UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 6)*
AUTOTOTE CORPORATION (f/k/a United Tote, Inc.)
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(Name of Issuer)
Class A Common Stock, $0.01 par value per share
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(Title of Class of Securities)
053323-10-1
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(CUSIP Number)
A. Lorne Weil (212-754-2233)
750 Lexington Avenue, New York, NY 10022
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 7, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement. (A fee is not
required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 10
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CUSIP NO. 053323-10-1 13D PAGE 2 OF 10 PAGES
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1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
A. Lorne Weil
###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[_]
(b)[_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS* OO (see Item 3 below)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canadian Citizen
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7 SOLE VOTING POWER
3,041,733
NUMBER OF -------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY -------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,041,733
PERSON -------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,041,733
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.05%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
<PAGE>
This Amended and Restated Schedule 13D amends and restates the Schedule
13D originally filed with the Securities and Exchange Commission (the
"Commission") on November 12, 1991, as amended by Amendment No. 1 filed April
16, 1992 and Second Amendment No. 1 filed November 30, 1992 and as further
amended by Amendments No. 2, No. 3, No. 4 and No. 5 filed with the Commission on
December 9, 1992, October 20, 1993, March 24, 1994 and April 15, 1994,
respectively (the "Schedule 13D").
The Schedule 13D is hereby amended and restated on behalf of Mr. Weil as
follows:
Item 1. Security and Issuer
This statement relates to the Class A Common Stock, $.01 par value per
share (the "Class A Common Stock") of Autotote Corporation, a Delaware
corporation (the "Issuer") having its principal executive offices at 750
Lexington Avenue, New York, New York 10022.
Item 2. Identity and Background
This statement is being filed by A. Lorne Weil. Mr. Weil's principal
business address is 750 Lexington Avenue, New York, New York 10022. Mr. Weil's
principal occupation is as President, Chief Executive Officer and Chairman of
the Board of the Issuer. During the past five years, Mr. Weil has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the past five years, Mr. Weil has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
which resulted in Mr. Weil being subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, Federal or State securities laws or finding any violation with respect to
such laws. Mr. Weil is a Canadian citizen.
Item 3. Source and Amount of Funds or Other Consideration
The initial acquisition of the Issuer's securities by Mr. Weil resulted
from the Issuer's acquisition of Autotote Systems, Incorporated in December
1989. Pursuant to a stock purchase agreement between the Issuer and certain
stockholders of Autotote Systems, Incorporated, dated as of December 8, 1989,
Mr. Weil exchanged his securities of Autotote Systems, Incorporated for (i)
securities, (ii) cash, and (iii) subordinated debentures of the Issuer, some of
which debentures, as described below, were the source of the consideration used
for future acquisitions of the Issuer's securities.
The acquisition to which the original Schedule 13D relates resulted
from Mr. Weil entering into a modification agreement with the Issuer dated as of
October 31, 1991 (the "Modification Agreement") to reduce the principal amount
of, and accrued interest on, the Issuer's subordinated debentures due January 1,
1998 (the "Debentures"). In exchange for a reduction of $312,972.00 of the
principal amount of the Debentures held by Mr. Weil, in the original principal
amount of $1,694,106.78, and the waiver of accrued and unpaid interest of
$149,132.89, Mr. Weil received a warrant (the "Warrant") to purchase 490,724
shares of Common Stock at $1.6357 per share (after adjustment for a 3 for 2
stock dividend paid on June 30, 1993, a 2 for 1 stock dividend paid on October
25, 1993 (the "Stock Splits"), and for certain
Page 3 of 10
<PAGE>
dilutive events in 1995 and 1996, as described below). The Modification
Agreement and Form of Common Stock Purchase Warrant are filed hereto as Exhibit
A and Exhibit B, respectively, and any description thereof is qualified in its
entirety by reference thereto.
The acquisition to which Amendment No. 1 relates resulted from a grant
by the Issuer to Mr. Weil on March 3, 1992 of an option (the "March 1992
Option") to purchase 525,000 shares of Class A Common Stock (after adjustment
for Stock Splits) at the exercise price of $2.34 per share (after adjustment for
Stock Splits), subject to Mr. Weil's execution of a two-year employment
agreement with the Issuer (the "Employment Agreement").
The acquisitions to which Second Amendment No. 1 and Amendment No. 2
relate resulted from Mr. Weil executing the Employment Agreement, dated as of
April 24, 1992, which provided for Mr. Weil's employment as Chief Executive
Officer; and from Mr. Weil's participation in the Issuer's Subordinated
Debenture Exchange Offer (the "Exchange Offer"), pursuant to which Mr. Weil
received 130,479 shares of Class A Common Stock (after adjustment for Stock
Splits) in exchange for tendering $432,997.38 principal amount of, and accrued
and unpaid interest on, the Debentures.
The acquisitions to which Amendment No. 3 relates resulted from the
issuance to Mr. Weil on October 5, 1992 of an option (the "October 1992 Option")
to purchase 600,000 shares of Class A Common Stock (after adjustment for Stock
Splits) at the exercise price of $3.50 per share (after adjustment for Stock
Splits) pursuant to Mr. Weil's execution of a five-year employment agreement
dated as of November 1, 1992 with the Issuer (the "1992 Employment Agreement"),
such agreement superseding the Employment Agreement. All of the shares subject
to the October 1992 Option are currently deemed to be beneficially owned by Mr.
Weil. Amendment No. 3 also relates to the disposition by Mr. Weil on September
28 and 29 and October 1, 1993 of 70,000, 62,500 and 17,500 shares, respectively,
pursuant to Rule 144 under the Securities Act of 1933.
The transaction to which Amendment No. 4 and Amendment No. 5 relate
resulted from Mr. Weil entering into a swap transaction (the "Swap") effective
March 25, 1994 with Bankers Trust Company ("BT") in respect of 500,000 shares
(the "Swap Shares") of Class A Common Stock of the Issuer held by him, the
details of which are more fully described in Item 6.
On December 14, 1995, in connection with Mr. Weil's employment, the
Issuer granted to Mr. Weil an option to purchase 273,000 shares (the "1995
Option") of Class A Common Stock at the exercise price of $3.00 per share.
One-half of the shares subject to the 1995 Option has vested and such shares are
currently deemed to be beneficially owned by Mr. Weil. On each of December 14,
1998 and 1999, 68,250 shares subject to the 1995 Option will vest and within 60
days prior to such vesting, Mr. Weil will be deemed to beneficially own the
shares of Class A Common Stock subject to such vested 1995 Option. On December
16, 1996, in connection with Mr. Weil's employment, the Issuer granted to Mr.
