Exhibit 2.1
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STOCK AND VSR PURCHASE AGREEMENT
By and Among
MAFCO CONSOLIDATED GROUP INC.,
POWER CONTROL TECHNOLOGIES, INC.
AND
PCT INTERNATIONAL HOLDINGS, INC.
Dated as of October 23, 1996
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TABLE OF CONTENTS
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ARTICLE I
SALE AND PURCHASE OF THE SHARES AND ISSUANCE OF VSRS
Section 1.1 The Shares; VSRs.............................................. 2
Section 1.2 Purchase Price................................................ 2
Section 1.3 Consideration................................................. 2
Section 1.4 Closing....................................................... 2
Section 1.5 Deliveries by Seller.......................................... 3
Section 1.6 Deliveries by Purchaser....................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Organization, Standing and Qualification...................... 4
Section 2.2 Authority Relative to this Agreement.......................... 4
Section 2.3 Capitalization................................................ 5
Section 2.4 Consents and Approvals; No Violation.......................... 6
Section 2.5 Financial Statements.......................................... 7
Section 2.6 Absence of Undisclosed Liabilities............................ 8
Section 2.7 Absence of Certain Changes or Events.......................... 8
Section 2.8 Title to Assets............................................... 10
Section 2.9 Leases........................................................ 10
Section 2.10 Intellectual Property........................................ 10
Section 2.11 Contracts.................................................... 12
Section 2.12 Litigation................................................... 13
Section 2.13 Insurance.................................................... 13
Section 2.14 Employee Benefit Plans; ERISA................................ 14
Section 2.15 Taxes........................................................ 17
Section 2.16 Environmental Matters........................................ 19
Section 2.17 Labor Relations and Employment............................... 21
Section 2.18 Brokers or Finders........................................... 21
Section 2.19 Transactions with Affiliates................................. 21
Section 2.20 Ownership of PCT Common Stock................................ 22
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization, Standing and Qualification...................... 22
Section 3.2 Authority Relative to this Agreement.......................... 22
Section 3.3 Capitalization................................................ 23
Section 3.4 Consents and Approvals; No Violation.......................... 23
Section 3.5 Brokers or Finders............................................ 24
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business........................................... 24
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Section 4.2 Access to Information......................................... 27
Section 4.3 Reasonable Best Efforts....................................... 28
Section 4.4 Preparation of Registration Statement;
Listing.................................................... 28
Section 4.5 Covenant of PCT............................................... 29
Section 4.6 Further Assurances............................................ 30
Section 4.7 No Solicitation............................................... 30
Section 4.8 Fees and Expenses............................................. 30
Section 4.9 Public Announcements.......................................... 31
Section 4.10 Books and Records............................................ 31
Section 4.11 Tax Matters.................................................. 31
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Each Party's Obligations........................ 42
Section 5.2 Conditions to Obligations of Purchaser........................ 42
Section 5.3 Conditions to Obligations of Seller........................... 43
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.1 Termination................................................... 44
Section 6.2 Effect of Termination......................................... 44
Section 6.3 Amendment..................................................... 44
Section 6.4 Extension; Waiver............................................. 44
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival Periods.............................................. 45
Section 7.2 Indemnification............................................... 45
Section 7.3 General Procedures; Third Party Claims........................ 47
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Certain Definitions........................................... 48
Section 8.2 Notices....................................................... 49
Section 8.3 Descriptive Headings.......................................... 50
Section 8.4 Counterparts.................................................. 50
Section 8.5 Entire Agreement; Assignment.................................. 50
Section 8.6 Governing Law................................................. 50
Section 8.7 Specific Performance.......................................... 50
Section 8.8 Parties in Interest........................................... 50
Section 8.9 Severability.................................................. 51
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INDEX OF DEFINED TERMS
Term Where Defined
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Acquisition Transaction......................... Section 4.7
Affected Party.................................. Section 4.11(h)(ii)
affiliate....................................... Section 8.1(a)
Agreement....................................... Recitals
associate....................................... Section 8.1(a)
Authorizations.................................. Section 5.2(d)
Balance Sheet................................... Section 2.5(a)
business day.................................... Section 8.1(b)
Closing......................................... Section 1.4
Closing Date.................................... Section 1.4
Code............................................ Section 2.14(c)
Common Stock.................................... Recitals
Company......................................... Recitals
Company SEC Documents........................... Section 2.5(b)
Contract........................................ Section 2.11
control......................................... Section 8.1(a)
CPA Firm........................................ Section 4.11(g)(iii)
Damages......................................... Section 7.2(a)
Deferred Cash Payments.......................... Section 1.3
Disclosure Schedule............................. Section 2.1
Election........................................ Section 4.11(a)
Encumbrances.................................... Section 2.8
Environment..................................... Section 2.16(e)(i)
Environmental Laws.............................. Section 2.16(e)(iii)
Environmental Material(s)....................... Section 2.16(e)(iv)
Environmental Notice............................ Section 2.16(e)(ii)
ERISA........................................... Section 2.14(a)
ERISA Affiliate................................. Section 2.14(a)
ERISA Plans..................................... Section 2.14(a)
Exchange Act.................................... Section 2.5(b)
Financial Statements............................ Section 2.5(a)
Forms 8023-A.................................... Section 4.11(a)
Governmental Entity............................. Section 2.4
HSR Act......................................... Section 2.4
Indemnified Parties............................. Section 7.2(c)
Indemnifying Party.............................. Section 7.3
Intellectual Property........................... Section 2.10
Interim Balance Sheet........................... Section 2.5(a)
IRS............................................. Section 4.11(a)
Mafco........................................... Recitals
Material Adverse Effect......................... Section 2.1
NYSE............................................ Section 4.4(b)
Payor........................................... Section 4.11(g)(iii)
Permits......................................... Section 2.16(a)
Permitted Liens................................. Section 2.8
person.......................................... Section 8.1(c)
Plans........................................... Section 2.14(a)
Preparer........................................ Section 4.11(g)iii)
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Term Where Defined
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Proceeding...................................... Section 2.12
Property........................................ Section 2.9
Purchase Common Stock........................... Section 3.3
Purchaser Group................................. Section 7.2(a)
Purchase Price.................................. Section 1.3
Purchaser....................................... Recitals
Recipient....................................... Section 4.11(h)(i)
Representatives................................. Section 7.2(a)
SEC............................................. Section 2.5(b)
Seller.......................................... Recitals
Seller Group.................................... Section 7.2(b)
Settling Party.................................. Section 4.11(h)(ii)
Shares.......................................... Recitals
Straddle Period................................. Section 4.11(f)
Subsidiary and Subsidiaries..................... Section 2.1
Tax(es)......................................... Section 2.15(c)
Tax Audit....................................... Section 4.11(h)(i)
Tax Return...................................... Section 2.15(c)
TIA............................................. Section 4.4(a)
Transfer Taxes.................................. Section 4.11(i)
VSR(s).......................................... Recitals
VSR Agreement................................... Recitals
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STOCK AND VSR PURCHASE AGREEMENT (the "Agreement"), dated as of
October 23, 1996, by and among Mafco Consolidated Group Inc., a Delaware
corporation ("Seller"), Power Control Technologies, Inc., a Delaware corporation
("PCT"), and PCT International Holdings, Inc., a Delaware corporation
("Purchaser").
W I T N E S S E T H
WHEREAS, Seller owns beneficially and of record all the outstanding
capital stock of Flavors Holdings Inc., a Delaware corporation ("Flavors");
WHEREAS, Flavors owns beneficially and of record all the outstanding
capital stock of Mafco Worldwide Corporation, a Delaware corporation (the
"Company");
WHEREAS, as of the date of this Agreement there are outstanding
1,000 shares of Class A Common Stock, par value $1.00 per share ("Class A Common
Stock"), of Flavors;
WHEREAS, upon the terms and subject to the conditions of this
Agreement, Purchaser has agreed to acquire from Seller, and Seller has agreed to
sell to Purchaser 1,000 shares of Class A Common Stock (the "Shares"),
representing all of the issued and outstanding shares of capital stock of
Flavors;
WHEREAS, at the Closing (as defined below), Seller shall issue
23,156,502 Value Support Rights (each a "VSR" and collectively, the "VSRs") to
Purchaser, pursuant to a Value Support Rights Agreement substantially in the
form of Exhibit A attached hereto (the "VSR Agreement");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements, and conditions contained
herein, and intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE SHARES AND ISSUANCE OF VSRS
Section 1.1 The Shares; VSRs. (a) Upon the terms and subject to the
conditions of this Agreement, at the Closing provided for in Section hereof,
Seller shall sell, convey, assign, transfer and deliver to Purchaser, and
Purchaser shall purchase, acquire and accept from Seller, all of the Shares,
free and clear of any liens, claims, options, pledges, security interests,
charges, encumbrances and restrictions whatsoever.
(b) Upon the terms and subject to the conditions of this Agreement,
at the Closing provided for in Section hereof, Seller shall issue and deliver to
Purchaser, and Purchaser shall purchase, acquire and accept from Seller, all of
the VSRs, free and clear of any liens, claims, options, pledges, security
interests, charges, encumbrances and restrictions whatsoever.
Section 1.2 Purchase Price. Upon the terms and subject to the
conditions of this Agreement, in consideration of the aforesaid sale,
conveyance, assignment, transfer and delivery of the Shares and the issuance of
the VSRs, Purchaser agrees to pay to Seller the Purchase Price (as defined
below) and, in consideration of certain indemnities previously provided by
Seller to PCT, Purchaser agrees to pay to Seller the Deferred Cash Payments (as
defined below).
Section 1.3 Consideration. The "Purchase Price" shall be cash in the
amount of $180,000,000 to be paid to Seller at the Closing. Subject to Section
4.8, the "Deferred Cash Payments" shall be cash in the amount of $3,700,000 to
be paid to Seller on June 30, 1997 and $3,500,000 to be paid to Seller on
December 31, 1997.
Section 1.4 Closing. Upon the terms and subject to the conditions of
this Agreement, the consummation of the transactions contemplated by this
Agreement (the "Closing") will take place on the second business day following
the satisfaction or waiver of all the conditions set forth in Article hereof at
10:00 a.m., at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000, or at such other time or at such other place as
shall be agreed upon by
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the parties. The date on which the Closing occurs is referred to herein as the
"Closing Date."
Section 1.5 Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered (unless previously delivered) to Purchaser, the
following:
(a)(i) stock certificates representing all of the Shares,
accompanied by stock powers duly executed in blank or duly executed instruments
of transfer and (ii) any other documents that are necessary to transfer to
Purchaser good and valid title to the Shares, with any necessary transfer tax
stamps affixed or accompanied by evidence that all stock transfer taxes have
been paid;
(b) a VSR Certificate (as defined in the VSR Agreement) which shall
represent 23,156,502 VSRs;
(c) the stock books, stock ledgers, minute books and corporate seals
of Flavors and the Company (to be at the principal executive offices of Flavors
and the Company, as the case may be, unless otherwise directed by Purchaser);
and
(d) resignations of directors and officers of Flavors, as directed
by Purchaser.
Section 1.6 Deliveries by Purchaser.
(a) At the Closing, Purchaser shall deliver (unless previously
delivered) to Seller, the Purchase Price in immediately available funds by wire
transfer to the bank account designated by Seller at least one business day
prior to the Closing Date.
(b) On each of June 30, 1997 and December 31, 1997, Purchaser shall
deliver (unless previously delivered) to Seller, the Deferred Cash Payments in
accordance with Section 1.3 hereof, in immediately available funds by wire
transfer to the bank account designated by Seller at least one business day
prior to each such date.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 2.1 Organization, Standing and Qualification. Each of
Seller, Flavors, the Company and each of the Subsidiaries (as defined below) is
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of organization and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Except as set forth on the Balance Sheet (as
defined below) or in Section of the Disclosure Schedule (as defined below),
Flavors has no liabilities or assets (other than the Shares), and does not own,
lease or operate any properties or carry on any business. Each of Flavors and
the Company is duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified or licensed would not have a
Material Adverse Effect. For purposes of this Agreement "Material Adverse
Effect" means with respect to the Company, a material adverse effect, on the
business, properties, assets, operations or financial results or condition of
the Company and the Subsidiaries, taken as a whole. Seller has heretofore
delivered to Purchaser complete and correct copies of the certificate of
incorporation and bylaws, as currently in effect, of Flavors and the Company.
Except for each subsidiary (each a "Subsidiary" and collectively, the
"Subsidiaries" to the extent any such entity is a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X of the Securities Exchange Act of 1934)
set forth in Section of the disclosure schedule delivered by Seller to Purchaser
concurrently herewith (the "Disclosure Schedule"), the Company has no
subsidiaries and owns no stock or equity interest in any corporation,
partnership, joint venture or other entity.
Section 2.2 Authority Relative to this Agreement. Seller has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the
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transactions contemplated hereby have been duly and validly authorized by
Seller's Board of Directors and no other corporate proceedings on the part of
Seller are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and constitutes, and each other agreement that
is to be executed and delivered by Seller in connection with the transactions
contemplated by this Agreement, when executed and delivered by Seller, as the
case may be, will constitute, a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights generally, and
(ii) as such enforceability may be limited by general principles of equity,
regardless of whether asserted in a proceeding in equity or law.
Section 2.3 Capitalization. The authorized capital stock of Flavors
consists of 2,000 shares of Class A Common Stock and 2,000 shares of Class B
Common Stock, par value $1.00 per share, of which 1,000 shares of Class A Common
Stock are issued and outstanding and owned by Seller. The authorized capital
stock of the Company consists of 1,000 shares (the "Company Shares") of common
stock, $1.00 par value per share, all of which are issued and outstanding and
owned by Flavors. There are no other shares of capital stock of Flavors or the
Company authorized, issued or outstanding. The Shares are owned by Seller, and
the Company Shares are owned by Flavors, beneficially and of record, and each of
the Shares and the Company Shares are duly authorized, validly issued, fully
paid and nonassessable and are not subject to any preemptive rights. There are
not (a) issued or outstanding any securities convertible into or exchangeable
for, or any options, warrants, calls, puts, subscriptions or other rights
(preemptive or otherwise) to acquire, any shares of capital stock of Flavors or
the Company, or (b) any agreements or contractual commitments (other than this
Agreement) relating to the Shares or the Company Shares or obligating Flavors to
issue or sell any shares of its capital stock or any such securities, options,
warrants, calls, puts, subscriptions or other rights, or (c) except as set forth
in Section of the Disclosure Schedule, any pledges, security interests, liens,
charges, encumbrances, equities, claims or options
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of whatever nature relating to any of the Shares or the Company Shares. At the
Closing, Purchaser will acquire good and valid title to the Shares, free and
clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature, except those set forth on
Section of the Disclosure Schedule.
Section 2.4 Consents and Approvals; No Violation. Except for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 and the rules and regulations thereunder (the "HSR Act"), there is no
requirement applicable to Seller or the Company to make any filing with, or to
obtain any permit, authorization, consent or approval of, any court of competent
jurisdiction, regulatory authority or other public body, federal, state or local
domestic or foreign (a "Governmental Entity") as a condition to the lawful
consummation by Seller of the transactions contemplated by this Agreement,
except where the failure to make any such filing or obtain any such permit,
authorization, consent or approval would not have a Material Adverse Effect.
Except as set forth in Section of the Disclosure Schedule and except for
applicable requirements of the HSR Act, neither the execution and delivery of
this Agreement by Seller, nor the consummation by Seller of the transactions
contemplated hereby, nor compliance by Seller with any of the provisions hereof
will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or bylaws of Seller, Flavors or the Company, (ii)
result in a breach of, or default under (or give rise to any right of
termination, cancellation or acceleration under), any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement, lease
or other instrument or obligation to which Seller, the Company or any Subsidiary
is a party, or by which any of their respective businesses, properties or assets
may be bound, except for such breaches or defaults (or rights of termination,
cancellation or acceleration) set forth in Section of the Disclosure Schedule as
to which requisite waivers or consents have been obtained or will be obtained
prior to the Closing Date, or (iii) violate any order, judgment, writ,
injunction, decree, statute, rule or regulation applicable to Seller, the
Company or the Company's assets or properties of the Company or any Subsidiary,
except for such violations which would not have a Material Adverse
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Effect. Except as set forth in Section of the Disclosure Schedule, there is no
Proceeding (as defined below) pending or, to the knowledge of the Company or
Seller, threatened against Seller, Flavors, the Company or any Subsidiary that
seeks to prevent the consummation of the transactions contemplated hereby.
Section 2.5 Financial Statements; SEC Reports. (a) Seller has
previously furnished to Purchaser (i) audited balance sheets of the Company as
of December 31, 1995 and 1994 and the related statements of income, retained
earnings and cash flows of the Company for the periods then ended, together with
the notes thereto and the report of Ernst & Young LLP thereon, (the audited
balance sheet of the Company for the period ending December 31, 1995 is referred
to herein as the "Balance Sheet") and (ii) an unaudited balance sheet of the
Company as of June 30, 1996 (the "Interim Balance Sheet") and the related
statement of income, retained earnings and cash flows of the Company for the
period then ended (such financial statements described in clauses (i) and (ii)
collectively, the "Financial Statements"). Each balance sheet included in the
Financial Statements presents fairly in all material respects the financial
position of the Company as of its respective date and each of the statements of
income and retained earnings, and cash flows included in the Financial
Statements presents fairly in all material respects the results of operations
and cash flows of the Company for the periods set forth therein, in each case in
accordance with GAAP, except as otherwise noted therein.
(b) The Company has filed with the Securities and Exchange
Commission (the "SEC"), all forms and reports required to be filed by it since
January 1, 1993 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and has heretofore made available to Purchaser (i) its Annual
Reports on Form 10-K for the years ended December 31, 1993, December 31, 1994
and December 31, 1995, respectively, (ii) its Quarterly Reports on Form 10-Q for
the periods ended March 31 and June 30, 1996 and (iii) all other forms and
reports filed by the Company with the SEC since January 1, 1993. The documents
described in clauses (i)-(iii) above are referred to in this Agreement
collectively as the "Company SEC Documents". As of their respective dates, the
Company SEC Documents (i) did not contain any untrue statement
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of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) complied in
all material respects with the applicable requirements of the Exchange Act and
the applicable rules and regulations of the SEC thereunder.
Section 2.6 Absence of Undisclosed Liabilities. To the best of
Seller's knowledge, the Company does not have any liabilities or obligations
required to be set forth on a balance sheet in accordance with GAAP, except for
the liabilities and obligations (i) reflected in the Balance Sheet, (ii)
incurred in the ordinary course of business consistent with past practice since
the date of the Balance Sheet which have not had, and are not reasonably likely
to have, a Material Adverse Effect, and (iii) pertaining to Taxes (as defined
below).
Section 2.7 Absence of Certain Changes or Events. To the best of
Seller's knowledge, except as expressly provided for in this Agreement or set
forth in Section of the Disclosure Schedule, since the date of the Balance
Sheet, the Company has not:
(a) except in the ordinary course of business, made any change
in its business or operations or in the manner of conducting its business;
(b) suffered any Material Adverse Effect;
(c) entered into any written employment contract or, except
for compensation arrangements entered into in the ordinary course of business,
compensation arrangement or employee benefit plan, or changed or committed to
change (including, without limitation, any change pursuant to any bonus,
pension, profit-sharing or other plan, commitment, policy or arrangement) the
compensation payable or to become payable to any of its officers, directors,
employees, agents or consultants, or made any pension, retirement, profit
sharing, bonus or other employee welfare or benefit payment or contribution,
other than in the ordinary course of business and consistent with past practice;
(d) declared, paid or made, or set aside for payment or
making, any dividend or other distribution
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in respect of its capital stock or other securities, or directly or indirectly
redeemed, purchased or otherwise acquired any of its capital stock or other
securities or subdivided or in any way reclassified or changed any of the terms
or provisions of any share of its capital stock;
(e) paid, loaned or advanced any amount to or in respect of,
or sold, transferred or leased any property or assets (real, personal or mixed,
tangible or intangible) to, or entered into any transaction, agreements or
arrangements with or for the benefit of, Seller or any affiliate or associate of
Seller, or any of the Company's officers or directors or any affiliate or
associate of its officers or directors, except for payments, loans and advances
to officers and directors in the ordinary course of business and consistent with
past practice;
(f) made any change in any accounting or tax principles,
practices or methods including, without limitation, its accounts payable
practices, except for such changes which are both required by GAAP or law;
(g) cancelled any material debts or claims, or waived any
rights of material value or incurred or guaranteed any material obligation or
liability (whether absolute, accrued, contingent or otherwise and whether due or
to become due), except for current liabilities incurred in the ordinary course
of business;
(h) terminated or amended or suffered the termination or
amendment of any material contract or disposed of or permitted to lapse any
material item of Intellectual Property (as defined in Section hereof); or
(i) agreed, whether in writing or otherwise, to take any
action described in this Section 2.7.
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Section 2.8 Title to Assets. The Company has good and valid title to
all its assets shown on the Balance Sheet or acquired since the date of the
Balance Sheet, other than the assets shown on the Balance Sheet and disposed of
since the date thereof in the ordinary course of business and consistent with
past practice, and all such assets are free and clear of any and all
Encumbrances (as defined below) other than those set forth on Section of the
Disclosure Schedule and Permitted Liens. "Encumbrances" means any mortgage,
pledge, lien, encumbrance, charge or adverse claim affecting title or resulting
in an encumbrance against real or personal property, or a security interest of
any kind. "Permitted Liens" means (i) liens for current taxes not yet due, (ii)
imperfections of title, easements and zoning restrictions, if any, which do not
materially detract from the value of the property subject thereto for the uses
and purposes to which such property is currently employed or materially impair
the operations of the Company and which have arisen only in the ordinary course
of business and consistent with past practice, and (iii) mechanics',
materialmen's and similar liens attaching by operation of law, incurred in the
ordinary course of business and securing payments not delinquent or payments
which are being contested in good faith by the Company.
Section 2.9 Leases. All material leases of real property
("Property") as to which the Company or any Subsidiary is the lessee or
sublessee, and all amendments and modifications thereof, are listed on Section
of the Disclosure Schedule (true, correct and complete copies of such leases
have been made available to Purchaser). To the best of Seller's knowledge, all
such leases are in full force and effect and have not been modified or amended,
except as set forth in Section of the Disclosure Schedule. There exists no event
of default by the Company or any Subsidiary under any such leases or, to the
best of Seller's knowledge, by any third party thereto, nor any event which with
notice or lapse of time or both would, in each case, constitute a Material
Adverse Effect.
