<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 31, 1999
Commission File Number
----------------------------------------------------
WIT CAPITAL GROUP, INC.
(exact name of registrant as specified in its charter)
DELAWARE 13-3900397
(State or other jurisdiction (I.R.S. Employer jurisdiction
of incorporation or organization) Industrial Identification Number)
826 BROADWAY, NEW YORK, NEW YORK 10003
(Address of principal executive offices) (Zip Code)
(212) 253-4400
(Registrant's telephone number, including area code)
----------------------------------------------------
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2
ITEM 5. OTHER EVENTS
On November 1, 1999 Wit Capital Group, Inc. ("Wit Capital") announced an
agreement with SoundView Technology Group, Inc. ("SoundView") to acquire 100
percent of the fully diluted shares of SoundView in exchange for $320 million
in newly issued Wit Capital shares and options. The Board of Directors of
each company and the shareholders of SoundView have approved the transaction.
Completion of the transaction is contingent on Wit Capital shareholder
approval, regulatory approval and other customary closing conditions.
Reference is made to the Agreement and Plan of Merger, which is attached as
an Exhibit, for a more complete description of the proposed transaction.
A copy of the press release announcing the transaction is attached as an
exhibit. Certain statements in this news release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause Wit Capital's actual results,
performance or achievements, or those of the industry in which it operates, to
be materially different from any expected future results, performance or
achievements expressed or implied in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those economic factors that affect the market for capital raising, including
initial public offerings and those factors discussed in the Registration
Statement of Wit Capital's initial public offering of common stock and periodic
reports filed from time to time with the Securities and Exchange Commission.
ITEM 7. EXHIBITS
99.1 Press release dated November 1, 1999
99.2 Agreement and Plan of Merger by and among Wit Capital Group, Inc., W/S
Merger Corp. and SoundView Technology Group, Inc. dated as of October 31, 1999.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Wit Capital Group, Inc.
Dated: November 4, 1999
By: /s/ Ronald Readmond
---------------------------
Ronald Readmond
President and Co-Chief Executive Officer
By: /s/ M. Bernard Siegel
---------------------------
M. Bernard Siegel
Chief Financial Officer
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Exhibit 99.1
WIT CAPITAL SOUNDVIEW TECHNOLOGY GROUP
CONTACTS:
CITIGATE DEWE ROGERSON, INC.
Kellie Walsh, 212-419-8366
John Hurson, 212-419-8354
WIT CAPITAL GROUP, INC.
Zoe Adlersberg, 212-253-4668
SOUNDVIEW TECHNOLOGY GROUP
Craig Jampol, 203-462-7242
WIT CAPITAL TO ACQUIRE SOUNDVIEW TECHNOLOGY GROUP;
LANDMARK TRANSACTION CREATES LEADING
INTERNET/TECHNOLOGY INVESTMENT BANKING FIRM
o SIGNIFICANTLY EXPANDED PRODUCT OFFERING: INDIVIDUAL INVESTORS WILL HAVE
ACCESS TO A GREATER ALLOCATION IN AN INCREASED NUMBER OF TRANSACTIONS
ACROSS A BROADER RANGE OF CORE TECHNOLOGY SECTORS, AS WELL AS
INSTITUTIONAL-QUALITY RESEARCH ON AN ADDITIONAL 190 TECHNOLOGY COMPANIES
o INCREASED DISTRIBUTION: TOTAL SHARES OFFERED TO INVESTORS COULD MORE THAN
TRIPLE IN THE FIRST YEAR FOLLOWING THE TRANSACTION
o EXPANDED SUITE OF PRODUCTS FOR ISSUERS: ISSUERS OF INTERNET/TECHNOLOGY
OFFERINGS WILL BENEFIT FROM SIGNIFICANTLY INCREASED CAPABILITIES IN CAPITAL
RAISING, RESEARCH, STRATEGIC ADVISORY, TRADING AND ONLINE INVESTOR ACCESS
o SOLIDIFIED LEADERSHIP POSITION: WIT CAPITAL STRENGTHENS ITS POSITION AS A
LEADING INTERNET/TECHNOLOGY INVESTMENT BANKING FIRM BY BUILDING ONE OF THE
LARGEST BANKING AND RESEARCH GROUPS FOCUSED EXCLUSIVELY ON
INTERNET/TECHNOLOGY COMPANIES
o INCREASED REVENUES: WIT CAPITAL'S NINE MONTH 1999 REVENUES INCREASE
SIGNIFICANTLY FROM $27 MILLION TO $127 MILLION ON A COMBINED BASIS
NOVEMBER 1, 1999 - (NEW YORK) - Wit Capital Group, Inc. (NASDAQ: WITC), parent
company of pioneering online investment banking firm Wit Capital Corporation,
today announced it has signed a definitive agreement to acquire SoundView
Technology Group, a Connecticut-based private investment banking firm focused
exclusively on technology. The acquisition will enable Wit Capital to
significantly expand its Internet-based product offering - both in terms of
number of shares distributed to online investors and breadth of timely research
coverage broadly accessible through the Internet. The acquisition positions Wit
Capital to be a the market leader in Internet/technology investment banking -
with one of the largest banking
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and research groups on Wall Street focused exclusively on the Internet and
technology. The companies had combined nine-month revenues totaling over $125
million and have separately lead or co-managed over 75 deals year to date.
Under the terms of the transaction, Wit Capital will acquire 100% of the fully
diluted shares of SoundView in exchange for approximately $320 million (based on
Wit Capital's closing price of $17.56 on 10/29/99) in newly issued Wit Capital
Common Shares and options. The exchange ratio in the merger is subject to
adjustment for changes in Wit Capital's trading price from $17.56 up to $18.56
or down to $15.56 and is not adjustable for changes beyond these levels. The
Board of Directors of each company and the shareholders of SoundView have
approved the transaction, which is expected to close in January 2000. Completion
is contingent on Wit Capital shareholder approval, regulatory approval and other
customary closing conditions. Russell Crabs, President and CEO of SoundView,
will take a seat on Wit Capital's Board of Director's and Curt Snyder, Chief
Operating Officer of SoundView, will become Chief Financial Officer of the
combined entity upon completion of the transaction.
The synergies between Wit Capital and SoundView result in a combined company
that has both a broad distribution channel through the Internet to individuals,
and well established access to the largest institutional Internet and technology
investors. Wit Capital's focus is on the Internet sector and retail
distribution. SoundView complements Wit Capital's strengths by adding expertise
in core technology sectors such as Software, Telecom, Datacom and Infrastructure
and a robust institutional sales and trading platform.
As a result of the combination, issuers will enjoy a stronger platform from
which to meet their capital raising needs, with a deeper bench of professionals
and a broader set of distribution capabilities. Individual investors will enjoy
access to a significantly increased number of shares from a broader selection of
companies, and a more comprehensive body of easily accessible online equity
research.
"This transaction represents a major milestone in the ongoing evolution of Wit
Capital, and it results in a number of important benefits that will enable the
company to fulfill our long-standing mission: to empower investors and issuers
alike by transforming the capital raising process through the use of the
Internet. It's a win-win situation - both groups benefit - issuers have expanded
services and distribution channels and individual investors have access to more
shares and more quality research," said Ron Readmond, Wit Capital's Co-CEO.
"More than that, though, we truly believe this merger will propel our model of
Internet-based capital formation to a new level."
The combination results in key competitive advantages for Wit Capital and
significant benefits to investors and issuers. Upon completion of the
transaction:
o Combined 9-month revenues total over $125 million
o Investment banking and equity research resources will more than double to
over 100 professionals
o Number of companies covered by research will more than quadruple to over
200
o Total shares offered to investors could more than triple in the first year
following the transaction
o Strategic advisory and market making capabilities will be greatly enhanced
o Wit Capital will have a strengthened ability to demand an increasing
proportion of deal economics and share retention
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Russ Crabs, SoundView's President and CEO, said "Wit Capital is the ideal
partner for SoundView. Our focus on core technology companies and institutional
investors is the perfect complement to Wit Capital's Internet and individual
investor emphasis. Together with our combined focus on value added research
analysis, we become the `must have' banking firm in Internet/technology
transactions."
Mark Loehr, Wit Capital's Head of Investment Banking, said, "This transaction
builds on the successes of the past year - completion of 94 transactions, the
expansion of our research team, the roll-out of our global strategy in Japan and
Europe, and the launch of our venture capital group. Our revenues will have
grown from $2 million in 1998, to $27 million through nine months of 1999, to a
number in excess of $127 million on a combined basis through nine months of
1999. We have clearly elevated our Internet capital raising capabilities
exponentially, and look forward to further success creating access for more
investors as we continue to redefine the capital raising process in this dynamic
digital economy."
The corporate headquarters of the combined company will be in New York, with the
Stamford office of SoundView and the San Francisco offices of both firms
remaining. The combined company will employ more than 380 individuals.
Goldman, Sachs & Co. acted as exclusive strategic and financial advisor to Wit
Capital and also provided a fairness opinion to Wit Capital's Board of
Directors. J.L. Freeman and Associates acted as exclusive strategic and
financial advisor to SoundView.
ABOUT WIT CAPITAL GROUP, INC.
Wit Capital Group, Inc. and its broker dealer subsidiary, Wit Capital
Corporation, were founded in New York in 1996 to create the first online
investment banking firm. Wit Capital Group, Inc. went public in June 1999. With
offices in New York and San Francisco, Wit Capital Corporation is an
issuer-driven Internet investment banking firm that offers an array of
investment banking services, including underwriting for public offerings,
private equity services, strategic advisory, and institutional quality research.
Wit Capital Corporation also offers individual investors online brokerage
services that include access to IPOs and other securities that in the past have
only been available to institutions and wealthy individuals.
Wit Capital is a registered broker-dealer and a member of NASD and SIPC. Wit
Capital Group, Inc. is listed on NASDAQ under the symbol "WITC." For more
information please visit the Company's web site at HTTP://WWW.WITCAPITAL.COM.
ABOUT SOUNDVIEW TECHNOLOGY GROUP
SoundView is a private investment banking firm with an exclusive focus on
technology. Originally founded in 1979 as part of Gartner Group, a leading
market information technology research and consulting firm, SoundView was spun
off in 1985 and is currently employee owned. SoundView offers a range of
services in the technology sector including investment banking, research and
trading. The firm has 170 employees, with offices in Stamford, Connecticut and
San Francisco.
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CERTAIN STATEMENTS IN THIS NEWS RELEASE CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS WHICH MAY CAUSE OUR ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS, OR THOSE OF THE INDUSTRY IN WHICH WE OPERATE, TO BE MATERIALLY
DIFFERENT FROM ANY EXPECTED FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
ECONOMIC FACTORS THAT AFFECT THE MARKET FOR CAPITAL RAISING, INCLUDING INITIAL
PUBLIC OFFERINGS AND THOSE FACTORS DISCUSSED IN THE REGISTRATION STATEMENT OF
OUR INITIAL PUBLIC OFFERING OF COMMON STOCK AND PERIODIC REPORTS FILED FROM TIME
TO TIME WITH THE SECURITIES & EXCHANGE COMMISSION.
# # # # #
YOU ARE INVITED
To join a simultaneous webcast of the Wit Capital conference call
which will take place TODAY AT 9:00 A.M. (EDT)
The webcast is available at WWW.VCALL.COM
Please register approximately 10 minutes before the call.
SPEAKERS ON THE WEBCAST WILL BE:
Ron Readmond, Co-CEO of Wit Capital
Mark Loehr, Head of Investment Banking at Wit Capital
Russell Crabs, President and CEO of SoundView
<PAGE>
Exhibit 99.2
CONFORMED COPY
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WIT CAPITAL GROUP, INC.
W/S MERGER CORP.
AND
SOUNDVIEW TECHNOLOGY GROUP, INC.
DATED AS OF: OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
<TABLE>
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PAGE
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ARTICLE I
The Merger; Effective Time; Closing
<S> <C>
1.1 The Merger...........................................................................1
1.2 Effective Time.......................................................................2
1.3 Effects of the Merger................................................................3
1.4 Closing..............................................................................3
ARTICLE II
Certificate of Incorporation and
Bylaws of the Surviving Corporation
2.1 Certificate of Incorporation.........................................................3
2.2 The Bylaws...........................................................................3
ARTICLE III
Directors and Officers of the
Surviving Corporation
3.1 Directors............................................................................3
3.2 Officers.............................................................................3
ARTICLE IV
Merger Consideration; Conversion or
Cancellation of Shares in the Merger
4.1 Share Consideration for the Merger; Conversion or Cancellation of Shares in
the Merger...........................................................................4
4.2 Exchange of Shares in the Merger.....................................................7
4.3 Fractional Shares....................................................................8
ARTICLE V
Election Procedure; Other Agreements
5.1 Limitation on Election...............................................................9
5.2 Form of Election.....................................................................9
5.3 Revocation of Election...............................................................9
5.4 Decision of Exchange Agent...........................................................9
5.5 Certain Employee Actions and Agreements.............................................10
5.6 Employment Agreements...............................................................10
5.7 Retention Pool......................................................................10
5.8 Soundview Stock and Option Arrangements.............................................10
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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ARTICLE VI
Representations and Warranties of SoundView
<S> <C>
6.1 Organization; Qualification.........................................................11
6.2 Subsidiaries and Affiliates.........................................................12
6.3 Capitalization......................................................................12
6.4 Authorization; Validity of Agreement; SoundView Action..............................13
6.5 Board Approvals Regarding Transactions..............................................13
6.6 Vote Required.......................................................................13
6.7 Consents and Approvals; No Violations...............................................14
6.8 Governmental Documents and Financial Statements.....................................14
6.9 Compliance with Applicable Law......................................................15
6.10 Books and Records...................................................................16
6.11 Ineligible Persons..................................................................16
6.12 No Undisclosed Liabilities..........................................................16
6.13 Interim Operations..................................................................17
6.14 Absence of Certain Changes..........................................................17
6.15 Technology and Intellectual Property................................................18
6.16 Legal Proceedings...................................................................19
6.17 Employee Benefit Plans..............................................................19
6.18 Tax Matters; Government Benefits....................................................21
6.19 Labor and Employment Matters........................................................22
6.20 Contracts and Commitments...........................................................23
6.21 Insurance...........................................................................23
6.22 Personnel...........................................................................23
6.23 Insider Interests...................................................................23
6.24 Brokers or Finders..................................................................24
ARTICLE VII
Representations and Warranties of Parent
7.1 Organization; Qualification.........................................................24
7.2 Subsidiaries and Affiliates.........................................................24
7.3 Capitalization......................................................................25
7.4 Authorization; Validity of Agreement; Parent Action.................................26
7.5 Board Approvals Regarding Transactions..............................................26
7.6 Vote Required.......................................................................26
7.7 Consents and Approvals; No Violations...............................................26
7.8 Governmental Documents and Financial Statements.....................................27
7.9 Compliance with Applicable Law......................................................27
7.10 Books and Records...................................................................29
7.11 Ineligible Persons..................................................................29
7.12 No Undisclosed Liabilities..........................................................29
7.13 Interim Operations..................................................................30
7.14 Absence of Certain Changes..........................................................30
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
7.15 Technology and Intellectual Property................................................31
7.16 Legal Proceedings...................................................................32
7.17 Employee Benefit Plans..............................................................32
7.18 Tax Matters; Government Benefits....................................................35
7.19 Labor and Employment Matters........................................................36
7.20 Contracts and Commitments...........................................................37
7.21 Insurance...........................................................................37
7.22 Insider Interests...................................................................37
7.23 Brokers or Finders..................................................................37
ARTICLE VIII
Covenants
8.1 Interim Operations of SoundView.....................................................37
8.2 Interim Operations of Parent........................................................40
8.3 Access; Confidentiality.............................................................42
8.4 Reasonable Best Efforts.............................................................42
8.5 Shareholders Meetings; Proxy Statement/Registration Statement.......................43
8.6 No Solicitation of Competing Transaction............................................44
8.7 Publicity...........................................................................44
8.8 Notification of Certain Matters.....................................................45
8.9 State Takeover Laws.................................................................45
8.10 Merger Sub Compliance...............................................................45
8.11 Expenses............................................................................45
8.12 Appointment of Director.............................................................45
8.13 Tax-Free Reorganization.............................................................45
ARTICLE IX
Conditions
9.1 Conditions to the Obligations of Parent and Merger Sub..............................46
9.2 Conditions to the Obligations of SoundView..........................................48
ARTICLE X
Termination/Survival
10.1 Termination.........................................................................50
10.2 Effect of Termination...............................................................52
10.3 No Survival of Representations and Warranties and Covenants.........................52
ARTICLE XI
Definitions
11.1 Definitions.........................................................................52
ARTICLE XII
Miscellaneous
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
12.1 Disputes............................................................................60
12.2 Amendments; Extension; Waiver.......................................................60
12.3 Entire Agreement....................................................................60
12.4 Specific Performance; Injunctive Relief.............................................61
12.5 Interpretation......................................................................61
12.6 Severability........................................................................61
12.7 Notices.............................................................................61
12.8 Binding Effect; Persons Benefitting; No Assignment..................................63
12.9 Counterparts........................................................................63
12.10 Governing Law.......................................................................63
12.11 Jurisdiction; Waiver of Jury Trial and Certain Damages..............................63
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of October 31, 1999, among Wit Capital Group, Inc., a Delaware
corporation ("Parent"), W/S Merger Corp., a Delaware corporation and a direct
wholly owned subsidiary of Parent ("Merger Sub"), and SoundView Technology
Group, Inc., a Delaware corporation ("SoundView").
