DEPOSITARY AGENT AGREEMENT
First Fidelity Bank, N.A.
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Attention: Corporate Trust Administrator
Gentlemen:
Pacific International Services Corp., a California corporation (the
"Company") is offering to exchange $5,250,000 in principal amount of its 10%
Convertible Subordinated Debentures Due September 1, 2007 (the "Debentures", the
holder of such a Debenture is referred to herein as a "Debtholder"). The
Company will exchange for each $1.00 in face amount of tendered Debentures, (i)
$0.50 in cash (the "Cash Payment"), (ii) .769505 shares of the Company's common
stock $0.10 stated value (the "Common Stock"), and (iii) a pro rata share of new
debentures (the "New Debentures") of the Company in an aggregate principal
amount equal to $1,050,000 less the face amount of any Debentures not tendered
and less the original principal amount, if any, of a new promissory note which
may be issued to Dollar Systems, Inc., as part of the sale by the Company of
substantially all of the assets and liabilities comprising the Company's vehicle
rental division, each upon and subject to the terms and conditions set forth in
the Offer to Exchange dated October 31, 1995 and in the related Letter of
Transmittal, copies of which are attached hereto as Exhibits A and B,
respectively, and which together, as they may be amended from time to time,
constitute the "Offer". The Cash Payment, the New Debentures and the 0.769505
shares of Common Stock are collectively referred to as the "Purchase Price."
The Company hereby appoints First Fidelity Bank, N.A. to act as Depositary
in connection with the Offer. References hereinafter to "you" shall refer to
First Fidelity Bank, N.A.
The Offer was commenced by the Company on October 31, 1995. The Letter of
Transmittal (which is addressed to you) that accompanies the Offer to Exchange
is to be used by the Debtholders to accept the Offer, and contains instructions
with respect to the delivery of Debentures tendered.
The Offer shall expire at 12:00 Midnight, New York City time on November
29, 1995 (the "Initial Expiration Date"), or at any subsequent date or time to
which the Company may extend the Offer. The Offeror expressly reserves the
right to extend the Offer from time to time and may extend the Offer by giving
notice (confirmed in writing) to you before 9:00 A.M., New York City time, on
the business day following the scheduled expiration date. The later of the
Initial Expiration Date or the latest time and date to which the Offer may be so
extended is hereinafter referred to as the "Exchange Expiration Date".
The Company is also soliciting (the "Solicitation") from each Debtholder,
as of the close of business on October 27, 1995 (the "Record Date"), acceptances
(the "Plan Acceptances") of a prepackaged plan of reorganization (the "Plan") of
the Company, a copy of which are attached hereto as Exhibit C, pursuant to which
the Debentures will be exchanged for consideration substantially equivalent to
the Purchase Price under the Offer to Exchange in the event the Offer to
Exchange is not consummated. The solicitation of acceptances for the Plan is
being made, and may only be made, pursuant to the Solicitation and Disclosure
Statement For Prepackaged Plan of Reorganization (the "Disclosure Statement")
issued by the Company dated October 31, 1995, a copy of which is attached hereto
as Exhibit D.
If the Offer to Exchange is not consummated but the requisite Plan
Acceptances are obtained, the Company currently intends to commence promptly a
case under chapter 11 ("Chapter 11") of title 11 of the United States Code (the
"Bankruptcy Code") and the rules and regulations promulgated thereunder and to
use such Plan Acceptances to obtain confirmation of the Plan by a United States
Bankruptcy Court of competent jurisdiction.
The expiration date for the Solicitation (the "Solicitation Expiration
Date") is 12:00 Midnight New York time, on November 29, 1995, unless extended by
the Company. Debtholders who are owners of the Debentures on the Record Date or
their authorized signatories are eligible to vote on the Plan. Debtholders who
purchased Debentures or whose purchase is registered after the Record Date and
who wish to vote on the Plan must arrange with their seller to receive a proxy
from the Debtholder of record on the Record Date.
The Company hereby further appoints First Fidelity Bank, N.A. to act as
Depositary in connection with the Solicitation.