Weil an option to purchase 200,000 shares (the "1996 Option") of Class A Common
Stock at the exercise price of $1.0625 per share. One-quarter of the shares
subject to the 1996 Option has vested and such shares are currently deemed to be
beneficially owned by Mr. Weil. On each of December 16, 1998, 1999 and 2000,
50,000 of the shares subject to the 1996 Option will vest and within 60 days
prior to such vesting, Mr. Weil will be deemed to beneficially own the shares of
Class A Common Stock subject to such vested 1996 Option. The Warrant issued to
Mr. Weil on October 31, 1991 was adjusted
Page 4 of 10
<PAGE>
pursuant to certain anti-dilution provisions in the terms of such warrant, as a
result of the issuances of securities by the Issuer in October 1995, November
1995, January 1996 and March 1996 for consideration below the then "current
market price," as such term is defined in the Form of Common Stock Purchase
Warrant (filed hereto as Exhibit B). Pursuant to such adjustments, the number of
shares of Class A Common Stock underlying the Warrant held by Mr. Weil was
increased from 481,599 to 490,724; and the exercise price of the Warrant was
adjusted from $1.6667 per share to $1.6357 per share. On April 15, 1996, Mr.
Weil purchased 100 shares of Class A Common Stock in an open market transaction
on the American Stock Exchange at a purchase price of $3.06 per share. In June
1996, the Issuer extended the expiration dates of the March 1992 Option and the
October 1992 Option; such options which were scheduled to expire in March 1997
and October 1997, respectively, will expire in March 2002 and October 2002,
respectively. In October 1996, the Issuer extended the expiration date of the
Warrant; such Warrant which was scheduled to expire in October 1996 will expire
in October 1999. On March 13, 1997, Mr. Weil and the Issuer executed a
subscription agreement with respect to the purchase by Mr. Weil of 250,000
shares of Class A Common Stock at the purchase price of $1.20 per share pursuant
to an offering for members of the Issuer's management and board of directors.
The aggregate purchase price of $300,000 for the 250,000 shares was paid for out
of the proceeds of a personal loan from BT which was subsequently repaid by Mr.
Weil. On September 24, 1997, Mr. Weil unwound the Swap as more fully described
in Item 6. On January 7, 1998, Mr. Weil reached an agreement with Lawrence,
Tyrrell, Ortale and Smith ("LTOS"), a New York limited partnership, with respect
to the purchase by Mr. Weil of LTOS's Common Stock Purchase Warrant covering
491,881 shares (the "LTOS Warrant") at a purchase price of $.90 per share. On
February 25, 1998, Mr. Weil and LTOS executed a purchase agreement for the LTOS
Warrant (see Item 6 below). The aggregate purchase price of $442,692.90 for the
LTOS Warrant was paid for out of the proceeds of a personal loan from IBJ
Schroder Bank & Trust Company.
Item 4. Purpose of the Transaction
Mr. Weil's acquisitions of the Issuer's securities have been for
investment purposes and include securities which were granted to him by the
Issuer in connection with his employment.
Item 5. Interest in Securities of the Issuer
Mr. Weil
Mr. Weil beneficially owns 3,041,733 shares of Class A Common Stock
(including 982,605 shares which may be acquired upon the exercise of warrants
and 1,311,500 shares which may be acquired upon the exercise of stock options)
or 8.05% of the Class A Common Stock outstanding as of March 1, 1998. Mr. Weil
holds sole voting and dispositive power over all of the shares beneficially
owned by him. To the best of Mr. Weil's knowledge, no other person has the right
to receive or the power to direct the receipt of dividends from, or proceeds
from the sale of, the shares of the Class A Common Stock beneficially owned by
him. Securities held by The Lorne Weil 1989 Trust, as described under the
caption "The Lorne Weil 1989 Trust" below, are not included in Mr. Weil's
beneficial holdings; and Mr. Weil disclaims beneficial ownership of such
securities pursuant to Rule 13d-4 under the Securities Exchange Act of 1934 (the
"Exchange Act").
Page 5 of 10
<PAGE>
Since the filing of Amendment No. 5, (i) the March 1992 Option and the
October 1992 Option to purchase 525,000 shares and 600,000 shares, respectively,
have become fully vested and are currently deemed to be beneficially owned by
Mr. Weil, and the expiration dates of such options were extended by five years;
(ii) Mr. Weil acquired the 1995 Option and the 1996 Option, 136,500 and 50,000
shares of which, respectively, are vested and currently deemed to be
beneficially owned by Mr. Weil; (iii) the Warrant was adjusted pursuant to the
anti-dilution provisions in the Warrant as a result of certain dilutive events
in 1995 and 1996, and the expiration date of such Warrant was extended by three
years; (iv) Mr. Weil and BT terminated the Swap on September 24, 1997; (v) Mr.
Weil purchased an aggregate of 250,100 shares of Class A Common Stock, 100 of
such shares on the open market, and 250,000 of such shares from the Issuer; and
(vi) Mr. Weil reached an agreement on January 7, 1998 with LTOS to purchase the
LTOS Warrant and executed a purchase agreement for such warrant on February 25,
1998.
The Lorne Weil 1989 Trust
The Lorne Weil 1989 Trust holds 314,790 shares of Class A Common Stock
(including 98,146 shares which may be acquired upon exercise of a warrant) (the
"Trust Shares") or .88% of the Class A Common Stock outstanding as of March 1,
1998. Under the terms of the trust agreement dated as of October 14, 1989 (the
"Trust Agreement"), Philip David, as trustee of The Lorne Weil 1989 Trust, holds
sole voting and investment power with respect to securities held by such trust;
and Mr. Weil, the grantor of The Lorne Weil 1989 Trust, is entitled to receive
the net income of such trust until October 14, 1999, the tenth anniversary of
the date of the Trust Agreement (see Item 6 below). Mr. Weil does not have or
share voting power or investment power with respect to the Trust Shares. The
Trust Shares, therefore, have not been aggregated, pursuant to 13d-3 under the
Exchange Act, in calculating the number of securities beneficially owned by Mr.
Weil. Mr. Weil disclaims beneficial ownership of the Trust Shares pursuant to
Rule 13d-4 under the Exchange Act.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to the Securities of the Issuer
On October 14, 1989, Mr. Weil entered into the Trust Agreement with
Philip David which established The Lorne Weil 1989 Trust. The Trust Agreement
provides that (i) Mr. David, as trustee, holds sole voting and investment power
with respect to securities held by the trust, and (ii) Mr. Weil, the grantor, is
entitled to receive the net income of the trust's assets until October 14, 1999,
the tenth anniversary of the Trust Agreement, at which time all undistributed
income will be distributed to Mr. Weil, and the principal of the trust as well
as all future income from such trust will be distributed to the beneficiaries of
the trust in accordance with the provisions of the Trust Agreement. The Trust
Agreement is filed as Exhibit C hereto and any description thereof is qualified
in its entirety by reference thereto. Pursuant to Rule 13d-4 under the Exchange
Act, Mr. Weil disclaims beneficial ownership of the securities held by The Lorne
Weil 1989 Trust.