Section 2.10 Intellectual Property. Section of the Disclosure
Schedule lists (a) the federal registration number and the date of registration
concerning registrations of patents, trademarks and service marks and of other
marks, trade names or other trade
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rights currently used by the Company or any Subsidiary in the conduct of its
business, all of the copyrights and all applications for any of the foregoing
and all analogous registrations, copyrights, and applications to any foreign
jurisdiction; and (b) all intellectual property rights owned by any third party
which are not generally commercially available and are currently used by the
Company or any Subsidiary in the conduct of its business, whether such use is or
will be pursuant to license, sublicense, agreement or permission. Seller has
delivered or made available to Purchaser complete and accurate copies of each
agreement, registration and other document relating to the intellectual property
set forth on Section of the Disclosure Schedule. To the best of Seller's
knowledge, the Company and each Subsidiary owns or possesses adequate and
enforceable licenses or other rights to use (i) all intellectual property rights
listed on Section 2.10 of the Disclosure Schedule, (ii) all computer software
used by the Company or any Subsidiary in the conduct of its businesses and (iii)
all other patents, trademarks, service marks, other marks, trade names and
assumed names, all applications for any of the foregoing, all trade secrets,
designs, plans, specifications and other intellectual property rights of every
kind of the Company or any Subsidiary (whether or not registered) that are
possessed by the Company or any Subsidiary or used in their respective
businesses (all of the items referred to in clauses (a) and (b) of this
paragraph and (ii) and (iii) of this sentence being the "Intellectual
Property"). To the best of Seller's knowledge, no person has a right to receive
a royalty or similar payment in respect of any item of Intellectual Property
pursuant to any contractual arrangements entered into by the Company, any
Subsidiary or Seller or otherwise. Except as set forth in Section of the
Disclosure Schedule, neither the Company, any Subsidiary nor Seller has granted
any license, sublicense or other similar agreement relating in whole or in part
to any Intellectual Property. Neither the Company, any Subsidiary nor Seller has
received written notice that the Company's or any Subsidiary's use of any
material item of Intellectual Property is interfering with, infringing upon or
otherwise violating the rights of any third party in or to such Intellectual
Property. No written notices have been received by Seller and, to the best of
the Company's and Seller's knowledge, no proceedings have been instituted
against Seller, the Company or any Subsidiary alleging that use
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or proposed use of any material item of the Intellectual Property by the Company
or any Subsidiary infringes upon or otherwise violates any rights of a third
party in or to such Intellectual Property.
Section 2.11 Contracts. To the best of Seller's knowledge, except as
set forth in Section of the Disclosure Schedule, neither the Company nor any
Subsidiary is a party to, or bound by, any written or oral: (a) contract,
agreement, understanding, commitment, or other arrangement (each, a "Contract")
with Seller or Seller's affiliates or with any present or former officer,
employee, agent, consultant, advisor, salesperson or sales representative or
affiliate or associate of the Company or any Subsidiary pursuant to which
payments may be required to be made at any time following the date hereof to any
such person in excess of $100,000 in any year; (b) Contract (including, but not
limited to, any mortgage, indenture, debenture, bond, note, installment
obligation or other instrument) constituting indebtedness; (c) guaranty of any
obligation for borrowings or performances, or guaranty or warranty of products
or services; (d) Contract for the sale or lease of any asset or property owned
or used by the Company or any Subsidiary exceeding $100,000 in value or annual
payments; (e) Contract for the purchase of any real estate, machinery, equipment
or other capital assets with a purchase price exceeding $100,000; (f) Contract
which is not terminable on ninety or fewer days' notice at any time without
premium or penalty or payment in excess of $100,000; or (g) Contract to which
the Company or any Subsidiary, Seller, or any of the Company's or any
Subsidiary's employees is a party which will restrict such person's ability to
do business in any geographic area or which grants to any person exclusive or
similar rights in any line of business or in any geographic area. Except as set
forth in Section 2.11 of the Disclosure Schedule, with respect to each Contract
listed in Section 2.11 of the Disclosure Schedule, there is no default by the
Company or any Subsidiary or event that with notice or lapse of time, or both,
would constitute such a default nor, to Seller's knowledge, any default, or
event that with notice, lapse of time or both, would constitute such a default,
by any other party thereto, existing with respect to any such Contract, except
for such defaults which do not result in a Material Adverse Effect. Neither the
Company, any Subsidiary nor Seller intends, and
12
neither has received notice that any party to any such Contract intends, to
terminate, amend or cancel any such Contract. Each of the Contracts listed in
Section 2.11 of the Disclosure Schedule is in full force and effect and
constitutes a legal, valid and binding obligation of the Company or any
Subsidiary, as the case may be. Seller has made available to Purchaser complete
and accurate copies of each Contract or other written evidence of the
obligations, and all amendments thereto, listed in Section 2.11 of the
Disclosure Schedule.
Section 2.12 Litigation. Except as set forth in Section of the
Disclosure Schedule, there are (i) to the best of Seller's knowledge no
investigations pending or threatened or (ii) no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions or decrees (each, a
"Proceeding") pending or, to the best of Seller's knowledge, threatened, against
the Company or any Subsidiary or Seller affecting the operations of the Company
or any Subsidiary, their respective businesses, assets or properties at law or
in equity, or before or by any Governmental Entity. Neither the Company nor any
Subsidiary is in default with respect to any order, writ, injunction or decree
of any Governmental Entity.
Section 2.13 Insurance. Set forth in Section of the Disclosure
Schedule is a complete and accurate list of all primary, excess and umbrella
policies, bonds and other forms of insurance currently owned or held by or on
behalf of and/or providing insurance coverage to the Company or any Subsidiary,
their respective businesses, properties and assets (or their directors,
officers, salespersons, agents or employees). All policies set forth in Section
2.13 of the Disclosure Schedule are in full force and effect and shall remain in
full force and effect through the Closing Date, and with respect to all
policies, all premiums currently payable or previously due have been paid, and,
to the best of Seller's knowledge, no notice of cancellation or termination has
been received by the Company, any Subsidiary or Seller with respect to any such
policy, except for statutory notices. All such policies are sufficient for
compliance with all requirements of law and of all Contracts and agreements to
which the Company or any Subsidiary is a party or otherwise bound and are valid,
outstanding, collectible and enforceable policies and provide insurance coverage
which is adequate and customary for a busi-
13
ness of the size and type of the Company or any Subsidiary, as the case may be.
Complete and accurate copies of all such policies and related documentation have
previously been provided or made available to Purchaser.
Section 2.14 Employee Benefit Plans; ERISA. (a) Section 2.14 of the
Disclosure Schedule contains a complete and accurate list of each deferred
compensation, incentive compensation, bonus, stock purchase, stock option,
employment, severance or termination pay, medical, life, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, and each other material
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA")), program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or any ERISA Affiliate, for which the Company
has direct liability for the benefit of any employee, officer, consultant (or
any dependent or beneficiary thereof) or former employee of the Company whether
formal or informal (the "Plans"). "ERISA Affiliate" means any entity (whether or
not incorporated) other than the Company that, together with the Company, is or
was a member of a controlled group of corporations within the meaning of Section
414(b) of the Code, or of a group of trades or businesses under common control
within the meaning of Section 414(c) of the Code, or of an affiliated service
group within the meaning of Section 414(m) of the Code. Section 2.14 of the
Disclosure Schedule identifies each of the Plans that is an "employee benefit
plan," as that term is defined in section 3(3) of ERISA (the "ERISA Plans").
(b) With respect to each Plan, Seller has heretofore delivered or
made available to Purchaser true and complete copies of each of the following
documents, if available:
(i) a copy of such Plan (including all amendments thereto) or, where
substantially similar arrangements exist, a sample copy (including all
amendments thereto) and a list of all persons participating in such arrangement;
14
(ii) a copy of the annual report and actuarial valuation report and
audited financial statements, if required under ERISA, and the report prepared
with respect thereto in accordance with Statement of Financial Accounting
Standards No. 87, Employer's Accounting for Pensions for the last three years;
(iii) a copy of the most recent Summary Plan Description required
under ERISA with respect thereto;
(iv) if the Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements and audited financial
statements thereof; and
(v) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan for which such letter has been
obtained.
(c) Except as set forth in Schedule 2.14 of the Disclosure Schedule,
neither the Company nor any ERISA Affiliate currently maintains, sponsors or
contributes to, nor has direct liability for, any Plan subject to Title IV of
ERISA. The Company has not received and is not aware of any material actions,
claims (other than routine claims for benefits), lawsuits, arbitrations or
investigations pending or to the best of Seller's and the Company's knowledge
threatened with respect to any Plan or against any fiduciary or any Plan.
(d) Neither the Company, nor any ERISA Plan, nor any trust created
thereunder, nor any trustee or administrator thereof, has engaged in a
transaction in connection with which the Company, any ERISA Plan or, such trust,
could be subject to either a material civil penalty assessed pursuant to section
409 or 502(i) of ERISA or a material tax imposed pursuant to section 4975 or
4976 of the Internal Revenue Code of 1986, as amended (the "Code"). No Plan
which is subject to Section 302 of ERISA or Section 412 of the Code has incurred
an "accumulated funding deficiency" as defined in either of such Sections,
whether or not waived, nor has requested or obtained any extension of any
applicable amortization period. As of the Closing Date, the Company and each
ERISA Affiliate shall have made all required contributions under each Plan for
all periods through and includ-
15
ing the Closing Date or adequate accruals therefor will have been provided for
and will be reflected on the Balance Sheet of the Company.
(e) No ERISA Plan is a "multiemployer plan," as defined in section
3(37) of ERISA, nor is any ERISA Plan a plan described in section 4063(a) of
ERISA.
(f) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Code.
(g) Each ERISA Plan that is intended to be "qualified" within the
meaning of Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, the trusts maintained thereunder have been
determined by, or a request for such determination has been made to, the
Internal Revenue Service to be exempt from taxation under section 501(a) of the
Code, and all required submissions have been made to the Internal Revenue
Service with respect to maintaining the "qualified" status of each such ERISA
Plan under Section 401(a) of the Code.
(h) No Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees or dependents thereof of the Company beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable law, (ii)
death benefits or retirement benefits under any "employee pension benefit plan,"
as that term is defined in section 3(2) of ERISA, (iii) deferred compensation
benefits accrued as liabilities on the books of the Company or (iv) benefits the
full cost of which is borne by the current or former employee (or his or her
dependents or beneficiaries)).
(i) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee, officer, director
or consultant of the Company to any payment, including, without limitation, any
severance pay, unemployment compensation, golden parachute, bonus or any other
payment or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation or benefit payable with respect to any current or former
employee, officer, direc-
16
tor or consultant of the Company. No Plan provides benefits or payments
contingent upon, triggered by or increased as a result of, a change in the
ownership or effective control of the Company.
(j) All reports, notices and other disclosure relating to Plans
required to be filed with, or furnished to, Governmental Entities, plan
participants or plan beneficiaries have been timely filed and furnished in
accordance with applicable law.
(k) No amounts payable under any Plan will fail to be deductible for
federal income tax purposes, including without limitation, by virtue of section
280G of the Code.
(l) With respect to each applicable Plan, the Company has complied
with the provisions of Section 4980B(f) of the Code.
(m) Except as set forth in Section 2.14 of the Disclosure Schedule,
(i) the Company has no written employment Contracts or other written
compensation or severance pay arrangements with Seller or Seller's affiliates or
associates, or any employee of the Company and (ii) all employees of the Company
are employed at will.
Section 2.15 Taxes. (a) Except as set forth in Section 2.15 of the
Disclosure Schedule, Flavors and each of its subsidiaries has filed, or as of
the Closing Date will have filed, with the appropriate federal, state, local and
foreign taxing authorities all federal income tax returns and all other material
Tax Returns (as defined in paragraph (d) below) required to be filed by or with
respect to Flavors or any of its subsidiaries, as the case may be, whose due
dates (taking into account any timely filed extensions) fall on or before the
Closing Date, and such Tax Returns are or will be true, correct and complete in
all material respects. Flavors and each of its subsidiaries has paid in full or
has made adequate provision in the Balance Sheet for all federal income taxes
and all other material Taxes (as defined in paragraph (d) below) which are or
will be due or claimed to be due from them by any taxing authority for all
periods (or portions thereof) up to and including the Closing Date. There are no
liens for Taxes upon the assets of
17
Flavors or any of its subsidiaries except for statutory liens for current Taxes
not yet due.
(b) Except as set forth in Section 2.15 of the Disclosure Schedule,
neither Flavors nor any of its subsidiaries has requested any extension of time
within which to file any Tax Return, which Tax Return has not since been filed
and neither Flavors nor any of its subsidiaries has waived any statute of
limitations for, or agreed to any extension of time with respect to, the
assessment of Taxes of Flavors or any of its subsidiaries, as the case may be.
(c) Except as set forth in Section 2.15 of the Disclosure Schedule,
neither Flavors nor any of its subsidiaries has received any notice of
deficiency or assessment from any taxing authority with respect to liabilities
for Taxes of Flavors or any of its subsidiaries which has not been fully paid or
finally settled. No power of attorney has been executed by, or on behalf of,
Flavors or any of its subsidiaries with respect to any matter relating to Taxes
which is currently in force.
(d) For purposes of this Agreement, "Tax" or "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed by any
United States federal, state, local or foreign taxing authority, including, but
not limited to, income, gross receipts, excise, property, sales, use (or any
similar taxes), transfer, franchise, payroll, withholding, social security,
business license fees, or other taxes including any interest, penalties or
additions thereto. For purposes of this Agreement, "Tax Return" shall mean any
return, report, information return, schedule or other document (including any
related or supporting information) required to be supplied to a taxing authority
with respect to Taxes.
(e) For purposes of this Section 2.15 (and Section 4.11 of this
Agreement), the term "subsidiaries" shall not include Rishmac Produce & Export
Company or Xxxxxx Xxxxxx.
18
Section 2.16 Environmental Matters. (a) Each of the Company and the
Subsidiaries and their respective properties and assets are in material
compliance with all applicable Environmental Laws (as defined in paragraph (e)
below) which compliance includes, but is not limited to, the possession of all
permits, licenses, registrations and other governmental authorizations required
under applicable Environmental Laws (collectively, "Permits"), and compliance
with the terms and conditions thereof, and there are no circumstances of a
nature which may materially prevent or interfere with compliance in the future.
Except as set forth in Section of the Disclosure Schedule, no additional Permits
are necessary for the conduct of the business of the Company or any Subsidiary
as currently conducted.
(b) There is no Environmental Notice (as defined in paragraph (e)
below) that is (i) pending or, to the best of Seller's knowledge, threatened
against the Company or any Subsidiary or (ii) to the best of Seller's knowledge,
pending or threatened against any person or entity whose liability for such
Environmental Notice may have been retained or assumed by or could reasonably be
imputed or attributed by law or contract to the Company or any Subsidiary.
(c) To the best of Seller's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents arising out
of, based upon, resulting from or relating to the operation, ownership or use of
any property or assets currently or formerly owned, operated or used by the
Company or any Subsidiary, including, without limitation, the release, emission,
discharge or disposal of any Environmental Material (as defined in paragraph (e)
below) into the Environment (as defined herein), that (i) would likely result in
the incurrence of costs under Environmental Laws which would have Material
Adverse Effect; or (ii) would likely form the basis of any Environmental Notice
against or with respect to the Company or any Subsidiary or against any person
or entity whose liability for any Environmental Notice may have been retained or
assumed by or could be imputed or attributed by law or contract to the Company
or any Subsidiary which would have Material Adverse Effect.
19
(d) Except as set forth in Section 2.16 of the Disclosure Schedule,
without in any way limiting the generality of the foregoing, to Seller's
knowledge (i) there are and have been no underground storage tanks located on
property owned, leased or used by the Company or any Subsidiary, (ii) there is
no asbestos contained in or forming part of any building, building component,
structure or office space owned, leased or used by the Company or any
Subsidiary, or located on the Property, (iii) no polychlorinated biphenyls
(PCBs) are used or stored on any property owned, leased or used by the Company
or any Subsidiary and (iv) there are no locations currently or formerly owned,
leased or used by the Company or any Subsidiary at which any Environmental
Material generated, used, owned or controlled by the Company, any Subsidiary or
Seller may have been disposed of or released into the Environment in violation
of Environmental Laws in effect at that time.
(e) For purposes of this Agreement:
(i) "Environment" means any surface water, ground water, drinking
water supply, land surface or subsurface strata, ambient air and including,
without limitation, any indoor location.
(ii) "Environmental Notice" means any notice or claim by any person
or entity alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental costs, or harm,
injuries or damages to any person, property, natural resources, or any fines or
penalties) arising out of, based upon, resulting from, or relating to the
emission, discharge, disposal, release or threatened release in or into the
Environment of any Material.
(iii) "Environmental Laws" means all federal, state, local and
foreign laws, codes, regulations, requirements, directives, orders, common law,
and administrative or judicial interpretations thereof, all as in effect on the
date hereof and on the Closing Date, that may be enforced by any governmental
agency or court, relating to pollution, the protection of human health, the
protection of the Environment, or the emission, discharge, disposal, release or
threatened release of Environmental Materials in or into the Environment.
20
(iv) "Environmental Material" or "Environmental Materials" means
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes, and including, without limitation, asbestos, or asbestos-containing
materials, PCBs, and petroleum, oil or petroleum or oil products or derivatives.
Section 2.17 Labor Relations and Employment. Except as set forth in
Section 2.17 of the Disclosure Schedule, (i) there is no labor strike, dispute,
slow-down, stoppage or lockout actually pending, or to the best of the Company's
or Seller's knowledge, affecting or threatened against the Company or any
Subsidiary and during the past three years there has not been any such action;
(ii) no union claims to represent the employees of the Company or any
Subsidiary; (iii) there is no agreement with any labor organization, nor work
rules or practices agreed to with any labor organization or employee
association, applicable to employees of the Company or any Subsidiary nor is the
Company or any Subsidiary a party to or bound by any collective bargaining
agreement; (iv) there is no grievance pending against the Company or any
Subsidiary arising out or under of any collective bargaining agreement or other
grievance procedure; (v) there are no charges with respect to or relating to the
Company or any Subsidiary pending before the Equal Employment Opportunity
Commission or any other agency responsible for the prevention of unlawful
employment practices; and (vi) neither the Company, any Subsidiary nor Seller
has received notice of the intent of any federal, state, local or foreign agency
responsible for the enforcement of labor or employment laws to conduct an
investigation with respect to or relating to the Company or any Subsidiary and,
to the best of the Company's and Seller's knowledge, no such investigation is in
progress.
Section 2.18 Brokers or Finders. Purchaser does not have and will
not have any obligation to pay any broker's, finder's, investment banker's,
financial advisor's or similar fee in connection with this Agreement, or the
transactions contemplated hereby, by reason of any action taken by or on behalf
of Seller or the Company.
Section 2.19 Transactions with Affiliates. Except as set forth in
Section of the Disclosure Schedule, the Company has no outstanding liabilities
or
21
obligations for amounts owing to, or notes or accounts receivable from, or
leases, contracts or other commitments or arrangements with or for the benefit
of, Seller, its affiliates or associates, or the Company's directors, officers
or employees.
Section 2.20 Ownership of PCT Common Stock. Seller and its
affiliates beneficially own 5,939,400 shares of PCT Common Stock (as defined
below) and 20,000 shares of PCT Preferred Stock (as defined below).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Each of PCT and Purchaser represents and warrants to Seller as
follows:
Section 3.1 Organization, Standing and Qualification. Each of PCT
and Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
Section 3.2 Authority Relative to this Agreement. Each of PCT and
Purchaser has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of each of PCT and Purchaser and no other corporate proceedings on the
part of either PCT or Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of PCT and Purchaser and constitutes,
and each other agreement that is to be executed and delivered by PCT or
Purchaser, as the case may be, in connection with the transactions contemplated
by this Agreement, when executed and delivered by any such party will
constitute, a valid and binding agreement of such party enforceable against such
party in accordance with its terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization and other similar
laws affecting creditors' rights generally, and (ii) as such en-
22
forceability may be limited by general principles of equity, regardless of
whether asserted in a proceeding in equity or law.
Section 3.3 Capitalization. The authorized capital stock of PCT
consists of 250,000,000 shares of common stock, par value $.01 per share ("PCT
Common Stock"), of which 20,594,120 are issued and outstanding and 250,000,000
shares of preferred stock, par value $0.01 per share ("PCT Preferred Stock"), of
which 20,000 are issued and outstanding. There are no other shares of capital
stock of PCT authorized, issued or outstanding. All outstanding shares of PCT
Common Stock and PCT Preferred Stock are duly authorized, validly issued, fully
paid and nonassessable and are not subject to any preemptive rights. Except as
set forth in Section 3.3 of the Disclosure Schedule, there are not (a) issued or
outstanding any securities convertible into or exchangeable for, or any options,
warrants, calls, puts, subscriptions or other rights (preemptive or otherwise)
to acquire, any shares of capital stock of PCT or (b) any agreements or
contractual commitments involving PCT or its affiliates relating to shares of
PCT Common Stock, PCT Preferred Stock or obligating PCT to issue or sell any
shares of its capital stock or any such securities, options, warrants, calls,
puts, subscriptions or other rights.
Section 3.4 Consents and Approvals; No Violation. Except for
applicable requirements of the HSR Act, there is no requirement applicable to
PCT or Purchaser to make any filing with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by PCT or Purchaser of the transactions contemplated
hereby. Except for applicable requirements of the HSR Act, neither the execution
and delivery of this Agreement by PCT or Purchaser, nor the consummation by PCT
or Purchaser of the transactions contemplated hereby, nor compliance by PCT or
Purchaser with any of the provisions hereof will (i) conflict with or result in
a breach of any provision of the certificate of incorporation or bylaws of PCT
or Purchaser, (ii) result in a breach of, or default under (or give rise to any
right of termination, cancellation or acceleration under), any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which PCT or Purchaser is
a party or by which any of
23
their respective properties or assets may be bound, except for such breaches or
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or will be obtained prior to
the Closing Date or (iii) violate any order, judgment, writ, injunction, decree,
statute, rule or regulation applicable to it or its properties or assets except
for such violations which would not have a material adverse effect on (x) the
business, properties, results of operations or financial or other conditions of
PCT and Purchaser, taken as a whole, or (y) on the ability of PCT or Purchaser
to consummate the transactions contemplated hereby. Except as set forth in
Section of the Disclosure Schedule, there is no Proceeding pending or, to the
best knowledge of PCT and Purchaser, threatened against PCT or Purchaser that
seeks to prevent the consummation of the transactions contemplated hereby.
