SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)
POWER CONTROL TECHNOLOGIES INC.
-------------------------------
(Name of issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(Title of class of securities)
739228-10-4
-------------------------------------
(CUSIP number)
Glenn P. Dickes
625 Madison Avenue - 11th Floor
New York, New York 10021
(212) 572-8500
---------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
with a copy to
Alan C. Myers, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
OCTOBER 23, 1996
-----------------------------
(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 ( ).
This statement amends and supplements the
Statement on Schedule 13D, as amended (the "Schedule
13D"), filed with the Securities and Exchange Commission
by Mafco Consolidated Group Inc., a Delaware corporation,
C&F (Parent) Holdings Inc., a Delaware corporation, and
Mafco Holdings Inc., a Delaware corporation, in
connection with their ownership of shares of common
stock, par value $.01 per share, of Power Control
Technologies Inc., a Delaware corporation. Unless
otherwise defined herein, all capitalized terms used
herein shall have the meanings ascribed to them in the
Schedule 13D.
Item 4. Purpose of Transaction.
Item 4 is hereby amended to add the following at the
end thereof:
"On October 23, 1996, Mafco entered into a
Stock and VSR Purchase Agreement (the "Purchase
Agreement"), dated as of October 23, 1996, with PCT and
PCT International Holdings Inc., a Delaware corporation
and wholly owned subsidiary of PCT ("Purchaser"),
pursuant to which Purchaser has agreed to purchase from
Mafco, and Mafco has agreed to sell and issue to
Purchaser, all the issued and outstanding shares (the
"Shares") of capital stock of Flavors Holdings Inc., a
Delaware corporation and wholly owned subsidiary of Mafco
("Flavors"), and 23,156,502 Value Support Rights (each a
"VSR" and collectively, the "VSRs") to be issued pursuant
to the Value Support Rights Agreement (the "VSR
Agreement") to be entered into between Mafco and American
Stock Transfer & Trust Company, as trustee. Flavors,
through its wholly owned subsidiary Mafco Worldwide
Corporation, a Delaware corporation, operates Mafco's
licorice extract and other flavoring agents manufacturing
and distributing business.
In consideration for the Shares and VSRs,
Purchaser has agreed to pay Mafco cash in the amount of
$180 million. In addition, Purchaser shall pay Mafco
deferred cash payments of $3.6 million on June 30, 1997
and $3.5 million on December 31, 1997.
It is anticipated that the VSRs will be
distributed to all holders of PCT Common Stock and PCT
Preferred Stock promptly following the effectiveness of a
registration statement to be filed by Mafco with the
Securities and Exchange Commission. Each VSR, subject to
certain limitations, entitles its holder to receive a
payment, if any, of up to $3.25 per VSR if the 30-Day
Average Market Price (as defined in the VSR Agreement) of
PCT Common Stock is below $11.00 per share on January 1,
1999; provided, however, Mafco has an optional right to
call the VSRs each April 1, July 1, October 1 and January
1 from and including April 1, 1997 to and including
October 1, 1998 (each, an "Optional Call Date"). If
Mafco calls the VSRs on or before January 1, 1998,
holders will be entitled to receive a payment of at least
$0.50 and up to $3.25 per VSR if the 30-Day Average
Market Price is below $10.25 per share as of such
Optional Call Date. If Mafco calls the VSRs after
January 1, 1998, each VSR will entitle its holder to a
payment, if any, of up to $3.25 per VSR if the 30-Day
Average Market Price is below $11.00 per share on such
Optional Call Date.
Pursuant to the Purchase Agreement, Mafco has
agreed to indemnify Purchaser, its subsidiaries and
affiliates and certain other persons against damages
resulting from or arising out of any breach of any
representation or warranty or failure to perform any
covenant or agreement made by Mafco under the Purchase
Agreement. Similarly, PCT and Purchaser, jointly and
severally, have agreed to indemnify Mafco, its
subsidiaries and affiliates and certain other persons
against damages resulting from or arising out of any
breach of any representation or warranty or failure to
perform any covenant or agreement made by or on behalf of
PCT or Purchaser under the Purchase Agreement or any
documents delivered by PCT or Purchaser in connection
therewith. Notwithstanding the foregoing, neither Mafco
nor PCT and Purchaser will be required to indemnify the
other unless the cumulative total of all such damages
exceeds $2,000,000 and then only to the extent the
cumulative total of such damages exceeds $2,000,000
(excluding tax liability); provided, however, that the
maximum amount that Mafco or PCT and Purchaser will be
liable for under the Purchase Agreement is $100,000,000
(excluding tax liability).
The Purchase Agreement contains a number of
representations, warranties and covenants by the parties.
Consummation of the transactions contemplated by the
Purchase Agreement is subject to a number of conditions,
and the Purchase Agreement may be terminated under
certain circumstances, all as set forth in the Purchase
Agreement.
A copy of each of the Purchase Agreement and
the VSR Agreement is attached hereto as Exhibit 7 and
Exhibit 8, respectively, and each is incorporated herein
by reference. The foregoing summary of each of the
Purchase Agreement and the VSR Agreement does not purport
to be complete and is qualified in its entirety by
reference to the provisions of such agreements.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of
the Issuer.
Item 6 is hereby amended as follows:
The information set forth in Item 4 is hereby
incorporated by reference.
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby amended to add the following at the
end thereof:
Exhibit 7. Stock and VSR Purchase Agreement,
dated as of October 23, 1996, by and
between Mafco Consolidated Group Inc.
and Power Control Technologies, Inc.
and PCT International Holdings Inc.
Exhibit 8. Form of Value Support Rights
Agreement between Mafco Consolidated
Group Inc. and American Stock
Transfer & Trust Company, as the
trustee (included as Exhibit A to the
Stock and VSR Purchase Agreement
filed herewith as Exhibit 7).
SIGNATURES
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information in
this statement is true, complete and correct.
Dated: October 25, 1996
MAFCO HOLDINGS INC.
C&F (PARENT) HOLDINGS INC.
MAFCO CONSOLIDATED GROUP INC.
By: /s/ Glenn P. Dickes
-----------------------------
Name: Glenn P. Dickes
Title: Authorized Signatory
Exhibit Index
Exhibit
7 Stock and VSR Purchase Agreement, dated as of
October 23, 1996, by and between Mafco
Consolidated Group Inc. and Power Control
Technologies, Inc. and PCT International
Holdings Inc.
8 Form of Value Support Rights Agreement
between Mafco Consolidated Group Inc. and
American Stock Transfer & Trust Company, as
trustee (included as Exhibit A to the Stock
and VSR Purchase Agreement filed herewith as
Exhibit 7).
==========================================================
STOCK AND VSR PURCHASE AGREEMENT
By and Among
MAFCO CONSOLIDATED GROUP INC.
POWER CONTROL TECHNOLOGIES, INC.
AND
PCT INTERNATIONAL HOLDINGS, INC.
Dated as of October 23, 1996
==========================================================
TABLE OF CONTENTS
Page
ARTICLE I
SALE AND PURCHASE OF THE SHARES AND ISSUANCE OF VSRS
Section 1.1 The Shares; VSRs . . . . . . . . . . . . . 2
Section 1.2 Purchase Price . . . . . . . . . . . . . . 2
Section 1.3 Consideration . . . . . . . . . . . . . . . 2
Section 1.4 Closing . . . . . . . . . . . . . . . . . . 2
Section 1.5 Deliveries by Seller . . . . . . . . . . . 3
Section 1.6 Deliveries by Purchaser . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Organization, Standing and Qualification . 4
Section 2.2 Authority Relative to this Agreement . . . 4
Section 2.3 Capitalization . . . . . . . . . . . . . . 5
Section 2.4 Consents and Approvals; No Violation . . . 6
Section 2.5 Financial Statements . . . . . . . . . . . 7
Section 2.6 Absence of Undisclosed Liabilities . . . . 8
Section 2.7 Absence of Certain Changes or Events . . . 8
Section 2.8 Title to Assets . . . . . . . . . . . . . 9
Section 2.9 Leases . . . . . . . . . . . . . . . . . . 10
Section 2.10 Intellectual Property . . . . . . . . . . 10
Section 2.11 Contracts . . . . . . . . . . . . . . . . 11
Section 2.12 Litigation . . . . . . . . . . . . . . . . 13
Section 2.13 Insurance . . . . . . . . . . . . . . . . 13
Section 2.14 Employee Benefit Plans; ERISA . . . . . . 13
Section 2.15 Taxes . . . . . . . . . . . . . . . . . . 17
Section 2.16 Environmental Matters . . . . . . . . . . 18
Section 2.17 Labor Relations and Employment . . . . . . 20
Section 2.18 Brokers or Finders . . . . . . . . . . . . 21
Section 2.19 Transactions with Affiliates . . . . . . . 21
Section 2.20 Ownership of PCT Common Stock . . . . . . 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization, Standing and Qualification . 22
Section 3.2 Authority Relative to this Agreement . . . 22
Section 3.3 Capitalization . . . . . . . . . . . . . . 22
Section 3.4 Consents and Approvals; No Violation . . . 23
Section 3.5 Brokers or Finders . . . . . . . . . . . . 24
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business . . . . . . . . . . . 24
Section 4.2 Access to Information . . . . . . . . . . 27
Section 4.3 Reasonable Best Efforts . . . . . . . . . 27
Section 4.4 Preparation of Registration Statement;
Listing. . . . . . . . . . . . . . . . . . 28
Section 4.5 Covenant of PCT . . . . . . . . . . . . . 29
Section 4.6 Further Assurances . . . . . . . . . . . . 29
Section 4.7 No Solicitation . . . . . . . . . . . . . 30
Section 4.8 Fees and Expenses . . . . . . . . . . . . 30
Section 4.9 Public Announcements . . . . . . . . . . . 31
Section 4.10 Books and Records . . . . . . . . . . . . 31
Section 4.11 Tax Matters . . . . . . . . . . . . . . . 31
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Each Party's Obligations . . 41
Section 5.2 Conditions to Obligations of Purchaser . . 42
Section 5.3 Conditions to Obligations of Seller . . . . 42
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.1 Termination . . . . . . . . . . . . . . . . 43
Section 6.2 Effect of Termination . . . . . . . . . . . 44
Section 6.3 Amendment . . . . . . . . . . . . . . . . . 44
Section 6.4 Extension; Waiver . . . . . . . . . . . . . 44
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival Periods . . . . . . . . . . . . . 44
Section 7.2 Indemnification . . . . . . . . . . . . . . 45
Section 7.3 General Procedures; Third Party Claims . . 46
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Certain Definitions . . . . . . . . . . . . 48
Section 8.2 Notices . . . . . . . . . . . . . . . . . . 48
Section 8.3 Descriptive Headings . . . . . . . . . . . 49
Section 8.4 Counterparts . . . . . . . . . . . . . . . 49
Section 8.5 Entire Agreement; Assignment . . . . . . . 49
Section 8.6 Governing Law . . . . . . . . . . . . . . . 50
Section 8.7 Specific Performance . . . . . . . . . . . 50
Section 8.8 Parties in Interest . . . . . . . . . . . . 50
Section 8.9 Severability . . . . . . . . . . . . . . . 50
INDEX OF DEFINED TERMS
----------------------
Term Where Defined
---- -------------
Acquisition Transaction . . . . . . . . SECTION 4.7
Affected Party . . . . . . . . . . . . SECTION 4.11(h)(ii)
affiliate . . . . . . . . . . . . . . . SECTION 8.1(a)
Agreement . . . . . . . . . . . . . . . Recitals
associate . . . . . . . . . . . . . . . SECTION 8.1(a)
Authorizations . . . . . . . . . . . . SECTION 5.2(d)
Balance Sheet . . . . . . . . . . . . . SECTION 2.5(a)
business day . . . . . . . . . . . . . SECTION 8.1(b)
Closing . . . . . . . . . . . . . . . . SECTION 1.4
Closing Date . . . . . . . . . . . . . SECTION 1.4
Code . . . . . . . . . . . . . . . . . SECTION 2.14(c)
Common Stock . . . . . . . . . . . . . Recitals
Company . . . . . . . . . . . . . . . . Recitals
Company SEC Documents . . . . . . . . . SECTION 2.5(b)
Contract . . . . . . . . . . . . . . . SECTION 2.11
control . . . . . . . . . . . . . . . . SECTION 8.1(a)
CPA Firm . . . . . . . . . . . . . . . SECTION 4.11(g)(iii)
Damages . . . . . . . . . . . . . . . . SECTION 7.2(a)
Deferred Cash Payments . . . . . . . . SECTION 1.3
Disclosure Schedule . . . . . . . . . . SECTION 2.1
Election . . . . . . . . . . . . . . . SECTION 4.11(a)
Encumbrances . . . . . . . . . . . . . SECTION 2.8
Environment . . . . . . . . . . . . . . SECTION 2.16(e)(i)
Environmental Laws . . . . . . . . . . SECTION 2.16(e)(iii)
Environmental Material(s) . . . . . . . SECTION 2.16(e)(iv)
Environmental Notice . . . . . . . . . SECTION 2.16(e)(ii)
ERISA . . . . . . . . . . . . . . . . . SECTION 2.14(a)
ERISA Affiliate . . . . . . . . . . . . SECTION 2.14(a)
ERISA Plans . . . . . . . . . . . . . . SECTION 2.14(a)
Exchange Act . . . . . . . . . . . . . SECTION 2.5(b)
Financial Statements . . . . . . . . . SECTION 2.5(a)
Forms 8023-A . . . . . . . . . . . . . SECTION 4.11(a)
Governmental Entity . . . . . . . . . . SECTION 2.4
HSR Act . . . . . . . . . . . . . . . . SECTION 2.4
Indemnified Parties . . . . . . . . . . SECTION 7.2(c)
Indemnifying Party . . . . . . . . . . SECTION 7.3
Intellectual Property . . . . . . . . . SECTION 2.10
Interim Balance Sheet . . . . . . . . . SECTION 2.5(a)
IRS . . . . . . . . . . . . . . . . . . SECTION 4.11(a)
Mafco . . . . . . . . . . . . . . . . . Recitals
Material Adverse Effect . . . . . . . . SECTION 2.1
NYSE . . . . . . . . . . . . . . . . . SECTION 4.4(b)
Payor . . . . . . . . . . . . . . . . . SECTION 4.11(g)(iii)
Permits . . . . . . . . . . . . . . . . SECTION 2.16(a)
Permitted Liens . . . . . . . . . . . . SECTION 2.8
person . . . . . . . . . . . . . . . . SECTION 8.1(c)
Plans . . . . . . . . . . . . . . . . . SECTION 2.14(a)
Preparer . . . . . . . . . . . . . . . SECTION 4.11(g)iii)
Proceeding . . . . . . . . . . . . . . SECTION 2.12
Property . . . . . . . . . . . . . . . SECTION 2.9
Purchase Common Stock . . . . . . . . . SECTION 3.3
Purchaser Group . . . . . . . . . . . . SECTION 7.2(a)
Purchase Price . . . . . . . . . . . . SECTION 1.3
Purchaser . . . . . . . . . . . . . . . Recitals
Recipient . . . . . . . . . . . . . . . SECTION 4.11(h)(i)
Representatives . . . . . . . . . . . . SECTION 7.2(a)
SEC . . . . . . . . . . . . . . . . . . SECTION 2.5(b)
Seller . . . . . . . . . . . . . . . . Recitals
Seller Group . . . . . . . . . . . . . SECTION 7.2(b)
Settling Party . . . . . . . . . . . . SECTION 4.11(h)(ii)
Shares . . . . . . . . . . . . . . . . Recitals
Straddle Period . . . . . . . . . . . . SECTION 4.11(f)
Subsidiary and Subsidiaries . . . . . . SECTION 2.1
Tax(es) . . . . . . . . . . . . . . . . SECTION 2.15(c)
Tax Audit . . . . . . . . . . . . . . . SECTION 4.11(h)(i)
Tax Return . . . . . . . . . . . . . . SECTION 2.15(c)
TIA . . . . . . . . . . . . . . . . . . SECTION 4.4(a)
Transfer Taxes . . . . . . . . . . . . SECTION 4.11(i)
VSR(s) . . . . . . . . . . . . . . . . Recitals
VSR Agreement . . . . . . . . . . . . . Recitals
STOCK AND VSR PURCHASE AGREEMENT (the
"Agreement"), dated as of October 23, 1996, by and among
Mafco Consolidated Group Inc., a Delaware corporation
("Seller"), Power Control Technologies, Inc., a Delaware
corporation ("PCT"), and PCT International Holdings,
Inc., a Delaware corporation ("Purchaser").
W I T N E S S E T H
WHEREAS, Seller owns beneficially and of record
all the outstanding capital stock of Flavors Holdings
Inc., a Delaware corporation ("Flavors");
WHEREAS, Flavors owns beneficially and of
record all the outstanding capital stock of Mafco
Worldwide Corporation, a Delaware corporation (the
"Company");
WHEREAS, as of the date of this Agreement there
are outstanding 1,000 shares of Class A Common Stock, par
value $1.00 per share ("Class A Common Stock"), of
Flavors;
WHEREAS, upon the terms and subject to the
conditions of this Agreement, Purchaser has agreed to
acquire from Seller, and Seller has agreed to sell to
Purchaser 1,000 shares of Class A Common Stock (the
"Shares"), representing all of the issued and outstanding
shares of capital stock of Flavors;
WHEREAS, at the Closing (as defined below),
Seller shall issue 23,156,502 Value Support Rights (each
a "VSR" and collectively, the "VSRs") to Purchaser,
pursuant to a Value Support Rights Agreement
substantially in the form of Exhibit A attached hereto
(the "VSR Agreement");
NOW, THEREFORE, in consideration of the
foregoing and the respective representations, warranties,
covenants, agreements, and conditions contained herein,
and intending to be legally bound hereby, the parties
agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE SHARES AND ISSUANCE OF VSRS
Section 1.1 The Shares; VSRs. (a) Upon the
terms and subject to the conditions of this Agreement, at
the Closing provided for in Section 1.4 hereof, Seller
shall sell, convey, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase, acquire and
accept from Seller, all of the Shares, free and clear of
any liens, claims, options, pledges, security interests,
charges, encumbrances and restrictions whatsoever.
(b) Upon the terms and subject to the
conditions of this Agreement, at the Closing provided for
in Section 1.4 hereof, Seller shall issue and deliver to
Purchaser, and Purchaser shall purchase, acquire and
accept from Seller, all of the VSRs, free and clear of
any liens, claims, options, pledges, security interests,
charges, encumbrances and restrictions whatsoever.
Section 1.2 Purchase Price. Upon the terms
and subject to the conditions of this Agreement, in
consideration of the aforesaid sale, conveyance,
assignment, transfer and delivery of the Shares and the
issuance of the VSRs, Purchaser agrees to pay to Seller
the Purchase Price (as defined below) and, in
consideration of certain indemnities previously provided
by Seller to PCT, Purchaser agrees to pay to Seller the
Deferred Cash Payments (as defined below).
Section 1.3 Consideration. The "Purchase
Price" shall be cash in the amount of $180,000,000 to be
paid to Seller at the Closing. Subject to Section 4.8,
the "Deferred Cash Payments" shall be cash in the amount
of $3,700,000 to be paid to Seller on June 30, 1997 and
$3,500,000 to be paid to Seller on December 31, 1997.
Section 1.4 Closing. Upon the terms and
subject to the conditions of this Agreement, the
consummation of the transactions contemplated by this
Agreement (the "Closing") will take place on the second
business day following the satisfaction or waiver of all
the conditions set forth in Article V hereof at 10:00
a.m., at the offices of Skadden, Arps, Slate, Meagher &
Flom, 919 Third Avenue, New York, NY 10022, or at such
other time or at such other place as shall be agreed upon
by the parties. The date on which the Closing occurs is
referred to herein as the "Closing Date."
Section 1.5 Deliveries by Seller. At the
Closing, Seller shall deliver or cause to be delivered
(unless previously delivered) to Purchaser, the
following:
(a)(i) stock certificates representing all of
the Shares, accompanied by stock powers duly executed in
blank or duly executed instruments of transfer and (ii)
any other documents that are necessary to transfer to
Purchaser good and valid title to the Shares, with any
necessary transfer tax stamps affixed or accompanied by
evidence that all stock transfer taxes have been paid;
(b) a VSR Certificate (as defined in the VSR
Agreement) which shall represent 23,156,502 VSRs;
(c) the stock books, stock ledgers, minute
books and corporate seals of Flavors and the Company (to
be at the principal executive offices of Flavors and the
Company, as the case may be, unless otherwise directed by
Purchaser); and
(d) resignations of directors and officers of
Flavors, as directed by Purchaser.
Section 1.6 Deliveries by Purchaser.
(a) At the Closing, Purchaser shall deliver
(unless previously delivered) to Seller, the Purchase
Price in immediately available funds by wire transfer to
the bank account designated by Seller at least one
business day prior to the Closing Date.
(b) On each of June 30, 1997 and December 31,
1997, Purchaser shall deliver (unless previously
delivered) to Seller, the Deferred Cash Payments in
accordance with Section 1.3 hereof, in immediately
available funds by wire transfer to the bank account
designated by Seller at least one business day prior to
each such date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to
Purchaser as follows:
Section 2.1 Organization, Standing and
Qualification. Each of Seller, Flavors, the Company and
each of the Subsidiaries (as defined below) is a
corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of
organization and has all requisite corporate power and
authority to own, lease and operate its properties and to
carry on its business as now being conducted. Except as
set forth on the Balance Sheet (as defined below) or in
Section 2.11 of the Disclosure Schedule (as defined
below), Flavors has no liabilities or assets (other than
the Shares), and does not own, lease or operate any
properties or carry on any business. Each of Flavors and
the Company is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of
the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or
licensed would not have a Material Adverse Effect. For
purposes of this Agreement "Material Adverse Effect"
means with respect to the Company, a material adverse
effect, on the business, properties, assets, operations
or financial results or condition of the Company and the
Subsidiaries, taken as a whole. Seller has heretofore
delivered to Purchaser complete and correct copies of the
certificate of incorporation and bylaws, as currently in
effect, of Flavors and the Company. Except for each
subsidiary (each a "Subsidiary" and collectively, the
"Subsidiaries" to the extent any such entity is a
"significant subsidiary" as defined in Rule 1-02 of
Regulation S-X of the Securities Exchange Act of 1934)
set forth in Section 2.1 of the disclosure schedule
delivered by Seller to Purchaser concurrently herewith
(the "Disclosure Schedule"), the Company has no
subsidiaries and owns no stock or equity interest in any
corporation, partnership, joint venture or other entity.
Section 2.2 Authority Relative to this
Agreement. Seller has full corporate power and authority
to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and
validly authorized by Seller's Board of Directors and no
other corporate proceedings on the part of Seller are
necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Seller
and constitutes, and each other agreement that is to be
executed and delivered by Seller in connection with the
transactions contemplated by this Agreement, when
executed and delivered by Seller, as the case may be,
will constitute, a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms,
except (i) as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization and
other similar laws affecting creditors' rights generally,
and (ii) as such enforceability may be limited by general
principles of equity, regardless of whether asserted in a
proceeding in equity or law.
Section 2.3 Capitalization. The authorized
capital stock of Flavors consists of 2,000 shares of
Class A Common Stock and 2,000 shares of Class B Common
Stock, par value $1.00 per share, of which 1,000 shares
of Class A Common Stock are issued and outstanding and
owned by Seller. The authorized capital stock of the
Company consists of 1,000 shares (the "Company Shares")
of common stock, $1.00 par value per share, all of which
are issued and outstanding and owned by Flavors. There
are no other shares of capital stock of Flavors or the
Company authorized, issued or outstanding. The Shares
are owned by Seller, and the Company Shares are owned by
Flavors, beneficially and of record, and each of the
Shares and the Company Shares are duly authorized,
validly issued, fully paid and nonassessable and are not
subject to any preemptive rights. There are not (a)
issued or outstanding any securities convertible into or
exchangeable for, or any options, warrants, calls, puts,
subscriptions or other rights (preemptive or otherwise)
to acquire, any shares of capital stock of Flavors or the
Company, or (b) any agreements or contractual commitments
(other than this Agreement) relating to the Shares or the
Company Shares or obligating Flavors to issue or sell any
shares of its capital stock or any such securities,
options, warrants, calls, puts, subscriptions or other
rights, or (c) except as set forth in Section 2.3 of the
Disclosure Schedule, any pledges, security interests,
liens, charges, encumbrances, equities, claims or options
of whatever nature relating to any of the Shares or the
Company Shares. At the Closing, Purchaser will acquire
good and valid title to the Shares, free and clear of all
pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever
nature, except those set forth on Section 2.3 of the
Disclosure Schedule.
Section 2.4 Consents and Approvals; No
Violation. Except for applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and
the rules and regulations thereunder (the "HSR Act"),
there is no requirement applicable to Seller or the
Company to make any filing with, or to obtain any permit,
authorization, consent or approval of, any court of
competent jurisdiction, regulatory authority or other
public body, federal, state or local domestic or foreign
(a "Governmental Entity") as a condition to the lawful
consummation by Seller of the transactions contemplated
by this Agreement, except where the failure to make any
such filing or obtain any such permit, authorization,
consent or approval would not have a Material Adverse
Effect. Except as set forth in Section 2.4 of the
Disclosure Schedule and except for applicable
requirements of the HSR Act, neither the execution and
delivery of this Agreement by Seller, nor the
consummation by Seller of the transactions contemplated
hereby, nor compliance by Seller with any of the
provisions hereof will (i) conflict with or result in any
breach of any provision of the certificate of
incorporation or bylaws of Seller, Flavors or the
Company, (ii) result in a breach of, or default under (or
give rise to any right of termination, cancellation or
acceleration under), any of the terms, conditions or
provisions of any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or
obligation to which Seller, the Company or any Subsidiary
is a party, or by which any of their respective
businesses, properties or assets may be bound, except for
such breaches or defaults (or rights of termination,
cancellation or acceleration) set forth in Section 2.4 of
the Disclosure Schedule as to which requisite waivers or
consents have been obtained or will be obtained prior to
the Closing Date, or (iii) violate any order, judgment,
writ, injunction, decree, statute, rule or regulation
applicable to Seller, the Company or the Company's assets
or properties of the Company or any Subsidiary, except
for such violations which would not have a Material
Adverse Effect. Except as set forth in Section 2.4 of
the Disclosure Schedule, there is no Proceeding (as
defined below) pending or, to the knowledge of the
Company or Seller, threatened against Seller, Flavors,
the Company or any Subsidiary that seeks to prevent the
consummation of the transactions contemplated hereby.
Section 2.5 Financial Statements; SEC Reports.
(a) Seller has previously furnished to Purchaser
(i) audited balance sheets of the Company as of December
31, 1995 and 1994 and the related statements of income,
retained earnings and cash flows of the Company for the
periods then ended, together with the notes thereto and
the report of Ernst & Young LLP thereon, (the audited
balance sheet of the Company for the period ending
December 31, 1995 is referred to herein as the "Balance
Sheet") and (ii) an unaudited balance sheet of the
Company as of June 30, 1996 (the "Interim Balance Sheet")
and the related statement of income, retained earnings
and cash flows of the Company for the period then ended
(such financial statements described in clauses (i) and
(ii) collectively, the "Financial Statements"). Each
balance sheet included in the Financial Statements
presents fairly in all material respects the financial
position of the Company as of its respective date and
each of the statements of income and retained earnings,
and cash flows included in the Financial Statements
presents fairly in all material respects the results of
operations and cash flows of the Company for the periods
set forth therein, in each case in accordance with GAAP,
except as otherwise noted therein.