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and SoundView
each have determined that it is in the best interests of their respective
stockholders for Merger Sub to merge with and into SoundView upon the terms and
subject to the conditions of this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
(as hereinafter defined in Section 1.1) shall qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, Parent, Merger Sub and SoundView desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Merger Sub and SoundView hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 THE MERGER. Subject to the terms and conditions of this Agreement
and the Delaware General Corporation Law (the "DGCL"), at the Effective Time (as
hereinafter defined), SoundView and Merger Sub shall consummate a merger (the
"Merger") in which (a) Merger Sub shall be merged with and into SoundView and
the separate corporate existence of Merger Sub shall thereupon cease, (b)
SoundView shall be the successor or surviving corporation in the Merger and
shall continue to be governed by the laws of the State of Delaware, and (c) the
separate corporate existence of SoundView with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger. The
corporation surviving the Merger is sometimes hereinafter referred to as the
"Surviving Corporation." At the election of Parent, with prior notice and
consultation with SoundView, any direct wholly owned subsidiary of Parent may be
substituted for Merger Sub as a constituent corporation in the Merger. In such
event, the parties agree to execute an appropriate amendment to this Agreement
in order to reflect the foregoing. If at any time after December 15, 1999,
Parent is unable to satisfy the condition set forth in Section 9.1(i), Parent
shall
<PAGE>
be entitled to restructure the Merger so that at the Effective Time, SoundView
shall be merged with and into Merger Sub and the separate corporate existence of
SoundView shall thereupon cease, Merger Sub shall be the successor or surviving
corporation in the Merger and shall continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of Merger Sub with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except that the name of Merger Sub shall be changed to
SoundView Technology Group, Inc.; provided, however, that no such election shall
be effective if such restructuring would be materially adverse to the
stockholders of SoundView or if within 5 business days after the date such
election is communicated in writing to SoundView, Parent shall have received an
opinion of Morrison & Foerster LLP or other counsel reasonably acceptable to
Parent addressed to Parent to the effect set forth in Section 9.1(i) and such
Section 9.1(i) shall thereafter be amended so as to replace references to
"Skadden Arps Slate Meagher & Flom LLP" with "Morrison & Foerster LLP" or such
other counsel in all places where it appears therein. In the event the foregoing
election is effective, the parties hereto agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing. If at any time
after December 15, 1999, SoundView is unable to satisfy the condition set forth
in Section 9.2(h), SoundView shall be entitled to restructure the Merger so that
at the Effective Time, SoundView shall be merged with and into Merger Sub and
the separate corporate existence of SoundView shall thereupon cease, Merger Sub
shall be the successor or surviving corporation in the Merger and shall continue
to be governed by the laws of the State of Delaware, and the separate corporate
existence of Merger Sub with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except that the name of
Merger Sub shall be changed to "SoundView Technology Group, Inc."; provided,
however, that no such election shall be effective if such restructuring would be
materially adverse to the business, operations or financial condition of
SoundView or if within 5 business days after the date such election is
communicated in writing to Parent, SoundView shall have received, an opinion of
Skadden Arps Slate Meagher & Flom LLP or other counsel reasonably acceptable to
SoundView addressed to SoundView to the effect set forth in Section 9.2(h) and
such Section 9.2(h) shall thereafter be amended so as to replace references to
"Morrison & Foerster LLP" with "Skadden Arps Slate Meagher & Flom LLP" or such
other counsel in all places where it appears therein. In the event the foregoing
election is effective, the parties hereto agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing.
1.2 EFFECTIVE TIME. Subject to the terms and conditions of this
Agreement, as soon as practicable after the satisfaction of the conditions set
forth in Article IX, Parent, Merger Sub and SoundView will cause an appropriate
Certificate of Merger (the "Certificate of Merger") to be executed and filed on
the date of the Closing (as hereinafter defined in Section 1.4) (or on such
other date as Parent and SoundView may agree) with the Secretary of State of the
State of Delaware in the manner provided in the DGCL. The Merger shall become
effective on the close of business on the date on which the Certificate of
Merger has been duly filed with the Secretary of State of the State of Delaware
or such other time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
2
<PAGE>
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Delaware law. Without limiting the generality of the foregoing, at the
Effective Time, all the properties, rights, privileges, powers and franchises of
SoundView and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of SoundView and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 CLOSING. The closing of the Merger (the "Closing") shall take place
(a) at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022, at 10:00 a.m. on the first business day
following the later of (i) the date on which the last of the conditions set
forth in Article IX hereof shall be fulfilled or waived in accordance with this
Agreement and (ii) January 7, 2000 or (b) at such other place, time and date as
Parent and SoundView may agree.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION. At the Effective Time and in
accordance with the DGCL, the Restated Certificate of Incorporation of Merger
Sub shall be the Certificate of Incorporation of the Surviving Corporation
except that the name of the corporation shall be "SoundView Technology Group,
Inc., until thereafter amended in accordance with applicable law.
2.2 THE BYLAWS. At the Effective Time and without any further action on
the part of SoundView, Merger Sub or the Surviving Corporation, the Bylaws of
Merger Sub shall be the Bylaws of the Surviving Corporation.
ARTICLE III
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
3.1 DIRECTORS. Ronald Readmond, Mark Loehr and Russell Crabs shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified.
3.2 OFFICERS. The officers of SoundView at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified.
3
<PAGE>
ARTICLE IV
MERGER CONSIDERATION;
CONVERSION OR CANCELLATION
OF SHARES IN THE MERGER
4.1 SHARE CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER. The manner of converting or canceling shares of SoundView
and Merger Sub in the Merger shall be as follows:
(a) NON-ELECTING SHARES. At the Effective Time, each share of
common stock, par value $0.01 per share, of SoundView ("SoundView Common Stock")
issued and outstanding immediately prior to the Effective Time (such shares of
SoundView Common Stock being referred to hereinafter as the "Shares"), other
than (i) Shares as to which an election to receive cash has been properly made
pursuant to Article V hereof and not revoked, relinquished or lost (such Shares
being referred to hereinafter as "Electing Shares"), (ii) Shares as to which
dissenters' rights have been properly asserted and not withdrawn or lost under
Section 262 of the DGCL (such Shares being referred to hereinafter as
"Dissenting Shares") and (iii) Shares owned by Parent, Merger Sub or any direct
or indirect wholly owned subsidiary of Parent (collectively, "Parent Companies")
or SoundView, shall, by virtue of the Merger and without any action on the part
of the holder thereof, cease to be outstanding, be canceled and retired and be
converted into (x) that number of shares of common stock, par value $.01 per
share, of Parent ("Parent Common Stock") together with the associated rights
(the "Parent Rights") to purchase shares of Series A Junior Participating
Preferred Stock of Parent issued pursuant to the Rights Agreement dated June 7,
1999 between Parent and American Stock Transfer Company as Rights Agent (the
"Parent Rights Agreement") (the shares of Parent Common Stock together with the
Parent Rights being referred to herein as the "Parent Shares"), rounded to the
nearest thousandth of a share (with "5" being rounded downward), equal to the
quotient (the "Exchange Ratio") derived by dividing $81.2387 by the average of
the mean between the closing bid and ask prices (as reported for the primary
trading session (currently ending at 4:00 p.m.) on the Nasdaq National Market
("NNM")) of Parent Shares during the period (the "Exchange Rate Period")
comprised of the seven consecutive trading days ending on the fifth trading day
prior to such date not more than twenty and not less than ten days prior to the
date then scheduled for the Closing as is determined in advance by resolution of
Parent's Board of Directors (the "Average Stock Price"); PROVIDED, HOWEVER, that
the Exchange Ratio shall not be greater than 5.220 or less than 4.376 and (y)
cash in lieu of fractional Parent Shares as contemplated by Section 4.3. Shares
other than Electing Shares, Dissenting Shares and Parent Companies Shares are
sometimes referred to herein as "Non-electing Shares").
(b) ELECTING SHARES. At the Effective Time, on the terms and
subject to the conditions hereinafter set forth in Article IX, each Electing
Share shall, by virtue of the Merger and the election made with respect thereto,
cease to be outstanding, be canceled and retired and be
4
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converted into cash in an amount equal to $81.2387 without interest thereon at
any time (the "Cash Value per Share").
(c) DISSENTING SHARES. Dissenting Shares shall not be converted
into or represent a right to receive the consideration set forth in Section 4.1
but the holder of such Shares shall be entitled only to such rights as are
provided by the DGCL, and Parent shall be solely responsible for the payment of
any amounts due in respect of such Dissenting Shares pursuant to the DGCL. If
any holder of Shares which theretofore were Dissenting Shares effectively
withdraws or loses (through failure to perfect or otherwise) such holder's right
to appraisal under Section 262 of the DGCL, then as of the occurrence of such
withdrawal or loss such holder's Share shall automatically be restored to the
status of Non-electing Shares.
(d) PARENT HOLDINGS. At the Effective Time, each Share issued and
outstanding and owned by Parent or any Parent Subsidiary immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding and be canceled and retired
without payment of any consideration therefor.
(e) MERGER SUB SHARES. At the Effective Time, each share of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Merger Sub or the holder thereof, cease to be outstanding, be canceled and
retired and be converted into and become one fully paid and nonassessable share
of common stock of the Surviving Corporation.
(f) SOUNDVIEW STOCK OPTIONS. Except as set forth below, the terms
and provisions of the SoundView Stock Option Plan (as defined below) shall
continue in full force and effect and shall govern each option (or portion
thereof, as the case may be) outstanding immediately prior to the Effective Time
under any SoundView Stock Option Plan, whether vested, unvested, exercisable or
unexercisable (a "SoundView Stock Option"). At the Effective Time, each
SoundView Stock Option then outstanding shall be automatically converted,
without any further action, into an option to purchase Parent Shares. The number
of shares of SoundView Common Stock to be substituted for shall be equal to the
number of shares of Parent Common Stock together with the Parent Rights, rounded
down to the nearest whole number, which is equal to the number of shares of
SoundView Common Stock that were subject to such SoundView Stock Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, at an
exercise price equal to the per share exercise price of each such SoundView
Stock Option immediately prior to the Effective Time divided by the Exchange
Ratio. Notwithstanding any vesting schedule set forth in or pursuant to any
SoundView Stock Option Plan or SoundView Stock Option, any SoundView Stock
Options of any SoundView employee outstanding and not yet vested at the
Effective Time shall, except to the extent forfeited pursuant to the terms of
the applicable SoundView Stock Option Plan or SoundView Stock Option, vest on
each March 31, June 30, September 30 and December 31 commencing March 31, 2000
and ending December 31, 2002 at the rate as nearly as practical equal to
one-twelfth of such unvested SoundView Stock Options of such SoundView employee.
Such options for Parent Common Stock shall for purposes of this Agreement be
called "Parent Common
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Stock Options." All of the Parent Common Stock Options held by an employee shall
vest immediately upon the occurrence of (i) the termination by Parent of such
employee's employment by Parent and its Subsidiaries without Cause; (ii) the
acquisition or creation by Parent of an additional business as a result of which
SoundView's institutional brokerage business, as developed and expanded within
Parent, is no longer Parent's primary institutional brokerage business; (iii)
the acquisition or creation by Parent of an additional business as a result of
which SoundView's investment banking technology group or research technology
group, as developed and expanded within Parent, is no longer Parent's primary
investment banking technology group or research technology group, respectively;
or (iv) the completion by Parent of a merger or consolidation or the completion
by another Person of a tender offer or exchange offer for, or purchase of,
shares of capital stock of Parent as a result of which both (A) the Persons who
were the holders of all of the shares of common stock of Parent immediately
prior to completion of such merger, consolidation, tender offer, purchase or
exchange offer hold shares of capital stock of Parent or a company of which
Parent is then a Subsidiary representing less than 50% of the voting power of
all classes of capital stock of Parent or such other company, as the case may
be, and (B) the individuals constituting the Board of Directors of Parent
immediately prior to completion of such merger, consolidation, tender offer,
purchase or exchange offer constitute less than 50% of the Board of Directors of
Parent or such other company, as the case may be. Notwithstanding any other
provisions of the SoundView Stock Options and SoundView Stock Option Plans to
the contrary, with respect to any Parent Common Stock Option that was vested
prior to the Effective Time (x) upon exercise thereof after the Effective Time
and prior to the first anniversary of the Effective Time, Parent shall issue to
the Person exercising such option three certificates for the Parent Shares
issuable upon such exercise, each of which shall be for a number of Parent
Shares as nearly equal as practicable to one-third of such Parent Shares, (A)
the first of which shall contain no restrictive legend other than as may be
required by the Securities Act, (B) the second of which shall be subject to a
restrictive legend substantially in the form set forth in Exhibit A hereto
providing for a one-year restriction from the Effective Time on transfer and (C)
the third of which shall be subject to a restrictive legend substantially in the
form set forth in Exhibit B hereto providing for a two-year restriction from the
Effective Time on transfer or (y) upon exercise thereof on or after the first
anniversary of the Effective Time and prior to the second anniversary of the
Effective Time, Parent shall issue to the Person exercising such option two
certificates for the Parent Shares issuable upon such exercise, (A) one of which
shall be for a number of Parent Shares as nearly equal as practicable to
two-thirds of such Parent Shares and which shall contain no restrictive legend
other than as may be required by the Securities Act and (B) the other of which
shall be for the balance of such Parent Shares and which shall contain a
restrictive legend substantially in the form set forth in Exhibit A hereto
providing for a restriction on transfer through the second anniversary of the
Effective Time. Parent and SoundView shall take such actions as may be necessary
to amend their stock option plans and stock option agreements to reflect the
foregoing agreements for all periods on and after the Effective Time. For
purposes of this Agreement, the term "SoundView Stock Option Plan" means
SoundView's 1995 Stock Option Plan (the "SoundView Stock Option Plan"). Parent
shall use all reasonable efforts to cause to be reserved for issuance the number
of Parent Shares issuable upon exercise of the Parent Common Stock Options
referred to in this Section 4.1(f) and, as soon as reasonably practicable after
the Effective Time, Parent shall use
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all reasonable efforts to cause to be filed a registration statement on Form S-8
(or any successor or other appropriate form) under the Securities Act, or an
amendment to an existing registration statement of Form S-8, to register the
Parent Shares issuable upon exercise of the Parent Common Stock Options.
(g) CHANGES IN CAPITALIZATION. If between the date of this
Agreement and the Effective Time, the outstanding Parent Shares shall be changed
into a different number of shares or a different class by reason of any
reclassification, reorganization, consolidation, merger, recapitalization,
split-up, combination or exchange of shares or if a stock dividend thereon shall
be declared with a record date within said period, the number of Parent Shares
to be issued in the Merger shall be appropriately adjusted. Nothing in this
Section 4.1(g) shall be deemed to constitute a waiver by SoundView of the
provisions of Section 8.2 hereof.
4.2 EXCHANGE OF SHARES IN THE MERGER. The manner of making exchange of
Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to
American Stock Transfer Company or such other exchange agent as may be selected
by Parent (the "Exchange Agent") for the benefit of the holders of Shares, a
sufficient number of certificates representing the aggregate number of Parent
Shares issuable pursuant to Section 4.1 (the certificates representing such
aggregate number of Parent Shares being hereinafter referred to as the "Stock
Merger Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
written instructions, deliver the Parent Shares contemplated to be issued
pursuant to Section 4.1 out of the Stock Merger Exchange Fund. The Stock Merger
Exchange Fund shall not be used for any other purpose.
(b) Promptly after the Effective Time, the Exchange Agent shall
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares (the "Certificates")
(i) a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the surrender of the Certificates for payment therefor.
Upon surrender of Certificates for cancellation to the Exchange Agent, together
with such letter of transmittal duly executed and any other required documents,
the holder of such Certificates shall be entitled to receive for the Shares
represented by such Certificates the consideration applicable to such Shares and
the Certificates so surrendered shall forthwith be canceled. Upon such
surrender, the Exchange Agent shall issue to each holder three certificates for
the Parent Shares included in such consideration, (A) the first of which shall
be for a number of Parent Shares as nearly equal as practicable to 34.84% of
such Parent Shares and shall contain no restrictive legend other than as may be
required by the Securities Act, (B) the second of which shall be for a number of
Parent Shares as nearly equal as practicable to 32.58% of such Parent Shares and
shall be subject to a restrictive legend substantially in the form set forth in
Exhibit A hereto providing for a one-year restriction on transfer and (C) the
third of which shall be for a number of Parent Shares as nearly equal as
practicable to 32.58% of such Parent Shares and shall be subject to a
restrictive legend substantially in the form set forth in Exhibit B
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hereto providing for a two-year restriction on transfer. Until so surrendered,
such Certificates shall represent solely the right to receive the consideration
applicable to such Share. No dividends or other distributions that are declared
after the Effective Time on Parent Shares and payable to the holders of record
thereof after the Effective Time will be paid to Persons entitled by reason of
the Merger to receive Parent Shares until Certificates representing the right to
receive such Parent Shares are surrendered in appropriate form. Upon such
surrender, there shall be paid to the Person in whose name the Parent Shares are
issued any dividends or other distributions having a record date after the
Effective Time and a payment date prior to the time of such surrender. After
such surrender there shall be paid to the Person in whose name the Parent Shares
are issued any dividends or other distributions on such Parent Shares which
shall have a record date after the Effective Time and prior to such surrender
and a payment date after such surrender. In no event shall the Persons entitled
to receive such dividends or other distributions be entitled to receive interest
on such dividends or other distributions. If any certificate representing Parent
Shares is to be issued or cash payment in lieu of fractional share interests is
to be made to a Person other than the one in whose name the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to the Exchange Agent any applicable transfer or other
similar taxes, or shall establish to the satisfaction of the Exchange Agent that
any such tax has been paid or is not applicable. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to a holder of
Shares for any Parent Shares or dividends thereon, or, in accordance with
Section 4.3, cash in lieu of fractional Parent Shares, delivered to a public
official when and if required by applicable escheat law. The Exchange Agent
shall not be entitled to vote or exercise any rights of ownership with respect
to the Parent Shares held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such Parent Shares for the account of the Persons entitled
thereto.
(c) Any portion of the Stock Merger Exchange Fund and the
Fractional Securities Fund (as hereinafter defined in Section 4.3) which remains
unclaimed by the former stockholders of SoundView for six months after the
Effective Time shall be delivered to Parent, upon demand of Parent, and any
former stockholders of SoundView shall thereafter look only to Parent for
payment of their claim for the consideration for the Shares, including any cash
in lieu of fractional Parent Shares.
4.3 FRACTIONAL SHARES. No fractional Parent Shares shall be issued in
the Merger. In lieu of any such fractional securities, each holder of Shares who
would otherwise be entitled to a fraction of a Parent Share upon surrender of
Certificates for exchange pursuant to this Article IV will be paid an amount in
cash (without interest) determined by multiplying (i) the Average Stock Price
(but not more than $18.5625 or less than $15.5625) by (ii) the fraction of a
Parent Share to which such holder would otherwise be entitled. Parent shall make
available to the Exchange Agent sufficient funds (herein referred to as the
"Fractional Securities Fund") as and when necessary to enable the Exchange Agent
to make the cash payments contemplated hereby. In no event shall interest be
paid or accrued on any such cash payments.