Section 3.5 Brokers or Finders. Seller will not have any obligation
to pay any broker's, finder's, investment banker's, financial advisor's or
similar fee in connection with this Agreement, or the transactions contemplated
hereby by reason of any action taken by or on behalf of PCT or Purchaser.
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business. During the period from the date
hereof to the Closing, except as otherwise contemplated by this Agreement,
Seller shall cause the Company to be operated only in the ordinary course of
business consistent with past practice. Seller will use its reasonable best
efforts to cause the Company to preserve intact the present organization of the
Company, keep available the services of the present officers and employees of
the Company and preserve the Company's relationships with customers, suppliers,
licensors, licensees, contractors, distributors and others having significant
business dealings with the Company, as the case may be. Without limiting the
generality of the foregoing, and except as otherwise provided in this Agreement,
from the date of this Agreement to the Closing, without the prior written
consent of Purchaser, Seller agrees that the Company shall not:
24
(a) (i) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any shares of its capital stock or any other securities or equity equivalents,
(ii) split, combine or reclassify any shares of its capital stock or (iii) amend
the terms of any such securities or agreements outstanding on the date hereof;
(b) amend its certificate of incorporation or by-laws;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, or redeem, repurchase or otherwise acquire any of its
securities, except that Flavors and the Company may declare, set aside or pay a
cash dividend in an amount not to exceed $5.4 million;
(d) (i) sell, lease, transfer or dispose of any assets or rights,
(ii) permit any asset to suffer any Encumbrance thereupon, except for such
Encumbrances existing on the date hereof and Permitted Liens, (iii) acquire any
assets or rights, unless in the case of (i), (ii) and (iii), (A) in the ordinary
course of business consistent with past practice, or (B) pursuant to obligations
in effect on the date hereof or (iv) enter into any commitment or transaction
binding on the Company with respect to (i), (ii) or (iii) above, unless in the
ordinary course of business consistent with past practice;
(e) (i) incur or assume any indebtedness for borrowed money other
than in the ordinary course of business consistent with past practice, (ii)
issue or sell any debt securities or warrants or rights to acquire any debt
securities, (iii) assume, guarantee, endorse or otherwise become liable (whether
directly, contingently or otherwise) for the obligations of any other person, or
(iv) make any loans, advances or capital contributions to, or investments in,
any other person;
(f) pay, discharge or satisfy any liability, obligation, or
Encumbrance (absolute, accrued, asserted or unasserted, contingent or otherwise)
of the Company,
25
other than the payment, discharge or satisfaction in the ordinary course of
business consistent with past practice or in accordance with their terms, of
claims, liabilities or obligations of the Company (i) reflected or reserved
against on the Balance Sheet or (ii) incurred in the ordinary course of business
consistent with past practice since the date of the Balance Sheet;
(g) change any of the accounting or tax principles, practices or
methods used by the Company (except as required by GAAP or law);
(h) enter into, adopt, amend or terminate any Plan, increase in any
manner the compensation or fringe benefits of any officer or employee of the
Company or pay any benefit not required by any existing Plan, or enter into any
contract, agreement commitment or arrangement to do any of the foregoing, except
to the extent required by applicable law or entered into in the ordinary course
of business consistent with past practice;
(i) enter into or offer to enter into any employment arrangement
(other than in the ordinary course of business consistent with past practice for
employees at will with annual salaries of not more than $100,000 per person) or
any consulting arrangement with any person (other than in the ordinary course of
business consistent with past practice);
(j) make or authorize any capital expenditures;
(k) settle or compromise any Tax liability;
(l) (i) enter into, amend or terminate any Contract, except in the
ordinary course of business consistent with past practice, or (ii) take any
action or fail to take any action that, with or without either notice or lapse
of time, would constitute a material default under any such Contract;
(m) make any payments, loans, advances or other distributions to, or
enter into any transaction, agreement or arrangement with, Seller, or any of
Seller's affiliates or associates;
26
(n) make any change in its accounts payable practices;
(o) terminate or amend or fail to perform any of its obligations,
permit any default to exist or cause any material breach under any of the
Company policies of insurance set forth in Section 2.13 of the Disclosure
Schedule;
(p) dispose of or permit to lapse any material item of Intellectual
Property;
(q) take, or agree in writing or otherwise to take, any of the
actions set forth in this Section 4.1.
Section 4.2 Access to Information. (a) Seller shall, and shall cause
the Company to, (i) give Purchaser and its authorized representatives full
access during normal business hours to all books and records, plants, offices,
warehouses and other facilities and properties utilized by the Company in
connection with its business and all information relating to the Company, its
business, properties, assets, financial condition, results of operations and
prospects, (ii) permit Purchaser and its authorized representatives, to make
such inspections thereof and to interview such personnel of the Company during
normal business hours as Purchaser may reasonably request and (iii) cause the
Company's officers and auditors to furnish Purchaser and its authorized
representatives with such financial and operating data and other information
with respect to the items set forth in clause (i) of this paragraph (a) as
Purchaser may from time to time reasonably request, and cause the Company's
auditors to deliver their workpapers related to such information if Purchaser
shall so request.
(b) All information about the Company obtained by Purchaser from
Seller or the Company or their respective directors, officers, employees, agents
or representatives in connection with the transactions contemplated hereby
(other than publicly available information) shall be held in confidence by
Purchaser and such information shall not be disclosed to any person (other than
Purchaser and its affiliates and its or their directors, officers, employees,
agents, and representatives) except as may be required by judicial process,
administrative order, or any law, rule or regulation.
27
Section 4.3 Reasonable Best Efforts. (a) Upon the terms and subject
to the conditions of this Agreement, each of the parties hereto agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable
including, but not limited to, (i) the preparation and filing of all applicable
forms under the HSR Act, (ii) the preparation and filing of all other forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders, exemptions or waivers by
any third party or Governmental Entity and (iii) the satisfaction of all
conditions to Closing. Each party shall promptly consult with the other party to
provide any necessary information not subject to legal privilege with respect
to, and provide the other party (or its counsel) copies of, all filings made by
such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
transactions contemplated by this Agreement.
(b) Each party hereto shall promptly inform the other party of any
communication from any Governmental Entity regarding any of the transactions
contemplated by this Agreement. If any party or affiliate thereof receives a
request for additional information or documentary material from any such
Governmental Entity with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request.
Section 4.4 Preparation of Registration Statement; Listing. (a) As
soon as practicable following the Closing Date, at the direction of, and with
all reasonably necessary assistance from, Purchaser, Seller shall prepare and
file with the SEC any registration statement (the "Registration Statement")
necessary for PCT to distribute the VSRs to its stockholders. Each party will
provide the other party and its agents with reasonable opportunity to review and
comment upon the Registration
28
Statement, including all amendments and supplements thereto, prior to the filing
thereof with the SEC and or distribution thereof to the stockholders of PCT, and
shall make all reasonable changes thereto requested by the other party or its
agents. Each party shall use its reasonable best efforts to have the
Registration Statement declared effective by the SEC as promptly as practicable.
Each party shall provide and shall be deemed to have provided the other party
with the information concerning it required to be included in the Registration
Statement. Seller shall take any action required to be taken under any
applicable state securities laws in connection with the issuance of the VSRs and
shall cause the VSR Agreement to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA"), if required by the TIA.
(b) As soon as practicable following the Closing Date, at the
direction of, and with all reasonable necessary assistance from, Purchaser,
Seller shall use its best efforts to cause the VSRs to be approved for listing
on the New York Stock Exchange ("NYSE") or other national securities exchange or
automated quotation system approved by Seller and Purchaser, in each case,
subject to official notice of issuance.
Section 4.5 Covenant of PCT. (a) Except as set forth in Section 4.5
of the Disclosure Schedule, from the date of this Agreement until the date of
the distribution of the VSRs to stockholders of PCT, without the prior written
consent of Seller, PCT shall not (i) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any shares of its capital stock or any other securities
or equity equivalents, (ii) split, combine or reclassify any shares of its
capital stock, (iii) amend the terms of any such securities or agreements
outstanding on the date hereof or (iv) declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, or redeem, repurchase or otherwise
acquire any of its securities.
(b) Each of PCT and Purchaser covenant to cause the distribution of
one VSR and 125 VSRs per share
29
to all holders of PCT Common Stock and PCT Preferred Stock, respectively, as
soon as practicable following the declaration by the SEC of the effectiveness of
the Registration Statement.
Section 4.6 Further Assurances. Seller and Purchaser agree that,
from time to time after the Closing, without additional consideration, each of
them will execute and deliver such further instruments and take such other
action as may be necessary to make effective the transactions contemplated by
this Agreement.
Section 4.7 No Solicitation. Seller will, and will cause the Company
to, immediately cease any existing discussions or negotiations with any third
parties conducted prior to the date hereof with respect to any merger, business
combination, sale of assets (other than sales permitted by this Agreement), sale
of shares of capital stock or other securities or similar transaction involving
any third party and Seller or the Company (an "Acquisition Transaction"). Seller
shall, and Seller will ensure that the Company and its directors and officers
shall, and will use their reasonable best efforts to cause Seller's and the
Company's employees or other affiliates not to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group (other than Purchaser or its directors, officers, employees or
other affiliates or representatives) concerning any Acquisition Transaction.
Seller will immediately communicate to Purchaser any such inquiries or proposals
regarding an Acquisition Transaction and the terms thereof.
Section 4.8 Fees and Expenses. Except as otherwise set forth in this
Agreement, each party hereto shall pay the fees and expenses incurred by it in
connection with the transaction contemplated hereby. In addition, the cost of
obtaining the third party consents set forth on Section 2.4 of the Disclosure
Schedule necessary to allow Seller, Flavors or the Company to consummate the
transactions contemplated hereby shall be borne by the Company. Any fees and
expenses incurred in connection with the settlement of the litigation set forth
in Sections 2.4 and 3.4 of the Disclosure Schedule shall be
30
split evenly between Seller and Purchaser until such aggregate amount equals
$1,000,000 and, thereafter, all such fees and expenses shall be paid by Seller;
provided, however, if requested by Seller, Purchaser shall advance the amount of
any fees and expenses to be paid by Seller and the amount of such advance shall
be deducted from the Deferred Cash Payments (together with interest accrued at a
rate of 5.5% annually until the date of the relevant Deferred Cash Payment),
first from the Deferred Cash Payment to be made on December 31, 1997 and then,
if necessary, from the Deferred Cash Payment to be made on June 30, 1997.
Section 4.9 Public Announcements. Subject to Section hereof, none of
Seller, the Company or Purchaser will issue or cause the publication of any
press release or otherwise make any public statement with respect to the
transactions contemplated hereby without the prior written consent of the
parties hereto; provided, that any party hereto may make a public announcement
to the extent required by law, judicial process or the rules, regulations or
interpretations of the Securities and Exchange Commission.
Section 4.10 Books and Records. At the Closing, Seller shall deliver
to the Company all books and records in its possession relating to the Company.
Section 4.11 Tax Matters. (a) Tax Treatment - Section 338(h)(10)
Election. With respect to the sale and acquisition of the Shares pursuant to
this Agreement, (A) within 240 days after the Closing Date, Seller and Purchaser
shall agree on the form and content of the IRS Forms 8023-A (the "Forms 8023-A")
on which the election to be made pursuant to Section 338(h)(10) of the Code (the
"Election") shall be made; (B) within fifteen (15) days thereafter, Purchaser
shall deliver to Seller properly executed Forms 8023-A, which Seller shall file
on a timely basis with the Internal Revenue Service (the "IRS") following the
Closing Date; (C) Seller and Purchaser shall jointly and timely make any
elections under state or local tax law comparable to the Election with respect
to the purchase of the Shares; (D) Seller and Purchaser shall, as promptly as
practicable following the Closing Date, cooperate with each other to take all
other actions necessary and appropriate (including filing such forms, returns,
elections, schedules and other documents
31
as may be required) otherwise to effect and preserve timely Election in
accordance with the provisions of Treasury Regulation Sections 1.338-1 and
1.338(h)(10)-1 (or any comparable provisions of state or local tax law) or any
successor provisions; and (E) Seller and Purchaser shall report the sale and
acquisition, respectively, of the Shares pursuant to this Agreement consistent
with the Election (and any comparable elections under state or local tax laws)
and shall take no position to the contrary thereto in any Tax Return, any
proceeding before any taxing authority or otherwise.
(b) To the extent permissible by law, Seller shall prepare and file
or cause to be filed (i) any corrections, amendments or supplements to the Forms
8023-A and (ii) any state or local forms or reports that are necessary or
appropriate for purposes of complying with the requirements for making any state
or local election that is comparable to the Election. To the extent necessary
for the valid filing of any such corrections, amendments, supplements, forms or
reports, Purchaser shall, at the request of Seller, properly execute or have
properly executed any requisite forms or reports specified by Seller, and, to
the extent required by law and reasonably practicable within the time period
following receipt of Seller's requests, Purchaser shall file timely or cause to
be filed timely any such forms or reports.
(c) In connection with the Election, within 180 days after the
Closing Date, (i) Seller shall provide to Purchaser a proposed determination of
the Modified Aggregate Deemed Sales Price (as defined under applicable Treasury
Regulations) with respect to Flavors, and (ii) Purchaser shall provide to Seller
a proposed allocation of such Modified Aggregate Deemed Sales Price among the
assets of Flavors, which allocations shall be made in accordance with Section
338(b) of the Code and any applicable Treasury Regulations. Within 10 days
following such provision, Purchaser and Seller, respectively, shall have the
right to object to any such determination or allocation. If a party objects to
any such determination or allocation, the parties shall resolve their dispute
pursuant to the provision for resolving Tax Related Disputes described in
paragraph (k) of this Section 4.11. Seller and Purchaser (i) shall be bound by
the allocations determined pursuant to this paragraph for purposes of
determining any Taxes; (ii) shall prepare and file all
32
Tax Returns to be filed with any taxing authority in a manner consistent with
such allocations; and (iii) shall take no position inconsistent with such
allocations in any Tax Return, any proceeding before any taxing authority or
otherwise. In the event that any such allocation is disputed by any taxing
authority, the party receiving notice of such dispute shall promptly notify and
consult with the other party hereto concerning resolution of such dispute.
Neither Seller nor Purchaser shall, or shall permit any of their affiliates
(including, without limitation, Flavors and any of its subsidiaries) to, take
any action to modify any of the forms or reports (including any corrections,
amendments or supplements thereto) that are required for the making of the
Election or any comparable elections under state or local tax law after their
execution or to modify or revoke the Election following the filing of the Forms
8023-A by Seller without the written consent of Seller and Purchaser, as the
case may be.
(d) For purposes of any Taxes, Seller and Purchaser agree that as of
the Closing Date each VSR has a fair market value equal to the average trading
price of the VSRs on the first day the VSRs are traded on the New York Stock
Exchange or other national securities exchange or automated quotation system,
unless Seller and Purchaser agree that such price does not accurately reflect
the value of the VSRs as of the Closing Date, in which case Seller and Purchaser
shall mutually agree on an appropriate fair market value for the VSRs. Purchaser
and Seller agree to file, and to cause their affiliates to file, all Tax Returns
on a basis consistent with the valuations set forth in this Section 4.11(d).
(e) Indemnification.
(i) Seller's Indemnification of Purchaser. Seller shall
indemnify Purchaser from, against, and in respect of (A) any Taxes of Flavors or
any of its subsidiaries for any taxable period, or portion of a Straddle Period
(as determined pursuant to Section 4.11(f) hereof), ending on or prior to the
Closing Date; (B) any Taxes of Flavors or any of its subsidiaries arising from
the departure by Flavors or any of its subsidiaries from an affiliated, unitary,
consolidated, combined, or other similar group as a result of the transactions
contemplated by this Agreement, or attribut-
33
able to any corporation or other entity which joined with Flavors or any of its
subsidiaries in the filing of an affiliated, unitary, consolidated, combined, or
similar return for any taxable period, or portion of a Straddle Period (as
determined pursuant to Section 4.11(f) hereof), ending on or prior to the
Closing Date; and (C) any Transfer Taxes for which Seller is liable pursuant to
Section 4.11(i) hereof; and
(ii) Purchaser's Indemnification of Seller. Purchaser
shall indemnify Seller from, against, and in respect of (A) any Taxes of Flavors
or any of its subsidiaries for any taxable period, or portion of a Straddle
Period (as determined pursuant to Section hereof), beginning after the Closing
Date; and (B) any Transfer Taxes for which Purchaser is liable pursuant to
Section 4.11(i) hereof.
(f) Computation of Tax Liabilities, Proration of Taxes and Earnings
and Profits. To the extent permitted by Law or administrative practice, the
taxable year of Flavors and each of its subsidiaries shall end on and include
the Closing Date. For purposes of determining the earnings and profits of
Flavors and each of its subsidiaries or the liability for Taxes for a portion of
a taxable year or period that begins before and ends after the Closing Date (a
"Straddle Period"), the determination of such earnings and profits or such Taxes
for the portion of the year or period ending on, and the portion of the year or
period beginning after, the Closing Date, shall be determined by assuming that
the taxable year or period ended on and included the Closing Date, except that
exemptions, allowances or deductions that are calculated on an annual basis and
annual real and personal property taxes shall be prorated on the basis of the
number of days in the annual period elapsed through the Closing Date as compared
to the number of days in the annual period elapsing after the Closing Date.
(g) Tax Returns.
(i) Seller shall prepare, or cause to be prepared, and
file, or cause to be filed, on a timely basis all Tax Returns with respect to
Flavors and each of its subsidiaries for any taxable period ending on or prior
to the Closing Date;
34
(ii) Purchaser shall prepare, or cause to be prepared,
and file, or cause to be filed, on a timely basis all Tax Returns with respect
to Flavors and each of its subsidiaries for any taxable period ending after the
Closing Date, including Tax Returns for any Straddle Period; and
(iii) If either Purchaser, on the one hand, or Seller,
on the other hand, may be liable for any portion of the Taxes payable on any Tax
Return to be filed by the other, the party responsible for filing such return
(the "Preparer") shall use its best efforts to prepare and deliver to the other
party (the "Payor") a copy of such return and any schedules, work papers and
other documentation then available that are relevant to the preparation of the
portion of such return for which the Payor is or may be liable hereunder not
later than thirty (30) days prior to the due date for such return (inclusive of
extensions). The Preparer shall not file such return without the prior written
consent of the Payor, which consent shall not be unreasonably withheld and which
consent shall be provided to the Preparer at least ten (10) days prior to the
due date for such return (inclusive of extensions). If the Preparer and the
Payor are unable to agree on the amount of the Payor's liability for any Taxes
reflected on a Tax Return, such dispute shall be settled by an internationally
recognized firm of independent public accountants mutually acceptable to both
the Preparer and the Payor (the "CPA Firm") whose fees and expenses shall be
paid by the Preparer and the Payor in proportion to each party's respective
liability for the items in dispute as determined by the CPA Firm, and the Payor
shall pay the amount determined by the CPA Firm within five (5) Business Days of
such determination. If the Preparer fails to satisfy its obligations under this
Section 4.11(g)(iii), the Payor's obligation to indemnify the Preparer for any
Taxes which are reflected on any such Tax Return shall be reduced to the extent
the Payor is prejudiced by such failure and the Payor shall retain any and all
remedies it may otherwise have which arise out of such failure.
(h) Contest Provisions. (i) Notification of Contests. Each of
Purchaser, on the one hand, and Seller, on the other hand (the "Recipient"),
shall notify the other party in writing within thirty (30) days of receipt by
the Recipient of written notice of any pending or
35
threatened audits, adjustments or assessments relating to Taxes (a "Tax Audit")
which may affect the liability for Taxes of such other party. If the Recipient
fails to give such written notice to the other party, the Recipient shall not be
entitled to indemnification for any Taxes arising in connection with such Tax
Audit to the extent such failure to give notice affects the other party's
ability to participate in the Tax Audit or increases the other party's liability
for Taxes;
(ii) Control of Contests. To the extent a Tax Audit
relates to any taxable period ending on or prior to the Closing Date, Seller
shall at its expense control the defense and settlement of such Tax Audit. To
the extent a Tax Audit relates to any taxable period beginning after the Closing
Date, Purchaser shall at its expense control the defense and settlement of such
Tax Audit. To the extent a Tax Audit relates to any Straddle Period Seller shall
at its expense control the defense and settlement of such Tax Audit.
Notwithstanding the foregoing, neither party shall be entitled to settle, either
administratively or after the commencement of litigation, any claim for Taxes
which would adversely affect the liability for Taxes of Flavors or any of its
subsidiaries with respect to any taxable period ending after the Closing Date
(including any Straddle Period) or the liability for Taxes of Seller, Flavors or
any of its subsidiaries with respect to periods ending on or before the Closing
Date to any extent (including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost adjustments, the lengthening
of any amortization or depreciation periods, the denial of amortization or
depreciation deductions, or the reduction of loss or credit carryforwards)
without the prior written consent of the other party. Such consent shall not be
unreasonably withheld and shall not be necessary to the extent that the
appropriate party has indemnified the other party in form and substance
reasonably acceptable to the indemnitee. If a firm offer is made by a taxing
authority to settle a claim or litigation and the party which desires to accept
the offer ("Settling Party") notifies the other party ("Affected Party") in
writing that it desires to accept and agree to such settlement, but the Affected
Party elects not to accept or agree to such settlement, the Affected Party may
continue to contest or defend such claim or litigation and, in such event, the
total maximum liability of
36
the Settling Party with respect to such claim or litigation shall be limited to
and shall not exceed the amount of the Settling Party's share of such settlement
offer, plus the Settling Party's reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and disbursements) to the date of notice
that the Settling Party desires to accept such settlement; and
(iii) Participation Rights. Any party whose liability
for Taxes may be affected by a Tax Audit shall be entitled to participate at its
own expense in such defense and to employ counsel of its choice at its own
expense.
