<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12 (b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
FUSION SYSTEMS CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 52-0915080
-------------------------- ---------------------
(State of Incorporation (IRS Employer
or Organization) Identification No.)
7600 Standish Place
Rockville, Maryland 20855
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(Address of principal executive offices) (zip code)
If this Form relates to the registration If this Form relates to the
of a class of debt securities and is registration of a class of debt
effective upon filing pursuant to securities and is to become
General Instruction A(c)(1) please check effective simultaneously with the
the following box. [ ] effectiveness of a concurrent
registration statement under the
Securities Act of 1933 pursuant to
General Instruction A(c)(2) please
check the following box. [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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None N/A
Securities to be registered pursuant to Section 12(g) of the Act:
Contingent Payment Rights
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(Title of Class)
<PAGE> 2
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On June 29, 1997, the Board of Directors of Fusion Systems Corporation
(the "Company") declared a dividend distribution of one contingent payment
right (the "Contingent Rights") with respect to (i) each share of common stock,
$.01 par value per share, of the Company ("Common Stock") outstanding and held
by stockholders of record at the close of business on July 25, 1997 (the
"Record Date"), and (ii) each share of Common Stock issued between the Record
Date and the earlier of December 31, 1997 or the Redemption Date (as such term
is defined in the Contingent Payment Rights Agreement (as defined hereinafter)),
upon exercise of options to purchase Common Stock issued under the Company's
1984 Stock Option Plan, 1994 Stock Option Plan, 1994 Non-Employee Director
Stock Option Plan and 1994 Employee Stock Purchase Plan and outstanding on the
Record Date ("Qualified Options"). The Contingent Rights will be distributed
on September 23, 1997 (the "Distribution Date") to the persons entitled to
receive such dividend and, thereafter, will be distributed contemporaneously
with the issuance of Common Stock upon exercise of Qualified Options to the
holders of such Qualified Options. A description and the terms of the
Contingent Rights are set forth in a Contingent Rights Agreement dated as of
June 30, 1997 (the "Contingent Rights Agreement") between the Company and
The First National Bank of Chicago, as trustee (the "Trustee").
The following is a summary of certain material provisions of the Contingent
Rights and the Contingent Rights Agreement. This summary does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Contingent Rights Agreement, which is filed as Exhibit 1 hereto and is
incorporated herein by reference.
The Contingent Rights will be unsecured obligations of the Company and
will rank equally with all other unsubordinated indebtedness of the Company.
Pursuant to the Contingent Rights Agreement, if a Change in Control (as defined
hereinafter) of the Company occurs prior to December 31, 1997 each registered
holder of a Contingent Right on the close of business on March 31, 1999 (the
"Contingent Payment Date") will be entitled to receive in respect of each
Contingent Right held, unless the Contingent Rights have been extinguished or
redeemed pursuant to their terms, the amount of cash determined by the
following schedule (the "Contingent Payment"), where "Net Sales" of the Company
means the amount of net sales reflected on the audited income statement of the
Company and its consolidated subsidiaries for the calendar year beginning
January 1, 1998 and ending December 31, 1998 (the "Contingent Payment Period"):
<TABLE>
<CAPTION>
NET SALES OF THE COMPANY FOR THE
CONTINGENT PAYMENT PERIOD CONTINGENT PAYMENT
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<S> <C>
$149,000,000 or greater................................. $ 5.00
$141,000,000............................................ $ 3.50
$134,000,000............................................ $ 2.25
$127,000,000............................................ $ 1.00
$122,000,000 or less.................................... $ 0.00
</TABLE>
If the Company's Net Sales for the Contingent Payment Period fall between
two of the levels specified in the above schedule, the amount of the Contingent
Payment for each Contingent Right shall be made by interpolation pursuant to a
formula set forth in Section 3.01(c) of the Contingent Rights Agreement.
<PAGE> 3
Pursuant to the Contingent Rights Agreement, a "Change of Control" of the
Company shall be deemed to have occurred if:
(i) there shall be consummated any reorganization, recapitalization,
consolidation or merger, or sale, lease, exchange, or other transfer (in
one transaction or a series of related transactions) of all or
substantially all of the assets, of the Company (a "Business Combination"),
in each case, unless, following such Business Combination, (a) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of, as of the date of determination, the outstanding
shares of Common Stock of the Company (the "Outstanding Common Shares") and
outstanding voting securities having a right to vote generally in the
election of directors (the "Outstanding Voting Securities") immediately
prior to such Business Combination beneficially own (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transactions owns the Company or all
or substantially all of the Company's assets either directly or through one
or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Common Shares and Outstanding Voting Securities, as the case
may be, (b) no Person (as such term is defined in the Contingent Rights
Agreement) (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation and (c) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Board of Directors of the Company
as of the date of the Contingent Rights Agreement; or
(ii) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company; or
(iii) any person (as such term is used in the Sections 13(d) and
14(d)(2) of the Exchange Act) other than the Company, or any employee
benefit plan sponsored by the Company, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of
the Company representing twenty-five percent (25%) or more of either (i)
the then Outstanding Common Shares or (ii) the Outstanding Voting
Securities; provided, however, that an acquisition by any corporation
pursuant to a transaction which complies with clauses (a), (b), and (c) of
paragraph (i) above shall not be deemed to be a Change of Control; or
(iv) individuals which constituted the Board of Directors of the
Company as of the date of the Contingent Rights Agreement shall cease for
any reason to constitute at least a majority thereof.
The Company may, at its option, at any time after the occurrence of a
Change of Control, redeem the then outstanding Contingent Rights, in whole or in
part, at $5.00 per Contingent Right, without interest. In addition, the
Contingent Rights shall be extinguished without payment therefor and will have
no further force and effect (i) on December 31, 1997, if no Change of Control
has occurred prior to such date or (ii) on March 31, 1999 if the Net Sales of
the Company for the Contingent Payment Period shall not have exceeded
$122,000,000.
<PAGE> 4
Pursuant to the Contingent Rights Agreement, the Company must use
reasonable efforts during the Contingent Payment Period to operate its business
in the ordinary course and substantially as operated heretofore; provided,
however, that the foregoing shall not prevent the Company from operating the
business of the Company in accordance with its business judgment to enhance the
growth and profitable development of the Company's business, so long as the
Company is not motivated by an intention to diminish the value of the
Contingent Rights. The Company must cause all properties used or useful in the
conduct of its business or the business of any Subsidiary (as defined in the
Contingent Rights Agreement) to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that the foregoing
shall not prevent the Company from discontinuing the operation or maintenance
of any of such properties if such discontinuance is, as determined by the Board
of Directors of the Company in good faith, desirable in the conduct of its
business or the business of any Subsidiary (as such term is defined in the
Contingent Rights Agreement). In addition, the Company must not engage in
material transactions with Affiliates (as such term is defined in the
Contingent Rights Agreement) other than subsidiaries of the Company, or
material transactions with other persons which are primarily for the benefit of
such Affiliates, which would reduce Net Sales during the Contingent Payment
Period, except on terms that are comparable to those that would be obtained
from unaffiliated parties on an arms-length basis. The Company is also
prohibited from merging or consolidating with or into any other Person (as such
term is defined in the Contingent Rights Agreement) or from selling or conveying
all or substantially all of its assets to any Person, unless (i) either the
Company remains as the continuing corporation or such Person is organized under
the laws of the United State of America or any State thereof and expressly
assumes the due and punctual payment of the Contingent Rights and the
performance and observance of all covenants and conditions under the Contingent
Rights Agreement, and (ii) the Company or such successor corporation, as the
case may be, is not, immediately after such merger or consolidation, or such
sale or conveyance, in default in performance of any such covenant or condition.
The following will be "Events of Default" under the Contingent Rights
Agreement: (i) default in the payment of the Contingent Payment when the same
shall become due and payable, and continuance of such default for a period of 30
days; or (ii) default in the performance, or breach, of any covenant of the
Company in the Contingent Rights Agreement, and continuance 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 registered holders of at least 25% of the outstanding Contingent Rights,
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"; (iii) a court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Company in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar
official) of the Company or for any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (iv)
the Company shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any such law, or
consent to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator or similar official, of the Company
or for any substantial part of its property, or make any general assignment for
the benefit of creditors.
