all reasonable expenses properly incurred by them in seeking independent professional advice on any matter that concerns them in the furtherance of their duties as a Director of the Company.
|
|
29.1
|
The Company may by Resolution of Directors appoint officers of the Company at such times as may be considered necessary or expedient. Such officers may consist of a Chairman of the Board, a Chief Executive Officer, one
or more vice-presidents, secretaries and treasurers and such other officers as may from time to time be considered necessary or expedient. Any number of offices may be held by the same person.
|
|
29.2
|
The officers shall perform such duties as are prescribed at the time of their appointment subject to any modification in such duties as may be prescribed thereafter by Resolution of Directors.
|
|
29.3
|
The emoluments of all officers shall be fixed by Resolution of Directors.
|
A-34
|
29.4
|
The officers of the Company shall hold office until their death, resignation or removal. Any officer elected or appointed by the directors may be removed at any time, with or without cause, by Resolution of Directors.
Any vacancy occurring in any office of the Company may be filled by Resolution of Directors.
|
|
29.5
|
Subject to the provisions of the Act, the Directors may appoint one or more of their number to the office of managing director or to any other executive office in the Company and may enter into an agreement or
arrangement with any Director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a director. Any such appointment, agreement or arrangement may be made upon such terms as the
Directors determine and they may remunerate any such Director for his services as they determine.
|
|
29.6
|
The Directors may, by a Resolution of Directors, appoint any person, including a person who is a Director, to be an agent of the Company. An agent of the Company shall have such powers and authority of the Directors,
including the power and authority to affix the Seal, as are set forth in the Articles or in the Resolution of Directors appointing the agent, except that no agent has any power or authority with respect to the matters specified in Article 25.2. The
Resolution of Directors appointing an agent may authorise the agent to appoint one or more substitutes or delegates to exercise some or all of the powers conferred on the agent by the Company. The Directors may remove an agent appointed by the
Company and may revoke or vary a power conferred on him.
|
|
30.1
|
A Director shall, forthwith after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose the interest to all other Directors.
|
|
30.2
|
For the purposes of Article 30.1, a disclosure to all other Directors to the effect that a Director is a member, director or officer of another named entity or has a fiduciary relationship with respect to the entity or
a named individual and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that entity or individual, is a sufficient disclosure of interest in relation to that transaction.
|
|
30.3
|
Subject to any applicable rules or regulations, a Director who is interested in a transaction entered into or to be entered into by the Company may:
|
|
|
(a)
|
vote on a matter relating to the transaction;
|
|
|
(b)
|
attend a meeting of Directors at which a matter relating to the transaction arises and be included among the Directors present at the meeting for the purposes of a quorum; and
|
|
|
(c)
|
sign a document on behalf of the Company, or do any other thing in his capacity as a Director, that relates to the transaction,
|
and, subject to compliance with the Act shall not, by reason of his office be accountable to the Company for any benefit which he derives from
such transaction and no such transaction shall be liable to be avoided on the grounds of any such interest or benefit.
|
31
|
DIRECTORS’ GRATUITIES AND PENSIONS
|
|
31.1
|
The Directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any Director who has held but no longer holds any executive office or employment with the Company or
with any body corporate which is or has been a subsidiary of the Company or a predecessor in business of the Company or of any such subsidiary, and for any member of his family (including a spouse and a former spouse) or any person who is or who was
dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit.
|
A-35
|
32
|
PROCEEDINGS OF DIRECTORS
|
|
32.1
|
Subject to the provisions of these Articles, the Directors may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors by
notifying each other Director in writing or otherwise. Questions arising at a meeting shall be decided by a majority of votes. In the case of an equality of votes the chairman shall have a second or casting vote. A Director who is also an alternate
Director shall be entitled to a separate vote for each Director for whom he acts as alternate in addition to his own vote.
|
|
32.2
|
A Director shall be given not less than 48 (forty eight) hours notice of meetings of Directors. A meeting of Directors held without 48 (forty eight) hours notice having been given to all Directors shall be valid if all
the Directors entitled to vote at the meeting who do not attend waive notice of the meeting, and for this purpose the presence of a Director at a meeting shall constitute a waiver by that Director. The inadvertent failure to give notice of a meeting
to a Director, or the fact that a Director has not received the notice, does not invalidate the meeting.
|
|
32.3
|
The quorum for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two except where there is a sole Director, in which case the quorum shall be
one. A person who is an alternate Director shall be counted in the quorum and any Director acting as an alternate Director shall also be counted as one for each of the Directors for whom he acts as alternate.
|
|
32.4
|
The Directors or any committee thereof may meet at such times and in such manner and places within or outside the British Virgin Islands as the notice calling the meeting provides.
|
|
32.5
|
A meeting of Directors may be held notwithstanding that such Directors may not be in the same place if a Director is, by any means, in communication with one or more other Directors so that each Director participating
in the communication can hear or read what is said or communicated by each of the others and any such meeting shall be deemed to be held in the place in which the chairman of the meeting is present and each such Director shall be deemed to be
present at such meeting and shall be counted when reckoning a quorum.
|
|
32.6
|
The continuing Directors or the only continuing Director may act notwithstanding any vacancies in their number, but, if the number of Directors is less than the number fixed as the quorum, the continuing Directors or
Director may act only for the purpose of filling vacancies or of calling a meeting of Members. In lieu of minutes of a meeting a sole continuing Director shall record in writing and sign a note or memorandum of all matters requiring a Resolution of
Directors. Such a note or memorandum constitutes sufficient evidence of such resolution for all purposes.
|
|
32.7
|
The Directors may appoint one of their number to be the chairman of the Board and may at any time remove him from that office. Unless he is unwilling to do so, the Directors so appointed shall preside at every meeting
of Directors at which he is present. But if there is no Director holding that office, or if the Directors holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Directors present may
appoint one of their number to be chairman of the meeting.
|
|
32.8
|
All acts done by a meeting of Directors, or of a committee of Directors, or by a person acting as a Director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any
Director or that any of them were disqualified from holding office, be as valid as if every such person had been duly appointed and was qualified.
|
|
32.9
|
An action that may be taken by the Directors or a committee of Directors at a meeting may also be taken by a Resolution of Directors or a resolution
of a committee of Directors consented to in writing by such majority of Directors or by such majority of the members of the committee, as the case may be, as would have been required to approve such Resolution of Directors or such resolution of a
committee of the Directors at a duly convened meeting of Directors or the Committee as applicable without the need for any notice. The consent may be in the form of counterparts each counterpart being signed by one or more
|
A-36
|
|
Directors. If the consent is in one or more counterparts, and the counterparts bear different dates, then the resolution shall take effect on the date upon which the last Director has consented
to the resolution by signed counterparts.
|
|
32.10
|
The Company shall keep a register of Directors containing:
|
|
|
(a)
|
the names and addresses of the persons who are Directors;
|
|
|
(b)
|
the date on which each person whose name is entered in the register was appointed as a Director;
|
|
|
(c)
|
the date on which each person named as a Director ceased to be a Director; and
|
|
|
(d)
|
such other information as may be prescribed by the Act and/or any applicable law, rules and regulations.
|
|
32.11
|
The register of Directors may be kept in any such form as the Directors may approve, but if it is in magnetic, electronic or other data storage form, the Company must be able to produce legible evidence of its contents.
Until a Resolution of Directors determining otherwise is passed, the magnetic, electronic or other data storage shall be the original register of Directors.
|
|
33.1
|
Subject to the limitations hereinafter provided the Company may indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection
with legal, administrative or investigative proceedings any person who:
|
|
|
(a)
|
is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a
Director; or
|
|
|
(b)
|
is or was, at the request of the Company, serving as a director of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise.
|
|
33.2
|
The indemnity in Article 33.1 only applies if the person acted honestly and in good faith with a view to the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to
believe that their conduct was unlawful.
|
|
33.3
|
The decision of the Directors as to whether the person acted honestly and in good faith and with a view to the best interests of the Company and as to whether the person had no reasonable cause to believe that his
conduct was unlawful is, in the absence of fraud, sufficient for the purposes of the Articles, unless a question of law is involved.
|
|
33.4
|
The termination of any proceedings by any judgment, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and
with a view to the best interests of the Company or that the person had reasonable cause to believe that his conduct was unlawful.
|
|
33.5
|
The Company may purchase and maintain insurance in relation to any person who is or was a Director, officer or liquidator of the Company, or who at the request of the Company is or was serving as a director, officer or
liquidator of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not
the Company has or would have had the power to indemnify the person against the liability as provided in the Articles.
|
|
34.1
|
The Company shall keep the following documents at the office of its registered agent:
|
|
|
(a)
|
the Memorandum and the Articles;
|
A-37
|
|
(b)
|
the register of Members, or a copy of the register of Members;
|
|
|
(c)
|
the register of Directors, or a copy of the register of Directors; and
|
|
|
(d)
|
copies of all notices and other documents filed by the Company with the Registrar in the previous 10 years.
|
|
34.2
|
If the Company maintains only a copy of the register of Members or a copy of the register of Directors at the office of its registered agent, it shall:
|
|
|
(a)
|
within 15 (fifteen) calendar days of any change in either register, notify the registered agent in writing of the change; and
|
|
|
(b)
|
provide the registered agent with a written record of the physical address of the place or places at which the original register of Members or the original register of Directors is kept.
|
|
34.3
|
The Company shall keep the following records at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the Directors may determine:
|
|
|
(a)
|
minutes of meetings and Resolutions of Members and classes of Members;
|
|
|
(b)
|
minutes of meetings and Resolutions of Directors and committees of Directors; and
|
|
|
(c)
|
an impression of the Seal, if any.
|
|
34.4
|
Where any original records referred to in this Article 34 are maintained other than at the office of the registered agent of the Company, and the place at which the original records is changed, the Company shall provide
the registered agent with the physical address of the new location of the records of the Company within 14 (fourteen) calendar days of the change of location.
|
|
34.5
|
The records kept by the Company under this Article 34 shall be in written form or either wholly or partly as electronic records complying with the requirements of the Electronic Transactions Act.
|
|
34.6
|
A Director is entitled, on giving reasonable notice, to inspect the documents and records of the Company:
|
|
|
(c)
|
at a reasonable time specified by the Director,
|
and to make copies of or take extracts from
the documents and records.
|
34.7
|
Subject to Article 34.8, a Member is entitled, on giving written notice to the Company, to inspect:
|
|
|
(a)
|
the Memorandum and Articles;
|
|
|
(b)
|
the register of Members;
|
|
|
(c)
|
the register of Directors; and
|
|
|
(d)
|
minutes of meetings of Members and Resolutions of Members and of those classes of Members of which he is a Member,
|
and to make copies of or take extracts from the documents and records.
|
34.8
|
The Directors may, if they are satisfied that it would be contrary to the Company’s interests to allow a Member to inspect any document, or part of a document, specified in Article 34.7(b), 34.7(c) or 34.7(d),
refuse to permit the Member to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking of extracts from the records.
|
|
34.9
|
The rights of inspection of a Director and a Member shall be exercisable during ordinary business hours.
|
A-38
|
35.1
|
The Company shall maintain at the office of its registered agent a register of charges in which there shall be entered the following particulars regarding each mortgage, charge and other encumbrance created by the
Company:
|
|
|
(a)
|
the date of creation of the charge;
|
|
|
(b)
|
a short description of the liability secured by the charge;
|
|
|
(c)
|
a short description of the property charged;
|
|
|
(d)
|
the name and address of the trustee for the security or, if there is no such trustee, the name and address of the chargee;
|
|
|
(e)
|
unless the charge is a security to bearer, the name and address of the holder of the charge; and
|
|
|
(f)
|
details of any prohibition or restriction contained in the instrument creating the charge on the power of the Company to create any future charge ranking in priority to or equally with the charge.
|
|
36.1
|
The Company may by Resolution of Directors or Resolution of Members continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws.
|
|
37.1
|
The Seal (if any) shall only be used by the authority of the Directors or of a committee of Directors authorised by the Directors.
|
|
37.2
|
Subject to the provisions of the Act, the Directors may determine to have an official for use in any country, territory or place outside the British Virgin Islands, which shall be a facsimile of the Seal. Any such
official seal shall in addition bear the name of every territory, district or place in which it is to be used.
|
|
37.3
|
The Directors may determine who shall sign any instrument to which the Seal or any official seal is affixed and, in respect of the Seal, unless otherwise so determined: (i) share certificates need not be signed or,
if signed, a signature may be applied by mechanical or other means or may be printed; and (ii) every other instrument to which the Seal is affixed shall be signed by a Director and by the secretary or by a second Director. A person affixing the
Seal or any official seal to any instrument shall certify thereon the date upon which and the place at which it is affixed (or, in the case of a share certificate, on which the Seal may be printed). The Directors may also decide, either generally or
in a particular case, that a signature may be dispensed with or affixed by mechanical means.
|
|
38.1
|
No Member shall (as such) have any right of inspecting any accounting records or other book or document of the Company except as conferred by the Act or authorised by the Directors or by these Articles.
|
|
38.2
|
The Company may appoint auditors to examine the accounts and report thereon in accordance with the Law.
|
A-39
|
39
|
CAPITALISATION OF PROFITS
|
|
39.1
|
The Directors may by a Resolution of Directors:
|
|
|
(a)
|
resolve to capitalise any undistributed profits of the Company or any part of the amount for the time being standing to the credit of any of the Company’s reserve accounts (including a capital reserve, profit and
loss account or revenue reserve) or subject as hereinafter provided any such amount standing to the credit of a share premium account or capital redemption reserve fund, whether or not available for distribution;
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(b)
|
appropriate the sum resolved to be capitalised to the Members who, in the case of any amount capable of being distributed by way of dividend, would have been entitled thereto if so distributed or, in the case of any
amount not so capable, to the Members who would have been entitled thereto on a winding-up of the Company and in either case in the same proportions and apply that sum on their behalf in or towards:
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(i)
|
paying up the amounts (if any) for the time being unpaid on shares held by them respectively, or
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(ii)
|
paying up in full unissued shares or debentures of an amount equal to that sum,
|
and allot the
shares or debentures, credited as paid up, to the Members (or as they may direct) in those proportions, or partly in one way and partly in the other;
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(c)
|
make any arrangements it thinks fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, without limitation, where shares or debentures become distributable in fractions the
Board may deal with the fractions as it thinks fit, including issuing fractional certificates, disregarding fractions or selling shares or debentures representing the fractions to a person for the best price reasonably obtainable and distributing
the net proceeds of the sale in due proportion amongst the Members (except that if the amount due to a Member is less than £10, or such other sum as the Board may decide, the sum may be retained for the benefit of the Company);
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(d)
|
authorise a person to enter (on behalf of all the Members concerned) an agreement with the Company providing for either:
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(i)
|
the allotment to the Members respectively, credited as paid up, of shares or debentures to which they may be entitled on the capitalisation; or
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(ii)
|
the payment by the Company on behalf of the Members (by the application of their respective proportions of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their
existing shares,
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an agreement made under the authority being effective and binding on all those Members; and
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(e)
|
generally do all acts and things required to give effect to the resolution.
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39.2
|
Notwithstanding any other provision of these Articles, but subject to the rights attached to shares, the Board may fix any date as the record date for a dividend, distribution, allotment or issue. The record date may be
on or at any time before or after a date on which the dividend, distribution, allotment or issue is declared, made or paid.
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40.1
|
Any notice and any account, balance sheet, report or other document (each a Document) to be given to or by any person pursuant to these Articles shall be in writing except that a notice calling a meeting of the
Directors or a committee of Directors need not be in writing.
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40.2
|
The Company may give any Document either:
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A-40
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(b)
|
by sending it by post in a prepaid envelope addressed to the Member at his registered address or by leaving it at that address or by sending it to or leaving it at such other address nominated for the purpose; or
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(c)
|
by transmitting it by facsimile to the registered address of the Member; or
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(d)
|
by sending it by electronic means (other than by transmission by facsimile) to such electronic address from time to time held by the Company for that Member, or by means of a website, unless such Member notifies the
Company otherwise and unless and until the Company receives such notice, a Member is deemed to agree to the sending of Documents by electronic means in any particular electronic form and to the sending of documents by means of a website; or
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(e)
|
if service cannot be effected in accordance with sub-paragraphs (a) to (d) inclusive above, in any other manner permitted by the Act.
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40.3
|
Any Document to be given to the Company pursuant to these Articles may be given either:
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(a)
|
by being sent by post in a prepaid envelope addressed to the Company (i) at its Office, or by leaving it at such address or (ii) by sending it to or leaving it at such other address nominated by the Directors
from time to time for the purpose; or
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(b)
|
by transmitting it by facsimile (addressed to the Company) (i) to the Company’s Office or (ii) to such other address nominated by the Directors from time to time for the purpose ; or
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(c)
|
by sending it by electronic means (other than by transmission by facsimile) to (i) such electronic address, or by means of a website, from time to time provided by the Company for the purpose of the service of
Documents upon it, or (ii) such other electronic address nominated by the Directors from time to time for the purpose; or
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(d)
|
if service cannot be effected in accordance with sub-paragraphs (a) to (c) inclusive above, in any other manner permitted by the Act.
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40.4
|
In the case of joint holders of a share, all Documents shall be given to the joint holder whose name stands first in the register of Members in respect of the joint holding and Documents so given shall be sufficient
disclosure to all the joint holders.
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40.5
|
A Member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the Company shall be deemed to have received notice of the meeting and, where requisite, of the
purposes for which it was called.
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40.6
|
Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before his name is entered in the register of Members, has been duly given to a person from which he derives his
title.
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40.7
|
Service of any Document by post shall be proved by showing the date of posting, the address thereon and the fact of prepayment.
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40.8
|
A Document addressed to the office, a registered address or an address for service is, if sent by post, deemed to be given 2 (two) calendar days after it has been posted or, if such day is not a Business Day, on the
next Business Day, and in proving service it is sufficient to prove that the envelope containing the Document was properly addressed and duly posted.
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40.9
|
A Document not sent by post but left at the office, a registered address or at an address for service is deemed to be given on the day it is left or, if such day is not a Business Day, on the next Business Day.
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40.10
|
Any Document sent by facsimile shall be deemed to be received within half an hour (local time in the jurisdiction where the document is being sent) of the time on the transmission notice on the Business Day that it is
sent or, if such time of receipt is after 5.00pm local time in the jurisdiction where the Document is sent, by 9.00am (local time in the jurisdiction where the Document is sent) on the next Business Day.
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A-41
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40.11
|
Any Document sent by other electronic means shall be deemed to be received immediately upon being sent on the Business Day that it is sent (provided that such time falls between 9.00am and 5.00pm local time in the
jurisdiction where the Document is sent) or, if such day is not a Business Day, or the Document is sent outside the hours of 9.00am to 5.00pm local time in the jurisdiction where the Document is sent, by 9.00am (local time in the jurisdiction where
the Document is sent) on the next Business Day.
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40.12
|
In proving service of a Document sent by facsimile or by electronic means it shall be sufficient to show that:
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|
|
(a)
|
in the case of a Document sent by facsimile, the facsimile was properly addressed to the facsimile number last notified to the sender by the recipient and that a transmission report was generated by the sender’s
facsimile machine recording a message from the recipient’s facsimile machine that all pages were successfully transmitted; and
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(b)
|
in the case of a notice sent by other electronic means, the electronic message was properly addressed to the electronic address from time to time held by the sender for the recipient, and that no error message has been
received in relation to the electronic message or the Document by the sender.
|
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40.13
|
Any Document served by an advertisement or notice published in a newspaper or the BVI Gazette is deemed to be given to all Members and other persons entitled to receive it at noon on the day when the advertisement or
notice appears or, where an advertisement or notice is given by more than one advertisement or notice and the advertisements or notices appear on different days, at noon on the last of the days when the advertisements or notices appear.
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40.14
|
Any Document served or delivered by the Company by any other means is deemed to be served when the Company has taken the action it has been authorised to take for that purpose.
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40.15
|
A Document may be given by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a Member by sending or delivering it, in any manner authorised by these Articles for the
giving of Documents to a Member, addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt or curator of the Member or by any like description at the address, if any, supplied for that purpose by the
persons claiming to be so entitled. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death, bankruptcy or incapacity had not occurred. If more than one person would be entitled to
receive a notice in consequence of the death, bankruptcy or incapacity of a Member, notice given to any one of such persons shall be sufficient notice to all such persons.
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41.1
|
If an Acquisition has not been announced by the Winding-up Date, the Directors shall determine whether to recommend to Members either that the Company be wound up or that the Company continues to pursue an Acquisition
for another year.
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41.2
|
Following any determination by the Directors pursuant to Article 41.1 to recommend that the Company be wound up or that the Company continues to pursue an Acquisition for another year, the Directors shall propose or
cause to be proposed either at a meeting of Members or in writing a Resolution of Members to the effect that either: (i) the Company shall be wound up; or (ii) the Company shall continue for another year.
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41.3
|
If any Resolution of Members proposed pursuant to Article 41.2 to continue the Company is approved, or to wind up the Company is not approved, the
Company shall continue for a further period of one year from the Winding-up Date. If an Acquisition has not been completed by such subsequent time, the Directors shall as soon as reasonably practicable thereafter propose or cause to be proposed
either at a meeting of Members or in writing a further Resolution of Members to the effect that the Company shall
|
A-42
|
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be wound up. If any such resolution is not approved, the Directors may thereafter (at any time and from time to time) propose or cause to be proposed either at a meeting of Members or in writing
a Resolution of Members to voluntarily wind up the Company.
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41.4
|
If any Resolution of Members proposed pursuant to Article 41.2 to continue the Company is not approved, the Directors shall as soon as reasonably practicable thereafter propose or cause to be proposed either at a
meeting of Members or in writing a Resolution of Members to the effect that the Company shall be wound up. If any such resolution to wind up the Company is not approved, the Company shall continue for a further period of one year from the Winding-up
Date. If an Acquisition has not been completed by such subsequent time, the Directors shall as soon as reasonably practicable thereafter propose or cause to be proposed either at a meeting of Members or in writing a further Resolution of Members to
the effect that the Company shall be wound up. If any such resolution is not approved, the Directors may thereafter (at any time and from time to time) propose or cause to be proposed either at a meeting of Members or in writing a Resolution of
Members to voluntarily wind up the Company.
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41.5
|
The Directors may by a Resolution of Directors approve the winding up of the Company to occur at any time after an Acquisition has been completed and when the Directors reasonably conclude that the Company is or will
become a Dormant Company. For the avoidance of doubt such Resolution of Directors may, subject to the Act, be approved at any time, including prior to completion of an Acquisition.
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41.6
|
Save in the circumstances provided in Article 41.3, Article 41.4, Article 41.5, Article 41.7 and Article 43, a Special Resolution of Members is required to approve the voluntary winding-up of the Company.
|
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41.7
|
If any proposal to wind up the Company is approved by a Special Resolution of Members, Resolution of Members or Resolution of Directors pursuant to this Article 41 or Article 43, the Company shall proceed to be wound-up
in accordance with section 199 of the Act.
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42
|
MERGER AND CONSOLIDATION
|
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42.1
|
Subject to Article 42.2, the Company may, with the approval of a Resolution of Members, on which only the holders of Founder Preferred Shares shall be entitled to vote (such resolution to be obtained prior to an
Acquisition), merge or consolidate with one or more other BVI or foreign companies, in the manner provided in the Act.
|
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42.2
|
Except in relation to a Resolution of Members obtained prior to an Acquisition pursuant to Article 42.1, only the holders of Ordinary Shares shall be entitled to vote on a Resolution of Members to approve the merger or
consolidation of the Company with one or more other BVI or foreign companies.
|
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42.3
|
A Resolution of Members (either pursuant to Article 42.1 or otherwise) shall not (unless the Law requires otherwise) be required in relation to a merger of a
parent company
with one or more
subsidiary
companies
(each as defined in section 169 of the Act) in accordance with section 172 of the Act.
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43.1
|
Notwithstanding anything to the contrary in these Articles, but subject to compliance with the Law, any matters which the Directors consider it is necessary or desirable to approve in relation to, in connection with or
resulting from an Acquisition (whether before or after the Acquisition has occurred), which for the avoidance of doubt shall include in respect of any continuation of the Company under the laws of a jurisdiction outside the British Virgin Islands in
the manner provided under those laws, and/or the admission to listing and trading of any class(es) of the Company’s Securities (or interests therein) on the New York Stock Exchange or such other stock exchange as the directors may in their
discretion determine, may be approved at any time by a Resolution of Directors or, to the extent a resolution of Members is required pursuant to the Law, upon the approval of a Resolution of Members (on which only the holders of Founder Preferred
Shares shall be entitled to vote).
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A-43
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44
|
AMENDMENT OF MEMORANDUM AND ARTICLES
|
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44.1
|
The Directors may at any time (including after an Acquisition) amend the Memorandum or these Articles where the Directors determine, in their discretion, by a Resolution of Directors that such changes are necessary or
desirable in relation to, in connection with or resulting from an Acquisition, which for the avoidance of doubt shall include in respect of any continuation of the Company under the laws of a jurisdiction outside the British Virgin Islands in the
manner provided under those laws, and/or the admission to listing and trading of any class(es) of the Company’s Securities (or interests therein) on the New York Stock Exchange or such other stock exchange as the Directors may in their
discretion determine, either upon or following an Acquisition), unless in each case the Directors in their discretion determine that such change materially prejudices the rights of the holders of any class of shares in the Company, in which case
such changes may only be made pursuant to a Resolution of Directors if also approved by the holders of each class of shares affected in such manner as is specified in Clause 7.1 of the Memorandum.
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45
|
RESOLUTIONS PRIOR TO ADMISSION
|
|
45.1
|
The Directors may, subject to compliance with the Law, at any time prior to Admission, by a Resolution of Directors, take any action as may be permitted or required to be taken by a Resolution of Members or Special
Resolution of Members pursuant to the Memorandum or these Articles, save that no amendment may be made to the Memorandum or these Articles by a Resolution of Directors at any time:
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|
|
(a)
|
to restrict the rights or powers of the Members to amend the Memorandum or Articles;
|
|
|
(b)
|
to change the percentage of Members required to pass a Resolution of Members to amend the Memorandum or Articles;
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|
|
(c)
|
in circumstances where the Memorandum or Articles cannot be amended by the Members; or
|
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|
(d)
|
to Clauses 6 or 7 of the Memorandum or this Article 45.
|
We, Ogier Fiduciary Services (BVI) Limited of Nemours
Chambers, Road Town, Tortola, British Virgin Islands, for the purpose of incorporating a BVI business company under the laws of the British Virgin Islands hereby sign this Articles of Association.
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Dated: 23 April 2013
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Incorporator
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Sgd: Gareth Thomas
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Sgd: Karen Fahie
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Gareth Thomas
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Karen Fahie
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Authorised Signatory
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Authorised Signatory
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Ogier Fiduciary Services (BVI) Limited
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Ogier Fiduciary Services (BVI) Limited
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A-44
APPENDIX B—FORM OF NEW CERTIFICATE
OF INCORPORATION OF PLATFORM
DELAWARE
CERTIFICATE OF INCORPORATION
OF
PLATFORM SPECIALTY
PRODUCTS CORPORATION
I, the undersigned, for the purposes of incorporating and organizing a corporation under the General Corporation
Law of the State of Delaware, do execute this certificate of incorporation and do hereby certify as follows:
FIRST. The name of the
corporation is Platform Specialty Products Corporation (the “
Corporation
”).
SECOND. The address of the
Corporation’s registered office in the State of Delaware is 160 Greentree Drive, Suite 101, City of Dover, County of Kent, State of Delaware 19901. The name of its registered agent at such address is National Registered Agents, Inc.
THIRD. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH.
1.
Capital Stock
. The total number of shares of all
classes of capital stock which the Corporation shall have authority to issue is two hundred five million (205,000,000) shares, divided into: (i) two hundred million (200,000,000) shares, par value $0.01 per share, of common stock (the
“
Common Stock
”); and (ii) five million (5,000,000) shares, par value $0.01 per share, of preferred stock (the “
Preferred Stock
”), of which two million (2,000,000) shares are designated as “Series A
Preferred Stock” (the “
Series A Preferred Stock
”).
2.
Additional Series of Preferred Stock
.
The Board of Directors of the Corporation (the “
Board of Directors
”) is hereby expressly authorized, by resolution or resolutions thereof, to provide from time to time out of the unissued shares of Preferred Stock for one or more
series of Preferred Stock, and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the powers (including voting powers), if any, of the shares of such series and the preferences
and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the shares of such series. The designations, powers, preferences and relative, participating, optional, special
and other rights of each series of Preferred Stock, if any, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series of Preferred Stock at any time outstanding. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of all of the then outstanding shares of capital stock of the
Corporation entitled to vote irrespective of Section 242(b)(2) of the General Corporation Law of the State of Delaware, without the separate vote of the holders of the Preferred Stock as a class.
1.
Dividends
. Subject to applicable law and the rights,
if any, of the holders of any series of Preferred Stock then outstanding, dividends may be declared and paid on the Common Stock at such times and in such amounts as the Board of Directors in its discretion shall determine.
2.
Voting Rights
. Except as may otherwise be provided in the certificate of incorporation of the Corporation (including
any certificate filed with the Secretary of State of the State of Delaware establishing
B-1
the terms of a series of Preferred Stock) or by applicable law, each holder of Common Stock, as such, shall be entitled to one (1) vote for each share of Common Stock held of record by such
holder on all matters on which stockholders generally are entitled to vote, and no holder of any series of Preferred Stock, as such, shall be entitled to any voting powers in respect thereof.
3.
Liquidation Rights
. Subject to applicable law and the rights, if any, of the holders of any series of Preferred Stock
then outstanding, in the event of any liquidation, dissolution or winding up of the Corporation, the holders of the Common Stock shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in
proportion to the number of shares of Common Stock held by them. A merger or consolidation of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which
shall not in fact result in the liquidation, dissolution or winding up of the Corporation and the distribution of assets to its stockholders) shall not be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of
this
Section 3
.
|
|
C.
|
SERIES A PREFERRED STOCK.
|
The powers (including voting powers), if any, and the preferences
and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the shares of Series A Preferred Stock are as follows:
1.
Definitions
. The following terms have the following meanings for purposes of this Article FOURTH C.:
(a) “
Annual Dividend Amount
” means the amount calculated as follows:
A X B, where
“A” =
an amount equal to twenty percent (20%) of the increase (if any) in the value of a share of Common Stock, such increase calculated as being the difference between (i) the Dividend Price for that Dividend Year, and (ii) (x) if no
Annual Dividend Amount has previously been paid, a price of $10.00 per share of Common Stock, or (y) if an Annual Dividend Amount has previously been paid, the highest Dividend Price for any prior Dividend Year, which such amount shall be
adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, exchange, reclassification or otherwise) or similar
reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser number of shares occurring after the original filing of this certificate of incorporation without a proportionate and corresponding subdivision,
combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock; and
“B” = a
number of shares of Common Stock equal to such number of ordinary shares of Platform Acquisition Holdings Limited as was in issue on the Date of Admission plus the number of ordinary shares of Platform Acquisition Holdings Limited as was issuable
upon automatic conversion of the founder preferred shares of Platform Acquisition Holdings Limited in accordance with the articles of association of Platform Acquisition Holdings Limited as if converted on the Date of Admission, which such amount
shall be adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, exchange, reclassification or otherwise) or similar
reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser number of shares occurring after the original filing of this certificate of incorporation without a proportionate and corresponding subdivision,
combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock.
(b) “
Average
Price
” means for any security, as of any date: (i) in respect of ordinary shares of Platform Acquisition Holdings Limited, the mid-market closing price of ordinary shares of
B-2
Platform Acquisition Holdings Limited on the London Stock Exchange as shown on Bloomberg; (ii) in respect of any other security, the volume weighted average price for such security on the
London Stock Exchange as reported by Bloomberg through its “Volume at Price” functions; (iii) if the London Stock Exchange is not the principal securities exchange or trading market for that security, the volume weighted average price
of that security on the principal securities exchange or trading market on which that security is listed or traded as reported by Bloomberg through its “Volume at Price” functions; (iv) if the foregoing do not apply, the last closing
trade price of that security in the over-the-counter market on the electronic bulletin board for that security as reported by Bloomberg; or (v) if no last closing trade price is reported for that security by Bloomberg, the last closing ask
price of that security as reported by Bloomberg. If the Average Price cannot be calculated for that security on that date on any of the foregoing bases, the Average Price of that security on such date shall be the fair market value as mutually
determined by the Corporation and the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock (acting reasonably), voting separately as a single class.
(c) “
Bloomberg
” means Bloomberg Financial Markets.
(d) “
Business Combination Agreement
” means the Business Combination Agreement and Plan of Merger, made as of October 10,
2013, by and among the Corporation, Platform Delaware Holdings, Inc., Platform Merger Sub, LLC, MacDermid Holdings, LLC, Tartan Holdings, LLC, MacDermid, Incorporated, and CSC Shareholder Services LLC, as seller representative.
(e) “
Change of Control
” means the acquisition of Control of the Corporation by any person or party (or by a group of person
or parties who are acting in concert).
(f) “
Completion Date
” means the date upon which the Merger (as defined in the
Business Combination Agreement) becomes effective.
(g) “
Control
” means
|
|
1.
|
The power (whether by way of record or beneficial ownership of shares, proxy, voting agreement or otherwise) to:
|
|
|
a.
|
vote or cause to be voted, more than fifty percent (50%) of the then outstanding shares of Common Stock; or
|
|
|
b.
|
elect, or cause the election of, or remove, all or a majority of the members of the Board of Directors,
|
excluding, in each case, any such power that arises as a result of the issuance of shares of Common Stock by the Corporation in connection
with the acquisition contemplated by the Business Combination Agreement; or
|
|
2.
|
record or beneficial ownership of more than fifty percent (50%) of the then outstanding shares of Common Stock.
|
(h) “
Date of Admission
” means the date ordinary shares of Platform Acquisition Holdings Limited were admitted to the standard
segment of the Official List maintained by the FCA acting in its capacity as competent authority for the purposes of admission to the Official List and to trading on the London Stock Exchange’s main market for listed securities.
(i) “
Dividend Date
” means in respect of a Dividend Year, the last date of such Dividend Year, except that (i) in the
event of the Company’s dissolution, the date that is the last Trading Day immediately prior to the date of dissolution, and (ii) in the event of the automatic conversion of shares of Series A Preferred Stock into shares of Common Stock
upon a Mandatory Conversion Date, the date that is the last Trading Day immediately prior to such Mandatory Conversion Date.
(j)
“
Dividend Price
” means the amount calculated by adding together the Average Price for each of the last ten (10) consecutive Trading Days in the relevant Dividend Year, and dividing such amount by ten (10).
B-3
(k) “
Dividend Year
” means the period commencing on the day immediately after
the Completion Date and ending on the last day of that Financial Year, and thereafter each subsequent Financial Year, except that: (i) in the event of the Corporation’s dissolution, the relevant Dividend Year shall end on the Trading Day
immediately prior to the date of dissolution; and (ii) in the event of the automatic conversion of the Series A Preferred Stock into shares of Common Stock upon a Mandatory Conversion Date, the relevant Dividend Year shall end on the Trading
Day immediately prior to such Mandatory Conversion Date.
(l) “
Financial Year
” means the financial year of the
Corporation, being the twelve (12) month (or shorter) period ending on December 31
st
in each year, except in respect of the first financial year of the Corporation, which shall end on
December 31, 2014, or such other financial year(s) (each of which may be a twelve (12) month period or any longer or shorter period) as may be determined from time to time by resolution of the Board of Directors.
(m) “
Independent Directors
” means those members of the Board of Directors from time to time considered by the Board of
Directors to be “independent” as that term is defined under the applicable rules and regulations of the SEC and the corporate governance standards of the NYSE (or other applicable securities exchange or quotation system on which shares of
Common Stock are listed).
(n) “
Junior Stock
” means the Common Stock and any outstanding series of Preferred Stock
ranking junior to the Series A Preferred Stock as to dividends or distributions payable to holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation, as applicable.
(o) “
London Stock Exchange
” means London Stock Exchange plc.
(p) “
Mandatory Conversion Date
” means the earlier to occur of (i) a Change of Control, or (ii) the last day of the
seventh (7
th
) full Financial Year of the Corporation after the Completion Date, or, if either such day is not a Trading Day, on the first Trading Day immediately following such day;
provided
,
however
, that the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock may request, by writing delivered to the Corporation prior to the tenth (10
th
) business day prior to the last day of the seventh (7
th
) full Financial Year of the Corporation after Completion Date, that the day
described in clause (ii) be deferred until the last day of the eighth (8
th
) full Financial Year of the Corporation after the Completion Date, and the Board of Directors, including by a
majority of the Independent Directors, by resolution or resolutions thereof, determines to so defer the day as so requested, then the day in clause (ii) shall be the last day of the eighth
(8
th
) full Financial Year of the Corporation after the Completion Date, or, if such day is not a Trading Day, on the first Trading Date immediately following such day;
provided
,
further
, that the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock may request, by writing delivered to the Corporation prior to the tenth (10
th
) business day prior to the last day of the eighth (8
th
) full Financial Year of the Corporation after the Completion Date, that the day
described in clause (ii) be deferred until the last day of the ninth (9
th
) full Financial Year of the Corporation after the Completion Date, and the Board of Directors, including by a
majority of the Independent Directors, by resolution or resolutions thereof, determines to so defer the day as requested, then the day in clause (ii) shall be the last day of the ninth
(9
th
) full Financial Year of the Corporation after the Completion Date, or, if such day is not a Trading Day, on the first Trading Date immediately following such day;
provided
,
further
, that the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock may request, by writing delivered to the Corporation prior to the tenth (10
th
) business day prior to the last day of the ninth (9
th
) full Financial Year of the Corporation after the Completion Date, that the day
described in clause (ii) be deferred until the last day of the tenth (10
th
) full Financial Year of the Corporation after the Completion Date, and the Board of Directors, including by a
majority of the Independent Directors, by resolution or
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resolutions thereof, determines to so defer the day as requested, then the day in clause (ii) shall be the last day of the tenth
(10
th
) full Financial Year of the Corporation after the Completion Date, or, if such day is not a Trading Day, on the first Trading Date immediately following such day.
(q) “
NYSE
” means the New York Stock Exchange or any successor national securities exchange.
(r) “
Parity Stock
” means any outstanding series of Preferred Stock ranking on parity with the Series A Preferred Stock as to
dividends or distributions payable to the holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation, as applicable.
(s) “
Payment Date
” means the date fixed by the Board of Directors for the payment of the Annual Dividend Amount, which date
shall be no later than ten (10) Trading Days after the Dividend Date, except in respect of any Annual Dividend Amount becoming due on the Trading Day immediately prior to the date of the Company’s dissolution, in which case, such date
shall be such Trading Day, and except in respect of any Annual Dividend Amount becoming due on account of an automatic conversion of shares of Series A Preferred Stock into shares of Common Stock upon a Mandatory Conversion Date occasioned by a
Change in Control, in which case, such date shall be the Trading Day immediately prior to the Mandatory Conversion Date.
(t)
“
SEC
” means the United States Securities and Exchange Commission.
(u) “
Senior Stock
” means any
outstanding series of Preferred Stock ranking senior to the Series A Preferred Stock as to dividends or distributions payable to holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation, as
applicable.
(v) “
Trading Date
” means any day on which the NYSE (or other applicable securities exchange or quotation
system) is open for business and on which shares of Common Stock may be traded (other than a day on which the NYSE (or other applicable securities exchange or quotation system) is scheduled to or does close prior to its regular weekday closing
time).
2.
Dividends
. Subject to the rights of the holders of any Senior Stock (as to dividends), and on parity with
the holders of any Parity Stock (as to dividends), the holders of the Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available therefor, and payable in preference and
priority to the declaration or payment of any dividends on any Junior Stock (as to dividends), cumulative annual dividends of the Annual Dividend Amount commencing from the date that is (i) after the Completion Date, and (ii) after the
Average Price per share of Common Stock has been $11.50 per share or more (as adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse
stock split, exchange, reclassification, recapitalization or otherwise) or similar reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser number of shares occurring after the original fling of this
certificate of incorporation without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock) for ten (10) consecutive Trading Days. The
Annual Dividend Amount shall be paid in shares of Common Stock on the Payment Date and shall be allocated among the holders of shares of Series A Preferred Stock
pro rata
based on the number of shares of Series A Preferred Stock held by them
on the relevant Dividend Date, divided by the Average Price per share of Common Stock on the relevant Dividend Date (provided that any fractional shares of Common Stock due pursuant to such calculation shall not be paid and instead the nearest lower
whole number of shares of Common Stock shall be paid). For the avoidance of doubt, the Annual Dividend Amount shall be payable in full and shall not be subject to prorating notwithstanding any Dividend Year being longer or shorter than twelve
(12) months.
3.
Voting Rights
. Except as may otherwise be provided in the certificate of incorporation of the
Corporation or by applicable law, each holder of Series A Preferred Stock, as such, shall not be entitled to vote and shall not be entitled to any voting powers in respect thereof. For so long as any shares of Series A Preferred Stock shall remain
outstanding, the Corporation shall not, without the prior vote or written consent of the holders of at least seventy-five percent (75%) of the shares of Series A Preferred Stock then
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outstanding, voting separately as a single class, amend, alter or repeal any provision of the certificate of incorporation of the Corporation, whether by merger, consolidation or otherwise, if
such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Series A Preferred Stock. Notwithstanding Article SEVENTH of this certificate of incorporation,
any action required or permitted to be taken at any meeting of the holders of Series A Preferred Stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of the outstanding Series A Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Series A Preferred Stock were
present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which minutes of
proceedings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt written notice of the take of corporate action without a
meeting by less than unanimous written consent of the holders of Series A Preferred Stock shall, to the extent required by law, be given to those holders of Series A Preferred Stock who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders of Series A Preferred Stock to take the action were
delivered to the Corporation.
4.
Liquidation
. In the event of any liquidation, dissolution or winding up of the
Corporation, subject to the rights of the holders of any Senior Stock (as to distributions payable to the holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation), and on parity with the holders
of any Parity Stock (as to distributions payable to the holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation) the holders of the Series A Preferred Stock shall be entitled to receive the assets
of the Corporation available for distribution to its stockholders ratably with the Common Stock in proportion to the number of shares of Common Stock into which such shares of Series A Preferred Stock may then be converted. A merger or consolidation
of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation, dissolution or winding up of the Corporation and
the distribution of assets to its stockholders) shall not be deemed to be liquidation, dissolution or winding up of the Corporation within the meaning of this
Section 4
.
5.
Conversion
.
(a)
Automatic Conversion
. Upon the Mandatory Conversion Date, each outstanding share of Series A Preferred Stock shall automatically be
converted into one (1) share of Common Stock.
(b)
Optional Conversion
. Each outstanding share of Series A Preferred Stock may
be converted into one (1) share of Common Stock by written notice of the holder thereof delivered the Corporation specifying the number of shares of Series A Preferred Stock to be converted (if such notice is silent as to the number of shares
of Series A Preferred Stock held by the holder and proposed to be converted hereunder, the notice shall be deemed to apply to all shares of Series A Preferred Stock held by such holder) and the surrender of the certificate(s) representing the shares
of Series A Preferred Stock proposed to be converted hereunder, duly indorsed for transfer to the Corporation, on the fifth (5
th
) Trading Day following receipt of said notice and
certificate(s) by the Corporation (the “
Optional Conversion Date
”). In the event of a conversion of share(s) of Series A Preferred Stock pursuant to this
Section 5(b)
, the holder whose shares are so converted shall not
be entitled to receive, in respect of the share(s) of Series A Preferred Stock so converted, the relevant pro rata amount of the Annual Dividend Amount which may have been attributable to such shares of Series A Preferred Stock in respect of the
Dividend Year in which the Optional Conversion Date occurs.
(c)
Mechanics of Conversion
. Before any holder of shares of Series A
Preferred Stock shall be entitled to receive certificate(s) representing the shares of Common Stock into which shares of
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Series A Preferred Stock shall have been converted pursuant to this
Section 5
, such holder shall surrender the certificate(s) representing such shares of Series A Preferred Stock to
the Corporation, duly indorsed for transfer to the Corporation. The Corporation shall, as soon as practicable, and in no even later than ten (10) days after the delivery of said certificate(s), issue and deliver to such holder, or the nominee
or nominees of such holder, certificate(s) representing the number of shares of Common Stock to which such holder shall be entitled under this
Section 5
, and the certificate(s) representing the share(s) of Series A Preferred Stock so
converted shall be cancelled. The person(s) entitled to receive share(s) of Common Stock issuable upon conversion of share(s) of Series A Preferred Stock pursuant to this
Section 5
shall be treated for all purposes as the record
holder(s) of such shares of Common Stock as of the Mandatory Conversion Date or the Optional Conversion Date, as applicable.
(d)
Adjustments
. In the event that at any time or from time to time after the original filing of this certificate of incorporation, the Corporation effects a subdivision (by stock split, subdivision, exchange, stock dividend, reclassification,
recapitalization or otherwise) or combination (by reverse stock split, exchange, reclassification, recapitalization or otherwise) or similar reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser
number of shares without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock, then and in each such event, the share(s) of Common Stock to
be received upon conversion of share(s) of Series A Preferred Stock pursuant to this
Section 5
shall be proportionately increased or decreased, as applicable.
FIFTH. The incorporator of the corporation is Brian J. Gavsie, whose mailing address is Greenberg Traurig, P.A., 401 East Las Olas Boulevard,
Suite 2000, Fort Lauderdale, Florida 33301.
SIXTH.
Board of Directors
.
(a)
Management
. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
(b)
Removal of Directors
. Except for such additional directors, if any, as are elected by the holders of any outstanding series of
Preferred Stock as provided for or fixed pursuant to the provisions of Article FOURTH hereof, any director or the entire Board of Directors may be removed, solely by the affirmative vote of the holders of at least a majority in voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
(c)
Vacancies
. Subject to the rights, if any, of the holders of any outstanding series of Preferred Stock as provided for or fixed
pursuant to the provisions of ARTICLE FOURTH hereof, newly created directorships resulting from an increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement,
disqualification, removal or other cause shall be filled solely and exclusively by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced and until his or her successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.
(d)
Automatic Increase/Decrease in Authorized Directors
. During any period when the holders of any outstanding series of Preferred
Stock as provided for or fixed pursuant to the provisions of Article FOURTH hereof have the right to elect one or more additional directors, then upon commencement of, and for the duration of, the period during which such right continues:
(i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such outstanding series of Preferred Stock shall be entitled to elect the
additional director or directors so provided or fixed pursuant to said provisions of Article FOURTH hereof; and (ii) each such additional director shall serve
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until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions of Article FOURTH
hereof, whichever occurs earlier, subject to such director’s earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series
of Preferred Stock pursuant to the provisions of Article FOURTH hereof, whenever the holders of any outstanding series of Preferred Stock having the right to elect one or more additional directors are divested of such right pursuant to the
provisions of such capital stock, the terms of office of each such additional director elected by the holders of such series of Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, retirement, disqualification or
removal of each such additional director, shall forthwith terminate and the total authorized number of directors of the Corporation shall automatically be decreased by such specified number of directors.
(e)
No Written Ballot
. Unless and except to the extent that the by-laws of the Corporation shall so require, the election of directors
of the Corporation need not be by written ballot.
(f)
Amendment of Bylaws
. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to make, alter, amend and repeal the by-laws of the Corporation. Any by-law that is to be made, altered, amended or repealed by the stockholders of the
Corporation shall receive the affirmative vote of the holders of at least sixty-six and two-thirds percent (66
2
⁄
3
%) in voting power of the then
outstanding shares of capital stock of the Corporation entitled to vote.
(g)
Meetings of Stockholders
. Except as may otherwise be
provided for or fixed pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of any outstanding series of Preferred Stock, special meetings of stockholders for any purpose or purposes may be called at any time, but
only by (i) the Chief Executive Officer of the Corporation, or (ii) the Board of Directors. Except as provided in the foregoing sentence, special meetings of stockholders may not be called by another person or persons. Any meeting of
stockholders may be postponed by action of the Board of Directors or by the person calling such meeting (if other than the Board of Directors) at any time in advance of such meeting.
SEVENTH. Except as may otherwise be provided for or fixed pursuant to the provisions of Article FOURTH hereof relating to the rights of the
holders of any outstanding series of Preferred Stock, no action that is required or permitted to be taken by the stockholders of the corporation at any annual or special meeting of stockholders may be effected by written consent of stockholders in
lieu of a meeting of stockholders.
EIGHTH. A director of the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be
amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation hereunder in respect of any act or omission occurring prior to the time of such amendment,
modification or repeal.
NINTH. The Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal
any provision contained in this certificate of incorporation, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this certificate of incorporation in its present form or as hereafter amended are granted subject to the rights
reserved in this Article NINTH.
[Signature Page Follows]
The undersigned incorporator hereby acknowledges that the foregoing certificate of incorporation is his act and deed on this the
day of , 20 .
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Brian J. Gavsie
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Incorporator
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APPENDIX C—FORM OF NEW BY-LAWS OF
PLATFORM DELAWARE
BY-LAWS
OF
PLATFORM SPECIALTY
PRODUCTS CORPORATION
ARTICLE I
Meetings of Stockholders
Section 1.1
Annual Meetings
. If required by applicable law, an annual meeting of stockholders shall be held for the election of
directors at such date, time and place, if any, either within or without the State of Delaware, as may be designated by resolution of the Board of Directors of the corporation (the “
Board of Directors
”) from time to time. Any other
proper business may be transacted at the annual meeting.
Section 1.2
Special Meetings
. Except as otherwise provided by or
pursuant to the certificate of incorporation, special meetings of stockholders for any purpose or purposes may be called at any time, but only by (i) the Chief Executive Officer, or (ii) the Board of Directors. Except as provided in the
foregoing sentence, special meetings of stockholders may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 1.3
Notice of Meetings
. Whenever stockholders are required or permitted to take any action at a meeting, a written notice
of the meeting shall be given that shall state the place, if any, date and hour of the meeting, the record date for determining stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders
entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the certificate of incorporation or these by-laws, the notice of any meeting shall
be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, as of the record date for determining the stockholders entitled to notice of the meeting. If
mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation.
Section 1.4
Adjournments
. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same
or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a
new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting in accordance with
Section 1.8
of these by-laws, and shall give
notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
Section 1.5
Quorum
. Except as otherwise provided by law, the certificate of incorporation or these by-laws, at each meeting of
stockholders the presence in person or by proxy of the holders of a majority in voting power of the then outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. In the absence of a
quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in
Section 1.4
of these by-laws until a quorum shall attend. Shares of its own stock belonging
to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by
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the corporation, shall neither be entitled to vote nor be counted for quorum purposes;
provided
,
however
, that the foregoing shall not limit the right of the corporation or any
subsidiary of the corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6
Organization
. Meetings of stockholders shall be presided over by the Chairperson of the Board, if any, or in his or
her absence by the Vice Chairperson of the Board, if any, or in his or her absence by the President, or in his or her absence by a Vice President, or in the absence of the foregoing persons by a chairperson designated by the Board of Directors, or
in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 1.7
Voting; Proxies
. Except as otherwise provided by or pursuant to the provisions of the certificate of incorporation,
each stockholder entitled to vote at any meeting of stockholders shall be entitled to one (1) vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy or a new proxy bearing a later date. Voting at meetings of stockholders need not be
by written ballot. When a quorum is present at any meeting of stockholders, all elections, questions or matters presented to the stockholders at such meeting shall be decided by the affirmative vote of the holders of at least a majority in voting
power of the then outstanding shares of capital stock of the corporation entitled to vote unless (i) the election, question or matter is one which, by express provision of the certificate of incorporation, these by-laws or the laws of the State
of Delaware, a vote of a different number or voting by class is required, in which case, such express provision shall govern, or (ii) the election, question or matter is brought pursuant to the rules or regulations of an exchange upon which the
securities of the corporation are listed, in which case, such rules and regulations shall govern.
Section 1.8
Fixing Date for
Determination of Stockholders of Record
. In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the
Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (1) in the case of determination of
stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting and, unless the
Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for determining the stockholders entitled to vote at such meeting, the record date for determining the
stockholders entitled to notice of such meeting shall also be the record date for determining the stockholders entitled to vote at such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten (10) days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding
the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action
in writing without a meeting, when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation in
accordance with applicable law, or, if
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prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided
,
however
, that the Board of Directors may fix a new record date for the determination of stockholders entitled to vote at the
adjourned meeting, and in such case shall also fix as the record date for the stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for the determination of stockholders entitled to vote in accordance
with the foregoing provisions of this
Section 1.8
at the adjourned meeting.
Section 1.9
List of Stockholders Entitled
to Vote
. The officer who has charge of the stock ledger shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting;
provided
,
however
, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date,
arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting
for a period of at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network,
provided
that the information required to gain access to such list is provided with the notice of meeting, or
(ii) during ordinary business hours at the principal place of business of the corporation. The list of stockholders must also be open to examination at the meeting as required by applicable law. Except as otherwise provided by law, the stock
ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this
Section 1.9
or to vote in person or by proxy at any meeting of stockholders.
Section 1.10
Action By Written Consent of Stockholders
. Except as otherwise provided by or pursuant to the certificate of
incorporation with respect to the rights of the holders of any outstanding series of preferred stock of the corporation, no action that is required or permitted to be taken by the stockholders of the corporation at any annual or special meeting of
stockholders may be effected by written consent of stockholders in lieu of a meeting of stockholders. When, as provided by or pursuant to the certificate of incorporation with respect to the rights of the holders of any outstanding series of
preferred stock of the corporation, action required or permitted to be taken at any annual or special meeting of stockholders is taken without a meeting, without prior notice and without a vote, a consent or consents in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and
voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which minutes of proceedings of
stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. When, as provided by or pursuant to the certificate of incorporation with respect to
the rights of the holders of any outstanding shares of preferred stock of the corporation, action required or permitted to be taken at any annual or special meeting of stockholders is taken without a meeting, without prior notice and without a vote,
prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall, to the extent required by law, be given to those stockholders who have not consented in writing and who, if the action had been taken
at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the corporation.
Section 1.11
Inspectors of Election
. The corporation may, and shall if required by law, in advance of any meeting of stockholders,
appoint one or more inspectors of election, who may be employees of the corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The corporation may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the
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discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector
or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the corporation
represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the
inspectors, and (v) certify their determination of the number of shares of capital stock of the corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certification and report shall specify such
other information as may be required by applicable law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspectors may consider such information as is permitted by
applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.
Section 1.12
Conduct of Meetings
. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board of
Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the
person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are
appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person at the meeting, may include, without limitation, the following: (i) the
establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to
stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct
of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and, if such presiding person should so determine, such presiding person shall so declare to the
meeting, and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders
shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 1.13
Notice of Stockholder Business
and Nominations
.
(A)
Annual Meetings of Stockholders
. (1) Nominations of one or more individuals for election to the Board of
Directors (each, a “
Nomination
,” and more than one, “
Nominations
”) and the proposal of business other than Nominations to be considered by the stockholders (“
Business
”) may be made at an annual
meetings of stockholders only (a) pursuant to the corporation’s notice of meeting (or any supplement thereto),
provided
,
however
, that reference in the corporation’s notice of meeting to the election of directors or the
election of the members of Board of Directors shall not include or be deemed to include Nominations, (b) by or at the direction of the Board of Directors, or (c) by an stockholder of the corporation who was a stockholder of record of the
corporation at the time the notice provided for in this
Section 1.13
is delivered to the Secretary, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this
Section 1.13
.
(2) For Nominations or Business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this
Section 1.13
, the stockholder must have given timely notice thereof in writing to the Secretary and any proposed Business must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice
shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of
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business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting (
provided
,
however
, that in the event that the date
of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of business on the later on the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date
of such meeting is first made by the corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting of stockholders of the corporation commence a new time period (or extend any time period) for the
giving of a stockholder’s notice as describe above. Such stockholder’s notice shall set forth: (a) as to each Nomination to be made by such stockholder, (i) all information relating to the individual subject to such the
Nomination that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of
1934, as amended (the “
Exchange Act
”), without regard to the application of the Exchange Act to either the Nomination or the corporation, and (ii) such individual’s written consent to being named in a proxy statement as a
nominee and to serving as director if elected; (b) as to the Business proposed by such stockholder, a brief description of the Business, the text of the proposed Business (including the text of any resolutions proposed for consideration and in
the event that such Business includes a proposal to amend the by-laws of the corporation, the language of the proposed amendment), the reasons for conducting such Business at the meeting and any material interest in such Business of such stockholder
and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the Nomination or Business is made (i) the name and address of such
stockholder, as they appear on the corporation’s books, and such beneficial owner, (ii) the class, series and number of shares of capital stock of the corporation which are owned beneficially and of record by such stockholder and such
beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and such stockholder (or a qualified representative of such stockholder) intends to appear in
person or by proxy at the meeting to propose such Nomination or Business, and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver by proxy statement
and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the Business or elect the nominee subject to the Nomination, and/or (y) otherwise to solicit proxies
from stockholders of the corporation in support of such Nomination or Business;
provided
,
however
, that if the Business is otherwise subject to Rule 14a-8 (or any successor thereto) promulgated under the Exchange Act (“
Rule
14a-8
”), the foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the corporation of his, her or its intention to present such Business at an annual meeting of stockholders of the
corporation in compliance with Rule 14a-8, and such Business has been included in a proxy statement that has been prepared by the corporation to solicit proxies for such annual meeting of stockholders. The corporation may require any individual
subject to such Nomination to furnish such other information as it may reasonably require to determine the eligibility of such individual subject to such Nomination to serve as a director of the corporation.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this
Section 1.13
to the contrary, in the event that
the number of directors to be elected to the Board of Directors at an annual meeting is increased and there is no public announcement by the corporation naming the nominees for election to the additional directorships at least one hundred
(100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this
Section 1.13
shall also be considered timely, but only with respect to nominees for election to the
additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first
made by the corporation.
(B)
Special Meetings of Stockholders
. Only such Business shall be conducted at a special meeting of
stockholders of the corporation as shall have been brought before the meeting pursuant to the corporation’s notice of meeting;
provided
,
however
, that reference therein to the election of directors or the election of members of
the Board of Directors shall not include or be deemed to include Nominations. Nominations may be
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made at a special meeting of stockholders of the corporation at which directors are to be elected pursuant to the corporation’s notice of meeting as aforesaid (1) by or at the direction
of the Board of Directors, or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the corporation who is a stockholder of record at the time the notice provided for in
this
Section 1.13
is delivered to the Secretary, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this
Section 1.13
. In the event the corporation calls a
special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such elections of directors may make Nominations of one or more individuals (as the case may be)
for election to such position(s) as specified in the corporation’s notice of meeting, if the stockholder’s notice required by paragraph (A)(2) of this
Section 1.13
shall be delivered to the Secretary at the principal executive
offices of the corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of
such special meeting and of the nominees proposed by the Board of Directors to be elected as such special meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting of stockholders of the corporation
commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(C)
General
. (1) Only individuals subject to a Nomination made in compliance with the procedures set forth in this
Section 1.13
shall be eligible for election at an annual or special meeting of stockholders of the corporation,
and only such business shall be conducted at an annual or special meeting of stockholders of the corporation as shall have been brought before such meeting in accordance with the procedures set forth in this
Section 1.13
. Except as
otherwise provided by law, the person presiding over the meeting shall have the power and duty (a) to determine whether a Nomination or any Business proposed to be brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this
Section 1.13
, and (b) if any proposed Nomination or Business shall be disregarded or that such Nomination or Business shall not be considered or transacted. Notwithstanding the
foregoing provisions of this
Section 1.13
, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the corporation to present a Nomination or Business,
such Nomination or Business shall be disregarded and such Nomination or Business shall not be considered or transacted, notwithstanding that proxies in respect of such vote may have been received by the corporation.
(2) For purposed of this
Section 1.13
, “public announcement” shall include disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14, and 15(d) of the Exchange Act (or any
successor thereto).
(3) Nothing in this
Section 1.13
shall be deemed to affect any (a) rights or obligations, if any,
of stockholders with respect to inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 (to the extent the corporation or such proposals are subject to Rule 14a-8), or (b) rights, if any, of the holders of any
series of Preferred Stock to elect directors pursuant to any applicable provisions of the certificate of incorporation.
ARTICLE II
Board of Directors
Section 2.1
Number; Qualifications
. The Board of Directors shall consist of one or more members, the number thereof to be
determined from time to time by resolution of the Board of Directors. Except with respect to newly created directorships resulting from an increase in the authorized number of directors or any vacancies on the Board of Directors resulting from
death, resignation, retirement, disqualification, removal or other cause, each director shall be elected by a majority of the votes cast with respect to the nominee for election to the Board
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of Directors at any meeting of stockholders at which directors are to be elected and a quorum is present,
provided
,
however
, that the directors shall be elected by a plurality of
the votes cast at any meeting of stockholders at which directors are to be elected, a quorum is present and a stockholder or stockholders of the corporation has or have (i) nominated one or more individuals for election to the Board of
Directors in compliance with
Section 1.13
of these by-laws such that the number of nominees for election to the Board of Directors exceeds the number of open seats, and (ii) not withdrawn such Nomination or Nominations on or prior
to the tenth (10
th
) day preceding the date the corporation first mails its notice of such meeting to the stockholders. For purposes of this
Section 2.1
, a “majority of the
votes cast” means that the number of shares voted “for” a nominee for election to the Board of Directors exceeds the votes cast “against” such nominee. Directors need not be stockholders.
Section 2.2
Election; Resignation; Vacancies
. The Board of Directors shall initially consist of the person or persons named as
directors in the certificate of incorporation or elected by the incorporator of the corporation, and each director so elected shall hold office until the first annual meeting of stockholders and until his or her successor is duly elected and
qualified. At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect directors each of whom shall hold office for a term of one (1) year or until his or her successor is duly elected and
qualified, subject to such director’s earlier death, resignation, disqualification or removal. Any director may resign at any time upon notice to the corporation. Unless otherwise provided by law or the certificate of incorporation, newly
created directorships resulting from an increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal or other cause shall be filled solely and
exclusively by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director so elected shall hold office until the expiration of the term of office of the director whom he or she has
replaced and until his or her successor is elected and qualified.
Section 2.3
Regular Meetings
. Regular meetings of the Board
of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine.
Section 2.4
Special Meetings
. Special meetings of the Board of Directors may be held at any time or place within or without the
State of Delaware whenever called by the Chief Executive Officer, President, the Secretary, or by any member of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting
at least twenty-four (24) hours before the special meeting.
Section 2.5
Telephonic Meetings Permitted
. Members of the
Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.
Section 2.6
Quorum; Vote Required for Action
. At all meetings of the Board of Directors the directors entitled to cast a majority of the votes of the whole Board of Directors shall constitute a quorum for the transaction of business. Except in cases in
which the certificate of incorporation, these by-laws or applicable law otherwise provides, a majority of the votes entitled to be cast by the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 2.7
Organization
. Meetings of the Board of Directors shall be presided over by the Chairperson of the Board, if any,
or in his or her absence by the Vice Chairperson of the Board, if any, or in his or her absence by the Chief Executive Officer, or in his or her absence by the President, or in their absence by a chairperson chosen at the meeting. The Secretary
shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 2.8
Action by Unanimous Consent of Directors
. Unless otherwise restricted by the certificate of incorporation or these
by-laws, any action required or permitted to be taken at any meeting of the Board of
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Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic
transmission and the writing or writings or electronic transmissions are filed with the minutes of proceedings of the board or committee in accordance with applicable law.
ARTICLE III
Committees
Section 3.1
Committees
. The Board of Directors may designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors or these by-laws, shall have and may
exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it.
Section 3.2
Committee Rules
. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors
may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to
Article II
of these
by-laws.
ARTICLE IV
Officers
Section 4.1
Executive Officers; Election; Qualifications; Term of Office, Resignation; Removal; Vacancies
. The Board of Directors
shall elect a Chief Executive Officer, President and Secretary, and it may, if it so determines, choose a Chairperson of the Board and a Vice Chairperson of the Board from among its members. The Board of Directors may also choose one or more Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as it shall from time to time deem necessary or desirable. Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding his or her election, and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Any officer may resign at any time
upon written notice to the corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the corporation. Any number
of offices may be held by the same person. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special
meeting.
Section 4.2
Powers and Duties of Executive Officers
. The officers of the corporation shall have such powers and
duties in the management of the corporation as may be prescribed in a resolution by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. The
Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties.
Section 4.3
Appointing Attorneys and Agents; Voting Securities of Other Entities
. Unless otherwise provided by resolution adopted
by the Board of Directors, the Chairperson of the Board, the Chief Executive
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Officer, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the corporation, for, in the name and on behalf of the corporation, to
cast the votes which the corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other entity, any of whose stock or other securities may be held by the corporation, at meetings of the holders of
the stock or other securities of such other corporation or other entity, or to consent in writing, in the name of the corporation as such holder, to any action by such other corporation or other entity, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consents, and may execute or cause to be executed for, in the name and on behalf of the corporation and under its corporate seal or otherwise, all such written proxies or other
instruments as he or she may deem necessary or proper. Any of the rights set forth in this
Section 4.3
which may be delegated to an attorney or agent may also be exercised directly by the Chairperson of the Board, the Chief Executive
Officer, the President or any Vice President.
ARTICLE V
Stock
Section 5.1
Certificates
. All shares of capital stock of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock
shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a
certificate signed by or in the name of the corporation by the Chairperson or Vice Chairperson of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, certifying the number of shares owned by such holder in the corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent, or
registrar at the date of issue. The corporation shall not have the power to issue a certificate in bearer form.
Section 5.2
Lost,
Stolen or Destroyed Stock Certificates; Issuance of New Certificates
. The corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the
corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
ARTICLE VI
Indemnification
Section 6.1
Right to Indemnification
. The corporation shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person (a “
Covered Person
”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a “
proceeding
”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the corporation or, while a director or
officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with
respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in
Section 6.3
, the corporation shall be required to indemnify a Covered
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Person in connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorized in the
specific case by the Board of Directors.
Section 6.2
Prepayment of Expenses
. The corporation shall to the fullest extent not
prohibited by applicable law as it presently exists or may hereafter be amended, pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any proceeding in advance of its final disposition,
provided
,
however
, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be
ultimately determined that the Covered Person is not entitled to be indemnified under this
Article VI
or otherwise.
Section 6.3
Claims
. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or
advancement of expenses under this
Article VI
is not paid in full within thirty (30) days after a written claim therefor by the Covered Person has been received by the corporation, the Covered Person may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the corporation shall have the burden of proving that the Covered Person is not entitled to the
requested indemnification or advancement of expenses under applicable law.
Section 6.4
Nonexclusivity of Rights
. The rights
conferred on any Covered Person by this
Article VI
shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these by-laws, agreement,
vote of stockholders or disinterested directors or otherwise.
Section 6.5
Other Sources
. The corporation’s obligation,
if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
Section 6.6
Amendment or Repeal
. Any repeal or modification of the foregoing provisions of this
Article VI
shall not
adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification.
Section 6.7
Other Indemnification and Prepayment of Expenses
. This
Article VI
shall not limit the right of the corporation,
to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.
ARTICLE VII
Miscellaneous
Section 7.1
Fiscal Year
. The fiscal year of the corporation shall be determined by resolution of the Board of Directors.
Section 7.2
Seal
. The corporate seal shall have the name of the corporation inscribed thereon and shall be in such form as may be
approved from time to time by the Board of Directors.
Section 7.3
Manner of Notice
. Except as otherwise provided herein or
permitted by applicable law, notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or
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stockholders at their addresses appearing on the books of the corporation. Notice to directors may be given by telecopier, telephone or other means of electronic transmission.
Section 7.4
Waiver of Notice of Meetings of Stockholders, Directors and Committees
. Any waiver of notice, given by the person
entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of
the stockholders, directors, or members of a committee of directors need be specified in a waiver of notice.
Section 7.5
Form of
Records
. Any records maintained by the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device or
method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time.
Section 7.6
Amendment of By-Laws
. These by-laws may be altered, amended or repealed, and new by-laws made, by the Board of Directors, but the stockholders may make additional by-laws and may alter and repeal any by-laws whether adopted by them or
otherwise. Any by-law that is to be made, altered, amended or repealed by the stockholders of the corporation shall receive the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66
2
⁄
3
%) in voting power of the then outstanding shares of capital stock of the corporation entitled to vote.
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APPENDIX D—EXCHANGE AGREEMENT
EXCHANGE AGREEMENT
This
EXCHANGE AGREEMENT
(this “
Agreement
”) is made and entered into as of October 25, 2013, by and among Platform
Acquisition Holdings Limited, a company limited by shares incorporated with limited liability under the laws of the British Virgin Islands (“
PAHL
”), Daniel H. Leever, Sharon L. Johnson and Frank J. Monteiro (collectively, the
“
Fiduciaries
”), not in their individual capacities but solely in their capacities as members of the Investment Committee, as defined in the MacDermid, Incorporated Profit Sharing and Employee Savings Plan (the
“
Plan
”), such Investment Committee being a fiduciary (within the meaning of ERISA Section 3(21)(A)(i)) with respect to the portion of Plan assets held in trust (the “
Trust
”) by The Charles Schwab Trust Company
Custodian for MacDermid Inc. PS and ESOP Plan (the “
Trustee
”) consisting of Company Shares (as defined below) held in accordance with the terms of the Plan and Trust.
WHEREAS
, PAHL, Platform Delaware Holdings, Inc., a Delaware corporation and direct wholly owned subsidiary of PAHL, (“
Platform
Holdco
”), Platform Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Platform Holdco (“
Merger Sub
”), MacDermid Holdings, LLC, a Delaware limited liability company (“
MD
Holdings
”), Tartan Holdings, LLC, a Delaware limited liability company (“
Newco
”), MacDermid, Incorporated, a Connecticut corporation (the “
Company
”), and CSC Shareholder Services LLC, a Delaware limited
liability company, as seller representative for the direct and indirect beneficial owners of the Company (“
Seller Representative
”), entered into a Business Combination Agreement and Plan of Merger, dated as of October 10, 2013
(the “
BCA
”), pursuant to which, among other things, PAHL has agreed to acquire substantially all of the equity in MD Holdings, representing approximately 97% of the equity interests of the Company, in accordance with the terms and
conditions set forth therein;
WHEREAS
, the Trust holds approximately 3% of the equity interests in the Company, consisting of
1,514,371.01 shares of common stock of the Company, no par value per share (the “
Company Common Stock
”) and 1,469 shares of 9.5% Series B Cumulative Compounding Preferred Stock of the Company, no par value per share (the
“
Company Preferred Stock
”, and together with the Company Common Stock, the “
Company Shares
”) in trust for the beneficial owners of the Company Shares held in the Plan (each such owner, a “
Beneficial
Owner
” and collectively, the “
Beneficial Owners
”); and
WHEREAS
, the Fiduciaries have agreed to exchange
all of the Company Shares for either (i) cash or (ii) provided that a registration statement on Form S-4 registering the exchange of the shares (the “
Registration Statement
”) has been declared effective, cash and/or shares
of common stock of PAHL (the “
PAHL Shares
”) (as indicated by the Beneficial Owners), on behalf of and at the instruction of the Beneficial Owners and on the terms and subject to the conditions set forth herein (the
“
Exchange
”).
Section 1.
Defined Terms
. All capitalized terms not defined herein shall have their respective meanings set
forth in the BCA. For purposes of this Agreement, the term:
1.1 “
Aggregate Cash Consideration
” means the aggregate amount
of consideration paid pursuant to (i) Section 2.4(a)(i)1)(1) and Section 2.4(a)(ii)(i)(2) or (ii) Section 2.4(a)(ii) of this Agreement.
1.2 “
Aggregate Consideration
” shall mean the sum of (i) the Company Preferred Stock Value Per Share
multiplied by
the number of shares of Company Preferred Stock held by the Plan
plus
(y) the Company Common Stock Value Per Share
multiplied by
the number of shares of Company Common Stock held by the Plan.
1.3 “
Aggregate Stock Election Value
” shall have the meaning set forth in Section 2.4(a)(i)3) of this Agreement.
1.4 “
Aggregate Stock Consideration
” means the aggregate amount of PAHL Shares to be paid pursuant to
Section 2.4(a)(i)3)(3) of this Agreement and, if the Trading Price shall be below $11.00, cash paid pursuant to the last sentence of Section 2.4(a)(i)(3).
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1.5 “
Beneficial Owner
” and “
Beneficial Owners
” shall have the
meaning set forth in the Recitals to this Agreement.
1.6 “
Cash Election
” shall have the meaning set forth in
Section 2.4(a)(i) of this Agreement.
1.7 “
Closing
” shall have the meaning set forth in Section 2.1 of this
Agreement.
1.8 “
Closing Date
” means the date on which the Closing shall occur.
1.9 “
Code
” means the Internal Revenue Code of 1986, as amended.
1.10 “
Company Equity Value
” shall mean an amount equal to (i) $1,800,000,000.00
plus
(ii) the Closing
Adjustment Amount (as defined in the BCA), which may be positive or negative,
plus
(iii) the Final Adjustment Amount (as defined in the BCA), which may be positive or negative,
minus
(iv) the Company Preferred Stock Value.
1.11 “
Company Common Stock
” shall have the meaning set forth in the Recitals to this Agreement.
1.12 “
Company Common Stock Value Per Share
” means an amount equal to the sum of (1) the amount each share of Company
Common Stock outstanding immediately prior to the Closing of the Business Combination would be entitled to receive under the Company’s Certificate of Incorporation, in effect on such date, if the Company were liquidated at the Measurement Time
and the net value available for distribution to the Company Class A Stock and the Company Common Stock were equal to the Company Equity Value
plus
(2) an amount equal to $0.13 per share
plus
$0.39 per share.
1.13 “
Company Preferred Stock
” shall have the meaning set forth in the Recitals to this Agreement.
1.14 “
Company Preferred Stock Value
” shall mean the aggregate amount that all shares of Company Preferred Stock outstanding
immediately prior to the closing of the Business Combination would be entitled to receive as a preference to the Company Common Stock under the Company’s Certificate of Incorporation, in effect on such date, if the Company were liquidated at
the Measurement Time.
1.15 “
Company Preferred Stock Value (Plan Portion)
” shall mean the amount of the Company Preferred
Stock Value allocable to the shares of Company Preferred Stock owned by the Plan immediately prior to the closing of the Business Combination in accordance with the Company’s Certificate of Incorporation, in effect on such date.
1.16 “
Company Preferred Stock Value Per Share
” shall mean an amount equal to the sum of Company Preferred Stock Value (Plan
Portion) divided by the number of shares of Company Preferred Stock held by the Plan immediately prior to the closing of the Business Combination.
1.17 “
Company Shares
” shall have the meaning set forth in the Recitals to this Agreement.
1.18 “
Effective Date
” means the effective date of the Registration Statement.
1.19 “
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended.
1.20 “
Exchange
” shall have the meaning set forth in the Recitals to this Agreement.
1.21 “
Fiduciaries
” shall have the meaning set forth in the preamble to this Agreement.
1.22 “
Indication of Interest
” shall have the meaning set forth in Section 3.1 of this Agreement.
1.23 “
Indication of Interest Election Form
” shall have the meaning set forth in Section 3.2 of this Agreement.
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1.24 “
Indication of Interest Materials
” shall have the meaning set forth in
Section 3.2 of this Agreement.
1.25 “
Indication of Interest Period
” shall have the meaning set forth in
Section 3.3 of this Agreement.
1.26 “
Measurement Time
” shall mean 12:01 a.m. New York time on the closing date of
the Merger and Retaining Holder Exchange.
1.27 “
Notice
” shall have the meaning set forth in Section 3.1 of this
Agreement.
1.28 “
PAHL
” shall have the meaning set forth in the preamble to this Agreement.
1.29 “
Plan
” shall have the meaning set forth in the preamble to this Agreement.
1.30 “
Prospectus
” means the final prospectus included in the Registration Statement.
1.31 “
Trust
” shall have the meaning set forth in the preamble to this Agreement.
1.32 “
Trustee
” shall have the meaning set forth in the preamble to this Agreement.
1.33 “
Securities Act
” means the Securities Act of 1933, as amended.
1.34 “
Stock Election
” shall have the meaning set forth in Section 2.4(a)(ii) of this Agreement.
1.35 “
Trading Price
” means the average daily closing price per PAHL Share on the New York Stock Exchange (or other exchange
on which such equity securities are then publicly traded) for the five (5) consecutive trading days ending on the trading day immediately prior to the Closing Date.
Section 2.
Exchange with the Trust
.
2.1 Upon the terms and subject to the conditions of this Agreement, the closing of the Exchange (the “
Closing
”) shall take
place at Greenberg Traurig, LLP located at 200 Park Avenue, New York, New York 10166 at 10:00 a.m. Eastern time on the earlier of (i) if the Registration Statement was declared effective prior to the one-hundred and eightieth (180
th
) day after the date hereof, three (3) business days after the closing of the Indication of Interest Period and (ii) if the Registration Statement was not declared effective prior to
the one-hundred and eightieth (180
th
) day after the date hereof, then on the date that is one-hundred and eighty-three days after the date thereof, or at such other place, time and date as
shall be agreed in writing between the parties.
2.2 The Fiduciaries shall provide PAHL with written delivery instructions with the
respect to the Aggregate Cash Consideration and the Aggregate Stock Consideration no later than two (2) business days prior to the Closing.
2.3 At the Closing, the parties shall cause (i) the execution and/or delivery by the appropriate person of all necessary cash,
certificates, documents and instruments, (ii) to be updated all company books, records and ledgers, as shall be required, to effect the transactions contemplated by this Agreement and (iii) to be delivered any certificates, documents and
instruments as the parties or their counsel may reasonably request (including all such certificates, documents and instruments referred to herein) to evidence or consummate the transactions contemplated by this Agreement.
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2.4
Payments at Closing
.
(a) At the Closing, PAHL shall pay the Aggregate Consideration to the Trustee (for the benefit of the Beneficial Owners) in the following
forms:
(i) To the extent the Registration Statement has been declared effective and the Indication of Interest Period has expired, PAHL
shall pay or deliver (or cause the delivery) to the Trustee (for the benefit of the Beneficial Owners):
1) in exchange for the aggregate
Company Preferred Stock for which Beneficial Owners have indicated that they wish to receive a cash payment (a “
Cash Election
”), an aggregate amount of cash equal to the product of (x) the Company Preferred Stock Value Per
Share
multiplied by
the number of shares of Company Preferred Stock for which a Cash Election has been made;
plus
2) in
exchange for the aggregate Company Common Stock for which Beneficial Owners have made a Cash Election, an aggregate amount of cash equal to the product of (x) the Company Common Stock Value Per Share
multiplied by
(y) the number of
shares of Company Common Stock for which a Cash Election has been made; and
3) in exchange for the aggregate Company Preferred Stock and
Company Common Stock for which Beneficial Owners have indicated that they wish to receive a payment in PAHL Shares (a “
Stock Election
”), a number of PAHL Shares equal to (A) the sum of (1) the Company Preferred Stock Value
Per Share
multiplied by
the number of shares of Company Preferred Stock for which a Stock Election has been made
plus
(2) the Company Common Stock Value Per Share
multiplied by
the number of shares of Company Common Stock
for which a Stock Election has been made, (the “
Aggregate Stock Election Value
”),
divided by
(B) $11.00;
provided, however,
that if the Trading Price shall be below $11.00, then PAHL shall also deliver to the
Trustee (for the benefit of the Beneficial Owners) cash in an amount equal to (A) the difference between $11.00 and the Trading Price multiplied by (B) the number of PAHL Shares delivered to the Trustee (for the benefit of the Beneficial
Owners).
(ii) To the extent either the Registration Statement has not been declared effective or the Indication of Interest Period has
not expired, an aggregate amount of cash equal to the Aggregate Consideration.
2.5
Deliveries at Closing
.
(a)
PAHL Deliveries
. At the Closing, the Trustees shall have received:
(i) the cash payments set forth in Section 2.4;
(ii) if any PAHL Shares are delivered in consideration pursuant to Section 2.4(a)(i)(3) above, evidence of book entry deposits
representing such PAHL Shares; and
(iii) all other agreements, documents, instruments or certificates required to be delivered by PAHL
to the Trustee and/or Fiduciaries at or prior to the Closing pursuant to this Agreement.
(b)
Fiduciary Deliveries
. At the Closing,
PAHL shall have received:
(i) stock certificates (or an affidavit of loss therefor acceptable to PAHL) evidencing the Company Shares,
free and clear of all liens, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank; and
(ii) all other agreements, documents, instruments or certificates required to be delivered by the Fiduciaries to PAHL at or prior to the
Closing pursuant to this Agreement.
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Section 3.
Indication of Interest from Beneficial Owners
.
3.1 As promptly as practicable following the Effective Date, but no later than five (5) business days following the Effective Date, the
Fiduciaries, directly will send, or will cause the Trustee to send, a written notice to all Beneficial Owners (the “
Notice
”) seeking a written indication of interest (an “
Indication of Interest
”) from each
Beneficial Owner as to whether such Beneficial Owner desires for the Fiduciaries to make or cause the Trustee to make, on behalf of such Beneficial Owner and in connection with the Exchange, either (i) a Stock Election with respect to all such
Company Shares beneficially owned by such Beneficial Owner or (ii) a Cash Election with respect to all such Company Shares beneficially owned by such Beneficial Owner.
3.2 In connection with the Notice, the Fiduciaries shall provide or shall cause the Trustee to provide, each Beneficial Owner with (i) a
copy of the Prospectus and (ii) an election form pursuant to which each Beneficial Owner will instruct the Fiduciaries to make or to cause the Trustee to make either the Cash Election or the Stock Election (an “
Indication of Interest
Election Form
”, and together with the Prospectus, the “
Indication of Interest Materials
”).
3.3 Each Beneficial
Owner shall have twenty (20) business days from the date the Indication of Interest Materials are first sent or mailed by the Fiduciaries (or the Trustee) to the Beneficial Owners (such period of time, the “
Indication of Interest
Period
”) to provide the Fiduciaries (or the Trustee) with a completed Indication of Interest Election Form.
3.4 The Notice shall
provide that each Beneficial Owner shall have the right to change his, her or its election during the Indication of Interest Period.
3.5
The Fiduciaries shall follow or cause the Trustee to follow the election instructions provided by each Beneficial Owner. If upon the expiration of the Indication of Interest Period, neither the Fiduciaries nor the Trustee have received a completed
Indication of Interest Election Form from a Beneficial Owner, the Fiduciaries shall make or cause the Trustee to make the Cash Election on behalf of such Beneficial Owner.
3.6 No later than the business day immediately following the last day of the Indication of Interest Period, the Fiduciaries shall notify PAHL
of (i) the aggregate number of shares of Company Common Stock and Company Preferred Stock for which Beneficial Owners have made the Cash Election and (ii) the aggregate number of shares of Company Common Stock and Company Preferred Stock
for which Beneficial Owners have made the Stock Election.
Section 4.
Representations and Warranties of the Fiduciaries and the Plan
.
The Fiduciaries, on behalf of the Trust and the Plan, represent and warrant to PAHL as follows:
4.1 The Fiduciaries have full power and authority to enter into this Agreement on behalf of the Plan and to carry out the transactions
contemplated hereby, and this Agreement has been duly and validly executed and delivered by the Fiduciaries and constitutes the legal, valid and binding obligation of the Trust, enforceable against the Trust in accordance with its terms.
4.2 The Trustee of the Trust is the record owner of the Company Shares, with good and marketable title thereto, free and clear of any liens or
encumbrances. There are no outstanding purchase agreements, options or other agreements of any kind entitling a person to purchase an interest in the Company Shares or restricting the transfer of the Company Shares.
4.3 The Fiduciaries have the authority and control within the meaning of ERISA Section 3(21)(A)(i) to direct the Trustee to transfer, on
behalf of the Trust, the Company Shares to PAHL and upon closing of the transaction contemplated hereby, PAHL will become the record owner of the Company Shares, with good and marketable title thereto, free and clear of any liens and encumbrances.
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4.4 The Fiduciaries have determined that both the Company Preferred Stock Value Per Share and the
Company Common Stock Value Per Share, whether payable in cash or in PAHL Shares and cash, constitute adequate consideration as defined in Section 3(18) of the ERISA and represent that such determination was made in accordance with the standards
developed under applicable provisions of ERISA and the Code, so as to ensure that the exchange does not constitute a “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code (the “
ERISA
Standards
”), including, without limitation, consideration of the Independent Fiduciary’s Report (as hereinafter defined) and other relevant facts and circumstances.
4.5 The Fiduciaries have retained Evercore Trust Company, N.A. as a fiduciary to the Plan within the meaning of Section 3(21) of ERISA,
who is independent of all parties to the transaction, other than the Plan and Trust, (the “
Independent Fiduciary
”), to determine whether the transactions contemplated by this Agreement (including the receipt of the Aggregate Cash
Consideration and/or Aggregate Stock Consideration) are fair to, and in the interests of, the Plan, the Trust and the Plan participants who are Beneficial Owners, and that the consideration to be received by the Plan and the Beneficial Owners in
connection with the Business Combination, is adequate consideration to the Plan (within the meaning of ERISA).
4.6 The Independent
Fiduciary has issued a report (the “
Independent Fiduciary’s Report
”) setting forth the Independent Fiduciary’s determination that the transactions contemplated by this Agreement (including the receipt of the Aggregate Cash
Consideration and/or Aggregate Stock Consideration) are fair to, and in the interests of, the Plan, the Trust and the Plan participants who are Beneficial Owners, and that the consideration to be received by the Plan and the Beneficial Owners in
connection with the Business Combination, is adequate consideration to the Plan (within the meaning of ERISA).
4.7 The Fiduciaries have
been given a full opportunity to ask questions of and to receive answers from representatives of PAHL concerning the terms and conditions of the Exchange, the BCA, the Registration Statement and the business of the Company and to obtain such other
information requested in accordance with the ERISA Standards in order to evaluate the Exchange and all such questions have been answered to the full satisfaction of the Fiduciaries.
Section 5.
Representations and Warranties of PAHL
.
PAHL represents and warrants to the Fiduciaries as follows:
5.1 PAHL has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby, and this
Agreement has been duly and validly executed and delivered by PAHL and constitutes the legal, valid and binding obligation of PAHL, enforceable against PAHL in accordance with its terms.
5.2 To the extent PAHL Shares are delivered to the Trustee under this Agreement, (i) the issuance, offer, sale and exchange of the PAHL
Shares will be duly authorized by PAHL, (ii) the PAHL Shares, when issued and delivered to the Trustee in exchange for the Company Shares, will be validly issued, fully paid and non-assessable, free from all liens and encumbrances other than
any restrictions on transfer contained in PAHL’s organizational documents and (iii) the PAHL Shares will be freely-tradeable and listed on the New York Stock Exchange (the “
NYSE
”).
5.3 To the extent PAHL Shares are delivered to the Trustee under this Agreement, the Prospectus will, at the time it (and any amendment or
supplement thereto) is first sent or given to the holders of Company Shares and on the Closing Date, not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made, not misleading.
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Section 6.
Covenants of the Parties
.
6.1
Registration Statement
. As promptly as practicable following the closing of the transactions contemplated by the BCA, PAHL shall
use commercially reasonable efforts to file with the SEC a registration statement on Form S-4 (as amended or supplemented from time to time, the “
Registration Statement
”) which shall register, among other things, the exchange of the
PAHL Shares pursuant to the terms of this Agreement under the Securities Act. The Registration Statement shall comply as to form, in all material respects, with the applicable provisions of the Securities Act. PAHL shall use commercially reasonable
efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing, keep the Registration Statement effective until the distribution contemplated in the Registration Statement has been
completed or, if earlier, until this Agreement is terminated pursuant to Section 8.1, and to ensure that it complies in all material respects with the applicable provisions of the Securities Act. PAHL will advise the Fiduciaries and the Trustee
promptly after it receives notice thereof, of the time when the Registration Statement has become effective, the issuance of any stop order or the suspension of the qualification of PAHL Shares issuable in connection with the transactions
contemplated by this Agreement for offering or sale in any jurisdiction.
6.2
Amendments to the Registration Statement
. If at any
time prior to the Closing any information relating to PAHL, or any of its affiliates, officers or directors, should be discovered by PAHL which should be set forth in an amendment or supplement to the Registration Statement, so that any of such
documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, PAHL shall promptly
(i) notify the Fiduciaries and the Trustee and (ii) file with the SEC an appropriate amendment or supplement describing such information and (iii) to the extent required by applicable law, disseminate the information contained in such
amendment or supplement to the Fiduciaries.
6.3
Non-Solicitation
. The Fiduciaries shall not, directly or indirectly,
(A) accept, solicit, initiate or take any action to knowingly facilitate or encourage the submission of any proposal relating to the purchase or sale of the Company Shares, (B) enter into or participate in any discussions or negotiations
with, or furnish any information relating to PAHL, the Company or any of their respective subsidiaries to, any person (other than PAHL) in connection with purchase or sale of the Company Shares or (C) enter into any agreement in principle,
letter of intent, term sheet, merger agreement, acquisition agreement, or other similar instrument (whether or not binding) constituting or relating to the purchase or sale of the Company Shares.
6.4
No Transfers of Company Shares
. Until the earlier of the consummation of the Closing or the termination of this Agreement, the
Fiduciaries shall not (and shall not permit any Beneficial Owner to), directly or indirectly, (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, warrant to purchase or otherwise transfer or dispose of any of its Company Shares or (ii) enter into any derivative transaction of any type whatsoever (including, without limitation, any swap, contract for differences,
option, warrant or futures transaction or arrangement) that transfers, in whole or in part, any of the economic consequences of its ownership of any of its Company Shares, whether any such transaction described in clauses (i) or (ii) above
is to be settled by delivery of Company Shares, in cash or otherwise.
6.5
Further Action
. Each of the parties agrees that it shall
use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws or otherwise, so as to permit consummation of the
Exchange as promptly as practicable and otherwise to enable consummation of the transactions contemplated by this Agreement including using its commercially reasonable efforts to make any filing, and obtain (and cooperating with the other party
hereto to obtain) any consent, authorization, registration, order or approval of, or any exemption by, any governmental entity and any other third party that is required to be obtained by PAHL, the Fiduciaries or the Trustee of the Plan or any of
their respective subsidiaries in connection with the Exchange.
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6.6
Additional Agreements
. In case at any time after the Closing any further action is
reasonably necessary to carry out the purposes of this Agreement, the proper authorized persons on behalf of each party to this Agreement and their respective subsidiaries shall take all such lawful and necessary action as may be reasonably
requested by the other party.
Section 7.
Conditions to Closing
.
7.1
Conditions to Obligations of PAHL
. The obligations of PAHL to consummate the Closing are subject to the satisfaction (or, to the
extent permissible, waiver) of the following conditions:
(a)
Representations and Warranties
. The representations and warranties of
the Fiduciaries shall be true and correct as of the date hereof and as of the Closing Date as though made on and as of the Closing (except that those representations and warranties that address matters only as of a particular date need only be true
and correct as of such date).
(b)
Agreements and Covenants
. The Fiduciaries shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing Date.
(c)
Officer’s Certificate
. The Fiduciaries shall have delivered to PAHL a certificate, signed by each Fiduciary and dated as of
the Closing Date, to the effect that the conditions set forth in Section 7.1(a) and Section 7.1(b) have been satisfied.
7.2
Additional Conditions for PAHL to deliver PAHL Shares
. The obligation of PAHL to deliver PAHL Shares, and the obligation of the Fiduciaries to cause the Trust to accept PAHL Shares, as part of the consideration for the Exchange is subject to
the following conditions:
(a)
Effectiveness of the Registration Statement
. The Registration Statement shall have become effective
under the Securities Act. No stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for that purpose shall be pending or threatened, by the SEC.
(b)
NYSE Listing
. The PAHL Shares issuable as part of the Stock Election Consideration shall have been authorized for listing on the
NYSE, subject to official notice of issuance (or other exchange on which such equity securities will be publicly traded).
(c)
Officer’s Certificate
. PAHL shall have delivered to the Fiduciaries and the Trustee a certificate, signed by an authorized representative of PAHL and dated as of the Closing Date, to the effect that the conditions set forth in
Section 7.2 have been satisfied.
7.3
Conditions to Obligations of the Fiduciaries
. The obligations of the Fiduciaries to
consummate the Closing are subject to the satisfaction (or, to the extent permissible, waiver) of the following conditions:
(a)
Representations and Warranties
. The representations and warranties of PAHL shall be true and correct as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except that those representations and
warranties that address matters only as of a particular date need only be true and correct as of such date).
(b)
Agreements and
Covenants
. PAHL shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c)
Officer’s Certificate
. PAHL shall have delivered to the Trustee, with a copy to the Fiduciaries, a certificate, signed by an
executive officer of PAHL and dated as of the Closing Date, to the effect that the conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied.
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Section 8.
Termination
.
8.1 This Agreement may be terminated at any time prior to the Closing:
(a) automatically, without any further action by the parties hereto, upon termination of the BCA (for any reason);
(b) by mutual written agreement of PAHL and the Fiduciaries;
(c) by either PAHL or the Fiduciaries, if the Closing has not been consummated on or before June 30, 2014 (the “
End
Date
”);
provided, however
, that the right to terminate this Agreement pursuant to this Section 8.1 shall not be available to any party if the failure of the Closing to occur by the End Date is due wholly or partly to the failure
of that party to fulfill in all material respects all of its obligations under this Agreement.
(d) by PAHL, if there has been a breach of
or failure to perform any representation, warranty, covenant or agreement on the part of the Fiduciaries set forth in this Agreement, which breach or failure to perform (i) would cause any of the conditions set forth in Section 7.1 or
Section 7.2 not to be satisfied and (ii) either cannot be cured or has not been cured prior to the earlier of (A) the fifteenth calendar day following receipt the Fiduciaries of written notice of such breach from PAHL and (B) the
calendar day immediately prior to the End Date;
(e) by the Fiduciaries, if there has been a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of PAHL set forth in this Agreement, which breach or failure to perform (i) would cause any of the conditions set forth in Section 7.2 or Section 7.3 not to be satisfied and
(ii) either cannot be cured or has not been cured prior to the earlier of (A) the fifteenth calendar day following receipt by PAHL of written notice of such breach from the Fiduciaries and (B) the calendar day immediately prior to the
End Date;
8.2 Notwithstanding anything set forth in this Agreement, in the event that this Agreement is terminated by PAHL under
Section 8.1(c) or under Section 8.1(d) with respect solely to a breach or failure to perform that would cause the conditions in Section 7.2 not to be satisfied, PAHL shall have the right to purchase, and the Fiduciaries shall be
obligated to direct the Trustee to sell to PAHL, all of the Company Shares for the Aggregate Cash Consideration as if a Cash Election has been made with respect to all Company Shares.
Section 9.
Miscellaneous
.
9.1 All
costs and expenses incurred by or on behalf of the parties hereto in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses when due.
9.2 All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (upon
confirmation of receipt), e-mailed (upon receipt) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
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if to PAHL, to:
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Platform Acquisition Holdings Limited
Regency Court
Glategny Esplanade
St. Peter Port
Guernsey GY1 3RH
Attention: Company Administrator
Facsimile No.: +(44) 1481 716
868
E-mail: mwoodall@iag.gg
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With a copy (which shall not constitute notice) to:
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Mariposa Capital, LLC
5200 Blue Lagoon
Drive
Suite 855
Miami, Florida 33126
Attention: Martin Franklin
Facsimile No.: (305) 675-0653
E-mail: mfranklin@jarden.com
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With a copy (which shall not constitute notice) to:
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Greenberg Traurig, P.A.
401 E. Las Olas Blvd., Suite 2000
Fort Lauderdale, FL 33301
Attention: Donn Beloff, Esq.
Facsimile No.: (954) 765-1477
E-mail: beloffd@gtlaw.com
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if to the Fiduciaries, to:
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Daniel H. Leever, Sharon L. Johnson and
Frank
J. Monteiro, as Fiduciaries
MacDermid, Incorporated Profit Sharing and
Employee Savings Plan
245 Freight Street
Waterbury, CT 06702
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With a copy (which shall not constitute notice) to:
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John L. Cordani, Esq
MacDermid,
Incorporated
245 Freight Street
Waterbury, CT 06702
E-mail: jcordani@macdermid.com
Michael E. Mooney, Esq.
Nutter, McClennen and Fish, LLP
Seaport West
155 Seaport Boulevard
Boston, MA 02210
Facsimile: 617-310-9342
E-mail: mmooney@nutter.com
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9.3 This Agreement may be executed in counterparts, and by facsimile or portable document format (pdf)
transmission, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the
same counterpart.
9.4 This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof and thereof.
9.5 If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of applicable law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated
to the fullest extent possible.
D-10
9.6 This Agreement and any other document or instrument delivered pursuant hereto, and all claims
or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, termination, performance or nonperformance of this Agreement (including any claim or cause of action
based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed and construed in accordance with the internal substantive laws
of the State of Delaware applicable to a contract entered into and fully performed solely within the State of Delaware without giving effect to the principles of conflict of laws thereof.
9.7 Except as expressly provided herein, neither this Agreement nor any of the rights, interests or obligations shall be assigned by any of
the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.
This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal
or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
9.8 Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by another party hereto or its successors or permitted assigns shall be brought and
determined exclusively in any state court or Federal court sitting in New Castle County, Delaware and each of the parties hereto hereby (i) irrevocably submits with regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the exclusive personal jurisdiction of the aforesaid courts in the event any dispute arises out of or relates to this Agreement or any transaction contemplated hereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any action arising out of or relating to this Agreement or any transaction contemplated hereby
in any court other than any state court or Federal court sitting in New Castle County, Delaware. It is understood and agreed that any other court or arbiter in any other jurisdiction shall be entitled to enforce any judgment of any state court or
Federal court sitting in New Castle County, Delaware. Any writs, process or summonses to be served on any other party in such action or proceeding may be made by delivery of process in accordance with the notice provisions contained in
Section 9.2 or as otherwise permitted by applicable law. Each of the parties hereto irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (i) the defense of sovereign immunity, (ii) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this
Section 9.8, (iii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and (iv) to the fullest extent permitted by law that (A) the suit, action or proceeding in any such court is brought in an inconvenient forum, (B) the venue of such suit,
action or proceeding is improper and (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
9.9
The parties hereto agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties hereto do not perform the provisions of this Agreement (including failing to
take such actions as are required of it hereunder to consummate the transactions contemplated by this Agreement) in accordance with its specified terms or otherwise breach such provisions. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that the party seeking the injunction,
specific performance and other equitable relief has an adequate remedy at law.
D-11
9.10 EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
9.11 This Agreement may not be amended or modified except (i) by an instrument in writing signed by, or on behalf of, the parties hereto
or (ii) by a waiver in accordance with Section 9.12.
9.12 Any party to this Agreement may extend the time for the performance
of any of the obligations or other acts of the other party, waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto or waive compliance with any
of the agreements of the other party or conditions to such party’s obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of
any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party hereto to assert any of
its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.
[Signature pages follow]
D-12
IN WITNESS WHEREOF
, the parties hereto have made and entered into this Agreement as of the
date first set forth above.
PLATFORM
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PLATFORM ACQUISITION HOLDINGS LIMITED
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By:
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Name:
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Martin E. Franklin
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Title:
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Director
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[Plan Exchange Agreement Signature Page]
D-13
FIDUCIARIES:
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INVESTMENT COMMITTEE OF MACDERMID, INCORPORATED
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By:
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Name:
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Daniel H. Leever
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and
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By:
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Name:
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Sharon L. Johnson
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and
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By:
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Name:
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Frank J. Monteiro
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[Plan Exchange Agreement Signature Page]
D-14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
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Item 20.
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Indemnification of Directors and Officers
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Section 102(b)(7) of the DGCL permits a
corporation, in its certificate of incorporation, to limit or eliminate the liability of a director to the corporation or its stockholders for monetary damages for breaches of fiduciary duty as a director, except for liability (a) for any breach of
the director’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the director derived an improper personal benefit.
Under Section 145 of the DGCL, a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation (or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of an action brought by or in the right of a corporation, the corporation may indemnify any person who was
or is a party or is threatened to be made a party to any such threatened, pending or completed action by reason of the fact that the person is or was a director, officer, employee or agent of the corporation (or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) only against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent the appropriate court finds that, in view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper.
The new Platform Delaware certificate of incorporation provides
that no director of Platform Delaware shall be liable to Platform Delaware or its stockholders for monetary damages for breach of fiduciary duty as a director except to the extent that such exemption from liability or limitation thereof is not
permitted under the DGCL as currently in effect or as the same may hereafter be amended. This provision in the certificate of incorporation does not eliminate the directors’ fiduciary duties, and in appropriate circumstances, equitable remedies
such as injunctive or other forms of nonmonetary relief will remain available under Delaware law. In addition, each director will be subject to liability for breach of the director’s duty of loyalty to Platform Delaware, for acts or omissions
not in good faith or involving intentional misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.
The new Platform Delaware by-laws also provide that Platform Delaware shall indemnify and advance expenses to its officers and directors to
the fullest extent permitted by applicable law. For purposes of the indemnification described in this paragraph, references to Platform Delaware include Platform Specialty Products Corporation as incorporated under British Virgin Islands law prior
to the continuance of its existence under Delaware law as Platform Delaware. Platform Delaware will remain obligated on any indemnification obligations of Platform BVI arising prior to the Domestication.
II-1
Further, on April 28, 2013, in the case of Messrs. Berggruen and Franklin, and on October 31, in
the case of Messrs. Leever, Ashken, Goss, Israel and O’Neal, we entered into Letters of Appointment, pursuant to which we agreed to indemnify each director and hold them harmless to the full extent authorized by the laws of the British Virgin
Islands.
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Item 21.
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Exhibits and Financial Statement Schedules
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Exhibit
Number
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Description
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2.1*
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Business Combination Agreement And Plan Of Merger, dated as of October 10, 2013, by and among Platform Acquisition Holdings Limited, Platform Delaware Holdings, Inc., Platform Merger Sub, LLC, MacDermid Holdings, LLC, Tartan
Holdings, LLC, a Delaware limited liability company, MacDermid, Incorporated and CSC Shareholder Services LLC as seller representative for the direct and indirect beneficial owners of the Company.
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2.2*
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Exchange Agreement, dated as of October 25, 2013, by and between Platform Acquisition Holdings Limited and the MacDermid Incorporated Profit Sharing and Employee Savings Plan.
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3.1
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Form of Certificate of Incorporation of Platform Specialty Products Corporation.
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3.2
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Form of Bylaws of Platform Specialty Products Corporation.
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4.1
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Specimen Common Stock certificate.
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4.2
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Warrant Instrument, dated as of May 17, 2013, executed by Platform Acquisition Holdings Limited (form of Warrant contained in Schedule 1 thereto).
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4.3
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Form of Supplement to the Warrant Instrument.
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5.1**
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Opinion of Greenberg Traurig, P.A.
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8.1
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Tax opinion of Greenberg Traurig, P.A.
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10.1†
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Severance Agreement Letter, dated as of May 23, 2011, between MacDermid, Incorporated and Daniel H. Leever.
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10.2†
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Severance Agreement Letter, dated as of January 7, 2003, between MacDermid, Incorporated and Frank J. Monteiro.
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10.3†
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Severance Agreement Letter, dated as of July 22, 2002, between MacDermid, Incorporated and John L. Cordani.
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10.4†
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Memorandum of Agreement, dated as of July 9, 2001, between MacDermid, Incorporated and John L. Cordani.
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10.5*†
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MacDermid, Incorporated Profit Sharing and Employee Savings Plan (as amended and restated generally effective January 1, 2010).
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10.6*†
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MacDermid, Incorporated Employees’ Pension Plan (as amended and restated generally effective January 1, 2009).
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10.7†
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MacDermid, Incorporated Supplemental Executive Retirement Plan, effective April 1, 1994, as amended on February 25, 2005, and as further amended on July 11, 2013.
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10.8†
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Second Amendment to MacDermid, Incorporated Employees’ Pension Plan, 2009 Restatement.
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10.9†
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Amendment No. 1 to MacDermid, Incorporated Supplemental Executive Retirement Plan (as Previously Amended and Restated).
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10.10†
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Form of Platform Specialty Products Corporation Amended and Restated 2013 Incentive Compensation Plan.
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II-2
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Exhibit
Number
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Description
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10.11†
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Form of Restricted Stock Agreement – Platform Specialty Products Corporation Equity Incentive Plan.
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10.12†
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Form of Director and Officer Indemnification Agreement.
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10.13
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Amended and Restated Credit Agreement, dated as of October 31, 2013, among, inter alia, Platform Acquisition Holding Limited, MacDermid Holdings, LLC, Matrix Acquisition Corp., MacDermid, Incorporated (as successor to Matrix
Acquisition Corp., the borrower), the subsidiaries of the borrower from time to time parties thereto, the lenders from time to time parties thereto and Credit Suisse AG, as administrative agent and as collateral agent.
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10.14
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Retaining Holder Securityholders Agreement.
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10.15
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Advisory Services Agreement, dated October 31, 2013, by and between Platform Specialty Products Corporation and Mariposa Capital, LLC.
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10.16†
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Letter Agreement with respect to Supplemental Executive Retirement Plan payment, dated as of October 29, 2013, between Platform Acquisition Holdings Limited and Daniel H. Leever.
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10.17
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Registration Rights Agreement.
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10.18
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Placing Agreement, dated May 17, 2013, by and between Platform Acquisition Holdings Limited, certain of its Directors, Berggruen Acquisition Holdings IV Ltd., Mariposa Acquisition, LLC, and Barclays Bank and Citigroup Global Markets
Limited as placing banks.
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10.19
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Form of Option Deeds.
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10.20**
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Form of Indication of Interest Notice.
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10.21†
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Third Amendment to Amended and Restated MacDermid, Incorporated Employees’ Pension Plan.
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10.22†
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Form of Non-Qualified Stock Option Agreement – Platform Specialty Products Corporation Equity Incentive Plan.
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10.23†
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Form of Incentive Stock Option Agreement – Platform Specialty Products Corporation Equity Incentive Plan.
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16.1*
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Letter from PricewaterhouseCoopers LLP, dated October 31, 2013, regarding change in certifying accountant.
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21.1
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List of subsidiaries of the registrant.
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23.1
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Consent of PricewaterhouseCoopers LLP.
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23.2
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Consent of KPMG LLP.
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23.3
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Consent of Greenberg Traurig, P.A. (included in Exhibit 5.1).
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24.1*
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Powers of Attorney (included in signature page to the Registration Statement on Form S-4 filed by Platform Specialty Products Corporation on December 11, 2013).
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**
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To be filed by amendment
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†
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Management contract or compensatory plan or arrangement.
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II-3
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement; and
(c) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) That, for the purpose of determining liability under the
Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of the registration statement shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness;
provided
,
however
, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such date of first use.
(4) Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants, the registrants have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of
the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each registrant will, unless in the opinion of its counsel,
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(6) The undersigned registrant hereby undertakes to supply, by means of a post-effective amendment, all
information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
(7) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities, if a primary offering of securities of the undersigned registrant is deemed to occur pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, and if
the securities are deemed to be offered or sold to such purchaser by
II-4
means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed
pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing
prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this registration statement to be signed on its behalf by the undersigned.
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PLATFORM SPECIALTY PRODUCTS CORPORATION
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By:
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/s/ Daniel H. Leever
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Name: Daniel H. Leever
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Title: Chief Executive Officer and Vice Chairman of the Board
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Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed
below by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Daniel H. Leever
Daniel H. Leever
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Chief Executive Officer and Vice Chairman of the Board
(principal executive officer)
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January 2, 2014
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/s/ Frank J. Monteiro
Frank J. Monteiro
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Chief Financial Officer (principal accounting officer)
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January 2, 2014
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*
Martin E. Franklin
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Chairman of the Board
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January 2, 2014
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*
Ian G. H. Ashken
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Director
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January 2, 2014
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*
Nicolas Berggruen
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Director
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January 2, 2014
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*
Michael F. Goss
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Director
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January 2, 2014
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*
Ryan Israel
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Director
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January 2, 2014
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*
E. Stanley O’Neal
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Director
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January 2, 2014
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*
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The undersigned, pursuant to a power of attorney, executed by each of the officers and directors above and filed with the SEC on December 11, 2013 on the signature page to the Form S-4 and incorporated herein by
reference, by signing his name hereto, does hereby sign and deliver this amendment to the registration statement on behalf of each of the persons noted above in the capacities indicated.
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By:
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/s/ Frank J. Monteiro
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Frank J. Monteiro, Attorney-in-fact
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II-6
EXHIBIT 3.1
APPENDIX B—FORM OF NEW CERTIFICATE OF INCORPORATION OF PLATFORM
DELAWARE
CERTIFICATE OF
INCORPORATION
OF
PLATFORM SPECIALTY PRODUCTS CORPORATION
I, the undersigned, for the purposes of incorporating and organizing a corporation under the General Corporation Law of the State of Delaware,
do execute this certificate of incorporation and do hereby certify as follows:
FIRST. The name of the corporation is Platform Specialty
Products Corporation (the “
Corporation
”).
SECOND. The address of the Corporation’s registered office in the State
of Delaware is 160 Greentree Drive, Suite 101, City of Dover, County of Kent, State of Delaware 19901. The name of its registered agent at such address is National Registered Agents, Inc.
THIRD. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH.
1.
Capital Stock
. The total number of shares of all
classes of capital stock which the Corporation shall have authority to issue is two hundred five million (205,000,000) shares, divided into: (i) two hundred million (200,000,000) shares, par value $0.01 per share, of common stock (the
“
Common Stock
”); and (ii) five million (5,000,000) shares, par value $0.01 per share, of preferred stock (the “
Preferred Stock
”), of which two million (2,000,000) shares are designated as “Series A
Preferred Stock” (the “
Series A Preferred Stock
”).
2.
Additional Series of Preferred Stock
.
The Board of Directors of the Corporation (the “
Board of Directors
”) is hereby expressly authorized, by resolution or resolutions thereof, to provide from time to time out of the unissued shares of Preferred Stock for one or more
series of Preferred Stock, and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the powers (including voting powers), if any, of the shares of such series and the preferences
and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the shares of such series. The designations, powers, preferences and relative, participating, optional, special
and other rights of each series of Preferred Stock, if any, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series of Preferred Stock at any time outstanding. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of all of the then outstanding shares of capital stock of the
Corporation entitled to vote irrespective of Section 242(b)(2) of the General Corporation Law of the State of Delaware, without the separate vote of the holders of the Preferred Stock as a class.
1.
Dividends
. Subject to applicable law and the rights,
if any, of the holders of any series of Preferred Stock then outstanding, dividends may be declared and paid on the Common Stock at such times and in such amounts as the Board of Directors in its discretion shall determine.
2.
Voting Rights
. Except as may otherwise be provided in the certificate of incorporation of the Corporation (including
any certificate filed with the Secretary of State of the State of Delaware establishing
1
the terms of a series of Preferred Stock) or by applicable law, each holder of Common Stock, as such, shall be entitled to one (1) vote for each share of Common Stock held of record by such
holder on all matters on which stockholders generally are entitled to vote, and no holder of any series of Preferred Stock, as such, shall be entitled to any voting powers in respect thereof.
3.
Liquidation Rights
. Subject to applicable law and the rights, if any, of the holders of any series of Preferred Stock
then outstanding, in the event of any liquidation, dissolution or winding up of the Corporation, the holders of the Common Stock shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in
proportion to the number of shares of Common Stock held by them. A merger or consolidation of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which
shall not in fact result in the liquidation, dissolution or winding up of the Corporation and the distribution of assets to its stockholders) shall not be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of
this
Section 3
.
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C.
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SERIES A PREFERRED STOCK.
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The powers (including voting powers), if any, and the preferences
and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the shares of Series A Preferred Stock are as follows:
1.
Definitions
. The following terms have the following meanings for purposes of this Article FOURTH C.:
(a) “
Annual Dividend Amount
” means the amount calculated as follows:
A X B, where
“A” =
an amount equal to twenty percent (20%) of the increase (if any) in the value of a share of Common Stock, such increase calculated as being the difference between (i) the Dividend Price for that Dividend Year, and (ii) (x) if no
Annual Dividend Amount has previously been paid, a price of $10.00 per share of Common Stock, or (y) if an Annual Dividend Amount has previously been paid, the highest Dividend Price for any prior Dividend Year, which such amount shall be
adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, exchange, reclassification or otherwise) or similar
reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser number of shares occurring after the original filing of this certificate of incorporation without a proportionate and corresponding subdivision,
combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock; and
“B” = a
number of shares of Common Stock equal to such number of ordinary shares of Platform Acquisition Holdings Limited as was in issue on the Date of Admission plus the number of ordinary shares of Platform Acquisition Holdings Limited as was issuable
upon automatic conversion of the founder preferred shares of Platform Acquisition Holdings Limited in accordance with the articles of association of Platform Acquisition Holdings Limited as if converted on the Date of Admission, which such amount
shall be adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, exchange, reclassification or otherwise) or similar
reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser number of shares occurring after the original filing of this certificate of incorporation without a proportionate and corresponding subdivision,
combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock.
(b) “
Average
Price
” means for any security, as of any date: (i) in respect of ordinary shares of Platform Acquisition Holdings Limited, the mid-market closing price of ordinary shares of
2
Platform Acquisition Holdings Limited on the London Stock Exchange as shown on Bloomberg; (ii) in respect of any other security, the volume weighted average price for such security on the
London Stock Exchange as reported by Bloomberg through its “Volume at Price” functions; (iii) if the London Stock Exchange is not the principal securities exchange or trading market for that security, the volume weighted average price
of that security on the principal securities exchange or trading market on which that security is listed or traded as reported by Bloomberg through its “Volume at Price” functions; (iv) if the foregoing do not apply, the last closing
trade price of that security in the over-the-counter market on the electronic bulletin board for that security as reported by Bloomberg; or (v) if no last closing trade price is reported for that security by Bloomberg, the last closing ask
price of that security as reported by Bloomberg. If the Average Price cannot be calculated for that security on that date on any of the foregoing bases, the Average Price of that security on such date shall be the fair market value as mutually
determined by the Corporation and the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock (acting reasonably), voting separately as a single class.
(c) “
Bloomberg
” means Bloomberg Financial Markets.
(d) “
Business Combination Agreement
” means the Business Combination Agreement and Plan of Merger, made as of October 10,
2013, by and among the Corporation, Platform Delaware Holdings, Inc., Platform Merger Sub, LLC, MacDermid Holdings, LLC, Tartan Holdings, LLC, MacDermid, Incorporated, and CSC Shareholder Services LLC, as seller representative.
(e) “
Change of Control
” means the acquisition of Control of the Corporation by any person or party (or by a group of person
or parties who are acting in concert).
(f) “
Completion Date
” means the date upon which the Merger (as defined in the
Business Combination Agreement) becomes effective.
(g) “
Control
” means
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1.
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The power (whether by way of record or beneficial ownership of shares, proxy, voting agreement or otherwise) to:
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a.
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vote or cause to be voted, more than fifty percent (50%) of the then outstanding shares of Common Stock; or
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b.
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elect, or cause the election of, or remove, all or a majority of the members of the Board of Directors,
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excluding, in each case, any such power that arises as a result of the issuance of shares of Common Stock by the Corporation in connection
with the acquisition contemplated by the Business Combination Agreement; or
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2.
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record or beneficial ownership of more than fifty percent (50%) of the then outstanding shares of Common Stock.
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(h) “
Date of Admission
” means the date ordinary shares of Platform Acquisition Holdings Limited were admitted to the standard
segment of the Official List maintained by the FCA acting in its capacity as competent authority for the purposes of admission to the Official List and to trading on the London Stock Exchange’s main market for listed securities.
(i) “
Dividend Date
” means in respect of a Dividend Year, the last date of such Dividend Year, except that (i) in the
event of the Company’s dissolution, the date that is the last Trading Day immediately prior to the date of dissolution, and (ii) in the event of the automatic conversion of shares of Series A Preferred Stock into shares of Common Stock
upon a Mandatory Conversion Date, the date that is the last Trading Day immediately prior to such Mandatory Conversion Date.
(j)
“
Dividend Price
” means the amount calculated by adding together the Average Price for each of the last ten (10) consecutive Trading Days in the relevant Dividend Year, and dividing such amount by ten (10).
3
(k) “
Dividend Year
” means the period commencing on the day immediately after
the Completion Date and ending on the last day of that Financial Year, and thereafter each subsequent Financial Year, except that: (i) in the event of the Corporation’s dissolution, the relevant Dividend Year shall end on the Trading Day
immediately prior to the date of dissolution; and (ii) in the event of the automatic conversion of the Series A Preferred Stock into shares of Common Stock upon a Mandatory Conversion Date, the relevant Dividend Year shall end on the Trading
Day immediately prior to such Mandatory Conversion Date.
(l) “
Financial Year
” means the financial year of the
Corporation, being the twelve (12) month (or shorter) period ending on December 31
st
in each year, except in respect of the first financial year of the Corporation, which shall end on
December 31, 2014, or such other financial year(s) (each of which may be a twelve (12) month period or any longer or shorter period) as may be determined from time to time by resolution of the Board of Directors.
(m) “
Independent Directors
” means those members of the Board of Directors from time to time considered by the Board of
Directors to be “independent” as that term is defined under the applicable rules and regulations of the SEC and the corporate governance standards of the NYSE (or other applicable securities exchange or quotation system on which shares of
Common Stock are listed).
(n) “
Junior Stock
” means the Common Stock and any outstanding series of Preferred Stock
ranking junior to the Series A Preferred Stock as to dividends or distributions payable to holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation, as applicable.
(o) “
London Stock Exchange
” means London Stock Exchange plc.
(p) “
Mandatory Conversion Date
” means the earlier to occur of (i) a Change of Control, or (ii) the last day of the
seventh (7
th
) full Financial Year of the Corporation after the Completion Date, or, if either such day is not a Trading Day, on the first Trading Day immediately following such day;
provided
,
however
, that the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock may request, by writing delivered to the Corporation prior to the tenth (10
th
) business day prior to the last day of the seventh (7
th
) full Financial Year of the Corporation after Completion Date, that the day
described in clause (ii) be deferred until the last day of the eighth (8
th
) full Financial Year of the Corporation after the Completion Date, and the Board of Directors, including by a
majority of the Independent Directors, by resolution or resolutions thereof, determines to so defer the day as so requested, then the day in clause (ii) shall be the last day of the eighth
(8
th
) full Financial Year of the Corporation after the Completion Date, or, if such day is not a Trading Day, on the first Trading Date immediately following such day;
provided
,
further
, that the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock may request, by writing delivered to the Corporation prior to the tenth (10
th
) business day prior to the last day of the eighth (8
th
) full Financial Year of the Corporation after the Completion Date, that the day
described in clause (ii) be deferred until the last day of the ninth (9
th
) full Financial Year of the Corporation after the Completion Date, and the Board of Directors, including by a
majority of the Independent Directors, by resolution or resolutions thereof, determines to so defer the day as requested, then the day in clause (ii) shall be the last day of the ninth
(9
th
) full Financial Year of the Corporation after the Completion Date, or, if such day is not a Trading Day, on the first Trading Date immediately following such day;
provided
,
further
, that the holders of at least a majority in voting power of the then outstanding shares of Series A Preferred Stock may request, by writing delivered to the Corporation prior to the tenth (10
th
) business day prior to the last day of the ninth (9
th
) full Financial Year of the Corporation after the Completion Date, that the day
described in clause (ii) be deferred until the last day of the tenth (10
th
) full Financial Year of the Corporation after the Completion Date, and the Board of Directors, including by a
majority of the Independent Directors, by resolution or
4
resolutions thereof, determines to so defer the day as requested, then the day in clause (ii) shall be the last day of the tenth
(10
th
) full Financial Year of the Corporation after the Completion Date, or, if such day is not a Trading Day, on the first Trading Date immediately following such day.
(q) “
NYSE
” means the New York Stock Exchange or any successor national securities exchange.
(r) “
Parity Stock
” means any outstanding series of Preferred Stock ranking on parity with the Series A Preferred Stock as to
dividends or distributions payable to the holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation, as applicable.