Mr. Weil and BT entered into the Swap effective as of March 25, 1994,
pursuant to which (a) Mr. Weil delivered the Swap Shares to BT, and was
obligated to pay BT (i) at the end of each quarter during the five-year term of
the Swap (the "Term") the amount of dividends
Page 6 of 10
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declared during such quarter on the Swap Shares, (ii) at the end of the Term any
appreciation during the term in the price of the Swap Shares above $26.7769 per
share, and (iii) an annual fee in consideration for BT entering into the Swap;
and (b) BT was obligated to pay Mr. Weil (i) at the end of each quarter during
the Term an amount equal to the three month London Interbank Offered Rate
("LIBOR") less 2.125% of the Calculation Amount, as such term is defined in the
Confirmation Letter Agreement dated as of March 21, 1994 between A. Lorne Weil
and BT (included as Exhibit D hereto), and (ii) at the end of the Term an amount
equal to any depreciation during the Term in the price of the Swap Shares below
$26.7769 per share. The Swap also provided that Mr. Weil would retain voting and
investment power over the Swap Shares during the Term of the Swap. On September
24, 1997, BT and Mr. Weil terminated the Swap and in connection therewith, BT
returned the Swap Shares to Mr. Weil and paid Mr. Weil $12,388,450 in cash. See
Confirmation Letter Agreement included as Exhibit D, the final draft of the
International Swap Dealers Association, Inc. ("ISDA") Master Agreement between
A. Lorne Weil and BT included as Exhibit E hereto, and the executed ISDA Master
Agreement between A. Lorne Weil and BT included as Exhibit F hereto.
On January 7, 1998, Mr. Weil reached an agreement with LTOS to
purchase a warrant with respect to 491,881 shares of Class A Common Stock at a
purchase price of $.90 per share. On February 25, 1998, Mr. Weil and LTOS
executed a purchase agreement for such warrant. Mr. Weil acquired the LTOS
Warrant for an aggregate purchase price of $442,692.90. See Purchase Agreement
dated February 25, 1998 between LTOS and A. Lorne Weil included as Exhibit G
hereto.
Page 7 of 10
<PAGE>
Item 7. Material to be filed as Exhibits
Exhibit A - Modification Agreement to Autotote Corporation
Subordinated Debentures dated as of October 31,
1991./1/
Exhibit B - Form of Common Stock Purchase Warrant dated as of
October 31, 1991./1/
Exhibit C - The Lorne Weil 1989 Trust Agreement dated as of
October 14, 1989.
Exhibit D - Confirmation Letter Agreement dated as of March
21, 1994 between A. Lorne Weil and Bankers Trust
Company, London Branch./2/
Exhibit E - Final draft of the International Swap Dealers
Association, Inc. ("ISDA") Master Agreement dated
as of January 12, 1994 between A. Lorne Weil and
Bankers Trust Company./2/
Exhibit F - Executed Copy of the ISDA Master Agreement dated
as of January 12, 1994 between A. Lorne Weil and
Bankers Trust Company./3/
Exhibit G - Purchase Agreement dated February 25, 1998 between
Lawrence, Tyrrell, Ortale & Smith and A. Lorne
Weil.
The Exhibit Index appears on page 10.
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1 Incorporated by reference to Exhibit B to the Issuer's Schedule 13D
filed with the Commission by A. Lorne Weil on November 12, 1991 (File
No. 5-36154).
2 Incorporated by reference as an exhibit to Amendment No. 4 to the
Issuer's Schedule13D filed with the Commission by A. Lorne Weil on
March 24, 1994 (File No. 5-36154).
3 Incorporated by reference as an exhibit to Amendment No. 5 to the
Issuer's Schedule13D filed with the Commission by A. Lorne Weil on
April 15, 1994 (File No. 5-36154).
Page 8 of 10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
May 13, 1998
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Date
/s/ A. Lorne Weil
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Name: A. Lorne Weil
Page 9 of 10
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EXHIBIT INDEX
Exhibit
Exhibit A - Modification Agreement to Autotote Corporation
Subordinated Debentures dated as of October 31,
1991./1/
Exhibit B - Form of Common Stock Purchase Warrant dated as of
October 31, 1991./1/
Exhibit C - The Lorne Weil 1989 Trust Agreement dated as of
October 14, 1989.
Exhibit D - Confirmation Letter Agreement dated as of March
21, 1994 between A. Lorne Weil and Bankers Trust
Company, London Branch./2/
Exhibit E - Final draft of the International Swap Dealers
Association, Inc. ("ISDA") Master Agreement dated
as of January 12, 1994 between A. Lorne Weil and
Bankers Trust Company./2/
Exhibit F - Executed Copy of the ISDA Master Agreement dated
as of January 12, 1994 between A. Lorne Weil and
Bankers Trust Company./3/
Exhibit G - Purchase Agreement dated February 25, 1998 between
Lawrence, Tyrrell, Ortale & Smith and A. Lorne
Weil.
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1 Incorporated by reference to Exhibit B to the Issuer's Schedule 13D
filed with the Commission by A. Lorne Weil on November 12, 1991 (File
No. 5-36154).
2 Incorporated by reference as an exhibit to Amendment No. 4 to the
Issuer's Schedule13D filed with the Commission by A. Lorne Weil on
March 24, 1994 (File No. 5-36154).
3 Incorporated by reference as an exhibit to Amendment No. 5 to the
Issuer's Schedule13D filed with the Commission by A. Lorne Weil on
April 15, 1994 (File No. 5-36154).
Page10 of 10
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EXHIBIT C
LORNE WEIL 1989
TRUST
Dated: October 14 , 1989
between
LORNE WEIL,
as Grantor,
and
PHILIP DAVID,
as Trustee.
<PAGE>
TABLE OF CONTENTS
Page Number
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ARTICLE I
Disposition of Income and Principal............................. 1
ARTICLE II
Provisions Regarding the Trustees............................. 5
ARTICLE III
Payment or Application of Income
and Principal............................................. 7
ARTICLE IV
Investment and Administrative Provisions........................ 8
ARTICLE V
Common Disaster Provision ...................................... 12
ARTICLE VI
Additional Property............................................. 12
ARTICLE VII
Irrevocability.................................................. 13
ARTICLE VIII
Governing Law................................................... 14
ARTICLE IX
Exculpatory Provision........................................... 14
ARTICLE X
Accounting by the Trustees...................................... 14
ARTICLE XI
Consolidation of Trust Funds.................................... 15
ARTICLE XII
Change of Situs................................................. 16
ARTICLE XIII
Release of Powers............................................... 16
ARTICLE XIV
Acceptance of Trusteeship....................................... 18
Acknowledgments
Schedule A
<PAGE>
LORNE WEIL 1989 TRUST, dated as of the day of
,1989, between LORNE WEIL, as Grantor (the "Grantor"),
and PHILIP DAVID, as Trustee.
The Grantor hereby assigns, transfers and delivers to the Trustee the
property listed on Schedule A, the receipt of which is hereby acknowledged by
the Trustee, to be held in trust. The trusts hereby created shall be managed and
disposed of, together with the income and proceeds thereof, in accordance with
the provisions of this Agreement.
ARTICLE I
---------
Disposition of Income and Principal
-----------------------------------
A. The net income of the trust shall be paid to or applied for the
benefit of the Grantor in convenient installments but not less often than
annually.