(i) Transfer Taxes. All excise, sales, use, transfer (including real
property transfer or gains), stamp, documentary, filing, recordation and other
similar taxes together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties ("Transfer
Taxes") resulting directly or indirectly from the transfer by Seller of the
Shares to Purchaser, shall be borne equally by Seller and Purchaser. Any Tax
Returns that must be filed in connection with such Transfer Taxes shall be
prepared and filed when due by the party primarily or customarily responsible
under the applicable local law for filing such Tax Returns, and such party will
use its best efforts to provide such Tax Returns to the other party at least
thirty (30) days prior to the due date for such Tax Returns. Notwithstanding
Section hereof, the responsibility for filing Tax Returns relating to Transfer
Taxes shall be covered exclusively by this Section 4.11(i).
(j) Certain Post-Closing Settlement Payments. (i) Purchaser's
Claiming, Receiving or Using Refunds and Overpayments. Except as provided in
Section 4.11(j)(ii), if, after the Closing Date, Purchaser, Flavors or any of
their subsidiaries receive any refund, or utilize the benefit of any overpayment
of Taxes which, in either case, (A) relates to a Tax paid by Seller or any of
its affiliates on or prior to the Closing Date, or (B) is the subject of
indemnification by Seller under this Agreement, Purchaser shall promptly
transfer, or cause to be transferred, to Seller the entire amount of the refund
or overpayment (including interest) received or utilized by Purchaser. Purchaser
shall notify Seller promptly after
37
the discovery of a right to claim any such refund or overpayment and the receipt
of any such refund or utilization of any such overpayment. Purchaser shall as
promptly as practicable claim any such refund or utilize any such overpayment
and shall furnish to Seller all information, records and assistance necessary to
verify the amount of the refund or overpayment;
(ii) Purchaser's Carryback of Post-Closing Losses.
Purchaser may carry back any Tax losses or credits to any taxable period of
Seller or Flavors ending on or prior to the Closing Date and shall be entitled
to retain the refund or other benefit resulting therefrom; provided, however,
that Purchaser shall indemnify Seller from, against and in respect of all Taxes
relating directly or indirectly to such carry back;
(iii) Realization of Tax Benefits in Respect of
Indemnified Liabilities. (A) If, after the Closing Date, (a) Purchaser or any of
its affiliates realizes any Damages for which it is indemnified by Seller or (b)
an adjustment required by any taxing authority increases Seller's
indemnification obligation under this Agreement, Purchaser and its affiliates
shall claim any such Damages and recognize any such adjustment on their Tax
Returns and claim to the fullest extent permissible all deductions allowable as
a result of any such Damages or adjustment. Purchaser shall furnish to Seller at
Seller's expense all relevant information, records and assistance reasonably
necessary to verify the amount of the decrease, if any, in Purchaser's and its
affiliates' Taxes paid solely as a result of recognizing or realizing such
Damages or adjustment and claiming all such permissible deductions (as compared
to the Taxes Purchaser and its affiliates would otherwise have paid solely
without such Damages or adjustment). Purchaser shall promptly transfer, or cause
to be transferred, to Seller the entire amount of such decrease at the time such
decrease is realized, whether realized by Purchaser and its affiliates paying
less Taxes or receiving a refund;
(B) If, after the Closing Date, (a) Seller or any of its
affiliates realizes any Damages for which it is indemnified by Purchaser hereof
or (b) an adjustment required by any taxing authority increases Purchaser's
indemnification obligation under this Agree-
38
ment, Seller and its affiliates shall claim any such Damages and recognize any
such adjustment on their Tax Returns and claim to the fullest extent permissible
all deductions allowed as a result of any such Damages or adjustment. Seller
shall furnish to Purchaser at Purchaser's expense all material information,
records and assistance necessary to verify the amount of the decrease, if any,
in Seller's and its affiliates' Taxes paid solely as a result of recognizing or
realizing such Damages or adjustment and claiming all such permissible
deductions (as compared to the Taxes Seller and its affiliates would otherwise
have paid solely without such Damages or adjustment). Seller shall promptly
transfer, or cause to be transferred, to Purchaser the entire amount of such
decrease at the time such decrease is realized, whether realized by Seller and
its affiliates by paying less Taxes or receiving a refund.
(iv) Subsequent Adjustment. In the event that any Tax refund,
benefit or savings described in any clause of this Section 4.11(j) is
subsequently reduced as a result of any adjustment required by any final
determination of the applicable law of the relevant jurisdictions, this Section
4.11(j) shall be applied taking into account such adjustment.
(k) Resolution of All Tax Related Disputes. For purposes of
computing the amount of any payment due under this Section 4.11, each party
shall provide to the other, as reasonably requested by the other, all reasonably
available information, records and assistance necessary to verify the amount of
the payment due. In the event that Seller, on the one hand, and Purchaser, on
the other hand, cannot agree on any calculation of any amount relating to Taxes
or the interpretation or application of any provision of this Agreement relating
to Taxes, such dispute shall be resolved by the CPA Firm, which shall act as an
arbitrator to resolve all points of disagreement and whose decision shall be
final and binding upon all persons involved and whose expenses shall be paid by
Seller and Purchaser in proportion to each party's respective liability as
determined by the CPA Firm.
(l) Closing and Post-Closing Actions which Affect Seller's Liability
for Taxes. (i) Purchaser shall not and shall not permit Flavors or any of its
39
subsidiaries, without the prior written consent of Seller, to take any action on
or after the Closing Date if such action could increase the liability for Taxes
of Seller with respect to the transactions contemplated by this Agreement
(including any obligation of Seller to indemnify Purchaser under this
Agreement).
(ii) Purchaser shall not, without the prior written
consent of Seller, amend any Tax Return filed by, or with respect to, Flavors or
any of its subsidiaries for any taxable period, or portion thereof, beginning
before the Closing Date and ending on or before the Closing Date.
(m) Maintenance of Books and Records. Until the applicable statute
of limitations (including periods of waiver) has run for all Tax Returns filed
or required to be filed with respect to taxable periods ending on or prior to
the Closing Date, Purchaser shall retain all of the books and records relating
to Flavors and each of its subsidiaries in existence on the Closing Date and
after the Closing Date will upon request and for a reasonable and specific
purpose provide Seller access to such relevant books and records for inspection
and copying by Seller and their representatives during normal business hours.
After the expiration of such period, no such books and records shall be
destroyed by Purchaser without first advising Seller in writing and giving
Seller at least sixty (60) business days to obtain possession thereof.
(n) Termination of Existing Tax Sharing Agreements. Prior to the
Closing Date, the parties shall terminate any existing tax sharing agreements to
the extent such agreement or arrangement binds Flavors or any of its
subsidiaries. The preceding sentence shall not apply to any agreement entered
into in connection with this Agreement.
(o) Assistance and Cooperation. The parties agree that, after the
Closing Date: (i) Each party shall assist the other party in preparing and
filing any Tax Returns which such other party is responsible for preparing and
filing;
(ii) The parties shall cooperate fully in preparing for
any audits of, or disputes
40
with taxing authorities regarding, any Tax Returns and payments in respect
thereof;
(iii) The parties shall make available to each other and
to any taxing authority as reasonably requested all relevant books and
records relating to Taxes;
(iv) Each party shall provide timely written notice to
the other party of any pending or proposed Tax Audit for which the other
party may have an indemnification obligation under this Agreement;
(v) Each party shall furnish the other party with copies
of all relevant correspondence received from any taxing authority in
connection with any Tax Audit or information request relating to any Taxes
referred to in subsection (iv) of this Section 4.11(o); and
(vi) Except as otherwise provided herein, the party
requesting assistance or cooperation shall bear the other party's
reasonable out-of-pocket expenses in complying with such request to the
extent that those expenses are attributable to fees and other costs of
unaffiliated third-party service providers.
(p) To the extent any provision in any other Section of this
Agreement is inconsistent with any provisions of this Section 4.11, this Section
4.11 shall exclusively govern all matters relating to Taxes (including the
procedure by which claims for Tax indemnification are made, the determination of
any amounts required to be paid, and the manner by which controversies are
resolved).
41
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Each Party's Obligations. The respective
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of the
following condition:
(a) No statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by a Governmental Entity
which prohibits the consummation of the transactions contemplated by this
Agreement and shall be in effect and, except as set forth in Sections 2.12 and
3.4 of the Disclosure Schedule, no Proceeding seeking such relief shall be
pending.
Section 5.2 Conditions to Obligations of Purchaser. The obligations
of PCT and Purchaser to effect the transactions contemplated by this Agreement
are further subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) The representations and warranties of Seller in this Agreement
shall be true and correct in all material respects as of the date hereof and at
and as of the Closing with the same effect as though such representations and
warranties had been made at and as of such time, other than representations and
warranties that speak as of a specific date or time (which need only be true and
correct in all material respects as of such date or time);
(b) Seller and the Company shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing;
(c) Purchaser shall have received certificates, dated the Closing
Date, from (i) the Company, duly executed by the Company, (ii) Flavors, duly
executed by Flavors and (iii) Seller, duly executed by Seller, to the effect of
(a) and (b) above;
(d) All authorizations, Permits, consents, orders or approvals of,
or declarations or filings with,
42
or expirations or terminations of waiting periods (including the waiting period
under the HSR Act) imposed by, any Governmental Entity, and all third party
consents (collectively, the "Authorizations") necessary to effect the
transactions contemplated by this Agreement, shall have occurred, been filed or
been obtained;
(e) Seller shall have delivered or caused to be delivered to
Purchaser each of the items specified in Section 1.5 hereof.
Section 5.3 Conditions to Obligations of Seller. The obligations of
Seller to effect the transactions contemplated by this Agreement are further
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Purchaser in this
Agreement shall be true and correct in all material respects as of the date
hereof and at and as of the Closing with the same effect as though such
representations and warranties had been made at and as of such time, other than
representations and warranties that speak as of a specific date or time (which
need only be true and correct in all respects as of such date or time);
(b) Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing;
(c) Seller shall have received certificates, dated the Closing Date,
from (i) Purchaser, duly executed by Purchaser, and (ii) PCT, duly executed by
PCT, to the effect of (a) and (b) above;
(d) All Authorizations necessary for Purchaser to effect the
transactions contemplated by this Agreement, shall have occurred, been filed or
been obtained by it; and
(e) Purchaser shall have delivered or caused to be delivered to
Seller each of the items specified in Section 1.6 hereof.
43
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.1 Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual consent of Seller and Purchaser;
(b) by either Seller, on the one hand, or Purchaser, on the other
hand, if the Closing shall not have occurred by December 31, 1996; or
(c) by either Seller or Purchaser if any court of competent
jurisdiction or other competent Governmental Entity shall have issued an order,
decree or injunction or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such statute, rule, regulation, order, decree or injunction or
other action shall have become final and nonappealable.
Section 6.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 6.1 hereof, (i) this
Agreement shall forthwith become void and have no effect, without any further
obligation on the part of any party hereto or its affiliates, directors,
officers, stockholders, agents, or representatives, except that the provisions
of Sections 2.18, 3.5, 4.2(b) and (and Section 8.7 to the extent it is
applicable to such Sections) shall survive and no party shall be relieved of any
liability for any breach of this Agreement and (ii) Purchaser will redeliver to
Seller all documents, work papers and other material of Seller or otherwise
delivered by Seller relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof.
Section 6.3 Amendment. This Agreement may be amended at any time by
the parties hereto, but only by an instrument in writing signed by each of the
parties hereto.
Section 6.4 Extension; Waiver. At any time prior to the Closing, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (ii) waive any inaccuracies in
the representations and warranties contained
44
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed by such party.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival Periods. All representations and warranties of
the parties contained in this Agreement, the Disclosure Schedule, or any
certificate or document delivered in connection herewith shall survive the
Closing and shall apply with respect to claims asserted in writing within
eighteen months from the Closing Date; provided, that the representations and
warranties set forth in Sections 2.1, 2.2, 2.3, 2.4 and 2.8 shall survive the
Closing indefinitely, the representations and warranties contained in Sections
2.14 and 2.15 shall survive the Closing Date until the third-year anniversary of
the date of this Agreement and the representations and warranties contained in
Section 2.15 shall survive the Closing Date until the expiration of the
applicable statutes of limitation for the assessment or collection of the Taxes
to which such representation or warranty relates. The covenants and agreements
of the parties hereto shall survive the Closing in accordance with their terms.
For purposes of this Agreement, the representations and warranties of Seller
contained herein shall be deemed to include the Disclosure Schedule. Rights of a
party to indemnification shall not be limited or affected by any pre-Closing
investigation by such party.
Section 7.2 Indemnification. Subject to the other provisions of this
Article VII, from and after the Closing:
(a) Seller shall indemnify and hold harmless Purchaser, its
subsidiaries and affiliates, each of Purchaser's, its subsidiaries' and
affiliates' directors, officers, employees, representatives and agents
("Representatives"), and each of the heirs, executors, successors and assigns of
any of the foregoing (collectively, "Purchaser Group") from and against any
costs or expenses (including attorneys' fees), judgments, fines, losses,
45
claims and damages (collectively, "Damages") incurred by the members of
Purchaser Group which arise out of or are the result of any breach of any
representation or warranty or failure to perform any covenant or agreement made
by Seller or on behalf of the Company under this Agreement or the Disclosure
Schedule delivered by Seller in connection herewith.
(b) PCT and Purchaser, jointly and severally, shall indemnify and
hold harmless Seller, each of its Representatives, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, "Seller
Group") from and against any Damages incurred by the members of Seller Group
which arise out of or are the result of any breach of any representation or
warranty or the failure to perform any covenant or agreement made by or on
behalf of Purchaser under this Agreement or any documents delivered by Purchaser
in connection herewith.
(c) The members of Seller Group, on the one hand, and the members of
Purchaser Group, on the other hand, as the case may be, are sometimes referred
to herein as the "Indemnified Parties."
(d) Neither the Purchaser Group nor the Seller Group shall be
entitled to indemnification from PCT and Purchaser, on the one hand, or Seller,
on the other hand, for Damages which arise out of or are the result of any
breach of any representation or warranty (except those set forth in Section 2.15
hereof) or the failure to perform any covenant or agreement under this Agreement
(except those set forth in Section 4.11 hereof), unless the cumulative total of
all Damages of the Purchaser Group or the Seller Group, as the case may be,
exceeds $2,000,000 and then only to the extent such cumulative total of Damages
exceeds $2,000,000. The maximum amount of Damages that PCT and Purchaser, on the
one hand, or Seller, on the other hand, shall be liable for under this Section
shall be $100,000,000 (which shall be in addition to any liability for Taxes
under Sections 2.15 and 4.11 hereof).
(e) To the extent permitted by law, Purchaser and Seller shall, and
shall cause their affiliates to, treat for tax purposes any indemnification
payments made
46
or received with respect to any Damages as an adjustment to the purchase price
for the Shares.
Section 7.3 General Procedures; Third Party Claims. (a) If an
Indemnified Party intends to seek indemnification pursuant to this Article VII,
such Indemnified Party shall promptly notify Seller or PCT and Purchaser (and in
any event shall deliver such notice within the survival periods set forth in
Section 7.1 hereof), as the case may be (the "Indemnifying Party"), in writing
of such claim describing such claim in reasonable detail; provided, that the
failure to provide such notice shall not affect the obligations of the
Indemnifying Party unless it is actually prejudiced thereby, subject, however,
to the time periods specified in Section 7.1 hereof. In the event that such
claim involves a claim by a third party against the Indemnified Party, the
Indemnifying Party shall have 30 days after receipt of such notice to decide
whether it will undertake, conduct and control, through counsel of its own
choosing (which shall be reasonably satisfactory to the Indemnified Party) and
at its own expense, the settlement or defense thereof, and if it so decides, the
Indemnified Party shall cooperate with it in connection therewith; provided,
that the Indemnified Party may participate in such settlement or defense through
counsel chosen by it whose fees and expenses shall be borne by the Indemnified
Party, unless the Indemnified Party shall have reasonably concluded based upon
written advice of counsel that representation by the same counsel would
represent a conflict of interest due to the availability to it of defenses which
are different from or additional to those available to the Indemnifying Party,
in which case, such reasonable fees and expenses of such counsel (which shall be
reasonably satisfactory to the Indemnifying Party) shall be borne by the
Indemnifying Party. Notwithstanding anything in this Section 7.3(a) to the
contrary, the Indemnifying Party may, without the consent of the Indemnified
Party, settle or compromise any action or consent to the entry of any judgment
which includes as an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a duly executed and legally effective
written release of the Indemnified Party from all liability in respect of such
action. The Indemnifying Party shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent (which shall not be
47
unreasonably withheld) or if there is a final judgment for the plaintiff in any
such action or proceeding, the Indemnifying Party agrees to indemnify and hold
harmless such Indemnified Parties from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing, any claims
for Damages with respect to Taxes pursuant to this Section 7.3 shall be governed
by Section 4.11 hereof.
(b) The Indemnified Party and the Indemnifying Party shall cooperate
fully in all aspects of any investigation, defense, pre-trial activities, trial,
compromise, settlement or discharge of any claim in respect of which indemnity
is sought pursuant to Article VII, including, but not limited to, by providing
the other party with reasonable access to employees and officers (including as
witnesses) and other information.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Certain Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) "affiliate" or "associate" of any specified person means any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing;
(b) "business day" means any day (other than a Saturday or a Sunday)
on which banking institutions in The City of New York, New York are not
authorized or obligated by law or executive order to close and, if the VSRs are
listed on a national securities exchange, such exchange is open for trading; and
(c) "person" means any individual, corporation, partnership, joint
venture, association, joint-stock
48
company, trust, limited liability company, unincorporated organization or
government or any agency or political subdivision thereof.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon receipt if delivered
personally, telecopied (which is confirmed) or mailed by registered or certified
mail (return receipt requested) or overnight delivery service to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to PCT or Purchaser, to:
Power Control Technologies Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
(b) if to Seller, to:
Mafco Consolidated Group Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
49
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Section 8.3 Descriptive Headings. The descriptive headings herein
are inserted for convenience only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
Section 8.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement.
Section 8.5 Entire Agreement; Assignment. This Agreement, including
the annexes and exhibits hereto and the documents, schedules (including, without
limitation, the Disclosure Schedule), certificates and instruments referred to
herein constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of law
or otherwise.
Section 8.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without regard
to any applicable principles of conflicts of law.
Section 8.7 Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
Section 8.8 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon
50
any other person or persons any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 8.9 Severability. This Agreement shall be deemed severable;
the invalidity or unenforceability of any term or provision of this Agreement
shall not affect the validity or enforceability of this Agreement or of any
other term hereof, which shall remain in full force and effect.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
MAFCO CONSOLIDATED GROUP INC.
/s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: President & Chief Ex-
ecutive Officer
POWER CONTROL TECHNOLOGIES, INC.
/s/ J. Xxxx Xxxxxx
---------------------------------
Name: J. Xxxx Xxxxxx
Title: Executive Vice Presi-
dent
PCT INTERNATIONAL HOLDINGS, INC.
/s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
52
List of Schedules
-----------------
Subsidiaries and Equity Investments Schedule 2.1
Pledge of Shares Schedule 2.3
Violations and Defaults Schedule 2.4
Certain Changes Schedule 2.7
Encumbrances Schedule 2.8
Leases of Real Property Schedule 2.9
Intellectual Property Schedule 2.10
Contracts Schedule 2.11
Litigation Schedule 2.12
Insurance Schedule 2.13
Employee Benefits Schedule 2.14
Taxes Schedule 2.15
Environmental Matters Schedule 2.16
Labor Relations Schedule 2.17
Affiliate Transactions Schedule 2.19
Capitalization Schedule 3.3
Proceedings to Prevent Consummation
of the Transactions Schedule 3.4
Capitalization Schedule 4.5
EXHIBIT A
================================================================================
MAFCO CONSOLIDATED GROUP INC.