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ARTICLE V
ELECTION PROCEDURE; OTHER AGREEMENTS
5.1 LIMITATION ON ELECTION. No holder of Shares may elect to receive
cash with respect to a number of Shares in excess of the product of (a) the
number of Shares of which such holder is the holder of record at the Effective
Time times (b) a fraction the numerator of which is the excess of (i) the lesser
of the shareholders' equity of SoundView as of December 31, 1999 or $30 million,
in each case less any distributions in respect of the Shares declared or made
after December 31, 1999 and not reflected in such shareholders' equity over (ii)
the product of the sum of (A) the number of Dissenting Shares that are not
Electing Shares times the Cash Value per Share plus (B) the number of Old
Agreement Securities that are not Dissenting Shares or Electing Shares and the
denominator of which is the product of the number of Shares issued and
outstanding plus the number of Shares subject to unexercised SoundView Stock
Options immediately prior to the Effective Time times the Cash Value per Share.
5.2 FORM OF ELECTION. A form of election (the "Form of Election") shall
be mailed to holders of Shares of record as of ten days prior to the
then-scheduled Effective Date. Any such holder's election to receive cash
pursuant to this Article V shall have been properly made only if the Exchange
Agent shall have received at its designated office, by 5:00 p.m. New York time
on the business day preceding the fifth day prior to the Effective Date, a Form
of Election properly completed and accompanied by certificates for the shares to
which such Form of Election relates (or an appropriate guarantee of delivery
guaranteeing that the certificates for such shares will be delivered prior to
the Effective Time), as set forth in such Form of Election, duly endorsed in
blank or otherwise in form acceptable for transfer on the books of SoundView.
5.3 REVOCATION OF ELECTION. Any Form of Election may be revoked by the
person submitting such Form to the Exchange Agent only by written notice
received by the Exchange Agent prior to 5:00 p.m. New York time on the business
day before the third day prior to the Effective Date. At such time any cash
election by a holder of Dissenting Shares shall be deemed revoked. If a Form of
Election is so revoked, the certificate or certificates (or guarantee of
delivery, as appropriate) for the Shares to which such Form of Election relates
shall be promptly returned to the person submitting the same to the Exchange
Agent.
5.4 DECISION OF EXCHANGE AGENT. The Exchange Agent shall have discretion
to determine (a) whether or not elections to receive cash have been properly
made or revoked pursuant to this Article V with respect to any Shares and (b)
when elections and revocations were received by it. If the Exchange Agent
determines that any election to receive cash was not properly made with respect
to any Shares, such Shares shall be treated by the Exchange Agent as Shares
which were not Electing Shares at the Effective Time of the Merger, and such
Shares shall be exchanged in the
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Merger for Parent Shares pursuant to Section 4.1(a) hereof. The Exchange Agent
may, with the mutual agreement of Parent and SoundView, make such equitable
changes in the procedures set forth in this Article V for the implementation of
the cash election provided for in this Article V as shall be necessary or
desirable to fully effect such elections.
5.5 CERTAIN EMPLOYEE ACTIONS AND AGREEMENTS. On the date hereof, each of
the holders of Shares named on Schedule 5.5 (a) has executed and delivered to
SoundView and Parent a written consent with respect to all of his or her Shares
approving the Merger and this Agreement in the form set forth as Exhibit C
hereto; (b) has executed and delivered to Parent a Voting Agreement (including
an irrevocable proxy) in the form set forth as Exhibit D hereto; and (c) has
executed and delivered to SoundView (and SoundView has executed and delivered to
Parent) an agreement implementing the provisions of Section 5.8 (each, a "Put
Termination Agreement") in the form set forth as Exhibit E. SoundView hereby
consents and agrees to the giving of each such consent and the entering into of
each such Voting Agreement and granting of each such irrevocable proxy.
5.6 EMPLOYMENT AGREEMENTS. On or about the date hereof, each of the
individuals named on Schedule 5.6 has entered into an Employment Agreement with
Parent, the term of which shall commence at the Effective Time.
5.7 RETENTION POOL. At the Effective Time, Parent shall issue to the
employees of SoundView and the SoundView Subsidiaries named on a Schedule (the
"Retention Schedule") to be agreed upon by Parent and SoundView in writing prior
to the Effective Time an aggregate number of Parent Shares (the "Retention
Shares") equal to the product of (a) the quotient resulting from dividing $25
million by $81.2387 times (b) the Exchange Ratio. The Retention Shares shall be
allocated among the employees listed on the Retention Schedule in the amounts
set forth in the Retention Schedule for each such employee. Subject to
applicable income tax withholding requirements, 50% of the Retention Shares
allocated to an employee who is continuously employed by Parent and its
Subsidiaries (including SoundView and its Subsidiaries) from the Effective Time
through the end of the thirtieth month after and including the month in which
the Effective Time occurs shall, on the last day of such thirtieth month, be
vested in and released to such employee, and 50% of the Retention Shares
allocated to an employee who is continuously employed by Parent and its
Subsidiaries (including SoundView and its Subsidiaries) from the Effective Time
through the end of the forty-second month after and including the month in which
the Effective Time occurs shall, on the last day of such forty-second month, be
vested in and released to such employee. If the employment by Parent or any of
its Subsidiaries of an employee to whom any Retention Shares have been allocated
is terminated for any reason other than by Parent without Cause, all of the
Retention Shares allocated to such employee shall be forfeited by such employee
and shall become treasury stock. All of the Retention Shares allocated to an
employee shall vest in and be released to such employee immediately upon the
occurrence of any of Section 4.1(f)(i)-(iv) hereof.
5.8 SOUNDVIEW STOCK AND OPTION ARRANGEMENTS. SoundView will use its
reasonable best efforts to complete each of the following actions at the
earliest practicable date: (a) to amend,
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effective immediately prior to the Effective Time, the bylaws of SoundView to
delete Sections 7 and 8 of Article VI thereof; (b) to amend, effective
immediately prior to the Effective Time, the SoundView Stock Option Plan to
delete Article XVI thereof and to implement the matters set forth in Section
4.1(f) hereof; (c) to amend, effective immediately prior to the Effective Time,
each SoundView Stock Option outstanding at such time and each associated stock
appreciation right to implement the matters set forth in Section 4.1(f) hereof
and to eliminate the right of the holder of such option or right to invoke the
rights, under Article XVI of the SoundView Stock Option Plan or any similar
rights under such holder's SoundView Stock Option, of a holder of a SoundView
Stock Option or Parent Common Stock Option or associated stock appreciation
right or of any Shares or Parent Shares acquired upon exercise of such option;
and (d) to terminate, effective immediately prior to the Effective Time, each
Stock Purchase and Transfer Restriction Agreement with each stockholder of
SoundView who is a party to such an agreement. Any Shares and SoundView Stock
Options as to which the foregoing deletions, amendments and terminations are not
effective immediately prior to the Effective Time are hereinafter referred to as
the "Old Agreement Securities."
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES OF SOUNDVIEW
Except as set forth in the Disclosure Schedule prepared and signed by
SoundView and delivered to Parent prior to the execution hereof (provided that
the listing of an item in one section of the Disclosure Schedule shall be deemed
to be a listing in another section of such Disclosure Schedule and apply to any
other representation and warranty of such party in this Agreement but only to
the extent that it is reasonably apparent from a reading of such disclosure
item), SoundView represents and warrants to Parent and Merger Sub that all of
the statements contained in this Article VI are true and correct as of the date
of this Agreement (or, if made as of a specified date, as of such date).
6.1 ORGANIZATION; QUALIFICATION. SoundView (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has full corporate power and authority to carry on its business
as it is now being conducted and to own, lease or operate the properties and
assets it now owns, leases or operates; and (iii) is duly qualified or licensed
to do business as a foreign corporation in good standing in every jurisdiction
in which ownership of property or the conduct of its business requires such
licensing or qualification or, if SoundView is not so licensed or qualified in
any such jurisdiction, it can become so qualified in such jurisdiction without
any material adverse effect (including assessment of state taxes for prior
years) upon its business and properties. SoundView has heretofore delivered to
Parent complete and correct copies of the certificate of incorporation and
by-laws of SoundView, as presently in effect.
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6.2 SUBSIDIARIES AND AFFILIATES. The Disclosure Schedule sets forth the
name, jurisdiction of incorporation and authorized and outstanding capital stock
of each SoundView Subsidiary and the jurisdictions in which each SoundView
Subsidiary is licensed or qualified to do business. SoundView does not own,
directly or indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity or ownership interest in any
business other than publicly traded securities constituting less than five
percent of the outstanding equity of the issuing entity. All the outstanding
capital stock of each SoundView Subsidiary is owned directly or indirectly by
SoundView free and clear of all liens, options or encumbrances of any kind and
all material claims or charges of any kind, and is validly issued, fully paid
and nonassessable, and there are no outstanding options, rights or agreements of
any kind relating to the issuance, sale or transfer of any capital stock or
other equity securities of any such SoundView Subsidiary to any person except
SoundView or another SoundView Subsidiary. Each SoundView Subsidiary (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation; (ii) has full corporate power and authority to
carry on its business as it is now being conducted and to own, lease or operate
the properties and assets it now owns, leases or operates; and (iii) is duly
qualified or licensed to do business as a foreign corporation in good standing
in every jurisdiction in which ownership of property or the conduct of its
business requires such licensing or qualification or, if a SoundView Subsidiary
is not so licensed or qualified in any such jurisdiction, it can become so
licensed or qualified in such jurisdiction without any material adverse effect
(including assessment of state taxes for prior years) upon its business and
properties. SoundView has heretofore delivered to Parent complete and correct
copies of the certificate of incorporation and by-laws of each SoundView
Subsidiary, as presently in effect.
6.3 CAPITALIZATION. (a) The authorized capital stock of SoundView
consists of 6,000,000 Shares. As of the date hereof, (i) 2,515,562 Shares are
issued and outstanding, (ii) no Shares are issued and held in the treasury of
SoundView and (iii) 1,577,962 Shares are reserved for issuance upon exercise
of SoundView Stock Options. All the outstanding shares of SoundView's capital
stock are, and all Shares which may be issued pursuant to the exercise of
outstanding SoundView Stock Options will be, when issued in accordance with
the respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable. There is no Voting Debt of SoundView or any SoundView
Subsidiary issued and outstanding. Except as set forth above and except for
the Transactions, as of the date hereof, (i) there are no shares of capital
stock of SoundView authorized, issued or outstanding; (ii) there are no
existing options, warrants, calls, pre-emptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character, relating to
the issued or unissued capital stock of SoundView or any SoundView
Subsidiary, obligating SoundView or any SoundView Subsidiary to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, SoundView or
any SoundView Subsidiary or securities convertible into or exchangeable for
such shares or equity interests, or obligating SoundView or any SoundView
Subsidiary to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment and (iii)
there are no outstanding contractual obligations of SoundView or any
SoundView Subsidiary to repurchase, redeem or otherwise acquire any Shares or
any of the capital stock of SoundView or
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any SoundView Subsidiary or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any SoundView
Subsidiary or any other entity. The Disclosure Schedule sets forth a complete
schedule of each SoundView Stock Option outstanding as of the date hereof,
including the name of the optionee, number of shares, exercise price, date of
grant and vesting schedule.
(b) There are no voting trusts or other agreements or
understandings to which SoundView or any SoundView Subsidiary is a party with
respect to the voting of the capital stock of SoundView or any of the SoundView
Subsidiaries.
(c) No Indebtedness of SoundView or any SoundView Subsidiary
contains any restriction upon (i) the prepayment of any Indebtedness of
SoundView or any SoundView Subsidiary, (ii) the incurrence of Indebtedness by
SoundView or any SoundView Subsidiary or (iii) the ability of SoundView or any
SoundView Subsidiary to grant any lien on the properties or assets of SoundView
or any SoundView Subsidiary.
6.4 AUTHORIZATION; VALIDITY OF AGREEMENT; SOUNDVIEW ACTION. SoundView
has full corporate power and authority to execute and deliver this Agreement,
and to consummate the Transactions. The execution, delivery and performance by
SoundView of this Agreement and the consummation by it of the Transactions have
been duly authorized by the SoundView Board of Directors and by written consent
of holders of SoundView Common Stock representing a majority of the Shares and
no other corporate action on the part of SoundView is necessary to authorize the
execution and delivery by SoundView of this Agreement or the consummation by it
of the Transactions. This Agreement has been duly executed and delivered by
SoundView and, assuming due and valid authorization, execution and delivery
thereof by Parent and Merger Sub, this Agreement is a valid and binding
obligation of SoundView enforceable against SoundView in accordance with its
terms.
6.5 BOARD APPROVALS REGARDING TRANSACTIONS. SoundView's Board of
Directors, at a meeting duly called and held, has (i) unanimously determined
that each of this Agreement and the Merger are fair to and in the best interests
of the shareholders of SoundView and (ii) approved the Transactions, and none of
the aforesaid actions by SoundView's Board of Directors has been amended,
rescinded or modified. The action taken by SoundView's Board of Directors
constitutes approval of the Merger and the other Transactions by SoundView's
Board of Directors under the provisions of Section 203 of the DGCL such that
Section 203 of the DGCL does not apply to this Agreement or the other
Transactions. No other state takeover statute is applicable to the Merger or the
other Transactions.
6.6 VOTE REQUIRED. The affirmative written consent of the holders of
a majority of the outstanding Shares, which is the only vote or consent of
the holders of any class or series of SoundView's capital stock necessary to
approve the Merger, has been obtained and copies of such consents have been
provided to Parent. No action of the holders of any class or series of
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SoundView's capital stock, acting in their capacity as stockholders, is
necessary to approve any of the Transactions other than the Merger.
6.7 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Advisers Act, the Exchange Act, the
Securities Act, the rules and regulations of the NASD, the HSR Act, state
securities or blue sky laws, and the DGCL, none of the execution, delivery or
performance of this Agreement by SoundView, the consummation by SoundView of the
Transactions or compliance by SoundView with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the certificate of
incorporation, the by-laws or similar organizational documents of SoundView or
any SoundView Subsidiary, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result in
a violation or breach of, or constitute (with or without due notice or the
passage of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any SoundView Agreement, or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to SoundView, any to
which SoundView or any SoundView Subsidiary is a party or by which any of the
assets of any of them is bound, any SoundView Subsidiary or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on SoundView and the SoundView
Subsidiaries, taken as a whole. There are no third party consents or approvals
required to be obtained under any SoundView Agreement prior to the consummation
of the Transactions, except for such consents and approvals the failure of which
to be obtained would not, individually or in the aggregate, have a material
adverse effect on SoundView and the SoundView Subsidiaries, taken as a whole.
6.8 GOVERNMENTAL DOCUMENTS AND FINANCIAL STATEMENTS. SoundView and each
SoundView Subsidiary has filed with the appropriate Governmental Entity, and has
heretofore made available to Parent, true and complete copies of, the
Governmental Documents of SoundView and each SoundView Subsidiary. As of their
respective dates or, if amended, as of the date of the last such amendment filed
prior to the date hereof, the Governmental Documents of SoundView and each
SoundView Subsidiary, including, without limitation, any financial statements or
schedules included therein (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading and (b) complied in all
material respects with the applicable requirements of Applicable Law. SoundView
has previously delivered to Parent copies of the audited balance sheets of
SoundView and the SoundView Subsidiaries as of December 31 for the fiscal years
1996, 1997 and 1998 and the related audited statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1996, 1997 and 1998,
inclusive, together with the related notes thereto, accompanied by the audit
report of Ernst & Young LLP, independent public accountants with respect
thereto, and the unaudited balance sheets of each of them as of June 30, 1999
and the related unaudited statements of income, changes in shareholders' equity
and cash flows for the period then ended (collectively, the balance sheets and
the statements above being referred to as the "SoundView Financial Statements"
and the June 30, 1999 balance
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sheet as the "SoundView Balance Sheet"). The audited balance sheets previously
delivered to Parent (including the related notes) fairly present in accordance
with GAAP the financial position of SoundView and the SoundView Subsidiaries as
of the dates thereof, and the other SoundView Financial Statements fairly
present in accordance with GAAP (subject, in the case of the unaudited
statements, to recurring adjustments normal in nature and amount and the
addition of footnotes) the results of the operations, cash flows and changes in
shareholders' equity of SoundView and the SoundView Subsidiaries for the
respective fiscal periods therein set forth; and such balance sheets and
statements (including the related notes, where applicable) have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as noted therein.
6.9 COMPLIANCE WITH APPLICABLE LAW. (a) SoundView and each SoundView
Subsidiary is, if so required by the nature of its business or assets, duly
registered with the SEC as a broker-dealer or an investment adviser and the
Commodity Futures Trading Commission as a commodity pool operator or commodity
trading adviser.
(b) SoundView, each SoundView Subsidiary, each SoundView Pooled
Product and each employee of each of them holds, and has at all pertinent times
held, all material licenses, franchises, permits, qualifications and
authorizations (collectively, "SoundView Permits") necessary for the lawful
ownership and use of the respective properties and assets of SoundView, the
SoundView Subsidiaries and the SoundView Pooled Products and the conduct of
their respective businesses under and pursuant to every, and have complied with
each, and are not in default in any material respect under any, Applicable Law
relating to any of them or any of their respective assets, properties or
operations, and SoundView does not know of any violations of any of the above
and has not received notice asserting any such violation. To SoundView's
knowledge, all such SoundView Permits are valid and in good standing and are not
subject to any proceeding for the suspension, modification or revocation
thereof.
(c) Except for normal examinations conducted by any Governmental
Entity in the regular course of the business of SoundView, the SoundView
Subsidiaries and the SoundView Pooled Products, no Governmental Entity has at
any time initiated or, to SoundView's knowledge, threatened any proceeding or
investigation into the business or operations of any of them or any of their
officers, directors or employees or (other than SoundView Pooled Products)
equityholders in their capacity as such. There is no unresolved violation,
criticism, or exception by any Governmental Entity with respect to any
examination of SoundView, the SoundView Subsidiaries or the SoundView Pooled
Products.
(d) SoundView and each of the SoundView Subsidiaries has at all
times since December 31, 1994 or its date of formation, whichever is later,
rendered investment advisory services to investment advisory clients, including
SoundView Pooled Products, with whom such entity is or was a party to an
investment advisory agreement or similar arrangement in material compliance with
all applicable requirements as to portfolio composition and portfolio management
including, but not limited to, the terms of such investment advisory agreements,
written instructions
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from such investment advisory clients, the organizational documents of such
investment advisory clients that are SoundView Pooled Products, prospectuses or
other offering materials, board of director or trustee directives and Applicable
Law.