B. Upon the tenth (10th) anniversary of the date of this Agreement,
the Trustees shall distribute (i) all accrued and undistributed income on hand
to the Grantor and (ii) the principal of the trust in accordance with the
provisions of Subdivision D of this Article.
C. If the Grantor shall die prior to the tenth (10th) anniversary of
the date of this Agreement, the princ- ipal of the trust remaining at the
Grantor's death, and all accrued and undistributed income, shall be distributed
to the legal representatives of the Grantor's estate to be disposed of as a part
of such estate.
D. Pursuant to the provisions of this Article, certain property is
to be disposed of in accordance with the provisions of this Subdivision D. Such
property shall be distributed in equal shares per stirpes to the Grantor's then
living issue, provided, however, that any share distributable to a child of the
Grantor who shall not have attained age
<PAGE>
forty (40) at that time shall not be distributed outright to such child, but
instead shall be held in a separate trust for his benefit in accordance with the
provisions of Subdivision E of this Article. If none of the Grantor's issue
shall be living at that time, such property shall be distributed to the legal
representatives of the estate of the Grantor's last living issue to be disposed
of as a part of such estate.
E. Pursuant to the foregoing provisions of this Article, certain
property is to be held by the Trustees in a separate trust for the benefit of a
child of the Grantor in accordance with the provisions of this Subdivision E.
The Trustees shall dispose of the income and principal of each such trust as
follows:
1. The net income of the trust shall be paid to or applied for
the benefit of the child of the Grantor for whom the trust was established (the
"Beneficiary"), in equal quarterly installments, as nearly as may be, or more
often in the discretion of the Trustees, provided, however, that the Trustees
may accumulate and add to principal the whole or any part of such net income,
any such capitalized income thereafter to be disposed of as a part of such
principal.
2. The Trustees are authorized, at any time and from time to
time, to pay to or apply for the benefit of the Beneficiary, such part or all of
the principal of the trust as the Trustees shall deem advisable in their
absolute discretion for any reason whatsoever, even though any such payment or
payments shall result in the termination of the trust.
3. When the Beneficiary shall attain age thirty (30),
one-third (1/3 ) of the principal of the trust remaining at that time shall be
distributed to the Beneficiary outright, provided, however, that if the
Beneficiary shall
-2
<PAGE>
have attained age thirty (30) but not age thirty-five (35) at the time this
trust is funded (or at the time property is added to this trust, as the case may
be) one-third (1/3) of the principal of the trust (or of such added property, as
the case may be) shall be paid to the Beneficiary at that time in lieu of the
payment specified in the first clause of this Paragraph 3.
4. When the Beneficiary shall attain age thirty-five (35),
one-half (1/2) of the principal of the trust remaining at that time shall be
distributed to the Beneficiary outright, provided, however, that if the
Beneficiary shall have attained age thirty-five (35) but not age forty (40) at
the time this trust is funded (or at the time property is added to this trust,
as the case may be) two-thirds (2/3) of the principal of the trust (or of such
added property, as the case may be) shall be paid to the Beneficiary at that
time in lieu of the payments specified in Paragraph 3 and in the first clause of
this Paragraph 4.
5. When the Beneficiary shall attain age forty (40), the
principal of the trust, at that time remaining, shall be distributed to the
Beneficiary.
6. If the Beneficiary shall die before attaining age forty
(40), the principal of the trust remaining at that time shall be distributed in
equal shares per stirpes to the Beneficiary's then living issue or, if none, in
equal shares per stirpes to the then living issue of the Grantor, provided,
however, that any property distributable to a child of the Grantor who shall not
have attained age forty (40) at that time shall not be distributed outright to
such child but instead shall be added to the trust for such child pursuant to
the provisions of this Subdivision E of Article I. If none of
-3
<PAGE>
the Grantor's issue shall be living at that time, such property shall be
distributed to the legal representative of the Beneficiary's estate to be
disposed of as a part of such estate.
F. If at any time more than one trust is held or to be held pursuant
to Subdivision E of this Article I for any one Beneficiary, then any two or more
of such trusts may be consolidated and held as a single trust for his benefit
pursuant to Subdivision E of this Article I.
G. Notwithstanding anything in this Article I to the contrary, if the
Trustees determine, in their absolute discretion, that it would not be in the
best interests of a child of the Grantor to distribute any part or all of the
principal of the trust created for his benefit at the time specified in
Paragraphs 3, 4 and 5 of Subdivision E of this Article I or to distribute to
such child any part or all of the property, if any, distributable to such child
pursuant to the provisions of Subdivision D of this Article I or Paragraph 6 of
Subdivision E of this Article I, the Trustees are authorized to retain such part
or all of the trust principal or such property, as the case may be, and to hold
it in trust for such period of time as they shall deem advisable, including for
the lifetime of such child, until the Trustees, in their absolute discretion,
shall determine that such distribution would no longer be against such child's
best interests. During such period of trust, the Trustees shall have the same
powers over income and principal as set forth in Paragraphs 1 and 2 of
Subdivision D of this Article I.
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<PAGE>
ARTICLE II
----------
Provisions Regarding the Trustees
---------------------------------
A. If PHILIP DAVID shall cease for any reason to act as Trustee
hereunder, KIM E. BAPTISTE shall act as successor Trustee hereunder.
B. The individual Trustees hereunder at any time in office, are
authorized, at any time and from time to time, by an instrument in writing,
signed and acknowledged, to appoint an individual or a series of individuals or
a bank or trust company to act as Trustee hereunder in succession to or in
addition to any Trustee herein appointed or to any other Trustee appointed
pursuant to the power herein granted. A successor Trustee may be appointed to
succeed a particular Trustee or to succeed any Trustee.
C. Any Trustee may at any time resign by an instru- ment in writing,
signed and acknowledged and delivered to the remaining or next successor
Trustee, as the case may be.
D. Any instrument appointing a successor Trustee shall be revocable by
the individual Trustees at the time being in office at any time prior to the
acceptance of such appointment and the assumption of the duties of Trustee by
the appointee. In the event that the individual Trustees, at any time in office,
shall have executed more than one instrument appointing a successor Trustee,
then the instrument which shall bear the most recent date and shall be unrevoked
shall govern.
E. PHILIP DAVID shall not receive any commissions or other
compensation for the performance of his duties as a Trustee hereunder, provided,
however, that he shall be entitled to reimbursement for reasonable expenses
incurred in connection with the performance of such duties.
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<PAGE>
F. The title, powers, duties, immunities and discretion conferred
upon the Trustees by this Agreement shall continue after the termination of the
trust until final distribution.
G. No bond or other security shall be required of any Trustee for the
faithful performance of his, her or its duties, any law of any state or
jurisdiction to the contrary notwithstanding.
H. The terms "Trustee" and "Trustees" wherever used in this Agreement
shall be taken to mean the trustees or trustee for the time being in office and
each such Trustee shall have the same rights, powers, duties, authority and
privileges, whether or not discretionary, as if originally appointed hereunder,
except as may be otherwise expressly provided.