(s) “
Payment Date
” means the date fixed by the Board of Directors for the payment of the Annual Dividend Amount, which date
shall be no later than ten (10) Trading Days after the Dividend Date, except in respect of any Annual Dividend Amount becoming due on the Trading Day immediately prior to the date of the Company’s dissolution, in which case, such date
shall be such Trading Day, and except in respect of any Annual Dividend Amount becoming due on account of an automatic conversion of shares of Series A Preferred Stock into shares of Common Stock upon a Mandatory Conversion Date occasioned by a
Change in Control, in which case, such date shall be the Trading Day immediately prior to the Mandatory Conversion Date.
(t)
“
SEC
” means the United States Securities and Exchange Commission.
(u) “
Senior Stock
” means any
outstanding series of Preferred Stock ranking senior to the Series A Preferred Stock as to dividends or distributions payable to holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation, as
applicable.
(v) “
Trading Date
” means any day on which the NYSE (or other applicable securities exchange or quotation
system) is open for business and on which shares of Common Stock may be traded (other than a day on which the NYSE (or other applicable securities exchange or quotation system) is scheduled to or does close prior to its regular weekday closing
time).
2.
Dividends
. Subject to the rights of the holders of any Senior Stock (as to dividends), and on parity with
the holders of any Parity Stock (as to dividends), the holders of the Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available therefor, and payable in preference and
priority to the declaration or payment of any dividends on any Junior Stock (as to dividends), cumulative annual dividends of the Annual Dividend Amount commencing from the date that is (i) after the Completion Date, and (ii) after the
Average Price per share of Common Stock has been $11.50 per share or more (as adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse
stock split, exchange, reclassification, recapitalization or otherwise) or similar reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser number of shares occurring after the original fling of this
certificate of incorporation without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock) for ten (10) consecutive Trading Days. The
Annual Dividend Amount shall be paid in shares of Common Stock on the Payment Date and shall be allocated among the holders of shares of Series A Preferred Stock
pro rata
based on the number of shares of Series A Preferred Stock held by them
on the relevant Dividend Date, divided by the Average Price per share of Common Stock on the relevant Dividend Date (provided that any fractional shares of Common Stock due pursuant to such calculation shall not be paid and instead the nearest lower
whole number of shares of Common Stock shall be paid). For the avoidance of doubt, the Annual Dividend Amount shall be payable in full and shall not be subject to prorating notwithstanding any Dividend Year being longer or shorter than twelve
(12) months.
3.
Voting Rights
. Except as may otherwise be provided in the certificate of incorporation of the
Corporation or by applicable law, each holder of Series A Preferred Stock, as such, shall not be entitled to vote and shall not be entitled to any voting powers in respect thereof. For so long as any shares of Series A Preferred Stock shall remain
outstanding, the Corporation shall not, without the prior vote or written consent of the holders of at least seventy-five percent (75%) of the shares of Series A Preferred Stock then
5
outstanding, voting separately as a single class, amend, alter or repeal any provision of the certificate of incorporation of the Corporation, whether by merger, consolidation or otherwise, if
such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Series A Preferred Stock. Notwithstanding Article SEVENTH of this certificate of incorporation,
any action required or permitted to be taken at any meeting of the holders of Series A Preferred Stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of the outstanding Series A Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Series A Preferred Stock were
present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which minutes of
proceedings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt written notice of the take of corporate action without a
meeting by less than unanimous written consent of the holders of Series A Preferred Stock shall, to the extent required by law, be given to those holders of Series A Preferred Stock who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders of Series A Preferred Stock to take the action were
delivered to the Corporation.
4.
Liquidation
. In the event of any liquidation, dissolution or winding up of the
Corporation, subject to the rights of the holders of any Senior Stock (as to distributions payable to the holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation), and on parity with the holders
of any Parity Stock (as to distributions payable to the holders of capital stock of the Corporation upon a liquidation, dissolution or winding up of the Corporation) the holders of the Series A Preferred Stock shall be entitled to receive the assets
of the Corporation available for distribution to its stockholders ratably with the Common Stock in proportion to the number of shares of Common Stock into which such shares of Series A Preferred Stock may then be converted. A merger or consolidation
of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation, dissolution or winding up of the Corporation and
the distribution of assets to its stockholders) shall not be deemed to be liquidation, dissolution or winding up of the Corporation within the meaning of this
Section 4
.
5.
Conversion
.
(a)
Automatic Conversion
. Upon the Mandatory Conversion Date, each outstanding share of Series A Preferred Stock shall automatically be
converted into one (1) share of Common Stock.
(b)
Optional Conversion
. Each outstanding share of Series A Preferred Stock may
be converted into one (1) share of Common Stock by written notice of the holder thereof delivered the Corporation specifying the number of shares of Series A Preferred Stock to be converted (if such notice is silent as to the number of shares
of Series A Preferred Stock held by the holder and proposed to be converted hereunder, the notice shall be deemed to apply to all shares of Series A Preferred Stock held by such holder) and the surrender of the certificate(s) representing the shares
of Series A Preferred Stock proposed to be converted hereunder, duly indorsed for transfer to the Corporation, on the fifth (5
th
) Trading Day following receipt of said notice and
certificate(s) by the Corporation (the “
Optional Conversion Date
”). In the event of a conversion of share(s) of Series A Preferred Stock pursuant to this
Section 5(b)
, the holder whose shares are so converted shall not
be entitled to receive, in respect of the share(s) of Series A Preferred Stock so converted, the relevant pro rata amount of the Annual Dividend Amount which may have been attributable to such shares of Series A Preferred Stock in respect of the
Dividend Year in which the Optional Conversion Date occurs.
(c)
Mechanics of Conversion
. Before any holder of shares of Series A
Preferred Stock shall be entitled to receive certificate(s) representing the shares of Common Stock into which shares of
6
Series A Preferred Stock shall have been converted pursuant to this
Section 5
, such holder shall surrender the certificate(s) representing such shares of Series A Preferred Stock to
the Corporation, duly indorsed for transfer to the Corporation. The Corporation shall, as soon as practicable, and in no even later than ten (10) days after the delivery of said certificate(s), issue and deliver to such holder, or the nominee
or nominees of such holder, certificate(s) representing the number of shares of Common Stock to which such holder shall be entitled under this
Section 5
, and the certificate(s) representing the share(s) of Series A Preferred Stock so
converted shall be cancelled. The person(s) entitled to receive share(s) of Common Stock issuable upon conversion of share(s) of Series A Preferred Stock pursuant to this
Section 5
shall be treated for all purposes as the record
holder(s) of such shares of Common Stock as of the Mandatory Conversion Date or the Optional Conversion Date, as applicable.
(d)
Adjustments
. In the event that at any time or from time to time after the original filing of this certificate of incorporation, the Corporation effects a subdivision (by stock split, subdivision, exchange, stock dividend, reclassification,
recapitalization or otherwise) or combination (by reverse stock split, exchange, reclassification, recapitalization or otherwise) or similar reclassification or recapitalization of the outstanding shares of Common Stock into a greater or lesser
number of shares without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalization of the outstanding shares of Series A Preferred Stock, then and in each such event, the share(s) of Common Stock to
be received upon conversion of share(s) of Series A Preferred Stock pursuant to this
Section 5
shall be proportionately increased or decreased, as applicable.
FIFTH. The incorporator of the corporation is Brian J. Gavsie, whose mailing address is Greenberg Traurig, P.A., 401 East Las Olas Boulevard,
Suite 2000, Fort Lauderdale, Florida 33301.
SIXTH.
Board of Directors
.
(a)
Management
. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
(b)
Removal of Directors
. Except for such additional directors, if any, as are elected by the holders of any outstanding series of
Preferred Stock as provided for or fixed pursuant to the provisions of Article FOURTH hereof, any director or the entire Board of Directors may be removed, solely by the affirmative vote of the holders of at least a majority in voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
(c)
Vacancies
. Subject to the rights, if any, of the holders of any outstanding series of Preferred Stock as provided for or fixed
pursuant to the provisions of ARTICLE FOURTH hereof, newly created directorships resulting from an increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement,
disqualification, removal or other cause shall be filled solely and exclusively by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced and until his or her successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.
(d)
Automatic Increase/Decrease in Authorized Directors
. During any period when the holders of any outstanding series of Preferred
Stock as provided for or fixed pursuant to the provisions of Article FOURTH hereof have the right to elect one or more additional directors, then upon commencement of, and for the duration of, the period during which such right continues:
(i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such outstanding series of Preferred Stock shall be entitled to elect the
additional director or directors so provided or fixed pursuant to said provisions of Article FOURTH hereof; and (ii) each such additional director shall serve
7
until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions of Article FOURTH
hereof, whichever occurs earlier, subject to such director’s earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series
of Preferred Stock pursuant to the provisions of Article FOURTH hereof, whenever the holders of any outstanding series of Preferred Stock having the right to elect one or more additional directors are divested of such right pursuant to the
provisions of such capital stock, the terms of office of each such additional director elected by the holders of such series of Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, retirement, disqualification or
removal of each such additional director, shall forthwith terminate and the total authorized number of directors of the Corporation shall automatically be decreased by such specified number of directors.
(e)
No Written Ballot
. Unless and except to the extent that the by-laws of the Corporation shall so require, the election of directors
of the Corporation need not be by written ballot.
(f)
Amendment of Bylaws
. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to make, alter, amend and repeal the by-laws of the Corporation. Any by-law that is to be made, altered, amended or repealed by the stockholders of the
Corporation shall receive the affirmative vote of the holders of at least sixty-six and two-thirds percent (66
2
⁄
3
%) in voting power of the then
outstanding shares of capital stock of the Corporation entitled to vote.
(g)
Meetings of Stockholders
. Except as may otherwise be
provided for or fixed pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of any outstanding series of Preferred Stock, special meetings of stockholders for any purpose or purposes may be called at any time, but
only by (i) the Chief Executive Officer of the Corporation, or (ii) the Board of Directors. Except as provided in the foregoing sentence, special meetings of stockholders may not be called by another person or persons. Any meeting of
stockholders may be postponed by action of the Board of Directors or by the person calling such meeting (if other than the Board of Directors) at any time in advance of such meeting.
SEVENTH. Except as may otherwise be provided for or fixed pursuant to the provisions of Article FOURTH hereof relating to the rights of the
holders of any outstanding series of Preferred Stock, no action that is required or permitted to be taken by the stockholders of the corporation at any annual or special meeting of stockholders may be effected by written consent of stockholders in
lieu of a meeting of stockholders.
EIGHTH. A director of the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be
amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation hereunder in respect of any act or omission occurring prior to the time of such amendment,
modification or repeal.
NINTH. The Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal
any provision contained in this certificate of incorporation, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this certificate of incorporation in its present form or as hereafter amended are granted subject to the rights
reserved in this Article NINTH.
[Signature Page Follows]
The undersigned incorporator hereby acknowledges that the foregoing certificate of incorporation is his act and deed on this the
day of , 20 .
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Brian J. Gavsie
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Incorporator
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EXHIBIT 3.2
APPENDIX C—FORM OF NEW BY-LAWS OF PLATFORM DELAWARE
BY-LAWS
OF
PLATFORM SPECIALTY PRODUCTS CORPORATION
ARTICLE I
Meetings of
Stockholders
Section 1.1
Annual Meetings
. If required by applicable law, an annual meeting of stockholders shall be held
for the election of directors at such date, time and place, if any, either within or without the State of Delaware, as may be designated by resolution of the Board of Directors of the corporation (the “
Board of Directors
”) from time
to time. Any other proper business may be transacted at the annual meeting.
Section 1.2
Special Meetings
. Except as otherwise
provided by or pursuant to the certificate of incorporation, special meetings of stockholders for any purpose or purposes may be called at any time, but only by (i) the Chief Executive Officer, or (ii) the Board of Directors. Except as
provided in the foregoing sentence, special meetings of stockholders may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 1.3
Notice of Meetings
. Whenever stockholders are required or permitted to take any action at a meeting, a written notice
of the meeting shall be given that shall state the place, if any, date and hour of the meeting, the record date for determining stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders
entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the certificate of incorporation or these by-laws, the notice of any meeting shall
be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, as of the record date for determining the stockholders entitled to notice of the meeting. If
mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation.
Section 1.4
Adjournments
. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same
or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a
new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting in accordance with
Section 1.8
of these by-laws, and shall give
notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
Section 1.5
Quorum
. Except as otherwise provided by law, the certificate of incorporation or these by-laws, at each meeting of
stockholders the presence in person or by proxy of the holders of a majority in voting power of the then outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. In the absence of a
quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in
Section 1.4
of these by-laws until a quorum shall attend. Shares of its own stock belonging
to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by
1
the corporation, shall neither be entitled to vote nor be counted for quorum purposes;
provided
,
however
, that the foregoing shall not limit the right of the corporation or any
subsidiary of the corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6
Organization
. Meetings of stockholders shall be presided over by the Chairperson of the Board, if any, or in his or
her absence by the Vice Chairperson of the Board, if any, or in his or her absence by the President, or in his or her absence by a Vice President, or in the absence of the foregoing persons by a chairperson designated by the Board of Directors, or
in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 1.7
Voting; Proxies
. Except as otherwise provided by or pursuant to the provisions of the certificate of incorporation,
each stockholder entitled to vote at any meeting of stockholders shall be entitled to one (1) vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy or a new proxy bearing a later date. Voting at meetings of stockholders need not be
by written ballot. When a quorum is present at any meeting of stockholders, all elections, questions or matters presented to the stockholders at such meeting shall be decided by the affirmative vote of the holders of at least a majority in voting
power of the then outstanding shares of capital stock of the corporation entitled to vote unless (i) the election, question or matter is one which, by express provision of the certificate of incorporation, these by-laws or the laws of the State
of Delaware, a vote of a different number or voting by class is required, in which case, such express provision shall govern, or (ii) the election, question or matter is brought pursuant to the rules or regulations of an exchange upon which the
securities of the corporation are listed, in which case, such rules and regulations shall govern.
Section 1.8
Fixing Date for
Determination of Stockholders of Record
. In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the
Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (1) in the case of determination of
stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting and, unless the
Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for determining the stockholders entitled to vote at such meeting, the record date for determining the
stockholders entitled to notice of such meeting shall also be the record date for determining the stockholders entitled to vote at such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten (10) days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding
the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action
in writing without a meeting, when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation in
accordance with applicable law, or, if
2
prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided
,
however
, that the Board of Directors may fix a new record date for the determination of stockholders entitled to vote at the
adjourned meeting, and in such case shall also fix as the record date for the stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for the determination of stockholders entitled to vote in accordance
with the foregoing provisions of this
Section 1.8
at the adjourned meeting.
Section 1.9
List of Stockholders Entitled
to Vote
. The officer who has charge of the stock ledger shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting;
provided
,
however
, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date,
arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting
for a period of at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network,
provided
that the information required to gain access to such list is provided with the notice of meeting, or
(ii) during ordinary business hours at the principal place of business of the corporation. The list of stockholders must also be open to examination at the meeting as required by applicable law. Except as otherwise provided by law, the stock
ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this
Section 1.9
or to vote in person or by proxy at any meeting of stockholders.
Section 1.10
Action By Written Consent of Stockholders
. Except as otherwise provided by or pursuant to the certificate of
incorporation with respect to the rights of the holders of any outstanding series of preferred stock of the corporation, no action that is required or permitted to be taken by the stockholders of the corporation at any annual or special meeting of
stockholders may be effected by written consent of stockholders in lieu of a meeting of stockholders. When, as provided by or pursuant to the certificate of incorporation with respect to the rights of the holders of any outstanding series of
preferred stock of the corporation, action required or permitted to be taken at any annual or special meeting of stockholders is taken without a meeting, without prior notice and without a vote, a consent or consents in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and
voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which minutes of proceedings of
stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. When, as provided by or pursuant to the certificate of incorporation with respect to
the rights of the holders of any outstanding shares of preferred stock of the corporation, action required or permitted to be taken at any annual or special meeting of stockholders is taken without a meeting, without prior notice and without a vote,
prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall, to the extent required by law, be given to those stockholders who have not consented in writing and who, if the action had been taken
at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the corporation.
Section 1.11
Inspectors of Election
. The corporation may, and shall if required by law, in advance of any meeting of stockholders,
appoint one or more inspectors of election, who may be employees of the corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The corporation may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the
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discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector
or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the corporation
represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the
inspectors, and (v) certify their determination of the number of shares of capital stock of the corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certification and report shall specify such
other information as may be required by applicable law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspectors may consider such information as is permitted by
applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.
Section 1.12
Conduct of Meetings
. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board of
Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the
person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are
appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person at the meeting, may include, without limitation, the following: (i) the
establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to
stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct
of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and, if such presiding person should so determine, such presiding person shall so declare to the
meeting, and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders
shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 1.13
Notice of Stockholder Business
and Nominations
.
(A)
Annual Meetings of Stockholders
. (1) Nominations of one or more individuals for election to the Board of
Directors (each, a “
Nomination
,” and more than one, “
Nominations
”) and the proposal of business other than Nominations to be considered by the stockholders (“
Business
”) may be made at an annual
meetings of stockholders only (a) pursuant to the corporation’s notice of meeting (or any supplement thereto),
provided
,
however
, that reference in the corporation’s notice of meeting to the election of directors or the
election of the members of Board of Directors shall not include or be deemed to include Nominations, (b) by or at the direction of the Board of Directors, or (c) by an stockholder of the corporation who was a stockholder of record of the
corporation at the time the notice provided for in this
Section 1.13
is delivered to the Secretary, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this
Section 1.13
.
(2) For Nominations or Business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this
Section 1.13
, the stockholder must have given timely notice thereof in writing to the Secretary and any proposed Business must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice
shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of
4
business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting (
provided
,
however
, that in the event that the date
of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of business on the later on the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date
of such meeting is first made by the corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting of stockholders of the corporation commence a new time period (or extend any time period) for the
giving of a stockholder’s notice as describe above. Such stockholder’s notice shall set forth: (a) as to each Nomination to be made by such stockholder, (i) all information relating to the individual subject to such the
Nomination that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of
1934, as amended (the “
Exchange Act
”), without regard to the application of the Exchange Act to either the Nomination or the corporation, and (ii) such individual’s written consent to being named in a proxy statement as a
nominee and to serving as director if elected; (b) as to the Business proposed by such stockholder, a brief description of the Business, the text of the proposed Business (including the text of any resolutions proposed for consideration and in
the event that such Business includes a proposal to amend the by-laws of the corporation, the language of the proposed amendment), the reasons for conducting such Business at the meeting and any material interest in such Business of such stockholder
and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the Nomination or Business is made (i) the name and address of such
stockholder, as they appear on the corporation’s books, and such beneficial owner, (ii) the class, series and number of shares of capital stock of the corporation which are owned beneficially and of record by such stockholder and such
beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and such stockholder (or a qualified representative of such stockholder) intends to appear in
person or by proxy at the meeting to propose such Nomination or Business, and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver by proxy statement
and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the Business or elect the nominee subject to the Nomination, and/or (y) otherwise to solicit proxies
from stockholders of the corporation in support of such Nomination or Business;
provided
,
however
, that if the Business is otherwise subject to Rule 14a-8 (or any successor thereto) promulgated under the Exchange Act (“
Rule
14a-8
”), the foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the corporation of his, her or its intention to present such Business at an annual meeting of stockholders of the
corporation in compliance with Rule 14a-8, and such Business has been included in a proxy statement that has been prepared by the corporation to solicit proxies for such annual meeting of stockholders. The corporation may require any individual
subject to such Nomination to furnish such other information as it may reasonably require to determine the eligibility of such individual subject to such Nomination to serve as a director of the corporation.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this
Section 1.13
to the contrary, in the event that
the number of directors to be elected to the Board of Directors at an annual meeting is increased and there is no public announcement by the corporation naming the nominees for election to the additional directorships at least one hundred
(100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this
Section 1.13
shall also be considered timely, but only with respect to nominees for election to the
additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first
made by the corporation.
(B)
Special Meetings of Stockholders
. Only such Business shall be conducted at a special meeting of
stockholders of the corporation as shall have been brought before the meeting pursuant to the corporation’s notice of meeting;
provided
,
however
, that reference therein to the election of directors or the election of members of
the Board of Directors shall not include or be deemed to include Nominations. Nominations may be
5
made at a special meeting of stockholders of the corporation at which directors are to be elected pursuant to the corporation’s notice of meeting as aforesaid (1) by or at the direction
of the Board of Directors, or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the corporation who is a stockholder of record at the time the notice provided for in
this
Section 1.13
is delivered to the Secretary, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this
Section 1.13
. In the event the corporation calls a
special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such elections of directors may make Nominations of one or more individuals (as the case may be)
for election to such position(s) as specified in the corporation’s notice of meeting, if the stockholder’s notice required by paragraph (A)(2) of this
Section 1.13
shall be delivered to the Secretary at the principal executive
offices of the corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of
such special meeting and of the nominees proposed by the Board of Directors to be elected as such special meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting of stockholders of the corporation
commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(C)
General
. (1) Only individuals subject to a Nomination made in compliance with the procedures set forth in this
Section 1.13
shall be eligible for election at an annual or special meeting of stockholders of the corporation,
and only such business shall be conducted at an annual or special meeting of stockholders of the corporation as shall have been brought before such meeting in accordance with the procedures set forth in this
Section 1.13
. Except as
otherwise provided by law, the person presiding over the meeting shall have the power and duty (a) to determine whether a Nomination or any Business proposed to be brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this
Section 1.13
, and (b) if any proposed Nomination or Business shall be disregarded or that such Nomination or Business shall not be considered or transacted. Notwithstanding the
foregoing provisions of this
Section 1.13
, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the corporation to present a Nomination or Business,
such Nomination or Business shall be disregarded and such Nomination or Business shall not be considered or transacted, notwithstanding that proxies in respect of such vote may have been received by the corporation.
(2) For purposed of this
Section 1.13
, “public announcement” shall include disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14, and 15(d) of the Exchange Act (or any
successor thereto).
(3) Nothing in this
Section 1.13
shall be deemed to affect any (a) rights or obligations, if any,
of stockholders with respect to inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 (to the extent the corporation or such proposals are subject to Rule 14a-8), or (b) rights, if any, of the holders of any
series of Preferred Stock to elect directors pursuant to any applicable provisions of the certificate of incorporation.
ARTICLE II
Board of Directors
Section 2.1
Number; Qualifications
. The Board of Directors shall consist of one or more members, the number thereof to be
determined from time to time by resolution of the Board of Directors. Except with respect to newly created directorships resulting from an increase in the authorized number of directors or any vacancies on the Board of Directors resulting from
death, resignation, retirement, disqualification, removal or other cause, each director shall be elected by a majority of the votes cast with respect to the nominee for election to the Board
6
of Directors at any meeting of stockholders at which directors are to be elected and a quorum is present,
provided
,
however
, that the directors shall be elected by a plurality of
the votes cast at any meeting of stockholders at which directors are to be elected, a quorum is present and a stockholder or stockholders of the corporation has or have (i) nominated one or more individuals for election to the Board of
Directors in compliance with
Section 1.13
of these by-laws such that the number of nominees for election to the Board of Directors exceeds the number of open seats, and (ii) not withdrawn such Nomination or Nominations on or prior
to the tenth (10
th
) day preceding the date the corporation first mails its notice of such meeting to the stockholders. For purposes of this
Section 2.1
, a “majority of the
votes cast” means that the number of shares voted “for” a nominee for election to the Board of Directors exceeds the votes cast “against” such nominee. Directors need not be stockholders.
Section 2.2
Election; Resignation; Vacancies
. The Board of Directors shall initially consist of the person or persons named as
directors in the certificate of incorporation or elected by the incorporator of the corporation, and each director so elected shall hold office until the first annual meeting of stockholders and until his or her successor is duly elected and
qualified. At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect directors each of whom shall hold office for a term of one (1) year or until his or her successor is duly elected and
qualified, subject to such director’s earlier death, resignation, disqualification or removal. Any director may resign at any time upon notice to the corporation. Unless otherwise provided by law or the certificate of incorporation, newly
created directorships resulting from an increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal or other cause shall be filled solely and
exclusively by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director so elected shall hold office until the expiration of the term of office of the director whom he or she has
replaced and until his or her successor is elected and qualified.
Section 2.3
Regular Meetings
. Regular meetings of the Board
of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine.
Section 2.4
Special Meetings
. Special meetings of the Board of Directors may be held at any time or place within or without the
State of Delaware whenever called by the Chief Executive Officer, President, the Secretary, or by any member of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting
at least twenty-four (24) hours before the special meeting.
Section 2.5
Telephonic Meetings Permitted
. Members of the
Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting.
Section 2.6
Quorum; Vote Required for Action
. At all meetings of the Board of Directors the directors entitled to cast a majority of the votes of the whole Board of Directors shall constitute a quorum for the transaction of business. Except in cases in
which the certificate of incorporation, these by-laws or applicable law otherwise provides, a majority of the votes entitled to be cast by the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 2.7
Organization
. Meetings of the Board of Directors shall be presided over by the Chairperson of the Board, if any,
or in his or her absence by the Vice Chairperson of the Board, if any, or in his or her absence by the Chief Executive Officer, or in his or her absence by the President, or in their absence by a chairperson chosen at the meeting. The Secretary
shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
Section 2.8
Action by Unanimous Consent of Directors
. Unless otherwise restricted by the certificate of incorporation or these
by-laws, any action required or permitted to be taken at any meeting of the Board of
7
Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic
transmission and the writing or writings or electronic transmissions are filed with the minutes of proceedings of the board or committee in accordance with applicable law.
ARTICLE III
Committees
Section 3.1
Committees
. The Board of Directors may designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors or these by-laws, shall have and may
exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it.
Section 3.2
Committee Rules
. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors
may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to
Article II
of these
by-laws.
ARTICLE IV
Officers
Section 4.1
Executive Officers; Election; Qualifications; Term of Office, Resignation; Removal; Vacancies
. The Board of Directors
shall elect a Chief Executive Officer, President and Secretary, and it may, if it so determines, choose a Chairperson of the Board and a Vice Chairperson of the Board from among its members. The Board of Directors may also choose one or more Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as it shall from time to time deem necessary or desirable. Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding his or her election, and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Any officer may resign at any time
upon written notice to the corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the corporation. Any number
of offices may be held by the same person. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special
meeting.
Section 4.2
Powers and Duties of Executive Officers
. The officers of the corporation shall have such powers and
duties in the management of the corporation as may be prescribed in a resolution by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. The
Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties.
Section 4.3
Appointing Attorneys and Agents; Voting Securities of Other Entities
. Unless otherwise provided by resolution adopted
by the Board of Directors, the Chairperson of the Board, the Chief Executive
8
Officer, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the corporation, for, in the name and on behalf of the corporation, to
cast the votes which the corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other entity, any of whose stock or other securities may be held by the corporation, at meetings of the holders of
the stock or other securities of such other corporation or other entity, or to consent in writing, in the name of the corporation as such holder, to any action by such other corporation or other entity, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consents, and may execute or cause to be executed for, in the name and on behalf of the corporation and under its corporate seal or otherwise, all such written proxies or other
instruments as he or she may deem necessary or proper. Any of the rights set forth in this
Section 4.3
which may be delegated to an attorney or agent may also be exercised directly by the Chairperson of the Board, the Chief Executive
Officer, the President or any Vice President.
ARTICLE V
Stock
Section 5.1
Certificates
. All shares of capital stock of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock
shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a
certificate signed by or in the name of the corporation by the Chairperson or Vice Chairperson of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, certifying the number of shares owned by such holder in the corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent, or
registrar at the date of issue. The corporation shall not have the power to issue a certificate in bearer form.
Section 5.2
Lost,
Stolen or Destroyed Stock Certificates; Issuance of New Certificates
. The corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the
corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
ARTICLE VI
Indemnification
Section 6.1
Right to Indemnification
. The corporation shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person (a “
Covered Person
”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a “
proceeding
”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the corporation or, while a director or
officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with
respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in
Section 6.3
, the corporation shall be required to indemnify a Covered
9
Person in connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorized in the
specific case by the Board of Directors.
Section 6.2
Prepayment of Expenses
. The corporation shall to the fullest extent not
prohibited by applicable law as it presently exists or may hereafter be amended, pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any proceeding in advance of its final disposition,
provided
,
however
, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be
ultimately determined that the Covered Person is not entitled to be indemnified under this
Article VI
or otherwise.
Section 6.3
Claims
. If a claim for indemnification (following the final disposition of such action, suit or proceeding) or
advancement of expenses under this
Article VI
is not paid in full within thirty (30) days after a written claim therefor by the Covered Person has been received by the corporation, the Covered Person may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the corporation shall have the burden of proving that the Covered Person is not entitled to the
requested indemnification or advancement of expenses under applicable law.
Section 6.4
Nonexclusivity of Rights
. The rights
conferred on any Covered Person by this
Article VI
shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these by-laws, agreement,
vote of stockholders or disinterested directors or otherwise.
Section 6.5
Other Sources
. The corporation’s obligation,
if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
Section 6.6
Amendment or Repeal
. Any repeal or modification of the foregoing provisions of this
Article VI
shall not
adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification.
Section 6.7
Other Indemnification and Prepayment of Expenses
. This
Article VI
shall not limit the right of the corporation,
to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.
ARTICLE VII
Miscellaneous
Section 7.1
Fiscal Year
. The fiscal year of the corporation shall be determined by resolution of the Board of Directors.
Section 7.2
Seal
. The corporate seal shall have the name of the corporation inscribed thereon and shall be in such form as may be
approved from time to time by the Board of Directors.
Section 7.3
Manner of Notice
. Except as otherwise provided herein or
permitted by applicable law, notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or
10
stockholders at their addresses appearing on the books of the corporation. Notice to directors may be given by telecopier, telephone or other means of electronic transmission.
Section 7.4
Waiver of Notice of Meetings of Stockholders, Directors and Committees
. Any waiver of notice, given by the person
entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of
the stockholders, directors, or members of a committee of directors need be specified in a waiver of notice.
Section 7.5
Form of
Records
. Any records maintained by the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device or
method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time.
Section 7.6
Amendment of By-Laws
. These by-laws may be altered, amended or repealed, and new by-laws made, by the Board of Directors, but the stockholders may make additional by-laws and may alter and repeal any by-laws whether adopted by them or
otherwise. Any by-law that is to be made, altered, amended or repealed by the stockholders of the corporation shall receive the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66
2
⁄
3
%) in voting power of the then outstanding shares of capital stock of the corporation entitled to vote.
11
EXHIBIT 4.1
COMMON STOCK COMMON STOCK
PAR VALUE $0.01 THIS
CERTIFICATE IS TRANSFERABLE
IN CANTON, MA, JERSEY CITY, NJ AND
COLLEGE
STATION, TX
Certificate Shares
Number
PLATFORM SPECIALTY PRODUCTS CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
is the owner of
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
Platform Specialty Products
Corporation (hereinafter called the “Company”), transferable on the books of
the Company in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed. This
Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the
Certificate of Incorporation, as amended, and the By-Laws, as amended, of the Company (copies of which are on
file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents.
This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.
DATED
FACSIMILE SIGNATURE TO COME COUNTERSIGNED AND REGISTERED:
COMPUTERSHARE INC.
President TRANSFER AGENT AND REGISTRAR,
2013
DELAWARE
FACSIMILE SIGNATURE TO COME
By
Secretary AUTHORIZED SIGNATURE
PLATFORM SPECIALTY PRODUCTS CORPORATION
THE
COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY OR SERIES THEREOF AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORS OF THE COMPANY MAY REQUIRE THE OWNER OF A LOST,
STOLEN OR DESTROYED STOCK CERTIFICATE, OR HIS LEGAL REPRESENTATIVES, TO GIVE THE COMPANY A BOND SUFFICIENT TO INDEMNIFY IT AGAINST ANY CLAIM THAT MAY BE MADE AGAINST IT ON ACCOUNT OF THE ALLEGED LOSS, THEFT OR DESTRUCTION OF ANY SUCH CERTIFICATE OR
THE ISSUANCE OF A NEW CERTIFICATE.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -... ..Custodian ...
(Cust) (Minor)
under Uniform Gifts to Minors Act...
(State)
UNIF TRF MIN ACT ..Custodian (until age ... ..)
(Cust)
..under Uniform Transfers to Minors Act ... .
(Minor) (State)
Additional abbreviations may also be used though not in the above list.
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE For value received, hereby sell, assign and transfer unto (PLEASE PRINT OR TYPEWRITE NAME AND
ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Signature(s) Guaranteed: Medallion Guarantee Stamp
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15. Dated Signature Signature
Exhibit 4.2
PLATFORM ACQUISITION HOLDINGS LIMITED
WARRANT INSTRUMENT
TABLE OF CONTENTS
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1.
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DEFINITIONS AND INTERPRETATION
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3
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2.
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CONSTITUTION AND FORM OF WARRANTS
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6
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3.
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WARRANT CERTIFICATES
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7
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4.
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EXERCISE OF WARRANTS
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7
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5.
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UNDERTAKINGS
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11
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6.
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ADJUSTMENT OF SUBSCRIPTION RIGHTS
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11
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7.
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MANDATORY REDEMPTION
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12
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8.
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GENERAL OFFERS AND LIQUIDATION
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13
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9.
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TRANSFER AND TITLE
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13
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10.
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MEETINGS OF WARRANTHOLDERS
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14
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11.
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MODIFICATIONS
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15
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12.
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PURCHASE, SURRENDER AND CANCELLATION
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15
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13.
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AVAILABILITY OF INSTRUMENT AND NOTICES
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15
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14.
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PURCHASE OF ORDINARY SHARES BY THE COMPANY
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15
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15.
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ENFORCEMENT
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16
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16.
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GOVERNING LAW
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16
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SCHEDULE 1
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FORM OF WARRANT CERTIFICATE
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17
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SCHEDULE 2
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24
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REGISTRATION, TRANSFER AND TRANSMISSION
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24
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THIS WARRANT INSTRUMENT IS EXECUTED BY WAY OF DEED POLL ON 17 MAY 2013 BY
PLATFORM ACQUISITION HOLDINGS LIMITED
, a company incorporated in the British Virgin Islands with registered number 1771302, whose registered office is
at Nemours Chambers, Road Town, Tortola British Virgin Islands (the “
Company
”).
BACKGROUND
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(A)
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By a resolution of the board of directors of the Company (the “
Board
”) passed on 16 May 2013 the Board authorised the issue by the Company of up to 90,529,500 Warrants (as defined below) on the
terms and subject to the conditions set out in this Instrument.
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(B)
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The Company has accordingly determined to execute this Instrument to set out the rights and interests of the Warrantholders (as defined below).
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OPERATIVE PROVISIONS
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1.
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DEFINITIONS AND INTERPRETATION
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“
Acquisition
” has the meaning given in the Prospectus;
“
Admission
” means admission of the Ordinary Shares and Warrants to the Official List and to trading on the London Stock
Exchange’s main market for listed securities;
“
Articles
” means the articles of association of the Company as amended
from time to time;
“
Average Price
” has the meaning given in the Prospectus;
“
business day
” means any day (excluding a Saturday or a Sunday) on which banks in England or, if the Receiving Agent is not
located in England, the country of location of the Receiving Agent (or such other person as has been notified to the Warrantholders in accordance with Clause 4.2) are open for business;
“
BVI
” means the territory of the British Virgin Islands;
“
Companies Act
” means the BVI Companies Act, 2004 (as amended);
“
Directors
” means the directors of the Company from time to time;
“
ERISA
” means the US Employee Retirement Income Security Act of 1974, as amended;
“
Exercise Price
” means $11.50 per Ordinary Share (or such adjusted price as may be determined from to time in accordance with
the provisions of Clause 6 (
Adjustment of Subscription Rights
)), which is the aggregate amount payable for each Minimum Exercise Amount;
“
Extraordinary Resolution
” means a resolution passed at a meeting of the Warrantholders duly convened and held and carried by
a majority consisting of not less than three-fourths of the votes cast upon a show of hands or, if a poll is duly demanded, by a majority of not less than three-fourths of the votes cast on a poll;
“
FCA
” means the UK Financial Conduct Authority;
3
“
FSMA
” means the UK Financial Services and Markets Act 2000, as amended;
“
Listing Rules
” means the listing rules made by the UK Listing Authority under section 73A of FSMA as amended from time to
time;
“
London Stock Exchange
” means London Stock Exchange plc;
“
Minimum Exercise Amount
” means, as of the applicable time of determination, with respect to each exercise of Warrants, the
number of Warrants necessary for a Warrantholder to exercise to receive one whole Ordinary Share upon such exercise;
“
New
Company
” has the meaning given in Clause 8.2;
“
Official List
” means the official list maintained by the UK
Listing Authority;
“
Ordinary Shares
” means (i) the ordinary shares of no par value each in the capital of the
Company and (ii) any capital shares into which such ordinary shares shall have been changed or any share capital resulting from a reclassification of such ordinary shares;
“
Portion
” means, as of the applicable time of determination, (as applicable) (i) from and after the date hereof through
the time immediately preceding the first adjustment (if any) under Clause 6, one third (1/3
rd
), (ii) from and after the time of the first adjustment (if any) under Clause 6 until the next
adjustment thereunder, the product of (x) one third (1/3
rd
) multiplied by (y) the applicable Adjustment Percentage that is calculated in respect of such first adjustment or
(iii) from and after the time of each successive adjustment (if any) under Clause 6, the product of (x) the fraction then in effect as previously determined pursuant to the immediately preceding clause (ii) or this clause
(iii) (as the case may be) multiplied by (y) the applicable Adjustment Percentage that is calculated in respect of such applicable adjustment.
“
Prohibited Person
” means any person who by virtue of his holding or beneficial ownership of shares or warrants in the Company
would or might in the opinion of the Directors: (i) give rise to an obligation on the Company to register as an “investment company” under the U.S. Investment Company Act or any similar legislation; (ii) give rise to an
obligation on the Company to register under the U.S. Exchange Act of 1934, as amended or any similar legislation or result in the Company not being considered a “foreign private issuer” as such term is defined in Rule 3b-4(c) under the
U.S. Exchange Act of 1934, as amended; (iii) result in a U.S. Plan Investor holding shares in the Company; or (iv) create a material legal or regulatory issue for the Company under the U.S. Bank Holding Company Act of 1956, as amended, or
regulations or interpretations thereunder;
“
Prospectus
” means the prospectus to be published by the Company in connection
with Admission in accordance with the Prospectus Rules on or around 17 May 2013;
“
Prospectus Rules
” means the
prospectus rules of the UK Listing Authority made in accordance with Section 73A of FSMA as amended from time to time;
“
QIB
” has the meaning given to the term “qualified institutional buyer” in Rule 144A;
“
Receiving Agent
” means Computershare Investor Services PLC or such other receiving agent as the Registrar may appoint from
time to time;
“
Redemption Event
” has the meaning given in Clause 7.2;
“
Redemption Notice
” means the notice to Warrantholders notifying the occurrence of a Redemption Event to be given pursuant to
Clause 7.3;
4
“
Redemption Trigger Price
” means $18 (subject to adjustment pursuant to Clause
7.4);
“
Register
” means the register of Warrantholders required to be maintained pursuant to Clause 9.1;
“
Registrar
” means Computershare Investors Services (BVI) Limited or such other person or persons appointed by the Company from
time to time to maintain the Register;
“
Regulation S
” means Regulation S under the Securities Act;
“
Regulatory Information Service
” means a regulatory information service authorised by the UK Listing Authority to receive,
process and disseminate regulatory information in respect of listed companies;
“
Rule 144A
” means Rule 144A promulgated by
the U.S. Securities and Exchange Commission under the Securities Act;
“
Securities Act
” means the U.S. Securities Act of
1933, as amended;
“
Subscription Notice
” means in relation to any Warrant the notice of subscription attached to the
Warrant Certificate;
“
Subscription Period
” means, in relation to any Warrant, the period commencing on the date of
Admission and ending on the earlier to occur of (i) 5:00 p.m. (London time) on the third anniversary of the completion of the Acquisition and (ii) such earlier date as is set forth in this Instrument, provided that if such day is not a
Trading Day, the Trading Day immediately following such day;
“
Subscription Rights
” means the subscription rights in
respect of Ordinary Shares granted by the Company to Warrantholders pursuant to this Instrument;
“
Trading Day
” means a
day on which the main market of the London Stock Exchange (or such other applicable securities exchange or quotation system on which the Ordinary Shares or Warrants are listed) is open for business (other than a day on which the main market of the
London Stock Exchange (or such other applicable securities exchange or quotation system) is scheduled to or does close prior to its regular weekday closing time);
“
UK Listing Authority
” means the FCA in its capacity as the competent authority for listing in the UK pursuant to Part VI of
FSMA;
“
U.S. Investment Company Act
” means the U.S. Investment Company Act of 1940, as amended, and related rules;
“
U.S. Person
” has the meaning given to the term “U.S. Person” in Regulation S;
“
U.S. Plan Investor
” means (i) an employee benefit plan as defined in section 3(3) of ERISA (whether or not subject to
the provisions of Title I of ERISA, but excluding plans maintained outside of the U.S. that are described in Section 4(b)(4) of ERISA); (ii) a plan, individual retirement account or other arrangement that is described in Section 4975
of the U.S. Tax Code, whether or not such plan, account or arrangement is subject to Section 4975 of the U.S. Tax Code; (iii) an insurance company using general account assets, if such general account assets are deemed to include assets of
any of the foregoing types of plans, accounts or arrangements for purposes of Title I of ERISA or Section 4975 of the U.S. Tax Code; or (iv) an entity which is deemed to hold the assets of any of the foregoing types of plans, accounts or
arrangements that is subject to Title I of ERISA of Section 4975 of the U.S. Tax Code;
5
“
U.S. Tax Code
” means the U.S. Internal Revenue Code of 1986, as amended;
“
Warrant Certificate
” means a certificate evidencing a holding of Warrants in certificated form, such certificate being in or
substantially in the form set out in Schedule 1 (Form of Warrant Certificate);
“
Warrantholder
” means in relation to any
Warrant, the person or persons who is or are for the time being the registered holder or joint holders of such Warrant in the Register; and
“
Warrants
” means each of the warrants of the Company constituted by this Instrument and all rights conferred by this
Instrument.
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1.2
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The Clause headings are inserted for guidance only and shall not affect the meaning or interpretation of any part of this Instrument.
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1.3
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Reference to Clauses, sub-Clauses and Schedules in this Instrument are references to the Clauses, sub-Clauses and Schedules of and to this Instrument.
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1.4
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References to any statute or statutory provision include references to that statute or statutory provision as from time to time amended, extended or re-enacted and to any rules, orders, regulations and delegated
legislation made thereunder.
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1.5
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Words importing the singular shall include the plural and vice versa; words importing the masculine shall include the feminine and neuter and vice versa; words importing persons shall include bodies corporate,
unincorporated associations and partnerships.
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1.6
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Any register, index, minute book or book of account required to be kept by this Instrument shall be kept, and inspection thereof shall be allowed and copies shall be supplied, in such form and manner and subject to such
precautions as would from time to time be permissible or required if it were a register, index, minute book or book of account required to be kept by the Companies Act and references to such records in the Instrument shall be construed accordingly.
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1.7
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A Warrant is “outstanding” unless the Subscription Rights attached to such Warrant have been exercised in full or have lapsed in accordance with the provisions of this Instrument.
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1.8
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Any reference to “writing” or “written” includes any method of reproducing words or text in a legible and non-transitory form but, for the avoidance of doubt, shall not include e-mail.
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1.9
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References to “$” are to the lawful currency of the United States as at the date of this Instrument.
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1.10
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References to times of the day are to that time in London and references to a day are to a period of 24 hours running from midnight to midnight.
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2.
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CONSTITUTION AND FORM OF WARRANTS
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2.1
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The Company hereby creates and constitutes, pursuant to a resolution of the Board passed on 16 May 2013, 90,529,500 warrants to subscribe for Ordinary Shares on the terms and subject to the conditions of this
Instrument.
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2.2
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Each Warrant confers the right (but not the obligation) on the Warrantholder to subscribe for the applicable Portion of an Ordinary Share during the Subscription Period on the terms and subject to the conditions set out
in this Instrument.
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6
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2.3
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The Company undertakes to comply with the terms and conditions of this Instrument and specifically, but without limitation, to do all such things and execute all such documents to the extent necessary in order to give
effect to the exercise of any Subscription Rights in accordance with this Instrument.
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2.4
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Upon the issue of any Warrant, the Company shall enter the person or persons to whom the Warrant is issued into the Register in respect of such Warrant. The Warrants registered in a Warrantholder’s name will be
held in certificated form and will be evidenced by a Warrant Certificate issued by the Company.
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2.5
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The Company shall, upon exercise of all or any of the Warrants in accordance with Clause 4 (
Exercise of Warrants
) from time to time during the Subscription Period, including, without limitation, the payment, in
full, of the Exercise Price with respect thereto, forthwith allot and issue the number of Ordinary Shares required to be allotted and issued in accordance with the terms of this Instrument.
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2.6
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The Warrants are issued subject to the Articles and otherwise on the terms and conditions of this Instrument, which are binding upon the Company and each Warrantholder and all persons claiming through them.
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3.1
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Every Warrant Certificate shall be in the form or substantially in the form set out in Schedule 1 (
Form of Warrant Certificate
) and shall have endorsed thereon a Subscription Notice and Form of Nomination in the
form or substantially in the form set out in Schedule 1 (
Form of Warrant Certificate
).
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3.2
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Every Warrantholder shall be entitled without charge to one Warrant Certificate for the Warrants held by him save that joint holders shall be entitled to one certificate only in respect of the Warrants held by them
jointly which certificate shall be delivered to the holder whose name stands first in the Register in respect of such joint holding. The Company shall not be bound to register more than four persons as joint holders of any Warrants.
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3.3
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Where some but not all of the Warrants comprised in any Warrant Certificate are transferred or exercised the Company shall issue, free of charge, to the relevant Warrantholder a fresh Warrant Certificate in accordance
with the other provisions of this Instrument for the balance of the Warrants retained by such Warrantholder.
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3.4
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All Warrant Certificates shall be executed by the Company.
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3.5
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If a Warrant Certificate is mutilated, defaced, lost, stolen or destroyed, it shall, at the discretion of the Company, be replaced at the office of the Registrar on payment of such expenses as may reasonably be incurred
in connection therewith and on such terms as to evidence, indemnity and/or security as the Company may reasonably require. Mutilated or defaced Warrant Certificates must be surrendered before replacements will be issued.
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4.1
|
Subject to this Clause 4 and the terms and conditions of this Instrument, a Warrantholder may exercise all or any portion of its Subscription Rights
for all or any whole number of Ordinary Shares for which he is entitled to subscribe at any time during the Subscription Period. The exercise of Subscription Rights must be made subject to, and in compliance with, any laws
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7
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and regulations for the time being in force and upon payment of any taxes, duties and other governmental charges payable by reason of the exercise (other than taxes and duties imposed on the
Company).
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4.2
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Notwithstanding anything contained in this Instrument to the contrary, no exercise of a Warrant shall be valid unless the number of Warrants exercised upon such exercise is equal to either the Minimum Exercise Amount or
a multiple of the Minimum Exercise Amount that results in only a whole number of Ordinary Shares being issued upon such exercise. No fraction of a Warrant will be issued or returned to a Warrantholder following exercise. Any fraction of a Warrant
arising upon exercise will lapse and be cancelled and a Warrantholder will have no further Subscription Rights in respect of any such Warrant. For the purposes of determining whether a (and if so what) fraction of a Warrant arises upon exercise, the
number of Warrants being exercised will first be aggregated.
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4.3
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In order to exercise Subscription Rights, whether in whole or in part, Warrantholders must deliver or cause to be delivered the relevant Warrant Certificate(s) to the Receiving Agent at the address indicated in the
Subscription Notice (or to any other person or address otherwise notified to Warrantholders in accordance with Clause 13.2) together with the Subscription Notice duly completed and signed (or any other document(s) as the Company may, in its absolute
discretion, accept), together with a remittance in cleared funds for the Exercise Price in respect of the whole number of Ordinary Shares being acquired with respect to the Warrants being exercised. Once so delivered, a Subscription Notice shall be
irrevocable save with the consent of the Board.
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4.4
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Warrants will be deemed to be exercised on the business day upon which the Receiving Agent (or such other person as shall have been notified to Warrantholders in accordance with Clause 12.2) shall have received the
relevant documentation and remittance in cleared funds referred to in this Clause 4 (
Exercise of Warrants
). Subject to Subscription Rights being validly exercised and value having been received by the Company in respect of the relevant
remittance, the Company shall allot the Ordinary Shares to be issued pursuant to the exercise of Subscription Rights and enter the allottee of such Ordinary Shares in the Company’s register of members not later than 10 days after the date on
which such Subscription Rights are exercised. If an adjustment is made pursuant to Clause 6 after the exercise date but before the relevant Ordinary Shares have been allotted, the Warrantholder will receive such number of Ordinary Shares as it would
have received had the exercise taken place following the adjustment taking effect.
|
|
4.5
|
As soon as practicable following the exercise of Subscription Rights in accordance with the terms of this Instrument and, in any event, not later than 28 days after the date on which such Subscription Rights are
exercised, the Company shall issue:
|
|
|
4.5.1
|
a certificate for the Ordinary Shares in the name of such Warrantholder or such other person as may be named on the Form of Nomination set out in the Warrant Certificate (subject as provided by law and to payment of
stamp duty, stamp duty reserve tax or any similar tax as may be applicable); and
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|
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4.5.2
|
in the event of a partial exercise of Subscription Rights by any Warrantholder, a Warrant Certificate in the name of such Warrantholder in respect of the balance of the Warrants represented by the relevant Warrant
Certificate that remaining outstanding.
|
The certificate for the Ordinary Shares arising on the exercise of Warrants
(together with any balancing Warrant Certificate) will be despatched at the risk of the person entitled thereto to the address of such person or (in the case of a joint holding) to that one of them whose name stands first in the Register or relevant
Form of Nomination and will be sent by ordinary postal delivery.
8
|
4.6
|
Every Warrant in respect of which Subscription Rights:
|
|
|
4.6.1
|
have been exercised in full; or
|
|
|
4.6.2
|
have not been exercised (whether in whole or in part) during the Subscription Period,
|
shall
lapse and be cancelled and Warrantholders will have no further Subscription Rights in respect of such Warrants.
|
4.7
|
Ordinary Shares allotted pursuant to the exercise of Warrants in accordance with the terms of this Instrument shall be issued fully paid and free from any liens, charges or encumbrances and rights of pre-emption but
shall not rank for any dividends or other distributions declared, made or paid on the Ordinary Shares for which the record date is prior to the relevant day on which the Warrants are exercised but, subject thereto, shall rank in full for all
dividends and other distributions declared, made or paid on the Ordinary Shares on or after the relevant day on which the Warrants are exercised and otherwise pari passu in all respects with the Ordinary Shares in issue at that date.
|
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4.8
|
At any time when the Ordinary Shares are listed on the Official List and admitted to trading on the London Stock Exchange’s main market for listed securities and/or any other securities exchange or quotation
system, it is the intention of the Company to apply to the UK Listing Authority and London Stock Exchange (or relevant authority for any other securities exchange or quotation system) for the Ordinary Shares allotted pursuant to any exercise of
Warrants to be admitted to the Official List and to trading on the London Stock Exchange’s main market for listed securities or such other securities exchange or quotation system on which the Ordinary Shares are traded or quoted.
|
|
4.9
|
The exercise of Subscription Rights by any holder or beneficial owner of Warrants who is a U.S. Person, or the right of such a holder or beneficial owner of Warrants or other U.S. Person to receive the Ordinary Shares
falling to be issued to him following the exercise of his Subscription Rights, will be subject to such requirements, conditions, restrictions, limitations and/or prohibitions as the Company may at any time impose, in its absolute discretion, for the
purpose of complying with the securities laws of the United States (including, without limitation, the Securities Act, the U.S. Investment Company Act, and any rules or regulations promulgated under such acts).
|
|
4.10
|
Each person exercising Subscription Rights will represent, warrant and agree as follows:
|
|
|
(a)
|
it is a QIB and exercising for its own account or the account of a QIB and is doing so in reliance upon an applicable exemption from the registration requirements of the Securities Act; and:
|
|
|
(i)
|
it understands that the Ordinary Shares to be issued upon exercise of the Warrants have not been and will not be registered under the Securities Act;
|
|
|
(ii)
|
it may be asked to supply an opinion of legal counsel that the Ordinary Shares issuable upon exercise of the Warrants are exempt from registration under the Securities Act;
|
9
|
|
(iii)
|
it understands that:
|
|
|
(A)
|
Ordinary Shares issued upon exercise of the Warrants will be subject to certain restrictions on transfer as set out in the Prospectus;
|
|
|
(B)
|
a new holding period for the Ordinary Shares issued upon exchange of such Warrant for cash, for purposes of Rule 144 under the Securities Act, will commence upon issue of such Ordinary Shares; and
|
|
|
(C)
|
its exercise of Warrants and acquisition of Ordinary Shares was not solicited by any form of general solicitation or general advertising and that it has been given access to information sufficient to permit it to make
an informed decision as to whether to invest in the Ordinary Shares; or
|
|
|
(b)
|
it is located outside the United States and is not a U.S. Person and is not exercising the Warrants for the account or benefit of a U.S. Person; and:
|
|
|
(i)
|
it is acquiring the Ordinary Shares to be issued upon exercise of such Warrants in an offshore transaction within the meaning of Regulation S;
|
|
|
(ii)
|
its exercise of Warrants and acquisition of Ordinary Shares to be issued upon exercise of such Warrants were not solicited by means of any “directed selling efforts” as defined in Regulation S;
|
|
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(iii)
|
it understands that:
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|
|
(A)
|
the Ordinary Shares will be subject to certain restrictions on transfer as set out in the Prospectus;
|
|
|
(B)
|
the Ordinary Shares have not been and will not be registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of U.S. Persons, other than QIBs, absent
registration or an exemption from registration under the Securities Act; and
|
|
|
(C)
|
a new holding period for the Ordinary Shares issued upon exchange of such Warrants for cash, for purposes of Rule 144 under the Securities Act, will commence upon issue of such Ordinary Shares;
|
|
|
4.10.2
|
no portion of the assets used by the Warrantholder to exercise its Subscription Rights constitutes or will constitute the assets of (i) an
“employee benefit plan” that is subject to Part 4 of Subtitle B of Title I of ERISA, (ii) a plan, individual retirement account or other arrangement that is subject to section 4975 of the U.S. Tax Code, (iii) entities whose
underlying assets are considered to include “plan assets” of any plan, account or arrangement described in preceding Clause (i) or (ii), or (iv) any governmental plan, church plan, non-U.S. plan or other investor whose purchase
or holding of Ordinary Shares would be subject to any state, local, non-U.S. or other laws or regulations similar to Part 4 of Subtitle B of Title I of ERISA or section 4975
|
10
|
|
of the U.S. Tax Code or that would have the effect of the regulations issued by the U.S. Department of Labor set forth at 29 CFR section 251 0.3-1 01, as modified by section 3(42) of ERISA; and
|
|
|
4.10.3
|
it is not a resident of Canada, Australia or Japan (or any other jurisdiction where the offer or sale of relevant securities would violate the relevant securities laws of such jurisdiction) and is not exercising the
Warrants on behalf of any such person.
|
|
4.11
|
The Registrar, the Receiving Agent and the Company reserve the right to delay taking any action on any particular instructions from the Warrantholder if any of them considers that it needs to do so to obtain further
information from the Warrantholder or to comply with any legal or regulatory requirement binding on it (including the obtaining of evidence of identity to comply with money laundering regulations), or to investigate any concerns they may have about
the validity of or any other matter relating to the instruction.
|
|
4.12
|
The Company shall not be obliged to issue and deliver Ordinary Shares pursuant to the exercise of a Warrant unless (i) such Ordinary Shares have been registered or qualified or deemed to be exempt under the
securities laws of the jurisdiction of state of residence of the Warrantholder; (ii) a registration statement under the Securities Act with respect to the Ordinary Shares is effective, (iii) the Warrantholder provides the Company with
reasonable assurance that such Ordinary Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto) (“Rule 144”) and the applicable sale of the Ordinary
Shares to be made in reliance on Rule 144 is made in accordance with the terms of Rule 144, or (iii) in the opinion of U.S counsel to the Company, the exercise of the Warrants is exempt from the registration requirements of the Securities Act
and such Ordinary Shares are qualified for sale or exempt from qualification under applicable securities laws of jurisdictions in which the Warrantholder resides. Warrants may not be exercised by, or Ordinary Shares issued or delivered to, any
Warrantholder in any state or other jurisdiction in which such exercise or issue and delivery of Ordinary Shares would be unlawful.
|
|
4.13
|
At any time during the Subscription Period, the Board will have the discretion to refuse to accept a notice of exercise of Subscription Rights to the extent such exercise may affect the Company’s ability to meet
the requirements in Listing Rule 14.3.2 which require a sufficient number of shares, being 25 per cent. of the shares for which application for admission has been made, to be in public hands (as defined in the Listing Rules).
|
|
5.1
|
Subject to the provisions of Clause 6 and, unless otherwise authorised by an Extraordinary Resolution, whilst any Subscription Rights remain outstanding, the Company shall at all times maintain all requisite shareholder
or other authorities necessary to enable the issue of Ordinary Shares (free from any rights of pre-emption) pursuant to the exercise of all the Warrants outstanding from time to time.
|
|
6.
|
ADJUSTMENT OF SUBSCRIPTION RIGHTS
|
|
6.1
|
If the Company, at any time while Subscription Rights are outstanding, (i) issues any Ordinary Shares by way of dividend or distribution to
holders of Ordinary Shares (solely in their capacity as holders of Ordinary Shares), (ii) subdivides (by any share split, recapitalization or otherwise) the number of Ordinary Shares outstanding into a larger number of Ordinary Shares or
(iii) consolidates (by consolidation, combination, reverse share split or otherwise) the number of outstanding Ordinary Shares into a smaller number of Ordinary Shares, then in each such case the Exercise Price shall be divided by the quotient
of (x) the number of Ordinary Shares outstanding immediately after such event divided by (y) number of Ordinary
|
11
|
|
Shares outstanding immediately before such event (the result of such quotient is referred to herein the “
Adjustment Percentage
”). Any adjustment made pursuant to sub clause
(i) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to sub clause (ii) or (iii) shall become effective
immediately after the effective date of such subdivision or consolidation. Following each adjustment to the Exercise Price pursuant to the immediately preceding sub clauses (i), (ii) or (iii), the Portion shall also be adjusted in accordance
with the definition thereof so that after such adjustment the aggregate Exercise Price payable hereunder shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.
|
|
6.2
|
On any adjustment to the Exercise Price pursuant to this Clause 6, the resultant Exercise Price, if not an integral multiple of one cent, will be rounded to the nearest cent (0.5 cents being rounded upwards).
|
|
|
(i)
|
the Board determines that an adjustment should be made to the Exercise Price and/or the Portion to which each Warrant relates as a result of one or more events or circumstances not referred to in Clause 6.1; or
|
|
|
(ii)
|
an event which gives or may give rise to an adjustment under Clause 6.1 occurs in circumstances such that the Board, in its absolute discretion, determines that the adjustment provisions of Clause 6.1 need to be
operated subject to some modification in order to give a result which is fair and reasonable in all the circumstances,
|
then
the Board may make any adjustment to the Exercise Price and/or Portion or modification to the operation of Clause 6.1 as it determines in good faith to be fair and reasonable to take account of the relevant event or circumstance and upon
determination the adjustment (if any) will be made and will take effect in accordance with the determination.
|
6.4
|
Notwithstanding any other provision of this Instrument, no adjustment will be made to the Exercise Price or the Portion other than as expressly set forth in Clauses 6.1 and 6.3.
|
|
7.1
|
Upon the occurrence of the Redemption Event, each Warrant, unless previously exercised or cancelled before the date set for redemption in accordance with Clause 7.3, will be mandatorily redeemed by the Company for $0.01
per Warrant.
|
|
7.2
|
The Redemption Event occurs if the daily Average Price of an Ordinary Share for any ten consecutive Trading Days is equal to or greater than the Redemption Trigger Price.
|
|
7.3
|
The Company will give Warrantholders notice of the Redemption Event having occurred within 20 days of its occurrence in accordance with the terms of this Instrument and will redeem all Warrants falling to be redeemed on
the date set by the Redemption Notice, being a date no longer than 30 days following the occurrence of the Redemption Event. Any Warrant which is exercised before the date set for Redemption by the Redemption Notice will not be redeemed.
|
|
7.4
|
On the date fixed for redemption, the Company shall pay to each holder of Warrants falling to be redeemed the amount due in respect of such redemption and upon making such payment the relevant Warrant will be cancelled.
|
12
|
7.5
|
If the Board determines that an adjustment should be made to the Redemption Trigger Price as a result of matters such as any subsequent consolidation or subdivision of the Ordinary Shares or issue of Ordinary Shares to
Shareholders by way of dividend or distribution, the Board shall determine in good faith as soon as practicable what adjustment (if any) to the Redemption Trigger Price is fair and reasonable and upon determination the adjustment (if any) will be
made and will take effect in accordance with the determination.
|
|
8.
|
GENERAL OFFERS AND LIQUIDATION
|
|
8.1
|
While any Subscription Rights remain outstanding, if at any time an offer is made to all holders of Ordinary Shares (or all such holders other than the offeror and/or any company controlled by the offeror and/or persons
acting in concert with the offeror) to acquire all or some of the issued Ordinary Shares and the Company becomes aware on or before the end of the Subscription Period that as a result of such offer (or as a result of such offer and any other offer
made by the offeror) the right to cast a majority of the votes which may ordinarily be cast on a poll at a general meeting of the Company has or will become vested in the offeror and/or such companies or persons as aforesaid, the Company will give
notice to the Warrantholders of such vesting within 14 days of it occurring, and each such Warrantholder will be entitled, at any time within the period of 30 days immediately following the date of such notice, to exercise his Subscription Rights on
the terms on which the same could have been exercised if they had been exercisable and had been exercised on the date of such notice after which time all Subscription Rights will lapse. If any part of such period falls after the end of the
Subscription Period, the end of the Subscription Period will be deemed to be the last business day of that 30 day period.
|
|
8.2
|
If in connection with the Acquisition holders of Ordinary Shares are offered or receive shares in another company (the “
New Company
”) the Directors may, in their absolute discretion, determine that the
Subscription Rights be replaced by new subscription rights in respect of shares of the New Company and Clause 8.1 will not apply if it would otherwise do so. Any such new subscription rights will be equivalent to the Subscription Rights (as
determined by the Directors in their absolute discretion acting in good faith) and will be on such terms as the Directors consider in their absolute discretion acting in good faith to be fair and reasonable.
|
|
8.3
|
If the Company enters into liquidation, all Subscription Rights will lapse on the date of entry into liquidation.
|
|
9.1
|
Warrants shall be transferable individually and in integral multiples by an instrument of transfer in any usual or common form or such other form as may be approved by or on behalf of the Board. The Registrar shall
maintain a register of Warrantholders in registered form and the provisions of Schedule 2 (Registration, Transfer and Transmission) relating to the transfer, transmission and registration of Warrants shall have full effect as if the same had been
incorporated in this Instrument.
|
|
9.2
|
The Company shall be entitled to appoint such person or persons as the Company thinks fit as the Registrar and to remove any such person or persons and make a new appointment in their stead. The Company shall forthwith
give a notice of any change in the identity or address of the Registrar in accordance with Clause 13.2.
|
|
9.3
|
The registered holder of a Warrant shall be treated as its absolute owner for all purposes notwithstanding any notice of ownership or notice of previous loss or theft or of trust or other interest therein (except as
ordered by a court of competent jurisdiction or required by law). The Company shall not (except as stated above) be bound to recognise any other claim to or interest in any Warrant.
|
13
|
9.4
|
No transfer of any Warrant to any person will be registered without the consent of the Company if it would constitute a transfer to a Prohibited Person.
|
|
9.5
|
Subject to compliance with all applicable laws and regulations for the time being in force, the Company may make arrangements to enable Warrants to be held in uncertificated form (whether in the form of depositary
interests or otherwise) in such manner as the Directors may determine from time to time.
|
|
10.
|
MEETINGS OF WARRANTHOLDERS
|
|
10.1
|
All the provisions of the Articles as to general meetings apply mutatis mutandis to meetings of Warrantholders as though the Warrants were a class of shares forming part of the capital of the Company, but:
|
|
|
10.1.1
|
the necessary quorum is the requisite number of Warrantholders (present in person or by proxy) entitled to subscribe for two-tenths in number of the Ordinary Shares attributable to such outstanding Warrants;
|
|
|
10.1.2
|
every Warrantholder present in person or by proxy at any such meeting is entitled on a show of hands to one vote and every such Warrantholder present in person or by proxy is entitled on a poll to one vote for each
Ordinary Share for which he is entitled to subscribe;
|
|
|
10.1.3
|
any Warrantholder present in person or by proxy may demand or join in demanding a poll; and
|
|
|
10.1.4
|
if at any adjourned meeting a quorum as above defined is not present, the Warrantholder or Warrantholders then present in person or by proxy are a quorum.
|
|
10.2
|
Without prejudice to the generality of the foregoing, the Warrantholders, by way of Extraordinary Resolution, shall have power to:
|
|
|
10.2.1
|
sanction any compromise or arrangement proposed to be made between the Company and the Warrantholders or any of them;
|
|
|
10.2.2
|
sanction any proposal by the Company for modification, abrogation, variation or compromise of, or arrangement in respect of the rights of the Warrantholders against the Company whether such rights shall arise under this
Instrument or otherwise;
|
|
|
10.2.3
|
sanction any proposal by the Company for the exchange or substitution for the Warrants of, or the conversion of the Warrants into, shares, stock, bonds, debentures, debenture stock, warrants or other obligations or
securities of the Company or any other body corporate formed or to be formed;
|
|
|
10.2.4
|
assent to any modification of the conditions to which the Warrants are subject and/or the provisions contained in this Instrument which shall be proposed by the Company;
|
|
|
10.2.5
|
authorise any person to concur in and execute and do all such documents, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution;
|
|
|
10.2.6
|
discharge or exonerate any person from any liability in respect of any act or omission for which such person may have become responsible under this Instrument; and
|
14
|
|
10.2.7
|
give any authority, direction or sanction which under the provisions of this Instrument is required to be given by Extraordinary Resolution.
|
|
11.1
|
Any modification to this Instrument and any of the rights attached to the Warrants may be effected only by an instrument in writing, executed by the Company and expressed to be supplemental to this Instrument and, save
in the case of a modification which is of a formal, minor or technical nature or made to correct a manifest error, only if it shall first have been sanctioned by an Extraordinary Resolution of the Warrantholders.
|
|
11.2
|
A memorandum of every such supplemental instrument shall be endorsed on this Instrument.
|
|
11.3
|
Notice of every modification to this Instrument shall be given by the Company to the Warrantholders in accordance with Clause 13.2.
|
|
12.
|
PURCHASE, SURRENDER AND CANCELLATION
|
|
12.1
|
The Company may at any time purchase Warrants:
|
|
|
12.1.1
|
by tender (available to all Warrantholders alike) at any price; or
|
|
|
12.1.2
|
on or through the market; or
|
|
|
12.1.3
|
by private treaty at any price.
|
|
12.2
|
The Company shall accept the surrender of Warrants at any time.
|
|
12.3
|
All Warrants purchased pursuant to Clause 12.1 or surrendered shall be cancelled forthwith and may not be reissued or sold.
|
|
13.
|
AVAILABILITY OF INSTRUMENT AND NOTICES
|
|
13.1
|
Every Warrantholder shall be entitled to inspect a copy of this Instrument at the offices of the Registrar’s agent, Computershare Investor Services (Jersey) Limited whose address is at: Queensway House, Hilgrove
Street, St. Helier, Jersey, JE1 1ES (or such other place as the Registrar may appoint) during normal business hours (Saturdays, Sundays and public holidays in the location of the Registrar’s agent excepted), and shall be entitled to receive a
copy of this Instrument against payment of such charges as the Board may impose in its absolute discretion.
|
|
13.2
|
Notices to be given pursuant to the provisions of this Instrument shall be given in accordance with paragraph 4 of Schedule 2 (Registration, Transfer and Transmission ).
|
|
13.3
|
The Company will use reasonable endeavours to give written notice to each Warrantholder at least fifteen calendar days prior to the date on which the Company closes its books or takes a record (A) with respect to
any distribution on the Ordinary Shares or (B) for determining rights to vote with respect to any voluntary dissolution or voluntary liquidation of the Company.
|
|
14.
|
PURCHASE OF ORDINARY SHARES BY THE COMPANY
|
|
14.1
|
The Company may at any time purchase Ordinary Shares, or arrange for the purchase of Ordinary Shares on its behalf or by any other member of its group, and whether by way of tender offer, without requiring, in each
case, the consent of Warrantholders for such purchase.
|
15
|
15.1
|
The Company acknowledges and covenants that the benefit of the covenants, obligations and conditions on the part of or binding upon it contained in this Instrument and the Schedules hereto shall enure to the benefit of
each and every Warrantholder.
|
|
15.2
|
Each Warrantholder shall be entitled to enforce the said covenants, obligations and conditions against the Company insofar as such Warrantholder’s Warrant is concerned, without the need to join the allottee of any
such Warrant or any intervening or other Warrantholder in the proceedings for such enforcement.
|
|
16.1
|
This Instrument and the Warrants and any dispute or claim arising out of or in connection with any of them or their subject matter or formation (including non-contractual disputes or claims) shall be governed by, and
construed in accordance with, the law of Cayman Islands.
|
|
16.2
|
The courts of the Cayman Islands shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Instrument or any Warrant or their subject matter or formation (including
non-contractual disputes or claims).
|
IN WITNESS THEREOF
this Instrument has been executed by the Company as a deed and is delivered
on the date first written above.
16
SCHEDULE 1
FORM OF WARRANT CERTIFICATE
THE
SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE (INCLUDING THE SECURITIES ISSUABLE UPON EXERCISE OF ANY WARRANT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER THE ACT.
THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE (INCLUDING THE SECURITIES ISSUABLE UPON THE EXERCISE OF ANY WARRANT) ARE SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN THE WARRANT INSTRUMENT DATED 17 MAY 2013, EXECUTED BY THE COMPANY (THE “WARRANT INSTRUMENT”). COPIES OF SUCH INSTRUMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE OFFICES OF THE REGISTRAR’S AGENT,
COMPUTERSHARE INVESTOR SERVICES (JERSEY) LIMITED AT THE ADDRESS BELOW (OR SUCH OTHER PLACE AS THE REGISTRAR MAY APPOINT).
SEE ANNEX A TO THIS WARRANT
CERTIFICATE FOR ADDITIONAL RESTRICTIVE LEGENDS APPLICABLE TO THIS WARRANT
|
|
|
|
|
No. of Certificate:
|
|
[
—
]
|
|
|
|
|
Number of Warrants:
|
|
[
—
]
|
|
|
|
|
Date of issue:
|
|
[
—
]
|
Warrants to subscribe for ordinary share(s) in
PLATFORM ACQUISITION HOLDINGS LIMITED
Registered Office: Nemours Chambers, Road Town, Tortola, British Virgin Islands
incorporated in the British Virgin Islands
(Registered number: 1771302)
This is to certify
that [
—
]
of [
—
]
is/are the registered holder(s) of [
—
] Warrants in Platform Acquisition Holdings Limited issued pursuant
to and in accordance with the terms of the Warrant Instrument (as from time to time amended) executed by Platform Acquisition Holdings Limited. Words and expressions used in this Warrant Certificate and the Subscription Notice shall have the same
meanings as in the Warrant Instrument.
The registered holder is entitled in respect of every one Warrant held to subscribe for the applicable Portion of
an Ordinary Share during the Subscription Period on the terms and conditions set forth in the Warrant Instrument. At the date of issue of this certificate, the applicable Portion is [one-third][insert applicable Portion if there has been a prior
adjustment] of an Ordinary Share.
17
Warrants are exercisable only as specified in Clause 4 of the Warrant Instrument.
Transfer of any of the Warrants comprised herein will not be registered without production of this Warrant Certificate.
The Warrant Instrument is enforceable severally by each Warrantholder and is available for inspection at the offices of the Registrar’s agent,
Computershare Investor Services (Jersey) Limited at the address below (or such other place as the Registrar may appoint) until the end of the Subscription Period.
Executed by the Company on [
—
] 2013.
The address for Computershare Investor Services (Jersey) Limited is: Queensway House, Hilgrove Street, St. Helier, Jersey, JE1 1ES.
18
Annex A
PRIOR TO INVESTING IN THE SECURITIES OR CONDUCTING ANY TRANSACTIONS IN THE SECURITIES, INVESTORS ARE ADVISED TO CONSULT PROFESSIONAL ADVISERS REGARDING THE
RESTRICTIONS ON TRANSFER SUMMARIZED BELOW AND ANY OTHER RESTRICTIONS.
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED DIRECTLY OR INDIRECTLY, UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER.
THIS SECURITY MAY NOT BE ACQUIRED, HELD BY OR TRANSFERRED TO (I) AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE U.S. EMPLOYEE RETIREMENT SECURITIES ACT
OF 1974, AS AMENDED (“ERISA”), (II) A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR ARRANGEMENT THAT IS SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), OR TO ANY OTHER STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT WOULD HAVE THE SAME EFFECT AS REGULATIONS PROMULGATED UNDER ERISA BY THE U.S. DEPARTMENT OF LABOR AND CODIFIED AT 29 C.F.R. SECTION 2510.3-101 (AS MODIFIED
BY SECTION 3(42) OF ERISA) SO AS TO CAUSE THE UNDERLYING ASSETS OF PLATFORM SPECIALTY PRODUCTS CORPORATION (THE “COMPANY”) TO BE TREATED AS ASSETS OF THAT INVESTING ENTITY BY VIRTUE OF ITS INVESTMENT IN THE COMPANY AND THEREBY SUBJECT THE
COMPANY (OR PERSONS RESPONSIBLE FOR THE INVESTMENT AND OPERATION OF THE COMPANY’S ASSETS) TO LAWS OR REGULATIONS THAT ARE SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR PROHIBITED TRANSACTION PROVISIONS CONTAINED IN TITLE I OF ERISA OR SECTION 4975
OF THE CODE, OR (III) AN ENTITY THE UNDERLYING ASSETS OF WHICH ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF SUCH PLANS, ACCOUNTS AND ARRANGEMENTS AND WHICH HAVE PURCHASED THIS SECURITY ON BEHALF OF, OR WITH “PLAN ASSETS” OF, ANY
PLAN (COLLECTIVELY A “PLAN”).
19
SUBSCRIPTION NOTICE
In order to exercise all or any of the Warrants represented by this Warrant Certificate the certificate should be submitted with this Subscription Notice duly
completed and signed, together with the payment in cleared funds referred to below, to Computershare Investor Services PLC (the Registrar’s Receiving Agent) at the following address: Computershare Priority Application, Corporate Actions,
Bristol, BS99 6AJ, United Kingdom.
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To:
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The Directors, Platform Acquisition Holdings Limited
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I/We the undersigned, being the registered holder(s) of
the Warrants comprised in this Warrant Certificate (and the several Warrant Certificates (if any) enclosed with this Subscription Notice) hereby give(s) notice of his/their wish to exercise [
—
]
Warrant(s) to subscribe for [
—
] Ordinary Shares in Platform Acquisition Holdings Limited in accordance with the provisions of the Warrant Instrument.
I/We enclose payment for $[
—
] in favour of Platform Acquisition Holdings Limited being the aggregate
payment of the full subscription price for the total number of such Warrants. *
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*
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Please contact the Receiving Agent if you wish to pay by way of electronic transfer.
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I/we represent, warrant
and agree:
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(a)
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I/we am/are a “qualified institutional buyer” or QIB” within the meaning of Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and am/are exercising for my/our
own account or the account of a QIB and am/are doing so in reliance upon an applicable exemption from the registration requirements of the Securities Act; and:
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(i)
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understand that the Ordinary Shares to be issued upon exercise of the Warrants have not been and will not be registered under the Securities Act;
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(ii)
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I/we may be asked to supply an opinion of legal counsel that the Ordinary Shares issuable upon exercise of the Warrants are exempt from registration under the Securities Act;
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(A)
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Ordinary Shares issued upon exercise of the Warrants will be subject to certain restrictions on transfer as set out in the prospectus published by the Company on [
—
]
2013 (the “Prospectus”);
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(B)
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a new holding period for the Ordinary Shares issued upon exchange of such Warrants for cash, for purposes of Rule 144 under the Securities Act, will commence upon issue of such Ordinary Shares; and
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(C)
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my/our exercise of Warrants and acquisition of Ordinary Shares to be issued upon exercise of such Warrants was not solicited by any form of general
solicitation or general advertising (as those terms are defined in Regulation D
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20
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under the Securities Act) and that it has been given access to information sufficient to permit it to make an informed decision as to whether to invest in such Ordinary Shares; or
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(b)
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I/we am/are located outside the United States and am/are not a “U.S. Person” (as defined in Regulation S under the Securities Act) and am/are not exercising the Warrants for the account or benefit of a U.S.
Person; and:
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(i)
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am/are acquiring the Ordinary Shares to be issued upon exercise of such Warrants in an offshore transaction within the meaning of Regulation S;
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(ii)
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my/our exercise of Warrants and acquisition of Ordinary Shares to be issued upon exercise of such Warrants were not solicited by means of any “directed selling efforts” as defined in Regulation S;
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(A)
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the Ordinary Shares will be subject to certain restrictions on transfer as set out in the Prospectus;
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(B)
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the Ordinary Shares have not been and will not be registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of U.S. Persons, other than QIBs, absent
registration or an exemption from registration under the Securities Act; and
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(C)
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a new holding period for the Ordinary Shares issued upon exchange of such Warrants for cash, for purposes of Rule 144 under the Securities Act, will commence upon issue of such Ordinary Shares;
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(II)
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no portion of the assets used by the Warrantholder to exercise my/our Subscription Rights constitutes or will constitute the assets of (i) an “employee benefit plan” that is subject to Part 4 of Subtitle
B of Title I of ERISA, (ii) a plan, individual retirement account or other arrangement that is subject to section 4975 of the U.S. Tax Code, (iii) entities whose underlying assets are considered to include “plan assets” of any
plan, account or arrangement described in preceding Clause (i) or (ii), or (iv) any governmental plan, church plan, non-U.S. plan or other investor whose purchase or holding of Ordinary Shares would be subject to any state, local, non-U.S.
or other laws or regulations similar to Part 4 of Subtitle B of Title I of ERISA or section 4975 of the U.S. Tax Code or that would have the effect of the regulations issued by the U.S. Department of Labor set forth at 29 CFR section 251 0.3-1 01,
as modified by section 3(42) of ERISA; and
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(III)
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I/we am/are not a resident of Canada, Australia or Japan (or any other jurisdiction where the offer or sale of relevant securities would violate the relevant securities laws of such jurisdiction) and is not exercising
the Warrants on behalf of any such person.
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I/We direct you to allot the registered shares in Platform Acquisition Holdings Limited issued
pursuant hereto to the person(s) whose name(s) and address(es) is/are set out in the Form of Nomination set out below and who has signed the acceptance set out therein or, if none is
21
set out, to me/us in which event I/we agree to accept such shares subject to the Memorandum of Association and Articles of Association of Platform Acquisition Holdings Limited. I/We authorise and
request the entry of the name(s) of such persons in the register of shareholders of the Company in respect thereof.
I/We require the despatch of:
|
(a)
|
[
—
] certificates in respect of the Ordinary Shares in Platform Acquisition Holdings Limited to be allotted to such persons; and
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(b)
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a Warrant Certificate in the name(s) of such persons for any balance of my/our Warrants remaining exercisable,
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at the risk of such persons to such address as is set out in the Form of Nomination or, if none is set out, to my/our address set out in the Register of
Warrantholders or (in the case of joint holders) to the address of that one whose name stands first in such form of Nomination or (if applicable) Register in respect of the Warrants represented by this Warrant Certificate by ordinary postal service.
Dated [
—
]
GUIDANCE NOTES:
Exercise of the
Warrants represented by this Warrant Certificate may be consolidated with the exercise of Warrants represented by other Warrant Certificates by the use of only one Subscription Notice, provided that the other Warrant Certificates are attached to the
Subscription Notice.
In the case of joint holdings, all joint holders must sign.
22
FORM OF NOMINATION
Please insert in
BLOCK CAPITALS
in the box below the full name(s) of the person(s) to whom you wish the Ordinary Shares arising on the exercise of your
Warrants to be allotted and the address to which the certificate for such Ordinary Shares together with any balance certificate for Warrants should be sent and the address of the sole or first-named Warrantholder.
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I/We agree to accept all the fully paid Ordinary Shares of the Company to be allotted to me/us subject to the
Memorandum of Association and Articles of Association of the Company.
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Signed
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Dated
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If the above box is left blank in the case of Warrants held in certificated form, the Ordinary Shares will be allotted to the
Warrantholder(s) named in the attached Warrant Certificate and the certificate for such Ordinary Shares together with any balance Warrant Certificate will be sent to the registered address of the sole or first-named Warrantholder.
23
SCHEDULE 2
REGISTRATION, TRANSFER AND TRANSMISSION
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1.
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REGISTRATION AND TITLE
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1.1
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An accurate register of the Warrants (the “
Register
”) will be kept by the Registrar and there shall be entered in the Register:
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1.1.1
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the names and addresses of the Warrantholders;
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1.1.2
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the amount of Warrants held by every registered holder; and
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1.1.3
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the date upon which the name of every such registered holder is entered in respect of the Warrants standing in his name.
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1.2
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Any change of name or address on the part of a Warrantholder shall forthwith be notified to the Registrar at the office of its agent, Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street,
St. Helier, Jersey, JE1 1ES, (or such other place as the Registrar may appoint) who shall cause the Register to be altered accordingly. The Register may be closed by the Company for such period or periods and at such times as it may think fit
provided that it shall not be closed for more than thirty days in any calendar year. Any transfer made while the Register is so closed shall, as between the Company and the person claiming under the transfer (but not otherwise), be considered as
made immediately after the reopening of the Register. The Warrantholders or any of them, and any person duly authorised by any such holder, shall be at liberty at all reasonable times during office hours to inspect the Register and to take copies of
or extracts from the same or any part thereof.
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1.3
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The Company shall be entitled to treat the registered holder of any Warrant as the absolute owner thereof for all purposes notwithstanding any notice of ownership or writing thereon or notice of previous loss or theft
or of trust (whether express or implied) or other interest therein (except as ordered by a court of competent jurisdiction or required by law) and shall not (except as aforesaid) be bound to recognise any equitable or other claim to or interest in
such Warrant.
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1.4
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Every Warrantholder will be recognised by the Company as entitled to his Warrants free from any equity, set-off or cross-claim on the part of the Company against the original or any intermediate holder of the Warrants.
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2.1
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Every transfer of a Warrant shall be made by instrument of transfer in the usual or common form or in any other form which may be approved by the Board. The instrument of transfer of a Warrant shall be signed by or on
behalf of the transferor but need not be signed by or on behalf of the transferee.
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The transferor shall be deemed to remain
the holder of the Warrant until the name of the transferee is entered in the Register in respect thereof. The Company shall not be obliged to give effect to any such instrument which purports to transfer any Warrants in respect of which a
Subscription Notice shall have been received.
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2.2
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The Company may decline to recognise any instrument of transfer unless such instrument is deposited at the office of the Registrar’s agent,
Computershare Investor Services (Jersey)
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24
|
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Limited, Queensway House, Hilgrove Street, St. Helier, Jersey, JE1 1ES (or such other place as the Registrar may appoint) accompanied by the Warrant Certificate to which it relates, and such
other evidence as the Registrar may reasonably require to show the right of the transferor to make the transfer and, if the instrument of transfer is executed by some other person on behalf of the transferor, the authority of that person so to do.
The Registrar may waive production of any Warrant Certificate upon evidence satisfactory to the Registrar of its loss or destruction or upon execution of an appropriate indemnity. All instruments of transfer which are registered may be retained by
the Company for so long as it thinks fit together with the cancelled Warrant Certificates.
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2.3
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No fee shall be charged by the Company in respect of the registration of any instrument of transfer or probate or letters of administration or certificate of marriage or death, or power of attorney or other document
relating to or affecting the title to any Warrants or otherwise for making any entry in the Register affecting the title to any Warrants.
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2.4
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The registration of a transfer shall be conclusive evidence of the approval by the Company and the Registrar of the transfer and the Company shall, on registration, issue the transferee with a Warrant Certificate in
respect of the Warrants transferred.
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3.1
|
In the case of the death of a Warrantholder the survivors or survivor where the deceased was a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder, shall be the
only persons recognised by the Company and the Registrar as having any title to his Warrants, but nothing herein contained shall release the estate of a deceased Warrantholder (whether sole or joint) from any liability in respect of any Warrant
solely or jointly held by him.
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3.2
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Subject to any other provision herein contained, any person becoming entitled to a Warrant in consequence of the death or bankruptcy of a Warrantholder or otherwise than by transfer may, upon producing such evidence of
title as the Company shall reasonably require, and subject as hereinafter provided, be registered himself as holder of the Warrant.
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3.3
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Subject to any other provision herein contained, if any person becoming entitled to a Warrant in consequence of the death or bankruptcy of a Warrantholder or otherwise than by transfer shall elect to be registered
himself, he shall deliver or send to the Company and the Registrar at the office of its agent, Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street, St. Helier, Jersey, JE1 1ES (or such other place as the Registrar may
appoint) a notice in writing signed by him stating that he so elects. All the limitations, restrictions and provisions herein contained relating to the right to transfer and the registration of transfers of Warrants shall be applicable to any such
notice of transfer as aforesaid as if the death or bankruptcy of the Warrantholder had not occurred and the notice of transfer were a transfer executed by such Warrantholder.
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3.4
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A person becoming entitled to a Warrant in consequence of the death or bankruptcy of a Warrantholder shall be entitled to receive and may give good discharge for any monies payable in respect thereof, but shall not be
entitled to receive notices of or to attend or vote at meetings of the Warrantholders or, save as aforesaid, to any of the rights or privileges of a Warrantholder until he shall have become a Warrantholder in respect of the Warrant.
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4.1
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Every Warrantholder shall register with the Company and the Registrar an address to which copies of notices can be sent. Any notice or document may be
given or served by the
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25
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Company on any Warrantholder either personally or by sending it by post in a prepaid letter addressed to such Warrantholder at his registered address as appearing in the register or by facsimile
transmission to any facsimile number notified by such Warrantholder to the Company.
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4.2
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Any notices given pursuant to the provisions of this Schedule with respect to Warrants standing in the names of joint holders shall be given to whichever of such persons is named first in the Register and such notice so
given shall be sufficient notice to all the holders of such Warrants.
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4.3
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Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. Any notice given by facsimile transmission shall be deemed to have been
served in the absence of an indication of failure of transmission when transmitted. A notice shall be deemed to be given at the expiration of forty-eight hours after the envelope containing it was posted.
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4.4
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When a given number of days’ notice or notice extending over any other period is required to be given, the day of service shall, but the day upon which such notice shall expire shall not, be included in calculating
such number of days or other period. The signature to any notice to be given by the Company may be written or printed.
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4.5
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Every person who by operation of law, transfer or other means whatsoever becomes entitled to a Warrant shall be bound by any notice in respect of such Warrant which, before his name is entered in the Register, has been
duly given to the person from whom he derives his title.
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4.6
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If at any time by reason of the suspension or curtailment of postal services the Company is unable effectively to convene a meeting of the Warrantholders by notices sent through the post, such a meeting may be convened
by a notice advertised on the same date in at least two national daily newspapers with appropriate circulations (and, where there is a suspension or curtailment of postal services within the British Isles, at least one of which shall be published in
London) and such notice shall be deemed to have been duly served on all Warrantholders entitled thereto at noon on the day when the advertisement appears. In any such case the Company shall send confirmatory copies of the notice by post if prior to
the meeting the posting of notices to addresses again becomes practicable.
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4.7
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Any Warrantholder present, either personally or by proxy, at any meeting of the Warrantholders shall for all purposes be deemed to have received due notice of such meeting, and, where requisite, of the purposes for
which such meeting was called.
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4.8
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Any notice or document delivered or sent by post to or left at the registered address of any Warrantholder in pursuance of this Instrument shall, notwithstanding that such Warrantholder is then dead, bankrupt, of
unsound mind or (being a corporation) in liquidation, and whether or not the Company has notice of the death, bankruptcy, insanity or liquidation of such Warrantholder, be deemed to have been duly served in respect of any Warrant registered in the
name of such Warrantholder as sole or joint holder unless his name has at the time of the service of the notice or document been removed from the Register as the holder of the Warrant, and such service shall for all purposes be deemed a sufficient
service of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the Warrant.
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5.
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Payment of Redemption or Other Moneys
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Any redemption amount or other moneys payable to
a Warrantholder may be paid by electronic transfer or cheque sent by post to the registered address of the person entitled or, if two or more persons are the holders of the Warrant or are jointly entitled to it by reason of the
26
death or bankruptcy of the holder, to the registered address of the one of those persons who is first named in the Register or to such person and to such address as the person or persons entitled
may in writing direct (and in default of such direction to that one of the persons jointly so entitled as the Directors shall in their absolute discretion determine). Every cheque shall be made payable to the order of the person or persons entitled
or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a Warrant as aforesaid may give receipts for any
dividend or other moneys payable in respect of the Warrant. Every cheque is sent at the risk of the person entitled to the payment. If payment is made by electronic transfer, the Company is not responsible for amounts lost or delayed in the course
of making that payment.
27
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EXECUTED as a deed by LORD PAUL
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)
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MYNERS, Chairman and ALUN CATHCART,
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)
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/s/ Lord Paul Myners
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Director, duly authorised for and on behalf of
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PLATFORM ACQUISITION HOLDINGS LIMITED
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)
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)
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/s/ Alun Cathcart
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28
EXHIBIT 4.3
PLATFORM SPECIALTY PRODUCTS CORPORATION
SUPPLEMENT TO THE WARRANT INSTRUMENT
THIS SUPPLEMENT TO THE WARRANT INSTRUMENT IS EXECUTED BY WAY OF DEED POLL ON __ 201_ BY
PLATFORM SPECIALTY PRODUCTS CORPORATION
, a company incorporated in the British Virgin Islands with registered number 1771302, whose registered office
is at Nemours Chambers, Road Town, Tortola British Virgin Islands (the “
Company
”).
BACKGROUND
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(A)
|
The Company executed a warrant instrument by way of deed poll on 17 May 2013 (the “
Instrument
”) which created and constituted 90,529,500 warrants to subscribe for Ordinary Shares on the terms and
subject to the conditions of the Instrument.
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(B)
|
This Supplement modifies the Instrument on the terms set out herein.
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OPERATIVE PROVISIONS
|
1.
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DEFINITIONS AND INTERPRETATION
|
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1.1
|
All capitalised terms referenced in this Supplement shall have the meaning given in the Instrument, unless expressly stated otherwise.
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2.
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AMENDMENT TO THE INSTRUMENT
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2.1
|
The definition of “Ordinary Shares” in the Instrument shall be deleted and replaced in its entirety with the following definition:
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“
Ordinary Shares
” means (i) the ordinary shares of no par value each in the capital of the Company and (ii) any capital shares into which such ordinary shares shall have been changed or any
share capital resulting from a reclassification of such ordinary shares which, for the avoidance of doubt, shall include any shares into which the ordinary shares are converted, or for which the ordinary shares are substituted or exchanged, upon the
Company being domesticated as a corporation in Delaware.”
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2.2
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A new clause 1.11 shall be added to the Instrument as follows:
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“References to “Company” in this Instrument shall mean the Company as incorporated and validly existing in the British Virgin Islands as at the date of this Instrument or as subsequently domesticated as a
corporation in Delaware.”
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3.1
|
This Supplement and any dispute or claim arising out of or in connection herewith (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the law of the Cayman Islands.
|
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3.2
|
The courts of the Cayman Islands shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Supplement (including non-contractual disputes or claims).
|
IN WITNESS THEREOF
this Supplement has been executed by the Company as a deed and is delivered on the date first written above.
2
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EXECUTED as a deed by
,
duly authorised
for and on behalf of PLATFORM
SPECIALTY PRODUCTS CORPORATION
|
|
)
)
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........................................................................
.
|
3
EXHIBIT 8.1
December 30, 2013
Platform Specialty Products Corporation
5200 Blue Lagoon Drive,
Suite 855
Miami, FL 33126
Ladies and Gentlemen:
We have acted as counsel to Platform Specialty Products Corporation, a company limited by shares incorporated with limited liability under the
laws of the British Virgin Islands (“Platform BVI”), in connection with the domestication (the “Domestication”) of Platform BVI as a corporation incorporated under the laws of the state of Delaware (“Platform
Delaware”). On the effective date of the Domestication (the “Effective Time”), each of Platform BVI’s currently issued and outstanding ordinary shares will automatically convert in connection with the Domestication, on a
one-for-one basis, into shares of Platform Delaware common stock. This opinion is being delivered in connection with the filing of the registration statement on Form S-4 (the “Registration Statement”) by Platform BVI with the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
We have examined (i) the Registration Statement and
(ii) the representation letter of Platform BVI delivered to us in connection with this opinion (the “Representation Letter”). In addition, we have examined, and relied as to matters of fact upon, originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records, agreements, documents and other instruments and made such other inquiries as we have deemed necessary or appropriate to enable us to render the opinion set forth below. In such
examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as
duplicates or certified or conformed copies, and the authenticity of the originals of such latter documents. We have not, however, undertaken any independent investigation of any factual matter set forth in any of the foregoing.
In rendering such opinion, we have assumed, with your permission, that (i) the statements concerning the Domestication set forth in the
Registration Statement are true, complete and correct and will remain true, complete and correct at all times up to and including the Effective Time, (ii) the representations made by Platform BVI in its Representation Letter are true, complete
and correct and will remain true, complete and correct at all times up to and including the Effective Time and (iii) any representations made in the Representation Letter “to the knowledge of”, or based on the belief of Platform or
similarly qualified are true, complete and correct and will remain true, complete and correct at all times up to and including the Effective Time, in each case without such qualification.
Based upon the foregoing, and subject to the qualifications, assumptions and limitations stated herein, we hereby confirm that the discussion
contained in the Registration Statement under the caption “Material U.S. Federal Income Tax Consequences of the Merger and the Domestication” represents our opinion as to such matters.
We do not express any opinion herein concerning any law other than the federal law of the United States.
We hereby consent to the filing of this opinion as Exhibit 8.1 to the Registration Statement, and to the references to our firm name therein.
In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act.
Very truly yours,
/s/ Greenberg Traurig, P.A.
GREENBERG TRAURIG, P.A.
Exhibit 10.1
[Letterhead of MacDermid]
May 23, 2011
Daniel H. Leever
1397 Vail Valley Drive
Vail, CO 81657
Dear Dan:
I write to confirm our agreement regarding severance in the case where your employment with MacDermid Incorporated (“MacDermid”) is
involuntarily terminated without Cause (as defined herein). If your employment is involuntarily terminated without Cause then you will be paid a severance equal to two (2) years base salary, based upon the then most recent one (1) year
period and two (2) years target bonus based upon the then current and applicable bonus plan for you as approved by the board of directors. If the conditions hereof are satisfied, the severance will become payable on the 91
st
day after your involuntary termination without Cause. No severance will be paid if you voluntarily leave your position or are terminated for Cause. In order to receive the foregoing severance
payment, you will be required to execute and effectuate (without revoking) MacDermid’s standard termination agreement containing a full, final general release in favor of MacDermid and its affiliates and will be required to sign and abide by
MacDermid’s Standard Employee Agreement, including without limitation its noncompetition provisions.
As used in this agreement,
Cause shall mean:
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(i)
|
you are charged with, convicted of, or plead guilty or nolo contendere to, any crime constituting a felony or involving dishonesty or moral turpitude;
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(ii)
|
you engage in any activity that amounts to gross negligence and that significantly affects the business affairs, or reputation of the company or;
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(iii)
|
you fail to perform your duties, after receiving notice of such failure from the company in writing; or
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(iv)
|
you commit a gross and willful violation of the Company’s standard policies, or the law, and such violation creates a material liability (actual or potential) for the company.
|
This agreement is contingent upon your signing MacDermid’s standard Employee Agreement which contains, among other things, a one
(1) year non-compete, and this agreement shall serve as additional consideration for your performance under the Employee Agreement. You will at all times be an at will employee. Please indicate your acceptance and agreement by countersigning
and returning this letter to my attention.
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Sincerely,
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/s/ John L. Cordani
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John L. Cordani
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Accepted and Agreed
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/s/ Daniel H. Leever
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Name:
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Daniel H. Leever
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Date:
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May 25, 2011
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Exhibit 10.2
[Letterhead of MacDermid]
Frank Monteiro
c/o MacDermid, Incorporated
245 Freight Street
Waterbury, CT. 06702
January 7, 2003
Dear Frank,
I write to confirm our agreement regarding severance in the case where your employment with MacDermid is involuntarily terminated without
Cause (as defined herein) or within two (2) years after a Change of Control (as defined herein). If your employment with MacDermid is involuntarily terminated without Cause then MacDermid will pay you a severance equal to one
(1) year’s base salary, based upon the then most recent year period. In the alternative, if your employment is involuntarily terminated within two (2) years after a Change of Control then you will be paid a severance equal to two
(2) year’s base salary and cash bonus, based upon the then most recent two year period. In order to receive either foregoing severance payment, you will be required to execute MacDermid’s standard termination agreement (form attached)
containing a full, final general release in favor of MacDermid.
As used in this agreement, Cause and Change of Control shall mean:
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(i)
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you are convicted of, or plead guilty or nolo contendere to, any crime constituting a felony or involving dishonesty or moral turpitude;
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(ii)
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you engage in any activity that amounts to negligence and that significantly affects the business affairs or reputation of the company;
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(iii)
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you willfully fail to perform your duties, or perform your duties in a grossly negligent manner, which failure or performance continues for twenty (20) days after written notice from the company; or
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(iv)
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you violate the Company’s standard policies, or the law, and such violation creates a substantial liability (actual or potential) for the company.
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(i)
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acquisition by any person or group, except for an employee benefit plan sponsored by the company, of beneficial ownership of 50% or more of the company’s voting securities in any combination;
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(ii)
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the sale of all or substantially all of the assets of MacDermid; or
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(iii)
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individuals, who as of January 1, 2002 are members of MacDermid’s Board of Directors (the “Incumbents”), and any additional individuals (“Additional Directors”) who are recommended to
become Directors by a majority of the Incumbents and/or any then previously so recommended and elected Additional Directors, cease for any reason to constitute a majority of the Board of Directors of MacDermid.
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Please indicate your acceptance and agreement by countersigning and returning this letter to my attention.
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Sincerely,
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/s/ John L. Cordani
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John L. Cordani
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Accepted and Agreed
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/s/ Frank Monteiro
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Name:
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Frank Monteiro
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Exhibit 10.3
[Letterhead of MacDermid Inc.]
John Cordani
c/o MacDermid, Incorporated
245 Freight Street
Waterbury, CT 06702
July 22, 2002
Dear John,
I write to confirm our agreement regarding severance in the case where your employment with MacDermid is involuntarily terminated without
Cause (as defined herein) or within two (2) years after a Change of Control (as defined herein). If your employment with MacDermid is involuntarily terminated without Cause then MacDermid will pay you a severance equal to one
(1) year’s base salary, based upon the then most recent year period. In the alternative, if your employment is involuntarily terminated within two (2) years after a Change of Control then you will be paid a severance equal to two
(2) year’s base salary and cash bonus, based upon the then most recent two year period. In order to receive either foregoing severance payment, you will be required to execute MacDermid’s standard termination agreement (form attached)
containing a full, final general release in favor of MacDermid.
As used in this agreement, Cause and Change of Control shall mean:
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(i)
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you are convicted of, or plead guilty or nolo contendere to, any crime constituting a felony or involving dishonesty or moral turpitude;
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(ii)
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you engage in any activity that amounts to negligence and that significantly affects the business affairs or reputation of the company;
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(iii)
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you willfully fail to perform your duties, or perform your duties in a grossly negligent manner, which failure or performance continues for twenty (20) days after written notice from the company; or
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(iv)
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you violate the Company’s standard policies, or the law, and such violation creates a substantial liability (actual or potential) for the company.
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(i)
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acquisition by any person or group, except for an employee benefit plan sponsored by the company, of beneficial ownership of 50% or more of the company’s voting securities in any combination;
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(ii)
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the sale of all or substantially all of the assets of MacDermid; or
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(iii)
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individuals, who as of January 1, 2002 are members of MacDermid’s Board of Directors (the “Incumbents”), and any additional individuals (“Additional Directors”) who are recommended to
become Directors by a majority of the Incumbents and/or any then previously so recommended and elected Additional Directors, cease for any reason to constitute a majority of the Board of Directors of MacDermid.
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Please indicate your acceptance and agreement by countersigning and returning this letter to my attention.
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Sincerely,
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/s/ Daniel H. Leever
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Daniel H. Leever
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Accepted and Agreed
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/s/ John L. Cordani
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John L. Cordani
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Exhibit 10.4
Memorandum of Agreement
MacDermid, Incorporated (“MacDermid”) and John L. Cordani (“Cordani”) hereby enter into this agreement of employment on
this 9
th
day of July, 2001. The parties hereto agree as follows:
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1.
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MacDermid will employ Cordani as its General Counsel, Secretary, and Vice President with the functions of General Counsel and Secretary for MacDermid and all of its subsidiaries. Cordani will be a member of
MacDermid’s executive committee. Cordani’s job functions, responsibilities, and location in Waterbury, CT will not change without mutual agreement of both parties.
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2.
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Cordani’s base salary shall be $250,000 per year and shall not be decreased. Cordani shall also be eligible for raises, incentive bonuses, stock options, and restricted stock grants at the discretion of
MacDermid’s compensation committee on a yearly basis on a basis similar to other executives. As of Cordani’s first day of employment, Cordani will be granted options which are essentially equal in value to all of the options previously
forfeited by Cordani. Cordani shall also be provided such other options as are necessary to put him on an equal footing with other MacDermid executives.
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3.
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Cordani shall be allowed to keep the previously issued restricted stock grants. One grant of 1,701 shares vested on 5/14/01 and another of 1,744 shares was to vest on 5/14/02.
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4.
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Cordani’s accrual of service for his pension benefit under MacDermid’s qualified pension plan shall begin immediately on his rehire date and be aggregated together with his prior service. Cordani did not
accrue service for the period of time he was employed elsewhere.
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5.
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Cordani shall be entitled to retiree health insurance (medical and dental) under the conditions of the plan based on his original hire date of June 16, 1986 without regard to his absence. The plan specifies that
Cordani must have 20 years with the company and be a participant in one of the medical and dental plans offered by the Company for the 20 years immediately preceding his retirement, but for other purposes Cordani’s absence from the Company
shall not be considered and his service shall be aggregated.
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6.
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Cordani shall receive retirement benefits under MacDermid’s supplemental executive retirement plan (SERF) based upon his aggregate years of employment with MacDermid as of retirement.
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7.
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Cordani shall be immediately eligible for all benefits offered to MacDermid employees and/or executives from time to time. There shall be no waiting period for any benefit including pension, KSOP, 401-k, health
insurance and other benefits. Cordani shall be immediately vested in all benefits, including pension, KSOP, 401-k and other benefits. Cordani shall be provided PTO based upon his entire aggregate employment with MacDermid.
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8.
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If at any time, Cordani’s employment with MacDermid is terminated or ceases
for any reason at all
, other than (i) if Cordani voluntarily leaves the employment of MacDermid entirely and solely of his own
accord or (ii) Cordani’s employment with MacDermid has been terminated as a result of his conviction for criminal wrongdoing in connection with his employment with MacDermid, then MacDermid shall pay Cordani a severance amount equal to two
years salary, in monthly installments. Such payments will cease at such time Cordani is employed elsewhere at a salary equal to or greater than his former salary with MacDermid. If Cordani takes a position making less than his former base salary,
MacDermid will make up the difference for the balance of that 24 month period.
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9.
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This agreement shall not be assigned by either party without the written consent of the other party but shall be binding upon and enforceable against all successors in interest of MacDermid.
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10.
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MacDermid will allow Cordani to transition his responsibilities at Carmody and Torrance. MacDermid will also allow Cordani to maintain his affiliation with Carmody and Torrance. MacDermid will indemnify Carmody and
Torrance for any liability that may arise as a result of any action taken by Cordani as an officer of MacDermid.
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11.
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This agreement shall become effective upon the written request of either party on January 1, 2002, or thereafter based upon mutual agreement.
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In witness whereof, the parties represent that this agreement had been duly authorized and have set their hands hereto on this 25
th
day of June, 2001.
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/s/ John L. Cordani
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MacDermid, Incorporated
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John L. Cordani
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By:
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/s/ Daniel H. Leever
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Daniel H. Leever
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CEO and Chairman of the Board
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2
Exhibit 10.7
M
AC
D
ERMID
, I
NCORPORATED
S
UPPLEMENTAL
E
XECUTIVE
R
ETIREMENT
P
LAN
E
FFECTIVE
A
PRIL
1, 1994
A
S
A
MENDED
ON
F
EBRUARY
25, 2005
T
ABLE
OF
C
ONTENTS
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Article I Definitions
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2
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1.1.
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“Board of Directors”
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2
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1.2.
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“Code”
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2
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1.3.
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“Committee”
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2
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1.4.
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“Company”
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2
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1.5.
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“Disability”
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2
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1.6.
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“Early Retirement Date”
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2
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1.7.
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“Normal Retirement Date”
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2
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1.8.
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“Participant”
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2
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1.9.
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“Pension Plan”
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2
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1.10.
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“Plan”
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2
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1.11.
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“Supplemental Pension Benefit”
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2
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1.12.
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“Year of Service”
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2
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Article II Benefits
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3
|
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2.1.
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Supplemental Pension Benefit
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3
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2.2.
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Death Benefit
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3
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2.3.
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Termination of Employment
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3
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2.4.
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Termination for Cause and Noncompetition
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4
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Article III Distributions
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5
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3.1.
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Time and Form of Payment of Supplemental Pension Benefit
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5
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Article IV Administration
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6
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4.1.
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Plan Administration
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6
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4.2.
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Expenses
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6
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4.3.
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Form of Election or Communication
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6
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4.4.
|
|
Annual Reports
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6
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4.5.
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|
Claims for Benefits
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6
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Article V General Provisions
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7
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5.1.
|
|
Purpose of Plan
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7
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5.2.
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Plan Unfunded
|
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7
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5.3.
|
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Unsecured Creditor
|
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7
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5.4.
|
|
Amendment and Termination
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7
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5.5.
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|
Assignment of Benefits
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7
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5.6.
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Employment Not Guaranteed
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7
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5.7.
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|
Binding Agreement
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7
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5.8.
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Withholding
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7
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5.9.
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|
Captions
|
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7
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5.10.
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Severability
|
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8
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5.11.
|
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Construction
|
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|
8
|
|
i
P
REAMBLE
WHEREAS
, MacDermid, Incorporated adopted the MacDermid Incorporated Supplemental Executive Retirement Plan (the “Plan”), a
nonqualified retirement plan, effective as of April 1, 1994, for the benefit of certain management and highly compensated employees; and
WHEREAS
, The Company intends to provide benefits under the Plan to replace certain benefits eligible employees may not receive under
the MacDermid, Incorporated Pension Plan as a result of the application of the limitations of sections 401 (a) (17) and 415 of the Internal Revenue Code of 1986, as amended (the “Code”), to such plans;
WHEREAS
, the Board of Directors of the Company has amended the Plan on August 2, 2004; and
WHEREAS
, the Board of Directors of the Company has further amended the Plan on February 25, 2005, to assure compliance of the Plan
with the provisions of section 409A of the Code, added to the Code by the provisions of the American Jobs Creation Act of 2004;
NOW
THEREFORE
, the Plan, originally effective April 1, 1994, as heretofore amended and as hereby amended, is continued in effect as set forth herein.
Article I
Definitions
1.1.
“Board of Directors” means the Board of Directors of MacDermid, Incorporated.
1.2. “Code” means the Internal Revenue
Code of 1986, as from time to time amended.
1.3. “Committee” means the committee appointed by MacDermid, Incorporated to
administer the Plan in accordance with Article V.
1.4. “Company” means MacDermid, Incorporated, a Connecticut corporation, and
any of its domestic subsidiaries which participate in the Plan with the consent of MacDermid, Incorporated.
1.5. “Disability”
means a disability as defined in the Pension Plan, provided, however, that in no event shall a Participant be considered to have incurred a Disability for purposes of the Plan unless the Participant (a) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months
under an accident and health plan covering employees of the Company.
1.6. “Early Retirement Date” means the early retirement
date of a Participant as defined in the Pension Plan.
1.7. “Normal Retirement Date” means the normal retirement date of a
Participant as defined in the Pension Plan.
1.8. “Participant” means a management or highly compensated employee of the Company
who has been designated by the Board of Directors to participate in the Plan.
1.9. “Pension Plan” means the MacDermid,
Incorporated Employees’ Pension Plan, as from time to time in effect.
1.10. “Plan” means the MacDermid, Incorporated
Supplemental Executive Retirement Plan set forth herein, as from time to time amended.
1.11. “Supplemental Pension Benefit”
means the benefit determined under Section 2.1 or, in the case of the surviving spouse of a Participant, Section 2.3.
1.12.
“Year of Service” means a year of vesting service as defined in the Pension Plan.
2
Article II
Benefits
2.1.
Supplemental Pension Benefit
. The Supplemental Pension Benefit payable to a Participant who retires on or after his or her Early Retirement Date or as the result of Disability shall be equal to the excess, if any, of:
|
|
(a)
|
the benefit that would be payable to the Participant under the Pension Plan if the limitations of section 401 (a)(17) and section 415 of the Code did not apply, and had not at any time applied, to the Pension Plan, over
|
|
|
(b)
|
the benefit actually payable to the Participant under the provisions of the Pension Plan taking into account such limitations.
|
The Participant’s benefit in each case shall be determined as of the date of his or her retirement or Disability, as the case may be, in
the form of a single lump sum payable (i) in the case of a retirement other than for Disability, six months and one day following the Participant’s retirement, or (ii) in the case of a retirement for Disability, the first day of the
month next following the Participant’s Disability. Such lump sum payment in each case shall be an amount that is the actuarial equivalent, calculated using reasonable actuarial assumptions, of the normal form of benefit payable under the
Pension Plan. No Supplemental Pension Benefit will be payable for retirement prior to Early Retirement Date.
2.2. Death Benefit
.
In the event of a Participant’s death, his or her beneficiary shall be entitled to a death benefit as specified in this Section 2.2. If the Participant’s beneficiary is his or her surviving spouse, such spouse shall be entitled to
receive a Supplemental Pension Benefit equal to the excess, if any, of
|
|
(a)
|
the death benefit to which such spouse would be entitled under the Pension Plan if the limitations of section 401 (a)(17) and section 415 of the Code did not apply, and had not at any time applied, to the Pension Plan,
over
|
|
|
(b)
|
the death benefit actually payable to such spouse under the Pension Plan taking into account such limitations.
|
Such death benefit shall be payable at the same time as the death benefit actually payable to such spouse under the Pension Plan.
If the Participant dies after benefits have commenced, no death benefits shall be paid under the Plan in the event of the Participant’s
death. If no beneficiary is designated, the Participant’s surviving spouse, if any, shall be deemed to be his or her beneficiary, and if no spouse survives the Participant, any benefits shall be paid to the Participant’s estate.
2.3. Termination of Employment
. Notwithstanding any other provision of the Plan, a Participant who terminates employment with the
Company for any reason other than Disability before his or her Early Retirement Date and before completing five or more Years of Service shall not be entitled to any benefit under the Plan and shall, upon his or her termination, be deemed to have
received a distribution of zero benefits hereunder.
3
2.4. Termination for Cause and Noncompetition
. Notwithstanding any other provision of the
Plan, in the event that
|
|
(a)
|
a Participant’s employment with the Company is terminated as a result (i) conviction of any criminal offense involving dishonesty or breach of trust or any felony or crime of moral turpitude which directly and
adversely affects the business of the Company, (ii) commission of an act of fraud on or materially evidencing bad faith towards the Company, or (iii) willful refusal to perform the duties reasonably assigned by the Company, which refusal
continues for more than ten days after written notice to the Participant pursuant to a vote of two-thirds of the Board of Directors, or
|
|
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(b)
|
the Participant or former Participant, within the period ending two years after the termination of his or her employment with the Company, enters into competition with the Company, or interferes with the relations
between the Company and any customer, or engages in any activity that would result in a material decrease in or loss of revenues by the Company, the rights of such Participant or former Participant and his or her beneficiary and spouse, if any, to a
benefit shall be forfeited and he or she shall not be entitled to any benefit under the Plan. However, no forfeiture of benefits shall occur under this Section 2.4 if the Board of Directors determines that such action is in the best interests
of the Company.
|
4
Article III
Distributions
3.1.
Time and Form of Payment of Supplemental Pension Benefit
. Except in the event of a Participant’s death or that of his or her beneficiary, a Participant’s Supplemental Pension Benefit shall be payable as a lump sum (i) in the case
of a retirement other than for Disability, six months and one day after the Participant’s retirement, or (ii) in the case of a retirement for Disability, on the first day of the month next following the Participant’s Disability.
5
Article IV
Administration
4.1.
Plan Administration
. The Plan shall be administered by the Committee. The Committee shall have complete discretion and authority to administer the Plan and to interpret the provisions of the Plan. Any determination made by the Committee shall be
conclusive and binding on all persons under the Plan in the absence of clear and convincing evidence that the Committee acted arbitrarily and capriciously. The Committee may establish reasonable rules and procedures to facilitate the administration
of the Plan.
4.2. Expenses
. All expenses incurred in administering the Plan shall be paid by the Company.
4.3. Form of Election or Communication
. Any election, claim, notice or other communication required or permitted to be made by a
Participant or beneficiary under the Plan shall be made in writing and in such form and manner as the Committee may prescribe. Such communication shall be effective upon receipt, if hand delivered or sent by first class mail, postage prepaid, return
receipt requested, to MacDermid, Incorporated, 245 Freight Street, Waterbury, CT 06702.
4.4. Annual Reports
. Once each calendar
year, as soon as practicable following December 31 of such year, the Committee shall provide each Participant with a statement of his or her benefits to date under the Plan.
4.5. Claims for Benefits
. In the case of a claim respecting benefits under the plan, the Committee shall provide the claimant with a
written determination allowing or denying the claim promptly, and in any event within 90 days, following receipt of the claim. If no written determination is provided within that period, the claim will be considered denied. A claimant may obtain
review of such determination by submitting a request for review to the Committee within 60 days after the determination is made or, if later, received by the claimant. A determination on review shall be provided to the claimant within 60 days of
receipt of the request for review.
6
Article V
General Provisions
5.1. Purpose of Plan
. The Plan is intended to provide deferred compensation for a select group of management and highly compensated
employees. Notwithstanding any other provision of the Plan, the Committee may, with the approval of the Board of Directors of MacDermid, Incorporated, limit the employees eligible to participate in the Plan so as to effect this purpose.
5.2. Plan Unfunded
. The Plan shall be unfunded and no assets shall be set aside for the payment of benefits under the Plan. All
benefits shall be paid from the general assets of the Company, which remain subject to the claims of the general creditors of the company and may be used by the Company for any corporate purpose until benefit payments are made.
5.3. Unsecured Creditor
. The rights of each Participant and his or her Beneficiary to benefits under the Plan shall be solely those of
an unsecured creditor of the Company.
5.4. Amendment and Termination
. The Board of Directors of MacDermid, Incorporated may at any
time amend or terminate the Plan by action of the Board and execution of a written instrument by an authorized officer of the Company. However, no amendment to the Plan shall have any right to reduce or modify any benefit which has become
nonforfeitable without the written consent of the Participant, or in the event of the Participant’s death, the Participant’s Beneficiary, except to the extent necessary, in the good faith judgment of the Committee, to comply with the
provisions of section 409A of the Code.
5.5. Assignment of Benefits
. No Participant or Beneficiary under the Plan shall have any
right to assign, transfer, pledge or otherwise encumber the right to receive any benefit under the Plan, and any attempted assignment, transfer, pledge or other encumbrance shall be void and have no effect.
5.6. Employment Not Guaranteed
. Participation in the Plan shall not be deemed to be consideration for, or an inducement to, or a
condition of employment of any employee. Nothing contained in the Plan shall be deemed to give any Participant the right to be retained in the employment of the Company, nor shall any Participant or Beneficiary or any other person have any right to
any payment, except as such payment may be provided under the terms of the Plan.
5.7. Binding Agreement
. The provisions of this
Plan shall be binding upon each Participant and the Company and their successors, assigns, heirs, executors and beneficiaries.
5.8.
Withholding
. The Company shall be entitled to deduct from all benefit payments made to a Participant or Beneficiary all applicable federal, state or local taxes required by law to be withheld from such payments.
5.9. Captions
. The captions at the heads of Sections of this Plan are designed for convenience of reference only and are not to be
resorted to for the purpose of interpreting any provision of this Plan.
7
5.10. Severability
. The invalidity of any portion of the Plan shall not invalidate the
remainder, and the remainder shall continue in full force and effect.
5.11. Construction
. The Plan shall be construed in
accordance with the laws of the State of Connecticut, except to the extent preempted by federal law, and in accordance with the provisions of section 409A of the Code, it being the intent of the Company and the Participants that the Plan and all
amounts payable to the Participants under the Plan shall meet the requirements of section 409A of the Code to the extent applicable to the Plan and such payments. Recognizing such intent and the lack of guidance currently available under section
409A, each provision of the Plan shall be construed in such manner as shall be necessary to comply with such requirements.
Executed this
25
th
day of February, 2005.
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MacDermid, Incorporated
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By:
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/s/ John L. Cordani
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Title: Secretary
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8
Exhibit 10.8
SECOND AMENDMENT TO MACDERMID, INCORPORATED
EMPLOYEES’ PENSION PLAN, 2009 RESTATEMENT
WHEREAS,
the Pension Protection Act amended the Internal Revenue Code funding rules;
WHEREAS,
the IRS has issued a model amendment for Pension Plans to incorporate restrictions on the Plan in the event the Plan is underfunded at certain
levels;
WHEREAS,
MacDermid, Incorporated may amend the Plan pursuant to Section 10.1 of the Plan;
NOW THEREFORE,
the Plan is amended to add Appendix A to the Plan as follows:
Appendix A
Limitations
Applicable If the Plan’s Adjusted Funding Target Attainment
Percentage Is
Less Than 80 Percent or If the Plan Sponsor Is In Bankruptcy
1. Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent, But Not Less Than 60
Percent. Notwithstanding any other provisions of the plan, if the plan’s adjusted funding target attainment percentage for a plan year is less than 80 percent (or would be less than 80 percent to the extent described in Section 1(b) below)
but is not less than 60 percent, then the limitations set forth in this Section 1 apply.
(a)
50 Percent Limitation on Single
Sum Payments. Other Accelerated Forms of Distribution, and Other Prohibited Payments
. A participant or beneficiary is not permitted to elect, and the plan shall not pay, a single sum payment or other optional form of benefit that includes a
prohibited payment with an annuity starting date on or after the applicable section 436 measurement date, and the plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment
or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of:
(i) 50 percent of the present value of the benefit payable in the optional form of benefit that includes the prohibited
payment; or
(ii) 100 percent of the PBGC maximum benefit guarantee amount (as defined in§ 1.436-1(d)(3)(iii)(C) of
the Treasury Regulations).
The limitation set forth in this Section 1(a) does not apply to any payment of a benefit which under§ 411(a)(11) of
the Internal Revenue Code may be immediately distributed without the consent of the participant. If an optional form of benefit that is otherwise available under
1
the terms of the plan is not available to a participant or beneficiary as of the annuity starting date because of the application of the requirements of this Section 1(a), the participant or
beneficiary is permitted to elect to bifurcate the benefit into unrestricted and restricted portions (as described in§ 1.436-1(d)(3)(iii)(D) of the Treasury Regulations). The participant or beneficiary may also elect any other optional form of
benefit otherwise available under the plan at that annuity starting date that would satisfy the 50 percent/PBGC maximum benefit guarantee amount limitation described in this Section 1(a), or may elect to defer the benefit in accordance
with any general right to defer commencement of benefits under the plan.