If a default in payment of the Contingent Payment occurs when and as such
Contingent Payment becomes due and payable and such default continues for a
period of 30 days, then upon demand of the Trustee, the Company will pay the
Contingent Payment to the Trustee for the benefit of the registered holders of
the Contingent Rights, as well as any other amount sufficient to cover the costs
and expenses of collection of such Contingent Payment. In addition, if an Event
of Default has occurred, and has not been waived and is continuing, the Trustee
may in its discretion proceed to protect and enforce the rights vested in it by
the Contingent Rights Agreement by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights.
<PAGE> 5
No registered holder of the Contingent Rights has any right by virtue of
the Contingent Rights Agreement to institute any action or proceeding at law or
in equity or in bankruptcy or otherwise, unless the registered holders of 25%
of the then outstanding Contingent Rights make a written request upon the
Trustee to institute such action or proceedings in its own name as trustee
under the Contingent Rights Agreement and have offered the Trustee reasonable
indemnity as it may require against any costs, expenses and liabilities that
the Trustee may incur. The right of any registered holder of the Contingent
Rights to receive payment of the Contingent Payments payable on or after the
Contingent Payment Date, or to institute suit for the enforcement of any such
payment, will not be impaired or affected without the consent of such holder.
The registered holders of a majority of the then outstanding Contingent Rights
may waive certain Events of Default and its consequences, except a default in
respect of a covenant or provision of the Contingent Rights Agreement which
cannot be modified or amended without the consent of the registered holder of
each Contingent Right affected.
The Contingent Rights Agreement provides that the Trustee shall, within 90
days after the occurrence of a default, give to the registered holders of the
Contingent Rights notice of all uncured defaults known to it, but the Trustee
shall be protected in withholding such notice if it in good faith determines
that the withholding of such notice is in the interest of such registered
holders.
Without the consent of any of the registered holders of the Contingent
Rights, the Company and the Trustee may modify and amend the Contingent Rights
Agreement, in the form satisfactory to the Trustee, (i) in order to convey,
transfer, assign, mortgage or pledge any property or assets to the Trustee as
security for the Contingent Rights, (ii) to provide for a guarantee by any
Person (as such term is defined in the Contingent Rights Agreement) of some or
all of the obligations of the Company under the Contingent Rights Agreement for
the benefit of the registered holders of the Contingent Rights, (iii) to add
further covenants, restrictions, conditions or provisions to the Contingent
Rights Agreement as the Board of Directors of the Company and the Trustee
consider to be for the protection of the registered holders of the Contingent
Rights, (iv) to cure any ambiguity or to make changes that do not adversely
affect the interests of the registered holders of the Contingent Rights in any
material respect. With the consent of not less than a majority of the registered
holders of the then outstanding Contingent Rights, the Company and the Trustee
may modify and amend the Contingent Rights Agreement and the Contingent Rights
for the purpose of adding, eliminating or changing any provision therein, or to
modifying in any manner the rights of the registered holders of the Contingent
Rights under the Contingent Rights Agreement; provided, however, that no such
amendment will, without the consent of the registered holder of each then
outstanding Contingent Right, (i) modify the definition of Contingent Payment
Period, Contingent Payment, Contingent Payment Date, or Net Sales as such terms
are defined in the Contingent Rights Agreement, or otherwise reduce the amounts
payable in respect of the Contingent Rights or (ii) reduce the amount of the
outstanding Contingent Rights.
The Contingent Rights shall not be transferable by the holders thereof
unless and until such Contingent Rights have become registered under the
Exchange Act and such registration is effective. THERE IS CURRENTLY NO PUBLIC
MARKET FOR THE CONTINGENT RIGHTS, AND THE PRICES AT WHICH THE CONTINGENT RIGHTS
MAY TRADE CANNOT BE PREDICTED. NO ASSURANCE CAN BE GIVEN THAT AN ACTIVE PUBLIC
MARKET FOR THE CONTINGENT RIGHTS WILL DEVELOP OR THAT ANY CONTINGENT PAYMENT
THEREUNDER WILL EVER BE PAID TO HOLDERS THEREOF PURSUANT TO THE CONTINGENT
RIGHTS. Until an orderly market develops, the prices at which trading occurs may
fluctuate significantly. Trading prices will be determined by the market and may
be influenced by many factors, including, among others, the depth and liquidity
of the market for such securities, investor perception of the Company, the
prospects for payment pursuant to the Contingent Rights, and general economic
and market conditions. Application has been made to have the Contingent Rights
approved for quotation on the NASDAQ National Market, but no assurance can be
given that such application will be approved or that such quotation will not be
suspended or terminated in the future.
<PAGE> 6
On June 30, 1997, the Company entered into a definitive Agreement and
Plan of Merger (the "Merger Agreement") with Eaton Corporation, an Ohio
corporation ("Eaton"), and ETN Acquisition Corp., a Delaware corporation ("ETN")
and a wholly owned subsidiary of Eaton. A copy of the Merger Agreement is filed
as Exhibit 1 to the Company's Solicitation/Recommendation Statement on Schedule
14D-9, which was filed with the Securities and Exchange Commission on July 7,
1997. Pursuant to the terms of the Merger Agreement, if certain conditions are
met, Eaton will acquire the Company (the "Acquisition") through a first-step
cash tender offer to stockholders of the Company and a second-step merger of ETN
with and into the Company. The Company, Eaton and ETN agree that the
Acquisition, if it is consummated, will constitute a Change in Control of the
Company as such term is defined herein and in the Contingent Rights Agreement
and that the Company, subsequent to the Acquisition, will become obligated to
make Contingent Payments with respect to the Contingent Rights if and to the
extent required in accordance with the Contingent Rights Agreement. If the
Acquisition is consummated, the Company will immediately thereafter be a wholly
owned subsidiary of Eaton. Eaton has not guaranteed or otherwise assumed any
liabilities for the Contingent Rights, whether or not the Acquisition is
consummated. In contemplation of the Acqusition, the Company provided
representatives of Eaton with certain forecasts of future operating performance
of the Company as follows. In May 1997, the Company provided Eaton with its 1997
Operating Plan, which had been approved by the Board of Directors of the Company
in December 1996, and which estimated sales for 1997 and 1998 of $93.3 million
and $116.0 million, respectively, and operating income of $13.9 million and
$23.2 million, respectively. Thereafter, the Company provided Eaton with an
updated 1997 forecast of $90.0 million in sales and $13.5 million of operating
income. The Company also provided Eaton with two new forecasts for 1998 without
any change in the 1997 forecast: a "high" forecast of $141.1 million of sales
based on an estimate of potential sales in 1998 and $38.1 million of operating
income, after estimating expenses for 1998, and a "low" estimate of $127.0
million of sales and $28.8 million of operating income which discounted the
"high" sales estimate by 10%. In late June 1997, the Company prepared a further
update of its forecasts which estimated 1997 sales of $93.0 million and
operating income of $12.5 million, and 1998 sales of $118.9 million and
operating income of $20.6 million. The Company advised Eaton that, compared to
the second set of forecasts, the latter forecasts gave effect to a higher level
of anticipated engineering costs and eliminated business that was recently lost,
production capacity that may not be built in 1997 and orders for new products or
from new customers that the Company's management considered to be more
speculative.
THE FOREGOING FORECASTS WERE NOT PREPARED WITH A VIEW TO PUBLIC
DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE SECURITIES AND
EXCHANGE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS. NEITHER THE COMPANY, EATON
NOR ETN ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OF THESE FORECASTS. WHILE
PRESENTED WITH NUMERICAL SPECIFICITY, THESE FORECASTS ARE BASED UPON A VARIETY
OF ASSUMPTIONS RELATING TO THE BUSINESSES OF THE COMPANY WHICH MAY NOT BE
REALIZED AND ARE SUBJECT TO SIGNIFICANT FINANCIAL, MARKET, ECONOMIC AND
COMPETITIVE UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT OR IMPOSSIBLE
TO PREDICT ACCURATELY, MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY AND
EATON. THERE CAN BE NO ASSURANCE THAT THE FORECASTS WILL BE REALIZED, AND
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. THE INCLUSION OF THE
FOREGOING FORECASTS SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY
OR ITS REPRESENTATIVES OR BY EATON OR ANY OF ITS AFFILIATES OR REPRESENTATIVES
THAT THE PROJECTED RESULTS WILL BE ACHIEVED.