(e) Each of SoundView, the SoundView Subsidiaries and the
SoundView Pooled Products has timely filed all reports, registration statements
and other documents, together with any amendments required to be made with
respect thereto, that it was required to file with any Governmental Entity, in a
form which was accurate in all material respects and has paid all fees and
assessments due and payable in connection therewith.
(f) As of their respective dates, the Governmental Documents of
SoundView, the SoundView Subsidiaries and the SoundView Pooled Products complied
in all material respects with the requirements of the Securities Laws applicable
to such Governmental Documents. SoundView has previously delivered or made
available to the Parent a complete copy of each Governmental Document filed by
any of the foregoing entities or any of their employees since December 31, 1994
and prior to the date hereof and will deliver or by notice make available to the
Parent at the same time as the filing thereof a complete copy of each
Governmental Document filed after the date hereof and prior to the Closing Date
by or on behalf of any of them.
(g) Since inception, each SoundView Pooled Product has been
excluded from the definition of an investment company under the Investment
Company Act by virtue of Section 3(c)(1) or Section 3(c)(7) thereof.
6.10 BOOKS AND RECORDS. Each of SoundView, the SoundView Subsidiaries
and SoundView Pooled Products has at all times since formation maintained
Records which accurately reflect its transactions in reasonable detail, and have
at all times maintained accounting controls, policies and procedures reasonably
designed to provide that such transactions are executed in accordance with its
management's general or specific authorization, as applicable, and recorded in a
manner which permits the preparation of financial statements in accordance with
GAAP and applicable regulatory accounting requirements and other account and
financial data, and the documentation pertaining thereto is retained, protected
and duplicated in accordance with applicable regulatory requirements.
6.11 INELIGIBLE PERSONS. None of SoundView or any SoundView Subsidiary,
or any "associated person" (as defined in the Advisers Act or the Exchange Act)
of any thereof, is ineligible pursuant to Section 203 of the Advisers Act or
Section 15(b) of the Exchange Act to serve as a registered investment adviser or
broker-dealer or as an associated person of a registered investment adviser or
broker-dealer.
6.12 NO UNDISCLOSED LIABILITIES. Except for liabilities and obligations
(a) disclosed in the Financial Statements, (b) incurred in the ordinary course
of business and consistent with past practice since the Balance Sheet Date or
(c) incurred in accordance with the terms of this Agreement or with
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the prior written consent of Parent, neither SoundView nor any SoundView
Subsidiary has, to the best of SoundView's knowledge, any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
have, or would be reasonably likely to have, material adverse effect on
SoundView and the SoundView Subsidiaries, taken as a whole. The reserves
reflected in the Financial Statements are adequate, appropriate and reasonable
and have been calculated in a consistent manner.
6.13 INTERIM OPERATIONS. Since the date of the SoundView Balance Sheet,
the business of SoundView and each SoundView Subsidiary has been conducted only
in the ordinary and usual course consistent with past practice. Since the date
of the SoundView Balance Sheet, there have not been any material adverse changes
in the financial condition, assets or results of operations of SoundView and the
SoundView Subsidiaries, taken as a whole. Since the Date of the SoundView
Balance Sheet such assets have not been affected in any way as a result of
flood, fire, explosion or other casualty (whether or not covered by insurance).
SoundView is not aware of any circumstances which may cause it or any of the
SoundView Subsidiaries to suffer any material adverse change in the business,
operations or prospects of SoundView and the SoundView Subsidiaries, taken as a
whole.
6.14 ABSENCE OF CERTAIN CHANGES. Since the date of the SoundView
Balance Sheet, except as contemplated by this Agreement, neither SoundView nor
any SoundView Subsidiary has:
(a) suffered any material adverse change in its working capital,
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects;
(b) incurred any liabilities or obligations (absolute, accrued,
contingent or otherwise) except non-material items incurred in the ordinary
course of business and consistent with past practice, none of which exceeds
$200,000 (counting obligations or liabilities arising from one transaction or a
series of similar transactions, and all periodic installments or payments under
any lease or other agreement providing for periodic installments or payments, as
a single obligation or liability), or increased, or experienced any change in
any assumptions underlying or methods of calculating, any bad debt, contingency
or other reserves;
(c) paid, discharged or satisfied any claim, liability or
obligation (whether absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected or
reserved against in the SoundView Balance Sheet or incurred in the ordinary
course of business and consistent with past practice since the date of the
SoundView Balance Sheet;
(d) permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance,
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restriction or charge of any kind, other than in the ordinary course of its
business as a broker-dealer and except for liens for current taxes not yet due;
(e) sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible), except
in the ordinary course of business and consistent with past practice;
(f) disposed of or permitted to lapse any rights to the use of
any Intellectual Property, or disposed of or disclosed (except as necessary in
the conduct of its business) to any person other than representatives of Parent
any trade secret, formula, process, know-how or other Intellectual Property not
theretofore a matter of public knowledge;
(g) granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or any increase in the compensation
payable or to become payable to any officer or employee, except in the ordinary
course of business and consistent with past practice;
(h) declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities of SoundView or any SoundView Subsidiary;
(i) made any change in any method of accounting or accounting
practice; or
(j) agreed, whether in writing or otherwise, to take any action
described in this section.
6.15 TECHNOLOGY AND INTELLECTUAL PROPERTY.
(a) The electronic data processing, information, record keeping,
communications, telecommunications, portfolio trading and computer systems and
Intellectual Property (including Software) which are used by SoundView and the
SoundView Subsidiaries in their businesses (collectively, the "Technology
Systems") are adequate for the operation of the business of SoundView and the
SoundView Subsidiaries as currently operated. SoundView owns or has the right to
use all components of the SoundView Technology Systems that are reasonably
necessary to the normal operations of the business of SoundView as currently
conducted by it. SoundView has good title to all SoundView Technology Systems
owned by it. There has not been any material malfunction with respect to any of
the SoundView Technology Systems since December 31, 1994 that has not been
remedied or replaced in all material respects, in each case without material
description to the businesses of SoundView and the SoundView Subsidiaries. The
completion of the Transactions will not materially alter or impair the right of
SoundView and the SoundView Subsidiaries to use each of the components of the
SoundView Technology Systems. No database included in the Intellectual Property
of SoundView and the SoundView Subsidiaries has been disclosed or authorized to
be disclosed to any third-party other than pursuant to a confidentiality or
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non-disclosure agreement that reasonably protects SoundView's and the SoundView
Subsidiaries' interest in and to such database.
(b) The conduct of the business of SoundView and the SoundView
Subsidiaries does not infringe upon any intellectual property right owned or
controlled by any third-party. There are no claims, proceedings or actions
pending or, to SoundView's knowledge, threatened, and SoundView has not received
any notice of any claim or suit (i) alleging that SoundView's or any SoundView
Subsidiary's activities infringes upon or constitutes the unauthorized use of
the proprietary rights of any third-party or (ii) challenging the ownership,
use, validity or enforceability of any Intellectual Property owned or controlled
by SoundView or any SoundView Subsidiary, nor is there a valid basis for any
such claim or suit. No third-party is, to SoundView's knowledge, infringing upon
any Intellectual Property owned or controlled by SoundView or any SoundView
Subsidiary, and no such claims have been made by SoundView or any SoundView
Subsidiary.
(c) SoundView's code, critical systems and other programs which
are material to the operation of SoundView's business are Year 2000 compliant.
SoundView is also actively working to ascertain Year 2000 compliance of
counterparty banks, brokers, administrators and clearing, settlement and other
service providers and SoundView has received assurances from each such Person
that it has developed strategies for addressing and resolving Year 2000 issues
and that it expects to be able to implement such strategies in advance of
January 1, 2000.
6.16 LEGAL PROCEEDINGS. Neither SoundView, any SoundView Subsidiary or
any SoundView Pooled Product nor, to SoundView's knowledge, the directors,
officers or employees of SoundView or any SoundView Subsidiary is a party to
any, and there are no, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
pending or, to SoundView's knowledge, threatened in writing against any of them
or any of their respective properties or assets relating to the business of
SoundView or any SoundView Subsidiary or any SoundView Pooled Product, or that
challenges any of the Transactions, and there is no injunction, order, judgment,
decree, or regulatory restriction imposed specifically upon any of them or any
of their respective properties, assets, directors, officers or employees
relating to the business of SoundView, any SoundView Subsidiary or any SoundView
Pooled Product, in each case, that would have a material adverse effect on
SoundView's assets, financial condition, business or operations if such
proceeding, claim, action or investigation is determined adversely to SoundView,
any SoundView Subsidiary or any SoundView Pooled Product business or properties.
6.17 EMPLOYEE BENEFIT PLANS.
(a) The Disclosure Schedule contains a true and complete list of
each deferred compensation and each incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of Section 3(1) of ERISA); each profit-sharing, stock bonus
or other "pension" plan, fund
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or program (within the meaning of Section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan,
fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by SoundView or
by any ERISA Affiliate of SoundView, or to which SoundView or an ERISA
Affiliate of SoundView is party, whether written or oral, for the benefit of
any director, former director, employee or former employee of SoundView or
any SoundView Subsidiary. None of SoundView, any SoundView Subsidiary or any
ERISA Affiliate of SoundView has any commitment or formal plan, whether
legally binding or not, to create any additional employee benefit plan or
modify or change any existing Plan that would affect any employee or former
employee of SoundView or any SoundView Subsidiary.
(b) SoundView has heretofore delivered to Parent true and
complete copies of each Plan and any amendments thereto (or if a Plan is not a
written Plan, a description thereof), any related trust or other funding
vehicle, any reports or summaries required under ERISA or the Code and the most
recent determination letter received from the Internal Revenue Service with
respect to each Plan intended to qualify under Section 401 of the Code.
(c) No Plan is a Title IV Plan.
(d) Neither SoundView, any SoundView Subsidiary, any Plan or any
trust created thereunder, nor any trustee or administrator of any thereof, has
engaged in a transaction in connection with which SoundView, any SoundView
Subsidiary, any Plan, any such trust, or any trustee or administrator thereof,
or any party dealing with any Plan or any such trust could be subject to either
a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code.
(e) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Code.
(f) Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified, and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the Code. Each Plan intended to
satisfy the requirements of Section 501(c)(9) has satisfied such requirements.
(g) No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
SoundView or any SoundView Subsidiary for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated by
applicable law, (ii) death benefits under any "pension plan," or (iii) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary).
(h) No amounts payable under the Plans will fail to be deductible
for federal income tax purposes by virtue of Section 280G of the Code.
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(i) The consummation of the Transactions will not, either alone
or in combination with another event, (i) entitle any current or former employee
or officer of SoundView or any ERISA Affiliate of SoundView to severance pay,
unemployment compensation or any other payment, except as expressly provided in
this Agreement, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
(j) There are no pending, or, to the knowledge of SoundView,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
6.18 TAX MATTERS; GOVERNMENT BENEFITS.
(a) SoundView and each of its Subsidiaries have duly filed all
Tax Returns that are required to be filed excluding only such Tax Returns as to
which any failure to file will not have a material adverse effect on SoundView
and the SoundView Subsidiaries, taken as a whole, and have duly paid or caused
to be duly paid in full or made provision in accordance with GAAP (or there has
been paid or provision has been made on their behalf) for the payment of all
Taxes (as hereinafter defined) for all periods or portions thereof ending
through the date hereof. All such Tax Returns are correct and complete in all
material respects and accurately reflect all liability for Taxes for the periods
covered thereby. All Taxes owed and due by SoundView and all SoundView
Subsidiaries relating to operations on or prior to the Balance Sheet Date
(whether or not shown on any Tax Return) have been paid or have been adequately
reflected on the Financial Statements. Since the Balance Sheet Date, SoundView
has not incurred liability for any Taxes other than in the ordinary course of
business. Neither SoundView nor any SoundView Subsidiary has received written
notice of any claim made by an authority in a jurisdiction where neither
SoundView nor any SoundView Subsidiary file Tax Returns, that SoundView or any
such SoundView Subsidiary is or may be subject to taxation by that jurisdiction.
(b) The federal income Tax Returns of SoundView and the SoundView
Subsidiaries have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of federal income Taxes for
such periods have expired) for all periods through and including December 31,
1995, and no material deficiencies were asserted as a result of such
examinations that have not been resolved or fully paid. Neither SoundView nor
any SoundView Subsidiary has waived any statute of limitations in any
jurisdiction in respect of Taxes or Tax Returns or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(c) No federal, state, local or foreign audits, examinations or
other administrative proceedings have been commenced or, to SoundView's
knowledge, are pending with regard to any Taxes or Tax Returns of SoundView or
of any SoundView Subsidiary. No written notification has been received by
SoundView or by any SoundView Subsidiary that such an audit, examination or
other proceeding is pending or threatened with respect to any Taxes due from or
with respect to or
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attributable to SoundView or any SoundView Subsidiary or any Tax Return filed by
or with respect to SoundView or any SoundView Subsidiary. To SoundView's
knowledge, there is no dispute or claim concerning any Tax liability of
SoundView, or any SoundView Subsidiary either claimed or raised by any taxing
authority in writing.
(d) Neither SoundView nor any of the SoundView Subsidiaries is a
party to any agreement, plan, contract or arrangement that could result,
separately or in the aggregate, in a payment of any "excess parachute payments"
within the meaning of Section 280G of the Code.
(e) Neither SoundView nor any of the SoundView Subsidiaries has
filed a consent pursuant to Section 341(f) of the Code (or any predecessor
provision) concerning collapsible corporations, or agreed to have Section
341(f)(2) of the Code apply to any disposition of a "subsection (f) asset" (as
such term is defined in Section 341(f)(4) of the Code) owned by SoundView or any
SoundView Subsidiary.
(f) No taxing authority is asserting or threatening to assert a
claim against SoundView or any SoundView Subsidiary under or as a result of
Section 482 of the Code or any similar provision of state, local or foreign law.
(g) Neither SoundView nor any of its Subsidiaries is a party to
any tax sharing, tax indemnity or other agreement or arrangement with any entity
not included in SoundView's Financial Statements which could result in a
material liability.
(h) None of SoundView or any SoundView Subsidiary has been a
member of any affiliated group within the meaning of Section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
state, local or foreign law (other than a group the common parent of which is
SoundView), or has any liability for Taxes of any person (other than SoundView
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law as a transferee or successor, by
contract or otherwise.
6.19 LABOR AND EMPLOYMENT MATTERS. (a) Neither SoundView nor any
SoundView Subsidiary is delinquent in any material respect in payments to any of
its current or former officers, directors, employees, consultants, or agents for
any wages, salaries, commissions, bonuses, benefits, expenses or other
compensation for any services performed by them or amounts required to be
reimbursed to them; and in the event of termination of the employment of any
employee of SoundView or any SoundView Subsidiaries, neither SoundView nor any
SoundView Subsidiary will be liable to any such employee under any agreement in
effect at the Closing for so-called "severance
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pay," incentive pay, liquidated damages or any other payments or benefits,
including, without limitation, post-employment health care, pension or
insurance benefits.
(b Since December 31, 1994 SoundView has not had any claim made
against it or any SoundView Subsidiary by any Person before any Governmental
Entity in respect of employment with SoundView for discrimination or harassment
on account of sex, race and other characteristic protected by law and there are
no pending or threatened proceedings in relation thereto.
6.20 CONTRACTS AND COMMITMENTS.
(a Neither SoundView nor any SoundView Subsidiary has any
agreements, contracts, commitments or restrictions which are material to its
business or operations.
(b Neither SoundView nor any SoundView Subsidiary is in default,
nor is there any known basis for any valid claim of default, under any contract
made or obligation owed by it which are material to its business or operations.
6.21 INSURANCE. SoundView maintains with reputable insurers the
worker's compensation, comprehensive property and casualty, liability, fidelity
and other insurance described on Schedule 6.21 hereto, which insurance is, in
the reasonable opinion of SoundView, sufficient for the operation of the
businesses operated by SoundView and the SoundView Subsidiaries.
6.22 PERSONNEL. The Disclosure Schedule sets forth a true and complete
list of: the names and current salaries of all directors and elected and
appointed officers of each of SoundView and SoundView Subsidiaries, the number
of Shares owned beneficially or of record, or both, by each such person and the
family relationships, if any, among such persons; and, in response to Section
6.17, all group insurance programs in effect for employees of each of SoundView
and SoundView Subsidiaries. SoundView has made available to Parent true and
accurate information relating to the wage rates for non-salaried and
non-executive salaried employees of each of SoundView and the SoundView
Subsidiaries and all labor union contracts.
6.23 INSIDER INTERESTS. No officer or director of SoundView or any
SoundView Subsidiary has any material interest in any property, real or
personal, tangible or intangible, including without limitation, office space,
fixtures, equipment, inventions, patents, trademarks or trade names, used in or
pertaining to the business of SoundView or any SoundView Subsidiary.
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6.24 BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any brokers or finders
fee or any other commission or similar fee in connection with any of the
Transactions except for Freeman & Co.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the Disclosure Schedule prepared and signed by
Parent and delivered to SoundView prior to the execution hereof (provided that
the listing of an item in one section of the Disclosure Schedule shall be deemed
to be a listing in another section of such Disclosure Schedule and apply to any
other representation and warranty of such party in this Agreement but only to
the extent that it is reasonably apparent from a reading of such disclosure
item), Parent represents and warrants to SoundView that all of the statements
contained in this Article VII are true and correct as of the date of this
Agreement (or, if made as of a specified date, as of such date).
7.1 ORGANIZATION; QUALIFICATION. Parent (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has full corporate power and authority to carry on its business
as it is now being conducted and to own, lease or operate the properties and
assets it now owns, leases or operates; and (iii) is duly qualified or licensed
to do business as a foreign corporation in good standing in every jurisdiction
in which ownership of property or the conduct of its business requires such
licensing or qualification or, if Parent is not so licensed or qualified in any
such jurisdiction, it can become so qualified in such jurisdiction without any
material adverse effect (including assessment of state taxes for prior years)
upon its business and properties. Parent has heretofore delivered to SoundView
complete and correct copies of the certificate of incorporation and by-laws of
Parent, as presently in effect.