I. Any individual Trustee may, at any time and from time to time, by
an instrument in writing, delegate any or all of his or her rights, powers,
duties, authority and privileges, whether or not discretionary, to any other
Trustee for such period or periods of time as may be specified in such written
instrument, provided, however, that any such instrument shall be revocable at
any time and that any Trustee who is granted any discretionary power hereunder
may not delegate such discretionary power to any Trustee who is not granted such
discretionary power.
J. No beneficiary who is acting as a Trustee here-under shall
exercise or participate in the exercise of any discretionary power to distribute
to himself or herself the income or principal of any trust created hereunder.
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<PAGE>
K. No Trustee shall use the income or principal of any trust created
hereunder to or for his or her own pecuniary benefit or for the discharge of his
or her legal obligations, including tax obligations.
L. Ministerial duties of the Trustees (such as signing of checks,
execution of brokerage transactions relating to securities or commodities, and
the like) may be executed by any one Trustee.
ARTICLE III
-----------
Payment or Application of Income and Principal
----------------------------------------------
A. The Trustees are authorized in their absolute
discretion and notwithstanding the foregoing provisions of this
Agreement:
1. In any case in which they are authorized or directed to
pay or distribute income or principal to any beneficiary, to apply the whole or
any part of such income and, in case such beneficiary shall be under the age of
twenty-one (21) years or, by reason of advanced age, illness or other physical
or mental incapacity, incapable of handling and disposing of his or her
property, as determined by the Trustees (other than such beneficiary) in their
absolute discretion, the whole or any part of such principal, directly to the
care, comfort, maintenance, support, education or use of such beneficiary,
instead of paying or distributing the same to such beneficiary or to pay or
distribute the whole or any part of such income or principal payable or
distributable to any such beneficiary to (i) the parents of such beneficiary,
(ii) the guardian, committee or other legal representative, wherever appointed,
of such beneficiary, (iii) the person with whom such beneficiary shall reside,
(iv) any other person having the care and control of such beneficiary, (v) any
adult person or bank or trust company to hold as custodian for any minor
beneficiary under the Uniform Gifts to Minors Act or similar statute of any
jurisdiction, or (vi) such beneficiary personally, the receipt of the person to
whom any such payment or distribution is so made being a sufficient discharge
therefor even though any one of the Trustees may be such person.
2. To defer, in whole or in part, payment or distribution of
any property to which a minor may be entitled until such minor shall have
attained the age of twenty-one (21) years, or to make such payment or
distribution at any time or from time to time during the minority of such minor,
holding the whole or the undistributed portion thereof as a separate and
distinct share for such minor absolutely with all of the powers and authority
set forth in Article IV of this Agreement; and
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<PAGE>
3. To accumulate and invest the whole or any part of any
income to which a minor may be entitled for the benefit of such minor, to pay,
distribute or apply any such accumulated income to or for the benefit of such
minor as provided in Paragraph 1 of this Subdivision A at any time during
minority, and to pay or distribute any balance thereof to such minor when such
minor shall have attained the age of twenty-one (21) years or, if such minor
shall die before attaining such age, to the executor, administrator or other
legal representative of the estate of such minor or, if there shall be no such
legal representative, to such persons as would have inherited the same, in the
same proportions as they would have taken under the law of the state in which
such minor shall die domiciled, if such minor had died intestate and the
absolute owner thereof.
B. No disposition, charge or encumbrance on the income or principal
of any trust created under this Agreement, or any part thereof, by any
beneficiary by way of anticipation shall be valid or in any way binding upon the
Trustees, and no beneficiary shall have the right to assign, transfer, encumber
or otherwise dispose of such income or principal or any part thereof until the
same shall be paid or distributed to such beneficiary by the Trustees, and no
income or principal or any part thereof shall in anywise be liable to any claim
of any creditor of any such beneficiary.
C. The word "minor" whenever used in this Agreement shall be taken
to mean any person who has not attained the age of twenty-one (21) years.
Whenever used in this Agreement, the words "child" and "children" shall not
include grandchildren or more remote descendants; the word "issue" shall include
descendants of whatever degree; the words "child", "children", and "issue" shall
include persons who shall have been legally adopted prior to attaining the age
of fourteen (14) years and any children or issue of children or issue so legally
adopted. Unless the context requires otherwise, words in the singular number
include the plural, words in the plural number include the singular, words of
the masculine gender include the feminine and words of the feminine gender
include the masculine.
ARTICLE IV
----------
Investment and Administrative Provisions
----------------------------------------
The Trustees are authorized in their absolute discretion with respect
to any property at any time held or acquired by them, including any accumulated
income, and in addition to all powers granted to them by law:
A. To sell or otherwise dispose of the same at such
times, in such manner, for cash or on credit, and upon such terms and
conditions, as they shall deem advisable;
B. To make such purchases or exchanges at such times, in such
manner and upon such terms and conditions as they shall deem advisable, and to
invest in such bonds, preferred or common stocks, mortgages, partnerships
(general or limited), joint ventures, investment trusts, or common trust funds
(regardless of any compensatory or other relation-
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<PAGE>
ship the Trustees may have with relation thereto), or other evidences of rights,
interests or obligations, or in such other property, real or personal, including
interests of any kind in natural resources (and including interests commonly
known as working interests in oil, gas or any other mineral) as they shall deem
advisable, and without regard to any law concerning the investment of trust
funds or to the amount which shall be invested in any one security or in any one
kind of investment and even though all or substantially all of such investments
may be in common stocks or other equity securities;
C. To exercise in person or by general or limited proxy all
voting and other rights, powers and privileges, and to take all steps to realize
all benefits with respect to stocks or other securities including the power to
enter into or oppose, alone or with others, voting trusts, mergers,
consolidations, foreclosures, liquidations, reorganizations or other changes in
the financial structure of any corporation;
D. To assent to or participate in any reorganization,
readjustment, recapitalization, consolidation, merger, dissolution, sale or
purchase of assets, lease, mortgage, contract or other action or proceeding by
any corporation; to deposit securities or other property under, or become a
party to, any agreement or plan for any such action or proceeding or for the
protection of holders of securities; to subscribe to new securities issued
pursuant to any such action or proceeding; to delegate discretionary powers to
any reorganization, protective or similar committee; to exchange any property
for any other property in connection with any of the foregoing; and to pay any
assessments or other expenses in connection with any of the foregoing;
E. To manage, maintain, improve, lease (for any term whether
or not extending beyond the term of any trust created by this Agreement or the
term fixed by any law), mortgage, partition or otherwise dispose of any real or
personal property or any interest therein, to make alterations in any buildings
now or hereafter located on any such property or to demolish the same, to
construct new buildings, all in such manner and upon such terms and conditions
as they shall deem advisable, and to enter into contracts or grant options with
respect to any of the foregoing;
F. To foreclose mortgages and bid in property under
foreclosure or to take title to property by conveyance in lieu of foreclosure,
either with or without payment of consideration; to continue mortgage