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(1)
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Provision to Allow Special Optional Forms of Benefit When Only Half Single Sum Payments Are Permitted to be Paid
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During a period when Section l(a) applies to the plan, participants and beneficiaries are permitted to elect payment in any optional form of benefit otherwise
available under the plan that provides for the current payment of the unrestricted portion of the benefit (as described in§ 1.436-1(d)(3)(iii)(D) of the Treasury Regulations), with a delayed commencement for the restricted portion of the
benefit (subject to other applicable qualification requirements, such as§§ 411(a)(11) and 401(a)(9) of the Internal Revenue Code).
(b)
Plan Amendments Increasing Liability for Benefits
. No amendment to the plan that has the effect of increasing liabilities of the
plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a plan year if the adjusted funding target attainment
percentage for the plan year is:
(i) Less than 80 percent; or
(ii) 80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into
account in determining the adjusted funding target attainment percentage.
The limitation set forth in this Section 1(b) does not apply to any
amendment to the plan that provides a benefit increase under a plan formula that is not based on compensation, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of participants covered
by the amendment.
2.
Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 60
Percent
. Notwithstanding any other provisions of the plan, if the plan’s adjusted funding target attainment percentage for a plan year is less than 60 percent (or would be less than 60 percent to the extent described in Section 2(b)
below), then the limitations in this Section 2 apply.
2
(a)
Single Sums, Other Accelerated Forms of Distribution, and Other Prohibited Payments Not
Permitted
. A participant or beneficiary is not permitted to elect, and the plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable
section 436 measurement date, and the plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. The limitation set forth in this
Section 2(a) does not apply to any payment of a benefit which under § 411(a)(11) of the Internal Revenue Code may be immediately distributed without the consent of the participant.
(b)
Shutdown Benefits and Other Unpredictable Contingent Event Benefits Not Permitted to Be Paid
. An unpredictable contingent event
benefit with respect to an unpredictable contingent event occurring during a plan year shall not be paid if the adjusted funding target attainment percentage for the plan year is:
(i) Less than 60 percent; or
(ii) 60 percent or more, but would be less than 60 percent if the adjusted funding target attainment percentage were
redetermined applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the plan year is 100 percent.
(c)
Benefit Accruals Frozen
. Benefit accruals under the plan shall cease as of the applicable section 436 measurement date. In
addition, if the plan is required to cease benefit accruals under this Section 2(c), then the plan is not permitted to be amended in a manner that would increase the liabilities of the plan by reason of an increase in benefits or establishment
of new benefits.
3.
Limitations Applicable If the Plan Sponsor Is In Bankruptcy.
Notwithstanding any other provisions of the plan,
a participant or beneficiary is not permitted to elect, and the plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date that occurs during any period in which the
plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, except for payments made within a plan year with an annuity starting date that occurs on or after the date on which the plan’s enrolled
actuary certifies that the plan’s adjusted funding target attainment percentage for that plan year is not less than 100 percent. In addition, during such period in which the plan sponsor is a debtor, the plan shall not make any payment for the
purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, except for payments that occur on a date within a plan year that is on or after the date on which the plan’s
enrolled actuary certifies that the plan’s adjusted funding target attainment percentage for that plan year is not less than 100 percent. The limitation set forth in this Section 3 does not apply to any payment of a benefit which under
§ 411(a)(11) of the Internal Revenue Code may be immediately distributed without the consent of the participant.
3
4.
Provisions Applicable After Limitations Cease to Apply.
(a)
Resumption of Prohibited Payments
. If a limitation on prohibited payments under Section 1(a), Section 2(a), or
Section 3 applied to the plan as of a section 436 measurement date, but that limit no longer applies to the plan as of a later section 436 measurement date, then that limitation does not apply to benefits with annuity starting dates that are on
or after that later section 436 measurement date.
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(1)
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Provision to Allow Full Single Sum Payments for Participants and Beneficiaries Who Previously Could Only Elect Half Single Sums:
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In addition, after the section 436 measurement date on which the limitation on prohibited payments under Section 1(a) ceases to apply to the plan, any
participant or beneficiary who had an annuity starting date within the period during which that limitation applied to the plan is permitted to make a new election (within 90 days after the section 436 measurement date on which the limit ceases to
apply or, if later, 30 days after receiving notice of the right to make such election) under which the form of benefit previously elected is modified at a new annuity starting date to be changed to a single sum payment for the remaining value of the
participant or beneficiary’s benefit under the plan, subject to the other rules in this section of the plan and applicable requirements of § 401(a) of the Internal Revenue Code, including spousal consent.
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(2)
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Provision to Allow Half Single Sum Payments for Participants and Beneficiaries Who Could Not Elect Single Sums:
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In addition, after the section 436 measurement date on which the limitation on prohibited payments under Section 2(a) ceases to apply to the plan, any
participant or beneficiary who had an annuity starting date within the period during which that limitation applied to the plan is permitted to make a new election (within 90 days after the section 436 measurement date on which the limit ceases to
apply or, if later, 30 days after receiving notice of the right to make such election) under which the form of benefit previously elected is modified at a new annuity starting date to be changed to a single sum payment for the remaining value of the
participant’s or beneficiary’s benefit under the plan, subject to the other rules in this section of the plan (including Section 1(a)) and applicable requirements of § 401(a) of the Internal Revenue Code, including spousal
consent.
(b)
Resumption of Benefit Accruals
. If a limitation on benefit accruals under Section 2(c) applied to the plan as of
a section 436 measurement date, but that limitation no longer applies to the plan as of a later section 436 measurement date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on
service on or after that later section 436 measurement date, except as otherwise provided under the plan. The plan shall comply with the rules relating to partial years of participation and the prohibition on double proration under Department of
Labor regulation 29 CFR § 2530.204-2(c) and (d).
4
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(1)
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Provision to Restore Accruals:
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In addition, benefit accruals that were not permitted to accrue because
of the application of Section 2(c) shall be restored when that limitation ceases to apply if the continuous period of the limitation was 12 months or less and the plan’s enrolled actuary certifies that the adjusted funding target
attainment percentage for the plan year would not be less than 60 percent taking into account any restored benefit accruals for the prior plan year.
(c)
Shutdown and Other Unpredictable Contingent Event Benefits
. If an unpredictable contingent event benefit with respect to an
unpredictable contingent event that occurs during the plan year is not permitted to be paid after the occurrence of the event because of the limitation of Section 2(b), but is permitted to be paid later in the same plan year (as a result of
additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the plan year that meets the requirements of § 1.436-1(g)(5)(ii)(B) of the Treasury Regulations), then
that unpredictable contingent event benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the plan (determined without regard to Section 2(b)). If the unpredictable contingent event benefit
does not become payable during the plan year in accordance with the preceding sentence, then the plan is treated as if it does not provide for that benefit.
(d)
Treatment of Plan Amendments That Do Not Take Effect
. If a plan amendment does not take effect as of the effective date of the
amendment because of the limitation of Section 1(b) or Section 2(c), but is permitted to take effect later in the same plan year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the
adjusted funding target attainment percentage for the plan year that meets the requirements of § 1.436-1(g)(5)(ii)(C) of the Treasury Regulations), then the plan amendment must automatically take effect as of the first day of the plan year
(or, if later, the original effective date of the amendment). If the plan amendment cannot take effect during the same plan year, then it shall be treated as if it were never adopted, unless the plan amendment provides otherwise.
5.
Notice Requirement
. See section 101(j) of ERISA for rules requiring the plan administrator of a single employer defined benefit
pension plan to provide a written notice to participants and beneficiaries within 30 days after certain specified dates if the plan has become subject to a limitation described in Section 1(a), Section 2, or Section 3.
6.
Methods to Avoid or Terminate Benefit Limitations
. See § 436(b)(2), (c)(2), (e)(2), and (f) of the Internal Revenue
Code and § 1.436-1(f) of the Treasury Regulations for rules relating to employer contributions and other methods to avoid or terminate the application of the limitations set forth in Sections 1 through 3 for a plan year. In general, the
methods a plan sponsor may use to avoid or terminate one or more of the benefit limitations under Sections 1 through 3 for a plan year include employer contributions and elections to increase the amount of plan assets which are taken into account in
determining the adjusted funding target attainment percentage, making an employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or
providing security to the plan.
5
7.
Special Rules.
(a)
Rules of Operation for Periods Prior to and After Certification of Plan’s Adjusted Funding Target Attainment Percentage
.
(i)
In General
. Section 436(h) of the Internal Revenue Code and§ 1.436-1(h) of the Treasury Regulations set
forth a series of presumptions that apply (1) before the plan’s enrolled actuary issues a certification of the plan’s adjusted funding target attainment percentage for the plan year and (2) if the plan’s enrolled actuary
does not issue a certification of the plan’s adjusted funding target attainment percentage for the plan year before the first day of the 10th month of the plan year (or if the plan’s enrolled actuary issues a range certification for the
plan year pursuant to § 1.436-1(h)(4)(ii) of the Treasury Regulations but does not issue a certification of the specific adjusted funding target attainment percentage for the plan by the last day of the plan year). For any period during which a
presumption under § 436(h) of the Internal Revenue Code and § 1.436-1(h) of the Treasury Regulations applies to the plan, the limitations under Sections 1 through 3 are applied to the plan as if the adjusted funding target
attainment percentage for the plan year were the presumed adjusted funding target attainment percentage determined under the rules of § 436(h) of the Internal Revenue Code and § 1.436-l(h)(l), (2), or (3) of the Treasury Regulations.
These presumptions are set forth in Section 7(a)(ii) though (iv).
(ii)
Presumption of Continued Underfunding
Beginning First Day of Plan Year
. If a limitation under Section 1, 2, or 3 applied to the plan on the last day of the preceding plan year, then, commencing on the first day of the current plan year and continuing until the plan’s
enrolled actuary issues a certification of the adjusted funding target attainment percentage for the plan for the current plan year, or, if earlier, the date Section 7(a)(iii) or Section 7(a)(iv) applies to the plan:
(1) The adjusted funding target attainment percentage of the plan for the current plan year is presumed to be the adjusted
funding target attainment percentage in effect on the last day of the preceding plan year; and date.
(2) The first day of
the current plan year is a section 436 measurement date.
(iii)
Presumption of Underfunding Beginning First Day of 4th
Month
. If the plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the plan year before the first day of the 4th month of the plan year and the plan’s adjusted funding target
attainment percentage for the preceding plan year was either at least 60 percent but less than 70 percent or at least 80 percent but less than 90 percent, or is described in§ 1.436-1(h)(2)(ii) of the Treasury Regulations, then, commencing on
the first day of the 4th month of the
6
current plan year and continuing until the plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the plan for the current plan year, or, if
earlier, the date Section 7(a)(iv) applies to the plan:
(1) The adjusted funding target attainment percentage of the
plan for the current plan year is presumed to be the plan’s adjusted funding target attainment percentage for the preceding plan year reduced by 10 percentage points; and
(2) The first day of the 4th month of the current plan year is a section 436 measurement date.
(iv)
Presumption of Underfunding On and After First Day of 10th Month.
If the plan’s enrolled actuary has not
issued a certification of the adjusted funding target attainment percentage for the plan year before the first day of the 10th month of the plan year for if the plan’s enrolled actuary has issued a range certification for the plan year pursuant
to § 1.436-1(h)(4)(ii) of the Treasury Regulations but has not issued a certification of the specific adjusted funding target attainment percentage for the plan by the last day of the plan year), then, commencing on the first day of the 10th
month of the current plan year and continuing through the end of the plan year:
(1) The adjusted funding target attainment
percentage of the plan for the current plan year is presumed to be less than 60 percent; and
(2) The first day of the
10th month of the current plan year is a section 436 measurement date.
(b)
New Plans, Plan Termination, Certain Frozen Plans, and
Other Special Rules
.
(i)
First 5 Plan Years
. The limitations in Section l(b), Section 2(b), and
Section 2(c) do not apply to a new plan for the first 5 plan years of the plan, determined under the rules of§ 436(i) of the Internal Revenue Code and § 1.436-1(a)(3)(i) of the Treasury Regulations.
(ii)
Plan Termination
. The limitations on prohibited payments in Section 1(a), Section 2(a), and
Section 3 do not apply to prohibited payments that are made to carry out the termination of the plan in accordance with applicable law. Any other limitations under this section of the plan do not cease to apply as a result of termination of the
plan.
(iii)
Exception to Limitations on Prohibited Payments Under Certain Frozen Plans
. The limitations on
prohibited payments set forth in Sections 1(a), 2(a), and 3 do not apply for a plan year if the terms of the plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the plan year, provide for no
benefit accruals with respect to any participants. This Section 7(b)(iii) shall cease to apply as of the date any benefits accrue under the plan or the date on which a plan amendment that increases benefits takes effect.
7
(iv)
Special Rules Relating to Unpredictable Contingent Event Benefits and
Plan Amendments Increasing Benefit Liability
. During any period in which none of the presumptions under Section 7(a) apply to the plan and the plan’s enrolled actuary has not yet issued a certification of the plan’s adjusted
funding target attainment percentage for the plan year, the limitations under Section 1(b) and Section 2(b) shall be based on the inclusive presumed adjusted funding target attainment percentage for the plan, calculated in accordance with
the rules of § 1.436-1(g)(2)(iii) of the Treasury Regulations.
(c)
Special Rules Under PRA 2010.
(i)
Payments Under Social Security Leveling Options
. For purposes of determining whether the limitations under
Section 1(a) or 2(a) apply to payments under a social security leveling option, within the meaning of § 436G)(3)(C)(i) of the Internal Revenue Code, the adjusted funding target attainment percentage for a plan year shall be determined in
accordance with the “Special Rule for Certain Years” under § 436G)(3) of the Internal Revenue Code and any Treasury Regulations or other published guidance thereunder issued by the Internal Revenue Service.
(ii)
Limitation on Benefit Accruals
. For purposes of determining whether the accrual limitation under Section 2(c)
applies to the plan, the adjusted funding target attainment percentage for a plan year shall be determined in accordance with the “Special Rule for Certain Years” under § 436G)(3) of the Internal Revenue Code (except as provided under
section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).
(d)
Interpretation of Provisions
. The limitations imposed by this section of the plan shall be interpreted and administered in accordance with§ 436 of the Internal Revenue Code and§ 1.436-1 of the Treasury Regulations.
8.
Definitions
. The definitions in the following Treasury Regulations apply for purposes of Sections 1 through 7: § 1.436-1(j)(1)
defining adjusted funding target attainment percentage; § 1.436-1(j)(2) defining annuity starting date; § 1.436-1(j)(6) defining prohibited payment; § 1.436-1(j)(8) defining section 436 measurement date; and § 1.436-1(j)(9)
defining an unpredictable contingent event and an unpredictable contingent event benefit.
9.
Effective Date
. The rules in Sections
1 through 8 are effective for plan years beginning after December 31, 2007.
8
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MACDERMID, INCORPORATED
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By:
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/s/ Frank J. Monteiro
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Its CFO
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Date: 11/2/12
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9
Exhibit 10.9
AMENDMENT NO. 1
TO
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Previously Amended and Restated)
Reference is made to the MacDermid, Incorporated Supplemental Executive Retirement Plan (the “Plan”) established effective initially
as of April 1, 1994.
WHEREAS, Section 5.4 of the Plan provides that the Board of Directors of MacDermid, Incorporated (the
“Company”) may amend the Plan at any time by action of the Board and execution of a written instrument by an authorized officer of the Company; and
WHEREAS, the Plan heretofore has been amended and restated most recently on July 11, 2013; and
WHEREAS, the Company desires to amend the Plan further, effective December 31, 2013, to cease the accrual of additional benefits under
the Plan and to cause accrued benefits as of the effective date of such amendment to become fully vested (
i.e.,
nonforfeitable) as of such date;
NOW, THEREFORE, pursuant to the provisions of Section 5.4 and every other power enabling it to do so, the Company, acting through its
Board of Directors, hereby amends the Plan, effective December 31, 2013, as follows:
1. The Preamble is amended by deleting the
fifth paragraph thereof in its entirety and by inserting in lieu thereof the following, provided however that the reference in such insert to “November 29, 2013” shall be conformed to the date on which this instrument is executed:
“WHEREAS, the Board of Directors of the Company has further amended and restated the Plan on November 29, 2013 in the form set forth in this instrument.”
2. Section 1.8 is hereby amended by deleting the period at the end of the first (and only) sentence thereof and by inserting in lieu
thereof the following: “, provided however that no individual shall be designated after December 31, 2013 to participate in the Plan or otherwise first become eligible to participate in the Plan after December 31, 2013.”
3. Section 2.1 is hereby amended as follows:
(i) By deleting from the first sentence thereof that portion of said first sentence that precedes clause (b), and by inserting
in lieu of the portion thus deleted, the following:
“Subject to Section 2.4 and Section 2.5, the Supplemental Pension
Benefit payable to a Participant who (i) retires under the Pension Plan (a) as the result of Disability, or (b) upon or after the attainment of such Participant’s Early Retirement Date, or (ii) separates from service after
December 31, 2013, shall be equal to the excess, if any, of:
(a) the benefit that would be payable to the Participant under the
Pension Plan if the limitations of section 401(a)(17) and section 415 of the Code did not apply, and had not applied, to the Pension Plan, provided however that in determining the amount of such benefit for purposes of the Plan, compensation earned
and services rendered after December 31, 2013 shall be disregarded, over”; and
(iii) By deleting in its entirety that portion of the second sentence of such
Section that precedes the clause (ii), and by inserting in lieu of the portion thus deleted the following: “The Participant’s benefit in each case shall be determined as of the date of his or her retirement, Disability or post-2013
separation from service, as the case may be, in the form of a single lump sum payable (a) in the case of a retirement other than for Disability, six months and one day following the Participant’s retirement, or (b) in the case of a
retirement for Disability, the first day of the month next following the Participant’s Disability, or (c) in the case of a post-2013 separation from service not described in the preceding clause (a) or (b), upon the later of the
Participant’s Early Retirement Date or the date that is 60 days after the Participant’s separation from service, or”;
(iv) By inserting immediately after the final sentence thereof the following new sentence: “Notwithstanding any provision
of the Plan or the Pension Plan to the contrary, for purposes of determining an individual’s eligibility for, and the amount of, a Supplemental Pension Benefit, compensation earned and service rendered after December 31, 2013 shall be
disregarded.”
4. Section 2.2 is hereby amended by inserting immediately after the final sentence thereof the following new
sentence: “Notwithstanding any provision of the Plan or the Pension Plan to the contrary, for purposes of determining a beneficiary’s (or surviving spouse’s or estate’s) benefit under this Section 2.2, compensation earned
and service rendered after December 31, 2013 by a Participant shall be disregarded.”
(i) By deleting from the
first sentence thereof clause (a) in its entirety and by inserting in lieu thereof the following:
“(a) the benefit that would be
payable to the Participant under the Pension Plan if the limitations of section 401(a)(17) and section 415 of the Code did not apply, and had not applied, to the Pension Plan, provided however that in determining the amount of such benefit for
purposes of the Plan, compensation earned and services rendered after December 31, 2013 shall be disregarded, over”; and
5.
Section 2.3 is hereby amended by deleting the first (and only) sentence thereof in its entirety and by inserting in lieu thereof the following new sentence:
“Notwithstanding any other provision of the Plan, a Participant who separates from service with the Company (i) prior to
January 1, 2014 for any reason other than Disability before his or her Early Retirement Date and before completing five or more Years of Service shall not be entitled to any benefit under the Plan and shall, upon his or her termination, be
deemed to have received a distribution of zero benefits hereunder in full satisfaction of all amounts to which such Participant (or such Participant’s beneficiaries) is or may become entitled under the Plan, and (ii) after
December 31, 2013 shall be entitled to a benefit in accordance with Section 2.1 or 2.2, as applicable.”
2
6. Section 2.4(a) is hereby amended by inserting, immediately after the phrase “a
Participant’s employment with the Company is terminated ….” the following: “prior to January 1, 2014.”
7.
Article II is hereby amended by inserting immediately after Section 2.4 the following new Section:
“
2.5 Cessation of Benefit
Accrual
. Notwithstanding any provision of the Plan to the contrary, (i) no individual who is not a Participant in the Plan as of December 31, 2013 shall be eligible to become a Participant, and (ii) no Participant (or beneficiary
of such Participant) shall accrue any additional right or benefit under the Plan after December 31, 2013. Notwithstanding any other provision of the Plan to the contrary, in determining, for purposes of the Plan, the value of a
Participant’s retirement benefit (or death benefit) under the Pension Plan, (1) compensation earned by or credited to a Participant after December 31, 2013, shall be excluded from the computation of a Participant’s Average
Monthly Compensation, Final Average Compensation, and Covered Compensation; and (2) service rendered by or credited to a Participant after December 31, 2013 shall be excluded from the computation of a Participant’s Credited
Service.”
7. Section 5.11 is hereby amended by inserting immediately after the final sentence thereof the following:
“Without limiting the foregoing, for purposes of the Plan, the terms “retire,” “termination of employment” and “separation from service” shall have the meaning ascribed to “separation from service” under
Section 409A of the Code and the Treasury Regulations promulgated thereunder.”
IN WITNESS WHEREOF, MacDermid, Incorporated has
caused this instrument to be executed in its name and on its behalf by an officer of the MacDermid, Incorporated, duly authorized for such purpose, as of December 13
th
, 2013.
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MacDermid, Incorporated
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/s/ Daniel H. Leever
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Name: Daniel H. Leever
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Title: CEO
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3
Exhibit 10.10
PLATFORM SPECIALTY PRODUCTS CORPORATION
AMENDED AND RESTATED
2013 INCENTIVE COMPENSATION PLAN
(EFFECTIVE [
—
], 2013)
PLATFORM SPECIALTY PRODUCTS CORPORATION
AMENDED AND RESTATED
2013 INCENTIVE COMPENSATION PLAN
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1.
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Purpose.
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1
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2.
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Definitions.
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1
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3.
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Administration.
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6
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4.
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Shares Subject to Plan.
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7
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5.
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Eligibility; Per-Person Award Limitations.
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9
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6.
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Specific Terms of Awards.
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9
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7.
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Certain Provisions Applicable to Awards.
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15
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8.
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Code Section 162(m) Provisions.
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18
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9.
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Change in Control.
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19
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10.
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General Provisions.
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22
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PLATFORM SPECIALTY PRODUCTS CORPORATION
AMENDED AND RESTATED
2013 INCENTIVE COMPENSATION PLAN
1.
Purpose
. The purpose of this PLATFORM SPECIALTY PRODUCTS CORPORATION AMENDED AND RESTATED 2013 INCENTIVE COMPENSATION PLAN
(the “
Plan
”) is to assist Platform Specialty Products Corporation, a company organized under the laws of the State of Delaware (the “
Company
”) and its Related Entities (as hereinafter defined) in
attracting, motivating, retaining and rewarding high-quality executives and other employees, officers, directors, consultants and other persons who provide services to the Company or its Related Entities by enabling such persons to acquire or
increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company’s shareholders, and providing such persons with performance incentives to expend their maximum efforts in the
creation of shareholder value.
2.
Definitions
. For purposes of the Plan, the following terms shall be defined as set forth
below, in addition to such terms defined in Section 1 hereof and elsewhere herein.
(a) “
Award
” means any
Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Share granted as a bonus or in lieu of another Award, Dividend Equivalent, Other Stock-Based Award or Performance Award, together with any other right or
interest, granted to a Participant under the Plan.
(b) “
Award Agreement
” means any written agreement, contract or
other instrument or document evidencing any Award granted by the Committee hereunder.
(c) “
Beneficiary
” means the
person, persons, trust or trusts that have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under the Plan upon such Participant’s death or to
which Awards or other rights are transferred if and to the extent permitted under Section 10(b) hereof. If, upon a Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means
the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.
(d)
“
Beneficial Owner
”
and “Beneficial Ownership”
shall have the meaning ascribed to such term in Rule
13d-3
under the Exchange Act and any successor to such Rule.
(e) “
Board
” means the Company’s Board of Directors.
(f) “
Cause
” shall, with respect to any Participant, have the meaning specified in the Award Agreement. In the absence
of any definition in the Award Agreement, “Cause” shall have the equivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment, consulting, or other agreement for the performance of
services between the Participant and the Company or a Related Entity or, in the absence of any such agreement or any such definition in such agreement, such term shall mean (i) the failure by the Participant to perform, in a reasonable manner,
his or her duties as assigned by the Company or a Related Entity, (ii) any violation or breach by the Participant of his or her employment, consulting or
other similar agreement with the Company or a Related Entity, if any, (iii) any violation or breach by the Participant of any non-competition, non-solicitation, non-disclosure and/or other
similar agreement with the Company or a Related Entity, (iv) any act by the Participant of dishonesty or bad faith with respect to the Company or a Related Entity, (v) use of alcohol, drugs or other similar substances in a manner that
adversely affects the Participant’s work performance, or (vi) the commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably upon the Participant or the Company or any Related Entity. The good faith
determination by the Committee of whether the Participant’s Continuous Service was terminated by the Company for “Cause” shall be final and binding for all purposes hereunder.
(g) “
Change in Control
” means a Change in Control as defined in Section 9(b) of the Plan.
(h) “
Code
” means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and
successor provisions and regulations thereto.
(i) “
Committee
” means a committee designated by the Board to
administer the Plan; provided, however, that if the Board fails to designate a committee or if there are no longer any members on the committee so designated by the Board, or for any other reason determined by the Board, then the Board shall serve
as the Committee. In the event that the Company is a Publicly Held Corporation (as hereinafter defined), then the Committee shall consist of at least two directors, each of whom shall be (i) a “non-employee director” within the
meaning of Rule 16b-3 (or any successor rule) under the Exchange Act, unless administration of the Plan by “non-employee directors” is not then required in order for exemptions under Rule 16b-3 to apply to transactions under the Plan,
(ii) an “outside director” within the meaning of Section 162(m) of the Code, and (iii) “Independent”, the failure of the Committee to be so comprised shall not invalidate any Award that otherwise satisfies the
terms of the Plan.
(j) “
Consultant
” means any Person (other than an Employee or a Director, solely with respect
to rendering services in such Person’s capacity as a director), including an independent contractor, who is engaged by the Company or any Related Entity to render consulting, advisory or other services to the Company or such Related Entity.
(k) “
Continuous Service
” means the uninterrupted provision of services to the Company or any Related Entity in
any capacity of Employee, Director, Consultant or other service provider. Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related
Entities, or any successor entities, in any capacity of Employee, Director, Consultant or other service provider, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity
of Employee, Director, Consultant or other service provider (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.
(l) “
Director
” means a member of the Board or the board of directors of any Related Entity.
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(m) “
Disability
” means, unless otherwise defined in an Award Agreement,
for purposes of the exercise of an Incentive Stock Option, a permanent and total disability, within the meaning of Code Section 22(e)(3), and for all other purposes, the Participant’s inability to perform the duties of his or her position
with the Company, a Parent or a Subsidiary by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.
(n) “
Dividend Equivalent
” means a right, granted to a Participant under Section 6(g) hereof, to receive cash,
Shares, other Awards or other property equal in value to regular dividends paid with respect to a specified number of Shares, or other periodic payments.
(o) “
Effective Date
” means the original effective date of the Plan, which shall be November 1, 2013. The
effective date of the Plan, as amended and restated, shall be [
—
], 2013.
(p)
“
Eligible Person
” means each officer, Director, Employee, Consultant and other person who provided bona fide services to the Company or any Related Entity. The foregoing notwithstanding, only Employees of the Company, or any
parent corporation or subsidiary corporation of the Company (as those terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible Persons for purposes of receiving any Incentive Stock Options. An Employee on leave
of absence may, in the discretion of the Committee, be considered as still in the employ of the Company or a Related Entity for purposes of eligibility for participation in the Plan.
(q) “
Employee
” means any person, including an officer or Director, who is an employee of the Company or any Related
Entity. The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.
(r) “
Exchange Act
” means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder
and successor provisions and rules thereto.
(s) “
Fair Market Value
” means the fair market value of Shares, Awards
or other property as determined by the Committee, or under procedures established by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of a Share as of any given date after which the Company is a Publicly Held
Corporation shall be the closing sale price per Share reported on a consolidated basis for stock listed on the principal stock exchange or market on which Shares are traded on the date as of which such value is being determined (or as of such later
measurement date as determined by the Committee on the date the Award is authorized by the Committee), or, if there is no sale on that date, then on the last previous day on which a sale was reported.
(t) “
Good Reason
” shall, with respect to any Participant, have the meaning specified in the Award Agreement. In the
absence of any definition in the Award Agreement, “Good Reason” shall have the equivalent meaning or the same meaning as “good reason” or “for good reason” set forth in any employment, consulting or other agreement for
the performance of services between the Participant and the Company or a Related Entity or, in the absence of any
3
such agreement or any such definition in such agreement, such term shall mean (i) the assignment to the Participant of any duties inconsistent in any material respect with the
Participant’s duties or responsibilities as assigned by the Company or a Related Entity, or any other action by the Company or a Related Entity which results in a material diminution in such duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad faith or any other action which is remedied by the Company or a Related Entity promptly after receipt of notice thereof given by the Participant; (ii) any material
failure by the Company or a Related Entity to comply with its obligations to the Participant as agreed upon, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith or any other failure which is remedied by the
Company or a Related Entity promptly after receipt of notice thereof given by the Participant; or (iii) the Company’s or Related Entity’s requiring the Participant to be based at any office or location outside of fifty (50) miles
from the location of employment or service as of the date of Award, except for travel reasonably required in the performance of the Participant’s responsibilities.
(u) “
Group
” has the meaning of “persons acting as a group” as defined in paragraph (i)(5)(v)(B) of Treasury
Regulation §1.409A-3.
(v) “
Incentive Stock Option
” means any Option intended to be designated as an
incentive stock option within the meaning of Section 422 of the Code or any successor provision thereto.
(w)
“
Independent
”, when referring to either the Board or members of the Committee, shall have the same meaning as used in the rules of the Listing Market.
(x) “
Listing Market
” means the New York Stock Exchange or any other national securities exchange on which any
securities of the Company are listed for trading, and if not listed for trading, by the rules of the Nasdaq Market.
(y)
“
Option
” means a right granted to a Participant under Section 6(b) hereof, to purchase Shares or other Awards at a specified price during specified time periods.
(z) “
Optionee
” means a person to whom an Option is granted under this Plan or any person who succeeds to the rights of
such person under this Plan.
(aa) “
Other Stock-Based Awards
” means Awards granted to a Participant under
Section 6(i) hereof.
(bb) “
Participant
” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.
(cc) “
Performance Award
” means any
Award of Performance Shares or Performance Units granted pursuant to Section 6(h) hereof.
(dd) “
Performance
Period
” means that period established by the Committee at the time any Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.
4
(ee) “
Performance Share
” means any grant pursuant to Section 6(h)
hereof of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon
achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
(ff) “
Performance Unit
” means any grant pursuant to Section 6(h) hereof of a unit valued by reference to a
designated amount of property (including cash) other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon
achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
(gg) “
Person
” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section 13(d) thereof.
(hh)
“
Publicly Held Corporation
” shall mean a publicly held corporation as that term is used under Section 162(m)(2) of the Code.
(ii) “
Related Entity
” means any Subsidiary, and any business, corporation, partnership, limited liability company or
other entity designated by the Board, in which the Company or a Subsidiary holds a substantial ownership interest, directly or indirectly.
(jj) “
Restricted Stock
” means any Share issued with the restriction that the holder may not sell, transfer, pledge or
assign such Share and with such risks of forfeiture and other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to receive any dividends), which restrictions
may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.
(kk)
“
Restricted Stock Award
” means an Award granted to a Participant under Section 6(d) hereof.
(ll)
“
Restricted Stock Unit
” means a right to receive Shares, including Restricted Stock, cash measured based upon the value of Shares or a combination thereof, at the end of a specified deferral period.
(mm) “
Restricted Stock Unit Award
” means an Award of Restricted Stock Unit granted to a Participant under
Section 6(e) hereof.
(nn)
“Restriction Period”
means the period of time specified by the Committee that
Restricted Stock Awards shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose.
5
(oo) “
Rule 16b-3
” means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.
(pp) “
Shares
” means the shares of common stock of the Company, and such other securities as may be substituted (or
resubstituted) for Shares pursuant to Section 10(c) hereof.
(qq) “
Stock Appreciation Right
” means a right
granted to a Participant under Section 6(c) hereof.
(rr) “
Subsidiary
” means any corporation or other entity
in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the distribution of profits or 50% or more of the assets on liquidation or dissolution.
(ss) “
Substitute Awards
” means Awards granted or Shares issued by the Company in assumption of, or in substitution or
exchange for, Awards previously granted, or the right or obligation to make future Awards, by a company (i) acquired by the Company or any Related Entity, (ii) which becomes a Related Entity after the date hereof, or (iii) with which
the Company or any Related Entity combines.
3.
Administration
.
(a)
Authority of the Committee
.
The Plan shall be administered by the Committee, provided, however, that except as
otherwise expressly provided in this Plan, the Board may exercise any power or authority granted to the Committee under this Plan and in that case, references herein shall be deemed to include references to the Board. The Committee shall have full
and final authority, subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants, grant Awards, determine the type, number and other terms and conditions of, and all other matters relating to, Awards,
prescribe Award Agreements (which need not be identical for each Participant) and rules and regulations for the administration of the Plan, construe and interpret the Plan and Award Agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. In exercising any discretion granted to the Committee under the Plan or pursuant to any
Award, the Committee shall not be required to follow past practices, act in a manner consistent with past practices, or treat any Eligible Person or Participant in a manner consistent with the treatment of any other Eligible Persons or Participants.
(b)
Manner of Exercise of Committee Authority.
In the event that the Company is a Publicly Held Corporation, the Committee,
and not the Board, shall exercise sole and exclusive discretion (i) on any matter relating to a Participant then subject to Section 16 of the Exchange Act with respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act, (ii) with respect to any Award that is intended to qualify as “performance-based compensation” under Section 162(m),
6
to the extent necessary in order for such Award to so qualify; and (iii) with respect to any Award to an Independent Director. Any action of the Committee shall be final, conclusive and
binding on all persons, including the Company, its Related Entities, Eligible Persons, Participants, Beneficiaries, transferees under Section 10(b) hereof or other persons claiming rights from or through a Participant, and shareholders. The
express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any
Related Entity, or committees thereof, the authority, subject to such terms and limitations as the Committee shall determine, to perform such functions, including administrative functions as the Committee may determine to the extent that such
delegation will not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company and will not cause Awards intended to qualify as
“performance-based compensation” under Code Section 162(m) to fail to so qualify. The Committee may appoint agents to assist it in administering the Plan, including, without limitation, appointing one or more members of the
Company’s management, with the power or authority otherwise granted to the Committee under this Plan with respect to a number of Shares reserved and available for delivery under the Plan, subject to the terms and limitations of such power or
authority as determined by the Committee in its sole and absolute discretion. In no event, however, may an agent appointed by the Committee to assist it in administering the Plan be permitted to grant Awards to, or exercise any discretion with
respect to any and all other matters relating to Awards previously granted to, such agent appointed by the Committee to assist it in administering the Plan.
(c)
Clawback
. The Committee shall have full authority to implement any policies and procedures that it determines to be
necessary or appropriate to comply with applicable securities laws or other laws, including, without limitation, Section 10D of the Exchange Act and any rules promulgated thereunder, including without limitation, including in any Award
Agreement, or amending any outstanding Award Agreement, without the consent of any Participant, to include language for the clawback (recapture) by the Company of any benefits under the Award Agreement that the Committee deems necessary or
appropriate to comply with that statutory provision and those rules.
(d)
Limitation of Liability.
The Committee and the
Board, and each member thereof, shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or Employee, the Company’s independent auditors, Consultants or any other agents
assisting in the administration of the Plan. Members of the Committee and the Board, and any officer or Employee acting at the direction or on behalf of the Committee or the Board, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
4.
Shares Subject to Plan.
(a)
Limitation on Overall Number of Shares Available for Delivery Under Plan
. Subject to adjustment as provided in
Section 10(c) hereof, the total number of Shares reserved and available for delivery under the Plan shall be equal to Fifteen Million Five Hundred Thousand (15,500,000). Any Shares delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
7
(b)
Application of Limitation to Grants of Awards.
No Award may be granted if the
number of Shares to be delivered in connection with such an Award exceeds the number of Shares remaining available for delivery under the Plan, minus the number of Shares deliverable in settlement of or relating to then outstanding Awards. The
Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of Shares actually delivered differs from the
number of Shares previously counted in connection with an Award.
(c)
Availability of Shares Not Delivered under Awards and
Adjustments to Limits.
(i) If any Shares subject to an Award are forfeited, expire or otherwise terminate without issuance of
such Shares, or any Award that could have been settled with Shares is settled for cash or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent of such forfeiture,
expiration, termination, cash settlement or non-issuance, again be available for delivery with respect to Awards under the Plan, subject to Section 4(c)(iii) below.
(ii) Substitute Awards shall not reduce the Shares authorized for grant under the Plan or authorized for grant to a Participant in any
period. Additionally, in the event that a company acquired by the Company or any Related Entity or with which the Company or any Related Entity combines has shares available under a pre-existing plan approved by its shareholders and not adopted in
contemplation of such acquisition or combination, the shares available for delivery pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula
used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized
for delivery under the Plan if and to the extent that the use of such Shares would not require approval of the Company’s shareholders under the rules of the Listing Market.
(iii) Any Share that again becomes available for delivery pursuant to this Section 4(c) shall be added back as one (1) Share.
(iv) Notwithstanding anything in this Section 4(c) to the contrary but subject to adjustment as provided in Section 10(c) hereof,
the maximum aggregate number of Shares that may be delivered under the Plan as a result of the exercise of the Incentive Stock Options shall be Fifteen Million Five Hundred Thousand (15,500,000) Shares. In no event shall any Incentive Stock
Options be granted under the Plan after the tenth anniversary of the date on which the Board adopts the Plan.
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5.
Eligibility; Per-Person Award Limitations
. Awards may be granted under the Plan
only to Eligible Persons. Subject to adjustment as provided in Section 10(c), in any fiscal year of the Company during any part of which the Plan is in effect and the Company is a Publicly Held Corporation, no Participant may be granted
(i) Options and/or Stock Appreciation Rights with respect to more than 3,100,000 Shares or (ii) Restricted Stock, Restricted Stock Units, Performance Shares and/or Other Stock-Based Awards denominated in or valued by reference to a
designated number of Shares and that are subject to Section 8 hereof, with respect to more than 3,100,000 Shares. In addition, the maximum dollar value payable to any one Participant with respect to Performance Units that are subject to
Section 8 hereof, is (x) $2,000,000 with respect to any 12 month Performance Period (pro-rated for any Performance Period that is less than 12 months based upon the ratio of the number of days in the Performance Period as compared to 365),
and (y) with respect to any Performance Period that is more than 12 months, $4,000,000.
6.
Specific Terms of Awards.
(a)
General
. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee
may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of the Participant’s Continuous Service and terms permitting a Participant to make elections relating to his or her Award. Except as otherwise expressly provided herein, the
Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under the Plan. Except in cases in which the Committee is authorized to require other forms of
consideration under the Plan, or to the extent other forms of consideration must be paid to satisfy the requirements of the laws of the State of Delaware, no consideration other than services may be required for the grant (as opposed to the
exercise) of any Award.
(b)
Options
. The Committee is authorized to grant Options to any Eligible Person on the following
terms and conditions:
(i)
Exercise Price
. Other than in connection with Substitute Awards, the exercise price per Share
purchasable under an Option shall be determined by the Committee, provided that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of the Option and shall not, in any event, be less than the par
value of a Share on the date of grant of the Option. If an Employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of
the Company (or any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and an Incentive Stock Option is granted to such Employee, the exercise price of
such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no less than 110% of the Fair Market Value of a Share on the date such Incentive Stock Option is granted. Other than pursuant to Section 10(c)(i) and
(ii), the Committee shall not be permitted to (A) lower the exercise price per Share of an Option after it is granted, (B) cancel an Option when the exercise price per Share exceeds the Fair Market Value of the underlying Shares in
exchange
9
for another Award (other than in connection with Substitute Awards), or (C) take any other action with respect to an Option that may be treated as a repricing pursuant to the applicable
rules of the Listing Market, without approval of the Company’s shareholders.
(ii)
Time and Method of Exercise
. The
Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which
Options shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the methods by which the exercise price may be paid or deemed to be paid (including in the discretion of the Committee a cashless
exercise procedure), the form of such payment, including, without limitation, cash, Shares (including without limitation the withholding of Shares otherwise deliverable pursuant to the Award), other Awards or awards granted under other plans of the
Company or a Related Entity, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis provided that such deferred payments are not in violation of the Sarbanes Oxley Act of 2002, as
amended, or any rule or regulation adopted thereunder or any other applicable law), and the methods by or forms in which Shares will be delivered or deemed to be delivered to Participants.
(iii)
Restrictions on Transfer of Shares.
The Committee may, in its sole discretion, impose in any Award of an Option
restrictions on the transferability of the Shares issued upon exercise of such Option. If any such restrictions are imposed, the Committee may require the Participant to enter into an escrow agreement providing that the certificates representing the
Shares subject to such transfer restrictions will remain in the physical custody of an escrow holder until such restrictions are removed or have expired. The Committee may require that certificates representing the Shares subject to such
restrictions bear a legend making appropriate reference to the restrictions imposed. Subject to any restrictions imposed in accordance with this Section 6(b)(iii), the Participant will have all rights of a shareholder with respect to any such
Shares acquired upon an Option exercise, including the right to vote the Shares and receive all dividends and other distributions paid or made with respect thereto.
(iv)
Incentive Stock Options
. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with
the provisions of Section 422 of the Code. Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including any Stock Appreciation Right issued in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participant has first requested, or
consents to, the change that will result in such disqualification. Thus, if and to the extent required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall be subject to the following special terms and
conditions:
(A) the Option shall not be exercisable for more than ten years after the date such Incentive Stock Option is granted;
provided, however, that if a Participant owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company (or any parent
10
corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to the extent required by the Code at the time of the grant) for no more than five years from the date of grant; and
(B) the aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Shares with respect to which
Incentive Stock Options granted under the Plan and all other option plans of the Company (and any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) that
become exercisable for the first time by the Participant during any calendar year shall not (to the extent required by the Code at the time of the grant) exceed $100,000; and
(C) if shares acquired by exercise of an Incentive Stock Option are disposed of within two years following the date the Incentive Stock
Option is granted or one year following the transfer of such Shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide
such other information regarding the disposition as the Committee may reasonably require.
(c)
Stock Appreciation Rights
.
The Committee may grant Stock Appreciation Rights to any Eligible Person in conjunction with all or part of any Option granted under the Plan or at any subsequent time during the term of such Option (a “Tandem Stock Appreciation Right”),
or without regard to any Option (a “Freestanding Stock Appreciation Right”), in each case upon such terms and conditions as the Committee may establish in its sole discretion, not inconsistent with the provisions of the Plan, including the
following:
(i)
Right to Payment
. A Stock Appreciation Right shall confer on the Participant to whom it is granted a right
to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise over (B) the grant price of the Stock Appreciation Right as determined by the Committee. The grant price of a Stock
Appreciation Right shall not be less than 100% of the Fair Market Value of a Share on the date of grant. Other than pursuant to Section 10(c)(i) and (ii), the Committee shall not be permitted to (A) lower the grant price per Share of a
Stock Appreciation Right after it is granted, (B) cancel a Stock Appreciation Right when the grant price per Share exceeds the Fair Market Value of the underlying Shares in exchange for another Award (other than in connection with Substitute
Awards), or (C) take any other action with respect to a Stock Appreciation Right that may be treated as a repricing pursuant to the applicable rules of the Listing Market, without shareholder approval.
(ii)
Other Terms
. The Committee shall determine at the date of grant or thereafter, the time or times at which and the
circumstances under which a Stock Appreciation Right may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which Stock Appreciation Rights shall cease to
be or become exercisable following termination of Continuous Service or upon other conditions, the method of exercise, method of settlement, form of consideration payable in
11
settlement, method by or forms in which Shares will be delivered or deemed to be delivered to Participants, whether or not a Stock Appreciation Right shall be in tandem or in combination with any
other Award, and any other terms and conditions of any Stock Appreciation Right.
(iii)
Tandem Stock Appreciation Rights
.
Any Tandem Stock Appreciation Right may be granted at the same time as the related Option is granted. Any Tandem Stock Appreciation Right related to an Option may be exercised only when the related Option would be exercisable and the Fair Market
Value of the Shares subject to the related Option exceeds the exercise price at which Shares can be acquired pursuant to the Option. In addition, if a Tandem Stock Appreciation Right exists with respect to less than the full number of Shares covered
by a related Option, then an exercise or termination of such Option shall not reduce the number of Shares to which the Tandem Stock Appreciation Right applies until the number of Shares then exercisable under such Option equals the number of Shares
to which the Tandem Stock Appreciation Right applies. Any Option related to a Tandem Stock Appreciation Right shall no longer be exercisable to the extent the Tandem Stock Appreciation Right has been exercised, and any Tandem Stock Appreciation
Right shall no longer be exercisable to the extent the related Option has been exercised.
(d)
Restricted Stock Awards
. The
Committee is authorized to grant Restricted Stock Awards to any Eligible Person on the following terms and conditions:
(i)
Grant
and Restrictions
. Restricted Stock Awards shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, or as otherwise provided in this Plan during the Restriction
Period. The terms of any Restricted Stock Award granted under the Plan shall be set forth in a written Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The restrictions may lapse
separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the date of grant or
thereafter. Except to the extent restricted under the terms of the Plan and any Award Agreement relating to a Restricted Stock Award, a Participant granted Restricted Stock shall have all of the rights of a shareholder, including the right to vote
the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee). During the period that the Restricted Stock Award is subject to a risk of forfeiture, subject to
Section 10(b) below and except as otherwise provided in the Award Agreement, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.
(ii)
Forfeiture
. Except as otherwise determined by the Committee, upon termination of a Participant’s Continuous Service
during the applicable Restriction Period, the Participant’s Restricted Stock that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall be forfeited and reacquired by the Company; provided that
the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to Restricted Stock Awards shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock.
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(iii)
Certificates for Stock
. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted
Stock.
(iv)
Dividends and Splits
. As a condition to the grant of a Restricted Stock Award, the Committee may require or
permit a Participant to elect that any cash dividends paid on a Share of Restricted Stock be automatically reinvested in additional Shares of Restricted Stock or applied to the purchase of additional Awards under the Plan, in each case in a manner
that does not violate the requirements of Section 409A of the Code. Unless otherwise determined by the Committee, Shares distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Shares or other property have been distributed.
(e)
Restricted Stock Unit Award
. The Committee is authorized to grant Restricted Stock Unit Awards to any Eligible Person on the
following terms and conditions:
(i)
Award and Restrictions
. Satisfaction of a Restricted Stock Unit Award shall occur upon
expiration of the deferral period specified for such Restricted Stock Unit Award by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, a Restricted Stock Unit Award shall be subject to such restrictions
(which may include a risk of forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or otherwise, as the Committee may determine. A Restricted Stock Unit Award may be satisfied by delivery of Shares, cash equal to the Fair Market Value of the specified number of
Shares covered by the Restricted Stock Units, or a combination thereof, as determined by the Committee at the date of grant or thereafter. Prior to satisfaction of a Restricted Stock Unit Award, a Restricted Stock Unit Award carries no voting or
dividend or other rights associated with Share ownership.
(ii)
Forfeiture
. Except as otherwise determined by the
Committee, upon termination of a Participant’s Continuous Service during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Stock Unit Award), the
Participant’s Restricted Stock Unit Award that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall be forfeited; provided that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that forfeiture conditions relating to a Restricted Stock Unit Award shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of any Restricted Stock Unit Award.
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(iii)
Dividend Equivalents
. Unless otherwise determined by the Committee at the
date of grant, any Dividend Equivalents that are granted with respect to any Restricted Stock Unit Award shall be either (A) paid with respect to such Restricted Stock Unit Award at the dividend payment date in cash or in Shares of unrestricted
stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Restricted Stock Unit Award and the amount or value thereof automatically deemed reinvested in additional Restricted Stock Units, other
Awards or other investment vehicles, as the Committee shall determine or permit the Participant to elect. The applicable Award Agreement shall specify whether any Dividend Equivalents shall be paid at the dividend payment date, deferred or deferred
at the election of the Participant. If the Participant may elect to defer the Dividend Equivalents, such election shall be made within 30 days after the grant date of the Restricted Stock Unit Award, but in no event later than 12 months before the
first date on which any portion of such Restricted Stock Unit Award vests (or at such other times prescribed by the Committee as shall not result in a violation of Section 409A of the Code).
(f)
Bonus Stock and Awards in Lieu of Obligations
. The Committee is authorized to grant Shares to any Eligible Persons as a
bonus, or to grant Shares or other Awards in lieu of obligations to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, provided that, in the case of Eligible Persons subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of Shares or other Awards are exempt from liability under Section 16(b) of the Exchange Act. Shares or
Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee.
(g)
Dividend
Equivalents
. The Committee is authorized to grant Dividend Equivalents to any Eligible Person entitling the Eligible Person to receive cash, Shares, other Awards, or other property equal in value to the regular dividends paid with respect to
a specified number of Shares, or other periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued
or shall be deemed to have been reinvested in additional Shares, Awards, or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify. Any such determination by the Committee
shall be made at the grant date of the applicable Award.
(h)
Performance Awards
. The Committee is authorized to grant
Performance Awards to any Eligible Person payable in cash, Shares, or other Awards, on terms and conditions established by the Committee, subject to the provisions of Section 8 if and to the extent that the Committee shall, in its sole
discretion, determine that an Award shall be subject to those provisions. The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each
Performance Award; provided, however, that a Performance Period shall not be shorter than twelve (12) months nor longer than five (5) years. Except as provided in Section 9 or as may be provided in an Award Agreement, Performance
Awards will be distributed only after the end of
14
the relevant Performance Period. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in
Section 8(b), or in the case of an Award that the Committee determines shall not be subject to Section 8 hereof, any other criteria that the Committee, in its sole discretion, shall determine should be used for that purpose. The amount of
the Award to be distributed shall be conclusively determined by the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the
Committee, on a deferred basis, in each case in a manner that does not violate the requirements of Section 409A of the Code.
(i)
Other Stock-Based Awards
. The Committee is authorized, subject to limitations under applicable law, to grant to any Eligible Person such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan. Other Stock-Based Awards may be granted to Participants either alone or in addition to other Awards granted under the Plan, and
such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan. The Committee shall determine the terms and conditions of such Awards. Shares delivered pursuant to an Award in the
nature of a purchase right granted under this Section 6(i) shall be purchased for such consideration, (including without limitation loans from the Company or a Related Entity provided that such loans are not in violation of the Sarbanes Oxley
Act of 2002, as amended, or any rule or regulation adopted thereunder or any other applicable law) paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, other Awards or other property, as the
Committee shall determine.
7.
Certain Provisions Applicable to Awards.
(a)
Stand-Alone, Additional, Tandem, and Substitute Awards
. Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Related Entity, or any business entity to be acquired by the
Company or a Related Entity, or any other right of a Participant to receive payment from the Company or any Related Entity. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution
or exchange for another Award or award, the Committee shall require the surrender of such other Award or award in consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash compensation, including in lieu of
cash amounts payable under other plans of the Company or any Related Entity, in which the value of Shares subject to the Award is equivalent in value to the cash compensation (for example, Restricted Stock or Restricted Stock Units), or in which the
exercise price, grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Shares minus the value of the cash compensation surrendered (for example, Options or Stock
Appreciation Right granted with an exercise price or grant price “discounted” by the amount of the cash compensation surrendered), provided that any such determination to grant an Award in lieu of cash compensation must be made in a manner
intended to comply with Section 409A of the Code.
15
(b)
Term of Awards
. The term of each Award shall be for such period as may be
determined by the Committee; provided that in no event shall the term of any Option or Stock Appreciation Right exceed a period of ten years (or in the case of an Incentive Stock Option such shorter term as may be required under Section 422 of
the Code).
(c)
Form and Timing of Payment Under Awards; Deferrals
. Subject to the terms of the Plan and any applicable
Award Agreement, payments to be made by the Company or a Related Entity upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Shares,
other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis, provided that any determination to pay in installments or on a deferred basis shall be made by the Committee at the date of
grant. Any installment or deferral provided for in the preceding sentence shall, however, be subject to the Company’s compliance with applicable law and all applicable rules of the Listing Market, and in a manner intended to be exempt from or
otherwise satisfy the requirements of Section 409A of the Code. Subject to Section 7(e) hereof, the settlement of any Award may be accelerated, and cash paid in lieu of Shares in connection with such settlement, in the sole discretion of
the Committee or upon occurrence of one or more specified events (in addition to a Change in Control). Any such settlement shall be at a value determined by the Committee in its sole discretion, which, without limitation, may in the case of an
Option or Stock Appreciation Right be limited to the amount if any by which the Fair Market Value of a Share on the settlement date exceeds the exercise or grant price. Installment or deferred payments may be required by the Committee (subject to
Section 7(e) of the Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award Agreement) or permitted at the election of the Participant on terms and conditions
established by the Committee, all in a manner that is intended to be exempt from or otherwise satisfy the requirements of Section 409A of the Code. The Committee may, without limitation, make provision for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Shares.
(d)
Exemptions from Section 16(b) Liability.
If the Company is a Publicly Held Corporation, it is the intent of the Company
that the grant of any Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange Act shall be exempt from Section 16 pursuant to an applicable exemption (except for transactions acknowledged in writing to
be non-exempt by such Participant). Accordingly, if any provision of this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 then applicable to any such transaction, such provision shall be construed or deemed amended to
the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b).
(e)
Code Section 409A
.
(i) The Award Agreement for any Award that the Committee reasonably determines to constitute a Section 409A Plan, as defined in
Section 7(e)(ii) hereof, and the provisions of the Plan applicable to that Award, shall be construed in a manner consistent
16
with the applicable requirements of Section 409A of the Code, and the Committee, in its sole discretion and without the consent of any Participant, may amend any Award Agreement (and the
provisions of the Plan applicable thereto) if and to the extent that the Committee determines that such amendment is necessary or appropriate to comply with the requirements of Section 409A of the Code.
(ii) If any Award constitutes a “nonqualified deferred compensation plan” under Section 409A of the Code (a
“
Section 409A Plan
”), then the Award shall be subject to the following additional requirements, if and to the extent required to comply with Section 409A of the Code:
(A) Payments under the Section 409A Plan may be made only upon (u) the Participant’s “separation from service”,
(v) the date the Participant becomes “disabled”, (w) the Participant’s death, (x) a “specified time (or pursuant to a fixed schedule)” specified in the Award Agreement at the date of the deferral of such
compensation, (y) a “change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets” of the Company, or (z) the occurrence of an “unforeseeble emergency”;
(B) The time or schedule for any payment of the deferred compensation may not be accelerated, except to the extent provided in
applicable Treasury Regulations or other applicable guidance issued by the Internal Revenue Service;
(C) Any elections with respect to
the deferral of such compensation or the time and form of distribution of such deferred compensation shall comply with the requirements of Section 409A(a)(4) of the Code; and
(D) In the case of any Participant who is “specified employee”, a distribution on account of a “separation from service”
may not be made before the date which is six months after the date of the Participant’s “separation from service” (or, if earlier, the date of the Participant’s death).
For purposes of the foregoing, the terms in quotations shall have the same meanings as those terms have for purposes of Section 409A of the Code, and the
limitations set forth herein shall be applied in such manner (and only to the extent) as shall be necessary to comply with any requirements of Section 409A of the Code that are applicable to the Award.
(iii) Notwithstanding the foregoing, or any provision of this Plan or any Award Agreement, the Company does not make any representation to
any Participant or Beneficiary that any Awards made pursuant to this Plan are exempt from, or satisfy, the requirements of, Section 409A of the Code, and the Company shall have no liability or other obligation to indemnify or hold harmless the
Participant or any Beneficiary for any tax, additional tax, interest or penalties that the Participant or any Beneficiary may incur in the event that any provision of this Plan, or any Award Agreement, or any amendment or modification thereof, or
any other action taken with respect thereto, is deemed to violate any of the requirements of Section 409A of the Code.
17
8.
Code Section 162(m) Provisions
.
(a)
Covered Employees.
If the Company is a Publicly Held Corporation, then, unless otherwise specified by the Committee, the
provisions of this Section 8 shall be applicable to any Restricted Stock Award, Restricted Stock Unit Award, Performance Award, or Other Stock-Based Award if it is granted to an Eligible Person who is, or is likely to be, as of the end of the
tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, and is intended to qualify as “performance-based compensation” that is exempt from the deduction limitations imposed under
Section 162(m) of the Code.
(b)
Performance Criteria
. If an Award is subject to this Section 8, then the payment
or distribution thereof or the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be contingent upon achievement of one or more objective performance goals. Performance goals
shall be objective and shall otherwise meet the requirements of Section 162(m) of the Code and regulations thereunder including the requirement that the level or levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain.” One or more of the following business criteria for the Company, on a consolidated basis, and/or for Related Entities, or for business or geographical units of the Company and/or a Related
Entity (except with respect to the total shareholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for such Awards: (1) earnings per share; (2) revenues or margins; (3) cash
flow; (4) operating margin; (5) return on net assets, investment, capital, or equity; (6) economic value added; (7) direct contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense and before extraordinary or special items; operating income or income from operations; income before interest income or expense, unusual items and income taxes, local,
state or federal and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (9) working capital; (10) management of fixed costs or variable costs; (11) identification or consummation of
investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures; (12) total shareholder return; (13) debt reduction; (14) market
share; (15) entry into new markets, either geographically or by business unit; (16) customer retention and satisfaction; (17) strategic plan development and implementation, including turnaround plans; and/or (18) the Fair Market
Value of a Share. Any of the above goals may be determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard &
Poor’s 500 Stock Index or a group of companies that are comparable to the Company. In determining the achievement of the performance goals, unless otherwise specified by the Committee at the time the performance goals are set, the Committee
shall exclude the impact of (i) restructurings, discontinued operations, extraordinary items (as defined pursuant to generally accepted accounting principles), and other unusual or non-recurring charges, (ii) change in accounting standards
required by generally accepted accounting principles; or (iii) such other exclusions or adjustments as the Committee specifies at the time the Award is granted.
18
(c)
Performance Period; Timing For Establishing Performance Goals
. Achievement of
performance goals in respect of Awards subject to this Section 8 shall be measured over a Performance Period no shorter than twelve (1) months and no longer than five (5) years, as specified by the Committee. Performance goals shall
be established not later than ninety (90) days after the beginning of any Performance Period applicable to Awards subject to this Section 8, or at such other date as may be required or permitted for “performance-based
compensation” under Section 162(m) of the Code.
(d)
Adjustments
. The Committee may, in its discretion, reduce the
amount of a settlement otherwise to be made in connection with Awards subject to this Section 8, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of an Award subject to this Section 8.
The Committee shall specify the circumstances in which such Awards shall be paid or forfeited in the event of termination of Continuous Service by the Participant prior to the end of a Performance Period or settlement of Awards.
(e)
Committee Certification
. No Participant shall receive any payment under the Plan that is subject to this Section 8
unless the Committee has certified, by resolution or other appropriate action in writing, that the performance criteria and any other material terms previously established by the Committee or set forth in the Plan, have been satisfied to the extent
necessary to qualify as “performance based compensation” under Section 162(m) of the Code.
9.
Change in
Control.
(a)
Effect of “Change in Control.”
If and only to the extent provided in any employment or other
agreement between the Participant and the Company or any Related Entity, or in any Award Agreement, or to the extent otherwise determined by the Committee in its sole discretion and without any requirement that each Participant be treated
consistently, upon the occurrence of a “Change in Control,” as defined in Section 9(b):
(i) Any Option or Stock
Appreciation Right that was not previously vested and exercisable as of the time of the Change in Control, shall become immediately vested and exercisable, subject to applicable restrictions set forth in Section 10(a) hereof.
(ii) Any restrictions, deferral of settlement, and forfeiture conditions applicable to a Restricted Stock Award, Restricted Stock Unit Award
or an Other Stock-Based Award subject only to future service requirements granted under the Plan shall lapse and such Awards shall be deemed fully vested as of the time of the Change in Control, except to the extent of any waiver by the Participant
and subject to applicable restrictions set forth in Section 10(a) hereof.
(iii) With respect to any outstanding Award subject to
achievement of performance goals and conditions under the Plan, the Committee may, in its discretion, deem such performance goals and conditions as having been met as of the date of the Change in Control.
(iv) Notwithstanding the foregoing or any provision in any Award Agreement to the contrary, and unless the Committee otherwise determines in
a specific
19
instance, or as is provided in any employment or other agreement between the Participant and the Company or any Related Entity, each outstanding Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Stock-Based Award shall not be accelerated as described in Sections 9(a)(i), (ii) and (iii), if either (A) the Company is the surviving entity in the Change in Control and the Option, Stock
Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award continues to be outstanding after the Change in Control on the substantially same terms and conditions as were applicable immediately prior to the
Change in Control or (B) the successor company assumes or substitutes for the applicable Award, as determined in accordance with Section 10(c)(ii) hereof. For the purposes of this Agreement, an Option, Stock Appreciation Right, Restricted
Stock Award, Restricted Stock Unit Award or Other Stock-Based Award shall be considered assumed or substituted for if following the Change in Control the Award confers the right to purchase or receive, for each Share subject to the Option, Stock
Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award immediately prior to the Change in Control, on substantially the same vesting and other terms and conditions as were applicable to the Award
immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such
transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a
Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary, provide that the consideration to be received upon the
exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company or its parent or
subsidiary substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be
made by the Committee in its sole discretion and its determination shall be conclusive and binding.
(b)
Definition of “Change
in Control”.
Unless otherwise specified in any employment agreement between the Participant and the Company or any Related Entity, or in an Award Agreement, a “
Change in Control
” shall mean the occurrence of any
of the following:
(i) The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than fifty percent (50%) of either (A) the value of then outstanding equity securities of the Company (the “
Outstanding Company Stock
”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of directors (the “
Outstanding Company Voting Securities
”) (the foregoing Beneficial Ownership hereinafter being referred to as a
“
Controlling Interest
”); provided, however, that for purposes of this Section 9(b), the following acquisitions shall not constitute or result in a Change in Control: (v) any acquisition directly from the Company;
(w) any acquisition by the Company; (x) any acquisition by any Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Related Entity; or (z) any acquisition by any entity pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below; or
20
(ii) During any period of two (2) consecutive years (not including any period
prior to the Effective Date) individuals who constitute the Board on the Effective Date (the “
Incumbent Board
”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Consummation of (A) a reorganization, merger, statutory share exchange or consolidation or similar transaction
involving (x) the Company or (y) any of its Subsidiaries, but in the case of this clause (y) only if equity securities of the Company are issued or issuable in connection with the transaction (each of the events referred to in this
clause (A) being hereinafter referred to as a “
Business Reorganization
”), or (B) a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or equity of
another entity by the Company or any of its Subsidiaries (each an “
Asset Sale
”), in each case, unless, following such Business Reorganization or Asset Sale, (1) all or substantially all of the individuals and entities
who were the Beneficial Owners, respectively, of the Outstanding Company Stock and Outstanding Company Voting Securities immediately prior to such Business Reorganization or Asset Sale beneficially own, directly or indirectly, more than fifty
percent (50%) of the value of the then outstanding equity securities and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of members of the board of directors (or comparable
governing body of an entity that does not have such a board), as the case may be, of the entity resulting from such Business Reorganization or Asset Sale (including, without limitation, an entity which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “
Continuing Entity
”) in substantially the same proportions as their ownership, immediately prior to
such Business Reorganization or Asset Sale, of the Outstanding Company Stock and Outstanding Company Voting Securities, as the case may be (excluding any outstanding equity or voting securities of the Continuing Entity that such Beneficial Owners
hold immediately following the consummation of the Business Reorganization or Asset Sale as a result of their ownership, prior to such consummation, of equity or voting securities of any company or other entity involved in or forming part of such
Business Reorganization or Asset Sale other than the Company), (2) no Person (excluding any employee benefit plan (or related trust) of the Company or any Continuing Entity or any entity controlled by the Continuing Corporation or any Person
that as of the Effective Date owns Beneficial Ownership of a Controlling Interest) beneficially owns, directly or indirectly, fifty percent (50%) or more of the value of the then outstanding equity securities of the Continuing Entity or the
combined voting power of the then outstanding voting securities of the Continuing Entity except to the extent that such ownership existed prior to the Business Reorganization or Asset Sale and (3) at least a
21
majority of the members of the Board of Directors or other governing body of the Continuing Entity were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such Business Reorganization or Asset Sale; or
(iv) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding anything to the contrary herein, the term “Change in Control” shall not include a sale of assets, a merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company, or an initial public offering underwritten on a firm commitment basis pursuant to a registration statement filed with the Securities Exchange Commission.
10.
General Provisions
.
(a)
Compliance With Legal and Other Requirements
. The Company may, to the extent deemed necessary or advisable by the Committee,
postpone the issuance or delivery of Shares or payment of other benefits under any Award until completion of such registration or qualification of such Shares or other required action under any federal or state law, rule or regulation, listing or
other required action with respect to the Listing Market, or compliance with any other obligation of the Company, as the Committee, may consider appropriate, and may require any Participant to make such representations, furnish such information and
comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Shares or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or
other obligations.
(b)
Limits on Transferability; Beneficiaries
. No Award or other right or interest granted under the Plan
shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party, or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution or
to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards
and other rights (other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may be transferred to one or more Beneficiaries or other transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Committee pursuant to the express terms of an Award Agreement (subject to any terms and conditions which the Committee may
impose thereon) and are otherwise not inconsistent with the rules as to the use of
Form S-8
Registration Statement under the Securities Act of 1933, as amended (or any successor or, at the sole discretion
of the Committee, other registration statement pursuant to which Awards, Shares, rights or interests under the Plan are then registered under such Act), if applicable. A Beneficiary, transferee, or other person claiming any rights under the Plan
from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.
22
(c)
Adjustments.
(i)
Adjustments to Awards
. In the event that any extraordinary dividend or other distribution (whether in the form of cash,
Shares, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the
Shares and/or such other securities of the Company or any other issuer, then the Committee shall, in such manner as it may deem equitable, substitute, exchange or adjust any or all of (A) the number and kind of Shares which may be delivered in
connection with Awards granted thereafter, (B) the number and kind of Shares by which annual per-person Award limitations are measured under Section 5 hereof, (C) the number and kind of Shares subject to or deliverable in respect of
outstanding Awards, (D) the exercise price, grant price or purchase price relating to any Award and/or make provision for payment of cash or other property in respect of any outstanding Award, and (E) any other aspect of any Award that the
Committee determines to be appropriate.
(ii)
Adjustments in Case of Certain Transactions
. In the event of any merger,
consolidation or other reorganization in which the Company does not survive, or in the event of any Change in Control, any outstanding Awards may be dealt with in accordance with any of the following approaches, without the requirement of obtaining
any consent or agreement of a Participant as such, as determined by the agreement effectuating the transaction or, if and to the extent not so determined, as determined by the Committee: (A) the continuation of the outstanding Awards by the
Company, if the Company is a surviving entity, (B) the assumption or substitution for, as those terms are defined below, the outstanding Awards by the surviving entity or its parent or subsidiary, (C) full exercisability or vesting and
accelerated expiration of the outstanding Awards, or (D) settlement of the value of the outstanding Awards in cash or cash equivalents or other property followed by cancellation of such Awards (which value, in the case of Options or Stock
Appreciation Rights, shall be measured by the amount, if any, by which the Fair Market Value of a Share exceeds the exercise or grant price of the Option or Stock Appreciation Right as of the effective date of the transaction). For the purposes of
this Plan, an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award shall be considered assumed or substituted for if following the applicable transaction the Award confers the right to
purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award immediately prior to the applicable transaction, on substantially the same vesting
and other terms and conditions as were applicable to the Award immediately prior to the applicable transaction, the consideration (whether stock, cash or other securities or property) received in the applicable transaction by holders of Shares for
each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration
received in the applicable transaction is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary, provide that the consideration to be
received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company or its
parent or subsidiary
23
substantially equal in fair market value to the per share consideration received by holders of Shares in the applicable transaction. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. The Committee shall give written notice of any proposed transaction referred to in this Section 10(c)(ii) at a reasonable
period of time prior to the closing date for such transaction (which notice may be given either before or after the approval of such transaction), in order that Participants may have a reasonable period of time prior to the closing date of such
transaction within which to exercise any Awards that are then exercisable (including any Awards that may become exercisable upon the closing date of such transaction). A Participant may condition his or her exercise of any Awards upon the
consummation of the transaction.
(iii)
Other Adjustments
. The Committee (and the Board if and only to the
extent such authority is not required to be exercised by the Committee to comply with Section 162(m) of the Code) is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Awards subject
to satisfaction of performance goals, or performance goals and conditions relating thereto) in recognition of unusual or nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and assets) affecting the
Company, any Related Entity or any business unit, or the financial statements of the Company or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or
in view of the Committee’s assessment of the business strategy of the Company, any Related Entity or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and
any other circumstances deemed relevant. Adjustments permitted hereby may include, without limitation, increasing the exercise price of Options and Stock Appreciation Rights, increasing performance goals, or other adjustments that may be adverse to
the Participant. Notwithstanding the foregoing, no adjustments may be made with respect to any Awards subject to Section 8 if and to the extent that such adjustment would cause the Award to fail to qualify as “performance-based
compensation” under Section 162(m) of the Code.
(d)
Taxes
. The Company and any Related Entity are
authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award not to be in excess of the minimum statutory withholding required, and to take such other action as the Committee may deem advisable to enable the Company or any Related Entity and
Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect
thereof in satisfaction of a Participant’s tax obligations not in excess of the minimum statutory withholding required, either on a mandatory or elective basis in the discretion of the Committee.
(e)
Changes to the Plan and Awards
. The Board may amend, alter, suspend, discontinue or terminate the Plan, or the
Committee’s authority to grant Awards under the Plan, without the consent of shareholders or Participants, except that any amendment or alteration to
24
the Plan shall be subject to the approval of the Company’s shareholders not later than the annual meeting next following such Board action if such shareholder approval is required by any
federal or state law or regulation (including, without limitation,
Rule 16b-3
or Code Section 162(m)) or the rules of the Listing Market, and the Board may otherwise, in its discretion, determine to
submit other such changes to the Plan to shareholders for approval; provided that, except as otherwise permitted by the Plan or Award Agreement, without the consent of an affected Participant, no such Board action may materially and adversely affect
the rights of such Participant under the terms of any previously granted and outstanding Award. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award
Agreement relating thereto, except as otherwise provided in the Plan; provided that, except as otherwise permitted by the Plan or Award Agreement, without the consent of an affected Participant, no such Committee or the Board action may materially
and adversely affect the rights of such Participant under terms of such Award.
(f)
Limitation on Rights Conferred Under
Plan
. Neither the Plan nor any action taken hereunder or under any Award shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the
Company or a Related Entity; (ii) interfering in any way with the right of the Company or a Related Entity to terminate any Eligible Person’s or Participant’s Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and Employees, or (iv) conferring on a Participant any of the rights of a shareholder of the Company or any Related Entity
including, without limitation, any right to receive dividends or distributions, any right to vote or act by written consent, any right to attend meetings of shareholders or any right to receive any information concerning the Company’s or any
Related Entity’s business, financial condition, results of operation or prospects, unless and until such time as the Participant is duly issued Shares on the stock books of the Company or any Related Entity in accordance with the terms of an
Award. None of the Company, its officers or its directors shall have any fiduciary obligation to the Participant with respect to any Awards unless and until the Participant is duly issued Shares pursuant to the Award on the stock books of the
Company in accordance with the terms of an Award. Neither the Company, nor any Related Entity, nor any of the their respective officers, directors, representatives or agents are granting any rights under the Plan to the Participant whatsoever, oral
or written, express or implied, other than those rights expressly set forth in this Plan or the Award Agreement.
(g)
Unfunded
Status of Awards; Creation of Trusts
. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant or obligation to deliver Shares
pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Participant any rights that are greater than those of a general creditor of the Company or Related Entity that issues the Award; provided that the
Committee may authorize the creation of trusts and deposit therein cash, Shares, other Awards or other property, or make other arrangements to meet the obligations of the Company or Related Entity under the Plan. Such trusts or other arrangements
shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant. The trustee of such trusts may be authorized to dispose of trust assets and reinvest the
proceeds in alternative investments, subject to such terms and conditions as the Committee may specify and in accordance with applicable law.
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(h)
Nonexclusivity of the Plan
. Neither the adoption of the Plan by the Board nor
its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable including incentive
arrangements and awards which do not qualify under Section 162(m) of the Code.
(i)
Payments in the Event of Forfeitures;
Fractional Shares
. Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash or other consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
(j)
Governing Law
. Except as otherwise
provided in any Award Agreement, the validity, construction and effect of the Plan, any rules and regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to
principles of conflict of laws, and applicable federal law.
(k)
Non-U.S. Laws
. The Committee shall have the authority to
adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Related Entities may operate to assure the viability of the benefits from
Awards granted to Participants performing services in such countries and to meet the objectives of the Plan.
(l)
Plan Effective
Date and Shareholder Approval; Termination of Plan
. The Plan shall become effective on the Effective Date and, to the extent so required by the rules of any stock exchange or automated quotation system on which the Shares may be listed or
quoted, shall be subject to subsequent approval by the shareholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the requirements of such stock exchange or automated quotation system. Notwithstanding the
foregoing, any Awards granted under the Plan that are intended to be Incentive Stock Options or are intended to be exempt from the deduction limitations contained in Section 162(m) of the Code shall not be exercised and/or settled unless and
until the applicable shareholder approval requirements of Sections 422 and/or 162(m) are satisfied. The Plan shall terminate at the earliest of (a) such time as no Shares remain available for issuance under the Plan, (b) termination of
this Plan by the Board, or (c) the tenth anniversary of the Effective Date. Awards outstanding upon expiration of the Plan shall remain in effect until they have been exercised or terminated, or have expired.
26
Exhibit 10.11
PLATFORM SPECIALTY PRODUCTS CORPORATION
RESTRICTED STOCK AGREEMENT
FOR
1.
Award of Restricted
Stock.
The Committee hereby grants, as of (the “
Date of Grant
”), to
, restricted shares of the
Company’s common stock (collectively the “
Restricted Stock
”). The Restricted Stock shall be subject to the terms, provisions and restrictions set forth in this Agreement and the Company’s Amended and Restated 2013
Incentive Compensation Plan (the “
Plan
”), which is incorporated herein for all purposes. As a condition to entering into this Agreement, and as a condition to the issuance of any Shares (or any other securities of the
Company), the Recipient agrees to be bound by all of the terms and conditions herein and in the Plan. Unless otherwise provided herein, terms used herein that are defined in the Plan and not defined herein shall have the meanings attributable
thereto in the Plan.
2.
Vesting of Restricted Stock.
(a)
General Vesting
.
The shares of Restricted Stock shall become vested in the following amounts, at the
following times and upon the following conditions, provided that the Continuous Service of the Recipient continues through and on the applicable Vesting Date:
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Except as otherwise provided in Sections 2(b), 2(c) and 4 hereof, there shall be no proportionate or partial
vesting of shares of Restricted Stock in or during the months, days or periods prior to each Vesting Date, and all vesting of shares of Restricted Stock shall occur only on the applicable Vesting Date.
(b)
Acceleration of Vesting Upon a Change in Control.
[In the event that a Change in Control of the Company occurs during the
Recipient’s Continuous Service, the shares of Restricted Stock subject to this Agreement shall become immediately vested as of the date of the Change in Control.] [Notwithstanding the foregoing, if in the event of a Change in Control the
successor company assumes or substitutes another award for this Restricted Stock award, then the vesting of the Restricted Stock shall not be accelerated as described in this paragraph (b). For purposes of this paragraph, the Restricted Stock shall
be considered assumed or substituted for if following the Change in Control the award confers the right to receive, for each Share subject to the Restricted Stock award immediately prior to the Change in Control, on
substantially the same vesting and other terms and conditions as were applicable to the Restricted Stock immediately prior to the Change in Control, the consideration (whether stock, cash or
other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its
parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary, provide that the consideration to be received upon the vesting of the Restricted Stock shall be solely common stock of the successor
company or its parent or subsidiary substantially equal in the fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of
value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.]
(c)
Acceleration of Vesting at Company Discretion.
Notwithstanding any other term or provision of this Agreement, the Board or the Committee shall be authorized, in its sole discretion, based upon its review and evaluation of the
performance of the Recipient and of the Company, to accelerate the vesting of any shares of Restricted Stock under this Agreement, at such times and upon such terms and conditions as the Board or the Committee shall deem advisable.
(d)
Definitions.
For purposes of this Agreement, the following terms shall have the meanings indicated:
(i) “
Non-Vested Shares
” means any portion of the Restricted Stock subject to this Agreement that has not become vested
pursuant to this Section 2.
(ii) “
Vested Shares
” means any portion of the Restricted Stock subject to this
Agreement that is and has become vested pursuant to this Section 2.
3.
Delivery of Restricted Stock.
(a)
Issuance of Stock Certificates and Legends.
One or more stock certificates evidencing the Restricted Stock shall be issued
in the name of the Recipient but shall be held and retained by the Records Administrator of the Company until the date (the “
Applicable Date
”) on which the shares (or a portion thereof) subject to this Restricted Stock award
become Vested Shares pursuant to Section 2 hereof, subject to the provisions of Section 4 hereof. All such stock certificates shall bear the following legends, along with such other legends that the Board or the Committee shall deem
necessary and appropriate or which are otherwise required or indicated pursuant to any applicable stockholders agreement:
THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO SUBSTANTIAL VESTING AND OTHER RESTRICTIONS AS SET FORTH IN THE RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THE SHARES, A COPY OF WHICH MAY BE
2
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES, AND INCLUDE VESTING CONDITIONS WHICH MAY RESULT IN THE COMPLETE FORFEITURE OF THE
SHARES.
(b)
Stock Powers.
The Recipient shall deposit with the Company stock powers or other instruments of transfer or
assignment, duly endorsed in blank with signature(s) guaranteed, corresponding to each certificate representing shares of Restricted Stock until such shares become Vested Shares. If the Recipient shall fail to provide the Company with any such stock
power or other instrument of transfer or assignment, the Recipient hereby irrevocably appoints the Secretary of the Company as his attorney-in-fact, with full power of appointment and substitution, to execute and deliver any such power or other
instrument which may be necessary to effectuate the transfer of the Restricted Stock (or assignment of distributions thereon) on the books and records of the Company.
(c)
Delivery of Stock Certificates.
On or after each Applicable Date, upon written request to the Company by the Recipient, the
Company shall promptly cause a new certificate or certificates to be issued for and with respect to all shares that become Vested Shares on that Applicable Date, which certificate(s) shall be delivered to the Recipient as soon as administratively
practicable after the date of receipt by the Company of the Recipient’s written request. The new certificate or certificates shall continue to bear those legends and endorsements that the Company shall deem necessary or appropriate (including
those relating to restrictions on transferability and/or obligations and restrictions under the Securities Laws).
(d)
Issuance
Without Certificates.
If the Company is authorized to issue Shares without certificates, then the Company may, in the discretion of the Committee, issue Shares pursuant to this Agreement without certificates, in which case any references in
this Agreement to certificates shall instead refer to whatever evidence may be issued to reflect the Recipient’s ownership of the Shares subject to the terms and conditions of this Agreement.
4.
Forfeiture of Non-Vested Shares
. If the Recipient’s Continuous Service with the Company and the Related Entities is terminated for any
reason, any Shares of Restricted Stock that are Non-Vested Shares, and that do not become Vested Shares pursuant to Section 2 hereof as a result of such termination, shall be forfeited immediately upon such termination of Continuous Service and
revert back to the Company without any payment to the Recipient. The Committee shall have the power and authority to enforce on behalf of the Company any rights of the Company under this Agreement in the event of the Recipient’s forfeiture of
Non-Vested Shares pursuant to this Section 4.
5.
Rights with Respect to Restricted Stock.
(a)
General.
Except as otherwise provided in this Agreement, the Recipient shall have, with respect to all of the shares of
Restricted Stock, whether Vested Shares or Non-Vested Shares, all of the rights of a holder of shares of common stock of the Company, including without limitation (i) the right to vote such Restricted Stock, (ii) the right to receive
dividends, if any, as may be declared on the Restricted Stock from time to time, and (iii) the rights available to
3
all holders of shares of common stock of the Company upon any merger, consolidation, reorganization, liquidation or dissolution, stock
split-up,
stock
dividend or recapitalization undertaken by the Company; provided, however, that all of such rights shall be subject to the terms, provisions, conditions and restrictions set forth in this Agreement (including without limitation conditions under
which all such rights shall be forfeited). Any Shares issued to the Recipient as a dividend with respect to shares of Restricted Stock shall have the same status and bear the same legend as the shares of Restricted Stock and shall be held by the
Company, if the shares of Restricted Stock that such dividend is attributed to is being so held, unless otherwise determined by the Committee. In addition, notwithstanding any provision to the contrary herein, unless the Committee determines
otherwise, any cash dividends declared with respect to shares of Restricted Stock subject to this Agreement shall be held in escrow by the Committee until such time as the shares of Restricted Stock that such cash dividends are attributed to shall
become Vested Shares, and in the event that such shares of Restricted Stock are subsequently forfeited, the cash dividends attributable to such portion shall be forfeited as well.
(b)
Adjustments to Shares.
If at any time while this Agreement is in effect (or Shares granted hereunder shall be or remain
Non-Vested Shares while Recipient’s Continuous Service continues and has not yet terminated or ceased for any reason), there shall be any increase or decrease in the number of issued and outstanding Shares of the Company through the declaration
of a stock dividend or through any recapitalization resulting in a stock split-up, combination or exchange of such Shares, then and in that event, the Board or the Committee shall make any adjustments it deems fair and appropriate, in view of such
change, in the number of shares of Restricted Stock then subject to this Agreement. If any such adjustment shall result in a fractional Share, such fraction shall be disregarded.
(c)
No Restrictions on Certain Transactions.
Notwithstanding any term or provision of this Agreement to the contrary, the
existence of this Agreement, or of any outstanding Restricted Stock awarded hereunder, shall not affect in any manner the right, power or authority of the Company to make, authorize or consummate: (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger, consolidation or similar transaction by or of the Company; (iii) any offer, issue or sale by the Company of any capital stock of the
Company, including any equity or debt securities, or preferred or preference stock that would rank prior to or on parity with the Restricted Stock and/or that would include, have or possess other rights, benefits and/or preferences superior to those
that the Restricted Stock includes, has or possesses, or any warrants, options or rights with respect to any of the foregoing; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of
the stock, assets or business of the Company; or (vi) any other corporate transaction, act or proceeding (whether of a similar character or otherwise).
6.
Transferability
.
Unless otherwise determined by the Committee, the shares of Restricted Stock are not transferable
unless and until they become Vested Shares in accordance with this Agreement, otherwise than by will or under the applicable laws of descent and distribution. The terms of this Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Recipient. Except as otherwise permitted pursuant to the first sentence of this Section, any attempt to effect a Transfer of any shares of Restricted Stock prior to the date on which the shares become Vested Shares
shall be void
ab initio
. For purposes of this Agreement,
4
“Transfer” shall mean any sale, transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or other disposition, whether similar or dissimilar to those previously
enumerated, whether voluntary or involuntary, and including, but not limited to, any disposition by operation of law, by court order, by judicial process, or by foreclosure, levy or attachment.
7.
Tax Matters; Section 83(b) Election.
(a)
Section 83(b) Election.
If the Recipient properly elects, within thirty (30) days of the Date of Grant, to include
in gross income for federal income tax purposes an amount equal to the fair market value (as of the Date of Grant) of the Restricted Stock pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “
Code
”),
the Recipient shall make arrangements satisfactory to the Company to pay to the Company any federal, state or local income taxes required to be withheld with respect to the Restricted Stock. If the Recipient shall fail to make such tax payments as
are required, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind (including without limitation, the withholding of any Shares that otherwise would be issued to the Recipient under this Agreement)
otherwise due to the Recipient any federal, state or local taxes of any kind required by law to be withheld with respect to the Restricted Stock.
(b)
No Section 83(b) Election.
If the Recipient does not properly make the election described in paragraph 7(a) above, the
Recipient shall, no later than the date or dates as of which the restrictions referred to in this Agreement hereof shall lapse, pay to the Company, or make arrangements satisfactory to the Committee for payment of, any federal, state or local taxes
of any kind required by law to be withheld with respect to the Restricted Stock (including without limitation the vesting thereof), and the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind
(including without limitation, the withholding of any Shares that otherwise would be distributed to the Recipient under this Agreement) otherwise due to Recipient any federal, state, or local taxes of any kind required by law to be withheld with
respect to the Restricted Stock.
(c)
Recipient’s Responsibilities for Tax Consequences.
Tax consequences on the
Recipient (including without limitation federal, state, local and foreign income tax consequences) with respect to the Restricted Stock (including without limitation the grant, vesting and/or forfeiture thereof) are the sole responsibility of the
Recipient. The Recipient shall consult with his or her own personal accountant(s) and/or tax advisor(s) regarding these matters, the making of a Section 83(b) election, and the Recipient’s filing, withholding and payment (or tax liability)
obligations.
8.
Amendment, Modification & Assignment; Non-Transferability.
This Agreement may only be modified or amended in a
writing signed by the parties hereto. No promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, with respect to the subject matter hereof, have
been made by either party which are not set forth expressly in this Agreement. Unless otherwise consented to in writing by the Company, in its sole discretion, this Agreement (and Recipient’s rights hereunder) may not be assigned, and the
obligations of Recipient hereunder may not be delegated, in whole or in part. The rights and obligations created hereunder shall be binding on the Recipient and his heirs and legal representatives and on the successors and assigns of the Company.
5
9.
Complete Agreement.
This Agreement (together with those agreements and documents expressly
referred to herein, for the purposes referred to herein) embody the complete and entire agreement and understanding between the parties with respect to the subject matter hereof, and supersede any and all prior promises, assurances, commitments,
agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, which may relate to the subject matter hereof in any way.
10.
Miscellaneous.
(a)
No
Right to (Continued) Employment or Service.
This Agreement and the grant of Restricted Stock hereunder shall not confer, or be construed to confer, upon the Recipient any right to employment or service, or continued employment or service,
with the Company or any Related Entity.
(b)
No Limit on Other Compensation Arrangements.
Nothing contained in this
Agreement shall preclude the Company or any Related Entity from adopting or continuing in effect other or additional compensation plans, agreements or arrangements, and any such plans, agreements and arrangements may be either generally applicable
or applicable only in specific cases or to specific persons.
(c)
Severability.
If any term or provision of this Agreement
is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or under any applicable law, rule or regulation, then such provision shall be construed or deemed amended to conform to applicable law (or if such provision
cannot be so construed or deemed amended without materially altering the purpose or intent of this Agreement and the grant of Restricted Stock hereunder, such provision shall be stricken as to such jurisdiction and the remainder of this Agreement
and the award hereunder shall remain in full force and effect).
(d)
No Trust or Fund Created.
Neither this Agreement nor
the grant of Restricted Stock hereunder shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Related Entity and the Recipient or any other person. To the extent that the
Recipient or any other person acquires a right to receive payments from the Company or any Related Entity pursuant to this Agreement, such right shall be no greater than the right of any unsecured general creditor of the Company.
(e)
Law Governing.
This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the
State of Delaware (without reference to the conflict of laws rules or principles thereof).
(f)
Interpretation/
/
Provisions of Plan Control.
This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and
interpretations relating to the Plan adopted by the Committee as may be in effect from time to time. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall
6
control, and this Agreement shall be deemed to be modified accordingly. The Recipient accepts the Restricted Stock subject to all of the terms and provisions of the Plan and this Agreement. The
undersigned Recipient hereby accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan and this Agreement, unless shown to have been made in an arbitrary and capricious
manner.
(g)
Headings.
Section, paragraph and other headings and captions are provided solely as a convenience to facilitate
reference. Such headings and captions shall not be deemed in any way material or relevant to the construction, meaning or interpretation of this Agreement or any term or provision hereof.
(h)
Notices.
Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when delivered
personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company’s Secretary at 245 Freight Street, Waterbury, Connecticut 06702, or if the Company should move its
principal office, to such principal office, and, in the case of the Recipient, to the Recipient’s last permanent address as shown on the Company’s records, subject to the right of either party to designate some other address at any time
hereafter in a notice satisfying the requirements of this Section.
(i)
Non-Waiver of Breach.
The waiver by any party hereto
of the other party’s prompt and complete performance, or breach or violation, of any term or provision of this Agreement shall be effected solely in a writing signed by such party, and shall not operate nor be construed as a waiver of any
subsequent breach or violation, and the waiver by any party hereto to exercise any right or remedy which he or it may possess shall not operate nor be construed as the waiver of such right or remedy by such party, or as a bar to the exercise of such
right or remedy by such party, upon the occurrence of any subsequent breach or violation.
(j)
Counterparts.
This Agreement
may be executed in two or more separate counterparts, each of which shall be an original, and all of which together shall constitute one and the same agreement.
7
IN WITNESS WHEREOF,
the undersigned have executed this Agreement as of the
day of , 20 .
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COMPANY:
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PLATFORM SPECIALTY PRODUCTS CORPORATION,
a Delaware corporation
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By:
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Name:
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Title:
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The Recipient acknowledges receipt of a copy of the Plan and represents that he or she has reviewed the
provisions of the Plan and this Agreement in their entirety, is familiar with and understands their terms and provisions, and hereby accepts this Restricted Stock subject to all of the terms and provisions of the Plan and the Agreement. The
Recipient further represents that he or she has had an opportunity to obtain the advice of counsel prior to executing this Agreement.
8
Exhibit 10.12
DIRECTOR AND OFFICER
INDEMNIFICATION AGREEMENT
This DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT (the “
Agreement
”), is made and entered into this
[ ] day of [ ], 201[ ], by and among Platform Specialty Products Corporation, a Delaware corporation (the “
Company
”), and
[ ]
(“
Indemnitee
”).
WHEREAS, it is essential to the Company that it be able to retain and attract as directors and officers
the most capable individuals available;
WHEREAS, increased corporate litigation has subjected directors and officers to litigation risks
and expenses, and the limitations on the availability and terms and conditions of directors and officers liability insurance have made it increasingly difficult for the Company to attract and retain such individuals;
WHEREAS, the Company’s certificate of incorporation (as amended or amended and restated from time to time, the
“
Charter
”), provides that a director of the Company shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty except to the extent that such exemption or limitation is not permitted by
the General Corporation Law of the State of Delaware (the “
DGCL
”);
WHEREAS, the Company’s By-laws (as amended or
amended and restated from time to time, the “
By-laws
”), provide for the indemnification of and advancement of expenses to the Company’s directors and officers under certain circumstances;
WHEREAS, under the DGCL, the Charter and the By-Laws are not exclusive and the Company is permitted to make other or additional
indemnification and advancement agreements;
WHEREAS, to further promote the Company’s ability to attract and retain qualified
individuals to serve as directors and/or officers of the Company, the Company maintains, and will continue to attempt to maintain, directors and officers liability insurance to protect the Company’s directors and officers from certain
liabilities;
WHEREAS, the Company desires that the Indemnitee serve as a director and/or officer of the Company;
WHEREAS, to promote the Company’s ability to attract and retain qualified individuals to serve as directors and/or officers of the
Company, the Company desires to provide Indemnitee with specific contractual assurance of Indemnitee’s rights to indemnification and advancement of expenses to protect against litigation risks and expenses (regardless, among other things, of
any change in the ownership of the Company or the composition of its Board of Directors); and
WHEREAS, Indemnitee is relying upon the
rights afforded under this Agreement in serving in Indemnitee’s position as a director and/or officer of the Company.
NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company
and Indemnitee do hereby covenant and agree as follows:
1.
Definitions
.
(a) “
Board of Directors
” shall mean the Board of Directors of the Company.
(b) “
Change in Control
” shall mean (i) any merger, consolidation, share exchange or business combination involving the
Company or any of its subsidiary Entities, (ii) a sale, lease, exchange, transfer or other disposition in a single transaction or a series of related transactions, of fifteen percent (15%) or more of the assets of the Company and its
subsidiary Entities, taken as a whole, (iii) any issuance, purchase or sale of shares of capital stock or other securities representing fifteen percent (15%) or more of the voting power of the capital stock of the Company or any of its
subsidiary Entities, including, without limitation, by way of tender or exchange offer, in a single transaction or a series of related transactions, (iv) any liquidation, dissolution or winding up of the Company, or (v) any change in the
composition of a majority of the Board of Directors in a single transaction or a series of related transactions, unless, in each case, such transaction described in subsections (i) - (v) hereof was adopted and approved by the members of the
Board of Directors (or new or additional members of the Board of Directors nominated or approved by such directors) in office at the time of the adoption of this Agreement by the Company.
(c) “
Corporate Status
” describes the status of a person who is serving or has served (i) as a director or officer of the
Company, (ii) in any capacity or service with respect to any employee benefit plan of the Company or any one or more of its subsidiary Entities, or (iii) as a director, officer, member, manager, partner, trustee, employee, or agent of any
other Entity at the request of the Company.
(d) “
Court of Chancery
” shall mean the Court of Chancery of the State of
Delaware.
(e) “
Disinterested Directors
” shall mean the directors of the Company who are not and were not parties to the
Proceeding in respect of which indemnification is sought by Indemnitee hereunder.
(f) “
Entity
” shall mean any
corporation, partnership (including, without limitation, any general, limited or limited liability partnership), joint venture, trust, enterprise, non-profit entity, limited liability company, trust, foundation, association, organization or other
legal entity.
(g) “
Expenses
” shall mean all fees, costs and expenses reasonably incurred in connection with any
Proceeding (as defined below) or any claim, issue or matter involved in any Proceeding, including, without limitation, reasonable attorneys’ fees, disbursements and retainers (including, without limitation, any such fees, disbursements and
retainers incurred by Indemnitee pursuant to
Sections 9
and
11
of this Agreement), fees, costs, expenses and disbursements of experts or expert witnesses, private investigators and professional advisors (including, without
limitation, accountants and investment bankers), court costs, transcript costs, travel expenses (including, without limitation, those of experts or expert witnesses, private investigators and professional advisors), duplicating, printing and binding
costs, telephone and fax transmission charges, postage, delivery services, secretarial services and other disbursements and expenses.
2
(h) “
Independent Counsel
” shall mean shall mean a law firm, or a member of a law
firm, that is of outstanding reputation, experienced in matters of corporation law and neither is as of the date of selection of such firm, nor has been during the period of three (3) years immediately preceding the date of selection of such
firm, retained to represent: (a) the Company or Indemnitee in any material matter (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (b) any
other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any law firm, or member of a law firm, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and
expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all fees, costs and expenses, including, without limitation, reasonable attorneys’ fees, disbursements and retainers, and Liabilities
arising out of or relating to this Agreement or its engagement pursuant hereto. For purposes of this definition, a “material matter” shall mean any matter for which billings exceeded or are expected to exceed $100,000.
(i) “
Liabilities
” shall mean liabilities, judgments, damages, losses, penalties, excise taxes, fines and amounts paid in
settlement.
(j) “
Proceeding
” shall mean any threatened, pending or completed claim, action, suit, proceeding,
litigation, arbitration, mediation, alternate dispute resolution process, investigation, administrative hearing, or appeal, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including, without
limitation, a Proceeding initiated by Indemnitee pursuant to
Section 11
of this Agreement to enforce Indemnitee’s rights hereunder.
2.
Services of Indemnitee
. In consideration of the Company’s covenants and obligations hereunder, Indemnitee agrees to
serve as a director and/or officer of the Company. This Agreement, however, shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other
agreements or commitments of the parties, if any.
3.
Agreement to Indemnify and Hold Harmless
. Subject to the
exceptions contained in
Section 4
below, if Indemnitee was or is a party to, or was or is threatened to be made a party to, or was or is otherwise involved (as a deponent, witness or otherwise) in, any Proceeding or any claim, issue or
matter involved in any Proceeding by reason of Indemnitee’s Corporate Status, Indemnitee shall, to the fullest extent permitted by applicable law, be indemnified and held harmless by the Company against all Expenses and Liabilities actually and
reasonably incurred or paid by or on behalf of Indemnitee in connection with such Proceeding or such claim, issue or matter (referred to herein as “
Indemnifiable Expenses
” and “
Indemnifiable Liabilities
,”
respectively, and collectively as “
Indemnifiable Amounts
”).
3
4.
Exceptions to Indemnification
. Indemnitee shall be entitled to the
indemnification provided in
Section 3
above in all circumstances other than the following:
(a) If indemnification is
sought by Indemnitee under
Section 3
above and it has been adjudicated finally by a court of competent jurisdiction evidenced by a final nonappealable order that, in connection with any Proceeding or any claim, issue or matter involved
in any Proceeding out of which the claim for indemnification hereunder has arisen, (i) Indemnitee failed to act in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or
(ii) with respect to any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful, Indemnitee shall not be entitled to indemnification of Indemnifiable Amounts hereunder with respect to such
Proceeding or such claim, issue or matter, as applicable;
(b) If indemnification is sought by Indemnitee under
Section 3
above and it has been adjudicated finally by a court of competent jurisdiction evidenced by a final nonappealable order that Indemnitee is liable to the Company with respect to any Proceeding by or in the right of the Company to procure a judgment
in its favor by reason of Indemnitee’s Corporate Status or any claim, issue or matter involved in any such Proceeding out of which the claim for indemnification hereunder has arisen, Indemnitee shall not be entitled to Indemnifiable Expense
hereunder with respect to such Proceeding or such claim, issue or matter, as applicable, unless the Court of Chancery or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability, but
in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Indemnifiable Expenses which the Court of Chancery or such other court shall deem proper; and
(c) If indemnification is sought by Indemnitee under
Section 3
above and the Company reasonably determines that indemnification of
Indemnitee would violate the securities laws of the United States.
For purposes of this
Section 4
, including, without limitation and to the
fullest extent permitted by law, the court adjudication contemplated hereby, Indemnitee shall be deemed to have acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or with
respect to any criminal Proceeding, without reasonable cause to believe that Indemnitee’s conduct was unlawful, if Indemnitee’s act or omission is based, in good faith, upon (i) the records of the Company, (ii) such information,
opinions, reports or statements presented to the Company or the Board of Directors by any of the Company’s officers, employees, directors, committees of the Board of Directors, legal counsel, professional advisors, experts or any other person
as to matters Indemnitee reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, and/or (iii) such information, opinions, reports
or statements presented to an Entity for which Indemnitee has Corporate Status or such Entity’s officers, employees, directors, committees of such Entity’s Board of Directors, legal counsel, professional advisors, experts or any other
person as to matters Indemnitee reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of such Entity.
4
5.
Procedure for Indemnification of Indemnifiable Amounts
.
(a) Indemnitee shall, following the final adjudication by a court of competent jurisdiction evidenced by a final nonappealable order, submit
to the Company a written claim specifying the Indemnifiable Amounts for which Indemnitee seeks indemnification under
Section 3
of this Agreement and the basis for such claim. At the reasonable request of the Company, Indemnitee shall
furnish such documentation and information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder, and the Company shall pay any fees, costs and expenses, including without
limitation, reasonable attorneys’ fees, disbursements and retainers, actually and reasonably incurred by Indemnitee in furnishing such documentation and information.
(b) Upon submission of a written claim for indemnification (but not for advancement of Expenses for which no determination is required)
pursuant to the first sentence of
Section 5(a)
above, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (a) if a Change in Control shall have occurred, by Independent Counsel
in a written opinion directed to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (b) if a Change in Control shall not have occurred, (i) by a majority vote of the Disinterested Directors (provided there is a
minimum of three (3) Disinterested Directors), even though less than a quorum of the Board, (ii) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors (provided there is a minimum of three
(3) Disinterested Directors), even though less than a quorum of the Board of Directors, or (iii) if there are less than three (3) Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a
written opinion directed to the Board of Directors, a copy of which shall be delivered to Indemnitee. Indemnitee shall cooperate with the Entity or individual(s) making such determination with respect to Indemnitee’s entitlement to
indemnification, including, without limitation, providing to such Entity or individual(s) upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination;
provided
, that nothing contained in this Agreement shall require Indemnitee to waive any privilege Indemnitee may have under applicable law. Any fees, costs and expenses,
including without limitation, reasonable attorneys’ fees, disbursements and retainers, incurred by Indemnitee in so cooperating with the Entity or individual(s) making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant
Section 5(b)
above, the
Independent Counsel shall be selected as provided in this
Section 5(c)
. If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to
Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected within ten (10) calendar days after the Company’s receipt of a written claim for indemnification pursuant to the first sentence of
Section 5(a)
above. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the
5
Independent Counsel so selected within ten (10) calendar days after the Company’s receipt of a written claim for indemnification pursuant to the first sentence of
Section 5(a)
. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) calendar days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection;
provided
,
however
, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined
in
Section 1
above, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the law firm or the member of a law firm so selected shall act as Independent Counsel. If
such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction or arbitrator (selected as provided
below) has determined that such objection is without merit. If, within twenty (20) calendar days after the Company’s receipt of a written claim for indemnification pursuant to the first sentence of
Section 5(a)
above, no
Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may seek arbitration for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of
Independent Counsel and/or for the appointment as Independent Counsel of a law firm or a member of a law firm selected by the arbitrator or by such other law firm or a member of a law firm as the arbitrator shall designate, and the law firm or the
member of a law firm with respect to whom all objections are so resolved or the law firm or the member of a law firm so appointed shall act as Independent Counsel under this
Section 5
. Such arbitration referred to in the previous
sentence shall be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The laws of the State of Delaware, without giving effect to the provisions thereof relating to conflicts of law,
shall apply to any such arbitration. The award rendered by such arbitration shall, to the fullest extent permitted by law, be final and binding upon the parties hereto, and final judgment on the arbitration award may be entered in any court of
competent jurisdiction, including, without limitation, the Court of Chancery. Upon the due commencement of any judicial proceeding pursuant to
Section 11
of this Agreement, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(d) Subject to
Section 4
above, the Company shall pay such Indemnifiable Amounts to Indemnitee within thirty (30) calendar days after receipt of such written claim.
6.
Indemnification for Expenses of a Participant
. Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a participant (as a deponent, witness or otherwise) in any Proceeding to which Indemnitee was or is not a party or was or is not threatened to be made a party, the Indemnitee shall be indemnified as
provided in
Section 3
of this Agreement.
7.
Indemnification for Expenses of a Party Who is Wholly or Partly
Successful
.
(a) Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent
that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, a party to and was or is successful, on the merits or otherwise, as to any Proceeding or any claim, issue or matter involved in any Proceeding, Indemnitee shall be
6
indemnified against all Expenses actually and reasonably incurred with respect to such Proceeding or such claim, issue or matter, as applicable. In furtherance and not in limitation of the
foregoing, and by way of further explanation, if Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters involved in such Proceeding, the
Company shall indemnify Indemnitee against all Expenses with respect to each successfully resolved claim, issue or matter.
(b) For
purposes of this
Section 7
, “successful” shall, to the fullest extent permitted by law, include, but not be limited to, (i) a termination, withdrawal or dismissal (with or without prejudice) of any Proceeding or any claim,
issue or matter involved in any Proceeding, without any express finding of liability or guilt against Indemnitee, (ii) the expiration of one hundred twenty (120) days after the making of any claim or threat of any Proceeding without the
institution of same and without the entering into of any settlement or compromise with respect to such claim or threat, or (iii) the entering into of any settlement or compromise with respect to any Proceeding or any claim, issue or matter
involved in any Proceeding pursuant to which Indemnitee is obligated to pay or is found liable for an amount less than $50,000.
8.
Effect of Certain Resolutions; Waiver of Right of Contribution Against Indemnitee
. Neither the termination of any Proceeding or any claim, issue or matter involved in any Proceeding by judgment, order, settlement, conviction, or upon a
plea of
nolo contedere
or its equivalent, nor the failure of the Company to award indemnification or to determine that indemnification is payable, shall create a presumption that Indemnitee is not entitled to indemnification
hereunder. The Company hereby waives, to the fullest extent permitted by law, any right of contribution that it may have against Indemnitee with respect to any Proceeding or any claim, issue or matter involved in any Proceeding in which the Company
and Indemnitee are jointly liable.
9.
Agreement to Advance Expenses; Conditions
. The Company shall pay to
Indemnitee, all Expenses actually and reasonably incurred by Indemnitee in connection with any Proceeding or any claim, issue or matter involved in any Proceeding, including, without limitation, a Proceeding by or in the right of the Company and a
Proceeding to enforce indemnification and advancement rights under this Agreement, in advance of the final disposition of such Proceeding or such claim, issue or matter, if Indemnitee furnishes the Company with a written undertaking to repay the
amount of such Expenses advanced to Indemnitee if it is finally determined by a court of competent jurisdiction evidenced by a final nonappealable order that Indemnitee is not entitled under this Agreement to indemnification with respect to such
Expenses. To the fullest extent permitted by applicable law, such undertaking shall be an unlimited general obligation of Indemnitee, shall be accepted by the Company without regard to the financial ability of Indemnitee to make repayment, and shall
in no event be required to be secured.
10.
Procedure for Advancement of Expenses
. Indemnitee shall submit to the
Company a written claim specifying the Expenses for which Indemnitee seeks advancement under
Section 9
of this Agreement, and the basis for such claim, together with documentation evidencing that Indemnitee has actually and reasonably
incurred such Expenses. The Company shall advance such Expenses to Indemnitee or on behalf of Indemnitee within thirty (30) calendar days after receipt of such written claim and documentation.
7
11.
Remedies of Indemnitee
.
(a)
Right to Petition Court
. In the event that Indemnitee submits to the Company a written claim for indemnification of Indemnifiable
Amounts under
Sections 3
and
5
above or submits to the Company a written claim for advancement of Expenses under
Sections 9
and
10
above, and the Company fails to make such indemnification or advancement, as
applicable, pursuant to the terms of this Agreement, Indemnitee may petition the Court of Chancery to enforce the Company’s obligations under this Agreement.
(b)
Burden of Proof
. In any judicial proceeding brought under
Section 11(a)
above, the Company shall have the burden of
proving that Indemnitee is not entitled to indemnification of Indemnifiable Amounts or advancement of Expenses, as applicable, hereunder.
(c)
Expenses
. The Company agrees to reimburse Indemnitee in full for any Expenses actually and reasonably incurred by Indemnitee in
connection with investigating, preparing for, litigating, defending, prosecuting or settling any judicial proceeding brought by Indemnitee under
Section 11(a)
above, except where such judicial proceeding or any claim, issue or matter
involved therein is adjudicated finally by a court of competent jurisdiction evidenced by a final nonappealable order in favor of the Company.
(d)
Validity of Agreement
. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action
under
Section 11(a)
above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in such court that the Company is bound by all the
provisions of this Agreement.
(e)
Failure to Act Not a Defense
. The failure of the Company (including, without limitation, the
Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the indemnification of Indemnifiable Amounts, nor an actual determination by the Company (including,
without limitation, the Board of Directors or any committee thereof, independent legal counsel or stockholders) concerning the permissibility of the indemnification of Indemnifiable Amounts, shall not be a defense in any action brought under
Section 11(a)
above, and shall not create a presumption that such indemnification is not permissible hereunder.
12.
Notice By Indemnitee; Defense of the Underlying Proceeding
.
(a)
Notice by Indemnitee
. Indemnitee agrees to notify the
Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding or any claim, issue or matter involved in any Proceeding which may result in the
indemnification of Indemnifiable Amounts or the advancement of Expenses hereunder;
provided
,
however
, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right
of Indemnitee, to receive indemnification of Indemnifiable Amounts or advancements of Expenses hereunder, except to the extent the Company’s ability to defend in such Proceeding or such claim, issue or matter is materially prejudiced thereby.
8
(b)
Defense by Company
. Subject to the provisions of the last sentence of this
Section 12(b)
and of
Section 12(c)
below, the Company shall have the right to defend Indemnitee in any Proceeding or any claim, issue or matter involved in any Proceeding which may give rise to the indemnification of
Indemnifiable Amounts hereunder;
provided
,
however
, that the Company shall notify Indemnitee of any such decision to defend within ten (10) calendar days of the Company’s receipt of notice of any such Proceeding or such
claim, issue or matter under
Section 12(a)
above. The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which
(i) includes an admission of fault of Indemnitee, or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding or such claim, issue or matter, which release
shall be in form and substance reasonably satisfactory to Indemnitee. This
Section 12(b)
shall not apply to a Proceeding or any claim, issue or matter involved in a Proceeding brought by Indemnitee under
Section 11(a)
above
or pursuant to
Section 20
below.
(c)
Indemnitee’s Right to Counsel
. Notwithstanding the provisions of
Section 12(b)
above, (i) if in a Proceeding or a claim, issue or matter involved in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (A) Indemnitee reasonably concludes that he or she
may have separate defenses or counterclaims to assert with respect to any issue which are inconsistent with the position of other defendants in such Proceeding or such claim, issue or matter, as applicable, or (B) a conflict of interest or
potential conflict of interest exists between Indemnitee and the Company, or (ii) if the Company fails to assume the defense of such Proceeding or such claim, issue or matter in a timely manner, Indemnitee shall be entitled to be represented by
separate legal counsel, which shall represent other persons’ similarly situated, of Indemnitee’s and such other persons’ choice and reasonably acceptable to the Company at the expense of the Company. In addition, if the Company fails
to comply with any of its obligations under this Agreement or in the event that the Company or any other Entity or individual takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding or any claim, issue or
matter involved in any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, except with respect to any Proceeding or any claim, issue or matter involved in any Proceeding that is resolved in
favor of the Company, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, at the expense of the Company, to represent Indemnitee in connection with any such matter.
(d)
Consent to Judgment or Settlement or Compromise by Indemnitee
. Indemnitee shall not, without the prior written consent of the
Company (which consent shall not be unreasonably withheld or delayed), consent to the entry of any judgment against Indemnitee or consent to or enter into any settlement or compromise with respect to any Proceeding or any claim, issue or matter
involved in any Proceeding with respect to which the Company may have indemnification or advancements obligations to Indemnitee hereunder. The Company shall have no obligation to indemnify Indemnitee under this Agreement with respect to any
Proceeding or any claim, issue or matter involved in any Proceeding for which a judgment, settlement or compromise is consented to or entered into by Indemnitee without the prior written consent of the Company (which consent shall not be
unreasonably withheld or delayed).
9
13.
Representations and Warranties of the Company
. The Company hereby represents
and warrants to Indemnitee as follows:
(a)
Authority
. The Company has all necessary power and authority to enter into, and be
bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement has been duly authorized by the Company.
(b)
Enforceability
. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a
legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the enforcement of creditors’ rights generally or equitable principles.
14.
Insurance
. The Company shall, to the
maximum extent available, cover Indemnitee under any insurance policy secured for the directors and officers of the Company or other Entity for which Indemnitee has Corporate Status.
15.
Contract Rights Not Exclusive
. The rights to indemnification of Indemnifiable Amounts and advancement of Expenses provided
by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law or the Charter or By-laws, or any other agreement, vote of stockholders or directors (or a committee of
directors), or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity as a result of Indemnitee’s serving as a director and/or officer of the Company.
16.
Successors
. This Agreement shall be (a) binding upon all successors and assigns of the Company (including, without
limitation, to the fullest extent permitted by law, any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law),
and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of Indemnitee. To the fullest extent permitted by applicable law, the Company shall cause any successor to the business,
stock and/or assets of the Company (whether by operation of law or otherwise) to assume and agree to perform this Agreement in the same manner as if no such succession had taken place. This Agreement shall continue for the benefit of Indemnitee and
the heirs, personal representatives, executors and administrators of Indemnitee after Indemnitee has ceased to have Corporate Status.
17.
Other Sources; Subrogation
. The Company’s obligation to indemnify Indemnifiable Amounts or advance Expenses to
Indemnitee, if any, hereunder shall be reduced by the amount Indemnitee may receive, as indemnification or advancement of expense from any other Entities or individuals or any insurance policy. In the event of any indemnification of Indemnifiable
Amounts or advancement of Expenses by the Company under this Agreement, the Company shall, to the fullest extent permitted by law, be subrogated to the extent of such indemnification or advancement to all of the rights of contribution or recovery of
Indemnitee
10
against other Entities or individuals and have a right of contribution against such other Entities or individuals, and, in furtherance thereof, Indemnitee shall take, at the request of the
Company, all reasonable action necessary to secure such rights, including, without limitation, securing the execution and delivery by such other Entities or individuals of an agreement as to the division of indemnification and advancement
liabilities as between such other Entities or individuals and the Company, in a manner reasonably acceptable to the Company prior to the payment by the Company of any such Indemnifiable Amounts or Expenses and/or the execution and delivery of such
documents as are reasonably necessary to enable the Company to bring suit to enforce such rights.
18.
Governing Law; Change in Law;
Jurisdiction
. This Agreement shall be governed by and construed and enforced under the laws of the State of Delaware, without giving effect to the provisions thereof relating to conflicts of law. To the fullest extent permitted by applicable
law, the parties hereto (i) irrevocably submit to the personal jurisdiction of the Court of Chancery, and (ii) waive any claim of improper venue or any claim that the Court of Chancery is an inconvenient forum. To the fullest extent
permitted by applicable law, the parties hereby agree that the mailing of process and other papers in connection with any such proceeding in the manner provided in
Section 22
below or in such other manner as may be permitted by law,
shall be valid and sufficient service thereof.
19.
Severability
. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable,
in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement
shall remain fully enforceable and binding on the parties.
20.
Indemnitee as Plaintiff
. Except as provided in
Section 11
of this Agreement and in the next sentence, Indemnitee shall not be entitled to indemnification of Indemnifiable Amounts or advancement of Expenses with respect to any Proceeding or any claim, issue or matter involved in any
Proceeding brought by Indemnitee against the Company, any Entity which the Company controls, or any director or officer of the Company or any such Entity, prior to a Change in Control, unless the commencement of such Proceeding or such claim, issue
or matter by Indemnitee was authorized in the specific case by the Board of Directors. This
Section 20
shall not apply to (i) affirmative defenses asserted by Indemnitee or any compulsory counterclaims required to be made by
Indemnitee in any Proceeding or with respect to any claim, issue or matter involved in any Proceeding brought against Indemnitee, or (ii) any Proceeding or any claim, issue or matter involved in any Proceeding brought by Indemnitee against the
Company, any Entity which the Company controls, or any director or officer of the Company or any such Entity, from and after a Change in Control.
21.
Modifications and Waiver
. No supplement, modification or amendment of this Agreement shall be binding unless executed in
writing by each of the parties hereto. Notwithstanding any other provision of this Agreement or any provision of law to the contrary, to the fullest extent permitted by law, no supplement, modification or amendment of this Agreement shall adversely
affect any right or protection of Indemnitee in respect of any act or
11
omission occurring prior to the time of such supplement, modification or amendment. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver.
22.
General
Notices
. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) when delivered by hand, (ii) when transmitted by facsimile and receipt is acknowledged,
or (iii) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, in each case, to such address as may have been furnished by any party to the other party.
23.
Termination
. This Agreement shall terminate as of the later of (i) ten (10) years after Indemnitee ceases to serve
as a director or officer of the Company, or (ii) one (1) year after the final adjudication by a court of competent jurisdiction evidenced by a final non-appealable order with respect to any Proceeding or any claim, issue or matter involved
in any Proceeding in respect of which Indemnitee is granted rights of indemnification or advancement of expenses hereunder.
[Signature Page Follows]
12
Exhibit 10.12
IN WITNESS WHEREOF, the parties hereto have executed this Director and Officer Indemnification Agreement as of the date first above written.
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THE COMPANY:
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PLATFORM SPECIALTY PRODUCTS CORPORATION
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Name:
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Title:
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INDEMNITEE:
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[
]
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[
Signature Page to Director and Officer Indemnification Agreement
]
Exhibit 10.13
Execution Version
AMENDED AND RESTATED CREDIT AGREEMENT
amended and restated as of October 31, 2013
among
MACDERMID HOLDINGS, LLC,
MACDERMID, INCORPORATED and
PLATFORM ACQUISITION HOLDINGS LIMITED
as the Borrowers,
CERTAIN
SUBSIDIARIES OF MACDERMID HOLDINGS, LLC, and
PLATFORM ACQUISITION HOLDINGS LIMITED
as Subsidiary Guarantors,
THE
LENDERS PARTY HERETO,
BARCLAYS BANK PLC,
as Administrative Agent and Collateral Agent,
CREDIT SUISSE SECURITIES (USA) LLC,
as Syndication Agent,
BARCLAYS BANK
PLC
as Sole Lead Arranger and Sole Bookrunner
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
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2
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1.01
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Defined Terms
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2
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1.02
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Other Interpretive Provisions
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41
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1.03
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Accounting Terms
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42
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1.04
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Rounding
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42
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1.05
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References to Agreements and Laws
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42
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1.06
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Times of Day
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42
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1.07
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Letter of Credit Amounts
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42
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1.08
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Conversion of Foreign Currencies
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43
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ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS
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43
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2.01
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The Loans
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43
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2.02
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Borrowings, Conversions and Continuations of Loans
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44
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2.03
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Letters of Credit
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46
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2.04
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[RESERVED]
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54
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2.05
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Prepayments
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54
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2.06
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Termination or Reduction of Commitments
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57
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2.07
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Repayment of Loans
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58
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2.08
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Interest
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59
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2.09
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Fees
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60
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2.10
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Computation of Interest and Fees
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60
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2.11
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Evidence of Indebtedness
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61
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2.12
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Payments Generally
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61
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2.13
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Sharing of Payments
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63
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2.14
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Incremental Facilities
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64
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2.15
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Defaulting Lender
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66
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ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
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69
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3.01
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Taxes
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69
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3.02
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Illegality
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70
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3.03
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Inability to Determine Rates
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70
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3.04
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Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurocurrency Rate Loans
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71
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3.05
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Funding Losses
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72
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3.06
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Matters Applicable to all Requests for Compensation
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73
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3.07
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Pro Rata Treatment
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73
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3.08
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Survival
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73
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i
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ARTICLE IV GUARANTY
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73
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4.01
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The Guaranty
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73
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4.02
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Obligations Unconditional
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74
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4.03
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Reinstatement
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75
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4.04
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Certain Additional Waivers
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75
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4.05
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Remedies
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75
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4.06
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Rights of Contribution
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75
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4.07
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Guarantee of Payment; Continuing Guarantee
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76
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ARTICLE V CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
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76
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5.01
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Reserved
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76
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5.02
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Conditions to all Credit Extensions
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76
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ARTICLE VI REPRESENTATIONS AND WARRANTIES
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77
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6.01
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Existence, Qualification and Power; Compliance with Laws
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77
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6.02
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Authorization; No Contravention
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77
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6.03
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Governmental Authorization; Other Consents
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77
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6.04
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Binding Effect
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77
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6.05
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Financial Statements; No Material Adverse Effect
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78
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6.06
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Litigation
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78
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6.07
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No Default
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78
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6.08
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Properties
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78
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6.09
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Environmental Compliance
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79
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6.10
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Insurance
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79
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6.11
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Taxes
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80
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6.12
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ERISA Compliance
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80
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6.13
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Subsidiaries; Equity Interests
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81
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6.14
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Margin Regulations; Investment Company Act
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81
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6.15
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Disclosure
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81
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6.16
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Compliance with Laws
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82
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6.17
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Intellectual Property; Licenses, Etc.
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82
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6.18
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Solvency
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82
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6.19
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Casualty, Etc.
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82
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6.20
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Perfection, Etc.
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82
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6.21
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Swap Obligations
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82
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6.22
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Labor Matters
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83
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6.23
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[RESERVED]
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83
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6.24
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Senior Indebtedness
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83
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ARTICLE VII AFFIRMATIVE COVENANTS
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83
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7.01
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Financial Statements
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83
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7.02
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Certificates; Other Information
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84
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7.03
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Notices
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85
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7.04
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Payment of Obligations
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86
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7.05
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Preservation of Existence, Etc.