ITEM 2. EXHIBITS
Exhibit No. Exhibit
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1 Contingent Payment Rights Agreement dated as of June 30, 1997
between Fusion Systems Corporation and The First National Bank
of Chicago, as trustee (which includes, in Sections 2.02 and
2.03 thereof, the Form of Contingent Payment Rights
Certificate).
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SIGNATURE
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Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
FUSION SYSTEMS CORPORATION
By:/s/ Joseph F. Greeves
-----------------------------------
Joseph F. Greeves,
Vice President and Chief Financial
Officer
Dated: July 25, 1997
<PAGE> 8
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
1 Contingent Payment Rights Agreement dated as of June 30, 1997
between Fusion Systems Corporation and The First National Bank of
Chicago, as trustee (which includes, in Sections 2.02 and 2.03
thereof, the Form of Contingent Payment Rights Certificate).
<PAGE> 1
EXHIBIT 1
FUSION SYSTEMS CORPORATION
TO
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
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CONTINGENT PAYMENT RIGHTS
AGREEMENT
Dated as of June 30, 1997
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TABLE OF CONTENTS*
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PARTIES & RECITALS....................................................... 1
ARTICLE ONE
Definitions and Other Provisions of
General Application
Section 1.01. Definitions ............................................ 1
Act............................................................. 2
Affiliate....................................................... 2
Agreement....................................................... 2
Board of Directors.............................................. 2
Board Resolution................................................ 2
Business Day.................................................... 3
Change of Control............................................... 3
Commission...................................................... 4
Common Shares................................................... 4
Company......................................................... 4
Company Request; Company Order.................................. 5
Contingent Payment.............................................. 5
Contingent Payment Date......................................... 5
Contingent Payment Period....................................... 5
Corporate Trust Office.......................................... 5
Event of Default................................................ 5
Exchange Act.................................................... 5
Holder.......................................................... 5
Net Sales....................................................... 5
Officers' Certificate........................................... 5
Opinion of Counsel.............................................. 6
Outstanding..................................................... 6
Outstanding Common Shares....................................... 6
Outstanding Options............................................. 6
Outstanding Voting Securities................................... 6
Paying Agent ................................................... 7
Person.......................................................... 7
Record Date..................................................... 7
Redemption Date................................................. 7
Redemption Price................................................ 7
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* Note: This table of contents shall not, for any purpose, be deemed
to be a part of this Agreement.
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Responsible Officer.......................................................................... 7
Right Certificate............................................................................ 7
Rights....................................................................................... 7
Securities................................................................................... 7
Security Register; Security Registrar........................................................ 7
Stock Plans.................................................................................. 7
Subsidiary................................................................................... 7
Threshold Level.............................................................................. 8
Trust Indenture Act.......................................................................... 8
Trustee...................................................................................... 8
vice president............................................................................... 8
Voting Stock................................................................................. 8
Section 1.02. Compliance Certificates and Opinions....................................... 8
Section 1.03. Form of Documents Delivered to Trustee..................................... 9
Section 1.04. Acts of Holders............................................................ 10
Section 1.05. Notices, etc. to Trustee and Company....................................... 11
Section 1.06. Notice to Holders; Waiver.................................................. 12
Section 1.07. Conflict with Trust Indenture Act.......................................... 13
Section 1.08. Effect of Headings and Table of Contents................................... 13
Section 1.09. Successors and Assigns..................................................... 13
Section 1.10. Benefits of Agreement...................................................... 13
Section 1.11. Governing Law.............................................................. 13
Section 1.12. Legal Holidays............................................................. 13
Section 1.13. Separability Clause........................................................ 13
ARTICLE TWO
Security Forms
Section 2.01. Forms Generally ........................................................... 14
Section 2.02. Form of Face of Right Certificates ........................................ 14
Section 2.03. Form of Reverse of Security ............................................... 16
Section 2.04. Form of Trustee's Certificate of
Authentication ......................................................... 18
ARTICLE THREE
The Securities
Section 3.01. Title and Terms ........................................................... 18
Section 3.02. Registrable Form .......................................................... 20
Section 3.03. Execution, Authentication, Delivery and
Dating ................................................................. 20
Section 3.04. Temporary Securities ...................................................... 21
Section 3.05. Registration, Registration of Transfer
and Exchange ........................................................... 22
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Section 3.06. Mutilated, Destroyed, Lost and
Stolen Securities ...................................................... 23
Section 3.07. Payments Under Right Certificate .......................................... 24
Section 3.08. Persons Deemed Owners ..................................................... 24
Section 3.09. Cancellation .............................................................. 24
Section 3.10. Redemption ................................................................ 24
Section 3.11. Extinguishment ............................................................ 27
ARTICLE FOUR
The Trustee
Section 4.01. Certain Duties and Responsibilities ....................................... 27
Section 4.02. Certain Rights of Trustee ................................................. 28
Section 4.03. Not Responsible for Recitals or Issuance
of Securities .......................................................... 30
Section 4.04. May Hold Securities ....................................................... 30
Section 4.05. Money Held in Trust ....................................................... 30
Section 4.06. Compensation and Reimbursement ............................................ 31
Section 4.07. Disqualification; Conflicting Interests ................................... 31
Section 4.08. Corporate Trustee Required; Eligibility ................................... 32
Section 4.09. Resignation and Removal; Appointment
of Successor ........................................................... 32
Section 4.10. Acceptance of Appointment by Successor .................................... 34
Section 4.11. Merger, Conversion, Consolidation or
Succession to Business ................................................. 34
Section 4.12. Preferential Collection of Claims
Against Company ........................................................ 35
ARTICLE FIVE
Holders' Lists and Reports by
Trustee and Company
Section 5.01. Company to Furnish Trustee Name and
Addresses of Holders .................................................... 35
Section 5.02. Preservation of Information; Communications
to Holders .............................................................. 35
Section 5.03. Reports by Trustee ......................................................... 36
Section 5.04. Reports by Company ......................................................... 36
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ARTICLE SIX
Amendments Page
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Section 6.01. Amendments Without Consent of Holders ..................................... 37
Section 6.02. Amendments with Consent of Holders ........................................ 39
Section 6.03. Execution of Amendments ................................................... 40
Section 6.04. Effect of Amendments ...................................................... 40
Section 6.05. Conformity with Trust Indenture Act ....................................... 40
Section 6.06. Reference in Securities to Amendments ..................................... 40
ARTICLE SEVEN
Covenants
Section 7.01. Payment of Amounts, If Any, to Holders .................................... 41
Section 7.02. Maintenance of Office or Agency ........................................... 41
Section 7.03. Money for Security Payments to Be
Held in Trust .......................................................... 42
Section 7.04. Maintenance of Properties ................................................. 42
Section 7.05. Conduct of Business ....................................................... 43
Section 7.06. Affiliate Transactions ................................................... 43
Section 7.07. Certain Asset Sales ....................................................... 43
Section 7.08. Exchange Act Registration ................................................. 43
ARTICLE EIGHT
Remedies of the Trustee and Holders
on Event of Default
Section 8.01. Event of Default Defined; Waiver of
Default ................................................................ 44
Section 8.02. Collection of Indebtedness by Trustee;
Trustee May Prove Debt ................................................. 45
Section 8.03. Application of Proceeds .................................................. 47
Section 8.04. Suits for Enforcement .................................................... 48
Section 8.05. Restoration of Rights on Abandonment
of Proceedings ......................................................... 48
Section 8.06. Limitations on Suits by Holders .......................................... 49
Section 8.07. Unconditional Right of Holders to
Institute Certain Suits ................................................ 50
Section 8.08. Powers and Remedies Cumulative; Delay
or Omission Not Waiver of Default ...................................... 50
Section 8.09. Control by Holders ....................................................... 50
Section 8.10. Waiver of Past Defaults .................................................. 51
Section 8.11. Trustee to Give Notice of Default, But
May Withhold in Certain Circumstances .................................. 51
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Section 8.12. Right of Court to Require Filing of
Undertaking to Pay Costs ............................................... 52
ARTICLE NINE
Consolidation, Merger, Sale or Conveyance
Section 9.01. Company May Consolidate, etc. on
Certain Terms .......................................................... 52
Section 9.02. Successor Corporation Substituted ......................................... 53
Section 9.03. Opinion of Counsel to Trustee ............................................. 54
</TABLE>
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<PAGE> 7
AGREEMENT, dated as of June 30, 1997, between FUSION SYSTEMS
CORPORATION, a Delaware corporation (hereinafter called the "Company"), and The
First National Bank of Chicago, a national banking association, as trustee
(hereinafter called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Board of Directors of the Company has authorized
the creation of an issue of contingent payment rights (hereinafter called the
"Securities" or "Rights") and the distribution of one Right with respect to (i)
each share of common stock, $.01 par value (the "Common Shares"), of the Company
outstanding on July 25, 1997 (the "Record Date"), and (ii) each Common Share
issued between the Record Date and the earlier of December 31, 1997 or the
Redemption Date (as herein defined) upon exercise of options to purchase Common
Shares issued under the Stock Plans (as herein defined) and outstanding on the
Record Date ("Outstanding Options");
WHEREAS, all things necessary have been done to make the
Securities, when executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company and to make this Agreement a
valid agreement of the Company, in accordance with their and its terms.