Issuer
-------------
VALUE SUPPORT RIGHTS AGREEMENT
Dated as of November [ ], 1996
-------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
Trustee
================================================================================
TABLE OF CONTENTS*
Page
----
PARTIES........................................................... 1
RECITALS.......................................................... 1
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.......................................... 2
Section 1.2 Compliance and Opinions.............................. 13
Section 1.3 Form of Documents Delivered to Trustee............... 15
Section 1.4 Acts of Holders...................................... 16
Section 1.5 Notices, etc., to Trustee and Company................ 18
Section 1.6 Notice to Holders; Waiver............................ 18
Section 1.7 Conflict with Trust Indenture Act.................... 19
Section 1.8 Effect of Headings and Table of Contents............. 19
Section 1.9 Successors and Assigns............................... 19
Section 1.10 Benefits of Agreement............................... 20
Section 1.11 Governing Law....................................... 20
Section 1.12 Legal Holidays...................................... 20
Section 1.13 Separability Clause................................. 20
Section 1.14 No Recourse Against Others.......................... 20
ARTICLE 2
SECURITY FORMS
Section 2.1 Forms Generally...................................... 21
Section 2.2 Form of Face of Security............................. 22
Section 2.3 Form of Reverse of Security.......................... 24
Section 2.4 Form of Trustee's Certificate of
Authentication............................ 32
ARTICLE 3
THE SECURITIES
Section 3.1 Title and Terms...................................... 33
Section 3.2 Registrable Form..................................... 40
Section 3.3 Execution, Authentication, Delivery and
Dating.................................... 40
Section 3.4 Temporary Securities................................. 41
Section 3.5 Registration, Registration of Transfer
and Exchange.............................. 42
Section 3.6 Mutilated, Destroyed, Lost and Stolen
Securities................................ 44
Section 3.7 Presentation of VSR Certificate...................... 45
Section 3.8 Persons Deemed Owners................................ 46
Section 3.9 Cancellation......................................... 46
--------
* Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Agreement.
i
Page
----
ARTICLE 4
THE TRUSTEE
Section 4.1 Certain Duties and Responsibilities.................. 47
Section 4.2 Certain Rights of Trustee............................ 49
Section 4.3 Not Responsible for Recitals or Issuance
of Securities............................. 51
Section 4.4 May Hold Securities.................................. 51
Section 4.5 Money Held in Trust.................................. 51
Section 4.6 Compensation and Reimbursement....................... 51
Section 4.7 Disqualification; Conflicting Interests.............. 53
Section 4.8 Corporate Trustee Required; Eligibility.............. 53
Section 4.9 Resignation and Removal; Appointment of
Successor................................. 53
Section 4.10 Acceptance of Appointment of Successor.............. 56
Section 4.11 Merger, Conversion, Consolidation or
Succession to Business.................... 56
Section 4.12 Preferential Collection of Claims
Against Company........................... 57
ARTICLE 5
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 5.1 Company to Furnish Trustee Names and
Addresses of Holders...................... 58
Section 5.2 Preservation of Information; Communications
to Holders................................ 58
Section 5.3 Reports by Trustee................................... 59
Section 5.4 Reports by Company................................... 59
ARTICLE 6
AMENDMENTS
Section 6.1 Amendments Without Consent of Holders................ 60
Section 6.2 Amendments with Consent of Holders................... 62
Section 6.3 Execution of Amendments.............................. 63
Section 6.4 Effect of Amendments; Notice to Holders.............. 64
Section 6.5 Conformity with Trust Indenture Act.................. 64
Section 6.6 Reference in Securities to Amendments................ 64
ARTICLE 7
COVENANTS
Section 7.1 Payment of Amounts, if any, to Holders............... 65
Section 7.2 Maintenance of Office or Agency...................... 65
Section 7.3 Money for Security Payments to Be Held
in Trust.................................. 67
Section 7.4 Certain Purchases and Sales.......................... 68
Section 7.5 Listing of Securities................................ 69
Section 7.6 Registration of Debt Securities; TIA................. 69
Section 7.7 Minimum Principal Amount of Debt Securities.......... 69
Section 7.8 Manipulative Transactions............................ 70
Section 7.9 Statement as to Compliance........................... 70
Section 7.10 Notice of Default................................... 71
ARTICLE 8
REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
Section 8.1 Event of Default Defined; Acceleration
ii
Page
----
of Maturity; Waiver of Default............ 71
Section 8.2 Collection of Indebtedness by Trustee;
Trustee May Prove Debt.................... 74
Section 8.3 Application of Proceeds.............................. 78
Section 8.4 Suits for Enforcement................................ 79
Section 8.5 Restoration of Rights on Abandonment of
Proceedings............................... 80
Section 8.6 Limitations on Suits by Holders...................... 80
Section 8.7 Unconditional Right of Holders to
Institute Certain Suits................... 81
Section 8.8 Powers and Remedies Cumulative; Delay
or Omission Not Waiver of Default......... 82
Section 8.9 Control by Holders................................... 82
Section 8.10 Waiver of Past Defaults............................. 83
Section 8.11 Trustee to Give Notice of Default, But
May Withhold in Certain Circumstances..... 84
Section 8.12 Right of Court to Require Filing of
Undertaking to Pay Costs.................. 85
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 Company May Consolidate, etc., on
Certain Terms............................. 85
Section 9.2 Successor Person Substituted......................... 86
Section 9.3 Opinion of Counsel to Trustee........................ 87
Exhibit A - Terms of Indenture
iii
Reconciliation and tie between Trust Indenture Act of 1939 and Value Support
Rights Agreement, dated as of November [ ], 1996.
Trust Indenture Act Section Agreement Section
--------------------------- -----------------
Section 310 (a)(1)................................. 4.9
(a)(2)................................. 4.9
(a)(3)................................. Not Applicable
(a)(4)................................. Not Applicable
(b).................................... 4.7, 4.9
Section 311 (a).................................... 4.13(a)
(b).................................... 4.13(b)
(b)(2)................................. 5.3(a)(2), 5.3(b)
Section 312 (a).................................... 5.1, 5.2(a)
(b).................................... 5.2(b)
(c).................................... 5.2(c)
Section 313 (a).................................... 5.3(a)
(b).................................... 5.3(b)
(c).................................... 5.3(a), 5.3(b)
(d).................................... 5.3(c)
Section 314 (a).................................... 5.4
(b).................................... Not Applicable
(c)(1)................................. 1.2
(c)(2)................................. 1.2
(c)(3)................................. Not Applicable
(d).................................... Not Applicable
(e).................................... 1.2
Section 315 (a).................................... 4.1(a)
(b).................................... 8.11, 5.3(a)(6)
(c).................................... 4.1(b)
(d).................................... 4.1(c)
(d)(1)................................. 4.1(a)(1)
(d)(2)................................. 4.1(c)(2)
(d)(3)................................. 4.1(c)(3)
(e).................................... 8.1, 8.12
Section 316 (a).................................... 1.1
(a)(1)(A).............................. 8.9
(a)(1)(B).............................. 8.10
(a)(2)................................. Not Applicable
(b).................................... 8.7
Section 317 (a)(1)................................. 8.2
(a)(2)................................. 8.2
(b).................................... 7.3
Section 318 (a).................................... 1.7
---------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Agreement.
iv
INDEX OF DEFINED TERMS
Term Where Defined
---- -------------
Accounting Firm........................... Section 3.1(c)
Act....................................... Section 1.4
Adjustment Event.......................... Section 3.1(k)
Affiliate................................. Section 1.1
Agreement................................. Section 1.1
Applicable Number......................... Section 1.1
Authorized Newspaper...................... Section 1.1
Base Amount............................... Section 1.1
big six................................... Section 3.1(c)
Board of Directors........................ Section 1.1
Board Resolution.......................... Section 1.1
Business Day.............................. Section 1.1
Change of Control......................... Section 1.1
Commission................................ Section 1.1
Company................................... Section 1.1
Company Order............................. Section 1.1
Company Request........................... Section 1.1
control, controlling, controlled.......... Section 1.1
Corporate Trust Office.................... Section 1.1
default or Defaults....................... Section 8.11
Default Payment Amount.................... Section 1.1
Default Payment Date...................... Section 1.1
Default Interest Rate..................... Section 1.1
Designated Options........................ Section 1.1
Distribution Amount....................... Section 1.1
Effective Date............................ Section 1.1
Event of Default.......................... Section 8.1
Exchange Act.............................. Section 5.4(a)(i)
Exchange Act Documents.................... Section 1.1
generally accepted accounting principles.. Section 1.1
Holder.................................... Section 1.1
indemnitee................................ Section 4.6(c)
Indenture................................. Exhibit A
Independent Financial Expert.............. Section 1.1
Market Price.............................. Section 1.1
Maturity Date............................. Section 1.1
Minimum Principal Per Holder.............. Section 7.7
NASDAQ.................................... Section 1.1
NMS/NASDAQ................................ Section 1.1
Notes..................................... Exhibit A
Notice of Default......................... Section 8.1(b)
Officers' Certificate..................... Section 1.1
Opinion of Counsel........................ Section 1.1
Optional Call Date........................ Section 1.1
Optional Call Payment Amount.............. Section 3.1(d)
Optional Call Payment Date................ Section 3.1(d)
Outstanding............................... Section 1.1
Owed Principal Amount..................... Section 7.7
Paying Agent.............................. Section 1.1
Payment Notes............................. Section 7.6
PCT....................................... Recitals
PCT Common Stock.......................... Section 1.1
Person.................................... Section 1.1
Prohibited Activity....................... Section 1.1
Purchase Agreement........................ Recitals
Purchaser................................. Recitals
Redemption Event.......................... Section 3.1(h)
Redemption Notice Date.................... Section 3.1(h)
Redemption Payment Date................... Section 3.1(h)
Redemption Price.......................... Section 3.1(h)
Redemption Transaction.................... Section 3.1(h)
Responsible Officer....................... Section 1.1
Securities................................ Recitals
Security Register......................... Section 3.5
Security Registrar........................ Section 3.5
Subsidiary................................ Section 1.1
Total Disposition......................... Section 1.1
Total Disposition Amount.................. Section 1.1
v
Total Disposition Payment Date............ Section 3.1(e)
Trust Indenture Act....................... Section 1.1
Trustee................................... Section 3.1
Value Support Rights...................... Section 3.1
vice president............................ Section 1.1
Voting Securities......................... Section 1.1
VSR Certificate........................... Section 1.1
VSRs...................................... Recitals
30-Day Average Market Price............... Section 2.3
vi
VALUE SUPPORT RIGHTS AGREEMENT, dated as of November [ ], 1996, by
and between MAFCO CONSOLIDATED GROUP INC., a Delaware corporation (the
"Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an issue of
value support rights (the "Securities" or "VSRs"), of substantially the tenor
and amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Agreement;
WHEREAS, pursuant to the Stock and VSR Purchase Agreement dated as
of October 23, 1996 (the "Purchase Agreement") by and among the Company, Power
Control Technologies, Inc., a Delaware corporation ("PCT"), and PCT
International Holdings, Inc., a Delaware corporation and wholly owned subsidiary
of PCT ("Purchaser"), the Company agreed to sell to Purchaser all of the
outstanding common stock of Flavors Holdings Inc., a Delaware corporation, and
the Company agreed to issue to Purchaser the Securities;
WHEREAS, pursuant to the Purchase Agreement, Purchaser and PCT are
obligated to deliver the Securities to all holders of PCT Common Stock (as
defined herein) and preferred stock, par value $.01 per share, of PCT; and
WHEREAS, all things necessary have been done to make the Securities,
when executed by the Company and authenticated and delivered hereunder, the
valid obligations of the Company and to make this Agreement a valid agreement of
the Company, all in accordance with their and its terms.
NOW, THEREFORE, for and in consideration of the premises and the
consummation of the transactions referred to above, it is covenanted and agreed,
for the equal and proportionate benefit of all Holders (as defined below) of the
Securities, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) all accounting terms used herein and not expressly defined
herein shall have the meanings assigned to such terms in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted as of the date of this Agreement;
(c) all other terms used herein which are defined in the Trust
Indenture Act (as defined herein), either directly or by reference therein, have
the meanings assigned to them therein; and
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For
2
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this instrument as originally executed and as it
may from time to time be supplemented or amended pursuant to the applicable
provisions hereof.
"Applicable Number", initially shall be equal to one, subject to
adjustment in accordance with Section 3.1(k).
"Authorized Newspaper" means The Wall Street Journal (Eastern
Edition), or if The Wall Street Journal (Eastern Edition) shall cease to be
published, or, if the publication or general circulation of The Wall Street
Journal (Eastern Edition) shall be suspended for whatever reason, such other
English language newspaper of general circulation in The City of New York, New
York as is selected by the Company.
"Base Amount" means, as of any date of determination, the excess
(rounded to the nearest $.01) of (a)(x) $10.25, if the date of determination
occurs on or before January 1, 1998, or (y) $11.00, if the date of determination
occurs after January 1, 1998, over (b) the Distribution Amount (as defined
herein).
"Board of Directors" means the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company, to have been duly adopted by
the Board of Directors of the Company and
3
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means any day (other than a Saturday or a Sunday) on
which banking institutions in The City of New York, New York are not authorized
or obligated by law or executive order to close and, if the VSRs are listed on a
national securities exchange, such exchange is open for trading.
"Change of Control" shall mean, with respect to any specified
Person, the occurrence of one or more of the following events: (i) a Person or
entity or a group of Persons or entities acting in concert as a partnership,
limited partnership, syndicate or other group (within the meaning of Rule 13d-3
under the Exchange Act) shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of shares representing 50% or more of the
voting power of the outstanding shares of voting stock of such specified Person;
(ii) such specified Person or any subsidiary of such specified Person shall
merge or consolidate with any other Person and after giving effect to such
merger or consolidation the holders of the voting stock of such specified Person
immediately prior thereto will own shares representing less than 50% of the
voting power of the voting stock of such specified Person or its ultimate
parent; (iii) a sale or other disposition of all or substantially all of the
assets of such specified Person; (iv) the issuance of shares of voting stock by
such specified Person which would result in the number of shares of voting stock
of such specified Person outstanding after such issuance being equal to or in
excess of 150% of the number of shares of voting stock of such specified Person
outstanding as of the Effective Date (subject to appropriate adjustment in the
event of a stock split, stock divi-
4
dend, recapitalization or other similar event applicable to shares of voting
stock following the Effective Date); and (v) if such specified Person is PCT,
individuals who would constitute a majority of the nominees to be elected to the
Board of Directors of PCT at any meeting of stockholders or by written consent
(without regard to any members of the Board of Directors elected pursuant to the
terms of any class or series of preferred stock of PCT) shall be elected to the
Board of Directors where the election or nomination for election by PCT's
stockholders of such directors was not approved by a vote of at least a majority
of the directors in office immediately prior to such election.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act (as defined herein), or
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person (as defined herein) named as the
"Company" in the first paragraph of this Agreement, until a successor Person
shall have become such pursuant to the applicable provisions of this Agreement,
and thereafter "Company" shall mean such successor Person. To the extent
necessary to comply with the requirements of the provisions of Trust Indenture
Act xx.xx. 310 through 317 as they are applicable to the Company, the term
"Company" shall include any other obligor with respect to the Securities for the
purposes of complying with such provisions.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by the chairman of the Board of
Directors or the president or any vice president,
5
the controller or assistant controller and the treasurer or assistant treasurer
or the secretary or any assistant secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Agreement is located
at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000.
"Default Payment Amount" means, as of a Default Payment Date (as
defined herein), an amount, if any, determined by the Accounting Firm, equal to
the lesser of (i) the excess, if any, of (x) the Base Amount determined as of
such Default Payment Date over (y) the 30-Day Average Market Price determined as
of such Default Payment Date and (ii) $3.25.
"Default Interest Rate" means 8.46% per annum.
"Default Payment Date" means the date upon which the Securities
become due and payable pursuant to Section 8.1.
"Distribution Amount" means, as of any date of determination, the
sum of (i) the value of all cash dividends or other cash distributions declared
and paid with respect to the Applicable Number of shares of PCT Common Stock,
(ii) all cash received by a holder of PCT Common Stock with respect to the
Applicable Number of shares of PCT Common Stock as consideration in a merger,
consolidation or other business combination, (iii) the fair market value, as
determined by the Independent Financial Expert, of all dividends or other
distributions consisting of property or assets (other than cash, the Securities
or other securities, but including any rights, warrants, options to purchase
Securities or other securities that expire prior to an Optional Call Date or the
Maturity Date, as the
6
case may be (collectively, "Designated Options")), declared and paid with
respect to the Applicable Number of shares of PCT Common Stock and (iv) the fair
market value, as determined by the Independent Financial Expert, of all
consideration consisting of property or assets (other than cash, the Securities
or other securities, but including Designated Options) received by a holder of
PCT Common Stock with respect to the Applicable Number of shares of PCT Common
Stock as consideration in a merger, consolidation or other business combination,
in all such cases from the Effective Date to such date of determination.
For the purposes of this definition, (x) the amount of dividends
declared and paid and the amount of consideration received with respect to the
Applicable Number of shares of PCT Common Stock shall include dividends declared
and paid and consideration received with respect to any securities paid as
dividends or received as consideration with respect to the Applicable Number of
shares of PCT Common Stock and (y) the fair market value of any Designated
Option, as of any date of determination, shall equal the excess, if any, of the
average of the Market Prices of the security underlying such Designated Option
for the 30 consecutive trading days ended on the Business Day immediately prior
to such date of determination (or if the underlying security no longer exists,
for the 30 consecutive trading days ended on the Business Day immediately prior
to the date of the transaction as a result of which such security ceased to
exist) over the exercise price therefor provided in such Designated Option;
provided that, if on the date any such Designated Option expired, the Market
Price of the security underlying such Designated Option was less than the
exercise price therefor provided in such
7
Designated Option, the fair market value of such Designated Option shall equal
zero.
"Effective Date" means November 30, 1996.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Independent Financial Expert" means a nationally recognized
investment banking firm selected by the Company, that does not have a direct or
indirect ownership interest in the Company or any of its Affiliates and that at
the time it is called upon to give independent financial advice to the Company,
is not (and none of whose directors, officers or Affiliates is) a director or
officer of the Company or any of its Affiliates; provided, that, notwithstanding
the foregoing, no such investment banking firm shall be disqualified from
serving as an Independent Financial Expert solely by reason of its ownership, in
the ordinary course of business, for its own account or for the account of any
customer of securities of the Company or any Affiliate of the Company.
"Market Price" means, as of any date of determination, for any
security, the last reported sale price as reported on the principal national
securities exchange on which such security is then listed, or, if (i) such
security is not listed on a national securities exchange or (ii) such security
is listed on a national securities exchange but the majority of the trading
volume with respect to such security is effected on the NMS/NASDAQ, the last
reported sale price as reported on the NMS/NASDAQ, or, if such security is not
listed on a national securities exchange and is not quoted on NMS/NASDAQ the
average of the highest reported bid and
8
lowest reported asked quotation on the NASDAQ or, if such security is not listed
on a national securities exchange and is not quoted by NMS/NASDAQ or NASDAQ but
is traded in the over-the-counter market, the fair market value as determined by
an Independent Financial Expert.
"Maturity Date" means January 1, 1999.
"NASDAQ" means the National Association of Securities
Dealers, Inc. Automated Quotation System.
"NMS/NASDAQ" means the National Market System of NASDAQ.
"Officers' Certificate," when used with respect to the Company means
a certificate signed by the chairman of the Board of Directors or the president
or any vice president, the controller or assistant controller and the treasurer
or assistant treasurer or the secretary or any assistant secretary of the
Company delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Optional Call Date" means each April 1, July 1, October 1 and
January 1 from and including April 1, 1997 to and including October 1, 1998.
"Outstanding" when used with respect to Securities means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Agreement, except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) From and after the earliest of the Default Payment Date,
the Total Disposition Payment Date, an Optional Call Date or the Maturity
Date, Securities for the payment of which money in the necessary amount
9
has been theretofore deposited with the Trustee or any Paying Agent (other
than the Company) in trust, or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities; and
(c) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Agreement, other than any such Securities in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands the Securities
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
Outstanding Securities have given any request, demand, direction, consent or
waiver hereunder, Securities owned by the Company or any Affiliate of the
Company, whether held as treasury stock or otherwise, shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, direction, consent
or waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded.
"PCT Common Stock" means the common stock, par value $.01 per share,
of PCT.
"Paying Agent" means any Person authorized by the Company to pay the
amount determined pursuant to Section 3.1, if any, on any Securities on behalf
of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited
10
liability company, unincorporated organization or government or any agency or
political subdivision thereof.
"Prohibited Activity" means, with respect to any period, any
acquisition or disposition in open market transactions, private transactions or
otherwise, of (i) any shares of PCT Common Stock, (ii) any securities
convertible into or exchangeable for shares of PCT Common Stock or (iii) any
securities which holders of PCT Common Stock have received with respect to their
shares of PCT Common Stock, whether as a dividend or distribution or in
connection with a merger, consolidation or otherwise (other than, in each case,
(w) shares of PCT Common Stock acquired on behalf of any 401k plan established
for PCT and its subsidiaries to satisfy participant directions and related
company matching obligations, (x) shares issued or acquired pursuant to employee
stock options granted to directors, officers or employees in the ordinary course
of business prior to the first day of such period, (y) sales or other
dispositions of shares by directors or officers, or (z) acquisitions of up to an
aggregate of 25,000 shares of PCT Common Stock in the open market by directors
or officers of PCT).
"Responsible Officer" when used with respect to the Trustee means
any officer assigned to the Corporate Trust Office and also means, with respect
to any particular corporate trust matter, any other officer of the Trustee to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Subsidiary" means each Person more than 50% of the outstanding
Voting Securities of which is owned, directly or indirectly, by the Company
and/or one or more Subsidiaries.
11
"30-Day Average Market Price" means, as of any date of
determination, the average of the Market Price of the Applicable Number of
shares of PCT Common Stock for the 30 consecutive trading days ended on the
Business Day immediately prior to such date of determination. For purposes of
this definition, the Market Price of the Applicable Number of shares of PCT
Common Stock shall (following such receipt) include the Market Price of any
securities (other than the Securities) which shall have been received by a
holder of PCT Common Stock with respect to the Applicable Number of shares of
PCT Common Stock from the Effective Date to the date of determination, whether
as a dividend or other distribution or in connection with a merger,
consolidation or other business combination or a reclassification of PCT Common
Stock.
"Total Disposition" means (i) one or more mergers, consolidations or
other business combinations, involving PCT after giving effect to which no
shares of PCT Common Stock shall remain outstanding or registered under the
Exchange Act, (ii) a sale, transfer or other disposition in one or a series of
transactions, of all or substantially all of the assets of PCT, or (iii) a
reclassification of PCT Common Stock as the capital stock of any other Person
(other than an Affiliate of PCT).
"Total Disposition Amount" means, the sum of the fair market value,
as determined by an Independent Financial Expert, of (A) the consideration, if
any, received with respect to the Applicable Number of shares of PCT Common
Stock by the holder thereof as a result of such Total Disposition, or (B) if an
election of the type of consideration to be received by the holders of PCT
Common Stock is made, the consideration selected by a majority of such
stock-
12
holders (and assuming such holder did not exercise any right of appraisal
granted under law).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Agreement, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Trustee" shall mean such successor Trustee.
"VSR Certificate" means a certificate representing any
of the VSRs.
"vice president" when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title of "vice president."
"Voting Securities" means securities having ordinary voting power to
elect a majority of the directors irrespective of whether or not stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency.
Section 1.2 Compliance and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Agreement, the Company shall furnish
to the Trustee an Officers' Certificate stating that, in the opinion of the
xxxxxx, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the case
13
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may
14
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company.
Any certificate, statement or opinion of an officer of the Company
or of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company. Any certificate or opinion of any
independent firm of public accountants filed with the Trustee shall contain a
statement that such firm is independent.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4 Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
15
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and (subject to Section 4.1) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section. The
Company may set a record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or consent authorized
or permitted under this Agreement. If not set by the Company prior to the first
solicitation of a Holder of Securities made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for such action shall be the later of 10 days prior to the first solicitation of
such consent or the date of the most recent list of Holders furnished to the
Trustee pursuant to Section 5.1 of this Agreement prior to such solicitation. If
a record date is fixed, those Persons who were Holders of Securities at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to take such action by vote or consent or, except with respect to
clause (d) below, to revoke any vote or consent previously given, whether or not
such Persons continue to be Holders after such record date. No such vote or
consent shall be valid or effective for more than 120 days after such record
date.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
16
(c) The ownership of Securities shall be proved by the
Security Register. Neither the Company nor the Trustee nor any Agent of the
Company or the Trustee shall be affected by any notice to the contrary.