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86
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ii
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7.06
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Maintenance of Properties
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86
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7.07
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Maintenance of Insurance
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87
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7.08
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Compliance with Laws
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87
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7.09
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Books and Records
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87
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7.10
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Inspection Rights
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87
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7.11
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Use of Proceeds
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87
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7.12
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Additional Collateral
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88
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7.13
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Compliance with Environmental Laws
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89
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7.14
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Further Assurances
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90
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7.15
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[RESERVED]
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90
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7.16
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Credit Rating
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90
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7.17
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Post-Closing Matters
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90
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ARTICLE VIII NEGATIVE COVENANTS
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90
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8.01
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Liens
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90
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8.02
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Indebtedness
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91
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8.03
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Fundamental Changes
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93
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8.04
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Dispositions
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94
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8.05
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Restricted Payments
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94
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8.06
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Change in Nature of Business
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96
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8.07
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Transactions with Affiliates
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96
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8.08
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Burdensome Agreements
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97
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8.09
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Use of Proceeds
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97
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8.10
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Financial Covenants
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98
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8.11
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Amendments of Organization Documents and Certain Other Agreements
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99
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8.12
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Accounting Changes
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99
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8.13
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Sale and Leaseback Transactions
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99
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8.14
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No Other “Designated Senior Indebtedness”
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99
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ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
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99
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9.01
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Events of Default
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99
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9.02
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Remedies Upon Event of Default
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102
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9.03
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Application of Funds
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102
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ARTICLE X THE AGENTS AND THE ARRANGER
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103
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10.01
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Appointment and Authority
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103
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10.02
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Delegation of Duties
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104
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10.03
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Rights as a Lender
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104
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10.04
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Exculpatory Provisions
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104
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10.05
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Reliance by Agents
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105
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10.06
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Non-Reliance on Agents and Other Lenders
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105
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10.07
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Resignation of Agent
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106
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10.08
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Administrative Agent May File Proofs of Claim
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106
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10.09
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Collateral and Guaranty Matters
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107
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10.10
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No Other Duties, Etc.
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107
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iii
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ARTICLE XI MISCELLANEOUS
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108
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11.01
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Amendments, Etc.
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108
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11.02
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Notices and Other Communications; Facsimile Copies
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109
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11.03
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No Waiver; Cumulative Remedies
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111
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11.04
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Expenses; Indemnity; Damage Waiver
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111
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11.05
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Payments Set Aside
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113
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11.06
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Successors and Assigns
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113
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11.07
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Confidentiality
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118
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11.08
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Setoff
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119
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11.09
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Interest Rate Limitation
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119
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11.10
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Counterparts
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120
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11.11
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Integration
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120
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11.12
|
|
Survival of Representations and Warranties
|
|
|
120
|
|
|
11.13
|
|
Severability
|
|
|
120
|
|
|
11.14
|
|
Tax Forms
|
|
|
121
|
|
|
11.15
|
|
Replacement of Lenders
|
|
|
122
|
|
|
11.16
|
|
Governing Law
|
|
|
123
|
|
|
11.17
|
|
Binding Effect
|
|
|
124
|
|
|
11.18
|
|
Waiver of Right to Trial by Jury
|
|
|
124
|
|
|
11.19
|
|
USA PATRIOT Act Notice
|
|
|
124
|
|
|
11.20
|
|
Waiver of Notice of Termination
|
|
|
124
|
|
|
11.21
|
|
Headings
|
|
|
124
|
|
|
11.22
|
|
Reserved
|
|
|
124
|
|
|
11.23
|
|
Judgment Currency
|
|
|
124
|
|
|
11.24
|
|
Co-Borrowers
|
|
|
125
|
|
SCHEDULES
|
|
|
|
|
1.01(a)
|
|
Existing Letters of Credit
|
|
1.01(c)
|
|
Mortgaged Properties
|
|
1.01(d)
|
|
Existing Investments
|
|
1.01(f)
|
|
Subsidiary Guarantors
|
|
2.01
|
|
Commitments and Pro Rata Shares
|
|
6.06
|
|
Litigation
|
|
6.09
|
|
Environmental Matters
|
|
6.12
|
|
ERISA
|
|
6.13
|
|
Subsidiaries
|
|
6.17
|
|
Intellectual Property Matters
|
|
6.22
|
|
Labor Matters
|
|
7.17
|
|
Post-Closing Matters
|
|
8.01(c)
|
|
Existing Liens
|
|
8.02
|
|
Existing Indebtedness
|
|
8.04
|
|
Certain Dispositions
|
|
11.02
|
|
Administrative Agent’s Office, Certain Addresses for Notices
|
iv
EXHIBITS
|
|
|
|
|
A
|
|
Assignment and Assumption
|
|
B
|
|
Committed Loan Notice
|
|
C
|
|
Compliance Certificate
|
|
D
|
|
Intellectual Property Security Agreement
|
|
E
|
|
Reserved
|
|
F
|
|
Mortgage
|
|
G
|
|
Perfection Certificate
|
|
H
|
|
Pledge and Security Agreement
|
|
I
|
|
Subsidiary Joinder Agreement
|
|
J-1
|
|
Term Loan Note
|
|
J-2
|
|
Dollar Revolving Note
|
|
J-3
|
|
Multicurrency Revolving Note
|
|
K
|
|
L/C Credit Extension Request
|
|
L
|
|
Prepayment Notice
|
v
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement is amended and restated as of October 31, 2013 among MACDERMID HOLDINGS, LLC, a Delaware
limited liability company (“
Holdings
”), MACDERMID, INCORPORATED, a Connecticut corporation (“
MacDermid
”), as a Revolving Credit Borrower and a Term Loan Borrower (each as defined below), PLATFORM
ACQUISITION HOLDINGS LIMITED (“
PAH
”), as a Revolving Credit Borrower, certain Subsidiaries of Holdings and PAH from time to time party hereto (each a “
Subsidiary Guarantor
”), each lender from time to
time party hereto (collectively, the “
Lenders
” and individually, a “
Lender
”), BARCLAYS BANK PLC, as administrative agent (in such capacity and together with its successors, the
“
Administrative Agent
”), as collateral agent (in such capacity and together with its successors, the “
Collateral Agent
”) and L/C Issuer and Credit Suisse AG, as L/C Issuer solely with respect to
Existing Letters of Credit, with CREDIT SUISSE SECURITIES (USA) LLC, as syndication agent (in such capacity, the “
Syndication Agent
”).
WHEREAS, MacDermid is party to that certain First Lien Credit Agreement dated as of June 7, 2013, among MacDermid, the several lenders
and other parties from time to time parties thereto and Credit Suisse AG, as administrative agent and collateral agent (the “
Existing First Lien Credit Agreement
”);
WHEREAS, pursuant to that certain Resignation and Appointment Agreement dated as of October 31, 2013, Credit Suisse AG, the Current
Collateral Agent and Current Administrative Agent (each as defined therein), has resigned as collateral agent and administrative agent effective as of the Amendment No. 1 Effective Date and Barclays Bank PLC shall serve as Successor Collateral
Agent and Successor Administrative Agent (each as defined therein) in such capacities from and after the Amendment No. 1 Effective Date; and
WHEREAS, the Required Lenders and other parties to Amendment No. 1 have agreed to amend and restate the Existing First Lien Credit
Agreement in its entirety to read as set forth in this Agreement, and it has been agreed by such parties that the Loans and any Letters of Credit outstanding as of the Amendment No. 1 Effective Date and other “Obligations” under (and
as defined in) the Existing First Lien Credit Agreement (including indemnities) shall be governed by and deemed to be outstanding under this Agreement with the intent that the terms of this Agreement shall supersede the terms of the Existing First
Lien Credit Agreement (which shall hereafter have no further effect upon the parties thereto other than with respect to any action, event, representation, warranty or covenant occurring, made or applying prior to the Amendment No. 1 Effective
Date), and all references to the Existing First Lien Credit Agreement in any Loan Document or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement and the provisions hereof;
provided
that
(1) the grants of security interests, Mortgages and Liens under and pursuant to the Loan Documents shall continue unaltered to secure, guarantee, support and otherwise benefit the Obligations of MacDermid and the other Loan Parties under the
Existing First Lien Credit Agreement and this Agreement and each other Loan Document and each of the foregoing shall continue in full force and effect in accordance with its terms except as expressly amended thereby or hereby or by Amendment
No. 1, and the parties hereto hereby ratify and confirm the terms thereof as being in full force and effect and unaltered by this Agreement, (2) the letters of credit identified on
Schedule 1.1(a)
hereto shall be deemed to be
Letters of Credit for all purposes under this Agreement and (3) it is agreed and understood that this Agreement does not constitute a novation, satisfaction, payment or reborrowing of any Obligation under the Existing First Lien Credit
Agreement or any other Loan Document except as expressly modified by this Agreement, nor does it operate as a waiver of any right, power or remedy of any Lender under any Loan Document.
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01
Defined Terms
. As used in this Agreement, the following terms shall have the meanings set forth below:
“
Acquired Entity
” has the meaning specified in the definition of “Permitted Acquisition”.
“
Acquired Indebtedness
” means with respect to any specified Person (i) Indebtedness of any other Person existing
at the time such other Person is merged with or into or became a Subsidiary of such specified Person,
provided
such Indebtedness is not incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
“
Act
” has the meaning specified in
Section 11.19
.
“
Adjustment Date
” has the meaning specified in the definition of “Applicable Pricing Grid.”
“
Administrative Agent
” has the meaning specified in the preamble hereto.
“
Administrative Agent’s Office
” means the Administrative Agent’s address and, as appropriate, account as set
forth on
Schedule 11.02
, or such other address or account as the Administrative Agent may from time to time notify MacDermid and the Lenders.
“
Administrative Questionnaire
” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“
Advisory Agreement
” means the Advisory Services Agreement, dated as of October 31, 2013 between PAH and
Mariposa Capital, LLC.
“
Affiliate
” means, with respect to any Person, another Person (other than, in the case of
the Loan Parties, a Subsidiary of such Person) that directly, or indirectly through one or more intermediaries, Governs or is Governed by or is under common Governance with the Person specified. “
Govern
” means the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “
Governing
” and
“
Governed
” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Governed by another Person if such other Person possesses, directly or indirectly, power to vote
10% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.
“
Agents
” has the meaning specified in
Section 10.01(b)
.
“
Agent Parties
” has the meaning specified in
Section 11.02(c)
.
“
Aggregate Dollar Revolving Credit Commitments
” means, as of the date of determination thereof, the sum of all Dollar
Revolving Credit Commitments of all Dollar Revolving Lenders at such date.
“
Aggregate Dollar Revolving Credit
Exposure
” means, at any time, the sum of (i) the unused portion of the Dollar Revolving Credit Commitment then in effect and (ii) the Dollar Total Outstandings at such time.
2
“
Aggregate Multicurrency Revolving Credit Commitments
” means, as of the
date of determination thereof, the sum of all Multicurrency Revolving Credit Commitments of all Multicurrency Revolving Lenders as of such date.
“
Aggregate Multicurrency Revolving Credit Exposure
” means, at any time, the sum of (i) the unused portion of the
Multicurrency Revolving Credit Commitment then in effect and (ii) the Multicurrency Total Outstandings at such time.
“
Aggregate Revolving Credit Exposure
” means, at any time, the sum of (i) the unused portion of the Revolving
Credit Commitment then in effect and (ii) the Total Outstandings at such time.
“
Agreement
” means this
Amended and Restated Credit Agreement.
“
Alternative Currency
” means, with respect to Multicurrency Revolving
Credit Loans, Yen, Euros and Pounds Sterling.
“
Amendment No. 1
” means that certain Amendment No. 1
dated as of October 31, 2013 by and among the Borrowers, the other Loan Parties, the Administrative Agent, the Collateral Agent, the Required Lenders party thereto and the other parties thereto.
“
Amendment No. 1 Effective Date
” shall have the meaning assigned to such term in Amendment No. 1.
“
Amendment No. 1 Transactions
” means that Acquisition, the Resignation and Appointment (as defined in Amendment
No. 1), the Refinancing (as defined in Amendment No. 1) and the other transactions contemplated by Amendment No. 1.
“
Anticipated Cure Deadline
” shall have the meaning assigned to such term in Section 8.10(b).
“
Applicable Pricing Grid
”: the table set forth below:
|
|
|
|
|
|
|
|
|
|
|
First Lien Net Leverage Ratio
|
|
Applicable
Rate for
Eurocurrency
Rate Loans
|
|
|
Applicable
Rate for
Base Rate
Loans
|
|
|
Less than 3.25 to 1.00
|
|
|
2.75
|
%
|
|
|
1.75
|
%
|
|
Greater than or equal to 3.25 to 1.00
|
|
|
3.00
|
%
|
|
|
2.00
|
%
|
For the purposes of the Applicable Pricing Grid, changes in the Applicable Rate resulting from changes in the
First Lien Net Leverage Ratio shall become effective on the date (the “
Adjustment Date
”) that is three Business Days after the date on which financial statements are delivered to the Lenders pursuant to Section 7.01 and
shall remain in effect until the next change to be effected pursuant to this paragraph; provided, that, in no event shall the Applicable Rate for Eurocurrency Rate Loans and Applicable Rate for Base Rate Loans be less than 3.00% and 2.00%,
respectively, prior to September 30, 2014; provided, further, that in no event shall the Applicable Rate for Eurocurrency Rate Loans and Applicable Rate for Base Rate Loans be less than 3.00% and 2.00%, respectively, unless, at the time the
First Lien Net Leverage Ratio is calculated in accordance with this paragraph, the Total Net Leverage Ratio is less than 5.75 to 1.00. If any financial statements referred to above are not delivered within the time periods specified in
Section 7.01, then, until the date that is three Business Days after the date on which such financial statements are delivered, the highest rate set forth in each column of the Applicable Pricing Grid shall apply. In addition, at all times
while an Event of Default shall have occurred and be continuing, the highest rate set forth in each column of the Applicable Pricing Grid shall apply.
3
“
Applicable Rate
” means (a) with respect to any Tranche B Term Loan
or Revolving Loan that is (i) a Eurocurrency Rate Loan, 3.00% per annum and (ii) a Base Rate Loan, 2.00% per annum, (b) with respect to the Letter of Credit Fees, 3.00% per annum and (c) with respect to the
Commitment Fee, 0.50% per annum;
provided
that, on and after the Adjustment Date, the Applicable Rate with respect to any Tranche B Term Loan will be determined pursuant to the Applicable Pricing Grid.
“
Approved Fund
” has the meaning specified in
Section 11.06(g)
.
“
Arranger
” means Barclays Bank PLC.
“
Asset Sale
” means the Disposition (by way of merger, casualty, condemnation or otherwise) by PAH or any of the
Subsidiaries to any Person other than a Borrower or any Subsidiary Guarantor of (a) any Equity Interests of any of the Subsidiaries (other than directors’ qualifying shares and employee options granted in the ordinary course of business)
or (b) any other assets of PAH or any of the Subsidiaries, including Equity Interests of any Person that is not a Subsidiary (other than (i) inventory disposed of in the ordinary course of business, or the disposition of obsolete, worn out
or no longer useful assets, scrap and Cash Equivalents and (ii) dispositions between Subsidiaries permitted by
Section 8.04(c)
);
provided
that any asset sale or series of related asset sales described in clause (b) above
having a value not in excess of $5,000,000 in any single transaction or series of related transactions shall be deemed not to be an “
Asset Sale
” for purposes of this Agreement
“
Assignee Group
” means, with respect to any Lender, such Lender’s Affiliates and Approved Funds with respect to
such Lender.
“
Assignment and Assumption
” means an Assignment and Assumption substantially in the form of
Exhibit A
or such other form approved by the Administrative Agent.
“
Attorney Costs
” means and includes all
reasonable fees, expenses and disbursements of any law firm or other external counsel.
“
Attributable
Indebtedness
” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP and
(b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease
were accounted for as a capital lease.
“
Audited Financial Statements
” means the audited consolidated balance
sheet of MacDermid and its Subsidiaries for the fiscal years ended December 31, 2010, December 31, 2011, and December 31, 2012 and the related consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal year of MacDermid and its Subsidiaries, including the notes thereto.
“
Auto-Renewal Letter of
Credit
” has the meaning specified in
Section 2.03(b)(iii)
.
“
Autotype Asset Sale
” means
the sale of the equity interests (and/or substantially all of the assets) of Autotype Holdings (USA) Inc., an Illinois corporation, and MacDermid Autotype Ltd, a UK company.
4
“
Availability Period
” means the period after the Closing Date, in each
case, to the earliest of (a) the Revolving Credit Maturity Date, (b) the date of termination of the Revolving Credit Commitments pursuant to
Section 2.06
, and (c) the date of termination of the commitment of each Revolving
Credit Lender to make Revolving Credit Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to
Section 9.02
.
“
Available Amount
” means, at any time (the “
Reference Date
”), an amount equal to the sum,
without duplication, of an amount equal to (x) the cumulative amount of Excess Cash Flow for all fiscal years of PAH completed after the Closing Date (commencing with the fiscal year ending on December 31, 2014) and prior to the Reference
Date
minus
(y) the portion of such Excess Cash Flow that has been (or will be) after the Closing Date and on or prior to the Reference Date required to be offered to prepay the Loans in accordance with Section 2.05(b) (without
giving effect to any dollar-for-dollar reduction in respect of voluntary prepayments of the Loans as therein provided)
minus
(b) the sum, without duplication, of the aggregate amount of Restricted Payments made pursuant to
Section 8.05(k) by all Loan Parties after the Closing Date and on or prior to the Reference Date.
“
Base
Amount
” has the meaning specified in
Section 8.10(c)
.
“
Base Rate
” means for any day a
fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1%, (b) the Prime Rate in effect on such day and (c) the Eurocurrency Rate determined on such day (or if such day is not a
Business Day, the immediately preceding Business Day) for a Eurocurrency Rate Loan with a one-month Interest Period plus 1.00%.
“
Base Rate Loan
” means a Loan that bears interest based on the Base Rate.
“
Bookrunner
” mean Barclays Bank PLC.
“
Borrower Materials
” has the meaning specified in
Section 7.02
.
“
Borrowers
” means the Revolving Credit Borrowers and the Term Loan Borrower (and each, a
“
Borrower
”).
“
Borrowing
” means a Term Loan Borrowing, a Dollar Revolving Credit Borrowing
or a Multicurrency Revolving Credit Borrowing, as the context may require.
“
Business Day
” means (a) any day
other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurocurrency
Rate Loan on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurocurrency market; (b)(i) when such term is used for the purposes of determining the date on which the Eurocurrency Rate is determined for
any loan denominated in Euros for any Interest Period therefor and for purposes of determining the first and last day of any Interest Period, a Target Operating Day or a day of the year on which banks are not required or authorized to close in New
York; and (ii) for notices, determinations, fundings and payments in connection with any Loan denominated in Euros, a Target Operating Day or a day of the year on which banks are not required or authorized to close in New York; and
(c) when such term is used for purposes of determining all notices, determinations, fundings and payments in connection with, and payments of principal and interest on, Loans denominated in Yen, any day which is a Business Day described in
clause (a) and which is also a day which is not a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close in Tokyo, Japan.
“
Cancelled L/Cs
” has the meaning assigned to such term in Section 2.03(n).
5
“
Capital Expenditures
” means, for any period, with respect to any Person,
without duplication (a) the net additions to property, plant and equipment and other capital expenditures of such Person and its consolidated subsidiaries that are (or should be) set forth in a consolidated statement of cash flows of such
Person for such period prepared in accordance with GAAP and (b) capital lease obligations incurred by such Person and its consolidated subsidiaries during such period.
“
Cash Collateralize
” has the meaning specified in
Section 2.03(g)
.
“
Cash Equivalents
” means any of the following types of Investments, to the extent owned by the Borrowers or any of
their Subsidiaries free and clear of all Liens:
(a) readily marketable obligations issued or directly and fully guaranteed or insured by
the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof;
provided
that the full faith and credit of the United States of America is pledged in
support thereof;
(b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that
(i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the
United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and
(iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than one year from the date of acquisition thereof;
(c) commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least
“Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and
(d) Investments, classified in accordance with GAAP as Current Assets of the Borrowers or any of their Subsidiaries, in money market
investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to
Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.
“
Cash
Payout Option
” means, with respect to each Plan Investor, the option of such Person to receive a payment in cash in exchange for such Person’s Equity Interests in MacDermid pursuant to and in accordance with the Exchange Agreement
dated as of October 25, 2013.
“
CERCLIS
” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection Agency.
“
Change of Control
” means,
an event or series of events by which:
(a) a “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such Person or its subsidiaries, and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have
6
“beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right,
an “
option right
”)), directly or indirectly, of 35% of the equity securities of PAH entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into
account all such securities that such person or group has the right to acquire pursuant to any option right),
(b) during any period of 12
consecutive months, a majority of the members of the board of directors or other equivalent governing body of PAH cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or
equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more
directors by or on behalf of the board of directors),
(c) Holdings and the Earnout Investors, in the aggregate, shall at any time fail to
own directly or indirectly, beneficially and of record, 100% of each class of issued and outstanding Equity Interests in MacDermid free and clear of all Liens (other than Liens created by the Pledge and Security Agreement and non-consensual Liens
permitted under
Section 8.01
),
(d) PAH and the Earnout Investors, in the aggregate, shall at any time fail to own directly or
indirectly, beneficially and of record, 100% of each class of issued and outstanding Equity Interests in Holdings free and clear of all Liens (other than Liens created by the Pledge and Security Agreement and non-consensual Liens permitted under
Section 8.01
), or
(d) any change of control (or similar event, however denominated) with respect to PAH or any Subsidiary
shall occur under any indenture or agreement in respect of Indebtedness having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit
arrangement) in excess of the Threshold Amount to which PAH or any Subsidiary is a party.
“
Class
”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Term Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit
Commitment or Tranche B Term Loan Commitment.
“
Closing Date
” means June 7, 2013.
“
Code
” means the Internal Revenue Code of 1986, as amended from time to time (unless as specifically provided
otherwise).
“
Collateral
” means all of the “
Collateral
” or “
Pledged
Collateral
” referred to in the Collateral Documents, the Mortgaged Property and all of the other property and assets that are or are intended under the terms of the Collateral Documents to be subject to Liens in favor of the Collateral
Agent for the benefit of the Secured Parties.
“
Collateral Agent
” has the meaning specified in the preamble
hereto.
7
“
Collateral Documents
” means, collectively, the Pledge and Security
Agreement, the Mortgages, the Intellectual Property Security Agreements, or other similar agreements delivered to the Collateral Agent and the Lenders pursuant to
Section 7.12
, and each of the other agreements, instruments or documents
that creates or purports to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.
“
Committed
Loan Notice
” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Loans, pursuant to
Section 2.02(a)
, which, if in writing, shall
be substantially in the form of
Exhibit B
or such other form approved by the Administrative Agent.
“
Commitment
” means, with respect to any Lender, such Lender’s Revolving Credit Commitment and Term Loan
Commitment.
“
Commitment Fee
” has the meaning specified in
Section 2.09(a)
.
“
Compliance Certificate
” means a certificate substantially in the form of
Exhibit C
or such other form
approved by the Administrative Agent and acceptable to MacDermid.
“
Confidential Information Memorandum
” means the
Confidential Information Memorandum of MacDermid dated May, 2013.
“
Consolidated EBITDA
” means, for any period,
Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Charges for such period, (ii) consolidated income tax
expense for such period (including any franchise taxes imposed in lieu of income taxes and any income taxes that would be payable if the entity were to become a taxable entity for purposes of federal, state or local income taxes), (iii) all
amounts attributable to depreciation and amortization for such period, (iv) any non-cash charges, expenses or losses (including, but not limited to, non-cash rent expense, impairment of goodwill or other intangible assets and exchange rate
losses) of PAH or any of its Subsidiaries for such period (excluding any such charge, expense or loss incurred that constitutes an accrual of or a reserve for cash charges for any future period or an amortization of a prepaid cash expense paid in a
prior period or writeoff or writedown of reserves with respect to current assets);
provided
,
however
, that cash payments made in such period or in any future period in respect of such non-cash items (excluding any non-cash items to the
extent representing an accrual for a future cash expenditure) shall be subtracted from Consolidated Net Income in calculating Consolidated EBITDA in the period when such payments are made, (v) any extraordinary, unusual, or non-recurring cash
charges or expenses for such period (including (i) payment of any prepayment premium pursuant to and in accordance with the Second Lien Credit Agreement (as defined in the Existing First Lien Credit Agreement) and (ii) restructuring
charges and severance, retention bonuses or other similar one time compensation payments made to employees of PAH or any of its Subsidiaries or made in connection with a Permitted Acquisition), (vi) deferred compensation, stock-option or
employee benefits-based and other equity-based compensation expenses for such period, (vii) transaction fees and expenses in connection with the Transactions and the Platform Acquisition for such period, (viii) transaction fees, costs and
expenses during such period in connection with any investment (including any Permitted Acquisition) or issuance of Equity Interests, in each case, to the extent permitted under this Agreement and whether or not such investment, issuance of Equity
Interests or acquisition shall have been consummated, (ix) losses to the extent reimbursable by third parties in connection with any Permitted Acquisition, as determined in good faith by the Borrowers, for such period;
provided
,
however
, that if the Administrative Agent, acting reasonably, determines in such period or the immediately succeeding period that such losses, or any portion thereof (which, in each case, were included in Consolidated EBITDA in such period or
such immediately preceding period pursuant to this clause (ix)), are no longer reimbursable or are not likely to
8
be reimbursed, then such losses, or any portion thereof, shall be subtracted from Consolidated Net Income in calculating Consolidated EBITDA in each such applicable period, (x) unrealized
losses in respect of Obligations under Swap Contracts during such period, (xi) any loss or expense during such period from discontinued operations or any loss or expense incurred in connection with the disposal of discontinued operations in
accordance with GAAP (or if not in accordance with GAAP as otherwise reasonably acceptable to the Administrative Agent), (xii) fees paid during such period in accordance with the Advisory Agreement as in effect on the Amendment No. 1
Effective Date, (xiii) non-cash charges or amounts recorded in connection with purchase accounting for such period (including any applicable to future Permitted Acquisitions), (xiv) non-cash purchase accounting adjustments during such
period relating to the writedown of deferred revenue (whether billed or unbilled) that are the result of accounting for any acquisition, (xv) fees, costs and expenses incurred under this Agreement for such period, (xvi) the cumulative
effect of a change in accounting principles for such period and to the extent permitted by Section 1.03(b), (xvii) expenses during such period in connection with the settlement of any litigation or claim involving PAH or its Subsidiaries,
(xviii) debt discount and debt issuance costs, fees, charges and commissions during such period, in each case incurred in connection with Indebtedness permitted to be incurred hereunder (whether or not such Indebtedness has been incurred), and
(xix) the amount of net cost savings, operating expense reductions, other operating improvements and acquisition synergies projected by the Borrowers in good faith to be realized during such period (calculated on a Pro Forma Basis as though
such items had been realized on the first day of such period) as a result of actions taken or to be taken in connection with any established cost reduction program, acquisition or disposition by PAH or any Subsidiary, net of the amount of
actual benefits realized during such period that are otherwise included in the calculation of Consolidated EBITDA from such actions, provided that (A) a duly completed certificate signed by a Responsible Officer of the Borrowers shall be
delivered to the Administrative Agent together with the Compliance Certificate required to be delivered pursuant to Section 7.02(a), certifying that (x) such cost savings, operating expense reductions and synergies are reasonably expected
and factually supportable as determined in good faith by the Borrowers, and (y) such actions are to be taken within 12 months after the consummation of the establishment of the cost reduction program or the acquisition or disposition, which is
expected to result in such cost savings, expense reductions or synergies, (B) no cost savings, operating expense reductions and synergies shall be added pursuant to this clause (xix) to the extent duplicative of any expenses or charges
otherwise added to Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for such period, (C) all steps shall have been taken for realizing such savings, (D) projected amounts (and not yet realized) may no longer be
added in calculating Consolidated EBITDA pursuant to this clause (xix) to the extent occurring more than four full fiscal quarters after the specified action taken in order to realize such projected cost savings, operating expense reductions
and synergies and (E) the aggregate amount of add backs made pursuant to this clause (xix) shall not exceed an amount equal to 10% of Consolidated EBITDA for the period of four consecutive fiscal quarters most recently ended prior to the
determination date (without giving effect to any adjustments pursuant to this clause (xix)), and
minus
(b) without duplication (i) to the extent included in determining such Consolidated Net Income, any extraordinary, unusual, or
non-recurring gains or income and all non-cash items of income or gains for such period, all determined on a consolidated basis in accordance with GAAP, and (ii) unrealized gains in respect of Obligations under Swap Contracts;
provided
that solely for purposes of calculating the First Lien Net Leverage Ratio and the Total Net Leverage Ratio for any period (A) the Consolidated EBITDA of any Acquired Entity acquired by any Borrower or any Subsidiary pursuant to a Permitted
Acquisition during such period shall be included on a Pro Forma Basis for such period (assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred as of the first day of such
period) and (B) the Consolidated EBITDA of any Person or line of business sold or otherwise disposed of by any Borrower or any Subsidiary during such period shall be excluded for such period (assuming the consummation of such sale or other
disposition and the repayment of any Indebtedness in connection therewith occurred as of the first day of such period).
9
“
Consolidated First Lien Indebtedness
” means Consolidated Indebtedness
that is secured by a first priority Lien on assets of PAH or any Subsidiary.
“
Consolidated Indebtedness
” means,
shall mean, at any time, the aggregate amount of Indebtedness of PAH and its Subsidiaries outstanding at such time, in the amount that would be reflected on a balance sheet prepared at such time on a consolidated basis in accordance with GAAP.
Consolidated Interest Charges
” means, for any period, the sum of (a) the interest expense (including imputed interest
expense in respect of capital lease obligations and Synthetic Lease Obligations) of PAH and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (including, for the avoidance of doubt, (i) any amounts of
premium or penalty payable in connection with the payment of make-whole amounts or other prepayment premiums payable in connection with any Indebtedness of PAH or any of its Subsidiaries, and (ii) all commissions, discounts and other fees and
charges owed in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP), plus (b) any interest accrued during such period in respect of Indebtedness of PAH or any of its Subsidiaries that is
required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP. For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by
PAH or any of its Subsidiaries with respect to interest rate Swap Contracts.
“
Consolidated Net Income
” means, for
any period, for PAH and its Subsidiaries on a consolidated basis, the net income (including, without duplication, interest income but excluding extraordinary gains and extraordinary losses) of PAH and its Subsidiaries for that period determined
before any reduction in respect of preferred stock dividends and any amounts attributable to minority interests in Platform Delaware Holdings, Inc.;
provided
that there shall be excluded (a) the income of any Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by the Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or
governmental regulation applicable to such Subsidiary, (b) the income or loss of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with any Borrower or any Subsidiary or the date that such
Person’s assets are acquired by any Borrower or any Subsidiary;
provided
,
however
, that such income or loss of such Person shall be included for such period to the extent Consolidated Net Income and Consolidated EBITDA are being
calculated on a Pro Forma Basis in accordance with this Agreement, (c) the income of any Person (other than a Subsidiary) in which any other Person (other than a Borrower or a wholly owned Subsidiary or any director holding qualifying shares in
accordance with applicable law) has an interest, except to the extent of the amount of dividends or other distributions actually paid to a Borrower or a wholly owned Subsidiary by such Person during such period and (d) any net unrealized gain
or loss (after any offset) resulting in such period from obligations in respect of Hedge Agreements or other derivative instruments and the application of Statement of Financial Accounting Standards No. 133.
“
Consolidated Senior Secured Debt
” means, as at any date of determination, the aggregate principal amount of
Consolidated Indebtedness outstanding on such date that is secured by a Lien on any asset or property of PAH or any of its Subsidiaries.
“
Contractual Obligation
” means, as to any Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“
Control Investment Affiliate
” means as to any Person, any other Person that (a) directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition,
“control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
10
“
Credit Agreement Refinancing Indebtedness
” means (a) Permitted
Equal Priority Refinancing Debt, (b) Permitted Junior Priority Refinancing Debt or (c) Permitted Unsecured Refinancing Debt;
provided
that, in each case, such Indebtedness is incurred to refinance, in whole or in part, existing Term
Loans (“
Refinanced Debt
”);
provided
,
further
, that (i) the final maturity date of any such Indebtedness, (x) in the case of any Permitted Equal Priority Refinancing Debt, shall be no earlier than the
maturity date of the Refinanced Debt and (y) in the case of any Permitted Junior Priority Refinancing Debt and/or any Permitted Unsecured Refinancing Debt, shall be at least 91 days beyond the final maturity date for the Refinanced Debt,
(ii) the weighted average life to maturity of any such Indebtedness shall be no shorter than the weighted average life to maturity of the Refinanced Debt, (iii) there shall be no obligors in respect of any such Indebtedness that are not
Loan Parties, (iv) the covenants, events of default and other terms and conditions of such Indebtedness (excluding, for the avoidance of doubt, interest rates, margins and floors, fees, funding discounts, original issue discounts and prepayment
or redemption premiums and terms) are substantially identical to, or less favorable to the persons providing any such Indebtedness than, those applicable to the Refinanced Debt (other than covenants, events of default and other terms and conditions
applicable only to periods after the Latest Maturity Date), (v) except to the extent otherwise permitted under this Agreement (subject to a dollar for dollar usage of any other basket set forth in Section 8.02, if applicable), such
Indebtedness shall not have a greater principal amount (or shall not have a greater accreted value, if applicable) than the principal amount of the Refinanced Debt plus accrued interest, fees and premiums (if any) thereon and fees and expenses
associated with the refinancing and (vi) such Refinanced Debt shall be repaid, defeased or satisfied and discharged on a dollar-for-dollar basis, and all accrued interest, fees and premiums (if any) in connection therewith shall be paid,
substantially concurrently with the date such Credit Agreement Refinancing Indebtedness is issued, incurred or obtained, in each case, in accordance with this Agreement.
“
Credit Extension
” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.
“
CT L/C Replacement Date
” has the meaning assigned to such term in Section 2.03(n).
“
CT L/Cs
” has the meaning assigned to such term in Section 2.03(n).
“
Cure Amount
” shall have the meaning assigned to such term in
Section 8.10(b)
.
“
Cure Right
” shall have the meaning assigned to such term in
Section 8.10(b)
.
“
Current Assets
” means, at any time, the consolidated current assets (other than cash and Cash Equivalents) of PAH and
its Subsidiaries in accordance with GAAP.
“
Current Liabilities
” means, at any time, the consolidated current
liabilities of PAH and its Subsidiaries at such time in accordance with GAAP, but excluding, without duplication, (a) the current portion of any
long-term
Indebtedness and (b) outstanding Revolving
Loans.
“
Customary Intercreditor Agreement
” means (a) to the extent executed in connection with the
incurrence of secured Indebtedness, the Liens on the Collateral securing which are intended to rank equal in priority to the Liens on the Collateral securing the Obligations (but without regard to the control of remedies), at the option of MacDermid
and the Administrative Agent acting together in good faith, a customary intercreditor agreement in form and substance reasonably acceptable to the Administrative Agent and MacDermid, which agreement shall provide that the Liens on the Collateral
securing such Indebtedness shall rank equal in priority to the Liens on the Collateral securing the
11
Obligations (but without regard to the control of remedies) and (b) to the extent executed in connection with the incurrence of secured Indebtedness the Liens on the Collateral securing
which are intended to rank junior to the Liens on the Collateral securing the Obligations, at the option of the Borrowers and the Administrative Agent acting together in good faith, a customary intercreditor agreement in form and substance
reasonably acceptable to the Administrative Agent and the Borrowers, which agreement shall provide that the Liens on the Collateral securing such Indebtedness shall rank junior to the Liens on the Collateral securing the Obligations.
“
Debtor Relief Laws
” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting
the rights of creditors generally.
“
Default
” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“
Default Rate
”
means an interest rate equal to (a) the Base Rate
plus
(b) the Applicable Rate applicable to Base Rate Loans
plus
(c) 2.0% per annum;
provided
,
however
, that with respect to a Eurocurrency Rate Loan,
the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2.0% per annum, in each case to the fullest extent permitted by applicable Laws.
“
Defaulting Dollar Revolving Lender
” shall have the meaning assigned to such term in
Section 2.15(a)(iii)(C)
.
“
Defaulting Lender
” means, subject to
Section 2.15(b)
, any
Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and MacDermid in writing that
such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been
satisfied, or (ii) pay to the Administrative Agent, any Issuing Bank or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date
when due, (b) has notified MacDermid, the Administrative Agent or any Issuing Bank in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public
statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable
default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or MacDermid, to confirm in writing to the
Administrative Agent and MacDermid that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by
the Administrative Agent and MacDermid), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any applicable bankruptcy law, or (ii) had appointed for it a receiver, custodian,
conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal
regulatory authority acting in such a capacity;
provided
that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by
a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or
permit such Lender (or such Governmental Authority) to reject, repudiate,
12
disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through
(d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to
Section 2.15(b)
) upon delivery of written notice of such determination to MacDermid, each Issuing
Bank and each Lender.
“
Disclosed Litigation
” has the meaning set forth in
Section 6.06
.
“
Disposition
” or “
Dispose
” means the sale, transfer, license, lease or other disposition
(including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“
Disqualified Stock
” means, with respect to any Person, any Equity Interest that, by its terms (or by the terms
of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Equity Interest), or upon the happening of any event (other than any event solely within the control of the issuer
thereof), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Equity Interest, in whole or in part, on or prior to the date that is 91 days after the Tranche
B Maturity Date. Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified Stock solely because the holders of the Equity Interest have the right to require a Borrower to repurchase such Equity Interest upon the
occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Equity Interest provide that such Borrower may not repurchase or redeem any such Equity Interest pursuant to such provisions unless such
repurchase or redemption complies with
Section 8.05
.
“
Dollar
” and “
$
” mean
lawful money of the United States.
“
Dollar Equivalent
” means, on the applicable Valuation Date, (a) with
respect to any amount denominated in Dollars, such amount and (b) with respect to any amount denominated in an Alternative Currency, the equivalent in Dollars of such amount, determined by the Administrative Agent pursuant to
Section 1.08
using the applicable Exchange Rate with respect to Euros, Pounds Sterling or Yen, as applicable, at the time in effect on the Valuation Date under the provisions of such
Section 1.08
.
“
Dollar Revolving Credit Borrowing
” means a borrowing consisting of simultaneous Dollar Revolving Credit Loans of the
same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Dollar Revolving Lenders pursuant to
Section 2.01(b)
.
“
Dollar Revolving Credit Commitment
” means, as to each Dollar Revolving Lender, (i) its obligation to
(a) make Dollar Revolving Credit Loans to the Revolving Credit Borrowers pursuant to
Section 2.01(b)
and (b) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed
the amount set forth opposite such Dollar Revolving Lender’s name on
Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, and (ii) any commitment by such Lender that
is included as part of an Incremental Revolving Facility, as such amount may be adjusted from time to time in accordance with this Agreement.
“
Dollar Revolving Credit Facility
”
has the meaning specified in the definition of “Facility”.
“
Dollar Revolving Credit Loan
” has the meaning specified in Section 2.01(b)(i).
13
“
Dollar Revolving Lender
” means, at any time, any Lender that has a
Dollar Revolving Credit Commitment or an outstanding Dollar Revolving Credit Loan at such time.
“
Dollar Revolving
Note
” has the meaning specified in
Section 2.11(a)
.
“
Dollar Total Outstandings
” means
the aggregate Outstanding Amount of all Dollar Revolving Credit Loans and all L/C Obligations.
“
Domestic
Subsidiary
” means any Subsidiary that is organized under the laws of any political subdivision of the United States.
“
Earnout Investors
” means (a) members of management and other employees or former employees of MacDermid who are
either (i) holders (directly or indirectly) of Equity Interests in MacDermid or Holdings on the Amendment No. 1 Effective Date, (ii) making a direct or indirect investment in Tartan Holdings, LLC contemporaneous with the consummation
of the Transaction or (iii) acquiring (directly or indirectly) Equity Interests in Tartan Holdings, LLC at any time thereafter in accordance with and pursuant to any equity plan or arrangement; or (b) any Plan that holds Equity Interests
in MacDermid on the Amendment No. 1 Effective Date.
“
Eligible Assignee
” has the meaning set forth in
Section 11.06(g)
.
“
EMU
” means Economic and Monetary Union as contemplated in the Treaty on European
Union.
“
EMU Legislation
” means the legislative measures of the European Union for the introduction of, changeover
to or operation of the Euro in one or more member states, being in part legislative measures to implement EMU.
“
Environmental
Claim
” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive, by any Governmental Authority or any other Person, arising (i) pursuant to or in
connection with any actual or alleged violation of any Environmental Law, (ii) in connection with any Environmental Liability, or (iii) in connection with any actual or alleged damage, injury, threat or harm to natural resources or the
environment.
“
Environmental Laws
” means any and all Laws, judgments, orders, decrees, permits, concessions,
grants, franchises, agreements or governmental restrictions relating to pollution, the protection of human health or the environment, or the Release of any Hazardous Materials into the environment, including those related to hazardous materials,
substances or wastes (including the exposure thereto), air emissions and discharges to waste or public systems.
“
Environmental
Liability
” means any liability (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Borrower, any other Loan Party or any of their respective Subsidiaries directly or
indirectly resulting from or based upon (a) any violation of, or liability pursuant to, any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment, disposal or presence of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed,
retained or imposed with respect to any of the foregoing.
“
Environmental Permit
” means any permit, approval,
registration, identification number, license or other authorization required under any Environmental Law.
14
“
Equity Interests
” means, with respect to any Person, all of the shares
of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options,
rights or other interests are outstanding on any date of determination.
“
Equity Issuance
” means any issuance or
sale by Holdings or a Borrower of any Equity Interests of Holdings or such Borrower, as applicable, or the receipt by Holdings or a Borrower of any capital contribution, as applicable.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor
thereto.
“
ERISA Affiliate
” means any trade or business (whether or not incorporated) which, together with any
Borrower is treated as a single employer under Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“
ERISA Event
” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any Borrower
or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a
withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in “reorganization” (within the meaning
of Section 4241 of ERISA), “insolvency” (within the meaning of Section 4245 of ERISA), or “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA);
(d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate; (g) the failure to meet the minimum funding standard of Sections 412 or 430 of the Code or
Sections 302 or 303 of ERISA with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Code or Section 302(c) of ERISA) or the failure to make by its due date a required installment under
Section 430(j) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (h) a determination that any Pension Plan is, or is expected to be in “at-risk” status (as
defined in Section 303(i) of ERISA or Section 430(i) of the Code); (i) the assertion of a material claim (other than routine individual claims for benefits) against any Plan other than a Multiemployer Plan or the assets thereof, or
against any Loan Party or any of their respective ERISA Affiliates in connection with any Plan; (j) receipt from the IRS of notice of the failure of any Pension Plan (or any other Plan intended to be qualified under Section 401(a) of the
Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; or (k) any other event or condition with respect
to any Plan that would reasonably be expected to result in material liability of the Loan Parties.
“
Euro
” or
“
€
” shall mean the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation.
15
“
Eurocurrency Liabilities
” has the meaning specified in
Section 3.04(c)
.
“
Eurocurrency Rate
” means, for any Interest Period with respect to any Eurocurrency
Rate Loan (i) that is a Term Loan, an interest rate per annum equal to the greater of (a) 1.00% per annum and (b) the product of (A) the LIBO Rate in effect for such Interest Period and (B) Statutory Reserves and
(ii) that is a Revolving Credit Loan, an interest rate per annum equal to the product of (A) the LIBO Rate in effect for such Interest Period and (B) Statutory Reserves.
“
Eurocurrency Rate Loan
” means a Loan that bears interest at a rate based on the Eurocurrency Rate.
“
Event of Default
” has the meaning specified in
Section 9.01
.
“
Excess Cash Flow
” means, for any fiscal year of PAH, (a) the sum, without duplication, of (i) Consolidated
EBITDA for such fiscal year and (ii) reductions to noncash working capital of PAH and its Subsidiaries for such fiscal year (
i.e.
, the decrease, if any, in Current Assets minus Current Liabilities from the beginning to the end of such
fiscal year (excluding any changes in working capital due to the effects of purchase accounting adjustments)) minus (b) the sum, without duplication, of (i) the amount of any taxes paid in cash by PAH and its Subsidiaries with respect to
such fiscal year (including any franchise taxes imposed in lieu of income taxes), (ii) Consolidated Interest Expense for such fiscal year paid in cash, (iii) the amount of any Capital Expenditures and investments (including any Permitted
Acquisition), in each case, to the extent permitted under this Agreement (whether or not such Capital Expenditure, investment or acquisition shall have been consummated) and that are made in cash during such fiscal year, except to the extent
financed with the proceeds of Indebtedness, equity issuances, casualty proceeds, condemnation proceeds or other proceeds that would not be included in Consolidated EBITDA, (iv) permanent repayments of Indebtedness (other than Voluntary
Prepayments and mandatory prepayments of Loans under Section 2.05(b)) made in cash by PAH and its Subsidiaries during such fiscal year, but only to the extent that the Indebtedness so prepaid by its terms cannot be reborrowed or redrawn and
such prepayments do not occur in connection with a refinancing of all or any portion of such Indebtedness, (v) the cash amounts added back to Consolidated EBITDA during such fiscal year pursuant to the definition of such term (excluding, for
the avoidance of doubt, amounts added back to Consolidated EBITDA pursuant to clauses (a)(i) and (ii) in the definition thereof to the extent such amounts are otherwise deducted from Excess Cash Flow pursuant to this clause (b)),
(vi) additions to noncash working capital for such fiscal year (
i.e.
, the increase, if any, in Current Assets minus Current Liabilities from the beginning to the end of such fiscal year), (vii) cash earnout and royalty payments made
during such fiscal year to former owners of Acquired Entities that were not deducted as expenses in determining Consolidated Net Income, (viii) the aggregate amount of Restricted Payments made in cash during such fiscal year in accordance with
Section 8.05(a) and (ix) the aggregate amount of any fees and expenses paid in cash during such fiscal year in connection with any Indebtedness permitted to be incurred pursuant to Section 8.02 (whether or not consummated).
“
Exchange Rate
” means on any day, with respect to any Alternative Currency, the rate at which such Alternative
Currency may be exchanged into Dollars, as set forth at approximately 11:00 a.m. (London time) on such day on the Bloomberg Key Cross-Currency Rates Page for such Alternative Currency . In the event that such rate does not appear on any
Bloomberg Key Cross-Currency Rates Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and MacDermid, or, in the absence of
such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such Alternative Currency are then being
conducted, at or about 10:00 a.m. (London time) on such date for the purchase of Dollars for delivery two Business Days later,
provided
that if at the time of any such determination, for any reason, no such spot rate is being
quoted, the Administrative Agent, after consultation with MacDermid, may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.
16
“
Excluded Domestic Subsidiary
” means any Domestic Subsidiary that is
disregarded as a separate entity for U.S. federal income tax purposes and owns no material assets other than the Equity Interests of one or more Foreign Subsidiaries (held directly or indirectly through one or more disregarded entities).
“
Excluded Swap Obligation
” means, with respect to any Guarantor, (a) as it relates to all or a portion of the
Guarantee of such Guarantor, any Swap Obligation if, and to the extent that, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading
Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the Guarantee of such Guarantor becomes effective with respect to such Swap Obligation or (b) as it relates to all or a portion of the grant by such Guarantor of a security interest, any Swap Obligation if,
and to the extent that, such Swap Obligation (or such security interest in respect thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or
official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the
security interest of such Guarantor becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation
that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.
“
Existing Credit
Agreement
” means that certain Credit Agreement dated as of April 12, 2007, among MacDermid Holdings, LLC, a Delaware limited liability company, Matrix Acquisition Corp. and MacDermid, Incorporated (as successor to Matrix
Acquisition Corp.), a Connecticut corporation, certain subsidiaries of MacDermid, Incorporated from time to time party thereto, the lenders from time to time party thereto, Credit Suisse AG, as administrative agent and the other agents and parties
party thereto from time to time.
“
Existing First Lien Credit Agreement
” has the meaning specified in the recitals
hereto.
“
Existing Indebtedness
” means the obligations under the Existing Credit Agreement and the Existing Notes.
“
Existing Letters of Credit
” means the letters of credit set forth on
Schedule 1.01(a)
hereto.
“
Existing Mortgages
” means those mortgages, deeds of trust or other agreements delivered in connection with the
Existing Credit Agreement.
“
Existing Notes
” means MacDermid’s
9
1
⁄
2
% Senior Subordinated Notes due 2017.
“
Facility
” means each of (a) the Tranche B Term Loan Commitments and the Tranche B Term Loans made thereunder
(the “
Term Loan Facility
”), (b) any New Term Loan Facility, (c) the Dollar Revolving Credit Commitments and the extensions of credit made thereunder (the “
Dollar Revolving Credit Facility
”)
and (d) the Multicurrency Revolving Credit Commitments and the extensions of credit made thereunder (the “
Multicurrency Revolving Credit Facility
”).
17
“
FATCA
” means Sections 1471 through 1474 of the Code, as of the date of
this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to
Section 1471(b)(1) of the Code.
“
Federal Funds Rate
” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding
such day;
provided
that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
“
Financial Covenant Default
” shall have the meaning assigned to
such term in
Section 8.10(c)
.
“
First-Tier Foreign Subsidiary
” means any Foreign Subsidiary that is
owned directly by a Loan Party.
“
First Lien Net Leverage Ratio
” means, as of any date of determination, the ratio
of (a) Consolidated First Lien Indebtedness as of such date minus the unrestricted cash and Cash Equivalents of the Borrowers and the Guarantors as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters most
recently ending on such date.
“
Foreign Government Scheme or Arrangement
” has the meaning specified in
Section
6.12(d)
.
“
Foreign Lender
” has the meaning specified in
Section 11.14(a)
.
“
Foreign Plan
” has the meaning specified in
Section 6.12(d)
.
“
Foreign Subsidiary
” means any Subsidiary that is not a Domestic Subsidiary.
“
Fraudulent Transfer Laws
” has the meaning assigned to such term in
Section 11.24(a)
.
“
FRB
” means the Board of Governors of the Federal Reserve System of the United States.
“
Fronting Exposure
” means, at any time there is a Defaulting Lender, with respect to each Issuing Bank, such
Defaulting Lender’s Pro Rata Share of the L/C Obligations with respect to Letters of Credit issued by such Issuing Bank other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other
Lenders or cash collateralized in accordance with the terms hereof.
“
Fully Satisfied
” means, with respect to the
Obligations as of any date, that, as of such date, (a) all principal of and interest accrued to such date which constitute Obligations shall have been irrevocably paid in full in cash, (b) all fees, expenses and other amounts then due and
payable which constitute Obligations shall have been irrevocably paid in cash, (c) all outstanding Letters of Credit shall have been (i) terminated, (ii) fully irrevocably Cash Collateralized or (iii) secured by one or more
letters of credit on terms and conditions, and with one or more financial institutions, reasonably satisfactory to the L/C Issuer and (d) the Commitments shall have expired or been terminated in full.
18
“
Fund
” has the meaning specified in
Section 11.06(g)
.
“
Funding Borrower
” has the meaning assigned to such term in
Section 11.24
.
“
GAAP
” means generally accepted accounting principles in the United States set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant
segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“
Govern
” has the meaning specified in the definition of “
Affiliate
.”
“
Governmental Authority
” means any nation or government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government including,
without limitation, any agency of the European Union or similar monetary or multinational authority.
“
Granting
Lender
” has the meaning specified in
Section 11.06(b)(vii)
.
“
Guarantee
” means, as to any
Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “
primary
obligor
”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other
obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation,
(iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation,
or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or
in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “
Guarantee
” as a verb has a corresponding
meaning.
“
Guarantors
” means a collective reference to Holdings and the Subsidiary Guarantors.
“
Guaranty
” means, collectively, the Guaranty made by the Guarantors and PAH in favor of the Administrative Agent and
the Lenders pursuant to
Article IV
.
“
Hazardous Materials”
means all explosive or radioactive substances or
wastes and all hazardous or toxic materials, substances, wastes or other contaminants or pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical
wastes and all other materials, substances or wastes of any nature regulated pursuant to any Environmental Law.
19
“
Hedge Bank
” means any Person that is an Agent, an Arranger, the
Bookrunner or a Lender, in each case at the time such applicable Secured Hedge Agreement is entered into, or an Affiliate of any of the foregoing, in its capacity as a party to a Secured Hedge Agreement.
“
Holdings
” has the meaning specified in the preamble hereto.
“
Honor Date
” has the meaning specified in
Section 2.03(c)(i)
.
“
Increased Amount Date
” has the meaning specified in
Section 2.14(a)
.
“
Incremental Commitment
” means any commitment made by a lender to provide all or any portion of an Incremental
Facility or Incremental Loans.
“
Incremental Facilities
” has the meaning assigned to such term in
Section 2.14.
“
Incremental Loans
” has the meaning assigned to such term in Section 2.14.
“
Incremental Revolving Commitment
” means any commitment made by a lender to provide all or any portion of an
Incremental Revolving Facility or Incremental Revolving Loans.
“
Incremental Revolving Facility
” has the meaning
assigned to such term in Section 2.14.
“
Incremental Revolving Loans
” has the meaning assigned to such term
in Section 2.14.
“
Incremental Term Facility
” has the meaning assigned to such term in Section 2.14.
“
Incremental Term Loans
” has the meaning assigned to such term in Section 2.14.
“
Indebtedness
” means, as to any Person at a particular time, without duplication, all of the following, whether or not
included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan agreements, convertible securities (to the extent that they have put provisions that are exercisable during the term of this Agreement) or other similar instruments;
(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;
(c) all obligations of such Person to pay the deferred purchase price
of property or services (other than trade accounts payable in the ordinary course of business);
(d) indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;
(e) capital leases and Synthetic Lease Obligations; and
(f) all Guarantees of such Person in respect of any of the foregoing.
20
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such
Person. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. Notwithstanding the foregoing, however, Indebtedness shall not
include any UK Pension Plan Liabilities and Obligations under The MacDermid Profit Sharing and Employee Stock Ownership Plan, the MacDermid Canning PLC Defined Benefit Pension Plan, The MacDermid Canning GmBH Defined Benefit Pension Plan, The
MacDermid Chemical Taiwan LTD. Defined Benefit Pension Plan, The MacDermid, Incorporated Retiree Medical/Dental Plan, The MacDermid Supplement Executive Retirement Plan and The Nippon MacDermid Defined Benefit Pension Plan, The MacDermid
Incorporated All Employees Pension Plan, any of their respective successors and assigns or any other liabilities or obligations under another employee benefit plan or for compensation or benefits.
“
Indemnitees
” has the meaning specified in
Section 11.04(b)
.
“
Information
” has the meaning specified in
Section 11.07
.
“
Intellectual Property Security Agreement
” means an Intellectual Property Security Agreement to be executed and
delivered by a Loan Party, substantially in the form of
Exhibit D
or such other form approved by the Administrative Agent.
“
Interest Payment Date
” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest
Period applicable to such Loan and in the case of any Term Loans, the applicable Term Loan Maturity Date, or in the case of Revolving Credit Loans, the Revolving Credit Maturity Date;
provided
,
however
, that if any Interest Period for
a Eurocurrency Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and in the case of any Term Loans, the applicable Term Loan Maturity Date, or in the case of Revolving Credit Loans, the Revolving Credit Maturity Date.
“
Interest Period
” means, as to each Eurocurrency Rate Loan, the period commencing on the date such Eurocurrency Rate
Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one, two, three or six months thereafter (or twelve months, if at the time of the relevant Borrowing, interest periods of such length are available to
all applicable Lenders), as selected by any Borrower in its Committed Loan Notice;
provided
that:
(i) any Interest Period that
would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond, in the case of any Term Loans, the applicable Term Loan Maturity Date, or in the case of
Revolving Credit Loans, the Revolving Credit Maturity Date.
21
“
Investment
” means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase
or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of
transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value
of such Investment.
“
IP Rights
” has the meaning set forth in
Section 6.17
.
“
IRS
” means the United States Internal Revenue Service.
“
Issuer Documents
” means with respect to any Letter of Credit, the Letter of Credit Application, and any other
document, agreement and instrument entered into by the L/C Issuer and any Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.
“
Judgment Currency
” shall have the meaning assigned to such term in
Section 11.23(a)
.
“
Judgment Currency Conversion Date
” shall have the meaning assigned to such term in
Section 11.23(a)
.
“
Latest Maturity Date
” shall mean, at any date, the latest maturity date of all classes of Loans or Commitments that
are outstanding on such date.
“
Laws
” means, collectively, all international, foreign, Federal, state and local
laws, statutes, treaties, rules, regulations or any determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such person or any of its Real Property or personal property or to which such
person or any of its property of any nature is subject.
“
L/C Advance
” means, with respect to each Dollar
Revolving Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Pro Rata Dollar Share.
“
L/C Borrowing
” means an extension of credit resulting from a drawing under any Letter of Credit which has not been
reimbursed on the date when made or refinanced as a Revolving Credit Borrowing.
“
L/C Credit Extension
” means,
with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof, which shall be substantially in the form of
Exhibit K
hereto.
“
L/C Issuer
” means as the context may require, (i) with respect to any Existing Letter of Credit, Credit Suisse
AG and (ii) with respect to any other Letter of Credit (other than an Existing Letter of Credit) Barclays Bank PLC or any Lender that may become an L/C Issuer pursuant to
Section 2.03(l)
or
Section 2.03(m)
, with respect
to Letters of Credit issued by such Lender. The L/C Issuer may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the L/C Issuer, in which case the term “L/C Issuer” shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate. For the avoidance of doubt, Credit Suisse AG has no obligations to issue any Letters of Credit (other than Existing Letters of Credit) after the Closing Date.
22
“
L/C Obligations
” means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit
plus
the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.
“
L/C Replacement Date
” has the meaning assigned to such term in Section 2.03(n).
“
L/C Resignation
” has the meaning assigned to such term in Section 2.03(n).
“
Leases
” means any and all leases, subleases, tenancies, options, concession agreements, rental agreements, occupancy
agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any portion of any Real Property.
“
Lender
” has the meaning
specified in the introductory paragraph hereto and, as the context requires, includes the L/C Issuer.
“
Lending
Office
” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify MacDermid and the
Administrative Agent.
“
Letter of Credit
” means any letter of credit issued hereunder and shall include the
Existing Letters of Credit. A Letter of Credit shall be a standby letter of credit.
“
Letter of Credit
Application
” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
“
Letter of Credit Commitment
” means the commitment of the L/C Issuer to issue Letters of Credit pursuant to
Section 2.03
.
“
Letter of Credit Expiration Date
” means the day that is five Business Days prior to
the Revolving Credit Maturity Date (or, if such day is not a Business Day, the next preceding Business Day).
“
Letter of Credit
Fee
” has the meaning specified in
Section 2.03(i)
.
“
Letter of Credit Sublimit
” means an
amount equal to $15,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Dollar Revolving Credit Facility.
“
LIBO Rate
” means, for any Interest Period with respect to any Eurocurrency Rate Loan, the rate per annum determined
by the Administrative Agent at approximately 11:00 a.m., London time, on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates for
deposits in dollars (as set forth by the Bloomberg Information Service or any successor thereto or any other service selected by the Administrative Agent which has been nominated by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such Interest Period;
provided
that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO
Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in dollars are offered for such relevant Interest Period to major banks in the London interbank market
in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period.
23
“
Lien
” means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to Real Property, and any financing lease having substantially the same economic effect as any of the foregoing).
“
Loan
” means an extension of credit by a Lender to any Borrower under
Article II
in the form of a Term Loan or
Revolving Credit Loan.
“
Loan Documents
” means, collectively, this Agreement, each Note, each Issuer Document,
Amendment No. 1, each joinder agreement referred to in Section 2.14, each Subsidiary Joinder Agreement, and the Collateral Documents.
“
Loan Parties
” means, collectively, Holdings, the Borrowers and each Subsidiary that is or becomes a party to a Loan
Document.
“
MacDermid
” has the meaning specified in the preamble hereto.
“
Majority Facility Lenders
” means (a) with respect to the Term Loan Facility, the holders of a majority of the
aggregate unpaid principal amount of the Tranche B Term Loan Commitments and Tranche B Term Loans outstanding under the Term Loan Facility, (b) with respect to the Revolving Credit Facility, the holders of a majority of the Aggregate Revolving
Credit Exposure, (c) with respect to the Dollar Revolving Credit Facility, the holders of a majority of the Aggregate Dollar Revolving Credit Exposure and (d) with respect to the Multicurrency Revolving Credit Facility, the holders of a
majority of the Aggregate Multicurrency Revolving Credit Exposure.
“
Material Adverse Effect
” means (a) a
material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of PAH and its Subsidiaries taken as a whole; (b) a
material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.
“
Material Real Property
” has the meaning specified in
Section 7.12(b)
.
“
Maximum Rate
” has the meaning specified in
Section 11.09
.
“
Minimum Collateral Amount
” means, at any time, (a) with respect to cash collateral consisting of cash or deposit
account balances, an amount equal to 105% of the Fronting Exposure of any Issuing Bank with respect to Letters of Credit issued and outstanding at such time and (b) for purposes of
Section 2.15
, an amount reasonably determined by
the Administrative Agent and the applicable Issuing Bank.
“
Minimum Eurocurrency Borrowing Amount
” means,
(i) with respect to Section 2.02(a)(2), a principal amount equal to the Dollar Equivalent of $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (ii) with respect to Section 2.05(a)(ii), a principal amount equal to
the Dollar Equivalent of $1,000,000 or a whole multiple of $500,000 in excess thereof.
“
Moody’s
” means
Moody’s Investors Service, Inc. and any successor thereto.
24
“
Mortgage
” means an agreement, including, but not limited to, a fee
mortgage, deed of trust, deeds to secure debt, assignment of rents and leases or any other document, creating and evidencing a Lien on a Mortgaged Property delivered pursuant to
Section 7.12
, as may be amended, modified, supplemented,
extended and/or consolidated from time to time, which shall be substantially in the form of
Exhibit F
, which form Mortgage shall be substantially similar to the Existing Mortgage, with such schedules and including such provisions as
shall be necessary to conform such document to applicable local or foreign law or as shall be customary under applicable local or foreign law.
“
Mortgaged Property
” means (a) each owned Real Property identified as a Mortgaged Property on
Schedule
1.01(c)
and (b) each Material Real Property located in the United States, if any, owned by any Loan Party and which shall be subject to a Mortgage delivered after the Closing Date pursuant to
Section 7.12
.
“
Multicurrency Revolving Credit Borrowing
” means a borrowing consisting of simultaneous Multicurrency Revolving Credit
Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Multicurrency Revolving Lenders pursuant to
Section 2.01(b)
.
“
Multicurrency Revolving Credit Commitment
” means, as to each Multicurrency Revolving Lender, (i) its obligation
to make Multicurrency Revolving Credit Loans to the Revolving Credit Borrowers pursuant to
Section 2.01(b)
, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Multicurrency
Revolving Lender’s name on
Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
“
Multicurrency Revolving Credit Facility
”
has the meaning specified in the definition of “Facility”.
“
Multicurrency Revolving Credit Loan
” has the meaning specified in Section 2.01(b)(ii).
“
Multicurrency Revolving Lender
” means, at any time, any Lender that has a Multicurrency Revolving Credit Commitment
or an outstanding Multicurrency Revolving Credit Loan at such time.
“
Multicurrency Revolving Note
” has the
meaning specified in
Section 2.11(a)
.
“
Multicurrency Total Outstandings
” means the aggregate
Outstanding Amount of all Multicurrency Revolving Credit Loans.
“
Multiemployer Plan
” means any employee benefit
plan of the type described in Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding six plan years, has made or been obligated to make contributions.
“
Net Cash Proceeds
” means, (a) with respect to any Asset Sale or Recovery Event, the excess, if any, of
(i) the sum of cash and Cash Equivalents received therefrom (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over
(ii) the sum of (A) the principal amount of any Indebtedness that is secured by such asset and that is required to be repaid in connection with the sale thereof (other than Indebtedness under the Loan Documents), (B) the out-of-pocket
expenses incurred by any Borrower or any Subsidiary in connection therewith and (C) income taxes reasonably
25
estimated to be actually payable as a result of any gain recognized in connection therewith;
provided
,
however
, that, if (x) the Borrowers shall deliver a certificate of a
Responsible Officer of the Borrowers to the Administrative Agent at the time of receipt thereof setting forth the Borrowers’ intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Borrowers
and the Subsidiaries within (1) 360 days of receipt of such proceeds or (2) if the Borrowers enter into a legally binding commitment to reinvest such proceeds within 360 days following receipt thereof, within the earlier of 180 days
following the date such legally binding commitment is entered into and the date on which such legally binding commitment terminates or is abandoned without the consummation of the reinvestment contemplated thereby (such applicable period described
in clause (1) or (2), the “
Reinvestment Period
”) and (y) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the proposed time of the application of such
proceeds, such proceeds shall not constitute Net Cash Proceeds except to the extent not so used at the end of the Reinvestment Period, at which time such proceeds shall be deemed to be Net Cash Proceeds;
provided
,
further
, that any
proceeds of such a Recovery Event (from settlement of insurance or otherwise) shall be remitted to the Borrowers so long as such proceeds are not deemed to be Net Cash Proceeds; and (b) with respect to any issuance or disposition of
Indebtedness, the cash proceeds thereof, net of all taxes and reasonable and customary fees, commissions, costs and other expenses incurred by the Borrowers and the Subsidiaries in connection therewith.
“
New Loan Lender
” has the meaning specified in
Section 2.14(a)
.
“
New Term Loan Commitments
” mean the commitments in respect of any New Term Loan Facility.
“
New Term Loan Facility
” shall have the meaning assigned to such term in Section 2.14.
“
New Term Loan Maturity Date
” means the maturity date or expiration date of any New Term Loan.
“
New Term Loans
” means any advance made by a lender under a New Term Loan Facility.
“
Non-Excluded Taxes
”
has the meaning specified in
Section 3.01(a)
.
“
Non-Qualified Subsidiary
” means any Subsidiary that is not a Subsidiary Guarantor.
“
Nonrenewal Notice Date
” has the meaning specified in
Section 2.03(b)(iii)
.
“
Note
” or “
Notes
” means the Term Loan Notes, the Dollar Revolving Notes and/or the
Multicurrency Revolving Notes, individually or collectively, as appropriate.
“
NPL
” means the National Priorities
List maintained by the U.S. Environmental Protection Agency pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980.
“
Obligation Currency
” shall have the meaning assigned to such term in
Section 11.23(a)
.
“
Obligation Aggregate Payments
” has the meaning assigned to such term in Section 11.24.
“
Obligation Fair Share
” has the meaning assigned to such term in Section 11.24.
26
“
Obligation Fair Share Contribution Amount
” has the meaning assigned to
such term in Section 11.24.
“
Obligation Fair Share Shortfall
” has the meaning assigned to such term in
Section 11.24.
“
Obligations
” means (a) all advances to, and debts, liabilities, obligations, covenants
and duties of, any Loan Party arising under (i) any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising including the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by any Loan Party under any Loan
Document and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding, (ii) any Secured Hedge Agreement, (iii) any Treasury Management Agreement between any Loan Party and an Agent, an Arranger, the Bookrunner or a Lender, in each case at
the time such applicable Treasury Management Agreement is entered into, or an Affiliate of any of the foregoing and (b) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing that any Lender, in its
reasonable sole discretion, may elect to pay or advance on behalf of such Loan Party. Notwithstanding anything to the contrary, the “Obligations” shall not include any Excluded Swap Obligations.
“
Off-Balance Sheet Liabilities
” means all liabilities of PAH and its Subsidiaries to the extent that such liabilities
do not appear on the consolidated balance sheet of PAH, including, without limitation, liabilities, if any, in respect of the factoring and securitization of receivables.
“
OID
” has the meaning specified in
Section 2.14(d)
.
“
Organization Documents
” means, (a) with respect to any corporation, the certificate or articles of incorporation
and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of
such entity.
“
Other Taxes
” has the meaning specified in
Section 3.01(b)
.
“
Outstanding Amount
” means (i) with respect to Dollar Revolving Credit Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Dollar Revolving Credit Loans occurring on such date; (ii) with respect to Multicurrency Revolving Credit Loans on any date, the Dollar
Equivalent of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Multicurrency Revolving Credit Loans occurring on such date and (iii) with respect to any L/C Obligations on
any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.
27
“
PAH
” has the meaning specified in the preamble hereto.
“
Participant
” has the meaning specified in
Section 11.06(d)
.
“
Participant Register
” has the meaning specified in Section 11.06(d).
“
Paying Agent
” has the meaning specified in
Section 10.07
.
“
PBGC
” means the Pension Benefit Guaranty Corporation or any successor thereto.
“
Pension Plan
” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of
ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Borrower or any ERISA Affiliate or to which any Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in
the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding six plan years.
“
Perfection Certificate
” means the Pre-Closing UCC Diligence Certificate substantially in the form of
Exhibit G
or such other form approved by the Administrative Agent.
“
Permitted Acquisition
” means the acquisition by any
Borrower or any wholly-owned Subsidiary (other than Holdings and Platform Delaware Holdings, Inc.) of all or substantially all the assets of a Person or line of business of such Person, or all of the Equity Interests of a Person (referred to herein
as the “
Acquired Entity
”);
provided
that (i) the Acquired Entity shall be a going concern and shall be in a similar line of business as that of the Borrowers and the Subsidiaries as conducted during the current
and most recently concluded calendar year; (ii) at the time of such transaction (A) both before and after giving effect thereto, no Event of Default or Default shall have occurred and be continuing; (B) the Borrowers would be in Pro
Forma Compliance; and (C) the aggregate amount of the consideration paid in connection with such acquisition and any related acquisitions pursuant to clause (e) of the definition of “Permitted Investments” (including Indebtedness
of the Acquired Entity that is assumed by or on behalf of the Borrowers and their Subsidiaries (other than Holdings and Platform Delaware Holdings, Inc.) for any such purchase or other acquisition of an entity that does not become a Guarantor
(including by way of merger) when aggregated with the total cash and noncash consideration (calculated on the same basis) paid by or on behalf of the Borrowers and the other Subsidiaries (other than Holdings and Platform Delaware Holdings, Inc.) for
all other purchases and other acquisitions made by the Borrowers and the other Subsidiaries (other than Holdings and Platform Delaware Holdings, Inc.) of entities that do not become Guarantors (including by way of merger), shall not exceed
$150,000,000 in the aggregate since the Closing Date; (iii) PAH and its Subsidiaries shall not incur or assume any Indebtedness in connection with such acquisition, except as permitted by
Section 8.02
; and (iv) the Borrowers
shall comply, and shall cause the Acquired Entity to comply, with the applicable provisions of
Sections 7.12
and
7.14
and the Collateral Documents.
“
Permitted Equal Priority Refinancing Debt
” means any secured Indebtedness incurred by the Borrowers and/or the
Subsidiary Guarantors in the form of one or more series of senior secured notes, bonds or debentures;
provided
that (a) such Indebtedness is secured by Liens on all or a portion of the Collateral on an equal priority basis with the Liens
on the Collateral securing the Obligations (but without regard to the control of remedies) and is not secured by any property or assets of Holdings, any Borrower or any Subsidiary Guarantor other than the Collateral, (b) such Indebtedness
satisfies the applicable requirements set forth in the provisos to the definition of “Credit Agreement Refinancing Indebtedness”, (c) such Indebtedness is not at any time guaranteed by any Subsidiaries of the Borrowers other than the
Subsidiary Guarantors and Holdings and (d) the holders of such Indebtedness (or their representative) and the Administrative Agent and/or Collateral Agent shall become parties to a Customary
28
Intercreditor Agreement providing that the Liens on the Collateral securing such obligations shall rank equal in priority to the Liens on the Collateral securing the Obligations (but without
regard to the control of remedies).
“
Permitted Investments
” means:
(a) Investments outstanding as of the Closing Date (such Investments in excess of $1,000,000 are set forth on
Schedule
1.01(d)
) and any replacements of such Investments with Investments of equal amount thereto;
(b) (i) Investments by
(x) Holdings and its Subsidiaries existing on the Closing Date in MacDermid and its Subsidiaries and (y) PAH and Platform Delaware Holdings, Inc. in each of their respective Subsidiaries as of the Amendment No. 1 Effective Date and
(ii) additional Investments by PAH and its Subsidiaries in the Borrowers and the Subsidiaries (other than Holdings and Platform Delaware Holdings, Inc.);
provided
that (A) if such Investment shall be in the form of an investment in
Equity Interests, any such Equity Interests held by a Loan Party shall be pledged pursuant to the Pledge and Security Agreement (subject to the limitation referred to in the proviso of
Section 7.12(a)(iii)
in the case of any First-Tier
Foreign Subsidiary or Excluded Domestic Subsidiary), (B) the aggregate amount of Investments under this clause (b)(ii) by Loan Parties in Subsidiaries that are not Subsidiary Guarantors shall not exceed $50,000,000 at any time outstanding, and
(C) if such Investment shall be in the form of a loan or advance, such loan or advance shall be unsecured, and, in the case of a loan or advance owed by a Loan Party to a Subsidiary that is not a Loan Party, shall be subordinated to the
Obligations on terms reasonably satisfactory to the Administrative Agent and, if such loan or advance shall be made by a Loan Party, shall be evidenced by a promissory note and such promissory note shall be pledged to the Collateral Agent for the
ratable benefit of the Secured Parties pursuant to the Pledge and Security Agreement;
(c) deposits with, or time deposits
with, including certificates of deposits issued by, (i) any office located in the United States of any bank or trust company that is organized under the laws of the United States or any state thereof and has capital surplus and undivided
profits aggregating at least $100,000,000, (ii) any Lender or (iii) any foreign bank for which S&P or Moody’s issues a rating of “A” or higher and which has capital surplus and undivided profits aggregating at least
$100,000,000;
(d) Investments held by any Loan Party or such Subsidiary (other than Holdings and Platform Delaware
Holdings, Inc.) in the form of Cash Equivalents;
(e) Permitted Acquisitions;
(f) Permitted Investments or Investments to the extent permitted pursuant to
Sections 8.02
or
8.07
;
(g) Investments consisting of Permitted Swap Obligations;
(h) intercompany loans and advances to PAH pursuant to
Section 8.05(d)
;
provided
that such intercompany
loans and advances (i) shall be made for the purposes, and shall be subject to all the applicable limitations set forth in,
Section 8.05(d)
and (ii) shall be unsecured and subordinated to the Obligations on terms reasonably
satisfactory to the Administrative Agent;
(i) [RESERVED]
29
(j) advances, loans or extensions of credit to customers and suppliers or to
employees, in the ordinary course of business by any Borrower or any of its Subsidiaries; and
(k) other Investments in an
aggregate amount not to exceed $50,000,000 at any time outstanding.
For all purposes of this Agreement, the amount of any Investment
shall be the original costs of such Investment plus the cost of all additions thereto, without adjustments for increases or decreases in value, write-ups, write-downs or write-offs with respect to such Investment.
“
Permitted Junior Priority Refinancing Debt
” means secured Indebtedness incurred by any Borrower and/or the Subsidiary
Guarantors in the form of one or more series of junior lien secured notes, bonds or debentures or junior lien secured loans;
provided
that (a) such Indebtedness is secured by all or a portion of the Collateral on a junior priority basis
to the Liens on the Collateral securing the Obligations and is not secured by any property or assets of Holdings, any Borrower or any Subsidiary Guarantor other than the Collateral, (b) such Indebtedness satisfies the applicable requirements
set forth in the provisos in the definition of “Credit Agreement Refinancing Indebtedness” (provided that such Indebtedness may be secured by a Lien on the Collateral that ranks junior to the Liens on the Collateral securing the
Obligations, notwithstanding any provision to the contrary contained in the definition of “Credit Agreement Refinancing Indebtedness”), (c) the holders of such Indebtedness (or their representative) and the Administrative Agent and/or
the Collateral Agent shall become parties to a Customary Intercreditor Agreement providing that the Liens on the Collateral securing such obligations shall rank junior to the Liens on the Collateral securing the Obligations and (d) such
Indebtedness is not at any time guaranteed by any Subsidiaries of the Borrowers other than the Subsidiary Guarantors and Holdings.
“
Permitted Liens
” means:
(a) in the case of Real Property, easements, restrictions, exceptions, reservations or defects which, individually or in the aggregate,
(a) do not materially interfere with the ordinary conduct of the business of PAH or its Subsidiaries at such Real Property and (b) do not materially affect the value thereof;
(b) non-consensual Liens, if contested in good faith by appropriate proceedings and appropriate reserves are maintained, in accordance with
generally accepted accounting principles, with respect thereto;
(c) pledges or deposits to secure obligations under workmen’s
compensation laws or similar legislation or to secure performance in connection with bids, tenders and contracts (other than contracts for the payment of borrowed money) to which any Borrower or any of its Subsidiaries is a party;
(d) deposits to secure public or statutory obligations of any Borrower or any of its Subsidiaries;
(e) materialmen’s, mechanics’, carriers’, workmen’s or similar Liens arising in the ordinary course of business, or
deposits of cash or United States obligations to obtain the release of such Liens;
(f) deposits to secure surety or appeal bonds in
proceedings to which any Borrower or any of its Subsidiaries is a party;
30
(g) Liens for Taxes not yet due and payable or being contested in good faith by appropriate
proceedings with adequate reserves on the books of any Borrower or the applicable Subsidiary with respect thereto in accordance with GAAP;
(h) Leases of the properties of any Borrower or Subsidiary, in each case entered into in the ordinary course of such Borrower or
Subsidiary’s business so long as such Leases are subordinate in all respects to the Liens granted and evidenced by the Collateral Documents and do not, individually or in the aggregate, (i) interfere in any material respect with the
ordinary conduct of the business of any Borrower or Subsidiary, or (ii) materially impair the use (for its intended purposes) or the value of the property subject thereto;
(i) Liens solely on any cash earnest money deposits made by PAH or any of its Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;
(j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods in the ordinary course of business;
(k) licenses of patents, trademarks, trade
secrets, and other intellectual property rights granted by any Borrower or any of its Subsidiaries in the ordinary course of business;
(l) easements, rights-of-way, restrictions, encroachments, protrusions and other similar encumbrances and minor title defects affecting Real
Property which, in the aggregate, do not in any case materially interfere with the ordinary course of the business of PAH or any of its Subsidiaries;
(m) judgment Liens securing judgments not constituting an Event of Default under
Article IX
;
(n) Liens arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;
(o) bankers, liens, rights of setoff and other similar Liens on deposits in one or more accounts maintained by any Borrower or any Subsidiary,
in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those
involving pooled accounts and netting arrangements; and
(p) Liens in favor of the MacDermid Canning Pensions Limited Defined Benefit
Pension Scheme in respect of the UK Pension Plan Liabilities.
“
Permitted Refinancing Indebtedness
” means
Indebtedness issued or incurred (including by means of the extension or renewal of existing Indebtedness) to refinance, refund, extend, renew or replace existing Indebtedness (“
Refinanced Indebtedness
”);
provided
that
(a) the principal amount of such refinancing, refunding, extending, renewing or replacing Indebtedness is not greater than the principal amount of such Refinanced Indebtedness plus the amount of any premiums or penalties and accrued and unpaid
interest paid thereon and reasonable fees and expenses, in each case associated with such refinancing, refunding, extension, renewal or replacement, (b) such refinancing, refunding, extending, renewing or replacing Indebtedness has a final
maturity that is no sooner than, and a weighted average life to maturity that is no shorter than, such Refinanced Indebtedness, (c) if such Refinanced Indebtedness or any Guarantees thereof are subordinated to the Obligations, such refinancing,
refunding, extending, renewing or replacing Indebtedness and any Guarantees thereof remain so subordinated and shall have a lien priority no greater than the priority of the liens securing the Refinanced Indebtedness to
31
the Liens securing the Obligations in accordance with, and otherwise subject to, the terms of a Customary Intercreditor Agreement, (d) the obligors in respect of such Refinanced Indebtedness
immediately prior to such refinancing, refunding, extending, renewing or replacing are the only obligors on such refinancing, refunding extending, renewing or replacing Indebtedness and (e) such refinancing, refunding, extending, renewing or
replacing Indebtedness contains covenants and events of default and is benefited by Guarantees, if any, which, taken as a whole, are determined in good faith by a Responsible Officer of the Borrowers to be no less favorable to the Borrowers or the
applicable Subsidiary and the Lenders in any material respect than the covenants and events of default or Guarantees, if any, in respect of such Refinanced Indebtedness.
“
Permitted Swap Obligations
” means all obligations (contingent or otherwise) of any Borrower or any Subsidiary (other
than Holdings and Platform Delaware Holdings, Inc.) existing or arising under Swap Contracts,
provided
that (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise
prohibited hereunder, and not for purposes of speculation or taking a “market view” and (b) such Swap Contracts do not contain any provision (“walk-away” provision) exonerating the non-defaulting party from its obligation to
make payments on outstanding transactions to the defaulting party.
“
Permitted Unsecured Refinancing Debt
” means
unsecured Indebtedness incurred by the Borrowers and/or the Subsidiary Guarantors in the form of one or more series of senior unsecured notes, bonds or debentures or loans; provided that (a) such Indebtedness satisfies the applicable
requirements set forth in the provisos in the definition of “Credit Agreement Refinancing Indebtedness” and (b) such Indebtedness is not at any time guaranteed by any Subsidiaries of the Borrowers other than Subsidiary Guarantors and
Holdings.
“
Person
” means any natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.
“
Plan
” means any “employee
benefit plan” (as such term is defined in Section 3(3) of ERISA), other than a Multiemployer Plan, that is established by any Borrower or any of its Subsidiaries or, with respect to any such plan that is subject to Section 412 of the
Code or Title IV of ERISA, any ERISA Affiliate, in any case, that is not a Foreign Plan (as defined in Section 6.12(d)).
“
Plan Investor
” means any member of management or other employee or former employee of MacDermid who is a holder
(directly or indirectly) of Equity Interests in MacDermid on the Amendment No. 1 Effective Date.
“
Platform
”
has the meaning specified in
Section 7.02
.
“
Platform Acquisition
” means the acquisition of a majority
of the issued and outstanding membership interests of Holdings from Weston Presidio and Court Square Capital Partners II, L.P. and its other members by way of a merger of a wholly owned subsidiary of PAH with and into Holdings; and the acquisition
of all of the outstanding Equity Interests of MacDermid owned by the MacDermid, Incorporated Profit Sharing and Employee Savings Plan.
“
Pledge and Security Agreement
” means the Amended and Restated Pledge and Security Agreement dated as of the Amendment
No. 1 Effective Date executed by each of the Loan Parties and the Administrative Agent for the benefit of the holders of the Obligations, in substantially the form of
Exhibit H
, as amended or modified from time to time in accordance with
the terms hereof.
32
“
Pledged Collateral
” has the meaning assigned to it in the Pledge and
Security Agreement.
“
Pounds Sterling
” and the symbol “
£
” means the lawful currency of the
United Kingdom.
“
Prime Rate
” means the rate of interest per annum determined from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective as of the opening of business on the date such change is announced as being effective. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate actually available.
“
Pro Forma Basis
”
means, with respect to compliance with any test or covenant hereunder, compliance with such covenant or test after giving effect to any proposed incurrence of Indebtedness, Permitted Acquisition, Asset Sale (which relates to assets meeting the
definition of clause (c) of Investments) or the making of any Restricted Payment (including pro forma adjustments arising out of events which are directly attributable to the proposed transaction, are factually supportable and are expected to
have a continuing impact, in each case which adjustments (a) are based on reasonably detailed written assumptions reasonably acceptable to the Administrative Agent and (b) are certified by a Responsible Officer of MacDermid as having been
prepared in good faith based upon reasonable assumptions) using, for purposes of determining such compliance, the historical financial statements of all entities or assets so acquired or sold or to be acquired or sold and the consolidated financial
statements of PAH and its Subsidiaries which shall be reformulated as if such transaction, and any other such transactions that have been consummated during the period, and any Indebtedness or other liabilities incurred in connection with any such
Permitted Acquisitions had been consummated and incurred at the beginning of such period.
“
Pro Forma Compliance
”
means, at any date of determination, that PAH shall be in pro forma compliance with the covenant set forth in
Section 8.10
to the extent (unless otherwise stated herein to the contrary) that such covenant shall be applicable to PAH at
such time, as of the last day of the most recent fiscal quarter end (computed on the basis of (a) balance sheet amounts as of the most recently completed fiscal quarter, and (b) income statement amounts for the most recently completed
period of four consecutive fiscal quarters, in each case, for which financial statements shall have been delivered to the Administrative Agent and calculated on a Pro Forma Basis in respect of the event giving rise to such determination).
“
property
” means any right, title or interest in or to property or assets of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any Person and whether now in existence or owned or hereafter entered into or acquired, including all Real Property.
“
Pro Rata Dollar Share
” means, with respect to each Dollar Revolving Lender at any time, a fraction (expressed as a
percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Dollar Revolving Credit Commitment of such Lender at such time and the denominator of which is the amount of the Aggregate Dollar Revolving Credit
Commitments at such time;
provided
that if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to
Section 9.02
, then the Pro Rata Dollar
Share of each Lender shall be determined based on the Pro Rata Dollar Share of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof. The initial Pro Rata Dollar
Share of each Lender is set forth opposite the name of such Lender on
Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
33
“
Pro Rata Multicurrency Share
” means, with respect to each Multicurrency
Revolving Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Multicurrency Revolving Credit Commitment of such Lender at such time and the denominator of
which is the amount of the Aggregate Multicurrency Revolving Credit Commitments at such time;
provided
that if the commitment of each Lender to make Loans have been terminated pursuant to
Section 9.02
, then the Pro Rata
Multicurrency Share of each Lender shall be determined based on the Pro Rata Multicurrency Share of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof. The
initial Pro Rata Multicurrency Share of each Lender is set forth opposite the name of such Lender on
Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“
Pro Rata Share
” means, with respect to each Lender at any time, its Pro Rata Dollar Share, Pro Rata Multicurrency
Share or Pro Rata Tranche B Share, as applicable.
“
Pro Rata Tranche B Share
” means, with respect to each Tranche
B Term Loan Lender at any time, a percentage (carried out to the ninth decimal place) of the principal amount of the Tranche B Term Loan funded by such Tranche B Term Loan Lender. The initial Pro Rata Tranche B Share of each Tranche B Term Loan
Lender is set forth opposite the name of such Lender on
Schedule 2.01
or in the Assignment and Assumption pursuant to which such Tranche B Term Loan Lender becomes a party hereto, as applicable.
“
Public Lender
” has the meaning specified in
Section 7.02
.
“
Real Property
” means, collectively, all right, title and interest (including any leasehold, mineral or other estate)
in and to any and all parcels of or interests in Real Property owned, leased or operated by any Person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all
improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.
“
Recovery Event
” means any settlement of or payment in respect of any property or casualty insurance claim or any
taking under power of eminent domain or by condemnation or similar proceeding of or relating to any property or asset of PAH or any of its Subsidiaries (excluding, in each case, business interruption insurance claims).
“
Refinancing Incremental Term Loans
” has the meaning assigned to such term in Section 2.14.
“
Register
” has the meaning set forth in
Section 11.06(c)
.
“
Reinvestment Period
” has the meaning specified in the definition of “Net Cash Proceeds”.
“
Related Parties
” means, with respect to any Person, such Person’s Affiliates and the partners, directors,
trustees, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.
“
Release
”
means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including the abandonment or
disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), including the movement of any Hazardous Materials through the air, soil, surface water or groundwater.
34
“
Reorganization”
means the transaction through which PAH becomes a
corporation or a limited liability company organized under the laws of a state of the U.S., whether effected through a merger, consolidation, domestication or otherwise; provided, that (i) the survivor of such transaction (if not PAH) assumes
the obligations of PAH under the Loan Documents pursuant to assumption documentation reasonably satisfactory to the Administrative Agent (including any documents required by Section 7.12 and 7.14 of this Agreement) and (ii) the Lenders
will not recognize any income, gain or loss as a result of such reorganization (or related transaction).
“
Repricing
Transaction
” shall mean the prepayment, refinancing, substitution or replacement of all or a portion of the Term Loans with the incurrence by any Borrower or any Subsidiary of any new or replacement tranche of term loans bearing
interest at an “effective” interest rate (with the comparative determinations to be made by the Administrative Agent consistent with generally accepted financial practices, after giving effect to, among other factors, margin, interest rate
floors, upfront or similar fees or original issue discount shared with all providers of such financing, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all
providers of such bank loans, and without taking into account any fluctuations in the LIBO Rate) that is less than the “effective” interest rate (as determined by the Administrative Agent on the same basis) of such Term Loans, including as
may be effected through any amendment to this Agreement relating to the effective” interest rate of, such Term Loans.
“
Reportable Event
” means any of the events set forth in
Section 4043(c)
of ERISA, other than events for
which the 30 day notice period has been waived.
“
Request for Credit Extension
” means (a) with respect to a
Borrowing, conversion or continuation of Loans, a Committed Loan Notice and (b) with respect to an L/C Credit Extension, a Letter of Credit Application.
“
Required Lenders
” means, as of any date of determination, Lenders having more than 50% of the sum of the
(a) Term Loans, (b) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this definition) and
(c) aggregate unused Revolving Credit Commitments;
provided
that the unused Revolving Credit Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making
a determination of Required Lenders.
“
Required Prepayment Percentage
” means (a) (x) in the case of any Asset
Sale or Recovery Event (other than an Autotype Asset Sale), 100% and (y) in the case of any Autotype Asset Sale, 50%; (b) in the case of any issuance or other incurrence of Indebtedness, 100%; and (c) in the case of any Excess Cash
Flow, 50% or, if on the date of the applicable prepayment, the First Lien Net Leverage Ratio is less than or equal to 3.50 to 1.00 but greater than to 2.50 to 1.00, 25%, or, if on the date of the applicable prepayment, the First Lien Net Leverage
Ratio is less than or equal to 2.50 to 1.00, 0%.
“
Responsible Officer
” means the chief executive officer,
president, chief financial officer, treasurer or assistant treasurer, corporate secretary of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
35
“
Restricted Payment
” means (a) any dividend or other payment or
distribution (except dividends or distributions payable solely in shares of such Person’s common stock or to any Borrower or any of its Subsidiaries) with respect to any capital stock or other Equity Interest of PAH or any of its Subsidiaries,
or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or
other Equity Interest (other than any such capital stock or other Equity Interests owned by any Borrower or any of its Subsidiaries), or on account of any return of capital to Holdings’, any Borrower’s or any Subsidiary’s
stockholders, partners or members (or the equivalent Persons thereof), (b) any Investment other than a Permitted Investment and (c) any prepayment, redemption, purchase, defeasance or other satisfaction prior to the scheduled maturity
thereof in any manner, or payment in violation of any applicable subordination terms, in each case, with respect to (i) any Indebtedness secured by a second priority Lien on the assets of PAH or any of its Subsidiaries and (ii) any
Indebtedness that is subordinated to the Obligations.
“
Revolving Credit Borrowing
” means the Dollar Revolving
Credit Borrowings and the Multicurrency Revolving Credit Borrowings.
“
Revolving Credit Borrowers
” means each of
MacDermid and PAH.
“
Revolving Credit Commitment
” means the Dollar Revolving Credit Commitments and the
Multicurrency Revolving Credit Commitments.
“
Revolving Credit Facility
”
means the Dollar Revolving Credit
Facility and the Multicurrency Revolving Credit Facility.
“
Revolving Credit Lender
” means each of the Dollar
Revolving Lenders and the Multicurrency Revolving Lenders.
“
Revolving Credit Loan
” means the Dollar
Revolving Credit Loans and the Multicurrency Revolving Credit Loans.
“
Revolving Credit Maturity Date
” means the
earlier of (i) June 7, 2018 and (ii)(x) in the case of the Dollar Revolving Credit Facility, the date of termination in whole of the Dollar Revolving Credit Commitments and the Letter of Credit Commitments pursuant to
Section 2.06
or
9.02
and (y) in the case of the Multicurrency Revolving Credit Facility, the date of termination in whole of the Multicurrency Revolving Credit Commitments pursuant to
Section 2.06
or
9.02.
“
Revolving Note
” means the Dollar Revolving Notes and the Multicurrency Revolving Notes.
“
S&P
” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.
and any successor thereto.
“
SEC
” means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.
“
Second Lien Loan Documents
” has the meaning assigned to such term
in the Existing First Lien Credit Agreement.
“
Secured Hedge Agreement
” means any Swap Contract permitted under
VIII
that is entered into by and between any Borrower and any Hedge Bank.
36
“
Secured Parties
” means, collectively, the Arranger; the Administrative
Agent; the Collateral Agent; the Syndication Agent; the L/C Issuer; the Lenders; the Hedge Banks; an Agent, an Arranger, the Bookrunner or a Lender, in each case at the time such applicable Treasury Management Agreement is entered into, or an
Affiliate of any of the foregoing, in its capacity as a party to a Treasury Management Agreement; each co-agent or sub-agent appointed by the Agents from time to time pursuant to
Section 10.01(b);
and the other Persons the Obligations
owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents; each co-agent or sub-agent appointed by the Agents from time to time pursuant to
Section 10.01(b);
and the other Persons the
Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents.
“
Senior Secured Net Leverage Ratio
” means as of any date of determination, the ratio of (a) Consolidated Senior
Secured Debt as of such date minus the unrestricted cash and Cash Equivalents of the Borrowers and the Guarantors as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently ending on such date.
“
Significant Subsidiary
” means, at any date of determination, any Subsidiary of any Borrower that, either individually
or together with its Subsidiaries, taken as a whole, has revenues, assets or earnings in an amount equal to at least 5% of (a) the consolidated revenues of the Borrowers and their Subsidiaries for the most recently completed fiscal quarter for
which the Lenders have received financial statements of the Borrowers and their Subsidiaries pursuant to
Section 7.01(a)
or
7.01(b)
, (b) the consolidated assets of the Borrowers and their Subsidiaries as of the last day of
the most recently completed fiscal quarter for which the Lenders have received financial statements of the Borrowers and their Subsidiaries pursuant to
Section 7.01(a)
or
7.01(b)
, or (c) the consolidated net earnings of the
Borrowers and their Subsidiaries for the most recently completed fiscal quarter for which the Lenders have received financial statements of the Borrowers and their Subsidiaries pursuant to
Section 7.01(a)
or
7.01(b)
, respectively,
in each case determined in accordance with GAAP for such period.
“
Solvent
” and “
Solvency
”
mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“
SPC
” has the meaning specified in
Section 11.06(b)(vii)
.
“
Statutory Reserves
” means a fraction (expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board of Governors of the Federal Reserve
System of the United States of America and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Eurocurrency Rate Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
37
“
Subsidiary
” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such
power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a “
Subsidiary
” or to “
Subsidiaries
” shall refer to a Subsidiary or Subsidiaries of either of the Borrowers.
“
Subsidiary Guarantor
” means, collectively, the Subsidiaries of Holdings listed on
Schedule 1.01(f)
, Platform
Delaware Holdings, Inc. and each other Subsidiary of any Borrower that shall be required to execute and deliver a Subsidiary Joinder Agreement pursuant to
Section 7.12
. Notwithstanding the foregoing, a Subsidiary Guarantor shall not
include any Foreign Subsidiary.
“
Subsidiary Joinder Agreement
” means a joinder agreement substantially in the
form of
Exhibit I
or such other form approved by the Administrative Agent, executed and delivered by a Subsidiary of any Borrower in accordance with the provisions of
Section 7.12
.
“
Survey
” means a survey of any Mortgaged Property (and all improvements thereon) which is (a) (i) prepared
by a surveyor or engineer licensed to perform surveys in the jurisdiction where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred
within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property or any easement, right of way or other interest in the Mortgaged Property has been granted or become effective through operation of law
or otherwise with respect to such Mortgaged Property which, in either case, can be depicted on a survey, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall
not have been completed as of such date of delivery, not earlier than 20 days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other interest in the Mortgaged Property,
(iii) certified by the surveyor (in a manner reasonably acceptable to the Administrative Agent) to the Administrative Agent, the Collateral Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of
the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment)
relating to such Mortgaged Property and issue the endorsements of the type required by
Section 5.01(d)(iii)
or (b) otherwise reasonably acceptable to the Collateral Agent.
“
Swap Contract
” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions,
forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other
similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “
Master Agreement
”), including any such obligations or liabilities under any Master Agreement.
38
“
Swap Obligation
” means, with respect to any Guarantor, any obligation to
pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“
Swap Termination Value
” means, in respect of any one or more Swap Contracts, after taking into account the effect of
any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s),
and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by
any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
“
Syndication
Agent
” has the meaning specified in the preamble hereto.
“
Synthetic Lease Obligation
” means the
monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such
Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
“
Target Operating Day
” means any date that is not (a) a Saturday or Sunday, (b) Christmas Day or New
Year’s Day or (c) any other day on which the Trans-European Real-time Gross Settlement Operating System (or any successor settlement system) is not operating (as determined by the Administrative Agent).
“
Taxes
” has the meaning specified in
Section 3.01(a)
.
“
Term Loan
” means the Tranche B Term Loans and/or the New Term Loans, as the context may require.
“
Term Loan Borrower
” means MacDermid.
“
Term Loan Borrowing
” means a Borrowing comprised of Tranche B Term Loans or New Term Loans.
“
Term Loan Commitment
” means, a Tranche B Term Loan Commitment or a New Term Loan Commitment.
“
Term Loan Facility
” has the meaning specified in the definition of “Facility”.
“
Term Loan Lender
” means a Tranche B Term Loan Lender or a Lender in respect of a New Term Loan Facility, as the
context may require.
“
Term Loan Maturity Date
” means the Tranche B Maturity Date or the New Term Loan Maturity
Date, as the case may be.
“
Term Loan Note
” has the meaning specified in
Section 2.11(a)
.
“
Test Period
” means a period of four consecutive fiscal quarters.
“
Threshold Amount
” means $50,000,000.
39
“
Title Company
” means Chicago Title Insurance Company or any other title
insurance company as shall be retained by Borrowers and reasonably acceptable to the Administrative Agent.
“
Title
Policy
” shall have the meaning assigned to such term in
Section 5.01(d)(iii)
.
“
Total Net Leverage
Ratio
” shall mean, on any date of determination, the ratio of (a) Consolidated Indebtedness on such date
minus
the unrestricted cash and Cash Equivalents of the Borrowers and the Guarantors as of such date to
(b) Consolidated EBITDA for the period of four fiscal quarters most recently ending on such date.
“
Total
Outstandings
” means the aggregate Outstanding Amount of all Revolving Credit Loans and all L/C Obligations.
“
Total Revolving Credit Commitment
” means, at any time, the aggregate amount of the Revolving Credit Commitments, as
in effect at such time. The initial Total Revolving Credit Commitment on the Closing Date is $50,000,000.
“
Tranche B Term
Loan
” has the meaning specified in
Section 2.01(a)
.
“
Tranche B Term Loan Commitment
”
means, as to each Tranche B Term Loan Lender, its obligation to make Tranche B Term Loans to the Term Loan Borrower pursuant to
Section 2.01(a)
in an aggregate principal amount at any one time outstanding not to exceed the amount set
forth opposite such Lender’s name on
Schedule 2.01
under the caption “Tranche B Term Loan Commitment” or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may
be adjusted from time to time in accordance with this Agreement. The aggregate amount of Tranche B Term Loan Commitments on the Closing Date is $755,000,000.
“
Tranche B Term Loan Lender
” means, at any time, any Lender that has a Tranche B Term Loan Commitment or an
outstanding Tranche B Term Loan at such time.
“
Tranche B Maturity Date
” means June 7, 2020.
“
Tranche B Repayment Date
” has the meaning specified in
Section 2.07(a)
.
“
Transaction
” has the meaning assigned to such term in the Existing First Lien Credit Agreement.
“
Treasury Management Agreement
” means any agreement governing the provision of treasury or cash management services,
including deposit accounts, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services.
“
Triggering Event
” shall have the meaning set forth in
Section 8.10(a)
.
“
Type
” means, with respect to a Loan, its character as a Base Rate Loan or a Eurocurrency Rate Loan.
“
UK Pension Plan Liabilities”
means the underfunded pension plan liabilities of UK defined benefit pension plan in an
aggregate amount not exceeding £25,000,000.
“
United States
” and “
U.S.
” mean the
United States of America.
40
“
Unreimbursed Amount
” has the meaning set forth in
Section 2.03(c)(i)
.
“
Valuation Date
” means (i) in connection with borrowing any Multicurrency
Revolving Credit Loan, the date two (2) Business Days prior to the making, continuing or converting of any Multicurrency Revolving Credit Loan and (ii) in connection with the repayment of any Multicurrency Revolving Credit Loan, the date
of such repayment.
“
Voluntary Prepayment
” means a prepayment of principal of Term Loans pursuant to
Section 2.05(a)
in any year to the extent that such prepayment reduces the scheduled installments of principal due in respect of Term Loans as set forth in
Section 2.07
in any subsequent year.
“
Wholly-Owned Consolidated Subsidiary
” means any Subsidiary all of the Equity Interests in which (except
directors’ qualifying shares) are, at the time, directly or indirectly owned by any Borrower.
“
Yen
” and the
symbol “
¥
” means the lawful currency of Japan.
“
Yield Differential
” has the meaning
specified in
Section 2.14(d).
1.02
Other Interpretive Provisions
. With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:
(a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b)
(i) (i) The words “
herein
,” “
hereto
,” “
hereof
” and “
hereunder
” and words
of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof.
(ii) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears.
(iii) The term “including” is by way of example and not limitation.
(iv) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or electronic form.
(c) In the computation of
periods of time from a specified date to a later specified date, the word “
from
” means “
from and including
;” the words “
to
” and “
until
” each mean “
to but
excluding
;” and the word “
through
” means “
to and including
.”
(d) Section
headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
41
1.03
Accounting Terms
(a) (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except
as otherwise specifically prescribed herein.
(b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan
Document, and either MacDermid or the Required Lenders shall so request, the Administrative Agent, the Lenders and MacDermid shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such
change in GAAP (subject to the approval of the Required Lenders);
provided
that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the
Borrowers shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP. Any change in GAAP occurring after the Amendment No. 1 Effective Date that would require operating leases to be treated as capital leases shall be disregarded for the
purposes of determining Indebtedness and any financial ratio or compliance requirement contained in any Loan Document.
1.04
Rounding
. Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.05
References to Agreements and Laws
. Unless otherwise expressly provided herein, (a) references to Organization Documents,
agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.
1.06
Times of Day
. Unless otherwise specified, all references herein to times of day shall be references to
Eastern time (daylight or standard, as applicable).
1.07
Letter of Credit Amounts
. Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time;
provided
,
however
, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.
42
1.08
Conversion of Foreign Currencies.
(a)
Consolidated Indebtedness
. Consolidated Indebtedness denominated in any currency other than Dollars shall be calculated using the
Dollar Equivalent thereof as of the date of the applicable financial statements on which such Consolidated Indebtedness is reflected.
(b)
Dollar Equivalents
. The Administrative Agent shall determine the Dollar Equivalent of any amount as of each Valuation Date (whether to determine compliance with any covenants specified herein or otherwise), and a determination thereof by the
Administrative Agent shall be conclusive absent manifest error. Such determination shall become effective as of such Valuation Date. The Administrative Agent may, but shall not be obligated to, rely on any determination made by any Loan Party in any
document delivered to the Administrative Agent. The Administrative Agent may determine or redetermine the Dollar Equivalent of any amount on any date either in its reasonable discretion or upon the reasonable request of any Lender or L/C Issuer.
(c)
Rounding-Off
. The Administrative Agent may set up appropriate rounding off mechanisms or otherwise round-off amounts hereunder
to the nearest higher or lower amount in whole Dollar or cent to ensure amounts owing by any party hereunder or that otherwise need to be calculated or converted hereunder are expressed in whole Dollars or in whole cents, as may be necessary or
appropriate.
ARTICLE II
THE
COMMITMENTS AND CREDIT EXTENSIONS
2.01
The Loans
(a) . Subject to the terms and conditions set forth herein, each Tranche B Term Loan Lender severally agrees to make term loans
(each such loan, a “
Tranche B Term Loan
”) to the Term Loan Borrower on the Closing Date in Dollars in an aggregate amount of up to such Tranche B Term Loan Lender’s Tranche B Term Loan Commitment. Amounts repaid or
prepaid in respect of Term Loans may not be reborrowed. Tranche B Term Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.
(b) Subject to the terms and conditions set forth herein, (i) each Dollar Revolving Lender severally agrees to make
revolving loans (each such loan, a “
Dollar Revolving Credit Loan
”) in Dollars to each Revolving Credit Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount of up to, at any
time outstanding, the amount of such Lender’s Dollar Revolving Credit Commitment and (ii) each Multicurrency Revolving Lender severally agrees to make revolving loans (each such loan, a “
Multicurrency Revolving Credit
Loan
”) in Dollars or an Alternative Currency to each Revolving Credit Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount of up to, at any time outstanding, the amount of such
Lender’s Multicurrency Revolving Credit Commitment;
provided
,
further
,
however
, that (1) after giving effect to any Dollar Revolving Credit Borrowing, (i) the aggregate Outstanding Amount of all Dollar Revolving
Credit Loans and L/C Obligations shall not exceed the Aggregate Dollar Revolving Credit Commitments and (ii) the aggregate Outstanding Amount of the Dollar Revolving Credit Loans of any Dollar Revolving Lender
plus
such Dollar Revolving
Lender’s Pro Rata Dollar Share of an amount equal to the aggregate Outstanding Amount of all L/C Obligations shall not exceed such Dollar Revolving Lender’s Dollar Revolving Credit Commitment, (2) after giving effect to any
Multicurrency Revolving Credit Borrowing, (i) the
43
aggregate Outstanding Amount of all Multicurrency Revolving Credit Loans shall not exceed the Aggregate Multicurrency Revolving Credit Commitments and (ii) the aggregate Outstanding Amount
of the Multicurrency Revolving Credit Loans of any Multicurrency Revolving Lender shall not exceed such Multicurrency Revolving Lender’s Multicurrency Revolving Credit Commitment and (3) after giving effect to any Revolving Credit
Borrowing, the Total Outstandings shall not exceed the Total Revolving Credit Commitments. Within the limits of each Lender’s Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Revolving Credit Borrowers may
borrow under this
Section 2.01
, prepay under
Section 2.05
, and reborrow under this
Section 2.01
. Revolving Credit Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.
2.02
Borrowings, Conversions and Continuations of Loans
.
(a) (1) Except as set forth below in clause (2) with respect to Multicurrency Revolving Credit Loans that are Eurocurrency
Rate Loans, each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurocurrency Rate Loans shall be made upon the Term Loan Borrower’s or any Revolving Credit Borrowers’, as applicable, irrevocable
notice to the Administrative Agent. Each such notice must be received by the Administrative Agent not later than (i) 11:00 A.M. on the third Business Day prior to the date of the proposed Loans in the case of Eurocurrency Rate Loans or
(ii) 12:00 p.m. on the same Business Day of the proposed Loans in the case of Base Rate Loans. The applicable Borrower shall deliver such notice to the Administrative Agent in the form of a written Committed Loan Notice, appropriately completed
and signed by a Responsible Officer of the applicable Borrower. Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as
provided in
Sections 2.03(c)
, each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the
applicable Borrower is requesting a Borrowing of Tranche B Term Loans (in the case of the Term Loan Borrower), a Dollar Revolving Credit Borrowing (in the case of any Revolving Credit Borrower), a Multicurrency Revolving Credit Borrowing (in the
case of any Revolving Credit Borrower), a conversion of Loans from one Type to the other, or a continuation of Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued and location of the account to which funds are to be disbursed, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted,
(v) if such Borrowing is a Multicurrency Revolving Credit Borrowing, whether such Borrowing is in Dollars, Yen, Pounds Sterling or Euro and (vi) if applicable, the duration of the Interest Period with respect thereto. If any Borrower fails
to specify a Type of Loan in a Committed Loan Notice or if any Borrower fails to give a timely notice requesting a conversion or continuation, then Loans (other than Multicurrency Revolving Credit Loans) shall be made as, or converted to, Base Rate
Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Loans. If any Borrower fails to specify an Interest Period with
respect to a Eurocurrency Rate Loan, it will be deemed to have specified an Interest Period of one month.
(2) Each Borrowing of
Multicurrency Revolving Credit Loans that are Eurocurrency Rate Loans and each continuation of such Eurocurrency Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent. Each such notice must be received by
the Administrative Agent not later than 11:00 A.M. on the fourth Business Day prior to the date of the proposed borrowing or continuation of such Eurocurrency Rate Loans; provided, that in the case of a Borrowing or
44
continuation of Multicurrency Revolving Loans in Yen, such notice must be received by the Administrative Agent not later than 11:00 A.M. on the fifth Business Day prior to the date of the
proposed borrowing or continuation of such Eurocurrency Rate Loans. Each Borrowing of or continuation of such Eurocurrency Rate Loans shall be in a principal amount that is not less than the Minimum Eurocurrency Borrowing Amount.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each applicable Lender of the
amount of its Pro Rata Share of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the applicable Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to
Base Rate Loans described in
Section 2.02(a)
. Each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 3:00 p.m. on the
Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in
Section 5.02
(and, if such Borrowing is the initial Credit Extension,
Section 5.01
), the
Administrative Agent shall make all funds so received available to the applicable Borrower in like funds as received by the Administrative Agent by wire transfer of such funds, in accordance with instructions provided to the Administrative Agent by
such Borrower in the Committed Loan Notice.
(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be
continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan. Upon notice to MacDermid from the Administrative Agent given at the request of the Required Lenders, during the existence of a Default, Loans may not
be requested as, converted to or continued as Eurocurrency Rate Loans without the consent of the Required Lenders;
provided
,
however
, that Multicurrency Revolving Credit Loans may be continued as Eurocurrency Rate Loans with an
Interest Period of one month. No Interest Period may be selected for any Eurocurrency Rate Term Borrowing that would end later than the Tranche B Repayment Date occurring on or after the first day of such Interest Period if, after giving effect to
such selection, the aggregate outstanding amount of (i) the Eurocurrency Rate Term Borrowings with Interest Periods ending on or prior to such repayment date and (B) the Base Rate Term Borrowings would not be at least equal to the
principal amount of Term Borrowings to be paid on such repayment date.
(d) The Administrative Agent shall promptly notify
the Borrowers and the Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Loans upon determination of such interest rate. The determination of the Eurocurrency Rate by the Administrative Agent shall be conclusive in
the absence of manifest error. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrowers and the Lenders of any change in the Prime Rate used in determining the Base Rate promptly following the
announcement of such change.
(e) After giving effect to all Borrowings, all conversions of Loans from one Type to the
other, and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect.
(f)
The failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the
failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing.
45
2.03
Letters of Credit
.
(a)
The Letter of Credit Commitment
.
(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other
Lenders set forth in this
Section 2.03
, (1) from time to time on any Business Day during the period from the Closing Date until 30 days prior to the Revolving Credit Maturity Date (or, if such day is not a Business Day, the next
preceding Business Day), to issue Letters of Credit denominated in Dollars for the account of each Revolving Credit Borrower, and to amend or renew Letters of Credit previously issued by it, in accordance with
Section 2.03(b)
, and
(2) to honor drafts under the Letters of Credit; and (B) the Dollar Revolving Lenders severally agree to participate in Letters of Credit issued for the account of each Revolving Credit Borrower or any of its Wholly-Owned Consolidated
Subsidiaries;
provided
that the L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Dollar Revolving Lender shall be obligated to participate in any Letter of Credit if as of the
date of such L/C Credit Extension, (w) the aggregate Outstanding Amount of all Dollar Revolving Credit Loans and L/C Obligations would exceed the Aggregate Dollar Revolving Credit Commitments, (x) the aggregate Outstanding Amount of the
Dollar Revolving Credit Loans of any Dollar Revolving Lender
plus
such Dollar Revolving Lender’s Pro Rata Dollar Share of the Outstanding Amount of all L/C Obligations would exceed such Dollar Revolving Lender’s Dollar Revolving
Credit Commitment, (y) the Total Outstandings would exceed the Total Revolving Credit Commitments, or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Each request by any Revolving Credit
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by such Revolving Credit Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the first proviso in the
preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, each Revolving Credit Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly such Revolving Credit Borrower may,
during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after
the Closing Date shall be subject to and governed by the terms and conditions hereof.
(ii) The L/C Issuer shall be under no obligation
to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the
L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which the L/C Issuer in good faith deems material to it;
(B) subject to
Section 2.03(b)(iii)
, the expiry date of
such requested Letter of Credit would occur more than twelve months after the date of issuance or last renewal (or as otherwise agreed by the Administrative Agent and the L/C Issuer);
(C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have
approved such expiry date;
(D) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer;
46
(E) except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of
Credit is in an initial stated amount less than $100,000; or
(F) any Lender is at such time a Defaulting Lender hereunder, unless the
L/C Issuer has entered into satisfactory arrangements with the Revolving Credit Borrowers or such Lender to eliminate the L/C Issuer’s risk with respect to such Lender or reallocate such risk pursuant to
Section 2.15(a)(iv)
.
(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such
time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
(iv) The L/C Issuer shall act on behalf of the Dollar Revolving Lenders with respect to any Letters of Credit issued by it and the documents
associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Agents in
Article X
with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Agents” as used in
Article X
included the L/C Issuer with respect to such acts or omissions, and
(B) as additionally provided herein with respect to the L/C Issuer.
(b)
Procedures for Issuance and Amendment of
Letters of Credit; Auto-Renewal Letters of Credit
.
(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of each Revolving Credit Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application and including agreed-upon draft language for such Letter of Credit reasonably
acceptable to the applicable L/C Issuer, appropriately completed and signed by a Responsible Officer of such Revolving Credit Borrower. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than
1:00 p.m. at least three Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount and requested currency thereof and the absence of specification of currency shall be deemed a request for a Letter of Credit denominated in Dollars; (C) the expiry date thereof; (D) the name and address
of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and
(G) such other matters as the L/C Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer
(A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may reasonably require.
Additionally, the Revolving Credit Borrowers shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as
the L/C Issuer or the Administrative Agent may reasonably require.
(ii) Promptly after receipt of any Letter of Credit Application, the
L/C Issuer will confirm with the Administrative Agent (in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the applicable Revolving Credit Borrower and, if not, the L/C
47
Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is
permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the applicable Revolving Credit Borrower or enter into the
applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Dollar Revolving Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Pro Rata Dollar Share
times
the amount of such Letter of
Credit.
(iii) If any Revolving Credit Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its
sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an “
Auto-Renewal Letter of Credit
”);
provided
that any such Auto-Renewal Letter of Credit must permit the L/C
Issuer to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “
Nonrenewal Notice
Date
”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Revolving Credit Borrowers shall not be required to make a specific request to the
L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Dollar Revolving Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the renewal of such Letter of Credit at any time
to an expiry date not later than the Letter of Credit Expiration Date;
provided
,
however
, that the L/C Issuer shall not permit any such renewal if (A) the L/C Issuer has determined that it would have no obligation at such time to
issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of
Section 2.03(a)(ii)
or otherwise), or (B) it has received notice (in writing) on or before the day that is three Business Days
before the Nonrenewal Notice Date (1) from the Administrative Agent that the Majority Facility Lenders in respect of the Dollar Revolving Credit Facility have elected not to permit such renewal or (2) from the Administrative Agent, any
Dollar Revolving Lender or any Revolving Credit Borrower that one or more of the applicable conditions specified in
Section 5.02
is not then satisfied.
(iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or
to the beneficiary thereof, the L/C Issuer will also deliver to the applicable Revolving Credit Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(c)
Drawings and Reimbursements; Funding of Participations
.
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall
notify the applicable Revolving Credit Borrower and the Administrative Agent thereof. Not later than 11:00 a.m. on the date immediately following any payment by the L/C Issuer under a Letter of Credit (each such date, an “
Honor
Date
”), each Revolving Credit Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing for a Letter of Credit issued on its behalf. If such Revolving Credit Borrower fails
to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Dollar Revolving Lender of the Honor Date, the amount of the unreimbursed drawing (the “
Unreimbursed Amount
”), and the amount of
such Dollar Revolving Lender’s Pro Rata Dollar Share thereof. In such event, such Revolving Credit Borrower shall be deemed to have requested a Dollar Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount
equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Dollar Revolving Credit
Commitments and the conditions set forth in
Section 5.02
(other than the
48
delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this
Section 2.03(c)(i)
must be in writing;
provided
that the
lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii) Each Dollar Revolving
Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to
Section 2.03(c)(i)
make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent’s Office in an
amount equal to its Pro Rata Dollar Share of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of
Section 2.03(c)(iii)
, each
Dollar Revolving Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the applicable Revolving Credit Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the
conditions set forth in
Section 5.02
cannot be satisfied or for any other reason, the applicable Revolving Credit Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount
that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Revolving Credit Lender’s payment to the Administrative Agent for the
account of the L/C Issuer pursuant to
Section 2.03(c)(ii)
shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation
under this
Section 2.03
.
(iv) Until each Dollar Revolving Lender funds its Dollar Revolving Credit Loan or L/C Advance
pursuant to this
Section 2.03(c)
to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata Dollar Share of such amount shall be solely for the account of the L/C
Issuer.
(v) Each Dollar Revolving Lender’s obligation to make Dollar Revolving Credit Loans or L/C Advances to reimburse the L/C
Issuer for amounts drawn under Letters of Credit, as contemplated by this
Section 2.03(c)
, shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment,
defense or other right which such Lender may have against the L/C Issuer, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether
or not similar to any of the foregoing;
provided
,
however
, that each Dollar Revolving Lender’s obligation to make Dollar Revolving Credit Loans pursuant to this
Section 2.03(c)
is subject to the conditions set forth in
Section 5.02
(other than delivery by any Revolving Credit Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Revolving Credit Borrowers to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit issued to such Revolving Credit Borrower, together with interest as provided herein.
(vi) If any Dollar Revolving Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required
to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.03(c)
by the time specified in
Section 2.03(c)(ii)
, the L/C Issuer shall be entitled to recover from such Dollar Revolving Lender (acting
through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection
with the foregoing. If such Dollar
49
Revolving Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Dollar Revolving Credit Loan included in the relevant Borrowing or
L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Dollar Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this
Section 2.03(c)(vi)
shall be conclusive absent manifest error.
(d)
Repayment of Participations
.
(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Dollar Revolving Lender such
Lender’s L/C Advance in respect of such payment in accordance with
Section 2.03(c)
, if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from any Revolving Credit Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Dollar Revolving Lender its Pro Rata Dollar Share
thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to
Section 2.03(c)(i)
is
required to be returned under any of the circumstances described in
Section 11.05
(including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Dollar Revolving Lender shall pay to the Administrative Agent
for the account of the L/C Issuer its Pro Rata Dollar Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Dollar Revolving Lender, at a rate per annum
equal to the Federal Funds Rate from time to time in effect. The obligations of the Dollar Revolving Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e)
Obligations Absolute
. The obligation of each Revolving Credit Borrower to reimburse the L/C Issuer for each drawing
under each Letter of Credit issued on behalf of such Revolving Credit Borrower and to repay each such L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any
other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that any
Revolving Credit Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply
with the terms of such Letter of Credit;
50
or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
(v) any exchange, release or nonperfection of any Collateral, or any release or amendment or waiver of or consent to departure from the
Guaranty or any other guarantee, for all or any of the Obligations of any Revolving Credit Borrower in respect of such Letter of Credit; or
(vi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any Revolving Credit Borrower.
Each Revolving Credit Borrower shall
promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with such Revolving Credit Borrower’s instructions or other irregularity, such Revolving Credit
Borrower will immediately notify the L/C Issuer. Each Revolving Credit Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.
(f)
Role of L/C Issuer
. Each Lender and each Revolving Credit Borrower agree that, in paying any drawing under a Letter
of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any
such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any of the respective correspondents, participants or assignees of
the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and nonappealable judgment); or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument
related to any Letter of Credit or Letter of Credit Application. Each Revolving Credit Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit;
provided
,
however
, that this assumption is not intended to, and shall not, preclude any Revolving Credit Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of
the L/C Issuer, the Administrative Agent, any of their respective Related Parties, nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses
(i) through (v) of
Section 2.03(e)
;
provided
,
however
, that anything in such clauses to the contrary notwithstanding, a Revolving Credit Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to such Revolving Credit Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by such Revolving Credit Borrower which such Revolving Credit Borrower proves were caused by
the L/C Issuer’s willful misconduct or gross negligence (as determined by a court of competent jurisdiction by final and nonappealable judgment) or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation
to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.