investments after maturity, either with or without renewal or extension, upon
such terms as they shall deem advisable; to consent to the modification, renewal
or extension of any note whether or not secured, or any bond or mortgage, or of
any term or provision thereof, or of any guarantee thereof, or to the release of
such guarantee; to release obligors on bonds secured by mortgages or to refrain
from instituting suits or actions against such obligors for deficiencies; to use
such part of the property held under this Agreement as they shall deem advisable
for the protection of any investment in real property or in any mortgage on real
property;
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<PAGE>
G. To abandon any property, real or personal, which they shall
deem to be worthless or not of sufficient value to warrant keeping or
protecting; to abstain from the payment of taxes, water rents, assessments,
repairs, maintenance and upkeep of any such property; to permit any such
property to be lost by tax sale or other proceedings, or to convey any such
property for a nominal consideration or without consideration;
H. To adjust, compromise and settle or refer to arbitration
any claim in favor of or against any trust created by this Agreement, and to
institute, prosecute or defend such legal proceedings as they shall deem
advisable;
I. To borrow money from themselves or from any other party,
whether for the purpose of raising funds to pay taxes or otherwise, and to give
or not to give security therefor, all upon such terms and for such periods as
they shall deem advisable;
J. To employ and pay the compensation of such accountants,
custodians, experts, counsel, legal or investment, and other agents as they
shall deem advisable and to delegate discretionary powers to, and to rely upon
information or advice furnished by, such accountants, custodians, experts,
counsel or other agents, provided, however, that if a bank or trust company
shall be acting as a Trustee hereunder, no payments shall be made to such bank
or trust company for its custodian or investment counsel services;
K. To carry on any business owned by the Grantor for such
period of time as they shall deem advisable, or to sell or liquidate the same;
L. To set up reserves for taxes, assessments, insurance,
repairs, depreciation, obsolescence and general maintenance on any buildings or
other property held by them out of rents, profits or other income receivedon
such buildings or other property;
M. To hold property in their name as Trustees or in the name
of a nominee or unregistered and in such form as will pass by delivery;
N. To make any division, distribution or partition of property
in kind or otherwise and to allot any property, including an undivided interest
therein, to any trust, part, fund or share, whether or not the same kind of
property is allotted to other trusts, parts, funds or shares;
O. To drill, test, explore, mine, develop and otherwise
exploit any oil, gas, mineral or other interests of any kind in natural
resources (including interests commonly known as working interests in oil, gas
or any other mineral), and to enter into pooling, unitization, repressurization
and any other type of agreement relating to the development, operation and
conversation of mineral properties which, in their discretion, is for the best
interests of any trust created hereunder;
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<PAGE>
P. To make any payment or distribution required or authorized
under this Agreement either wholly or partly in kind and to cause any share to
be composed of cash, property or undivided fractional interests in property
different in kind from any other share, pro rats or non pro rata, without regard
to differences in the tax bases of any such property;
Q. To divide the principal of any trust created hereunder
which has an inclusion ratio, as defined in Section 2642(a)(1) of the Internal
Revenue Code of 1986, as amended from time to time (the "Code") of neither one
(1) nor zero into two (2) separate trusts representing two (2) fractional shares
of the property being divided, one to have an inclusion ratio of one (1) and the
other to have an inclusion ratio of zero;
R. With respect to all or any part of the principal of any
trust created hereunder (including a pecuni- ary amount), the Trustees (other
than the Grantor and a Trustee who is also a beneficiary of the affected trust)
are authorized, by an instrument in writing filed with the trust records, (a) to
give any beneficiary hereunder a general testamentary power of appointment
within the meaning of Section 2041 of the Code (including a power that requires
the consent of the Trustees other than a beneficiary of the affected trust) over
any part or all of the principal of the trust held for such beneficiary; (b) to
eliminate such power for all or any part of such principal as to which such
power was previously created; (c) to release irrevocably the right to eliminate
such power; and (d) to divide any trust into two (2) fractional shares based
upon the then portion of the trust that would be includible in the gross estate
of the beneficiary holding such power if he died immediately before such
division and each such part shall be administered as a separate trust unless the
Trustees shall, in their sole discretion, thereafter combine such separate
trusts into a single trust which they may do. In authorizing such action it is
the Grantor's hope (but he does not direct) that a general power will be kept in
effect when the Trustees believe the inclusion of the property affected thereby
in the beneficiary's gross estate may achieve a significant savings in transfer
taxes by having an estate tax rather than a Chapter 13 tax imposed on the
property subject to the general power or significant income tax benefits; and
S. Generally, to exercise all such rights and powers and to do
all such acts and to enter into all such agreements as persons owning similar
property in their own right might lawfully exercise, do or enter into.
In any case in which the Trustees are required or permitted to
divide any property held hereunder or any investment made hereunder into shares
they shall not be required physically to divide any of such property or
investments but may assign undivided interests therein to the various shares.
No person dealing with the Trustees shall be bound to see to the
application or disposition of cash or other property transferred to the
Trustees, or to inquire into the authority for or propriety of any action by the
Trustees.
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<PAGE>
Notwithstanding any contrary provision in this Agreement, in the
event that any non-income producing property shall be held in the trust for the
benefit of the Grantor under Article I of this Agreement, the Trustees shall,
upon the written request of the Grantor, convert such property into income
producing property within a reasonable period of time.
The Trustees are authorized, in their absolute discretion,
irrespective of whether they may also be serving as legal representatives of the
Grantor's estate, to purchase on behalf of any trust hereunder any property,
real, personal or mixed, tangible or intangible, and wherever situated,
belonging to the estate of the Grantor or to make loans or advancements, secured
or unsecured, to the legal representatives of the estate of the Grantor in order
to provide funds for the payment of any taxes, administration expenses, or other
indebtedness of such estate. Any such purchases, loans and advancements shall be
made upon such terms and conditions as the Trustees in their discretion deem
appropriate, and the Trustees shall not be liable for any loss to any trust
hereunder for having acted in accordance with this Paragraph.
ARTICLE V
---------
Common Disaster Provision
-------------------------
In the event that any beneficiary and any person upon whose death
such beneficiary shall become entitled to receive either income or principal
under this Agreement shall die in a common accident or disaster or under such
circumstances that it is difficult or impracticable to determine who survived
the other, then for the purposes of this Agreement such beneficiary shall be
deemed to have predeceased such person.
ARTICLE VI
----------
Additional Property
-------------------
If at any time after the tenth (10th) anniversary of the date of
this Agreement, additional property of any kind acceptable to the Trustees shall
be assigned and transferred to them by the Grantor or any other person, inter
vivos or by will admitted to probate, or delivered to the Trustees to be added
to the trust, the Trustees shall accept such property and hold the same as part
of the trust estate, subject to the terms and conditions of this Agreement.
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<PAGE>
ARTICLE VII
-----------
Irrevocability
--------------
A. This Agreement and the trusts hereby created shall be irrevocable
and shall not be subject to modification or amendment, except to the limited
extent provided in Subdivision B of this Article.