(d) At any time prior to (but not after) the evidencing to the
Trustee, as provided in this Section 1.4, of the taking of any action by the
Holders of the Securities specified in this Agreement in connection with such
action, any Holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the Holders
of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of holding as provided in this Section
1.4, revoke such action so far as concerns such Security. Any request, demand,
authorization, direction, notice, consent, waiver or other action by the Holder
of any Security shall bind every future Holder of the same Security or the
Holder of every Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, suffered or
omitted to be done by the Trustee, any Paying Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
Section 1.5 Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given,
17
furnished or filed, in writing, to or with the Trustee at American Stock
Transfer & Trust Company, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000; or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class
postage prepaid, to the Company addressed to it at 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: General Counsel, or at any other address
previously furnished in writing to the Trustee by the Company.
Section 1.6 Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Agreement provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable
18
to mail notice of any event as required by any provision of this Agreement, then
any method of giving such notice as shall be satisfactory to the Trustee shall
be deemed to be a sufficient giving of such notice.
Section 1.7 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Agreement by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
Section 1.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.9 Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.10 Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Agreement or under any covenant or
provision herein contained, all such covenants and provisions being for sole
benefit of the parties hereto and their successors and of the Holders.
Section 1.11 Governing Law.
This Agreement and the Securities shall be governed by and construed
in accordance with the laws of the State of New York.
Section 1.12 Legal Holidays.
19
In the event that an Optional Call Date, the Maturity Date, the
Total Disposition Payment Date or the Default Payment Date, as the case may be,
shall not be a Business Day, then (notwithstanding any provision of this
Agreement or the Securities to the contrary) payment on the Securities need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on an Optional Call Date, the Maturity
Date, the Total Disposition Payment Date or the Default Payment Date, as the
case may be.
Section 1.13 Separability Clause.
In case any provision in this Agreement or in the VSRs shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.14 No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee under the Securities or the Agreement or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security each Holder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
ARTICLE 2
SECURITY FORMS
Section 2.1 Forms Generally.
The Securities and the Trustee's certificate of authentication shall
be in substantially the forms set forth in this
20
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may be required by law or any rule or regulation
pursuant thereto, all as may be determined by the officers executing such
Securities, as evidenced by their execution of the Securities. Any portion of
the text of any Security may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
Section 2.2 Form of Face of Security.
MAFCO CONSOLIDATED GROUP INC.
No. _____ Certificate for ___ Value Support Rights
This Certificate expires on January 1, 1999 unless redeemed or
otherwise terminated.
This certifies that _______________, or registered assigns (the
"Holder"), is the registered holder of the number of Value Support Rights
("VSRs") set forth above. Each VSR entitles the Holder, subject to the
provisions contained herein and in the Agreement referred to on the reverse
hereof, to a payment from Mafco Consolidated Group Inc., a Delaware corporation
(the "Company"), in an amount determined pursuant to the provisions set forth on
the reverse hereof and as more fully described in the Agreement. Such payment,
if any, shall be made on the Optional Call Payment Date, the Maturity Date, the
Redemption Payment Date upon a redemption, the Default Payment Date upon the
occurrence of an Event of Default or the Total Disposition Payment Date upon the
occurrence of a Total Disposition.
21
Payment of any amounts pursuant to this VSR Certificate shall be
made only upon presentation by the Holder hereof, at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
is legal tender for the payment of public and private debts. However, the
Company may pay such amounts by its check payable in such money, or as provided
on the reverse hereof. American Stock Transfer & Trust Company has been
appointed as paying agent in the Borough of Manhattan, the City of New York.
Reference is hereby made to the further provisions of this VSR
Certificate set forth on the reverse hereof which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this VSR Certificate shall not be entitled to any benefit under the Agreement,
or be valid or obligatory for any purpose.
22
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: MAFCO CONSOLIDATED
GROUP INC.
By___________________________
Attest:
[SEAL]
----------------------------
Authorized Signature
23
Section 2.3 Form of Reverse of Security.
This VSR Certificate is issued under and in accordance with the
Value Support Rights Agreement, dated as of October [ ], 1996 (the "Agreement"),
between the Company and American Stock Transfer & Trust Company, as trustee (the
"Trustee," which term includes any successor Trustee under the Agreement), and
is subject to the terms and provisions contained in the Agreement, to all of
which terms and provisions the Holder of this VSR Certificate consents by
acceptance hereof. The Agreement is hereby incorporated herein by reference and
made a part hereof. Reference is hereby made to the Agreement for a full
statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Trustee and the Holders of the
VSRs. Capitalized terms not otherwise defined shall have the meanings set forth
in the Agreement.
Unless the right to receive payment hereunder previously has been
satisfied in connection with an Optional Call Date, a Total Disposition, an
Event of Default or a Redemption Event as provided below, the Company shall pay
to the Holder hereof on January 1, 1999 (the "Maturity Date"), for each VSR
represented hereby an amount, if any, as determined by an independent "big six"
accounting firm (other than the accounting firm or firms serving as the
principal auditors for the Company or PCT) selected by the Company (the
"Accounting Firm"), equal to the lesser of (x) the excess, if any, of the Base
Amount determined as of such date, over the 30-Day Average Market Price
determined as of such date and (y) $3.25. Such determinations by the Accounting
Firm absent manifest error shall be final and binding on the Company and the
Holders.
Upon an Optional Call Date, the Company may, in its sole discretion,
pay to the Holder hereof for each VSR represented hereby an amount, as
determined by the Accounting Firm, payable in cash equal to the lesser of (x)
the excess, if any, of the Base Amount determined as of an Optional Call Date,
over the 30-Day Average Market Price determined as of such date and (y) $3.25;
provided, however, such amount (the "Optional Call Payment Amount") shall in no
event be less than $0.50 if such Optional Call Date is on or prior to January 1,
1998. Such determinations by the Accounting Firm absent manifest error shall be
final and binding on the Company and the Holders. Such payment shall be made on
any date (the "Optional Call Payment Date") established by the Company, which in
no event shall be more than 30 days after the Optional Call Date, to holders of
record at the close of business on the tenth business day following such
Optional Call Date. In the event the Company exercises its optional right to
call the Securities on an Optional Call Date, the Company shall issue a press
release on such date announcing such event, the Optional Call Payment Amount and
the Optional Call Payment Date. As soon as practicable following such Optional
Call Date, the Company shall give the Holder and the Trustee hereof notice that
the Company has exercised its optional right to call the Securities, the
Optional Call Payment Amount and the Optional Call Payment Date; provided,
however, such notice to Holders may, at the option of the Company, occur
simultaneously with the payment of the Optional Call Payment Amount.
24
Upon the consummation of a Total Disposition, the Company shall pay
to the Holder hereof for each VSR represented hereby an amount, if any, as
determined by the Accounting Firm, equal to the lesser of (x) the excess, if
any, of the Base Amount, determined as of the Total Disposition Payment Date
over the Total Disposition Amount and (y) $3.25. Such determinations by the
Accounting Firm and any Independent Financial Expert absent manifest error shall
be final and binding on the Company and the Holder. Such payment shall be made
on any date (the "Total Disposition Payment Date") established by the Company,
which in no event shall be more than 30 days after the date on which the Total
Disposition was consummated. As soon as practicable following a Total
Disposition, the Company shall give the Holder and the Trustee hereof notice of
such Total Disposition and the Total Disposition Payment Date.
Upon the occurrence and during the continuance of an Event of
Default, either the Trustee or the Holders of not less than 25% of the
Securities outstanding, by delivery of a written notice to the Company (and to
the Trustee if given by the Holders), may declare the Securities to be due and
payable immediately, and upon any such declaration the Company shall pay to each
Holder for each VSR held by such Holder the Default Payment Amount with interest
at the Default Interest Rate from the Default Payment Date through the date
payment is made or duly provided for.
In the event that it is determined that no amount is payable on the
VSRs to the Holder on an Optional Call Date, the Maturity Date, the Default
Payment Date or the Total Disposition Payment Date, as the case may be, the
Company shall give to the Holder and the Trustee notice of such determination.
Upon making such determination, absent manifest error this VSR Certificate shall
terminate and become null and void and the Holder hereof shall have no further
rights with respect hereto. The failure to give such notice or any defect
therein shall not affect the validity of such determination.
Upon the occurrence of a Redemption Event, the VSRs represented by
this VSR Certificate may be redeemed at the option of the Company in whole (but
not in part) at a redemption price, payable in cash, equal to the lesser of (x)
115% of the excess, if any, of the Base Amount determined as of the fifth
Business Day prior to the date notices of redemption are mailed to Holders (the
date of such mailing is referred to herein as the "Redemption Notice Date") over
the 30-Day Average Market Price determined as of the fifth Business Day prior to
the Redemption Notice Date and (y) $3.25 (the "Redemption Price").
A "Redemption Event" shall be deemed to have occurred if either (i)
as a result of an event beyond the reasonable control of the Company, the
existence of the VSRs would cause the Company to cease to be a member of the
consolidated group with respect to which the Company files consolidated federal
income tax returns and such situation would be avoided or cured by the
redemption of the VSRs or (ii) the VSRs would create any material financial or
legal impediment to the consummation of any bona fide significant corporate
event or transaction (a "Redemption Transaction") involving the
25
Company, which transaction would, if consummated, result in a Change of Control
of the Company and in connection with which transaction the Company has entered
into definitive documentation which creates a binding obligation upon the
Company to consummate such transaction (subject to customary conditions to
closing and fiduciary obligations), in either of clauses (i) and (ii) as
determined in good faith by the Board of Directors of the Company, as evidenced
by an Officers' Certificate of the Company.
Notwithstanding the foregoing, VSRs may not be redeemed (i) if the
Company or (unless it shall have been the subject of a Change of Control) PCT or
any of their respective successors or Affiliates (including for such purpose any
director or officer of the Company or PCT) shall have engaged in any Prohibited
Activity during the 35-trading day period preceding the Redemption Notice Date
or (ii) in the case of a Redemption Event arising out of a Redemption
Transaction, unless such Redemption Transaction shall have been consummated on
or prior to the Redemption Payment Date.
Notice of redemption shall include the Redemption Price, determined
as provided for above, and if the Redemption Event arises out of a Redemption
Transaction, a statement to the effect that such redemption is contingent upon
the consummation of such Redemption Transaction, and shall be mailed at least 15
days but not more than 60 days before the date (the "Redemption Payment Date")
payments are scheduled to be made to each Holder of VSR Certificates to be
redeemed at its registered address. If money sufficient to pay the Redemption
Price of all VSR Certificates to be redeemed is deposited with the Paying Agent
on or before the payment date, on and after such date such VSR Certificates
shall terminate and become null and void and the Holders thereof shall have no
further rights with respect thereto subject, in the case of a Redemption Event
arising out of a Redemption Transaction, to the consummation of such Redemption
Transaction.
Notwithstanding any provision of the Agreement or of this VSR
Certificate to the contrary, (i) other than in the case of interest on the
Default Payment Amount, no interest shall accrue on any amounts payable on the
VSRs to any Holder, (ii) during the 60-day period immediately preceding (and
including) an Optional Call Date on which the Company exercises its optional
right to call the Securities or the Maturity Date, as the case may be, the
Company shall not, and shall not permit any of its Subsidiaries or Affiliates
(including for such purpose any director or officer of the Company and PCT) to
engage in any Prohibited Activity and (iii) the Company shall not, and shall not
permit any of its Subsidiaries or Affiliates (including for such purpose any
director or officer of the Company and PCT) to acquire in open market
transactions, private transactions or otherwise, the Securities.
"Applicable Number" initially shall be equal to one subject to
adjustment in accordance with Section 3.1(l) of the Agreement.
"Base Amount" means, as of any date of determination, the excess
(rounded to the nearest $.01) of (a)(x) $10.25, if the date of determination
occurs on or before January 1, 1998, or (y)
26
$11.00, if the date of determination occurs after January 1, 1998, over (b) the
Distribution Amount.
"Change of Control" shall mean, with respect to any specified
Person, the occurrence of one or more of the following events: (i) a Person or
entity or a group of Persons or entities acting in concert as a partnership,
limited partnership, syndicate or other group (within the meaning of Rule 13d-3
under the Exchange Act) shall become the beneficial owner within the meaning of
Rule 13d-3 under the Exchange Act) of shares representing 50% or more of the
voting power of the outstanding shares of voting stock of such specified Person;
(ii) such specified Person or any subsidiary of such specified Person shall
merge or consolidate with any other Person and after giving effect to such
merger or consolidation the holders of the voting stock of such specified Person
immediately prior thereto will own shares representing less than 50% of the
voting power of the voting stock of such specified Person or its ultimate
parent; (iii) a sale or other disposition of all or substantially all of the
assets of such specified Person; (iv) the issuance of shares of voting stock by
such specified Person which would result in the number of shares of voting stock
of such specified Person outstanding after such issuance being equal to or in
excess of 150% of the number of shares of voting stock of such specified Person
outstanding as of the Effective Date (subject to appropriate adjustment in the
event of a stock split, stock dividend, recapitalization or other similar event
applicable to shares of voting stock following the Effective Date); and (v) if
such specified Person is PCT, individuals who would constitute a majority of the
nominees to be elected to the Board of Directors of PCT at any meeting of
stockholders or by written consent (without regard to any members of the Board
of Directors elected pursuant to the terms of any class or series of preferred
stock of PCT) shall be elected to the Board of Directors where the election or
nomination for election by PCT's stockholders of such directors was not approved
by a vote of at least a majority of the directors in office immediately prior to
such election.
"Default Payment Amount" means, as of a Default Payment Date, an
amount, if any, as determined by the Accounting Firm, equal to the lesser of (i)
the excess, if any, of (x) the Base Amount determined as of such Default Payment
Date over (y) the 30-Day Average Market Price determined as of such Default
Payment Date and (ii) $3.25.
"Default Interest Rate" means 8.46% per annum.
"Default Payment Date" means the date upon which this VSR becomes
due pursuant to Section 8.1 of the Agreement.
"Distribution Amount" means, as of any date of determination, the
sum of (i) the value of all cash dividends or other cash distributions declared
and paid with respect to the Applicable Number of shares of PCT Common Stock,
(ii) all cash received by a holder of PCT Common Stock with respect to the
Applicable Number of shares of PCT Common Stock as consideration in a merger,
consolidation or other business combination, (iii) the fair market value, as
determined by the Independent Financial Expert, of all dividends
27
or other distributions consisting of property or assets (other than cash, the
Securities or other securities, but including any rights, warrants or options to
purchase Securities or other securities that expire prior to the Optional Call
Date or the Maturity Date, as the case may be (collectively, "Designated
Options")), declared and paid with respect to the Applicable Number of shares of
PCT Common Stock, and (iv) the fair market value, as determined by the
Independent Financial Expert, of all consideration consisting of property or
assets (other than cash, the Securities or other securities, but including
Designated Options) received by a holder of PCT Common Stock with respect to the
Applicable Number of shares of PCT Common Stock as consideration in a merger,
consolidation or other business combination, in all such cases from the
Effective Date to such date of determination.
For the purposes of this definition, (x) the amount of dividends
declared and paid and the amount of consideration received with respect to the
Applicable Number of shares of PCT Common Stock shall include dividends declared
and paid and consideration received with respect to any securities paid as
dividends or received as consideration with respect to the Applicable Number of
shares of PCT Common Stock and (y) the fair market value of any Designated
Option, as of any date of determination, shall equal the excess, if any, of the
average of the Market Prices of the security underlying such Designated Option
for the 30 consecutive trading days ended on the Business Day immediately prior
to such date of determination (or if the underlying security no longer exists,
for the 30 consecutive trading days ended on the Business Day immediately prior
to the date of the transaction as a result of which such security ceased to
exist) over the exercise price therefor provided in such Designated Option;
provided that, if on the date any such Designated Option expired, the Market
Price of the security underlying such Designated Option was less than the
exercise price therefor provided in such Designated Option, the fair market
value of such Designated Option shall equal zero.
"Independent Financial Expert" means a nationally recognized
investment banking firm selected by the Company that does not have a direct or
indirect ownership interest in the Company or any of its Affiliates and that at
the time it is called upon to give independent financial advice to the Company,
is not (and none of whose directors, officers or Affiliates is) a director or
officer of the Company or any of its Affiliates; provided, that, notwithstanding
the foregoing, no such investment banking firm shall be disqualified as an
Independent Financial Expert solely by reason of its ownership, in the ordinary
course of business, for its own account or for the account of any customer of
securities of the Company or any Affiliates of the Company.
"Market Price" means, as of any date of determination, for any
security, the last reported sale price as reported on the principal national
securities exchange on which such security is then listed or, if (i) such
security is not listed on a national securities exchange or (ii) such security
is listed on a national securities exchange but the majority of the trading
volume with respect to such security is effected on the NMS/NASDAQ, the last
reported sale price as reported on NMS/NASDAQ or, if such security is not listed
on a national securities exchange and is not quoted on NMS/NASDAQ, the average
of the highest reported bid and lowest reported asked quotation on the NASDAQ
or, if such security
28
is not listed on a national securities exchange and is not quoted on NMS/NASDAQ
or NASDAQ but is traded in the over-the-counter market, the fair market value of
such security as determined by an Independent Financial Expert.
"Prohibited Activity" means, with respect to any period, any
acquisition or disposition in open market transactions, private transactions or
otherwise, of (i) any shares of PCT Common Stock, (ii) any securities
convertible into or exchangeable for shares of PCT Common Stock or (iii) any
securities which holders of PCT Common Stock have received with respect to their
shares of PCT Common Stock, whether as a dividend or distribution or in
connection with a merger, consolidation or otherwise (other than, in each case,
(w) shares of PCT Common Stock acquired on behalf of any 401k plan established
for PCT and its subsidiaries to satisfy participant directions and related
company matching obligations, (x) shares issued or acquired pursuant to employee
stock options granted to directors, officers or employees in the ordinary course
of business prior to the first day of such period, (y) sales or other
dispositions of shares by directors or officers, or (z) acquisitions of up to an
aggregate of 25,000 shares Of PCT Common Stock in the open market by directors
or officers of PCT).
"30-Day Average Market Price" means, as of any date of
determination, the average of the Market Price of the Applicable Number of
shares of PCT Common Stock for the 30 consecutive trading days ended on the
Business Day immediately prior to such date of determination. For purposes of
this definition, the Market Price of the Applicable Number of shares of PCT
Common Stock shall (following such receipt) include the Market Price of any
securities (other than the Securities) which shall have been received by a
holder of PCT Common Stock with respect to the Applicable Number of shares of
PCT Common Stock from the Effective Date to the date of determination, whether
as a dividend or other distribution or in connection with a merger,
consolidation or other business combination or a reclassification of PCT Common
Stock.
"Total Disposition" means (i) one or more mergers, consolidations or
other business combinations involving PCT after giving effect to which no shares
of PCT Common Stock shall remain outstanding or registered under the Exchange
Act, (ii) a sale, transfer or other disposition, in one or a series of
transactions, of all or substantially all of the assets of PCT or (iii) a
reclassification of PCT Common Stock as the capital stock of any other Person
(other than an Affiliate of PCT).
"Total Disposition Amount" means, with respect to a Total
Disposition, the fair market value, as determined by an Independent Financial
Expert, of (A) the consideration, if any, received with respect to the
Applicable Number of shares of PCT Common Stock, by the holder thereof as a
result of such Total Disposition, or (B) if an election of the type of
consideration to be received by the holders of PCT Common Stock is made, the
consideration selected by a majority of such stockholders (and assuming
29
such holder did not exercise any right of appraisal granted under law).
As set forth in Section 3.1(g) of the Agreement, to the extent the
aggregate principal amount of the senior debt obligation referred to below is at
least $25,000,000, all amounts payable on the Maturity Date may be paid, at the
option of the Company, either in cash or, subject to the provisions of Sections
7.5 and 7.6 of the Agreement, by the issuance of a senior debt obligation of the
Company which is not subordinated to any other debt obligation of the Company,
with a principal amount equal to the amount of the payment due. Any debt issued
by the Company in satisfaction of the Company's obligations with respect to VSRs
shall be issued pursuant to an indenture having the principal terms set forth on
Exhibit A to the Agreement and will have a maturity of up to three years from
the date of issuance and will have an interest rate and redemption provisions
determined in good faith by the Board of Directors of the Company to result in
such debt having in the opinion of an Independent Financial Expert a market
value as of the date of issuance on a fully distributed basis equal to 100% of
its principal amount.
The Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Agreement at any time by the
Company and the Trustee with the consent of the Holders of a majority of the
Securities at the time Outstanding.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of the VSRs represented by this VSR Certificate
is registerable on the Security Register of the Company, upon surrender of this
VSR Certificate for registration of transfer at the office or agency of the
Company maintained for such purpose in The City of New York, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new VSR
Certificates, for the same amount of VSRs, will be issued to the designated
transferee or transferees.
As provided in the Agreement and subject to certain limitations
therein set forth, this VSR Certificate is exchangeable for one or more VSR
Certificates representing the same number of VSRs as represented by this VSR
Certificate as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange of VSRs, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to the time of due presentment of this VSR Certificate for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this VSR Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.
30
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee under the VSR or the Agreement or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
VSR Certificate, each Holder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the VSR Certificate.
All capitalized terms used in this VSR Certificate without
definition shall have the meanings assigned to them in the Agreement.
31
Section 2.4 Form of Trustee's Certificate of Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the VSR Certificates referred to in the
within-mentioned Agreement.
[TRUSTEE],
as Trustee
By____________________________________
Authorized Officer
32
ARTICLE 3
THE SECURITIES
Section 3.1 Title and Terms.
(a) The aggregate number of VSR Certificates which may be
authenticated and delivered under this Agreement is limited to a number equal to
23,500,000 except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities pursuant to
Section 3.4, 3.5, 3.6 or 6.6.
(b) The Securities shall be known and designated
as the "Value Support Rights" of the Company.
(c) Unless the right to receive any such amount previously has
been satisfied in connection with an Optional Call Date, a Total Disposition, an
Event of Default, or a Redemption Event, the Company shall pay to each Holder on
the Maturity Date, for each VSR held by such Holder an amount, if any, as
determined by an independent "big six" accounting firm (other than the
accounting firm or firms serving as the principal auditors for the Company or
PCT) selected by the Company (the "Accounting Firm"), equal to the lesser of (x)
the excess, if any, of the Base Amount determined as of such date, over the
30-Day Average Market Price determined as of such date and (y) $3.25. Such
determinations by the Accounting Firm absent manifest error shall be final and
binding on the Company and the Holders. The Company shall provide notice to the
Trustee of the amount payable and the method of payment pursuant to this Section
3.1(c) together with a reasonably detailed calculation of the determination of
such amount.