NOW, THEREFORE, for and in consideration of the premises, it
is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) all accounting terms used herein and not expressly defined
herein shall have the meanings assigned to
<PAGE> 8
such terms in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of any
computation;
(c) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision.
"Act" when used with respect to any Holder has the meaning
specified in Section 1.04.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of Voting Stock, 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.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors 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 Rights
are listed on a national securities exchange, such exchange is open for trading.
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<PAGE> 9
"Change of Control" shall be deemed to have occurred
if:
(a) there shall be consummated any reorganization,
recapitalization, consolidation or merger, or sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets, of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Common Shares and Outstanding Voting Securities immediately
prior to such Business Combination beneficially own (within the meaning
of Rule 13d-3 under the Exchange Act), directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Common Shares and
Outstanding Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Board of
Directors of the Company as of the date of this Agreement; or
(b) the stockholders of the Company shall approve any
plan or proposal for the liquidation or dissolution of the
Company; or
(c) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) other than the Company, or any employee
benefit plan sponsored by the Company, shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing twenty-five percent (25%)
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<PAGE> 10
or more of either (i) the Outstanding Common Shares or (ii) the
Outstanding Company Voting Securities; provided, however, that an
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of paragraph (a) above shall not be
deemed to be a Change of Control; or
(d) individuals which constituted the Board of Directors of
the Company as of the date hereof shall cease for any reason to
constitute at least a majority thereof.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Shares" means the common stock, $.01 par value, of the
Company.
"Company" means Fusion Systems Corporation, a Delaware
corporation, until a successor Person shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Company" shall mean
such successor Person. To the extent necessary to comply with the requirements
of the provisions of the 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 Company 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, and delivered to the Trustee.
"Contingent Payment" shall have the meaning set forth in
Section 3.01.
"Contingent Payment Date" means March 31, 1999.
"Contingent Payment Period" means the calendar year beginning
January 1, 1998 and ending December 31, 1998.
"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
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<PAGE> 11
date of execution of this Agreement is located at One First National Plaza,
Suite 0126, Chicago, Illinois 60670-0126.
"Event of Default" shall have the meaning set forth in Section
8.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Net Sales" means the amount of net sales reflected on the
audited income statement of the Company and its consolidated subsidiaries for
the Contingent Payment Period prepared by the Company in accordance with
generally accepted accounting principles consistent with the Company's policies
in effect prior to the date hereof.
"Officers' Certificate" 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, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be reasonably acceptable to the
Trustee.
"Outstanding" when used with respect to the Securities means,
as of the date of determination, all Securities theretofore authenticated and
delivered under this Agreement, except:
(a) Securities theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation; and
(b) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Agreement, other than any such Securities in respect of which there
shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands the
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
Outstanding Securities have given any request, demand, direction, consent or
waiver hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor shall be
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<PAGE> 12
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.
"Outstanding Common Shares" means, as of the date of
determination, all outstanding Common Shares.
"Outstanding Options" shall have the meaning set forth in the
recitals.
"Outstanding Voting Securities" means, as of the date of
determination, all outstanding voting securities of the Company having the right
to vote generally in the election of directors.
"Paying Agent" means any Person authorized by the Company to
pay the amount determined pursuant to Section 3.01, 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.
"Record Date" means July 25, 1997.
"Redemption Date" means the date established by the Company
for the redemption of the Rights in whole or in part pursuant to Section 3.10.
"Redemption Price" means $5.00 per Right, without
interest.
"Responsible Officer" when used with respect to the Trustee
means any officer assigned to the Corporate Trust Office and also means, with
respect to any particular corporate trust matter, any other officer of the
Trustee to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Right Certificate" means a certificate representing any of
the Rights.
"Rights" shall have the meaning set forth in the recitals to
this Agreement.
"Securities" shall have the meaning set forth in the recitals
to this Agreement.
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<PAGE> 13
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.05.
"Stock Plans" means the following plans of the Company: 1984
Stock Option Plan; 1994 Stock Option Plan; 1994 Non-Employee Director Plan; and
1994 Employee Stock Purchase Plan.
"Subsidiary" means each Person more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by the
Company or one or more Subsidiaries, or by the Company and one or more other
Subsidiaries.
"Threshold Level" shall have the meaning set forth in Section
3.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Agreement, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Trustee" shall mean such successor Trustee.
"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 Stock" means stock having ordinary voting power to
elect a majority of the directors irrespective of whether or not stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency.
Section 1.02. Compliance Certificates 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 all conditions precedent, if any, provided
for in this Agreement (including any covenants compliance with which constitutes
a condition precedent) 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
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<PAGE> 14
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 covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he 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 or not, in the opinion of each
such individual, such condition or covenant has been complied with.
Section 1.03. 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 representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that
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<PAGE> 15
the information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Any certificate, statement or opinion of an officer of the
Company or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous. Any certificate or
opinion of any independent firm of public accountants filed with the Trustee
shall contain a statement that such firm is independent.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one instrument.
Section 1.04. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 4.01)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section. The Company may set a record date for purposes of
determining the identity of Holders entitled to vote or consent to any action by
vote or consent authorized or permitted under this Agreement. If not set by the
Company prior to the first solicitation of a Holder of Securities made by any
Person in respect of any such action, or, in the case of any such vote, prior to
such vote, the record date for such action shall be the later of 10 days prior
to the
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<PAGE> 16
first solicitation of such consent or the date of the most recent list of
Holders furnished to the Trustee pursuant to Section 5.01 of this Agreement
prior to such solicitation. If a record date is fixed, those Persons who were
Holders of securities at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to take such action by vote or consent
or, except with respect to clause (d) below, to revoke any vote or consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such vote or consent shall be valid or effective for more than
120 days after such record date.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) At any time prior to (but not after) the evidencing to the
Trustee, as provided in this Section 1.04, of the taking of any action by the
Holders of the Securities specified in this Agreement in connection with such
action, any Holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the Holders
of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of holding as provided in this Section
1.04, revoke such action so far as concerns such Security. Any request, demand,
authorization, direction, notice, consent, waiver or other action by the Holder
of any Security shall bind every future Holder of the same Security or the
Holder of every Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, suffered or
omitted to be done by the Trustee, any Paying Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
Section 1.05. Notices, etc. to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Agreement to be made
upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed, in writing, to or with the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Administration; or
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<PAGE> 17
(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 7600
Standish Place, Rockville, Maryland 20855, Attention: Treasurer, or at
any other address previously furnished in writing to the Trustee by the
Company.
Section 1.06. Notice to Holders; Waiver. Where this Agreement
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Agreement, then any method of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.07. 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 1.08. 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 1.09. Successors and Assigns. All covenants and
agreements in this Agreement by the Company shall bind its successors and
assigns, whether so expressed or not.
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<PAGE> 18
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 the sole benefit of the parties hereto and
their successors and of the Holders.
Section 1.11. Governing Law. This Agreement and the Securities
shall be governed by and construed in accordance with the laws of the State of
New York.
Section 1.12. Legal Holidays. In the event that any date on
which any payment in respect of any Security is due 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 the date due.
Section 1.13. Separability Clause. In case any provision in
this Agreement or in the Rights 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.