(b) The Company has filed with the Securities
and Exchange Commission (the "SEC"), all forms and
reports required to be filed by it since January 1, 1993
under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and has heretofore made available
to Purchaser (i) its Annual Reports on Form 10-K for the
years ended December 31, 1993, December 31, 1994 and
December 31, 1995, respectively, (ii) its Quarterly
Reports on Form 10-Q for the periods ended March 31 and
June 30, 1996 and (iii) all other forms and reports filed
by the Company with the SEC since January 1, 1993. The
documents described in clauses (i)-(iii) above are
referred to in this Agreement collectively as the
"Company SEC Documents". As of their respective dates,
the Company SEC Documents (i) did not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not misleading
and (ii) complied in all material respects with the
applicable requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder.
Section 2.6 Absence of Undisclosed
Liabilities. To the best of Seller's knowledge, the
Company does not have any liabilities or obligations
required to be set forth on a balance sheet in accordance
with GAAP, except for the liabilities and obligations (i)
reflected in the Balance Sheet, (ii) incurred in the
ordinary course of business consistent with past practice
since the date of the Balance Sheet which have not had,
and are not reasonably likely to have, a Material Adverse
Effect, and (iii) pertaining to Taxes (as defined below).
Section 2.7 Absence of Certain Changes or
Events. To the best of Seller's knowledge, except as
expressly provided for in this Agreement or set forth in
Section 2.7 of the Disclosure Schedule, since the date of
the Balance Sheet, the Company has not:
(a) except in the ordinary course of
business, made any change in its business or operations
or in the manner of conducting its business;
(b) suffered any Material Adverse Effect;
(c) entered into any written employment
contract or, except for compensation arrangements entered
into in the ordinary course of business, compensation
arrangement or employee benefit plan, or changed or
committed to change (including, without limitation, any
change pursuant to any bonus, pension, profit-sharing or
other plan, commitment, policy or arrangement) the
compensation payable or to become payable to any of its
officers, directors, employees, agents or consultants, or
made any pension, retirement, profit sharing, bonus or
other employee welfare or benefit payment or
contribution, other than in the ordinary course of
business and consistent with past practice;
(d) declared, paid or made, or set aside
for payment or making, any dividend or other distribution
in respect of its capital stock or other securities, or
directly or indirectly redeemed, purchased or otherwise
acquired any of its capital stock or other securities or
subdivided or in any way reclassified or changed any of
the terms or provisions of any share of its capital
stock;
(e) paid, loaned or advanced any amount
to or in respect of, or sold, transferred or leased any
property or assets (real, personal or mixed, tangible or
intangible) to, or entered into any transaction,
agreements or arrangements with or for the benefit of,
Seller or any affiliate or associate of Seller, or any of
the Company's officers or directors or any affiliate or
associate of its officers or directors, except for
payments, loans and advances to officers and directors in
the ordinary course of business and consistent with past
practice;
(f) made any change in any accounting or
tax principles, practices or methods including, without
limitation, its accounts payable practices, except for
such changes which are both required by GAAP or law;
(g) cancelled any material debts or
claims, or waived any rights of material value or
incurred or guaranteed any material obligation or
liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due), except for
current liabilities incurred in the ordinary course of
business;
(h) terminated or amended or suffered the
termination or amendment of any material contract or
disposed of or permitted to lapse any material item of
Intellectual Property (as defined in Section 2.10
hereof); or
(i) agreed, whether in writing or
otherwise, to take any action described in this Section
2.7.
Section 2.8 Title to Assets. The Company has
good and valid title to all its assets shown on the
Balance Sheet or acquired since the date of the Balance
Sheet, other than the assets shown on the Balance Sheet
and disposed of since the date thereof in the ordinary
course of business and consistent with past practice, and
all such assets are free and clear of any and all
Encumbrances (as defined below) other than those set
forth on Section 2.8 of the Disclosure Schedule and
Permitted Liens. "Encumbrances" means any mortgage,
pledge, lien, encumbrance, charge or adverse claim
affecting title or resulting in an encumbrance against
real or personal property, or a security interest of any
kind. "Permitted Liens" means (i) liens for current
taxes not yet due, (ii) imperfections of title, easements
and zoning restrictions, if any, which do not materially
detract from the value of the property subject thereto
for the uses and purposes to which such property is
currently employed or materially impair the operations of
the Company and which have arisen only in the ordinary
course of business and consistent with past practice, and
(iii) mechanics', materialmen's and similar liens
attaching by operation of law, incurred in the ordinary
course of business and securing payments not delinquent
or payments which are being contested in good faith by
the Company.
Section 2.9 Leases. All material leases of
real property ("Property") as to which the Company or any
Subsidiary is the lessee or sublessee, and all amendments
and modifications thereof, are listed on Section 2.9 of
the Disclosure Schedule (true, correct and complete
copies of such leases have been made available to
Purchaser). To the best of Seller's knowledge, all such
leases are in full force and effect and have not been
modified or amended, except as set forth in Section 2.9
of the Disclosure Schedule. There exists no event of
default by the Company or any Subsidiary under any such
leases or, to the best of Seller's knowledge, by any
third party thereto, nor any event which with notice or
lapse of time or both would, in each case, constitute a
Material Adverse Effect.
Section 2.10 Intellectual Property. Section
2.10 of the Disclosure Schedule lists (a) the federal
registration number and the date of registration
concerning registrations of patents, trademarks and
service marks and of other marks, trade names or other
trade rights currently used by the Company or any
Subsidiary in the conduct of its business, all of the
copyrights and all applications for any of the foregoing
and all analogous registrations, copyrights, and
applications to any foreign jurisdiction; and (b) all
intellectual property rights owned by any third party
which are not generally commercially available and are
currently used by the Company or any Subsidiary in the
conduct of its business, whether such use is or will be
pursuant to license, sublicense, agreement or permission.
Seller has delivered or made available to Purchaser
complete and accurate copies of each agreement,
registration and other document relating to the
intellectual property set forth on Section 2.10 of the
Disclosure Schedule. To the best of Seller's knowledge,
the Company and each Subsidiary owns or possesses
adequate and enforceable licenses or other rights to use
(i) all intellectual property rights listed on Section
2.10 of the Disclosure Schedule, (ii) all computer
software used by the Company or any Subsidiary in the
conduct of its businesses and (iii) all other patents,
trademarks, service marks, other marks, trade names and
assumed names, all applications for any of the foregoing,
all trade secrets, designs, plans, specifications and
other intellectual property rights of every kind of the
Company or any Subsidiary (whether or not registered)
that are possessed by the Company or any Subsidiary or
used in their respective businesses (all of the items
referred to in clauses (a) and (b) of this paragraph and
(ii) and (iii) of this sentence being the "Intellectual
Property"). To the best of Seller's knowledge, no person
has a right to receive a royalty or similar payment in
respect of any item of Intellectual Property pursuant to
any contractual arrangements entered into by the Company,
any Subsidiary or Seller or otherwise. Except as set
forth in Section 2.10 of the Disclosure Schedule, neither
the Company, any Subsidiary nor Seller has granted any
license, sublicense or other similar agreement relating
in whole or in part to any Intellectual Property.
Neither the Company, any Subsidiary nor Seller has
received written notice that the Company's or any
Subsidiary's use of any material item of Intellectual
Property is interfering with, infringing upon or
otherwise violating the rights of any third party in or
to such Intellectual Property. No written notices have
been received by Seller and, to the best of the Company's
and Seller's knowledge, no proceedings have been
instituted against Seller, the Company or any Subsidiary
alleging that use or proposed use of any material item of
the Intellectual Property by the Company or any
Subsidiary infringes upon or otherwise violates any
rights of a third party in or to such Intellectual
Property.
Section 2.11 Contracts. To the best of
Seller's knowledge, except as set forth in Section 2.11
of the Disclosure Schedule, neither the Company nor any
Subsidiary is a party to, or bound by, any written or
oral: (a) contract, agreement, understanding,
commitment, or other arrangement (each, a "Contract")
with Seller or Seller's affiliates or with any present or
former officer, employee, agent, consultant, advisor,
salesperson or sales representative or affiliate or
associate of the Company or any Subsidiary pursuant to
which payments may be required to be made at any time
following the date hereof to any such person in excess of
$100,000 in any year; (b) Contract (including, but not
limited to, any mortgage, indenture, debenture, bond,
note, installment obligation or other instrument)
constituting indebtedness; (c) guaranty of any obligation
for borrowings or performances, or guaranty or warranty
of products or services; (d) Contract for the sale or
lease of any asset or property owned or used by the
Company or any Subsidiary exceeding $100,000 in value or
annual payments; (e) Contract for the purchase of any
real estate, machinery, equipment or other capital assets
with a purchase price exceeding $100,000; (f) Contract
which is not terminable on ninety or fewer days' notice
at any time without premium or penalty or payment in
excess of $100,000; or (g) Contract to which the Company
or any Subsidiary, Seller, or any of the Company's or any
Subsidiary's employees is a party which will restrict
such person's ability to do business in any geographic
area or which grants to any person exclusive or similar
rights in any line of business or in any geographic area.
Except as set forth in Section 2.11 of the Disclosure
Schedule, with respect to each Contract listed in Section
2.11 of the Disclosure Schedule, there is no default by
the Company or any Subsidiary or event that with notice
or lapse of time, or both, would constitute such a
default nor, to Seller's knowledge, any default, or event
that with notice, lapse of time or both, would constitute
such a default, by any other party thereto, existing with
respect to any such Contract, except for such defaults
which do not result in a Material Adverse Effect.
Neither the Company, any Subsidiary nor Seller intends,
and neither has received notice that any party to any
such Contract intends, to terminate, amend or cancel any
such Contract. Each of the Contracts listed in Section
2.11 of the Disclosure Schedule is in full force and
effect and constitutes a legal, valid and binding
obligation of the Company or any Subsidiary, as the case
may be. Seller has made available to Purchaser complete
and accurate copies of each Contract or other written
evidence of the obligations, and all amendments thereto,
listed in Section 2.11 of the Disclosure Schedule.
Section 2.12 Litigation. Except as set forth
in Section 2.12 of the Disclosure Schedule, there are (i)
to the best of Seller's knowledge no investigations
pending or threatened or (ii) no actions, causes of
action, claims, suits, proceedings, orders, writs,
injunctions or decrees (each, a "Proceeding") pending or,
to the best of Seller's knowledge, threatened, against
the Company or any Subsidiary or Seller affecting the
operations of the Company or any Subsidiary, their
respective businesses, assets or properties at law or in
equity, or before or by any Governmental Entity. Neither
the Company nor any Subsidiary is in default with respect
to any order, writ, injunction or decree of any
Governmental Entity.
Section 2.13 Insurance. Set forth in Section
2.13 of the Disclosure Schedule is a complete and
accurate list of all primary, excess and umbrella
policies, bonds and other forms of insurance currently
owned or held by or on behalf of and/or providing
insurance coverage to the Company or any Subsidiary,
their respective businesses, properties and assets (or
their directors, officers, salespersons, agents or
employees). All policies set forth in Section 2.13 of
the Disclosure Schedule are in full force and effect and
shall remain in full force and effect through the Closing
Date, and with respect to all policies, all premiums
currently payable or previously due have been paid, and,
to the best of Seller's knowledge, no notice of
cancellation or termination has been received by the
Company, any Subsidiary or Seller with respect to any
such policy, except for statutory notices. All such
policies are sufficient for compliance with all
requirements of law and of all Contracts and agreements
to which the Company or any Subsidiary is a party or
otherwise bound and are valid, outstanding, collectible
and enforceable policies and provide insurance coverage
which is adequate and customary for a business of the
size and type of the Company or any Subsidiary, as the
case may be. Complete and accurate copies of all such
policies and related documentation have previously been
provided or made available to Purchaser.
Section 2.14 Employee Benefit Plans; ERISA.
(a) Section 2.14 of the Disclosure Schedule contains a
complete and accurate list of each deferred compensation,
incentive compensation, bonus, stock purchase, stock
option, employment, severance or termination pay,
medical, life, disability or other insurance,
supplemental unemployment benefits, profit-sharing,
pension, or retirement plan, program, agreement or
arrangement, and each other material employee benefit
plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended from
time to time ("ERISA")), program, agreement or
arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Company or any ERISA
Affiliate, for which the Company has direct liability for
the benefit of any employee, officer, consultant (or any
dependent or beneficiary thereof) or former employee of
the Company whether formal or informal (the "Plans").
"ERISA Affiliate" means any entity (whether or not
incorporated) other than the Company that, together with
the Company, is or was a member of a controlled group of
corporations within the meaning of Section 414(b) of the
Code, or of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Code,
or of an affiliated service group within the meaning of
Section 414(m) of the Code. Section 2.14 of the
Disclosure Schedule identifies each of the Plans that is
an "employee benefit plan," as that term is defined in
section 3(3) of ERISA (the "ERISA Plans").
(b) With respect to each Plan, Seller has
heretofore delivered or made available to Purchaser true
and complete copies of each of the following documents,
if available:
(i) a copy of such Plan (including all
amendments thereto) or, where substantially similar
arrangements exist, a sample copy (including all
amendments thereto) and a list of all persons
participating in such arrangement;
(ii) a copy of the annual report and actuarial
valuation report and audited financial statements, if
required under ERISA, and the report prepared with
respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for
Pensions for the last three years;
(iii) a copy of the most recent Summary Plan
Description required under ERISA with respect thereto;
(iv) if the Plan is funded through a trust or
any third party funding vehicle, a copy of the trust or
other funding agreement (including all amendments
thereto) and the latest financial statements and audited
financial statements thereof; and
(v) the most recent determination letter
received from the Internal Revenue Service with respect
to each Plan for which such letter has been obtained.
(c) Except as set forth in Schedule 2.14 of
the Disclosure Schedule, neither the Company nor any
ERISA Affiliate currently maintains, sponsors or
contributes to, nor has direct liability for, any Plan
subject to Title IV of ERISA. The Company has not
received and is not aware of any material actions, claims
(other than routine claims for benefits), lawsuits,
arbitrations or investigations pending or to the best of
Seller's and the Company's knowledge threatened with
respect to any Plan or against any fiduciary or any Plan.
(d) Neither the Company, nor any ERISA Plan,
nor any trust created thereunder, nor any trustee or
administrator thereof, has engaged in a transaction in
connection with which the Company, any ERISA Plan or,
such trust, could be subject to either a material civil
penalty assessed pursuant to section 409 or 502(i) of
ERISA or a material tax imposed pursuant to section 4975
or 4976 of the Internal Revenue Code of 1986, as amended
(the "Code"). No Plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred an
"accumulated funding deficiency" as defined in either of
such Sections, whether or not waived, nor has requested
or obtained any extension of any applicable amortization
period. As of the Closing Date, the Company and each
ERISA Affiliate shall have made all required
contributions under each Plan for all periods through and
including the Closing Date or adequate accruals therefor
will have been provided for and will be reflected on the
Balance Sheet of the Company.
(e) No ERISA Plan is a "multiemployer plan,"
as defined in section 3(37) of ERISA, nor is any ERISA
Plan a plan described in section 4063(a) of ERISA.
(f) Each Plan has been operated and
administered in all material respects in accordance with
its terms and applicable law, including but not limited
to ERISA and the Code.
(g) Each ERISA Plan that is intended to be
"qualified" within the meaning of Section 401(a) of the
Code has been determined by the Internal Revenue Service
to be so qualified, the trusts maintained thereunder have
been determined by, or a request for such determination
has been made to, the Internal Revenue Service to be
exempt from taxation under section 501(a) of the Code,
and all required submissions have been made to the
Internal Revenue Service with respect to maintaining the
"qualified" status of each such ERISA Plan under Section
401(a) of the Code.
(h) No Plan provides benefits, including
without limitation death or medical benefits (whether or
not insured), with respect to current or former employees
or dependents thereof of the Company beyond their
retirement or other termination of service (other than
(i) coverage mandated by applicable law, (ii) death
benefits or retirement benefits under any "employee
pension benefit plan," as that term is defined in section
3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of the Company or
(iv) benefits the full cost of which is borne by the
current or former employee (or his or her dependents or
beneficiaries)).
(i) The consummation of the transactions
contemplated by this Agreement will not (i) entitle any
current or former employee, officer, director or
consultant of the Company to any payment, including,
without limitation, any severance pay, unemployment
compensation, golden parachute, bonus or any other
payment or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation or
benefit payable with respect to any current or former
employee, officer, director or consultant of the Company.
No Plan provides benefits or payments contingent upon,
triggered by or increased as a result of, a change in the
ownership or effective control of the Company.
(j) All reports, notices and other disclosure
relating to Plans required to be filed with, or furnished
to, Governmental Entities, plan participants or plan
beneficiaries have been timely filed and furnished in
accordance with applicable law.
(k) No amounts payable under any Plan will
fail to be deductible for federal income tax purposes,
including without limitation, by virtue of section 280G
of the Code.
(l) With respect to each applicable Plan, the
Company has complied with the provisions of Section
4980B(f) of the Code.
(m) Except as set forth in Section 2.14 of the
Disclosure Schedule, (i) the Company has no written
employment Contracts or other written compensation or
severance pay arrangements with Seller or Seller's
affiliates or associates, or any employee of the Company
and (ii) all employees of the Company are employed at
will.
Section 2.15 Taxes. (a) Except as set forth
in Section 2.15 of the Disclosure Schedule, Flavors and
each of its subsidiaries has filed, or as of the Closing
Date will have filed, with the appropriate federal,
state, local and foreign taxing authorities all federal
income tax returns and all other material Tax Returns (as
defined in paragraph (d) below) required to be filed by
or with respect to Flavors or any of its subsidiaries, as
the case may be, whose due dates (taking into account any
timely filed extensions) fall on or before the Closing
Date, and such Tax Returns are or will be true, correct
and complete in all material respects. Flavors and each
of its subsidiaries has paid in full or has made adequate
provision in the Balance Sheet for all federal income
taxes and all other material Taxes (as defined in
paragraph (d) below) which are or will be due or claimed
to be due from them by any taxing authority for all
periods (or portions thereof) up to and including the
Closing Date. There are no liens for Taxes upon the
assets of Flavors or any of its subsidiaries except for
statutory liens for current Taxes not yet due.
(b) Except as set forth in Section 2.15 of the
Disclosure Schedule, neither Flavors nor any of its
subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not
since been filed and neither Flavors nor any of its
subsidiaries has waived any statute of limitations for,
or agreed to any extension of time with respect to, the
assessment of Taxes of Flavors or any of its
subsidiaries, as the case may be.
(c) Except as set forth in Section 2.15 of the
Disclosure Schedule, neither Flavors nor any of its
subsidiaries has received any notice of deficiency or
assessment from any taxing authority with respect to
liabilities for Taxes of Flavors or any of its
subsidiaries which has not been fully paid or finally
settled. No power of attorney has been executed by, or
on behalf of, Flavors or any of its subsidiaries with
respect to any matter relating to Taxes which is
currently in force.
(d) For purposes of this Agreement, "Tax" or
"Taxes" shall mean all taxes, charges, fees, levies,
penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority,
including, but not limited to, income, gross receipts,
excise, property, sales, use (or any similar taxes),
transfer, franchise, payroll, withholding, social
security, business license fees, or other taxes including
any interest, penalties or additions thereto. For
purposes of this Agreement, "Tax Return" shall mean any
return, report, information return, schedule or other
document (including any related or supporting
information) required to be supplied to a taxing
authority with respect to Taxes.
(e) For purposes of this Section 2.15 (and
Section 4.11 of this Agreement), the term "subsidiaries"
shall not include Rishmac Produce & Export Company or
Choube Shirin.
Section 2.16 Environmental Matters. (a) Each
of the Company and the Subsidiaries and their respective
properties and assets are in material compliance with all
applicable Environmental Laws (as defined in paragraph
(e) below) which compliance includes, but is not limited
to, the possession of all permits, licenses,
registrations and other governmental authorizations
required under applicable Environmental Laws
(collectively, "Permits"), and compliance with the terms
and conditions thereof, and there are no circumstances of
a nature which may materially prevent or interfere with
compliance in the future. Except as set forth in Section
2.16 of the Disclosure Schedule, no additional Permits
are necessary for the conduct of the business of the
Company or any Subsidiary as currently conducted.
(b) There is no Environmental Notice (as
defined in paragraph (e) below) that is (i) pending or,
to the best of Seller's knowledge, threatened against the
Company or any Subsidiary or (ii) to the best of Seller's
knowledge, pending or threatened against any person or
entity whose liability for such Environmental Notice may
have been retained or assumed by or could reasonably be
imputed or attributed by law or contract to the Company
or any Subsidiary.
(c) To the best of Seller's knowledge, there
are no past or present actions, activities,
circumstances, conditions, events or incidents arising
out of, based upon, resulting from or relating to the
operation, ownership or use of any property or assets
currently or formerly owned, operated or used by the
Company or any Subsidiary, including, without limitation,
the release, emission, discharge or disposal of any
Environmental Material (as defined in paragraph (e)
below) into the Environment (as defined herein), that (i)
would likely result in the incurrence of costs under
Environmental Laws which would have Material Adverse
Effect; or (ii) would likely form the basis of any
Environmental Notice against or with respect to the
Company or any Subsidiary or against any person or entity
whose liability for any Environmental Notice may have
been retained or assumed by or could be imputed or
attributed by law or contract to the Company or any
Subsidiary which would have Material Adverse Effect.
(d) Except as set forth in Section 2.16 of the
Disclosure Schedule, without in any way limiting the
generality of the foregoing, to Seller's knowledge (i)
there are and have been no underground storage tanks
located on property owned, leased or used by the Company
or any Subsidiary, (ii) there is no asbestos contained in
or forming part of any building, building component,
structure or office space owned, leased or used by the
Company or any Subsidiary, or located on the Property,
(iii) no polychlorinated biphenyls (PCBs) are used or
stored on any property owned, leased or used by the
Company or any Subsidiary and (iv) there are no locations
currently or formerly owned, leased or used by the
Company or any Subsidiary at which any Environmental
Material generated, used, owned or controlled by the
Company, any Subsidiary or Seller may have been disposed
of or released into the Environment in violation of
Environmental Laws in effect at that time.
(e) For purposes of this Agreement:
(i) "Environment" means any surface water,
ground water, drinking water supply, land surface or
subsurface strata, ambient air and including, without
limitation, any indoor location.
(ii) "Environmental Notice" means any notice
or claim by any person or entity alleging potential
liability (including, without limitation, potential
liability for investigatory costs, cleanup costs,
governmental costs, or harm, injuries or damages to any
person, property, natural resources, or any fines or
penalties) arising out of, based upon, resulting from, or
relating to the emission, discharge, disposal, release or
threatened release in or into the Environment of any
Material.
(iii) "Environmental Laws" means all federal,
state, local and foreign laws, codes, regulations,
requirements, directives, orders, common law, and
administrative or judicial interpretations thereof, all
as in effect on the date hereof and on the Closing Date,
that may be enforced by any governmental agency or court,
relating to pollution, the protection of human health,
the protection of the Environment, or the emission,
discharge, disposal, release or threatened release of
Environmental Materials in or into the Environment.
(iv) "Environmental Material" or
"Environmental Materials" means pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or
wastes, and including, without limitation, asbestos, or
asbestos-containing materials, PCBs, and petroleum, oil
or petroleum or oil products or derivatives.
Section 2.17 Labor Relations and Employment.
Except as set forth in Section 2.17 of the Disclosure
Schedule, (i) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending, or to the
best of the Company's or Seller's knowledge, affecting or
threatened against the Company or any Subsidiary and
during the past three years there has not been any such
action; (ii) no union claims to represent the employees
of the Company or any Subsidiary; (iii) there is no
agreement with any labor organization, nor work rules or
practices agreed to with any labor organization or
employee association, applicable to employees of the
Company or any Subsidiary nor is the Company or any
Subsidiary a party to or bound by any collective
bargaining agreement; (iv) there is no grievance pending
against the Company or any Subsidiary arising out or
under of any collective bargaining agreement or other
grievance procedure; (v) there are no charges with
respect to or relating to the Company or any Subsidiary
pending before the Equal Employment Opportunity
Commission or any other agency responsible for the
prevention of unlawful employment practices; and (vi)
neither the Company, any Subsidiary nor Seller has
received notice of the intent of any federal, state,
local or foreign agency responsible for the enforcement
of labor or employment laws to conduct an investigation
with respect to or relating to the Company or any
Subsidiary and, to the best of the Company's and Seller's
knowledge, no such investigation is in progress.
Section 2.18 Brokers or Finders. Purchaser
does not have and will not have any obligation to pay any
broker's, finder's, investment banker's, financial
advisor's or similar fee in connection with this
Agreement, or the transactions contemplated hereby, by
reason of any action taken by or on behalf of Seller or
the Company.
Section 2.19 Transactions with Affiliates.
Except as set forth in Section 2.19 of the Disclosure
Schedule, the Company has no outstanding liabilities or
obligations for amounts owing to, or notes or accounts
receivable from, or leases, contracts or other
commitments or arrangements with or for the benefit of,
Seller, its affiliates or associates, or the Company's
directors, officers or employees.
Section 2.20 Ownership of PCT Common Stock.
Seller and its affiliates beneficially own 5,939,400
shares of PCT Common Stock (as defined below) and 20,000
shares of PCT Preferred Stock (as defined below).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Each of PCT and Purchaser represents and
warrants to Seller as follows:
Section 3.1 Organization, Standing and
Qualification. Each of PCT and Purchaser is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to
carry on its business as now being conducted.
Section 3.2 Authority Relative to this
Agreement. Each of PCT and Purchaser has full corporate
power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of
Directors of each of PCT and Purchaser and no other
corporate proceedings on the part of either PCT or
Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and
delivered by each of PCT and Purchaser and constitutes,
and each other agreement that is to be executed and
delivered by PCT or Purchaser, as the case may be, in
connection with the transactions contemplated by this
Agreement, when executed and delivered by any such party
will constitute, a valid and binding agreement of such
party enforceable against such party in accordance with
its terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting
creditors' rights generally, and (ii) as such
enforceability may be limited by general principles of
equity, regardless of whether asserted in a proceeding in
equity or law.
Section 3.3 Capitalization. The authorized
capital stock of PCT consists of 250,000,000 shares of
common stock, par value $.01 per share ("PCT Common
Stock"), of which 20,594,120 are issued and outstanding
and 250,000,000 shares of preferred stock, par value
$0.01 per share ("PCT Preferred Stock"), of which 20,000
are issued and outstanding. There are no other shares of
capital stock of PCT authorized, issued or outstanding.
All outstanding shares of PCT Common Stock and PCT
Preferred Stock are duly authorized, validly issued,
fully paid and nonassessable and are not subject to any
preemptive rights. Except as set forth in Section 3.3 of
the Disclosure Schedule, there are not (a) issued or
outstanding any securities convertible into or
exchangeable for, or any options, warrants, calls, puts,
subscriptions or other rights (preemptive or otherwise)
to acquire, any shares of capital stock of PCT or (b) any
agreements or contractual commitments involving PCT or
its affiliates relating to shares of PCT Common Stock,
PCT Preferred Stock or obligating PCT to issue or sell
any shares of its capital stock or any such securities,
options, warrants, calls, puts, subscriptions or other
rights.