51
(g)
Cash Collateral
. Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason
remains outstanding, the Revolving Credit Borrowers shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to 105% of such Outstanding Amount determined as of the date of such L/C
Borrowing or the Letter of Credit Expiration Date, as the case may be). For purposes of this
Section 2.03
,
Section 2.05
and
Section 9.02(c)
, “
Cash Collateralize
” means to pledge and deposit
with or deliver to the Collateral Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Collateral Agent
and the L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Revolving Credit Borrowers hereby grant to the Collateral Agent, for the benefit of the L/C Issuer and the Dollar
Revolving Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash Collateral shall be maintained in blocked deposit accounts with the Collateral Agent. If at any time the
Administrative Agent or the Collateral Agent determines that any funds held as Cash Collateral are subject to any right or claim of any Person other than the Collateral Agent or that the total amount of such funds is less than 105% of the aggregate
Outstanding Amount of all L/C Obligations, the Revolving Credit Borrowers will, forthwith upon demand by the Collateral Agent, pay to the Collateral Agent, as additional funds to be deposited and held in the deposit accounts with the Collateral
Agent as aforesaid, an amount equal to the excess of (a) 105% of such aggregate Outstanding Amount over (b) the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent or the Collateral Agent determines to
be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable law, to reimburse the L/C Issuer.
(h)
Applicability of ISP98
. Unless otherwise expressly agreed by the L/C Issuer and the Revolving Credit Borrowers, when
a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or
such later version thereof as may be in effect at the time of issuance) shall apply to each Letter of Credit.
(i)
Letter of Credit Fees
. The Revolving Credit Borrowers shall pay to the Administrative Agent for the account of each Dollar Revolving Lender in accordance with its Pro Rata Dollar Share a Letter of Credit fee (the “
Letter of Credit
Fee
”) for each Letter of Credit equal to the Applicable Rate
times
the daily maximum amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance with
Section 1.07
. Such letter of credit fees shall be computed on a quarterly basis in arrears. Letter of Credit Fees shall be (i) due and payable on the
last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the date on which the Dollar Revolving Credit Commitment of each Dollar Revolving Lender
shall be terminated as provided herein, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily maximum
amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
52
(j)
Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer
. The Revolving Credit Borrowers shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit at a rate per annum equal to 0.25% unless as otherwise agreed with such L/C Issuer, computed on
the daily amount available to be drawn under each Letter of Credit on a quarterly basis in arrears. Such fronting fees shall due and payable on the last Business Day of each March, June, September and December in respect of the most recently-ended
quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the date on which the Dollar Revolving Credit Commitments shall be terminated as
provided herein, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance
with
Section 1.07
. In addition, the Revolving Credit Borrowers shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
(k)
Conflict with Issuer Documents
. In the event of any conflict between the terms hereof and the terms of any Issuer
Document, the terms hereof shall control.
(l)
Resignation or Removal of the L/C Issuer
. The L/C Issuer may resign
at any time by giving 90 days’ prior written notice to the Administrative Agent, the Lenders and the Revolving Credit Borrowers. Subject to the next succeeding paragraph, upon the acceptance of any appointment as the L/C Issuer hereunder by a
Lender that shall agree to serve as successor L/C Issuer, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring L/C Issuer and the retiring L/C Issuer shall be discharged from its
obligations to issue additional Letters of Credit hereunder. At the time such removal or resignation shall become effective, the Revolving Credit Borrowers shall pay all accrued and unpaid fees pursuant to
Section 2.03(j)
. The acceptance
of any appointment as the L/C Issuer hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Revolving Credit Borrowers and the Administrative Agent, and, from and after the
effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous L/C Issuer under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents
to the term “L/C Issuer” shall be deemed to refer to such successor or to any previous L/C Issuer, or to such successor and all previous L/C Issuers, as the context shall require. After the resignation or removal of the L/C Issuer
hereunder, the retiring L/C Issuer shall remain a party hereto and shall continue to have all the rights and obligations of an L/C Issuer under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue additional Letters of Credit.
(m)
Additional L/C
Issuers
. The Revolving Credit Borrowers may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such Lender, designate one or more additional Lenders to act as an
issuing bank under the terms of the Agreement. Any Lender designated as an issuing bank pursuant to this paragraph shall be deemed to be an “L/C Issuer” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued
by such Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other L/C Issuer and such Lender.
(n) Notwithstanding anything to the contrary set forth herein, the parties hereto agree that effective upon the L/C Replacement
Date, Credit Suisse AG, in its capacity as L/C Issuer will resign as L/C Issuer (the “
L/C Resignation
”) solely with respect to the Cancelled L/Cs (as
53
defined below). The parties hereto further agree that on or before the date that is ninety (90) days after the Amendment No. 1 Effective Date (or such later date as Barclays Bank PLC
and Credit Suisse AG agree, the “
L/C Replacement Date
”), the Existing Letters of Credit (other than the Existing Letters of Credit Nos. TS-07004512 and TS-07004513 with the Connecticut Department of Environmental Protection, as
beneficiary (collectively, the “
CT L/Cs
”)) will be replaced (the “
Cancelled L/Cs
”) with new Letters of Credit in form and substance satisfactory to Barclays Bank PLC, in its capacity as L/C Issuer, and MacDermid.
From and after the L/C Replacement Date, Credit Suisse AG, in its capacity as L/C Issuer, shall be released from all duties and obligations as a L/C Issuer with respect to the Cancelled L/Cs. Credit Suisse AG, in its capacity as L/C Issuer, Barclays
Bank PLC, in its capacity as L/C Issuer, and MacDermid further agree that in the event that the CT L/Cs are not terminated by December 31, 2013, Barclays Bank PLC, in its capacity as L/C Issuer, and MacDermid will use best efforts to replace
such CT L/Cs with new Letters of Credit issued by Barclays Bank PLC, in its capacity as L/C Issuer (the date of such replacement, the “
CT L/C Replacement Date
”). From and after the CT L/C Replacement Date, if it occurs, Credit
Suisse AG, in its capacity as L/C Issuer, shall be released from all duties and obligations as a L/C Issuer with respect to the CT L/Cs. For the avoidance of doubt, the parties hereto agree that the Credit Suisse AG shall have no obligation to issue
any additional Letters of Credit from and after the Amendment No. 1 Effective Date.
2.04
[RESERVED]
.
2.05
Prepayments
.
(a)
Optional
(i) . (i) Except as set forth in clause (ii) below with respect to Multicurrency Revolving Credit Loans, the Borrowers may, upon
notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty (other than as set forth in
Section 2.05(a)(iv))
;
provided
that (1) such notice must
be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurocurrency Rate Loans, and (B) one Business Day prior to the date of prepayment of Base Rate Loans; (2) any
prepayment of Eurocurrency Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof; and (3) any prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall be substantially in the form of
Exhibit L
and shall specify the date and amount of such prepayment, the Class
and the Type(s) of Loans to be prepaid, whether such prepayment is of a Dollar Revolving Credit Loan or Multicurrency Revolving Credit Loan and if Eurocurrency Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative
Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Dollar Share, Pro Rata Multicurrency Share or other Pro Rata Tranche B Share, as applicable, of such prepayment. If such
notice is given by the Borrowers, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all
accrued interest thereon, together with any additional amounts required pursuant to
Section 3.05
.
(ii) The Borrowers may,
upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Multicurrency Revolving Credit Loans in whole or in part without premium or penalty (other than as set forth in
Section 2.05(a)(iv))
;
provided
that such notice must
54
be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to any date of prepayment of Eurocurrency Rate Loans. Each prepayment of Multicurrency Revolving Credit
Loans that are Eurocurrency Rate Loans shall be in a principal amount that is not less than the Minimum Eurocurrency Borrowing Amount, or, if less, the entire principal amount thereof then outstanding.
(iii) Optional prepayments of Term Loans shall be applied on a pro rata basis in direct order to the remaining scheduled installments of
principal due in respect of the Tranche B Term Loans pursuant to
Section 2.07
.
(iv) In the event that, on or prior to twelve
months after the Closing Date, any Borrower (x) prepays, refinances, substitutes or replaces any Term Loans in connection with a Repricing Transaction (including, for avoidance of doubt, any prepayment made pursuant to Section 2.05(b)(iv)
that constitutes a Repricing Transaction), or (y) effects any amendment of this Agreement resulting in a Repricing Transaction, the Borrowers shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders,
(I) in the case of clause (x), a prepayment premium of 1.00% of the aggregate principal amount of the Term Loans so prepaid, refinanced, substituted or replaced and (II) in the case of clause (y), a fee equal to 1.00% of the aggregate
principal amount of the applicable Term Loans outstanding immediately prior to such amendment. Such amounts shall be due and payable on the date of effectiveness of such Repricing Transaction. As a condition to effectiveness of any assignment
pursuant to the parenthetical set forth in the first sentence of Section 11.15 in respect of any amendment of this Agreement effective on or prior to twelve months after the Closing Date resulting in a Repricing Transaction, the Borrowers shall
pay to the applicable non-consenting Lender a premium equal to the premium that would apply if such Lender’s Term Loans being assigned were being prepaid and subject to the premium set forth in the immediately preceding sentence.
(b)
Mandatory
(i) . (i) In the event of any termination of all of the Dollar Revolving Credit Commitments, the Revolving Credit Borrowers shall, on
the date of such termination, repay or prepay all outstanding Dollar Revolving Credit Loans and replace all outstanding Letters of Credit and/or Cash Collateralize the L/C Obligations in a cash collateral account established with the Collateral
Agent for the benefit of the Secured Parties in the manner described in
Section 2.03(g)
. In the event of any termination of all of the Multicurrency Revolving Credit Commitments, the Borrowers shall, on the date of such termination,
repay or prepay all outstanding Multicurrency Revolving Credit Loans. If for any reason the Outstanding Amount of all Dollar Revolving Credit Loans and L/C Obligations at any time exceed the Aggregate Dollar Revolving Credit Commitments then in
effect, the Borrowers shall immediately prepay all outstanding Dollar Revolving Credit Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess;
provided
,
however
, that the Borrowers shall not be
required to Cash Collateralize the L/C Obligations pursuant to this
Section 2.05(b)(i)
unless after the prepayment in full of the Dollar Revolving Credit Loans the Outstanding Amount of all Dollar Revolving Credit Loans and L/C
Obligations exceed the Aggregate Dollar Revolving Credit Commitments then in effect. If for any reason the Outstanding Amount of all Multicurrency Revolving Credit Loans at any time exceeds the Aggregate Multicurrency Revolving Credit Commitments
then in effect, the Borrowers shall immediately prepay all outstanding Multicurrency Revolving Credit Loans in an aggregate amount equal to such excess.
(ii) Not later than the fifth Business Day following the completion of any Asset Sale and/or not later than the tenth Business Day following
the occurrence of any Recovery Event and, in each case, the receipt of Net Cash Proceeds resulting therefrom, the Borrowers shall apply the Required Prepayment Percentage of such Net Cash Proceeds received with respect thereto to prepay outstanding
Loans and/or Cash Collateralize Letters of Credit in accordance with
Section 2.05(b)(vii)
.
55
(iii) [Reserved]
(iv) In the event that any Loan Party or any Subsidiary of a Loan Party shall receive Net Cash Proceeds from the issuance or other incurrence
of Indebtedness of any Loan Party or any Subsidiary of a Loan Party (other than Indebtedness permitted pursuant to
Section 8.02
), the Borrowers shall, substantially simultaneously with (and in any event not later than the fifth Business
Day next following) the receipt of such Net Cash Proceeds by such Loan Party or such Subsidiary, apply an amount equal to the Required Prepayment Percentage of such Net Cash Proceeds to prepay outstanding Loans and/or Cash Collateralize Letters of
Credit in accordance with
Section 2.05(b)(vii)
.
(v) No later than the earlier of (i) 90 days after the end of each
fiscal year of PAH, commencing with the fiscal year ending on December 31, 2014, and (ii) the date on which the financial statements with respect to such period are delivered pursuant to
Section 7.01(a)
, the Borrowers shall
prepay outstanding Loans and/or Cash Collateralize Letters of Credit in accordance with
Section 2.05(b)(vii)
, in an aggregate principal amount equal to the Required Prepayment Percentage of Excess Cash Flow for the fiscal year then ended
less
the aggregate amount of all Voluntary Prepayments during such fiscal year.
(vi) MacDermid shall deliver to the
Administrative Agent, at the time of each prepayment required under this
Section 2.05(b)
, (i) a certificate signed by a Responsible Officer of the Borrowers setting forth in reasonable detail the calculation of the amount of such
prepayment and (ii) to the extent practicable, at least 10 Business Days prior written notice of such prepayment (and the Administrative Agent shall promptly notify each Lender). Each notice of prepayment shall be substantially in the form of
Exhibit L
and shall specify the prepayment date, the Class and Type of each Loan being prepaid and the principal amount of each Loan (or portion thereof) to be prepaid. All prepayments of Borrowings pursuant to this
Section 2.05
shall be subject to
Section 3.05
, but shall otherwise be without premium or penalty.
(vii) Mandatory prepayments under
sub-paragraphs (ii), (iii), (iv) and (v) of this Section shall be applied:
first
, to prepay outstanding
Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) to the full extent thereof (and the corresponding accrued and unpaid interest and fees on the principal amount of Term Loans so prepaid),
subject to the provisions of sub-paragraph (viii) below and any re-offer described therein;
second
,
at
any time when there shall be no Term Loans outstanding, to prepay outstanding Revolving Loans to the full extent thereof (and the corresponding accrued and unpaid interest and fees on the principal amount of Revolving Loans so prepaid), with no
corresponding reduction of the Revolving Credit Commitments; and
third
, at any time when there shall be no Term
Loans outstanding, to Cash Collateralize any outstanding Letters of Credit (up to an aggregate amount equal to 105% of the aggregate undrawn face amount of all such Letters of Credit) as described in Section 2.03(g), with no corresponding
reduction of the Revolving Credit Commitments;
with any remaining amounts being retained by the Borrowers to be used in accordance with
the provisions of this Agreement.
(viii) Mandatory prepayments of outstanding Term Loans under this Agreement shall be applied pro rata
against the remaining scheduled installments of principal due in
56
respect of the Tranche B Term Loans pursuant to
Section 2.07
. Such mandatory prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid
irrespective of whether such outstanding Term Loans are Base Rate Loans or Eurocurrency Rate Loans;
provided
that if no Lenders decline a given mandatory prepayment of the Term Loans as described below, then, with respect to such mandatory
prepayment, the amount of such mandatory prepayment shall be applied in the case of the applicable principal amount of the Term Loans being so prepaid, first to Term Loans that are Base Rate Loans to the full extent thereof before application to
Term Loans that are Eurocurrency Rate Loans in a manner that minimizes the amount of any payments required to be made by the Borrowers pursuant to
Section 3.05
. Notwithstanding anything herein to the contrary, any Term Loan Lender may
elect, by notice to the Administrative Agent by facsimile at least eight Business Days prior to the applicable prepayment date, to decline all of any prepayment of its Term Loans pursuant to sub-paragraphs (ii), (iv) or (v) of this
Section, in which case the aggregate amount of the prepayment that would have been applied to prepay such Term Loans but was so declined shall be retained by the Borrowers to be used in accordance with the provisions of this Agreement.
(c)
Prepayments to Include Accrued Interest, Etc
. All prepayments (other than prepayments of Revolving Credit Loans that
are Base Rate Loans that are not made in connection with the termination or permanent reduction of the Revolving Credit Commitments) under this
Section 2.05
shall be made together with (i) accrued and unpaid interest to the date of
such prepayment on the principal amount so prepaid and (ii) in the case of any such prepayment of a Eurocurrency Rate Loan on a date other than the last day of an Interest Period therefor, any amounts owing in respect of such Eurocurrency Rate
Loan pursuant to
Section 3.05
.
2.06
Termination or Reduction of Commitments
.
(a)
Optional
. The Borrowers may, upon notice by MacDermid to the Administrative Agent, terminate the unused portion of
the Letter of Credit Sublimit, the unused Dollar Revolving Credit Commitments, the unused Multicurrency Revolving Credit Commitments or the unused Term Loan Commitments, or from time to time permanently reduce the unused portion of the Letter of
Credit Sublimit, the unused Revolving Credit Commitments or the unused Term Loan Commitment;
provided
that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date
of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) the Borrowers shall not terminate or reduce the unused portion of
the Letter of Credit Sublimit or the unused Dollar Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of all Dollar Revolving Credit Loans and L/C Obligations at any time
would exceed the Aggregate Dollar Revolving Credit Commitments then in effect.
(b)
Mandatory
.
(i) (i) Unless previously terminated in accordance with the terms hereof, (i) the Tranche B Term Loan Commitments shall
automatically terminate at 5:00 p.m. on the Closing Date and (ii) the Revolving Credit Commitments and the Letter of Credit Commitment shall automatically terminate on the Revolving Credit Maturity Date.
(ii) If after giving effect to any reduction or termination of unused Commitments under this
Section 2.06
, the Letter of Credit
Sublimit exceeds the amount of the Aggregate Dollar Revolving Credit Commitments, such Sublimit shall be automatically reduced by the amount of such excess.
57
(c)
Application of Commitment Reductions; Payment of Fees
. The
Administrative Agent will promptly notify the Lenders of any termination or reduction of the unused portions of the Letter of Credit Sublimit, the unused Dollar Revolving Credit Commitment, the unused Multicurrency Revolving Credit Commitment or the
unused Term Loan Commitments under this
Section 2.06
. Upon any reduction of unused Dollar Revolving Credit Commitments, unused Multicurrency Revolving Credit Commitments or unused Term Loan Commitments, the Dollar Revolving Credit
Commitment, the Multicurrency Revolving Credit Commitments or Term Loan Commitments, as applicable, of each Lender shall be reduced by such Lender’s Pro Rata Share of the amount by which the applicable Revolving Credit Facility or Term Loan
Facility, as applicable, is reduced. All Commitment Fees accrued until the effective date of any termination of the Total Revolving Credit Commitments shall be paid on the effective date of such termination.
2.07
Repayment of Loans
.
(a)
Tranche B Term Loans
. On each date set forth below, or if any such date is not a Business Day, on the next preceding
Business Day (each such date being called a “
Tranche B Repayment Date
”), the Term Loan Borrower shall pay to the Administrative Agent, for the account of the Tranche B Term Lenders, a principal amount of the Tranche B Term
Loans (as adjusted from time to time pursuant to
Sections 2.05
and
2.06(b)
) equal to the amount set forth below for such date:
|
|
|
|
|
|
|
Repayment Date
|
|
Amount
|
|
|
September 30, 2013
|
|
$
|
1,887,500
|
|
|
December 31, 2013
|
|
$
|
1,887,500
|
|
|
March 31, 2014
|
|
$
|
1,887,500
|
|
|
June 30, 2014
|
|
$
|
1,887,500
|
|
|
September 30, 2014
|
|
$
|
1,887,500
|
|
|
December 31, 2014
|
|
$
|
1,887,500
|
|
|
March 31, 2015
|
|
$
|
1,887,500
|
|
|
June 30, 2015
|
|
$
|
1,887,500
|
|
|
September 30, 2015
|
|
$
|
1,887,500
|
|
|
December 31, 2015
|
|
$
|
1,887,500
|
|
|
March 31, 2016
|
|
$
|
1,887,500
|
|
|
June 30, 2016
|
|
$
|
1,887,500
|
|
|
September 30, 2016
|
|
$
|
1,887,500
|
|
|
December 31, 2016
|
|
$
|
1,887,500
|
|
|
March 31, 2017
|
|
$
|
1,887,500
|
|
|
June 30, 2017
|
|
$
|
1,887,500
|
|
|
September 30, 2017
|
|
$
|
1,887,500
|
|
|
December 31, 2017
|
|
$
|
1,887,500
|
|
|
March 31, 2018
|
|
$
|
1,887,500
|
|
|
June 30, 2018
|
|
$
|
1,887,500
|
|
|
September 30, 2018
|
|
$
|
1,887,500
|
|
|
December 31, 2018
|
|
$
|
1,887,500
|
|
|
March 31, 2019
|
|
$
|
1,887,500
|
|
|
June 30, 2019
|
|
$
|
1,887,500
|
|
|
September 30, 2019
|
|
$
|
1,887,500
|
|
58
|
|
|
|
|
|
|
Repayment Date
|
|
Amount
|
|
|
December 31, 2019
|
|
$
|
1,887,500
|
|
|
March 31, 2020
|
|
$
|
1,887,500
|
|
|
Tranche B Maturity Date
|
|
|
Remainder
|
|
To the extent not previously paid, all Tranche B Term Loans shall be due and payable on the Tranche B Maturity
Date, together with accrued and unpaid interest and fees on the principal amount to be paid up to but excluding the date of payment. All repayments pursuant to this
Section 2.07(a)
shall be subject to
Section 3.05
, but shall
otherwise be without premium or penalty.
(b)
Reserved
.
(c)
Revolving Credit Loans
. The Revolving Credit Borrowers shall repay to the Administrative Agent for the ratable
account of the Dollar Revolving Lenders on the Revolving Credit Maturity Date the aggregate principal amount of all Dollar Revolving Credit Borrowings outstanding on such date. The Revolving Credit Borrowers shall repay to the Administrative Agent
for the ratable account of the Multicurrency Revolving Lenders on the Revolving Credit Maturity Date the aggregate principal amount of all Multicurrency Revolving Credit Borrowings outstanding on such date.
2.08
Interest
.
(a) Subject to the provisions of
Section 2.08(b)
, (i) each Eurocurrency Rate Loan shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurocurrency Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.
(b)
If any amount payable by any Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Furthermore, upon the request of the Required Lenders, while any Event of Default exists, the Borrowers shall pay interest
on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest on past due amounts
(including interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and
payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after
the commencement of any proceeding under any Debtor Relief Law.
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2.09
Fees.
In addition to certain fees described in
Sections 2.03(i)
and
(j)
:
(a)
Commitment Fees
. The Revolving Credit Borrowers shall pay to the Administrative Agent (x) for the account of
each Dollar Revolving Lender in accordance with its Pro Rata Dollar Share, (i) a commitment fee equal to the Applicable Rate
times
the average daily unused amount of the Dollar Revolving Credit Commitments of such Lender during the
preceding quarter (or other period commencing with the Closing Date or ending with the Revolving Credit Maturity Date or the date on which the Commitments of such Lender shall expire or be terminated) and (y) for the account of each
Multicurrency Revolving Lender in accordance with its Pro Rata Multicurrency Share, (i) a commitment fee equal to the Applicable Rate
times
the average daily unused amount of the Multicurrency Revolving Credit Commitments of such Lender
during the preceding quarter (or other period commencing with the Closing Date or ending with the Revolving Credit Maturity Date or the date on which the Commitments of such Lender shall expire or be terminated) (clauses (x) and
(y) collectively, the “
Commitment Fee
”);
provided
,
however
, that any Commitment Fee accrued with respect to any of the Revolving Credit Commitments of a Defaulting Lender during the period prior to the time
such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Revolving Credit Borrowers so long as such Lender shall be a Defaulting Lender except to the extent that the Commitment Fee shall otherwise have been due and
payable by the Revolving Credit Borrowers prior to such time; and
provided
further
that no Commitment Fee shall accrue on any of the Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. The
Commitment Fee shall accrue at all times during the Availability Period (and thereafter so long as any Revolving Credit Loans or L/C Obligations remain outstanding), including at any time during which one or more of the conditions in
Article
V
is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and to but excluding the last day of the
Availability Period (and, if applicable, thereafter on demand). The Commitment Fee shall be calculated quarterly in arrears.
(b)
Other Fees
(i) . The Borrowers shall pay to the Agents for their own respective accounts such fees as shall have been separately agreed upon in writing
in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
(ii) The Borrowers shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
2.10
Computation of
Interest and Fees
. All computations of interest for Base Rate Loans in respect of which the rate of interest is calculated on the basis of the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).
Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid,
provided
that any Loan that is repaid on the same day on
which it is made shall, subject to
Section 2.12(a)
, bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
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2.11
Evidence of Indebtedness
(a) . (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by
such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall
control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower so notified shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such
Lender’s Loans in addition to such accounts or records. Each such Note shall (i) in the case of Tranche B Term Loans, be in the form of
Exhibit J-1
(a “
Term Loan Note
”), (iii) in the case of Dollar
Revolving Credit Loans, be in the form of
Exhibit J-2
(a “
Dollar Revolving Note
”) and (iii) in the case of Multicurrency Revolving Credit Loans, be in the form of J-3 (a “
Multicurrency Revolving
Note
”). Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in
Section 2.11(a)
, each Lender and the Administrative
Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
(c) Entries made in good faith by the Administrative Agent in the Register pursuant to
Section 2.11(b)
, and by each
Lender in its account or accounts pursuant to
Section 2.11(a)
, shall be
prima facie
evidence of the amount of principal and interest due and payable or to become due and payable from the Borrowers to, in the case of the Register,
each Lender and, in the case of such account or accounts, such Lender, under this Agreement and the other Loan Documents, absent manifest error;
provided
that the failure of the Administrative Agent or such Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrowers under this Agreement and the other Loan Documents.
2.12
Payments Generally
.
(a) All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in the relevant currency, as the case may be, and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Dollar Share,
Pro Rata Multicurrency Share or Pro Rata Tranche B Share, as applicable, (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed in the Administrative Agent’s sole discretion received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Except as
61
otherwise provided herein, if any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such
extension of time shall be reflected in computing interest or fees, as the case may be;
provided
,
however
, that, if such extension would cause payment of interest on or principal of Eurocurrency Rate Loans to be made in the next
succeeding calendar month, such payment shall be made on the immediately preceding Business Day.
(b)
(i) (i) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurocurrency
Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in accordance with
Section 2.02
(or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the
time required by
Section 2.02
) and may, in reliance upon such assumption, make available to the Borrowers a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including
the date such amount is made available to the Borrowers to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by
the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the
case of a payment to be made by the Borrowers, the interest rate applicable to Base Rate Loans. If the Borrowers and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent
shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such
Lender’s Loan included in such Borrowing. Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(ii) Unless the Administrative Agent shall have received notice from the Borrowers prior to the time at which any payment is due to the
Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if the Borrowers has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
A notice of the Administrative Agent to any Lender or the Borrowers with respect to any amount owing under this
subsection (b)
shall be
conclusive, absent manifest error.
(c) If any Lender makes available to the Administrative Agent funds for any Loan to be
made by such Lender as provided in the foregoing provisions of this
Article II
, and such funds
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are not made available to the Borrowers by the Administrative Agent because the conditions to the applicable Credit Extension set forth in
Article V
are not satisfied or waived in
accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(d) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and to make payments
pursuant to
Section 11.04(c)
are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under
Section 11.04(c)
on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or make its payment under
Section 11.04(c)
.
(e) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
(f) The Borrowers hereby authorize each Lender, if and to the extent payment owed to such Lender is not made when due hereunder
or, in the case of a Lender, under the Note held by such Lender, to charge from time to time against any or all of the Borrowers’ accounts with such Lender any amount so due.
(g) Whenever any payment received by the Administrative Agent under this Agreement or any of the other Loan Documents is
insufficient to pay in full all amounts due and payable to the Administrative Agent and the Lenders under or in respect of this Agreement and the other Loan Documents on any date, such payment shall be distributed by the Administrative Agent and
applied by the Administrative Agent and the Lenders in the order of priority set forth in
Section 9.03
.
2.13
Sharing of
Payments
. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations, any payment (whether voluntary, involuntary, through the exercise of any right
of setoff, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such
participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such
Loans or such participations, as the case may be, pro rata with each of them;
provided
,
however
, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances
described in
Section 11.05
(including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrowers agrees that any Lender so purchasing a participation
from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff, but subject to
Section 11.08
) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrowers in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the
63
absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the
same extent as though the purchasing Lender were the original owner of the Obligations purchased.
2.14
Incremental Facilities
.
(a) The Borrowers may by written notice to the Administrative Agent elect to request the establishment of one or more new
tranches or term facilities (each, a “
New Term Loan Facility
”) and/or increase the principal amount of the Term Loans or any Incremental Term Loans by requesting new term loan commitments to be added to such Loans (together
with any New Term Loan Facility, the “
Incremental Term Facility
” and any Loans made pursuant to an Incremental Term Facility, “
Incremental Term Loans
” ) and/or request increase the commitments in
respect of the Dollar Revolving Credit Facility (an “
Incremental Revolving Facility
” and, together with any Incremental Term Facility, “
Incremental Facilities
” and the loans thereunder,
“
Incremental Revolving Loans
” and, together with any Incremental Term Loans, “
Incremental Loans
”), in an aggregate amount not in excess of the greater of (x) $150,000,000 and (y) an unlimited
amount if, after giving effect to the incurrence of such amount, the First Lien Net Leverage Ratio is less than or equal to 4.50:1.00 on a Pro Forma Basis (assuming (A) the Indebtedness being incurred as of such date of determination would be
included in the definition of Consolidated Indebtedness, whether or not such Indebtedness would otherwise be included and (B) any Incremental Revolving Facilities are fully drawn) and not less than $5,000,000 individually (or such lesser amount
which shall be approved by the Administrative Agent);
provided
, that, notwithstanding the foregoing, Incremental Term Loans may be incurred without regard to the foregoing limits to the extent that the Net Cash Proceeds of such Incremental
Term Loans are used on the date of incurrence to permanently prepay and refinance on a dollar-for-dollar basis Term Loans (and any such Incremental Term Loans, the “
Refinancing Incremental Term Loans
”) shall be deemed to have
been incurred pursuant to this proviso. Each such notice shall specify (i) the date (each, an “
Increased Amount Date
”) on which the applicable Borrowers propose that the applicable Incremental Facility shall be
effective, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent, (ii) the identity of each Lender or Affiliate or other Person that is consented to by the
Administrative Agent (which consent shall not be unreasonably withheld) (each such Affiliate or other Person, a “
New Loan Lender
”) to whom the Borrowers propose any portion of such Incremental Facility be allocated and the
amounts of such allocations;
provided
that all existing Lenders shall be approached first to provide all or a portion of the Incremental Facility and may elect or decline, in their sole discretion, to provide Incremental Loans in respect of
such Incremental Facility and (iii) whether such Incremental Facility is to be an Incremental Term Facility or Incremental Revolving Facility. Such Incremental Facility shall become effective, as of such Increased Amount Date;
provided
that (A) no Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to such Incremental Loans; (B) both before and after giving effect to the making of any such Incremental Loans, each of the
conditions set forth in
Section 5.02
shall be satisfied and all fees and expenses owing in respect of such increase to the Administrative Agent and the Lenders have been paid; (C) any Incremental Facility provided by any New Loan
Lender shall be effected pursuant to one or more joinder agreement in form and substance satisfactory to the Administrative Agent and executed and delivered by the Borrowers and the Administrative Agent, each of which shall be recorded in the
Register; and (D) the Borrowers shall deliver or cause to be delivered any legal opinions or other documents reasonably requested by the Administrative Agent in connection with any such transaction.
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(b) The creation or provision of any Incremental Facility or Incremental Loan
shall not require the approval of any existing Lender other than any existing Lender providing all or part of any Incremental Commitment.
(c) The terms and provisions of any Incremental Revolving Facility shall be, except as otherwise set forth herein, identical to
the existing Dollar Revolving Credit Facility.
(d) The terms and provisions of any Incremental Term Loans shall be, if
such Incremental Term Loans are not Tranche B Term Loans, except as otherwise set forth herein or in the joinder agreement set forth in clause (a) above, identical to the Tranche B Term Loans;
provided
that, (i) the weighted average
life to maturity of any New Term Loan Facility shall be no shorter than the weighted average life to maturity of the Term Loans, (ii) the final maturity date of with respect to any New Term Loans shall be no shorter than the Latest Maturity
Date, (iii) if the initial yield on any New Term Loans (as determined by the Administrative Agent to be equal to the sum of (x) the Eurocurrency Rate on the New Term Loans and (y) if the New Term Loans are initially made at a discount
or the Lenders making the same receive a fee directly or indirectly from PAH or any of its Subsidiaries for doing so (the amount of such fee, expressed as a percentage of the Incremental Term Loans, being referred to herein as
“
OID
”), the amount of such OID divided by the lesser of (A) the average life to maturity of such New Term Loans and (B) four) exceeds by more than 50 basis points (the amount of such excess above 50 basis
points being referred to herein as the “
Yield Differential
”) the Applicable Rate then in effect for any Eurocurrency Rate Term Loans, then the Applicable Rate then in effect for Term Loans shall automatically be increased by
the Yield Differential, effective upon the making of the New Term Loans (and if the Eurocurrency Rate margins on the New Term Loans are subject to a leveraged-based pricing grid, appropriate increases to the other Applicable Rates for the Term
Loans, consistent with the foregoing, shall be made), (iv) any New Term Loan Facility shall rank
pari passu
or junior in right of payment and
pari passu
or junior with respect to security with the Term Loans or may be unsecured
(and to the extent subordinated in right of payment or security, shall be subject to intercreditor arrangements reasonably satisfactory to the Administrative Agent). Each joinder agreement referred to in clause (a) above may, without the
consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provision of this
Section 2.14
.
(e) Each of the parties hereto hereby agrees that the Administrative Agent may take any and all action as may be reasonably
necessary to ensure that all Incremental Loans that are to be additional Tranche B Term Loans or Dollar Revolving Credit Loans, as applicable, and when originally made, are included in each Borrowing of outstanding Tranche B Term Loans or
Dollar Revolving Credit Loans, as applicable, on a pro rata basis. This may be accomplished at the discretion of the Administrative Agent by requiring each outstanding Eurocurrency Rate Borrowing to be converted into a Base Rate Borrowing on the
date of each such Incremental Loan, or by allocating a portion of each such Incremental Loan to each outstanding applicable Eurocurrency Rate Borrowing on a pro rata basis, even though as a result thereof such Incremental Loan may effectively have a
shorter Interest Period than the Loans included in the Borrowing of which they are a part (and notwithstanding any other provision of this Agreement that would prohibit such an initial Interest Period). Any conversion of Eurocurrency Rate Loans to
Base Rate Loans made pursuant to the preceding sentence shall be subject to
Section 3.05
. If any Incremental Loans is to be allocated to an existing Interest Period for a Eurocurrency Rate Borrowing then, subject to
Section 2.08(b)
, the interest rate applicable to such Incremental Loan for the remainder of such Interest Period shall equal the Eurocurrency Rate for a period approximately equal to the remainder of such Interest Period (as determined
by the Administrative Agent two Business Days before the date such Incremental Loan is made) plus the Applicable Rate then in effect. In addition, to the extent any Incremental Term Loans
65
are to be additional Tranche B Term Loans, the applicable scheduled amortization payments under
Section 2.07
required to be made after the making of such Incremental Term Loans shall
be ratably increased by the aggregate principal amount of such Incremental Term Loans.
2.15
Defaulting Lender
.
(a) Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(i)
Waivers and Amendments
. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect
to this Agreement shall be restricted as set forth in the definition of Required Lenders and in
Section 11.01
.
(ii)
Defaulting Lender Waterfall
. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or
otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to
Section 11.08
shall be applied at such time or times as may be determined by the Administrative Agent as follows:
first
, to the payment of any
amounts owing by such Defaulting Lender to the Administrative Agent hereunder;
second
, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the Issuing Bank hereunder;
third
, to cash collateralize the
Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender in accordance with
Section 2.15(d)
;
fourth
, as the Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Loan
in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent;
fifth
, if so determined by the Administrative Agent and the Borrowers, to be held in a
deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) cash collateralize the Issuing Banks’ future Fronting
Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with
Section 2.15(d)
;
sixth
, to the payment of any amounts owing to the Lenders or the Issuing
Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Bank against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement;
seventh
, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers against such Defaulting Lender as a
result of such Defaulting Lender’s breach of its obligations under this Agreement; and
eighth
, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction;
provided
that if (x) such payment is a
payment of the principal amount of any Loans or L/C Borrowing in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the
conditions set forth in
Section 5.02
were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of
any Loans of, or L/C Borrowings owed to, such Defaulting Lender until such time as all Loans and L/C Exposure are held by the Lenders pro rata in accordance with the Commitments under the applicable Facility without giving effect to
Section 2.15(a)(iv)
. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this
Section 2.15(a)(ii)
shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)
Certain Fees
. (A) No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that
Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
66
(B) Each Dollar Revolving Lender that is a Defaulting Lender shall be entitled to receive Letter
of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Pro Rata Dollar Share of the stated amount of Letters of Credit for which it has provided cash collateral pursuant to
Section 2.15(d).
(C) With respect to any Letter of Credit Fees not required to be paid to any Dollar Revolving Lender that is a
Defaulting Lender (as “
Defaulting Dollar Revolving Lender
”) pursuant to clause (B) above, the Revolving Credit Borrowers shall (x) pay to each non-Defaulting Lender Dollar Revolving Lender that portion of any such
fee otherwise payable to such Defaulting Dollar Revolving Lender with respect to such Defaulting Dollar Revolving Lender’s obligation to fund participations in respect of Letters of Credit that have been reallocated to such non-Defaulting
Dollar Revolving Lender pursuant to clause (iv) below, (y) pay to each Issuing Bank the amount of any such fee otherwise payable to such Defaulting Dollar Revolving Lender to the extent allocable to such Issuing Bank’s Fronting
Exposure to such Defaulting Dollar Revolving Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv)
Reallocation of Participations to Reduce Fronting Exposure
. All or any part of such Defaulting Dollar Revolving Lender’s obligation to fund participations in respect of Letters of Credit shall be reallocated among the non-Defaulting
Dollar Revolving Lenders in accordance with their respective Pro Rata Dollar Shares (calculated without regard to such Defaulting Dollar Revolving Lender’s Dollar Revolving Credit Commitment) but only to the extent that (x) the conditions
set forth in
Section 5.02
are satisfied at the time of such reallocation (and, unless the Borrowers shall have otherwise notified the Administrative Agent at such time, the Borrowers shall be deemed to have represented and warranted that
such conditions are satisfied at such time), and (y) the Outstanding Amount of each non-Defaulting Dollar Revolving Lender’s Dollar Revolving Credit Loans and L/C Obligations (with the aggregate amount of each Dollar Revolving
Lender’s funded participations in L/C Obligations (prior to giving effect to such reallocation) being deemed ‘held” by such Dollar Revolving Lender for this purpose) do not exceed the Dollar Revolving Commitment of such non-Defaulting
Dollar Revolving Lender. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a
non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.
(v)
Cash
Collateral
. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Revolving Credit Borrowers shall, without prejudice to any right or remedy available to it hereunder or under law, cash
collateralize any Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in
Section 2.15(d)
.
(b) Defaulting Lender Cure. If the Borrowers, the Administrative Agent and each Issuing Bank agree in writing that a Lender is
no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to
any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and
funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments under the applicable Facility (without giving effect to Section 2.15(a)(iv)), whereupon such Lender will cease to be a
Defaulting Lender;
provided
that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of any Borrower while that Lender was a Defaulting Lender; and
provided
,
further
, that
except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a
Defaulting Lender.
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(c)
New Letters of Credit
. So long as any Dollar Revolving Lender is a
Defaulting Lender, no Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto (determined after giving effect to
Section 2.15(a)(iv) and any cash collateral provided by such Defaulting Lender).
(d)
Cash Collateral
.
(i) At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or any Issuing Bank (with a copy to the Administrative Agent) the Borrowers shall cash collateralize
such Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.15(a)(iv) and any cash collateral provided by such Defaulting Lender) in an amount not less than the Minimum
Collateral Amount.
(ii) The Borrowers, and to the extent provided by any Defaulting Dollar Revolving Lender, such Defaulting Dollar
Revolving Lender, hereby grant to the Administrative Agent, for the benefit of each Issuing Bank, and agrees to maintain, a first priority security interest in all such cash collateral as security for the Defaulting Dollar Revolving Lender’s
obligation to fund participations in respect of Letters of Credit, to be applied pursuant to clause (iii) below. If at any time the Administrative Agent determines that cash collateral is subject to any right or claim of any Person other than
the Administrative Agent and such Issuing Bank as herein provided (other than Permitted Liens), or that the total amount of such cash collateral is less than the Minimum Collateral Amount, the Borrowers will, promptly upon demand by the
Administrative Agent, pay or provide to the Administrative Agent additional cash collateral in an amount sufficient to eliminate such deficiency (after giving effect to any cash collateral provided by the Defaulting Dollar Revolving Lender).
(iii) Notwithstanding anything to the contrary contained in this Agreement, cash collateral provided under this Section 2.15 in respect
of Letters of Credit shall be applied to the satisfaction of the Defaulting Dollar Revolving Lender’s obligation to fund participations in respect of Letters of Credit (including, as to cash collateral provided by a Defaulting Dollar Revolving
Lender, any interest accrued on such obligation) for which the cash collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(iv) Cash collateral (or the appropriate portion thereof) provided to reduce any Issuing Bank’s Fronting Exposure shall no longer be
required to be held as cash collateral pursuant to this Section 2.15 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the
determination by the Administrative Agent and such Issuing Bank that there exists excess cash collateral;
provided
that, subject to this Section 2.15 the Person providing cash collateral and such Issuing Bank may agree that cash
collateral shall be held to support future anticipated Fronting Exposure or other obligations; provided further, that to the extent that such cash collateral was provided by a Borrower, such cash collateral shall remain subject to the security
interest granted pursuant to the Loan Documents.
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ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01
Taxes
.
(a) Except as required by applicable law, any and all payments by or on behalf of any Loan Party to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and
all interest, penalties or other liabilities with respect thereto (hereinafter referred to as “
Taxes
”),
excluding
, in the case of the Administrative Agent and each Lender, (A) taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income taxes), in each case, by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is
organized, maintains a lending office, or is subject to tax by virtue of any present or former connection (other than solely having executed, performed its obligations, received payments under or enforced the Loan Documents), (B) branch profits
taxes imposed by a jurisdiction described under clause (A) above, (C) in the case of a Foreign Lender (other than an assignee pursuant to a request by MacDermid under
Section 11.15
), any United States withholding tax that is
imposed on amounts payable to such Foreign Lender under the law applicable at the time such Lender becomes a party to this Agreement (or designates a new lending office) except to the extent that such Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive additional amounts with respect to such withholding tax pursuant to this
Section 3.01
, (D) taxes attributable to the failure to comply with
Section 11.14
and (E) any U.S. federal withholding taxes imposed under FATCA (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, interest, penalties and other
liabilities being hereinafter referred to as “
Non-Excluded Taxes
”). Notwithstanding the foregoing, if any Taxes are required to be deducted from or in respect of any sum payable under any Loan Document to the Administrative
Agent or any Lender, (i) such Loan Party shall make such deductions, (ii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, (iii) if such Tax
is a Non-Excluded Tax, the sum payable by the Loan Party shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Administrative Agent
and such Lender receives an amount equal to the sum it would have received had no such deductions been made on account of Non-Excluded Taxes and (iv) within 30 days after the date of such payment, such Loan Party shall furnish to the
Administrative Agent (which shall forward the same to such Lender) or Lender (as the case may be) the original or a certified copy of a receipt evidencing payment thereof to the extent such a receipt is issued therefor, or other written proof of
payment thereof that is reasonably satisfactory to the Administrative Agent.
(b) In addition, each Loan Party agrees to
pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, any Loan Document, excluding any such taxes imposed with respect to an assignment (other than an assignment made pursuant to
Section 11.15
) (hereinafter referred to as
“
Other Taxes
”).
(c) Each Loan Party agrees to indemnify the Administrative Agent and each Lender
for (i) the full amount of any Non-Excluded Taxes and Other Taxes (including any Non-Excluded Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender
and (ii) any reasonable expenses arising therefrom or with respect thereto, in each case whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, except for any
interest and penalties with respect to Non-Excluded Taxes or Other Taxes to the extent such Non-Excluded Taxes or Other Taxes are determined by a court of competent jurisdiction by final
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and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the Administrative Agent or such Lender. Payment under this
Section 3.01(c)
shall be
made within 30 days after the date such Lender or the Administrative Agent makes a demand therefor. Any demand for payment under
Section 3.01(c)(i)
must be accompanied by a notice of assessment from the relevant Governmental Authority
for a Non-Excluded Tax or Other Tax.
(d) If any Lender is entitled to a refund (including any credit in lieu of a refund)
of any Taxes with respect to which it has been indemnified pursuant to this
Section 3.01
(including by the payment of additional amounts pursuant to this
Section 3.01)
, such Lender shall pay over such refund to the applicable
Loan Party (but only to the extent of additional amounts paid by the Loan Party under this
Section 3.01
with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to such refund);
provided
, that the Loan Party, upon the request of such Lender, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest
or other charges imposed by the relevant Governmental Authority) to such Lender in the event such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any Lender to make available
its tax returns (or any other information relating to its taxes which it deems confidential) to any Loan Party or any other Person.
3.02
Illegality
. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurocurrency Rate Loans, or
to determine or charge interest rates based upon the Eurocurrency Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars or any Alternative Currency
in the applicable interbank market then, on notice thereof by such Lender to the Borrowers through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurocurrency Rate Loans in the affected currency or currencies or
to convert Base Rate Loans to Eurocurrency Rate Loans shall be suspended until such Lender notifies the Administrative Agent and MacDermid that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, each
Loan Party shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay such Eurocurrency Rate Loans or, if applicable and such Loans are denominated in Dollars, convert all Eurocurrency Rate Loans of such Lender to Base
Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurocurrency
Rate Loans. Upon any such prepayment or conversion, the applicable Loan Party shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need
for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.
3.03
Inability to Determine Rates
. If the Required Lenders determine that (i) for any reason adequate and reasonable means do not exist for determining the Eurocurrency Rate for any requested Interest Period with respect to a proposed
Eurocurrency Rate Loan, (ii) they are unable to obtain matching deposits in the London inter-bank market at or about 11:00 A.M. (London time) on the second Business Day before the making of a Borrowing in sufficient amounts to fund their
respective Loans as a part of such Borrowing during its Interest Period or (iii) the Eurocurrency Rate for any Interest Period for such Loans will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their
respective Eurocurrency Rate Loans for such Interest Period, the Administrative Agent will promptly so notify MacDermid and
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each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurocurrency Rate Loans (or such other applicable Loan in an Alternative Currency) shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, any Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans or,
failing that, in the case of Eurocurrency Rate Loans (or such other applicable Loan in an Alternative Currency), will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in Dollars in (or, in the case
of any applicable Loan in an Alternative Currency, in an amount equal to the Dollar Equivalent of) the amount specified therein.
3.04
Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurocurrency Rate Loans
.
(a) If any Lender
determines that as a result of the introduction of or any change in or in the interpretation of any Law, in each case after the Closing Date, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining Eurocurrency Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the
foregoing (excluding for purposes of this
Section 3.04(a)
any such increased costs or reduction in amount resulting from (i) Non-Excluded Taxes or Other Taxes, in each case, addressed by
Section 3.01
, (ii) changes
in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and
(iii) reserve requirements contemplated by
Section 3.04(c))
, then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts
as will compensate such Lender for such increased cost or reduction.
(b) If any Lender determines that the introduction of
any Law regarding capital adequacy or liquidity or any change therein or in the interpretation thereof, in each case after the Closing Date, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired
return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.
(c) The Borrowers shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “
Eurocurrency Liabilities
”), additional interest on the unpaid principal amount of each Eurocurrency Rate Loan equal to the
actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan,
provided
the Borrowers shall have received at least 15 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest
Payment Date, such additional interest shall be due and payable 15 days from receipt of such notice.
(d) Failure or delay
on the part of any Lender, the Administrative Agent or the L/C Issuer to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s, the Administrative Agent’s or the L/C Issuer’s right to demand such
compensation;
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provided
that the Borrowers shall not be under any obligation to compensate any Lender, the Administrative Agent or the L/C Issuer under paragraph (a) or (b) above for increased
costs or reductions with respect to any period prior to the date that is 120 days prior to such request if such Lender, the Administrative Agent or the L/C Issuer knew or could reasonably have been expected to know of the circumstances giving rise
to such increased costs or reductions and of the fact that such circumstances would result in a claim for increased compensation by reason of such increased costs or reductions;
provided
further
that the foregoing limitation shall not
apply to any increased costs or reductions arising out of the retroactive application of any change in law within such 120-day period. The protection of this Section shall be available to each Lender, the Administrative Agent and the L/C Issuer
regardless of any possible contention of the invalidity or inapplicability of the change in law that shall have occurred or been imposed.
(e) Notwithstanding anything herein to the contrary, for purposes of this
Section 3.04
, (x) the Dodd-Frank Wall Street Reform
and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “change in law” or “change in
the interpretation of law”, regardless of the date enacted, adopted or issued.
3.05
Funding Losses
. Upon demand of any Lender
(with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last
day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by any Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue
or convert any Loan other than a Base Rate Loan on the date or in the amount notified by any Borrower;
(c) any assignment
of a Eurocurrency Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by any Borrower pursuant to
Section 11.15
; or
(d) any payment by any Revolving Credit Borrower of the principal of or interest on any Dollar Revolving Credit Loan (or
interest due thereon) denominated in an Alternative Currency in a different currency from the currency in which the applicable Dollar Revolving Credit Loan is denominated;
including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan
or from fees payable to terminate the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrowers to the Lenders under this
Section 3.05
, each Lender shall be deemed to have funded
each Eurocurrency Rate Loan made by it at the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the London interbank eurocurrency market for a comparable amount and for a comparable period, whether or not such Eurocurrency
Rate Loan was in fact so funded.
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3.06
Matters Applicable to all Requests for Compensation
.
(a) A certificate of the Administrative Agent or any Lender claiming compensation under this
Article III
and setting
forth the additional amount or amounts to be paid to it hereunder and the calculation thereof in reasonable detail shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any
reasonable averaging and attribution methods.
(b) Upon any Lender’s making a claim for compensation under
Section 3.01
or
3.04
, the Borrowers may replace such Lender in accordance with
Section 11.15
.
3.07
Pro
Rata Treatment
. Except as required under
Section 3.02
, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of the Commitment Fees, each reduction of the Term
Loan Commitments, Dollar Revolving Credit Commitments or Multicurrency Revolving Credit Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). Each Lender agrees that in computing such
Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole dollar amount.
3.08
Survival
. All of the Borrowers’ obligations under this
Article III
shall survive termination of the Tranche B Term
Loan Commitments, the Total Revolving Credit Commitments and repayment of all other Obligations hereunder.
ARTICLE IV
GUARANTY
4.01
The
Guaranty
.
(a) Each of the Guarantors and PAH hereby jointly and severally guarantees to the Administrative Agent, for
the ratable benefit of the Secured Parties, as hereinafter provided, as primary obligor and not as surety, the prompt payment of the Obligations (or, in the case of PAH, the Term Loan Borrower’s Obligations) in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof. The Guarantors and PAH hereby further agree that if any of the Obligations (or, in the case of
PAH, the Term Loan Borrower’s Obligations) are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise), the Guarantors or PAH, as applicable, will,
jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Obligations (or, in the case of PAH, the Term Loan Borrower’s Obligations),
the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) in accordance with the terms of such extension or renewal.
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(b) Notwithstanding any provision to the contrary contained herein or in any
other of the Loan Documents, the obligations of each Guarantor and PAH under this Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount as will result in such obligations with respect hereto and
thereto not constituting a fraudulent transfer or conveyance after giving full effect to the liability under such guarantee set forth in Section 4 hereof and its related contribution rights but before taking into account any liabilities under
any other guarantee by such Guarantor or PAH, as applicable.
4.02
Obligations Unconditional
(a) . (a) The obligations of the Guarantors (and PAH, solely with respect to its guarantee of the Term Loan
Borrower’s Obligations) under
Section 4.01(a)
are joint and several, absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents or any other agreement or
instrument referred to therein, or any substitution, release, impairment or exchange of any other guarantee of or security for any of the Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this
Section 4.02(a)
that the obligations of the Guarantors and PAH hereunder shall be absolute and
unconditional under any and all circumstances. Each of PAH and each Guarantor agrees that PAH or such Guarantor, as applicable, shall have no right of subrogation, indemnity, reimbursement or contribution against any Borrower or any other Guarantor
or PAH for amounts paid under this
Article IV
until such time as the Obligations have been paid in full.
(b)
Without limiting the generality of the foregoing
subsection (a)
, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor and PAH
hereunder which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor or PAH, the time for any performance of or compliance with any of the Obligations (or, in the case of PAH, the Term Loan Borrower’s Obligations) shall be extended, or such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of the Loan Documents or any other agreement or instrument referred to in the
Loan Documents shall be done or omitted;
(iii) the maturity of any of the Obligations, in the case of the Guarantors or the Term Loan
Borrower’s Obligations, in the case of PAH, shall be accelerated, or any of the Obligations or Term Loan Borrower’s Obligations, as applicable, shall be modified, supplemented or amended in any respect, or any right under any of the Loan
Documents or any other agreement or instrument referred to in the Loan Documents shall be waived or any other guarantee of any of the Obligations or Term Loan Borrower’s Obligations, as applicable, or any security therefor shall be released,
impaired or exchanged in whole or in part or otherwise dealt with; or
(iv) any of the Obligations or the Term Loan Borrower’s
Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of any Guarantor or PAH, respectively) or shall be subordinated to the claims of any Person (including, without limitation, any
creditor of any Guarantor or PAH, respectively).
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(c) With respect to its obligations hereunder, each Guarantor and PAH hereby
expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against any Person under any of the Loan
Documents or any other agreement or instrument referred to in the Loan Documents or against any other Person under any other guarantee of, or security for, any of the Obligations or Term Loan Borrower’s Obligations, respectively.
4.03
Reinstatement
. The obligations of the Guarantors and PAH under this
Article IV
shall be automatically reinstated if and to
the extent that for any reason any payment by or on behalf of any Person in respect of the Obligations or Term Loan Borrower’s Obligations, as applicable, is rescinded or must be otherwise restored by any holder of any of the Obligations or
Term Loan Borrower’s Obligations, as applicable, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and PAH and each Guarantor agrees that it will indemnify the Arranger, the Administrative Agent, the
Collateral Agent, the Syndication Agent, the L/C Issuer and each Lender on demand for all reasonable costs and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by such Persons in connection with such
rescission or restoration, including any such reasonable costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
4.04
Certain Additional Waivers
. Each Guarantor and PAH agrees that such Guarantor or PAH, as applicable, shall have
no right of recourse to security for the Obligations or Term Loan Borrower’s Obligations, respectively, except through the exercise of rights of subrogation pursuant to
Section 4.02
and through the exercise of rights of contribution
pursuant to
Section 4.06
.
4.05
Remedies
. The Guarantors and PAH agree that, to the fullest extent permitted by law, as
between the Guarantors or PAH, as applicable, on the one hand, and the Administrative Agent, for the ratable benefit of the Secured Parties on the other hand, the Obligations or Term Loan Borrower’s Obligations, as applicable, may be declared
to be forthwith due and payable as provided in
Section 9.02
(and shall be deemed to have become automatically due and payable in the circumstances provided in said
Section 9.02
) for purposes of
Section 4.01(a)
notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Obligations or Term Loan Borrower’s Obligations, as applicable, from becoming automatically due and payable) as against any other Person
and that, in the event of such declaration (or the Obligations or Term Loan Borrower’s Obligations, as applicable, being deemed to have become automatically due and payable), the Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors or PAH, as applicable, for purposes of
Section 4.01(a)
.
4.06
Rights of Contribution
. The Guarantors and PAH hereby agree as among themselves that, in connection with payments made hereunder, (i) each Guarantor shall have a right of contribution from each other Guarantor with respect to the
Obligations and (ii) each Guarantor and PAH shall have a right of contribution from each other Guarantor or PAH, as applicable, with respect to the Term Loan Borrower’s Obligations, in
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each case in accordance with applicable Law. Such contribution rights shall be subordinate and subject in right of payment to the Obligations (in the case of clause (i) above) and the Term
Loan Borrower’s Obligations (in the case of clause (ii) above) until such time as the Obligations or Term Loan Borrower’s Obligations, as applicable, have been Fully Satisfied, and none of the Guarantors and PAH shall exercise any
such contribution rights until the Obligations or Term Loan Borrower’s Obligations, as applicable, have been paid in full.
4.07
Guarantee of Payment; Continuing Guarantee
. The guarantee given by the Guarantors and PAH in this
Article IV
is a guaranty of payment and not of collection, is a continuing guarantee, and shall apply to all Obligations, in the case of
the Guarantors and all of the Term Loan Borrower’s Obligations, in the case of PAH, whenever arising.
ARTICLE V
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
5.01
Reserved.
5.02
Conditions to all Credit Extensions
. The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurocurrency Rate
Loans) is subject to the following conditions precedent:
(a) The representations and warranties of Holdings, each Borrower
and each other Loan Party contained in
Article VI
or any other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date;
provided
that any representation and warranty that is qualified as to “materiality”,
“Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates.
(b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds
therefrom.
(c) The Administrative Agent and, if applicable, the L/C Issuer shall have received a Request for Credit
Extension in accordance with the requirements hereof.
(d) Solely with respect to any Credit Extension under the Revolving
Credit Facility, if as of the date of such Credit Extension and after giving effect thereto the aggregate Outstanding Amount of Revolving Loans and all Unreimbursed Amounts, including all L/C Borrowings, shall in the aggregate exceed $12,500,000,
the financial covenant set forth in Section 8.01(a) shall be satisfied, calculated at the time of such Credit Extension by looking back to the last day of the prior fiscal quarter to determine if PAH would have been in compliance with the
financial covenant set forth in Section 8.10(a) as of such fiscal quarter end as if the financial covenant had been tested for such fiscal quarter (after giving
pro forma
effect to the Credit Extension).
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each Loan Party jointly and severally represents and warrants to the Arranger, the Administrative Agent, the Collateral Agent, the L/C Issuer
and the Lenders that:
6.01
Existence, Qualification and Power; Compliance with Laws
. Each Loan Party and each of its Subsidiaries
(a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents and each other agreement or instrument contemplated hereby or
thereby to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or
license, and (d) is in compliance with all Laws (including the Act); except in each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
6.02
Authorization; No Contravention
. The execution, delivery and performance by each Loan Party of each Loan Document to which such
Person is or is to be a party, and the consummation of the Amendment No. 1 Transactions (other than the Acquisition) are within such Loan Party’s corporate or other powers, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any material Lien under, or
require any material payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree
of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law that would adversely affect the rights of the Lenders, the Administrative Agent or the Collateral Agent under the Loan
Documents. No Loan Party or any of its Subsidiaries is in violation of any Law or in breach of any such Contractual Obligation, the violation or breach of which could be reasonably likely to have a Material Adverse Effect.
6.03
Governmental Authorization; Other Consents
. No approval, consent, exemption, authorization, or other action by, or notice to, or
filing (other than security filings and those for which such approval, consent, exemption, authorization has been obtained or such action has been taken or notice or filing made) with, any Governmental Authority or any other Person is necessary or
required in connection with (i) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, or for the consummation of the Amendment No. 1 Transactions, (ii) the
grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created under the Collateral Documents (including the first priority nature thereof) or (iv) the
exercise by the Administrative Agent, the Collateral Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents.
6.04
Binding Effect
. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and
delivered by each Loan Party that is party hereto and thereto. This
77
Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party
hereto and thereto in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium other similar laws generally affecting creditors’ rights and by
equitable principles (regardless of whether enforcement is sought in equity or at law).
6.05
Financial Statements; No Material Adverse
Effect
(a) . (a) The Audited Financial Statements delivered to the Administrative Agent (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrowers and their Subsidiaries as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other
liabilities, direct or contingent, of the Borrowers and their Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness, to the extent required by GAAP.
(b) Reserved.
(c) No event, change or condition has occurred since December 31, 2012, that has had, or could reasonably be expected to
have, a Material Adverse Effect.
6.06
Litigation
. There are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Loan Parties after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of its Subsidiaries or against any of their
properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document or the consummation of the Amendment No. 1 Transactions, or (b) except as specifically disclosed on
Schedule 6.06
(the
“
Disclosed Litigation
”), either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect, and there has been no material adverse change in the status, or
financial effect on any Loan Party, of the matters described on
Schedule 6.06
hereto.
6.07
No Default
. Neither any Loan
Party nor any Subsidiary is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is
continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
6.08
Properties
(a) . (a) Each Loan Party and each of its Subsidiaries has good record, valid and marketable title
in fee simple to, or valid leasehold interests in, all Real Property necessary or used in the ordinary conduct of its business, free and clear of all Liens except for Permitted Liens and defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The property of each Loan Party and each of its Subsidiaries, taken as a whole, (i) is in good operating order, condition and repair (ordinary wear and tear excepted) and
(ii) constitutes all the property which is required for the business and operations of the Loan Parties as presently conducted.
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(b)
Section II.E
to the Perfection Certificate dated the Closing Date
contain a true and complete list of each interest in Real Property located in the United States (i) owned by any Borrower as of the Closing Date and (ii) leased, subleased or otherwise occupied or utilized by any Borrower, as lessee,
sublessee, franchisee or licensee, as of the Closing Date.
(c) No Mortgage encumbers improved Real Property that is
located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards within the meaning of the National Flood Insurance Act of 1968 unless flood insurance available under such Act has
been obtained in accordance with
Section 7.07
.
6.09
Environmental Compliance
(a) Each Loan Party and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing
Environmental Laws, Environmental Liabilities and Environmental Claims on their respective businesses, operations and properties, and as a result thereof such Loan Party has reasonably concluded that, except as specifically disclosed in
Schedule
6.09
, compliance with such Environmental Laws or any claims alleging violation of, or liability under, such Environmental Laws could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Except as otherwise set forth on
Schedule 6.09
, none of the properties currently owned or operated by any Loan Party
or any of its Subsidiaries is listed or proposed for listing on the NPL or CERCLIS.
(c) Except as otherwise set forth on
Schedule 6.09
, all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently owned or operated by any Loan Party or any of its Subsidiaries have been properly stored, handled or
disposed of in a manner not reasonably expected to result in any material Environmental Liabilities to the Borrowers and their Subsidiaries, taken as a whole.
(d) Except as otherwise set forth on
Schedule 6.09
, neither any Loan Party nor any Subsidiary is subject to any
Environmental Claims or Environmental Liabilities which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(e) Each Loan Party and its Subsidiaries are in compliance with, and possesses all Environmental Permits required pursuant to,
Environmental Laws, except to the extent such noncompliance or failure to possess could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.10
Insurance
. The properties of the Loan Parties and their Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of any Loan Party, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the applicable Loan
Party or the applicable Subsidiary operates,
provided
that no coverage in respect of terrorism shall be required. As of the Amendment No. 1 Effective Date, such insurance is in full force and effect and all premiums have been duly paid.
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6.11
Taxes
. The Loan Parties and their Subsidiaries have filed all material Federal, state
and other tax returns and reports required to be filed, and have paid all material Federal, state and other taxes, assessments, fees and other material governmental charges levied or imposed upon them or their properties, income or assets otherwise
due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against any Loan
Party or any Subsidiary that would, if made, have a Material Adverse Effect.
6.12
ERISA Compliance
(a) . (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other
Federal or state Laws and the Borrowers and all applicable ERISA Affiliates have performed in all material respects their obligations with respect to each Plan. Each Plan that is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of the Loan Parties, nothing has occurred which would prevent, or cause the loss of,
such qualification. Each Loan Party and each ERISA Affiliate have made all required contributions to each Plan subject to Sections 412 or 430 of the Code (except where such would not result in material liability), and no application for a funding
waiver or an extension of any amortization period pursuant to Sections 412 of the Code or 303 of ERISA has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that could
reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 6.12 or as could not
reasonably be expected to have a Material Adverse Effect: (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iii) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; (iv) no Loan Party nor any ERISA Affiliate has
engaged in a transaction that could reasonably be expected to be subject to Sections 4069 or 4212(c) of ERISA; (v) as of the most recent valuation date for any Pension Plan that precedes the Amendment No. 1 Effective Date, the amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefits
liabilities) was zero; (vi) as of the most recent valuation date that precedes the Amendment No. 1 Effective Date for each Multiemployer Plan for which the actuarial report is available, the potential liability of the Loan Parties and
their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based
on information available pursuant to section 4221(e) of ERISA was zero; and (vii) except to the extent required under Section 4980B of the Code or any applicable state or local law, no Plan provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employee of any Loan Parties or any of their respective ERISA Affiliates.
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(d) With respect to each scheme or arrangement mandated by a government other
than the United States (a “
Foreign Government Scheme or Arrangement
”) and with respect to each employee benefit plan maintained or contributed to by any Loan Party or any Subsidiary of any Loan Party that is not subject to
United States law (a “
Foreign Plan
”) except as could not reasonably be expected to have a Material Adverse Effect:
(A) Any and all employer and employee contributions required by law or by the terms of any Foreign Government Scheme or Arrangement or any
Foreign Plan have been made in all material respects, or, if applicable, accrued, in accordance with normal accounting practices, other than such contributions in respect of the UK Pension Plan Liabilities.
(B) Each Foreign Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory
authorities and is in compliance in all material respects with applicable law.
6.13
Subsidiaries; Equity Interests
. As of the
Amendment No. 1 Effective Date, no Loan Party has any Subsidiaries other than those specifically disclosed in
Schedule 6.13
, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and
non-assessable and are directly or indirectly owned by a Loan Party (except for certain immaterial director’s qualifying shares) free and clear of all Liens except those created under the Collateral Documents and as otherwise disclosed in
Schedule 6.13
. All of the outstanding Equity Interests in each Loan Party and its Subsidiaries have been validly issued, are fully paid and non-assessable.
6.14
Margin Regulations; Investment Company Act
(a) (a) The Borrowers are not engaged, nor will they engage, principally or as one of its important activities, in the
business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock and no proceeds of any Borrowings or drawings under any Letter of
Credit will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.
(b) No Loan Party, nor any Person Governing any Loan Party, nor any Subsidiary is or is required to be registered as an
“investment company” under the Investment Company Act of 1940. Neither the making of any Loan, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by any Borrower, nor the consummation of the
other transactions contemplated by the Loan Documents, will violate any provision of any such Act or any rule, regulation or order of the SEC thereunder.
6.15
Disclosure
. Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or
other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. All written information (including
the Confidential Information Memorandum) heretofore furnished by any Borrower or any of its Subsidiaries to the Administrative
81
Agent or any Lender for purposes of or in connection with this Agreement, the Amendment No. 1 Transactions or any other transaction contemplated hereby is, and all such information hereafter
furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is stated or certified.
6.16
Compliance with Laws
. Except as otherwise provided in the representations above, each Loan Party and each Subsidiary is in
compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
6.17
Intellectual Property; Licenses, Etc
. Each Loan Party and its Subsidiaries own, or possess the right to use, all of the
trademarks, service marks, trade names, copyrights, patents, and licenses (collectively, “
IP Rights
”) that are used in the operation of their respective businesses. To the best knowledge of each Loan Party, no slogan or other
advertising device, product, process, method, substance, part or other material now employed by any Loan Party or any Subsidiary infringes upon any rights held by any other Person except where such infringement could not reasonably be expected to
have a Material Adverse Effect. Except as disclosed on
Schedule 6.17
, no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of each Loan Party, threatened, which, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
6.18
Solvency
. Immediately after the consummation of the Amendment
Transactions to occur on the Amendment No. 1 Effective Date and immediately following the making of each Loan and after giving effect to the application of proceeds of each Loan, the Loan Parties are, together with their Subsidiaries on a
consolidated basis, Solvent.
6.19
Casualty, Etc
. Neither the business nor the properties of any Loan Party or any of its
Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could be
reasonably likely to have a Material Adverse Effect.
6.20
Perfection, Etc
. All filings and other actions necessary to perfect and
protect the security interest in the Collateral created under the Collateral Documents have been duly made or taken and are in full force and effect, and the Collateral Documents create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral (subject to Liens permitted under the Loan Documents), securing the payment of the Obligations, and all filings and other
actions necessary to perfect and protect such security interest have been duly taken. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for the liens and security interests created or permitted
under the Loan Documents.
82
6.21
Swap Obligations
. Neither the Borrowers nor any of their Subsidiaries have incurred
any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations.
6.22
Labor Matters
. As of the
Amendment No. 1 Effective Date, there are no strikes, lockouts or slowdowns against PAH or any of its Subsidiaries pending or, to the knowledge of PAH, Holdings or any Borrower, threatened. Except as provided on
Schedule 6.22
, the
hours worked by and payments made to employees of Holdings, the Borrowers and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters, except
for such violations that could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. All payments due from PAH or any of its Subsidiaries, or for which any claim may be made against PAH or any of its
Subsidiaries, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of PAH or any of its Subsidiaries, except for such failures that could not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect. The consummation of the Amendment No. 1 Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which PAH or any of its Subsidiaries is bound.
6.23
[RESERVED]
.
6.24
Senior Indebtedness
. The Obligations under the Facilities constitute “senior debt”, “senior indebtedness”,
“guarantor senior debt”, “senior secured financing” and “designated senior indebtedness” (or any comparable term) under the documentation for all Indebtedness that is subordinated in right of payment to the Obligations
(if applicable).
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as
any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder, other than contingent indemnification obligations for which no claim has been asserted, which is accrued and payable shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, each Loan Party shall, and shall (except in the case of the covenants set forth in
Sections 7.01
,
7.02
,
7.03
and
7.11
) cause each Subsidiary to:
7.01
Financial Statements
. Deliver to the Administrative Agent who will deliver the same to each Lender, in form and detail reasonably
satisfactory to the Administrative Agent:
(a) within 90 days after the end of each fiscal year of PAH, a consolidated and
consolidating balance sheet of PAH and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by (i) a report and opinion of an independent certified public accountant of
nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to
83
any “going concern” or like qualification or exception (other than any such exception or explanatory paragraph that is expressly solely with respect to, or expressly resulting solely
from, an upcoming maturity date under the Facilities that is scheduled to occur within one year from the time such report and opinion are delivered) or any qualification or exception as to the scope of such audit that would be material to PAH and
its Subsidiaries, taken as a whole and (ii) to the extent filed with the SEC, a copy of the attestation report filed with the SEC of such independent certified public accountant of nationally recognized standing as to the PAH’s internal
controls pursuant to Section 404 of Sarbanes-Oxley;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of PAH (or, with respect to the fiscal quarter ended September 30, 2013, Holdings), a consolidated and consolidating balance sheet of PAH and its Subsidiaries (or, with respect to the fiscal quarter ended
September 30, 2013, Holdings and its Subsidiaries) as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of PAH’s (or, with respect to the fiscal quarter ended September 30, 2013, Holdings’) fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous
fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of MacDermid as fairly presenting the financial condition, results of operations, shareholders’ equity and
cash flows of PAH and its Subsidiaries (or, with respect to the fiscal quarter ended September 30, 2013, Holdings and its Subsidiaries) in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and
(c) no later than 45 days after the end of each fiscal year of PAH, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet and related statements of projected operations and cash flows as of the end of and for such following fiscal year and setting forth the assumptions used for purposes of preparing such budget) in form
reasonably satisfactory to the Administrative Agent and, promptly when available, any material revisions to such budget.
7.02
Certificates; Other Information
. Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent:
(a) concurrently with the delivery of the financial statements referred to in
Sections 7.01(a)
and
(b)
, a
duly completed Compliance Certificate signed by a Responsible Officer of PAH, which shall, among other things, (i) specify whether a Triggering Event has occurred during the preceding fiscal quarter and (ii) in the case of a certificate
delivered with the financial statements required by 7.01(a) above, beginning with the fiscal year ending December 31, 2014, set forth the PAH’s calculation of Excess Cash Flow and in reasonable detail the Available Amount as at the end of
the fiscal year to which such financial statements relates;
(b) promptly upon receipt thereof, copies of all notices,
requests and other documents received by any Loan Party or any of its Subsidiaries under or pursuant to any instrument, indenture, loan or credit or similar agreement, in each case, that is material, regarding or related to any breach or default by
any party thereto or any other event that could materially impair the value of the interests or the rights of any Loan Party or otherwise have a Material Adverse Effect and copies of any amendment, modification or waiver of any provision of any
instrument, indenture, loan or credit or similar agreement and, from time to time upon request by the Administrative Agent, such information and reports regarding such instruments, indentures and loan and credit and similar agreements as the
Administrative Agent may reasonably request;
84
(c) promptly after the assertion or occurrence thereof, written notice of any
Environmental Claim against, of any Environmental Liability incurred by, or of any noncompliance by, any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could reasonably be expected to have a Material
Adverse Effect; and
(d) promptly, such additional information regarding the business, financial or corporate affairs of
any Loan Party or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request, including with respect to applicable “know your customer” and
anti-money laundering rules and regulations (including the Act).
The Borrowers hereby acknowledge that (a) the Administrative Agent
will make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of any Borrower hereunder (collectively, the “
Borrower Materials
”) by posting the Borrower Materials on IntraLinks or
another similar electronic system (the “
Platform
”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the
Borrower or its securities) (each, a “
Public Lender
”). The Borrowers hereby agree that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked
“PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the
Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrowers or their securities for purposes of United States federal and state securities laws
(
provided
,
however
, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in
Section 11.07
); (y) all Borrower Materials marked “PUBLIC” are permitted to be made
available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting
on a portion of the Platform not marked as “Public Investor.” Notwithstanding the foregoing, the following Borrower Materials shall be deemed to be marked “PUBLIC”, unless the Borrowers notify the Administrative Agent promptly
that any such document contains material non-public information: (1) the Loan Documents, (2) notification of changes in the terms of the Facilities and (3) all information delivered pursuant to
Sections 7.01(a)
and
(b)
and
Section 7.02(a)
.
7.03
Notices
. Promptly notify the Administrative Agent and each Lender:
(a) within 10 days after any officer of any Loan Party obtains knowledge of the occurrence of any Default;
(b) within 10 days after any officer of any Loan Party obtains knowledge of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect;
(c) of the occurrence of or the reasonably expected occurrence of any
ERISA Event that could reasonably be expected to result in liability to any Loan Party in excess of 50% of the Threshold Amount and provide a written notice specifying the nature thereof, what action the Loan Party or its ERISA Affiliates has taken,
is taking or proposes to take with respect thereof and, when known, any action taken or threatened by the IRS, the U.S. Department of Labor or the PBGC
85
with respect thereto and with reasonable promptness, copies of the following to the extent requested by the Administrative Agent: (i) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by Loan Parties or any of their respective ERISA Affiliates with the IRS with respect to each Pension Plan; and (ii) copies of such other documents or governmental reports or filings relating to any Plan
as Administrative Agent shall reasonably request;
(d) of all notices received by the Loan Parties and any of their
respective ERISA Affiliates from a Multiemployer Plan concerning an ERISA Event that could reasonably be anticipated to have a Material Adverse Effect and provide copies of such notices;
(e) of any material change in accounting policies or financial reporting practices by PAH; and
(f) the filing or commencement of, or any written threat or written notice of intention of any Person to file or commence, any
action, suit or proceeding, whether at law or in equity or by or before any arbitrator or Governmental Authority, against PAH or any of its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of MacDermid setting forth details of the
occurrence referred to therein and stating what action the Borrowers have taken and proposes to take with respect thereto. Each notice pursuant to
Section 7.03(a)
shall describe with particularity any and all provisions of this Agreement
and any other Loan Document that have been breached.
7.04
Payment of Obligations
. Pay and discharge as the same shall become due
and payable, all its obligations and liabilities, including (a) all material tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Loan Party or such Subsidiary; and (b) all material lawful claims which, if unpaid, would by law become a Lien upon its property, except
claims which are being contested in good faith by appropriate proceedings with adequate reserves on the books of the Borrowers or the applicable Subsidiary with respect thereto in accordance with GAAP.
7.05
Preservation of Existence, Etc
. (a) Preserve, renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization except in a transaction permitted by
Sections 8.03 or 8.04
;
provided
,
however
, that the Borrowers and their Subsidiaries may cause to occur or consummate any merger
or consolidation permitted under
Section 8.03
or dissolution permitted under
Section 8.04(e)
; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary in the normal
conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the
non-preservation of which could reasonably be expected to have a Material Adverse Effect.
7.06
Maintenance of Properties
.
Maintain, preserve and protect all of its material properties and equipment useful and necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted.
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7.07
Maintenance of Insurance
(a) . (a) Maintain with financially sound and reputable insurance companies not Affiliates of any Loan Party, insurance
with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances
by such other Persons,
provided
that insurance coverage in respect of terrorism shall not be required.
(b) With
respect to each Mortgaged Property, obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require, if at any time the area in which any improvements located on any Mortgaged Property is
designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as amended from time to time.
7.08
Compliance with Laws
. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.
7.09
Books and Records
. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity
with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of PAH or any of its Subsidiaries, as the case may be; and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over such Loan Party or such Subsidiary, as the case may be.
7.10
Inspection Rights
. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and
inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its officers, employees and independent public
accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to MacDermid.
7.11
Use of Proceeds
. Use the proceeds of the Tranche B Term Loans, solely to refinance the Existing Indebtedness, to finance payment
by MacDermid of the Specified Cash Distribution (as defined in the Existing First Lien Credit Agreement) and to pay fees and expenses related to the Transaction. The Revolving Credit Borrowers will use the proceeds of the Revolving Loans for general
corporate purposes. The Revolving Credit Borrowers shall be entitled to request the issuance of Letters of Credit to support payment obligations incurred in the ordinary course of business.
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7.12
Additional Collateral
. (a) Upon the formation or acquisition of any new direct
or indirect Domestic Subsidiaries (other than any Excluded Domestic Subsidiary) by any Loan Party, then the Borrowers shall, in each case at the Borrowers’ expense:
(i) within 30 Business Days after such formation or acquisition, cause each such Subsidiary, and cause each direct and indirect parent
of such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent (A) a Subsidiary Joinder Agreement, in form and substance satisfactory to the Administrative Agent, guaranteeing the Borrowers’
obligations under the Loan Documents and (B) deliver to the Administrative Agent documents of the types referred to in
Sections 5.01(b)
(c)
,
(e)
and
(f)
,
(ii) within 30 days after such formation or acquisition (or, in the case of Anion, within 30 days after the Anion Release), deliver to the
Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion with respect to such Subsidiary, addressed to the Administrative Agent and the other Secured Parties, of counsel for the
Loan Parties reasonably acceptable to the Administrative Agent as to the matters contained in the legal opinion delivered pursuant to
Section 5.01(g)
with respect to the Subsidiary Guarantors as of the Closing Date, and
(iii) at any time and from time to time, promptly execute and deliver any further instruments and documents and take all such other action as
the Collateral Agent may deem reasonably necessary in obtaining the full benefits of, or in perfecting and preserving the Liens of, the Collateral Documents;
provided
, that each Loan Party shall cause (A) 100% of the issued and outstanding Equity Interests of each Domestic Subsidiary
(other than any Excluded Domestic Subsidiary) and (B) 65% of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each First-Tier Foreign Subsidiary and Excluded Domestic Subsidiary to be subject at all times to a perfected Lien in favor of the Collateral Agent pursuant to the
terms and conditions of the Collateral Documents, together with any filings and deliveries reasonably necessary in connection therewith to perfect the security interests therein, all in form and substance reasonably satisfactory to the Collateral
Agent;
provided
,
further
however
, that the Borrowers shall be permitted to exempt any Subsidiary from the
requirements of this
Section 7.12
(whereby such Subsidiary will be a Non-Qualified Subsidiary for purposes of this Agreement), so long as (x) the consolidated assets of such Non-Qualified Subsidiary shall not exceed 2.5% of the
total assets of the Borrowers and their Subsidiaries, taken as a whole, and (y) the assets of all Non-Qualified Subsidiaries, taken as a whole, shall not exceed 5% of the total assets of the Borrowers and their Subsidiaries taken as a whole.
(b) Within 90 days of the acquisition thereof, promptly grant to the Collateral Agent a security interest in and Mortgage
on each Real Property located in the United States, owned in fee by such Loan Party as is acquired by such Loan Party after the Closing Date and that, together with any improvements thereon, individually has a fair market value of at least
$3,000,000 at the time of acquisition, as reasonably estimated in good faith by the Loan Parties (each, a “
Material Real Property
”), as additional security for the Obligations. Such Mortgages shall be granted pursuant to
documentation reasonably satisfactory in form and substance to the Administrative Agent and the Collateral Agent and shall constitute valid and enforceable perfected Liens subject only to Permitted Liens, Liens pursuant to Section 8.01(g) or
other Liens acceptable to the Collateral Agent. The Mortgages or instruments related thereto shall be duly recorded or filed in such manner and in such
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places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and all taxes, fees and other
charges payable in connection therewith shall be paid in full. Such Loan Party shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall reasonably
require to confirm the validity, perfection and priority of the Lien of any existing Mortgage or new Mortgage against such after-acquired Material Real Property (including a Title Policy, a Survey) and local counsel opinion (in form and substance
reasonably satisfactory to the Administrative Agent and the Collateral Agent) in respect of such Mortgage) and deliver to the Collateral Agent all documents required to be delivered with respect to each Mortgaged Property pursuant to
Section 5.01(d)
. Notwithstanding anything in this Agreement or any Loan Document to the contrary, the Loan Parties shall not be required to (i) execute and deliver to the Collateral Agent Mortgages with respect to (A) any fee
owned real property other than a Material Real Property; (B) secure any portion of the Revolving Credit Facility with a mortgage on Material Real Property located in New York State; and (C) any leasehold rights or interests in real
property, or (ii) pledge or grant security interests in any of their property or assets if, in the reasonable judgment of Collateral Agent, the costs of creating or perfecting such pledges or security interests in such property or assets are
excessive in relation to the benefits to the Secured Parties.
(c) With respect to any Collateral acquired after the
Closing Date or, in the case of inventory or equipment, any material Collateral moved after the Closing Date by any Borrower or any other Loan Party (other than any Collateral described in paragraphs (a) or (b) of this Section) as to which
the Collateral Agent, for the benefit of the Secured Parties, does not have a first priority perfected security interest, promptly (and, in any event, within 10 days following the date of such acquisition) (i) execute and deliver to the
Administrative Agent and the Collateral Agent such amendments to the Pledge and Security Agreement or such other Collateral Documents as the Collateral Agent deems necessary or advisable to grant to the Collateral Agent, for the benefit of the
Secured Parties, a security interest in such Collateral and (ii) take all actions necessary or advisable to grant to, or continue on behalf of, the Collateral Agent, for the benefit of the Secured Parties, a perfected first priority security
interest in such Collateral, including the filing of UCC financing statements in such jurisdictions as may be required by the Pledge and Security Agreement or by law or as may be requested by the Administrative Agent or the Collateral Agent.
7.13
Compliance with Environmental Laws
. (a) Comply, and cause all lessees and other Persons operating or occupying its properties
to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; (b) obtain and renew all Environmental Permits necessary for its operations and properties; (c) take any and all actions necessary to
(i) cure any violation of applicable Environmental Laws and (ii) cure and have dismissed with prejudice any Environmental Claim against Company or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder;
and (d) if required by Environmental Law, conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its current or
former properties, in accordance with the requirements of all Environmental Laws; except in each case of (a), (b), (c) and/or (d) above, where such non-compliance, failure to obtain Environmental Permits, Environmental Claims or
requirements of Environmental Law does not or could not be reasonably expected to have a Material Adverse Effect;
provided
,
however
, that no Loan Party nor any of its Subsidiaries shall be required to undertake any such compliance, to
obtain any such Environmental Permits, to cure, any such Environmental Claims or to perform any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and
appropriate reserves are being maintained with respect to such circumstances
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7.14
Further Assurances
. Promptly upon request by the Administrative Agent or the
Collateral Agent, (i) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (ii) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent or Collateral Agent may reasonably require from time to time in order to implement the provisions of
the Loan Documents.
7.15
[RESERVED].
7.16
Credit Rating
. The Borrowers shall at all times use its commercially reasonable efforts to cause to be maintained (a) a
corporate rating for the Borrowers from S&P, (b) a corporate family rating for the Borrowers from Moody’s and (c) a rating for each for each of the Facilities from each of S&P and Moody’s.
7.17
Post-Closing Matters
. MacDermid shall, and shall cause each of the Subsidiaries to, take all necessary actions to satisfy the
requirements set forth on Schedule 7.17, within such periods as specified on such schedule.
ARTICLE VIII
NEGATIVE COVENANTS
So long as
any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder, other than contingent indemnification obligations for which no claim has been asserted, which is accrued and payable shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, no Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly:
8.01
Liens
. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or file or suffer to exist under the Uniform Commercial Code of any jurisdiction a
financing statement that names the Loan Party or any of its Subsidiaries as debtor, or sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement, or assign any accounts or other right to
receive income, other than the following:
(a) Liens pursuant to (i) any Loan Document and (ii) any document
governing any Credit Agreement Refinancing Indebtedness;
provided
that in the case of this clause (ii), (a) such Liens do not extend to any assets that are not Collateral and (b) the applicable parties to such Credit Agreement
Refinancing Indebtedness (or a representative thereof on behalf of such holders) shall have entered into with the Administrative Agent and/or the Collateral Agent a Customary Intercreditor Agreement, which agreement shall provide either that the
Liens on the Collateral securing such Credit Agreement Refinancing Indebtedness shall have either (x) the same priority ranking as the Liens on the Collateral securing the Obligations (but without regard to control of remedies) or
(y) shall rank junior to the Liens on the Collateral securing the Obligations; without any further consent of the Lenders, the Administrative Agent and the Collateral Agent shall be authorized
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to negotiate, execute and deliver on behalf of the Secured Parties any Customary Intercreditor Agreement or any amendment (or amendment and restatement) to the Collateral Documents or a Customary
Intercreditor Agreement to the extent necessary to effect the provisions contemplated by this Section 8.01(a)(ii);
(b) Permitted Liens;
(c) Liens existing on the Closing Date and listed on
Schedule 8.01(c)
and any renewals or extensions thereof,
provided
that the property covered thereby is not changed and the amount not increased or the direct or any contingent obligor changed and any renewal or extension of the obligations secured or benefited thereby is permitted by
Section 8.02(c)
;
(d) Liens securing factoring programs of Foreign Subsidiaries in an aggregate amount up to
$20,000,000 at any time outstanding;
(e) Liens securing Indebtedness permitted by
Section 8.02(m)
;
(f) Liens securing Indebtedness or any other obligations in an aggregate amount up to the greater of (i) $75,000,000 and
(ii) 40% of Consolidated EBITDA as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 7.01 at any time outstanding;
(g) Liens on the Collateral securing Indebtedness that is permitted by Section 8.02(g);
provided
that (i) such
security interests are incurred, and the Indebtedness secured thereby is created, within 120 days after such acquisition (or construction) (ii) the Indebtedness secured thereby does not exceed the lesser of the cost or the fair market
value of such real property, improvements or equipment at the time of such acquisition (or construction) and (iii) such security interests do not apply to any other property or assets of any Borrower or any Subsidiary; and
(h) Liens granted to secure Indebtedness permitted by Section 8.02 (the “
Second Lien
Indebtedness
”) which Lien is junior to the Liens securing the Obligations;
provided
that, (i) on the date such Second Lien Indebtedness is incurred, the Senior Secured Net Leverage Ratio on a consolidated basis for the
Borrowers and their Subsidiaries’ most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such Second Lien Indebtedness is incurred shall not exceed 6.75 to
1.00, determined on a Pro Forma Basis (including a pro forma application of the net proceeds therefrom), as if the Second Lien Indebtedness had been incurred at the beginning of such four-quarter period and (ii) the agent, trustee or similar
person party to such Second Lien Indebtedness shall enter into a Customary Intercreditor Agreement in form and substance reasonably satisfactory to the Administrative Agent.
8.02
Indebtedness
. Directly or indirectly, create, incur, assume or suffer to exist any Indebtedness, in the case of Holdings or the
Borrowers, issue any shares of Disqualified Stock or in the case of the Borrowers’ Subsidiaries (other than Holdings and MacDermid), issue any shares of Disqualified Stock or preferred stock, except:
(a) Indebtedness under this Agreement and the other Loan Documents and Credit Agreement Refinancing Indebtedness incurred to
refinance (in whole or in part) such Indebtedness;
(b) Reserved;
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(c) Indebtedness (including, without limitation, credit lines) outstanding on the
Closing Date and listed on
Schedule 8.02
and any Permitted Refinancing Indebtedness incurred to refinance such Indebtedness;
(d) Indebtedness consisting of Guarantees of the Borrowers with respect to (i) Indebtedness of any Subsidiary to the
extent that such Subsidiary’s Indebtedness is permitted to be incurred pursuant to a subsection under this Section 8.02 (other than this subsection (d)) and (ii) Indebtedness of any Person that is not a Subsidiary,
provided
that the aggregate principal amount of such Indebtedness shall not at any time exceed $25,000,000 (without giving effect to any write-offs or write-downs of such Indebtedness);
(e) intercompany loans (i) between the Borrowers and the Subsidiary Guarantors, (ii) between Subsidiary Guarantors,
(iii) between the Borrowers, (iv) between Non-Qualified Subsidiaries, (v) from a Non-Qualified Subsidiary to a Borrower or a Subsidiary Guarantor, in each case, so long as the payee with respect to such intercompany loans is Solvent,
both before and after giving effect to such intercompany loan and (vi) intercompany loans from any Borrower or any Subsidiary Guarantor to a Non-Qualified Subsidiary to the extent such loans are permitted under clause (b) of the definition
of “Permitted Investments”;
provided
that intercompany loans described in clause (v) are subordinated to the Obligations pursuant on terms reasonably satisfactory to the Administrative Agent;
(f) Indebtedness consisting of Permitted Swap Obligations;
(g) capital lease obligations, mortgage financings, industrial revenue bonds or purchase money obligations, in each case,
incurred for the purpose of financing all or any part of the purchase price or cost of design, development, construction or improvement of property, plant or equipment used in the business of any Borrower or any Subsidiary, in an aggregate principal
amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (g), not to exceed the greater of (x) $50,000,000 and (y) 30% of Consolidated EBITDA
as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 7.01 at any time outstanding;
(h) Acquired Indebtedness in an aggregate principal amount not to exceed $25,000,000 at any time outstanding;
(i) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business,
provided
,
however
, that such Indebtedness is extinguished within five Business Days of its incurrence;
(j) Indebtedness consisting of the financing of insurance premiums in the ordinary course of business in an amount not to
exceed $10,000,000 at any time outstanding;
(k) Indebtedness of Foreign Subsidiaries in an aggregate principal amount not
to exceed the greater of (x) $80,000,000 and (y) 50% of Consolidated EBITDA as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 7.01 at any time outstanding;
(l) the incurrence of additional Indebtedness (including Acquired Indebtedness) by (A) any Borrower or any of its
Subsidiaries or (B) Persons that are acquired by or merged or amalgamated with or into any Borrower or any of its Subsidiaries in accordance with the terms of this
92
Agreement and in each case, incurred to finance a Permitted Acquisition or any other acquisition of any Acquired Entity by any Borrower or any wholly-owned Subsidiary;
provided
, in each
case, that, at the time such additional Indebtedness is incurred, the Total Net Leverage Ratio on a consolidated basis for the Borrowers and their Subsidiaries’ most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional Indebtedness is incurred shall not exceed 6.75 to 1.00, in each case, determined on a Pro Forma Basis (including a pro forma application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred at the beginning of such four-quarter period;
(m) Indebtedness in an
amount not to exceed $25,000,000 outstanding at any one time for the repurchase, redemption, acquisition or retirement of Equity Interests of any Borrower or Holdings held in a Plan or otherwise held by employees or independent contractors;
(n) Indebtedness (in addition to the allowances in the other subsections of this
Section 8.02
) in an aggregate
principal amount at any time outstanding not to exceed the greater of (x) $75,000,000 and (y) 50% of Consolidated EBITDA as of the last day of the last Test Period for which financial statements have been delivered pursuant to
Section 7.01 at any time outstanding;
provided
that the Borrowers and their Subsidiaries shall not be permitted to incur additional Indebtedness under this subsection (n) during the existence of an Event of Default or if an Event of
Default would occur after giving effect to the incurrence of such Indebtedness;
(o) unsecured Indebtedness issued or
incurred by any Borrower or any Subsidiary Guarantor;
provided
that (i) such Indebtedness include a maturity date that is no earlier than the date that is 365 days after the Latest Maturity Date, (ii) such Indebtedness does not
provide for any required, scheduled or mandatory prepayment on account of principal (including amortization or otherwise, but excluding a customary offer to redeem or repay with asset sale proceeds or following a Change of Control) prior to the date
that is 365 days after the Latest Maturity Date, (iii) after giving effect to such incurrence and the applicable of proceeds therefrom, no Default or Event of Default shall have occurred and be continuing or would result therefrom ,
(iv) at the time such unsecured Indebtedness is incurred or issued, as applicable, the Total Net Leverage Ratio on a consolidated basis for the Borrowers and their Subsidiaries’ most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred shall not exceed 7.00 to 1.00, in each case, determined on a Pro Forma Basis (including a pro forma application of the net
proceeds therefrom), as if the unsecured Indebtedness had been incurred or issued, as applicable, at the beginning of such four-quarter period and (v) the terms and provisions of the documentation governing such Indebtedness is no more
restrictive on the Borrowers and their Subsidiaries than the terms and provisions of this Agreement; and
(p) Reserved.
8.03
Fundamental Changes
. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:
(a) any Borrower or any Subsidiary (other than Holdings and Platform Delaware Holdings, Inc.) may merge with or acquire another
Person, through a stock, asset or any other similar transaction, which is the business of specialty chemicals or any related business and related equipment if (i) such Borrower or such Subsidiary is the surviving entity, (ii) such
acquisition is friendly and is done with the recommendation of the acquiree’s board of directors or similar governing body and (iii) such acquisition constitutes a Permitted Acquisition;
93
(b) any Subsidiary of a Loan Party may merge with a Loan Party or a Wholly-Owned
Consolidated Subsidiary of a Loan Party if (i) such Loan Party or such Wholly-Owned Consolidated Subsidiary, as the case may be, is the surviving entity of such merger (
provided
that if such merger involves (x) a Subsidiary
Guarantor, the surviving entity of such merger shall be a Subsidiary Guarantor and (y) any Borrower, the surviving entity of such merger shall be such Borrower) and (ii) immediately after giving effect to such merger, no Default shall have
occurred or be continuing;
(c) Reserved; and
(d) PAH may effect the Reorganization.
8.04
Dispositions
. Make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business;
(c) Dispositions by any Borrower or any Subsidiary to any Borrower or any Subsidiary Guarantor and Dispositions by a Subsidiary
that is not a Subsidiary Guarantor to another Subsidiary that is not a Subsidiary Guarantor;
(d) other Dispositions
(i) for fair market value and for consideration at least 75% of which is cash or Cash Equivalents;
provided
that such Cash Equivalents shall mature within 180 days after the date of such Disposition, (ii) the proceeds of which shall
be reinvested into the business of the Borrowers and their Subsidiaries within the Reinvestment Period or applied in accordance with
Section 2.05
if and to the extent required thereby and (iii) so long as the Loan Parties are in Pro
Forma Compliance;
(e) the dissolution of any Subsidiary that (i) is not a Loan Party and (ii) is not material to
the business of the Borrowers and their Subsidiaries, taken as a whole;
(f) Dispositions set forth on
Schedule
8.04
; and
(g) other Dispositions in an aggregate amount not to exceed $15,000,000 during the term of this Agreement.
8.05
Restricted Payments
. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except:
(a) so long as no Event of Default or Default shall have occurred and be continuing or would
result therefrom, any Loan Party may repurchase its Equity Interests owned by employees of such Loan Party (or held by any Plans maintained by the foregoing) or make payments
94
to employees of PAH or the Subsidiaries upon termination of employment in connection with the exercise of stock options, stock appreciation rights or similar equity incentives or equity based
incentives pursuant to management incentive plans or other Plans or in connection with the death or disability of such employees in an aggregate amount not to exceed $2,500,000 in any fiscal year (excluding any net repurchases or payments over
issuances of such Equity Interests in such fiscal year to such employees) (the “
Distribution Amount
”);
provided
, that the amount of permitted distributions pursuant to this
Section 8.05(a)
shall be
increased by (A) the unused Distribution Amount for the immediately preceding fiscal year less (B) an amount equal to the unused Distribution Amount carried forward to such preceding fiscal year;
(b) the redemption, retirement or defeasance of any Indebtedness of PAH or its Subsidiaries with the Net Cash Proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(c) the payment of any dividend or distribution by a Subsidiary of PAH
to the holders of its Equity Interests on a pro rata basis;
(d) so long as no Event of Default or Default shall have
occurred and be continuing or would result therefrom, dividends or distributions by PAH at the times due and in an amount necessary to make payments in accordance with and to the extent permitted by
Section 8.07(f)
;
(e) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Holdings or any Borrower;
(f) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, Platform
Delaware Holdings, Inc. may repurchase its Equity Interests owned by Tartan Holdings, LLC in exchange for Equity Interests of PAH;
(g) in addition to the foregoing and following Restricted Payments, any Loan Party may make additional Restricted Payments to
any other Loan Party;
(h) Reserved;
(i) so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, dividends or
distributions by MacDermid to Holdings (and Holdings may make dividends or distributions to the holders of its Equity Interests in an equal amount) in an aggregate amount not to exceed 50% of the Net Cash Proceeds received from any Autotype Asset
Sale;
(j) so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom,
Restricted Payments in an aggregate amount not to exceed $50,000,000;
(k) in addition to the foregoing and following
Restricted Payments, Holdings, the Borrowers and their Subsidiaries may make additional Restricted Payments (i) pursuant to clause (a) of the definition thereof and (ii) pursuant to clause (b) of the definition thereof,
collectively, in an aggregate amount not to exceed an amount (which shall not be less than zero) equal to the portion, if any, of the Available Amount on the date of such election that the Borrowers elect to apply to this
Section 8.05(k)
, such election to be specified in a written notice of a Responsible Officer of MacDermid calculating in reasonable detail the amount of Available Amount immediately prior to such election and the amount thereof elected to
be so applied;
provided
that, in the case of this
95
Section 8.05(k)
, immediately after giving effect to any such Restricted Payment, (i) no Default or Event of Default shall have occurred and be continuing and (ii) in the
case of Restricted Payments pursuant to clause (i) and (iii), the First Lien Net Leverage Ratio shall not exceed 4.50:1.00 on a Pro Forma Basis;
(l) from the Amendment No. 1 Effective date until the date that is six months following such date, MacDermid may
(i) repurchase its Equity Interests owned by any Plan Investor in exchange for Equity Interests of PAH and (ii) make payments in cash to any Plan Investor that elects the Cash Payout Option in an amount equal to such Plan Investor’s
pro rata share of the Cash Payout Option; provided, that (x) concurrently with such payment, such Plan Investor’s Equity Interests in MacDermid are terminated and (y) the aggregate amount of cash payments permitted pursuant to this
clause (l) shall not exceed $22,000,000 during such six month period; and
(m) so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, prepayments, redemptions, purchases, defeasances, or other satisfactions prior to the scheduled maturity thereof with respect to the Indebtedness permitted to be secured under
Section 8.01(h)
in an aggregate amount not to exceed $50,000,000.
For the avoidance of doubt, the Restricted Payments
permitted pursuant to Section 8.05(m) are in addition to any Restricted Payments permitted pursuant to Section 8.05(j).
8.06
Change in Nature of Business
(a) . (a) With respect to the Borrowers and their Subsidiaries (other than
Holdings and Platform Delaware Holdings, Inc.), engage in any material line of business substantially different from those lines of business conducted by the Borrower and their Subsidiaries on the Closing Date or any business substantially related
or incidental thereto.
(b) With respect to each of Holdings and Platform Delaware Holdings Inc., engage in any business
activities or own any assets or liabilities other than de minimus assets and liabilities and its ownership of the Equity Interests in MacDermid and Holdings, respectively, and liabilities incidental thereto, including its liabilities pursuant to the
Loan Documents;
provided
that each of Holdings and Platform Delaware Holdings, Inc. may (A) engage in those activities that are incidental to (i) the maintenance of its corporate existence in compliance with applicable law,
(ii) legal, tax and accounting matters in connection with any of the foregoing activities, and (iii) the entering into, and performing its obligations under, this Agreement and the other Loan Documents to which it is a party, (B)(i) pay or
make of Restricted Payments to the extent expressly permitted under Section 8.05 and (ii) guarantee Indebtedness expressly permitted to be incurred under section 8.02 by the Borrowers and the Subsidiaries (other than Holdings and Platform
Delaware Holdings Inc. ) to the extent such guarantee is expressly permitted under Section 8.02.
8.07
Transactions with
Affiliates
. Enter into any transaction of any kind with any Affiliate of any Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to such Borrower or such Subsidiary as
would be obtainable by such Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate,
provided
that the foregoing restriction shall not apply to:
(a) participation by any Borrower or any Subsidiary in, or effecting any transaction in connection with, any joint enterprise
or other joint arrangement with any Affiliate if such Borrower or such Subsidiary, as applicable, participates in the ordinary course of its business and on a basis no less advantageous than the basis on which such Affiliate participates;
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(b) loans and other transactions among the Loan Parties to the extent permitted
by this Article VIII;
(c) any payment from any Subsidiary to any Borrower;
(d) Intercompany Indebtedness permitted under
Section 8.02
and Restricted Payments permitted under
Section 8.05
;
(e) compensation arrangements with directors and employees entered into in the ordinary course
of business;
(f) so long as no Event of Default or Default shall have occurred and be continuing or would result
therefrom, fees may be paid (and expenses may be reimbursed) pursuant to and in accordance with the Advisory Agreement as such agreement is in effect on the Amendment No. 1 Effective Date;
(g) issuance of Equity Interests (other than Disqualified Stock) of Holdings or any Borrower; or
(h) the Reorganization.
8.08
Burdensome Agreements
. Enter into or permit to exist any Contractual Obligation (other than this Agreement, any other Loan
Document or any Permitted Refinancing Indebtedness incurred to refinance such Indebtedness) that (a) limits the ability (i) of any Loan Party to perform its obligations under any Loan Document, (ii) except as permitted under
Section 8.01
and the documentation governing any Credit Agreement Refinancing Indebtedness, of any Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person to secure the Obligations or any
refinancing thereof or (iii) of any Borrower or any Subsidiary to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to Holdings, any Borrower or any other Subsidiary or to
Guarantee Indebtedness of any Borrower or any Subsidiary or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person;
provided
that the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale;
provided
further
that such restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder.
8.09
Use of Proceeds
. Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness
originally incurred for such purpose.
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8.10
Financial Covenants
(a) Solely in respect of the Revolving Credit Facility, so long as the aggregate Outstanding Amount of Revolving Loans and all
Unreimbursed Amounts, including all L/C Borrowings exceeds $12,500,000 (a “
Triggering Event
”) as of the end of any fiscal quarter of PAH, permit the First Lien Net Leverage Ratio as of the last day of any fiscal quarter to
exceed 6.50 to 1.00.
(b)
Right to Cure
. Notwithstanding anything to the contrary contained in Section 9.01 or 9.02, in the
event that the Borrowers fail to comply with the requirements of the financial covenant set forth in Section 8.10(a) at any time when PAH is required to comply with such financial covenant, pursuant to the terms thereof, then (A) until the
expiration of the tenth Business Day subsequent to the date the relevant financial statements are required to be delivered pursuant to Sections 7.01 (a) or (b) (the last day of such period being the “
Anticipated Cure
Deadline
”), PAH shall have the right to issue or obtain a contribution to its equity (which shall be in the form of common equity or otherwise in a form reasonably acceptable to the Administrative Agent) for cash and contribute the
proceeds therefrom to Holdings in the form of cash common equity and Holdings shall be permitted to contribute the proceeds therefrom to MacDermid in the form of cash common equity (the “
Cure Right
”), and upon the receipt
MacDermid of such cash (the “
Cure Amount
”), pursuant to the exercise by MacDermid of such Cure Right, the calculation of Consolidated EBITDA as used in the financial covenant set forth in Section 8.10(a) shall be
recalculated giving effect to the following pro forma adjustments:
(i) Consolidated EBITDA shall be increased, solely for
the purpose of measuring the financial covenant set forth in Section 8.10(a) and not for any other purpose under this Agreement (including but not limited to determining the availability or amount of any covenant baskets or carve-outs
(including the determination of the Available Amount) or determining the Applicable Rate), by an amount equal to the Cure Amount;
provided
that (1) the receipt by MacDermid of the Cure Amount pursuant to the Cure Right shall be deemed to
have no other effect whatsoever under this Agreement (including but not limited to determining the availability or amount of any covenant baskets or carve-outs or determining the Applicable Rate) and (2) no Cure Amount shall reduce Indebtedness
(including as “unrestricted cash or Cash Equivalents” of the Borrowers and their Subsidiaries) on a Pro Forma Basis for the applicable fiscal quarter for which such Cure Amount was contributed for purposes of calculating the financial
covenant set forth in Section 8.10(a); and
(ii) If, after giving effect to the foregoing recalculations, the
Borrowers shall then be in compliance with the requirements of the financial covenant set forth in Section 8.10(a), the Borrowers shall be deemed to have satisfied the requirements of the financial covenant set forth in Section 8.10(a) as
of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the financial covenant set forth in Section 8.10(a) that had occurred shall
be deemed cured for the purposes of this Agreement; and
(iii) (B) upon receipt by the Administrative Agent of written
notice, on or prior to the Anticipated Cure Deadline, that the Borrowers intend to exercise the Cure Right in respect of a fiscal quarter, the Lenders shall not be permitted to accelerate Loans held by them or to exercise remedies against the
Collateral on the basis of a failure to comply with the requirements of the financial covenant set forth in Section 8.10(a), unless such failure is not cured pursuant to the exercise of the Cure Right on or prior to the Anticipated Cure
Deadline.
Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal-quarter period there
shall be at least two fiscal quarters in respect of
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which the Cure Right is not exercised, (ii) there can be no more than four fiscal quarters in respect of which the Cure Right is exercised during the term of this Agreement and
(iii) for purposes of this Section 8.10(b), the Cure Amount utilized shall be no greater than the minimum amount required to remedy the applicable failure to comply with the financial covenant set forth in Section 8.10(a).
8.11
Amendments of Organization Documents and Certain Other Agreements
. Amend, modify or otherwise alter any of its Organization
Documents in any manner that would conflict with its obligations under the Loan Documents (excluding any amendments of PAH’s Organizational Documents to effect the Reorganization; provided that such amendments are reasonably satisfactory to the
Administrative Agent) or (b) the instrument or agreement governing any Indebtedness that is subordinated to the Obligations if such amendment, modification or alteration is in violation of the Customary Intercreditor Agreement entered into with
respect thereto.
8.12
Accounting Changes
. Make any (a) significant change in a manner adverse to the Lenders in accounting
policies or reporting practices, except as permitted or required by generally accepted accounting principles, or (b) change its fiscal year.
8.13
Sale and Leaseback Transactions
. Enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as
the property being sold or transferred unless (i) the sale of such property is permitted by
Section 8.04
and (ii) any capital lease obligations or Liens arising in connection therewith are permitted by
Sections 8.02
and
8.01
, respectively.
8.14
No Other “Designated Senior Indebtedness”
. No Borrower shall designate, nor permit the
designation of, any Indebtedness (other than under this Agreement or the other Loan Documents) as “Designated Senior Indebtedness” or any other similar term for the purpose of the definition of the same or the subordination provisions
contained in the documentation for all Indebtedness that is subordinated in right of payment to the Obligations (if applicable) or any Permitted Refinancing Indebtedness in respect thereof.
ARTICLE IX
EVENTS OF DEFAULT AND
REMEDIES
9.01
Events of Default
. Any of the following shall constitute an Event of Default:
(a)
Non-Payment
. Any Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any
amount of principal of any Loan or any L/C Obligation, or (ii) within five days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any Commitment Fee or other fee due hereunder, or (iii) within five days
after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
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(b)
Specific Covenants
. Any Borrower or any other Loan Party fails to
perform or observe any term, covenant or agreement contained in any of (i)
Sections 7.01
,
7.02
, or
7.03
, if such failure continues for three Business Days or (ii)
Sections
7.05
,
7.09
,
7.10
,
7.11
,
7.17
or
Article VIII
;
provided
that any Event of Default under
Section 8.10
shall not constitute an Event of Default with respect to the Term Loan Facility or any New Term Loan Facility until the earlier
of (i) the date that is 30 days after the date such Event of Default arises with respect to the Revolving Credit Facility and (ii) the date on which the Administrative Agent or the Revolving Credit Lenders exercise any remedies with
respect to the Revolving Credit Facility in accordance with
Section 9.02
and
provided
further
that any Event of Default under
Section 8.10
may be waived, amended or otherwise modified from time to time pursuant
to clause (i) of
Section 11.01
; or
(c)
Other Defaults
. Any Borrower or any other Loan Party fails
to perform or observe any other covenant or agreement (not specified in
Section 9.01(a)
or
(b)
above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or
(d)
Representations and Warranties
. Any representation, warranty, certification or statement of fact made or deemed made
by or on behalf of any Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading, in each case in any material respect, when made or deemed
made; or
(e)
Cross-Default
. (i) Any Loan Party or any Significant Subsidiary (or any group of Subsidiaries
that, when taken together, would constitute a Significant Subsidiary) (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee in excess of the Threshold Amount or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which any Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which any Borrower or any Subsidiary is an Affected Party (as defined in such Swap Contract) and, in either event, the Swap Termination Value owed by the Loan
Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or
(f)
Insolvency Proceedings,
Etc
. Any Loan Party or any Significant Subsidiary (or any group of Subsidiaries that, when taken together, would constitute a Significant Subsidiary) institutes or consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment
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continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or
(g)
Inability to Pay Debts; Attachment
. (i) Any Loan Party or any Significant Subsidiary (or any group of
Subsidiaries that, when taken together, would constitute a Significant Subsidiary) becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or
(h)
Judgments
. There is entered against any Loan Party or any Subsidiary (i) a final judgment or order for the
payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Borrower and does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any
creditor upon such judgment or order, or (B) there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
(i)
ERISA
. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect, (ii) any Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount or (iii) there exists any fact or circumstance that reasonably could be expected to result in the imposition of a
Lien or security interest under Section 430(k) of the Code or under Section 303(k) of ERISA in excess of the Threshold Amount; or
(j)
Invalidity of Loan Documents
. Any material provision of any Loan Document, at any time after its execution and
delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in any manner the validity or enforceability of
any material provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or
(k) Reserved; or
(l)
Change of Control
. There occurs any Change of Control; or
(m)
Collateral Document
. Any Collateral Document after delivery thereof pursuant to
Sections 5.01
or
7.12
shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby (subject to Liens expressly permitted
under the Loan Documents) and is not, upon the written request of an Agent, promptly corrected.
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9.02
Remedies Upon Event of Default
. If any Event of Default occurs and is continuing, the
Administrative Agent may, and at the request of the Required Lenders, shall take any or all of the following actions (it being understood that during any period during which an Event of Default under
Section 8.10
exists solely with
respect to the Revolving Credit Facility, the Administrative Agent may, and at the request of the Majority Facility Lenders in respect of the Revolving Credit Facility, shall take any of the actions described below solely as they relate to the
Revolving Credit Facility):
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer
to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
(b) declare
the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived by each Borrower;
(c) require that the Revolving
Credit Borrowers Cash Collateralize the L/C Obligations (in an amount equal to 105% of the then Outstanding Amount thereof); and
(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the
L/C Issuer under the Loan Documents or applicable Law;
provided
,
however
, that upon the occurrence of an event with respect to Holdings or
any Borrower described in
Section 9.01(f)
, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Revolving Credit Borrowers to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each
case without further act of the Administrative Agent or any Lender.
9.03
Application of Funds
. After the exercise of remedies
provided for in
Section 9.02
(or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to
Section 9.02
), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:
First
, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney
Costs and amounts payable under
Article III
) payable to each Agent in its capacity as such;
Second
, to payment of that
portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under
Article III
), ratably among them in proportion to the
amounts described in this clause Second payable to them;
Third
, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans and L/C Borrowings, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;
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Fourth
, to (a) payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, (b) payment of breakage, termination or other payments, and any interest accrued thereon, due under any Secured Hedge Agreement and (c) payments of amounts due under any Treasury Management
Agreement between any Loan Party and an Agent, an Arranger, the Bookrunner or a Lender, in each case at the time such applicable Treasury Management Agreement is entered into, or an Affiliate of any of the foregoing, ratably among the Lenders, the
L/C Issuer, the Hedge Banks and any Affiliate of a Lender in proportion to the respective amounts described in this clause Fourth payable to or held by them;
Fifth
, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize 105% of that portion of L/C Obligations
comprised of the aggregate undrawn amount of Letters of Credit;
Sixth
, to the payment of all other Obligations of the Loan Parties
owing under or in respect of the Loan Documents that are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative
Agent and the other Secured Parties on such date; and
Last
, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrowers or as otherwise required by Law.
Subject to
Section 2.03(c)
, amounts used to Cash
Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of
Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
ARTICLE X
THE AGENTS AND THE
ARRANGER
10.01
Appointment and Authority
.
(a) Each of the Lenders and the L/C Issuer hereby irrevocably appoints Credit Suisse AG to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and no Borrower nor any other Loan Party shall have
rights as a third party beneficiary of any of such provisions.
(b) Each of the Lenders (in its capacities as a Lender and
potential Hedge Bank) and the L/C Issuer hereby irrevocably appoints Credit Suisse AG to act on its behalf as the Collateral Agent (for purposes of this
Article X
, the Administrative Agent and the Collateral Agent are referred to collectively
as the “
Agents
”) hereunder and hereby authorizes the Collateral Agent to acquire, hold and enforce any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers
and discretion as are reasonably incidental thereto. In this connection, the Collateral Agents and any co-agents, sub-agents and attorneys-in-fact appointed by the Collateral Agent pursuant to
Section 10.02
for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Collateral Agent), shall be entitled to the benefits of all provisions
of this
Article X
and
Article XI
(including
Section 11.04(c)
, as though such co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the Loan Documents) as if set forth in full herein with respect
thereto.
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10.02
Delegation of Duties
. Each Agent may perform any and all of its duties and exercise
its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with
the syndication of the credit facilities provided for herein as well as activities as such Agent.
10.03
Rights as a Lender
. The
Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated or unless the context otherwise requires, include the Person serving as an Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor
or in any other advisory capacity for and generally engage in any kind of business with PAH or any of its Subsidiaries or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.
10.04
Exculpatory Provisions
. No Agent shall have any duties or obligations except those expressly set forth herein and in the
other Loan Documents. Without limiting the generality of the foregoing, no Agent:
(a) shall be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents),
provided
that the such Agent shall not be required to take any action that, in its opinion or the opinion of its
counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law; and
(c) shall,
except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall be liable for the failure to disclose, any information relating to any Borrower or any of its Affiliates that is communicated to or obtained
by the Person serving as such Agent or any of its Affiliates in any capacity.
Each Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as
provided in
Sections 11.01
and
9.02
) or (ii) in the absence of its own gross negligence or willful misconduct. Each Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice
describing such Default is given to such Agent by any Borrower, a Lender or the L/C Issuer.
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No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness
of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any
Collateral, or (v) the satisfaction of any condition set forth in
Article V
or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to such Agent.
10.05
Reliance by Agents
.
(a) Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, an Agent may presume that such condition is satisfactory
to such Lender or the L/C Issuer unless such Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. Each Agent may consult with legal counsel
(who may be counsel for PAH or any of its Subsidiaries), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or
experts.
(b) Without limiting the generality of the provisions of
Section 10.04
, for purposes of determining
compliance with the conditions specified in
Section 5.01
, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
10.06
Non-Reliance on Agents and Other Lenders
. Each Lender and the L/C Issuer acknowledges that it has, independently and without
reliance upon the Agents, the Arranger, the Syndication Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Agents, the Arranger, the Syndication Agent or any other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or
thereunder.
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10.07
Resignation of Agent
. Each Agent may at any time give notice of its resignation to
the Lenders, the L/C Issuer and the Borrowers. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor, which shall be a bank with an office in the United
States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then such retiring Agent may on behalf of the Lenders and the L/C Issuer, appoint a successor Agent meeting the qualifications set forth above;
provided
that if such Agent shall notify the Borrowers and the Lenders
that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and, subject to the last sentence of this
Section 10.07
, (a) the retiring Agent shall
be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Collateral Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents,
the retiring Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through such Agent
shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as Agent
hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrowers to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrowers and such successor. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and
Section 11.04
shall continue in effect for the benefit of such retiring Agent, its
sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent. In addition, notwithstanding the effectiveness of a resignation by the Administrative
Agent hereunder, (a) the retiring Administrative Agent may, in its sole discretion, continue to provide the services of the Administrative Agent solely with respect to administering, collecting and delivering any payments of principal,
interest, fees, premium or other amounts in respect of the Loans and maintaining the books and records relating thereto (such Administrative Agent acting in such capacity, the “
Paying Agent
”), (b) the term
“Administrative Agent” when used in connection with any such functions shall be deemed to mean such retiring Administrative Agent in its capacity as the Paying Agent and (c) such retiring Administrative Agent shall, in its capacity as
the Paying Agent, continue to be vested with and enjoy all of the rights and benefits of an Administrative Agent hereunder.
10.08
Administrative Agent May File Proofs of Claim
. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal
of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and
the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the
Lenders, the L/C Issuer and the Administrative Agent under
Sections 2.03(i)
and
(j)
and
2.09
) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such
judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to
pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under
Section 2.09
.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or
accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in
respect of the claim of any Lender or the L/C Issuer or in any such proceeding.
10.09
Collateral and Guaranty Matters
. The Lenders
and the L/C Issuer irrevocably authorize the Collateral Agent, at its option and in its discretion,
(a) to release any
Lien on any property granted to or held by the Collateral Agent under any Loan Document (i) upon termination of the Total Revolving Credit Commitments and payment in full of all Obligations (other than (x) contingent indemnification
obligations not yet accrued and payable and obligations in respect of Treasury Management Agreements and (y) Obligations under Secured Hedge Agreements;
provided
that the net termination liability under or in respect of, and other
amounts due and payable under, each Secured Hedge Agreement at such time shall have been paid or secured in the manner provided in such Secured Hedge Agreement or by a collateral arrangement reasonably satisfactory to the relevant Hedge Bank in its
sole discretion) and the expiration or termination of all Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) subject to
Section 11.01
, if approved, authorized or ratified in writing by the Required Lenders; and
(b) to release any
Subsidiary Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.
Upon request by the Collateral Agent at any time, the Required Lenders will confirm in writing the Collateral Agent’s authority to
release its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this
Section 10.09
. In each case as specified in this
Section 10.09
, the
Collateral Agent will, at the Borrowers’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security
interest granted under the Collateral Documents, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this
Section 10.09
.
10.10
No Other Duties, Etc
. Anything herein to the contrary notwithstanding, the Arranger and the Syndication Agent listed on the cover
page hereof shall not have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as an Agent, a Lender or the L/C Issuer hereunder.