A. In carrying out your duties as Depositary, with respect to the Offer
to Exchange, you are to act in accordance with the following instructions:
1. You will establish and maintain an account in respect of the
Debentures at The Depository Trust Company ("DTC"), the Midwest Security Trust
Company ("MSTC") and the Philadelphia Depository Trust Company ("PDTC"), in
connection with the Offer, in accordance with Rule 17Ad-14 under the Securities
Exchange Act of 1934, as amended. Any financial institution that is a
participant in the DTC, MSTC or PDTC system may make book-entry transfer of the
Debentures by causing DTC, MSTC, or PDTC to transfer such Debentures into the
account maintained by you pursuant to this paragraph, in accordance with DTC's,
MSTC's or PDTC's procedure for such transfer, and you may effect a withdrawal of
Debentures through such account by book-entry movement. However, although
delivery of Debentures may be effected through book-entry transfer at DTC, MSTC
or PDTC, the Letter of Transmittal or the Notice of Guaranteed Delivery (or
facsimile thereof) with any required signature guarantees and any other
documents must, in any case, be received by you prior to the Exchange Expiration
Date in order for Debentures to be properly tendered.
2. You are to examine each of the Letters of Transmittal and
Debentures and any other documents delivered or mailed to you by or for
Debtholders before the Exchange Expiration Date to ascertain whether (i) the
Letters of Transmittal and any such other documents are duly executed and
properly completed in accordance with instructions set forth therein and (ii)
the Debentures otherwise have been properly tendered. In each case where the
Letter of Transmittal or any other document has been improperly completed or
executed or any of the Debentures are not in proper form for transfer or some
other irregularity in connection with the acceptance of the Offer exists, you
will make a reasonable attempt to inform the presenters of the need for
fulfillment of all requirements and to take any other action as may be necessary
or advisable to cause such irregularity to be corrected.
3. All questions as to the validity, form, eligibility (including
time of receipt) and acceptance of any tender of Debentures will be determined
by the Company in its sole discretion, whose determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any Debentures not in appropriate form or the acceptance of which, in the
opinion of counsel for the Company, would be unlawful. With the approval of an
authorized officer of the Company (such approval, if given orally, to be
confirmed in writing by one of the Officers of the Company set forth on Exhibit
E), or any other party designated by such an officer, you are authorized to
waive any irregularities in connection with any tender pursuant to the Offer.
4. Tenders of Debentures may be made only as set forth in Section 2
of the Offer to Exchange, and Debentures shall be considered properly tendered
to you only when:
(a) Debentures (whether physically delivered or delivered pursuant to
the procedure for book-entry transfer set forth in Section 2 of the Offer
to Exchange, in which latter case confirmation of receipt of such tendered
Debentures must be received by you) are covered by a properly completed and
duly executed Letter of Transmittal received by you (together with any
other required documents) prior to the Exchange Expiration Date, or by an
appropriate Notice of Guaranteed Delivery from an Eligible Institution
received by you in accordance with Section 2 of the Offer to Exchange prior
to the Exchange Expiration Date. For the purposes of these instructions:
an "Eligible Institution" shall be a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office,
branch or agency in the United States; and "an appropriate notice of
Guaranteed Delivery" shall be a Notice of Guaranteed Delivery substantially
in the form attached hereto as Exhibit F, which is either delivered to you
or transmitted to you by telegram, telex, facsimile transmission or letter;
(b) Debentures (together with any other required documents) are
received by you, or you have received confirmation of receipt of such
Debentures pursuant to the book-entry transfer procedures set forth in
Section 2 of the Offer to Exchange, prior to the Exchange Expiration Date
or, in the case of an appropriate Notice of Guaranteed Delivery, along with
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any other documents required by the Letter of
Transmittal, within five New York Stock Exchange trading days after the
date of such Notice of Guaranteed Delivery; and
(c) the adequacy of the items relating to Debentures and the related
Letter of Transmittal has been favorably passed upon as provided above.
Notwithstanding the provisions of this paragraph 4, Debentures which
the Offeror shall approve as having been properly tendered shall be considered
to be properly tendered.
A tender made on the basis of an appropriate Notice of Guaranteed
Delivery will not be considered to have been properly made unless all of
Debentures covered thereby have been deposited (either physically or pursuant to
book-entry transfer) within the time periods provided in this paragraph 4 and
Section 2 of the Offer to Exchange; and when all such Debentures have been so
delivered and all other requirements in this paragraph 4 and Section 2 of the
Offer to Exchange have been complied with, the tender will be deemed effected at
the time of receipt by you of the Letter of Transmittal or appropriate Notice of
Guaranteed Delivery as the case may be, provided for in such Section 2 and this
paragraph 4.
5. You shall advise the Company with respect to Debentures received
subsequent to the Exchange Expiration Date and accept its instructions with
respect to disposition of such Debentures.
6. You shall accept tenders:
(a) in cases where the Debentures are registered in two or more names
only if signed by all named holders.
(b) signed by persons acting in a fiduciary or representative
capacity only if such capacity is shown on the Letter of Transmittal and
proper evidence of their authority to so act is submitted.