B. It is intended that after the tenth (10th) anniversary of the date
of this Agreement, the Grantor shall not be treated as the owner of any portion
of the trust for federal income tax purposes pursuant to Sections 671 through
677 of the Code and the regulations promulgated thereunder, and that the Grantor
shall not have retained any interest in or power with respect to property
transferred in trust hereunder which interest or power would cause such property
to be included in the Grantor's gross estate for federal estate tax purposes
pursuant to Sections 2033, 2035, 2036, 2037, 2038, 2041 or 2042 of the Code and
the regulations promulgated thereunder or pursuant to any other provision of
law. This instrument shall be construed in accordance with the foregoing
statement of intent and, subject thereto, it may be amended by an instrument
executed by all of the Trustees, but only to the extent that any purported
amendment shall: (i) clarify the meaning of any provision so as to avoid the
necessity of instructions by a court; (ii) alter or add to the administrative
powers of the Trustees for the better accomplishment of the trust purposes; and
(iii) conform such provisions to laws or regulations (including any provisions
of the Code or any regulation promulgated thereunder) affecting the federal or
state gift or estate tax consequences of such trust. All modifications or
amendments of this Agreement shall be effected by written instrument signed and
acknowledged by all of the Trustees.
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<PAGE>
ARTICLE VIII
------------
Governing Law
-------------
All questions pertaining to the validity, construction and
administration of this Agreement and the trusts hereby created shall be
determined in accordance with the laws of the State of New York.
ARTICLE IX
----------
Exculpatory Provision
---------------------
No individual Trustee acting hereunder shall be liable for any
loss or damage which may happen in connection with the execution of his or her
duties under this Agreement without his or her willful default or deliberate
wrongdoing, unless such loss or damage shall be occasioned by the willful
violation of an express provision hereof, and shall not be liable or responsible
to any person or entity beneficially interested in the trust for any loss or
depreciation which may arise from any investment made in accordance with this
Agreement or which may be occasioned by the exercise of any discretionary power
authorized herein.
ARTICLE X
---------
Accounting by the Trustees
--------------------------
During the lifetime of the Grantor, the Trustees may, at any time
and from time to time, render an account of their transactions as Trustees to
the Grantor with respect to any trust created hereunder.
After the death of the Grantor, the Trustees may, at any time and
from time to time, render an account of their transactions as Trustees with
respect to any trust created hereunder to the person or persons entitled to the
current income thereof and to any one or more of the persons presump-
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<PAGE>
tively entitled to the next eventual estate in whole or in part as to principal.
Such designated person or persons shall have full power to settle
finally any such account and, on the basis of such account, to release the
Trustees, individually and as Trustees, from all liability, responsibility or
accountability for their acts or omissions as Trustees. In the event that any
one or more of such designated persons shall be an infant or under other legal
disability, his or her guardian or committee in any jurisdiction or, in the case
of such a person without a guardian or committee, his or her parents or either
of them, shall have full power to act with respect to any such settlement and
release. Any such settlement and release shall be binding and conclusive upon
all persons having or claiming any interest under this Agreement and shall have
the force and effect of a final decree of a court of competent jurisdiction
rendered in an appropriate proceeding for the settlement of such an account in
which jurisdiction was obtained of all necessary and proper parties.
The foregoing provisions, however, shall not preclude the Trustees
from having their accounts judicially settled if they shall so desire.
ARTICLE XI
----------
Consolidation of Trust Funds
----------------------------
In any case in which the Trustees are directed by any provision
hereunder to hold property in trust for any beneficiary or beneficiaries for
whom other property is being held or is to be held in a trust with similar terms
under the Will or an inter vivos instrument of the Grantor or the Grantor's
spouse they may, after the tenth (10th) anniversary of the date of this
Agreement, add such property to the principal of such
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<PAGE>
trust, such property to be disposed of in all respects as part of such
principal, instead of holding such property in a separate trust hereunder, as
the Trustees, in their absolute discretion, shall deem advisable, whether to
achieve economies of administration or for tax reasons or for any other reason.
ARTICLE XII
-----------
Change of Situs
---------------
Notwithstanding the foregoing provisions of this Agreement, the
situs of any of the trusts created hereunder may be transferred, at any time and
from time to time, to such other state of the United States of America or to
such other country or jurisdiction, as the Trustees shall deem advisable in
their absolute discretion, without the approval of any court unless required by
applicable law and without the filing of any bond. The Trustees are hereby
authorized to take whatever action may be necessary to effect a transfer of
situs. If court approval is required to effect a transfer of situs, it is the
Grantor's intention and desire that the court accept the determination of the
Trustees even if one or more trust beneficiaries disagree with such
determination. A transfer of situs by the Trustees shall be evidenced by an
instrument in writing, signed and acknowledged by them. From and after such
transfer of situs, the administration of the trust or trusts affected shall be
governed by the law of the new situs.
ARTICLE XIII
------------
Release of Powers
-----------------
Any beneficiary or Trustee hereunder may, at any time, release any
power of appointment or power to distribute principal or income or power to
terminate any trust or any other similar power given to such beneficiary or
Trustee, as
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<PAGE>
the case may be, by this Agreement, either with or without consideration, with
respect to the whole or any part of the property subject to the power, and also
in such manner as to reduce or limit the persons or objects or classes of
persons or objects in whose favor such power would otherwise be exercisable, by
written instrument signed by the beneficiary or Trustee releasing such power and
delivered to the Trustees. In the event of the release of any power by any
Trustee pursuant to the provisions of this Article, the remaining Trustees may
thereafter exercise such power (other than any such power which may not be
vested in such remaining Trustees). The release of any power by any Trustee
pursuant to the provisions of this Article shall not be binding upon any Trustee
who may thereafter act hereunder, provided, however, that the release of any
power by all of the Trustees or a sole Trustee, as the case may be, then in
office, shall be binding upon any and all Trustees who may thereafter act
hereunder if such Trustees or sole Trustee, as the case may be, shall
specifically so provide by written instrument signed by such Trustees or sole
Trustee, as the case may be.
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<PAGE>
ARTICLE XIV
-----------
Acceptance of Trusteeship
-------------------------
PHILIP DAVID hereby accepts the trusts created by this Agreement and
agrees to act in accordance with the terms and provisions hereof.
IN WITNESS WHEREOF, LORNE WEIL has hereunto set his hand and seal as
Grantor, and PHILIP DAVID has hereunto set his hand and seal as Trustee as of
the date and year first above written.
/s/ Lorne Weil [L.S.]
---------------------------
LORNE WEIL, Grantor
/s/ Philip David [L.S.]
---------------------------
PHILIP DAVID, Trustee
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<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 28th day of October , 1989, before me person- ally appeared
LORNE WEIL, to me known and known to me to be the person described in and who
executed the foregoing instrument, and he duly acknowledged to me that he
executed the same.
/s/ Carol Ann Sacha Martin
--------------------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 27thday of October , 1989, before me personally appeared PHILIP
DAVID, to me known and known to me to be the person described in and who
executed the foregoing instrument, and he duly acknowledged to me that he
executed the same.