7.2 SUBSIDIARIES AND AFFILIATES. Parent does not own, directly or
indirectly, any capital stock or other equity securities of any corporation or
have any direct or indirect equity or ownership interest in any business other
than publicly traded securities constituting less than five percent of the
outstanding equity of the issuing entity. All the outstanding capital stock of
each Parent Subsidiary is owned directly or indirectly by Parent free and clear
of all liens, options or encumbrances of any kind and all material claims or
charges of any kind, and is validly issued, fully paid and nonassessable, and
there are no outstanding options, rights or agreements of any kind relating to
the issuance, sale or transfer of any capital stock or other equity securities
of any such Parent Subsidiary to any person except Parent or another Parent
Subsidiary. Each Parent Subsidiary (i) is a corporation
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<PAGE>
duly organized, validly existing and in good standing under the laws of its
state of incorporation; (ii) has full corporate power and authority to carry on
its business as it is now being conducted and to own, lease or operate the
properties and assets it now owns, leases or operates; and (iii) is duly
qualified or licensed to do business as a foreign corporation in good standing
in every jurisdiction in which ownership of property or the conduct of its
business requires such licensing or qualification or, if a Parent Subsidiary is
not so licensed or qualified in any such jurisdiction, it can become so licensed
or qualified in such jurisdiction without any material adverse effect (including
assessment of state taxes for prior years) upon its business and properties.
Parent has heretofore delivered to SoundView complete and correct copies of the
certificate of incorporation and by-laws of each Parent Subsidiary, as presently
in effect.
7.3 CAPITALIZATION. (a) The authorized capital stock of Parent
consists of 500,000,000 Parent Shares, 75,000,000 shares of Class B Common
Stock, par value. $.01 per share ("Class B Shares"), 159,000,000 shares of Class
C Common Stock, par value $.01 per share ("Class C Shares") and 30,000,000
shares of preferred stock, par value $.001 per share. As of the date hereof, (i)
8,740,000 Shares, 11,666,667 Class B Shares and 51,915,902 Class C Shares are
issued and outstanding, (ii) no Parent Shares, no Class B Shares and no Class C
Shares are issued and held in the treasury of Parent, (iii) 30,000,000 shares of
preferred stock are designated as Series A Junior Participating Preferred Stock,
none of which are issued and outstanding, and (iv) 13,147,298 Parent Shares are
reserved for issuance upon exercise of Parent Stock Options. Each of the Class C
Shares will automatically convert into one Parent Share on December 7, 1999. All
the outstanding shares of Parent's capital stock are, and all Parent Shares
which may be issued pursuant to the exercise of outstanding Parent Stock Options
will be, when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable. There is no Voting
Debt of Parent or any Parent Subsidiary issued and outstanding. Except as set
forth above and except for the Transactions, as of the date hereof, (i) there
are no shares of capital stock of Parent authorized, issued or outstanding; (ii)
there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of Parent or any
Parent Subsidiary, obligating Parent or any Parent Subsidiary to issue, transfer
or sell or cause to be issued, transferred or sold any shares of capital stock
or Voting Debt of, or other equity interest in, Parent or any Parent Subsidiary
or securities convertible into or exchangeable for such shares or equity
interests, or obligating Parent or any Parent Subsidiary to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment and (iii) there are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem
or otherwise acquire any shares of the capital stock of Parent or any Parent
Subsidiary or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any Parent Subsidiary or any other entity.
The Disclosure Schedule sets forth a complete schedule of each Parent Stock
Option outstanding
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as of the date hereof, including the name of the optionee, number of shares,
exercise price, date of grant and vesting schedule.
(b There are no voting trusts or other agreements or
understandings to which Parent or any Parent Subsidiary is a party with respect
to the voting of the capital stock of Parent or any of the Parent Subsidiaries.
7.4 AUTHORIZATION; VALIDITY OF AGREEMENT; PARENT ACTION. Parent has
full corporate power and authority to execute and deliver this Agreement, and to
consummate the Transactions. The execution, delivery and performance by Parent
of this Agreement and the consummation by it of the Transactions have been duly
authorized by Parent Board of Directors and, except for obtaining the approval
of its shareholders as contemplated by Section 9.2(b), no other corporate action
on the part of Parent is necessary to authorize the execution and delivery by
Parent of this Agreement or the consummation by it of the Transactions. This
Agreement has been duly executed and delivered by Parent and, assuming due and
valid authorization, execution and delivery thereof by SoundView and Merger Sub,
this Agreement is a valid and binding obligation of Parent enforceable against
Parent in accordance with its terms.
7.5 BOARD APPROVALS REGARDING TRANSACTIONS. Parent's Board of
Directors, at a meeting duly called and held, has (i) unanimously determined
that each of this Agreement and the Merger are fair to and in the best interests
of the shareholders of Parent and (ii) approved the Transactions, and none of
the aforesaid actions by Parent's Board of Directors has been amended, rescinded
or modified. The action taken by Parent's Board of Directors constitutes
approval of the Merger and the other Transactions by Parent's Board of Directors
under the provisions of Section 203 of the DGCL such that Section 203 of the
DGCL do not apply to this Agreement or the other Transactions. No other state
takeover statute is applicable to the Merger or the other Transactions.
7.6 VOTE REQUIRED. Other than the possibility that the affirmative
vote of the holders of a majority of the Parent Shares and Class C shares voting
thereon will be required under the shareholder voting policy of the NASD, no
action by the holders of any class or series of Parent's capital stock is
necessary to approve the Merger. No vote of any class or series of Parent's
capital stock is necessary to approve any of the Transactions other than the
Merger.
7.7 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Securities Act, the
rules and regulations of the NASD, the HSR Act, state securities or blue sky
laws, and the DGCL, none of the execution, delivery or performance of this
Agreement by Parent, the consummation by Parent of the Transactions or
compliance by Parent with
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any of the provisions hereof will (i) conflict with or result in any breach of
any provision of the certificate of incorporation, the by-laws or similar
organizational documents of Parent or any Parent Subsidiary, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (iii) result in a violation or breach of, or constitute (with or without
due notice or the passage of time or both) a default (or give rise to any right
of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Parent Agreement, or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any to which Parent or any Parent Subsidiary is a party or by which any
of the assets of any of them is bound, any Parent Subsidiary or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on Parent and the Parent Subsidiaries,
taken as a whole. There are no third party consents or approvals required to be
obtained under any Parent Agreement prior to the consummation of the
Transactions, except for such consents and approvals the failure of which to be
obtained would not, individually or in the aggregate, have a material adverse
effect on Parent and the Parent Subsidiaries, taken as a whole.
7.8 GOVERNMENTAL DOCUMENTS AND FINANCIAL STATEMENTS. Parent and each
Parent Subsidiary has filed with the appropriate Governmental Entity, and has
heretofore made available to SoundView, true and complete copies of, the
Governmental Documents of Parent and each Parent Subsidiary. As of their
respective dates or, if amended, as of the date of the last such amendment filed
prior to the date hereof, the Governmental Documents of Parent and each Parent
Subsidiary, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading and (b) complied in all material
respects with the applicable requirements of Applicable Law. The Financial
Statements have been prepared from, and are in accordance with, the books and
records of Parent and the Parent Subsidiaries, comply in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP applied on a consistent basis during the period involved (except as
may be stated in the notes thereto) and fairly present in accordance with GAAP
the consolidated financial position and the consolidated results of operations
and cash flows (and changes in financial position, if any) of Parent and its
consolidated Subsidiaries (subject, in the case of the unaudited statements, to
recurring adjustments normal in nature and amount and the addition of footnotes)
as of the times and for the periods referred to therein.
7.9 COMPLIANCE WITH APPLICABLE LAW. (a) Parent and each Parent
Subsidiary is, if so required by the nature of its business or assets, duly
registered with the SEC as a broker-dealer and
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to be duly registered with the SEC as an investment adviser or with the
Commodity Futures Trading Commission as a commodity pool operator or commodity
trading adviser.
(b Parent, each Parent Subsidiary, each Parent Pooled Product and
each employee of each of them holds, and has at all pertinent times held, all
material licenses, franchises, permits, qualifications and authorizations
(collectively, "Parent Permits") necessary for the lawful ownership and use of
the respective properties and assets of Parent, the Parent Subsidiaries and the
Parent Pooled Products and the conduct of their respective businesses under and
pursuant to every, and have complied with each, and are not in default in any
material respect under any, Applicable Law relating to any of them or any of
their respective assets, properties or operations, and Parent does not know of
any violations of any of the above and has not received notice asserting any
such violation. To Parent's knowledge, all such Parent Permits are valid and in
good standing and are not subject to any proceeding for the suspension,
modification or revocation thereof.
(c Except for normal examinations conducted by any Governmental
Entity in the regular course of the business of Parent, the Parent Subsidiaries
and the Parent Pooled Products, no Governmental Entity has at any time initiated
or, to Parent's knowledge, threatened any proceeding or investigation into the
business or operations of any of them or any of their officers, directors or
employees or (other than Parent Pooled Products) equityholders in their capacity
as such. There is no unresolved violation, criticism, or exception by any
Governmental Entity with respect to any examination of Parent, the Parent
Subsidiaries or the Parent Pooled Products.
(d Parent and each of the Parent Subsidiaries has at all times
since December 31, 1996 or its date of formation, whichever is later, rendered
investment advisory services to investment advisory clients, including Parent
Pooled Products, with whom such entity is or was a party to an investment
advisory agreement or similar arrangement in material compliance with all
applicable requirements as to portfolio composition and portfolio management
including, but not limited to, the terms of such investment advisory agreements,
written instructions from such investment advisory clients, the organizational
documents of such investment advisory clients that are Parent Pooled Products,
prospectuses or other offering materials, board of director or trustee
directives and Applicable Law.
(e Each of Parent, the Parent Subsidiaries and the Parent Pooled
Products has timely filed all reports, registration statements and other
documents, together with any amendments required to be made with respect
thereto, that it was required to file with any Governmental Entity, in a form
which was accurate in all material respects and has paid all fees and
assessments due and payable in connection therewith.
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(f As of their respective dates, the Governmental Documents of
Parent, the Parent Subsidiaries and the Parent Pooled Products complied in all
material respects with the requirements of the Securities Laws applicable to
such Governmental Documents. Parent has previously delivered or made available
to the SoundView a complete copy of each Governmental Document filed by any of
the foregoing entities or any of their employees since December 31, 1996 and
prior to the date hereof and will deliver or by notice make available to the
SoundView at the same time as the filing thereof a complete copy of each
Governmental Document filed after the date hereof and prior to the Closing Date
by or on behalf of any of them.
(g Since inception, each Parent Pooled Product has been excluded
from the definition of an investment company under the Investment Company Act by
virtue of Section 3(c)(1) or Section 3(c)(7) thereof.
7.10 BOOKS AND RECORDS. Each of Parent, the Parent Subsidiaries and
the Parent Pooled Products has at all times since formation maintained Records
which accurately reflect all its material transactions in reasonable detail, and
have at all times maintained accounting controls, policies and procedures
reasonably designed to provide that such transactions are executed in accordance
with its management's general or specific authorization, as applicable, and
recorded in a manner which permits the preparation of financial statements in
accordance with GAAP and applicable regulatory accounting requirements and other
account and financial data, and the documentation pertaining thereto is
retained, protected and duplicated in accordance with applicable regulatory
requirements.
7.11 INELIGIBLE PERSONS. None of Parent or any Parent Subsidiary, or
any "associated person" (as defined in the Advisers Act or the Exchange Act) of
any thereof, is ineligible pursuant to Section 203 of the Advisers Act or
Section 15(b) of the Exchange Act to serve as a registered investment adviser or
broker-dealer or as an associated person of a registered investment adviser or
broker-dealer.
7.12 NO UNDISCLOSED LIABILITIES. Except for liabilities and
obligations (a) disclosed in the Financial Statements, (b) incurred in the
ordinary course of business and consistent with past practice since the Balance
Sheet Date or (c) incurred in accordance with the terms of this Agreement or
with the prior written consent of SoundView, neither Parent nor any Parent
Subsidiary has, to the best of Parent's knowledge, any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
have, or would be reasonably likely to have, a material adverse effect on Parent
and the Parent Subsidiaries, taken as a whole. The reserves reflected in the
Financial Statements are adequate, appropriate and reasonable and have been
calculated in a consistent manner.
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7.13 INTERIM OPERATIONS. Since the date of the Parent Balance Sheet,
the business of Parent and each Parent Subsidiary has been conducted only in the
ordinary and usual course consistent with past practice. Since the date of the
Parent Balance Sheet, there have not been any material adverse changes in the
financial condition, assets or results of operations of Parent and the Parent
Subsidiaries, taken as a whole. Since the Date of the Parent Balance Sheet such
assets have not been affected in any way as a result of flood, fire, explosion
or other casualty (whether or not covered by insurance). Parent is not aware of
any circumstances which may cause it or any of the Parent Subsidiaries to suffer
any material adverse change in the business, operations or prospects of Parent
and the Parent Subsidiaries taken as a whole.
7.14 ABSENCE OF CERTAIN CHANGES. Since the date of the Parent Balance
Sheet, except as contemplated by this Agreement, neither Parent nor any Parent
Subsidiary has:
(a suffered any material adverse change in its working capital,
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects;
(b incurred any liabilities or obligations (absolute, accrued,
contingent or otherwise) except non-material items incurred in the ordinary
course of business, none of which exceeds $200,000 (counting obligations or
liabilities arising from one transaction or a series of similar transactions,
and all periodic installments or payments under any lease or other agreement
providing for periodic installments or payments, as a single obligation or
liability), or increased, or experienced any change in any assumptions
underlying or methods of calculating, any bad debt, contingency or other
reserves;
(c paid, discharged or satisfied any claim, liability or
obligation (whether absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business of
liabilities and obligations reflected or reserved against in the Parent Balance
Sheet or incurred in the ordinary course of business and consistent with past
practice since the date of the Parent Balance Sheet;
(d sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible), except
in the ordinary course of business;
(e disposed of or permitted to lapse any rights to the use of any
Intellectual Property, or disposed of or disclosed (except as necessary in the
conduct of its business) to any
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person other than representatives of Parent any trade secret, formula, process,
know-how or other Intellectual Property not theretofore a matter of public
knowledge;
(f granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or any increase in the compensation
payable or to become payable to any officer or employee, except in the ordinary
course of business;
(g declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities of Parent or any Parent Subsidiary;
(h made any change in any method of accounting or accounting
practice; or
(i agreed, whether in writing or otherwise, to take any action
described in this section.
7.15 TECHNOLOGY AND INTELLECTUAL PROPERTY.
(a The electronic data processing, information, record keeping,
communications, telecommunications, portfolio trading and computer systems and
Intellectual Property (including Software) which are used by Parent and the
Parent Subsidiaries in their businesses (collectively, the "Parent Technology
Systems") are adequate for the operation of the business of Parent and the
Parent Subsidiaries as currently operated. Parent owns or has the right to use
all components of the Parent Technology Systems that are reasonably necessary to
the normal operations of the business of Parent as currently conducted by it.
Parent has good title to all Parent Technology Systems owned by it. There has
not been any material malfunction with respect to any of the Parent Technology
Systems since December 31, 1996 that has not been remedied or replaced in all
material respects, in each case without material description to the businesses
of Parent and the Parent Subsidiaries. The completion of the Transactions will
not materially alter or impair the right of Parent and the Parent Subsidiaries
to use each of the components of the Parent Technology Systems. No database
included in the Intellectual Property of Parent and the Parent Subsidiaries has
been disclosed or authorized to be disclosed to any third-party other than
pursuant to a confidentiality or non-disclosure agreement that reasonably
protects Parent's and the Parent Subsidiaries' interest in and to such database.
(b The conduct of the business of Parent and the Parent
Subsidiaries does not infringe upon any intellectual property right owned or
controlled by any third-party. There are no claims, proceedings or actions
pending or, to Parent's knowledge, threatened, and Parent has not
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received any notice of any claim or suit (i) alleging that Parent's or any
Parent Subsidiary's activities infringes upon or constitutes the unauthorized
use of the proprietary rights of any third-party or (ii) challenging the
ownership, use, validity or enforceability of any Intellectual Property owned or
controlled by Parent or any Parent Subsidiary, nor is there a valid basis for
any such claim or suit. No third-party is, to Parent's knowledge, infringing
upon any Intellectual Property owned or controlled by Parent or any Parent
Subsidiary, and no such claims have been made by Parent or any Parent
Subsidiary.
(c Parent has undertaken a review and assessment, consisting of
the steps and procedures set forth on Schedule 7.15(c), of code, critical
systems and other programs for Year 2000 compliance and has developed a
methodology, as described on Schedule 7.15(c), for testing code, systems and
programs for Year 2000 compliance. Parent has developed and is engaged in
pursuing a strategy, as described on Schedule 7.15(c), with the goal of
addressing and satisfactorily resolving all potential Year 2000 issues in
advance of January 1, 2000. Parent has no reason to believe that it will not be
able to implement such strategy in advance of January 1, 2000. Parent is also
actively working to ascertain Year 2000 compliance of counterparty banks,
brokers, administrators and clearing, settlement and other service providers and
Parent has received assurances from each such Person that it has developed
strategies for addressing and resolving Year 2000 issues and that it expects to
be able to implement such strategies in advance of January 1, 2000.
7.16 LEGAL PROCEEDINGS. Neither Parent, any Parent Subsidiary, any
Pooled Product, or the directors, officers or employees of Parent or any Parent
Subsidiary is a party to any, and there are no, legal, administrative, arbitral
or other proceedings, claims, actions or governmental or regulatory
investigations of any nature pending or, to Parent's knowledge, threatened in
writing against any of them or any of their respective properties or assets
relating to the business of Parent or any Parent Subsidiary or any Parent Pooled
Product, or that challenges any of the Transactions, and there is no injunction,
order, judgment, decree, or regulatory restriction imposed specifically upon any
of them or any of their respective properties, assets, directors, officers or
employees relating to the business of Parent, any Parent Subsidiary or any
Parent Pooled Product, in each case, that would have a material adverse effect
on Parent's assets, financial condition, business or operations if such
proceeding, claim, action or investigation, is determined adversely to Parent,
any Parent Subsidiary or any Parent Pooled Product.