ARTICLE TWO
SECURITY FORMS
Section 2.01. Forms Generally. The Right Certificates 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 officers
executing such Right Certificates, as evidenced by their execution of the Right
Certificates. Any portion of the text of any Right Certificate may be set forth
on the reverse thereof, with an appropriate reference thereto on the face of the
Right Certificate.
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<PAGE> 19
The definitive Right Certificates 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 the Right Certificates representing such
Securities, as evidenced by their execution of such Right Certificates.
Section 2.02. Form of Face of Right Certificates.
FUSION SYSTEMS CORPORATION
CONTINGENT PAYMENT RIGHTS
Certificate No. ___________ Rights
This certifies that ___________________, or registered assigns
(the "Holder"), is the registered holder of the number of Contingent Payment
Rights ("Rights") set forth above. Fusion Systems Corporation, a Delaware
corporation (the "Company"), shall, subject to the terms and provisions
contained herein and in the Agreement referred to on the reverse hereof, unless
the Rights have been extinguished or redeemed pursuant to the Agreement, pay to
the Holder hereof on March 31, 1999 (the "Contingent Payment Date") an amount,
if any, as determined by the Company in accordance with Section 3.01 of the
Agreement (the "Contingent Payment"). Such determination by the Company absent
manifest error shall be final and binding on the Company and the Holder.
Payment of said Contingent Payment shall be made, net of any
applicable withholding taxes, only upon presentation and surrender of this Right
Certificate by the Holder hereof at the offices or agencies of the Company
maintained for that purpose in The City of New York, New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts. First Chicago Trust Company
of New York has been appointed as the initial paying agent at its office
located at 14 Wall Street, 8th Floor, New York, New York 10005.
Reference is hereby made to the further provisions of the
Rights 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 or on behalf of the Trustee referred to on the reverse hereof by
facsimile or manual signature, the
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<PAGE> 20
Rights represented by this Right 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: FUSION SYSTEMS CORPORATION
By_____________________________
Attest:
__________________________ [SEAL]
Authorized Signature
Section 2.03. Form of Reverse of Security. This Right
Certificate is issued under and in accordance with the Contingent Payment Rights
Agreement, dated as of June 30, 1997 (the "Agreement"), between the Company
and The First National Bank of Chicago, 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 Right Certificate consents by acceptance hereof.
The Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Agreement for a full statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the holders of the Rights. Copies of
the Agreement can be obtained by contacting the Trustee.
The Company may, at its option, at any time after the
occurrence of a Change of Control, upon not less than 30 days nor more than 60
days notice, redeem the then outstanding Rights, in whole or in part, at a price
of $5.00 per Right, without interest.
The Rights shall be extinguished without any payment therefor
and have no further force and effect (i) on December 31, 1997, if no Change of
Control has occurred prior to such date or (ii) on March 31, 1999 if Net Sales
for the Contingent Payment Period shall not have exceeded $122,000,000.
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<PAGE> 21
The Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Agreement at
any time by the Company and the Trustee with the consent of the holders of a
majority of the Rights at the time Outstanding.
No reference herein to the Agreement and no provision of the
Rights or of the Agreement shall alter or impair the obligation of the Company,
which is absolute and unconditional, to make the Contingent Payment on the
Rights at the time and in the amounts and in the coin or currency prescribed in
the Agreement; provided, however, that any such payment will be made net of any
applicable withholding taxes.
The Rights are issuable only in registered form, and Right
Certificates representing any integral number of Rights may be issued. As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of the Rights represented by this Right Certificate is registrable
on the Security Register of the Company, upon surrender of this Right
Certificate for registration of transfer at the office or agency of the Company
maintained for such purpose in The City of New York, New York, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Right
Certificates, for the same number of Rights, will be issued to the designated
transferee or transferees. The Company hereby initially designates the office of
First Chicago Trust Company of New York located at 14 Wall Street, 8th Floor,
New York, New York 10005 as the office for registration of transfer of this
Right Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, this Right Certificate is exchangeable for one or
more Right Certificates representing the same number of Rights as represented by
this Right Certificate as requested by the Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange of Rights, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to the time of due presentment of this Right Certificate
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Right Certificate
is registered as the owner hereof for all purposes, and neither the Company,
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<PAGE> 22
the Trustee nor any agent shall be affected by notice to the contrary.
The obligation of the Company to the Holder of the Rights
represented hereby to make the payments required in respect of the Rights
represented hereby shall be governed by, and construed in accordance with, the
laws of the State of New York, without giving effect to the principles of
conflict of laws thereof.
All capitalized terms used in this Right Certificate without
definition shall have the meanings assigned to them in the Agreement.
Section 2.04. Form of Trustee's Certificate of Au-
thentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Right Certificates referred to in the
within-mentioned Agreement.
The First National Bank of Chicago
___________________________________
as Trustee
By
___________________________________
Authorized Officer
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ARTICLE THREE
THE SECURITIES
Section 3.01. Title and Terms. (a) The aggregate number of
Right Certificates which may be authenticated and delivered under this Agreement
is limited to the number equal to the number of Rights issued by the Company (i)
to holders of record of Common Shares on the Record Date and (ii) to holders of
Outstanding Options upon exercise thereof between the Record Date and the
earlier of December 31, 1997 or the Redemption Date, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 3.04, 3.05, 3.06, 3.10
or 6.06.
(b) The Securities shall be known and designated as the
"Contingent Payment Rights" of the Company.
(c) Unless the Rights have been extinguished pursuant to
Section 3.11 or redeemed pursuant to Section 3.10, each Person who is the Holder
of a Right at the close of business on the Contingent Payment Date will be
entitled to receive in respect of each Right held, only upon presentation and
surrender of the Right Certificate at the offices or agencies of the Company
designated pursuant to Section 3.07, in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts, the amount determined by the following schedule:
<TABLE>
<CAPTION>
Net Sales of the Company for
the Contingent Payment Period Contingent Payment
- ----------------------------- ------------------
<S> <C>
$149,000,000 or greater $5.00
$141,000,000 $3.50
$134,000,000 $2.25
$127,000,000 $1.00
$122,000,000 or less $0.00
</TABLE>
If Net Sales falls between two of the levels (each, a "Threshold Level")
specified above, the amount of the Contingent Payment shall be equal to "C" in
the following equation:
S - L = C - PL
_____ ______
G - S PG - C
Where:
S = Net Sales
L= Highest Threshold Level of Net Sales which is less than S
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G = Lowest Threshold Level of Net Sales which is greater than S
PL= Contingent Payment if Net Sales were L
PG= Contingent Payment if Net Sales were G
C = Contingent Payment
For example, if Net Sales are $147,000,000, the Contingent Payment determined by
such formula would be $4.63. Under no circumstances shall any payment be made in
respect of the Rights if Net Sales for the Contingent Payment Period do not
exceed $122,000,000. The determination of Net Sales shall be made by the Company
and set forth in an Officers' Certificate and accompanied by a certificate or
opinion of an independent public accountant prepared in accordance with Section
1.03, delivered to the Trustee not later than March 15, 1999. Such determination
absent manifest error shall be final and binding on the Company and the Holders.
(d) Contingent Payments on each Right shall be calculated to
the nearest cent, with one-half cent rounded for such purpose to the next
greater whole number.
(e) Notwithstanding any provision of this Agreement or the
Right Certificates to the contrary, other than as expressly provided under this
Agreement, no interest shall accrue on any amounts payable on the Rights to any
Holder.
Section 3.02. Registrable Form. The Securities shall be
issuable only in registered form.
Section 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its chairman of the
Board of Directors or any vice chairman of the Board of Directors or its
president or any vice president or its treasurer, under its corporate seal which
may, but need not, be attested. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time 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 authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Agreement, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such
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Company Order shall authenticate and deliver such Securities as provided in this
Agreement and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and that the Holder is entitled to the benefits of this
Agreement.
Section 3.04. Temporary Securities. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, substantially of
the tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine with the concurrence of the
Trustee. Temporary Securities may contain such reference to any provisions of
this Agreement as may be appropriate. Every temporary Security shall be executed
by the Company and be authenticated by the Trustee upon the same conditions and
in substantially the same manner, and with like effect, as the definitive
Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 7.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
amount of definitive Securities. Until so exchanged the temporary Securities
shall in all respects be entitled to the same benefits under this Agreement as
definitive Securities.