Section 3.4 Consents and Approvals; No
Violation. Except for applicable requirements of the HSR
Act, there is no requirement applicable to PCT or
Purchaser to make any filing with, or to obtain any
permit, authorization, consent or approval of, any
Governmental Entity as a condition to the lawful
consummation by PCT or Purchaser of the transactions
contemplated hereby. Except for applicable requirements
of the HSR Act, neither the execution and delivery of
this Agreement by PCT or Purchaser, nor the consummation
by PCT or Purchaser of the transactions contemplated
hereby, nor compliance by PCT or Purchaser with any of
the provisions hereof will (i) conflict with or result in
a breach of any provision of the certificate of
incorporation or bylaws of PCT or Purchaser, (ii) result
in a breach of, or default under (or give rise to any
right of termination, cancellation or acceleration
under), any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation to which PCT or
Purchaser is a party or by which any of their respective
properties or assets may be bound, except for such
breaches or defaults (or rights of termination,
cancellation or acceleration) as to which requisite
waivers or consents have been obtained or will be
obtained prior to the Closing Date or (iii) violate any
order, judgment, writ, injunction, decree, statute, rule
or regulation applicable to it or its properties or
assets except for such violations which would not have a
material adverse effect on (x) the business, properties,
results of operations or financial or other conditions of
PCT and Purchaser, taken as a whole, or (y) on the
ability of PCT or Purchaser to consummate the
transactions contemplated hereby. Except as set forth in
Section 3.4 of the Disclosure Schedule, there is no
Proceeding pending or, to the best knowledge of PCT and
Purchaser, threatened against PCT or Purchaser that seeks
to prevent the consummation of the transactions
contemplated hereby.
Section 3.5 Brokers or Finders. Seller will
not have any obligation to pay any broker's, finder's,
investment banker's, financial advisor's or similar fee
in connection with this Agreement, or the transactions
contemplated hereby by reason of any action taken by or
on behalf of PCT or Purchaser.
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business. During the
period from the date hereof to the Closing, except as
otherwise contemplated by this Agreement, Seller shall
cause the Company to be operated only in the ordinary
course of business consistent with past practice. Seller
will use its reasonable best efforts to cause the Company
to preserve intact the present organization of the
Company, keep available the services of the present
officers and employees of the Company and preserve the
Company's relationships with customers, suppliers,
licensors, licensees, contractors, distributors and
others having significant business dealings with the
Company, as the case may be. Without limiting the
generality of the foregoing, and except as otherwise
provided in this Agreement, from the date of this
Agreement to the Closing, without the prior written
consent of Purchaser, Seller agrees that the Company
shall not:
(a) (i) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase
or otherwise) any shares of its capital stock or any
other securities or equity equivalents, (ii) split,
combine or reclassify any shares of its capital stock or
(iii) amend the terms of any such securities or
agreements outstanding on the date hereof;
(b) amend its certificate of incorporation or
by-laws;
(c) declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock,
or redeem, repurchase or otherwise acquire any of its
securities, except that Flavors and the Company may
declare, set aside or pay a cash dividend in an amount
not to exceed $5.4 million;
(d) (i) sell, lease, transfer or dispose of
any assets or rights, (ii) permit any asset to suffer any
Encumbrance thereupon, except for such Encumbrances
existing on the date hereof and Permitted Liens,
(iii) acquire any assets or rights, unless in the case of
(i), (ii) and (iii), (A) in the ordinary course of
business consistent with past practice, or (B) pursuant
to obligations in effect on the date hereof or (iv) enter
into any commitment or transaction binding on the Company
with respect to (i), (ii) or (iii) above, unless in the
ordinary course of business consistent with past
practice;
(e) (i) incur or assume any indebtedness for
borrowed money other than in the ordinary course of
business consistent with past practice, (ii) issue or
sell any debt securities or warrants or rights to acquire
any debt securities, (iii) assume, guarantee, endorse or
otherwise become liable (whether directly, contingently
or otherwise) for the obligations of any other person, or
(iv) make any loans, advances or capital contributions
to, or investments in, any other person;
(f) pay, discharge or satisfy any liability,
obligation, or Encumbrance (absolute, accrued, asserted
or unasserted, contingent or otherwise) of the Company,
other than the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice
or in accordance with their terms, of claims, liabilities
or obligations of the Company (i) reflected or reserved
against on the Balance Sheet or (ii) incurred in the
ordinary course of business consistent with past practice
since the date of the Balance Sheet;
(g) change any of the accounting or tax
principles, practices or methods used by the Company
(except as required by GAAP or law);
(h) enter into, adopt, amend or terminate any
Plan, increase in any manner the compensation or fringe
benefits of any officer or employee of the Company or pay
any benefit not required by any existing Plan, or enter
into any contract, agreement commitment or arrangement to
do any of the foregoing, except to the extent required by
applicable law or entered into in the ordinary course of
business consistent with past practice;
(i) enter into or offer to enter into any
employment arrangement (other than in the ordinary course
of business consistent with past practice for employees
at will with annual salaries of not more than $100,000
per person) or any consulting arrangement with any person
(other than in the ordinary course of business consistent
with past practice);
(j) make or authorize any capital
expenditures;
(k) settle or compromise any Tax liability;
(l) (i) enter into, amend or terminate any
Contract, except in the ordinary course of business
consistent with past practice, or (ii) take any action or
fail to take any action that, with or without either
notice or lapse of time, would constitute a material
default under any such Contract;
(m) make any payments, loans, advances or
other distributions to, or enter into any transaction,
agreement or arrangement with, Seller, or any of Seller's
affiliates or associates;
(n) make any change in its accounts payable
practices;
(o) terminate or amend or fail to perform any
of its obligations, permit any default to exist or cause
any material breach under any of the Company policies of
insurance set forth in Section 2.13 of the Disclosure
Schedule;
(p) dispose of or permit to lapse any material
item of Intellectual Property;
(q) take, or agree in writing or otherwise to
take, any of the actions set forth in this Section 4.1.
Section 4.2 Access to Information. (a) Seller
shall, and shall cause the Company to, (i) give Purchaser
and its authorized representatives full access during
normal business hours to all books and records, plants,
offices, warehouses and other facilities and properties
utilized by the Company in connection with its business
and all information relating to the Company, its
business, properties, assets, financial condition,
results of operations and prospects, (ii) permit
Purchaser and its authorized representatives, to make
such inspections thereof and to interview such personnel
of the Company during normal business hours as Purchaser
may reasonably request and (iii) cause the Company's
officers and auditors to furnish Purchaser and its
authorized representatives with such financial and
operating data and other information with respect to the
items set forth in clause (i) of this paragraph (a) as
Purchaser may from time to time reasonably request, and
cause the Company's auditors to deliver their workpapers
related to such information if Purchaser shall so
request.
(b) All information about the Company obtained
by Purchaser from Seller or the Company or their
respective directors, officers, employees, agents or
representatives in connection with the transactions
contemplated hereby (other than publicly available
information) shall be held in confidence by Purchaser and
such information shall not be disclosed to any person
(other than Purchaser and its affiliates and its or their
directors, officers, employees, agents, and
representatives) except as may be required by judicial
process, administrative order, or any law, rule or
regulation.
Section 4.3 Reasonable Best Efforts. (a)
Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly
as practicable including, but not limited to, (i) the
preparation and filing of all applicable forms under the
HSR Act, (ii) the preparation and filing of all other
forms, registrations and notices required to be filed to
consummate the transactions contemplated by this
Agreement and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders,
exemptions or waivers by any third party or Governmental
Entity and (iii) the satisfaction of all conditions to
Closing. Each party shall promptly consult with the
other party to provide any necessary information not
subject to legal privilege with respect to, and provide
the other party (or its counsel) copies of, all filings
made by such party with any Governmental Entity or any
other information supplied by such party to a
Governmental Entity in connection with this Agreement and
the transactions contemplated by this Agreement.
(b) Each party hereto shall promptly inform
the other party of any communication from any
Governmental Entity regarding any of the transactions
contemplated by this Agreement. If any party or
affiliate thereof receives a request for additional
information or documentary material from any such
Governmental Entity with respect to the transactions
contemplated by this Agreement, then such party will
endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation
with the other party, an appropriate response in
compliance with such request.
Section 4.4 Preparation of Registration
Statement; Listing. (a) As soon as practicable
following the Closing Date, at the direction of, and with
all reasonably necessary assistance from, Purchaser,
Seller shall prepare and file with the SEC any
registration statement (the "Registration Statement")
necessary for PCT to distribute the VSRs to its
stockholders. Each party will provide the other party
and its agents with reasonable opportunity to review and
comment upon the Registration Statement, including all
amendments and supplements thereto, prior to the filing
thereof with the SEC and or distribution thereof to the
stockholders of PCT, and shall make all reasonable
changes thereto requested by the other party or its
agents. Each party shall use its reasonable best efforts
to have the Registration Statement declared effective by
the SEC as promptly as practicable. Each party shall
provide and shall be deemed to have provided the other
party with the information concerning it required to be
included in the Registration Statement. Seller shall
take any action required to be taken under any applicable
state securities laws in connection with the issuance of
the VSRs and shall cause the VSR Agreement to be
qualified under the Trust Indenture Act of 1939, as
amended (the "TIA"), if required by the TIA.
(b) As soon as practicable following the
Closing Date, at the direction of, and with all
reasonable necessary assistance from, Purchaser, Seller
shall use its best efforts to cause the VSRs to be
approved for listing on the New York Stock Exchange
("NYSE") or other national securities exchange or
automated quotation system approved by Seller and
Purchaser, in each case, subject to official notice of
issuance.
Section 4.5 Covenant of PCT. (a) Except as
set forth in Section 4.5 of the Disclosure Schedule, from
the date of this Agreement until the date of the
distribution of the VSRs to stockholders of PCT, without
the prior written consent of Seller, PCT shall not (i)
authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any
shares of its capital stock or any other securities or
equity equivalents, (ii) split, combine or reclassify any
shares of its capital stock, (iii) amend the terms of any
such securities or agreements outstanding on the date
hereof or (iv) declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock,
or redeem, repurchase or otherwise acquire any of its
securities.
(b) Each of PCT and Purchaser covenant to
cause the distribution of one VSR and 125 VSRs per share
to all holders of PCT Common Stock and PCT Preferred
Stock, respectively, as soon as practicable following the
declaration by the SEC of the effectiveness of the
Registration Statement.
Section 4.6 Further Assurances. Seller and
Purchaser agree that, from time to time after the
Closing, without additional consideration, each of them
will execute and deliver such further instruments and
take such other action as may be necessary to make
effective the transactions contemplated by this
Agreement.
Section 4.7 No Solicitation. Seller will, and
will cause the Company to, immediately cease any existing
discussions or negotiations with any third parties
conducted prior to the date hereof with respect to any
merger, business combination, sale of assets (other than
sales permitted by this Agreement), sale of shares of
capital stock or other securities or similar transaction
involving any third party and Seller or the Company (an
"Acquisition Transaction"). Seller shall, and Seller
will ensure that the Company and its directors and
officers shall, and will use their reasonable best
efforts to cause Seller's and the Company's employees or
other affiliates not to, directly or indirectly,
encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any
information to, any corporation, partnership, person or
other entity or group (other than Purchaser or its
directors, officers, employees or other affiliates or
representatives) concerning any Acquisition Transaction.
Seller will immediately communicate to Purchaser any such
inquiries or proposals regarding an Acquisition
Transaction and the terms thereof.
Section 4.8 Fees and Expenses. Except as
otherwise set forth in this Agreement, each party hereto
shall pay the fees and expenses incurred by it in
connection with the transaction contemplated hereby. In
addition, the cost of obtaining the third party consents
set forth on Section 2.4 of the Disclosure Schedule
necessary to allow Seller, Flavors or the Company to
consummate the transactions contemplated hereby shall be
borne by the Company. Any fees and expenses incurred in
connection with the settlement of the litigation set
forth in Sections 2.4 and 3.4 of the Disclosure Schedule
shall be split evenly between Seller and Purchaser until
such aggregate amount equals $1,000,000 and, thereafter,
all such fees and expenses shall be paid by Seller;
provided, however, if requested by Seller, Purchaser
shall advance the amount of any fees and expenses to be
paid by Seller and the amount of such advance shall be
deducted from the Deferred Cash Payments (together with
interest accrued at a rate of 5.5% annually until the
date of the relevant Deferred Cash Payment), first from
the Deferred Cash Payment to be made on December 31, 1997
and then, if necessary, from the Deferred Cash Payment to
be made on June 30, 1997.
Section 4.9 Public Announcements. Subject to
Section 4.4 hereof, none of Seller, the Company or
Purchaser will issue or cause the publication of any
press release or otherwise make any public statement with
respect to the transactions contemplated hereby without
the prior written consent of the parties hereto;
provided, that any party hereto may make a public
announcement to the extent required by law, judicial
process or the rules, regulations or interpretations of
the Securities and Exchange Commission.
Section 4.10 Books and Records. At the
Closing, Seller shall deliver to the Company all books
and records in its possession relating to the Company.
Section 4.11 Tax Matters. (a) Tax Treatment
- Section 338(h)(10) Election. With respect to the sale
and acquisition of the Shares pursuant to this Agreement,
(A) within 240 days after the Closing Date, Seller and
Purchaser shall agree on the form and content of the IRS
Forms 8023-A (the "Forms 8023-A") on which the election
to be made pursuant to Section 338(h)(10) of the Code
(the "Election") shall be made; (B) within fifteen (15)
days thereafter, Purchaser shall deliver to Seller
properly executed Forms 8023-A, which Seller shall file
on a timely basis with the Internal Revenue Service (the
"IRS") following the Closing Date; (C) Seller and
Purchaser shall jointly and timely make any elections
under state or local tax law comparable to the Election
with respect to the purchase of the Shares; (D) Seller
and Purchaser shall, as promptly as practicable following
the Closing Date, cooperate with each other to take all
other actions necessary and appropriate (including filing
such forms, returns, elections, schedules and other
documents as may be required) otherwise to effect and
preserve timely Election in accordance with the
provisions of Treasury Regulation Sections 1.338-1 and
1.338(h)(10)-1 (or any comparable provisions of state or
local tax law) or any successor provisions; and (E)
Seller and Purchaser shall report the sale and
acquisition, respectively, of the Shares pursuant to this
Agreement consistent with the Election (and any
comparable elections under state or local tax laws) and
shall take no position to the contrary thereto in any Tax
Return, any proceeding before any taxing authority or
otherwise.
(b) To the extent permissible by law, Seller
shall prepare and file or cause to be filed (i) any
corrections, amendments or supplements to the Forms 8023-
A and (ii) any state or local forms or reports that are
necessary or appropriate for purposes of complying with
the requirements for making any state or local election
that is comparable to the Election. To the extent
necessary for the valid filing of any such corrections,
amendments, supplements, forms or reports, Purchaser
shall, at the request of Seller, properly execute or have
properly executed any requisite forms or reports
specified by Seller, and, to the extent required by law
and reasonably practicable within the time period
following receipt of Seller's requests, Purchaser shall
file timely or cause to be filed timely any such forms or
reports.
(c) In connection with the Election, within
180 days after the Closing Date, (i) Seller shall provide
to Purchaser a proposed determination of the Modified
Aggregate Deemed Sales Price (as defined under applicable
Treasury Regulations) with respect to Flavors, and (ii)
Purchaser shall provide to Seller a proposed allocation
of such Modified Aggregate Deemed Sales Price among the
assets of Flavors, which allocations shall be made in
accordance with Section 338(b) of the Code and any
applicable Treasury Regulations. Within 10 days
following such provision, Purchaser and Seller,
respectively, shall have the right to object to any such
determination or allocation. If a party objects to any
such determination or allocation, the parties shall
resolve their dispute pursuant to the provision for
resolving Tax Related Disputes described in paragraph (k)
of this Section 4.11. Seller and Purchaser (i) shall be
bound by the allocations determined pursuant to this
paragraph for purposes of determining any Taxes; (ii)
shall prepare and file all Tax Returns to be filed with
any taxing authority in a manner consistent with such
allocations; and (iii) shall take no position
inconsistent with such allocations in any Tax Return, any
proceeding before any taxing authority or otherwise. In
the event that any such allocation is disputed by any
taxing authority, the party receiving notice of such
dispute shall promptly notify and consult with the other
party hereto concerning resolution of such dispute.
Neither Seller nor Purchaser shall, or shall permit any
of their affiliates (including, without limitation,
Flavors and any of its subsidiaries) to, take any action
to modify any of the forms or reports (including any
corrections, amendments or supplements thereto) that are
required for the making of the Election or any comparable
elections under state or local tax law after their
execution or to modify or revoke the Election following
the filing of the Forms 8023-A by Seller without the
written consent of Seller and Purchaser, as the case may
be.
(d) For purposes of any Taxes, Seller and
Purchaser agree that as of the Closing Date each VSR has
a fair market value equal to the average trading price of
the VSRs on the first day the VSRs are traded on the New
York Stock Exchange or other national securities exchange
or automated quotation system, unless Seller and
Purchaser agree that such price does not accurately
reflect the value of the VSRs as of the Closing Date, in
which case Seller and Purchaser shall mutually agree on
an appropriate fair market value for the VSRs.
Purchaser and Seller agree to file, and to cause their
affiliates to file, all Tax Returns on a basis consistent
with the valuations set forth in this Section 4.11(d).
(e) Indemnification.
(i) Seller's Indemnification of
Purchaser. Seller shall indemnify Purchaser from,
against, and in respect of (A) any Taxes of Flavors or
any of its subsidiaries for any taxable period, or
portion of a Straddle Period (as determined pursuant to
Section 4.11(f) hereof), ending on or prior to the
Closing Date; (B) any Taxes of Flavors or any of its
subsidiaries arising from the departure by Flavors or any
of its subsidiaries from an affiliated, unitary,
consolidated, combined, or other similar group as a
result of the transactions contemplated by this
Agreement, or attributable to any corporation or other
entity which joined with Flavors or any of its
subsidiaries in the filing of an affiliated, unitary,
consolidated, combined, or similar return for any taxable
period, or portion of a Straddle Period (as determined
pursuant to Section 4.11(f) hereof), ending on or prior
to the Closing Date; and (C) any Transfer Taxes for which
Seller is liable pursuant to Section 4.11(i) hereof; and
(ii) Purchaser's Indemnification of
Seller. Purchaser shall indemnify Seller from, against,
and in respect of (A) any Taxes of Flavors or any of its
subsidiaries for any taxable period, or portion of a
Straddle Period (as determined pursuant to Section
4.11(f) hereof), beginning after the Closing Date; and
(B) any Transfer Taxes for which Purchaser is liable
pursuant to Section 4.11(i) hereof.
(f) Computation of Tax Liabilities, Proration
of Taxes and Earnings and Profits. To the extent
permitted by Law or administrative practice, the taxable
year of Flavors and each of its subsidiaries shall end on
and include the Closing Date. For purposes of
determining the earnings and profits of Flavors and each
of its subsidiaries or the liability for Taxes for a
portion of a taxable year or period that begins before
and ends after the Closing Date (a "Straddle Period"),
the determination of such earnings and profits or such
Taxes for the portion of the year or period ending on,
and the portion of the year or period beginning after,
the Closing Date, shall be determined by assuming that
the taxable year or period ended on and included the
Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis and
annual real and personal property taxes shall be prorated
on the basis of the number of days in the annual period
elapsed through the Closing Date as compared to the
number of days in the annual period elapsing after the
Closing Date.
(g) Tax Returns.
(i) Seller shall prepare, or cause
to be prepared, and file, or cause to be filed, on a
timely basis all Tax Returns with respect to Flavors and
each of its subsidiaries for any taxable period ending on
or prior to the Closing Date;
(ii) Purchaser shall prepare, or
cause to be prepared, and file, or cause to be filed, on
a timely basis all Tax Returns with respect to Flavors
and each of its subsidiaries for any taxable period
ending after the Closing Date, including Tax Returns for
any Straddle Period; and
(iii) If either Purchaser, on the
one hand, or Seller, on the other hand, may be liable for
any portion of the Taxes payable on any Tax Return to be
filed by the other, the party responsible for filing such
return (the "Preparer") shall use its best efforts to
prepare and deliver to the other party (the "Payor") a
copy of such return and any schedules, work papers and
other documentation then available that are relevant to
the preparation of the portion of such return for which
the Payor is or may be liable hereunder not later than
thirty (30) days prior to the due date for such return
(inclusive of extensions). The Preparer shall not file
such return without the prior written consent of the
Payor, which consent shall not be unreasonably withheld
and which consent shall be provided to the Preparer at
least ten (10) days prior to the due date for such return
(inclusive of extensions). If the Preparer and the Payor
are unable to agree on the amount of the Payor's
liability for any Taxes reflected on a Tax Return, such
dispute shall be settled by an internationally recognized
firm of independent public accountants mutually
acceptable to both the Preparer and the Payor (the "CPA
Firm") whose fees and expenses shall be paid by the
Preparer and the Payor in proportion to each party's
respective liability for the items in dispute as
determined by the CPA Firm, and the Payor shall pay the
amount determined by the CPA Firm within five (5)
Business Days of such determination. If the Preparer
fails to satisfy its obligations under this Section
4.11(g)(iii), the Payor's obligation to indemnify the
Preparer for any Taxes which are reflected on any such
Tax Return shall be reduced to the extent the Payor is
prejudiced by such failure and the Payor shall retain any
and all remedies it may otherwise have which arise out of
such failure.
(h) Contest Provisions. (i) Notification of
Contests. Each of Purchaser, on the one hand, and
Seller, on the other hand (the "Recipient"), shall notify
the other party in writing within thirty (30) days of
receipt by the Recipient of written notice of any pending
or threatened audits, adjustments or assessments relating
to Taxes (a "Tax Audit") which may affect the liability
for Taxes of such other party. If the Recipient fails to
give such written notice to the other party, the
Recipient shall not be entitled to indemnification for
any Taxes arising in connection with such Tax Audit to
the extent such failure to give notice affects the other
party's ability to participate in the Tax Audit or
increases the other party's liability for Taxes;
(ii) Control of Contests. To the
extent a Tax Audit relates to any taxable period ending
on or prior to the Closing Date, Seller shall at its
expense control the defense and settlement of such Tax
Audit. To the extent a Tax Audit relates to any taxable
period beginning after the Closing Date, Purchaser shall
at its expense control the defense and settlement of such
Tax Audit. To the extent a Tax Audit relates to any
Straddle Period Seller shall at its expense control the
defense and settlement of such Tax Audit.
Notwithstanding the foregoing, neither party shall be
entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which
would adversely affect the liability for Taxes of Flavors
or any of its subsidiaries with respect to any taxable
period ending after the Closing Date (including any
Straddle Period) or the liability for Taxes of Seller,
Flavors or any of its subsidiaries with respect to
periods ending on or before the Closing Date to any
extent (including, but not limited to, the imposition of
income tax deficiencies, the reduction of asset basis or
cost adjustments, the lengthening of any amortization or
depreciation periods, the denial of amortization or
depreciation deductions, or the reduction of loss or
credit carryforwards) without the prior written consent
of the other party. Such consent shall not be
unreasonably withheld and shall not be necessary to the
extent that the appropriate party has indemnified the
other party in form and substance reasonably acceptable
to the indemnitee. If a firm offer is made by a taxing
authority to settle a claim or litigation and the party
which desires to accept the offer ("Settling Party")
notifies the other party ("Affected Party") in writing
that it desires to accept and agree to such settlement,
but the Affected Party elects not to accept or agree to
such settlement, the Affected Party may continue to
contest or defend such claim or litigation and, in such
event, the total maximum liability of the Settling Party
with respect to such claim or litigation shall be limited
to and shall not exceed the amount of the Settling
Party's share of such settlement offer, plus the Settling
Party's reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and disbursements)
to the date of notice that the Settling Party desires to
accept such settlement; and
(iii) Participation Rights. Any
party whose liability for Taxes may be affected by a Tax
Audit shall be entitled to participate at its own expense
in such defense and to employ counsel of its choice at
its own expense.
(i) Transfer Taxes. All excise, sales, use,
transfer (including real property transfer or gains),
stamp, documentary, filing, recordation and other similar
taxes together with any interest, additions or penalties
with respect thereto and any interest in respect of such
additions or penalties ("Transfer Taxes") resulting
directly or indirectly from the transfer by Seller of the
Shares to Purchaser, shall be borne equally by Seller and
Purchaser. Any Tax Returns that must be filed in
connection with such Transfer Taxes shall be prepared and
filed when due by the party primarily or customarily
responsible under the applicable local law for filing
such Tax Returns, and such party will use its best
efforts to provide such Tax Returns to the other party at
least thirty (30) days prior to the due date for such Tax
Returns. Notwithstanding Section 4.11(g) hereof, the
responsibility for filing Tax Returns relating to
Transfer Taxes shall be covered exclusively by this
Section 4.11(i).
(j) Certain Post-Closing Settlement Payments.
(i) Purchaser's Claiming, Receiving or Using Refunds and
Overpayments. Except as provided in Section 4.11(j)(ii),
if, after the Closing Date, Purchaser, Flavors or any of
their subsidiaries receive any refund, or utilize the
benefit of any overpayment of Taxes which, in either
case, (A) relates to a Tax paid by Seller or any of its
affiliates on or prior to the Closing Date, or (B) is the
subject of indemnification by Seller under this
Agreement, Purchaser shall promptly transfer, or cause to
be transferred, to Seller the entire amount of the refund
or overpayment (including interest) received or utilized
by Purchaser. Purchaser shall notify Seller promptly
after the discovery of a right to claim any such refund
or overpayment and the receipt of any such refund or
utilization of any such overpayment. Purchaser shall as
promptly as practicable claim any such refund or utilize
any such overpayment and shall furnish to Seller all
information, records and assistance necessary to verify
the amount of the refund or overpayment;
(ii) Purchaser's Carryback of Post-
Closing Losses. Purchaser may carry back any Tax losses
or credits to any taxable period of Seller or Flavors
ending on or prior to the Closing Date and shall be
entitled to retain the refund or other benefit resulting
therefrom; provided, however, that Purchaser shall
indemnify Seller from, against and in respect of all
Taxes relating directly or indirectly to such carry back;
(iii) Realization of Tax Benefits in
Respect of Indemnified Liabilities. (A) If, after the
Closing Date, (a) Purchaser or any of its affiliates
realizes any Damages for which it is indemnified by
Seller or (b) an adjustment required by any taxing
authority increases Seller's indemnification obligation
under this Agreement, Purchaser and its affiliates shall
claim any such Damages and recognize any such adjustment
on their Tax Returns and claim to the fullest extent
permissible all deductions allowable as a result of any
such Damages or adjustment. Purchaser shall furnish to
Seller at Seller's expense all relevant information,
records and assistance reasonably necessary to verify the
amount of the decrease, if any, in Purchaser's and its
affiliates' Taxes paid solely as a result of recognizing
or realizing such Damages or adjustment and claiming all
such permissible deductions (as compared to the Taxes
Purchaser and its affiliates would otherwise have paid
solely without such Damages or adjustment). Purchaser
shall promptly transfer, or cause to be transferred, to
Seller the entire amount of such decrease at the time
such decrease is realized, whether realized by Purchaser
and its affiliates paying less Taxes or receiving a
refund;
(B) If, after the Closing Date, (a)
Seller or any of its affiliates realizes any Damages for
which it is indemnified by Purchaser hereof or (b) an
adjustment required by any taxing authority increases
Purchaser's indemnification obligation under this
Agreement, Seller and its affiliates shall claim any such
Damages and recognize any such adjustment on their Tax
Returns and claim to the fullest extent permissible all
deductions allowed as a result of any such Damages or
adjustment. Seller shall furnish to Purchaser at
Purchaser's expense all material information, records and
assistance necessary to verify the amount of the
decrease, if any, in Seller's and its affiliates' Taxes
paid solely as a result of recognizing or realizing such
Damages or adjustment and claiming all such permissible
deductions (as compared to the Taxes Seller and its
affiliates would otherwise have paid solely without such
Damages or adjustment). Seller shall promptly transfer,
or cause to be transferred, to Purchaser the entire
amount of such decrease at the time such decrease is
realized, whether realized by Seller and its affiliates
by paying less Taxes or receiving a refund.