7.17 EMPLOYEE BENEFIT PLANS.
(a The Disclosure Schedule contains a true and complete list of
each deferred compensation and each incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical,
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surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of Section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan, fund or program (within the meaning of
Section 3(2) of ERISA); each employment, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement, in
each case, that is sponsored, maintained or contributed to or required to be
contributed to by Parent or by any ERISA Affiliate of Parent, or to which Parent
or an ERISA Affiliate of Parent is party, whether written or oral, for the
benefit of any director, former director, employee or former employee of Parent
or any Parent Subsidiary. None of Parent, any Parent Subsidiary or any ERISA
Affiliate of Parent has any commitment or formal plan, whether legally binding
or not, to create any additional employee benefit plan or modify or change any
existing Plan that would affect any employee or former employee of Parent or any
Parent Subsidiary. The Disclosure Schedule indicates each Plan that is Title IV
Plan.
(b Parent has heretofore delivered to SoundView true and complete
copies of each Plan and any amendments thereto (or if a Plan is not a written
Plan, a description thereof), any related trust or other funding vehicle, any
reports or summaries required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service with respect to
each Plan intended to qualify under Section 401 of the Code (including but not
limited to the forms 5500 and related reports for the two most recently
completed plan years).
(c No liability under Title IV or Section 302 of ERISA has been
incurred by Parent or any ERISA Affiliate of Parent that has not been satisfied
in full, and no condition exists that presents a material risk to Parent or any
ERISA Affiliate of Parent of incurring any such liability, other than liability
for premiums due the PBGC (which premiums have been paid when due). Insofar as
the representation made in this Section 3.16(c) applies to Sections 4064, 4069
or 4204 of Title IV of ERISA, it is made with respect to any employee benefit
plan, program, agreement or arrangement subject to Title IV of ERISA to which
Parent or any ERISA Affiliate of Parent made, or was required to make,
contributions during the five year period ending on the last day of the most
recent plan year ended prior to the Closing Date.
(d The PBGC has not instituted proceedings to terminate any Title
IV Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
(e With respect to each Title IV Plan, the present value of
accrued benefits under such plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such plan's
actuary with respect to such plan did not exceed, as of its latest valuation
date, then current value of the assets of such plan allocable to such accrued
benefits.
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(f No Title IV Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each Title IV Plan ended prior to the Closing
Date. All contributions required to be made with respect to any Plan on or prior
to the Closing Date have been timely made.
(g No Title IV Plan is a "multi-employer pension plan," as
defined in Section 3(37) of ERISA, nor is any Title IV Plan a plan described in
Section 4063(a) of ERISA. Neither Parent nor any ERISA Affiliate of Parent has
made or suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in Sections 4203 and 4205 of ERISA (or any
liability resulting therefrom has been satisfied in full).
(h Neither Parent, any Parent Subsidiary, any Plan or any trust
created thereunder, nor any trustee or administrator of any thereof, has engaged
in a transaction in connection with which Parent, any Parent Subsidiary, any
Plan, any such trust, or any trustee or administrator thereof, or any party
dealing with any Plan or any such trust could be subject to either a civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed
pursuant to Section 4975 or 4976 of the Code.
(i Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Code.
(j Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified, and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the Code. Each Plan intended to
satisfy the requirements of Section 501(c)(9) has satisfied such requirements.
(k No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
Parent or any Parent Subsidiary for periods extending beyond their retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary).
(l No amounts payable under the Plans will fail to be deductible
for federal income tax purposes by virtue of Section 280G of the Code.
(m The consummation of the Transactions will not, either alone or
in combination with another event, (i) entitle any current or former employee or
officer of Parent or any
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ERISA Affiliate of Parent to severance pay, unemployment compensation or any
other payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(n There are no pending or, to the knowledge of Parent,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
7.18 TAX MATTERS; GOVERNMENT BENEFITS.
(a Parent and each of its Subsidiaries have duly filed all Tax
Returns that are required to be filed excluding only such Tax Returns as to
which any failure to file will not have a material adverse effect on Parent and
the Parent Subsidiaries, taken as a whole, and have duly paid or caused to be
duly paid in full or made provision in accordance with GAAP (or there has been
paid or provision has been made on their behalf) for the payment of all Taxes
(as hereinafter defined) for all periods or portions thereof ending through the
date hereof. All such Tax Returns are correct and complete in all material
respects and accurately reflect all liability for Taxes for the periods covered
thereby. All Taxes owed and due by Parent and all Parent Subsidiaries relating
to operations on or prior to the Balance Sheet Date (whether or not shown on any
Tax Return) have been paid or have been adequately reflected on the Financial
Statements. Since the Balance Sheet Date, Parent has not incurred liability for
any Taxes other than in the ordinary course of business. Neither Parent nor any
Parent Subsidiary has received written notice of any claim made by an authority
in a jurisdiction where neither Parent nor any Parent Subsidiary file Tax
Returns, that Parent or any such Parent Subsidiary is or may be subject to
taxation by that jurisdiction.
(b Neither Parent nor any Parent Subsidiary has waived any
statute of limitations in any jurisdiction in respect of Taxes or Tax Returns or
agreed to any extension of time with respect to a Tax assessment or deficiency.
(c No federal, state, local or foreign audits, examinations or
other administrative proceedings have been commenced or, to Parent's knowledge,
are pending with regard to any Taxes or Tax Returns of Parent or of any Parent
Subsidiary. No written notification has been received by Parent or by any Parent
Subsidiary that such an audit, examination or other proceeding is pending or
threatened with respect to any Taxes due from or with respect to or attributable
to Parent or any Parent Subsidiary or any Tax Return filed by or with respect to
Parent or any Parent Subsidiary. To Parent's knowledge, there is no dispute or
claim concerning any Tax liability of Parent, or any Parent Subsidiary either
claimed or raised by any taxing authority in writing.
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(d Neither Parent nor any of the Parent Subsidiaries is a party
to any agreement, plan, contract or arrangement that could result, separately or
in the aggregate, in a payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(e Neither Parent nor any of the Parent Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by Parent or any Parent
Subsidiary.
(f No taxing authority is asserting or threatening to assert a
claim against Parent or any Parent Subsidiary under or as a result of Section
482 of the Code or any similar provision of state, local or foreign law.
(g Neither Parent nor any of its Subsidiaries is a party to any
tax sharing, tax indemnity or other agreement or arrangement with any entity not
included in Parent's consolidated financial statements most recently filed by
Parent with the SEC which could result in a material liability.
(h None of Parent or any Parent Subsidiary has been a member of
any affiliated group within the meaning of Section 1504(a) of the Code, or any
similar affiliated or consolidated group for tax purposes under state, local or
foreign law (other than a group the common parent of which is Parent), or has
any liability for Taxes of any person (other than Parent and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 or any similar provision of state,
local or foreign law as a transferee or successor, by contract or otherwise.
7.19 LABOR AND EMPLOYMENT MATTERS. (a) Neither Parent nor any
Parent Subsidiary is delinquent in any material respect in payments to any of
its current or former officers, directors, employees, consultants, or agents for
any wages, salaries, commissions, bonuses, benefits, expenses or other
compensation for any services performed by them or amounts required to be
reimbursed to them; and in the event of termination of the employment of any
employee of Parent or any Parent Subsidiaries, neither Parent nor any Parent
Subsidiary will be liable to any such employee under any agreement in effect at
the Closing for so-called "severance pay," incentive pay, liquidated damages or
any other payments or benefits, including, without limitation, post-employment
health care, pension or insurance benefits.
(b Since December 31, 1996 Parent has not had any claim made
against it or any Parent Subsidiary by any Person before any Governmental Entity
in respect of employment with
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Parent for discrimination or harassment on account of sex, race and other
characteristic protected by law and there are no pending or threatened
proceedings in relation thereto.
7.20 CONTRACTS AND COMMITMENTS.
(a Neither Parent nor any Parent Subsidiary has any agreements,
contracts, commitments or restrictions which are material to its business or
operations.
(b Neither Parent nor any Parent Subsidiary is in default, nor is
there any known basis for any valid claim of default, under any contract made or
obligation owed by it which are material to its business or operations.
7.21 INSURANCE. Parent maintains with reputable insurers the worker's
compensation, comprehensive property and casualty, liability, errors and
omissions, fidelity and other insurance described on Schedule 7.21 hereto, which
insurance is, in the reasonable opinion of Parent, sufficient for the operation
of the businesses operated by Parent and the Parent Subsidiaries.
7.22 INSIDER INTERESTS. No officer or director of Parent or any Parent
Subsidiary has any material interest in any property, real or personal, tangible
or intangible, including without limitation, office space, fixtures, equipment,
inventions, patents, trademarks or trade names, used in or pertaining to the
business of Parent or any Parent Subsidiary.
7.23 BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers
or finders fee or any other commission or similar fee in connection with any of
the Transactions except for Goldman Sachs & Co.
ARTICLE VIII
COVENANTS
8.1 INTERIM OPERATIONS OF SOUNDVIEW. SoundView covenants and agrees
that prior to the Effective Date, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Section 8.1 of the Disclosure Schedule, or (iii)
as agreed in writing by Parent, after the date hereof:
(a the business of SoundView and the SoundView Subsidiaries shall
be conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and each of SoundView and the SoundView
Subsidiaries shall use all
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commercially reasonable efforts to preserve its business organization intact,
keep available the services of its current officers and employees and maintain
its existing relations with Persons having business dealings with it, to the end
that the goodwill and ongoing business of each of them shall be unimpaired at
the Effective Time;
(b neither SoundView nor any SoundView Subsidiary shall: (i)
amend its certificate of incorporation or by-laws or similar organizational
documents, (ii) issue, sell, transfer, pledge, dispose of or encumber any shares
of any class or series of its capital stock or Voting Debt, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of any class or series of its
capital stock or any Voting Debt, other than Shares reserved for issuance on the
date hereof pursuant to the exercise of Company Options outstanding on the date
hereof, (iii) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to any shares of any class or
series of its capital stock; (iv) split, combine or reclassify any shares of any
class or series of its stock; or (v) redeem, purchase or otherwise acquire
directly or indirectly any shares of any class or series of its capital stock,
or any instrument or security which consists of or includes a right to acquire
such shares;
(c neither SoundView nor any SoundView Subsidiary shall (i) incur
or modify any indebtedness or other liability, other than in the ordinary and
usual course of business and consistent with past practice; or (ii) modify,
amend or terminate any of its material contracts or waive, release or assign any
material rights or claims, except in the ordinary course of business and
consistent with past practice;
(d neither SoundView nor any SoundView Subsidiary shall: (i)
incur or assume any long-term debt, or except in the ordinary course of
business, incur or assume any short-term indebtedness in amounts not consistent
with past practice; (ii) modify the terms of any indebtedness or other
liability, other than modifications of short term debt in the ordinary and usual
course of business and consistent with past practice; (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary course of business and consistent with past practice; (iv) make any
loans (except for loans to facilitate exercises of SoundView Stock Options),
advances or capital contributions to, or investments in, any other person (other
than to or in wholly owned Subsidiaries of SoundView) except in the ordinary
course of business and consistent with past practice; or (v) enter into any
material commitment or transaction (including, but not limited to, any capital
expenditure or purchase, sale or lease of assets or real estate) except in the
ordinary course of business;
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(e neither SoundView nor any SoundView Subsidiary shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other
than in the ordinary course of business and consistent with past practice;
(f) neither SoundView nor any SoundView Subsidiary shall make any
change in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants (other than normal increases or
decreases reflecting the performance of SoundView and the SoundView Subsidiaries
and of such Persons in the ordinary course of business consistent with past
practice) or to Persons providing management services, or enter into or amend
any employment, severance, consulting, termination or other agreement or
employee benefit plan (other than an amendment required to conform such plan to
this Agreement or to changes that have occurred or may hereafter be made in
Applicable Law) or make any loans to any of its officers, directors, employees,
Affiliates, agents or consultants or make any change in its existing borrowing
or lending arrangements for or on behalf of any of such Persons pursuant to an
employee benefit plan or otherwise (except for loans to facilitate exercises of
SoundView Stock Options);
(g) neither SoundView nor any SoundView Subsidiary shall pay or
make any accrual or arrangement for payment of any pension, retirement allowance
or other employee benefit pursuant to any existing plan, agreement or
arrangement to any officer, director, employee or Affiliate or pay or agree to
pay or make any accrual or arrangement for payment to any officers, directors,
employees or Affiliates of SoundView of any amount relating to unused vacation
days, except payments and accruals made in the ordinary course of business
consistent with past practice or as required by an existing Plan, as the same
may be amended to conform such Plan to this Agreement and to changes that have
occurred or may hereafter be made in applicable law; adopt or pay, grant, issue,
accelerate or accrue salary or other payments or benefits pursuant to any
pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement, or any employment or consulting agreement with or for the
benefit of any director, officer, employee, agent or consultant, whether past or
present except as required by an existing Plan, as the same may be amended to
conform such Plan to this Agreement and to changes that have occurred or may
hereafter be made in applicable law; or amend in any material respect any such
existing plan, agreement or arrangement in a manner inconsistent with the
foregoing;
(h) neither SoundView nor any SoundView Subsidiary shall permit
any insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent, except policies providing
coverage for losses not in excess of $200,000;
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(i) neither SoundView nor any SoundView Subsidiary shall enter
into any contract or transaction relating to the purchase of assets other than
in the ordinary course of business consistent with prior practices;
(j) neither SoundView nor any SoundView Subsidiary shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of SoundView and the SoundView Subsidiaries;
(k) neither SoundView nor SoundView's Subsidiary will adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of SoundView or any
SoundView Subsidiary (other than the Merger);
(l) neither SoundView nor any SoundView Subsidiary will (i)
change any of the accounting methods used by it unless required by GAAP or (ii)
make any material election relating to Taxes, change any material election
relating to Taxes already made, adopt any material accounting method relating to
Taxes, change any material accounting method relating to Taxes unless required
by GAAP, enter into any closing agreement relating to Taxes, settle any claim or
assessment relating to Taxes or consent to any claim or assessment relating to
Taxes or any waiver of the statute of limitations for any such claim or
assessment;
(m) neither SoundView nor any of SoundView Subsidiary will take,
or agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Merger set forth in Article IX not being
satisfied, or would make any representation or warranty of SoundView contained
herein materially inaccurate in any respect at, or as of any time prior to, the
Effective Time, or that would materially impair the ability of SoundView, Parent
or Merger Sub to consummate the Merger in accordance with the terms hereof or
materially delay such consummation; and
(n) neither SoundView nor any of SoundView Subsidiary will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
8.2 INTERIM OPERATIONS OF PARENT. Parent covenants and agrees that
prior to the Effective Date, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Section 8.1 of the Disclosure Schedule, or (iii)
as agreed in writing by SoundView, after the date hereof:
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(a) the business of Parent and the Parent Subsidiaries shall be
conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and each of Parent and the Parent
Subsidiaries shall use all commercially reasonable efforts to preserve its
business organization intact, keep available the services of its current
officers and employees and maintain its existing relations with Persons having
business dealings with it, to the end that the goodwill and ongoing business of
each of them shall be unimpaired at the Effective Time;
(b) neither Parent nor any Parent Subsidiary shall declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to any shares of any class or series of its capital stock;
(c) neither Parent nor any Parent Subsidiary shall (i) incur or
modify any indebtedness or other liability, other than in the ordinary and usual
course of business and consistent with past practice; or (ii) modify, amend or
terminate any of its material contracts or waive, release or assign any material
rights or claims, except in the ordinary course of business and consistent with
past practice;
(d) neither Parent nor any Parent Subsidiary shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of Parent and the Parent Subsidiaries;
(e) neither Parent nor any Parent Subsidiary will change any of
the accounting methods used by it unless required by GAAP;
(f) neither Parent nor any Parent Subsidiary will take, or agree
to commit to take, any action that would or is reasonably likely to result in
any of the conditions to the Merger set forth in Section 9.2 not being
satisfied, or would make any representation or warranty of Parent contained
herein materially inaccurate in any respect at, or as of any time prior to, the
Effective Time, or that would materially impair the ability of Parent,
SoundView, Merger Sub to consummate the Merger in accordance with the terms
hereof or materially delay such consummation; and
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(g) neither Parent nor any Parent Subsidiary will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing.
8.3 ACCESS; CONFIDENTIALITY. Each of SoundView and Parent shall
afford to the officers, employees, accountants, counsel and other
representatives of Parent, full access to all properties, books, contracts,
commitments and records of itself and its subsidiaries and each of Parent and
SoundView shall furnish promptly to the other (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of Securities Laws and (b) all
other information concerning its business, properties and personnel as the other
may reasonably request. Unless otherwise required by law, the party receiving
such information will hold any such information which is nonpublic in confidence
in accordance with the provisions of the Confidentiality Agreement to which such
party is subject.
8.4 REASONABLE BEST EFFORTS.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Parent, Merger Sub and SoundView agree to use
their respective reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable (subject to any applicable laws) to consummate and make effective the
Merger and the other Transactions as promptly as practicable including, but not
limited to (i) the preparation and filing of all forms, registrations and
notices required to be filed to consummate the Merger and the other Transactions
and the taking of such actions as are necessary to obtain any requisite
approvals, consents, orders, exemptions or waivers by any third party or
Governmental Entity including notification by Parent to the NASD regarding the
issuance of additional Parent Shares in the Merger, and (ii) the satisfaction of
the other parties' conditions to Closing. In addition, no party hereto shall
take any action after the date hereof that would reasonably be expected to
materially delay the obtaining of, or result in not obtaining, any permission,
approval or consent from any Governmental Entity necessary to be obtained prior
to Closing.
(b) Prior to the Closing, each party shall promptly consult with
the other parties hereto with respect to, provide any necessary information with
respect to, and provide the other parties (or their respective counsel) with
copies of, all filings made by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in connection
with this Agreement, the Merger and the other Transactions. Each party hereto
shall promptly inform the other of any communication from any Governmental
Entity regarding any of the Transactions. If any party hereto or Affiliate
thereof receives a request for additional information or documentary material
from any such Governmental Entity with respect to any of the Transactions,
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then such party shall endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, SoundView and Parent shall use its
reasonable best efforts to effect such transfers, amendments or modifications.
SoundView, Parent and Merger Sub shall make, subject to the condition that the
transactions contemplated herein actually occur, any undertakings (including
undertakings to make divestitures, provided, in any case, that such divestitures
need not themselves be effective or made until after the transactions
contemplated hereby actually occur) required in order to comply with the
antitrust requirements or laws of any governmental entity, including the HSR
Act, in connection with the transactions contemplated by this Agreement.