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Section 3.05. Registration, Registration of Transfer and
Exchange. The Company shall cause to be kept at the office of the Security
Registrar (as hereinafter defined) located at 14 Wall Street, 8th Floor, New
York, New York 10005 Corporate Trust Office of the Trustee a register (the
register maintained in such office and in any other office or agency designated
pursuant to Section 7.02 being herein sometimes referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities and of transfers of
Securities. First Chicago Trust Company of New York is hereby initially
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at
the office or agency of the Company designated pursuant to Section 7.02, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Right
Certificates representing the same aggregate number of Rights represented by the
Right Certificate so surrendered that are to be transferred and the Company
shall execute and the Trustee shall authenticate and deliver, in the name of the
transferor, one or more new Right Certificates represented by such Right
Certificate that are not to be transferred.
At the option of the Holder, Right Certificates may be
exchanged for other Right Certificates that represent in the aggregate the same
number of Rights as the Right Certificates surrendered at such office or agency.
Whenever any Right Certificates are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Right
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 right, 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 registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other
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governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
3.04 or 6.06 not involving any transfer.
Section 3.06. 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 its written request the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new Right Certificate of like
tenor and amount of Rights, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Securities under this Section,
the Company may require the payment of a sum sufficient to cover 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 Securities.
Section 3.07. Payments Under Right Certificate. Payment of the
Contingent Payment shall be made, net of any applicable withholding taxes, upon
presentation and surrender of the Right Certificate at the offices or agencies
of the Company maintained for that purpose in The City of New York, New York, 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. First Chicago Trust Company
of New York has been appointed as paying agent in The City of New York, New
York.
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Section 3.08 Persons Deemed Owners. Prior to the time of due
presentment for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name any Security is
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 any such
payment 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 3.09 Cancellation. All Securities surrendered for
payment, redemption, registration of transfer or exchange shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled 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.
Section 3.10. Redemption.
(a) The Company may, at its option, at any time after the
occurrence of a Change of Control, redeem the then Outstanding Securities, in
whole or in part, at the Redemption Price.
(b) The election of the Company to redeem any Securities shall
be evidenced by an Officers' Certificate which shall also evidence compliance
with the condition set forth in paragraph (a). In case of any redemption at the
election of the Company of less than all the Securities of any series, the
Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the number of Securities to be
redeemed.
(c) If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected from the outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate. The Trustee shall promptly
notify the Company in writing of the Securities selected for redemption. For all
purposes of this Agreement, unless the
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context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed or to be
redeemed only in part, to the portion of such Securities which has been or is to
be redeemed.
(d) Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the certificate number) of the particular Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed;
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
Any notice which is mailed in the manner herein provided shall
be conclusively presumed to be duly given, whether or not the Holder receives
such notice; any failure to give such notice by mail or any defect in such
notice to the Holder of a particular Security designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
(e) On or prior to any Redemption Date, the Company shall
deposit with the Trustee or with a paying agent (or, if the Company is acting as
its own paying agent, segregate and hold in trust) an amount of money sufficient
to pay the Redemption Price of all the Securities which are to be redeemed on
that date.
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(f) Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price, and from and after such date (unless the
Company shall default on the payment of the Redemption Price) such Securities
shall cease to be Outstanding. Upon surrender of any such Security for
redemption in accordance with said office, such Security shall be paid by the
Company at the Redemption Price.
(g) Any Security which is to be redeemed only in part shall be
surrendered at the office or agency of the Company to be maintained pursuant to
Section 3.07 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
to the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a Security or Securities representing the unredeemed portion of the Security so
surrendered and bearing a number not contemporaneously outstanding.
Section 3.11. Extinguishment. The Rights shall be extinguished
without payment therefor and have no further force and effect (i) on December
31, 1997, if no Change of Control has occurred prior to such date as evidenced
by an Officers' Certificate delivered to the Trustee or (ii) on March 31, 1999
if Net Sales for the Contingent Payment Period shall not have exceeded
$122,000,000 as evidenced by an Officers' Certificate and accompanied by a
certificate or opinion of an independent public accountant prepared in
accordance with Section 1.03 delivered to the Trustees.
ARTICLE FOUR
THE TRUSTEE
Section 4.01. Certain Duties and Responsibilities. (a) With
respect to the Holders of Securities issued hereunder, the Trustee, prior to the
occurrence of an Event of Default with respect to the Securities and after the
curing or waiving of all Events of Default which may have occurred, undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement. 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
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the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) In the absence of bad faith on its part, prior to the
occurrence of an Event of Default and after the curing or waiving of all such
Events of Default which may have occurred, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement; but in the case of any such certificates
or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(1) this Subsection (c) shall not be construed to limit the
effect of Subsections (a) and (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) no provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any 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 8.09 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
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affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
Section 4.02. Certain Rights of Trustee. Subject to
the provisions of Section 4.01:
(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;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion of counsel;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request
or direction of any of the Holders pursuant to this Agreement, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal,
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bond, debenture, note, coupon, security, or other paper or document
unless requested in writing to do so by the Holders of not less than a
majority of the Securities then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such investigation shall be paid by the Company or,
if paid by the Trustee or any predecessor Trustee, shall be repaid by
the Company upon demand; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
Section 4.03. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
Section 4.04. May Hold Securities. The Trustee, any Paying
Agent, Security Registrar or any other agent of the Company, in its individual
or any other capacity, may become the owner or pledgee of Securities, and,
subject to Sections 4.07 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 4.05. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder.
Section 4.06. Compensation and Reimbursement. The Company
agrees:
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(a) to pay to the Trustee, the Security Registrar and/or the
Paying Agent from time to time reasonable compensation for all services rendered
by such Trustee, Security Registrar and/or Paying Agent, hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee, the Security Registrar and/or the Paying Agent upon
request for all reasonable expenses, disbursements and advances incurred or made
by such Trustee, Security Registrar and/or Paying Agent, in accordance with any
provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of their agents and counsel), except any such
expense, disbursement or advance as may be attributable to such Trustee's,
Security Registrar's or Paying Agent's negligence or bad faith; and
(c) to indemnify the Trustee, the Security Registrar and/or
the Paying Agent for, and to hold such Trustee, Security Registrar and/or Paying
Agent, harmless against, any loss, liability or expense incurred without
negligence or bad faith on such Trustee's, Security Registrar's or Paying
Agent's part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending the
Trustee, the Security Registrar and/or the Paying Agent against any claim or
liability in connection with the exercise or performance of any of such
Trustee's, Security Registrar's or Paying Agent's powers or duties hereunder.
Section 4.07. Disqualification; Conflicting Interests. If the
Trustee has or shall acquire any conflicting interest within the meaning of the
Trust Indenture Act, it shall, within 90 days after ascertaining that it has
such conflicting interest, either eliminate such conflicting interest or resign
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Agreement.
Section 4.08. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a corporation that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. 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 Article.
Section 4.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee
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and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 4.10.
(b) The Trustee or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the
Holders of a majority of the Outstanding Securities, delivered to the Trustee
and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 4.07 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 4.08
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee
or (ii) the Holder of any Security who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith
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upon its acceptance of such appointment in accordance with Section 4.10, become
the successor Trustee and supersede the successor Trustee appointed by the
Company. If no successor Trustee shall have been so appointed by the Company or
the Holders of the Securities and so accepted appointment, 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 competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office. If the Company fails to send such notice
within ten days after acceptance of appointment by a successor Trustee, it shall
not be a default hereunder but the successor Trustee shall cause the notice to
be mailed at the expense of the Company.
Section 4.10. Acceptance of Appointment by 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, on 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 appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 4.11. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any
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corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and such certificate shall have the full force which it is anywhere in the
Securities or in this Agreement provided that the certificate of the Trustee
shall have; provided that the right to adopt the certificate of authentication
of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
Section 4.12. Preferential Collection of Claims Against
Company. If and when the Trustee shall be or shall become a creditor, directly
or indirectly, secured or unsecured, 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 FIVE
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 5.01. Company to Furnish Trustee Names and Addresses
of Holders. The Company will furnish or cause to be furnished to the Trustee (a)
semiannually, not later than May 1 and November 1, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of
April 15 and October 15, respectively, and (b) at such times as the Trustee may
request in writing, within 30 days after receipt by the Company of any such
request, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of a date not more than 15 days prior to
the time such list is furnished; provided, however, that if and so long as the
Trustee or First Chicago Trust Company of New York shall be the Security
Registrar, no such list need be furnished.