(iv) Subsequent Adjustment. In the event
that any Tax refund, benefit or savings described in any
clause of this Section 4.11(j) is subsequently reduced as
a result of any adjustment required by any final
determination of the applicable law of the relevant
jurisdictions, this Section 4.11(j) shall be applied
taking into account such adjustment.
(k) Resolution of All Tax Related
Disputes. For purposes of computing the amount of any
payment due under this Section 4.11, each party shall
provide to the other, as reasonably requested by the
other, all reasonably available information, records and
assistance necessary to verify the amount of the payment
due. In the event that Seller, on the one hand, and
Purchaser, on the other hand, cannot agree on any
calculation of any amount relating to Taxes or the
interpretation or application of any provision of this
Agreement relating to Taxes, such dispute shall be
resolved by the CPA Firm, which shall act as an
arbitrator to resolve all points of disagreement and
whose decision shall be final and binding upon all
persons involved and whose expenses shall be paid by
Seller and Purchaser in proportion to each party's
respective liability as determined by the CPA Firm.
(l) Closing and Post-Closing Actions which
Affect Seller's Liability for Taxes. (i) Purchaser
shall not and shall not permit Flavors or any of its
subsidiaries, without the prior written consent of
Seller, to take any action on or after the Closing Date
if such action could increase the liability for Taxes of
Seller with respect to the transactions contemplated by
this Agreement (including any obligation of Seller to
indemnify Purchaser under this Agreement).
(ii) Purchaser shall not, without
the prior written consent of Seller, amend any Tax Return
filed by, or with respect to, Flavors or any of its
subsidiaries for any taxable period, or portion thereof,
beginning before the Closing Date and ending on or before
the Closing Date.
(m) Maintenance of Books and Records. Until
the applicable statute of limitations (including periods
of waiver) has run for all Tax Returns filed or required
to be filed with respect to taxable periods ending on or
prior to the Closing Date, Purchaser shall retain all of
the books and records relating to Flavors and each of its
subsidiaries in existence on the Closing Date and after
the Closing Date will upon request and for a reasonable
and specific purpose provide Seller access to such
relevant books and records for inspection and copying by
Seller and their representatives during normal business
hours. After the expiration of such period, no such
books and records shall be destroyed by Purchaser without
first advising Seller in writing and giving Seller at
least sixty (60) business days to obtain possession
thereof.
(n) Termination of Existing Tax Sharing
Agreements. Prior to the Closing Date, the parties shall
terminate any existing tax sharing agreements to the
extent such agreement or arrangement binds Flavors or any
of its subsidiaries. The preceding sentence shall not
apply to any agreement entered into in connection with
this Agreement.
(o) Assistance and Cooperation. The parties
agree that, after the Closing Date: (i) Each party
shall assist the other party in preparing and filing any
Tax Returns which such other party is responsible for
preparing and filing;
(ii) The parties shall cooperate
fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns
and payments in respect thereof;
(iii) The parties shall make
available to each other and to any taxing authority
as reasonably requested all relevant books and
records relating to Taxes;
(iv) Each party shall provide timely
written notice to the other party of any pending or
proposed Tax Audit for which the other party may
have an indemnification obligation under this
Agreement;
(v) Each party shall furnish the
other party with copies of all relevant
correspondence received from any taxing authority in
connection with any Tax Audit or information request
relating to any Taxes referred to in subsection (iv)
of this Section 4.11(o); and
(vi) Except as otherwise provided
herein, the party requesting assistance or
cooperation shall bear the other party's reasonable
out-of-pocket expenses in complying with such
request to the extent that those expenses are
attributable to fees and other costs of unaffiliated
third-party service providers.
(p) To the extent any provision in any other
Section of this Agreement is inconsistent with any
provisions of this Section 4.11, this Section 4.11 shall
exclusively govern all matters relating to Taxes
(including the procedure by which claims for Tax
indemnification are made, the determination of any
amounts required to be paid, and the manner by which
controversies are resolved).
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Each Party's
Obligations. The respective obligations of each party to
effect the transactions contemplated by this Agreement
shall be subject to the satisfaction at or prior to the
Closing of the following condition:
(a) No statute, rule, regulation, order,
decree or injunction shall have been enacted, entered,
promulgated or enforced by a Governmental Entity which
prohibits the consummation of the transactions
contemplated by this Agreement and shall be in effect
and, except as set forth in Sections 2.12 and 3.4 of the
Disclosure Schedule, no Proceeding seeking such relief
shall be pending.
Section 5.2 Conditions to Obligations of
Purchaser. The obligations of PCT and Purchaser to
effect the transactions contemplated by this Agreement
are further subject to the satisfaction at or prior to
the Closing of the following conditions:
(a) The representations and warranties of
Seller in this Agreement shall be true and correct in all
material respects as of the date hereof and at and as of
the Closing with the same effect as though such
representations and warranties had been made at and as of
such time, other than representations and warranties that
speak as of a specific date or time (which need only be
true and correct in all material respects as of such date
or time);
(b) Seller and the Company shall have
performed in all material respects all obligations
required to be performed by them under this Agreement at
or prior to the Closing;
(c) Purchaser shall have received
certificates, dated the Closing Date, from (i) the
Company, duly executed by the Company, (ii) Flavors, duly
executed by Flavors and (iii) Seller, duly executed by
Seller, to the effect of (a) and (b) above;
(d) All authorizations, Permits, consents,
orders or approvals of, or declarations or filings with,
or expirations or terminations of waiting periods
(including the waiting period under the HSR Act) imposed
by, any Governmental Entity, and all third party consents
(collectively, the "Authorizations") necessary to effect
the transactions contemplated by this Agreement, shall
have occurred, been filed or been obtained;
(e) Seller shall have delivered or caused to
be delivered to Purchaser each of the items specified in
Section 1.5 hereof.
Section 5.3 Conditions to Obligations of
Seller. The obligations of Seller to effect the
transactions contemplated by this Agreement are further
subject to the satisfaction at or prior to the Closing of
the following conditions:
(a) The representations and warranties of
Purchaser in this Agreement shall be true and correct in
all material respects as of the date hereof and at and as
of the Closing with the same effect as though such
representations and warranties had been made at and as of
such time, other than representations and warranties that
speak as of a specific date or time (which need only be
true and correct in all respects as of such date or
time);
(b) Purchaser shall have performed in all
material respects all obligations required to be
performed by it under this Agreement at or prior to the
Closing;
(c) Seller shall have received certificates,
dated the Closing Date, from (i) Purchaser, duly executed
by Purchaser, and (ii) PCT, duly executed by PCT, to the
effect of (a) and (b) above;
(d) All Authorizations necessary for Purchaser
to effect the transactions contemplated by this
Agreement, shall have occurred, been filed or been
obtained by it; and
(e) Purchaser shall have delivered or caused
to be delivered to Seller each of the items specified in
Section 1.6 hereof.
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.1 Termination. This Agreement may
be terminated at any time prior to the Closing:
(a) by mutual consent of Seller and Purchaser;
(b) by either Seller, on the one hand, or
Purchaser, on the other hand, if the Closing shall not
have occurred by December 31, 1996; or
(c) by either Seller or Purchaser if any court
of competent jurisdiction or other competent Governmental
Entity shall have issued an order, decree or injunction
or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such statute, rule,
regulation, order, decree or injunction or other action
shall have become final and nonappealable.
Section 6.2 Effect of Termination. In the
event of the termination and abandonment of this
Agreement pursuant to Section 6.1 hereof, (i) this
Agreement shall forthwith become void and have no effect,
without any further obligation on the part of any party
hereto or its affiliates, directors, officers,
stockholders, agents, or representatives, except that the
provisions of Sections 2.18, 3.5 and 4.2(b) (and Section
8.7 to the extent it is applicable to such Sections)
shall survive and no party shall be relieved of any
liability for any breach of this Agreement and (ii)
Purchaser will redeliver to Seller all documents, work
papers and other material of Seller or otherwise
delivered by Seller relating to the transactions
contemplated hereby, whether so obtained before or after
the execution hereof.
Section 6.3 Amendment. This Agreement may be
amended at any time by the parties hereto, but only by an
instrument in writing signed by each of the parties
hereto.
Section 6.4 Extension; Waiver. At any time
prior to the Closing, the parties hereto may (i) extend
the time for the performance of any of the obligations or
other acts of the parties hereto, (ii) waive any
inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement
on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written
instrument signed by such party.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival Periods. All
representations and warranties of the parties contained
in this Agreement, the Disclosure Schedule, or any
certificate or document delivered in connection herewith
shall survive the Closing and shall apply with respect to
claims asserted in writing within eighteen months from
the Closing Date; provided, that the representations and
warranties set forth in Sections 2.1, 2.2, 2.3, 2.4 and
2.8 shall survive the Closing indefinitely, the
representations and warranties contained in Sections 2.14
and 2.16 shall survive the Closing Date until the third-
year anniversary of the date of this Agreement and the
representations and warranties contained in Section 2.15
shall survive the Closing Date until the expiration of
the applicable statutes of limitation for the assessment
or collection of the Taxes to which such representation
or warranty relates. The covenants and agreements of the
parties hereto shall survive the Closing in accordance
with their terms. For purposes of this Agreement, the
representations and warranties of Seller contained herein
shall be deemed to include the Disclosure Schedule.
Rights of a party to indemnification shall not be limited
or affected by any pre-Closing investigation by such
party.
Section 7.2 Indemnification. Subject to the
other provisions of this Article VII, from and after the
Closing:
(a) Seller shall indemnify and hold harmless
Purchaser, its subsidiaries and affiliates, each of
Purchaser's, its subsidiaries' and affiliates' directors,
officers, employees, representatives and agents
("Representatives"), and each of the heirs, executors,
successors and assigns of any of the foregoing
(collectively, "Purchaser Group") from and against any
costs or expenses (including attorneys' fees), judgments,
fines, losses, claims and damages (collectively,
"Damages") incurred by the members of Purchaser Group
which arise out of or are the result of any breach of any
representation or warranty or failure to perform any
covenant or agreement made by Seller or on behalf of the
Company under this Agreement or the Disclosure Schedule
delivered by Seller in connection herewith.
(b) PCT and Purchaser, jointly and severally,
shall indemnify and hold harmless Seller, each of its
Representatives, and each of the heirs, executors,
successors and assigns of any of the foregoing
(collectively, "Seller Group") from and against any
Damages incurred by the members of Seller Group which
arise out of or are the result of any breach of any
representation or warranty or the failure to perform any
covenant or agreement made by or on behalf of Purchaser
under this Agreement or any documents delivered by
Purchaser in connection herewith.
(c) The members of Seller Group, on the one
hand, and the members of Purchaser Group, on the other
hand, as the case may be, are sometimes referred to
herein as the "Indemnified Parties."
(d) Neither the Purchaser Group nor the Seller
Group shall be entitled to indemnification from PCT and
Purchaser, on the one hand, or Seller, on the other hand,
for Damages which arise out of or are the result of any
breach of any representation or warranty (except those
set forth in Section 2.15 hereof) or the failure to
perform any covenant or agreement under this Agreement
(except those set forth in Section 4.11 hereof), unless
the cumulative total of all Damages of the Purchaser
Group or the Seller Group, as the case may be, exceeds
$2,000,000 and then only to the extent such cumulative
total of Damages exceeds $2,000,000. The maximum amount
of Damages that PCT and Purchaser, on the one hand, or
Seller, on the other hand, shall be liable for under this
Section shall be $100,000,000 (which shall be in addition
to any liability for Taxes under Sections 2.15 and 4.11
hereof).
(e) To the extent permitted by law, Purchaser
and Seller shall, and shall cause their affiliates to,
treat for tax purposes any indemnification payments made
or received with respect to any Damages as an adjustment
to the purchase price for the Shares.
Section 7.3 General Procedures; Third Party
Claims. (a) If an Indemnified Party intends to seek
indemnification pursuant to this Article VII, such
Indemnified Party shall promptly notify Seller or PCT and
Purchaser (and in any event shall deliver such notice
within the survival periods set forth in Section 7.1
hereof), as the case may be (the "Indemnifying Party"),
in writing of such claim describing such claim in
reasonable detail; provided, that the failure to provide
such notice shall not affect the obligations of the
Indemnifying Party unless it is actually prejudiced
thereby, subject, however, to the time periods specified
in Section 7.1 hereof. In the event that such claim
involves a claim by a third party against the Indemnified
Party, the Indemnifying Party shall have 30 days after
receipt of such notice to decide whether it will
undertake, conduct and control, through counsel of its
own choosing (which shall be reasonably satisfactory to
the Indemnified Party) and at its own expense, the
settlement or defense thereof, and if it so decides, the
Indemnified Party shall cooperate with it in connection
therewith; provided, that the Indemnified Party may
participate in such settlement or defense through counsel
chosen by it whose fees and expenses shall be borne by
the Indemnified Party, unless the Indemnified Party shall
have reasonably concluded based upon written advice of
counsel that representation by the same counsel would
represent a conflict of interest due to the availability
to it of defenses which are different from or additional
to those available to the Indemnifying Party, in which
case, such reasonable fees and expenses of such counsel
(which shall be reasonably satisfactory to the
Indemnifying Party) shall be borne by the Indemnifying
Party. Notwithstanding anything in this Section 7.3(a)
to the contrary, the Indemnifying Party may, without the
consent of the Indemnified Party, settle or compromise
any action or consent to the entry of any judgment which
includes as an unconditional term thereof the delivery by
the claimant or plaintiff to the Indemnified Party of a
duly executed and legally effective written release of
the Indemnified Party from all liability in respect of
such action. The Indemnifying Party shall not be liable
for any settlement of any such action or proceeding
effected without its written consent, but if settled with
its written consent (which shall not be unreasonably
withheld) or if there is a final judgment for the
plaintiff in any such action or proceeding, the
Indemnifying Party agrees to indemnify and hold harmless
such Indemnified Parties from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing, any claims for Damages
with respect to Taxes pursuant to this Section 7.3 shall
be governed by Section 4.11 hereof.
(b) The Indemnified Party and the Indemnifying
Party shall cooperate fully in all aspects of any
investigation, defense, pre-trial activities, trial,
compromise, settlement or discharge of any claim in
respect of which indemnity is sought pursuant to Article
VII, including, but not limited to, by providing the
other party with reasonable access to employees and
officers (including as witnesses) and other information.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Certain Definitions. For all
purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) "affiliate" or "associate" of any specified
person means any other person directly or indirectly
controlling or controlled by or under direct or indirect
common control with such specified person. For the
purposes of this definition, "control" when used with
respect to any specified person means the power to direct
the management and policies of such person, directly or
indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative
to the foregoing;
(b) "business day" means any day (other than a
Saturday or a Sunday) on which banking institutions in
The City of New York, New York are not authorized or
obligated by law or executive order to close and, if the
VSRs are listed on a national securities exchange, such
exchange is open for trading; and
(c) "person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, limited liability company, unincorporated
organization or government or any agency or political
subdivision thereof.
Section 8.2 Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given upon receipt if delivered personally,
telecopied (which is confirmed) or mailed by registered
or certified mail (return receipt requested) or overnight
delivery service to the parties at the following
addresses (or at such other address for a party as shall
be specified by like notice):
(a) if to PCT or Purchaser, to:
Power Control Technologies Inc.
35 East 62nd Street
New York, New York 10021
Telephone: (212) 572-8600
Telecopy: (212) 572-5056
Attention: General Counsel
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Telephone: (212) 715-9100
Telecopy: (212) 715-8000
Attention: Thomas E. Constance, Esq.
(b) if to Seller, to:
Mafco Consolidated Group Inc.
35 East 62nd Street
New York, New York 10021
Telephone: (212) 572-8600
Telecopy: (212) 572-5056
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Telecopy: (212) 735-2000
Attention: Alan C. Myers, Esq.
Section 8.3 Descriptive Headings. The
descriptive headings herein are inserted for convenience
only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement.
Section 8.4 Counterparts. This Agreement may
be executed in two or more counterparts, all of which
shall be considered one and the same agreement.
Section 8.5 Entire Agreement; Assignment.
This Agreement, including the annexes and exhibits hereto
and the documents, schedules (including, without
limitation, the Disclosure Schedule), certificates and
instruments referred to herein constitute the entire
agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties
with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or
otherwise.
Section 8.6 Governing Law. This Agreement
shall be governed and construed in accordance with the
laws of the State of New York, without regard to any
applicable principles of conflicts of law.
Section 8.7 Specific Performance. The parties
hereto agree that if any of the provisions of this
Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable
damage would occur, no adequate remedy at law would exist
and damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or
equity.
Section 8.8 Parties in Interest. This
Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall
confer upon any other person or persons any rights,
benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 8.9 Severability. This Agreement
shall be deemed severable; the invalidity or
unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability
of this Agreement or of any other term hereof, which
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be signed by their respective
officers thereunto duly authorized as of the date first
written above.
MAFCO CONSOLIDATED GROUP INC.
/s/ James R. Maher
-----------------------------
Name: James R. Maher
Title: President & Chief
Executive Officer
POWER CONTROL TECHNOLOGIES, INC.
/s/ J. Eric Hanson
----------------------------
Name: J. Eric Hanson
Title: Executive Vice
President
PCT INTERNATIONAL HOLDINGS, INC.
/s/ Laurence Winoker
-----------------------------
Name: Laurence Winoker
Title: Vice President
Subsidiaries and Equity Investments Schedule 2.1
Pledge of Shares Schedule 2.3
Violations and Defaults Schedule 2.4
Certain Changes Schedule 2.7
Encumbrances Schedule 2.8
Leases of Real Property Schedule 2.9
Intellectual Property Schedule 2.10
Contracts Schedule 2.11
Litigation Schedule 2.12
Insurance Schedule 2.13
Employee Benefits Schedule 2.14
Taxes Schedule 2.15
Environmental Matters Schedule 2.16
Labor Relations Schedule 2.17
Affiliate Transactions Schedule 2.19
Capitalization Schedule 3.3
Proceedings to Prevent Consummation
of Transactions Schedule 3.4
Capitalization Schedule 4.5
EXHIBIT A
MAFCO CONSOLIDATED GROUP INC.
Issuer
_____________
VALUE SUPPORT RIGHTS AGREEMENT
Dated as of November [ ], 1996
_____________
AMERICAN STOCK TRANSFER & TRUST COMPANY
Trustee
TABLE OF CONTENTS(1)
Page
PARTIES . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 2
Section 1.1 Definitions . . . . . . . . . . . 2
Section 1.2 Compliance and Opinions . . . . . 13
Section 1.3 Form of Documents Delivered to
Trustee . . . . . . . . . . . . . 14
Section 1.4 Acts of Holders . . . . . . . . . 16
Section 1.5 Notices, etc., to Trustee and
Company . . . . . . . . . . . . 18
Section 1.6 Notice to Holders; Waiver . . . . 18
Section 1.7 Conflict with Trust Indenture
Act . . . . . . . . . . . . . . 19
Section 1.8 Effect of Headings and Table of
Contents . . . . . . . . . . . 19
Section 1.9 Successors and Assigns . . . . . . 19
Section 1.10 Benefits of Agreement . . . . . . 19
Section 1.11 Governing Law . . . . . . . . . . 20
Section 1.12 Legal Holidays . . . . . . . . . . 20
Section 1.13 Separability Clause . . . . . . . 20
Section 1.14 No Recourse Against Others . . . . 20
ARTICLE 2
SECURITY FORMS . . . . . . . . 21
Section 2.1 Forms Generally . . . . . . . . . 21
Section 2.2 Form of Face of Security . . . . . 22
Section 2.3 Form of Reverse of Security . . . 24
Section 2.4 Form of Trustee's Certificate of
Authentication . . . . . . . . . . 32
ARTICLE 3
THE SECURITIES . . . . . . . . 33
Section 3.1 Title and Terms . . . . . . . . . 33
Section 3.2 Registrable Form . . . . . . . . . 40
Section 3.3 Execution, Authentication, Deliv-
ery and Dating . . . . . . . . . 40
Section 3.4 Temporary Securities . . . . . . . 41
Section 3.5 Registration, Registration of
Transfer and Exchange . . . . . 42
Section 3.6 Mutilated, Destroyed, Lost and
Stolen Securities . . . . . . . 44
Section 3.7 Presentation of VSR Certificate . 45
Section 3.8 Persons Deemed Owners . . . . . . 46
Section 3.9 Cancellation . . . . . . . . . . . 46
ARTICLE 4
THE TRUSTEE . . . . . . . . . 47
Section 4.1 Certain Duties and Responsibili-
ties . . . . . . . . . . . . . 47
Section 4.2 Certain Rights of Trustee . . . . 49
Section 4.3 Not Responsible for Recitals or
Issuance of Securities . . . . 51
Section 4.4 May Hold Securities . . . . . . . 51
Section 4.5 Money Held in Trust . . . . . . . 51
Section 4.6 Compensation and Reimbursement . . 51
Section 4.7 Disqualification; Conflicting
Interests . . . . . . . . . . . 53
Section 4.8 Corporate Trustee Required; Eli-
gibility . . . . . . . . . . . 53
Section 4.9 Resignation and Removal; Appoint-
ment of Successor . . . . . . . 53
Section 4.10 Acceptance of Appointment of
Successor . . . . . . . . . . . 56
Section 4.11 Merger, Conversion, Consolidation
or Succession to Business . . . 56
Section 4.12 Preferential Collection of Claims
Against Company . . . . . . . . 57
ARTICLE 5
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. 57
Section 5.1 Company to Furnish Trustee Names
and Addresses of Holders . . . . 57
Section 5.2 Preservation of Information;
Communications to Holders . . . 58
Section 5.3 Reports by Trustee . . . . . . . . 59
Section 5.4 Reports by Company . . . . . . . . 59
ARTICLE 6
AMENDMENTS . . . . . . . . . 60
Section 6.1 Amendments Without Consent of
Holders . . . . . . . . . . . . 60
Section 6.2 Amendments with Consent of Hold-
ers . . . . . . . . . . . . . . 62
Section 6.3 Execution of Amendments . . . . . 63
Section 6.4 Effect of Amendments; Notice to
Holders . . . . . . . . . . . . 63
Section 6.5 Conformity with Trust Indenture
Act . . . . . . . . . . . . . . 64
Section 6.6 Reference in Securities to Amend-
ments . . . . . . . . . . . . . 64
ARTICLE 7
COVENANTS . . . . . . . . . . 65
Section 7.1 Payment of Amounts, if any, to
Holders . . . . . . . . . . . . 65
Section 7.2 Maintenance of Office or Agency . 65
Section 7.3 Money for Security Payments to Be
Held in Trust . . . . . . . . . 66
Section 7.4 Certain Purchases and Sales . . . 68
Section 7.5 Listing of Securities . . . . . . 68
Section 7.6 Registration of Debt Securities;
TIA . . . . . . . . . . . . . . 68
Section 7.7 Minimum Principal Amount of Debt
Securities . . . . . . . . . . . 69
Section 7.8 Manipulative Transactions . . . . 70
Section 7.9 Statement as to Compliance . . . . 70
Section 7.10 Notice of Default . . . . . . . . 71
ARTICLE 8
REMEDIES OF THE TRUSTEE AND HOLDERS
ON EVENT OF DEFAULT . . . . . . . 71
Section 8.1 Event of Default Defined; Accel-
eration of Maturity; Waiver
of Default . . . . . . . . . . 71
Section 8.2 Collection of Indebtedness by
Trustee; Trustee May Prove Debt. 74
Section 8.3 Application of Proceeds . . . . . 78
Section 8.4 Suits for Enforcement . . . . . . 79
Section 8.5 Restoration of Rights on Abandon-
ment of Proceedings . . . . . . 79
Section 8.6 Limitations on Suits by Holders . 80
Section 8.7 Unconditional Right of Holders to
Institute Certain Suits . . . . 81
Section 8.8 Powers and Remedies Cumulative;
Delay or Omission Not
Waiver of Default . . . . . . . 81
Section 8.9 Control by Holders . . . . . . . . 82
Section 8.10 Waiver of Past Defaults . . . . . 83
Section 8.11 Trustee to Give Notice of De-
fault, But May Withhold in
Certain Circumstances . . . . . 84
Section 8.12 Right of Court to Require Filing
of Undertaking to Pay Costs . . 84
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE . . 85
Section 9.1 Company May Consolidate, etc., on
Certain Terms . . . . . . . . . 85
Section 9.2 Successor Person Substituted . . . 86
Section 9.3 Opinion of Counsel to Trustee . . 87
Exhibit A - Terms of Indenture
_________________
1 Note: This table of contents shall not, for
any purpose, be deemed to be a part of this
Agreement.
Reconciliation and tie between Trust Indenture Act of
1939 and Value Support Rights Agreement, dated as of
October [ ], 1996.
Trust Indenture Act Section Agreement Section
SECTION 310 (a)(1) . . . . . . . . . 4.9
(a)(2) . . . . . . . . . . . . 4.9
(a)(3) . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . 4.7, 4.9
SECTION 311 (a) . . . . . . . . . . 4.13(a)
(b) . . . . . . . . . . . . . 4.13(b)
(b)(2) . . . . . . . . . . . . 5.3(a)(2), 5.3(b)
SECTION 312 (a) . . . . . . . . . . . 5.1, 5.2(a)
(b) . . . . . . . . . . . . . 5.2(b)
(c) . . . . . . . . . . . . . 5.2(c)
SECTION 313 (a) . . . . . . . . . . . 5.3(a)
(b) . . . . . . . . . . . . . 5.3(b)
(c) . . . . . . . . . . . . . 5.3(a), 5.3(b)
(d) . . . . . . . . . . . . . 5.3(c)
SECTION 314 (a) . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . 1.2
(c)(2) . . . . . . . . . . . . 1.2
(c)(3) . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . 1.2
SECTION 315 (a) . . . . . . . . . . . 4.1(a)
(b) . . . . . . . . . . . . . 8.11, 5.3(a)(6)
(c) . . . . . . . . . . . . . 4.1(b)
(d) . . . . . . . . . . . . . 4.1(c)
(d)(1) . . . . . . . . . . . . 4.1(a)(1)
(d)(2) . . . . . . . . . . . . 4.1(c)(2)
(d)(3) . . . . . . . . . . . . 4.1(c)(3)
(e) . . . . . . . . . . . . . 8.1, 8.12
SECTION 316 (a) . . . . . . . . . . . 1.1
(a)(1)(A) . . . . . . . . . . 8.9
(a)(1)(B) . . . . . . . . . . 8.10
(a)(2) . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . 8.7
SECTION 317(a)(1) . . . . . . . . . . 8.2
(a)(2) . . . . . . . . . . . . 8.2
(b) . . . . . . . . . . . . . 7.3
SECTION 318(a). . . . . . . . . . . . 1.7
_______________
Note: This reconciliation and tie shall not, for any pur-
pose, be deemed to be a part of the Agreement.