(c) SoundView and Parent shall file as soon as practicable
notifications under the HSR Act and respond as promptly as practicable to any
inquiries received from the Federal Trade Commission and the Antitrust Division
of the Department of Justice for additional information or documentation and
respond as promptly as practicable to all inquiries and requests received from
any State Attorney General or other Governmental Entity in connection with
antitrust matters. Concurrently with the filing of notifications under the HSR
Act or as soon thereafter as practicable, SoundView and Parent shall each
request early termination of the HSR Act waiting period.
(d) Notwithstanding the foregoing, nothing in this Agreement
shall be deemed to require SoundView, Parent or Merger Sub to commence any
litigation against any entity in order to facilitate the consummation of any of
the Transactions or to defend against any litigation brought by any Governmental
Entity seeking to prevent the consummation of any of the Transactions.
8.5 SHAREHOLDERS MEETING; PROXY STATEMENT/REGISTRATION STATEMENT. If
required by Applicable Law in order to consummate the Merger, Parent, acting
through its Board of Directors, shall, in accordance with Applicable Law: (a)
duly call, give notice of, convene and hold a special meeting of its
shareholders as promptly as practicable for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement; and (b) use its reasonable best efforts to solicit from holders of
Parent Shares proxies in favor of the Merger and the Merger Agreement and shall
take all other action necessary or, in the reasonable opinion of Parent,
advisable to secure any vote or consent of shareholders required under
Applicable Law.
(a) Unless registration of the Parent Shares under the Securities
Act is not required by Applicable Law in order to solicit the approval, consent
or election of stockholders of SoundView, Parent shall promptly prepare and file
with the SEC under the Act, a Registration Statement on Form S-4 or other
appropriate form (the "S-4 Registration Statement") with respect to
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the Parent Shares to be issued in S-4 Registration Statement declared effective
by the SEC as promptly as practicable. SoundView shall furnish Parent with all
information and shall take such other action as may reasonably request in
connection with the S-4 Registration Statement.
If, at any time prior to the Parent shareholders meeting, if any,
or the date by which SoundView shareholders are required to elect cash for a
portion of their Shares if they do not wish to receive solely Parent Shares, any
event should occur relating to or affecting SoundView or Parent, or their
respective officers or directors, which event should be described in an
amendment or supplement to the S-4 Registration Statement, the parties shall
promptly prepare, file and clear with the SEC and, if required by Applicable
Law, mail to the shareholders of SoundView and/or Parent such amendment or
supplement.
8.6 NO SOLICITATION OF COMPETING TRANSACTION. (a) Neither SoundView
nor any SoundView Subsidiary or Affiliate of SoundView shall (and SoundView
shall instruct its officers, directors, employees, representatives and agents of
SoundView, each SoundView Subsidiary and each Affiliate of SoundView, including,
but not limited to, investment bankers, attorneys and accountants, not to, and
shall not permit any of them to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any Person or group (other than Parent, any of its Affiliates or
representatives) concerning any Acquisition Proposal, SoundView will immediately
notify Parent of the existence of any proposal, discussion, negotiation or
inquiry received by SoundView, and SoundView will immediately communicate to
Parent the terms of any proposal, discussion, negotiation or inquiry which it
may receive (and will immediately provide to Parent copies of any written
materials received by SoundView in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal or
inquiry or engaging in such discussion or negotiation. SoundView will promptly
provide to Parent any non-public information concerning SoundView provided to
any other party which was not previously provided to Parent.
(b) SoundView's Board of Directors shall not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Merger Sub, the approval or recommendation by such Board of Directors of this
Agreement or the Merger, (ii) approve or recommend or propose to approve or
recommend, any Acquisition Proposal or (iii) enter into any agreement with
respect to any Acquisition Proposal.
8.7 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and SoundView. Thereafter, until the Closing, or the date the Transactions are
terminated or abandoned pursuant to Article XII, neither SoundView, Parent nor
any of their respective Affiliates shall issue or cause the publication of any
press release
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or other announcement with respect to the Merger, this Agreement or the other
Transactions without prior consultation with the other party, except as may be
required by law or by any listing agreement with a national securities exchange
or trading market.
8.8 NOTIFICATION OF CERTAIN MATTERS. Each of SoundView and Parent
shall give prompt notice to the other, of (i) the occurrence or non-occurrence
of any event the occurrence or non-occurrence of which would cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of it to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 8.8 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
8.9 STATE TAKEOVER LAWS. Notwithstanding any other provision in this
Agreement, in no event shall the Section 203 Approval be withdrawn, revoked or
modified by the Board of Directors of SoundView. If any state takeover statute
other than Section 203 of the DGCL becomes or is deemed to become applicable to
the Agreement, the acquisition of Shares pursuant to the Merger or the other
Transactions, SoundView shall take all action necessary to render such statute
inapplicable to all of the foregoing.
8.10 MERGER SUB COMPLIANCE. Parent shall cause Merger Sub to comply
with all of its obligations under or related to this Agreement.
8.11 EXPENSES. Except as provided elsewhere herein, SoundView shall
bear the direct and indirect expenses of SoundView and Parent shall bear the
direct and indirect expenses of Parent, incurred in connection with the
negotiation and preparation of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby.
8.12 APPOINTMENT OF DIRECTOR. Effective upon the Effective Time, the
Board of Directors of Parent will appoint Russell Crabs as a member of the
Parent Board of Directors.
8.13 TAX-FREE REORGANIZATION. Neither SoundView nor Parent shall take
any action prior to or after the Effective Time which is likely to cause the
Merger to fail to qualify as a reorganization within the meaning of the Code.
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ARTICLE IX
CONDITIONS
9.1 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB. The
respective obligations of Parent and Merger Sub to consummate the Merger are
subject to the fulfillment at or prior to the Effective Time of the following
conditions, any or all of which may be waived in whole or in part by Parent or
Merger Sub, as the case may be, to the extent permitted by Applicable Law.
(a) CERTIFICATE. The representations and warranties of SoundView
set forth in this Agreement shall be true and correct in material respects on
and as of the Effective Time with the same force and effect as though the same
has been made on and as of the Effective Time (except to the extent they relate
to a particular date), SoundView shall have performed in all material respects
all of its obligations under this Agreement theretofore to be performed, and
Parent shall have received at the Effective Time a certificate to that effect
dated the Effective Time and executed by the Chief Executive Officer of
SoundView.
(b) SOUNDVIEW STOCKHOLDER APPROVAL. This agreement and the Merger
shall have been duly approved by the holders of a majority of the outstanding
Shares in accordance with Applicable Law and the Certificate of Incorporation
and By-Laws of SoundView.
(c) INJUNCTION, REGULATORY ACTION. There shall be in effect no
preliminary or permanent injunction or other order of a court or governmental or
regulatory agency of competent jurisdiction directing that the transactions
contemplated herein not be consummated.
(d) S-4 REGISTRATION STATEMENT. Unless registration of the Parent
Shares under the Securities Act is not required by Applicable Law in order for
holders of Shares who receive Parent Shares in the Merger to dispose of such
Parent Shares as are not subject to restrictions on transfer by reason of this
Agreement, the S-4 Registration Statement shall have become effective and no
stop order suspending the effectiveness of the S-4 Registration Statement shall
have been issued and remain in effect and no proceedings for such purpose shall
have been initiated or threatened by the SEC and any amendment or supplement to
the S-4 Registration Statement required to be prepared, filed and cleared
pursuant to Section 8.5 above shall have been so prepared, filed and cleared. If
registration of the Parent Shares under the 1933 Act is not required by
Applicable Law for the foregoing purposes, Parent shall have received all state
securities laws or "blue sky" permits and authorizations necessary to issue
Parent Shares in exchange for the Shares in the Merger.
(e) GOVERNMENT FILINGS AND CONSENTS. Except for the filing of the
Certificate of Merger, all governmental filings required to be made prior to the
Effective Time by SoundView with, and all governmental consents required to be
obtained prior to the Effective Time by
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SoundView from any Governmental Entity in connection with the execution and
delivery of this Agreement by and the consummation of the transactions
contemplated hereby, shall have been made or obtained, and any waiting periods
or extensions thereof under HSR Act shall have expired or been terminated.
(f) RULE 145. Each Affiliate of SoundView shall have executed and
delivered to Parent an Affiliate Letter, together with such other documents and
instruments as Parent may reasonably request related to compliance with the
Securities Act.
(g) THIRD-PARTY CONSENTS. All required authorizations, consents
and approvals of any third party (other than those referred to in Section 9.1(e)
above), the failure of which (either individually or in the aggregate) to be
obtained would have a Material Adverse Effect on SoundView or the Surviving
Company (assuming the Merger had taken place), shall have been obtained.
(h) OPINIONS OF COUNSEL FOR SOUNDVIEW. Parent shall have received
the opinion of Morrison & Foerster LLP, special counsel to SoundView, addressed
to Parent and dated the Closing Date, as to the organization, qualification and
capitalization of SoundView; authorization, due execution, validity and
enforceability of the Merger Agreement, the Employment Agreements and the Put
Termination Agreements; and regulatory approvals, in form and substance
reasonably satisfactory to Parent.
(i) TAX OPINION. Parent shall have received an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, dated on or about the date that is
either two business days prior to the date the Proxy Statement is first mailed
to Parent stockholders if a meeting of Parent stockholders is required, and the
date of the Closing, to the effect that (i) the Merger will be treated for
Federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, (ii) each of Parent, Merger Sub and the Company will be a
party to the reorganization within the meaning of Section 368(b) of the Code and
(iii) no gain or loss will be recognized by a stockholder of SoundView as a
result of the conversion of the Shares into Parent Shares pursuant to the terms
of the Merger (except with respect to the cash received in lieu of fractional
share interests in Parent). In rendering such opinion, Skadden, Arps, Slate,
Meagher & Flom LLP will be entitled to rely upon, among other things,
representations contained in certificates of SoundView, Merger Sub and Parent in
such form as is reasonably satisfactory to such counsel.
(j) CERTAIN AGREEMENTS. Employment Agreements in substantially
the form attached hereto as Exhibit G with each of the individuals named in such
Exhibit G and each of the other agreements set forth in such Exhibit G shall be
in full force and effect.
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(k) PARENT STOCKHOLDER APPROVAL. If required by the shareholder
voting policy of the NASD, this Agreement shall have been duly approved by a
majority of the outstanding Parent Shares entitled to vote and voting thereon.
(l) DISSENTING SHARES. The sum of Dissenting Shares and Old
Agreement Securities immediately prior to the Effective Time shall not exceed
10% of the sum of the issued and outstanding Shares immediately prior to the
Effective Time.
9.2 CONDITIONS TO THE OBLIGATIONS OF SOUNDVIEW. The obligation of
SoundView to consummate the Merger is subject to the fulfillment at or prior to
the Effective Time of the following conditions, any or all of which may be
waived in whole or in part by SoundView to the extent permitted by applicable
law.
(a) CERTIFICATE. The representations and warranties of Parent and
Merger Sub set forth in this Agreement shall be true and correct in all material
respects on and as of the Effective Time with the same force and effect as
though the same had been made on and as of the Effective Time (except to the
extent they relate to a particular date), Parent and Merger Sub shall have
performed in all material respects all of their respective obligations under
this Agreement theretofore to be performed, and SoundView shall have received at
the Effective Time a certificate to that effect dated the Effective Time and
executed by the President of Parent.
(b) PARENT STOCKHOLDER APPROVAL. If required by the shareholder
voting policy of the NASD, this Agreement shall have been duly approved by the
holders of a majority of the outstanding Parent Shares entitled to vote and
voting thereon.
(c) INJUNCTION, REGULATORY ACTION. There shall be in effect no
preliminary or permanent injunction or other order of a court or governmental or
regulatory agency of competent jurisdiction directing that the transactions
contemplated herein not be consummated.
(d) S-4 REGISTRATION STATEMENT. Unless registration of the Parent
Shares under the 1933 Act is not required by Applicable Law in order for holders
of Shares who receive Parent Shares in the Merger to dispose of such Parent
Shares as are not subject to restricting on transfer by reason of this
Agreement, the S-4 Registration Statement shall have become effective and no
stop order suspending the effectiveness of the S-4 Registration Statement shall
have been issued and remain in effect and no proceedings for such purpose shall
have been initiated or threatened by the SEC and any amendment or supplement to
the S-4 Registration Statement required to be prepared, filed and cleared
pursuant to Section 8.5 above shall have been so prepared, filed and cleared. If
registration of the Parent Shares under the 1933 Act is not required by
Applicable Law for the
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foregoing purposes, Parent shall have received all state securities laws or
"blue sky" permits and authorizations necessary to issue Parent Shares in
exchange for the Shares in the Merger.
(e) GOVERNMENTAL FILINGS AND CONSENTS. Except for the filing of
the Certificate of Merger, all governmental filings required to be made prior to
the Effective Time by Parent and Merger Sub with, and all governmental consents
required to be obtained prior to the Effective Time by Parent and Merger Sub
from, governmental, regulatory and self-regulatory authorities in connection
with the execution and deliver of this Agreement by Parent and Merger Sub and
the consummation of the transactions contemplated hereby shall have been made or
obtained, and any waiting periods or extensions thereof under the HSR Act shall
have expired or been terminated.
(f) THIRD-PARTY CONSENTS. All required authorizations, consents
and approvals of any third party (other than a governmental or regulatory
authority), the failure of which (either individually or in the aggregate) to be
obtained would have a Material Adverse Effect on Parent, shall have been
obtained.
(g) OPINIONS OF COUNSEL FOR PARENT. SoundView shall have received
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to
Parent, addressed to SoundView and dated the Closing Date as to the
organization, qualification and capitalization of Parent; authorization,
issuance and nonassessability of the Parent Shares issuable in the Merger;
authorization, due execution, validity and enforceability of the Merger
Agreement and the Employment Agreements; and regulatory approvals, in form and
substance reasonably acceptable to SoundView.
(h) TAX OPINION. SoundView shall have received an opinion of
Morrison & Foerster LLP, dated the date of the Closing, to the effect that (i)
the Merger will be treated for federal income tax purposes as a reorganization
with the meaning of Section 368(a) of the Code, (i) each of Parent, Merger Sub
and SoundView will be a party to the reorganization within the meaning of
Section 368(b) of the Code, and (iii) no gain or loss will be recognized by a
stockholder of SoundView as a result of the conversion of the Shares into Parent
Shares pursuant to the terms of the Merger (except with respect to cash received
in lieu of fractional share interests in Parent). In rendering such opinion,
Morrison & Foerster LLP will be entitled to rely, among other things, upon
representations contained in certificates of SoundView, Parent and Merger Sub in
such form as is reasonably satisfactory to such counsel.
(i) EMPLOYMENT AGREEMENTS. Parent shall have executed and
delivered each of the Employment Agreements referred to in Exhibit G to the
extent set forth therein and shall not
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have breached in any material respect any such Employment Agreement executed and
delivered by the applicable employee.
ARTICLE X
TERMINATION/SURVIVAL
10.1 TERMINATION. (a) This Agreement may be terminated at any time prior
to the Closing as follows:
(i) by the mutual written consent of Parent and
SoundView;
(ii) by Parent or SoundView if it has become
reasonably certain that any of the conditions to the other party's
obligation to close the transactions contemplated by this Agreement will
not be satisfied on or prior to the date set forth in Section
10.1(a)(vii) below and not waived;
(iii) by Parent, on the one hand, or by SoundView,
on the other hand, if there shall have been a breach of any of the
representations and warranties set forth in this Agreement on the part
of the other, which breach would, under Section 9.1(a) (in the case of a
breach of representation or warranty by SoundView) or Section 9.2(a) (in
the case of a breach of representation or warranty by Parent), entitle
the party receiving such representations and warranties not to
consummate the transactions contemplated hereby and which breach by its
nature cannot be cured prior to the date set forth in Section
10.1(a)(vii) below;
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(iv) by SoundView on the one hand, or by Parent, on
the other hand, if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of
SoundView (in the case of termination by Parent) or on the part of
Parent (in the case of termination by SoundView), which breach shall not
have been cured within 20 Business Days following receipt by the
breaching party of written notice of such breach from the other;
(v) by SoundView if the volume weighted average
trading price of the Parent Shares as reported for the primary trading
session (currently ending at 4:00 p.m.) on the NNM on each of any five
consecutive trading days, the first of which occurs after December 15,
1999 (excluding December 31, 1999 and January 3, 2000) and the last of
which occurs prior to the Effective Time, is less than $10 and if
SoundView shall have terminated this Agreement in writing within ten
days after the foregoing condition shall have first been satisfied;
(vi) by Parent if the volume weighted average
trading price of the Parent Shares as reported for the primary trading
session (currently ending at 4;00 p.m.) on the NNM on each of any five
consecutive trading days , the first of which occurs after December 15,
1999 (excluding December 31, 1999 and January 3, 2000) and the last of
which occurs prior to the Effective Time, is greater than $25 and if
Parent shall have terminated this Agreement in writing within ten days
after the foregoing condition shall have first been satisfied; and
(vii) at the election of Parent or SoundView, if
the Closing shall not occur on or before May 31, 2000.
Notwithstanding Section 10.1(a)(ii)-(vii) hereof, a party who is
in material breach of any of its obligations or representations and warranties
hereunder shall not have the right to terminate this Agreement pursuant to
Section 10.1(a)(ii)-(vii).
(b) The termination of this Agreement shall be effectuated by the
delivery by the party terminating this Agreement to the other party of a written
notice of such termination. If this Agreement so terminates, it shall become
null and void and have no further force or effect, except as provided in Section
10.2.
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10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement (other than Section 8.3
and Article XII) shall forthwith become void and have no effect except that,
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
breach of any provision of this Agreement. In the event of termination of this
Agreement, Parent and SoundView shall continue to honor the terms of the
Confidentiality Agreements, including the return of all confidential materials.
10.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS. The
respective representations and warranties SoundView and Parent contained herein
and in the certificates of SoundView and Parent to be delivered at the Closing
shall expire and be terminated and extinguished at the Effective Time.
ARTICLE XI
DEFINITIONS
11.1 DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context clearly requires otherwise:
"Acquisition Proposal" shall mean any proposal or offer to
acquire all or a substantial part of the business or properties of SoundView or
any SoundView Subsidiary or any capital stock of SoundView or any SoundView
Subsidiary, whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving SoundView or any Subsidiary, division or
operating or principal business unit of SoundView.