(c) from persons other than the registered Debtholder only if the
Debentures are properly endorsed or accompanied by an appropriate allonge,
with signatures on such Debentures or allonge being guaranteed by an
Eligible Institution.
You shall accept partial tenders of Debentures where so indicated in
the Letter of Transmittal and shall deliver new Debentures to the transfer agent
for the split-up and the return of untendered Debentures to the person who
deposited them as promptly as practicable.
7. The Company will purchase Debentures duly tendered on the terms
and subject to the conditions set forth in the Offer to Exchange and the Letter
of Transmittal. Upon acceptance by the Company of Debentures, you shall notify
the Company of the number of certificates to be issued, and the names in which
those securities are to be issued. The Company shall cause such certificates to
be issued to you. Upon receipt of such certificates, and in exchange for the
Debentures, you shall forward certificates for Common Stock (at the rate of
.769505 shares for each $1.00 in principal amount of Debentures), you shall
issue checks for the Cash Payment on behalf of the Company as soon as
practicable, and issue the New Debentures in accordance with the Offer to
Exchange; provided, however, that in all cases, payment for Debentures tendered
and exchanged pursuant to the Offer will be made only after timely receipt by
you of: (i) Debentures (or timely confirmation of a book-entry transfer of such
Debentures into your account at DTC, MSTC, or PDTC), (ii) a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), and (iii) any
other required documents. Immediately available funds will be deposited with
you on the day checks are mailed or delivered by you. After such payment, you
shall promptly present the Debentures, and any applicable transfer taxes (to be
furnished pursuant to Section A paragraph 11 of this Agreement).
8. Debentures tendered pursuant to the Offer are irrevocable, except
as set forth in Section 3 of the Offer to Exchange. You are authorized and
directed to return to any person tendering Debentures, without expense to such
person, any Debentures tendered by such person but withdrawn pursuant to Section
3 of the Offer to Exchange and such withdrawn Debentures shall no longer be
considered to be validly tendered.
9. The Company shall not be required to exchange any Debentures
tendered if there shall occur any of the events set forth in Section 5 of the
Offer to Exchange or if any of the other conditions set forth in the Offer are
not met. Notice of any decision by the Company not to Exchange any Debentures
tendered shall be given (and confirmed in writing) by the Company to you.
10. All Common Stock certificates, all New Debentures, all checks or
drafts issued in exchange for the Debentures shall be forwarded by (a)
first-class mail under a blanket surety bond protecting you and the Company from
loss or liability arising out of the non-receipt or non-delivery of such checks,
drafts and certificates or (b) by registered mail insured separately for the
replacement value of each of such checks, drafts and certificates.
11. You shall deliver or cause to be delivered in a timely manner to
each governmental authority to which any transfer taxes are payable in respect
of the transfer of Debentures to the Company your check in the amount of all
transfer taxes so payable, and the Company shall reimburse you for the amount of
any and all transfer taxes payable in respect of the transfer of Debentures to
the Company; provided, however, that you shall use your best efforts to obtain
any refund to which the Company is entitled and that you shall reimburse the
Company for amounts refunded to you in respect of your payment of any such
transfer taxes, at the time such refund is received by you.
12. Letters of Transmittal and Notices of Guaranteed Delivery
submitted in lieu thereof pursuant to Section 2 of the Offer to Exchange shall
be stamped by you as to the date, and, after the expiration of the Offer, the
time, of receipt thereof and shall be preserved by you for a period of time at
least equal to the periods of time your preserve other records pertaining to the
transfer of securities. You shall dispose of unused Letters of Transmittal and
other surplus materials by returning them to the Company. You shall deliver
cancelled Debentures to the Company.
13. You hereby expressly waive any lien, encumbrance or right of
set-off whatsoever that you may have with respect to funds deposited with you
for the Exchange of Debentures and the payment of transfer taxes by reason of
amounts, if any, owed to you by the Company or any of its subsidiaries or
affiliates.
14. You shall arrange to comply with all requirements under the tax
laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file form 1099B with respect to the Cash
Payment with the Internal Revenue Service. The Company understands that you are
required to deduct 20% on payments to holders who have not supplied their
correct Taxpayer Identification Number or the required certification. Such
funds will be turned over to the Internal Revenue Service.