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ARTICLE XI
MISCELLANEOUS
11.01
Amendments, Etc
. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the
Required Lenders and MacDermid or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which
given;
provided
,
however
, that no such amendment, waiver or consent shall:
(a) extend or increase the
Commitment of any Lender (or reinstate any Commitment terminated pursuant to
Section 9.02
) without the written consent of such Lender;
(b) postpone any date scheduled for any payment of principal or interest under
Sections 2.07
or
2.08
, or any date
fixed by the Administrative Agent for the payment of fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;
(c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause
(iv) of the second proviso to this
Section 11.01
) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;
provided
,
however
,
that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of any Borrower to pay interest at the Default Rate;
(d) amend or modify the pro rata requirements of
Section 3.07
, change the provision in
Section 11.06(a)(i)
, change any provision of this
Section 11.01
or the definitions of “Required Lenders” or “Majority Facility Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;
(e) change the provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of
payments due to Lenders holding Loans of one Class differently from the rights of Lenders holding Loans of any other Class without the prior written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of
each adversely affected Class;
(f) release all or substantially all of the Collateral in any transaction or series of
related transactions, without the written consent of each Lender;
(g) release Holdings, any Borrower or all or
substantially all of the Subsidiary Guarantors, from its or their obligations under the Loan Documents without the written consent of each Lender;
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(h) impose any greater restriction on the ability of any Lender to assign any of
its rights or obligations hereunder with respect to any Facility without the written consent of the Majority Facility Lenders then in effect in respect of such Facility. For purposes of this clause, the aggregate amount of each Lender’s risk
participation and funded participation in L/C Obligations shall be deemed to be held by such Lender;
(i) amend, waive or
otherwise modify any of the terms and provisions (and related definitions) of
Section 8.10
(even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder)
or any of the terms and provisions of the proviso set forth in
Section 9.01(b)
, without the written consent of the Majority Facility Lenders in respect of the Revolving Credit Facility, and, notwithstanding anything else in this
Agreement to the contrary, any such amendment, waiver or other modification shall be effective for all purposes of this Agreement with the written consent of only the Majority Facility Lenders in respect of the Revolving Credit Facility (or the
Administrative Agent with the prior written consent thereof), on the one hand, and MacDermid, on the other hand;
(j)
modify the protections afforded to an SPC pursuant to the provisions of
Section 11.06(b)(vii)
without the written consent of such SPC; or
(k) amend, modify or waive (i) any Loan Document so as to alter the ratable treatment of Obligations under Secured Hedge
Agreements or (ii) the definition of “Hedge Bank,” “Secured Hedge Agreement,” or “Obligations,” in each case in a manner adverse to any Hedge Bank with Obligations then outstanding without the written consent of
any such Hedge Bank,
and
provided
further
that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C
Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it and (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of, or any fees or other amounts payable to, the Administrative Agent under this Agreement or any other Loan
Document. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.
11.02
Notices and Other Communications; Facsimile Copies
.
(a)
Notices Generally
. Except as provided in subsection (b) below, all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows:
(i) if to Holdings, the Borrowers, the Agents, or the L/C Issuer, to the address, telecopier number or electronic mail address specified for
such Person on
Schedule 11.02
; and
(ii) if to any other Lender, to the address, telecopier number or electronic mail address
specified in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be
deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to
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have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below
shall be effective as provided in such subsection (b).
(b)
Electronic Communications
. Notices and other
communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent,
provided
that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to
Article II
if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrowers may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it,
provided
that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent
otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested”
function, as available, return e-mail or other written acknowledgement),
provided
that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have
been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
(c)
The Platform
. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED
BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE
PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “
Agent Parties
”) have any liability to any Borrower, any Lender, the L/C Issuer, any Arranger or the Syndication Agent or
any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent
Party;
provided
,
however
, that in no event shall any Agent Party have any liability to any Borrower, any Lender, the L/C Issuer, any Arranger or the Syndication Agent or any other Person for indirect, special, incidental, consequential
or punitive damages (as opposed to direct or actual damages).
(d)
Change of Address, Etc
. Each of Holdings, the
Borrowers, the Agents, and the L/C Issuer may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to Holdings, the Borrowers, the Agents, and the L/C Issuer. In addition, each Lender agrees to notify the
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Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.
(e)
Reliance by Agents, L/C Issuer and Lenders
. The Agents, the L/C Issuer and the Lenders shall be entitled to rely and
act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of the Borrowers even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrowers shall indemnify the Agents, the L/C Issuer, each Lender and the Related Parties of each of
them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrowers. All telephonic notices to and other telephonic communications with the Administrative
Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
11.03
No Waiver;
Cumulative Remedies
. No failure by any Lender or the Agents to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided,
and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
11.04
Expenses; Indemnity; Damage Waiver
.
(a)
Costs and Expenses
. The Loan Parties shall (i) reimburse from time to time, upon presentation of a reasonably
detailed statement all reasonable and documented out-of-pocket expenses incurred by the Agents, the Arranger, the Syndication Agent, each Lender, the L/C Issuer and their respective Affiliates (including the fees and expenses, to one primary counsel
and, if reasonably necessary, to one local counsel in each appropriate jurisdiction and one special counsel and, solely in the case of an actual or perceived conflict of interest, one or more additional counsel for each affected group), in
connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated);
provided
that the aggregate amount of the foregoing expenses for legal counsel in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents described in this clause (i) for which the Loan Parties shall be responsible shall not
exceed the amount set forth in the Amendment Engagement Letter;
provided
,
further
that the aggregate amount of the foregoing expenses (other than legal fees) in connection with the syndication of the credit facilities provided for
herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents described in this clause (i) for which the Loan Parties shall be responsible shall not exceed the amount set forth in
the Amendment Engagement Letter, (ii) all reasonable and documented out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance,
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amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) reimburse from time to time, upon presentation of a reasonably detailed statement, all
reasonable and documented out-of-pocket expenses incurred by the Agents, the Arranger, the Syndication Agent, the L/C Issuer, any Lender (including the reasonable fees and expenses to one primary counsel and, if reasonably necessary, to one local
counsel in each appropriate jurisdiction and one special counsel and, solely in the case of an actual or perceived conflict of interest, one or more additional counsel for each affected group), in connection with the enforcement or protection of its
rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b)
Indemnification by Holdings and the Borrowers
. Holdings and each Borrower shall indemnify the Agents (and any sub-agent thereof), the Arranger, the Syndication Agent, each Lender and the L/C Issuer, and each Related Party of any of the
foregoing Persons (each such Person being called an “
Indemnitee
”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges
and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of
Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the
terms of such Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property currently or formerly owned or operated by any Borrower or any of its Subsidiaries, or any other Environmental Claim
or Environmental Liability related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any
other theory, whether brought by a third party or by any Borrower or any other Loan Party or any of such Borrower’s or such Loan Party’s directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto;
provided
that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Borrower or any other Loan Party against an Indemnitee for a material breach of such
Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.
(c)
Reimbursement by Lenders
. To the extent that Holdings or any Borrower for any reason fails to indefeasibly pay any
amount required under subsection (a) or (b) of this Section to be paid by either of them to the Agents (or any sub-agent thereof), the Arranger, the Syndication Agent, the L/C Issuer or any Related Party of any of the foregoing, each
Lender severally agrees to pay to the Agents (or any such sub-agent), the Arranger, the Syndication Agent, the L/C Issuer or such Related Party, as the case may be, such Lender’s Pro Rata Share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or related
112
expense, as the case may be, was incurred by or asserted against the Agents (or any such sub-agent), the Arranger, the Syndication Agent, or the L/C Issuer in its capacity as such, or against any
Related Party of any of the foregoing acting for the Agents (or any such sub-agent), the Arranger, the Syndication Agent, or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to
the provisions of
Section 2.12(d)
.
(d)
Waiver of Consequential Damages, Etc
. To the fullest extent
permitted by applicable law, Holdings and each Borrower each shall not assert, and Holdings and each Borrower each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or
Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such
unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for
direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.
(e)
Payments
. All amounts due under this Section shall be payable not later than 10 Business Days after written demand
therefor.
(f)
Survival
. The agreements in this Section shall survive the resignation of the Administrative Agent
and the L/C Issuer, the replacement of any Lender, the termination of the Total Revolving Credit Commitments and the repayment, satisfaction or discharge of all the other Obligations.
11.05
Payments Set Aside
. To the extent that any payment by or on behalf of any Borrower is made to the Agents or any Lender, or the
Agents or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agents or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the
Agents upon demand their applicable share of any amount so recovered from or repaid by the Agents, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to
time in effect.
11.06
Successors and Assigns
.
(a)
Successors and Assigns Generally
. The provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby, except that (i) Holdings, any Borrower or any other Loan Party may not assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Administrative Agent, the L/C Issuer and each Lender (and any attempted assignment without such
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consent shall be null and void); and (ii) no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (A) to an assignee in accordance with the
provisions of
Section 11.06(b)
, (B) by way of participation in accordance with the provisions of
Section 11.06(d)
, or (C) by way of pledge or assignment of a security interest subject to the restrictions of
Section 11.06(f)
(and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the L/C Issuer and the
Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)
Assignments by
Lenders
. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment(s) and the Loans (including for purposes of this
Section 11.06(b)
, participations in L/C Obligations) at the time owing to it);
provided
that any such assignment shall be subject to the following conditions:
(i)
Minimum Amounts
.
(A) no minimum amount need be assigned in the case of (x) an assignment of the entire remaining amount of the assigning Lender’s
Commitment under any Facility and the Loans at the time owing to it under such Facility and (y) an assignment by a Lender to any other Lenders, Affiliates and Approved Funds; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than, (i) in the case of any Facility (other than the
Multicurrency Revolving Credit Facility), $1,000,000, in the case of any assignment under such Facility and (ii) in the case of the Multicurrency Revolving Credit Facility, the Dollar Equivalent of $1,000,000, in each case, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is continuing, MacDermid otherwise consents (each such consent not to be unreasonably withheld or delayed);
provided
,
however
, that concurrent assignments to
members of an Assignee Group with respect to any Lender and concurrent assignments from members of an Assignee Group with respect to any Lender to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum amount has been met;
(ii)
Proportionate Amounts
.
Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause
(ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Facilities on a non-pro rata basis. If any such assignment shall be of the assigning Lender’s Dollar Revolving Credit
Outstandings and Dollar Revolving Credit Commitments, such assignment shall cover the same percentage of such Lender’s Dollar Revolving Credit Outstandings and Dollar Revolving Credit Commitment. If any such assignment shall be of the assigning
Lender’s Multicurrency Revolving Credit Outstandings and Multicurrency Revolving Credit Commitments, such assignment shall cover the same percentage of such Lender’s Multicurrency Revolving Credit Outstandings and Multicurrency Revolving
Credit Commitments;
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(iii)
Required Consents
. No consent shall be required for any assignment except to the
extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of MacDermid (such consent not to be
unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment, (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund and
(3) such assignment is during the primary syndication of the Loans and Commitments to Persons identified by the Administrative Agent to MacDermid on or prior to the Closing Date;
provided
, that if MacDermid has not given the
Administrative Agent written notice of its objection to such assignment within ten (10) Business Days after written notice to MacDermid, MacDermid shall be deemed to have consented to such assignment;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in
respect of (i) any Term Loan Commitment or Revolving Credit Commitment if such assignment is to a Person that is not a Lender with a Commitment in respect of the applicable Facility, an Affiliate of such Lender or an Approved Fund with respect
to such Lender or (ii) any Term Loan to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund; and
(C) the
consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the Revolving Credit Facility.
(iv)
Assignment and Assumption
. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and
Assumption (such Assignment and Assumption to be delivered via an electronic settlement system acceptable to the Administrative Agent (or, if previously agreed with the Administrative Agent, manually)), and shall pay to the Administrative Agent a
processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent). The assignee, if it shall not be a Lender immediately prior to the assignment, shall deliver to the Administrative
Agent an Administrative Questionnaire and applicable tax forms. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment
and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 3.01
,
3.04
,
3.05
and
11.04
with respect to facts and circumstances occurring
prior to the effective date of such assignment). Upon request, the Borrowers (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with
Section 11.06(d)
;
(v) No such assignment shall be made to any Borrower or any of its Affiliates or Subsidiaries;
(vi)
No Assignment to Natural Persons
. No such assignment shall be made to a natural person;
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(vii)
SPC
. Notwithstanding anything to the contrary contained herein, any Lender (a
“
Granting Lender
”) may grant to a special purpose funding vehicle (an “
SPC
”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the
option to provide to the Revolving Credit Borrowers or Term Loan Borrower, as applicable, all or any part of any Loan that such Granting Lender would otherwise be obligated to make to such Borrower pursuant to this Agreement;
provided
that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated
to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall
survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other
Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in
this
Section 11.06(b)(vii)
, any SPC may (i) with notice to, but without the prior written consent of, the Borrowers and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its
interests in any Loans to the Granting Lender or to any financial institutions (consented to by MacDermid and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of
Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC;
(viii)
No Assignment to Defaulting Lender
. No such assignment shall be made to any Defaulting Lender or any of its Subsidiaries, or
any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender; and
(ix) In connection with any assignment of
rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the
Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or sub-participations, or other compensating actions, including funding,
with the consent of MacDermid and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to
(x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Issuing Bank, each other Lender hereunder (and interest accrued thereon) and the Borrowers, and (y) acquire (and fund
as appropriate) its full pro rata share of all outstanding Term Loans and/or Revolving Credit Commitments, as applicable, and all participations in Letters of Credit. Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of
this Agreement until such compliance occurs.
(c)
Register
. The Administrative Agent, acting solely for this purpose
as a non-fiduciary agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the
116
“
Register
”). Upon its receipt of, and consent to, a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above, if applicable, and the written consent of the Administrative
Agent and, if required, MacDermid and each Issuing Bank to such assignment and any applicable tax forms, the Administrative Agent shall (i) accept such Assignment and Assumption and (ii) promptly record the information contained therein in
the Register. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (c). The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, any Lender
(with respect to any entry relating to such Lender’s Commitment or Loans) and any L/C Issuer, at any reasonable time and from time to time upon reasonable prior notice.
(d)
Participations
. Any Lender may at any time, without the consent of, or notice to, the Borrowers or the
Administrative Agent, sell participations to any Person (other than a natural person or any Borrower or any of its Affiliates or Subsidiaries) (each, a “
Participant
”) in all or a portion of such Lender’s rights and/or
obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations) owing to it);
provided
that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the L/C Issuer shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided
that such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification described in
Section 11.01(b)
,
(c)
,
(d)
,
(f)
or
(g)
that affects such Participant. Subject to subsection (e) of
this Section, the Borrowers agree that each Participant shall be entitled to the benefits of
Sections 3.01
,
3.04
and
3.05
to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to
Section 11.06(b)
. To the extent permitted by law, each Participant also shall be entitled to the benefits of
Section 11.08
as though it were a Lender,
provided
such Participant agrees to be subject to
Section 2.13
as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “
Participant Register
”);
provided
that no Lender
shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other
obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for
all purposes of this Agreement notwithstanding any notice to the contrary.
(e)
Limitations upon Participant Rights
.
A Participant shall not be entitled to receive any greater payment under
Sections 3.01
or
3.04
than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale
of the participation to such Participant is made with MacDermid’s prior written consent. A Participant that
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would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 3.01
unless MacDermid is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the applicable, to comply with
Section 11.14(a)
as though it were a Lender.
(f)
Certain Pledges
. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights
under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided
that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g) As used herein, the following terms have the following meanings:
“
Eligible Assignee
” means any Person that meets the requirements to be an assignee under
Section 11.06(b)(iii)
,
(v)
and
(vi)
(subject to such consents, if any, as may be required under
Section 11.06(b)(iii)
).
“
Fund
” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the ordinary course.
“
Approved Fund
”
means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
(h)
Electronic Execution of Assignments
. The words “execution,” “signed,” “signature,” and
words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
11.07
Confidentiality
. Each Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’
respective partners, directors, trustees, officers, employees, agents, advisors (including accountants, legal counsel and other advisors) and representatives (it being understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance
Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or under
any other Loan Document or any action or proceeding relating to this Agreement, any suit, any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as
those of this
Section 11.07
, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the obligations of the Loan Parties; (g) with the consent of the Borrowers; (h) to the extent such Information (i) becomes publicly available other than as a result of a
breach of this
Section 11.07
or (ii) becomes available to each Agent, any Lender, the L/C Issuer or any of their respective
118
Affiliates on a nonconfidential basis from a source other than the Borrowers; or (j) to any rating agency when required by it (it being understood that, prior to any such disclosure, such
rating agency shall undertake to preserve the confidentiality of any Information relating to the Loan Parties received by it from such Lender). In addition, each Agent and the Lenders may disclose the existence of this Agreement and information
about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to each Agent and the Lenders in connection with the administration, settlement and management of this Agreement, the other Loan
Documents, the Commitments, and the Credit Extensions. “
Information
” means all information received from any Loan Party or any Subsidiary thereof relating to any Loan Party or any Subsidiary thereof or their respective
businesses, other than any such information that is available to any Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by any Loan Party or any Subsidiary thereof,
provided
that, in the case of information
received from a Loan Party or any such Subsidiary after the Closing Date, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this
Section 11.07
shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential
information.
Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include
material non-public information concerning a Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including Federal and state securities Laws.
11.08
Setoff
. In addition to any
rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default and the making of the request or the granting of the consent specified by
Section 9.02
to authorize the
Administrative Agent to declare the Loans due and payable pursuant to the provisions of
Section 9.02
, each Lender and each of their respective Affiliates is authorized at any time and from time to time, without prior notice to the
Borrowers or any other Loan Party, any such notice being waived by the Borrowers (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by, and other Indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender hereunder or under
any other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or
unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness. Each Lender agrees promptly to notify the Borrowers and the Administrative Agent after any such set-off and application made by such Lender;
provided
,
however
, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Administrative Agent and each Lender and their respective Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other rights of setoff) that the Administrative Agent, such Lender and their respective Affiliates may have.
11.09
Interest Rate Limitation
. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to
be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “
Maximum Rate
”). If the Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In
119
determining whether the interest contracted for, charged, or received by an Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law,
(a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
11.10
Counterparts
. This
Agreement and each other Loan Document may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier or e-mail of an executed
counterpart of a signature page to this Agreement and each other Loan Document shall be effective as delivery of an original executed counterpart of this Agreement and such other Loan Document. The Administrative Agent may also require that any such
documents and signatures delivered by telecopier be confirmed by a manually-signed original thereof;
provided
that the failure to request or deliver the same shall not limit the effectiveness of any document or signature delivered by
telecopier.
11.11
Integration
. This Agreement, together with the other Loan Documents, comprises the complete and integrated
agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control;
provided
that the inclusion of supplemental rights or remedies in favor of the Agents or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each
Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.
11.12
Survival of Representations and Warranties
. All representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent
and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any
Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
11.13
Severability
. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
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11.14
Tax Forms
(a) (a)
(i) (i)
Each Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code (a “
Foreign Lender
”) shall, to the extent it is legally able to do so, deliver to the Administrative Agent
and the Borrowers, prior to receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such
Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on payments to be made to such Foreign Lender by the Borrowers pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to payments to be
made to such Foreign Lender by the Borrowers pursuant to this Agreement) or such other applicable evidence satisfactory to the Borrowers and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, U.S.
withholding tax (including, in the case of a Foreign Lender claiming any exemption pursuant to Section 881(c) of the Code, a certificate to the effect that such Foreign Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the
Code (each a “Tax Compliance Certificate”).
(ii) Each Foreign Lender, to the extent it does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such Lender under any of the Loan Documents (for example, in the case of a typical participation by such Lender), shall, to the extent that it is legally able to do so, deliver
to the Administrative Agent and the Borrowers on the date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and at such other times as may be necessary in the determination of
the Administrative Agent and the Borrowers (in the reasonable exercise of their discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth above, to establish the portion of
any such sums paid or payable with respect to which such Lender acts for its own account that is not subject to U.S. withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any successor thereto), together with IRS Form
W-8ECI, IRS Form W-8BEN, Tax Compliance Certificates, IRS Form W-9, and/or any other certificate or statement of exemption from each beneficial owner required under the Code, as applicable.
(b) Each Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9 or otherwise establish an exemption from United States back-up withholding tax. If such Lender fails to deliver such forms, then the Administrative Agent may
withhold from any interest payment to such Lender an amount equivalent to the applicable back-up withholding tax imposed by the Code, without reduction.
(c) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if
such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent
at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code)
and such additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine whether such Lender
has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (c), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.
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(d) To the extent required by any applicable Laws, the Administrative Agent may
withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. Without limiting or expanding the provisions of Section 11.14(d), each Lender shall indemnify and hold harmless the Administrative Agent against,
and shall make payable in respect thereof within 10 days after demand therefor, any and all taxes and any and all related losses, claims, liabilities and expenses (including fees, charges and disbursements of any counsel for the Administrative
Agent) incurred by or asserted against the Administrative Agent by the IRS or any other Governmental Authority as a result of the failure of the Administrative Agent to properly withhold tax from amounts paid to or for the account of such Lender for
any reason (including, without limitation, because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or
reduction of withholding tax ineffective). A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative
Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due the Administrative Agent under this Section 11.14(d). The agreements in this
Section 11.14(d) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the termination of the Total Revolving Credit Commitments, repayment
of all other Obligations hereunder and the resignation of the Administrative Agent.
(e) Each Lender agrees that if any
form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Administrative Agent and the Borrowers in writing of its legal inability to do
so.
11.15
Replacement of Lenders
. Under any circumstances set forth herein providing that the Borrowers shall have the right to
replace a Lender as a party to this Agreement, the Borrowers may, upon notice to such Lender and the Administrative Agent, replace such Lender by causing such Lender to assign all of its interests, rights and obligations (or if any Lender refuses to
consent to any amendment, waiver or other modification of any Loan Document requested by the Borrowers that requires the consent of a percentage of the Lenders other than the Required Lenders and such amendment, waiver or other modification is
consented to by the Required Lenders, all of its interests, rights and obligations with respect to the Class of Loans or Commitments that is the subject of the related consent, amendment, waiver or other modification), with the assignment fee to be
paid by the Borrowers in such instance, pursuant to
Section 11.06(b)
to one or more other Lenders or Eligible Assignees procured by the Borrowers;
provided
,
however
, that if the Borrowers elect to exercise such right with
respect to any Lender pursuant to
Section 3.06(b)
, it shall be obligated to replace all Lenders that have made similar requests for compensation pursuant to
Sections 3.01
or
3.04
. The Borrowers shall (x) pay in full
all principal, interest, fees and other amounts owing to such Lender through the date of replacement (including any amounts payable pursuant to
Section 3.05
or
2.05(a)(iv)
, as applicable), (y) provide appropriate assurances
and indemnities (which may include letters of credit) to the L/C Issuer as it may reasonably require with respect to any continuing obligation to fund participation interests in any L/C Obligations then outstanding, and (z) release such Lender
from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver an Assignment and Assumption with respect to such Lender’s Commitment and outstanding Loans and participations in L/C Obligations. Each Lender
hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment and Assumption necessary to effectuate any assignment
of such Lender’s interests hereunder in the circumstances contemplated by this
Section 11.15
.
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11.16
Governing Law
(a) . THIS AGREEMENT AND ANY OTHER LOAN DOCUMENT AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT
IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS).
(b) EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION
OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT. EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH PARTY HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
(c) EACH LOAN PARTY HEREBY IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS CORPORATION SERVICE COMPANY WITH OFFICES ON THE DATE HEREOF IN NEW YORK, NEW YORK (OR SUCH OTHER AGENT TO RECEIVE SERVICE OF PROCESS IN NEW YORK, NEW YORK AS IS REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT), AS ITS
DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR
ANY REASON SUCH DESIGNEE, APPOINTEE, AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH LOAN PARTY AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
ADMINISTRATIVE AGENT UNDER THIS AGREEMENT. EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH ON SCHEDULE 11.02, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY LENDER OR
THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWERS IN ANY OTHER JURISDICTION.
123
11.17
Binding Effect
. This Agreement shall become effective when it shall have been
executed by each of the parties hereto and thereafter shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns, except that the Loan Parties shall not have the right to assign their
rights hereunder or any interest herein without the prior written consent of the Administrative Agent, the L/C Issuer and the Lenders.
11.18
Waiver of Right to Trial by Jury
. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
11.19
USA PATRIOT Act Notice
. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself
and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “
Act
”), it is required to
obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each
Loan Party in accordance with the Act.
11.20
Waiver of Notice of Termination
. Those Lenders party hereto which are also party to
the Existing Credit Agreement hereby waive any prior notice requirement under the Existing Credit Agreement with respect to the termination of commitments thereunder and the making of any prepayments thereunder.
11.21
Headings
. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part
of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
11.22
Reserved
.
11.23
Judgment Currency
(a) . (a) The obligations of the Revolving Credit Borrowers hereunder and under the other Loan Documents to make payments in Dollars or
an Alternative Currency, as the case may be
124
(the “
Obligation Currency
”), shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than
the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent or a Lender of the full amount of the Obligation Currency expressed to be payable to the Administrative Agent or
Lender under this Agreement or the other Loans Documents. If, for the purpose of obtaining or enforcing judgment against any Borrower or any other Loan Party in any court or in any jurisdiction, it becomes necessary to convert into or from any
currency other than the Obligation Currency (such other currency being hereinafter referred to as the “
Judgment Currency
”) an amount due in the Obligation Currency, the conversion shall be made, at the Dollar Equivalent of
such amount, in each case, as of the date immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the “
Judgment Currency Conversion Date
”).
(b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, the Borrowers covenant and agree to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the
rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange
prevailing on the Judgment Currency Conversion Date.
For purposes of determining the Dollar Equivalent, such amounts shall include any
premium and costs payable in connection with the purchase of the Obligation Currency.
11.24
Co-Borrowers.
(a) Joint and Several Liability. All Obligations of the Revolving Credit Borrowers under this Agreement and the other Loan Documents shall be
joint and several Obligations of each Revolving Credit Borrower. Anything contained in this Agreement and the other Loan Documents to the contrary notwithstanding, the Obligations of each Revolving Credit Borrower hereunder, solely to the extent
that such Revolving Credit Borrower did not receive proceeds of Loans from any borrowing hereunder, shall be limited to a maximum aggregate amount equal to the largest amount that would not render its Obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under §548 of the Bankruptcy Code of the United States, 11 U.S.C. §548, or any applicable provisions of comparable state law (collectively, the “
Fraudulent Transfer Laws
”), in each
case after giving effect to all other liabilities of such Revolving Credit Borrower, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Revolving Credit Borrower in
respect of intercompany Indebtedness to any other Loan Party or Affiliates of any other Loan Party to the extent that such Indebtedness would be discharged in an amount equal to the amount paid by such Loan Party hereunder) and after giving effect
as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation or contribution of such Revolving Credit Borrower pursuant to (i) applicable law or (ii) any agreement
providing for an equitable allocation among such Borrower and other Affiliates of any Loan Party of Obligations arising under the Guaranty by such parties.
(b) Subrogation. Until the Obligations shall have been paid in full in cash, each Revolving Credit Borrower shall withhold exercise of any
right of subrogation, contribution or any other right to enforce any remedy which it now has or may hereafter have against the other Borrower or any other guarantor of the Obligations. Each Revolving Credit Borrower further agrees that, to the
extent the waiver of its rights of subrogation, contribution and remedies as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any such rights such Revolving Credit Borrower may have against the
other Revolving Credit Borrower, any collateral or security or any such
125
other guarantor, shall be junior and subordinate to any rights Collateral Agent may have against the other Borrower, any such collateral or security, and any such other guarantor. The Revolving
Credit Borrowers under this Agreement and the other Loan Documents together desire to allocate among themselves, in a fair and equitable manner, their Obligations arising under this Agreement and the other Loan Documents. Accordingly, in the event
any payment or distribution is made on any date by any Revolving Credit Borrower under this Agreement and the other Loan Documents (a “
Funding Borrower
”) that exceeds its Obligation Fair Share (as defined below) as of such
date, that Funding Borrower shall be entitled to a contribution from the other Borrower in the amount of such other Revolving Credit Borrower’s Obligation Fair Share Shortfall (as defined below) as of such date, with the result that all such
contributions will cause each Revolving Credit Borrower’s Obligation Aggregate Payments (as defined below) to equal its Obligation Fair Share as of such date. “
Obligation Fair Share
” means, with respect to a Borrower as
of any date of determination, an amount equal to (i) the ratio of (x) the Obligation Fair Share Contribution Amount (as defined below) with respect to such Revolving Credit Borrower to (y) the aggregate of the Obligation Fair Share
Contribution Amounts with respect to all Revolving Credit Borrowers, multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Funding Borrowers under this Agreement and the other Loan Documents in respect of the
Obligations guarantied. “
Obligation Fair Share Shortfall
” means, with respect to a Revolving Credit Borrower as of any date of determination, the excess, if any, of the Obligation Fair Share of such Borrower over the
Obligation Aggregate Payments of such Revolving Credit Borrower. “
Obligation Fair Share Contribution Amount
” means, with respect to a Revolving Credit Borrower as of any date of determination, the maximum aggregate amount of
the Obligations of such Revolving Credit Borrower under this Agreement and the other Loan Documents that would not render its Obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under §548 of the
Bankruptcy Code, 11 U.S.C. §548, or any comparable applicable provisions of state law; provided that, solely for purposes of calculating the Obligation Fair Share Contribution Amount with respect to any Revolving Credit Borrower for purposes of
this Section 2.25, any assets or liabilities of such Loan Party arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or Obligations of contribution hereunder shall not be considered as assets or
liabilities of such Revolving Credit Borrower. “
Obligation Aggregate Payments
” means, with respect to a Revolving Credit Borrower as of any date of determination, an amount equal to (i) the aggregate amount of all
payments and distributions made on or before such date by such Revolving Credit Borrower in respect of this Agreement and the other Loan Documents (including in respect of this Section 11.24) minus (ii) the aggregate amount of all payments
received on or before such date by such Revolving Credit Borrower from the other Revolving Credit Borrower as contributions under this Section 11.24. The amounts payable as contributions hereunder shall be determined as of the date on which the
related payment or distribution is made by the applicable Funding Borrower. The allocation among the Revolving Credit Borrowers of their Obligations as set forth in this Section 11.24 shall not be construed in any way to limit the liability of
any Revolving Credit Borrower hereunder or under any Loan Document.
(c) Representative of Revolving Credit Borrowers. PAH hereby appoints
MacDermid as its agent, attorney-in-fact and representative for the purpose of (i) making any borrowing requests or other requests required under this Agreement, (ii) the giving and receipt of notices by and to Borrowers under this
Agreement, (iii) the delivery of all documents, reports, financial statements and written materials required to be delivered by the Borrowers under this Agreement, and (iv) all other purposes incidental to any of the foregoing. PAH agrees
that any action taken by MacDermid as the agent, attorney-in-fact and representative of PAH shall be binding upon PAH to the same extent as if directly taken by PAH.
(d) Allocation of Loans. All Revolving Credit Loans shall be made to MacDermid as borrower unless a different allocation of the Loans as
between MacDermid and PAH with respect to any borrowing hereunder is included in the applicable Committed Loan Notice.
126
(e) Obligations Absolute. Each Revolving Credit Borrower hereby waives, for the benefit of
Secured Parties: (a) any right to require any Secured Party, as a condition of payment or performance by such Revolving Credit Borrower, to (i) proceed against any other Revolving Credit Borrower, any guarantor (including any other
Guarantor) of the Obligations or any other Person, (ii) proceed against or exhaust any security held from any other Revolving Credit Borrower, any guarantor or any other Person, (iii) proceed against or have resort to any balance of any
Deposit Account (as defined in the Pledge and Security Agreement) or credit on the books of any Secured Party in favor of any other Borrower or any other Person, or (iv) pursue any other remedy in the power of any Secured Party whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any other Revolving Credit Borrower or any Guarantor including any defense based on or arising out of the lack of validity or the
unenforceability of the Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of any other Revolving Credit Borrower or any Guarantor from any cause other than payment in full of the Obligations;
(c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Secured
Party’s errors or omissions in the administration of the Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms
hereof and any legal or equitable discharge of such Revolving Credit Borrower’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Borrower’s liability hereunder or the enforcement hereof,
(iii) any rights to set offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Secured Party protect, secure, perfect or insure any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder or under the Treasury Management Agreements, Secured Hedge
Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Obligations or any agreement related thereto, notices of any extension of credit to the Borrowers and notices of any of the matters
referred to in Section 4.02 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with
the terms hereof.
127
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above
written.
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MACDERMID HOLDINGS, LLC
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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Chief Financial Officer
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MACDERMID, INCORPORATED
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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Chief Financial Officer and Senior Vice President
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PLATFORM ACQUISITION HOLDINGS LIMITED
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By:
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/s/ Martin E. Franklin
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Name:
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Martin E. Franklin
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Title:
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Director
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Signature Page to MacDermid Amended and Restated Credit Agreement
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AUTOTYPE HOLDINGS (USA) INC.
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BAYPORT CHEMICAL SERVICE, INC.
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CANNING GUMM, LLC
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DYNACIRCUITS, LLC
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ECHO INTERNATIONAL, INC.
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MACDERMID ANION, INC.
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MACDERMID ACUMEN, INC.
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MACDERMID AUTOTYPE INCORPORATED
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MACDERMID BRAZIL, INC.
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MACDERMID CHEMICAL INDUSTRIES ARGENTINA, INC.
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MACDERMID GROUP, INC.
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MACDERMID HOUSTON, INC.
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MACDERMID INTERNATIONAL INVESTMENTS, LLC
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MACDERMID INTERNATIONAL PARTNERS
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MACDERMID INVESTMENT CORP.
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MACDERMID OFFSHORE SOLUTIONS, LLC
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MACDERMID OVERSEAS ASIA LIMITED
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MACDERMID PRINTING SOLUTIONS ACUMEN, INC.
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MACDERMID PRINTING SOLUTIONS, LLC
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MACDERMID PUBLICATION & COATING PLATES, LLC
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MACDERMID SOUTH AMERICA, INCORPORATED
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MACDERMID SOUTH ATLANTIC, INCORPORATED
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MACDERMID TEXAS, INC.
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MACDERMID US HOLDINGS, LLC
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MRD ACQUISITION CORP.
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NAPP PRINTING PLATE DISTRIBUTION, INC.
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NAPP SYSTEMS INC.
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SEXTANT, INC.
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SPECIALTY POLYMERS, INC.
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W. CANNING INC.
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W. CANNING LTD.
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W. CANNING USA, LLC
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PLATFORM DELAWARE HOLDINGS, INC.
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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President
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Signature Page to
MacDermid Amended and Restated Credit Agreement
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DYNACIRCUITS, LLC
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By:
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MacDermid, Incorporated, its member
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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Chief Financial Officer and Senior Vice President
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By:
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Echo International, Inc., its member
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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President
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PLATFORM DELAWARE HOLDINGS, INC.
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By:
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/s/ Martin E. Franklin
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Name:
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Martin E. Franklin
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Title:
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President
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MACDERMID INTERNATIONAL INVESTMENTS, LLC
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By:
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MacDermid International Partners, its sole member
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By:
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MacDermid, Incorporated, its partner
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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Chief Financial Officer and Senior Vice President
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By:
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MacDermid Overseas Asia Limited, its partner
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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President
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Signature Page to
MacDermid Amended and Restated Credit Agreement
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MACDERMID INTERNATIONAL PARTNERS
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By:
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MacDermid, Incorporated, its partner
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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Chief Financial Officer and Senior Vice President
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By:
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MacDermid Overseas Asia Limited, its partner
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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President
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W. CANNIN USA, LLC
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By:
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MacDermid, Incorporated, its sole member
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By:
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/s/ Frank J. Monteiro
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Name:
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Frank J. Monteiro
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Title:
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Chief Financial Officer and Senior Vice President
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Signature Page to
MacDermid Amended and Restated Credit Agreement
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BARCLAYS BANK PLC,
as
Administrative Agent, Collateral Agent and L/C Issuer
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By:
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/s/ Vanessa A. Kurbatskiy
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Name:
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Vanessa A. Kurbatskiy
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Title:
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Vice President
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Signature Page to
MacDermid Amended and Restated Credit Agreement
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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as L/C Issuer
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By:
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/s/ Robert Hetu
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Name:
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Robert Hetu
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Title:
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Authorized Signatory
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By:
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/s/ Alex Verdone
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Name:
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Alex Verdone
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Title:
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Authorized Signatory
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Signature Page to
MacDermid Amended and Restated Credit Agreement
Exhibit 10.14
EXECUTION COPY
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TO:
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PLATFORM ACQUISITION HOLDINGS LIMITED
PLATFORM
DELAWARE HOLDINGS, INC.
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Re:
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Retaining Holder Securityholders’ Agreement
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Reference is made to the Business Combination Agreement and Plan of Merger (the “
Business Combination
Agreement
”), dated as of October 10, 2013, by and among Platform Acquisition Holdings Limited, a company limited by shares incorporated with limited liability under the laws of the British Virgin Islands (“
PAHL
”),
Platform Delaware Holdings, Inc., a Delaware corporation and direct wholly owned subsidiary of PAHL (“
Platform Holdco
”), Platform Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Platform Holdco
(“
Merger Sub
”), MacDermid Holdings, LLC, a Delaware limited liability company (“
MD Holdings
”), Tartan Holdings, LLC, a Delaware limited liability company (“
Tartan
”), MacDermid, Incorporated, a
Connecticut corporation (the “
Company
”), and the other parties named therein, pursuant to which, through a series of steps, PAHL will acquire the equity, business and operations of the Company (the “
Business
Combination
”). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Business Combination Agreement.
The undersigned holder (the “
Holder
”) of units representing membership interests in MD Holdings (the
“
Units
”) has elected, pursuant to a letter of transmittal dated on or about the date hereof (the “
Letter of Transmittal
”), to receive, pursuant to the terms of, and subject to the consummation of the transactions
contemplated by, the Business Combination Agreement, in exchange for the Holder’s Units (which are being surrendered to Platform Holdco pursuant to the Letter of Transmittal) (1) shares of common stock of Platform Holdco (the
“
Holdco Shares
”) and (2) the undersigned’s pro rata portion of the Contingent Litigation Proceeds and the Contingent Purchase Price, if any. As a condition to Holder’s receipt of the Holdco Shares, the Holder, PAHL
and Platform Holdco agree to the terms, conditions and provisions of this Retaining Holder Securityholders’ Agreement (this “
Agreement
”).
1.
Descriptions of the Business Combination and Agreements
.
Any description of the Business Combination and the terms thereof
included in this Agreement or in any other documents provided to the Holder, including, without limitation, the Offering Memorandum dated October 15, 2013, (a) is provided for convenience of reference only, (b) is subject to and
qualified by the detailed provisions in the Business Combination Agreement, a copy of which has been provided to Holder, and (c) shall not alter, amend or modify in any manner any term or provision of the Business Combination Agreement or any
other document or agreement referred to therein
.
2.
Restrictions on Transfer
.
2.1 The Holder acknowledges and agrees that, other than the Holder’s right to exchange the Holdco Shares for shares of common stock of
PAHL as described in Section 3 below, the Holdco Shares may not be sold, assigned or otherwise transferred, directly or indirectly, at any time without the prior written consent of Platform Holdco or as expressly permitted pursuant to this
Section 2.1. Accordingly, the Holder agrees that the Holder shall not, without the prior written consent of Platform Holdco, (a) sell, assign, transfer (including by
operation of Law), incur any liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other
restrictions on title or transfer of any nature whatsoever (collectively, “
Liens
”), dispose of or otherwise encumber (each, a “
Transfer
”) any of the Holdco Shares, (b) deposit any of the Holdco Shares received
by Holder into a voting trust or enter into a voting agreement or arrangement or grant any proxy or power of attorney with respect thereto that is inconsistent with this Agreement, or (c) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect Transfer or other disposition of any Holdco Shares or the economic interests thereunder. Notwithstanding the foregoing, the Holder may Transfer the Holdco Shares to (i) the spouse or former
spouse of the Holder pursuant to a domestic relations order or similar court order upon the divorce of the Holder and his or her spouse and (ii) the Holder’s executors, administrators or testamentary trustees upon the death of Holder;
provided
that, in each of cases (i) and (ii), (A) such Transfer does not violate any federal or state securities laws and (B) the respective transferee shall, as a condition to such Transfer, agree in writing to be bound by the
terms and conditions of this Agreement.
2.2 The Holder further acknowledges and agrees that, without the written consent of PAHL (which
consent shall not be unreasonably withheld, condition or delayed), during each consecutive twelve (12) month period commencing on the first anniversary of the Closing, the Holder may not Transfer, make any short sale of, grant any option for
the purchase of, or enter into any hedging or similar transaction with the same economic effect as a Transfer of, that number of Exchange Shares (as defined below) that exceeds 25% of the total number of Exchange Shares issuable to the Holder
hereunder;
provided
that, to the extent the Holder has Transferred less than 25% of his Exchange Shares in any such consecutive twelve (12) month period, the number of Exchange Shares less than 25% that may be Transferred may be rolled
over to succeeding twelve (12) month periods such that, after the fourth anniversary of the Closing, the Holder shall be permitted to Transfer all of his, her or its Exchange Shares whenever acquired without PAHL’s agreement. PAHL may
impose stop-transfer instructions and may stamp each certificate representing Exchange Shares with an appropriate legend to enforce the provisions of the foregoing sentence.
2.3 The restrictions contained in this Section 2 shall apply to any other securities into which the Holdco Shares or Exchange Shares, as
applicable, may be converted or exchanged prior to the expiration of the applicable restriction.
2.4 Any Transfer or Lien in violation of
this Section 2 shall be void.
3.
Exchange of Holdco Shares
.
3.1 The Holder shall have the right (the “
Exchange Right
”), exercisable at any time following the earlier of (i) the
first anniversary of the Closing and (ii) the consummation of a Change in Control (as defined below) (as applicable, the “
Trigger Date
”), to exchange all or any portion of the Holder’s Holdco Shares (such Holdco Shares to
be exchanged pursuant hereto, the “
Surrendered Shares
”), on the terms and subject to the conditions set forth in this Section 3. Upon the proper exercise of the Exchange Right by the Holder, PAHL shall
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exchange the Surrendered Shares for that number of PAHL Ordinary Shares (the “
Exchange Shares
”) equal to the product of (a) the number of Exchanged Shares, and (b) the
then-current Exchange Rate (as defined below).
3.2 As used herein, “
Change of Control
” shall mean (a) a merger or
consolidation of PAHL with another entity where PAHL is not the surviving entity and where immediately after the merger or consolidation PAHL’s stockholders immediately prior to the merger or consolidation hold less than 50% of the voting stock
of the surviving entity, or (b) the sale of all or substantially all of PAHL’s and its subsidiaries’ assets to a third party if, immediately following such sale, PAHL’s stockholders hold less than 50% of the stock of said third
party; and the “
Exchange Rate
” shall initially be one (1). In the event PAHL: (a) declares or pays a dividend on the PAHL Ordinary Shares in PAHL Ordinary Shares, (b) splits or subdivides the outstanding PAHL Ordinary
Shares or (c) effects a reverse stock split or otherwise combines the outstanding PAHL Ordinary Shares into a smaller number of PAHL Ordinary Shares, the Exchange Rate shall be adjusted by multiplying the Exchange Rate in effect immediately
prior to such adjustment by a fraction, (i) the numerator of which shall be the number of PAHL Ordinary Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming
for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time) and (ii) the denominator of which shall be the actual number of PAHL Ordinary Shares issued and outstanding on
the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has not occurred as of such time). Any
adjustments to the Exchange Rate shall become effective immediately after the effective date of such event, retroactive to the record date, if any, for such event.
3.3 In order to exercise the Exchange Right, the Holder shall deliver a written notice (an “
Exchange Notice
”) to such effect
to PAHL, not less than five (5) Business Days prior to the date as of which the Holder desires the closing (the “
Exchange Closing
”) of the exchange to occur (but in no event prior to the Trigger Date). At the Exchange Closing,
PAHL shall deliver (or cause the delivery) to the Holder a certificate or evidence of book entry deposits representing the Exchange Shares, against delivery by the Holder to PAHL of stock certificates evidencing the Surrendered Shares, free and
clear of all Liens, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, and such other instruments and certificates as may be reasonably requested by PAHL in connection therewith. The
Exchange Closing shall, unless otherwise mutually agreed by the Company and the Holder, be held at the principal offices of PAHL, on a date (the “
Exchange Closing Date
”) selected by PAHL that is no later than five (5) Business
Days following the delivery of the Exchange Notice (subject to PAHL’s receipt on or before the Exchange Closing Date of the certificates and other documents referred to in the immediately preceding sentence).
4.
Rule 144; Registration
.
4.1 Subject to the provisions of Sections 2.1 and 2.2 above, PAHL shall, at PAHL’s expense, for so long as the Holder holds any Exchange
Shares, cooperate with the
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Holder, as may be reasonably requested by the Holder from time to time, to facilitate any proposed sale of Exchange Shares by the Holder in accordance with the provisions of Rule 144 promulgated
under the Securities Act of 1933, as amended (the “
Securities Act
”), or any successor rule (“
Rule 144
”), including, without limitation, by complying with the current public information requirements of Rule 144 and
providing opinions of counsel, to the extent required.
4.2 Subject to the Holder’s compliance with the provisions of
Section 4.4 below, promptly after the completion of PAHL’s domestication into Delaware, PAHL will file with the Securities and Exchange Commission (the “
SEC
”) a registration statement registering (among other securities)
the resale of the Exchange Shares (the “
Registration Statement
”). PAHL shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof. PAHL shall
notify the Holder as promptly as practicable after the Registration Statement is declared effective and shall simultaneously provide the Holder with copies of any related prospectus to be used in connection with the sale or other disposition of the
securities covered thereby. Subject to this Section 4.2 and Section 4.3 below, PAHL shall (a) prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement and any prospectus used in
connection therewith and perform such other actions as may be necessary to keep the Registration Statement (or another registration statement that registers the resale of the Exchange Shares) continuously effective as to the Exchange Shares until
the Termination Date (as defined below), and (b) comply in all material respects with the applicable provisions of the Securities Act, the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), and the rules and
regulations of the SEC promulgated thereunder with respect to the disposition of all Exchange Shares covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holder thereof set forth in such Registration Statement as so amended or in such prospectus as so supplemented. PAHL will pay all expenses associated with the registration pursuant hereto, including filing and printing fees, the
Company’s counsel and accounting fees and expenses, costs associated with clearing the Exchange Shares for sale under applicable state securities laws and listing fees, but excluding any fees or expenses incurred by the Holder (including any
counsel to the Holder) and any discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Exchange Shares being sold.
4.3 For not more than 30 consecutive days (subject to extension by PAHL by up to an additional 60 days, solely to the extent that PAHL
requires such extension of time to complete financial statements required under applicable Law to be contained in PAHL’s SEC filings) or for a total of not more than 90 days in any 12 month period (but not more than twice in any such 12 month
period), PAHL may suspend the use of any prospectus included in the Registration Statement in the event that PAHL determines in good faith that such suspension is necessary to (a) delay the disclosure of material non-public information
concerning PAHL, the disclosure of which at the time is not, in the good faith opinion of PAHL, in the best interests of PAHL or (b) amend or supplement the Registration Statement or the related prospectus so that the Registration Statement or
prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the prospectus in light of the circumstances under which
they were made,
- 4 -
not misleading (an “
Allowed Delay
”). The Holder agrees that, upon receipt of any notice from the Company of an Allowed Delay, the Holder will immediately discontinue disposition
of Exchange Shares pursuant to the Registration Statement, until the Holder is advised by the Company that such dispositions may again be made.
4.4 The Holder shall furnish in writing to PAHL such information regarding the Holder, the Exchange Shares held by the Holder and the intended
method of disposition thereof as shall be reasonably requested by PAHL to effect the registration of the Exchange Shares, and shall execute such documents in connection with such registration as PAHL may reasonably request that are customary of a
selling stockholder in similar situations.
4.5 PAHL shall indemnify and hold harmless the Holder, each person who controls the Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, members, managers, stockholders, partners, agents and employees of each of them (each an “
Indemnified
Party
”), to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively,
“
Losses
”), as incurred, arising out of or relating to (a) any untrue or alleged untrue statement of a material fact contained in a Registration Statement or any prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in light of
the circumstances under which they were made) not misleading or (b) any violation or alleged violation by PAHL of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the
performance of its obligations under this Agreement; in each case, except to the extent, but only to the extent, that (i) such untrue statement or omission is based upon information regarding the Holder furnished in writing to PAHL by or on
behalf of the Holder expressly for use therein, or (ii) such information relates to the Holder or the Holder’s proposed method of distribution of Exchange Shares and was approved in writing by or on behalf of the Holder expressly for use
in the Registration Statement, such prospectus or in any amendment or supplement thereto.
The Holder shall indemnify and hold harmless
PAHL, each director of PAHL, each officer of the Company who shall sign a Registration Statement, each underwriter, broker or other Person acting on behalf of the holders of securities included in a Registration Statement, and each Person
who controls any of the foregoing Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) against any Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in a Registration Statement or any prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, but only to the extent that (i) such untrue statement or
omission is based upon information regarding the Holder furnished in writing to PAHL by or on behalf of the Holder expressly for use therein, or (ii) such information relates to the Holder or the Holder’s
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proposed method of distribution of Exchange Shares and was approved in writing by or on behalf of the Holder expressly for use in the Registration Statement, such prospectus or in any amendment
or supplement thereto.
If the indemnification provided in this Section 4.5 is unavailable to an Indemnified Party or insufficient to
hold the Indemnified Party harmless for any Losses, then PAHL shall contribute to the amount paid or payable by the Indemnified Party, in such proportion as is appropriate to reflect the relative fault of PAHL and such Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of PAHL and the Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, PAHL or the Indemnified Party,
and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The parties hereto agree that it would not be just and equitable if any contribution were determined by
pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this paragraph, no Indemnified Party shall be
required to contribute pursuant to this paragraph, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Indemnified Party from the sale of the Exchange Shares subject to the proceeding exceeds the
amount of any damages that such Indemnified Party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
4.6 PAHL’s obligations under this Section 4 shall terminate with respect to the Holder on the earlier of (a) the date on which
all of the Holder’s Exchange Shares have been sold, and (b) the date on which all of the Holder’s Exchange Shares may be sold pursuant to Rule 144 without volume or other restrictions (the “
Termination Date
”).
5.
Appointment of Representatives
.
5.1 The Holder hereby acknowledges and agrees to the appointment, as set forth in Section 12.13 of the Business Combination Agreement, of
CSC Shareholder Services LLC as “Seller Representative” to represent each of the direct and indirect beneficial owners of the Company, including the Holder, following the Closing for all purposes of the Business Combination Agreement,
other than with respect to the Contingent Purchase Price for which Tartan shall act as representative, and that the Holder shall be a Represented Party for all purposes of the Business Combination Agreement. The Holder further acknowledges and
agrees that the Seller Representative, pursuant to the Business Combination Agreement and this Agreement, has the full and exclusive authority to act on the Holder’s behalf in connection with the Business Combination Agreement and the documents
related thereto including, without limitation: (a) to interpret the terms and provisions of the Business Combination Agreement and the documents to be executed and delivered in connection therewith, (b) to execute and deliver and receive
deliveries of all agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents required or permitted to be given in
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connection with the consummation of the transactions contemplated by the Business Combination Agreement, (c) to receive service of process in connection with any claims under the Business
Combination Agreement, (d) to agree to negotiate, enter into settlements and compromises of, assume the defense of claims, demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims and to take all
actions necessary or appropriate in the sole judgment of the Seller Representative for the accomplishment of the foregoing, (e) to give and receive notices and communications, (f) to authorize delivery to PAHL of funds from the Escrow
Account or any portion, (g) to receive and distribute the consideration payable hereunder or under the Business Combination Agreement, including payments from the Escrow Account and any earnings and proceeds thereon, and holdback therefrom any
amounts necessary or appropriate in the judgment of the Seller Representative, and (h) to make, execute, acknowledge and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions,
certificates, unit powers, letters and other writings, and, in general, to take all actions (or refrain from taking actions) necessary or appropriate in the judgment of the Seller Representative as agent for and on behalf of the Represented Parties
in connection with the Business Combination Agreement. Without limiting the generality of the foregoing, the Holder acknowledges and agrees that pursuant to the terms of the Business Combination Agreement, following the occurrence of the Contingent
Litigation Proceeds Payment Event, if any, PAHL will pay the Contingent Litigation Proceeds to the Seller Representative for distribution to each Contingent Litigation Proceeds Recipient, including the Holder.
5.2 The Holder hereby acknowledges and agrees to the appointment, as set forth in Section 12.14 of the Business Combination Agreement, of
Tartan as “Retaining Holder Representative” to represent each of the Retaining Holders, including the Holder, following the Closing for all purposes in connection with the Contingent Purchase Price. Without limiting the generality of the
foregoing, the Holder acknowledges and agrees that pursuant to the terms of the Business Combination Agreement, PAHL will pay the Contingent Purchase Price, if any, to the Retaining Holders Representative for distribution to each Retaining Holder,
including the Holder.
6.
Certain Covenants
. For the period commencing on the Closing Date and continuing until the earlier of the
seventh anniversary of the Closing Date and such date on which all of Platform Holdco’s outstanding shares of common stock are owned (directly or indirectly) by PAHL, (a) Platform Holdco covenants and agrees that it will not
(i) engage in any business activity other than to hold the interest in MD Holdings or (ii) issue additional securities (or instruments convertible, exchangeable or exercisable for securities) without the prior written consent of
shareholders representing a majority of the shares of Platform Holdco common stock not held by Platform, and (b) PAHL will not effect a merger, reorganization or consolidation of Platform Holdco without the prior consent of Platform Holdco
shareholders representing a majority of the shares of outstanding common stock of Platform Holdco not held by PAHL, unless PAHL delivers to the shareholders of Platform Holdco other than PAHL an opinion of counsel, reasonably acceptable to the
holders of a majority of such shares, to the effect that such merger, reorganization or consolidation will be done in a manner that is tax-free to the holders of Platform Holdco common stock.
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7.
Abandonment of the Business Combination
. Holder acknowledges that certain conditions
must be satisfied prior to the consummation of the Business Combination. If the Business Combination Agreement is terminated without the Business Combination having been consummated, this Agreement shall terminate and be of no further force or
effect, and Holder shall have no rights hereunder or under the Business Combination Agreement.
8.
General Provisions
.
8.1 Except as otherwise provided herein, all costs and expenses incurred by or on behalf of the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses when due.
8.2 All notices
and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (upon confirmation of receipt) or delivered by an express courier (with confirmation) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
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To PAHL or Platform Holdco:
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c/o MacDermid, Incorporated
1401 Blake
Street
Denver, CO 80202
Attention: General Counsel
Facsimile No.: (720) 479-3085
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with a copy (which shall not constitute notice) to:
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Greenberg Traurig, P.A.
401 E. Las Olas Blvd.,
Suite 2000
Fort Lauderdale, FL 33301
Attention: Donn Beloff,
Esq.
Facsimile No.: (954) 765-1477
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To Holder:
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The address set forth beneath Holder’s signature hereto
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8.3 This Agreement may be executed in counterparts, and by facsimile or portable document format (pdf)
transmission, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the
same counterpart.
8.4 This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof and thereof.
8.5 If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
- 8 -
manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
8.6 This Agreement and any other document or instrument delivered pursuant hereto, and all claims or causes of action
(whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, termination, performance or nonperformance of this Agreement (including any claim or cause of action based upon, arising
out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed and construed in accordance with the internal substantive laws of the State of
Delaware applicable to a contract entered into and fully performed solely within the State of Delaware without giving effect to the principles of conflict of laws thereof.
8.7 Except as expressly provided herein, neither this Agreement nor any of the rights, interests or obligations shall be assigned by any of
the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.
This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal
or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
8.8 Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by another party hereto or its successors or permitted assigns shall be brought and
determined exclusively in any state court or Federal court sitting in New Castle County, Delaware and each of the parties hereto hereby (i) irrevocably submits with regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the exclusive personal jurisdiction of the aforesaid courts in the event any dispute arises out or relates to this Agreement or any transaction contemplated hereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any action arising out of or relating to this Agreement or any transaction contemplated hereby
in any court other than any state court or Federal court sitting in New Castle County, Delaware. It is understood and agreed that any other court or arbiter in any other jurisdiction shall be entitled to enforce any Judgment of any state court or
Federal court sitting in New Castle County, Delaware. Any writs, process or summonses to be served on any other party in such action or proceeding may be made by delivery of process in accordance with the notice provisions contained in
Section 8.2 or as otherwise permitted by Law. Each of the parties hereto irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement,
(i) the defense of sovereign immunity, (ii) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the
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failure to serve process in accordance with this Section 8.8, (iii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (iv) to the fullest extent permitted by Law that (A) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper and (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
8.9 The parties hereto agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would
occur in the event that the parties hereto do not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate the transactions contemplated by this Agreement and the Business
Combination Agreement) in accordance with its specified terms or otherwise breach such provisions. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions, specific performance and other equitable relief to
prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties
agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that the party seeking the injunction, specific performance and other equitable relief has an adequate remedy at law.
8.10 EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
8.11 This Agreement may not
be amended or modified except (i) by an instrument in writing signed by, or on behalf of, the parties hereto or (ii) by a waiver in accordance with Section 8.12.
8.12 Any party to this Agreement may extend the time for the performance of any of the obligations or other acts of the other party, waive any
inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto or waive compliance with any of the agreements of the other party or conditions to such
party’s obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of
any
- 10 -
subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.
[
Signature Page Follows
]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first below written.
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PLATFORM ACQUISITION HOLDINGS LIMITED
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By:
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Name:
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Martin E. Franklin
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Title:
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Director
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Date:
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PLATFORM DELAWARE HOLDINGS, INC.
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By:
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Name:
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Martin E. Franklin
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Title:
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President
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Date:
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[Retaining Holder
Securityholders’ Agreement]
[Retaining Holder
Securityholders’ Agreement]
Exhibit 10.15
ADVISORY SERVICES AGREEMENT
This ADVISORY SERVICES AGREEMENT (this “
Agreement
”), dated as of October 31, 2013 (the “
Effective
Date
”), is entered into by and between Platform Specialty Products Corporation (f/k/a Platform Acquisition Holdings Limited) (the “
Company
”), and Mariposa Capital, LLC, a Delaware limited liability company
(“
Advisor
”).
WHEREAS, the Company desires to receive from Advisor, and Advisor desires to provide to the Company, the
Services (as defined below) pursuant to the terms and conditions set forth in this Agreement; and
WHEREAS, the compensation arrangements
set forth in this Agreement are designed to compensate Advisor for providing such Services to the Company.
NOW, THEREFORE, in
consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows:
1.
Agreement; Term
.
(a) The Company hereby retains Advisor to perform, and Advisor agrees to render to the Company and its direct and indirect subsidiaries
(“
Subsidiaries
”), on the terms herein set forth, the following services (collectively, the “
Services
”):
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(i)
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corporate development and advisory services;
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(ii)
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advisory services with respect to mergers and acquisitions;
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(iii)
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investor relations services;
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(iv)
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strategic planning advisory services;
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(v)
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capital expenditure allocation advisory services;
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(vi)
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strategic treasury advisory services (including without limitation advice regarding financings, equity offerings, global cash planning and other related services); and
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(vii)
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such other services relating to the Company and its Subsidiaries as may from time to time be mutually agreed to among the parties.
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(b) It is expressly understood and agreed that Advisor shall devote only so much time, and shall consult with and advise the officers and
directors of the Company only to such extent and, at such times and places, as may be mutually convenient to the Company and Advisor. Advisor shall be free to provide similar services to such other business enterprises or activities as Advisor may
deem fit without any limitation or restriction whatsoever.
(c) The initial term of this Agreement shall commence as of the Effective Date
and shall terminate on the first anniversary of the Effective Date (the “
Initial Term
”). The Initial Term shall be automatically renewed for successive one-year terms (each, a “
Renewal Term
”) unless either party
notifies the other party in writing of its intention not to renew the Agreement no later than 90 days prior to the expiration of the Initial Term or a Renewal Term, as
the case may be. This Agreement may only be terminated by the Company upon a vote of a majority of the Company’s directors. In the event that this Agreement is terminated by the Company, the
effective date of the termination shall be six months following the expiration of the Initial Term or a Renewal Term, as the case may be.
2.
Compensation and Expenses
.
(a) For the Services to be rendered by Advisor hereunder, Advisor shall receive an annual fee (the “
Management Fee
”) equal to
$2,000,000. The Company shall pay the Management Fee in quarterly installments, in advance, equal to $500,000. Within ten (10) days of the date hereof, the Company shall pay Advisor an amount representing the pro rata portion of the Management
Fee for the quarter ending December 31, 2013.
(b) The Company shall reimburse Advisor for the cost of all reasonable
out-of-pocket
fees and expenses incurred by Advisor and its affiliates in the performance of the Services hereunder and all matters related thereto. The aforementioned
expenses will be payable by the Company to Advisor or its designee promptly following presentation by Advisor of invoices for such expenses.
3.
Relationship of the Parties
. Advisor is providing the Services hereunder as an independent contractor. Nothing in this Agreement
shall be deemed to constitute the parties hereto as joint venturers, alter egos, partners or participants in an unincorporated business or other separate entity, nor in any manner create any
employer-employee
or principal-agent relationship between the Company and/or any of its Subsidiaries on the one hand, and Advisor or any of Advisor’s members, Advisors, officers or employees on the other hand (notwithstanding the fact that the Company and
Advisor may have in common any officers, directors, stockholders, members, managers, employees, or other personnel).
4.
Directors and
Officers
. Nothing in this Agreement shall be construed to relieve the directors or officers of the Company and its Subsidiaries from the performance of their respective duties or limit the exercise of their powers in accordance with the
Company’s and its Subsidiaries’ charter, bylaws, operating agreement, other constituent documents, applicable law, or otherwise. The activities of the Company and its Subsidiaries shall at all times be subject to the control and direction
of their respective directors and officers. The Company and its Subsidiaries reserve the right to make all decisions with regard to any matter upon which Advisor has rendered its advice and consultation. The Company, its Subsidiaries and Advisor
expressly acknowledge and agree that Advisor is being engaged by the Company and its Subsidiaries to provide the Services to the Company and its Subsidiaries, for which Advisor will be compensated pursuant to the terms of this Agreement. Advisor
shall not, and shall have no authority to, control the Company or its Subsidiaries or the Company’s or its Subsidiaries’ day-to-day operations, whether through the performance of Advisor’s duties hereunder or otherwise. Moreover,
although the Company and/or its Subsidiaries may grant to Advisor authority to sign, review or approve the Company’s and/or its Subsidiaries’ checks, payments, expenditures, transfers and/or conveyances, any such grant of authority shall
be made by the Company or its Subsidiaries, as applicable, and accepted by Advisor with the express understanding and
2
limitation that Advisor shall possess and exercise such authority solely in its capacity as a provider of the Services pursuant to the terms of this Agreement, and in no other capacity, and that
no inference shall be drawn therefrom as to any ability of Advisor to control the Company or its Subsidiaries or the Company’s or its Subsidiaries’ day-to-day operations or any liability or responsibility therefor. The Company’s and
its Subsidiaries’ directors, officers and employees shall retain all responsibility for the Company, its Subsidiaries and their operations as and to the extent required by the Company’s and its Subsidiaries’ charter, bylaws, operating
agreement, other constituent documents, and applicable law.
5.
Limitation of Liability
. Neither Advisor nor any of its affiliates,
nor any of their respective members, managers, partners, directors, officers, employees, agents and/or controlling persons, nor any successor by operation of law (including by merger) of any such person, nor any entity that acquires all or
substantially all of the assets of any such person in a single transaction or series of related transactions (all of the foregoing, collectively, the “
Advisor Indemnitees
”) shall be liable to the Company or any of its Subsidiaries
or affiliates or any of the security holders or creditors of the Company or any of its affiliates for (i) any damage, loss, liability, deficiency, diminution in value, action, suit, claim, proceeding, investigation, audit, demand, assessment,
fine, judgment, cost or other expense (including, without limitation, legal fees and expenses) (collectively “
Liabilities
”) directly or indirectly (whether direct or indirect, in contract or tort or otherwise) arising out of,
related to, caused by, based upon or in connection with the performance of the Services contemplated by this Agreement unless such Liability shall be proven to result directly and primarily from the willful misconduct of such person or (ii) any
Outside Activities (as defined below). Advisor makes no representations or warranties, express or implied, in respect of the Services provided by any Advisor Indemnitee. In no event will any Advisor Indemnitee be liable to the Company (x) for
any special, indirect, punitive, incidental or consequential damages, including, without limitation, loss of profits or savings or lost business, whether or not such damages are foreseeable or such Advisor Indemnitee has been advised of the
possibility of such damages or (y) in respect of any Liabilities relating to any third party claims (whether based in contract, tort or otherwise), except as set forth in Section 6 below. Under no circumstances will the aggregate of any
and all Liabilities of Advisor Indemnitees exceed, in the aggregate, the fees actually paid to Advisor hereunder.
6.
Indemnification
. The Company and its Subsidiaries shall jointly and severally reimburse, defend, indemnify and hold Advisor Indemnitees, and each of them, harmless from and against any Liabilities arising out of, related to, caused by, based
upon or in connection with (a) any act or omission of, or on behalf of, the Company, any of its Subsidiaries, Advisor or any of Advisor Indemnitees, except to the extent proven to result directly and primarily from the willful misconduct of the
person seeking indemnification, or (b) any act or omission made at the direction of the Company or any of its Subsidiaries (collectively, “
Claims
”). The Company and its Subsidiaries and affiliates shall jointly and severally
defend at their own cost and expense any and all suits or actions (just or unjust) which may be brought against the Company, its Subsidiaries or any of their affiliates, or any Advisor Indemnitee or in which any Advisor Indemnitee may be impleaded
with others upon any Claims, or upon any matter, directly or indirectly arising out of, related to, caused by, based upon or in connection with this Agreement or the performance (or failure of performance) hereof by any Advisor Indemnitee.
3
7.
Notices
. All notices, requests, demands or other communications permitted or required
to be given hereunder shall be given or made in writing and shall be (i) delivered personally (including delivery by commercial courier), (ii) sent by registered or certified airmail, postage prepaid, or (iii) sent by telecopier,
addressed to the party to whom they are directed at the following addresses, or at such other address as ay be designated by notice from such party hereunder:
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To the Company:
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Platform Specialty Products Corporation
Nemours Chambers
Road Town
Tortola
British Virgin Islands
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Attention:
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Karen Fahie
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Ogier Fiduciary Services
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Facsimile No.: +1-(284) 852-7450
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To Advisor:
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Mariposa Capital, LLC
5200 Blue
Lagoon Drive
Suite 855
Miami, Florida 33126
Attention: Desiree DeStefano
Facsimile No.:
+1-(305) 675-0653
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Any notice, request, demand or other communication permitted or required to be given hereunder shall be deemed
conclusively to have been given: (a) on the first business day following the day timely deposited with a nationally recognized overnight delivery service with an order for
next-day
delivery, with the cost
of delivery prepaid for the account of the sender; (b) on the fifth business day following the day duly sent by certified or registered United States mail, postage prepaid and return receipt requested; or (c) if delivered by other means,
when actually received by the addressee on a business day (or on the next business day if received after the close of normal business hours or on any
non-business
day).
8.
Assignment; Successors and Assigns
. This Agreement and the rights, duties and obligations of the Company and its Subsidiaries
hereunder may not be assigned or delegated by the Company or its Subsidiaries without the prior written consent of Advisor. This Agreement and the rights, duties and obligations of Advisor hereunder may not be assigned or delegated by Advisor, other
than to an affiliate of Advisor, without the prior written consent of the Company (which consent shall not be unreasonably withheld, delayed or conditioned). All covenants, promises and agreements by or on behalf of the parties contained in this
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.
4
9.
Amendments
. No amendment, supplement or waiver of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by Advisor and the Company (in the case of an amendment or supplement) or by the waiving party (in the case of a waiver).
10.
Applicable Law; WAIVER OF JURY TRIAL
. This Agreement shall be governed by, and construed and enforced in accordance with, the laws
of the State of Delaware, without giving effect to principles of conflicts of law or choice of law that would compel the application of the substantive laws of any other jurisdiction. EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED
BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
11.
Section Headings
. The headings of each section are contained herein for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
12.
Entire Agreement
. This Agreement sets forth the entire agreement of the
parties hereto with regard to the subject matter hereof and supersedes and replaces all prior agreements, understandings and representations, oral or written, with regard to such matters.
13.
Severability
. If any provision of this Agreement or application thereof under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in
all other circumstances.
14.
Counterparts
. This Agreement may be executed in counterparts, each of which shall be an original, and
both of which together shall constitute one and the same document. Any counterpart may be executed by PDF or facsimile signature and such PDF or facsimile signature shall be deemed an original.
15.
Further Assurances
. Each party hereto agrees to use all reasonable efforts to obtain all consents and approvals, and to do all
other things, necessary for the transactions contemplated by this Agreement. The parties agree to take such further action and to deliver or cause to be delivered any additional agreements or instruments as any of them may reasonably request for the
purpose of carrying out this Agreement and the agreements and transactions contemplated hereby.
5
16.
Attorneys’ Fees
. If any action at law or in equity is necessary or desirable to
enforce or interpret the terms of this Agreement, to protect the rights obtained hereunder, or where any provision hereof is validly asserted as a defense, then Advisor shall be entitled to recover from the Company its reasonable attorneys’
fees incurred in connection therewith, including attorneys’ fees on appeal, and all costs and disbursements, in addition to any other available relief or remedy to which it may be entitled.
17.
Outside Activities
. The Company hereby acknowledges and agrees that one or more of Advisor Indemnitees have had, and from time to
time may have, outside activities or interests that conflict or may conflict with the best interests of the Company, its Subsidiaries or any of their affiliates (collectively, “
Outside Activities
”), including (without limitation)
investment opportunities or investments in, ownership of, or participation in entities that are or could be complementary to, or competitive with, the Company, its Subsidiaries or any of their affiliates. The Company hereby consents to all such
Outside Activities, and no Advisor Indemnitee shall be liable to the Company, its Subsidiaries or any of their affiliates for breach of any duty (contractual or otherwise), including without limitation any fiduciary duties, by reason of any such
activities or of such person’s participation therein. In the event that any Advisor Indemnitee acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both the Company, its Subsidiaries or any of their
affiliates, on the one hand, and any Advisor Indemnitee, on the other hand, or any other person, no Advisor Indemnitee shall have any duty (contractual or otherwise), including without limitation any fiduciary duties, to communicate, present or
offer such corporate opportunity to the Company, its Subsidiaries or any of their affiliates and, notwithstanding any provision of this Agreement to the contrary, shall not be liable to the Company, its Subsidiaries or any of their affiliates for
breach of any duty (contractual or otherwise), including without limitation any fiduciary duties, by reason of the fact that any Advisor Indemnitee directly or indirectly pursues or acquires such opportunity for itself, directs such opportunity to
another person, or does not present or communicate such opportunity to the Company, its Subsidiaries or any of their affiliates, even though such corporate opportunity may be of a character that, if presented to the Company, its Subsidiaries or any
of their affiliates, could be taken by the Company, its Subsidiaries or any of their affiliates, as applicable. The Company hereby renounces any interest, right, or expectancy in any such opportunity not offered to it by Advisor Indemnitees to the
fullest extent permitted by law. For the avoidance of doubt, the provisions of this Section 17 shall not limit in any respect the provisions of Section 4 of this Agreement.
18.
Construction
. The construction of this Agreement shall not take into consideration the party who drafted or whose representative
drafted any portion of this Agreement, and no canon of construction shall be applied that resolves ambiguities against the drafter of a document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, the parties have executed this Advisory Services Agreement as of the date
first above written.
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COMPANY:
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PLATFORM SPECIALTY PRODUCTS CORPORATION
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By:
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Name:
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Daniel H. Leever
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Title:
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Chief Executive Officer
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ADVISOR:
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MARIPOSA CAPITAL, LLC
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By:
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Name:
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Title:
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7
Exhibit 10.16
PLATFORM ACQUISITION HOLDINGS LIMITED
Nemours Chambers
Road Town
Tortola
British Virgin Islands
October 29, 2013
Daniel Leever
c/o MacDermid, Incorporated
1401 Blake Street
Denver, CO 80202
Dear Dan,
Reference is made to (i) the Business Combination Agreement and Plan of Merger (the “
Business Combination Agreement
”),
dated as of October 10, 2013, by and among Platform Acquisition Holdings Limited (“
PAHL
”), Platform Delaware Holdings, Inc., Platform Merger Sub, LLC, MacDermid Holdings, LLC, Tartan Holdings, LLC, MacDermid, Incorporated
(“
MacDermid
”), and CSC Shareholder Services LLC; and (ii) the MacDermid, Incorporated Supplemental Executive Retirement Plan, effective April 1, 1994, as amended on February 25, 2005, as further amended on
July 11, 2013 ( the “
SERP
”).
By your signature below, you hereby acknowledge and agree that, if the transactions
contemplated by the Business Combination Agreement are consummated, then:
In the event that you decide to voluntarily terminate your
employment relationship with MacDermid on or prior to the five year anniversary of the Closing Date (as defined in the Business Combination Agreement) you will forfeit and shall be deemed to have released all right, title and interest in, any and
all amounts due and owing to you under the SERP. In the event that the Board of Platform decides it needs to terminate you for whatever reason in the future it will be free to do so, and you will receive your SERP and severance as per your existing
severance agreement.
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Sincerely,
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PLATFORM ACQUISITION HOLDINGS LIMITED
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By:
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/s/ Martin E. Franklin
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Martin E. Franklin, Director
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Acknowledged and Agreed:
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/s/ Daniel H. Leever
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Daniel H. Leever
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[Leever SERP Letter]
Exhibit 10.17
TO: THE UNDERSIGNED FUNDS MANAGED BY PERSHING SQUARE CAPITAL MANAGEMENT, L.P.
Re: Affiliate Securityholders’ Agreement
Each Holder of Ordinary Shares of no par value of PAHL (the “
Shares
”) and Platform Acquisition Holdings Limited, a company
limited by shares incorporated with limited liability under the laws of the British Virgin Islands (“
PAHL
”) have agreed to the following terms, conditions and provisions of this Holder Securityholders’ Agreement (this
“
Agreement
”). “
Holder
” shall refer to each undersigned holder of Shares and any transferee of such Holder that is an affiliate of the Holder at the time of the transfer, or is an affiliate of, or fund managed by,
Pershing Square Capital Management, L.P.; provided that such transferee executes a customary joinder to this Securityholders’ Agreement. “
Holders
” shall refer collectively to the Holders.
1. Rule 144; Registration.
1.1 PAHL shall, at PAHL’s expense, for so long as any Holder holds any Shares, cooperate with the Holders, as may
be reasonably requested by any Holder from time to time, to facilitate any proposed sale of Shares by the requesting Holder(s) in accordance with the provisions of Rule 144 promulgated under the Securities Act of 1933, as amended (the
“
Securities Act
”), or any successor rule (“
Rule 144
”), including, without limitation, by complying with the current public information requirements of Rule 144 and providing opinions of counsel, to the extent
required.
1.2 Subject to the applicable Holder’s compliance with the provisions of Section 1.5 below,
promptly after PAHL becomes eligible to utilize a Form S-3 registration statement, PAHL will file with the Securities and Exchange Commission (the “
SEC
”) a registration statement on Form S-3 registering (among other securities) the
resale of the Shares of the Holders (the “
Registration Statement
”). PAHL shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof. PAHL shall
notify all Holders as promptly as practicable after the Registration Statement is declared effective and shall simultaneously provide all Holders with copies of any related prospectus to be used in connection with the sale or other disposition of
the securities covered thereby. Subject to this Section 1.2 and Section 1.3 below, PAHL shall (a) prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement and any prospectus
used in connection therewith and perform such other actions as may be necessary to keep the Registration Statement (or another registration statement that registers the resale of the Shares) continuously effective as to the Shares of the Holders
until the Termination Date (as defined below), and (b) comply in all material respects with the applicable provisions of the Securities Act, the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), and the rules
and regulations of the SEC promulgated thereunder with respect to the disposition of all Shares of the Holders covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the applicable Holder thereof set forth in such Registration Statement as so amended or in such prospectus as so supplemented. PAHL will pay all expenses associated with the registration pursuant hereto, including filing
and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Shares of the Holders for
sale under applicable state securities laws and listing fees, but excluding any fees or expenses incurred by the
Holder (including any counsel to the Holders) and any discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Shares being sold. If the Holders intend to sell
Shares under the Registration Statement in an underwritten offering, the Company will use reasonable efforts to arrange for the provision to the underwriters of customary legal opinions, disclosure letters and comfort letters, participate in
customary due diligence sessions and execute customary agreements (that include customary indemnification and contribution provisions) as reasonably requested by the underwriters and otherwise provide customary assistance in connection therewith.
1.3 For not more than 30 consecutive days (subject to extension by PAHL by up to an additional 60 days, solely to
the extent that PAHL requires such extension of time to complete financial statements required under applicable law to be contained in PAHL’s SEC filings) or for a total of not more than 90 days in any 12 month period (but not more than twice
in any such 12 month period), PAHL may suspend the use of any prospectus included in the Registration Statement in the event that PAHL determines in good faith that such suspension is necessary to (a) delay the disclosure of material non-public
information concerning PAHL, the disclosure of which at the time is not, in the good faith opinion of PAHL, in the best interests of PAHL or (b) amend or supplement the Registration Statement or the related prospectus so that the Registration
Statement or prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the prospectus in light of the circumstances
under which they were made, not misleading (an “
Allowed Delay
”). Each Holder, severally and not jointly, agrees that, upon receipt of any notice from the Company of an Allowed Delay, such Holder will immediately discontinue
disposition of Shares pursuant to the Registration Statement, until such Holder is advised by the Company that such dispositions may again be made.
1.4 Each Holder shall furnish in writing to PAHL such information regarding such Holder, the Shares held by such
Holder, and the intended method of disposition thereof as shall be reasonably requested by PAHL to effect the registration of the Shares, and shall execute such documents in connection with such registration as PAHL may reasonably request that are
customary of a selling stockholder in similar situations.
1.5 PAHL shall indemnify and hold harmless each Holder,
each person who controls any Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, members, managers, stockholders, partners, limited partners, agents and employees
of each of them (each an “
Indemnified Party
”), to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’
fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (a) any untrue or alleged untrue statement of a material fact contained in a Registration Statement or any prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading or (b) any violation or alleged violation by PAHL of the Securities Act, the Exchange Act or any state securities law, or any
2
rule or regulation thereunder, in connection with the performance of its obligations under this Agreement; in
each case, except to the extent, but only to the extent, that (i) such untrue statement or omission is based upon information regarding such Holder furnished in writing to PAHL by or on behalf of such Holder expressly for use therein, or
(ii) such information relates to such Holder or such Holder’s proposed method of distribution of Shares and was approved in writing by or on behalf of the Holder expressly for use in the Registration Statement, such prospectus or in any
amendment or supplement thereto.
Each Holder shall, severally and not jointly, indemnify and hold harmless PAHL, each director of PAHL,
each officer of the Company who shall sign a Registration Statement, each underwriter, broker or other Person acting on behalf of the holders of securities included in a Registration Statement, and each Person who controls any of the foregoing
Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) against any Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a
Registration Statement or any prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, but only to the extent that (i) such untrue statement or omission is based upon
information regarding such Holder furnished in writing to PAHL by or on behalf of such Holder expressly for use therein, or (ii) such information relates to such Holder or such Holder’s proposed method of distribution of Shares and was
approved in writing by or on behalf of the Holder expressly for use in the Registration Statement, such prospectus or in any amendment or supplement thereto.
If the indemnification provided in this Section 1.6 is unavailable to an Indemnified Party or insufficient to hold the Indemnified Party
harmless for any Losses, then PAHL shall contribute to the amount paid or payable by the Indemnified Party, in such proportion as is appropriate to reflect the relative fault of PAHL and such Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of PAHL and the Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, PAHL or the Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The parties hereto agree that it would not be just and equitable if any contribution were determined by pro rata allocation
or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this paragraph, no Indemnified Party shall be required to
contribute pursuant to this paragraph, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Indemnified Party from the sale of the Shares subject to the proceeding exceeds the amount of any damages
that such Indemnified Party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
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1.6 PAHL’s obligations under this Section 1 shall terminate with
respect to the Holder on the earlier of (a) the date on which all of the Holder’s Shares have been sold, and (b) the date on which all of the Holder’s Shares may be sold pursuant to Rule 144 without volume or other
restrictions (the “
Termination Date
”).
2.
General Provisions.
2.1 Except as otherwise provided herein, all costs and expenses incurred by or on behalf of the parties hereto in
connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses when due.
2.2 All notices and other communications hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (upon confirmation of receipt) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
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To PAHL:
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Platform Acquisition Holdings Limited
Regency Court
Glategny Esplanade
St. Peter Port
Guernsey GY1 3RH
Attn: Company Administrator
Facsimile No:
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with a copy (which shall not constitute notice) to:
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Greenberg Traurig, P.A.
401 E. Las Olas
Blvd., Suite 2000
Fort Lauderdale, FL 33301
Attention: Donn
Beloff, Esq.
Facsimile No.: (954) 765-1477
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To Holder:
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The address set forth beneath Holder’s signature hereto
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2.3 This Agreement may be executed in counterparts, and by facsimile or portable
document format (pdf) transmission, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
2.4 This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof.
2.5 If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
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provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent
possible.
2.6 This Agreement and any other document or instrument delivered pursuant hereto, and all claims or
causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, termination, performance or nonperformance of this Agreement (including any claim or cause of action based
upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed and construed in accordance with the internal substantive laws of the
State of Delaware applicable to a contract entered into and fully performed solely within the State of Delaware without giving effect to the principles of conflict of laws thereof.
2.7 Except as expressly provided herein, neither this Agreement nor any of the rights, interests or obligations shall be
assigned by any of the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
2.8 Each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement or
for recognition and enforcement of any judgment in respect hereof brought by another party hereto or its successors or permitted assigns shall be brought and determined exclusively in any state court or Federal court sitting in New Castle County,
Delaware and each of the parties hereto hereby (i) irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive personal jurisdiction of the
aforesaid courts in the event any dispute arises out or relates to this Agreement or any transaction contemplated hereby, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave
from any such court and (iii) agrees that it will not bring any action arising out of or relating to this Agreement or any transaction contemplated hereby in any court other than any state court or Federal court sitting in New Castle County,
Delaware. It is understood and agreed that any other court or arbiter in any other jurisdiction shall be entitled to enforce any Judgment of any state court or Federal court sitting in New Castle County, Delaware. Any writs, process or summonses to
be served on any other party in such action or proceeding may be made by delivery of process in accordance with the notice provisions contained in Section 2.2 or as otherwise permitted by law. Each of the parties hereto irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (i) the defense of sovereign immunity, (ii) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this Section 2.8, (iii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such
5
courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (iv) to the fullest extent permitted by law that (A) the suit, action or proceeding in any such court is brought in an inconvenient forum, (B) the venue of such suit, action or
proceeding is improper and (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
2.9 The parties hereto agree that irreparable damage for which monetary damages, even if available, would not be an
adequate remedy, would occur in the event that the parties hereto do not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate the transactions contemplated by this Agreement
and the Business Combination Agreement) in accordance with its specified terms or otherwise breach such provisions. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions, specific performance and other equitable
relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. Each of the
parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that the party seeking the injunction, specific performance and other equitable relief has an adequate remedy at law.
2.10 EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
2.11 This Agreement may not be amended or modified except (i) by an instrument in writing signed by, or on behalf
of, the parties hereto or (ii) by a waiver in accordance with Section 2.12.
2.12 Any party to this
Agreement may extend the time for the performance of any of the obligations or other acts of the other party, waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other
party pursuant hereto or waive compliance with any of the agreements of the other party or conditions to such party’s obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed
by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The
failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
[Signature Page Follows]
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first below written
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PLATFORM ACQUISITION HOLDINGS LIMITED
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By:
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/s/ Desiree DeStefano
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Name:
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Desiree DeStefano
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Title:
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VP
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Date:
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11-7-13
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On behalf of:
PERSHING SQUARE, L.P.
PERSHING SQUARE II, L.P.
PERSHING SQUARE INTERNATIONAL, LTD.
PERSHING SQUARE HOLDINGS,
LTD.
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BY:
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PERSHING SQUARE CAPITAL MANAGEMENT, L.P.
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BY:
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PS MANAGEMENT GP, LLC, its General Partner
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By:
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/s/ William A. Ackman
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Name:
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William A. Ackman
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Title:
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Managing Member
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Date:
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11/5/2013
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Notice Address:
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Roy J. Katzovicz, Esq.
Pershing
Square Capital Management, L.P.
888 Seventh Avenue, 42nd Floor
New York, New York 10019
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[Holder Securityholders’ Agreement]
8
Exhibit 10.18
17 May 2013
PLATFORM ACQUISITION HOLDINGS LIMITED
and
THE DIRECTORS OF PLATFORM
ACQUISITION HOLDINGS LIMITED
and
BERGGRUEN ACQUISITION HOLDINGS IV LTD.
and
MARIPOSA ACQUISITION, LLC
and
BARCLAYS BANK
PLC
and
CITIGROUP
GLOBAL MARKETS LIMITED
PLACING AGREEMENT
Herbert Smith
Freehills LLP
PLATFORM: PLACING AGREEMENT
THIS AGREEMENT
is made on 17 May 2013
BETWEEN:
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1.
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PLATFORM ACQUISITION HOLDINGS LIMITED
, a company incorporated with limited liability in the British Virgin Islands with registered number 1771302 whose registered office is situated at Nemours Chambers, Road
Town, Tortola, British Virgin Islands (the “
Company
”);
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2.
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THE PERSONS
whose names and addresses are set out in Parts A and B of Schedule 1 (the “
Directors
”);
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3.
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BERGGRUEN ACQUISITION HOLDINGS IV LTD.
, a British Virgin Islands Business Company with registered number 1718113 whose registered office is situated at Kingston Chambers, PO Box 173, Road Town, Tortola, British
Virgin Islands;
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4.
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MARIPOSA ACQUISITION, LLC
, a limited liability company incorporated in the State of Delaware with file number 5314432 whose registered office is situated at c/o National Registered Agents, Inc., 160 Greentree
Drive, Suite 101, Dover, Delaware 19904;
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5.
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BARCLAYS BANK PLC
, a company incorporated in England with registered number 1026167 whose registered office is situated at 1 Churchill Place, London E14 5HP (“
Barclays
”); and
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6.
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CITIGROUP GLOBAL MARKETS LIMITED
a company incorporated in England with registered number 01763297 whose registered office is situated at Citigroup Centre, Canary Wharf, Canada Square, London E14 5LB
(“
Citi
”) (each of Barclays and Citi being a “
Placing Bank
” and together, the “
Placing Banks
”),
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(together the “
Parties
”).
WHEREAS:
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(A)
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The Company was incorporated and registered in the British Virgin Islands under the BVI Companies Act (as defined below) on 23 April 2013.
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(B)
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The Company will apply to the UK Listing Authority for approval of the Final Prospectus (as defined below) and for the admission of the whole of its ordinary share capital and the Warrants (as defined below) to the
standard listing segment of the Official List (as defined below) and to the London Stock Exchange for the whole of its ordinary share capital and the Warrants to be admitted to trading on the main market for listed securities.
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(C)
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In connection with the Offer (as defined below) and the Company’s application for Admission (as defined below), the Preliminary Prospectus (as defined below) and the Final Prospectus (as defined below) have been
prepared.
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(D)
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The Company proposes to issue the New Ordinary Shares (as defined below) (with Matching Warrants (as defined below)) at the Offer Price (as defined below) by means of the Offer pursuant to the terms of this Agreement
and under the terms set out in the Final Prospectus or any other arrangements or transactions contemplated by the Final Prospectus or this Agreement.
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(E)
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The Founder Entities (as defined below) will subscribe for New Ordinary Shares (with Matching Warrants) at the Offer Price pursuant to the terms of this Agreement and under the terms set out in the Final Prospectus or
any other arrangements or transactions contemplated by the Final Prospectus or this Agreement.
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(F)
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The Offer is being made outside the United States pursuant to Regulation S under the Securities Act (as defined below). In so far as Shares (as
defined below) and/or Warrants are to be made available in the United States in connection with these arrangements, they
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PLATFORM: PLACING AGREEMENT
1
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are to be made available only to QIBs (as defined below), Mariposa Acquisition, LLC and Pershing Square II, LP pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act. Neither the Shares nor the Warrants shall be registered under the Securities Act.
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IT IS AGREED
as follows:
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1.
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DEFINITIONS AND INTERPRETATION
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In this Agreement (including the Recitals and Schedules to it) the
following expressions have the respective meanings set out below, unless the contrary intention appears:
“
2010 PD Amending
Directive
” has the meaning given to it in paragraph 7 of Schedule 8;
“Accounts Date”
means 23 April 2013;
“Accounts Publication Date”
means the day falling three months after publication of the Company’s annual report and
accounts for the year ending 31 December 2014 or, in the event the Company changes its financial year end, the day falling three months after publication of the Company’s annual report and accounts for the next financial year ending after
31 December 2014;
“Acquisition”
means the acquisition by the Company (or by any subsidiary thereof) of a company or
business as described in Part I (Investment Opportunity and Strategy) of the Final Prospectus (and, in the context of the Acquisition, references to a company without reference to a business and references to a business without reference to a
company shall in both cases be construed to mean both a company or a business);
“Acquisition Closing Date”
means the date
of the completion of the Acquisition;
“Admission”
means admission of all of the Company’s ordinary share capital and
the Warrants, issued and to be issued in connection with the Offer, to the standard listing segment of the Official List becoming effective in accordance with the Listing Rules and to trading on the London Stock Exchange’s main market for
listed securities becoming effective in accordance with the Admission and Disclosure Standards;
“Admission and Disclosure
Standards”
means the requirements contained in the publication entitled “Admission and Disclosure Standards” dated 16 April 2013 containing, among other things, the admission requirements to be met by companies seeking
admission to trading on the London Stock Exchange’s main market for listed securities, as amended from time to time;
“Affiliate”
has the meaning given to it in Rule 405 under the Securities Act;
“Agent”
has the meaning given to it in clause 17.2;
“Agreed Rate”
means the one month London Inter Bank Offered Rate (LIBOR) as quoted on a reputable information service;
“Articles of Association”
means the articles of association of the Company from time to time;
“associate”
has the meaning given to it by section 345 of the Companies Act;
“Auditors”
means the auditors of the Company, being PricewaterhouseCoopers LLP of 1 Embankment Place, London, WC2N 6RH;
“Authorisation”
has the meaning given to it in paragraph 60 of Schedule 3;
PLATFORM: PLACING AGREEMENT
2
“Board of Directors”
means the board of directors of the Company (or a duly
constituted and authorised committee thereof);
“Business Day”
means a day other than a Saturday or Sunday on which
trading banks are open for general banking business in London and the British Virgin Islands;
“BVI Companies Act”
means
the British Virgin Islands Business Companies Act 2004 as amended, supplemented or replaced from time to time;
“Chairman”
means Lord Myners, of Truro, CBE, or the Chairman of the Board of Directors from time to time, provided that such person was independent on appointment for the purposes of the UK Corporate Governance Code;
“CJA”
means the Criminal Justice Act 1993;
“Claims”
has the meaning given to it in clause 12.1;
“Closing Date”
means 22 May 2013 or such other date which the Company, the Founders and the Placing Banks may agree in
writing for settlement of subscriptions for the Offer, being no later than 28 May 2013;
“Corporate Governance Code”
means the UK Corporate Governance Code published by the Financial Reporting Council;
“Companies Act”
means the Companies
Act 2006;
“Company’s Counsel”
means:
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•
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as to US law, Greenberg Traurig LLP, 200 Park Avenue, New York, New York 10166;
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•
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as to English law, Greenberg Traurig Maher LLP, 200 Grays Inn Road, London EC1X 8HF; and
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•
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as to British Virgin Islands law, Ogier, Ogier House, St. Julian’s Avenue, St. Peter Port, Guernsey GY1 1WA;
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“Competent Authority”
has the meaning given to it in the Listing Rules;
“Completion”
has the meaning given to it in clause 11.2.4(A);
“Conditions”
means the conditions set out in clause 7.1;
“CREST”
means the
computer-based
system and procedures which enable title to units of
a security to be evidenced and transferred in dematerialised form (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations);
“CREST Nominee”
means Citigroup Global Markets Limited, nominee number 9SMAY;
“CREST Regulations”
means the Uncertificated Securities Regulations 2001;
“CTA 09”
means the Corporation Tax Act 2009;
“CTA 10”
means the Corporation Tax Act 2010;
“Deed Poll”
means the deed poll, in the agreed form, duly executed by the Depositary on 7 May 2013;
“
Depositary
” means the depositary from time to time under the Deed Poll which at the date of this Agreement is Computershare
Investor Services PLC;
“
Depositary Agreement
” means the depositary agreement, in the agreed form, duly executed by the
Company and the Depositary dated on the date of this Agreement;
PLATFORM: PLACING AGREEMENT
3
“
Depositary Interests
” means the depositary interests each representing one
Share or one Warrant (as the case may be) and issued by the Depositary from time to time pursuant to the Deed Poll;
“Directors”
means the persons whose names and addresses are set out in Parts A and B of Schedule 1;
“Directors’ Questionnaire”
means the questionnaire, in the agreed form, and answers to it, completed by each of the
Directors duly signed and dated;
“Directors’ Responsibility Statements”
means the letters completed by each of the
Directors and addressed to the Company and the Placing Banks, in the agreed form, among other things, accepting responsibility for the information contained in the Preliminary Prospectus, the Final Prospectus and any Supplementary Prospectus, duly
signed by, or on behalf of, each Director on or prior to the date of this Agreement;
“Disclosure and Transparency Rules”
means the UK Disclosure Rules and Transparency Rules of the UK Listing Authority made under Part VI of FSMA;
“Disposal”
has the meaning given to it in paragraph 4.1 of Schedule 6;
“Encumbrance”
means any pledge, lien, security interest,
claim, equity, mortgage, charge, encumbrance or third party right or interest of any nature whatsoever and including for the avoidance of doubt any pre-emptive or similar right;
“ERISA”
means the US Employee Retirement Income Security Act of 1974, as amended;
“Euroclear”
means Euroclear UK & Ireland Limited;
“Exchange Act”
means the United States Securities Exchange Act of 1934, as amended;
“FCA”
means the Financial Conduct Authority of the United Kingdom;
“FCA Handbook”
means the Financial Conduct Authority Handbook of Rules and Guidance and all other rules and regulations made
by the FCA under FSMA;
“FCPA”
has the meaning given to it in paragraph 91 of Schedule 3;
“Final Prospectus”
means the final prospectus of the Company in the agreed form to be published on the date of this Agreement
in connection with the Offer;
“Founder Directors”
means each of the Directors listed in Part A of Schedule 1;
“Founder Entities”
means Berggruen Acquisition Holdings IV Ltd. and Mariposa Acquisition, LLC;
“Founder Preferred Shares”
means the convertible preferred shares in the capital of the Company;
“Founders”
means the Founder Directors and the Founder Entities (and
“Founder”
shall mean any one of them);
“FSMA”
means the Financial Services and Markets Act 2000;
“Governmental Agency”
has the meaning given to it in paragraph 60 of Schedule 3;
“IFRS”
means the International Financial Reporting Standards as adopted in the European Union;
“Indemnified Person”
has the meaning given to it in clause 12.21;
“Indemnifying Person”
has the meaning given to it in clause 12.1;
“Independent Non-Executive Directors”
means Alun Cathcart and Alain Minc or the non-executive directors of the Board of
Directors from time to time considered by the Board of Directors to be independent for the purposes of the UK Corporate Governance Code;
PLATFORM: PLACING AGREEMENT
4
“Insider Letters”
means the individual letters, in the agreed form, addressed to
the Company and the Placing Banks duly executed by each of Mariposa Acquisition, LLC, Berggruen Acquisition Holdings IV Ltd., and each Director, on or prior to the date of this Agreement;
“Investment Company Act”
means the United States Investment Company Act of 1940, as amended;
“Judgment Currency”
has the meaning given to it in clause 16.20;
“Listing Condition”
means the condition set out in clause 7.1.8;
“Listing Rules”
means the Listing Rules of the UK Listing Authority made under Part VI of FSMA;
“Lock-up Period”
has the meaning given to it in paragraph 4.1 of Schedule 6;
“London Stock Exchange”
means London Stock Exchange plc;
“Losses”
has the meaning given to it in clause 12.1;
“LPDT Rules”
means the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules;
“Matching Warrants”
means the 88,500,000 Warrants proposed to be issued to subscribers of New Ordinary Shares in the Offer on
the basis of one Warrant per New Ordinary Share;
“Material Adverse Change”
means any material adverse change, or any
development involving a prospective material adverse change, in the condition (financial, operational, legal or otherwise), or in the earnings, business affairs, solvency or prospects of the Company
,
whether or not arising in the
ordinary course of business;
“Memorandum of Association”
means the memorandum of association of the Company from time to
time;
“Model Code”
means the Model Code on directors’ dealings in securities set out in LR 9 Annex 1 of the Listing
Rules;
“Money Laundering Laws”
has the meaning given to it in paragraph 90 of Schedule 3;
“New Ordinary Shares”
means the 88,500,000 new Shares proposed to be issued by the Company as part of the Offer;
“New Securities”
has the meaning given to it in paragraph 23 of Schedule 6;
“No Significant Change Letter”
means the comfort letter, in the agreed form, relating to there having been no significant
change in the financial or trading position of the Company since the Accounts Date, from the Reporting Accountants and addressed to the Directors and the Placing Banks and dated the date of the Final Prospectus;
“Non-Founder Directors”
means each of the Directors listed in Part B of Schedule 1;
“OECD Convention”
has the meaning given to it in paragraph 91 of Schedule 3;
“OFAC”
means the Office of Foreign Assets Control of the US Department of the Treasury;
“Offer”
means an offering of New Ordinary Shares (with Matching Warrants) (i) to certain investors in the United Kingdom
and elsewhere outside the United States pursuant to Regulation S under the Securities Act; and (ii) in the United States only to QIBs,
PLATFORM: PLACING AGREEMENT
5
Mariposa Acquisition, LLC and Pershing Square II, LP pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and which, in each
case, shall be made pursuant to the terms of this Agreement and under the terms set out in the Final Prospectus;
“Offer
Documents”
means the Prospectuses, the Press Releases, the Roadshow Materials, the Pre-Marketing Materials and any amendments or supplements to any of the foregoing and any other document published or otherwise distributed to investors by
or on behalf of the Company or the Founders or their respective Affiliates in connection with the Offer or Admission and any supplements or amendments thereto;
“Offer Price”
means US$10.00 per New Ordinary Share (with one Matching Warrant);
“Official List”
means the official list maintained by the UK Listing Authority pursuant to Part VI of the FSMA;
“other economic sanctions”
has the meaning given to it in paragraph 92 of Schedule 3;
“payee”
has the meaning given to it in clause 9.4.2;
“payer”
has the meaning given to it in clause 9.4.2;
“Placing Banks’ Counsel”
means Herbert Smith Freehills LLP of Exchange House, Primrose Street, London EC2A 2EG;
“Placing Proceeds”
has the meaning given to it in clause 9.1.1(A);
“Plan Asset Regulations”
means the regulations promulgated by the US Department of Labor at 29 CFR 2510.3-101, as
modified by section 3(42) of ERISA;
“Plan Investor”
means (i) any “employee benefit plan” that is subject
to Part 4 of Subtitle B of Title I of ERISA, (ii) a plan, individual retirement account or other arrangement that is subject to section 4975 of the US Internal Revenue Code of 1986, as amended, (iii) entities whose underlying assets are
considered to include “plan assets” of any plan, account or arrangement described in preceding paragraph (i) or (ii), or (iv) any governmental plan, church plan, non-US plan or other investor whose purchase or holding of Shares
would be subject to any state, local, non-US or other laws or regulations similar to Part 4 of Subtitle B of Title I of ERISA or section 4975 of the US Internal Revenue Code of 1986, as amended, or that would have the effect of the Plan Asset
Regulations;
“
Preliminary Prospectus
” means the preliminary prospectus of the Company dated 10 May 2013;
“Pre-Marketing Materials”
means the presentations, each in the agreed form, prepared by the Company and used during the course
of meetings with institutional investors on or prior to 9 May 2013 in connection with a potential offer;
“Press
Releases”
means the press releases, in the agreed form, to be issued (i) on or about the date of this Agreement relating to the publication of the Final Prospectus and (ii) any other press release relating to the Offer (including
any press release issued in connection with the publication of any Supplementary Prospectus), the issue of which is authorised by the Company;
“Prospectuses”
means the Preliminary Prospectus, the Final Prospectus and any Supplementary Prospectus;
“Prospectus Directive”
has the meaning given to it in paragraph 7 of Schedule 8;
“Prospectus Rules”
means the Prospectus Rules of the UK Listing Authority made under Part VI of FSMA;
PLATFORM: PLACING AGREEMENT
6
“Publicity Guidelines”
means the publicity guidelines, in the agreed form,
prepared by the Company’s Counsel in connection with the Offer;
“QIBs”
means qualified institutional buyers within
the meaning of Rule 144A under the Securities Act;
“Register of Members”
means the register of members in relation to the
Shares and the register of warrantholders in relation to the Warrants maintained by the Registrar;
“Registrar of
Companies”
means the Registrar of Corporate Affairs in the British Virgin Islands;
“Registrars”
means
Computershare Investor Services (BVI) Limited of Woodbourne Hall, P O Box 3162, Road Town, Tortola, British Virgin Islands, acting as registrars in connection with the Offer;
“Registrars’ Agreement”
means the agreement, in the agreed form, duly executed by the Company and the Registrars on or
about the date of this Agreement;
“Regulation D”
means Regulation D under the Securities Act;
“Regulation S”
means Regulation S under the Securities Act;
“Regulatory Information Service”
means a regulatory information service authorised by the UK Listing Authority to receive,
process and disseminate regulatory information in respect of listed companies;
“Relevant Persons”
has the meaning given
to it in paragraph 9 of Schedule 6;
“Relevant Sum”
has the meaning given to it in clause 9.4.3;
“Reporting Accountants”
means the auditors of the Company, being PricewaterhouseCoopers LLP of 1 Embankment Place, London,
WC2N 6RH;
“Restricted Announcement”
has the meaning given to it in paragraph 2.1 of Schedule 6;
“Restricted Period”
has the meaning given to it in paragraph 2.1 of Schedule 6;
“Roadshow Materials”
means the presentation, in the agreed form, prepared by the Company and used during the course of
roadshow presentations in connection with the Offer;
“Rule 144A”
means Rule 144A under the Securities Act;
“Securities Act”
means the United States Securities Act of 1933, as amended;
“Shares”
means ordinary shares of no par value in the capital of the Company excluding, for the avoidance of doubt, the
Founder Preferred Shares;
“Share Option Deeds”
means the option deeds entered into between the Company and each
Non-Founder Director granting each Non-Founder Director the option to acquire Shares;
“Supplementary Prospectus”
means
any prospectus supplementary to the Final Prospectus published by the Company in accordance with section 87G of FSMA;
“Taxation”
or
“tax”
means all taxes, levies, imposts, duties, charges or withholdings of any nature
whatsoever imposed by a tax authority of any jurisdiction, together with all penalties, charges and interest relating to any of the foregoing and regardless of whether the Company, or a Placing Bank or any other person concerned is primarily or
directly liable or not and regardless of whether or not such taxes, levies, imposts duties, charges, withholdings, penalties and interest are attributable directly or primarily to the Company or a Placing Bank or any other person concerned,
including (without limitation) corporation
PLATFORM: PLACING AGREEMENT
7
tax, advance corporation tax, income tax, capital gains tax, VAT, duties of customs and excise, national insurance contributions, capital duty, stamp duty, stamp duty reserve tax, stamp duty land
tax and any other transfer tax or duty, all taxes, duties or charges replaced by or replacing any of them, and all other taxes on gross or net income, profits or gains, distributions, receipts, importations, sales, use, occupation, franchise, value
added, and personal property;
“Transaction Agreements”
means this Agreement, the Depositary Agreement and the Warrant
Instrument and any amendment or supplement thereto;
“Transfer Taxes”
means stamp duty, stamp duty reserve tax, capital
duty or any similar issuance or transfer tax or duty and any related costs, fines, penalties or interest (if any) whether of the United Kingdom or elsewhere;
“UK Listing Authority”
means the FCA acting in its capacity as the competent authority in the United Kingdom under
Part VI of the FSMA;
“United States” and “US”
means the United States of America, its territories and
possessions, any state of the United States and the District of Colombia;
“
US Treasuries
”
means securities
issued by the United States Department of the Treasury;
“VAT”
means value added tax chargeable under or pursuant to the
Value Added Tax Act 1994 or the EC Council Directive 2006/112/EC on the common system of value added tax and any other sales, purchase or turnover tax of a similar nature, whether imposed in the United Kingdom or elsewhere;
“
Verification Bundles
” means the materials, in the agreed form, prepared by the Company’s Counsel and comprising
information provided by the Company in order to verify material statements and information contained in the Pre-Marketing Materials and the Roadshow Materials approved by the Directors on the date of the publication of the Final Prospectus;
“Verification Notes”
means the notes, in the agreed form, prepared by the Company’s Counsel and comprising information
provided by the Company in order to verify material statements and information contained in the Preliminary Prospectus and the Final Prospectus signed by the Directors on the date of the publication of the Final Prospectus, together with the answers
thereto;
“Warrant Instrument”
means the deed poll entered into by the Company on the date of this Agreement setting out
the rights and interests of the registered holders of the Warrants for the time being and to afford protection for such rights and interests;
“Warrants”
means the 90,529,500 warrants to subscribe for Shares proposed to be issued by the Company pursuant to the Warrant
Instrument;
“Warranties”
means the representations, warranties and undertakings of the Company and the Founders set out
in Schedule 3 and
“Warranty”
means any one of them; and
“Warrantor”
means, in relation to any
Warranty, the party expressed in this Agreement to be giving the Warranty in the terms of that Warranty.
|
1.2
|
Agreed form documents
|
Any reference to a document being “in the agreed form”
means in the form of the draft or proof thereof signed or initialled for the purpose of identification by the Placing Banks’ Counsel and the Company’s Counsel, or as otherwise evidenced as being in the agreed form by communications between
the Placing Banks’ Counsel and the Company’s Counsel as the case may be, with such alterations (if any) as may subsequently be agreed by or on behalf of the Placing Banks, the Founders, the Directors and the Company (as the case may be). A
complete list of documents in the agreed form as at the date of this Agreement is set out in Schedule 4.
PLATFORM: PLACING AGREEMENT
8
|
1.3
|
Subordinate legislation
|
References to a statutory provision include any subordinate
legislation made from time to time under that provision.
|
1.4
|
Modification and re-enactment
|
References to a statutory provision include that
provision as from time to time modified or re-enacted so far as such modification or re-enactment applies or is capable of applying to any transactions entered into in accordance with this Agreement.
The expressions “
company
”, “
holding
company
”, “
subsidiary undertaking
” and “
subsidiary
” shall have the same meanings in this Agreement as in the Companies Act.
Expressions defined or used in the CREST Regulations shall have the
same meanings in this Agreement (except where the context otherwise requires).
|
1.7
|
Recitals, Clauses and Schedules
|
References in this Agreement to recitals, clauses and
schedules are, unless otherwise specified, to the recitals and clauses of and schedules to this Agreement.
Headings shall be ignored in construing this Agreement.
References to time of day are to London, United Kingdom, time.
|
1.10
|
References to “includes” or “including”
|
References to
“includes” or “including” shall mean “includes without limitation” or “including without limitation”.
Words in the singular shall include the plural and vice versa.
|
1.12
|
References to gender
|
References to one gender include other genders.
|
1.13
|
References to a person
|
A reference to a person shall include a reference to a firm, a
body corporate, an unincorporated association, a partnership or to an individual’s executors or administrators.
|
1.14
|
Analogous legal terms
|
References to any English legal term for any action, remedy,
method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates the English legal term in that
jurisdiction and references to any English statute or enactment shall be deemed to include any equivalent or analogous laws or rules in any other jurisdiction.
PLATFORM: PLACING AGREEMENT
9
|
1.15
|
References to this Agreement
|
References to this Agreement include this Agreement as
amended or supplemented in accordance with its terms.
|
2.
|
APPLICATIONS FOR ADMISSION AND APPOINTMENTS
|
|
2.1
|
Applications for Admission
|
|
|
2.1.1
|
The Company undertakes to apply or procure the application as soon as practicable after the date of this Agreement, to:
|
|
|
(A)
|
the UK Listing Authority for admission of the Shares and Warrants to the standard listing segment of the Official List;
|
|
|
(B)
|
the London Stock Exchange for admission of the Shares and Warrants to trading on its main market for listed securities; and
|
|
|
(C)
|
Euroclear for admission of the Depositary Interests as participating securities (as defined in the CREST Regulations) in CREST.
|
|
|
2.1.2
|
Each of the Company, the Founder Entities and the Directors severally undertakes that it will (in the case of each of the Founder Entities and the Directors so far as is within its power) duly perform all of its
respective obligations in connection with the Offer and Admission and will use all reasonable endeavours to execute or cause to be executed all such documents, provide or cause to be provided all such information, and do or cause to be done all such
things as may be required by or are necessary to comply with the requirements of the UK Listing Authority, the London Stock Exchange, Euroclear and all other applicable legislation and regulation, in each case in connection with such applications
and the Offer.
|
|
|
2.1.3
|
The Company, the Founder Entities and the Directors undertake to apply to the UK Listing Authority for formal approval of the Final Prospectus for the purposes of, and in accordance with, the Listing Rules and the
Prospectus Rules and shall use all reasonable endeavours to obtain such approval as soon as practicable and in any event before publishing the Final Prospectus.
|
|
|
2.1.4
|
The Company, the Founder Entities and the Directors shall use all reasonable endeavours to secure Admission by not later than 8.00 a.m. on the Closing Date (or such other time and/or date as the Company and the Placing
Banks agree).
|
|
2.2
|
Appointment of the Placing Banks as agents of the Company
|
|
|
2.2.1
|
The Company confirms its appointment of each Placing Bank as joint global coordinator and joint bookrunner to the Offer, and each Placing Bank confirms its acceptance of such appointment, subject to the terms of this
Agreement.
|
|
|
2.2.2
|
The appointments under clause 2.2.1 confer on each Placing Bank all powers, authorities and discretions which are necessary for, or incidental to, the performance by each Placing Bank of its functions as a joint global
coordinator and joint bookrunner to the Offer (including, without limitation, the power to appoint
sub-agents
or to delegate the exercise of any of its powers, authorities or discretions to such persons as
each Placing Bank sees fit, including the appointment of selling agents who are registered broker-dealers in the United States to offer, sell and effect transactions in the United States and the appointment of its subsidiaries or associates to
offer, sell and effect transactions outside the United States). The Company agrees to ratify all actions which each Placing Bank and its
sub-agents
and delegates lawfully take pursuant to this appointment.
|
PLATFORM: PLACING AGREEMENT
10
|
2.3
|
Assistance to the Placing Banks
|
Each of the Company, the Founder Entities and the
Directors severally undertakes to each of the Placing Banks that it or he will at all times provide to each Placing Bank all information and assistance and take all actions (including paying all relevant fees) reasonably requested by them or that
may be required by them to satisfy their obligations under or in connection with the Offer, the LPDT Rules and the Admission and Disclosure Standards, including (without limitation) to provide the FCA with any such information or explanation the FCA
may require for the purpose of verifying whether the Listing Rules and the Prospectus Rules are being, and have been, complied with by the Company.
|
2.4
|
The Company authorises each of the Placing Banks to give to the Registrar and/or to Euroclear any instructions consistent with this Agreement and/or the Offer Documents that it reasonably considers to be necessary for,
or incidental to, the performance of its functions as a joint global coordinator and joint bookrunner in connection with the Offer, Admission and the applications for the Depositary Interests to be transferred through and held in dematerialised form
through CREST (including, without limitation, delivery to Euroclear of the letter referred to in clause 7.1.10).
|
|
2.5
|
The Company, the Founder Entities, and the Directors each undertake to the Placing Banks not to revoke the appointments, authorities or instructions contained in this clause 2 before the earlier of (i) the
termination of this Agreement and (ii) the Closing Date.
|
|
2.6
|
Each of the Company, the Founder Entities, and the Directors consents to each of the Placing Banks disclosing to the FCA at any time before or after Admission any information which the relevant Placing Bank in its
absolute discretion deems: (i) to relate to the Company; and (ii) to address
non-compliance
with the LPDT Rules. Nothing in this Agreement shall require a Placing Bank to do anything inconsistent
with, or restrict a Placing Bank from complying with, its legal or regulatory responsibilities, duties or obligations.
|
|
3.
|
AGREEMENT TO ISSUE AND SELL SHARES AND WARRANTS
|
|
3.1
|
Issue and allotment by the Company
|
|
|
3.1.1
|
Subject to the satisfaction (or waiver, if capable of waiver) of the Conditions (other than the Listing Condition) and to this Agreement not having been terminated under clause 13, the Company undertakes to the Placing
Banks that it will prior to 8.00 a.m. on the Closing Date, against the undertaking to make payment pursuant to clause 6.2 (Payment), allot and issue, in accordance with the terms and conditions of the Offer, New Ordinary Shares and Matching
Warrants as directed by the Placing Banks.
|
|
|
3.1.2
|
The Company undertakes to the Placing Banks that it will (a) allot and issue all New Ordinary Shares to be allotted and issued by it pursuant to clause 3.1.1 fully paid up in cash at the Offer Price, free from all
Encumbrances and (b) allot and issue all Matching Warrants to be allotted and issued by it pursuant to clause 3.1.1 in compliance with the Warrant Instrument and free of any payment and free from all Encumbrances.
|
|
|
3.1.3
|
The Company undertakes to the Placing Banks that it will, in accordance with the terms and conditions of the Warrant Instrument, allot and issue Shares on any valid exercise of Warrants, fully paid up in cash and free
from all Encumbrances.
|
PLATFORM: PLACING AGREEMENT
11
Subject to the terms of this Agreement and relying on the covenants,
undertakings, representations and warranties contained in this Agreement, and subject to the satisfaction (or waiver, if capable of waiver) of the Conditions and subject to this Agreement not having been terminated under clause 13, each Placing Bank
severally, and not jointly nor jointly and severally, agrees that it will in each case at the Offer Price on the Closing Date: (i) purchase from the Company; or (ii) use reasonable endeavours to procure subscribers for, or failing which
itself subscribe for, the number of New Ordinary Shares (with Matching Warrants) set forth against its name in Part B of Schedule 9, provided that nothing in this Agreement shall require the Placing Banks to purchase, procure subscribers for, or
failing which subscribe for, any New Ordinary Shares (with Matching Warrants) that are to be subscribed for by the Founders pursuant to clause 3.3.3.
|
3.3
|
Commitment of the Founders
|
Subject to the terms of this Agreement:
|
|
3.3.1
|
Berggruen Acquisition Holdings IV Ltd. agrees that, as soon as reasonably practicable on the Closing Date, it shall subscribe for 940,000 Founder Preferred Shares (with 940,000 Warrants being issued to Berggruen
Acquisition Holdings IV Ltd. on the basis of one Warrant per Founder Preferred Share) at US$10 per Founder Preferred Share and undertakes to the Company to pay an amount equal to the aggregate subscription price for such Founder Preferred Shares as
soon as reasonably practicable on the Closing Date;
|
|
|
3.3.2
|
Mariposa Acquisition, LLC agrees that, as soon as reasonably practicable on the Closing Date, it shall subscribe for 1,060,000 Founder Preferred Shares (with 1,060,000 Warrants being issued to Mariposa Acquisition, LLC
on the basis of one Warrant per Founder Preferred Share) at US$10 per Founder Preferred Share and undertakes to the Company to pay an amount equal to the aggregate subscription price for such Founder Preferred Shares as soon as reasonably
practicable on the Closing Date; and
|
|
|
3.3.3
|
each Founder Entity severally, and not jointly nor jointly and severally, agrees that it shall subscribe for the number of New Ordinary Shares (with Matching Warrants) set forth against its name in Part A of Schedule 9,
in each case at the Offer Price as soon as reasonably practicable on the Closing Date.
|
|
3.4
|
Non-binding
indications of interest
|
It is
acknowledged by each of the Company, the Founder Entities and the Directors that any information it or he may receive or has received regarding the identity of persons expressing an interest in subscribing for or purchasing New Ordinary Shares (with
Matching Warrants) in the Offer and the prices at which they may be willing to do so will be based on
non-binding
indications of interest from such persons and that there can be no assurance that such persons
will, or that there will be any obligation on such persons to, subsequently agree to acquire any New Ordinary Shares (with Matching Warrants) or to acquire the number of New Ordinary Shares (with Matching Warrants) indicated or at the prices so
indicated. Each of the Company, the Founder Entities and the Directors agrees that any such information obtained or received by it or him or any of such person’s officers or employees will be held in confidence and recognises that such
information may constitute inside information in relation to the Company and/or its securities for the purposes of the CJA and that use of such information may constitute market abuse for the purposes of FSMA. Each of the Company, the Founder
Entities and the Directors severally agrees to conduct itself and, where relevant, direct its officers and employees to conduct themselves so as to avoid an offence under the CJA or a breach of the legislation and rules in relation to market abuse
by reference to such information.