/s/ Dominic A. Petito
--------------------------
Notary Public
<PAGE>
SCHEDULE A
<PAGE>
EXHIBIT G
PURCHASE AGREEMENT
Purchase Agreement dated this 25th day of February, 1998, but as of
January 7th, 1998, by and between Lawrence, Tyrrell, Ortale and Smith ("Seller")
and A. Lorne Weil ("Buyer").
WHEREAS, the Seller wishes to sell to the Buyer, and the Buyer wishes
to buy from the Seller, warrants (the "Warrant") to purchase 491,881 shares of
the Class A Common Stock of Autotote Corporation, a Delaware Corporation, par
value $.01 per share (the "Warrant Shares");
WHEREAS, Buyer in a Memorandum dated January 7 had reached an
understanding with Seller on the terms of purchase contemplated herein, subject
to determining the appropriate method of complying with Securities Exchange Act
Section 16(b);
WHEREAS, Seller, as of today's date, has agreed to comply with said
Section 16(b) by arranging for the payment of a check to Autotote Corporation
for the short-swing profit resulting from the transaction contemplated herein;
WHEREAS, contemporaneous with the January 7th Memorandum, Larry J.
Lawrence, a Director of Autotote Corporation and a general partner of the
general partner of Seller, had purchased from Thomas H. Lee or an affiliate,
approximately 500,000 warrants similar in terms to the Warrants, for the same
consideration as provided in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
I. THE WARRANT.
(a) The Seller had agreed, on January 7, 1998, to sell the Warrant to the Buyer,
and Buyer had agreed, on said date, to purchase from the Seller the Warrant at a
price of $.90 per Warrant Share or an aggregate of $442,692.90 for all the
Warrant Shares.
(b) The closing of the purchase, sale and delivery of the Warrant shall take
place at the offices of Autotote Corporation, 750 Lexington Avenue, New York,
New York 10022 on a date to be mutually agreed (such closing being called the
"Closing" and such date and time being called the "Closing Date").
(c) The Buyer shall pay the purchase price for the Warrant by delivery of a
check or by a wire transfer of same day funds to such account as Seller shall
specify to Buyer in writing. At the Closing, the Seller shall deliver the
Warrant to the Buyer together with the executed assignment form.
1
<PAGE>
II. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer hereby represents to the Seller that :
(a) he is an "accredited investor" within the meaning of Rule 501 of the
Regulation D under the Securities Act of 1933, as amended ("the "Securities
Act").
(b) he has sufficient knowledge and experience in investing in companies similar
to the Company in terms of the Company's stage of development so as to be able
to evaluate the risks and merits of his investment in the Company and he is able
financially to bear the risks thereof.
(c) he has obtained copies of all of the following items and has had an
opportunity to review them prior to the execution and delivery of this
Agreement: (i) the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC") for the most recent fiscal year
(including its financial statements included or incorporated by reference
therein), (ii) the Company's Quarterly Reports on Form 10-Q filed with the SEC
for each of the quarters ended since the date of such Annual Report, (iii) the
Company's Current Reports on Form 8-K, if any, filed with the SEC during the
most recent twelve months, (iv) the Company's Proxy Statements filed with the
SEC during the most recent fiscal year, (v) the Company's Annual Report to
Stockholders for the most recent fiscal year, and, (vi) the Company's
Registration Statements filed with the SEC during the most recent twelve months.
(d) the Warrant is being acquired for his own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof other than in compliance with the Securities Act and
applicable state securities laws.
(e) he understands that (i) neither the Warrant nor the Warrant Shares have been
registered under the Securities Act in reliance upon one or more exemptions from
the registration requirements of the Securities Act; (ii) the Warrant and
Warrant Shares must be held indefinitely unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from such registration;
(iii) the Warrant and the Warrant Shares will bear a legend to such effect; and,
(iv) the Company will make a notation of its transfer books to such effect.
(f) he has no contract, arrangement or understanding with any broker, finder or
similar agent with respect to any of the transactions contemplated by this
Agreement; and,
(g) he is a natural person, that he has full legal right, power and authority to
purchase the Warrant and that this Agreement has been fully authorized by all
necessary action on his part and is a valid and binding agreement, enforceable
against the Buyer in accordance with its terms.
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III. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Buyer that:
(a) it has good and marketable title to the Warrant being sold hereunder, and is
selling and delivering such Warrant to the Buyer free and clear from any liens,
claims, options or other encumbrances.
(b) it has acquired the Warrant from the Company at least two years prior to the
date hereof.
(c) it has not, directly or indirectly, offered to sell or solicited any offer
to buy the Warrant by means of any general advertising or general solicitation.
(d) it has full legal right, power and authority to transfer the Warrant
hereunder, and that this Agreement has been duly authorized by all necessary
action on his part, including without limitation obtaining all necessary
consents by, and making all necessary disclosures to, Seller's investors and
partners in the fund, and is a valid and binding agreement, enforceable against
the Seller in accordance with its terms, except as enforcement may be limited by
general principles of equity or by bankruptcy, insolvency, moratorium and other
laws affecting the enforcement of creditors' rights generally. This agreement
shall be executed on behalf of Seller by both Larry J. Lawrence, and by another
general partner of Seller' general partner.
IV. PAYMENT OF SHORT-SWING PROFIT.
Larry J. Lawrence, the owner of a 6.93% pecuniary interest in the Seller, shall,
at the Closing, deliver a check to the order of Autotote Corporation in the
amount of $8,521.84. Said amount represents a short-swing profit of $.25 per
share on 34,087.35 Autotote Corporation common shares purchased by Larry J.
Lawrence and matched with his pecuniary interest in the Warrant shares sold by
Seller.
V. MISCELLANEOUS.
(a) Each of the parties hereto shall bear his own expenses in connection with
the transactions contemplated hereby, whether or not such transactions shall be
consummated.
(b) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
(c) This Agreement constitutes the sole and entire agreement of the parties with
respect to the subject matter hereof.
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(d) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(e) This Agreement may not be amended or modified, and no provision hereof may
be waived, without the prior written consent of both parties. Any such waiver
may be given subject to the satisfaction of conditions stated therein and shall
be effective only in the specific instance and for the specific purpose for
which given.
(f) If any provision of this Agreement shall be declared void or unenforceable
by any judicial or administrative authority, the validity of any other provision
and of the entire Agreement shall not be affected thereby.
(g) The titles and subtitles used in this agreement are for convenience only and
shall have no other effect.
(h) Each of the parties hereto agrees to execute and deliver such other
documents and instruments and to take such further action as may be reasonably
necessary to carry out fully the intent and purposes of this Agreement,
including without limitation the registration of transfer of the Warrant to the
Buyer on the records of the Company.
IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of
the day and year first written above.
LAWRENCE, TYRRELL, ORTALE and SMITH
By: Lawrence Venture Partners,
General Partner
By: /s/Larry J. Lawrence
---------------------------
Name: Larry J. Lawrence
Title: General Partner
By: /s/Richard W. Smith
---------------------------
Name: Richard W. Smith
Title: General Partner
/s/A. Lorne Weil
-----------------
A. Lorne Weil
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