B. In carrying out your duties as Depositary, with respect to the
Solicitation, you are to act in accordance with the following instructions:
1. You are to examine each of the Ballots and any other documents
delivered or mailed to you by or for Debtholders before the Solicitation
Expiration Date to ascertain whether (i) the Ballots and any such other
documents are duly executed and properly completed in accordance with
instructions set forth therein and (ii) the Ballots otherwise have been properly
delivered. In each case where the Ballots or any other document has been
improperly completed, executed or delivered or any of the Ballots are not in
proper form or some other irregularity in connection with the vote, you will
make a reasonable attempt to inform the Debtholder of the need for fulfillment
of all requirements and to take any other action as may be necessary or
advisable to cause such irregularity to be corrected.
2. All questions as to the validity, form, eligibility (including
time of receipt) and acceptance of any Ballot will be determined by the Company
in its sole discretion, whose determination shall be final and binding. The
Company reserves the absolute right to reject any and all Ballots not in
appropriate form or the acceptance of which, in the opinion of counsel for the
Company, would be unlawful. With the approval of an authorized officer of the
Company (such approval, if given orally, to be confirmed in writing by one of
the Officers of the Company set forth on Exhibit E), or any other party
designated by such an officer, you are authorized to waive any irregularities in
connection with any Ballot.
3. Votes may be only cast as set forth in the Disclosure Statement.
All Debtholders as of the Record Date whether or not they tender their
Debentures in the Offer to Exchange, should vote to accept or reject the Plan.
Only the Debtholders who vote will be counted for purposes of determining
whether the Plan has been accepted. Failure of a Debtholder to vote in
accordance with the procedures described in the Disclosure Statement will be
deemed to be an abstention. Abstentions will not be counted as votes for or
against the Plan.
Any Debtholder holding Debentures on the Record Date through a brokerage
firm, commercial bank, trust company or other nominee (a "Nominee") must vote by
completing a Ballot and returning it to the Nominee early enough to permit such
Nominee to transcribe the information onto a Master Ballot and return the Master
Ballot to the Solicitation Agent provided for in the Solicitation before the
Solicitation Expiration Date.
Any Debtholder who has voted on the Plan may: (i) change its vote by
delivering a subsequent properly completed Ballot in accordance with the
procedures described in the Disclosure Statement; or (ii) withdraw its vote by
delivering a written notice of revocation to the Solicitation Agent (or, if the
Debentures are held by a Nominee, to the Nominee so that the Nominee may deliver
such notice of revocation to the Solicitation Agent), so that the Solicitation
Agent receives such notice prior to the earlier of the Solicitation Expiration
Date or the commencement by the Company of a case under Chapter 11 of the
Bankruptcy Code.
4. You shall advise the Company with respect to Ballots received
subsequent to the Solicitation Expiration Date and accept its instructions with
respect to disposition of such Ballots.
C. In carrying out your duties as Depositary, with respect to the Offer
to Exchange and the Solicitation, you are to act in accordance with the
following instructions:
1. As Depositary hereunder you:
(a) shall have no duties or obligations other than those specifically
set forth herein or as may be subsequently agreed to by you and the
Company;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of
any Debentures thereby deposited with you pursuant to the Offer, and will
not be required to and will make no representation as to the validity,
value or genuineness of the Offer or the Plan;
(c) shall not be obligated to take any legal action hereunder which
might in your judgment
involve any expense or liability, unless you shall have been furnished with
reasonable indemnity;
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram, or other document or security delivered to you and reasonably
believed by you to be genuine and to have been signed by the proper party
or parties;
(e) may act upon any tender, statement, request, consent, agreement
or other instrument whatsoever not only as to its due execution and
validity and effectiveness of its provisions, but also as to the truth and
accuracy of any information contained therein, which you shall in good
faith reasonably believe to be genuine or to have been signed or
represented by a proper person or persons;
(f) may rely on and shall be protected in acting upon written or oral
instructions from any Vice President or more senior officer of the Company;
(g) may consult counsel satisfactory to you with respect to any
questions relating to your duties and responsibilities and the opinion of
such counsel shall be full and complete authorization and protection in
respect to any action taken, suffered or omitted by you hereunder in good
faith and in accordance with the opinion of such counsel;
(h) shall not advise any person tendering Debentures pursuant to the
Offer as to the wisdom of making such tender or as to the market value or
decline or appreciation in market value of any Debentures; and
(i) shall not advise any person voting pursuant to the Solicitation
as to the wisdom of making such vote.
2. If a Debtholder, broker, dealer, commercial bank or trust company
contacts you requesting additional copies of the Offer to Exchange, Letter of
Transmittal, Notice of Guaranteed Delivery, the Plan or Disclosure Statement you
shall refer such Debtholder, broker, dealer, commercial bank or trust company
to:
Xxxxxxxxx & Company Inc.
Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Managing Director
Telephone: (000) 000-0000
Fascimile: (000) 000-0000
3. You are authorized to cooperate with and to furnish information to
any organization (and its representatives) designated from time to time by the
Company in any manner reasonably requested by it in connection with the Offer
and any tenders thereunder, or the Solicitation.
4. At, or as promptly as practicable following, the close of each
business day from the earlier of the commencement of the Offer or the
commencement of the Solicitation to the later of the Exchange Expiration Date or
the Solicitation Expiration Date, you will give telephonic notice (confirmed in
writing as promptly as practicable) of the information set forth on the form of
Daily Report, attached to this letter as Exhibit G, to:
Xxxxxxx Xxxxxx
Chief Financial Officer
Pacific International Services Corp.
0000 Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
(000) 000-0000
Facsimile (000) 000-0000
In addition, you will also inform, and cooperate in making available to, the
aforementioned person upon oral request made from time to time prior to the
later of either the Exchange Expiration Date or the Solicitation Expiration Date
of such other information as he may reasonably request. Such cooperation shall
include, without limitation, the granting by you to the Company, the person
listed in the preceding sentence and such other persons as they may request, of
access to those persons on your staff who are responsible for (A) receiving
tenders, in order to ensure that immediately prior to the Initial Expiration
Date and each other Exchange Expiration Date, if any, the Company shall have
received information in sufficient detail to enable it to decide whether to
extend the Offer; and (B) receiving Ballots, in order to ensure that immediately
prior to the Solicitation Expiration Date, the Company shall have received
information in sufficient detail to enable it to decide whether the Plan was
accepted. You shall prepare a final list of (A) all persons whose tenders were
accepted, the principal amount of Debentures tendered and the amount accepted,
and (B) all persons who accepted the Plan, and shall deliver said lists to
Xxxxxxx Xxxxxx of the Company.
5. For services rendered as Depositary hereunder, you shall be
entitled to compensation of TEN THOUSAND DOLLARS ($10,000) which shall be
payable on the date hereof.
6. You hereby acknowledge receipt of the Offer to Exchange, the
Letter of Transmittal, the Plan and the Disclosure Statement and further
acknowledge that you have examined each of them. Any inconsistency between this
Agreement, on the one hand, and the Offer to Exchange, the Letter of
Transmittal, the Plan and the Disclosure Statement (as they may be amended from
time to time), on the other hand, shall be resolved in favor of the latter two
documents, except with respect of the duties, liabilities and indemnification of
you as Depositary.
7. The Company covenants and agrees to indemnify and hold you
harmless against any loss, liability, cost or expense (including attorneys'
fees) incurred without negligence, misconduct or bad faith on your part arising
out of or in connection with any act, omission, delay or refusal made by you in
reasonable reliance upon any signature, endorsement, assignment, certificate,
order, request, notice, instruction, or other instrument or document believed by
you in good faith to be valid, genuine and sufficient, and in accepting any
tender or effecting any transfer of Debentures believed by you in good faith to
be authorized, and in delaying or refusing in good faith to accept any tenders
or effect any transfer of Debentures, and in delaying or refusing in good faith
to accept any Ballots. In no case shall the Company be liable under this
indemnity with respect to any claim against you unless the Company shall be
notified by you, by letter or cable or by telex confirmed by letter, of the
written assertion of a claim against you or of any other action commenced
against you, promptly after you shall have received any such written assertion
or shall have been served with a summons in connection therewith. The Company
shall be entitled to participate at its own expense in the defense of any such
claim or other action and, if the Company so elects, the Company shall assume
the defense of any suit brought to enforce any such claim. In the event that
the Company shall assume the defense of any such suit, the Company shall not be
liable for the fees and expenses of any additional counsel thereafter retained
by you, so long as the Company shall retain counsel reasonably satisfactory to
you to defend such suit.
8. THIS AGREEMENT AND YOUR APPOINTMENT AS DEPOSITARY HEREUNDER SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
AND SHALL INURE TO THE BENEFIT OF, AND THE OBLIGATIONS CREATED HEREBY SHALL BE
BINDING UPON, THE SUCCESSORS AND ASSIGNS OF EACH OF THE PARTIES HERETO.
Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
Very truly yours,
PACIFIC INTERNATIONAL SERVICES CORP.
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Accepted as of the date
first above written.
FIRST FIDELITY BANK, N.A.
By: /s/ Xxxx Xxxxxx
Title: Vice President
[Exhibits Excluded from Conformed Copy]