"Advisers Act" means the Investment Advisers Act of 1940, as
amended, and all rules and regulations of the SEC thereunder.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Affiliate Letter" shall mean a letter for use with respect to
sales of stock by Affiliates of SoundView who become Affiliates of Parent which
is executed and delivered by each Affiliate of SoundView and delivered to Parent
pursuant to Section 9.1(f) hereof and which complies as to form with the
requirements of SEC Rule 145.
"Agreement" or "this Agreement" shall mean this Agreement and
Plan of Merger, together with the Exhibits and Schedules hereto and the
Disclosure Schedule.
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"Applicable Law" means any statute, law, ordinance, rule, public
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any Governmental Entity applicable to
Parent, any Parent Subsidiary, or any Parent Pooled Product, SoundView, any
SoundView Subsidiary or any SoundView Pooled Product, or any of their respective
properties, assets, officers, directors, partners, members, employees or agents.
"Balance Sheet Date" shall mean the date of the SoundView Balance
Sheet or the Parent Balance Sheet, as the contest may require.
"Cause" shall mean the relevant employee's (i) neglect, failure
or refusal to timely perform the duties of his employment (other than by reason
of a physical or mental illness or impairment), or his gross negligence in the
performance of his duties, (ii) material breach of any agreements, covenants and
representations made in any employment agreement or other agreement with Parent
or any of its Subsidiaries, (iii) violation of any law, rule, regulation or
by-law of any governmental authority (state, federal or foreign), any securities
exchange or association or other regulatory or self-regulatory body or agency
applicable to Parent or any of its Subsidiaries or any material general policy
or directive of Parent or any of its Subsidiaries applicable to such employee,
(iv) conviction of, or plea of guilty or nolo contendere to, a crime involving
moral turpitude, dishonesty, fraud or unethical business conduct, or a felony,
(v) giving or accepting undisclosed material commissions or other payments in
cash or in kind in connection with the affairs of Parent or any of its
Subsidiaries or their clients, (vi) failure to obtain or maintain any
registration, license or other authorization or approval that Parent reasonably
believes is required in order for the employee to perform his duties; or (vii)
habitual abuse of alcohol or drugs.
"Confidentiality Agreement" shall mean either the letter
agreement dated July 28, 1999 between SoundView and Parent or the letter
agreement dated July 28, 1999 between SoundView and Parent or both of them, as
the context may require.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"DGCL" shall mean the General Corporation Law of the State of
Delaware, as now or hereafter amended.
"Disclosure Schedule" shall mean the disclosure schedule of even
date herewith prepared and signed by SoundView or Parent, as the case may be,
and delivered to the other simultaneously with the execution hereof.
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"Employment Agreement" means an employment agreement and
non-disclosure, non-competition and assignment of inventions agreement
substantially in the form of Exhibit G hereto with each of the individuals named
on such Exhibit G.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business, whether or
not incorporated, that together with SoundView or Parent, as applicable, would
be deemed a "single employer" within the meaning of Section 4001(b) of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Documents" means all reports and registration
statements filed, or required to be filed, by law, by contract or otherwise, by
an entity pursuant to the authority of any Governmental Entity.
"Governmental Entity" shall mean any nation, state, territory,
province, county, city or other unit or subdivision thereof or any entity,
authority, agency, department, board, commission, instrumentality, court or
other judicial body authorized on behalf of any of the foregoing to exercise
legislative, judicial, regulatory or administrative functions of or pertaining
to government and, in the case of SoundView, any governmental or
non-governmental self-regulatory organization of which SoundView or any
SoundView Subsidiary was or is a member or to whose regulations any thereof was
or is subject or, in the case of Parent, any governmental or non-governmental
self-regulatory organization of which Parent or any Parent Subsidiary was or is
a member or to whose regulations any thereof was or is subject.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Intellectual Property" means all domestic and foreign
copyrights, patents, proprietary models, processes, formulas and databases,
service marks, Software, know-how, trade names, trademarks and trade secrets,
and all registrations or applications for registration of any of the foregoing.
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"Investment Company Act" means the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC promulgated
thereunder.
"Merger Sub" shall mean W/S Merger Corp, a Delaware corporation
which is a wholly owned Subsidiary of Parent.
"Merger Sub Common Stock" shall mean common stock, par value $.01
per share, of Merger Sub.
"NASD" shall mean the National Association of Securities Dealers,
Inc, NASD Regulation, Inc. or The Nasdaq National Market, Inc., as the context
may require.
"Parent Agreement" shall mean any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent or any Parent Subsidiary is a party or by which any of them or
any of their properties or assets may be bound.
"Parent Balance Sheet" shall mean the most recent balance sheet
of Parent and its consolidated subsidiaries included in the Financial
Statements.
"Parent Board of Directors" shall mean the board of directors of
Parent.
"Parent Common Stock" shall mean shares of common stock par value
$0.01 per share, of Parent.
"Parent Financial Statements" shall mean the financial statements
of Parent included in the Governmental Documents.
"Parent Pooled Products" means each vehicle for collective
investment (in whatever form of organization, including in the form of a
corporation, company, limited liability company, partnership (limited or
general), association, trust or other entity and including each separate
portfolio of any of the foregoing) but only during the period with respect to
which Parent or any Parent Subsidiary has acted or acts as the sponsor, general
partner, managing member, trustee, investment manager, investment adviser (but
excluding for all purposes other than its investment advisory services any
Parent Pooled Product as to which Parent or such Parent Subsidiary has acted or
acts solely in a subadvisory capacity) or in a similar capacity.
"Parent Subsidiary" shall mean each Person which is a Subsidiary
of Parent.
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"Parent's knowledge" or "best knowledge of Parent" shall mean the
knowledge that the Chairman and Co-Chief Executive Officer, the Vice Chairman,
Co-Chief Executive Officer and President, the Vice Chairman, Founder and Chief
Strategist, the Senior Vice President and Chief Financial Officer, the Director
of Investment Banking or either of the Co-General Counsels have or would possess
after reasonable investigation and inquiry.
"Person" shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other entity
or organization.
"Plan" shall mean, with respect to SoundView, a plan, program,
agreement, arrangement or program required to be included in the Disclosure
Schedule of SoundView pursuant to Section 6.17(a) and with respect to Parent, a
plan, program, agreement, management or program required to be included in the
Disclosure Schedule of SoundView pursuant to Section 7.17(a).
"President's Letter" shall mean a letter from the Vice Chairman,
Co-Chief Executive Officer and President of Parent to the President and Chief
Executive Officer of SoundView dated the date hereof.
"Proxy Statement" shall mean the proxy statement to be filed by
Parent with the SEC if Parent is required by the shareholder voting policy of
the NASD to solicit approval of the Merger Agreement, together with all
amendments and supplements thereto and including the exhibits thereto.
"Records" means all records and original documents in the
possession of SoundView or any SoundView Subsidiary or Parent or any Parent
Subsidiary, as the case may be, which pertain to or have been or are utilized by
SoundView or any SoundView Subsidiary or Parent or any Parent Subsidiary, as the
case may be, to administer, reflect, monitor, evidence or record information
respecting the business or conduct of SoundView or any SoundView Subsidiary
including, without limitation, (1) all such records maintained on electronic or
magnetic media, or in an electronic database system, and (2) all such records as
necessary to comply with any Applicable Law, including, without limitation, any
and all records kept in accordance with, or documents filed pursuant to, any
Securities Laws.
"Related Agreements" shall mean the Employment Agreements, the
President's Letter, the Put Termination Agreement, the Voting Agreement and the
Confidentiality Agreements.
"Retained Employees" shall mean those persons who were employees
of SoundView or any SoundView Subsidiary immediately prior to the Effective
Time.
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"S-4 Registration Statement" shall mean the registration
statement on Form S-4 or other appropriate form of Parent contemplated by
Article VIII of this Agreement.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Section 203 Approval" shall mean the action taken by the
SoundView Board of Directors referred to in Section 6.5 causing Section 203 of
the DGCL not to apply to this Agreement or the other Transactions.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Securities Laws" means the Securities Act; the Exchange Act; the
Investment Company Act; the Advisers Act; the securities or "blue sky" laws of
any state or territory of the United States; the rules and regulations of the
NASD; the Commodity Exchange Act, as amended, and the published rules and
regulations of the Commodity Futures Trading Commission promulgated thereunder;
and the comparable laws, rules and regulations in effect in any other country.
"Software" means (i) any and all computer software programs,
including all source and object code, (ii) databases and compilations, including
any and all data and collections of data, whether machine readable or otherwise,
(iii) all descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, (iv) all domain names and the content
contained on the respective Internet site(s), and (v) all documentation,
including user manuals and training materials, relating to any of the foregoing.
"SoundView Agreement" shall mean any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which SoundView or any SoundView Subsidiary is a party or by which any of
them or any of their properties or assets may be bound.
"SoundView Board of Directors" shall mean the board of directors
of SoundView.
"SoundView Financial Statements" shall have the meaning given in
Section 6.8.
"SoundView's knowledge" or "best knowledge of SoundView" shall
mean the knowledge that the President and Chief Executive Officer, Chief
Financial Officer or Controller of SoundView have or would possess after
reasonable investigation and inquiry.
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"SoundView Pooled Products" means each vehicle for collective
investment (in whatever form of organization, including in the form of a
corporation, company, limited liability company, partnership (limited or
general), association, trust or other entity and including each separate
portfolio of any of the foregoing) but only during the period with respect to
which SoundView or any SoundView Subsidiary has acted or acts as the sponsor,
general partner, managing member, trustee, investment manager, investment
adviser (but excluding for all purposes other than its investment advisory
services any SoundView Pooled Product as to which SoundView or such SoundView
Subsidiary has acted or acts solely in a subadvisory capacity) or in a similar
capacity.
"SoundView Subsidiary" shall mean each Person which is a
Subsidiary of SoundView.
"Subsidiary" shall mean, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (a) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries or (b) such party or any other Subsidiary of such party is a
general partner, managing member or Person performing similar functions
(excluding any such partnership or other entity where such party or any
Subsidiary of such party does not have general primary decisional authority in
such partnership or other entity).
"Surviving Corporation" shall have the meaning given in Section
1.1.
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local or
foreign governmental authority, including, but not limited to, income, gross
receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding, social
security, minimum estimated, and other taxes, and shall include interest,
penalties or additions attributable thereto;
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Title IV Plan" shall mean a Plan that is subject to Section 302
or Title IV of ERISA or Section 412 of the Code.
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"Transactions" shall mean the transactions provided for or
contemplated by this Agreement and the Related Agreements.
"Voting Agreement" shall mean a voting agreement (including an
irrevocable proxy) in substantially the form attached hereto as Exhibit D by and
among Parent and the holders of Shares named on Schedule 5.5.
"Voting Debt" shall mean indebtedness having general voting
rights and debt convertible into securities having such rights.
11.2 ADDITIONAL DEFINITIONS. The following terms shall have the
meaning specified in the indicated section of this Agreement.
TERM SECTION
---- -------
Agreement.................................................... Preamble
Average Stock Price ......................................... Section 4.1(a)
Certificates................................................. Section 4.2(b)
Cash Value per Share......................................... Section 4.1(b)
Closing...................................................... Section 1.4
Code......................................................... Recitals
Dissenting Shares............................................ Section 4.1(a)
DGCL......................................................... Section 1.1
Effective Time............................................... Section 1.2
Electing Shares.............................................. Section 4.1(a)
Exchange Agent............................................... Section 4.2(a)
Exchange Rate Period ........................................ Section 4.1(a)
Exchange Ratio............................................... Section 4.1(a)
Form of Election............................................. Section 5.2
Fractional Securities Fund................................... Section 4.3
Merger....................................................... Section 1.1
Merger Sub................................................... Preamble
NNM.......................................................... Section 4.1(a)
Non-Electing Shares.......................................... Section 4.1(a)
Old Agreement Securities..................................... Section 5.8
Parent....................................................... Preamble
Parent Common Stock ......................................... Section 4.1(a)
Parent Companies............................................. Section 4.1(a)
Parent Common Stock Options.................................. Section 4.1(f)
Parent Permits............................................... Section 7.9(b)
Parent Rights................................................ Section 4.1(a)
Parent Rights Agreement...................................... Section 4.1(a)
Parent Shares................................................ Section 4.1(a)
Parent Technology Systems ................................... Section 7.15
Pub Agreement................................................ Section 8.5
Retention Shares............................................. Section 5.7
S-4 Registration Statement................................... Section 8.5
Shares....................................................... Section 4.1(a)
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SoundView.................................................... Preamble
SoundView Balance Sheet...................................... Section 6.8
SoundView Common Stock....................................... Section 4.1(a)
SoundView Financial Statements............................... Section 6.8
SoundView Stock Options...................................... Section 4.1(f)
SoundView Permits............................................ Section 6.9(b)
SoundView Stock Option Plan(s)............................... Section 4.1(f)
SoundView Technology Systems................................. Section 6.15
SoundView Merger Exchange Fund............................... Section 4.2(a)
Surviving Corporation........................................ Section 1.1
ARTICLE XII
MISCELLANEOUS
12.1 DISPUTES. Except for requests for injunctive relief, specific
performance or enforcement of the award of an arbitrator, all disputes arising
in connection with this Agreement shall be resolved by binding arbitration in
accordance with the applicable rules of the American Arbitration Association.
The arbitration shall be held in the State of New York before a single
arbitrator selected in accordance with Section 12 of the American Arbitration
Association Commercial Arbitration Rules who shall have substantial business
experience in the investment banking industry, and shall otherwise be conducted
in accordance with such association's Commercial Arbitration Rules. The award of
such arbitrator shall be enforceable in any court having jurisdiction over the
parties to such arbitration.
12.2 AMENDMENTS; EXTENSION; WAIVER. Subject to compliance with
Applicable Law, this Agreement may be amended, altered or modified by written
instrument executed by each of the parties hereto without any requirement that
the stockholders of any party hereto approve any amendment that does not
materially decrease the consideration provided by this Agreement to such
stockholders; PROVIDED, HOWEVER, that SoundView may waive in writing the
performance by Parent of any of its representations, warranties, covenants or
other agreements and that Parent may waive in writing the performance by
SoundView of any of its representations, warranties covenants or other
agreements.
12.3 ENTIRE AGREEMENT. This Agreement (including Exhibits, Schedules,
certificates and lists referred to herein, and any documents executed by the
parties simultaneously herewith or pursuant hereto) and the Related Agreements
constitutes the entire understanding and agreement of
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the parties hereto, except as provided herein, and supersedes all prior
agreements and understandings, written and oral, among the parties with
respect to the subject matter hereof.
12.4 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. Each party understands
and agrees that it will be irreparably damaged in the event this Agreement is
not specifically enforced. Each party, therefore, agrees that in the event of a
breach of any material provision of this Agreement, the aggrieved party may
elect to institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the continuing breach
of this Agreement. Such remedies shall, however, be cumulative and not
exclusive, and shall be in addition to any other remedy which a party may have.
12.5 INTERPRETATION. When a reference is made in this Agreement to a
Section, Exhibit, Annex or Schedule, such reference shall be to a Section of or
Exhibit, Annex or Schedule to this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms
and the singular form of nouns and pronouns shall include the plural and vice
versa. The phrases "the date of this Agreement," "the date hereof" and terms of
similar import, unless the context otherwise requires, shall be deemed to refer
to the date set forth in the first paragraph of this Agreement.
12.6 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
12.7 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if (a) delivered in person, (b) transmitted
by telecopy (with confirmation), (c) mailed by certified or registered mail
(return receipt requested) or (d) delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Parent:
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Wit Capital Group, Inc.
826 Broadway
New York, New York 10003
Telecopy: (212) 253-4650
Attention: Ronald Readmond
Vice Chairman, Co-Chief Executive Officer and President
With copies to:
Wit Capital Group, Inc.
826 Broadway
New York, New York 10003
Telecopy: (212) 253-5289
Attention: Lloyd H. Feller
Senior Vice President and Co-General Counsel
and
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2000
Attention: Richard T. Prins, Esq.
If to SoundView:
SoundView Technology Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902
Telecopy: (203) 462-7244
Attention: Russell D. Crabs
President and Chief Executive Officer
With copies to:
SoundView Technology Group, Inc.
22 Gatehouse Road
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Stamford, Connecticut 06902
Telecopy: (203) 462-7244
Attention: Curtis L. Synder
Managing Director, Chief Operating Officer and
Chief Financial Officer
and
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104
Telecopy: (212) 468-7900
Attention: Lorraine Massaro, Esq.
12.8 BINDING EFFECT; PERSONS BENEFITTING; NO ASSIGNMENT. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and the
respective heirs, legal representatives, estates, executors, successors and
permitted assigns of the parties and such persons. Nothing in this Agreement is
intended or shall be construed to confer upon any entity or person other than
the parties hereto and their respective heirs, legal representatives, estates,
executors, successors and permitted assigns any right, remedy or claim under or
by reason of their Agreement or any part hereof. Without the prior written
consent of each of the other parties hereto, this Agreement and the rights
hereunder may not be assigned by any of the parties hereto.
12.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.
12.10 GOVERNING LAW. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE
PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED BY
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
12.11 JURISDICTION; WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. Subject
to the arbitration requirements of Section 12.1 hereof, all actions arising
under or relating to this Agreement shall be brought exclusively in the Federal
District Court for Delaware, the Southern District of New York,
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the District of Connecticut or in any Delaware New York or Connecticut State
Court sitting in such district and having subject matter jurisdiction over
such matters, and each of the parties hereto consents and agrees to personal
jurisdiction, and waives any objection as to the venue, of such courts for
purposes of such action. The parties to this Agreement agree to waive any
right to a jury trial as to all disputes and any right to seek punitive or
consequential damages.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
WIT CAPITAL GROUP, INC.
By: /s/ MARK LOEHR
--------------------------------------
Name: Mark Loehr
Title: Director of Investment Banking
SOUNDVIEW TECHNOLOGY GROUP, INC.
By: /s/ RUSSELL CRABS
--------------------------------------
Name: Russell Crabs
Title: President
W/S MERGER CORP.
By: /s/ MARK LOEHR
--------------------------------------
Name: Mark Loehr
Title: Vice President, Treasurer and Secretary