Section 5.02. Preservation of Information; Communications to
Holders. (a) The Trustee or the Security Registrar 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 5.01 and the names and
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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 5.01 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Agreement and the corresponding
rights and privileges of the Trustee shall be as provided by the Trust Indenture
Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders made pursuant to the
Trust Indenture Act.
Section 4.3. Reports by Trustee. (a) Within 60 days after May
15 of each year commencing with the first May 15 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 notify the Trustee when the Securities are listed on
any stock exchange.
Section 5.04. Reports by Company. The Company shall:
(a) file with the Trustee, 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
Section 15(d) of the Exchange Act; or if the Company is not required to
file information, documents or reports pursuant to either of said
Sections, then it shall nonetheless, during such period as the
Securities remain outstanding, file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Exchange Act in
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respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Agreement as may be required from time to time by such rules
and regulations;
(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
Subsections (a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission; and
(d) furnish to the Trustee, not less often than annually, a
brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants
under this Agreement (for purpose of this paragraph, such compliance
shall be determined without regard to any period of grace or
requirement of notice provided under this Agreement).
ARTICLE SIX
AMENDMENTS
Section 6.01. Amendments Without Consent of Holders. Without
the consent of any Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may enter into one or more
amendments hereto, in form satisfactory to the Trustee, for any of the following
purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities any property or assets; or
(b) to provide for a guarantee by any Person of some or all of
the obligations of the Company under this Agreement for the benefit of
the Holders of Securities; or
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(c) to evidence the succession of another Person to the
Company in accordance with Article Nine hereof, and the assumption by
any such successor of the covenants of the Company herein and in the
Securities; or
(d) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions as its Board of
Directors and the Trustee shall consider to be for the protection of
the Holders of Securities, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies
provided in this Agreement as herein set forth, provided that in
respect of any such additional covenant, restriction, condition or
provision such amendment may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the remedies
available to the Trustee upon such an Event of Default or may limit the
rights of the Holders of a majority of the Outstanding Securities to
waive such an Event of Default; or
(e) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Agreement that shall not
adversely affect the interests of the Holders in any material respect;
or
(f) to make any amendments or changes necessary to comply or
maintain compliance with the Trust Indenture Act.
Promptly following any amendment of this Agreement or the
Securities in accordance with this Section 6.01, the Trustee shall notify the
Holders of the Securities of such amendment; provided that any failure so to
notify the Holders shall not affect the validity of such amendment.
Section 6.02. 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
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provisions of this Agreement or to the Securities or of modifying in any manner
the rights of the Holders under this Agreement or to the Securities; provided,
however, that no such amendment shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) modify the definition of Contingent Payment Period,
Contingent Payment, Contingent Payment Date, Net Sales, or otherwise
reduce the amounts payable in respect of the Securities;
(b) reduce the amount of the Outstanding Securities, the
consent of whose Holders is required for any such amendment; or
(c) modify any of the provisions of this Section or Section
8.10, except to increase any such percentage or to provide that certain
other provisions of this Agreement cannot be modified or waived without
the consent of the Holder of each Security affected thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of
any amendment pursuant to the provisions of this Section, 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 6.03. Execution of Amendments. In executing any
amendment permitted by this Article, the Trustee shall be entitled to receive,
and (subject to Section 4.01) 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 may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 6.04. Effect of Amendments. Upon the execution of any
amendment under this Article, this Agreement and the Securities shall be
modified in accordance therewith, and
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such amendment shall form a part of this Agreement and the Securities for all
purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.
Section 6.05. Conformity with Trust Indenture Act. Every
amendment executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act.
Section 6.06. Reference in Securities to Amendments. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. Securities authenticated and
delivered after the execution of any amendment pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such amendment. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Board of Directors, 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 SEVEN
COVENANTS
Section 7.01. 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.
Section 7.02. Maintenance of Office or Agency. As long as any
of the Securities remain Outstanding, the Company will maintain in The City of
New York, New York, an office or agency (i) where Securities may be surrendered
for registration of transfer or exchange and (ii) where notices and demands to
or upon the Company in respect of the Securities and this Agreement may be
served. The Company hereby designates the office of First Chicago Trust Company
of New York as 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 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 maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of
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the Trustee, and the Company hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York, 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 City of New York, New York for
such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of any such office
or agency. The Company also designates the Corporate Trust Office as one of such
offices.
Section 7.03. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will, on or
before each due date of any amount due on any of the Rights, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the amounts, if any, so becoming due until such sums shall be paid to such
Persons or 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 each due date of any amount due on any of
the Rights, deposit with a Paying Agent a sum in same day funds sufficient to
pay the amount, if any, so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such amount, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of such action or any
failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that (A) such Paying Agent will hold all sums held by it for the payment of any
amount payable on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided and (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.
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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 such amount has become due and payable, 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 thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money shall thereupon cease.
Section 7.04. Maintenance of Properties. The Company will
cause all properties used or useful in the conduct of its business or the
business of any Subsidiary of the Company to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, as
determined by the Board of Directors in good faith, desirable in the conduct of
its business or the business of any Subsidiary.
Section 7.05. Conduct of Business. The Company shall
use reasonable efforts during the Contingent Payment Period to operate its
business in the ordinary course and substantially as operated heretofore,
provided, however, that nothing in this Section shall prevent the Company from
operating the business of the Company in accordance with its business judgment
to enhance the growth and profitable development of the Company's business, so
long as the Company is not motivated by an intention to diminish the value of
the Securities.
Section 7.06. Affiliate Transactions. The Company shall not
engage in material transactions with Affiliates (other than Subsidiaries of the
Company), or material transactions with other persons which are primarily for
the benefit of such Affiliates, which would reduce Net Sales during the
Contingent Payment Period, except on terms that are comparable to those that
would be obtained from unaffiliated parties on an arms-length basis.
Section 7.07. Certain Asset Sales. Prior to January 1, 1999,
the Company will not sell or transfer a substantial portion of the assets of the
Company, other than in the ordinary course of business or pursuant to a
transaction which is
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subject to Section 9.01 of this Agreement, unless the Company shall have called
for the redemption of all of the then Outstanding Securities pursuant to Section
3.10 of this Agreement.
Section 7.08. Exchange Act Registration. If the Securities are
not registered under the Exchange Act prior to the issuance of the Securities,
the Securities shall not be transferable by the Holders thereof until such
registration is effective. The Company shall use all reasonable efforts to cause
such registration to become effective prior to the issuance of the Securities or
as promptly as practicable thereafter.
ARTICLE EIGHT
REMEDIES OF THE TRUSTEE AND HOLDERS
ON EVENT OF DEFAULT
Section 8.01. Event of Default Defined; Waiver of Default.
"Event of Default" with respect to Securities, means any 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 the Contingent Payment when the
same shall become due and payable, and continuance of such default for
a period of 30 days; or
(b) default in the performance, or breach, of any covenant of
the Company in this Agreement (other than a covenant or a default in
whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for
a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% of the Outstanding Securities, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(c) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee,
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custodian, trustee or sequestrator (or similar official) of the Company
or for any substantial part of its property, or ordering the winding up
or liquidation of its affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(d) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment of
or taking possession by a receiver, liquidator, assignee, custodian,
trustee or sequestrator or similar official, of the Company or for any
substantial part of its property, or make any general assignment for
the benefit of creditors.
Section 8.02. Collection of Indebtedness by Trustee; Trustee
May Prove Debt. The Company covenants that in case default shall be made in the
payment of the Contingent Payment when and as the same shall have become due and
payable and such default continues for the period of 30 days, then upon demand
of the Trustee, the Company will pay to the Trustee for the benefit of the
Holders of the Securities the amount of such Contingent Payment; and in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Trustee and
each predecessor Trustee, their respective agents, attorneys and counsel, and
any expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of its negligence or bad faith.