PLATFORM: PLACING AGREEMENT
12
The Placing Banks shall determine, in consultation with the Company
and the Founders the basis of allocations and the proportions in which subscribers under the Offer will receive New Ordinary Shares (with Matching Warrants) and it is acknowledged by the Company, the Founder Entities and the Directors that the
Placing Banks have (to the extent permitted by law and subject to confidentiality restrictions) discussed with them the basis of allocations and the identity of potential subscribers in the Offer.
|
3.6
|
Contents of the Offer Documents
|
The Company, the Founder Entities and the Directors
acknowledge that the Placing Banks are not responsible for and have not authorised and will not authorise the contents of the Prospectus or any other Offer Document for the purposes of section 90 of FSMA and the Prospectus Rules or otherwise and
that neither of the Placing Banks have been requested to verify, nor is, nor shall be, responsible for verifying, the accuracy, completeness or fairness of any information in any of the Offer Documents (or any supplement or amendment to any of the
foregoing).
|
4.
|
APPROVAL, RELEASE AND DELIVERY OF DOCUMENTS
|
|
|
4.1.1
|
The Company confirms to each Placing Bank that a meeting (or meetings) of the Board of Directors has (or have) been held which has (or have):
|
|
|
(A)
|
authorised the Company to enter into and perform its obligations under this Agreement;
|
|
|
(B)
|
(i) ratified or approved the content and form, and taken responsibility for; and (ii) authorised and ratified or approved the publication of each of the Offer Documents, as appropriate;
|
|
|
(C)
|
approved the making of the Offer and the applications for Admission;
|
|
|
(D)
|
approved the making of an application to Euroclear for admission of the Depositary Interests as participating securities (as defined in the CREST Regulations) in CREST; and
|
|
|
(E)
|
authorised all necessary steps to be taken by the Company in connection with each of the above matters.
|
|
|
4.1.2
|
Each of the Founders confirms to each Placing Bank and the Company that it has approved the Pre-Marketing Materials.
|
|
|
4.1.3
|
The Company, each of the Founder Entities and each of the Directors confirms that all necessary resolutions of the Company and its shareholders (and any necessary resolutions of any members of their subsidiary
undertakings or associates) are passed to authorise the Shares and Warrants being held by the Depositary or its nominated custodian whereby the Depositary will issue Depositary Interests which shall be admitted as participating securities (as
defined in the CREST Regulations) in CREST.
|
|
|
4.1.4
|
The Company, each of the Founder Entities and each of the Directors confirms that all necessary resolutions have been passed by and/or consents obtained from the Company’s shareholders to enable the Company to give
effect to its obligations under this Agreement and the terms of the Offer.
|
PLATFORM: PLACING AGREEMENT
13
|
4.2
|
Publication of Offer Documents
|
|
|
4.2.1
|
The Company shall publish the Final Prospectus in a form satisfactory to each of the Placing Banks and furnish promptly to each of the Placing Banks, in such quantities as they may request, copies of the Final
Prospectus and any Supplementary Prospectus together with any other documentation relating to the Offer as they may reasonably request from time to time, and procure that each of the Offer Documents is approved, filed, published and/or made
available or issued in accordance with, and complies with, the LPDT Rules (as applicable) and that:
|
|
|
(A)
|
a press release, in the agreed form, is delivered to a Regulatory Information Service in time for release no later than 8.00 a.m. on the date of this Agreement;
|
|
|
(B)
|
sufficient copies of the Final Prospectus and any Supplementary Prospectus are made available at the appropriate times to the public and/or to subscribers for the New Ordinary Shares (with Matching Warrants);
|
|
|
(C)
|
sufficient copies of any Final Prospectus and Supplementary Prospectus are made available at the registered office of the Company, the offices of the Registrars and the Document Viewing Facility (as defined in the
Listing Rules) and on the Company’s website, in accordance with the requirements of the Prospectus Rules; and
|
|
|
(D)
|
the documents described in the Final Prospectus and any Supplementary Prospectus as being available for inspection are made available as described in the Final Prospectus or any such Supplementary Prospectus.
|
|
4.3
|
Delivery of documents
|
|
|
4.3.1
|
Immediately following execution of this Agreement, each of the Company and the Directors shall deliver, or procure to be delivered, to the Placing Banks, to the extent not previously delivered, the documents listed in
Part A of Schedule 5, other than the documents in paragraph 2 thereof and the Directors shall deliver the Insider Letters to be entered into by each such person.
|
|
|
4.3.2
|
Immediately following execution of this Agreement, each of the Founder Entities shall deliver, or procure to be delivered, to the Placing Banks, to the extent not previously delivered, the Insider Letters to be entered
into by each of the Founder Entities.
|
|
|
4.3.3
|
Prior to the publication of any Supplementary Prospectus, each of the Company and the Directors shall deliver or procure to be delivered, to the Placing Banks, the documents listed in Part B of Schedule 5, other than
the documents in paragraph 6 thereof.
|
|
|
4.3.4
|
Prior to the publication of any Supplementary Prospectus each of the Founder Entities shall deliver, or procure to be delivered, to the Placing Banks, the documents listed in paragraph 6 of Part B of Schedule 5.
|
|
|
4.3.5
|
Each of the Company and the Directors shall, no later than noon on the Business Day prior to the Closing Date deliver or procure to be delivered to the Placing Banks, the documents listed in Part C of Schedule 5, other
than the documents in paragraph 7 thereof.
|
PLATFORM: PLACING AGREEMENT
14
|
|
4.3.6
|
Each of the Founder Entities shall, no later than noon on the Business Day prior to the Closing Date, deliver or procure to be delivered to the Placing Banks, the documents listed in paragraph 7 of Part C of Schedule 5.
|
|
5.
|
PRE-CLOSING
OBLIGATIONS
|
|
5.1
|
Admission of Depositary Interests to CREST
|
Each of the Company, the Founder Entities
and the Directors shall procure that on or before Admission:
|
|
5.1.1
|
all necessary filings have been made with the Registrar of Companies to facilitate the transfer of Depositary Interests through CREST;
|
|
|
5.1.2
|
securities application forms (in connection with the Shares and the Warrants) are submitted by the Company to Euroclear;
|
|
|
5.1.3
|
the Registrars confirm to Euroclear that they are the registrars for all of the Shares and Warrants; and
|
|
|
5.1.4
|
the Registrars and the Depositary take all necessary steps and give all necessary instructions to Euroclear to allow the Depositary Interests to be held in dematerialised form as at and from Admission.
|
|
5.2
|
Determination of the Allocations
|
Allocations under the Offer will be determined in
accordance with clause 3.5.
|
5.3
|
Notification of details for delivery of New Ordinary Shares and Matching Warrants
|
No
later than 5.00 p.m. on the second Business Day prior to the Closing Date, the Placing Banks shall notify the Company and the Registrars of the number of New Ordinary Shares and Matching Warrants to be issued and in each case delivered on the
Closing Date and the names, addresses and, if relevant, custodial details of the persons to whom such New Ordinary Shares and Matching Warrants are to be issued and delivered, together with the relevant number of New Ordinary Shares and Matching
Warrants to be delivered to each such person.
|
5.4
|
Allotment of New Ordinary Shares and Matching Warrants
|
|
|
5.4.1
|
The Company and, so far as each Director has the power to do so, each Director will procure that on or before the Business Day prior to the Closing Date, the Board of Directors passes appropriate resolutions and takes
all other necessary steps to allot and issue on the Closing Date, conditional only on Admission, (i) the New Ordinary Shares fully paid up at the Offer Price and (ii) the Matching Warrants, to subscribers in the proportions and as
otherwise directed by the Placing Banks.
|
|
|
5.4.2
|
The Company will arrange to issue the New Ordinary Shares and Matching Warrants to the Depositary or its nominated custodian and for the Depositary to issue Depositary Interests in respect thereof to the CREST Nominee,
which will hold such Depositary Interests as nominee for the persons entitled thereto, and for such Depositary Interests to be credited to the CREST account of the CREST Nominee notified to the Company by the Placing Banks (such notification to be
made no later than the Business Day prior to the Closing Date).
|
PLATFORM: PLACING AGREEMENT
15
|
6.1
|
Issue of Shares and Warrants
|
Upon satisfaction or waiver (if capable of waiver) of the
Conditions (other than the Listing Condition in the case of clause 6.1.1) and subject to this Agreement not having been terminated in accordance with clause 13, the Company undertakes to the Placing Banks that by 8.00 a.m. on the Closing Date:
|
|
6.1.1
|
Issue of New Ordinary Shares and Matching Warrants
|
conditional on Admission and
against the undertaking to make payment pursuant to clause 6.2, it will issue the New Ordinary Shares and Matching Warrants to be issued pursuant to the Offer to the Depositary or its nominated custodian, procure that the Depositary Interests in
respect of such New Ordinary Shares and Matching Warrants are credited to the CREST account of the CREST Nominee notified to the Company by the Placing Banks under clause 5.4.2, instruct the CREST Nominee to hold such Depositary Interests as nominee
for the persons entitled thereto (as directed by the Placing Banks), and instruct the Registrars to register the Depositary or its nominated custodian as the holder of such New Ordinary Shares and Matching Warrants in the Register of Members;
|
|
6.1.2
|
Notification to CREST
|
it will immediately following Admission notify CREST that the
Conditions have been satisfied or waived (as the case may be).
|
|
6.2.1
|
Following satisfaction or waiver (if capable of waiver) of the Conditions on the Closing Date and against compliance by the Company, each of the Founder Entities and each of the Directors with its or his obligations
under clauses 4 and 5 and this clause 6, each Placing Bank shall make or procure payment to the Company of an amount equal to the aggregate of: (i) any monies received by it from the Founders for New Ordinary Shares (with Matching Warrants)
pursuant to the Offer and (ii) the Offer Price multiplied by the number of New Ordinary Shares (with Matching Warrants) set forth against its name in the Part B of Schedule 9, less:
|
|
|
(1)
|
the commission payable to it by the Company pursuant to clause 9.1;
|
|
|
(2)
|
the costs and expenses payable by the Company pursuant to clause 9.3;
|
|
|
(3)
|
any amount in respect of VAT payable by the Company pursuant to clause 9.4; and
|
|
|
(4)
|
an amount equal to the aggregate of any amounts payable by the Company pursuant to clause 10.1.
|
|
|
6.2.2
|
Any payment of monies under this clause 6.2 shall be made by wire transfer by the Placing Bank in United States dollars on the Closing Date to the
account notified by the Company to the Placing Banks no later than two Business Days prior to the Closing Date (it being acknowledged that the bank with which the account is held and the jurisdiction in which it is located must be
reasonably acceptable to the Placing Banks and it being further acknowledged that depending on the location of such account, the monies may not be received on the day of transfer), evidence of such payment taking the form of a confirmation from the
|
PLATFORM: PLACING AGREEMENT
16
|
|
Placing Banks that they have made the relevant payment to the Company and the compliance by each Placing Bank with its obligations under this clause 6 will be a complete discharge of its
obligations under this Agreement.
|
|
6.3
|
Exercise by Placing Banks of Company’s rights
|
The Company acknowledges and agrees
that, subject to compliance by the Placing Banks with this clause 6, the Placing Banks may exercise any and all rights which the Company may have against any person who for any reason whatsoever has failed to pay for any New Ordinary Shares (with
Matching Warrants) allotted or transferred to him.
|
7.1
|
Conditions to this Agreement
|
The obligations of the Placing Banks under this Agreement
are subject to the following conditions:
the Warranties being true and accurate and not misleading in each case on
the date of this Agreement, the date of any Supplementary Prospectus and the Closing Date as though, in each such case, they had been given and made on such date and time by reference to the facts and circumstances then subsisting;
each of the Company, the Founder Entities and the Directors having complied
with all their respective obligations under this Agreement and having satisfied all the Conditions to be satisfied by any of them, in each case under this Agreement or under the terms and conditions of the Offer, which fall to be performed or
satisfied on or prior to Admission;
no matter having arisen prior to Admission which in the opinion of the
Placing Banks might reasonably be expected to give rise to a Claim under clause 12;
|
|
7.1.4
|
Approval of Final Prospectus
|
the Final Prospectus having been approved by the UK
Listing Authority and being filed with the FCA in accordance with the Prospectus Rules and FSMA not later than 3.00 p.m. on the date of this Agreement (or such later time or date as the Placing Banks may agree with the Company);
|
|
7.1.5
|
Publication of the Final Prospectus
|
the Final Prospectus being published and made
available to the public in accordance with the Prospectus Rules not later than 3.00 p.m. on the date of this Agreement (or such later time or date as the Placing Banks may agree with the Company);
|
|
7.1.6
|
Receipt of documents
|
delivery of the documents referred to in clause 4.3 in accordance
with the terms set out in clause 4.3;
|
|
7.1.7
|
Amendments and Supplements
|
no event referred to in section 87G of FSMA arising between
the date of publication of the Final Prospectus and Admission and no Supplementary Prospectus being published by or on behalf of the Company and/or the Founders prior to Admission;
PLATFORM: PLACING AGREEMENT
17
Admission occurring not later than 8.00 a.m. on the Closing Date (or such
later time and/or date as the Company and the Placing Banks may agree (the
“Listing Condition”
));
|
|
7.1.9
|
Depositary Interests
|
the Company and the Depositary having entered into the Depositary
Agreement and the Depositary having entered into the Deed Poll;
|
|
7.1.10
|
Admission to CREST
|
the delivery to the Placing Banks on or before at least one day
before Admission of a letter or letters from the Depositary addressed to Euroclear dated the date of Admission confirming to Euroclear that all the outstanding conditions for the admission of all of the Depositary Interests to CREST have been
satisfied;
|
|
7.1.11
|
Material Adverse Change
|
there not having occurred in the opinion of the Placing Banks,
acting in good faith, any Material Adverse Change (whether or not foreseeable);
|
|
7.1.12
|
Subscription by the Founder Entities
|
the Founder Entities (i) paying in cleared
funds for the New Ordinary Shares (with Matching Warrants) set out against their names in Part A of Schedule 9 as soon as reasonably practicable on the Closing Date, (ii) complying with their obligations in paragraph 24 of Schedule 6, and
(iii) subscribing for such New Ordinary Shares and Matching Warrants as soon as reasonably practicable on the Closing Date;
|
|
7.1.13
|
Issue of the Founder Preferred Shares
|
the valid issue of the fully paid Founder
Preferred Shares and Warrants (as described in paragraphs 4.3 of Part VIII (Additional Information) of the Final Prospectus) by no later than Admission on the Closing Date;
|
|
7.1.14
|
Entry into the Warrant Instrument
|
the Warrant Instrument having been executed by the
Company and remaining in full force and effect, and having not lapsed or been amended or terminated prior to Admission; and
|
|
7.1.15
|
Entry into of the Insider Letters
|
each of the Insider Letters being entered into and
the obligations in such letters being legal, valid, binding and enforceable,
together, the
“Conditions”
and each a
“Condition”
.
|
7.2
|
Non satisfaction or waiver
|
|
|
7.2.1
|
If any of the Conditions having fallen due for satisfaction (each Condition being due for satisfaction by the time and date specified therein or, where no such time or date is specified, by Admission) or waiver (if
capable of waiver) have not been fulfilled or waived in writing by the Placing Banks (in their absolute discretion) or have become incapable of being satisfied by the relevant time and date, then this Agreement and all the obligations of the parties
hereunder shall, except as provided in clause 13.3, forthwith cease to have effect.
|
PLATFORM: PLACING AGREEMENT
18
|
|
7.2.2
|
The Placing Banks may not waive the Conditions set out in clauses 7.1.4, 7.1.5 and 7.1.8.
|
|
8.1
|
The provisions of Schedule 6 shall have effect as undertakings to each of the Placing Banks.
|
|
8.2
|
In connection with the Offer, the Placing Banks agree to comply with the selling restrictions set out in Schedule 8.
|
|
9.
|
COMMISSIONS, COSTS AND EXPENSES
|
|
|
9.1.1
|
Subject to the satisfaction (or waiver if capable of waiver) of the Conditions and to this Agreement not having been terminated under clause 13 prior to Admission on the Closing Date, the Company undertakes to pay to
the Placing Banks on the Closing Date a commission of:
|
|
|
(A)
|
2.25% of an amount equal to the aggregate of the Offer Price multiplied by the total number of New Ordinary Shares (with Matching Warrants) set out in Part B of Schedule 9 (the “
Placing Proceeds
”); and
|
|
|
(B)
|
if the Placing Proceeds are greater than $400 million, an additional 0.75% of the amount equal to the difference between the Placing Proceeds and $400 million,
|
(and for the avoidance of doubt, commissions shall not be payable on any New Ordinary Shares (with Matching Warrants) subscribed for by the
Founders) (together with any amounts in respect of VAT properly chargeable in respect of the relevant supply payable in accordance with clause 9.4).
|
|
9.1.2
|
The commission payable pursuant to clause 9.1.1 shall be allocated between the Placing Banks in equal proportions.
|
Payment of commission in accordance
with clause 9.1 (including any VAT chargeable thereon) shall be made in cleared funds on the Closing Date by deduction of the amount of such commission (including any VAT chargeable thereon) from the payment to be made by the Placing Banks pursuant
to clause 6.2.
|
9.3
|
Company costs and expenses
|
|
|
9.3.1
|
In addition to the commissions referred to in clause 9.1 the Company undertakes to pay or cause to be paid (subject to the satisfaction (or waiver if capable of waiver) of the Conditions and to this Agreement not having
been terminated under clause 13) all costs, charges, fees and expenses (including, without limitation, such part of any such costs, charges, fees and expenses as relates to VAT, as the case may be, chargeable on any supply or supplies for which such
costs, charges, fees and expenses are all or any part of the consideration, such VAT, as the case may be, to be payable in accordance with clause 9.4) in connection with or incidental to the Offer, Admission and the arrangements referred to or
described in the Transaction Agreements including, without limitation:
|
|
|
(A)
|
all fees and expenses payable to the UK Listing Authority (including fees payable pursuant to the Listing Rules), the London Stock Exchange or in respect of CREST;
|
PLATFORM: PLACING AGREEMENT
19
|
|
(B)
|
all costs and expenses payable in connection with the preparation, printing, distribution and filing of the Offer Documents;
|
|
|
(C)
|
all costs and expenses payable in connection with the Transaction Agreements, any closing documents and any other documents in connection with the Offer and the offering, allotment, subscription, issue, purchase, sale,
transfer and delivery of the Shares and Warrants in connection with the Offer and/or the arrangements contemplated by the Transaction Agreements;
|
|
|
(D)
|
the cost of preparing and despatching certificates to represent the Shares and Warrants;
|
|
|
(E)
|
the costs and expenses of the Registrars and the Depositary;
|
|
|
(F)
|
the fees, disbursements and expenses of the Company’s Counsel, the Reporting Accountants, counsel in any other jurisdiction and any other experts or advisers retained by the Company;
|
|
|
(G)
|
the fees, disbursements and expenses of the Placing Banks’ Counsel (including, without limitation, the fees, disbursements and expenses of any overseas legal counsel instructed by the Placing Banks’ Counsel)
such fees not to exceed the cap agreed between the Placing Banks and the Company (and for the avoidance of doubt such cap excludes any applicable VAT, disbursements or expenses of: (i) the Placing Banks’ Counsel; or
(ii) overseas/legal counsel instructed by the Placing Banks’ Counsel);
|
|
|
(H)
|
such Transfer Taxes paid or payable by the Company pursuant to clause 10.1;
|
|
|
(I)
|
printing, public relations, marketing, advertising, courier, postage and telecommunications expenses;
|
|
|
(J)
|
the costs and expenses relating to investor presentations or other meetings with prospective investors undertaken in connection with the marketing of the Offer (including, without limitation, the cost of hiring the
venues and travel and accommodation expenses);
|
|
|
(K)
|
all travel and out-of-pocket expenses properly incurred by each Placing Bank in connection with the Offer, Admission and the arrangements referred to in, or contemplated by, the Transaction Agreements;
|
|
|
(L)
|
all filing fees and similar expenses in connection with the qualification of the Shares and Warrants for offering and sale in any jurisdiction agreed between the Placing Banks and the Company or contemplated by the
Offer Documents; and
|
|
|
(M)
|
all other costs and expenses properly incurred by each of the Placing Banks in connection with the Offer or the performance of their obligations under this Agreement.
|
|
|
9.3.2
|
The Company undertakes upon request by either of the Placing Banks from time to time to promptly pay to or to reimburse to them the amount of any such costs, charges, fees and expenses referred to in this clause 9.3
which any of them may have properly paid or incurred.
|
|
|
9.3.3
|
Without prejudice to their right to receive payment directly from the Company pursuant to this clause 9.3, the Placing Banks shall be entitled and are
authorised
|
PLATFORM: PLACING AGREEMENT
20
|
|
to deduct some or all of such costs, charges, fees and expenses payable pursuant to this clause 9.3 from any payment to be made by the Placing Banks to the Company under this Agreement. Deduction
of these amounts under this clause 9.3 will discharge the Company’s obligations to pay those amounts, but only to the extent of the amounts deducted and no further. Any further amounts payable will be paid promptly on demand.
|
|
|
9.4.1
|
Amounts payable by the Company to either of the Placing Banks for any supply (for VAT purposes) made by the Placing Banks under or pursuant to this Agreement are expressed exclusive of amounts payable in respect of VAT.
|
|
|
9.4.2
|
If the performance by either of the Placing Banks (for the purposes of this clause 9.4 only, each a “
payee
”) of any of its obligations under this Agreement shall represent for VAT purposes the making by
a payee of any supply to the Company (for the purposes of this clause 9.4 only, the “
payer
”) that is subject to VAT at a positive rate, the payer shall pay in addition to such consideration (if any) payable for the supply an amount
equal to any VAT properly chargeable on such supply (if any) within 14 days of presentation of a valid VAT invoice in respect of such supply.
|
|
|
9.4.3
|
Subject to clause 9.4.4, where a sum (a “
Relevant Sum
”) is payable or is to be reimbursed by the payer to a payee in respect of any cost, charge, fee or expense, and such cost, charge, fee or expense
includes an amount in respect of VAT, which is borne by the relevant payee on the supply or supplies for which the cost, charge, fee or expense in question is all or any part of the consideration, the payer shall pay to the relevant payee in respect
of such VAT an amount equal to the amount of such VAT which the relevant payee certifies is not recoverable by it (or by the representative member of a VAT group of which it is a member) by repayment or credit (such certificate to be conclusive in
the absence of manifest error) such payment to be made within 14 days of the later of:
|
|
|
(A)
|
the date upon which payment of VAT in respect of the Relevant Sum has been made by the relevant payee; and
|
|
|
(B)
|
the date on which certification in accordance with this clause 9.4.3 is produced to the payer.
|
|
|
9.4.4
|
If the Relevant Sum constitutes for VAT purposes the reimbursement of costs, charges, fees or expenses incurred by a payee as agent of the payer excluding where the relevant payee acts as an agent for the payer within
the meaning of Sections 47(2A) or 47(3) of the Value Added Tax Act 1994 (or an equivalent provision in another relevant jurisdiction), the payer shall pay to the relevant payee an amount equal to the element included in the costs, charges, fees or
expenses in respect of VAT (that is to say the part of the costs, charges, fees or expenses which relates to the VAT chargeable on any supply or supplies for which such costs or expenses are all or any part of the consideration) provided that in
such case the relevant payee shall use its reasonable endeavours to procure that, as soon as reasonably practicable, the person making the supply or supplies in respect of which the costs, charges, fees or expenses are incurred issues, a valid VAT
invoice to the payer, that names the payer as the recipient of the relevant supply or supplies.
|
PLATFORM: PLACING AGREEMENT
21
|
10.1
|
Transfer Taxes to be paid by the Company
|
The Company shall be liable to pay and
reimburse the Placing Banks in respect of all Transfer Taxes which may arise in connection with the execution, delivery and performance of this Agreement and/or Admission and/or the issue, subscription or delivery of the New Ordinary Shares or
Warrants (or Depositary Interests in respect of the foregoing) to the initial subscribers thereof (including, if applicable, to the Placing Banks), including but not limited to any Transfer Taxes arising in respect of any issue, transfer or
agreement to transfer to or by the Depositary or its nominated custodian or the CREST Nominee or acquisition or agreement to acquire from or by the Depositary or its nominated custodian or the CREST Nominee, New Ordinary Shares or Warrants. For the
avoidance of doubt, the Company shall not be liable under this clause 10.1 to pay to and reimburse the Placing Banks in respect of any Transfer Taxes in respect of any subsequent sale of New Ordinary Shares or Warrants by subscribers procured by the
Placing Banks to any other person or, in circumstances where a Placing Bank has subscribed for New Ordinary Shares or Warrants as principal, in respect of any subsequent sale of such Shares or such Warrants by a Placing Bank to any other person.
Any amount payable by the Company pursuant to clause 10.1 shall be
paid as follows:
|
|
10.2.1
|
by a Placing Bank deducting from the amount payable to the Company pursuant to clause 6.2 any sum payable by the Company pursuant to clause 10.1. Such deduction may include the Placing Banks’ reasonable estimate of
the maximum amount of such Transfer Taxes (if any) payable by the Company pursuant to clause 10.1;
|
|
|
10.2.2
|
to the extent that the actual amount in respect of Transfer Taxes or any related costs, fines, penalties or interest actually payable by the Company pursuant to clause 10.1 exceeds the amount deducted by the Placing
Banks in respect thereof from the payment made by the Placing Banks to the Company pursuant to clause 10.2.1 above, the Company shall on demand pay to the Placing Banks, a sum equal to the excess and the Company will indemnify the Placing Banks
against all Claims and Losses suffered or incurred by any Placing Bank in connection with enforcing its rights against the Company under this clause 10.2.2;
|
|
|
10.2.3
|
to the extent that the actual amount in respect of Transfer Taxes or any related costs, fines, penalties or interest actually payable by the Company to the Placing Banks pursuant to clause 10.1 is less than the amount
deducted by the Placing Banks from the payment to the Company pursuant to clause 10.2.1 above, the excess or amount of recovery will be promptly repaid or paid to the Company on discovery of that fact (or, if such sum has been accounted for to the
relevant tax authority, the Placing Banks shall, subject to having such security in respect of costs and expenses as it may require, take all reasonable steps as may be required to obtain a refund of such sum (together, where relevant, with interest
at the appropriate rate from the relevant tax authority) and shall on receipt thereof pay any such amounts recovered to the Company after deduction of any costs and expenses properly incurred by the Placing Banks).
|
PLATFORM: PLACING AGREEMENT
22
|
11.1
|
Warranties by the Company and the Founders
|
Each of the Company and the Founders
severally represents and warrants to the Placing Banks in the terms of the Warranties set out in Schedule 3.
|
11.2
|
Repetition of Warranties
|
|
|
11.2.1
|
Each of the Warranties are given as at the date of this Agreement and shall be deemed to be repeated and given as of the date that any Supplementary Prospectus is published by the Company and on the Closing Date, in
each case, by reference to the facts and circumstances subsisting at such time.
|
|
|
11.2.2
|
Each of the certificates to be delivered pursuant to paragraphs 5, 6 and 7 of Part B of Schedule 5 and paragraphs 6, 7 and 8 of Part C of Schedule 5 will have effect as a representation and warranty, as of their date,
by the Company and the Founders as the case may be, to the Placing Banks as to the matters contained therein.
|
|
|
11.2.3
|
Each of the Company and the Founders acknowledges that each of the Placing Banks is entering into this Agreement in reliance on the Warranties and that each Warranty shall be separately construed and shall not be
limited by reference (express or implied) to the terms of any other Warranty or any other term of this Agreement.
|
|
|
11.2.4
|
Each party giving a Warranty under this Agreement severally undertakes to each Placing Bank:
|
|
|
(A)
|
not to do, or omit to do, anything which would or might cause any Warranty given by it to become untrue, inaccurate, misleading or breached at any time (by reference to the facts and circumstances existing at that time)
between the date of this Agreement and the Closing Date (
“Completion”
); and
|
|
|
(B)
|
promptly to give notice to each of the Placing Banks if it becomes aware of a fact or circumstance which constitutes a breach of any of the Warranties given by it or has caused or would or might cause any Warranty given
by it to become untrue, inaccurate or misleading at any time (by reference to the facts and circumstances existing at that time) before Completion or if it becomes aware, before Completion, of a fact or circumstance which would or might give rise to
a claim under any of the indemnities as contained in, or given pursuant to, clause 12 or any other provision of this Agreement.
|
|
|
11.3.1
|
If, at any time prior to Completion, either of the Placing Banks:
|
|
|
(A)
|
receives notice of the type referred to in clause 11.2.4(B); or
|
|
|
(B)
|
becomes aware that any of the Warranties was, is, has become or is reasonably likely to become untrue, inaccurate, misleading or breached in any respect,
|
the Placing Banks may (without prejudice to its right to terminate this Agreement pursuant to clause 13 and without prejudice to the
Conditions and the determination of the Placing Banks whether or not to waive such Conditions) require the Company, at its own expense, to amend, update or supplement the Final Prospectus (such amendment or supplement to be in a form approved by the
PLATFORM: PLACING AGREEMENT
23
Placing Banks) and/or require the Company, at its own expense, to make such announcements and/or despatch such communications and/or take such other steps as the Placing Banks, consider necessary
or desirable in connection with the untruth, inaccuracy or misleading nature of the representation, warranty or undertaking concerned.
|
|
11.3.2
|
If the Company fails to comply with any such requirement, the Placing Banks may require that the Company shall:
|
|
|
(A)
|
cease to communicate any Offer Document which contains any reference to the Placing Banks; and/or
|
|
|
(B)
|
notify any person to whom any Offer Document has been despatched and any other person known to be relying on any Offer Document, of the relevant circumstances which render such Offer Document untrue, inaccurate or
misleading or not in compliance with applicable legal or regulatory requirements.
|
|
11.4
|
Maximum liability of the Founders
|
|
|
11.4.1
|
The aggregate liability of Nicolas Berggruen and Berggruen Acquisition Holdings IV Ltd. pursuant to this Agreement shall not exceed US$25 million, save to the extent that any such liability arises as a result of the
fraud or wilful default of either of Nicolas Berggruen or Berggruen Acquisition Holdings IV Ltd.
|
|
|
11.4.2
|
The aggregate liability of Martin Franklin and Mariposa Acquisition, LLC pursuant to this Agreement shall not exceed US$25 million, save to the extent that any such liability arises as a result of the fraud or wilful
default of either of Martin Franklin or Mariposa Acquisition, LLC.
|
|
|
11.4.3
|
For the avoidance of doubt, the limitations in clause 11.4 shall not apply in relation to clause 3.3 and paragraph 24 of Schedule 6.
|
|
11.5
|
Maximum Liability of the Non-Founder Directors
|
The aggregate liability of each
Non-Founder Director pursuant to this Agreement shall not exceed the amount set out opposite his name in Part B of Schedule 1, save to the extent that any such liability arises as a result of the fraud or wilful default of such Non-Founder Director.
|
11.6
|
Time limit on claims
|
|
|
11.6.1
|
Subject to clause 11.6.2, no claim shall be brought against any Founder Entity or Director in respect of any breach of this Agreement (other than in relation to paragraphs 4.1, 7.4, 19, 21 and 23 of Schedule 6) unless
notice in writing of the claim (giving reasonable details of the claim) has been given to the relevant Founder Entity or Director by no later than the Accounts Publication Date and, in relation to any claim which may be outstanding on the Accounts
Publication Date, unless court proceedings have been instituted or commenced against the relevant Director in a court of competent jurisdiction prior to the date falling 12 months after the Accounts Publication Date.
|
|
|
11.6.2
|
The limitation in clause 11.6.1 shall not apply in relation to any claim:
|
|
|
(A)
|
arising as a result of the Warranties set out in paragraphs 1, 2, 3 and 4 of Schedule 3 being untrue, inaccurate, misleading or breached in any respect; or
|
PLATFORM: PLACING AGREEMENT
24
|
|
(B)
|
resulting from fraud or wilful default, in each case in respect of or on the part of the person for whose benefit the limitation would have otherwise applied.
|
|
11.7
|
All representations, warranties and undertakings given or deemed to be given under this Agreement or any document delivered under it shall remain in full force and effect notwithstanding the completion of the
subscription and purchase of the New Ordinary Shares and Matching Warrants, the completion of the Offer and all other matters and arrangements referred to or contemplated by this Agreement.
|
|
11.8
|
Where any of the Warranties are qualified by reference to awareness and/or knowledge and/or information and/or belief, that reference shall be deemed to include a statement to the effect that the relevant Warranty has
been given after making all reasonable enquiries (unless expressly stated to the contrary, as when the word “actual” is used).
|
|
12.
|
INDEMNITIES AND WAIVER OF CLAIMS
|
|
12.1
|
Indemnity by the Company
|
The Company (an
“Indemnifying Person”
)
undertakes to indemnify and hold harmless each of the Indemnified Persons against all claims, actions, proceedings, investigations, demands, judgments and awards (together
“Claims”
) which may be brought, made, threatened or alleged
against or otherwise involve all or any of the Indemnified Persons and against all losses, liabilities, damages, costs, charges, duties, expenses (including legal expenses) and Taxation (other than any Taxation incurred by an Indemnified Person on
its net income, profits or gains) (together
“Losses”
), on demand, whether joint or several, which may be suffered or incurred by any of the Indemnified Persons (including, without limitation, all Losses which all or any of the
Indemnified Persons may incur in investigating, preparing for, disputing or defending, or providing evidence in connection with, any such Claims (whether or not the Indemnified Person is an actual or potential party to such Claims) or Losses or in
establishing any Claim or mitigating any Loss on its part or otherwise enforcing its rights under this clause 12.1) which arise, directly or indirectly, out of, or are attributable to, or connected with anything done or omitted to be done by
any person (including the relevant Indemnified Person) in connection with the Offer, Admission or the arrangements contemplated by the Offer Documents (or any of them) or the Transaction Agreements (or any of them) or any other agreement relating to
the Offer (or any amendment or supplement to any of them), including but not limited to:
|
|
12.1.1
|
any and all Losses or Claims in connection with or arising out of the Offer Documents (or any of them) not containing or fairly presenting, or being alleged not to contain or fairly present, all information required to
be contained therein or any statement therein being or being alleged to be in any respect untrue, inaccurate or misleading or not based on reasonable grounds or an untrue or alleged untrue statement of a material fact contained in any Offer Document
or any omission or alleged omission in any Offer Document to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
|
|
|
12.1.2
|
any and all Losses or Claims in connection with or arising out of any breach or alleged breach by the Company, any of the Founder Entities or any Director of any of their respective obligations (including, without
limitation, the Warranties given by them pursuant to clause 11 and the undertakings given by them pursuant to clause 8) in this Agreement or in connection with the Offer, Admission or the arrangements contemplated by the Offer Documents (or any of
them) or the Transaction Agreements (or any of them) or any other agreement relating to the Offer (or any amendment or supplement to any of them);
|
PLATFORM: PLACING AGREEMENT
25
|
|
12.1.3
|
any and all Losses or Claims in connection with or arising out of the publication, distribution or issue of the Offer Documents (or any of them) or any other documents or materials relating to the Offer or Admission;
|
|
|
12.1.4
|
any and all Losses or Claims in connection with or arising out of any failure or alleged failure by the Company or any of the Directors or any of the Company’s Affiliates, agents, employees or advisers (in each
case other than the relevant Indemnified Person) to comply with FSMA, the LPDT Rules, the Admission and Disclosure Standards or any other applicable legal or regulatory requirements in any jurisdiction in relation to the Offer, Admission or to the
arrangements contemplated by the Offer Documents (or any of them) or the Transaction Agreements (or any of them) or any other agreement relating to the Offer (or any amendment or supplement to any of them);
|
|
|
12.1.5
|
any and all Losses or Claims whatsoever suffered or incurred by such Indemnified Person as a person who has communicated or approved the contents of any financial promotion made in connection with the Offer or the
application for Admission for the purpose of section 21 of FSMA;
|
|
|
12.1.6
|
any and all Losses or Claims in connection with or arising out of the carrying out (whether as an agent to the Company or otherwise) by an Indemnified Person of any of its obligations or services under or in connection
with the Offer, Admission or the arrangements contemplated by the Offer Documents (or any of them) or the Transaction Agreements (or any of them) or any other agreement relating to the Offer (or any amendment or supplement to any of them) either
before, on or after the date of this Agreement.
|
The indemnity contained in clause 12.1 shall not apply to any Claims
or Losses:
|
|
12.2.1
|
(otherwise than in connection with the matters referred to in clauses 12.1.1 to 12.1.4) to the extent finally judicially determined by a court of competent jurisdiction to have arisen primarily out of the gross
negligence, fraud or wilful default on the part of such Indemnified Person; or
|
|
|
12.2.2
|
comprising a decline in the market value of the New Ordinary Shares which is suffered or incurred by an Indemnified Person as a result of it having been required to subscribe for New Ordinary Shares pursuant to clause
3.2 unless such decline is caused by or results from or is attributable to or would not have arisen but for (in each case directly or indirectly) the negligence or default of the Company or any breach by the Company of its obligations under the
Transaction Agreements (or any of them) or any other agreement relating to the Offer (or any amendment or supplement to any of them), including without limitation a breach of the Warranties or any circumstance which constitutes such a breach.
|
|
12.3
|
Notification and conduct of claims
|
|
|
12.3.1
|
If any Indemnified Person becomes aware of any Claim against it in respect of which indemnification under this clause 12 may be sought, that
Indemnified Person (or, if the Indemnified Person is not a party to this Agreement and an associated Indemnified Person who is a party to this Agreement so elects, that Indemnified Person who is a party to this Agreement) shall as soon as reasonably
practicable notify the Indemnifying Person from whom indemnification under
|
PLATFORM: PLACING AGREEMENT
26
|
|
this clause 12 will be sought of such Claim. It is agreed that failure by the Indemnified Person to so notify the Indemnifying Person informed shall not relieve the Indemnifying Person from
any liability set out in this clause 12 or otherwise.
|
|
|
12.3.2
|
In case any such Claim is brought against any Indemnified Person, the Indemnifying Person shall, unless the Indemnified Person elects to assume the defence themselves, assume the defence thereof and appoint counsel
satisfactory to the Indemnified Person and shall be liable to pay the fees and expenses of such counsel related to such Claim. In any Claim, any Indemnified Person shall have the right to retain its own counsel and assume the defence themselves, but
the fees and expenses of such counsel shall be at the expense of the Indemnified Person unless:
|
|
|
(A)
|
the Indemnifying Person and the Indemnified Person shall have mutually agreed to the retention of such counsel;
|
|
|
(B)
|
representation of both the Indemnifying Person and the Indemnified Persons by the same counsel (in the absolute discretion of the Indemnified Person) would be or becomes inappropriate due to actual or potential
differing interests between them;
|
|
|
(C)
|
pursuant to this clause 12.3.2, the Indemnified Person has elected to assume the defence itself or the Indemnifying Person has failed to appoint counsel satisfactory to the Indemnified Person; or
|
|
|
(D)
|
the relevant Indemnified Person’s insurers confirm that rights under its policies of insurance may be prejudiced.
|
It is understood that the Indemnifying Person shall reimburse such fees and expenses as they are incurred in respect of clauses 12.3.2(A) to
12.3.2(D).
|
|
12.3.3
|
Each Indemnifying Person agrees that if it becomes aware of any Claim relevant for the purpose of this clause 12 or any matter which may give rise to any such Claim, it shall promptly notify the Placing Banks thereof
and shall promptly provide the Placing Banks with such information and copies of such documents relating to such Claim as they may reasonably request.
|
|
12.4
|
Claims by the Company, the Founder Entities or the Directors
|
|
|
12.4.1
|
Each of the Company, the Founder Entities and the Directors agrees not to (and shall procure that none of its Affiliates nor any persons asserting
claims on behalf of or in right of such person shall bring, make, threaten or allege any Claims against or otherwise involve any Indemnified Person to recover any Losses which the Company, the Founder Entities, or the Directors may suffer or incur
(including, without limitation, all Losses which such person may incur in investigating, preparing for, disputing or defending, or providing evidence in connection with, any such Claims or Losses or in establishing any Claims or mitigating any Loss
on its part) by reason of, or arising out of, directly or indirectly, attributable to, or in connection with, the carrying out or the performance by any Indemnified Persons, or on their behalf, of their obligations or services under or in connection
with the Offer, Admission or the arrangements contemplated by the Offer Documents (or any of them) or the Transaction Agreements (or any of them) or any other agreement relating to the Offer (or any amendment or supplement to any of them) on, before
or after the date of this Agreement unless and to the extent that such Claims or Losses (otherwise than in
|
PLATFORM: PLACING AGREEMENT
27
|
|
connection with the matters referred to in clauses 12.1.1 to 12.1.4 inclusive) are finally judicially determined by a court of competent jurisdiction to have arisen primarily out of the gross
negligence, fraud or wilful default on the part of such Indemnified Person.
|
|
|
12.4.2
|
Notwithstanding any rights or claims which the Company, the Founders or any of their respective subsidiaries, Affiliates or any of the directors, officers or employees of any of them may have or assert against a Placing
Bank in connection with the Offer, Admission or the arrangements contemplated by the Offer Documents (or any of them) or the Transaction Agreements (or any of them) or any other agreement relating to the Offer (or any amendment or supplement to any
of them), no claim will be brought by any such person against any director or any other officer or employee of any Indemnified Person in respect of any conduct, action or omission by the individual concerned in connection with the Offer, Admission
or the arrangements contemplated by the Offer Documents (or any of them) or the Transaction Agreements (or any of them) or any other agreement relating to the Offer (or any amendment or supplement to any of them).
|
|
12.5
|
Settlement of claims
|
The Indemnifying Person agrees that it will not, without the prior
written consent of the relevant Indemnified Person(s), settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any Governmental Agency, commenced, pending or threatened, or
any claim whatsoever in respect of which indemnification or contribution could be sought under this clause 12 (whether or not the Indemnified Persons are actual or potential parties thereto) unless such settlement, compromise or consent:
|
|
12.5.1
|
includes an unconditional release of each Indemnified Person from all liability arising out of such litigation, investigation, proceeding or claim; and
|
|
|
12.5.2
|
does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
|
|
12.6
|
Proportionate liability
|
If an Indemnifying Person enters into any agreement or
arrangement with any adviser or any other person for the purpose of or in connection with the Offer, the terms of which provide that the liability of the adviser or such other person to the Indemnifying Person or any other person, or the liability
of any Indemnifying Person to any other person, is excluded or limited in any manner, and any Indemnified Person may have joint or joint and several liability with such adviser or such other person to the Indemnifying Person or to any other person
arising out of the performance of its duties under this Agreement, the Indemnifying Person shall:
|
|
12.6.1
|
not be entitled to recover any amount from an Indemnified Person in respect of any Loss suffered by an Indemnifying Person, in excess of the proportion of such Loss equal to the proportion of that Indemnified
Person’s contribution to the overall fault for such Loss, as agreed between the relevant parties or, in the absence of agreement, as determined by a court of competent jurisdiction and in any such event (but without prejudice to the foregoing)
the Indemnifying Person shall not be entitled to recover more from an Indemnified Person than would have been recoverable had such agreement or arrangement not been entered into;
|
PLATFORM: PLACING AGREEMENT
28
|
|
12.6.2
|
indemnify the Indemnified Person in respect of any increased liability to any third party which would not have arisen in the absence of such exclusion or limitation; and
|
|
|
12.6.3
|
take such other action as the Indemnified Person may require to ensure that the Indemnified Person is not prejudiced as a consequence of such agreement or arrangement.
|
|
12.7
|
Regulatory obligations
|
Nothing in this Agreement shall exclude or restrict any duty or
liability of any Indemnified Person which it has under FSMA or under the regulatory system (as defined in the FCA Handbook) to the extent such exclusion or restriction is prohibited by the FCA Handbook. The parties agree that the terms of this
Agreement, including this clause 12, are reasonable, honest, fair and professional.
Without prejudice to the generality of clause 16.9, each of the
sub-clauses
in this clause 12 and each of the exclusions of liability and indemnities within those
sub-clauses
is and shall be construed as separate and severable and in
the event that any such
sub-clause,
exclusion of liability or indemnity is determined by any court to be unenforceable in whole or in part for any reason, such unenforceability shall not affect or impair the
enforceability of the other
sub-clauses
or the remainder of any
sub-clause
as appropriate and any such other
sub-clauses
or parts
thereof, as appropriate, shall continue to bind the parties.
|
12.9
|
Rights in addition to others
|
The indemnities contained in this clause 12 are in
addition to any rights which any Indemnified Person may have at common law or otherwise, including but not limited to any right of contribution and the provisions of this clause 12 shall remain in full force and effect notwithstanding the
completion of all matters and arrangements referred to in or contemplated by this Agreement or any termination of this Agreement.
|
12.10
|
Discretion of Indemnified Persons
|
Each of the Placing Banks shall have an absolute
discretion whether or not to exercise or enforce any right under this Agreement, shall be free to deal with its rights under this Agreement without regard to the interests of any Indemnified Person and shall not be required to account to any
Indemnified Person in respect of any amount which it receives under this Agreement and shall not be liable to any Indemnified Person for any loss arising from any act or omission with respect to this Agreement.
|
12.11
|
Discretion of Indemnifying Persons
|
Each of the Placing Banks shall be entitled to take,
in their absolute discretion, any and all steps (including, without limitation, instituting proceedings) against each of the Indemnifying Persons in relation to any Claims and Losses which may arise under this Agreement.
PLATFORM: PLACING AGREEMENT
29
|
12.12
|
Unavailability or inadequacy of indemnities
|
In the event that the indemnity provided in
clause 12.1 is unavailable, or insufficient, to hold harmless an Indemnified Person in respect of any Claims or Losses (save where no amounts would have been payable in any case in respect of such Claims or Losses by virtue of clause 12.2), in
either such case as a result of any rule of law or other limit on their validity or effectiveness (other than a limit provided in this Agreement) then in lieu of indemnifying such Indemnified Person thereunder, each Indemnifying Person shall
contribute to the aggregate amount of such Claims or Losses incurred or suffered by any such Indemnified Person, as incurred:
|
|
12.12.1
|
in such proportion as is appropriate to reflect the relative benefits (as described in clause 12.13) received from the Offer by the Company on the one hand, and each of the Placing Banks on the other hand; or
|
|
|
12.12.2
|
if the allocation provided by clause 12.12.1 is not permitted by any applicable law or regulation, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 12.12.1 but also
the relative fault (as described in clause 12.14) of the Company on the one hand, and each of the Placing Banks on the other hand, in connection with any of the acts or statements or omissions which resulted in such Claims or Losses, as well as any
other relevant equitable considerations.
|
The relative benefits received by the Company on the one hand, and
each of the Placing Banks on the other hand, from the Offer, shall be deemed to be in the same respective proportions as the total gross proceeds from the Offer (before deducting expenses) received by the Company and the total commissions received
by the Placing Banks bear to the total gross proceeds from the Offer.
|
12.14
|
Determination of fault
|
The relative fault of the Company on the one hand, and each of
the Placing Banks on the other hand, shall be determined by reference to, among other things, whether any untrue statement or alleged untrue statement in the Offer Documents or any omission or alleged omission from the Offer Documents relates to
information supplied by the Company on the one hand, or any of the Placing Banks on the other hand, and by the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the publication of such untrue
statement or alleged untrue statement or such omission or alleged omission.
|
12.15
|
Obligation to contribute
|
The Company agrees that it would not be just and equitable if
contributions pursuant to clause 12.12 to clause 12.18 were determined by pro rata allocation (even if the Placing Banks were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable
considerations referred to above in clauses 12.12 to clause 12.18. The aggregate amount of any Claims or Losses incurred by an Indemnified Person shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Person
in investigating, preparing for, defending, or providing evidence in connection with any litigation, or any investigation or proceeding by any Governmental Agency, commenced or threatened, or any Claim or Loss which arise, directly or indirectly,
out of or are attributable to or connected with anything done or omitted to be done by any person (including by the relevant Indemnified Person) in connection with the Offer, Admission or the arrangements contemplated by the Offer Documents, or any
of them (or any amendment or supplement to any of them), or this Agreement or any other agreement relating to the Offer (or any amendment or supplement to any of them), including but not limited to those based on any untrue statement or alleged
untrue statement or omission or alleged omission.
|
12.16
|
Limit on contribution
|
Notwithstanding any other provision of clause 12.12 to clause
12.18, none of the Placing Banks shall be required to contribute any amount in excess of the placing commissions received by it pursuant to this Agreement and any obligation to contribute under clause 12.12 are several in proportion to their
respective placing obligations and not joint nor joint and several.
PLATFORM: PLACING AGREEMENT
30
|
12.17
|
Effect of fraud – obligation to contribute
|
Notwithstanding clause 12.12, no person
guilty of fraud or fraudulent misrepresentation (within the meaning of section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraud or fraudulent misrepresentation.
|
12.18
|
Right of Indemnified Persons to contribution
|
For the purposes of clauses 12.12 to
clause 12.18, each Indemnified Person shall have the same rights to contribution as each of the Placing Banks.
|
12.19
|
Contracts (Rights of Third Parties) Act 1999
|
|
|
12.19.1
|
Each Indemnified Person shall have the right under the Contracts (Rights of Third Parties) Act 1999 (which shall apply to this Agreement only to the extent provided in this clause 12.19) to enforce its rights against
the Company under this clause 12 provided that, save to the extent notified in writing to the relevant Indemnified Person, Barclays (without obligation) will have the sole conduct of any action to enforce such rights on behalf of an Indemnified
Person connected with it.
|
|
|
12.19.2
|
Save as provided in this clause 12.19, Indemnified Persons other than the relevant Placing Bank will not be entitled directly to enforce their rights against the Company under this Agreement under the Contracts (Rights
of Third Parties) Act 1999 or otherwise. The parties to this Agreement may agree to terminate this Agreement or vary any of its terms without the consent of any Indemnified Person and the Placing Banks will have no responsibility to any Indemnified
Person under or as a result of this Agreement.
|
No claim under this clause 12 shall be made in respect of:
|
|
12.20.1
|
Taxation (which includes, for the avoidance of doubt, Transfer Taxes) which an Indemnified Person is compensated for under clause 9.4 or clause 10 of this Agreement, or would have been compensated for under clause 9.4
or clause 10 of this Agreement but was not so compensated solely because one of the exclusions in clause 9.4 or clause 10 of this Agreement applied;
|
|
|
12.20.2
|
Taxation incurred by an Indemnified Person on its net income, profit or gain; and/or
|
For the purposes of this clause 12, the expression
“Indemnified Person”
shall include in the case of each Placing Bank:
|
|
12.21.1
|
that Placing Bank and each of its subsidiaries, branches and Affiliates;
|
|
|
12.21.2
|
a person who is, on or at any time after the date of this Agreement a director, officer, partner, employee or agent of an undertaking specified in clause 12.21.1 above; and
|
|
|
12.21.3
|
its selling agents and each person, if any, who controls such Placing Bank within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and such Placing Bank’s Affiliates, subsidiaries, associates and branches and
|
PLATFORM: PLACING AGREEMENT
31
|
|
agents of the foregoing persons and holding companies and the subsidiaries of such subsidiaries, branches, Affiliates, associates and holding companies and each of such person’s respective
directors, officers, employees and agents,
|
(each an “
Indemnified Person
”).
If at any time before Admission:
|
|
13.1.1
|
there shall have been a breach by any of the Company, the Founder Entities or the Directors of any of the Warranties contained in this Agreement or any other provision of this Agreement or any of the Warranties is not
or has ceased to be, true, accurate and not misleading;
|
|
|
13.1.2
|
any Condition has not been satisfied by the time and date it is required to have been satisfied or waived (if capable of waiver) by the Placing Banks or if any matter or circumstance arises as a result of which it is
reasonable to expect that any of the Conditions will not be satisfied at the required time(s) (if any) and continue to be satisfied at Admission;
|
|
|
13.1.3
|
any statement contained in any Offer Document is or has become or has been discovered to be untrue, inaccurate or misleading in any material respect, or any matter has arisen which would, if any of the Offer Documents
were to be issued at that time, constitute a material omission from the Offer Document;
|
|
|
13.1.4
|
a matter has arisen which in the opinion of the Placing Banks acting in good faith might reasonably be expected to give rise to a claim under clause 12;
|
|
|
13.1.5
|
in the opinion of the Placing Banks acting in good faith, a Material Adverse Change has occurred or is likely to occur (whether or not foreseeable at the date of this Agreement);
|
|
|
13.1.6
|
a Supplementary Prospectus has been published or, in the opinion of the Placing Banks acting in good faith, a Supplementary Prospectus is required to be published and made available pursuant to section 87G of FSMA;
|
|
|
13.1.7
|
an application of the Company for Admission is withdrawn or refused by the UK Listing Authority or the London Stock Exchange;
|
|
|
13.1.8
|
there having occurred or it being likely that there will occur, in each case, in the opinion of the Placing Banks:
|
|
|
(A)
|
any material adverse change in the financial markets in the United States, the United Kingdom, the British Virgin Islands or in any member or associate member of the European Union or the international financial
markets, any outbreak or escalation of hostilities, war, act of terrorism, declaration of emergency or martial law or other calamity or crisis or event or any change or development involving a prospective change in national or international
political, financial, economic, monetary or market conditions (primary or secondary) or currency exchange rates or controls;
|
|
|
(B)
|
(a) a suspension or material limitation of (i) trading of any securities of the Company on the London Stock Exchange or on any exchange or
over-the-counter market, or (ii) trading generally on the London Stock Exchange, the New York Stock Exchange, the NASDAQ Stock Market
|
PLATFORM: PLACING AGREEMENT
32
|
|
or any over-the-counter market; (b) a fixing of or minimum or maximum prices for trading, or the imposition of a requirement for maximum ranges for prices, by any of said exchanges or by
such system or by order of any governmental authority; or (c) a material disruption in commercial banking or securities settlement or clearance services in the United States or in the United Kingdom or in the British Virgin Islands or in a
member or associated member of the European Union;
|
|
|
(C)
|
any actual adverse or prospective adverse change or development in United States or United Kingdom or the British Virgin Islands taxation or taxation in a member or associate member of the European Union, materially and
adversely, affecting the Company, the New Ordinary Shares or Warrants or the transfer thereof or exchange controls have been imposed by the United States or the British Virgin Islands or the United Kingdom; or
|
|
|
(D)
|
a banking moratorium has been declared by the United States or the United Kingdom or the British Virgin Islands or a member or associate member of the European Union,
|
then each of the Company, the Founder Entities and the Directors will inform each of the Placing Banks forthwith of any such event (to the
extent that they are aware of such event) and (whether or not the Placing Banks are so informed) the Placing Banks may in their absolute discretion give notice to the Company (copied to each other party to this Agreement) to terminate this Agreement
on behalf of all parties, in each case except to the extent specified in clause 13.3.
|
13.2
|
Withdrawal of applications for Admission
|
If any notice is given by the Placing Banks to
the Company pursuant to this clause 13 or the Agreement terminates pursuant to clause 7 before Admission, the Placing Banks shall, on behalf of the Company, withdraw the applications for Admission.
|
13.3
|
Effect of termination
|
If this Agreement is terminated either in full or in part,
pursuant to the provisions of this clause 13, clause 7 or otherwise:
|
|
13.3.1
|
such termination shall be without prejudice to any accrued rights or obligations of any party under this Agreement; and
|
|
|
13.3.2
|
the provisions of clauses 1, 9, 10, 11, 12, 13, 14, 15, 16, 17 and 18 shall remain in full force and effect.
|
|
14.
|
WITHHOLDING AND
GROSS-UP
|
All sums payable to the Placing Banks or to any other Indemnified Person
under this Agreement shall be paid free and clear of all deductions or withholdings unless the deduction or withholding is required by law, in which event the relevant person making the payment shall pay such additional amount as shall be required
to ensure that the net amount received by the Placing Banks or any other Indemnified Person will equal the full amount which would have been received by it had no such deduction or withholding been made.
If HM Revenue & Customs or
any other tax authority brings into charge to tax (or into any computation of income, profit or gains for the purposes of any charge to tax or would do so
PLATFORM: PLACING AGREEMENT
33
|
|
but for the utilisation of any tax relief) any sum payable to the Placing Banks or any other Indemnified Person under this Agreement (other than any remuneration paid pursuant to this Agreement
including the commissions due under clause 9.1) then the person liable to make such payment shall pay such additional amount as shall be required to ensure that the total amount paid, less the tax chargeable thereon or that which would be so
chargeable but for the availability of relief in respect of that charge to tax is equal to the amount that would otherwise be so received under this Agreement (any such additional payments being made on demand of the Placing Banks or the Indemnified
Person concerned).
|
|
14.3
|
Effect of certification
|
The recipient Placing Bank or other Indemnified Person shall
certify to the Company that the original payment received by the relevant recipient is subject to tax, that certificate to be conclusive save in the case of manifest error.
|
15.1
|
Written communications
|
Save as otherwise provided in this Agreement, a notice
(including any approval, consent or other communication) in connection with this Agreement:
|
|
15.1.1
|
must be in writing in the English language;
|
|
|
15.1.2
|
must be left at the address of the addressee or sent by
pre-paid
first class post to the address of the addressee or sent by facsimile to the facsimile number of the addressee, in
each case which is specified in this clause 15 in relation to the party to whom the notice is addressed, and marked for the attention of the person so specified, or to such other address or facsimile number in England or Wales, and/or marked for the
attention of such other person as the relevant party may from time to time specify by notice given in accordance with this clause 15;
|
For the avoidance of doubt, no notice, demand or other communication given under this Agreement may be given by e-mail.
The relevant details of each party at the date of this Agreement are:
|
|
|
|
|
If to the Company or any Director to:
|
|
Address:
|
|
|
|
|
|
|
International Administration Group
(Guernsey)
Limited
Regency Court
Glategny Esplanade
St. Peter Port
Guernsey
|
|
|
|
|
|
|
Fax Number: +44 (0)1481 716868
|
|
|
|
|
|
|
For the attention of: Mark Woodall
|
|
|
|
|
If to Berggruen Acquisition Holdings IV Ltd. to:
|
|
Address:
|
|
|
|
|
|
|
c/o Berggruen Holdings Inc.
1114 Avenue of the
Americas, 41
st
Floor
New York, NY 10036
|
|
|
|
|
|
|
Fax Number: (212) 382-0121
|
|
|
|
|
|
|
For the attention of: Jared Bluestein
|
PLATFORM: PLACING AGREEMENT
34
|
|
|
|
|
|
|
|
If to Mariposa Acquisition, LLC to:
|
|
Address:
|
|
|
|
|
|
|
Mariposa Acquisition, LLC
5200 Blue Lagoon
Drive
Suite 800
Miami, Florida, 33126
|
|
|
|
|
|
|
Fax Number: 305-675-0653
|
|
|
|
|
|
|
For the attention of: Desiree DeStefano
|
|
|
|
|
If to any of the Placing Banks, to:
|
|
The contact details set out against that person’s name in Schedule 2
|
In the absence of evidence of earlier receipt, any notice shall take
effect from the time that it is deemed to be received in accordance with clause 15.3 below.
|
|
15.3.1
|
Subject to clause 15.4 below, a notice is deemed to be received:
|
|
|
(A)
|
in the case of a notice left at the address of the addressee, upon delivery at that address;
|
|
|
(B)
|
in the case of a posted letter, on the third day after posting or, if posted to or from a place outside the United Kingdom, the seventh day after posting; and
|
|
|
(C)
|
in the case of a facsimile, on production of a transmission report from the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the recipient.
|
A notice received or deemed to be received in accordance with clause 15.3
on a day which is not a Business Day or after 5.00 p.m. on any Business Day according to local time in the place of receipt, shall be deemed to be received on the next following Business Day.
Each Party undertakes to notify all of the other Parties by notice
served in accordance with this clause if the address specified herein is no longer an appropriate address for the service of notices.
|
16.1
|
Acknowledgement of no duty
|
|
|
16.1.1
|
Each of the Company, the Founder Entities and the Directors agrees and acknowledges that each Indemnified Person is acting solely pursuant to a
|
PLATFORM: PLACING AGREEMENT
35
|
|
contractual relationship with the Company on an arm’s length basis with respect to the Offer (including in connection with determining the terms of the Offer), and on the terms, and with the
obligations and duties expressly stated in this Agreement and that such person is not acting as a financial adviser or fiduciary to the Company, the Founder Entities, the Directors or any other person in respect of the Offer. It is acknowledged by
all parties that:
|
|
|
(A)
|
the Indemnified Persons may be engaged in a broad range of transactions that involve interests that differ from those of the Company, the Founder Entities, the Directors or any other person and the Indemnified Persons
may take into account any factors (including those solely in its interest) they consider appropriate in performing duties or exercising rights under this Agreement; and
|
|
|
(B)
|
no Indemnified Person has advised as to, or is required to give, the Company, the Founder Entities, the Directors, or any other person, any general financial or strategic advice or any legal, tax, investment,
accounting, regulatory or other specialist or technical advice in connection with the Offer in any jurisdiction, and the Company, the Founder Entities, the Directors, and any such other person have consulted their own, and will rely on their own
expertise and that of, specialist legal, tax, investment, accounting or regulatory advisers to the extent they deem appropriate, and in respect of the due diligence investigations in connection with the Offer and no Indemnified Person shall have any
responsibility to the Company, the Founder Entities, the Directors or any other person with respect thereto.
|
|
|
16.1.2
|
No Placing Bank shall have any liability for any claims brought against any person (and the Company, the Founder Entities, and the Directors confirm they will not make any claim against any of the Placing Banks) in
respect of the timing, terms and structure of the Offer, or that the Offer Price was set at a level that is too high or too low, or with respect to any sales of any New Ordinary Shares or Warrants by investors following allocation to them of such
New Ordinary Shares or Warrants.
|
|
|
16.1.3
|
The parties further agree that it is not their intention to create a fiduciary relationship between the Company, the Founder Entities and the Directors on the one hand and either of the Placing Banks on the other.
|
|
|
16.1.4
|
The Company, the Founder Entities and the Directors acknowledge and agree:
|
|
|
(A)
|
each of the Placing Banks is and has been acting for the Company and no one else in connection with the Offer and the Admission and will not regard, and have not regarded, any other person as their client and have not
been and will not be responsible to anyone other than the Company for providing the protections afforded to clients of each of the Placing Banks nor for providing advice in relation to the Offer, the Admission or any of the transactions contemplated
by this Agreement;
|
|
|
(B)
|
any advice, whether written or oral, given by a Placing Bank to the Company, or any communications between a Placing Bank and the Company, may not be used or relied upon by any third party and may not be disclosed to
any third party without the prior written approval of the relevant Placing Bank (other than the Company’s professional advisers who may place no reliance on such advice);
|
PLATFORM: PLACING AGREEMENT
36
|
|
(C)
|
each of the Placing Banks is a full service securities firm and they, along with their respective Affiliates, are engaged in various activities, including securities trading, investment management, financing and
brokerage activities and financial planning and benefits counselling for both companies and individuals;
|
|
|
(D)
|
in the ordinary course of the activities referred to in this clause 16.1.4(D), each of the Placing Banks and their respective Affiliates may actively trade the debt and equity securities (or related derivative
securities) of the Company and its related bodies corporate for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities;
|
|
|
(E)
|
no Placing Bank is obliged to disclose to the Company, the Founder Entities, the Directors or utilise for the benefit of the Company, the Founder Entities, or the Directors any non-public information which a Placing
Bank obtains in the course of its business; and
|
|
|
(F)
|
each of the Placing Banks will use and rely on information provided by or on behalf of the Company in performing their obligations under this Agreement, without having independently verified the information, and the
Placing Banks do not assume responsibility for the accuracy and completeness of the information or any other information on which it may rely in connection with this Agreement.
|
The obligations of each of the Placing Banks under this Agreement
are several and not joint or joint and several. Other than as expressly set out in this Agreement, nothing contained or implied in this Agreement constitutes a Placing Bank the partner, agent or representative of any other Placing Bank for any
purpose or creates any partnership, agency or trust between them and none of them has the authority to bind the others in any way. No Placing Bank is liable to any other person for the acts or omissions of, advice given by or failure or default of
another Placing Bank.
Any agreement, covenant, representation, warranty or undertaking
pursuant to this Agreement on the part of two or more parties shall, save where the contrary is expressly provided, be deemed to be made on a several basis. Other than where joint action is expressly provided for, each of the Placing Banks and the
Indemnified Persons shall (except as otherwise agreed among them) have the right to protect and enforce each of its rights without joining any of the others in any proceedings.
This Agreement will operate for the benefit of and be binding upon (as
appropriate) the parties hereto and the Indemnified Persons under clause 12 and their respective successors or legal personal representatives. No subscriber or purchaser of any of the New Ordinary Shares or Warrants from the Placing Banks shall be
deemed as successor or assignor by reason merely of such subscription or purchase.
|
16.5
|
Release, compromise, etc.
|
Any liability to a Placing Bank, Director, Founder Entity or
the Company under this Agreement may in whole or in part be released, compounded or compromised and time or indulgence may be given by such Placing Bank, Director, Founder Entity or the Company in its absolute discretion as regards any person under
such liability without in any way
PLATFORM: PLACING AGREEMENT
37
prejudicing or affecting the rights of such Placing Bank, Director, Founder Entity or the Company against any other person under the same or a similar liability, whether joint and several or
otherwise.
The rights and remedies of the parties to this Agreement or any Indemnified
Person shall not be affected by any failure to exercise or delay in exercising any right or remedy or by the giving of any indulgence by any other party or by anything whatsoever except a specific waiver or release in writing and any such waiver or
release shall not prejudice or affect any other rights or remedies of the parties or any Indemnified Person. No single or partial exercise of any right or remedy shall prevent any further or other exercise thereof or the exercise of any other right
or remedy.
Any date or period specified in this Agreement may be postponed or
extended by mutual agreement in writing between the Company (for itself and on behalf of the Founder Entities and the Directors) and the Placing Banks but, as regards any date or period originally fixed or any date or period so postponed or
extended, time shall be of the essence.
This Agreement may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same document.
If any provision in or part of this Agreement is void or unenforceable due
to any applicable law, it shall be deemed deleted and the remaining provisions of this Agreement shall continue in full force and effect.
At any time after the date of this Agreement the Company shall, and
shall use all reasonable endeavours to procure that any necessary third party shall, at the cost of the Company, execute such documents and do such acts and things as the Placing Banks may reasonably require for the purpose of giving full effect to
all the provisions of this Agreement by which he, she or it is bound.
|
16.11
|
Survival of representations, warranties and obligations
|
Each of the representations,
warranties, agreements, undertakings and indemnities set out in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of any Placing Bank and notwithstanding the issue, sale, transfer or delivery
of and payment for the New Ordinary Shares or Warrants or completion of the Offer.
None of the rights or obligations under this Agreement may be assigned or
transferred without the written consent of the other parties.
No variation of this Agreement (or any document referred to herein) shall be
effective unless it is in writing (which for this purpose does not include email) signed by or on behalf of each of the parties to this Agreement. The expression “variation” includes any variation, supplement, deletion or replacement
however effected.
PLATFORM: PLACING AGREEMENT
38
|
16.14
|
Contracts (Rights of Third Parties) Act 1999
|
|
|
16.14.1
|
Save as provided in clause 12.19, a person who is not a party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this does not affect any
right or remedy of a third party which exists or is available apart from that Act.
|
|
|
16.14.2
|
Notwithstanding clause 12.19, this Agreement may be varied or terminated without the consent from and without reference to persons entitled to enforce the terms of this Agreement by virtue of the Contracts (Rights of
Third Parties) Act 1999.
|
|
16.15
|
Indemnities without prejudice
|
The indemnities set out or referred to in this Agreement
shall be in addition to and shall not limit, affect or prejudice any other right, relief or remedy available to any Indemnified Person.
|
16.16
|
Remedies cumulative with those at law
|
The powers, rights and remedies conferred on the
parties herein and each Indemnified Person pursuant to clause 12 shall be in addition and without prejudice to all other powers, rights and remedies available to the parties and each Indemnified Person pursuant to clause 12 by law.
Interest shall run (before and after judgment) on any sums due and payable
hereunder from the due date for payment thereof until the date of actual payment at the Agreed Rate.
|
16.18
|
Without prejudice to liabilities
|
The provisions of this Agreement are without prejudice
to any liabilities which any of the parties may have under any rule of law or equity (including without limitation the Companies Act, FSMA and the Securities Act) to the extent they cannot be excluded or restricted as provided under this Agreement.
Save under any applicable policy of insurance lawfully maintained by the
Company, no Director shall seek to recover any amount from the Company or any of its officers or employees, other than each other, in connection with any claim or matter arising out of this Agreement or seek to set off against, or withhold from, any
sum owing to the Company or any of its or their officers or employees any amount owing by the Company or its or their officers or employees in connection with such claim or matter.
The Company and the Founders agree to indemnify each Placing Bank
against any loss incurred by such Placing Bank as a result of any judgment or order being given or made for any amount due hereunder and such judgment or order being expressed and paid in a currency (the
“Judgment Currency”
) other
than pounds sterling and as a result of any variation between: (i) the rate of exchange at which the pounds sterling amount is converted into Judgment Currency for the purpose of such judgment or order; and (ii) the rate of exchange at
which such Placing Bank is able to purchase pounds sterling, at the business day nearest the date of judgment, with the amount of the Judgment Currency actually received by the relevant Placing Bank. The foregoing indemnity shall constitute a
separate and independent obligation of the Company and the Founders and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term “rate of exchange” shall include any premium and costs of
exchange payable in connection with the purchase of or conversions into the relevant currency.
PLATFORM: PLACING AGREEMENT
39
|
17.
|
APPOINTMENT OF PROCESS AGENT
|
|
17.1
|
Each of the Company, the Founders and the Non-Founder Directors shall maintain an agent for service of process in England.
|
|
17.2
|
Each of the Company, the Founders and the Non-Founder Directors shall, prior to Admission on the Closing Date, appoint Law Debenture Corporate Services Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX as a
process agent in the UK (the “
Agent
”), to act as its agent to accept service of process in England in any legal action or proceedings arising out of or in connection with this Agreement and shall procure that the Agent will, prior
to Admission on the Closing Date, confirm in writing to the Placing Banks its acceptance of such appointment. All correspondence with the Agent shall be delivered in accordance with clause 15.
|
|
17.3
|
If the Agent appointed under this clause 17 ceases to be able to act as such or to have an address in England, each of the Company, the Founders and the Non-Founder Directors irrevocably agrees to appoint a new process
agent having an address in England and to deliver to the Placing Banks within 10 Business Days a copy of a written acceptance of appointment by the new process agent. If any of the Company, the Founders and the Non-Founder Directors do not make such
an appointment within 10 Business Days of such cessation, then the Placing Banks, acting reasonably, may do so on behalf of the Company, the Founders and the Non-Founder Directors and at the cost of the Company, the Founders and the Non-Founder
Directors and shall notify the Company, the Founders and the Non-Founder Directors if it does so.
|
|
17.4
|
Each party agrees that without preventing any other mode of service, any document in an action (including, but not limited to, a claim form or any other document to be served under the Civil Procedure Rules) may be
served on any party by being delivered to or left for that party at its address for service of notices under clause 15 or, in the case of each of the Company, the Founders and the Non-Founder Directors, by being delivered to the Agent.
|
|
18.
|
GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS
|
This Agreement and any dispute or claim arising out of or in connection
with it or its subject matter, existence, negotiation, validity, termination or enforceability (including non-contractual disputes or claims) shall be governed by and construed in accordance with English law.
|
18.2
|
Submission to jurisdiction
|
|
|
18.2.1
|
Each party irrevocably agrees for the benefit of each of the Placing Banks that the courts of England have exclusive jurisdiction in relation to any dispute or claim arising out of or in connection with this Agreement
or its subject matter, existence, negotiation, validity, termination or enforceability (including non-contractual disputes or claims).
|
|
|
18.2.2
|
Each of the Company, the Founder Entities and the Directors irrevocably waives any right that it may have to object to an action being brought in any such court as is referred to in clause 18.2.1 on the grounds of
inconvenient forum or otherwise as regards proceedings in connection with this Agreement and further irrevocably agrees that a judgment or order of any such court in connection with this Agreement shall be conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.
|
PLATFORM: PLACING AGREEMENT
40
|
|
18.2.3
|
Regardless of whether the courts of any country other than England have jurisdiction to consider a dispute falling within clause 18.2.1 of this Agreement, the Company irrevocably undertakes that it will neither issue
nor cause to be issued originating or other process in respect to such a dispute in any jurisdiction other than England.
|
|
|
18.2.4
|
The submission to the jurisdiction of the Courts of England shall not (and shall not be construed so as to) limit the right of the Placing Banks to bring legal proceedings in any other court of competent jurisdiction
including, without limitation, the courts having jurisdiction by reason of any other party’s domicile. Legal proceedings by the Placing Banks in any one or more jurisdictions shall not preclude legal proceedings by either of them in any other
jurisdiction, whether by way of substantive action, ancillary relief, enforcement or otherwise.
|
Each party agrees that, without preventing any other mode of
service, any document in an action (including, but not limited to, a claim form or any other document to be served under the Civil Procedure Rules) may be served on any party by being delivered to or left for that party at its address for service of
notices under clause 15.1 or, in the case of each of the Company, the Founder Entities and the Directors, by being delivered to the Agent. Each party undertakes to either maintain such an address at all times in the United Kingdom or maintain the
appointment of an Agent (as applicable) and to notify the other party in advance of any change from time to time of the details of such address in accordance with the manner prescribed for service of notices under clause 15.3.
IN WITNESS WHEREOF
this Agreement has been entered into the day and year first above written.
PLATFORM: PLACING AGREEMENT
41
SCHEDULE 1
DIRECTORS
PART A
FOUNDER DIRECTORS
|
|
|
|
|
Name
|
|
Address
|
|
|
|
|
Martin Franklin
|
|
c/o Jarden Corporation
555 Theodore Fremd
Avenue
Suite B-302
Rye, NY 10580
|
|
Nicolas Berggruen
|
|
c/o Berggruen Holdings Inc.
1114 Avenue of the
Americas
41
st
Floor
New York, NY 10036
|
PART B
NON-FOUNDER
DIRECTORS
|
|
|
|
|
|
|
|
|
Name
|
|
Address
|
|
Maximum Liability in
US dollars
|
|
|
|
|
|
|
Alun Cathcart
|
|
##############
###########################
###########################
|
|
US$
|
85,000
|
|
|
|
|
|
|
Lord Myners of Truro CBE
|
|
#################
###############
|
|
US$
|
125,000
|
|
|
|
|
|
|
Alain Minc
|
|
####################
###########
######
|
|
US$
|
85,000
|
|
PLATFORM: PLACING AGREEMENT
42
SCHEDULE 2
PLACING BANKS
JOINT
GLOBAL CO-ORDINATORS AND JOINT BOOKRUNNERS
|
|
|
|
|
Name
|
|
Address, facsimile number and contact
|
|
|
|
|
Barclays Bank PLC
|
|
Address:
Equity Syndicate Desk
5 The North Colonnade
London E14 4BB
Fax number: +44 (0)20 7516 3404
For the attention of: Equity Syndicate Desk
|
|
|
|
|
Citigroup Global Markets Limited
|
|
Address:
Citigroup Centre
Canary Wharf
Canada Square,
London E14 5LB
Fax number: +44 (0)20 7986 1103
For the attention of: ECM Syndicate Desk
|
PLATFORM: PLACING AGREEMENT
43
SCHEDULE 3
WARRANTIES OF THE COMPANY AND THE FOUNDERS
Offer documents and listing
|
1.
|
Each of the Offer Documents (other than the Pre-Marketing Materials) is true and accurate in all material respects and not misleading in any material respect and each of: (i) the Offer Documents taken together; and
(ii) each of the Preliminary Prospectus and the Final Prospectus, fairly presents (or when issued and published will fairly present) the information contained therein and does not or, when made, will not contain any untrue statement of any
material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. All forecasts, estimates and expressions of opinion, intention, belief
or expectation contained in the Offer Documents are and will be, at their respective dates, truly and honestly held and have been made on reasonable grounds and after due and careful enquiry.
|
|
2.
|
Each of: (1) the Offer Documents taken together; and (2) the Prospectuses contain (or will when published contain) all particulars and information required by, and comply with (and, to the extent applicable,
will comply with), the Companies Act, FSMA, the CJA, the LPDT Rules, the Admission and Disclosure Standards, the rules and regulations of the London Stock Exchange, the CREST Regulations and all other applicable laws and regulations. Each of the
Preliminary Prospectus and the Final Prospectus contain (or will when published contain), having regard to the particular nature of the Shares and Warrants and the Company, the information necessary to enable investors to make an informed assessment
of: (a) the assets and liabilities, financial position, profits and losses and prospects of the Company; and (b) the rights attaching to the Shares and Warrants and such information is in a form which is comprehensible and easy to analyse.
|
|
3.
|
The Pre-Marketing Materials were at the time they were distributed and, save to the extent any information therein has been amended in the Final Prospectus: (a) remain true and accurate in all material respects and
not misleading in any material respect; and (b) fairly present the information contained therein and do not contain any untrue statement of any material fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading and the Pre-Marketing Materials comply with the LPDT Rules and all other applicable laws and regulations.
|
|
4.
|
There are no facts or matters known, or which could have been known, to the Warrantor omitted from any of the Offer Documents as at their respective dates (following publication, if applicable), the omission of which
would make any statement of a material fact or expression of opinion, intention or expectation contained in any of the Offer Documents misleading in any respect.
|
|
5.
|
The section in the Final Prospectus entitled “Summary” is written in a concise manner and in non-technical language and its content (i) conveys the key information of the securities concerned and
(ii) provides, in conjunction with the Final Prospectus, appropriate information about essential elements of the securities concerned, in each case in order to aid investors when considering whether to invest in such securities.
|
|
6.
|
There are no matters other than those disclosed in the Final Prospectus or otherwise in writing to the UK Listing Authority or the London Stock
Exchange (copies of such letters
|
PLATFORM: PLACING AGREEMENT
44
|
|
have been provided to each of the Placing Banks) which the Warrantor considers should be taken into account by the UK Listing Authority or the London Stock Exchange in considering the
applications for Admission.
|
|
7.
|
The statements set forth in Part VII (Taxation), in Part VIII (Additional Information) of the Final Prospectus under the headings: “Share Capital”, “Articles of Association of the Company”,
“Directors’ Letters of Appointment”, “City Code”, “Material contracts” and “BVI Law”, in Part IX (the Terms and Conditions of the Warrants), and in Part XI (Depositary Interests) insofar as they purport
to constitute a summary of the laws and documents referred to therein, are true, accurate and complete in all material respects and not misleading in any material respect.
|
|
8.
|
All statements made or information provided by or on behalf of the Company to the UK Listing Authority (including in connection with any application for certain information to be omitted from the Final Prospectus) are
(or, when made, will be) true and accurate in all material respects and are not (or, when made, will not be) misleading in any material respect and there are no facts which have not been disclosed to the UK Listing Authority in connection therewith
which by their omission make any such statements misleading or which are otherwise material for disclosure to the UK Listing Authority.
|
Verification and due diligence
|
9.
|
The Verification Notes have been read by the Directors and approved by them and have been prepared in good faith with due care and the replies given have been prepared or approved by persons having appropriate knowledge
and responsibility to enable them properly to provide such replies. There are no facts which are known to any of the Directors which materially adversely affect (whether by omission or otherwise) the accuracy or completeness of any of the replies
contained in the Verification Notes.
|
|
10.
|
The Verification Bundles have been approved by the Directors and have been prepared in good faith with due care. There are no facts which are known to any of the Directors which materially adversely affect (whether by
omission or otherwise) the accuracy or completeness of any of the information contained in the Verification Bundles.
|
|
11.
|
All information provided by or on behalf of the Company to any of the Placing Banks in connection with their due diligence enquiries or similar requests for information in connection with the Offer has been supplied in
good faith and such information was, when supplied, true and accurate in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make any of the statements contained
therein in light of the circumstances under which such statements were made, not misleading.
|
Offering materials
|
12.
|
There has been no distribution of any offering material in connection with the Offer other than the Offer Documents.
|
|
13.
|
There is no material information disclosed in the Pre-Marketing Materials, the Roadshow Materials or the Preliminary Prospectus which is not disclosed in the Final Prospectus which would be material for disclosure.
|
Directors
|
14.
|
The Placing Banks have been furnished in writing with all material information relating to the Directors which has been requested by them.
|
PLATFORM: PLACING AGREEMENT
45
|
15.
|
Each of the Directors has full power and authority to enter into and perform their obligations pursuant to this Agreement and this Agreement constitutes a valid and legally binding agreement enforceable against each of
the Directors in accordance with its terms.
|
|
16.
|
Each of the Directors has had explained to him and understands his responsibilities and obligations as a director of a listed company under the LPDT Rules and FSMA.
|
|
17.
|
The answers given to the Directors’ Questionnaire by each of (i) in relation to the Warranty given by the Company, the Directors and (ii) in relation to the Warranty given by the Founders, the Founder
Directors, were when given, and remain true, accurate and complete and not misleading either by omission or misstatement.
|
|
18.
|
The information contained in the Directors’ Responsibility Statements of (i) in relation to the Warranty given by the Company, the Directors and (ii) in relation to the Warranty given by the Founders, the
Founder Directors, is complete and accurate in all respects and not misleading in any respect and the Directors have read and approved the contents of the Final Prospectus.
|
Corporate organisation and business
|
19.
|
The Company is a company with limited liability, duly incorporated and validly existing under the laws of the British Virgin Islands, with full power and authority under its Articles of Association and otherwise to
conduct its business as described in the Final Prospectus and to enter into and perform its obligations pursuant to the Offer, this Agreement and any other agreement to be entered into by it in connection with the Offer (including, without
limitation, the power to pay commissions, fees, costs and expenses provided for in this Agreement).
|
|
20.
|
The Company does not have any subsidiaries nor will it have any subsidiaries prior to completion of the Offer.
|
|
|
21.1
|
in violation of its Articles of Association or other governing or constitutional documents (which are in full force and effect on Admission), the violation of any of which would, singly or in aggregate, be material; or
|
|
|
21.2
|
in breach or default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, any document of title or in any bond, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the Company is a party or by which the Company may be bound, or to which any of their properties or assets is subject, the breach or default of any of which, singly or in
aggregate, would be material and the Company is not aware of any circumstances likely to give rise to such a breach or default; or
|
|
|
21.3
|
in violation of any applicable law, statute, rule, licence regulation, judgment, order, writ, claim form or decree of any government, government instrumentality or court having jurisdiction over the Company or any of
their assets or properties, the violation of any of which would, singly or in aggregate, be material.
|
Share capital
|
22.
|
The issued share capital of the Company as at the date of the Final Prospectus is as described in paragraph 3.1 of Part VIII (Additional Information)
of the Final Prospectus,
|
PLATFORM: PLACING AGREEMENT
46
|
|
and all of the issued shares of the Company (including, for the avoidance of doubt, the New Ordinary Shares and the Founder Preferred Shares (as described in paragraph 4.3 of Part VIII
(Additional Information) of the Final Prospectus)) have been, or when issued will be, duly and validly authorised and issued, are, or when issued will be, fully paid and are not, or when issued will not be, subject to calls for further payment or
otherwise assessable and are, or when issued will be, free from all Encumbrances (save for the Founders’ rights in respect of the Founder Preferred Shares as described in paragraphs 4.3 of Part VIII (Additional Information) of the Final
Prospectus) and will conform upon Admission to the descriptions thereof contained in the Final Prospectus.
|
|
23.
|
Save as fairly disclosed in paragraphs 4.3, 10 and 15.8 of Part VIII (Additional Information) and Part IX (The Terms and Conditions of the Warrants) of the Final Prospectus, there are no rights (conditional or
otherwise) to require the issue of any shares or other securities (including without limitation any loan capital) or securities convertible into or exchangeable for, or warrants, rights or options to purchase, or obligations, commitments or
intentions to create the same which are outstanding and in force.
|
|
24.
|
The New Ordinary Shares will, upon issue, be free from all Encumbrances and will rank pari passu in all respects and will conform to the description thereof in the Final Prospectus.
|
|
25.
|
The New Ordinary Shares are freely issuable by the Company to or for the account of the subscribers procured by the Placing Banks (or to the Placing Banks themselves) and there are no restrictions on voting or transfer
of the Shares under the laws of the British Virgin Islands or upon declaration or payment of any dividend or distribution thereon.
|
Warrants
|
26.
|
All of the Warrants, when issued, will be duly and validly authorised and issued and are not, or when issued will not be, subject to calls for further payment or otherwise assessable and are, or when issued will be,
free from all Encumbrances and will conform upon Admission to the descriptions thereof contained in the Final Prospectus.
|
|
27.
|
The Warrants are freely issuable by the Company to or for the account of the subscribers procured by the Placing Banks (or to the Placing Banks themselves) and there are no restrictions on voting or transfer of the
Warrants under the laws of the British Virgin Islands.
|
Compliance and corporate governance
|
28.
|
The Directors have established procedures which, as at and from Admission, enable the Company to comply with the LPDT Rules on an ongoing basis. The Company does not have an external management company as defined in the
Listing Rules and the discretion of the Directors to make strategic decisions on behalf of the Company has not been limited or transferred to another person and the Directors have the capability to act on key strategic matters in the absence of a
recommendation from any other person.
|
|
29.
|
The Company has reviewed the compliance of the Company with the provisions of the Corporate Governance Code and as at the date of Admission, save as fairly disclosed in the Final Prospectus in Part III (The Company, its
Board and the Acquisition Structure) under the heading “Corporate governance”, will be in compliance with the provisions of the Corporate Governance Code and has established procedures to enable the Company, following Admission, to comply
with its provisions.
|
PLATFORM: PLACING AGREEMENT
47
|
30.
|
Each of the Directors has the benefit of an indemnity provided by the Company indemnifying the Director against liabilities incurred in his office as director, in terms that are in accordance with the BVI Companies Act.
|
|
31.
|
There are no shadow directors of the Company.
|
No dividends
|
32.
|
Since incorporation of the Company, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its share capital.
|
CREST
|
33.
|
The Depositary Interests are eligible for admission to, and will be freely transferable in, CREST and the terms of issue of the Depositary Interests and the Articles of Association comply with all the requirements of
Euroclear, the CREST Regulations, the Depositary Agreement and the Deed Poll. The Depositary Interests do not contravene BVI law and will, when issued be freely convertible into Shares or Warrants (as applicable). The holders of Depositary Interests
will, on issue of the Depositary Interests, benefit from all the rights attaching to the Shares or Warrants (as applicable), including voting rights and, in the case of Shares, dividends and participation in corporate actions.
|
Financial information
|
34.
|
The financial information included in section B of Part VI (Financial Information on the Company) of the Final Prospectus:
|
|
|
34.1
|
has been prepared and presented in conformity with IFRS and its interpretation promulgated by the International Accounting Standards Board, applied and in a form consistent with that which will be adopted in the
Company’s next published financial statements:
|
|
|
34.2
|
gives a true and fair view of the state of affairs and financial condition of the Company as at the dates stated; and
|
|
|
34.3
|
has been prepared after due and careful enquiry by the Company and is presented on the basis set out in the Final Prospectus consistently with the accounting policies of the Company.
|
|
35.
|
The Company does not have any off-balance sheet arrangements, investment or liability.
|
Information
provided to the Reporting Accountants
|
36.
|
All information supplied by or on behalf of the Company to the Reporting Accountants for the purposes of preparing the No Significant Change Letter and any of the Reporting Accountants’ other reports and comfort
letters in connection with the Offer, and in respect of any updates to such, has been supplied in good faith after due and careful enquiry; such information was when supplied and remains true and accurate in all respects and was not by itself or by
omission misleading in any respect and no further information has been withheld which might reasonably have affected the contents of such reports in any respect.
|
Working capital
|
37.
|
The Company has sufficient working capital for its present requirements, that is, for at least 12 months from the date of the Final Prospectus.
|
PLATFORM: PLACING AGREEMENT
48
Auditors
|
38.
|
The Auditors who audited the financial statements of the Company included in the Final Prospectus are independent auditors in respect of the Company.
|
Financial reporting procedures
|
39.
|
The Directors have established procedures which provide a reasonable basis for them to make proper judgments on an ongoing basis as to the financial position and prospects of the Company and the Company maintains a
system of internal financial and accounting controls sufficient to provide reasonable assurance that:
|
|
|
39.1
|
transactions are executed in accordance with management’s general or specific authorisations;
|
|
|
39.2
|
transactions are recorded as necessary to permit the preparation of returns and reports which are complete and accurate in all material respects to regulatory bodies as and when required by them and the preparation of
financial statements in accordance with IFRS and the BVI Companies Act and to maintain accountability for assets; and
|
|
|
39.3
|
the Company’s asset records are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
|
|
40.
|
There are no weaknesses in the Company’s internal control over financial reporting (whether or not remedied) of the Company and there has been no fraud that involves any member of management or any other employee
of the Company.
|
No significant change
|
41.
|
Save as set out in paragraph 12 of Part VIII (Additional Information) of the Final Prospectus, since the Accounts Date, there has been no significant change in the financial or trading position of the Company and there
has been no Material Adverse Change or circumstances likely to lead to a Material Adverse Change since the Accounts Date.
|
No Trading
|
42.
|
Since the date of its incorporation, the Company has not conducted any business or traded.
|
Borrowings and
obligations
|
43.
|
Save as fairly disclosed in the Final Prospectus in Part V (Share Capital, Liquidity and Capital Resources and Accounting Policies) under the heading “Indebtedness”, the Company has not entered into nor is
bound by any material obligation, agreement, covenant, contract or instrument and other than fees and expenses payable in connection with the Offer and any indemnities given by the Company pursuant to this Agreement neither the Company nor any
person acting on its behalf has entered into or assumed any note, debenture, guarantee or indemnity, material liability (including, without limitation, material contingent liability) or other indebtedness in the nature of borrowing.
|
Insolvency
|
|
44.1
|
is, and immediately after the Closing Date will be, solvent as such term is understood under the laws of the British Virgin Islands and it will not be unable to pay its debts within the meaning of section 123 of the
Insolvency Act 1986 or any analogous law or regulation;
|
PLATFORM: PLACING AGREEMENT
49
|
|
44.2
|
has not had a controller appointed or is in liquidation, in provisional liquidation, under administration or is being wound up or has had a receiver appointed to any part of its property;
|
|
|
44.3
|
is not subject to any arrangement, assignment, moratorium or composition, protected from creditors under any statute or being dissolved (in each case, other than to carry out a reconstruction or amalgamation while
solvent on terms approved by the other parties to this Agreement);
|
|
|
44.4
|
has not had an application or order made (and in the case of an application, which has not been stayed, withdrawn or dismissed within 30 days), resolution passed, proposal put forward, or any other action taken which is
preparatory to or could result in the events described in paragraphs 44.1 to 44.3 above;
|
|
|
44.5
|
is otherwise able to pay its debts when they fall due; and
|
|
|
44.6
|
is not subject to any other proceedings with a substantially similar effect to 44.1 to 44.4 under the law of any jurisdiction.
|
|
45.
|
The Company has not taken any action (including, but not limited to, the convening of meetings to vote on relevant resolutions), nor have any other steps been taken or legal proceedings commenced or been threatened
against the Company for its winding-up or dissolution or for any similar or analogous proceeding in any jurisdiction or for the Company to enter into any arrangement or composition for the benefit of creditors or for the appointment of a receiver,
administrator, provisional liquidator or similar officer.
|
|
46.
|
There is not outstanding any liability, obligation or commitment of any kind on the part of the Directors or the Company in relation to any current or pending insolvency proceedings in relation to the Company.
|
Arrangements with Directors and Shareholders
|
47.
|
There are no loans made by the Company to, nor are there any debts owing to the Company from, any of the shareholders of the Company and/or any of the Directors of the Company and/or any associate of any of them save,
in each case, to the extent (individually or in aggregate) that would not be and would not be reasonably likely to be, material in the context of the Offer or Admission.
|
|
48.
|
Save as fairly disclosed in Part VIII (Additional Information) of the Final Prospectus:
|
|
|
48.1
|
there are no existing material contracts or engagements to which the Company is a party and in which any of the Directors or any associate of any of them is interested; and
|
|
|
48.2
|
no shareholder has any rights, in his capacity as such, in relation to the Company.
|
|
49.
|
For the purposes of paragraphs 47 and 48, associate has the meaning:
|
|
|
49.1
|
in the case of an individual, given to the “connected person” under sections 252 to 254 of the Companies Act; and
|
|
|
49.2
|
in the case of a body corporate, given to “associated company” in sections 449 of the CTA 10.
|
PLATFORM: PLACING AGREEMENT
50
Tax
|
50.
|
The Company is not subject to income tax in the British Virgin Islands and is not, and never has been, treated as resident in any other jurisdiction for Tax purposes. The Company is not, and never has been, subject to
Tax in any jurisdiction other than the British Virgin Islands by virtue of having a permanent establishment in that jurisdiction.
|
|
51.
|
Except as fairly disclosed in the sections headed “British Virgin Islands taxation” and “United Kingdom taxation” of Part VII (Taxation) of the Final Prospectus, no stamp duty or other issuance or
transfer taxes and no capital gains, income, withholding or other tax are payable in the United Kingdom or the British Virgin Islands in connection with the sale or issue and delivery by the Company of the New Ordinary Shares or Matching Warrants
(or Depositary Interests in respect of the same) to or for the account of the Placing Banks or purchasers or subscribers procured by them.
|
|
|
51.1
|
The Company is, to the extent required, registered for the purposes of VAT and has complied with the terms of legislation relating to VAT.
|
|
|
51.2
|
The Company is not nor has it been treated as a member of a group for the purposes of VAT legislation with any company and has not applied for such treatment.
|
|
|
52.1
|
the Company has not been involved in any transaction which has given or may give rise to a liability to tax (or would have given or might have given rise to such a liability but for the availability of any relief) other
than tax in respect of normal trading income or receipts arising from transactions entered into by it in the ordinary course of business;
|
|
|
52.2
|
no disposal has taken place or other event occurred which has or may have the effect of crystallising a liability to tax; and
|
|
|
52.3
|
no accounting period (as defined in section 9 of the CTA 09) of the Company has ended as referred to in section 10(1) of that Act.
|
|
53.
|
Since incorporation neither (i) in relation to the Warranty given by the Company, the Company nor any Director (in their capacity as such), nor (ii) in relation to the Warranty given by the Founders, the
Company nor the Founder Directors (in their capacity as such), as the case may be, has paid or become liable to pay, and there are no circumstances by reason of which it or they may become liable to pay, to any tax authority any penalty, fine,
surcharge or interest in respect of tax (including, without limitation, in respect of any failure to make any return, give any notice or supply any information to any relevant tax authority, or any failure to pay tax on the due date for payment).
|
|
54.
|
All transactions between the Company and any third party have been and are on fully arm’s length terms. To the best of the Warrantor’s knowledge, there are no circumstances in existence which could cause any
tax authority to make any adjustment for tax purposes to the terms on which any transaction between the Company and any third party is treated as taking place and no such adjustment has been made or attempted in fact.
|
Compliance with laws and regulations
|
55.
|
The Company has established procedures to ensure compliance with all applicable regulatory requirements in the British Virgin Islands and other relevant jurisdictions.
|
PLATFORM: PLACING AGREEMENT
51
|
56.
|
In relation to (i) the Warranty given by the Company, the Company and the Directors, and (ii) the Warranty given by the Founders, the Company and the Founder Directors, have at all times complied with all
applicable laws and regulations of the United Kingdom (including, without limitation, FSMA, the LPDT Rules, the Admission and Disclosure Standards, the CJA and the Companies Act) and of the British Virgin Islands (including the BVI Companies Act),
and with the provisions of the Company’s Memorandum of Association and Articles of Association and have or will have the right, power and authority under the Articles of Association of the Company to enter into and perform this Agreement
(including, without limitation, the power to pay commissions, fees, costs and expenses provided for in this Agreement), to make the Offer, to allot and issue the New Ordinary Shares and Matching Warrants in certificated and uncertificated form, to
issue the Offer Documents in the manner proposed and, subject to approval of the Final Prospectus by the UK Listing Authority, and Admission, there are no other consents, authorisations or approvals required by the Company in connection with the
entering into and the performance of this Agreement and the actions referred to in this paragraph 56 of Schedule 3 which have not been irrevocably and unconditionally obtained.
|
|
57.
|
The statutory books, books of accounts and other records legally required to be kept by the Company are up-to-date, complete and accurate in all material respects and no notice or allegation that any of such books or
records is incorrect or should be rectified has been received. All accounts, documents and returns required by law to be delivered or made to the Registrar of Companies or any other authority have been duly and correctly delivered or made without
material omission or default.
|
|
58.
|
Neither (i) in relation to the Warranty given by the Company, the Company, nor the Founders, nor the Directors, nor (ii) in relation to the Warranty given by the Founders, the Company nor the Founders, nor in
the case each of (i) and (ii) its or their Affiliates nor any person acting on its or their behalf (other than the Placing Banks and their respective Affiliates, as to whom each of the Company and the Founders makes no representation) has
done or engaged in, or will do or engage in, directly or indirectly, any act or any course of conduct in relation to the Offer in breach of the CJA or sections 89 or 90 of the Financial Services Act 2012 or constituting market abuse under section
118 of FSMA, in each case including any regulations made pursuant thereto, or the equivalent provisions under the securities laws applicable in any other relevant jurisdiction.
|
|
59.
|
Neither (i) in relation to the Warranty given by the Company, the Company nor the Founders nor the Directors, nor (ii) in relation to the Warranty given by the Founders, the Company nor the Founders, nor in
the case each of (i) and (ii) its or their Affiliates nor any person acting on its or their behalf (other than the Placing Banks and their respective Affiliates, as to whom each of the Company and the Founders makes no representation) has
done or engaged in, or will do or engage in, directly or indirectly, any action designed to stabilise, maintain or manipulate, or which has constituted or which might reasonably be expected to cause or result in the stabilisation, maintenance or
manipulation of the price of any security of the Company or any instrument evidencing rights to Shares or Warrants or any other such security.
|
Consents, authorisations and approvals
|
60.
|
All consents, approvals, authorisations, filings, orders, registrations, notifications, permits, certificates, licences, concessions, clearances and
qualifications (each an “
Authorisation
”) of or with any court or governmental, supranational, regulatory, self-regulatory, taxation or stock exchange authority, agency, institution, or body including but not limited to the
|
PLATFORM: PLACING AGREEMENT
52
|
|
Competition Commission and the Commission of the European Union (each a “
Governmental Agency
”) having jurisdiction over the Company or any Affiliate of the Company or any of
their properties or any stock exchange authorities:
|
|
|
60.1
|
required by the Company for the issue and sale of the New Ordinary Shares and Matching Warrants (and the Depositary Interests in respect thereof) and for this Agreement or any of the agreements in the agreed form to be
duly and validly authorised, executed and delivered, to give effect to the arrangements contemplated therein and to perform any obligations, referred to in or contemplated by this Agreement or the Offer Documents; or
|
|
|
60.2
|
necessary to conduct the business of the Company: (i) have been made or obtained and are in full force and effect, or will be in full force and effect prior to Admission and the Company is in compliance with all
relevant Authorisations; or (ii) have been fulfilled and performed except where the failure of such Authorisations to be in full force and effect, or the failure of the Company to be in compliance with them, would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Change.
|
No event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination of any Authorisation where such revocation or termination would, singly or in the aggregate, reasonably be expected to result in a Material Adverse Change or results or would result in
any other impairment of the rights of the holder of any such Authorisation.
The Offer, the allotment, issue and sale of the New Ordinary
Shares and Matching Warrants (and the Depositary Interests in respect thereof), the distribution of the Offer Documents and any other documents in connection with the Offer and the Admission, the compliance by the Company with the provisions of this
Agreement and the consummation of the transactions contemplated herein will not result in any review, revocation or termination of any Authorisation.
|
61.
|
The making of the Offer, the allotment, issue and sale of the New Ordinary Shares and Matching Warrants (and the Depositary Interests in respect thereof), the distribution of the Offer Documents and any other documents
in connection with the Offer and Admission, the execution, delivery and performance by the Company of this Agreement and all other agreements to be entered into in connection with the Offer and the consummation of the other transactions contemplated
in this Agreement:
|
|
|
61.1
|
have been or will prior to Admission have been duly authorised, executed and delivered by the Company;
|
|
|
61.2
|
will not: (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (ii) result in any third party being capable of terminating, or constitute a
repayment event under, or (iii) result in the creation or imposition of any Encumbrance upon any property or assets of the Company pursuant to, any agreement, any indenture, mortgage, deed of trust or loan agreement or other instrument to which
the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject; and
|
|
|
61.3
|
will not result in any violation of the provisions of the Articles of Association of the Company which are in force at the relevant time or, to the extent material, any statute or any order, rule or regulation of any
Governmental Agency having jurisdiction over the Company or any of its properties.
|
PLATFORM: PLACING AGREEMENT
53
|
62.
|
There are no outstanding, pending, threatened or imminent actions, suits, proceedings, claims, reviews, reports, adjudications, penalties, fines, complaints, sanctions or investigations of any Governmental Agency in
relation to the Company or in relation to any Authorisations.
|
|
63.
|
The Company has fulfilled and followed all relevant industry best practice relating to the Authorisations, including, but not limited to, compliance with all relevant codes, guidance, codes of practice and practice
notes issued by any Governmental Agency or in association with the Authorisations.
|
Related party transactions
|
64.
|
Save as fairly disclosed in paragraph 16 of Part VIII (Additional Information) of the Final Prospectus under the heading “Related party transactions”, the Company has not entered and will not enter into any
related party transaction (within the meaning set out in the IFRS) in the period covered by the financial information contained in the Final Prospectus and up to, and including, Completion.
|
Contracts
|
65.
|
Save as fairly disclosed in paragraph 15 of Part VIII (Additional Information) of the Final Prospectus under the heading “Material contracts”, since its incorporation the Company has not entered into:
(a) any material contract outside the ordinary course of its business; or (b) any contract or commitment outside the ordinary course of its business which contains any provision under which the Company has any entitlement or obligation
which is material to the Company as of the date hereof; or (c) any contract or commitment of an unusual or onerous nature which, in the context of the issue and sale of the New Ordinary Shares or Matching Warrants, might be material to the
conduct of the business of the Company.
|
|
66.
|
Each of the Material Contracts (being the contracts fairly disclosed in paragraph 15 of Part VIII (Additional Information) of the Final Prospectus under the heading “Material Contracts” has been duly
authorised, executed and delivered by the Company and constitutes a valid, subsisting and legally binding agreement, enforceable in accordance with its respective terms except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganisation, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and general principles of equity.
|
|
67.
|
The summary of those Material Contracts contained in the Final Prospectus is accurate and complete in all material respects and not misleading.
|
Litigation, arbitration and other proceedings
|
|
68.1
|
the Company is engaged in any litigation, arbitration, prosecution or other legal proceedings (including any inquiries or investigation by any court or Governmental Agency or governmental body, domestic or foreign); nor
|
|
|
68.2
|
is any such proceeding pending or threatened against the Company or so far as the Warrantor is aware, imminent; nor
|
|
|
68.3
|
is there any claim so far as the Warrantor is aware or any fact likely to give rise to a claim,
|
which in any such case may result in or has resulted in during the 12 months preceding the date of the Final Prospectus a material effect on
the financial position of the Company or which would materially affect, singly or in the aggregate, the Offer or the consummation of the transactions contemplated by this Agreement by the Company.
PLATFORM: PLACING AGREEMENT
54
|
69.
|
The Company, nor any of its officers or agents or employees in relation to the affairs of the Company has been a party to any undertaking or assurance given to any court or government agency or the subject of any
injunction which is still in force.
|
Employment and Pensions
|
70.
|
The Company does not have any material employee or pensions related liabilities.
|
Insurance
|
71.
|
The Company maintains, from well-established and reputable insurers, insurance of the type and in amounts reasonably considered by the Company and the Directors to be adequate for their business and, to the best of the
Warrantor’s knowledge, consistent with insurance coverage maintained by companies carrying on similar businesses or owning assets of a similar nature. No claim under any policy of insurance taken out in connection with the business or assets of
the Company which is material is outstanding and there are no current circumstances likely to give rise to such a claim. Such insurances are in full force and effect and there exist no circumstances which could render any of such insurances void or
voidable.
|
Real Estate
|
72.
|
The Company does not own or lease, and has not owned or leased any real property.
|
Assets
|
73.
|
The Company does not have any material assets.
|
Intellectual property
|
74.
|
The Company has not infringed any Intellectual Property owned or licensed by a third party to the extent that such infringement, in aggregate, would reasonably be expected to result in a Material Adverse Change.
|
United States
|
75.
|
None of the Company, the Founders, nor their respective Affiliates nor any persons acting on their behalf (other than the Placing Banks and their respective Affiliates, as to whom each of the Company, its Affiliates and
each of the Founders makes no representation), directly or indirectly, has made or will make offers or sales of any security, or has solicited or will solicit offers to buy, or otherwise has negotiated or will negotiate in respect of any security,
under circumstances that would require the registration of the Shares or Warrants under the Securities Act.
|
|
76.
|
The Company is a “foreign private issuer” as such term is defined in Rule 405 under the Securities Act.
|
|
77.
|
At the date hereof, there is no “substantial US market interest”, as such term is defined in Regulation S, in any class of securities to be offered or sold in connection with the Offer.
|
|
78.
|
None of the Company, the Founders or their respective Affiliates has entered or will enter into any contractual arrangement with a distributor (as defined by Regulation S) with respect to the distribution of the New
Ordinary Shares or Matching Warrants, except with the Placing Banks pursuant to this Agreement.
|
PLATFORM: PLACING AGREEMENT
55
|
79.
|
Save as described in the section headed “Use of Proceeds” in Part I of the Prospectus, prior to completion of the Acquisition, the Company will invest or deposit the net proceeds of the offering and sale of
the New Ordinary Shares (with Matching Warrants) and any proceeds received from the subscription for the Founder Preferred Shares (with Matching Warrants) in US Treasuries or such money market fund instruments as approved by the Non-Founder
Directors, in a manner that will not result in the Company being an “investment company” as such term is defined in the Investment Company Act.
|
|
80.
|
Prior to completion of the Acquisition, the Company will invest or deposit any proceeds received from the exercise of Warrants in a manner that will not result in the Company being an “investment company” as
such term is defined in the Investment Company Act.
|
|
81.
|
None of (i) in relation to the Warranty given by the Company, the Company nor the Founders, nor the Directors, nor (ii) in relation to the Warranty given by the Founders, the Company nor the Founders, nor in
the case of each of (i) and (ii) their respective Affiliates nor any person acting on their behalf (other than the Placing Banks and their respective Affiliates, as to whom each of the Company and its Affiliates makes no representation),
directly or indirectly, has engaged or will engage in any directed selling efforts (as defined in Regulation S) with respect to the New Ordinary Shares or Matching Warrants.
|
|
82.
|
The Company is not and immediately after giving effect to the offering and sale of the New Ordinary Shares (with Matching Warrants) and the application of the net proceeds thereof as described in the Final Prospectus,
will not be an “investment company” as such term is defined in the Investment Company Act.
|
|
83.
|
None of (i) in relation to the Warranty given by the Company, the Company, nor the Founders, nor the Directors, nor (ii) in relation to the Warranty given by the Founders, the Company, nor the Founders, nor in
the case of each of (i) and (ii) their respective Affiliates nor any person acting on their behalf (other than the Placing Banks and their respective Affiliates, as to whom each of the Company and its Affiliates makes no representation),
directly or indirectly, has engaged or will engage in any form of “general solicitation” or “general advertising” as those terms are defined in Rule 502(c) of Regulation D in connection with any offer or sale of the New Ordinary
Shares or the Matching Warrants.
|
|
84.
|
The New Ordinary Shares and the Matching Warrants are eligible for re-sale pursuant to Rule 144A and will not be, at the Closing Date, of the same class as securities listed on a national securities exchange registered
under section 6 of the Exchange Act, or quoted in a US automated inter dealer quotation system.
|
|
85.
|
Subject to compliance by the Placing Banks with the selling restrictions set forth in Schedule 8, no registration of the New Ordinary Shares and Matching Warrants is required under the Securities Act in connection with
the offer, allotment, issue, sale and delivery of the New Ordinary Shares and Matching Warrants to the Placing Banks or to subscribers or purchasers procured by the Placing Banks, as applicable, in the manner contemplated by this Agreement and the
Final Prospectus.
|
|
86.
|
The issue and delivery of any Shares upon any exercise of Warrants, in the manner contemplated by this Agreement and the Final Prospectus, will not require registration under the Securities Act.
|
PLATFORM: PLACING AGREEMENT
56
Ethics, bribery and corruption
|
87.
|
Neither (i) in relation to the Warranty given by the Company, the Company nor any of its officers, employees, representatives or agents, nor (ii) in relation to the Warranty given by the Founders, the Company
nor any of its respective officers, employees, representatives or agents (other than the Non-Founder Directors, as to whom the Founders make no representation), has either in private business dealings or in dealings with the public / government
sector directly or indirectly given, offered or received or agreed (either themselves or in agreement with others) to offer, give or receive any bribe or committed or attempted to commit (either themselves or in agreement with others) any other
corrupt act.
|
|
88.
|
Neither (i) in relation to the Warranty given by the Company, the Company nor any of its officers, employees, representatives or agents, nor (ii) in relation to the Warranty given by the Founders, the Company
nor any of its respective officers, employees, representatives or agents (other than the Non-Founder Directors, as to whom the Founders make no representation) has received, agreed or attempted to receive the proceeds of or profits from a crime or
agreed to assist any person to retain the benefits of a crime.
|
|
89.
|
Neither (i) in relation to the Warranty given by the Company, the Company nor any of its officers, employees, representatives or agents, nor (ii) in relation to the Warranty given by the Founders, the Company
nor any of its respective officers, employees, representatives or agents (other than the Non-Founder Directors, as to whom the Founders make no representation) have been investigated (or are being investigated or are subject to a pending or
threatened investigation) or are involved in an investigation (as a witness or possible suspect) in relation to any of the matters set out in paragraphs 84 or 85 by any law enforcement agency or any customer, or been debarred from bidding for any
contract/business, and there are no such circumstances which are likely to give rise to such investigation.
|
|
90.
|
The operations of the Company are and have been conducted at all times in compliance with the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “
Money Laundering Laws
”) and no action, suit or proceeding by or before any court or Governmental Agency, authority or body or
any arbitrator involving the Company or any of its Affiliates with respect to Money Laundering Laws is pending or, to the best knowledge of the Warrantor, threatened.
|
|
91.
|
None of (i) in relation to the Warranty given by the Company, the Company nor the Founders nor the Directors, nor (ii) in relation to the
Warranty given by the Founders, the Company nor the Founders, nor in the case of each of (i) and (ii), to the knowledge of the Warrantor, any agent, employee or Affiliate of these, is aware of, or has taken any action, directly or indirectly,
that could result in a violation by such persons of the US Foreign Corrupt Practices Act of 1977, as amended, or the rules and regulations thereunder (the “
FCPA
”) (including, without limitation, making use of the mail or any means
or instrument of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorisation of the payment of any money, or other property, gift, promise to give, or authorisation of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign political office, in contravention of the FCPA), the OECD Convention on Bribery of Foreign Public Officials in International Business Transactions (the “
OECD
Convention
”) or any similar law or regulation, to which the Company, any director, officer, agent, or employee of the Company or to the knowledge of the Warrantor, any Affiliate is subject; and the Company and its Affiliates have conducted
|
PLATFORM: PLACING AGREEMENT
57
|
|
their businesses in compliance with the FCPA, the OECD Convention and any applicable similar law or regulation and have instituted and maintain policies and procedures designed to ensure, and
which are reasonably expected to continue to ensure, continued compliance therewith.
|
|
92.
|
Neither the Company, nor any director, officer, or, to the knowledge of the Warrantor, any employee or Affiliate of the Company (other than, in relation to the Warranty given by the Founders, the Non-Founder Directors,
as to whom the Founders make no representation) is currently subject to any sanctions administered by the Office of Foreign Assets Control of the US Department of the Treasury (“
OFAC
”), the US State Department, the US Commerce
Department or other US agencies or any similar sanctions imposed by the European Union, the United Nations or any other body, governmental or other, to which the Company or any of its Affiliates is subject (collectively, “
other economic
sanctions
”).
|
PLATFORM: PLACING AGREEMENT
58
SCHEDULE 4
DOCUMENTS IN THE AGREED FORM
|
|
|
|
|
Document
|
|
Marked
|
|
|
|
|
Offer Documents
|
|
|
|
|
|
|
Final Prospectus
|
|
A
|
|
|
|
|
Press Release to be issued on or about the date of this Agreement
|
|
B
|
|
|
|
|
Press Release to be issued on or about the Closing Date
|
|
C
|
|
|
|
|
Pre-Marketing Materials
|
|
D
|
|
|
|
|
Roadshow Materials
|
|
E
|
|
|
|
|
From the Company
|
|
|
|
|
|
|
Warrant Instrument
|
|
F
|
|
|
|
|
Letters of appointment for the Directors
|
|
G
|
|
|
|
|
Verification Notes
|
|
H
|
|
|
|
|
Verification Bundles
|
|
I
|
|
|
|
|
Minutes of the meetings of the Board of Directors approving the Preliminary Prospectus and the pre-marketing of the Offer
|
|
J
|
|
|
|
|
Minutes of the meetings of the Board of Directors approving the Offer Documents (other than the Preliminary Prospectus), this Agreement, the Verification Notes, the Verification Bundles and (where appropriate) the other documents
referred to in this Agreement and authorising the steps to be taken by the Company in connection with the Offer, including the execution of this Agreement and authorising the Directors to allot: (i) the New Ordinary Shares; (ii) the Founder
Preferred Shares; (iii) the Warrants; and (iv) any Shares allotted to Non-Founder Directors in connection with the arrangements disclosed in the Preliminary Prospectus; and for all pre-emption rights in the Articles of Association to be waived in
respect of such allotments
|
|
K
|
|
|
|
|
Minutes of the meetings of the Board of Directors, authorising any steps to be taken in connection with Admission and closing and settlement of the Offer, including the allotment and issuance, conditional only on Admission, of the
New Ordinary Shares and Matching Warrants to subscribers in the proportions and as otherwise directed by the Placing Bank, and, to the extent not previously provided, approving any Offer Documents issued after the date of this Agreement
|
|
L
|
|
|
|
|
Letter addressed to the Placing Banks from the Company addressing the following: (i) the fact that there has been no significant change in the financial and trading position, including the indebtedness position, of the Company since
the Accounts Date; (ii) the sufficiency of the Company’s working capital, and (iii) the extraction of financial information
|
|
M
|
PLATFORM: PLACING AGREEMENT
59
|
|
|
|
|
Document
|
|
Marked
|
|
|
|
|
Memorandum on directors’ responsibilities for a prospectus
|
|
N
|
|
|
|
|
Memorandum on the responsibilities and obligations of a director of a company admitted to the standard segment of the Official List
|
|
O
|
|
|
|
|
Memorandum on the financial reporting procedures of the Company
|
|
P
|
|
|
|
|
Registrars’ Agreement
|
|
Q
|
|
|
|
|
Depositary Agreement
|
|
R
|
|
|
|
|
Deed Poll
|
|
S
|
|
|
|
|
Securities Application Forms in respect of the Shares and Warrants
|
|
T
|
|
|
|
|
Share Option Deeds
|
|
U
|
|
|
|
|
From the Directors
|
|
|
|
|
|
|
Directors’ Responsibility Statements
|
|
V
|
|
|
|
|
Directors’ powers of attorney
|
|
W
|
|
|
|
|
Letters of consent to appointment
|
|
X
|
|
|
|
|
Directors’ Questionnaires
|
|
Y
|
|
|
|
|
From the Directors and Founder Entities
|
|
|
|
|
|
|
Insider Letters executed by the Founder Entities and the Directors
|
|
Z
|
|
|
|
|
From the Founder Entities
|
|
|
|
|
|
|
Promissory note addressed to the Company
|
|
AA
|
|
|
|
|
From Founder Directors
|
|
|
|
|
|
|
Letter of undertaking from all Founder Directors to Non-Founder Directors in relation to their Letters of Appointment
|
|
BB
|
|
|
|
|
From Company’s Counsel
|
|
|
|
|
|
|
English law opinion
|
|
CC
|
|
|
|
|
BVI law opinion in relation to the Company
|
|
DD
|
|
|
|
|
BVI law opinion in relation to the Depositary Interests
|
|
EE
|
|
|
|
|
British Virgin Islands letter in relation to, inter alia, BVI taxation
|
|
FF
|
|
|
|
|
Memorandum in relation to the directors’ duties under BVI law
|
|
GG
|
|
|
|
|
Legal opinion provided to CREST in relation to Depositary Interests
|
|
HH
|
PLATFORM: PLACING AGREEMENT
60
|
|
|
|
|
Document
|
|
Marked
|
|
|
|
|
Rule 10b-5 disclosure letter
|
|
II
|
|
|
|
|
US law opinion
|
|
JJ
|
|
|
|
|
Short form report
|
|
KK
|
|
|
|
|
No Significant Change Letter
|
|
LL
|
|
|
|
|
Financial reporting procedures comfort letter
|
|
MM
|
|
|
|
|
UK taxation comfort letter
|
|
NN
|
|
|
|
|
Prospectus comfort letter
|
|
OO
|
|
|
|
|
Bring down comfort letter (UK)
|
|
PP
|
|
|
|
|
US SAS 72 comfort letter
|
|
QQ
|
|
|
|
|
US SAS 72 bring down comfort letter
|
|
RR
|
|
|
|
|
International SAS 72 “look-alike” comfort letter
|
|
SS
|
|
|
|
|
International SAS 72 “look-alike” bring down comfort letter
|
|
TT
|
PLATFORM: PLACING AGREEMENT
61
SCHEDULE 5
DOCUMENTS TO BE DELIVERED
PART A
DELIVERY OF
DOCUMENTS ON, OR PRIOR TO, THE DATE OF THIS AGREEMENT
On, or prior to, the date of this Agreement, the Company shall deliver the following documents
to the Placing Banks:
Documents from the Company, the Founders and the Directors
|
1.
|
Two certified copies of the minutes of the meetings of the Board of Directors approving:
|
|
|
1.1
|
the Preliminary Prospectus and the marketing of the Offer; and
|
|
|
1.2
|
the Offer Documents, this Agreement, the Verification Notes, the Verification Bundles and (where appropriate) the other documents referred to in this Agreement and authorising the steps to be taken by the Company in
connection with the Offer, including the execution of this Agreement and authorising the Directors to allot: (i) the New Ordinary Shares; (ii) the Founder Preferred Shares; (iii) the Warrants; and (iv) any Shares allotted to
Non-Founder Directors in connection with the arrangements disclosed in the Preliminary Prospectus; and for all pre-emption rights in the Articles of Association to be waived in respect of such allotments (and, if the said minutes are of such a
committee, a certified copy of the minutes of the Board of Directors appointing such committee),
|
both in the agreed form.
|
2.
|
Two certified copies of the Final Prospectus bearing evidence of the formal approval of the UK Listing Authority pursuant to the Prospectus Rules and dated the date of this Agreement.
|
|
3.
|
Two certified copies of each of the other Offer Documents (other than any Supplementary Prospectus and any press release required to be issued in connection with the publication of any Supplementary Prospectus).
|
|
4.
|
An original version and certified copy of the Verification Notes, signed by each of the persons named therein as being responsible for such answers, in the agreed form, and copies of all evidence supporting answers in
the notes.
|
|
5.
|
A copy of the Application for admission of securities to the Official List (in the form required by paragraph 3.3.2(1)R of the Listing Rules), duly signed by a Director or Company Secretary.
|
|
6.
|
A copy of the Application for admission to trading on the London Stock Exchange (LSE Form 1) in relation to the Shares, duly signed by a Director or Company Secretary.
|
|
7.
|
A copy of Form A (application for the approval of a prospectus) (referred to in paragraph 3.1.1R(1) of the Prospectus Rules), duly signed by a Director or Company Secretary.
|
PLATFORM: PLACING AGREEMENT
62
|
8.
|
Two original letters addressed to the Placing Banks from the Company, in the agreed form, dated the same date as the Final Prospectus, duly signed by the Company, addressing the following:
|
|
|
8.1
|
the fact that there has been no significant change in the financial and trading position, including the indebtedness position, of the Company since the Accounts Date;
|
|
|
8.2
|
the sufficiency of the Company’s working capital; and
|
|
|
8.3
|
the extraction of financial information.
|
|
9.
|
An original and certified copy of each of the Directors’ Responsibility Statements.
|
|
10.
|
An original and certified copy of each of the powers of attorney, in the agreed form, signed by the Directors.
|
|
11.
|
Two copies of the memorandum of advice from the Company’s Counsel relating to the Directors’ responsibilities as directors of a listed company, in the agreed form, dated 19 April 2013.
|
|
12.
|
Two copies of the memorandum of advice from the Company’s Counsel relating to the Directors’ responsibilities for the Prospectus, in the agreed form, dated 19 April 2013.
|
|
13.
|
A copy of the memorandum of advice from the Company’s Counsel as to British Virgin Islands law relating to the Directors’ duties, responsibilities and liabilities pursuant to the laws of the British Virgin
Islands, in the agreed form, dated April 2013.
|
|
14.
|
Two certified copies of each of the Directors’ Questionnaires.
|
|
15.
|
Two original versions of the Insider Letters.
|
Documents from, or relating to the documents from, the
Reporting Accountants
.
|
16.
|
Two original letters addressed to the Directors and the Placing Banks in relation to the Preliminary Prospectus, in the agreed form, dated the same date as the Preliminary Prospectus, duly signed by the Reporting
Accountants.
|
|
17.
|
Two original versions of the short form report, in the agreed form, dated the same date as the Final Prospectus, duly signed by the Reporting Accountants.
|
|
18.
|
Two certified copies of the letter, in the agreed form, addressed to the Directors and dated the date of the Final Prospectus consenting to the inclusion in the Final Prospectus of their reports and letters in the form
and context in which they are included in the Final Prospectus and authorising, for the purposes of paragraph 5.5.3R(2)(f) of the Prospectus Rules, the contents of those reports and letters, duly signed by the Reporting Accountants.
|
|
19.
|
Two original versions of the No Significant Change Letter, addressed to the Directors and the Placing Banks dated the same date as the Final Prospectus, duly signed by the Reporting Accountants.
|
|
20.
|
Two original letters, in the agreed form, addressed to the Directors and the Placing Banks and dated the date of the Final Prospectus confirming the accuracy of the section headed “United Kingdom taxation” in
Part VII (Taxation) of the Final Prospectus, duly signed by the Reporting Accountants.
|
|
21.
|
Two certified copies of the memorandum on financial reporting procedures prepared by the Company dated 17 May 2013.
|
PLATFORM: PLACING AGREEMENT
63
|
22.
|
Two original letters, in the agreed form, addressed to the Directors and the Placing Banks dated the same date as the Final Prospectus relating to the financial reporting procedures established by the Company, duly
signed by the Reporting Accountants.
|
|
23.
|
Two original versions of the US SAS 72 comfort letter and international SAS 72 “lookalike” comfort letter, addressed to the Directors and the Placing Banks, in the agreed form, dated the date of the Final
Prospectus duly signed by the Reporting Accountants.
|
Other documents
|
24.
|
Two original letters from Company’s Counsel addressed to the Placing Banks confirming the accuracy of the section headed “British Virgin Islands taxation” in Part VII (Taxation) of the Final Prospectus,
duly signed and dated the date of the Final Prospectus.
|
|
25.
|
Two certified copies of the Registrars’ Agreement.
|
|
26.
|
Two certified copies of the Warrant Instrument.
|
|
27.
|
Two certified copies of the Depositary Agreement.
|
|
28.
|
Two certified copies of the Deed Poll.
|
|
29.
|
Two certified copies of the certificate of incorporation, the Memorandum of Association and Articles of Association of the Company.
|
|
30.
|
Two certified copies of any other document, not referred to above, stated in the Final Prospectus as being available for inspection.
|
|
31.
|
Two certified copies of each power of attorney pursuant to which any party executes this Agreement or any other agreement in connection with the Offer.
|
The Placing Banks may, in their absolute discretion, elect that delivery of any of the documents referred to in this Part A of Schedule 5 may be deferred
and in lieu of any such delivery require delivery of the relevant document in a form reasonably satisfactory to them at a later time specified by the Placing Banks.