INDEX OF DEFINED TERMS
Term Where Defined
Accounting Firm . . . . . . . . . SECTION3.1(c)
Act . . . . . . . . . . . . . . . SECTION 1.4
Adjustment Event . . . . . . . . SECTION 3.1(k)
Affiliate . . . . . . . . . . . . SECTION 1.1
Agreement . . . . . . . . . . . . SECTION 1.1
Applicable Number . . . . . . . . SECTION 1.1
Authorized Newspaper . . . . . . SECTION 1.1
Base Amount . . . . . . . . . . . SECTION 1.1
big six . . . . . . . . . . . . . SECTION 3.1(c)
Board of Directors . . . . . . . SECTION 1.1
Board Resolution . . . . . . . . SECTION 1.1
Business Day . . . . . . . . . . SECTION 1.1
Change of Control . . . . . . . . SECTION 1.1
Commission . . . . . . . . . . . SECTION 1.1
Company . . . . . . . . . . . . . SECTION 1.1
Company Order . . . . . . . . . . SECTION 1.1
Company Request . . . . . . . . . SECTION 1.1
control, controlling, controlled SECTION 1.1
Corporate Trust Office . . . . . SECTION 1.1
default or Defaults . . . . . . . SECTION 8.11
Default Payment Amount . . . . . SECTION 1.1
Default Payment Date . . . . . . SECTION 1.1
Default Interest Rate . . . . . . SECTION 1.1
Designated Options . . . . . . . SECTION 1.1
Distribution Amount . . . . . . . SECTION 1.1
Effective Date . . . . . . . . . SECTION 1.1
Event of Default . . . . . . . . SECTION 8.1
Exchange Act . . . . . . . . . . SECTION 5.4(a)(i)
Exchange Act Documents . . . . . SECTION 1.1
generally accepted accounting
principles . . . . . . . . . . SECTION 1.1
Holder . . . . . . . . . . . . . SECTION 1.1
indemnitee . . . . . . . . . . . SECTION 4.6(c)
Indenture . . . . . . . . . . . . Exhibit A
Independent Financial Expert . . SECTION 1.1
Market Price . . . . . . . . . . SECTION 1.1
Maturity Date . . . . . . . . . . SECTION 1.1
Minimum Principal Per Holder . . SECTION 7.7
NASDAQ . . . . . . . . . . . . . SECTION 1.1
NMS/NASDAQ . . . . . . . . . . . SECTION 1.1
Notes . . . . . . . . . . . . . . Exhibit A
Notice of Default . . . . . . . . SECTION 8.1(b)
Officers' Certificate . . . . . . SECTION 1.1
Opinion of Counsel . . . . . . . SECTION 1.1
Optional Call Date . . . . . . . SECTION 1.1
Optional Call Payment Amount . . SECTION 3.1(d)
Optional Call Payment Date . . . SECTION 3.1(d)
Outstanding . . . . . . . . . . . SECTION 1.1
Owed Principal Amount . . . . . . SECTION 7.7
Paying Agent . . . . . . . . . . SECTION 1.1
Payment Notes . . . . . . . . . . SECTION 7.6
PCT . . . . . . . . . . . . . . . Recitals
PCT Common Stock . . . . . . . . SECTION 1.1
Person . . . . . . . . . . . . . SECTION 1.1
Prohibited Activity . . . . . . . SECTION 1.1
Purchase Agreement . . . . . . . Recitals
Purchaser . . . . . . . . . . . . Recitals
Redemption Event . . . . . . . . SECTION 3.1(h)
Redemption Notice Date . . . . . SECTION 3.1(h)
Redemption Payment Date . . . . . SECTION 3.1(h)
Redemption Price . . . . . . . . SECTION 3.1(h)
Redemption Transaction . . . . . SECTION 3.1(h)
Responsible Officer . . . . . . . SECTION 1.1
Securities . . . . . . . . . . . Recitals
Security Register . . . . . . . . SECTION 3.5
Security Registrar . . . . . . . SECTION 3.5
Subsidiary . . . . . . . . . . . SECTION 1.1
Total Disposition . . . . . . . . SECTION 1.1
Total Disposition Amount . . . . SECTION 1.1
Total Disposition Payment Date . SECTION 3.1(e)
Trust Indenture Act . . . . . . . SECTION 1.1
Trustee . . . . . . . . . . . . . SECTION 3.1
Value Support Rights . . . . . . SECTION 3.1
vice president . . . . . . . . . SECTION 1.1
Voting Securities . . . . . . . . SECTION 1.1
VSR Certificate . . . . . . . . . SECTION 1.1
VSRs . . . . . . . . . . . . . . Recitals
30-Day Average Market Price . . . SECTION 2.3
VALUE SUPPORT RIGHTS AGREEMENT, dated as of
November [ ], 1996, by and between MAFCO CONSOLIDATED
GROUP INC., a Delaware corporation (the "Company"), and
AMERICAN STOCK TRANSFER & TRUST COMPANY, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the
creation of an issue of value support rights (the "Secu-
rities" or "VSRs"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Compa-
ny has duly authorized the execution and delivery of this
Agreement;
WHEREAS, pursuant to the Stock and VSR Purchase
Agreement dated as of October [ ], 1996 (the "Purchase
Agreement") by and among the Company, Power Control
Technologies, Inc., a Delaware corporation ("PCT"), and
PCT International Holdings, Inc., a Delaware corporation
and wholly owned subsidiary of PCT ("Purchaser"), the
Company agreed to sell to Purchaser all of the outstand-
ing common stock of Flavors Holdings Inc., a Delaware
corporation, and the Company agreed to issue to Purchaser
the Securities;
WHEREAS, pursuant to the Purchase Agreement,
Purchaser and PCT are obligated to deliver the Securities
to all holders of PCT Common Stock (as defined herein)
and preferred stock, par value $.01 per share, of PCT;
and
WHEREAS, all things necessary have been done to
make the Securities, when executed by the Company and
authenticated and delivered hereunder, the valid obliga-
tions of the Company and to make this Agreement a valid
agreement of the Company, all in accordance with their
and its terms.
NOW, THEREFORE, for and in consideration of the
premises and the consummation of the transactions re-
ferred to above, it is covenanted and agreed, for the
equal and proportionate benefit of all Holders (as de-
fined below) of the Securities, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
For all purposes of this Agreement, except as
otherwise expressly provided or unless the context other-
wise requires:
(a) the terms defined in this Article
have the meanings assigned to them in this Article, and
include the plural as well as the singular;
(b) all accounting terms used herein and
not expressly defined herein shall have the meanings
assigned to such terms in accordance with generally
accepted accounting principles, and the term "generally
accepted accounting principles" means such accounting
principles as are generally accepted as of the date of
this Agreement;
(c) all other terms used herein which are
defined in the Trust Indenture Act (as defined herein),
either directly or by reference therein, have the mean-
ings assigned to them therein; and
(d) the words "herein," "hereof" and
"hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Affiliate" of any specified Person means any
other Person directly or indirectly controlling or con-
trolled by or under direct or indirect common control
with such specified Person. For the purposes of this
definition, "control" when used with respect to any
specified Person means the power to direct the management
and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this instrument as originally
executed and as it may from time to time be supplemented
or amended pursuant to the applicable provisions hereof.
"Applicable Number", initially shall be equal
to one, subject to adjustment in accordance with Section
3.1(k).
"Authorized Newspaper" means The Wall Street
Journal (Eastern Edition), or if The Wall Street Journal
(Eastern Edition) shall cease to be published, or, if the
publication or general circulation of The Wall Street
Journal (Eastern Edition) shall be suspended for whatever
reason, such other English language newspaper of general
circulation in The City of New York, New York as is
selected by the Company.
"Base Amount" means, as of any date of determi-
nation, the excess (rounded to the nearest $.01) of
(a)(x) $10.25, if the date of determination occurs on or
before January 1, 1998, or (y) $11.00, if the date of
determination occurs after January 1, 1998, over (b) the
Distribution Amount (as defined herein).
"Board of Directors" means the board of direc-
tors of the Company or any duly authorized committee of
that board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of
the Company, to have been duly adopted by the Board of
Directors of the Company and to be in full force and
effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means any day (other than a
Saturday or a Sunday) on which banking institutions in
The City of New York, New York are not authorized or
obligated by law or executive order to close and, if the
VSRs are listed on a national securities exchange, such
exchange is open for trading.
"Change of Control" shall mean, with respect to
any specified Person, the occurrence of one or more of
the following events: (i) a Person or entity or a group
of Persons or entities acting in concert as a partner-
ship, limited partnership, syndicate or other group
(within the meaning of Rule 13d-3 under the Exchange Act)
shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of shares representing
50% or more of the voting power of the outstanding shares
of voting stock of such specified Person; (ii) such
specified Person or any subsidiary of such specified
Person shall merge or consolidate with any other Person
and after giving effect to such merger or consolidation
the holders of the voting stock of such specified Person
immediately prior thereto will own shares representing
less than 50% of the voting power of the voting stock of
such specified Person or its ultimate parent; (iii) a
sale or other disposition of all or substantially all of
the assets of such specified Person; (iv) the issuance of
shares of voting stock by such specified Person which
would result in the number of shares of voting stock of
such specified Person outstanding after such issuance
being equal to or in excess of 150% of the number of
shares of voting stock of such specified Person outstand-
ing as of the Effective Date (subject to appropriate
adjustment in the event of a stock split, stock dividend,
recapitalization or other similar event applicable to
shares of voting stock following the Effective Date); and
(v) if such specified Person is PCT, individuals who
would constitute a majority of the nominees to be elected
to the Board of Directors of PCT at any meeting of stock-
holders or by written consent (without regard to any
members of the Board of Directors elected pursuant to the
terms of any class or series of preferred stock of PCT)
shall be elected to the Board of Directors where the
election or nomination for election by PCT's stockholders
of such directors was not approved by a vote of at least
a majority of the directors in office immediately prior
to such election.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created
under the Exchange Act (as defined herein), or if at any
time after the execution of this instrument such Commis-
sion is not existing and performing the duties now as-
signed to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person (as defined herein)
named as the "Company" in the first paragraph of this
Agreement, until a successor Person shall have become
such pursuant to the applicable provisions of this Agree-
ment, and thereafter "Company" shall mean such successor
Person. To the extent necessary to comply with the
requirements of the provisions of Trust Indenture Act
SECTIONS 310 through 317 as they are applicable to the
Company, the term "Company" shall include any other obligor
with respect to the Securities for the purposes of complying
with such provisions.
"Company Request" or "Company Order" means a
written request or order signed in the name of the Compa-
ny by the chairman of the Board of Directors or the
president or any vice president, the controller or assis-
tant controller and the treasurer or assistant treasurer
or the secretary or any assistant secretary, and deliv-
ered to the Trustee.
"Corporate Trust Office" means the office of
the Trustee at which at any particular time its corporate
trust business shall be principally administered, which
office at the date of execution of this Agreement is
located at 6201 Fifteenth Avenue, Brooklyn, New York
11219.
"Default Payment Amount" means, as of a Default
Payment Date (as defined herein), an amount, if any,
determined by the Accounting Firm, equal to the lesser of
(i) the excess, if any, of (x) the Base Amount determined
as of such Default Payment Date over (y) the 30-Day
Average Market Price determined as of such Default Pay-
ment Date and (ii) $3.25.
"Default Interest Rate" means 8.46% per annum.
"Default Payment Date" means the date upon
which the Securities become due and payable pursuant to
Section 8.1.
"Distribution Amount" means, as of any date of
determination, the sum of (i) the value of all cash
dividends or other cash distributions declared and paid
with respect to the Applicable Number of shares of PCT
Common Stock, (ii) all cash received by a holder of PCT
Common Stock with respect to the Applicable Number of
shares of PCT Common Stock as consideration in a merger,
consolidation or other business combination, (iii) the
fair market value, as determined by the Independent
Financial Expert, of all dividends or other distributions
consisting of property or assets (other than cash, the
Securities or other securities, but including any rights,
warrants, options to purchase Securities or other securi-
ties that expire prior to an Optional Call Date or the
Maturity Date, as the case may be (collectively, "Desig-
nated Options")), declared and paid with respect to the
Applicable Number of shares of PCT Common Stock and (iv)
the fair market value, as determined by the Independent
Financial Expert, of all consideration consisting of
property or assets (other than cash, the Securities or
other securities, but including Designated Options)
received by a holder of PCT Common Stock with respect to
the Applicable Number of shares of PCT Common Stock as
consideration in a merger, consolidation or other busi-
ness combination, in all such cases from the Effective
Date to such date of determination.
For the purposes of this definition, (x) the
amount of dividends declared and paid and the amount of
consideration received with respect to the Applicable
Number of shares of PCT Common Stock shall include divi-
dends declared and paid and consideration received with
respect to any securities paid as dividends or received
as consideration with respect to the Applicable Number of
shares of PCT Common Stock and (y) the fair market value
of any Designated Option, as of any date of determina-
tion, shall equal the excess, if any, of the average of
the Market Prices of the security underlying such Desig-
nated Option for the 30 consecutive trading days ended on
the Business Day immediately prior to such date of deter-
mination (or if the underlying security no longer exists,
for the 30 consecutive trading days ended on the Business
Day immediately prior to the date of the transaction as a
result of which such security ceased to exist) over the
exercise price therefor provided in such Designated
Option; provided that, if on the date any such Designated
Option expired, the Market Price of the security underly-
ing such Designated Option was less than the exercise
price therefor provided in such Designated Option, the
fair market value of such Designated Option shall equal
zero.
"Effective Date" means November 30, 1996.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended.
"Holder" means a Person in whose name a Securi-
ty is registered in the Security Register.
"Independent Financial Expert" means a nation-
ally recognized investment banking firm selected by the
Company, that does not have a direct or indirect owner-
ship interest in the Company or any of its Affiliates and
that at the time it is called upon to give independent
financial advice to the Company, is not (and none of
whose directors, officers or Affiliates is) a director or
officer of the Company or any of its Affiliates; provid-
ed, that, notwithstanding the foregoing, no such invest-
ment banking firm shall be disqualified from serving as
an Independent Financial Expert solely by reason of its
ownership, in the ordinary course of business, for its
own account or for the account of any customer of securi-
ties of the Company or any Affiliate of the Company.
"Market Price" means, as of any date of deter-
mination, for any security, the last reported sale price
as reported on the principal national securities exchange
on which such security is then listed, or, if (i) such
security is not listed on a national securities exchange
or (ii) such security is listed on a national securities
exchange but the majority of the trading volume with
respect to such security is effected on the NMS/NASDAQ,
the last reported sale price as reported on the
NMS/NASDAQ, or, if such security is not listed on a
national securities exchange and is not quoted on
NMS/NASDAQ the average of the highest reported bid and
lowest reported asked quotation on the NASDAQ or, if such
security is not listed on a national securities exchange
and is not quoted by NMS/NASDAQ or NASDAQ but is traded
in the over-the-counter market, the fair market value as
determined by an Independent Financial Expert.
"Maturity Date" means January 1, 1999.
"NASDAQ" means the National Association of
Securities Dealers, Inc. Automated Quotation System.
"NMS/NASDAQ" means the National Market System
of NASDAQ.
"Officers' Certificate," when used with respect
to the Company means a certificate signed by the chairman
of the Board of Directors or the president or any vice
president, the controller or assistant controller and the
treasurer or assistant treasurer or the secretary or any
assistant secretary of the Company delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of
counsel, who may be counsel for the Company.
"Optional Call Date" means each April 1, July
1, October 1 and January 1 from and including April 1,
1997 to and including October 1, 1998.
"Outstanding" when used with respect to Securi-
ties means, as of the date of determination, all Securi-
ties theretofore authenticated and delivered under this
Agreement, except:
(a) Securities theretofore cancelled by
the Trustee or delivered to the Trustee for cancel-
lation;
(b) From and after the earliest of
the Default Payment Date, the Total Disposition
Payment Date, an Optional Call Date or the
Maturity Date, Securities for the payment of
which money in the necessary amount has been
theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust,
or set aside and segregated in trust by the
Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securi-
ties; and
(c) Securities in exchange for or in
lieu of which other Securities have been au-
thenticated and delivered pursuant to this
Agreement, other than any such Securities in
respect of which there shall have been present-
ed to the Trustee proof satisfactory to it that
such Securities are held by a bona fide pur-
chaser in whose hands the Securities are valid
obligations of the Company;
provided, however, that in determining whether the Hold-
ers of the requisite Outstanding Securities have given
any request, demand, direction, consent or waiver hereun-
der, Securities owned by the Company or any Affiliate of
the Company, whether held as treasury stock or otherwise,
shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand,
direction, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded.
"PCT Common Stock" means the common stock, par
value $.01 per share, of PCT.
"Paying Agent" means any Person authorized by
the Company to pay the amount determined pursuant to
Section 3.1, if any, on any Securities on behalf of the
Company.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, limited liability company, unincorporated
organization or government or any agency or political
subdivision thereof.
"Prohibited Activity" means, with respect to
any period, any acquisition or disposition in open market
transactions, private transactions or otherwise, of (i)
any shares of PCT Common Stock, (ii) any securities
convertible into or exchangeable for shares of PCT Common
Stock or (iii) any securities which holders of PCT Common
Stock have received with respect to their shares of PCT
Common Stock, whether as a dividend or distribution or in
connection with a merger, consolidation or otherwise
(other than, in each case, (w) shares of PCT Common Stock
acquired on behalf of any 401k plan established for PCT
and its subsidiaries to satisfy participant directions
and related company matching obligations, (x) shares
issued or acquired pursuant to employee stock options
granted to directors, officers or employees in the ordi-
nary course of business prior to the first day of such
period, (y) sales or other dispositions of shares by
directors or officers, or (z) acquisitions of up to an
aggregate of 25,000 shares of PCT Common Stock in the
open market by directors or officers of PCT).
"Responsible Officer" when used with respect to
the Trustee means any officer assigned to the Corporate
Trust Office and also means, with respect to any particu-
lar corporate trust matter, any other officer of the
Trustee to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Subsidiary" means each Person more than 50% of
the outstanding Voting Securities of which is owned,
directly or indirectly, by the Company and/or one or more
Subsidiaries.
"30-Day Average Market Price" means, as of any
date of determination, the average of the Market Price of
the Applicable Number of shares of PCT Common Stock for
the 30 consecutive trading days ended on the Business Day
immediately prior to such date of determination. For
purposes of this definition, the Market Price of the
Applicable Number of shares of PCT Common Stock shall
(following such receipt) include the Market Price of any
securities (other than the Securities) which shall have
been received by a holder of PCT Common Stock with re-
spect to the Applicable Number of shares of PCT Common
Stock from the Effective Date to the date of determina-
tion, whether as a dividend or other distribution or in
connection with a merger, consolidation or other business
combination or a reclassification of PCT Common Stock.
"Total Disposition" means (i) one or more
mergers, consolidations or other business combinations,
involving PCT after giving effect to which no shares of
PCT Common Stock shall remain outstanding or registered
under the Exchange Act, (ii) a sale, transfer or other
disposition in one or a series of transactions, of all or
substantially all of the assets of PCT, or (iii) a re-
classification of PCT Common Stock as the capital stock
of any other Person (other than an Affiliate of PCT).
"Total Disposition Amount" means, the sum of
the fair market value, as determined by an Independent
Financial Expert, of (A) the consideration, if any,
received with respect to the Applicable Number of shares
of PCT Common Stock by the holder thereof as a result of
such Total Disposition, or (B) if an election of the type
of consideration to be received by the holders of PCT
Common Stock is made, the consideration selected by a
majority of such stockholders (and assuming such holder
did not exercise any right of appraisal granted under
law).
"Trust Indenture Act" means the Trust Indenture
Act of 1939, as amended from time to time.
"Trustee" means the Person named as the "Trust-
ee" in the first paragraph of this Agreement, until a
successor Trustee shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter
"Trustee" shall mean such successor Trustee.
"VSR Certificate" means a certificate repre-
senting any of the VSRs.
"vice president" when used with respect to the
Company or the Trustee, means any vice president, whether
or not designated by a number or a word or words added
before or after the title of "vice president."
"Voting Securities" means securities having
ordinary voting power to elect a majority of the direc-
tors irrespective of whether or not stock of any other
class or classes shall have or might have voting power by
reason of the happening of any contingency.
Section 1.2 Compliance and Opinions.
Upon any application or request by the Company
to the Trustee to take any action under any provision of
this Agreement, the Company shall furnish to the Trustee
an Officers' Certificate stating that, in the opinion of
the signor, all conditions precedent, if any, provided
for in this Agreement relating to the proposed action
have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that,
in the case of any such application or request as to
which the furnishing of such documents is specifically
required by any provision of this Agreement relating to
such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in
this Agreement shall include:
(a) a statement that each individual
signing such certificate or opinion has read such cove-
nant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature
and scope of the examination or investigation upon which
the statements or opinions contained in such certificate
or opinion are based;
(c) a statement that, in the opinion of
each such individual, he or she has made such examination
or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the
opinion of each such individual, such condition or cove-
nant has been complied with.
Section 1.3 Form of Documents Delivered to
Trustee.
In any case where several matters are required
to be certified by, or covered by an opinion of, any
specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or
covered by only one document, but one such Person may
certify or give an opinion with respect to some matters
and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the
Company may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representa-
tions by, counsel. Any such certificate or Opinion of
Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representa-
tions by, an officer or officers of the Company stating
that the information with respect to such factual matters
is in the possession of the Company.
Any certificate, statement or opinion of an
officer of the Company or of counsel may be based, inso-
far as it relates to accounting matters, upon a certifi-
cate or opinion of or representations by an accountant or
firm of accountants in the employ of the Company. Any
certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a state-
ment that such firm is independent.
Where any Person is required to make, give or
execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments
under this Agreement, they may, but need not, be consoli-
dated and form one instrument.
Section 1.4 Acts of Holders.
(a) Any request, demand, authorization,
direction, notice, consent, waiver or other action pro-
vided by this Agreement to be given or taken by Holders
may be embodied in and evidenced by one or more instru-
ments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writ-
ing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it
is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied there-
in and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument
or of a writing appointing any such agent shall be suffi-
cient for any purpose of this Agreement and (subject to
Section 4.1) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
The Company may set a record date for purposes of deter-
mining the identity of Holders entitled to vote or con-
sent to any action by vote or consent authorized or
permitted under this Agreement. If not set by the Compa-
ny prior to the first solicitation of a Holder of Securi-
ties made by any Person in respect of any such action,
or, in the case of any such vote, prior to such vote, the
record date for such action shall be the later of 10 days
prior to the first solicitation of such consent or the
date of the most recent list of Holders furnished to the
Trustee pursuant to Section 5.1 of this Agreement prior
to such solicitation. If a record date is fixed, those
Persons who were Holders of Securities at such record
date (or their duly designated proxies), and only those
Persons, shall be entitled to take such action by vote or
consent or, except with respect to clause (d) below, to
revoke any vote or consent previously given, whether or
not such Persons continue to be Holders after such record
date. No such vote or consent shall be valid or effec-
tive for more than 120 days after such record date.
(b) The fact and date of the execution by
any Person of any such instrument or writing may be
proved in any reasonable manner which the Trustee deems
sufficient.
(c) The ownership of Securities shall be
proved by the Security Register. Neither the Company nor
the Trustee nor any Agent of the Company or the Trustee
shall be affected by any notice to the contrary.
(d) At any time prior to (but not after)
the evidencing to the Trustee, as provided in this Sec-
tion 1.4, of the taking of any action by the Holders of
the Securities specified in this Agreement in connection
with such action, any Holder of a Security the serial
number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of
which have consented to such action may, by filing writ-
ten notice at the Corporate Trust Office and upon proof
of holding as provided in this Section 1.4, revoke such
action so far as concerns such Security. Any request,
demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind
every future Holder of the same Security or the Holder of
every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done
by the Trustee, any Paying Agent or the Company in reli-
ance thereon, whether or not notation of such action is
made upon such Security.
Section 1.5 Notices, etc., to Trustee and
Company.
Any request, demand, authorization, direction,
notice, consent, waiver or Act of Holders or other docu-
ment provided or permitted by this Agreement to be made
upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the
Company shall be sufficient for every purpose hereunder
if made, given, furnished or filed, in writing, to or
with the Trustee at American Stock Transfer & Trust
Company, 6201 Fifteenth Avenue, Brooklyn, New York 11219;
or
(b) the Company by the Trustee or by any
Holder shall be sufficient for every purpose hereunder if
in writing and mailed, first-class postage prepaid, to
the Company addressed to it at 35 East 62nd Street, New
York, New York 10021, Attention: General Counsel, or at
any other address previously furnished in writing to the
Trustee by the Company.
Section 1.6 Notice to Holders; Waiver.
Where this Agreement provides for notice to
Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it
appears in the Security Register, not later than the
latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.
Where this Agreement provides for notice in any manner,
such notice may be waived in writing by the Person enti-
tled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance
upon such waiver.
In case by reason of the suspension of regular
mail service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by
any provision of this Agreement, then any method of
giving such notice as shall be satisfactory to the Trust-
ee shall be deemed to be a sufficient giving of such
notice.
Section 1.7 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required
to be included in this Agreement by any of the provisions
of the Trust Indenture Act, such required provision shall
control.
Section 1.8 Effect of Headings and Table of
Contents.
The Article and Section headings herein and the
Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 1.9 Successors and Assigns.
All covenants and agreements in this Agreement
by the Company shall bind its successors and assigns,
whether so expressed or not.
Section 1.10 Benefits of Agreement.
Nothing in this Agreement or in the Securities,
express or implied, shall give to any Person (other than
the parties hereto and their successors hereunder, any
Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Agreement or
under any covenant or provision herein contained, all
such covenants and provisions being for sole benefit of
the parties hereto and their successors and of the Hold-
ers.
Section 1.11 Governing Law.
This Agreement and the Securities shall be
governed by and construed in accordance with the laws of
the State of New York.
Section 1.12 Legal Holidays.
In the event that an Optional Call Date, the
Maturity Date, the Total Disposition Payment Date or the
Default Payment Date, as the case may be, shall not be a
Business Day, then (notwithstanding any provision of this
Agreement or the Securities to the contrary) payment on
the Securities need not be made on such date, but may be
made on the next succeeding Business Day with the same
force and effect as if made on an Optional Call Date, the
Maturity Date, the Total Disposition Payment Date or the
Default Payment Date, as the case may be.
Section 1.13 Separability Clause.
In case any provision in this Agreement or in
the VSRs shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
Section 1.14 No Recourse Against Others.
A director, officer, employee or stockholder,
as such, of the Company or the Trustee shall not have any
liability for any obligations of the Company or the
Trustee under the Securities or the Agreement or for any
claim based on, in respect of or by reason of such obli-
gations or their creation. By accepting a Security each
Holder waives and releases all such liability. The
waiver and release are part of the consideration for the
issue of the Securities.