(d) Upon an Optional Call Date, the Company may, in its sole
discretion, pay to the Holder hereof for each VSR represented
33
hereby an amount, as determined by the Accounting Firm, payable in cash equal to
the lesser of (x) the excess, if any, of the Base Amount determined as of such
Optional Call Date, over the 30-Day Average Market Price determined as of such
date and (y) $3.25; provided, however, such amount (the "Optional Call Payment
Amount") shall in no event be less than $0.50 if such Optional Call Date is on
or prior to January 1, 1998. Such determinations by the Accounting Firm absent
manifest error shall be final and binding on the Company and the Holders. Such
payment shall be made on any date (the "Optional Call Payment Date") established
by the Company, which in no event shall be more than 30 days after the Optional
Call Date, to holders of record at the close of business on the tenth business
day following such Optional Call Date. In the event the Company exercises its
optional right to call the Securities on an Optional Call Date, the Company
shall issue a press release on such date announcing such event, the Optional
Call Payment Amount and the Optional Call Payment Date. As soon as practicable
following such Optional Call Date, the Company shall give the Holder and the
Trustee hereof notice, in the form set forth below, that the Company has
exercised its optional right to call the Securities, the Optional Call Payment
Amount and the Optional Call Payment Date; provided, however, such notice to
Holders may, at the option of the Company, occur simultaneously with the payment
of the Optional Call Payment Amount.
34
* * * * * *
MAFCO CONSOLIDATED GROUP INC.
VALUE SUPPORT RIGHTS
[Date]
NOTICE OF EXERCISE OF OPTIONAL RIGHT TO CALL THE SECURITIES
NOTICE IS HEREBY GIVEN THAT, pursuant to Section 3.1 of the Value
Support Rights Agreement, dated as of October [ ], 1996 (the "Agreement"),
between Mafco Consolidated Group Inc., (the "Company"), and American Stock
Transfer & Trust Company, as trustee (the "Trustee"), the Company has exercised
its optional right to call the Securities. All terms used in this Notice which
are defined in the Agreement shall have the meanings assigned to them in the
Agreement.
The Optional Call Payment Amount payable to each Holder on ________,
the Optional Call Payment Date, for each VSR held by such Holder shall be equal
to $___________.
MAFCO CONSOLIDATED GROUP INC.
* * * * * *
(e) Upon the consummation of a Total Disposition, the Company
shall pay to each Holder for each VSR held by such Holder an amount, if any, as
determined by the Accounting Firm, equal to the lesser of (x) the excess, if
any, of the Base Amount determined as of the Total Disposition Payment Date over
the Total Disposition Amount and (y) $3.25. Such determinations by the
Accounting Firm and any Independent Financial Expert absent manifest error shall
be final and binding on the Company and the Holders. Such payment shall be made
on any date (the "Total Disposition Payment Date") established by the Company,
which in no event shall be more than 30 days after the date on which the Total
Disposition was consummated.
(f) As soon as practicable following a Total Disposition, the
Company shall give each Holder and the Trustee notice of such Total Disposition
and the Total Disposition Payment
35
Date and such notice to the Trustee shall also specify the method of payment of
the amount payable on the Total Disposition Payment Date. The Company shall also
provide to the Trustee an Officers' Certificate as to the occurrence of a Total
Disposition setting forth the amount of such payment.
(g) To the extent the aggregate principal amount of the senior
debt obligation referred to below is at least $25,000,000, all amounts payable
pursuant to the VSRs on the Maturity Date may be paid, at the option of the
Company, either in cash or, subject to the provisions of Sections 7.5 and 7.6 of
this Agreement, by the issuance of a senior debt obligation of the Company which
is not subordinated to any other debt obligation of the Company, with a
principal amount equal to the amount of the payment due. The Company shall
provide notice to the Trustee of the method of payment within one Business Day
prior to the payment thereof. Any debt issued by the Company in satisfaction of
the Company's obligations with respect to VSRs shall be issued pursuant to an
indenture having the principal terms set forth on Exhibit A hereto and will have
a maturity of up to three years from the date of issuance and will have an
interest rate and redemption provisions determined in good faith by the Board of
Directors of the Company to result in such debt having in the opinion of an
Independent Financial Expert a market value as of the date of issuance on a
fully distributed basis equal to 100% of its principal amount. Such
determination of the Board of Directors will be supported by a written opinion
delivered to the Board of Directors by an Independent Financial Expert. Prior to
the issuance of such debt securities, the Company shall provide the Trustee with
an Officer's
36
Certificate as to compliance with the conditions precedent to the issuance of
such debt securities set forth in this Agreement.
(h) Upon the occurrence of a Redemption Event, the VSRs may be
redeemed at the option of the Company in whole (but not in part) on or prior to
the consummation of such event or transaction at a redemption price, payable in
cash, equal to the lesser of (x) 115% of the excess, if any, of the Base Amount
determined as of the fifth Business Day prior to the date notices of redemption
are mailed to Holders (the date of such mailing is referred to herein as the
"Redemption Notice Date") over the 30-Day Average Market Price determined as of
the Redemption Notice Date and (y) $3.25 (the "Redemption Price"). A notice of
the redemption pursuant to this Section 3.1(h) setting forth the Redemption
Price and the date of redemption shall also be delivered to the Trustee,
together with an Officer's Certificate as to the occurrence of a Redemption
Event and specifying the Redemption Price and redemption date.
A "Redemption Event" shall be deemed to have occurred if either (i)
as a result of an event beyond the reasonable control of the Company, the
existence of the VSRs would cause the Company to cease to be a member of the
consolidated group with respect to which the Company files consolidated federal
income tax returns and such situation would be avoided or cured by the
redemption of the VSRs or (ii) the VSRs would create any material financial or
legal impediment to the consummation of any bona fide significant corporate
event or transaction (a "Redemption Transaction") involving the Company, which
transaction would, if consummated, result in a Change of Control of the Company
and in connection with which transaction the Company has entered into definitive
documentation which creates a binding obligation upon the Company to consummate
such transaction
37
(subject to customary conditions to closing and fiduciary obligations), in
either of clauses (i) and (ii) as determined in good faith by the Board of
Directors of the Company as evidenced by an Officers' Certificate of the
Company.
Notwithstanding the foregoing, VSRs may not be redeemed (i) if the
Company or (unless it shall have been the subject of a Change of Control) PCT or
any of their respective successors or Affiliates (including for such purpose any
director or officer of the Company and PCT) shall have engaged in any Prohibited
Activity during the 35-trading day period preceding the Redemption Notice Date
or (ii) in the case of a Redemption Event arising out of a Redemption
Transaction, unless such Redemption Transaction shall have been consummated on
or prior to the Redemption Payment Date.
Notice of redemption shall include the Redemption Price, determined
as provided for above, and if the Redemption Event arises out of a Redemption
Transaction, a statement to the effect that such redemption is contingent upon
the consummation of such Redemption Transaction, and shall be mailed at least 15
days but not more than 60 days before the date (the "Redemption Payment Date")
payments are scheduled to be made to each Holder of VSR Certificates to be
redeemed at its registered address. If money sufficient to pay the Redemption
Price of all VSR Certificates to be redeemed is deposited with the Paying Agent
on or before the payment date, on and after such date such VSR Certificates
shall terminate and become null and void and the Holders thereof shall have no
further rights with respect thereto subject, in the case of a Redemption Event
arising out of a Redemption Transaction, to the consummation of such Redemption
Transaction.
38
(i) Notwithstanding any provision of this Agreement or the VSR
Certificates to the contrary, other than in the case of interest on the Default
Payment Amount, no interest shall accrue on any amounts payable on the VSRs to
any Holder.
(j) In the event that all of the VSR Certificates not previously
cancelled shall have been called for redemption by the Company pursuant to
Section 3.1(h) hereof or shall have become due and payable pursuant to the terms
hereof, and the Company has paid or caused to be paid or deposited with the
Trustee all amounts payable to the Holders under this Agreement, then this
Agreement shall cease to be of further effect and shall be deemed satisfied and
discharged. Notwithstanding the satisfaction and discharge of this Agreement,
the obligations of the Company under Section 4.6(c) shall survive.
(k) In the event PCT shall in any manner subdivide (by stock
split, stock dividend or otherwise) or combine (by reverse stock split or
otherwise) the number of outstanding shares of PCT Common Stock (an "Adjustment
Event"), the Applicable Number with respect to shares of PCT Common Stock shall,
from and after the date of such Adjustment Event (subject to further adjustment
in accordance with this Section 3.1(k)), equal the Applicable Number with
respect to the shares of PCT Common Stock in effect immediately prior to such
Adjustment Event, multiplied by a fraction, the numerator of which shall be the
total number of shares of PCT Common Stock outstanding immediately following
such Adjustment Event and the denominator of which shall be the total number of
shares of PCT Common Stock outstanding immediately prior to such Adjustment
Event. In the event that any securities received with respect to PCT Common
Stock shall in any manner be subdivided (by stock split, stock
39
dividend or otherwise) or combined (by reverse stock split or otherwise),
appropriate adjustments shall be made in a manner consistent with the principles
set forth in this Section 3.1(k). Whenever an adjustment is made as provided in
this Section 3.1(k), the Company shall (i) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting for
such adjustment, (ii) promptly file with the Trustee a copy of such certificate
and (iii) mail a brief summary thereof to each Holder. The Trustee shall be
fully protected in relying on any such certificate and on any adjustment therein
contained. Such adjustment absent manifest error shall be final and binding on
the Company and the Holders.
Section 3.2 Registrable Form.
The Securities shall be issuable only in registered form.
Section 3.3 Execution, Authentication, Delivery and
Dating.
The Securities shall be executed on behalf of the Company by its
chairman of the Board of Directors or its president or any vice president or its
treasurer, but need not be attested. The signature of any of these officers on
the Securities may be manual or facsimile. The Company's seal shall be
impressed, affixed, imprinted or reproduced on the Securities and may be in
facsimile form.
Securities bearing the manual or facsimile signatures of individuals
who were at the time of execution the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to
40
the authentication and delivery of such Securities or did not hold such offices
at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Agreement, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as
provided in this Agreement and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual or facsimile signature of an authorized
officer, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and that the Holder is entitled to the benefits of this
Agreement.
Section 3.4 Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order, the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, substantially of the tenor of the definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine with the concurrence of the Trustee.
41
Temporary Securities may contain such reference to any provisions of this
Agreement as may be appropriate. Every temporary Security shall be executed by
the Company and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 7.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
amount of definitive Securities. Until so exchanged the temporary Securities
shall in all respects be entitled to the same benefits under this Agreement as
definitive Securities.
Section 3.5 Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the office of American Stock
Transfer & Trust Company a register (the register maintained in such office and
in any other office or agency designated pursuant to Section 7.2 being herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. American Stock
Transfer & Trust Company is hereby initially appointed "Security Registrar" for
the purpose of registering Securities and transfers of Securities as herein
provided.
42
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 7.2, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new VSR Certificates
representing the same aggregate number of VSRs represented by the VSR
Certificate so surrendered that are to be transferred and the Company shall
execute and the Trustee shall authenticate and deliver, in the name of the
transferor, one or more new VSR Certificates representing the aggregate number
of VSRs represented by such VSR Certificate that are not to be transferred.
At the option of the Holder, VSR Certificates may be exchanged for
other VSR Certificates that represent in the aggregate the same number of VSRs
as the VSR Certificates surrendered at such office or agency. Whenever any VSR
Certificates are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the VSR Certificates which the Holder
making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
rights, and entitled to the same benefits under this Agreement, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
43
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4 or 6.6 not involving any transfer.
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee, or (b)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon delivery of a Company Order the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new VSR Certificate of like
tenor and amount of VSRs, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is to become due and payable within 15 days, the Company in its
discretion may, instead of issuing a new VSR Certificate, pay to the Holder of
such Security on an Optional Call Date, the Maturity Date, the Total Disposition
Payment Date or the Default Payment Date, as the case may be, all amounts due
and payable with respect thereto.
Upon the issuance of any new Securities under this Section, the
Company shall pay any tax or other governmental charge
44
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Agreement equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Presentation of VSR Certificate.
Payment of any amounts pursuant to the VSRs shall be made only upon
presentation by the Holder thereof, at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
and at any other office or agency maintained by the Company for such purpose in
such coin or currency of the United States of America as at the time is legal
tender for the payment of public and private debts or in debt securities of the
Company in accordance with the provisions of Section 3.1(g). However, the
Company may pay such amounts by its check payable in such money.
Section 3.8 Persons Deemed Owners.
Prior to the time of due presentment for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name any Security is
45
registered as the owner of such Security for the purpose of receiving payment on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 3.9 Cancellation.
All Securities surrendered for payment, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Securities held by the Trustee shall
be disposed of as directed by a Company Order.
ARTICLE 4
THE TRUSTEE
Section 4.1 Certain Duties and Responsibilities.
(a) With respect to the Holders of Securities issued, the
Trustee, prior to the occurrence of an Event of Default with respect to the
Securities and after the curing or waiving of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement and no implied covenants shall be read
into this Agreement against the Trustee. In case an Event of Default with
respect to the Securities has occurred (which has not been cured or
46
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) In the absence of bad faith on its part, prior to the
occurrence of an Event of Default and after the curing or waiving of all such
Events of Default which may have occurred, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement; but in the case of any such certificates
or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(1) this Subsection (c) shall not be construed to
limit the effect of Subsections (a) and (b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) no provision of this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any
47
of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it; and
(4) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders pursuant to Section 8.9 relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
Section 4.2 Certain Rights of Trustee.
Subject to the provisions of Section 4.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties and the Trustee need not investigate any fact or matter stated in the
document;
(b) any request or direction or order of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of
48
Directors may be sufficiently evidenced by a Board Resolution and the Trustee
shall not be liable for any action it takes or omits to take in good faith
reliance thereon;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate and the Trustee shall not be liable
for any action it takes or omits to take in good faith reliance thereon or an
Opinion of Counsel;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request or
direction of any of the Holders pursuant to this Agreement, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or document,
but the Trustee in its discretion may make such further inquiry or investigation
into such
49
facts or matters as it may see fit, and if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement.
Section 4.3 Not Responsible for Recitals or Issuance of
Securities.
The Trustee shall not be accountable for the Company's use of the
Securities or the proceeds from the Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Securities.
Section 4.4 May Hold Securities.
The Trustee, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities, and, subject to Sections 4.7 and 4.12, may otherwise deal
with the Company with the
50
same rights it would have if it were not Trustee, Paying Agent, Security
Registrar or such other agent.
Section 4.5 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder.
Section 4.6 Compensation and Reimbursement.
The Company agrees
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(c) to indemnify the Trustee and each of its agents, officers,
directors and employees (each an "indemnitee") for, and to hold it harmless
against, any loss, liability or expense (including attorneys fees and expenses)
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The
51
obligations of the Company hereunder shall constitute additional indebtedness
hereunder. To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
particular Securities. The Company's payment obligations pursuant to this
Section shall survive the termination of this Agreement. When a Trustee incurs
expenses after the occurrence of an Event of Default specified in Section 8.1(c)
or 8.1(d) with respect to the Company, the expenses are intended to constitute
expenses of administration under bankruptcy laws.
Section 4.7 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire any conflicting interest within
the meaning of the Trust Indenture Act, it shall, within 90 days after
ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Agreement. The
Company shall take prompt steps to have a successor appointed in the manner
provided in this Agreement.
Section 4.8 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $15,000,000. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth
52
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
Section 4.9 Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 4.10.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the
Holders of a majority of the Outstanding Securities, delivered to the Trustee
and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 4.7
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section
4.8 and shall fail to resign after written request therefor by the Company
or by any such Holder, or
53
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) the Holder of any Security who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after any removal by Holders of a
majority of the Outstanding Securities, a successor Trustee shall be appointed
by Act of the Holders of a majority of the Outstanding Securities delivered to
the Company and the retiring Trustee the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with Section
4.10, become the successor Trustee and supersede the successor Trustee appointed
by the Company. If no successor Trustee shall have been so appointed by the
Company or the Holders of the Securities and accepted appointment within 60 days
after the retiring Trustee tenders its resignation or is removed, the retiring
Trustee may, or, the Holder of any Security who has been a bona fide Holder for
at least six months may on behalf of himself and all
54
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust office. If the Company fails to send such notice
within ten days after acceptance of appointment by a successor Trustee, it shall
not be a default hereunder but the successor Trustee shall cause the notice to
be mailed at the expense of the Company.
Section 4.10 Acceptance of Appointment of Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, upon request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and
55
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 4.11 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and such certificate shall have the full force which it is anywhere in the
Securities or in this Agreement provided that the certificate of the Trustee
shall have; provided that the right to adopt the certificate of authentication
of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
Section 4.12 Preferential Collection of Claims Against
Company.
56
If and when the Trustee shall be or shall become a creditor of the
Company (or any other obligor upon the Securities) the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
ARTICLE 5
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 5.1 Company to Furnish Trustee Names and
Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee (i)
semiannually, not later than June 30 and December 31 of each year, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders as of such date, and (ii) at such times as the Trustee may request
in writing, within 30 days after receipt by the Company of any such request, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of a date not more than 15 days prior to the time
such list is furnished; provided, however, that if and so long as the Trustee
shall be the Security Registrar, no such list need be furnished.
Section 5.2 Preservation of Information; Communications
to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 5.1 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 5.1 upon receipt of a new list so furnished.
57
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Agreement and the corresponding
rights and privileges of the Trustee shall be as provided by the Trust Indenture
Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee shall be deemed to be in violation of law or held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Holders made pursuant to the Trust Indenture Act.
Section 5.3 Reports by Trustee.
(a) Within 60 days after December 31 of each year commencing
with the first December 31 after the first issuance of Securities, the Trustee
shall transmit to all Holders such reports concerning the Trustee and its
actions under this Agreement as may be required pursuant to the Trust Indenture
Act at the time and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to the Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and also with the
Company. The Company will promptly notify the Trustee when the Securities are
listed on any stock exchange.
Section 5.4 Reports by Company.
The Company shall:
(a) file with the Trustee,
(i) within 15 days after the Company is required to file
the same with the Commission, copies of the annual reports and of the
information, documents and other
58
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which
the Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act (such required
information, documents and other reports, generally, the "Exchange Act
Documents"); or,
(ii) if the Company is not required to file its Exchange
Act Documents, quarterly and annual financial information that would be
required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations; and
(b) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information documents and
reports required to be filed by the Company pursuant to subsection (a) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
ARTICLE 6
AMENDMENTS
Section 6.1 Amendments Without Consent of Holders.
Without the consent of any Holders, the Company and the Trustee, at
any time and from time to time, may enter into one or more amendments hereto or
to the Securities, for any of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities any property or assets; or
59
(b) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(c) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions as its Board of
Directors and the Trustee shall consider to be for the protection of the
Holders of Securities, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an Event of Default permitting the enforcement of
all or any of the several remedies provided in this Agreement as herein
set forth; provided that in respect of any such additional covenant,
restriction, condition or provision such amendment may provide for a
particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for
an immediate enforcement upon such an Event of Default or may limit the
remedies available to the Trustee upon such an Event of Default or may
limit the right of the Holders of a majority of the Securities to waive
such an Event of Default; or
(d) to cure any ambiguity, or to correct or supplement any
provision herein or in the Securities which may be defective or
inconsistent with any other provision herein; provided that such
provisions shall not materially reduce the benefits of this Agreement or
the Securities to the Holders; or
(e) to make any other provisions with respect to matters or
questions arising under this Agreement; provided
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that such provisions shall not adversely affect the interests of the
Holders; or
(f) to make any amendments or changes necessary to comply or
maintain compliance with the Trust Indenture Act.
Promptly following any amendment of this Agreement or the Securities
in accordance with this Section 6.1, the Trustee shall notify the Holders of the
Securities of such amendment; provided that any failure so to notify the Holders
shall not affect the validity of such amendment.
Section 6.2 Amendments with Consent of Holders.
With the consent of the Holders of a majority of the Outstanding
Securities, by Act of said Holders delivered to the Company and the Trustee, the
Company (when authorized by a Board Resolution) and the Trustee may enter into
one or more amendments hereto or to the Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or to the Securities or of modifying in any manner the rights of
the Holders under this Agreement or to the Securities; provided, however, that
no such amendment shall, without the consent of the Holder of each Outstanding
Security affected thereby:
(a) modify the definition of Optional Call Date, Optional Call
Payment Date, Maturity Date, Total Disposition Payment Date, Default Payment
Date, Market Price, 30-Day Average Market Price, Default Payment Amount, Default
Payment Interest Rate, Base Amount or Prohibited Activity, modify Section 3.1(k)
or otherwise extend the maturity of the Securities or reduce the amounts payable
in respect of the Securities or modify any other payment term, interest rate or
payment date or, except as expressly permitted by Section 6.1(e), modify the
definition of Applicable Number, Distri-
61
bution Amount, Optional Call Payment Amount, Total Disposition Amount or Change
of Control;
(b) reduce the amount of the Outstanding Securities, the
consent of whose Holders is required for any such amendment; or
(c) modify any of the provisions of this Section or Section
8.10, except to increase any such percentage or to provide that certain other
provisions of this Agreement cannot be modified or waived without the consent of
the Holder of each Security affected thereby.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed amendment, but it shall he
sufficient if such Act shall approve the substance thereof.
Section 6.3 Execution of Amendments.
In executing any amendment permitted by this Article, the Trustee
shall be entitled to receive indemnity reasonably satisfactory to it, and
(subject to Section 4.1) shall be fully protected in relying upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement. The Trustee shall execute any amendment authorized pursuant
to this Article VI if the amendment does not adversely affect the Trustee's own
rights, duties or immunities under this Agreement or otherwise. Otherwise, the
Trustee may, but need not, execute such amendment.
Section 6.4 Effect of Amendments; Notice to Holders.
Upon the execution of any amendment under this Article, this
Agreement and the Securities shall be modified in accordance therewith, and such
amendment shall form a part of this Agreement
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and the Securities for all purposes; and every Holder of Securities theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.
Promptly after the execution by the Company and the Trustee of any
amendment pursuant to the provisions of this Article, the Company shall mail a
notice thereof by first class mail to the Holders of Securities at their
addresses as they shall appear on the Security Register, setting forth in
general terms the substance of such amendment. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such amendment.
Section 6.5 Conformity with Trust Indenture Act.
Every amendment executed pursuant to this Article shall conform to
the requirements of the Trust Indenture Act.