PLATFORM: PLACING AGREEMENT
64
PART B
DELIVERY OF DOCUMENTS PRIOR TO THE PUBLICATION OF ANY SUPPLEMENTARY PROSPECTUS
Prior to the publication of any Supplementary Prospectus, the Company shall deliver the following documents to the Placing Banks:
Documents from the Company, the Founders and the Directors
|
1.
|
Two certified copies of the minutes of the meetings of the Board of Directors approving the Supplementary Prospectus and, to the extent not previously provided, approving any Offer Documents issued on or prior to the
date of the Supplementary Prospectus and after the date of this Agreement (and, if the said minutes are of such a committee, to the extent not previously provided, a certified copy of the minutes of the Board of Directors appointing such committee).
|
|
2.
|
An original version and certified copy of any additions to the Verification Notes in relation to the Supplementary Prospectus signed by or on behalf of each of the persons named therein as being responsible for the
answers.
|
|
3.
|
Two certified copies of the Supplementary Prospectus bearing evidence of the formal approval of the UK Listing Authority pursuant to the Prospectus Rules and the Listing Rules.
|
|
4.
|
Two certified copies of the press release, in the agreed form, to be issued in connection with the publication of the Supplementary Prospectus.
|
|
5.
|
Two original letters from the Company in the form of Part A of Schedule 7 of this Agreement duly signed by a Director or the Secretary of the Company authorised to do so and dated the date of the Supplementary
Prospectus.
|
|
6.
|
Two original letters from each of the Founder Entities in the form of Part B of Schedule 7 of this Agreement duly signed by a director or the secretary of such Founder Entity authorised to do so and dated the date of
the Supplementary Prospectus.
|
|
7.
|
Two original letters from each of the Founder Directors in the form of Part C of Schedule 7 of this Agreement duly signed by him and dated the date of the Supplementary Prospectus.
|
Documents from the Reporting Accountants
|
8.
|
Two original versions of the “bring-down” letters, in the agreed form, addressed to the Directors and the Placing Banks, dated the date of the Supplementary Prospectus, duly signed by the Reporting
Accountants.
|
|
9.
|
Two original versions of the “bring-down” US SAS 72 comfort letter and international SAS 72 “lookalike” comfort letter, in the agreed form, addressed to the Directors and the Placing Banks, dated the
date of the Supplementary Prospectus, duly signed by the Reporting Accountants.
|
Other documents
|
10.
|
Two certified copies of any documents stated in the Supplementary Prospectus as being available for inspection which have not already been provided to the Placing Banks.
|
The Placing Banks may, in their absolute discretion, elect that delivery of any of the documents referred to in this Part B of Schedule 5 may be deferred
and in lieu of any such delivery require delivery of the relevant document in a form reasonably satisfactory to them at a later time specified by the Placing Banks.
PLATFORM: PLACING AGREEMENT
65
PART C
DELIVERY OF DOCUMENTS ON THE CLOSING DATE
On, or prior to, the Closing Date the Company shall deliver the following documents to the Placing Banks:
Documents from the Company, the Founders and the Directors
|
1.
|
Two certified copies of the minutes of the meetings of the Board of Directors, authorising any steps to be taken in connection with Admission and closing and settlement of the Offer, including the allotment and
issuance, conditional only on Admission, of the New Ordinary Shares and Matching Warrants to subscribers in the proportions and as otherwise directed by the Placing Banks, and, to the extent not previously provided, approving any Offer Documents
issued after the date of this Agreement (and, if the said minutes are of such a committee, to the extent not previously provided, a certified copy of the minutes of the Board of Directors appointing such committee).
|
|
2.
|
A copy of the security application form in respect of the Depositary Interests that has been given to Euroclear, in the agreed form.
|
|
3.
|
A copy of the CREST enablement letters confirming that the conditions for admission of the Depositary Interests to CREST are satisfied.
|
|
4.
|
A copy of the legal opinion provided by the Company’s Counsel to CREST in relation to BVI law.
|
|
5.
|
A copy of the OPS Bulletins provided to Euroclear in relation to the Depositary Interests.
|
|
6.
|
Two original letters from the Company in the form of Part A of Schedule 7 of this Agreement duly signed by a Director or the Secretary of the Company authorised to do so and dated the date of the Closing Date.
|
|
7.
|
Two original letters from each of the Founder Entities in the form of Part B Schedule 7 of this Agreement duly signed by a director, managing member or the secretary of such Founder Entity authorised to do so and dated
the date of the Closing Date.
|
|
8.
|
Two original letters from each of the Founder Directors in the form of Part C Schedule 7 of this Agreement duly signed by him and dated the date of the Closing Date.
|
Documents from the Reporting Accountants
|
9.
|
Two original versions of the “bring-down” letters, in the agreed form, addressed to the Directors and the Placing Banks, dated the date of the Closing Date, duly signed by the Reporting Accountants.
|
|
10.
|
Two original versions of the “bring-down” US SAS 72 comfort letter and international SAS 72 “lookalike” comfort letter, in the agreed form, addressed to the Directors and the Placing Banks, dated the
date of the Closing Date, duly signed by the Reporting Accountants.
|
Opinions and letters from legal advisers
|
11.
|
Two original versions of the signed Rule 10b-5 disclosure letter addressed to the Placing Banks, in the agreed form, from the Company’s Counsel dated the date of the Closing Date.
|
|
12.
|
Two original versions of the signed US legal opinion addressed to the Placing Banks, in the agreed form, from the Company’s Counsel dated the date of the Closing Date.
|
PLATFORM: PLACING AGREEMENT
66
|
13.
|
Two original versions of the signed English law opinion of the Company’s Counsel, in the agreed form, addressed to the Placing Banks dated the date of the Closing Date.
|
|
14.
|
Two original versions of the signed Delaware law opinion, in the agreed form, addressed to the Placing Banks, from Greenberg Traurig LLP dated the date of the Closing Date, in relation to Mariposa Acquisition, LLC.
|
|
15.
|
Two original versions of the signed British Virgin Islands law opinion of the Company’s Counsel in relation to the Company addressed to the Placing Banks, in the agreed form, dated the date of the Closing Date.
|
|
16.
|
Two original versions of the signed British Virgin Islands law opinion, in the agreed form, addressed to the Placing Banks, from Maples and Calder dated the date of the Closing Date in relation to Berggruen Acquisition
Holdings IV Ltd.
|
|
17.
|
Two original versions of the signed Rule 10b-5 disclosure letter addressed to the Placing Banks from the Placing Banks’ Counsel dated the date of the Closing Date.
|
|
18.
|
Two original versions of the signed US legal opinion addressed to the Placing Banks, from the Placing Banks’ Counsel dated the date of the Closing Date.
|
|
19.
|
Two original versions of the signed English law opinion of the Placing Bank’s Counsel, addressed to the Placing Banks, dated the date of the Closing Date.
|
The Placing Banks may, in their absolute discretion, elect that delivery of any of the documents referred to in this Part C of Schedule 5 may be deferred
and in lieu of any such delivery require delivery of the relevant document in a form reasonably satisfactory to them at a later time specified by the Placing Banks.
PLATFORM: PLACING AGREEMENT
67
SCHEDULE 6
UNDERTAKINGS
|
1.
|
COMMITMENTS, ARRANGEMENTS AND DEVELOPMENTS
|
|
1.1
|
During the period from the date of this Agreement until the date which is 180 calendar days after the Closing Date, neither the Company nor any of the Directors nor any director from time to time of the Company shall
take any steps which would be inconsistent with any expression of policy or intention in the Offer Documents without prior consultation with each of the Placing Banks.
|
|
2.1
|
Save in relation to an announcement, advertisement, statement or communication required by law or by any securities exchange or governmental or regulated body (a “
Restricted Announcement
”), each of the
Company, the Founder Entities and the Directors severally undertakes not to circulate, distribute, publish, issue, make or despatch (and will not authorise any other person to circulate, distribute, publish, issue, make or despatch) any public
announcement, advertisement document or communication concerning the Company, the Offer or otherwise relating to the assets, liabilities, profits, losses, financial or trading conditions or the earnings, business affairs or business prospects of the
Company which is or may be material in the context of the Company or in relation to the Offer at any time prior to the date which is 90 calendar days after the Closing Date (the “
Restricted Period
”), without having first furnished
to each of the Placing Banks a copy of each such proposed announcement or communication as far in advance of the announcement as reasonably practicable to enable them to comment thereon and to consult with them and having obtained the Placing
Banks’ prior written consent as to its contents and the timing and manner of its release.
|
|
2.2
|
The Company undertakes to make all such announcements concerning the Offer as shall be necessary to comply with the LPDT Rules, the Admission and Disclosure Standards, the Companies Act and FSMA or which the Placing
Banks otherwise reasonably consider to be necessary or desirable and each of the Placing Banks shall be entitled (following consultations with the other parties to this Agreement where practicable) to make any such announcement if the Company fails
(in the opinion of such Placing Bank) promptly to fulfil its obligations under this paragraph 2.2.
|
|
2.3
|
The Company undertakes that it will not at any time during the Restricted Period make any Restricted Announcement without first:
|
|
|
2.3.1
|
notifying the Placing Banks as to the content of publication of such Restricted Announcement;
|
|
|
2.3.2
|
making available drafts of such Restricted Announcement to the Placing Banks in sufficient time prior to its publication to allow the Placing Banks an opportunity to consider and comment on the same;
|
|
|
2.3.3
|
consulting with the Placing Banks as to the content of publication of such Restricted Announcement; and
|
|
|
2.3.4
|
taking account of the Placing Banks’ reasonable requirements.
|
PLATFORM: PLACING AGREEMENT
68
|
3.
|
RESTRICTIONS ON THE COMPANY IN RELATION TO THE SHARES
|
|
3.1
|
Without prejudice to paragraph 7.2 of this Schedule 6 and subject to paragraph 3.2 of this Schedule 6, the Company undertakes that it will not, without the prior written consent of each of the Placing Banks, during the
period commencing on the date of this Agreement and ending on the date which is 180 days from the date of this Agreement: (a) undertake any consolidation or sub-division of its share capital or any capitalisation issue; or (b) directly or
indirectly, allot, issue, offer, sell, lend, pledge, contract to sell or issue, grant any option, right or warrant to purchase or otherwise dispose of any Shares (or any interest therein or in respect thereof) or other securities of the Company
exchangeable for, convertible into or representing the right to receive Shares or any such substantially similar securities; or (c) otherwise enter into any transaction (including any derivative transaction) directly or indirectly, permanently
or temporarily, to dispose of any Shares; or (d) undertake any other transaction with the same economic effect as any of the foregoing or announce an offering of Shares or any interest therein; or (e) to announce publicly any intention to
enter into any transaction described in paragraphs (a) to (d) above.
|
|
3.2
|
The undertaking in paragraph 3.1 shall not apply to:
|
|
|
3.2.1
|
the issue by the Company of any Shares upon the conversion of the Founder Preferred Shares as described in paragraph 4.3 of Part VIII (Additional Information) of the Final Prospectus; or
|
|
|
3.2.2
|
the issue by the Company of any Shares upon the exercise of the Warrants as described in paragraph 1 of Part IX (Terms and Conditions of the Warrants) of the Final Prospectus;
|
|
|
3.2.3
|
any of the matters referred to in paragraphs 3.1 (a) to (e) when carried out in relation to the Acquisition; or
|
|
|
3.2.4
|
the issue and offer by the Company of Shares pursuant to the Offer and to Non-Founder Directors under their Letters of Appointment and Share Option Deeds.
|
|
4.
|
RESTRICTIONS ON THE FOUNDERS AND THE NON-FOUNDER DIRECTORS IN RELATION TO THE SHARES AND WARRANTS
|
|
4.1
|
Subject to paragraph 4.2 of this Schedule 6, each of the Founder Entities and the Directors severally undertakes that (other than as provided for in this Agreement) it will not and will procure that no Affiliate of it
shall, without the prior written consent of each of the Placing Banks, during the period (the “
Lock-up Period
”) commencing on the date of this Agreement and ending on the date which is the earlier of: (i) 365 days from the
Acquisition Closing Date; or (ii) the liquidation of the Company for failure to complete an Acquisition: (a) directly or indirectly, offer, sell, lend, pledge, contract to sell, distribute, grant any option, right or warrant to purchase or
otherwise dispose of: (x) any Shares (including, but not limited to, any Shares received by the conversion of the Founder Preferred Shares) or Warrants; (y) the Founder Preferred Shares; or (z) other securities which are exchangeable
for, convertible into or representing the right to receive Shares, Founder Preferred Shares or any substantially similar securities; or (b) otherwise enter into any transaction (including any derivative transaction) directly or indirectly,
permanently or temporarily, to dispose of any Shares or the Founder Preferred Shares or Warrants; or (c) undertake any other transaction with the same economic effect as any of the foregoing; or (d) announce an offering of any Shares,
Founder Preferred Shares or Warrants or any interest therein; or (e) to announce publicly any intention to enter into any transaction described in paragraphs (a) to (d) above (each, a “
Disposal
”).
|
PLATFORM: PLACING AGREEMENT
69
|
4.2
|
The undertaking in paragraph 4.1 of this Schedule 6 shall not apply to any of the following provided that in each case the Disposal is conducted in accordance with all applicable laws (including the Securities Act),
the Articles of Association and the Warrant Instrument (as applicable) (including without limitation that the transferee is not a Prohibited Person as described therein):
|
|
|
4.2.1
|
a Disposal by: (i) Mariposa Acquisition, LLC or Martin Franklin of up to an aggregate amount of 10% of their Shares; or (ii) Berggruen Acquisition Holdings IV Ltd. or Nicolas Berggruen of up to an aggregate
amount of 10% of their Shares or Warrants, as a bona fide gift (in each case, by reference to the number of Shares and Warrants they held immediately following Admission);
|
|
|
4.2.2
|
a Disposal of Founder Preferred Shares as a bona fide gift made with the prior written consent of the Placing Banks;
|
|
|
4.2.3
|
a Disposal of Shares, Founder Preferred Shares or Warrants by a Director for estate planning purposes to persons immediately related to the relevant Director, as the case may be, making such Disposal by blood, marriage
or adoption;
|
|
|
4.2.4
|
a Disposal of Shares, Founder Preferred Shares or Warrants by a Director to (i) any trust that is solely for the benefit of the relevant Director, as the case may be, and/or the persons described in paragraph 4.2.3
of this Schedule 6 or (ii) any direct or indirect wholly-owned subsidiary of such trust;
|
|
|
4.2.5
|
a Disposal of Shares, Founder Preferred Shares or Warrants by a Founder Director or a Founder Entity to any of the Company’s Directors (from time to time);
|
|
|
4.2.6
|
a Disposal of Shares, Founder Preferred Shares or Warrants by a Founder Entity to any of its Affiliates or direct or indirect holders of equity, holders of partnership interests or members;
|
|
|
4.2.7
|
a Disposal of Shares, Founder Preferred Shares or Warrants to a Founder Entity (or Affiliates or direct or indirect holders of equity, partnership interests or members of a Founder Entity);
|
|
|
4.2.8
|
a Disposal of Shares, Founder Preferred Shares or Warrants to a direct or indirect subsidiary of the Company or to a target company or shareholders of a target company (or direct or indirect subsidiary of a target
company) in connection with, or as a result of transactions related to, the completion of the Acquisition;
|
|
|
4.2.9
|
after the Acquisition Closing Date, a Disposal of Shares by any Founder Entity (or in the event of a Disposal under paragraph 4.2.6 of this Schedule 6, any Affiliate or direct or indirect equity holder, holder of
partnership interest or member of such Founder Entity) to any person if and to the extent that either (i) the proceeds of sale are used solely for the purpose of making a payment by way of charitable gift to a charitable organisation registered
with the applicable charities regulator or (ii) such person is a charitable organisation registered with the applicable charities regulator; provided, however, that the aggregate number of Shares which are the subject of such Disposals by a
Founder Entity and any equity holder, holder of partnership interest or member referred to therein of such Founder Entity shall not exceed up to an aggregate amount of 10% of the number of Shares such Founder Entity would have held immediately
following Admission having exercised all the Warrants it held at that time;
|
|
|
4.2.10
|
an acceptance of a general offer for the Shares or Warrants made to all holders of Shares and/or Warrants on equal terms;
|
PLATFORM: PLACING AGREEMENT
70
|
|
4.2.11
|
the provision of an irrevocable undertaking to accept an offer as described in paragraph 4.2.10 of this Schedule 6;
|
|
|
4.2.12
|
after the Acquisition Closing Date, any Disposal of Shares by a Founder to any person if and to the extent that the proceeds of sale are used solely for the purpose of meeting any tax liability incurred in connection
with, or as a result of transactions related to, the completion of the Acquisition; or
|
|
|
4.2.13
|
a Disposal of any Shares or Warrants acquired by a Founder Entity or Director after the date of Admission in any open-market transaction;
|
provided that:
|
|
(A)
|
with respect to any of the Disposals listed in paragraphs 4.2.1 to 4.2.8 of this Schedule 6 above, the relevant disposing Founder Entity or Director shall deliver to each of the Placing Banks and the Company, prior to
or contemporaneously with making such a Disposal, an enforceable
lock-up
agreement in the form set out in Schedule 10 of this Agreement, duly executed by the permitted transferee (or the trustee or legal
guardian of such transferee) in respect of the Shares, Founder Preferred Shares or Warrants (as applicable) to be transferred to him, her or it; and
|
|
|
(B)
|
each Founder Entity or Director severally undertakes to each of the Placing Banks and the Company that any Disposal by it pursuant to this paragraph 4.2 shall, to the extent permitted by relevant law or regulation, be
notified in writing to each of the Placing Banks and the Company no later than five Business Days after the entry into of any agreement relating to the same.
|
Promptly following receipt of an agreement referred to in paragraph 4.2(A) above, the Company shall duly execute such agreement and deliver it
to the Placing Banks.
|
5.
|
COPIES OF DOCUMENTS AND PROVISION OF INFORMATION
|
During the period from the date of
this Agreement until the date which is 180 days after the Closing Date, the Company undertakes to furnish to each of the Placing Banks copies of all reports or other communications (financial or other) furnished to shareholders or warrantholders and
to deliver to each of the Placing Banks: (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the FCA, the London Stock Exchange or any securities exchange on which any class of securities
of the Company is listed (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to the FCA, the London Stock Exchange or any securities exchange
on which any class of securities of the Company is listed); and (ii) such additional information concerning the business and financial condition of the Company as each of the Placing Banks may from time to time reasonably request.
|
6.
|
SUPPLEMENTARY PROSPECTUS
|
|
6.1
|
The Company will comply with FSMA and the LPDT Rules so as to permit the completion of the distribution of the New Ordinary Shares and Matching Warrants as contemplated in this Agreement and the Offer Documents. If at
any time after the Final Prospectus has been lodged with the FCA for approval and prior to Admission:
|
|
|
6.1.1
|
any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of the Placing Banks, the Company or the
respective legal advisers, to amend or supplement any Offer Document in order that such Offer Document will not contain any untrue statement of a material fact or omit to state a material
|
PLATFORM: PLACING AGREEMENT
71
|
|
fact necessary in order to make the statements therein not misleading in light of the circumstances existing at the time it is delivered to a subscriber of New Ordinary Shares and Matching
Warrants;
|
|
|
6.1.2
|
if there arises or is noted any matter referred to in section 87G of FSMA of which the Company is, or becomes, aware prior to Admission and which requires the Company to deal with such change in accordance with
section 87G of FSMA, the Prospectus Rules and/or the Listing Rules; or
|
|
|
6.1.3
|
if it shall be necessary, in the opinion of the Placing Banks’ Counsel or Company’s Counsel, at any such time to amend or supplement any Offer Document in order to comply with the requirements of FSMA, the
Prospectus Rules and/or the Listing Rules or other appropriate law or regulation (as the case may be),
|
the Company, the
Founders or the Directors (as the case may be) will:
|
|
(A)
|
promptly bring such event or condition to the notice of the Placing Banks and shall promptly prepare and file with the UK Listing Authority (or procure the filing with the FCA of) such amendment or supplement as may be
necessary to correct such statement or omission or to make such Offer Document comply with such requirements. Before amending or supplementing any Offer Documents, the Company will furnish the Placing Banks with a copy of each such proposed
amendment or supplement, and will not make any such proposed amendment or supplement without the consent of each of the Placing Banks, such consent not to be unreasonably withheld or delayed, provided always that (i) nothing in this paragraph
shall prevent the Company or the Founders or the Directors from complying with their obligations at law or under FSMA or the LPDT Rules and (ii) this paragraph shall be without prejudice to the rights of the Placing Banks pursuant to clause 13;
and
|
|
|
(B)
|
furnish to the Placing Banks such number of copies or such amendment or supplement as the Placing Banks may reasonably request.
|
|
6.2
|
Each of the Company, the Founder Entities and the Directors undertakes promptly to notify each of the Placing Banks if it comes to its or his attention at any time on or before Admission that any person wishes to
exercise statutory withdrawal rights after the issue by the Company of a Supplementary Prospectus. However, the Founder Entities shall have no right of withdrawal in the event a Supplementary Prospectus is issued.
|
|
7.
|
SELLING RESTRICTIONS AND EXERCISE OF WARRANTS
|
|
7.1
|
The Company, each of the Founder Entities and each of the Directors severally undertakes that it has (and undertakes that each of its Affiliates has) complied, and will (and will procure that each of their respective
Affiliates will) comply with all relevant laws and regulations of each relevant jurisdiction (including, without prejudice to the generality of the foregoing, all requirements of all applicable regulatory authorities in each such jurisdiction) in
connection with the Offer and the release or distribution of any document or information relating to the Offer in each such jurisdiction.
|
|
7.2
|
The Company, each of the Founder Entities and each of the Directors severally undertakes that it has not (and undertakes that each of its Affiliates
has not) made, and will not (and will procure that each of its Affiliates will not) make, directly or indirectly, offers or sales of any Shares or other securities of the Company exchangeable for, convertible into or representing the right to
receive Shares or any such substantially similar securities or
|
PLATFORM: PLACING AGREEMENT
72
|
|
otherwise enter into any transaction (including any derivative transaction) in respect of such Shares, Warrants or other securities nor has it solicited, nor will it solicit, offers to buy or
otherwise negotiate in respect of any such security under circumstances which, either separately or together, constitute an unlawful offering to the public in, or otherwise contravene the laws of any jurisdiction or which would require registration
under the Securities Act and will, notwithstanding the foregoing, promptly, from time to time, take such action as each of the Placing Banks may reasonably request to qualify the Shares or Warrants for offering and sale under the securities laws of
any such jurisdiction and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares.
|
|
7.3
|
For so long as there remain unexercised Warrants, the Company shall not allow any person to exercise their Warrants where to do so would affect the Company’s ability to meet the requirements in Listing Rule 4.3.2
which require a sufficient number of Shares, being 25 per cent. of the Shares, to be in public hands.
|
|
7.4
|
Each of the Company, the Founder Entities and the Directors severally undertakes that it will and undertakes that its Affiliates and any person acting on its behalf (other than the Placing Banks and their respective
Affiliates, as to whom no undertaking is made) will comply with all applicable provisions of the US federal securities laws in connection with the issue and delivery of any Shares upon any exercise of Warrants.
|
|
8.
|
DIVIDENDS AND SHARE CAPITAL
|
Other than in connection with an Acquisition, the Company
will not, on or after the date of this Agreement until after the Acquisition Completion Date declare, make or pay any dividends or other distribution on any of its share capital nor increase, reduce or modify any part thereof in any way.
|
9.
|
RELATED PARTY TRANSACTIONS
|
For so long as the Company has a listing on the standard
listing segment of the Official List, the Company will not enter into any transaction which would constitute a “related party transaction” as defined in Chapter 11 of the Listing Rules (were Chapter 11 of the Listing Rules to apply to the
Company) without the specific prior approval of a majority of the Relevant Persons (where
“Relevant Persons”
means the non-executive directors determined by the Board of Directors to be independent for the purposes of the Corporate
Governance Code and the Chairman of the Board of Directors from time to time, if he was independent at the time of his appointment for the purposes of the Corporate Governance Code).
The Company will not enter into the Acquisition without the specific prior
approval of a majority of the Relevant Persons.
|
11.
|
AUTHORITY OF REGISTRARS AND DEPOSITARY
|
The Company undertakes to provide the Registrars
and the Depositary respectively with all necessary authorisations, information and instructions to enable the Registrars and the Depositary respectively to perform their duties in accordance with, and as contemplated by, this Agreement, the Final
Prospectus (as amended or supplemented from time to time), the Registrars’ Agreement, the Depositary Agreement and the Deed Poll. Prior to the Acquisition Closing Date, the Company undertakes not to exercise any right to terminate the
Registrars’ Agreement or the Depositary Agreement without the written consent of each of the Placing Banks.
PLATFORM: PLACING AGREEMENT
73
|
12.
|
INVESTMENT COMPANY ACT
|
The Company is not, and immediately after giving effect to the
offer and sale of the New Ordinary Shares (with Matching Warrants) and the application of the proceeds thereof as described in the Prospectus, will not be an “investment company” as such term is defined in the Investment Company Act.
|
13.
|
NO DIRECTED SELLING EFFORTS
|
None of the Company, the Founder Entities, the Directors,
nor their respective Affiliates nor any person acting on its or their behalf (other than the Placing Banks and their respective Affiliates, as to whom no undertaking is made), directly or indirectly, will engage in any “directed selling
efforts” (within the meaning of Regulation S) in connection with any offer or sale of the New Ordinary Shares or Matching Warrants.
|
14.
|
NO GENERAL SOLICITATION
|
None of the Company, the Founder Entities, the Directors nor
their respective Affiliates nor any person acting on its or their behalf (other than the Placing Banks and their respective Affiliates, as to whom no undertaking is made), directly or indirectly, will engage in any form of “general
solicitation” or “general advertising” (within the meaning of Rule 502(c) of Regulation D) in connection with any offer or sale of the New Ordinary Shares or Matching Warrants.
|
15.
|
RULE 144A ELIGIBLE SECURITIES
|
For so long as the New Ordinary Shares, Warrants and
Shares issued and delivered upon exercise of Warrants are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will not become an “open-end company”, “unit investment trust”
or “face-amount certificate company”, as such terms are defined in, and that it is not registered or required to be registered under Section 8 of, the Investment Company Act.
|
16.
|
RULE 144A INFORMATION
|
For so long as any of the New Ordinary Shares, Warrants and
Shares issued and delivered upon exercise of Warrants remain outstanding and are “restricted securities” (within the meaning of Rule 144(a)(3) under the Securities Act), the Company undertakes that during any period in which it is not
subject to Section 13 or 15(d) of the Exchange Act nor exempt from reporting pursuant to Rule 12g3-2b under the Exchange Act, it will make available to any holder or beneficial owner of New Ordinary Shares, Warrants and Shares issued and
delivered upon exercise of Warrants which are restricted securities and to any prospective purchaser (as designated by such holder or beneficial owner) of such restricted securities, in each case upon request, any information required to be provided
by Rule 144A(d)(4) under the Securities Act. The undertakings of the company in this paragraph 16 are enforceable by such holders who are not parties to this Agreement by virtue of the Contracts (Rights of Third Parties) Act 1999.
|
17.
|
LIMITATIONS ON RESALES BY AFFILIATES
|
The Company undertakes that, for so long as the
New Ordinary Shares, Warrants and Shares issued and delivered upon exercise of Warrants are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, it will not, and will not permit any of its Affiliates to,
resell in the United States any Shares and Warrants acquired by any of them other than in transactions that meet the applicable requirements of Regulation S or are otherwise exempt from, or not subject to, the registration requirements of the
Securities Act.
PLATFORM: PLACING AGREEMENT
74
The Company undertakes that it will use its best endeavours to monitor its
shareholder base and restrict ownership of, or other equity interests in, its Shares by Plan Investors to less than 25 per cent. of its Shares, after excluding the ownership of, or equity interests in, any Shares held by each of the Founders
and the Directors and any of their respective affiliates (as such term is defined in the Plan Asset Regulations).
The Company and each of the Directors undertakes that it or he will
not approve the appointment of a director to the Board of Directors unless the Board of Directors at the relevant time is satisfied that the Company will maintain its status as a foreign private issuer (as defined in Rule 405 under the Securities
Act).
|
20.1
|
The Company will use the net proceeds received by it from the sale of the New Ordinary Shares (with Matching Warrants) and any proceeds raised from the subscription for the Founder Preferred Shares in the manner
specified in the Prospectus under the paragraph entitled “Use of proceeds” in Part I (Investment Opportunity and Strategy) of the Final Prospectus. Neither the Company nor any of the Founders will, directly or indirectly, use the proceeds
of the Offer and any proceeds received from the subscription for the Founder Preferred Shares or from any exercise of the Warrants or lend, contribute or otherwise make available such proceeds to any Affiliate, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently subject to any US sanctions administered by OFAC or any similar sanctions imposed by the European Union, the United Nations or any other body, governmental or otherwise.
|
|
20.2
|
Save as described in the section headed “Use of Proceeds” in Part I of the Prospectus, prior to completion of the Acquisition, the Company will invest or deposit the net proceeds received by it from the sale
of the New Ordinary Shares (with Matching Warrants) and any proceeds raised from the subscription for the Founder Preferred Shares in US Treasuries or such money market fund instruments as approved by the Non-Founder Directors, in a manner that will
not result in the Company being an “investment company” as such term is defined in the Investment Company Act.
|
|
20.3
|
Prior to completion of the Acquisition, the Company will invest or deposit any proceeds received from the exercise of Warrants in a manner that will not result in the Company being an “investment company” as
such term is defined in the Investment Company Act.
|
|
21.
|
COMPLIANCE WITH LPDT RULES
|
Prior to the Acquisition Closing Date, each of the Directors
will, and will ensure that the Company will, as of the date of this Agreement, comply with the LPDT Rules on an ongoing basis.
The Company undertakes that it has not maintained, does not
currently maintain and will not maintain any register of members in the United Kingdom at any time prior to the Acquisition Closing Date.
|
23.
|
REORGANISATION IN CONNECTION WITH AN ACQUISITION
|
Notwithstanding clause 16.4 of this
Agreement and, without prejudice to paragraph 4 of Schedule 6, in the event that any of the Founder Entities or Directors receive, in connection
PLATFORM: PLACING AGREEMENT
75
with the Acquisition, an interest in an entity other than the Company (such securities, the “
New Securities
”), each of the Founder Entities and Directors acknowledges and agrees
that the New Securities shall be (i) subject to the transfer restrictions set forth in paragraph 4.1 of Schedule 6 and (ii) entitled to the benefits of the same exceptions to such transfer restrictions permitted by paragraph 4.2 of
Schedule 6 to the Placing Agreement to the same extent as such exceptions apply to the Disposal of the Shares.
|
24.
|
SUBSCRIPTION BY THE FOUNDERS
|
Each of the Founder Entities severally undertakes that
(i) no later than two Business Days prior to the Closing Date, it will (A) deposit cleared funds (in an amount equal to the Offer Price multiplied by the number of New Ordinary Shares (with Matching Warrants) set forth against its name in
Part A of Schedule 9 (such New Ordinary Shares (with Matching Warrants), the “
Founder Subscription Securities
”, and such amount, the “
Founder Subscription Funds
”) in an account at its custodian (or an affiliate
thereof); and (B) instruct such custodian to enter into a receive versus payment instruction with the CREST Nominee providing for the transfer, as soon as reasonably practicable on the Closing Date, of the Founder Subscription Funds; and
(ii) subject to Admission occurring not later than the Closing Date (or such later time and date as the Company and the Placing Banks may agree), (A) it will not, nor will it instruct any person acting on its behalf to, amend, modify,
terminate or cancel the instruction described in sub-paragraph 24(i)(B) above; and (B) it will make or procure payment of the Founder Subscription Funds and subscribe for the Founder Subscription Securities on the Closing Date as described in
sub-paragraph 24(i)(B) above. Berggruen Acquisition Holdings IV Ltd. confirms that its custodian for these purposes and the custodian’s details are as follows:
Agent Bank: Pershing Securities Ltd (BIC: ########)
Crest #: ###
Account Name:
######## ###
One Pershing Plaza
Jersey City, New Jersey 07399
Account #: ##########
BIC Code:
########
Ref: Acc # ###-######
Contact Info:
Abigail R.
Stevenson
CREDIT SUISSE (USA) LLC
Eleven Madison Avenue
New York,
NY 10010-3629
Tel: +# ### ### ####
and Mariposa Acquisition, LLC confirms that its custodian for these purposes and the custodian’s details are as follows:
JPM Chase Bank London
SWIFT:
########
Participant No at CREST: #####
Ref: #####
Contact Info:
Melissa Stanhope & Jennifer Dunham
JPM Morgan Chase Bank
500
Stanton Christiana Road
Newark, DE 19713
Tel: +#-###-###-####
PLATFORM: PLACING AGREEMENT
76
Each of Nicolas Berggruen and Martin Franklin severally undertakes that each of Berggruen
Acquisition Holdings IV Ltd. and Mariposa Acquisition, LLC, respectively, will comply with its obligations in this paragraph 24 of Schedule 6.
|
25.
|
ISSUANCE OF FOUNDER PREFERRED SHARES
|
The Company undertakes that, until after the
Acquisition Closing Date, it will not issue any Founder Preferred Shares unless such issuance has first been approved by a majority of Independent Non-Executive Directors and the Chairman of the Board of Directors.
PLATFORM: PLACING AGREEMENT
77
SCHEDULE 7
CERTIFICATES
PART A
CERTIFICATE FROM THE COMPANY
[Letterhead of the Company]
Citigroup Global Markets Limited
[
—
] 2013
Dear Sirs
Proposed Offer
We refer to the Placing Agreement dated 17 May 2013 in which a draft of this letter appears as Schedule 7 (the “
Placing Agreement
”).
Words and expressions defined in the Placing Agreement have the same meanings herein.
We confirm, with respect to the representations, warranties and
undertakings given by the Company under the Placing Agreement, that (subject only to the giving of this letter):
|
i.
|
we have complied with our undertakings and obligations under the Placing Agreement in all respects to the extent that they fall due for performance on or before the date of this letter;
|
|
ii.
|
none of the representations, warranties or undertakings referred to in clause 11 of the Placing Agreement has been breached or was untrue, inaccurate or misleading when made and none of such representations, warranties
or undertakings would be breached or be untrue, inaccurate or misleading were it to be repeated by reference to the facts and circumstances subsisting at the date hereof; and
|
|
iii.
|
since the date of the Placing Agreement, there has been no Material Adverse Change.
|
This letter shall be
governed by and construed in accordance with English law.
|
|
|
Yours faithfully
|
|
|
|
|
|
Director
|
|
|
|
for and on behalf of Platform Acquisition Holdings Limited
|
PLATFORM: PLACING AGREEMENT
78
PART B
CERTIFICATE FROM THE FOUNDER ENTITIES
[Letterhead of the Founder Entity]
Citigroup Global Markets Limited
[
—
] 2013
Dear Sirs
Proposed Offer
We refer to the Placing Agreement dated 17 May 2013 in which a draft of this letter appears as Schedule 7 (the “
Placing Agreement
”).
Words and expressions defined in the Placing Agreement have the same meanings herein.
We confirm, with respect to the representations, warranties and
undertakings given by [name of the Founder Entity] under the Placing Agreement, that (subject only to the giving of this letter):
|
i.
|
we have complied with our undertakings and obligations under the Placing Agreement in all respects to the extent that they fall due for performance on or before the date of this letter;
|
|
ii.
|
none of the representations, warranties or undertakings referred to in clause 11 of the Placing Agreement has been breached or was untrue, inaccurate or misleading when made and none of such representations, warranties
or undertakings would be breached or be untrue, inaccurate or misleading were it to be repeated by reference to the facts and circumstances subsisting at the date hereof; and
|
|
iii.
|
since the date of the Placing Agreement, there has been no Material Adverse Change.
|
This letter shall be
governed by and construed in accordance with English law.
|
|
|
Yours faithfully
|
|
|
|
|
|
Director
|
|
|
|
for and on behalf of [name of the Founder Entity]
|
PLATFORM: PLACING AGREEMENT
79
PART C
CERTIFICATE FROM THE FOUNDER DIRECTORS
Citigroup Global Markets Limited
[
—
] 2013
Dear Sirs
Proposed Offer
I refer to the Placing Agreement dated 17 May 2013 in which a draft of this letter appears as Schedule 7 (the “
Placing Agreement
”). Words and
expressions defined in the Placing Agreement have the same meanings herein.
I confirm, with respect to the representations, warranties and undertakings
given by me under the Placing Agreement, that (subject only to the giving of this letter):
|
i.
|
I have complied with my undertakings and obligations under the Placing Agreement in all respects to the extent that they fall due for performance on or before the date of this letter;
|
|
ii.
|
none of the representations, warranties or undertakings referred to in clause 11 of the Placing Agreement has been breached or was untrue, inaccurate or misleading when made and none of such representations, warranties
or undertakings would be breached or be untrue, inaccurate or misleading were it to be repeated by reference to the facts and circumstances subsisting at the date hereof; and
|
|
iii.
|
since the date of the Placing Agreement, there has been no Material Adverse Change.
|
This letter shall be
governed by and construed in accordance with English law.
|
|
|
Yours faithfully
|
|
|
|
|
|
[Name of Founder Director]
|
PLATFORM: PLACING AGREEMENT
80
SCHEDULE 8
SELLING RESTRICTIONS
United States
|
1.
|
Each of the Placing Banks severally understands and agrees that the New Ordinary Shares and Matching Warrants have not been and will not be registered under the Securities Act and may not be offered or sold within the
United States, except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act.
|
|
2.
|
Each of the Placing Banks severally agrees that its Affiliates and any persons acting on its or their behalf has not solicited and will not solicit offers, and has not offered or sold, and will not offer or sell, the
New Ordinary Shares or Matching Warrants as part of its distribution at any time except (A) in the United States to (i) persons it reasonably believes to be QIBs in transactions meeting the requirements of Rule 144A or that are otherwise
exempt from the registration requirements of the Securities Act and (ii) Mariposa Acquisition, LLC and Pershing Square II, LP, in each case, in transactions that are exempt from the registration requirements of the Securities Act, or
(B) outside the United States in accordance with Rule 903 of Regulation S.
|
|
3.
|
Each of the Placing Banks severally agrees, represents, warrants and undertakes to the Company that neither it, its Affiliates nor any persons acting on its or their behalf has engaged or will engage in any directed
selling efforts (within the meaning of Regulation S) with respect to the New Ordinary Shares or Warrants.
|
|
4.
|
Each of the Placing Banks severally agrees, represents, warrants and undertakes to the Company that neither it, its Affiliates nor any persons acting on its or their behalf has engaged or will engage in any form of
“general solicitation” or “general advertising” (within the meaning of Rule 502(c) of Regulation D under the Securities Act) in connection with any offer or sale of the New Ordinary Shares or Matching Warrants in the United
States.
|
United Kingdom
|
5.
|
Each of the Placing Banks severally agrees, represents, warrants and undertakes to the Company and the Founders that it has not offered or sold and will not offer or sell any New Ordinary Shares or Matching Warrants to
the public in the United Kingdom nor requested the admission of the Shares and Warrants to trading on a regulated market situated or operating in the United Kingdom prior to the Final Prospectus having been approved by the UK Listing Authority and
made available in accordance with FSMA and the Prospectus Rules.
|
|
6.
|
Each of the Placing Banks severally agrees, represents, warrants and undertakes to the Company and the Founders that it has complied and will comply with all applicable provisions of FSMA with respect to anything done
by it in relation to the New Ordinary Shares and Matching Warrants in, from or otherwise involving the United Kingdom.
|
European Economic
Area
|
7.
|
In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a “
Relevant Member State
”), each of the Placing Banks represents and agrees it has
not made and will not make an offer of any New Ordinary Shares or Matching Warrants to the public in that Relevant Member State, except that it may make an offer of any New Ordinary Shares or Matching Warrants to the public in that Relevant Member
State at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
|
|
|
(i)
|
to any legal entity which is a qualified investor as defined under the Prospectus Directive;
|
PLATFORM: PLACING AGREEMENT
81
|
|
(ii)
|
to fewer than 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive); and
|
|
|
(iii)
|
in any other circumstances falling within Article 3(2) of the Prospectus Directive,
|
provided
that no such offer of New Ordinary Shares or Matching Warrants shall result in a requirement for the publication by the Company or any Placing Bank of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the
Prospectus Directive in that Member State.
For the purposes of this provision, the expression “an offer of any New Ordinary Shares or
Matching Warrants to the public” in relation to any New Ordinary Shares or Matching Warrants in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Offer and any New
Ordinary Shares or Matching Warrants to be offered so as to enable an investor to decide to acquire any New Ordinary Shares or Matching Warrants, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in
that Member State. The expression “
Prospectus Directive
” means Directive 2003/71/EC (and the amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any
relevant implementing measure in each Relevant Member State and the expression “
2010 PD Amending Directive
” means Directive 2010/73/EC.
PLATFORM: PLACING AGREEMENT
82
SCHEDULE 9
PLACING ALLOCATION TABLE
PART A
NEW ORDINARY
SHARES AND MATCHING WARRANTS TO BE ACQUIRED BY THE FOUNDER ENTITIES
|
|
|
|
|
|
|
New Ordinary Shares (each with one Matching Warrant per
Share)
|
|
|
|
|
Mariposa Acqusition, LLC
|
|
4,240,000 New Ordinary Shares and 4,240,000 Matching Warrants
|
|
|
|
|
Berggruen Acquisition Holdings IV Ltd.
|
|
3,760,000 New Ordinary Shares and 3,760,000 Matching Warrants
|
|
|
|
|
Total
|
|
8,000,000 New Ordinary Shares and 8,000,000 Matching Warrants
|
PART B
PLACING COMMITMENTS
|
|
|
|
|
|
|
New Ordinary Shares (each with one Matching Warrant per
Share)
|
|
|
|
|
Barclays
|
|
40,250,000 New Ordinary Shares and 40,250,000 Matching Warrants
|
|
|
|
|
Citi
|
|
40,250,000 New Ordinary Shares and 40,250,000 Matching Warrants
|
|
|
|
|
Total
|
|
80,500,000 New Ordinary Shares and 80,500,000 Matching Warrants
|
PLATFORM: PLACING AGREEMENT
83
SCHEDULE 10
FORM OF LOCK-UP DEED
THIS DEED is made
on by
of (the “Covenantor”).
WHEREAS:
(1) (i) Mariposa Acquisition, LLC;
(ii) Berggruen Acquisition Holdings IV Ltd.; ((i) and (ii) each a “
Founder Entity
”); (iii) Nicolas Berggruen; (iv) Martin Franklin; ((iii) and (iv) each a “
Founder Director
”);
(v) Barclays Bank PLC; (vi) Citigroup Global Markets Limited ((v) and (vi) each a “
Placing Bank
”); (vii) Alun Cathcart; (viii) Alain Minc, (ix) Lord Myners of Truro, CBE; ((vii), (viii), (ix) each
a “
Non-Founder Director
” and each, together with each of the Founder Directors, a “
Director
”); and (ix) Platform Acquisition Holdings Limited (the “
Company
”) entered into a placing agreement on
17 May 2013 (the “
Placing Agreement
”);
(2) Pursuant to the terms of the Placing Agreement the relevant disposing Founder Entity,
Founder Director or Non-Founder Director has agreed to deliver to each of the Placing Banks and the Company, prior to or contemporaneously with making any Disposal permitted pursuant to paragraphs 4.2.1 to 4.2.7 of Schedule 6 of the Placing
Agreement, a
lock-up
agreement in the agreed form, duly executed by the permitted transferee (or the trustee or legal guardian of such transferee) (a “
Permitted Transferee
”) in respect of the
Shares, Founder Preferred Shares or Warrants (as applicable) to be transferred to the Permitted Transferee; and
(3) The Covenantor is a Permitted
Transferee and is entering into this Deed as required by the terms of the Placing Agreement.
NOW THIS DEED WITNESSES AS FOLLOWS:
|
1.
|
DEFINITION AND INTERPRETATION
|
|
1.1
|
Unless a contrary indication appears, a term defined in the Placing Agreement has the same meaning when used in this Deed; and
|
|
1.2
|
The principles of constructions set out in clauses 1.3 to 1.15 of the Placing Agreement shall be incorporated into this Deed
mutatis mutandis
as if set out in full in this Deed.
|
|
2.
|
RESTRICTION ON TRANSFERS
|
|
2.1
|
The Covenantor represents, warrants and undertakes that it is a permitted transferee for the purposes of paragraphs 4.2.1 to 4.2.7 of Schedule 6 of the Placing Agreement.
|
|
2.2
|
Subject to clause 3, the Covenantor undertakes that it will not, and will procure that no Affiliate of it shall, without the prior written consent of each of the Placing Banks, during the period commencing on the date
of this Deed and ending on the date which is the earlier of: (i) 365 days from the Acquisition Closing Date; or (ii) the liquidation of the Company for failure to complete an Acquisition, make any Disposal.
|
|
3.
|
EXCEPTIONS TO THE TRANSFER RESTRICTION
|
|
3.1
|
The undertaking in clause 2.2 shall not apply to any of the following provided that in each case the Disposal is conducted in accordance with all applicable laws (including the Securities Act), the Articles of
Association and the Warrant Instrument (as applicable) (including without limitation that the transferee is not a Prohibited Person as described therein):
|
|
|
3.1.1
|
a Disposal by: (i) Mariposa Acquisition, LLC or Martin Franklin of up to an aggregate amount of 10% of their Shares; or (ii) Berggruen Acquisition Holdings IV Ltd. or Nicolas Berggruen of up to an aggregate
amount of 10% of their Shares, as a bona fide gift (by reference, in each case, to the number of Shares and Warrants they held immediately following Admission);
|
PLATFORM: PLACING AGREEMENT
84
|
|
3.1.2
|
a Disposal of Shares, Founder Preferred Shares or Warrants by the Covenantor as a bona fide gift made with the prior written consent of the Placing Banks;
|
|
|
3.1.3
|
a Disposal of Shares, Founder Preferred Shares or Warrants by a Coventantor for estate planning purposes to persons immediately related to the Coventantor by blood, marriage or adoption;
|
|
|
3.1.4
|
a Disposal of Shares, Founder Preferred Shares or Warrants by a Coventantor to (i) any trust that is solely for the benefit of the Coventantor and/or persons immediately related to the Coventantor by blood,
marriage or adoption or (ii) any direct or indirect wholly-owned subsidiary of such trust;
|
|
|
3.1.5
|
a Disposal of Shares, Founder Preferred Shares or Warrants to any of the Company’s Directors (from time to time);
|
|
|
3.1.6
|
a Disposal of Shares, Founder Preferred Shares or Warrants by a Covenantor to any of its Affiliates or direct or indirect holders of equity so long as such holders of equity are Affiliates of either a Founder Entity or
a Founder Director;
|
|
|
3.1.7
|
a Disposal of Shares, Founder Preferred Shares or Warrants to a Founder Entity (or Affiliates or direct or indirect holders of equity, partnership interests or members of a Founder Entity);
|
|
|
3.1.8
|
a Disposal of Shares, Founder Preferred Shares or Warrants to a direct or indirect subsidiary of the Company or to a target company (or direct or indirect subsidiary) or shareholders of a target company in connection
with, or as a result of transactions related to, the completion of the Acquisition;
|
|
|
3.1.9
|
after the Acquisition Closing Date, a Disposal of Shares by any Founder Entity (or in the event of a Disposal under clause 3.1.6, any Affiliate or direct or indirect equity holder, holder of partnership interest or
member of such Founder Entity) to any person if and to the extent that either (i) the proceeds of sale are used solely for the purpose of making a payment by way of charitable gift to a charitable organisation registered with the applicable
charities regulator or (ii) such person is a charitable organisation registered with the applicable charities regulator; provided, however, that the aggregate number of Shares which are the subject of such Disposals by a Founder Entity and any
equity holder, holder of partnership interest or member referred to therein of such Founder Entity shall not exceed up to an aggregate amount of 10% of the number of Shares such Founder Entity would have held immediately following Admission having
exercised the Warrants it held at that time;
|
|
|
3.1.10
|
an acceptance of a general offer for the Shares or Warrants made to all holders of Shares or Warrants (as applicable) on equal terms;
|
|
|
3.1.11
|
the provision of an irrevocable undertaking to accept an offer as described in clause 3.1.10;
|
|
|
3.1.12
|
after the Acquisition Closing Date, any Disposal of Shares by a Covenantor to any person if and to the extent that the proceeds of sale are used solely for the purpose of meeting any tax liability incurred in connection
with, or as a result of transactions related to, the completion of the Acquisition; or
|
|
|
3.1.13
|
a Disposal of any Shares or Warrants acquired by a Covenantor after the date of Admission in any open-market transaction;
|
PLATFORM: PLACING AGREEMENT
85
provided that: (a) with respect to any of the Disposals listed in clauses 3.1.1 to 3.1.8
above, the Covenantor shall deliver to each of the Placing Banks and the Company, prior to, or contemporaneously with, making such a Disposal, an enforceable
Lock-Up
Deed in the same form as this Deed, duly
executed by the permitted transferee (or the trustee or legal guardian of such transferee) in respect of the Shares, Founder Preferred Shares or Warrants (as applicable) to be transferred to him, her or it; and (b) the Covenantor undertakes to
each of the Placing Banks and the Company that any Disposal by it pursuant to this Deed shall, to the extent permitted by relevant law or regulation, be notified in writing to each of the Placing Banks and the Company no later than five Business
Days after the entry into of any agreement relating to the same.
|
3.2
|
Promptly following receipt of an agreement referred to in sub-paragraph (a) above, the Company shall duly execute such agreement and deliver it to the Placing Banks.
|
|
4.
|
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
|
No term of this Deed is enforceable under
the Contracts (Rights of Third Parties Act) 1999, by a person who is not a party to this Deed.
|
5.1
|
Each of the Company and the Covenantor shall maintain an agent for service of process in England.
|
|
5.2
|
Each of the Company and the Covenantor shall, prior entering into this Deed, appoint [
—
] of [
—
] as process agent in
the UK (the “
Agent
”) to act as its agent to accept service of process in England in any legal action or proceedings arising out of or in connection with this Deed and shall procure that the Agent will, no later than the date hereof,
confirm in writing to the Placing Banks its acceptance of such appointment. All correspondence with the Agent shall be marked for the attention of the party notified to the Placing Banks in the written acceptance letter mentioned in this clause 5.2
and delivered in accordance with clause 6 and clause 15 of the Placing Agreement.
|
|
5.3
|
If the Agent ceases to be able to act as such or to have an address in England, each of the Company and the Covenantor agrees to appoint a new process agent having an address in England and to deliver to the Placing
Banks within 10 Business Days a copy of a written acceptance of appointment by the new process agent. If either of the Company or the Covenantor does not make such an appointment within 10 Business Days of such cessation, then each of the Placing
Banks, acting reasonably, may do so on behalf of the Company and the Covenantor and at the cost of the Company and the Covenantor, and shall notify the Company and the Covenantor if it does so.
|
|
6.1
|
The provisions of clauses 15.1 (subject to clause 6.2 below), 15.2, 15.3, 15.4, 16.8, 16.9, 16.12, 16.13, 17.4 and 18 of the Placing Agreement shall be incorporated into this Deed
mutatis mutandis
as if set out
in full in this Deed. References in these incorporated clauses to “Agreement” shall be deemed to be to this Deed, references to “Founders”, “Non-Founder Directors”, “Founder Entities” and “Directors”
shall be deemed to be solely to the Covenantor (save that the undertaking in clause 18.2.3 shall be deemed made by each of the Company and the Covenantor), and references to “prior to Admission on the Closing Date” shall be deemed to be to
prior to entering into this Deed.
|
|
6.2
|
For the purposes of clause 15 of the Placing Agreement, the relevant details of the Covenantor are set out below and the relevant details of each of the Company and the Placing Banks are as set out in clause 15 of the
Placing Agreement.
|
PLATFORM: PLACING AGREEMENT
86
Relevant details for the Covenantor:
Address:
Fax Number:
For the attention of:
IN WITNESS
WHEREOF
, this Deed has been entered into the day and year first above written.
|
|
|
|
|
EXECUTED
as a Deed by
|
|
)
|
|
[
NAME OF COVENANTOR
]
|
|
)
|
|
in the presence of:
|
|
)
|
|
|
|
)
|
|
Signature of witness
|
|
|
|
|
|
|
Name of witness
|
|
|
|
(in BLOCK CAPITALS)
|
|
|
|
|
|
|
Address of witness
|
|
|
|
|
|
|
EXECUTED
as a Deed by
|
|
)
|
|
PLATFORM ACQUISITION
|
|
)
|
|
HOLDINGS LIMITED
|
|
)
|
|
acting by:
|
|
)
|
|
|
|
)
|
|
Director
|
|
|
|
|
|
|
Director/Secretary
|
|
|
PLATFORM: PLACING AGREEMENT
87
In witness whereof, this Agreement has been entered into the day and year first above written.
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
PLATFORM ACQUISITION
|
|
)
|
|
/s/ Lord Myners of Truro, CBE
|
|
HOLDINGS LIMITED
|
|
)
|
|
|
|
acting by:
|
|
)
|
|
|
|
|
|
)
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
/s/ Alun Cathcart
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
BARCLAYS BANK PLC
|
|
)
|
|
/s/ Stephanie Kogels
|
|
acting by:
|
|
)
|
|
|
|
Vice President
|
|
)
|
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
CITIGROUP GLOBAL
|
|
)
|
|
/s/ Andrew Seaton
|
|
MARKETS LIMITED
|
|
)
|
|
|
|
acting by:
|
|
)
|
|
|
|
|
|
)
|
|
|
|
Director
|
|
|
|
|
PLATFORM: PLACING AGREEMENT
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
BERGGRUEN ACQUISITION
|
|
)
|
|
/s/ Nicolas Berggruen
|
|
HOLDINGS IV LTD.
|
|
)
|
|
|
|
acting by:
|
|
)
|
|
|
|
|
|
)
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
Director/Secretary
|
|
|
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
MARIPOSA ACQUISITION, LLC
|
|
)
|
|
/s/ Martin Franklin
|
|
acting by:
|
|
)
|
|
|
|
|
|
)
|
|
|
|
|
|
|
|
Managing Member and/or
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
MARTIN FRANKLIN
|
|
)
|
|
/s/ Martin Franklin
|
|
|
|
)
|
|
|
|
|
|
)
|
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
NICOLAS BERGGRUEN
|
|
)
|
|
/s/ Nicolas Berggruen
|
|
|
|
)
|
|
|
|
|
|
)
|
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
ALUN CATHCART
|
|
)
|
|
/s/ Alun Cathcart
|
|
|
|
)
|
|
|
|
|
|
)
|
|
|
PLATFORM: PLACING AGREEMENT
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
ALAIN MINC
|
|
)
|
|
/s/ Alain Minc
|
|
|
|
)
|
|
|
|
|
|
)
|
|
|
|
|
|
|
|
SIGNED
by
|
|
)
|
|
|
|
LORD MYNERS OF TRURO, CBE
|
|
)
|
|
/s/ Lord Myners of Truro, CBE
|
|
|
|
)
|
|
|
|
|
|
)
|
|
|
PLATFORM: PLACING AGREEMENT
Exhibit 10.19
DATED 2013
PLATFORM ACQUISITION HOLDINGS LIMITED
AND
[
NAME OF
DIRECTOR
]
SHARE OPTION DEED
GREENBERG TRAURIG MAHER LLP
7
TH
F
LOOR
200 G
RAY
’
S
I
NN
R
OAD
L
ONDON
WC1X 8HF
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
DEFINITIONS
|
|
|
3
|
|
|
|
|
|
|
2.
|
|
INTERPRETATION
|
|
|
4
|
|
|
|
|
|
|
3.
|
|
GRANT OF SHARE OPTION
|
|
|
4
|
|
|
|
|
|
|
4.
|
|
EXERCISE OF SHARE OPTION
|
|
|
4
|
|
|
|
|
|
|
5.
|
|
CESSATION OF OFFICE
|
|
|
5
|
|
|
|
|
|
|
6.
|
|
RELATIONSHIP WITH TERMS OF APPOINTMENT
|
|
|
5
|
|
|
|
|
|
|
7.
|
|
TAX
|
|
|
6
|
|
|
|
|
|
|
8.
|
|
NON-TRANSFERABILITY
|
|
|
6
|
|
|
|
|
|
|
9.
|
|
TAKEOVERS, WINDING-UP AND RECONSTRUCTION
|
|
|
6
|
|
|
|
|
|
|
10.
|
|
NOTICES
|
|
|
7
|
|
|
|
|
|
|
11.
|
|
MISCELLANEOUS
|
|
|
8
|
|
|
|
|
|
|
12.
|
|
GOVERNING LAW AND JURISDICTION
|
|
|
8
|
|
|
|
|
|
SCHEDULE 1 SHARE OPTION
|
|
|
9
|
|
THIS DEED
is dated 2013
BETWEEN
:
|
(1)
|
PLATFORM ACQUISITION HOLDINGS LIMITED
(incorporated in the Territory of the British Virgin Islands with registered number [
—
]) whose registered office is at
[
address
]
(the “
Company
”); and
|
|
(2)
|
[
Name of
Director]
of [
address
] (the “
Holder
”).
|
WHEREAS:-
|
(A)
|
The Holder was appointed as a non-executive director of the Company on [
—
] 2013.
|
|
(B)
|
The Directors have resolved that it is in the Company’s best interests to grant to the Holder the Share Option pursuant to the terms and conditions of this Agreement.
|
NOW IT IS HEREBY AGREED
as follows:-
|
1.1
|
In this Agreement, except where a different interpretation is necessary in the context, the words and expressions set out below shall have the following meanings:
|
“
Acquisition
” has the meaning given in the Prospectus;
“
Admission
” means admission of the Ordinary Shares to the standard segment of the Official List and to trading on the main
market for listed securities of the London Stock Exchange;
“
Agreement
” means this deed of agreement;
“
Award Tax Liability
” means in relation to the Holder, any liability of the Company (and any other member of its Group) to
account to Her Majesty’s Revenue & Customs or any other tax authority for any amount of, or representing, income tax, NICs, or social security contributions or any other tax charge, levy or other sum (whether under the laws of the UK
or otherwise) (with the exception of employer NICs) which may arise on the grant, vesting, exercise, assignment or release of the Share Option;
“
Directors
” means the board of directors of the Company or a duly authorised committee of the directors;
“
Exercise Price
” means US$11.50 per Ordinary Share;
“
FCA
” means the UK Financial Conduct Authority;
“
Group
” means the Company and any company which is for the time being a Subsidiary;
“
Model Code
” means the Model Code on directors’ dealings in securities issued by the UKLA and adopted by the Company;
“
New Company
” has the meaning given in Clause 9.2;
“
Official List
” means the official list maintained by the UKLA;
“
Ordinary Shares
” means ordinary shares of no par in the capital of the Company
“
Prospectus
” means the prospectus to be published by the Company on or around
[
—
] 2013 in connection with Admission;
3
“
Share Option
” means the rights to subscribe for Ordinary Shares granted to the
Holder by this Agreement;
“
Subsidiary
” means any company which is for the time being a subsidiary (as defined in section
4 of the BVI Business Companies Act, 2004 (as amended)) of the Company;
“
Subscription Period
” means the period commencing
on the Trading Day immediately following the date of completion of the Acquisition and ending at 5.00 p.m. (London time) on the fifth anniversary of the completion of the Acquisition, or if such day is not a Trading Day, the Trading Day immediately
following such day;
“
Trading Day
” has the meaning given in the Prospectus;
“
UKLA
” means the FCA in its capacity as the competent authority for listing in the UK;
“
UK
” means the United Kingdom of Great Britain and Northern Ireland;
“
Variation
” means (in relation to the share capital of the Company) an issue of Ordinary Shares by way of dividend or
distribution to holders of Ordinary Shares, a subdivision, consolidation or any other variation of the share capital of the Company, as determined by the Directors.
The headings in this Agreement are for convenience and should be ignored
when construing the contract. Unless the context otherwise requires, words in the singular include the plural and vice versa and words importing either gender include both genders. Reference in this Agreement to any statutory provision are to those
provisions as amended or re-enacted from time to time, and include any regulations or other subordinate legislation made under them. References to “$” or “US$” are to the lawful currency of the United States.
The Company hereby grants to the Holder the right (subject to the
terms and conditions of this Agreement), but not the obligation, to subscribe for up to [100,000] [75,000] Ordinary Shares at any time during the Subscription Period at the Exercise Price.
|
4.
|
EXERCISE OF SHARE OPTION
|
|
4.1
|
The Share Option shall not be exercised on any occasion if such exercise would not be in accordance with the Model Code.
|
|
4.2
|
The Holder may exercise all or any of the subscription rights pursuant to the Share Option at any time during the Subscription Period by notice in writing in substantially the same form as set out in Schedule 1 to the
Company and, subject to receipt of the Exercise Price for each Ordinary Share to be issued, the Company shall (within 10 days of the Company receiving the notice in question) issue to (or to the order of) the Holder the Ordinary Shares in question.
Subscription rights will be deemed to be exercised on the Trading Day upon which the Company receives the relevant documentation and remittance in cleared funds.
|
|
4.3
|
Ordinary Shares issued pursuant to the exercise or partial exercise of the Share Option in accordance with the terms of this Agreement shall be issued fully paid and free from any liens, charges or encumbrances and
rights of pre-emption but shall not rank for any dividends or other distributions declared, made or paid on the Ordinary Shares for which the record date is prior to the relevant day on which relevant rights pursuant to the Share Option are
exercised but subject thereto, shall rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares on or after the relevant day on which relevant rights pursuant to the Share Option are exercised and otherwise
pari passu in all respects with the Ordinary Shares in issue at that date.
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4
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4.4
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At any time when Ordinary Shares are traded on the London Stock Exchange and/or any other securities exchange or quotation system, it is the intention of the Company to apply to the UKLA (or relevant authority or any
securities exchange or quotation system) for the Ordinary Shares issued pursuant to the exercise or partial exercise of the Share Option to be admitted to the Official List and to trading on the London Stock Exchange’s main market for listed
securities or such other securities exchange or quotation system on which the Ordinary Shares are traded or quoted.
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Otherwise than in connection with the Acquisition, and unless the
Directors (in their absolute discretion) determine otherwise, if for any reason the Holder ceases to hold office as a non-executive director with the Company (or if for any reason he gives or receives notice to terminate his office as a
non-executive director with the Company) before the completion of the Acquisition, the Share Option will lapse and cease to be exercisable from the earlier of the date of such giving or receiving of notice and the date of ceasing to hold office.
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6.
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RELATIONSHIP WITH TERMS OF APPOINTMENT
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6.1
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The Share Option is governed solely by the terms of this Agreement and does not form part of the Holder’s entitlement to remuneration or benefits pursuant to his terms of appointment as a non-executive director and
save as otherwise provided the rights and obligations of the Holder under his terms of appointment as a non-executive director shall not be affected by the granting of the Share Option.
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6.2
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The rights or opportunity granted to the Holder on the granting of the Share Option shall not give the Holder any rights or additional rights to compensation or damages in consequence of either:-
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6.2.1
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the Holder giving or receiving notice of termination of his office as non-executive director; or
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6.2.2
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the loss or termination of his office as non-executive director with the Company for any reason whatsoever,
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whether or not the termination (and/or giving of notice) is ultimately held to be wrongful or unfair.
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6.3
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The Holder shall not be entitled to any compensation or damages for any loss or potential loss which he may suffer by reason of being unable to acquire Ordinary Shares, or any interest in Ordinary Shares, pursuant to
the Share Option in consequence of:-
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6.3.1
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the Holder giving or receiving notice of termination of his office as non-executive director (whether or not the termination (and/or giving of notice) is ultimately held to be wrongful or unfair);
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6.3.2
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the loss or termination of his office as non-executive director with the Company for any reason whatsoever (whether or not the termination is ultimately held to be wrongful or unfair);
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6.3.3
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the exercise by the Directors of any discretion in accordance with this Agreement; or
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5
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6.3.4
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for any other reason.
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7.1
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The Holder irrevocably agrees to pay to the Company and any other member of its Group a sum equal to any Award Tax Liability of such company.
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7.2
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In the event of any claim being made by the Company pursuant to Clause 7.1 the Company shall have the right:-
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7.2.1
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to sell as agent for the Holder (and the Holder hereby appoints the Company as its agent and attorney for this purpose) a sufficient number of Ordinary Shares held by the Holder and to retain from the net proceeds of
sale of such Ordinary Shares (after deduction of all fees, commissions and expenses incurred in relation to such sale) monies sufficient to satisfy the amount claimed;
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(a)
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this power of attorney is irrevocable, save with the consent of the Company and is given by way of security to secure the interest of the Company (for itself and as trustee under this Deed on behalf of any relevant
Group Company) as a person liable to account for or pay any Award Tax Liability;
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(b)
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a person who deals in good faith with the Holder’s attorney appointed under this Clause 7 may accept a written statement signed by that person that this power of attorney has not been revoked as conclusive evidence
of that fact; and/or
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7.2.2
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to deduct the amount claimed from the Holder’s fees under his terms of appointment as non-executive director.
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8.1
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The Share Option is personal to the Holder and may not be transferred during his lifetime.
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8.2
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The Holder shall immediately cease to have any right or entitlement to receive any Ordinary Shares pursuant to this Share Option if the Holder:-
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8.2.1
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transfers or assigns, mortgages, charges or otherwise disposes of the Share Option (other than to his personal representatives); or
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8.2.2
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is adjudged bankrupt or an interim order is made because he intends to propose a voluntary arrangement to his creditors under the Insolvency Act 1986 (or any other provision of the laws of any jurisdiction outside the
UK which is intended to have similar effect or purpose); or
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8.2.3
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makes or proposes any other plan or arrangement, in relation to his debts, with his creditors or any section of them; or
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8.2.4
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is otherwise deprived (except on death) of the legal or beneficial ownership of the Share Option, whether by operation of law or by doing or omitting to do anything which causes him to be so deprived.
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9.
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TAKEOVERS AND WINDING-UP
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9.1
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While any subscription rights under the Share Option remain outstanding (whether or not such rights have become exercisable), if at any time an offer
is made to all holders of
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6
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Ordinary Shares (or all such holders other than the offeror and/or any company controlled by the offeror and/or persons acting in concert with the offeror) to acquire all or some of the issued
Ordinary Shares and the Company becomes aware on or before the end of the Subscription Period that as a result of such offer (or as a result of such offer and any other offer made by the offeror) the right to cast a majority of the votes which may
ordinarily be cast on a poll at a general meeting of the Company has or will become vested in the offeror and/or such companies or persons as aforesaid, the Company will give notice to the Holder of such vesting within 14 days of it occurring, and
each such Holder will be entitled, at any time within the period of 30 days immediately following the date of such notice, to exercise his outstanding subscription rights under the Share Option on the terms on which the same could have been
exercised if they had been exercisable and had been exercised on the date of such notice after which time all subscription rights under the Share Option will lapse. If any part of such period falls after the end of the Subscription Period, the end
of the Subscription Period will be deemed to be the last business day of that 30 day period.
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9.2
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If in connection with the Acquisition holders of Ordinary Shares are offered or receive shares in another company (the “
New Company
”) the Directors may in their absolute discretion determine that the
Share Option will be replaced by a new share option in respect of shares of the New Company and Clause 9.1 will not apply if it otherwise would do so. Any such new share option will be equivalent to the Share Option (as determined by the Directors
in their absolute discretion) and will be on such terms as the Directors consider in their absolute discretion to be fair and reasonable.
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9.3
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If the Company enters liquidation, all subscription rights under the Share Option will lapse on the date of entry into liquidation. The Company will use reasonable endeavours to give the Holder at least 15 calendar
days’ notice prior to the date on which the Company closes its books or takes a record with respect to determining rights to vote with respect to any voluntary dissolution or voluntary liquidation of the Company.
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10.1
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Any notice or document to be given by the Directors or the Company to the Holder in accordance or in connection with this Agreement shall be duly given:-
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10.1.1
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by sending it through the post in a pre-paid envelope to the address last known to the Company to be his address and, if so sent, it shall be deemed to have been duly given on the second day following the date of
posting; or
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10.1.2
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by sending it to him by e-mail or by sending to him a facsimile transmission addressed to him at his normal email address or fax number for communications with the Company and such notice shall be deemed to have been
duly given at the time of transmission.
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10.2
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Any notice in writing or document to be submitted or given to the Company in accordance or in connection with this Agreement may be delivered, sent by post, facsimile transmission or e-mail to such person as may from
time to time be nominated by the Company and whose name and address, facsimile and email details are notified to the Holder and:-
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10.2.1
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in the case of notice by delivery, such notice shall be deemed to have been given when the notice is delivered; or
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10.2.2
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in the case of notice by post, such notice shall be deemed to have been duly given on the day following the date of posting; or
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10.2.3
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in the case of notice by facsimile or e-mail, such notice shall be deemed to have been duly given at the time of transmission, provided that for notice given by email, a return receipt must be received indicating that
the email has been opened.
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7
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11.1
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In the event of any Variation, the Directors may make such adjustments as they consider appropriate to the number of Ordinary Shares in respect of which the Share Option subsists and/or the Exercise Price.
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11.2
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The Company and the Holder may at any time by the execution of a deed alter or add to any of the provisions of this Agreement in any respect.
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11.3
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The issue of Ordinary Shares pursuant to this Agreement shall be subject to the Company’s Memorandum and Articles of Association and compliance by the Holder with all laws, rules, regulations, requirements and
guidance applicable to dealing in the Ordinary Shares.
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11.4
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Unless otherwise provided in this Agreement this Share Option shall become incapable of exercise and shall lapse at the end of the Subscription Period.
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11.5
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Except as otherwise expressly stated to the contrary, neither this Agreement nor the granting of the Share Option shall have the effect of giving any third party any rights under this Agreement.
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11.6
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This Agreement may be executed in any number of counterparts and by each of the parties on separate counterparts, each of which when executed and delivered shall be deemed to be an original, but all the counterparts
together shall constitute one and the same agreement.
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12.
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GOVERNING LAW AND JURISDICTION
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12.1
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This Agreement shall be governed by and construed in all respects in accordance with the laws of the British Virgin Islands.
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12.2
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The courts of the British Virgin Islands shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning the Share Option and any matter arising from or in relation to this Agreement.
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EXECUTED AS A DEED
by the parties on the date which first appears in this Agreement.
8
SCHEDULE 1
SHARE OPTION
[NAME]
[ADDRESS]
The Directors
Platform Acquisition Holdings Limited
[
—
]
(the “
Company
”)
[DATE]
Dear Sirs
SUBSCRIPTION OF SHARES IN THE COMPANY PURSUANT TO SHARE OPTION
Unless otherwise stated, defined terms shall have the meaning given to them in the Share Option Deed entered into between me and the Company, dated [
—
] 2013 (the “
Share Option Deed
”).
Pursuant to the Share Option Deed, I hereby give notice
that I wish to exercise my right to subscribe for [
—
] Ordinary Shares in the Company. Accordingly, I hereby apply for [
—
] Ordinary Shares to be
issued fully paid in cash at the total subscription price of $[
—
] (the “
Subscription Price
”).
I enclose payment of a cheque made payable to the Company for an amount equal to the Subscription Price / I have made other arrangements (as agreed with the
Company) to pay the Subscription Price by electronic transfer (
delete as appropriate
).
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*
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If you wish to pay by electronic transfer please contact the Company.
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I hereby undertake and agree to
take the said Ordinary Shares subject to the provisions of the Memorandum and Articles of Association of the Company and I hereby authorise you to enter my name and relevant particulars in the Register of Members of the Company as holder of the
Ordinary Shares so issued to me pursuant to this application and to send the relevant share certificate to me at the address set out above at my own risk.
9
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EXECUTED
as a
DEED
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)
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by
PLATFORM ACQUISITION HOLDINGS LIMITED
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)
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acting by
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)
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a director in the presence of
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)
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Director
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Witness signature:
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Name:
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Address:
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Occupation:
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EXECUTED
as a
DEED
(but not delivered until
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)
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dated) by
[
NAME OF DIRECTOR
]
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)
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in the presence of:-
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)
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Witness signature:
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Name:
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Address:
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Occupation:
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10
Exhibit 10.21
MacDERMID, INCORPORATED EMPLOYEES’ PENSION PLAN
THIRD AMENDMENT
to
Amended and Restated Plan
WHEREAS, MacDermid, Incorporated, a corporation organized under the laws of the State of Connecticut (the
“Corporation”), adopted the MacDermid, Incorporated Employees’ Pension Plan (the “Plan”) effective April 1, 1976, and most recently restated the Plan effective generally January 1, 2009; and
WHEREAS, Article X of the Plan reserves to the Corporation the right to amend the Plan; and
WHEREAS, the Corporation amended the Plan most recently by adoption of the Second Amendment on October 30, 2012; and
WHEREAS, the Company entered into an agreement with Platform Acquisition Holdings Limited (“PAHL”) and certain other parties dated
as of October 10, 2013 pursuant to which, among other things, PAHL agreed to purchase the business and operations of the Company (the “Business Combination Agreement”) and the closing of the transactions contemplated by the Business
Combination Agreement occurred on October 31, 2013; and
WHEREAS, the Corporation now desires to amend the Plan further to, effective
December 31, 2013, (i) cease the admission of new participants into the Plan, (ii) create a class of participants (“Grandfathered Participants”) consisting of each active participant as of December 31, 2013 who is
credited with at least five years of service as of such date provided the sum of such participant’s age and years of credited service is not less than 50, (iii) cease accrual of additional benefits by Non-Grandfathered Participants,
(iv) cease additions to Credited Service after December 31, 2013 by Grandfathered Participants, and (v) make certain technical changes in accordance with guidance issued by the U.S. Internal Revenue Service (the “IRS”)
relating to the Pension Protection Act of 2006, including without limitation IRS Notice 2011-96;
NOW, THEREFORE, the Plan is amended
effective December 31, 2013, as follows:
1. Section 2.1 is amended by inserting, immediately after the first (and only)
sentence thereof the following:
“Notwithstanding the foregoing, (i) a Non-Grandfathered Participant’s Accrued Benefit shall
be frozen as of December 31, 2013 and accrual of additional benefits under the Plan shall cease as of such date, and (ii) a Grandfathered Participant’s Credited Service shall be frozen as of December 31, 2013. In no event shall a
Non-Grandfathered Participant’s Average Monthly Compensation, Covered Compensation, Final Average Compensation, Credited Service or other applicable components of the Plan benefit formulae be determined based on compensation (including
Compensation) or service (including Hours of Service) attributable to any period after December 31, 2013.”
2. Section 2.8 is amended by inserting immediately after the final sentence thereof the
following:
“Notwithstanding any provision of the Plan to the contrary, a Non-Grandfathered Participant’s Average Monthly
Compensation shall be determined as of December 31, 2013 or as of his earlier separation from service, and in computing any benefit on or after December 31, 2013, the Average Monthly Compensation of a Non-Grandfathered Participant shall be
his Average Monthly Compensation determined as of December 31, 2013.”
3. Section 2.13 is amended by inserting immediately
after the final sentence thereof the following:
“Notwithstanding any provision of the Plan to the contrary, compensation paid for
services rendered by a Non-Grandfathered Participant (or to which a Non-Grandfathered Participant is otherwise entitled or credited for any other reason, including paid leave) with respect to any period after December 31, 2013 shall be
disregarded in determining a Non-Grandfathered Participant’s “Compensation” for purposes of the Plan, and no compensation shall be imputed for such purpose with respect to any period.”
4. Section 2.15 is amended by deleting the period at the end of the first (and only) sentence thereof and inserting in lieu thereof the
following: “or, with respect to Non-Grandfathered Participants, December 31, 2013, if earlier.”
5. Section 2.16 is
amended as follows:
(i) by deleting from clause (b) the word “Solely” and inserting in lieu thereof the
following: “Subject to clause (g) of this Section 2.16, solely ….”;
(ii) by inserting immediately
after clause (f) thereof the following:
“(g) Notwithstanding any provision of the Plan to the contrary, in no event shall any
service attributable to any period after December 31, 2013 be considered for purposes of determining Credited Service under this Section 2.16.”
6. Section 2.22 is amended by inserting immediately after the final sentence thereof the following:
“Notwithstanding any provision of the Plan to the contrary, compensation for Plan Years commencing on or after January 1, 2014 shall
be disregarded for purposes of determining a Non-Grandfathered Participant’s benefit under the Plan.”
- 2 -
7. Article II is amended as follows:
(i) by inserting immediately after Section 2.23 the following new Section:
“ ‘Grandfathered Participant’ means each Participant employed by the Company on December 31, 2013 provided that, as at
such date, (i) such Participant is credited with at least five years of Credited Service and (ii) the sum of such Participant’s age and years of Credited service as of December 31, 2013 must equal or exceed fifty (50).”;
(ii) by amending Section 2.25 to insert immediately after clause (f) thereof the following:
“(g) Notwithstanding any provision of the Plan to the contrary, in no event shall any service attributable to any period after
December 31, 2013 be considered for purposes of determining Hours of Service.”; and
(iii) by inserting
immediately after Section 2.25 the following new Section:
“ ‘Non-Grandfathered Participant’ means each Participant
who is not a Grandfathered Participant.”
8. Section 2.32 is amended by inserting immediately after the final sentence thereof
the following:
“With respect to a Non-Grandfathered Participant in service on December 31, 2013, the Social Security Taxable
Wage Base shall be determined as of December 31, 2013 to reflect the suspension of accruals as of that date.”
9.
Section 2.37 is amended by inserting immediately after clause (g) thereof the following:
“(h) Notwithstanding any provision
of the Plan to the contrary, a Participant’s Years of Service and Vesting Service shall be determined as of December 31, 2013 and no service rendered thereafter shall be recognized for any purpose under the Plan, including without
limitation, for purposes of determining the amount of a Participant’s benefit, except to the extent required otherwise by applicable law, including without limitation Section 411 of the Code.”
10. Article II is hereby amended by redesignating the sections of Article II in sequential order consistent with the foregoing.
11. Section 3.3 is amended by inserting immediately after the third (and final) sentence thereof the following: “Notwithstanding the
foregoing, no former Participant who is reemployed by the Company after the forfeiture or distribution in full of such former Participant’s benefit under the Plan shall be eligible to become a Participant upon reemployment if such reemployment
date is on or after January 1, 2014.”
- 3 -
12. Article III is amended by inserting immediately after Section 3.4 the following new
Section:
“3.5
Cessation of New Entrants after December 31, 2013
. Notwithstanding any provision of the Plan to the
contrary, no individual who is not a Participant in the Plan as of December 31, 2013 shall be eligible to become a Participant thereafter.”
13. Section 6.1 is amended by inserting immediately after clause (b) the following new clause:
“(c) Notwithstanding any provision of the Plan to the contrary, in no event shall a Non-Grandfathered Participant’s Average Monthly
Compensation, Covered Compensation, Final Average Compensation, Credited Compensation or other applicable components of the formulae for determining a Participant’s benefit under this Section 6.1 be based on compensation earned by or
otherwise credited to such Participant or service rendered by or otherwise credited to such Participant with respect to any period after December 31, 2013.”
14. Section 6.2 is amended by inserting immediately after the final sentence thereof the following new clause:
“(c) Notwithstanding any provision of the Plan to the contrary, in no event will the benefit to which a Non-Grandfathered Participant is
entitled under this Section 6.2 be increased based on compensation earned or service rendered by such Participant with respect to any period after December 31, 2013.”
15. Section 6.3 is amended by inserting immediately after the final sentence thereof the following new paragraph:
“Notwithstanding any provision of the Plan to the contrary, in no event will the benefit to which a Non-Grandfathered Participant is
entitled under this Section 6.3 be increased based on compensation earned or service rendered by such Participant with respect to any period after December 31, 2013.”
16. Section 6.4 is amended by inserting immediately after the final sentence thereof the following new sentence: “Notwithstanding
any provision of the Plan to the contrary, in no event will the benefit to which a Non-Grandfathered Participant is entitled under this Section 6.4 be increased based on compensation earned or service rendered by such Participant with respect
to any period after December 31, 2013.”
17. Article 6 is amended by adding a new Section 6.27 to read as follows:
“
6.27 Freeze of Benefit Accruals
Notwithstanding any provision of the Plan to the contrary, for purposes of determining the rights and benefits of any Non-Grandfathered
Participant (or beneficiary) under the Plan including, without limitation, such Non-Grandfathered Participant’s Accrued Benefit, Participant’s Average Monthly Compensation, Covered Compensation, Final Average Compensation, Hours of
Service, Credited Service, compensation earned
- 4 -
or to which an individual is otherwise entitled and service rendered by or otherwise credited to an individual with respect to any period after December 31, 2013 shall be disregarded.
Without limiting the foregoing, a Non-Grandfathered Participant’s benefit under this Plan (including any benefit payable on behalf of or with respect to a Participant) shall be determined as if such Non-Grandfathered Participant separated from
service effective December 31, 2013. Notwithstanding any provision of the Plan to the contrary, for purposes of determining the Credited Service or Years of Service of any Grandfathered Participant (or beneficiary) under the Plan service
rendered by or otherwise credited to an individual with respect to any period after December 31, 2013 shall be disregarded.”
18. Effective for Plan Years beginning after December 31, 2007, Article VIII is amended by inserting immediately after Section 8.2
the following new section:
“
8.3
Limitations applicable if the Plan’s Adjusted Funding Target Attainment Percentage is
less than 80 percent or if the Company is in Bankruptcy
. (1) Notwithstanding any other provision of the Plan to the contrary, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 80 percent (or would
be less than 80 percent to the extent described in Section 8.3(1)(b) below) but is not less than 60 percent, then the limitations set forth in this Section 8.3(1) shall apply.
|
|
(a)
|
50 Percent Limitation on Single Sum Payments, Other Accelerated Forms of Distribution, and Other Prohibited Payments
. A Participant or beneficiary is not permitted to elect, and the Plan shall not pay, an
optional form of benefit that includes a prohibited payment with an Annuity Starting Date on or after the applicable Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an
insurer to pay benefits or any other payment or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of:
|
|
|
(i)
|
50 percent of the present value of the benefit payable in the optional form of benefit that includes the prohibited payment; or
|
|
|
(ii)
|
100 percent of the PBGC maximum benefit guarantee amount (as defined in Treasury Regulation Sec. 1.436-1(d)(3)(iii)(C)).
|
The limitation set forth in this Section 8.3(1)(a) does not apply to any payment of a benefit which under Section 411(a)(11) of the
Code may be immediately distributed without the consent of the Participant. If an optional form of benefit that is otherwise available under the terms of the Plan is not available to a Participant or beneficiary as of the Annuity Starting Date
because of the application of the requirements of this Section 8.3(1)(a), the Participant or beneficiary is permitted to elect to bifurcate the benefit into unrestricted and restricted portions (as described in Treasury Regulation
Section 1.436-1(d)(3)(iii)(D)). The Participant or beneficiary may also elect any other optional
- 5 -
form of benefit otherwise available under the Plan at that Annuity Starting Date that would satisfy the 50 percent/PBGC maximum benefit guarantee amount limitation described in this
Section 8.3(1)(a), or may elect to defer the benefit in accordance with any general right to defer commencement of benefits under the Plan.
|
|
(b)
|
Plan Amendments Increasing Liability for Benefits
. No amendment to the Plan that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing
the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the adjusted funding target attainment percentage for the Plan Year is:
|
|
|
(i)
|
Less than 80 percent; or
|
|
|
(ii)
|
80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the adjusted funding target attainment percentage.
|
The limitation set forth in this Section 8.3(1)(b) does not apply to any amendment to the Plan that provides a benefit increase under a
Plan formula that is not based on Compensation, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of Participants covered by the amendment.
(2)
Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 60 Percent
. Notwithstanding any
other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 60 percent (or would be less than 60 percent to the extent described in Section 8.3(2)(b) below), then the limitations
in this Section 8.3(2) apply.
|
|
(a)
|
Single Sums, Other Accelerated Forms of Distribution, and Other Prohibited Payments Not Permitted
. A Participant or beneficiary is not permitted to elect, and the Plan shall not pay, an optional form of benefit
that includes a prohibited payment with an Annuity Starting Date on or after the applicable Code Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits
or any other payment or transfer that is a prohibited payment. The limitation set forth in this Section 8.3(2)(a) does not apply to any payment of a benefit which under Section 411(a)(11) of the Code may be immediately distributed without
the consent of the Participant.
|
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(b)
|
Shutdown Benefits and Other Unpredictable Contingent Event Benefits Not Permitted to Be Paid
. An unpredictable contingent event benefit with respect to an unpredictable contingent event occurring during a Plan
Year shall not be paid if the adjusted funding target attainment percentage for the Plan Year is:
|
|
|
(i)
|
Less than 60 percent; or
|
- 6 -
|
|
(ii)
|
60 percent or more, but would be less than 60 percent if the adjusted funding target attainment percentage were redetermined applying an actuarial assumption that the likelihood of occurrence of the unpredictable
contingent event during the plan year is 100 percent.
|
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(c)
|
Benefit Accruals Frozen
. Benefit accruals under the Plan shall cease as of the applicable Code Section 436 measurement date. In addition, if the Plan is required to cease benefit accruals under this
Section 8.3(2)(c), then the Plan is not permitted to be amended in a manner that would increase the liabilities of the Plan by reason of an increase in benefits or establishment of new benefits.
|
(3)
Limitations Applicable If the Company Is In Bankruptcy
. Notwithstanding any other provisions of the Plan, a Participant or
beneficiary is not permitted to elect, and the plan shall not pay, an optional form of benefit that includes a prohibited payment with an Annuity Starting Date that occurs during any period in which the Company is a debtor in a case under title 11,
United States Code, or similar Federal or State law, except for payments made within a Plan Year with an Annuity Starting Date that occurs on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted funding
target attainment percentage for that Plan Year is not less than 100 percent. In addition, during such period in which the Company is a debtor, the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay
benefits or any other payment or transfer that is a prohibited payment, except for payments that occur on a date within a Plan Year that is on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted
funding target attainment percentage for that Plan Year is not less than 100 percent. The limitation set forth in this Section 8.3(3) does not apply to any payment of a benefit which under Section 411(a)(11) of the Code may be immediately
distributed without the consent of the Participant.
(4)
Provisions Applicable After Limitations Cease to Apply
.
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(a)
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Resumption of Prohibited Payments
. If a limitation on prohibited payments under Section 8.3(1)(a), Section 8.3(2)(a), or Section 8.3(3) applied to the Plan as of a Code Section 436 measurement
date, but that limit no longer applies to the Plan as of a later Code Section 436 measurement date, then that limitation does not apply to benefits with Annuity Starting Dates that are on or after that later Code Section 436 measurement
date.
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(b)
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Resumption of Benefit Accruals
. If a limitation on benefit accruals under Section 8.3(2)(c) applied to the Plan as of a Code Section 436 measurement date, but that limitation no longer applies to the
Plan as of a later Code Section 436 measurement date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later Code Section 436 measurement
date, except as otherwise provided under the Plan. The Plan shall comply with the rules relating to partial years of participation and the prohibition on double proration under Labor Regulation Section 2530.204-2(c) and (d).
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- 7 -
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(c)
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Shutdown and Other Unpredictable Contingent Event Benefits
. If an unpredictable contingent event benefit with respect to an unpredictable contingent event that occurs during the Plan Year is not permitted to be
paid after the occurrence of the event because of the limitation of Section 8.3(2)(b), but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of
the adjusted funding target attainment percentage for the Plan year that meets the requirements of Treasury Regulation Section 1.436-1(g)(5)(ii)(B)), then that unpredictable contingent event benefit shall be paid, retroactive to the period that
benefit would have been payable under the terms of the Plan (determined without regard to Section 8.3(2)(b)). If the unpredictable contingent event benefit does not become payable during the Plan Year in accordance with the preceding sentence,
then the Plan is treated as if it does not provide for that benefit.
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(d)
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Treatment of Plan Amendments That Do Not Take Effect
. If a Plan amendment does not take effect as of the effective date of the amendment because of the limitation of Section 8.3(1)(b) or
Section 8.3(2)(c), but is permitted to take effect later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the Plan
Year that meets the requirements of Treasury Regulation Section 1.436-1(g)(5)(ii)(C), then the Plan amendment must automatically take effect as of the first day of the Plan Year (or, if later, the original effective date of the amendment). If
the Plan amendment cannot take effect during the same Plan Year, then it shall be treated as if it were never adopted, unless the Plan amendment provides otherwise.
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(5)
Notice Requirement
. The Administrator shall provide written notice to participants and beneficiaries in accordance with
Section 101(j) of ERISA if the Plan has become subject to a limitation described in Section 8.3(1)(a), Section 8.3(2), or Section 8.3(3).
(6)
Methods to Avoid or Terminate Benefit Limitations
. The application of the limitations set forth in Sections 1 through 3 may be
avoided or terminated for a Plan Year in accordance with the rules set forth in Sections 436(b)(2), (c)(2), (e)(2), and (f) of the Code and Treasury Regulation Section 1.436-1(f) and their successor provisions.
(7)
Special Rules.
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(a)
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Rules of Operation for Periods Prior to and After Certification of Plan’s Adjusted Funding Target Attainment Percentage
.
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(i)
|
In General.
Section 436(h) of the Code and Treasury Regulation Section 1.436-1(h) set forth a series of presumptions that apply
(1) before the Plan’s enrolled actuary issues a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year and (2) if the Plan’s enrolled actuary does not issue a certification of the
Plan’s adjusted funding target attainment percentage for the Plan Year before the first day of the 10th month of the Plan
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- 8 -
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Year (or if the Plan’s enrolled actuary issues a range certification for the Plan Year pursuant to Treasury Regulation Section 1.436-1(h)(4)(ii) but does not issue a certification of
the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year). For any period during which a presumption under Code Section 436(h) and Treasury Regulation Section 1.436-1(h) set forth in clauses
(ii) through (iv) below applies to the Plan, the limitations under Sections 8.3(1), 8.3(2) and 8.3(3) are applied to the Plan as if the adjusted funding target attainment percentage for the Plan Year were the presumed adjusted funding
target attainment percentage determined under the rules of Section 436(h) of the Code and Treasury Regulation Sections 1.436-1(h)(1), (2), or (3).
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(ii)
|
Presumption of Continued Underfunding Beginning First Day of Plan Year
. If a limitation under Section 8.3(1), 8.3(2), or 8.3(3) applied to the Plan on the last day of the preceding Plan Year, then,
commencing on the first day of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date
Section 8.3(7)(a)(iii) or Section 8.3(7)(a)(iv) applies to the Plan:
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(1)
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The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the adjusted funding target attainment percentage in effect on the last day of the preceding Plan Year; and
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(2)
|
The first day of the current Plan Year is a Code Section 436 measurement date.
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(iii)
|
Presumption of Underfunding Beginning First Day of 4th Month
. If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the
first day of the 4
th
month of the Plan Year and the Plan’s adjusted funding target attainment percentage for the preceding Plan Year was either at least 60 percent but less than 70 percent or
at least 80 percent but less than 90 percent, or is described in Treasury Regulation Section 1.436-1(h)(2)(ii), then, commencing on the first day of the 4
th
month of the current Plan Year and
continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date Section 8.3(7)(a)(iv) applies to the Plan:
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(1)
|
The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the Plan’s adjusted funding target attainment percentage for the preceding Plan Year reduced by 10
percentage points; and
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(2)
|
The first day of the 4th month of the current Plan Year is a Code Section 436 measurement date.
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- 9 -
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(iv)
|
Presumption of Underfunding On and After First Day of 10th Month
. If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before
the first day of the 10th month of the Plan Year (or if the Plan’s enrolled actuary has issued a range certification for the Plan Year pursuant to Treasury Regulation Section 1.436-1(h)(4)(ii) but has not issued a certification of the
specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year), then, commencing on the first day of the 10th month of the current Plan Year and continuing through the end of the Plan Year:
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(1)
|
The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be less than 60 percent; and
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(2)
|
The first day of the 10th month of the current Plan Year is a Code Section 436 measurement date.
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(b)
|
Plan Termination, Certain Frozen Plans, and Other Special Rules.
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(i)
|
Plan Termination
. The limitations on prohibited payments in Section 8.3(1)(a), 8.3(2)(a), and 8.3(3) do not apply to prohibited payments that are made to carry out the termination of the Plan in accordance
with applicable law. Any other limitations under this section of the Plan do not cease to apply as a result of termination of the Plan.
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(iv)
|
Special Rules Relating to Unpredictable Contingent Event Benefits and Plan Amendments Increasing Benefit Liability
. During any period in which none of the presumptions under Section 8.3(7)(a) apply to the
Plan and the Plan’s enrolled actuary has not yet issued a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year, the limitations under Section 8.3(1)(b) and Section 8.3(2)(b) shall be based
on the inclusive presumed adjusted funding target attainment percentage for the Plan, calculated in accordance with the rules of Treasury Regulation Section 1.436-1(g)(2)(iii).
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(c)
|
Special Rules Under PRA 2010
.
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(i)
|
Payments Under Social Security Leveling Options
. For purposes of determining whether the limitations under Section 8.3(1)(a) or 8.3(2)(a) apply to payments under a social security leveling option, within the
meaning of Section 436(j)(3)(C)(i) of the Code, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Section 436(j)(3) of the Code and
any Treasury Regulations or other published guidance thereunder issued by the Internal Revenue Service.
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(ii)
|
Limitation on Benefit Accruals
. For purposes of determining whether the accrual limitation under Section 8.3(2)(c) applies to the Plan,
the adjusted funding target attainment percentage for a Plan Year shall be determined in
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- 10 -
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accordance with the “Special Rule for Certain Years” under Section 436(j)(3) of the Code (except as provided under Section 203(b) of the Preservation of Access to Care for
Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).
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(d)
|
Interpretation of Provisions
. The limitations imposed by this Section 8.3 shall be interpreted and administered in accordance with Section 436 of the Code and Treasury Regulation Section 1.436-1.
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(8).
Definitions
. The definitions in the following Treasury Regulations apply for purposes of this Section 8.3:
Section 1.436-1(j)(1) defining adjusted funding target attainment percentage; Section 1.436-1(j)(2) defining annuity starting date; Sec. 1.436-1(j)(6) defining prohibited payment; Section 1.436-1(j)(8) defining section 436 measurement
date; and Section 1.436-1(j)(9) defining an unpredictable contingent event and an unpredictable contingent event benefit.”
IN
WITNESS WHEREOF, the Corporation has caused this instrument to be executed on its behalf by its duly authorized officers as of this
13
th
day of December, 2013.
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MacDermid, Incorporated
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By:
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/s/ Daniel H. Leever
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Daniel H. Leever
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CEO
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- 11 -
Exhibit 10.22
PLATFORM SPECIALTY PRODUCTS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR
Agreement
1.
Grant of Option
.
PLATFORM SPECIALTY PRODUCTS CORPORATION (the “
Company
”) hereby
grants, as of (“
Date of Grant
”), to
(the “
Optionee
”) an option (the “
Option
”) to purchase up to
shares of the Company’s common stock (the “
Shares
”), at an exercise price per share equal to
$ (the “
Exercise Price
”). The Option shall be subject to the terms and conditions set forth herein. The Option is being granted pursuant to the Company’s Amended and
Restated 2013 Incentive Compensation Plan (the “
Plan
”), which is incorporated herein for all purposes. The Option is a Non-Qualified Stock Option, and not an Incentive Stock Option. The Optionee hereby acknowledges receipt of
a copy of the Plan and agrees to be bound by all of the terms and conditions hereof and thereof and all applicable laws and regulations.
2.
Definitions
. Unless otherwise provided herein, terms used herein that are defined in the Plan and not defined herein shall have the meanings attributed thereto in the Plan.
3.
Exercise Schedule
. Except as otherwise provided in Sections 6 or 9 of this Agreement, or in the Plan, the Option is exercisable in
installments as provided below, which shall be cumulative. To the extent that the Option has become exercisable with respect to a percentage of Shares as provided below, the Option may thereafter be exercised by the Optionee, in whole or in part, at
any time or from time to time prior to the expiration of the Option as provided herein. The following table indicates each date (the “
Vesting Date
”) upon which the Optionee shall be entitled to exercise the Option with
respect to the percentage of Shares granted as indicated beside the date, provided that the Continuous Service of the Optionee continues through and on the applicable Vesting Date:
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Percentage of Shares
|
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Vesting Date
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Except as otherwise specifically provided herein, there shall be no proportionate or partial vesting in the
periods prior to each Vesting Date, and all vesting shall occur only on the appropriate Vesting Date. Upon the termination of the Optionee’s Continuous Service, any unvested portion of the Option shall terminate and be null and void.
4.
Method of Exercise
. The vested portion of this Option shall be exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder’s
1
investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised after both (a) receipt by the Company of such written notice
accompanied by the Exercise Price and (b) arrangements that are satisfactory to the Committee in its sole discretion have been made for Optionee’s payment to the Company of the amount, if any, that is necessary to be withheld in accordance
with applicable Federal or state withholding requirements. No Shares shall be issued pursuant to the Option unless and until such issuance and such exercise shall comply with all relevant provisions of applicable law, including the requirements of
any stock exchange upon which the Shares then may be traded.
5.
Method of Payment
. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; (c) to the extent permitted by the Committee, with Shares owned by the Optionee, or the withholding of Shares that otherwise would be delivered
to the Optionee as a result of the exercise of the Option, (d) pursuant to a “cashless exercise” procedure, by delivery of a properly executed exercise notice together with such other documentation, and subject to such guidelines, as
the Committee shall require to effect an exercise of the Option and delivery to the Company by a licensed broker acceptable to the Company of proceeds from the sale of Shares sufficient to pay the Exercise Price and any applicable income or
employment taxes, or (e) such other consideration or in such other manner as may be determined by the Committee in its absolute discretion.
6.
Termination of Option
.
(a)
General
. Any unexercised portion of the Option shall automatically and without
notice terminate and become null and void at the time of the earliest to occur of the following:
(i) unless the Committee otherwise
determines in writing in its sole discretion, three months after the date on which the Optionee’s Continuous Service is terminated other than by reason of (A) by the Company or a Related Entity for Cause, (B) a Disability of the
Optionee as determined by a medical doctor satisfactory to the Committee, or (C) the death of the Optionee;
(ii) immediately upon
the termination of the Optionee’s Continuous Service by the Company or a Related Entity for Cause;
(iii) twelve months after the
date on which the Optionee’s Continuous Service is terminated by reason of a Disability as determined by a medical doctor satisfactory to the Committee;
(iv) twelve months after the date of termination of the Optionee’s Continuous Service by reason of the death of the Optionee; or
(v) the tenth (10
th
) anniversary of the Date of Grant.
(b)
Cancellation
. To the extent not previously exercised, (i) the Option shall terminate immediately in the event of
(A) the liquidation or dissolution of the Company, or (B)
2
any reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the Shares are exchanged for or converted into securities issued by
another entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring entity, or an affiliate thereof, assumes the Option or substitutes an equivalent option or right pursuant to Section 10(c) of the Plan, and
(ii) the Committee in its sole discretion may by written notice (“cancellation notice”) cancel, effective upon the consummation of any transaction that constitutes a Change in Control, the Option (or portion thereof) that remains
unexercised on such date. The Committee shall give written notice of any proposed transaction referred to in this Section 6(b) a reasonable period of time prior to the closing date for such transaction (which notice may be given either before
or after approval of such transaction), in order that the Optionee may have a reasonable period of time prior to the closing date of such transaction within which to exercise the Option if and to the extent that it then is exercisable (including any
portion of the Option that may become exercisable upon the closing date of such transaction). The Optionee may condition his exercise of the Option upon the consummation of a transaction referred to in this Section 6(b).
7.
Transferability
. Unless otherwise determined by the Committee, the Option granted hereby is not transferable otherwise than by will or under
the applicable laws of descent and distribution, and during the lifetime of the Optionee the Option shall be exercisable only by the Optionee, or the Optionee’s guardian or legal representative. In addition, the Option shall not be assigned,
negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the
Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.
8.
No Rights of Stockholders
. Neither the Optionee nor any
personal representative (or beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any Shares purchasable or issuable upon the exercise of the Option, in whole or in part, prior to the
date on which the Shares are issued.
9.
Acceleration of Exercisability of Option
.
(a)
Acceleration Upon Certain Terminations or Cancellations of Option
. This Option shall become immediately fully exercisable in
the event that, prior to the termination of the Option pursuant to Section 6 hereof, (i) the Option is terminated pursuant to Section 6(b)(i) hereof, or (ii) the Company exercises its discretion to provide a cancellation notice
with respect to the Option pursuant to Section 6(b)(ii) hereof.
(b)
Acceleration Upon Change in
Control
.
This Option [shall] [shall not] become immediately fully exercisable in the event that, prior to the termination of the Option pursuant to Section 6 hereof, and during the Optionee’s Continuous
Service, there is a Change in Control, as defined in Section 9(b) of the Plan.
3
(c)
[Exception to Acceleration Upon Change in Control
.
Notwithstanding the foregoing, if in the event of a Change in Control the successor company assumes or substitutes for the Option, the vesting of the Option shall not be accelerated as described in Section 9(b). For the purposes of this
paragraph, the Option shall be considered assumed or substituted for if following the Change in Control the Option or substituted option confers the right to purchase, for each Share subject to the Option immediately prior to the Change in Control,
on substantially the same vesting and other terms and conditions as were applicable to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction
constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of
the successor company, or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of the Option will be solely common stock of the successor company or its parent or subsidiary substantially equal in Fair
Market Value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole
discretion and its determination shall be conclusive and binding.]
10.
No Right to Continued Employment
. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or service with the Company.
11.
Law Governing
. This Agreement
shall be governed in accordance with and governed by the internal laws of the State of Delaware.
12.
Interpretation
/
Provisions of
Plan Control
. This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan adopted
by the Committee as may be in effect from time to time. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be
modified accordingly. The Optionee accepts the Option subject to all of the terms and provisions of the Plan and this Agreement. The undersigned Optionee hereby accepts as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions arising under the Plan and this Agreement, unless shown to have been made in an arbitrary and capricious manner.
13.
Notices
. Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of
the Company, to the Company’s Secretary at 245 Freight Street, Waterbury, Connecticut 06702, or if the Company should move its principal office, to such principal office, and, in the case of the Optionee, to the Optionee’s last permanent
address as shown on the Company’s records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.
4
14.
Non-Waiver of Breach
.
The waiver by any party hereto of the other
party’s prompt and complete performance, or breach or violation, of any term or provision of this Agreement shall be effected solely in a writing signed by such party, and shall not operate nor be construed as a waiver of any subsequent breach
or violation, and the waiver by any party hereto to exercise any right or remedy which he or it may possess shall not operate nor be construed as the waiver of such right or remedy by such party, or as a bar to the exercise of such right or remedy
by such party, upon the occurrence of any subsequent breach or violation.
15.
Counterparts
.
This Agreement may be
executed in two or more separate counterparts, each of which shall be an original, and all of which together shall constitute one and the same agreement.
5
IN WITNESS WHEREOF,
the undersigned have executed this Agreement as of the
day of , 20 .
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COMPANY:
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PLATFORM SPECIALTY PRODUCTS CORPORATION,
a Delaware corporation
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By:
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Name:
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Title:
|
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The Optionee acknowledges receipt of a copy of the Plan and represents that he or she has reviewed the
provisions of the Plan and this Option Agreement in their entirety, is familiar with and understands their terms and provisions, and hereby accepts this Option subject to all of the terms and provisions of the Plan and the Option Agreement. The
Optionee further represents that he or she has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement.
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Dated:
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OPTIONEE
:
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By:
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[ ]
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6
Exhibit 10.23
PLATFORM SPECIALTY PRODUCTS CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
FOR
Agreement
1.
Grant of Option
.
PLATFORM SPECIALTY PRODUCTS CORPORATION (the “
Company
”) hereby
grants, as of (“
Date of Grant
”), to
(the “
Optionee
”) an option (the “
Option
”) to purchase up to
shares of the Company’s common stock (the “
Shares
”), at an exercise price per share equal to
$ [
must be 100% of FMV as of Date of Grant, or 110% of FMV in the case of a 10% owner
] (the “
Exercise Price
”). The Option shall be subject to the terms and conditions set
forth herein. The Option is being granted pursuant to the Company’s Amended and Restated 2013 Incentive Compensation Plan (the “
Plan
”), which is incorporated herein for all purposes. The Option is an Incentive Stock
Option and not a Non-Qualified Stock Option. The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all of the terms and conditions hereof and thereof and all applicable laws and regulations.
2.
Definitions
. Unless otherwise provided herein, terms used herein that are defined in the Plan and not defined herein shall have the meanings
attributed thereto in the Plan.
3.
Exercise Schedule
. Except as otherwise provided in Sections 6 or 9 of this Agreement, or in the Plan,
the Option is exercisable in installments as provided below, which shall be cumulative. To the extent that the Option has become exercisable with respect to a percentage of Shares as provided below, the Option may thereafter be exercised by the
Optionee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein. The following table indicates each date (the “
Vesting Date
”) upon which the Optionee shall be entitled
to exercise the Option with respect to the percentage of Shares granted as indicated beside the date, provided that the Continuous Service of the Optionee continues through and on the applicable Vesting Date:
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Percentage of Shares
|
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Vesting Date
|
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Except as otherwise specifically provided herein, there shall be no proportionate or partial vesting in the
periods prior to each Vesting Date, and all vesting shall occur only on the appropriate Vesting Date. Upon the termination of the Optionee’s Continuous Service, any unvested portion of the Option shall terminate and be null and void.
4.
Method of Exercise
. The vested portion of this Option shall be exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to exercise the Option, the number of Shares in respect of which the
1
Option is being exercised, and such other representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option
shall be deemed to be exercised after both (a) receipt by the Company of such written notice accompanied by the Exercise Price and (b) arrangements that are satisfactory to the Committee in its sole discretion have been made for
Optionee’s payment to the Company of the amount, if any, that is necessary to be withheld in accordance with applicable Federal or state withholding requirements. No Shares shall be issued pursuant to the Option unless and until such issuance
and such exercise shall comply with all relevant provisions of applicable law, including the requirements of any stock exchange upon which the Shares then may be traded.
5.
Method of Payment
. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; (b) check; (c) to the extent permitted by the Committee, with Shares owned by the Optionee, or the withholding of Shares that otherwise would be delivered to the Optionee as a result of the exercise of the Option,
(d) pursuant to a “cashless exercise” procedure, by delivery of a properly executed exercise notice together with such other documentation, and subject to such guidelines, as the Committee shall require to effect an exercise of the
Option and delivery to the Company by a licensed broker acceptable to the Company of proceeds from the sale of Shares sufficient to pay the Exercise Price and any applicable income or employment taxes, or (e) such other consideration or in such
other manner as may be determined by the Committee in its absolute discretion.
6.
Termination of Option
.
(a)
General
. Any unexercised portion of the Option shall automatically and without notice terminate and become null and void at
the time of the earliest to occur of the following:
(i) unless the Committee otherwise determines in writing in its sole discretion,
three months after the date on which the Optionee’s Continuous Service is terminated other than by reason of (A) by the Company or a Related Entity for Cause, (B) a Disability of the Optionee as determined by a medical doctor
satisfactory to the Committee, or (C) the death of the Optionee;
(ii) immediately upon the termination of the Optionee’s
Continuous Service by the Company or a Related Entity for Cause;
(iii) twelve months after the date on which the Optionee’s
Continuous Service is terminated by reason of a Disability as determined by a medical doctor satisfactory to the Committee;
(iv) twelve
months after the date of termination of the Optionee’s Continuous Service by reason of the death of the Optionee; or
(v) the tenth
(10
th
) anniversary of the Date of Grant.
2
(b)
Cancellation
. To the extent not previously exercised, (i) the Option shall
terminate immediately in the event of (A) the liquidation or dissolution of the Company, or (B) any reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the Shares are
exchanged for or converted into securities issued by another entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring entity, or an affiliate thereof, assumes the Option or substitutes an equivalent option or
right pursuant to Section 10(c) of the Plan, and (ii) the Committee in its sole discretion may by written notice (“cancellation notice”) cancel, effective upon the consummation of any transaction that constitutes a Change in
Control, the Option (or portion thereof) that remains unexercised on such date. The Committee shall give written notice of any proposed transaction referred to in this Section 6(b) a reasonable period of time prior to the closing date for such
transaction (which notice may be given either before or after approval of such transaction), in order that the Optionee may have a reasonable period of time prior to the closing date of such transaction within which to exercise the Option if and to
the extent that it then is exercisable (including any portion of the Option that may become exercisable upon the closing date of such transaction). The Optionee may condition his exercise of the Option upon the consummation of a transaction referred
to in this Section 6(b).
7.
Transferability
. Unless otherwise determined by the Committee, the Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and distribution, and during the lifetime of the Optionee the Option shall be exercisable only by the Optionee, or the Optionee’s guardian or legal representative. In addition, the
Option shall not be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign,
negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. The terms of
this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.
8.
No Rights of
Stockholders
. Neither the Optionee nor any personal representative (or beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any Shares purchasable or issuable upon the
exercise of the Option, in whole or in part, prior to the date on which the Shares are issued.
9.
Acceleration of Exercisability of Option
.
(a)
Acceleration Upon Certain Terminations or Cancellations of Option
. This Option shall become immediately fully
exercisable in the event that, prior to the termination of the Option pursuant to Section 6 hereof, (i) the Option is terminated pursuant to Section 6(b)(i) hereof, or (ii) the Company exercises its discretion to provide a
cancellation notice with respect to the Option pursuant to Section 6(b)(ii) hereof.
(b)
Acceleration Upon Change in
Control
.
This Option [shall] [shall not] become immediately fully exercisable in the event that, prior to the termination of the Option pursuant to Section 6 hereof, and during the Optionee’s Continuous
Service, there is a Change in Control, as defined in Section 9(b) of the Plan.
3
(c)
[Exception to Acceleration Upon Change in Control.
Notwithstanding the
foregoing, if in the event of a Change in Control the successor company assumes or substitutes for the Option, the vesting of the Option shall not be accelerated as described in Section 9(b). For the purposes of this paragraph, the Option shall
be considered assumed or substituted for if following the Change in Control the Option or substituted option confers the right to purchase, for each Share subject to the Option immediately prior to the Change in Control, on substantially the same
vesting and other terms and conditions as were applicable to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control
by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however,
that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company, or its parent or
subsidiary, provide that the consideration to be received upon the exercise or vesting of the Option will be solely common stock of the successor company or its parent or subsidiary substantially equal in Fair Market Value to the per share
consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination
shall be conclusive and binding.]
10.
No Right to Continued Employment
. Neither the Option nor this Agreement shall confer upon the
Optionee any right to continued employment or service with the Company.
11.
Law Governing
. This Agreement shall be governed in accordance
with and governed by the internal laws of the State of Delaware.
12.
Incentive Stock Option Treatment
. The terms of this Option shall be
interpreted in a manner consistent with the intent of the Company and the Optionee that the Option qualifies as an Incentive Stock Option under Section 422 of the Code. If any provision of the Plan or this Agreement shall be impermissible in
order for the Option to qualify as an Incentive Stock Option, then the Option shall be construed and enforced as if such provision had never been included in the Plan or the Option. If and to the extent that the number of Options granted pursuant to
this Agreement exceeds the limitations contained in Section 422 of the Code on the value of Shares with respect to which this Option may qualify as an Incentive Stock Option, this Option shall be a Non-Qualified Stock Option.
13.
Interpretation
/
Provisions of Plan Control
. This Agreement is subject to all the terms, conditions and provisions of the
Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan adopted by the Committee as may be in effect from time to time. If and to the extent that this Agreement
conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly. The Optionee accepts the Option subject to all of the terms and provisions of
the Plan and this Agreement. The undersigned Optionee hereby accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan and this Agreement, unless shown to have been made in
an arbitrary and capricious manner.
4
14.
Notices
. Any notice under this Agreement shall be in writing and shall be deemed to have been
duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company’s Secretary at 245 Freight Street, Waterbury, Connecticut 06702, or if the
Company should move its principal office, to such principal office, and, in the case of the Optionee, to the Optionee’s last permanent address as shown on the Company’s records, subject to the right of either party to designate some other
address at any time hereafter in a notice satisfying the requirements of this Section.
15.
Non-Waiver of Breach
.
The waiver by any
party hereto of the other party’s prompt and complete performance, or breach or violation, of any term or provision of this Agreement shall be effected solely in a writing signed by such party, and shall not operate nor be construed as a waiver
of any subsequent breach or violation, and the waiver by any party hereto to exercise any right or remedy which he or it may possess shall not operate nor be construed as the waiver of such right or remedy by such party, or as a bar to the exercise
of such right or remedy by such party, upon the occurrence of any subsequent breach or violation.
16.
Counterparts
.
This Agreement
may be executed in two or more separate counterparts, each of which shall be an original, and all of which together shall constitute one and the same agreement.
5
IN WITNESS WHEREOF,
the undersigned have executed this Agreement as of the
day of , 20 .
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COMPANY:
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PLATFORM SPECIALTY PRODUCTS CORPORATION,
a Delaware corporation
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By:
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Name:
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Title:
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The Optionee acknowledges receipt of a copy of the Plan and represents that he or she has reviewed the
provisions of the Plan and this Option Agreement in their entirety, is familiar with and understands their terms and provisions, and hereby accepts this Option subject to all of the terms and provisions of the Plan and the Option Agreement. The
Optionee further represents that he or she has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement.
6
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
The list below represents the entities that are subsidiaries of the registrant.
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Subsidiary
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Jurisdiction of Formation
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Anion Quimica Industrial S.A.
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Brazil
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Aprochim Filtersystem GmbH
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Germany
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Aprochim SpA
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Italy
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Autotype Holdings (USA) Inc.
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Illinois
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Autotype Holdings, Inc.
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Illinois
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Autotype International Ltd.
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United Kingdom
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Bayport Chemical Service, Inc.
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Texas
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Canning Gumm, LLC
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Delaware
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CPS Chemical Products & Services A/S
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Denmark
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Dynacircuits LLC
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Illinois
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Echo International, Inc.
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Delaware
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Establishment Godel SA
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France
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MacDermid Actium Limited
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United Kingdom
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MacDermid Acumen, Inc.
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Delaware
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MacDermid Anion, Inc.
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Delaware
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MacDermid Autotype, Inc.
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Delaware
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MacDermid Autotype Ltd
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United Kingdom
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MacDermid Autotype Pte Ltd.
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Singapore
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MacDermid Benelux BV
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Netherlands
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MacDermid Brazil, Inc.
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Delaware
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MacDermid Canning GmbH
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Germany
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MacDermid Canning, ltd
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United Kingdom
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MacDermid Chemical Industries Argentina, Inc.
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Delaware
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MacDermid Chemicals, Inc.
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Canada
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MacDermid Continental Investments Ltd.
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United Kingdom
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MacDermid CZ s.r.o.
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Czech Republic
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MacDermid do Brazil Ltda.
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Brazil
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MacDermid Dutch Investments CV
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Netherlands
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MacDermid Espanola, S.A.
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Spain
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Subsidiary
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Jurisdiction of Formation
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MacDermid Europe Ltd.
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United Kingdom
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MacDermid European Capital Investments I, LLC
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Delaware
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MacDermid European Capital Investments II, LLC
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Delaware
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MacDermid European Capital Partners LLP
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United Kingdom
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MacDermid European Holdings BV
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Netherlands
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MacDermid European Holdings GmbH
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Germany
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MacDermid Financial B.V.
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Netherlands
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MacDermid France, S.A.
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France
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MacDermid G.B. Holdings Ltd.
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United Kingdom
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MacDermid GmbH
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Germany
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MacDermid Group, Inc.
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Delaware
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MacDermid Holdings B.V.
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Netherlands
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MacDermid Holdings, LLC
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Delaware
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MacDermid Holdings SAS
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France
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MacDermid Hong Kong Ltd.
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Hong Kong
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MacDermid Houston, Inc.
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Delaware
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MacDermid, Inc.
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Connecticut
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MacDermid India Pvt Ltd
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India
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MacDermid International Investments, LLC
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Delaware
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MacDermid International Partners
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Delaware
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MacDermid Investment Corp.
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Delaware
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MacDermid Italian Holdings srl
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Italy
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MacDermid Italiana srl
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Italy
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MacDermid Korea Ltd.
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South Korea
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MacDermid Ltd.
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United Kingdom
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MacDermid Luxembourg Properties S.à.r.l.
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Luxembourg
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MacDermid Mauritius
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Mauritius
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MacDermid Mexico Holdings S de RL de CV
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Mexico
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MacDermid Mexico SA de CV
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Mexico
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MacDermid Netherlands Cooperatief W.A.
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Netherlands
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MacDermid Offshore Fluidos do Brazil Industrial Ltda.
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Brazil
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Subsidiary
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Jurisdiction of Formation
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MacDermid Offshore Solutions, LLC
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Delaware
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MacDermid Operations S de RL de CV
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Mexico
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MacDermid Overseas Asia, Ltd.
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Delaware
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MacDermid Panyu Specialty Chemical Co. Ltd.
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China
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MacDermid Plc
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United Kingdom
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MacDermid Printing Solutions Acumen, Inc.
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Delaware
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MacDermid Printing Solutions, LLC
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Delaware
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MacDermid Printing Solutions Ltd.
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United Kingdom
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MacDermid Publication & Coating Plates, LLC
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Delaware
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MacDermid Scandinavia AB
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Sweden
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MacDermid Services Mexico SA de CV
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Mexico
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MacDermid Services S de RL de CV
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Mexico
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MacDermid Singapore Pte. Ltd.
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Singapore
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MacDermid South America, Incorporated
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Delaware
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MacDermid South Atlantic, Incorporated
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Delaware
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MacDermid Suisse Sarl
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Switzerland
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MacDermid Taiwan Holdings BV
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Netherlands
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MacDermid Taiwan, Ltd.
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Taiwan
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MacDermid Technology (Suzhou) Company Ltd.
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China
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MacDermid Texas, Inc.
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Delaware
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MacDermid Thailand
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Thailand
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MacDermid U.K. Ltd.
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United Kingdom
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MacDermid U.S. Holdings, LLC
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Delaware
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Marston Bentley Ltd.
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United Kingdom
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MIT Belgium NV
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Belgium
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MPS Europe SAS
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France
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Napp Printing Plate Distribution, Inc.
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South Dakota
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Napp Systems, Inc.
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Iowa
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Nippon MacDermid Co. Ltd
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Japan
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Oak Barrel Investments Ltd.
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United Kingdom
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Pinetree Investments Ltd.
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United Kingdom
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Subsidiary
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Jurisdiction of Formation
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PTI Produtos Technicos Impressao Ltda.
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Brazil
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Plates & Blankets S de RL de CV
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Mexico
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Revestsul Productos Quimicos Ltd.
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Brazil
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Rockville Venture LLC
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Delaware
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Semitronic SA
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Spain
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Sextant Azimuth Ltda.
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Brazil
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Sextant, Inc.
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Connecticut
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Specialty Polymers, Inc.
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Massachusetts
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Surface Treatments Ltd.
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United Kingdom
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Tabitha Holdings BV
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Netherlands
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Vernon-Rockville Venture LLC
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Delaware
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W. Canning Australia Pty. Ltd.
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Australia
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W. Canning, Inc.
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Delaware
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W. Canning International BV
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Netherlands
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W. Canning Ltd.
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Texas
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W. Canning USA, LLC
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Delaware
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-4 of Platform Specialty Products Corporation (previously known as Platform Acquisition
Holdings Limited) of our report dated October 30, 2013 relating to the financial statements of Platform Acquisition Holdings Limited, which appears in such Registration Statement. We also consent to the reference to us under the heading
“Experts” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
London, United Kingdom
December 30, 2013
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
The Board of Directors
MacDermid, Incorporated and
subsidiaries:
We consent to the use of our report dated March 6, 2013, with respect to the consolidated balance sheets of MacDermid, Incorporated
and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended
December 31, 2012, included herein and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ KPMG LLP
Hartford, Connecticut
December 30, 2013