In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Company or other obligor
upon such Securities and collect in the manner provided by law out of the
property of the Company or other obligor upon such Securities, wherever
situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the
Company or any other obligor upon the Securities under Title 11 of the United
States Code or any other applicable Federal or State bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or
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its property or such other obligor, or in case of any other judicial proceedings
relative to the Company or other obligor upon the Securities, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of any Securities shall then be due and
payable as herein expressed or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, 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 the
creditors or property of the Company or such other obligor;
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency proceedings or person performing similar functions in
comparable proceedings; and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Holders and of the
Trustee on their behalf; and any trustee, receiver, or liquidator,
custodian or other similar official is hereby authorized by each of the
Holders to make payments to the Trustee, and, in the event that the
Trustee shall consent to the making of payments directly to the
Holders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee
and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence
or bad faith and all other amounts due to the Trustee or any
predecessor Trustee pursuant to Section 4.06.
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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 relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Agreement to
which the Trustee shall be a party) the Trustee shall be held to represent all
the Holders, and it shall not be necessary to make any Holders of such
Securities parties to any such proceedings.
Section 8.03. Application of Proceeds. Any moneys collected by
the Trustee pursuant to this Article in respect of any Securities shall be
applied in the following order at the date or dates fixed by the Trustee upon
presentation of the several Securities in respect of which monies have been
collected and stamping (or otherwise noting) thereon the payment in exchange for
the presented Securities if only partially paid or upon surrender thereof if
fully paid:
FIRST: To the payment of costs and expenses in respect of
which monies have been collected, including reasonable compensation to
the Trustee and each predecessor Trustee and their respective agents
and attorneys and of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith, and all other amounts due to the
Trustee or any predecessor Trustee pursuant to Section 406;
SECOND: To the payment of the Contingent Payments on the
Securities, and in case such moneys shall be insufficient to pay in
full the whole amount so due and unpaid upon the Securities,
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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 8.04. 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 judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Agreement or in and 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 8.05. Restoration of Rights on Abandonment of
Proceedings. In case the Trustee or Holder shall have proceeded to enforce any
right under this Agreement and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Trustee
or to such Holder, then and in every such case the Company and the Trustee and
the Holder 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 8.06. Limitations on Suits by Holders. No Holder of
any Security shall have any right by virtue or by availing of any provision of
this Agreement to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Agreement, or for
the appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the Holders of not less than
25% of the Securities then Outstanding shall have made written request upon the
Trustee to institute such action or proceedings in its own name as trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby and the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such action or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 8.09; it being
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understood and intended, and being expressly covenanted by the taker and Holder
of every Security with every other taker and Holder and the Trustee, that no one
or more Holders of Securities shall have any right in any manner whatever by
virtue or by availing of any provision of this Agreement to effect, disturb or
prejudice the rights of any other such Holder of Securities, or to obtain or
seek to obtain priority over or preference to any other such Holder or to
enforce any right under this Agreement, except in the manner herein provided and
for the equal, ratable and common benefit of all Holders of Securities. For the
protection and enforcement of the provisions of this Section, each and every
Holder and the Trustee shall be entitled to such relief as can be given either
at law or in equity.
Section 8.07. 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 Contingent Payments payable in respect of such Security on or
after the respective Contingent Payment Dates, or to institute suit for the
enforcement of any such payment on or after such respective Contingent Payment
Dates, shall not be impaired or affected without the consent of such Holder.
Section 8.08. Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default. Except as provided in Section 8.06, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein; and, subject to Section 8.06, 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 8.09. 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
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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 4.01) the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, shall determine that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or responsible officers
of the Trustee shall determine that the action or proceedings so directed would
involve the Trustee in personal liability or if the Trustee in good faith shall
so determine that the actions or forebearances specified in or pursuant to such
direction would be unduly prejudicial to the interests of Holders of the
Securities not joining in the giving of said direction, it being understood that
the Trustee shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Holders.
Nothing in this Agreement shall impair the right of the
Trustee in its discretion to take any action deemed proper by the Trustee and
which is not inconsistent with such direction or directions by Holders.
Section 8.10. Waiver of Past Defaults. In the case of a
default or an Event of Default specified in clause (b), (c) or (d) of Section
8.01, the Holders of a majority of all the Securities then Outstanding may waive
any such default or Event of Default, and its consequences except a default in
respect of a covenant or provisions hereof which cannot be modified or amended
without the consent of the Holder of each Security affected. In the case of any
such waiver, the Company, the Trustee and the Holders of the Securities shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 8.11. Trustee to Give Notice of Default, But May
Withhold in Certain Circumstances. The Trustee shall transmit to the Holders, as
the names and addresses of such Holders
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appear on the Security Register, notice by mail of all defaults which have
occurred, such notice to be transmitted within 90 days after the occurrence
thereof, unless such defaults shall have been cured before the giving of such
notice (the term "default" or "defaults" for the purposes of this Section being
hereby defined to mean any event or condition which is, or with notice or lapse
of time or both would become, an Event of Default); provided that, except in the
case of default in the payment of the amounts payable in respect of any of the
Securities, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee, or a trust committee of
directors or trustees and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
Section 8.12. Right of Court to Require Filing of Undertaking
to Pay Costs. All parties to this Agreement agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Agreement or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith or 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 NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.01. 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) either the Company shall be the continuing corporation, or
the successor corporation or the Person which acquires by sale or conveyance
substantially all the assets of the Company (if other than the Company) shall be
a Person organized under the laws of the United States of America or any State
thereof and
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shall expressly assume the due and punctual payment of the Securities, according
to their tenor, and the due and punctual performance and observance of all of
the covenants and conditions of this Agreement to be performed or observed by
the Company, by supplemental agreement satisfactory to the Trustee, executed and
delivered to the Trustee by such corporation, and (ii) the Company or such
successor corporation, 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.
Section 9.02. Successor Corporation Substituted. In case of
any such consolidation, merger, sale or conveyance in which the Company shall
not be the continuing corporation, and following such an assumption by the
successor corporation, such successor corporation shall succeed to and be
substituted for the Company, with the same effect as if it had been named
herein. Such successor corporation may cause to be signed, and may issue either
in its own name or in the name of the Company prior to such succession any or
all of the Securities issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
successor corporation instead of the Company and subject to all the terms,
conditions and limitations in this Agreement prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Company to the Trustee for
authentication, and any Securities which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All of
the Securities so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Securities theretofore or 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, lease or
conveyance, such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a
conveyance by way of lease) the Company or any Person which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Agreement and the Securities and
may be liquidated and dissolved.
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Section 9.03. Opinion of Counsel to Trustee. The Trustee may
receive an Opinion of Counsel, prepared in accordance with Section 1.03, as
conclusive evidence that any such consolidation, merger, sale, lease or
conveyance, and any such assumption, and any such liquidation or dissolution,
complies with the applicable provisions of this Agreement.
* * * * *
This Agreement may 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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
FUSION SYSTEMS CORPORATION
By /s/ Joseph F. Greeves
---------------------------------
Title: Vice President and Chief
Financial Officer
Attest: /s/ Ellen S. Ranard
-------------------------
Title: General Counsel and
Assistant Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE
By /s/ Richard D. Manella
---------------------------------
Title: Vice President
Attest: /s/ Leland Hansen
------------------------
Title: Assistant Vice President
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STATE OF MARYLAND )
: ss.:
COUNTY OF MOUNTEEMERY )
On the 17th day of July, 1997, before me personally came Joseph F. Greeves,
to me known, who, being by me duly sworn, did depose and say that he resides at
8305 Tomlinson Ave., Bethesda, MD; that he is Vice President and CFO of Fusion
Systems Corporation, one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of such corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
pursuant to authority of the Board of Directors of such corporation; and that he
signed his name thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Andrea L. Owens
-------------------
<PAGE> 57
STATE OF ILLINOIS )
: ss.:
COUNTY OF COOK )
On the 11th day of July, 1997, before me personally came Richard D. Manella,
to me known, who, being by me duly sworn, did depose and say that he resides at
211 Willow Pky, Buffalo Grove, IL 60089; that he is Vice President of The First
National Bank of Chicago, one of the corporations described in and which
executed the above instrument; that he knows the corporate seal of such
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed pursuant to authority of the Board of Directors of such
corporation; and that he signed his name thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Somsri Helmer
-----------------