Section 6.6 Reference in Securities to Amendments.
If an amendment changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee. Securities
authenticated and delivered after the execution of any amendment pursuant to
this Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such amendment. If the
Company shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors of the Company, to any such
amendment may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
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ARTICLE 7
COVENANTS
Section 7.1 Payment of Amounts, if any, to Holders.
The Company will duly and punctually pay the amounts, if any, on the
Securities in accordance with the terms of the Securities and this Agreement.
Such amounts shall be considered paid on the date due if on such date the
Trustee or the Paying Agent holds in accordance with this Agreement money
sufficient to pay all such amounts then due. Notwithstanding any other provision
of this Agreement, the Trustee and the Paying Agent shall comply with all U.S.
federal withholding requirements with respect to payments to Holders that the
Company, the Trustee or the Paying Agent reasonably believes are applicable
under the Internal Revenue Code of 1986, as amended, and the Treasury
regulations thereunder. Amounts withheld in compliance with such withholding
requirements shall, for purposes of this Agreement, be treated as paid to the
Holder such withholding was made with respect to. The consent of Holder shall
not be required for any such withholding.
Section 7.2 Maintenance of Office or Agency.
As long as any of the Securities remain Outstanding, the Company
will maintain in the Borough of Manhattan, The City of New York, an office or
agency (i) where Securities may be presented or surrendered for payment, (ii)
where Securities may be surrendered for registration of transfer or exchange and
(iii) where notices and demands to or upon the Company in respect of the
Securities and this Agreement may be served. The office of the Trustee at
Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 shall be such office or agency of the
Company, unless the Company shall designate and maintain some other office or
agency for one or more of such purposes. The
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Company or any of its Subsidiaries may act as Paying Agent, registrar or
transfer agent; provided that such Person shall take appropriate actions to
avoid the commingling of funds. The Company will give prompt written notice to
the Trustee of any change in the location of any such office or agency. If at
any time the Company shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes, and may from time
to time rescind such designation; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, The City of New York for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any such office or
agency.
Section 7.3 Money for Security Payments to Be Held in
Trust.
If the Company or any of its Subsidiaries shall at any time act as
the Paying Agent, it will, on or before an Optional Call Payment Date, the
Maturity Date, the Total Disposition Payment Date, Redemption Payment Date or
the Default Payment Date, as the case may be, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the amounts,
if any, so becoming due until such sums shall be paid to such Persons or
65
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or before an Optional Call Payment Date, the Maturity
Date, the Total Disposition Payment Date, the Redemption Payment Date or the
Default Payment Date, as the case may be, deposit with a Paying Agent a sum in
same day funds sufficient to pay the amount, if any, so becoming due; such sum
to be held in trust for the benefit of the Persons entitled to such amount, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
(A) such Paying Agent will hold all sums held by it for the payment of any
amount payable on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided and will notify the Trustee of the sums so held and (B) that
it will give the Trustee notice of any failure by the Company (or by any other
obligor on the Securities) to make any payment on the Securities when the same
shall be due and payable.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment on any Security and remaining
unclaimed for one year after an Optional Call Payment Date, the Maturity Date,
the Total Disposition Payment Date, Redemption Payment Date or the Default
Payment Date, as the case may be, shall be paid to the Company on Company
Request, or (if then
66
held by the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money shall thereupon cease.
Section 7.4 Certain Purchases and Sales.
(a) During the 60-day period immediately preceding (and including)
an Optional Call Date on which the Company exercises its optional right to call
the Securities or the Maturity Date, as the case may be, the Company shall not,
and shall not permit any of its Subsidiaries or Affiliates (including for such
purpose any director or officer of the Company and PCT) to engage in any
Prohibited Activity.
(b) The Company shall not, and shall not permit any of its
Subsidiaries or Affiliates (including for such purpose any director or officer
of the Company and PCT) to acquire in open market transactions, private
transactions or otherwise, the Securities.
Section 7.5 Listing of Securities.
The Company will use its best efforts to cause (i) the Securities
and (ii) the securities, if any, contemplated to be issued pursuant to an
indenture having the terms set forth on Exhibit A hereto, to be either (a)
registered on a national securities exchange or (b) quoted on NMS/NASDAQ.
Section 7.6 Registration of Debt Securities; TIA.
If the Company elects to satisfy its obligations hereunder, subject
to the provisions of Section 7.7 hereof, by issuing debt securities pursuant to
an indenture having the terms set forth on Exhibit A (the "Payment Notes"), the
Company, shall cause, no
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later than the applicable payment date hereunder, (i) such issuance of debt
securities to be registered under the Securities Act and (ii) such indenture to
be qualified under the TIA.
Section 7.7 Minimum Principal Amount of Debt Securities.
Notwithstanding anything in this Agreement to the contrary, if the
Company elects to issue Payment Notes pursuant to Section 7.6 hereof, the
Company may elect not to issue Payment Notes to any individual Holder if such
Holder would receive, in the aggregate, a principal amount of Payment Notes (the
"Owed Principal Amount") that is less than an amount to be determined by the
Company prior to the issuance thereof (the "Minimum Principal Per Holder"), but
the Minimum Principal Per Holder shall not exceed $1,000.00. If such individual
Holder's owed Principal Amount exceeds the Minimum Principal Per Holder, the
Company may elect to issue to such individual Holder Payment Notes in an
aggregate principal amount that is (i) at least the Minimum Principal Per Holder
and (ii) in increments above the Minimum Principal Per Holder in an amount to be
determined by the Company prior to the issuance of the Payment Notes, but each
such increment shall not exceed $1,000.00. Any obligations under this Agreement
of the Company to any such individual Holder that are not satisfied by the
issuance of Payment Notes as a result of the provisions of this Section 7.7
shall be satisfied by the Company as otherwise provided in this Agreement. Any
payments of cash by the Company contemplated by this Agreement (including this
Section 7.7) may be funded in whole or in part by the issuance of Payment Notes
to the Trustee and by the Trustee's subsequent sale of such Payment Notes on the
principal national securities exchange on which such Payment Notes are listed
or, if such Payment Notes are not so
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listed, on NMS/NASDAQ. Nothing in this Section 7.7 shall require the Company to
issue any Payment Notes to any Holder.
Section 7.8 Manipulative Transactions.
Neither the Company nor any of its Affiliates shall take
any action that is intended to manipulate the 30-Day Average Market Price during
the 60-day period immediately preceding (and including) an Optional Call Date on
which the Company exercises its optional right to call the Securities or the
Maturity Date, as the case may be.
Section 7.9 Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company, commencing with the fiscal
year ending in the year during which the Securities are first issued hereunder
(but in no event more than one year from such issuance), a written statement
signed by the Chairman of the Board, President or other principal executive
officer or Vice President of the Company and by the Treasurer or other principal
financial officer or principal accounting officer of the Company, stating, as to
each signer thereof, that
(a) a review of the activities of the Company during such year
and of performance under this Agreement has been made under his supervision, and
(b) to the best of his knowledge, based on such review, the
Company has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to him and the nature and status
thereof.
Section 7.10 Notice of Default.
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The Company shall file with the Trustee written notice of the
occurrence of any Event of Default or other default under this Agreement within
five business days of its becoming aware of any such Default or Event of
Default.
ARTICLE 8
REMEDIES OF THE TRUSTEE AND HOLDERS
ON EVENT OF DEFAULT
Section 8.1 Event of Default Defined; Acceleration of
Maturity; Waiver of Default.
"Event of Default" with respect to the Securities, means each one of
the following events which shall have occurred and be continuing (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of all or any part of the amounts
payable in respect of any of the Securities as and when the same shall
become due and payable either at an Optional Call Payment Date, the
Maturity Date, the Total Disposition Payment Date or otherwise; or
(b) default in the performance, or breach, of any covenant or
warranty of the Company in respect of the Securities (other than a
covenant or warranty in respect of the Securities, a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of 90
days after there has been given, by registered or certified mail,
70
to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% of the Outstanding Securities, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(c) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee or sequestrator (or similar official) of the Company or
for any substantial part of its property or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or
(d) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary
case under any such law, or consent to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or for any substantial
part of its property, or make any general assignment for the benefit of
creditors.
If an Event of Default described above occurs and is continuing, then, and in
each and every such case, unless all of the Securities shall have already become
due and payable, either the Trustee or the Holders of not less than 25% of the
Securities then Outstanding hereunder by notice in writing to the Company (and
to the Trustee if
71
given by the Holders), may declare the Securities to be due and payable
immediately, and upon any such declaration the Default Amount for each VSR shall
become immediately due and payable and, thereafter, shall bear interest at the
Default Interest Rate until payment is made to the Trustee.
The foregoing provisions, however, are subject to the condition that
if, at any time after the Securities shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum sufficient to pay all amounts which
shall have become due otherwise than by acceleration (with interest upon such
overdue amount at the Default Interest Rate to the date of such payment or
deposit) and such amount as shall be sufficient to cover reasonable compensation
to the Trustee, its agents, attorneys and counsel, and all other expenses and
liabilities incurred and all advances made, by the Trustee except as a result of
negligence or bad faith, and if any and all Events of Default under this
Agreement, other than the non-payment of the amounts which shall have become due
by acceleration, shall have been cured, waived or otherwise remedied as provided
herein, then and in every such case the Holders of a majority of all the
Securities then Outstanding, by written notice to the Company and to the
Trustee, may waive all defaults with respect to the Securities and rescind and
annul such declaration and its consequences, but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereof.
Section 8.2 Collection of Indebtedness by Trustee; Trustee May
Prove Debt.
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The Company covenants that in case default shall be made in the
payment of all or any part of the Securities when the same shall have become due
and payable, whether at an Optional Call Payment Date, the Maturity Date, the
Total Disposition Payment Date, the Default Payment Date, or upon acceleration
or otherwise, then upon demand of the Trustee, the Company will pay to the
Trustee for the benefit of the Holders of the Securities the whole amount that
then shall have become due and payable on all Securities (with interest from the
date due and payable to the date of such payment upon the overdue amount at the
Default Interest Rate); and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and any expenses and liabilities incurred, and
all advances made, by the Trustee and each predecessor Trustee except as a
result of its negligence or bad faith.
The Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Agreement or in aid of the exercise of any power granted herein, or to enforce
any other remedy.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law or
in equity for the collection of the sums so due and unpaid, and may prosecute
any such
73
action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Company or other obligor upon such
Securities and collect in the manner provided by law out of the property of the
Company or other obligor upon such Securities, wherever situated, the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Company
or an other obligor upon the Securities under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for
ortaken possession of the Company or its property or such other obligor, or in
case of any other comparable judicial proceedings relative to the Company or
other obligor upon the Securities, or to the creditors or property of the
Company or such other obligor the Trustee, irrespective of whether the principal
of any Securities shall then be due and payable as herein expressed or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section, shall be entitled and empowered, (but shall have
no obligation) by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
owing and unpaid in respect of the Securities, and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for reasonable compensation to
the Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses
74
and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or bad faith) and of
the Holders allowed in any judicial proceedings relative to the Company or
other obligor upon the Securities, or to their respective property;
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings; and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders and of the Trustee on
their behalf; and any trustee, receiver, or liquidator, custodian or other
similar official is hereby authorized by each of the Holders to make
payments to the Trustee, and, in the event that the Trustee shall consent
to the making of payments directly to the Holders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to
the Trustee, each predecessor Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee except
as a result of negligence or bad faith and all other amounts due to the
Trustee or any predecessor Trustee pursuant to Section 4.6. To the extent
that such payment of reasonable compensation, expenses, disbursements,
advances and other amounts out of the estate in any such proceedings shall
be
75
denied for any reason, payment of the same shall be secured by a lien
on, and shall be paid out of, any and all distributions, dividends,
moneys, securities and other property which the Holders may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities, or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.
All rights of action and of asserting claims under this Agreement,
or under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities or the production thereof and any trial or
other proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Agreement to which the
Trustee shall be a party) the Trustee shall be held to represent all the
Holders, and it shall not be necessary to make any Holders of such Securities
parties to any such proceedings.
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Section 8.3 Application of Proceeds.
Any monies collected by the Trustee pursuant to this Article in
respect of any Securities shall be applied in the following order at the date or
dates fixed by the Trustee upon presentation of the several Securities in
respect of which monies have been collected and stamping (or otherwise noting)
thereon the payment in exchange for the presented Securities if only partially
paid or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses in respect of which
monies have been collected, including reasonable compensation to the
Trustee and each predecessor Trustee and their respective agents and
attorneys and of all expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith, and all other amounts due to the Trustee or any
predecessor Trustee pursuant to Section 4.6;
SECOND: To the payment of the whole amount then owing and unpaid
upon all the Securities, with interest at the Default Interest Rate on all
such amounts, and in case such monies shall be insufficient to pay in full
the whole amount so due and unpaid upon the Securities, then to the
payment of such amounts without preference or priority of any security
over any other Security, ratably to the aggregate of such amounts due and
payable; and
THIRD: To the payment of the remainder, if any, to the
Company or any other person lawfully entitled thereto.
Section 8.4 Suits for Enforcement.
In case an Event of Default has occurred, has not been
waived and is continuing, the Trustee may in its discretion proceed
77
to protect and enforce the rights vested in it by this Agreement by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Agreement or in aid of the exercise of any power
granted in this Agreement or to enforce any other legal or equitable right
vested in the Trustee by this Agreement or by law.
Section 8.5 Restoration of Rights on Abandonment of
Proceedings.
In case the Trustee or any Holder shall have proceeded to enforce
any right under this Agreement and such proceedings shall have been discontinued
or abandoned for any reason, or shall have been determined adversely to the
Trustee or to such Holder, then and in every such case the Company and the
Trustee and the Holders shall be restored respectively to their former positions
and rights hereunder, and all rights, remedies and powers of the Company, the
Trustee and the Holders shall continue as though no such proceedings had been
taken.
Section 8.6 Limitations on Suits by Holders.
No Holder of any Security shall have any right by virtue
or by availing of any provision of this Agreement to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to this Agreement, or for the appointment of a trustee, receiver,
liquidator, custodian or other similar official or for any other remedy
hereunder, unless such Holder previously shall have given to the Trustee written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of not less than 25% of the Securities
78
then Outstanding shall have made written request upon the Trustee to institute
such action or proceedings in its own name as trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 8.9; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Security with every other
taker and Holder and the Trustee, that no one or more Holders of Securities
shall have any right in any manner whatever by virtue or by availing of any
provision of this Agreement to effect, disturb or prejudice the rights of any
other such Holder of Securities, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities. For the protection and enforcement
of the provisions of this Section, each and every Holder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Section 8.7 Unconditional Right of Holders to Institute
Certain Suits.
Notwithstanding any other provision in this Agreement and any
provision of any Security, the right of any Holder of any Security to receive
payment of the amounts payable in respect of such Security on or after the
respective due dates expressed in such Security, or to institute suit for the
enforcement of any such
80
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
Section 8.8 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default.
Except as provided in Section 8.6, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder to exercise any
right or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and, subject to
Section 8.6, every power and remedy given by this Agreement or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Holders.
Section 8.9 Control by Holders.
The Holders of a majority of the Securities at the time Outstanding
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Securities by this Agreement;
provided that such direction shall not be otherwise than in accordance with law
and the
81
provisions of this Agreement; and provided further that (subject to
the provisions of Section 4.1) the Trustee shall have the right to decline to
follow any such direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may not lawfully be taken or
if the Trustee in good faith by its board of directors, the executive committee,
or a trust committee of directors or responsible officers of the Trustee shall
determine that the action or proceedings so directed would involve the Trustee
in personal liability or if the Trustee in good faith shall so determine that
the actions or forebearances specified in or pursuant to such direction would be
unduly prejudicial to the interests of Holders of the Securities not joining in
the giving of said direction, it being understood that (subject to Section 4.1)
the Trustee shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Holders.
Nothing in this Agreement shall impair the right of the Trustee in
its discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Holders.
Section 8.10 Waiver of Past Defaults.
Prior to the declaration of the acceleration of the maturity of the
Securities as provided in Section 8.1, in the case of a default or an Event of
Default specified in clause (b), (c) or (d) of Section 8.1, the Holders of a
majority of all the Securities then Outstanding may waive any such default or
Event of Default, and its consequences except a default in respect of a covenant
or provisions hereof which cannot be modified or amended without the consent of
the Holder of each Security affected. In the case of any such waiver, the
Company, the Trustee and the Holders of the Securities
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shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 8.11 Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances.
The Trustee shall transmit to the Holders, as the names and
addresses of such Holders appear on the Security Register, notice by mail of all
defaults which have occurred and are known to the Trustee, such notice to be
transmitted within 90 days after the occurrence thereof, unless such defaults
shall have been cured before the giving of such notice (the term "default" or
"Defaults" for the purposes of this Section being hereby defined to mean any
event or condition which is, or with notice or lapse of time or both would
become, an Event of Default); provided that, except in the case of default in
the payment of the amounts payable in respect of any of the Securities, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
or trustees and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders.
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Section 8.12 Right of Court to Require Filing of Undertaking to Pay
Costs.
All parties to this Agreement agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Agreement or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including attorneys' fees, against any
party litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder or group of Holders holding in the aggregate more than
10% of the Securities Outstanding or to any suit instituted by any Holder for
the enforcement of the payment of any Security on or after the due date
expressed in such Security.
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 Company May Consolidate, etc., on Certain Terms.
The Company covenants that it will not merge or consolidate with or
into any other Person or sell or convey all or substantially all of its assets
to any Person, unless (i) the Company shall be the continuing corporation, or
the successor Person or the Person which acquires by sale or conveyance
substantially all the assets of the Company shall be a Person organized under
the laws of the United States of America or any State thereof and shall
expressly assume by
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an instrument supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
Securities, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Agreement to be
performed or observed by the Company and (ii) the Company, or such successor
Person, as the case may be, shall not, immediately after such merger or
consolidation, or such sale or conveyance, be in default in the performance of
any such covenant or condition provided, however, that nothing herein shall
affect the rights of the Holders or the Trustee upon any Total Disposition.
Section 9.2 Successor Person Substituted.
In case of any such consolidation, merger, sale or conveyance, and
following such an assumption by the successor Person, such successor Person
shall succeed to and be substituted for the Company with the same effect as if
it had been named herein. Such successor Person may cause to be signed, and may
issue either in its own name or in the name of the Company prior to such
succession any or all of the Securities issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee; and,
upon the order of such successor corporation instead of the Company and subject
to all the terms, conditions and limitations in this Agreement prescribed, the
Trustee shall authenticate and shall deliver any Securities which previously
shall have been signed and delivered to the Trustee for authentication, and any
Securities which such successor corporation thereafter shall cause to be signed
and delivered to the Trustee for that purpose. All of the Securities so issued
shall in all respects have the same legal rank and benefit under this Agreement
as the Securities theretofore or
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thereafter issued in accordance with the terms of this Agreement as though all
of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance
by way of lease) the Company or any Person which shall theretofore have become
such in the manner described in this Article shall be discharged from all
obligations and covenants under this Agreement and the Securities and may be
liquidated and dissolved.
Section 9.3 Opinion of Counsel to Trustee.
The Trustee, subject to the provisions of Sections 4.1 and 4.2,
shall receive an Opinion of Counsel, prepared in accordance with Sections 1.3
and 1.4, as conclusive evidence that any such consolidation, merger, sale or
conveyance, and any such assumption, and any such liquidation or dissolution,
complies with the applicable provisions of this Agreement.
* * * * * *
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This Agreement shall be signed in any number of counterparts with
the same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
MAFCO CONSOLIDATED GROUP INC.
By:__________________________________
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST COMPA-
NY, as Trustee
By:__________________________________
Name:
Title:
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EXHIBIT A
Mafco Consolidated Group Inc.
Summary of Terms of Senior Notes
Issuer: Mafco Consolidated Group Inc. (the
"Company").
Securities: Senior Notes (the "Notes") to be issued under an
indenture (the "Indenture") between the Company
and American Stock Transfer & Trust Company, as
trustee (the "Trustee").
Principal Amount: Aggregate amount due and payable with
respect to the VSRs issued by the Company.
Maturity: Up to three years from date of issu-
ance.
Interest; Redemption: A rate of interest and redemption pro-
visions determined in good faith by
the Board of Directors such that the
Notes will have in the opinion of an
Independent Financial Expert a market
value as of the date of issuance on a
fully distributed basis equal to 100%
of its principal amount. Such deter-
mination will be supported by a writ-
ten opinion delivered to the Board of
Directors by an Independent Financial
Expert (as such term is defined in the
VSR Agreement). Interest will be pay-
able in cash semiannually in arrears.
Covenants: Pursuant to the Indenture, the Company
shall covenant (i) to pay the princi-
pal of and interest on the Notes
promptly when due; (ii) to furnish the
Trustee and holders of the Notes with
information, documents and other re-
ports required to be filed with the
SEC under Sections 13 and 15(d) of the
Securities Exchange Act of 1934, as
amended; and (iii) not to engage in
any affiliated transaction on other
than arm's-length terms.
Ranking: The Notes will not be subordinated to
any other indebtedness of the Company and will
rank pari passu with all other unsubordinated
indebtedness of the Company (provided that the
Company
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shall not be prohibited from issuing
secured indebtedness).
Successor Company
Provisions: The Company shall not consolidate or
merge with or into, or sell all or
substantially all of its assets to,
any Person unless (i) the surviving or
transferee Person is a Person orga-
nized under the laws of the United
States or any state thereof and shall
expressly assume the obligations under
the Indenture and (ii) immediately
after giving effect to such transac-
tion no default shall have occurred
and being continuing.
Events of Default: Failure to pay principal when due;
failure to pay interest within 30 days
of when due; failure to comply with
the Successor Company provisions; de-
fault in the performance of any other
covenant for a period of 90 days after
notice thereof; and events of bank-
ruptcy, insolvency or reorganization
with respect to the Company.
Registration; TIA;
Listing: The issuance of the Notes shall have
been registered under the Securities
Act of 1933, as amended; the Indenture
shall have been qualified under the
Trust Indenture Act of 1939, as amend-
ed; and the Notes shall have been ap-
proved for listing, subject to offi-
cial notice of issuance, on a national
securities exchange or on NASDAQ.
Additional Terms: The Indenture shall contain such other
provisions, where applicable, as are
consistent with the VSR Agreement.
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