ARTICLE 2
SECURITY FORMS
Section 2.1 Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set
forth in this Article, with such appropriate insertions,
omissions, substitutions and other variations as are
required or permitted by this Agreement and may have such
letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be
required to comply with the rules of any securities
exchange or as may be required by law or any rule or
regulation pursuant thereto, all as may be determined by
the officers executing such Securities, as evidenced by
their execution of the Securities. Any portion of the
text of any Security may be set forth on the reverse
thereof, with an appropriate reference thereto on the
face of the Security.
The definitive Securities shall be printed,
lithographed or engraved on steel engraved borders or
produced by any combination of these methods or may be
produced in any other manner permitted by the rules of
any securities exchange on which the Securities may be
listed all as determined by the officers executing such
Securities, as evidenced by their execution of such
Securities.
Section 2.2 Form of Face of Security.
MAFCO CONSOLIDATED GROUP INC.
No. _____ Certificate for ___ Value Support Rights
This Certificate expires on January 1, 1999
unless redeemed or otherwise terminated.
This certifies that _______________, or
registered assigns (the "Holder"), is the registered
holder of the number of Value Support Rights ("VSRs") set
forth above. Each VSR entitles the Holder, subject to
the provisions contained herein and in the Agreement
referred to on the reverse hereof, to a payment from
Mafco Consolidated Group Inc., a Delaware corporation
(the "Company"), in an amount determined pursuant to the
provisions set forth on the reverse hereof and as more
fully described in the Agreement. Such payment, if any,
shall be made on the Optional Call Payment Date, the
Maturity Date, the Redemption Payment Date upon a redemp-
tion, the Default Payment Date upon the occurrence of an
Event of Default or the Total Disposition Payment Date
upon the occurrence of a Total Disposition.
Payment of any amounts pursuant to this VSR
Certificate shall be made only upon presentation by the
Holder hereof, at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan,
The City of New York, and at any other office or agency
maintained by the Company for such purpose in such coin
or currency of the United States of America as at the
time is legal tender for the payment of public and pri-
vate debts. However, the Company may pay such amounts by
its check payable in such money, or as provided on the
reverse hereof. American Stock Transfer & Trust Company
has been appointed as paying agent in the Borough of
Manhattan, the City of New York.
Reference is hereby made to the further provi-
sions of this VSR Certificate set forth on the reverse
hereof which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon
has been duly executed by the Trustee referred to on the
reverse hereof by manual signature, this VSR Certificate
shall not be entitled to any benefit under the Agreement,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: MAFCO CONSOLIDATED
GROUP INC.
By_______________________
Attest:
_______________________ [SEAL]
Authorized Signature
Section 2.3 Form of Reverse of Security.
This VSR Certificate is issued under and in
accordance with the Value Support Rights Agreement, dated
as of October [ ], 1996 (the "Agreement"), between the
Company and American Stock Transfer & Trust Company, as
trustee (the "Trustee," which term includes any successor
Trustee under the Agreement), and is subject to the terms
and provisions contained in the Agreement, to all of
which terms and provisions the Holder of this VSR Certif-
icate consents by acceptance hereof. The Agreement is
hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Agreement for a
full statement of the respective rights, limitations of
rights, duties, obligations and immunities thereunder of
the Company, the Trustee and the Holders of the VSRs.
Capitalized terms not otherwise defined shall have the
meanings set forth in the Agreement.
Unless the right to receive payment hereunder
previously has been satisfied in connection with an
Optional Call Date, a Total Disposition, an Event of
Default or a Redemption Event as provided below, the
Company shall pay to the Holder hereof on January 1, 1999
(the "Maturity Date"), for each VSR represented hereby an
amount, if any, as determined by an independent "big six"
accounting firm (other than the accounting firm or firms
serving as the principal auditors for the Company or PCT)
selected by the Company (the "Accounting Firm"), equal to
the lesser of (x) the excess, if any, of the Base Amount
determined as of such date, over the 30-Day Average
Market Price determined as of such date and (y) $3.25.
Such determinations by the Accounting Firm absent mani-
fest error shall be final and binding on the Company and
the Holders.
Upon an Optional Call Date, the Company may, in
its sole discretion, pay to the Holder hereof for each
VSR represented hereby an amount, as determined by the
Accounting Firm, payable in cash equal to the lesser of
(x) the excess, if any, of the Base Amount determined as
of an Optional Call Date, over the 30-Day Average Market
Price determined as of such date and (y) $3.25; provided,
however, such amount (the "Optional Call Payment Amount")
shall in no event be less than $0.50 if such Optional
Call Date is on or prior to January 1, 1998. Such deter-
minations by the Accounting Firm absent manifest error
shall be final and binding on the Company and the Hold-
ers. Such payment shall be made on any date (the "Op-
tional Call Payment Date") established by the Company,
which in no event shall be more than 30 days after the
Optional Call Date, to holders of record at the close of
business on the tenth business day following such Option-
al Call Date. In the event the Company exercises its
optional right to call the Securities on an Optional Call
Date, the Company shall issue a press release on such
date announcing such event, the Optional Call Payment
Amount and the Optional Call Payment Date. As soon as
practicable following such Optional Call Date, the Compa-
ny shall give the Holder and the Trustee hereof notice
that the Company has exercised its optional right to call
the Securities, the Optional Call Payment Amount and the
Optional Call Payment Date; provided, however, such
notice to Holders may, at the option of the Company,
occur simultaneously with the payment of the Optional
Call Payment Amount.
Upon the consummation of a Total Disposition,
the Company shall pay to the Holder hereof for each VSR
represented hereby an amount, if any, as determined by
the Accounting Firm, equal to the lesser of (x) the
excess, if any, of the Base Amount, determined as of the
Total Disposition Payment Date over the Total Disposition
Amount and (y) $3.25. Such determinations by the Ac-
counting Firm and any Independent Financial Expert absent
manifest error shall be final and binding on the Company
and the Holder. Such payment shall be made on any date
(the "Total Disposition Payment Date") established by the
Company, which in no event shall be more than 30 days
after the date on which the Total Disposition was consum-
mated. As soon as practicable following a Total Disposi-
tion, the Company shall give the Holder and the Trustee
hereof notice of such Total Disposition and the Total
Disposition Payment Date.
Upon the occurrence and during the continuance
of an Event of Default, either the Trustee or the Holders
of not less than 25% of the Securities outstanding, by
delivery of a written notice to the Company (and to the
Trustee if given by the Holders), may declare the Securi-
ties to be due and payable immediately, and upon any such
declaration the Company shall pay to each Holder for each
VSR held by such Holder the Default Payment Amount with
interest at the Default Interest Rate from the Default
Payment Date through the date payment is made or duly
provided for.
In the event that it is determined that no
amount is payable on the VSRs to the Holder on an Option-
al Call Date, the Maturity Date, the Default Payment Date
or the Total Disposition Payment Date, as the case may
be, the Company shall give to the Holder and the Trustee
notice of such determination. Upon making such determi-
nation, absent manifest error this VSR Certificate shall
terminate and become null and void and the Holder hereof
shall have no further rights with respect hereto. The
failure to give such notice or any defect therein shall
not affect the validity of such determination.
Upon the occurrence of a Redemption Event, the
VSRs represented by this VSR Certificate may be redeemed
at the option of the Company in whole (but not in part)
at a redemption price, payable in cash, equal to the
lesser of (x) 115% of the excess, if any, of the Base
Amount determined as of the fifth Business Day prior to
the date notices of redemption are mailed to Holders (the
date of such mailing is referred to herein as the "Re-
demption Notice Date") over the 30-Day Average Market
Price determined as of the fifth Business Day prior to
the Redemption Notice Date and (y) $3.25 (the "Redemption
Price").
A "Redemption Event" shall be deemed to have
occurred if either (i) as a result of an event beyond the
reasonable control of the Company, the existence of the
VSRs would cause the Company to cease to be a member of
the consolidated group with respect to which the Company
files consolidated federal income tax returns and such
situation would be avoided or cured by the redemption of
the VSRs or (ii) the VSRs would create any material
financial or legal impediment to the consummation of any
bona fide significant corporate event or transaction (a
"Redemption Transaction") involving the Company, which
transaction would, if consummated, result in a Change of
Control of the Company and in connection with which
transaction the Company has entered into definitive
documentation which creates a binding obligation upon the
Company to consummate such transaction (subject to cus-
tomary conditions to closing and fiduciary obligations),
in either of clauses (i) and (ii) as determined in good
faith by the Board of Directors of the Company, as evi-
denced by an Officers' Certificate of the Company.
Notwithstanding the foregoing, VSRs may not be
redeemed (i) if the Company or (unless it shall have been
the subject of a Change of Control) PCT or any of their
respective successors or Affiliates (including for such
purpose any director or officer of the Company or PCT)
shall have engaged in any Prohibited Activity during the
35-trading day period preceding the Redemption Notice
Date or (ii) in the case of a Redemption Event arising
out of a Redemption Transaction, unless such Redemption
Transaction shall have been consummated on or prior to
the Redemption Payment Date.
Notice of redemption shall include the Redemp-
tion Price, determined as provided for above, and if the
Redemption Event arises out of a Redemption Transaction,
a statement to the effect that such redemption is contin-
gent upon the consummation of such Redemption Transac-
tion, and shall be mailed at least 15 days but not more
than 60 days before the date (the "Redemption Payment
Date") payments are scheduled to be made to each Holder
of VSR Certificates to be redeemed at its registered
address. If money sufficient to pay the Redemption Price
of all VSR Certificates to be redeemed is deposited with
the Paying Agent on or before the payment date, on and
after such date such VSR Certificates shall terminate and
become null and void and the Holders thereof shall have
no further rights with respect thereto subject, in the
case of a Redemption Event arising out of a Redemption
Transaction, to the consummation of such Redemption
Transaction.
Notwithstanding any provision of the Agreement
or of this VSR Certificate to the contrary, (i) other
than in the case of interest on the Default Payment
Amount, no interest shall accrue on any amounts payable
on the VSRs to any Holder, (ii) during the 60-day period
immediately preceding (and including) an Optional Call
Date on which the Company exercises its optional right to
call the Securities or the Maturity Date, as the case may
be, the Company shall not, and shall not permit any of
its Subsidiaries or Affiliates (including for such pur-
pose any director or officer of the Company and PCT) to
engage in any Prohibited Activity and (iii) the Company
shall not, and shall not permit any of its Subsidiaries
or Affiliates (including for such purpose any director or
officer of the Company and PCT) to acquire in open market
transactions, private transactions or otherwise, the
Securities.
"Applicable Number" initially shall be equal to
one subject to adjustment in accordance with Section
3.1(l) of the Agreement.
"Base Amount" means, as of any date of determi-
nation, the excess (rounded to the nearest $.01) of
(a)(x) $10.25, if the date of determination occurs on or
before January 1, 1998, or (y) $11.00, if the date of
determination occurs after January 1, 1998, over (b) the
Distribution Amount.
"Change of Control" shall mean, with respect to
any specified Person, the occurrence of one or more of
the following events: (i) a Person or entity or a group
of Persons or entities acting in concert as a partner-
ship, limited partnership, syndicate or other group
(within the meaning of Rule 13d-3 under the Exchange Act)
shall become the beneficial owner within the meaning of
Rule 13d-3 under the Exchange Act) of shares representing
50% or more of the voting power of the outstanding shares
of voting stock of such specified Person; (ii) such
specified Person or any subsidiary of such specified
Person shall merge or consolidate with any other Person
and after giving effect to such merger or consolidation
the holders of the voting stock of such specified Person
immediately prior thereto will own shares representing
less than 50% of the voting power of the voting stock of
such specified Person or its ultimate parent; (iii) a
sale or other disposition of all or substantially all of
the assets of such specified Person; (iv) the issuance of
shares of voting stock by such specified Person which
would result in the number of shares of voting stock of
such specified Person outstanding after such issuance
being equal to or in excess of 150% of the number of
shares of voting stock of such specified Person outstand-
ing as of the Effective Date (subject to appropriate
adjustment in the event of a stock split, stock dividend,
recapitalization or other similar event applicable to
shares of voting stock following the Effective Date); and
(v) if such specified Person is PCT, individuals who
would constitute a majority of the nominees to be elected
to the Board of Directors of PCT at any meeting of stock-
holders or by written consent (without regard to any
members of the Board of Directors elected pursuant to the
terms of any class or series of preferred stock of PCT)
shall be elected to the Board of Directors where the
election or nomination for election by PCT's stockholders
of such directors was not approved by a vote of at least
a majority of the directors in office immediately prior
to such election.
"Default Payment Amount" means, as of a Default
Payment Date, an amount, if any, as determined by the
Accounting Firm, equal to the lesser of (i) the excess,
if any, of (x) the Base Amount determined as of such
Default Payment Date over (y) the 30-Day Average Market
Price determined as of such Default Payment Date and (ii)
$3.25.
"Default Interest Rate" means 8.46% per annum.
"Default Payment Date" means the date upon
which this VSR becomes due pursuant to Section 8.1 of the
Agreement.
"Distribution Amount" means, as of any date of
determination, the sum of (i) the value of all cash
dividends or other cash distributions declared and paid
with respect to the Applicable Number of shares of PCT
Common Stock, (ii) all cash received by a holder of PCT
Common Stock with respect to the Applicable Number of
shares of PCT Common Stock as consideration in a merger,
consolidation or other business combination, (iii) the
fair market value, as determined by the Independent
Financial Expert, of all dividends or other distributions
consisting of property or assets (other than cash, the
Securities or other securities, but including any rights,
warrants or options to purchase Securities or other
securities that expire prior to the Optional Call Date or
the Maturity Date, as the case may be (collectively,
"Designated Options")), declared and paid with respect to
the Applicable Number of shares of PCT Common Stock, and
(iv) the fair market value, as determined by the Indepen-
dent Financial Expert, of all consideration consisting of
property or assets (other than cash, the Securities or
other securities, but including Designated Options)
received by a holder of PCT Common Stock with respect to
the Applicable Number of shares of PCT Common Stock as
consideration in a merger, consolidation or other busi-
ness combination, in all such cases from the Effective
Date to such date of determination.
For the purposes of this definition, (x) the
amount of dividends declared and paid and the amount of
consideration received with respect to the Applicable
Number of shares of PCT Common Stock shall include divi-
dends declared and paid and consideration received with
respect to any securities paid as dividends or received
as consideration with respect to the Applicable Number of
shares of PCT Common Stock and (y) the fair market value
of any Designated Option, as of any date of determina-
tion, shall equal the excess, if any, of the average of
the Market Prices of the security underlying such Desig-
nated Option for the 30 consecutive trading days ended on
the Business Day immediately prior to such date of deter-
mination (or if the underlying security no longer exists,
for the 30 consecutive trading days ended on the Business
Day immediately prior to the date of the transaction as a
result of which such security ceased to exist) over the
exercise price therefor provided in such Designated
Option; provided that, if on the date any such Designated
Option expired, the Market Price of the security underly-
ing such Designated Option was less than the exercise
price therefor provided in such Designated Option, the
fair market value of such Designated Option shall equal
zero.
"Independent Financial Expert" means a nation-
ally recognized investment banking firm selected by the
Company that does not have a direct or indirect ownership
interest in the Company or any of its Affiliates and that
at the time it is called upon to give independent finan-
cial advice to the Company, is not (and none of whose
directors, officers or Affiliates is) a director or
officer of the Company or any of its Affiliates; provid-
ed, that, notwithstanding the foregoing, no such invest-
ment banking firm shall be disqualified as an Independent
Financial Expert solely by reason of its ownership, in
the ordinary course of business, for its own account or
for the account of any customer of securities of the
Company or any Affiliates of the Company.
"Market Price" means, as of any date of deter-
mination, for any security, the last reported sale price
as reported on the principal national securities exchange
on which such security is then listed or, if (i) such
security is not listed on a national securities exchange
or (ii) such security is listed on a national securities
exchange but the majority of the trading volume with
respect to such security is effected on the NMS/NASDAQ,
the last reported sale price as reported on NMS/NASDAQ
or, if such security is not listed on a national securi-
ties exchange and is not quoted on NMS/NASDAQ, the aver-
age of the highest reported bid and lowest reported asked
quotation on the NASDAQ or, if such security is not
listed on a national securities exchange and is not
quoted on NMS/NASDAQ or NASDAQ but is traded in the over-
the-counter market, the fair market value of such securi-
ty as determined by an Independent Financial Expert.
"Prohibited Activity" means, with respect to
any period, any acquisition or disposition in open market
transactions, private transactions or otherwise, of (i)
any shares of PCT Common Stock, (ii) any securities
convertible into or exchangeable for shares of PCT Common
Stock or (iii) any securities which holders of PCT Common
Stock have received with respect to their shares of PCT
Common Stock, whether as a dividend or distribution or in
connection with a merger, consolidation or otherwise
(other than, in each case, (w) shares of PCT Common Stock
acquired on behalf of any 401k plan established for PCT
and its subsidiaries to satisfy participant directions
and related company matching obligations, (x) shares
issued or acquired pursuant to employee stock options
granted to directors, officers or employees in the ordi-
nary course of business prior to the first day of such
period, (y) sales or other dispositions of shares by
directors or officers, or (z) acquisitions of up to an
aggregate of 25,000 shares Of PCT Common Stock in the
open market by directors or officers of PCT).
"30-Day Average Market Price" means, as of any
date of determination, the average of the Market Price of
the Applicable Number of shares of PCT Common Stock for
the 30 consecutive trading days ended on the Business Day
immediately prior to such date of determination. For
purposes of this definition, the Market Price of the
Applicable Number of shares of PCT Common Stock shall
(following such receipt) include the Market Price of any
securities (other than the Securities) which shall have
been received by a holder of PCT Common Stock with re-
spect to the Applicable Number of shares of PCT Common
Stock from the Effective Date to the date of determina-
tion, whether as a dividend or other distribution or in
connection with a merger, consolidation or other business
combination or a reclassification of PCT Common Stock.
"Total Disposition" means (i) one or more
mergers, consolidations or other business combinations
involving PCT after giving effect to which no shares of
PCT Common Stock shall remain outstanding or registered
under the Exchange Act, (ii) a sale, transfer or other
disposition, in one or a series of transactions, of all
or substantially all of the assets of PCT or (iii) a
reclassification of PCT Common Stock as the capital stock
of any other Person (other than an Affiliate of PCT).
"Total Disposition Amount" means, with respect
to a Total Disposition, the fair market value, as deter-
mined by an Independent Financial Expert, of (A) the
consideration, if any, received with respect to the
Applicable Number of shares of PCT Common Stock, by the
holder thereof as a result of such Total Disposition, or
(B) if an election of the type of consideration to be
received by the holders of PCT Common Stock is made, the
consideration selected by a majority of such stockholders
(and assuming such holder did not exercise any right of
appraisal granted under law).
As set forth in Section 3.1(g) of the Agree-
ment, to the extent the aggregate principal amount of the
senior debt obligation referred to below is at least
$25,000,000, all amounts payable on the Maturity Date may
be paid, at the option of the Company, either in cash or,
subject to the provisions of Sections 7.5 and 7.6 of the
Agreement, by the issuance of a senior debt obligation of
the Company which is not subordinated to any other debt
obligation of the Company, with a principal amount equal
to the amount of the payment due. Any debt issued by the
Company in satisfaction of the Company's obligations with
respect to VSRs shall be issued pursuant to an indenture
having the principal terms set forth on Exhibit A to the
Agreement and will have a maturity of up to three years
from the date of issuance and will have an interest rate
and redemption provisions determined in good faith by the
Board of Directors of the Company to result in such debt
having in the opinion of an Independent Financial Expert
a market value as of the date of issuance on a fully
distributed basis equal to 100% of its principal amount.
The Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modi-
fication of the rights and obligations of the Company and
the rights of the Holders under the Agreement at any time
by the Company and the Trustee with the consent of the
Holders of a majority of the Securities at the time
Outstanding.
As provided in the Agreement and subject to
certain limitations therein set forth, the transfer of
the VSRs represented by this VSR Certificate is register-
able on the Security Register of the Company, upon sur-
render of this VSR Certificate for registration of trans-
fer at the office or agency of the Company maintained for
such purpose in The City of New York, duly endorsed by,
or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Regis-
trar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new
VSR Certificates, for the same amount of VSRs, will be
issued to the designated transferee or transferees.
As provided in the Agreement and subject to
certain limitations therein set forth, this VSR Certifi-
cate is exchangeable for one or more VSR Certificates
representing the same number of VSRs as represented by
this VSR Certificate as requested by the Holder surren-
dering the same.
No service charge shall be made for any regis-
tration of transfer or exchange of VSRs, but the Company
may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection there-
with.
Prior to the time of due presentment of this
VSR Certificate for registration of transfer, the Compa-
ny, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this VSR
Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Trustee nor any
agent shall be affected by notice to the contrary.
A director, officer, employee or stockholder,
as such, of the Company or the Trustee shall not have any
liability for any obligations of the Company or the
Trustee under the VSR or the Agreement or for any claim
based on, in respect of or by reason of such obligations
or their creation. By accepting a VSR Certificate, each
Holder waives and releases all such liability. The
waiver and release are part of the consideration for the
issue of the VSR Certificate.
All capitalized terms used in this VSR Certifi-
cate without definition shall have the meanings assigned
to them in the Agreement.
Section 2.4 Form of Trustee's Certificate of
Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the VSR Certificates referred to
in the within-mentioned Agreement.
[TRUSTEE],
as Trustee
By_________________________
Authorized Officer
ARTICLE 3
THE SECURITIES
Section 3.1 Title and Terms.
(a) The aggregate number of VSR Certifi-
cates which may be authenticated and delivered under this
Agreement is limited to a number equal to 23,500,000
except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in
lieu of, other Securities pursuant to Section 3.4, 3.5,
3.6 or 6.6.
(b) The Securities shall be known and
designated as the "Value Support Rights" of the Company.
(c) Unless the right to receive any such
amount previously has been satisfied in connection with
an Optional Call Date, a Total Disposition, an Event of
Default, or a Redemption Event, the Company shall pay to
each Holder on the Maturity Date, for each VSR held by
such Holder an amount, if any, as determined by an inde-
pendent "big six" accounting firm (other than the ac-
counting firm or firms serving as the principal auditors
for the Company or PCT) selected by the Company (the
"Accounting Firm"), equal to the lesser of (x) the ex-
cess, if any, of the Base Amount determined as of such
date, over the 30-Day Average Market Price determined as
of such date and (y) $3.25. Such determinations by the
Accounting Firm absent manifest error shall be final and
binding on the Company and the Holders. The Company
shall provide notice to the Trustee of the amount payable
and the method of payment pursuant to this Section 3.1(c)
together with a reasonably detailed calculation of the
determination of such amount.
(d) Upon an Optional Call Date, the Company
may, in its sole discretion, pay to the Holder hereof for
each VSR represented hereby an amount, as determined by
the Accounting Firm, payable in cash equal to the lesser
of (x) the excess, if any, of the Base Amount determined
as of such Optional Call Date, over the 30-Day Average
Market Price determined as of such date and (y) $3.25;
provided, however, such amount (the "Optional Call Pay-
ment Amount") shall in no event be less than $0.50 if
such Optional Call Date is on or prior to January 1,
1998. Such determinations by the Accounting Firm absent
manifest error shall be final and binding on the Company
and the Holders. Such payment shall be made on any date
(the "Optional Call Payment Date") established by the
Company, which in no event shall be more than 30 days
after the Optional Call Date, to holders of record at the
close of business on the tenth business day following
such Optional Call Date. In the event the Company exer-
cises its optional right to call the Securities on an
Optional Call Date, the Company shall issue a press
release on such date announcing such event, the Optional
Call Payment Amount and the Optional Call Payment Date.
As soon as practicable following such Optional Call Date,
the Company shall give the Holder and the Trustee hereof
notice, in the form set forth below, that the Company has
exercised its optional right to call the Securities, the
Optional Call Payment Amount and the Optional Call Pay-
ment Date; provided, however, such notice to Holders may,
at the option of the Company, occur simultaneously with
the payment of the Optional Call Payment Amount.
* * * * * *
MAFCO CONSOLIDATED GROUP INC.
VALUE SUPPORT RIGHTS
[Date]
NOTICE OF EXERCISE OF OPTIONAL RIGHT TO CALL THE SECURITIES
NOTICE IS HEREBY GIVEN THAT, pursuant to Sec-
tion 3.1 of the Value Support Rights Agreement, dated as
of October [ ], 1996 (the "Agreement"), between Mafco
Consolidated Group Inc., (the "Company"), and American
Stock Transfer & Trust Company, as trustee (the "Trust-
ee"), the Company has exercised its optional right to
call the Securities. All terms used in this Notice which
are defined in the Agreement shall have the meanings
assigned to them in the Agreement.
The Optional Call Payment Amount payable to
each Holder on ________, the Optional Call Payment Date,
for each VSR held by such Holder shall be equal to
$___________.
MAFCO CONSOLIDATED GROUP INC.
* * * * * *
(e) Upon the consummation of a Total
Disposition, the Company shall pay to each Holder for
each VSR held by such Holder an amount, if any, as deter-
mined by the Accounting Firm, equal to the lesser of (x)
the excess, if any, of the Base Amount determined as of
the Total Disposition Payment Date over the Total Dispo-
sition Amount and (y) $3.25. Such determinations by the
Accounting Firm and any Independent Financial Expert
absent manifest error shall be final and binding on the
Company and the Holders. Such payment shall be made on
any date (the "Total Disposition Payment Date") estab-
lished by the Company, which in no event shall be more
than 30 days after the date on which the Total Disposi-
tion was consummated.
(f) As soon as practicable following a
Total Disposition, the Company shall give each Holder and
the Trustee notice of such Total Disposition and the
Total Disposition Payment Date and such notice to the
Trustee shall also specify the method of payment of the
amount payable on the Total Disposition Payment Date.
The Company shall also provide to the Trustee an
Officers' Certificate as to the occurrence of a Total
Disposition setting forth the amount of such payment.
(g) To the extent the aggregate principal
amount of the senior debt obligation referred to below is
at least $25,000,000, all amounts payable pursuant to the
VSRs on the Maturity Date may be paid, at the option of
the Company, either in cash or, subject to the provisions
of Sections 7.5 and 7.6 of this Agreement, by the issu-
ance of a senior debt obligation of the Company which is
not subordinated to any other debt obligation of the
Company, with a principal amount equal to the amount of
the payment due. The Company shall provide notice to the
Trustee of the method of payment within one Business Day
prior to the payment thereof. Any debt issued by the
Company in satisfaction of the Company's obligations with
respect to VSRs shall be issued pursuant to an indenture
having the principal terms set forth on Exhibit A hereto
and will have a maturity of up to three years from the
date of issuance and will have an interest rate and
redemption provisions determined in good faith by the
Board of Directors of the Company to result in such debt
having in the opinion of an Independent Financial Expert
a market value as of the date of issuance on a fully
distributed basis equal to 100% of its principal amount.
Such determination of the Board of Directors will be
supported by a written opinion delivered to the Board of
Directors by an Independent Financial Expert. Prior to
the issuance of such debt securities, the Company shall
provide the Trustee with an Officer's Certificate as to
compliance with the conditions precedent to the issuance
of such debt securities set forth in this Agreement.
(h) Upon the occurrence of a Redemption Event,
the VSRs may be redeemed at the option of the Company in
whole (but not in part) on or prior to the consummation
of such event or transaction at a redemption price,
payable in cash, equal to the lesser of (x) 115% of the
excess, if any, of the Base Amount determined as of the
fifth Business Day prior to the date notices of redemp-
tion are mailed to Holders (the date of such mailing is
referred to herein as the "Redemption Notice Date") over
the 30-Day Average Market Price determined as of the
Redemption Notice Date and (y) $3.25 (the "Redemption
Price"). A notice of the redemption pursuant to this
Section 3.1(h) setting forth the Redemption Price and the
date of redemption shall also be delivered to the Trust-
ee, together with an Officer's Certificate as to the
occurrence of a Redemption Event and specifying the
Redemption Price and redemption date.
A "Redemption Event" shall be deemed to have
occurred if either (i) as a result of an event beyond the
reasonable control of the Company, the existence of the
VSRs would cause the Company to cease to be a member of
the consolidated group with respect to which the Company
files consolidated federal income tax returns and such
situation would be avoided or cured by the redemption of
the VSRs or (ii) the VSRs would create any material
financial or legal impediment to the consummation of any
bona fide significant corporate event or transaction (a
"Redemption Transaction") involving the Company, which
transaction would, if consummated, result in a Change of
Control of the Company and in connection with which
transaction the Company has entered into definitive
documentation which creates a binding obligation upon the
Company to consummate such transaction (subject to cus-
tomary conditions to closing and fiduciary obligations),
in either of clauses (i) and (ii) as determined in good
faith by the Board of Directors of the Company as evi-
denced by an Officers' Certificate of the Company.
Notwithstanding the foregoing, VSRs may not be
redeemed (i) if the Company or (unless it shall have been
the subject of a Change of Control) PCT or any of their
respective successors or Affiliates (including for such
purpose any director or officer of the Company and PCT)
shall have engaged in any Prohibited Activity during the
35-trading day period preceding the Redemption Notice
Date or (ii) in the case of a Redemption Event arising
out of a Redemption Transaction, unless such Redemption
Transaction shall have been consummated on or prior to
the Redemption Payment Date.
Notice of redemption shall include the Redemp-
tion Price, determined as provided for above, and if the
Redemption Event arises out of a Redemption Transaction,
a statement to the effect that such redemption is contin-
gent upon the consummation of such Redemption Transac-
tion, and shall be mailed at least 15 days but not more
than 60 days before the date (the "Redemption Payment
Date") payments are scheduled to be made to each Holder
of VSR Certificates to be redeemed at its registered
address. If money sufficient to pay the Redemption Price
of all VSR Certificates to be redeemed is deposited with
the Paying Agent on or before the payment date, on and
after such date such VSR Certificates shall terminate and
become null and void and the Holders thereof shall have
no further rights with respect thereto subject, in the
case of a Redemption Event arising out of a Redemption
Transaction, to the consummation of such Redemption
Transaction.
(i) Notwithstanding any provision of this
Agreement or the VSR Certificates to the contrary, other
than in the case of interest on the Default Payment
Amount, no interest shall accrue on any amounts payable
on the VSRs to any Holder.
(j) In the event that all of the VSR Certifi-
cates not previously cancelled shall have been called for
redemption by the Company pursuant to Section 3.1(h)
hereof or shall have become due and payable pursuant to
the terms hereof, and the Company has paid or caused to
be paid or deposited with the Trustee all amounts payable
to the Holders under this Agreement, then this Agreement
shall cease to be of further effect and shall be deemed
satisfied and discharged. Notwithstanding the satisfac-
tion and discharge of this Agreement, the obligations of
the Company under Section 4.6(c) shall survive.
(k) In the event PCT shall in any manner
subdivide (by stock split, stock dividend or otherwise)
or combine (by reverse stock split or otherwise) the
number of outstanding shares of PCT Common Stock (an
"Adjustment Event"), the Applicable Number with respect
to shares of PCT Common Stock shall, from and after the
date of such Adjustment Event (subject to further adjust-
ment in accordance with this Section 3.1(k)), equal the
Applicable Number with respect to the shares of PCT
Common Stock in effect immediately prior to such Adjust-
ment Event, multiplied by a fraction, the numerator of
which shall be the total number of shares of PCT Common
Stock outstanding immediately following such Adjustment
Event and the denominator of which shall be the total
number of shares of PCT Common Stock outstanding immedi-
ately prior to such Adjustment Event. In the event that
any securities received with respect to PCT Common Stock
shall in any manner be subdivided (by stock split, stock
dividend or otherwise) or combined (by reverse stock
split or otherwise), appropriate adjustments shall be
made in a manner consistent with the principles set forth
in this Section 3.1(k). Whenever an adjustment is made
as provided in this Section 3.1(k), the Company shall (i)
promptly prepare a certificate setting forth such adjust-
ment and a brief statement of the facts accounting for
such adjustment, (ii) promptly file with the Trustee a
copy of such certificate and (iii) mail a brief summary
thereof to each Holder. The Trustee shall be fully
protected in relying on any such certificate and on any
adjustment therein contained. Such adjustment absent
manifest error shall be final and binding on the Company
and the Holders.
Section 3.2 Registrable Form.
The Securities shall be issuable only in
registered form.
Section 3.3 Execution, Authentication, Deliv-
ery and Dating.
The Securities shall be executed on behalf of
the Company by its chairman of the Board of Directors or
its president or any vice president or its treasurer, but
need not be attested. The signature of any of these
officers on the Securities may be manual or facsimile.
The Company's seal shall be impressed, affixed, imprinted
or reproduced on the Securities and may be in facsimile
form.
Securities bearing the manual or facsimile
signatures of individuals who were at the time of execu-
tion the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the au-
thentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the
execution and delivery of this Agreement, the Company may
deliver Securities executed by the Company to the Trustee
for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the
Trustee in accordance with such Company Order shall
authenticate and deliver such Securities as provided in
this Agreement and not otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit
under this Agreement or be valid or obligatory for any
purpose unless there appears on such Security a certifi-
cate of authentication substantially in the form provided
for herein duly executed by the Trustee by manual or
facsimile signature of an authorized officer, and such
certificate upon any Security shall be conclusive evi-
dence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this Agreement.
Section 3.4 Temporary Securities.
Pending the preparation of definitive Securi-
ties, the Company may execute, and upon Company Order,
the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, substantially of the
tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omis-
sions, substitutions and other variations as the officers
executing such Securities may determine with the concur-
rence of the Trustee. Temporary Securities may contain
such reference to any provisions of this Agreement as may
be appropriate. Every temporary Security shall be execut-
ed by the Company and be authenticated by the Trustee
upon the same conditions and in substantially the same
manner, and with like effect, as the definitive Securi-
ties.
If temporary Securities are issued, the Company
will cause definitive Securities to be prepared without
unreasonable delay. After the preparation of definitive
Securities, the temporary Securities shall be exchange-
able for definitive Securities upon surrender of the
temporary Securities at the office or agency of the
Company designated for such purpose pursuant to Section
7.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the
Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like amount of defini-
tive Securities. Until so exchanged the temporary Secu-
rities shall in all respects be entitled to the same
benefits under this Agreement as definitive Securities.
Section 3.5 Registration, Registration of
Transfer and Exchange.
The Company shall cause to be kept at the
office of American Stock Transfer & Trust Company a
register (the register maintained in such office and in
any other office or agency designated pursuant to Section
7.2 being herein sometimes referred to as the "Security
Register") in which, subject to such reasonable regula-
tions as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Secu-
rities. American Stock Transfer & Trust Company is
hereby initially appointed "Security Registrar" for the
purpose of registering Securities and transfers of Secu-
rities as herein provided.
Upon surrender for registration of transfer of
any Security at the office or agency of the Company
designated pursuant to Section 7.2, the Company shall
execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees,
one or more new VSR Certificates representing the same
aggregate number of VSRs represented by the VSR Certifi-
cate so surrendered that are to be transferred and the
Company shall execute and the Trustee shall authenticate
and deliver, in the name of the transferor, one or more
new VSR Certificates representing the aggregate number of
VSRs represented by such VSR Certificate that are not to
be transferred.
At the option of the Holder, VSR Certificates
may be exchanged for other VSR Certificates that repre-
sent in the aggregate the same number of VSRs as the VSR
Certificates surrendered at such office or agency.
Whenever any VSR Certificates are so surrendered for
exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the VSR Certificates
which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of
transfer or exchange of Securities shall be the valid
obligations of the Company, evidencing the same rights,
and entitled to the same benefits under this Agreement,
as the Securities surrendered upon such registration of
transfer or exchange.
Every Security presented or surrendered for
registration of transfer or for exchange shall (if so
required by the Company or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing.
No service charge shall be made for any regis-
tration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed
in connection with any registration of transfer or ex-
change of Securities, other than exchanges pursuant to
Section 3.4 or 6.6 not involving any transfer.
Section 3.6 Mutilated, Destroyed, Lost and
Stolen Securities.
If (a) any mutilated Security is surrendered to
the Trustee, or (b) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss
or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may
be required by them to save each of them harmless, then,
in the absence of notice to the Company or the Trustee
that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon delivery of
a Company Order the Trustee shall authenticate and deliv-
er, in exchange for any such mutilated Security or in
lieu of any such destroyed, lost or stolen Security, a
new VSR Certificate of like tenor and amount of VSRs,
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or
stolen Security has become or is to become due and pay-
able within 15 days, the Company in its discretion may,
instead of issuing a new VSR Certificate, pay to the
Holder of such Security on an Optional Call Date, the
Maturity Date, the Total Disposition Payment Date or the
Default Payment Date, as the case may be, all amounts due
and payable with respect thereto.
Upon the issuance of any new Securities under
this Section, the Company shall pay any tax or other
governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this
Agreement equally and proportionately with any and all
other Securities duly issued hereunder.
The provisions of this Section are exclusive
and shall preclude (to the extent lawful) all other
rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securi-
ties.
Section 3.7 Presentation of VSR Certificate.
Payment of any amounts pursuant to the VSRs
shall be made only upon presentation by the Holder there-
of, at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New
York, and at any other office or agency maintained by the
Company for such purpose in such coin or currency of the
United States of America as at the time is legal tender
for the payment of public and private debts or in debt
securities of the Company in accordance with the provi-
sions of Section 3.1(g). However, the Company may pay
such amounts by its check payable in such money.
Section 3.8 Persons Deemed Owners.
Prior to the time of due presentment for regis-
tration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person
in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment on
such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.
Section 3.9 Cancellation.
All Securities surrendered for payment, regis-
tration of transfer or exchange shall, if surrendered to
any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. The Compa-
ny may at any time deliver to the Trustee for cancella-
tion any Securities previously authenticated and deliv-
ered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall
be promptly canceled by the Trustee. No Securities shall
be authenticated in lieu of or in exchange for any Secu-
rities canceled as provided in this Section, except as
expressly permitted by this Agreement. All cancelled
Securities held by the Trustee shall be disposed of as
directed by a Company Order.
ARTICLE 4
THE TRUSTEE
Section 4.1 Certain Duties and Responsibili-
ties.
(a) With respect to the Holders of Secu-
rities issued, the Trustee, prior to the occurrence of an
Event of Default with respect to the Securities and after
the curing or waiving of all Events of Default which may
have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agree-
ment and no implied covenants shall be read into this
Agreement against the Trustee. In case an Event of
Default with respect to the Securities has occurred
(which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by
this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or
use under the circumstances in the conduct of his own
affairs.
(b) In the absence of bad faith on its
part, prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default
which may have occurred, the Trustee may conclusively
rely, as to the truth of the statements and the correct-
ness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to
the requirements of this Agreement; but in the case of
any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Agreement.
(c) No provision of this Agreement shall
be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to
act, or its own willful misconduct, except that
(1) this Subsection (c) shall not be
construed to limit the effect of Subsections (a) and
(b) of this Section;
(2) the Trustee shall not be liable
for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that
the Trustee was negligent in ascertaining the perti-
nent facts;
(3) no provision of this Agreement
shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity
against such risk or liability is not reasonably
assured to it; and
(4) the Trustee shall not be liable
with respect to any action taken or omitted to be
taken by it in good faith in accordance with the
direction of the Holders pursuant to Section 8.9
relating to the time, method and place of conducting
any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement.
(d) Whether or not therein expressly so
provided, every provision of this Agreement relating to
the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provi-
sions of this Section.
Section 4.2 Certain Rights of Trustee.
Subject to the provisions of Section 4.1:
(a) the Trustee may rely and shall be
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to
have been signed or presented by the proper party or
parties and the Trustee need not investigate any fact or
matter stated in the document;
(b) any request or direction or order of
the Company mentioned herein shall be sufficiently evi-
denced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution and the Trustee shall not
be liable for any action it takes or omits to take in
good faith reliance thereon;
(c) whenever in the administration of
this Agreement the Trustee shall deem it desirable that a
matter be proved or established prior to taking, suffer-
ing or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an
Officers' Certificate and the Trustee shall not be liable
for any action it takes or omits to take in good faith
reliance thereon or an Opinion of Counsel;
(d) the Trustee may consult with counsel
and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(e) the Trustee shall be under no obliga-
tion to exercise any of the rights or powers vested in it
by this Agreement at the request or direction of any of
the Holders pursuant to this Agreement, unless such
Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to
make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approv-
al, appraisal, bond, debenture, note, coupon, security,
or other paper or document, but the Trustee in its dis-
cretion may make such further inquiry or investigation
into such facts or matters as it may see fit, and if the
Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by
agent or attorney;
(g) the Trustee may execute any of the
trusts or powers hereunder or perform any duties hereun-
der either directly or by or through agents or attorneys
and the Trustee shall not be responsible for any miscon-
duct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be liable for
any action taken, suffered or omitted to be taken by it
in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon
it by this Agreement.
Section 4.3 Not Responsible for Recitals or
Issuance of Securities.
The Trustee shall not be accountable for the
Company's use of the Securities or the proceeds from the
Securities.
The recitals contained herein and in the Secu-
rities, except the Trustee's certificates of authentica-
tion, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement or of the
Securities.
Section 4.4 May Hold Securities.
The Trustee, any Paying Agent, Security Regis-
trar or any other agent of the Company, in its individual
or any other capacity, may become the owner or pledgee of
Securities, and, subject to Sections 4.7 and 4.12, may
otherwise deal with the Company with the same rights it
would have if it were not Trustee, Paying Agent, Security
Registrar or such other agent.
Section 4.5 Money Held in Trust.
Money held by the Trustee in trust hereunder
need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no
liability for interest on any money received by it here-
under.
Section 4.6 Compensation and Reimbursement.
The Company agrees
(a) to pay to the Trustee from time to
time reasonable compensation for all services rendered by
it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provid-
ed herein, to reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any
provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disburse-
ment or advance as may be attributable to its negligence
or bad faith; and
(c) to indemnify the Trustee and each of
its agents, officers, directors and employees (each an
"indemnitee") for, and to hold it harmless against, any
loss, liability or expense (including attorneys fees and
expenses) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance
or administration of this trust and the performance of
its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in con-
nection with the exercise or performance of any of its
powers or duties hereunder. The obligations of the
Company hereunder shall constitute additional indebted-
ness hereunder. To secure the Company's payment obliga-
tions in this Section, the Trustee shall have a lien
prior to the Securities on all money or property held or
collected by the Trustee other than money or property
held in trust to pay particular Securities. The
Company's payment obligations pursuant to this Section
shall survive the termination of this Agreement. When a
Trustee incurs expenses after the occurrence of an Event
of Default specified in Section 8.1(c) or 8.1(d) with
respect to the Company, the expenses are intended to
constitute expenses of administration under bankruptcy
laws.
Section 4.7 Disqualification; Conflicting
Interests.
If the Trustee has or shall acquire any con-
flicting interest within the meaning of the Trust Inden-
ture Act, it shall, within 90 days after ascertaining
that it has such conflicting interest, either eliminate
such conflicting interest or resign to the extent and in
the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Agreement. The Company
shall take prompt steps to have a successor appointed in
the manner provided in this Agreement.
Section 4.8 Corporate Trustee Required; Eligi-
bility.
There shall at all times be a Trustee hereunder
which shall be a corporation that is eligible pursuant to
the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $15,000,000. If such
corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of a
supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Arti-
cle.
Section 4.9 Resignation and Removal; Appoint-
ment of Successor.
(a) No resignation or removal of the
Trustee and no appointment of a successor Trustee pursu-
ant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under
Section 4.10.
(b) The Trustee, or any trustee or trust-
ees hereafter appointed, may resign at any time by giving
written notice thereof to the Company. If an instrument
of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving
of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any
time by an Act of the Holders of a majority of the Out-
standing Securities, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply
with Section 4.7 after written request therefor by
the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months,
or
(2) the Trustee shall cease to be
eligible under Section 4.8 and shall fail to resign
after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapa-
ble of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer
shall take charge or control of the Trustee or of
its property or affairs for the purpose of rehabili-
tation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution
may remove the Trustee, or (ii) the Holder of any Securi-
ty who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If the Trustee shall resign, be
removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after any removal
by Holders of a majority of the Outstanding Securities, a
successor Trustee shall be appointed by Act of the Hold-
ers of a majority of the Outstanding Securities delivered
to the Company and the retiring Trustee the successor
Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with Section 4.10,
become the successor Trustee and supersede the successor
Trustee appointed by the Company. If no successor Trust-
ee shall have been so appointed by the Company or the
Holders of the Securities and accepted appointment within
60 days after the retiring Trustee tenders its resigna-
tion or is removed, the retiring Trustee may, or, the
Holder of any Security who has been a bona fide Holder
for at least six months may on behalf of himself and all
others similarly situated, petition any court of compe-
tent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each
resignation and each removal of the Trustee and each
appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage pre-
paid, to the Holders of Securities as their names and
addresses appear in the Security Register. Each notice
shall include the name of the successor Trustee and the
address of its Corporate Trust office. If the Company
fails to send such notice within ten days after accep-
tance of appointment by a successor Trustee, it shall not
be a default hereunder but the successor Trustee shall
cause the notice to be mailed at the expense of the
Company.
Section 4.10 Acceptance of Appointment of
Successor.
Every successor Trustee appointed hereunder
shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of
the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but,
upon request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of
the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of
any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting
in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appoint-
ment unless at the time of such acceptance such successor
Trustee shall be qualified and eligible under this Article.
Section 4.11 Merger, Conversion, Consolidation
or Succession to Business.
Any corporation into which the Trustee may be
merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party,
or any corporation succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of
any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolida-
tion to such authenticating Trustee may adopt such au-
thentication and deliver the Securities so authenticated
with the same effect as if such successor Trustee had
itself authenticated such Securities; and such certifi-
cate shall have the full force which it is anywhere in
the Securities or in this Agreement provided that the
certificate of the Trustee shall have; provided that the
right to adopt the certificate of authentication of any
predecessor Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
Section 4.12 Preferential Collection of Claims
Against Company.
If and when the Trustee shall be or shall
become a creditor of the Company (or any other obligor
upon the Securities) the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such
other obligor).
ARTICLE 5
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 5.1 Company to Furnish Trustee Names
and Addresses of Holders.
The Company will furnish or cause to be fur-
nished to the Trustee (i) semiannually, not later than
June 30 and December 31 of each year, a list, in such
form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such date, and (ii) at
such times as the Trustee may request in writing, within
30 days after receipt by the Company of any such request,
a list, in such form as the Trustee may reasonably re-
quire, of the names and addresses of the Holders as of a
date not more than 15 days prior to the time such list is
furnished; provided, however, that if and so long as the
Trustee shall be the Security Registrar, no such list
need be furnished.
Section 5.2 Preservation of Information;
Communications to Holders.
(a) The Trustee shall preserve, in as
current a form as is reasonably practicable, the names
and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 5.1
and the names and addresses of Holders received by the
Trustee in its capacity as Security Registrar. The
Trustee may destroy any list furnished to it as provided
in Section 5.1 upon receipt of a new list so furnished.
(b) The rights of the Holders to communi-
cate with other Holders with respect to their rights
under this Agreement and the corresponding rights and
privileges of the Trustee shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by re-
ceiving and holding the same, agrees with the Company and
the Trustee that neither the Company nor the Trustee
shall be deemed to be in violation of law or held ac-
countable by reason of the disclosure of any such infor-
mation as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 5.3 Reports by Trustee.
(a) Within 60 days after December 31 of
each year commencing with the first December 31 after the
first issuance of Securities, the Trustee shall transmit
to all Holders such reports concerning the Trustee and
its actions under this Agreement as may be required
pursuant to the Trust Indenture Act at the time and in
the manner provided pursuant thereto.
(b) A copy of each such report shall, at
the time of such transmission to the Holders, be filed by
the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and also with
the Company. The Company will promptly notify the Trust-
ee when the Securities are listed on any stock exchange.
Section 5.4 Reports by Company.
The Company shall:
(a) file with the Trustee,
(i) within 15 days after the Company
is required to file the same with the Commission,
copies of the annual reports and of the information,
documents and other reports (or copies of such
portions of any of the foregoing as the Commission
may from time to time by rules and regulations
prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Sec-
tion 15(d) of the Exchange Act (such required infor-
mation, documents and other reports, generally, the
"Exchange Act Documents"); or,
(ii) if the Company is not required
to file its Exchange Act Documents, quarterly and
annual financial information that would be required
pursuant to Section 13 of the Exchange Act in re-
spect of a security listed and registered on a
national securities exchange as may be prescribed
from time to time in such rules and regulations; and
(b) transmit by mail to all Holders, as
their names and addresses appear in the Security Regis-
ter, within 30 days after the filing thereof with the
Trustee, such summaries of any information documents and
reports required to be filed by the Company pursuant to
subsection (a) of this Section as may be required by
rules and regulations prescribed from time to time by the
Commission.
ARTICLE 6
AMENDMENTS
Section 6.1 Amendments Without Consent of
Holders.
Without the consent of any Holders, the Company
and the Trustee, at any time and from time to time, may
enter into one or more amendments hereto or to the Secu-
rities, for any of the following purposes:
(a) to convey, transfer, assign, mortgage
or pledge to the Trustee as security for the Securi-
ties any property or assets; or
(b) to evidence the succession of another
Person to the Company, and the assumption by any
such successor of the covenants of the Company
herein and in the Securities; or
(c) to add to the covenants of the Compa-
ny such further covenants, restrictions, conditions
or provisions as its Board of Directors and the
Trustee shall consider to be for the protection of
the Holders of Securities, and to make the occur-
rence, or the occurrence and continuance, of a
default in any such additional covenants, restric-
tions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the
several remedies provided in this Agreement as
herein set forth; provided that in respect of any
such additional covenant, restriction, condition or
provision such amendment may provide for a particu-
lar period of grace after default (which period may
be shorter or longer than that allowed in the case
of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may
limit the remedies available to the Trustee upon
such an Event of Default or may limit the right of
the Holders of a majority of the Securities to waive
such an Event of Default; or
(d) to cure any ambiguity, or to correct
or supplement any provision herein or in the Securi-
ties which may be defective or inconsistent with any
other provision herein; provided that such provi-
sions shall not materially reduce the benefits of
this Agreement or the Securities to the Holders; or
(e) to make any other provisions with
respect to matters or questions arising under this
Agreement; provided that such provisions shall not
adversely affect the interests of the Holders; or
(f) to make any amendments or changes
necessary to comply or maintain compliance with the
Trust Indenture Act.
Promptly following any amendment of this Agree-
ment or the Securities in accordance with this Section
6.1, the Trustee shall notify the Holders of the Securi-
ties of such amendment; provided that any failure so to
notify the Holders shall not affect the validity of such
amendment.
Section 6.2 Amendments with Consent of Holders.
With the consent of the Holders of a majority
of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company
(when authorized by a Board Resolution) and the Trustee
may enter into one or more amendments hereto or to the
Securities for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provi-
sions of this Agreement or to the Securities or of modi-
fying in any manner the rights of the Holders under this
Agreement or to the Securities; provided, however, that
no such amendment shall, without the consent of the
Holder of each Outstanding Security affected thereby:
(a) modify the definition of Optional
Call Date, Optional Call Payment Date, Maturity Date,
Total Disposition Payment Date, Default Payment Date,
Market Price, 30-Day Average Market Price, Default Pay-
ment Amount, Default Payment Interest Rate, Base Amount
or Prohibited Activity, modify Section 3.1(k) or other-
wise extend the maturity of the Securities or reduce the
amounts payable in respect of the Securities or modify
any other payment term, interest rate or payment date or,
except as expressly permitted by Section 6.1(e), modify
the definition of Applicable Number, Distribution Amount,
Optional Call Payment Amount, Total Disposition Amount or
Change of Control;
(b) reduce the amount of the Outstanding
Securities, the consent of whose Holders is required for
any such amendment; or
(c) modify any of the provisions of this
Section or Section 8.10, except to increase any such
percentage or to provide that certain other provisions of
this Agreement cannot be modified or waived without the
consent of the Holder of each Security affected thereby.
It shall not be necessary for any Act of Hold-
ers under this Section to approve the particular form of
any proposed amendment, but it shall he sufficient if
such Act shall approve the substance thereof.
Section 6.3 Execution of Amendments.
In executing any amendment permitted by this
Article, the Trustee shall be entitled to receive indem-
nity reasonably satisfactory to it, and (subject to
Section 4.1) shall be fully protected in relying upon an
Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement.
The Trustee shall execute any amendment authorized pursu-
ant to this Article VI if the amendment does not adverse-
ly affect the Trustee's own rights, duties or immunities
under this Agreement or otherwise. Otherwise, the Trust-
ee may, but need not, execute such amendment.
Section 6.4 Effect of Amendments; Notice to
Holders.
Upon the execution of any amendment under this
Article, this Agreement and the Securities shall be
modified in accordance therewith, and such amendment
shall form a part of this Agreement and the Securities
for all purposes; and every Holder of Securities thereto-
fore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Promptly after the execution by the Company and
the Trustee of any amendment pursuant to the provisions
of this Article, the Company shall mail a notice thereof
by first class mail to the Holders of Securities at their
addresses as they shall appear on the Security Register,
setting forth in general terms the substance of such
amendment. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment.
Section 6.5 Conformity with Trust Indenture
Act.
Every amendment executed pursuant to this
Article shall conform to the requirements of the Trust
Indenture Act.
Section 6.6 Reference in Securities to Amend-
ments.
If an amendment changes the terms of a Securi-
ty, the Trustee may require the Holder of the Security to
deliver it to the Trustee. Securities authenticated and
delivered after the execution of any amendment pursuant
to this Article may, and shall if required by the Trust-
ee, bear a notation in form approved by the Trustee as to
any matter provided for in such amendment. If the Compa-
ny shall so determine, new Securities so modified as to
conform, in the opinion of the Trustee and the Board of
Directors of the Company, to any such amendment may be
prepared and executed by the Company and authenticated
and delivered by the Trustee in exchange for Outstanding
Securities. Failure to make the appropriate notation or
to issue a new Security shall not affect the validity of
such amendment.
ARTICLE 7
COVENANTS
Section 7.1 Payment of Amounts, if any, to
Holders.
The Company will duly and punctually pay the
amounts, if any, on the Securities in accordance with the
terms of the Securities and this Agreement. Such amounts
shall be considered paid on the date due if on such date
the Trustee or the Paying Agent holds in accordance with
this Agreement money sufficient to pay all such amounts
then due. Notwithstanding any other provision of this
Agreement, the Trustee and the Paying Agent shall comply
with all U.S. federal withholding requirements with
respect to payments to Holders that the Company, the
Trustee or the Paying Agent reasonably believes are
applicable under the Internal Revenue Code of 1986, as
amended, and the Treasury regulations thereunder.
Amounts withheld in compliance with such withholding
requirements shall, for purposes of this Agreement, be
treated as paid to the Holder such withholding was made
with respect to. The consent of Holder shall not be
required for any such withholding.
Section 7.2 Maintenance of Office or Agency.
As long as any of the Securities remain Out-
standing, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency (i)
where Securities may be presented or surrendered for
payment, (ii) where Securities may be surrendered for
registration of transfer or exchange and (iii) where
notices and demands to or upon the Company in respect of
the Securities and this Agreement may be served. The
office of the Trustee at Fifteenth Avenue, Brooklyn, New
York 11219 shall be such office or agency of the Company,
unless the Company shall designate and maintain some
other office or agency for one or more of such purposes.
The Company or any of its Subsidiaries may act as Paying
Agent, registrar or transfer agent; provided that such
Person shall take appropriate actions to avoid the com-
mingling of funds. The Company will give prompt written
notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company
shall fail to furnish the Trustee with the address there-
of, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of
the Trustee, and the Company hereby appoints the Trustee
as its agent to receive all such presentations, surren-
ders, notices and demands.
The Company may from time to time designate one
or more other offices or agencies (in or outside of The
City of New York) where the Securities may be presented
or surrendered for any or all such purposes, and may from
time to time rescind such designation; provided, however,
that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, The City
of New York for such purposes. The Company will give
prompt written notice to the Trustee of any such designa-
tion or rescission and any change in the location of any
such office or agency.
Section 7.3 Money for Security Payments to Be
Held in Trust.
If the Company or any of its Subsidiaries shall
at any time act as the Paying Agent, it will, on or
before an Optional Call Payment Date, the Maturity Date,
the Total Disposition Payment Date, Redemption Payment
Date or the Default Payment Date, as the case may be,
segregate and hold in trust for the benefit of the Per-
sons entitled thereto a sum sufficient to pay the
amounts, if any, so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more
Paying Agents for the Securities, it will, on or before
an Optional Call Payment Date, the Maturity Date, the
Total Disposition Payment Date, the Redemption Payment
Date or the Default Payment Date, as the case may be,
deposit with a Paying Agent a sum in same day funds
sufficient to pay the amount, if any, so becoming due;
such sum to be held in trust for the benefit of the
Persons entitled to such amount, and (unless such Paying
Agent is the Trustee) the Company will promptly notify
the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other
than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of this Section,
that (A) such Paying Agent will hold all sums held by it
for the payment of any amount payable on Securities in
trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or other-
wise disposed of as herein provided and will notify the
Trustee of the sums so held and (B) that it will give the
Trustee notice of any failure by the Company (or by any
other obligor on the Securities) to make any payment on
the Securities when the same shall be due and payable.
Any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for
the payment on any Security and remaining unclaimed for
one year after an Optional Call Payment Date, the Maturi-
ty Date, the Total Disposition Payment Date, Redemption
Payment Date or the Default Payment Date, as the case may
be, shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from
such trust; and the Holder of such Security shall there-
after, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust
money shall thereupon cease.
Section 7.4 Certain Purchases and Sales.
(a) During the 60-day period immediately
preceding (and including) an Optional Call Date on which
the Company exercises its optional right to call the
Securities or the Maturity Date, as the case may be, the
Company shall not, and shall not permit any of its Sub-
sidiaries or Affiliates (including for such purpose any
director or officer of the Company and PCT) to engage in
any Prohibited Activity.
(b) The Company shall not, and shall not
permit any of its Subsidiaries or Affiliates (including
for such purpose any director or officer of the Company
and PCT) to acquire in open market transactions, private
transactions or otherwise, the Securities.
Section 7.5 Listing of Securities.
The Company will use its best efforts to cause
(i) the Securities and (ii) the securities, if any,
contemplated to be issued pursuant to an indenture having
the terms set forth on Exhibit A hereto, to be either (a)
registered on a national securities exchange or (b)
quoted on NMS/NASDAQ.
Section 7.6 Registration of Debt Securities;
TIA.
If the Company elects to satisfy its obliga-
tions hereunder, subject to the provisions of Section 7.7
hereof, by issuing debt securities pursuant to an inden-
ture having the terms set forth on Exhibit A (the "Pay-
ment Notes"), the Company, shall cause, no later than the
applicable payment date hereunder, (i) such issuance of
debt securities to be registered under the Securities Act
and (ii) such indenture to be qualified under the TIA.
Section 7.7 Minimum Principal Amount of Debt
Securities.
Notwithstanding anything in this Agreement to
the contrary, if the Company elects to issue Payment
Notes pursuant to Section 7.6 hereof, the Company may
elect not to issue Payment Notes to any individual Holder
if such Holder would receive, in the aggregate, a princi-
pal amount of Payment Notes (the "Owed Principal Amount")
that is less than an amount to be determined by the
Company prior to the issuance thereof (the "Minimum
Principal Per Holder"), but the Minimum Principal Per
Holder shall not exceed $1,000.00. If such individual
Holder's owed Principal Amount exceeds the Minimum Prin-
cipal Per Holder, the Company may elect to issue to such
individual Holder Payment Notes in an aggregate principal
amount that is (i) at least the Minimum Principal Per
Holder and (ii) in increments above the Minimum Principal
Per Holder in an amount to be determined by the Company
prior to the issuance of the Payment Notes, but each such
increment shall not exceed $1,000.00. Any obligations
under this Agreement of the Company to any such individu-
al Holder that are not satisfied by the issuance of
Payment Notes as a result of the provisions of this
Section 7.7 shall be satisfied by the Company as other-
wise provided in this Agreement. Any payments of cash by
the Company contemplated by this Agreement (including
this Section 7.7) may be funded in whole or in part by
the issuance of Payment Notes to the Trustee and by the
Trustee's subsequent sale of such Payment Notes on the
principal national securities exchange on which such
Payment Notes are listed or, if such Payment Notes are
not so listed, on NMS/NASDAQ. Nothing in this Section
7.7 shall require the Company to issue any Payment Notes
to any Holder.
Section 7.8 Manipulative Transactions.
Neither the Company nor any of its Affiliates
shall take any action that is intended to manipulate the
30-Day Average Market Price during the 60-day period
immediately preceding (and including) an Optional Call
Date on which the Company exercises its optional right to
call the Securities or the Maturity Date, as the case may
be.
Section 7.9 Statement as to Compliance.
The Company will deliver to the Trustee, within
120 days after the end of each fiscal year of the Compa-
ny, commencing with the fiscal year ending in the year
during which the Securities are first issued hereunder
(but in no event more than one year from such issuance),
a written statement signed by the Chairman of the Board,
President or other principal executive officer or Vice
President of the Company and by the Treasurer or other
principal financial officer or principal accounting
officer of the Company, stating, as to each signer there-
of, that
(a) a review of the activities of the
Company during such year and of performance under this
Agreement has been made under his supervision, and
(b) to the best of his knowledge, based
on such review, the Company has fulfilled all of its
obligations under this Agreement throughout such year,
or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to
him and the nature and status thereof.
Section 7.10 Notice of Default.
The Company shall file with the Trustee written
notice of the occurrence of any Event of Default or other
default under this Agreement within five business days of
its becoming aware of any such Default or Event of Default.
ARTICLE 8
REMEDIES OF THE TRUSTEE AND HOLDERS
ON EVENT OF DEFAULT
Section 8.1 Event of Default Defined; Acceler-
ation of Maturity; Waiver of Default.
"Event of Default" with respect to the Securi-
ties, means each one of the following events which shall
have occurred and be continuing (whatever the reason for
such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of all or any
part of the amounts payable in respect of any of the
Securities as and when the same shall become due and
payable either at an Optional Call Payment Date, the
Maturity Date, the Total Disposition Payment Date or
otherwise; or
(b) default in the performance, or
breach, of any covenant or warranty of the Company
in respect of the Securities (other than a covenant
or warranty in respect of the Securities, a default
in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continu-
ance of such default or breach for a period of 90
days after there has been given, by registered or
certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at
least 25% of the Outstanding Securities, a written
notice specifying such default or breach and requir-
ing it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(c) a court having jurisdiction in the
premises shall enter a decree or order for relief in
respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appoint-
ing a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the
Company or for any substantial part of its property
or ordering the winding up or liquidation of its
affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecu-
tive days; or
(d) the Company shall commence a volun-
tary case under any applicable bankruptcy, insolven-
cy or other similar law now or hereafter in effect,
or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to
the appointment of or taking possession by a receiv-
er, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or
for any substantial part of its property, or make
any general assignment for the benefit of creditors.
If an Event of Default described above occurs and is
continuing, then, and in each and every such case, unless
all of the Securities shall have already become due and
payable, either the Trustee or the Holders of not less
than 25% of the Securities then Outstanding hereunder by
notice in writing to the Company (and to the Trustee if
given by the Holders), may declare the Securities to be
due and payable immediately, and upon any such declara-
tion the Default Amount for each VSR shall become immedi-
ately due and payable and, thereafter, shall bear inter-
est at the Default Interest Rate until payment is made to
the Trustee.
The foregoing provisions, however, are subject
to the condition that if, at any time after the Securi-
ties shall have been so declared due and payable, and
before any judgment or decree for the payment of the
moneys due shall have been obtained or entered as herein-
after provided, the Company shall pay or shall deposit
with the Trustee a sum sufficient to pay all amounts
which shall have become due otherwise than by accelera-
tion (with interest upon such overdue amount at the
Default Interest Rate to the date of such payment or
deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents,
attorneys and counsel, and all other expenses and liabil-
ities incurred and all advances made, by the Trustee
except as a result of negligence or bad faith, and if any
and all Events of Default under this Agreement, other
than the non-payment of the amounts which shall have
become due by acceleration, shall have been cured, waived
or otherwise remedied as provided herein, then and in
every such case the Holders of a majority of all the
Securities then Outstanding, by written notice to the
Company and to the Trustee, may waive all defaults with
respect to the Securities and rescind and annul such
declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect
any subsequent default or shall impair any right conse-
quent thereof.
Section 8.2 Collection of Indebtedness by
Trustee; Trustee May Prove Debt.
The Company covenants that in case default
shall be made in the payment of all or any part of the
Securities when the same shall have become due and pay-
able, whether at an Optional Call Payment Date, the
Maturity Date, the Total Disposition Payment Date, the
Default Payment Date, or upon acceleration or otherwise,
then upon demand of the Trustee, the Company will pay to
the Trustee for the benefit of the Holders of the Securi-
ties the whole amount that then shall have become due and
payable on all Securities (with interest from the date
due and payable to the date of such payment upon the
overdue amount at the Default Interest Rate); and in
addition thereto, such further amount as shall be suffi-
cient to cover the costs and expenses of collection,
including reasonable compensation to the Trustee and each
predecessor Trustee, their respective agents, attorneys
and counsel, and any expenses and liabilities incurred,
and all advances made, by the Trustee and each predeces-
sor Trustee except as a result of its negligence or bad
faith.
The Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of
any covenant or agreement in this Agreement or in aid of
the exercise of any power granted herein, or to enforce
any other remedy.
In case the Company shall fail forthwith to pay
such amounts upon such demand, the Trustee, in its own
name and as trustee of an express trust, shall be enti-
tled and empowered to institute any action or proceedings
at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceed-
ings to judgment or final decree, and may enforce any
such judgment or final decree against the Company or
other obligor upon such Securities and collect in the
manner provided by law out of the property of the Company
or other obligor upon such Securities, wherever situated,
the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings
relative to the Company or an other obligor upon the
Securities under Title 11 of the United States Code or
any other applicable Federal or state bankruptcy, insol-
vency or other similar law, or in case a receiver, as-
signee or trustee in bankruptcy or reorganization, liqui-
dator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or its
property or such other obligor, or in case of any other
comparable judicial proceedings relative to the Company
or other obligor upon the Securities, or to the creditors
or property of the Company or such other obligor the
Trustee, irrespective of whether the principal of any
Securities shall then be due and payable as herein ex-
pressed or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provi-
sions of this Section, shall be entitled and empowered,
(but shall have no obligation) by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims
for the whole amount owing and unpaid in respect of
the Securities, and to file such other papers or
documents as may be necessary or advisable in order
to have the claims of the Trustee (including any
claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective
agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor
Trustee, except as a result of negligence or bad
faith) and of the Holders allowed in any judicial
proceedings relative to the Company or other obligor
upon the Securities, or to their respective property;
(b) unless prohibited by applicable law
and regulations, to vote on behalf of the Holders in
any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or person
performing similar functions in comparable proceed-
ings; and
(c) to collect and receive any moneys or
other property payable or deliverable on any such
claims, and to distribute all amounts received with
respect to the claims of the Holders and of the
Trustee on their behalf; and any trustee, receiver,
or liquidator, custodian or other similar official
is hereby authorized by each of the Holders to make
payments to the Trustee, and, in the event that the
Trustee shall consent to the making of payments
directly to the Holders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trust-
ee and their respective agents, attorneys and coun-
sel, and all other expenses and liabilities in-
curred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of
negligence or bad faith and all other amounts due to
the Trustee or any predecessor Trustee pursuant to
Section 4.6. To the extent that such payment of
reasonable compensation, expenses, disbursements,
advances and other amounts out of the estate in any
such proceedings shall be denied for any reason,
payment of the same shall be secured by a lien on,
and shall be paid out of, any and all distributions,
dividends, moneys, securities and other property
which the Holders may be entitled to receive in such
proceedings, whether in liquidation or under any
plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or vote
for or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition
affecting the Securities, or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding except,
as aforesaid, to vote for the election of a trustee in
bankruptcy or similar person.
All rights of action and of asserting claims
under this Agreement, or under any of the Securities, may
be enforced by the Trustee without the possession of any
of the Securities or the production thereof and any trial
or other proceedings instituted by the Trustee shall be
brought in its own name as trustee of an express trust,
and any recovery of judgment, subject to the payment of
the expenses, disbursements and compensation of the
Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of
the Holders.
In any proceedings brought by the Trustee (and
also any proceedings involving the interpretation of any
provision of this Agreement to which the Trustee shall be
a party) the Trustee shall be held to represent all the
Holders, and it shall not be necessary to make any Hold-
ers of such Securities parties to any such proceedings.
Section 8.3 Application of Proceeds.
Any monies collected by the Trustee pursuant to
this Article in respect of any Securities shall be ap-
plied in the following order at the date or dates fixed
by the Trustee upon presentation of the several Securi-
ties in respect of which monies have been collected and
stamping (or otherwise noting) thereon the payment in
exchange for the presented Securities if only partially
paid or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses in
respect of which monies have been collected, includ-
ing reasonable compensation to the Trustee and each
predecessor Trustee and their respective agents and
attorneys and of all expenses and liabilities in-
curred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of
negligence or bad faith, and all other amounts due
to the Trustee or any predecessor Trustee pursuant
to Section 4.6;
SECOND: To the payment of the whole amount
then owing and unpaid upon all the Securities, with
interest at the Default Interest Rate on all such
amounts, and in case such monies shall be insuffi-
cient to pay in full the whole amount so due and
unpaid upon the Securities, then to the payment of
such amounts without preference or priority of any
security over any other Security, ratably to the
aggregate of such amounts due and payable; and
THIRD: To the payment of the remainder, if
any, to the Company or any other person lawfully
entitled thereto.
Section 8.4 Suits for Enforcement.
In case an Event of Default has occurred, has
not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights
vested in it by this Agreement by such appropriate judi-
cial proceedings as the Trustee shall deem most effectual
to protect and enforce any of such rights, either at law
or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement
contained in this Agreement or in aid of the exercise of
any power granted in this Agreement or to enforce any
other legal or equitable right vested in the Trustee by
this Agreement or by law.
Section 8.5 Restoration of Rights on Abandon-
ment of Proceedings.
In case the Trustee or any Holder shall have
proceeded to enforce any right under this Agreement and
such proceedings shall have been discontinued or aban-
doned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then and in
every such case the Company and the Trustee and the
Holders shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies
and powers of the Company, the Trustee and the Holders
shall continue as though no such proceedings had been
taken.
Section 8.6 Limitations on Suits by Holders.
No Holder of any Security shall have any right
by virtue or by availing of any provision of this Agree-
ment to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise upon or under or
with respect to this Agreement, or for the appointment of
a trustee, receiver, liquidator, custodian or other
similar official or for any other remedy hereunder,
unless such Holder previously shall have given to the
Trustee written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the
Holders of not less than 25% of the Securities then
Outstanding shall have made written request upon the
Trustee to institute such action or proceedings in its
own name as trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be in-
curred therein or thereby and the Trustee for 60 days
after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action
or proceeding and no direction inconsistent with such
written request shall have been given to the Trustee
pursuant to Section 8.9; it being understood and intend-
ed, and being expressly covenanted by the taker and
Holder of every Security with every other taker and
Holder and the Trustee, that no one or more Holders of
Securities shall have any right in any manner whatever by
virtue or by availing of any provision of this Agreement
to effect, disturb or prejudice the rights of any other
such Holder of Securities, or to obtain or seek to obtain
priority over or preference to any other such Holder or
to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities. For the
protection and enforcement of the provisions of this
Section, each and every Holder and the Trustee shall be
entitled to such relief as can be given either at law or
in equity.
Section 8.7 Unconditional Right of Holders to
Institute Certain Suits.
Notwithstanding any other provision in this
Agreement and any provision of any Security, the right of
any Holder of any Security to receive payment of the
amounts payable in respect of such Security on or after
the respective due dates expressed in such Security, or
to institute suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired
or affected without the consent of such Holder.
Section 8.8 Powers and Remedies Cumulative;
Delay or Omission Not Waiver of Default.
Except as provided in Section 8.6, no right or
remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder
or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropri-
ate right or remedy.
No delay or omission of the Trustee or of any
Holder to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid
shall impair any such right or power or shall be con-
strued to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 8.6, every
power and remedy given by this Agreement or by law to the
Trustee or to the Holders may be exercised from time to
time, and as often as shall be deemed expedient, by the
Trustee or by the Holders.
Section 8.9 Control by Holders.
The Holders of a majority of the Securities at
the time Outstanding shall have the right to direct the
time, method, and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any
trust or power conferred on the Trustee with respect to
the Securities by this Agreement; provided that such
direction shall not be otherwise than in accordance with
law and the provisions of this Agreement; and provided
further that (subject to the provisions of Section 4.1)
the Trustee shall have the right to decline to follow any
such direction if the Trustee, being advised by counsel,
shall determine that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith
by its board of directors, the executive committee, or a
trust committee of directors or responsible officers of
the Trustee shall determine that the action or proceed-
ings so directed would involve the Trustee in personal
liability or if the Trustee in good faith shall so deter-
mine that the actions or forebearances specified in or
pursuant to such direction would be unduly prejudicial to
the interests of Holders of the Securities not joining in
the giving of said direction, it being understood that
(subject to Section 4.1) the Trustee shall have no duty
to ascertain whether or not such actions or forebearances
are unduly prejudicial to such Holders.
Nothing in this Agreement shall impair the
right of the Trustee in its discretion to take any action
deemed proper by the Trustee and which is not inconsis-
tent with such direction or directions by Holders.
Section 8.10 Waiver of Past Defaults.
Prior to the declaration of the acceleration of
the maturity of the Securities as provided in Section
8.1, in the case of a default or an Event of Default
specified in clause (b), (c) or (d) of Section 8.1, the
Holders of a majority of all the Securities then Out-
standing may waive any such default or Event of Default,
and its consequences except a default in respect of a
covenant or provisions hereof which cannot be modified or
amended without the consent of the Holder of each Securi-
ty affected. In the case of any such waiver, the Compa-
ny, the Trustee and the Holders of the Securities shall
be restored to their former positions and rights hereun-
der, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right conse-
quent thereon.
Upon any such waiver, such default shall cease
to exist and be deemed to have been cured and not to have
occurred, and any Event of Default arising therefrom
shall be deemed to have been cured, and not to have
occurred for every purpose of this Agreement; but no such
waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
Section 8.11 Trustee to Give Notice of De-
fault, But May Withhold in Certain Circumstances.
The Trustee shall transmit to the Holders, as
the names and addresses of such Holders appear on the
Security Register, notice by mail of all defaults which
have occurred and are known to the Trustee, such notice
to be transmitted within 90 days after the occurrence
thereof, unless such defaults shall have been cured
before the giving of such notice (the term "default" or
"Defaults" for the purposes of this Section being hereby
defined to mean any event or condition which is, or with
notice or lapse of time or both would become, an Event of
Default); provided that, except in the case of default in
the payment of the amounts payable in respect of any of
the Securities, the Trustee shall be protected in with-
holding such notice if and so long as the board of direc-
tors, the executive committee, or a trust committee of
directors or trustees and/or Responsible Officers of the
Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders.
Section 8.12 Right of Court to Require Filing
of Undertaking to Pay Costs.
All parties to this Agreement agree, and each
Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discre-
tion require, in any suit for the enforcement of any
right or remedy under this Agreement or in any suit
against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party liti-
gant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion
assess reasonable costs, including attorneys' fees,
against any party litigant in such suit, having due
regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions
of this Section shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder or
group of Holders holding in the aggregate more than 10%
of the Securities Outstanding or to any suit instituted
by any Holder for the enforcement of the payment of any
Security on or after the due date expressed in such Security.
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 Company May Consolidate, etc., on
Certain Terms.
The Company covenants that it will not merge or
consolidate with or into any other Person or sell or
convey all or substantially all of its assets to any
Person, unless (i) the Company shall be the continuing
corporation, or the successor Person or the Person which
acquires by sale or conveyance substantially all the
assets of the Company shall be a Person organized under
the laws of the United States of America or any State
thereof and shall expressly assume by an instrument
supplemental hereto, executed and delivered to the Trust-
ee, in form satisfactory to the Trustee, the due and
punctual payment of the Securities, according to their
tenor, and the due and punctual performance and obser-
vance of all of the covenants and conditions of this
Agreement to be performed or observed by the Company and
(ii) the Company, or such successor Person, as the case
may be, shall not, immediately after such merger or
consolidation, or such sale or conveyance, be in default
in the performance of any such covenant or condition
provided, however, that nothing herein shall affect the
rights of the Holders or the Trustee upon any Total
Disposition.
Section 9.2 Successor Person Substituted.
In case of any such consolidation, merger, sale
or conveyance, and following such an assumption by the
successor Person, such successor Person shall succeed to
and be substituted for the Company with the same effect
as if it had been named herein. Such successor Person
may cause to be signed, and may issue either in its own
name or in the name of the Company prior to such succes-
sion any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order
of such successor corporation instead of the Company and
subject to all the terms, conditions and limitations in
this Agreement prescribed, the Trustee shall authenticate
and shall deliver any Securities which previously shall
have been signed and delivered to the Trustee for authen-
tication, and any Securities which such successor corpo-
ration thereafter shall cause to be signed and delivered
to the Trustee for that purpose. All of the Securities
so issued shall in all respects have the same legal rank
and benefit under this Agreement as the Securities there-
tofore or thereafter issued in accordance with the terms
of this Agreement as though all of such Securities had
been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale
or conveyance, such changes in phraseology and form (but
not in substance) may be made in the Securities thereaf-
ter to be issued as may be appropriate.
In the event of any such sale or conveyance
(other than a conveyance by way of lease) the Company or
any Person which shall theretofore have become such in
the manner described in this Article shall be discharged
from all obligations and covenants under this Agreement
and the Securities and may be liquidated and dissolved.
Section 9.3 Opinion of Counsel to Trustee.
The Trustee, subject to the provisions of
Sections 4.1 and 4.2, shall receive an Opinion of Coun-
sel, prepared in accordance with Sections 1.3 and 1.4, as
conclusive evidence that any such consolidation, merger,
sale or conveyance, and any such assumption, and any such
liquidation or dissolution, complies with the applicable
provisions of this Agreement.
* * * * * *
This Agreement shall be signed in any number of
counterparts with the same effect as if the signatures to
each counterpart were upon a single instrument, and all
such counterparts together shall be deemed an original of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed, all as of the
day and year first above written.
MAFCO CONSOLIDATED GROUP INC.
By:
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By:
Name:
Title:
EXHIBIT A
MAFCO CONSOLIDATED GROUP INC.
SUMMARY OF TERMS OF SENIOR NOTES
ISSUER: Mafco Consolidated Group Inc.
(the "Company").
SECURITIES: Senior Notes (the "Notes") to be
issued under an indenture (the
"Indenture") between the Company
and American Stock Transfer &
Trust Company, as trustee (the
"Trustee").
PRINCIPAL AMOUNT: Aggregate amount due and payable
with respect to the VSRs issued
by the Company.
MATURITY: Up to three years from date of
issuance.
INTEREST; REDEMPTION: A rate of interest and redemp-
tion provisions determined in
good faith by the Board of Di-
rectors such that the Notes will
have in the opinion of an Inde-
pendent Financial Expert a mar-
ket value as of the date of
issuance on a fully distributed
basis equal to 100% of its prin-
cipal amount. Such determina-
tion will be supported by a
written opinion delivered to the
Board of Directors by an Inde-
pendent Financial Expert (as
such term is defined in the VSR
Agreement). Interest will be
payable in cash semiannually in
arrears.
COVENANTS: Pursuant to the Indenture, the
Company shall covenant (i) to
pay the principal of and inter-
est on the Notes promptly when
due; (ii) to furnish the Trustee
and holders of the Notes with
information, documents and other
reports required to be filed
with the SEC under Sections 13
and 15(d) of the Securities
Exchange Act of 1934, as amend-
ed; and (iii) not to engage in
any affiliated transaction on
other than arm's-length terms.
RANKING: The Notes will not be subordi-
nated to any other indebtedness
of the Company and will rank
pari passu with all other
unsubordinated indebtedness of
the Company (provided that the
Company shall not be prohibited
from issuing secured indebted-
ness).
SUCCESSOR COMPANY
PROVISIONS: The Company shall not consoli-
date or merge with or into, or
sell all or substantially all of
its assets to, any Person unless
(i) the surviving or transferee
Person is a Person organized
under the laws of the United
States or any state thereof and
shall expressly assume the obli-
gations under the Indenture and
(ii) immediately after giving
effect to such transaction no
default shall have occurred and
being continuing.
EVENTS OF DEFAULT: Failure to pay principal when
due; failure to pay interest
within 30 days of when due;
failure to comply with the Suc-
cessor Company provisions; de-
fault in the performance of any
other covenant for a period of
90 days after notice thereof;
and events of bankruptcy, insol-
vency or reorganization with
respect to the Company.
REGISTRATION; TIA;
LISTING: The issuance of the Notes shall
have been registered under the
Securities Act of 1933, as
amended; the Indenture shall
have been qualified under the
Trust Indenture Act of 1939, as
amended; and the Notes shall
have been approved for listing,
subject to official notice of
issuance, on a national securi-
ties exchange or on NASDAQ.
ADDITIONAL TERMS: The Indenture shall contain such
other provisions, where applica-
ble, as are consistent with the
VSR Agreement.
