SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
___ SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
______________________________________________
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_____ SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
_________________ ________________________
Commission file number 1-5240
_______________
THE DREYFUS CORPORATION
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
New York 13-5673135
________________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
200 Park Avenue, New York, N.Y. 10166
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 922-6000
_____________________________
Not Applicable
________________________________________________________________________________
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
________ ________
Indicate the number of shares outstanding of each of the Issuer's classes
of common stock, as of the latest practicable date.
Common Stock (par value $.10) 36,559,078 shares
_____________________________ _________________
(Class) (Outstanding at July 29, 1994)
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
INDEX
Page
____
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets--June 30, 1994
(Unaudited) and December 31, 1993 . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Income
(Unaudited)--Three Months and Six Months Ended June 30, 1994 and
June 30, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)--Six Months Ended June 30, 1994 . . . . . . . . . . . . . . . 6
Condensed Consolidated Statements of Cash Flows
(Unaudited)--Six Months Ended June 30, 1994 and June 30, 1993 . . . . . . 7
Notes to Condensed Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 17
Exhibit I -- Amended and Restated Agreement and Plan of Merger, dated
as of December 5, 1993, by and among Mellon Bank
Corporation, Mellon Bank, N.A., XYZ Sub Corporation and
The Dreyfus Corporation . . . . . . . . . . . . . . . . . . 24
Exhibit II -- Agreement and Release of Robert H. Schmidt. . . . . . . . . 94
Exhibit III -- Computation of Earnings Per Share (Unaudited) . . . . . . . 98
PART II--OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . .100
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
-2-
PART I--ITEM 1. FINANCIAL INFORMATION
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000'S OMITTED)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993 (A)
---------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents - primarily shares
of sponsored money market investment
companies $154,698 $301,277
Receivables, including management, investment
advisory and administrative fees
of $20,356 in 1994 and $23,114 in 1993 80,583 50,114
Investments in marketable securities - Note 2 481,179 331,731
Other investments - at cost (fair value - $78,731
in 1994 and $175,862 in 1993) 82,484 133,923
Fixed assets - at cost, less accumulated depreciation
and amortization of $43,395 in 1994 and $37,585
in 1993 76,954 62,643
Other assets, including prepaid expenses and
deferred charges of $49,200 in 1994 and $20,026
in 1993 - Note 3 58,393 34,900
-------- --------
Total Assets $934,291 $914,588
======== ========
-3-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)
(000'S OMITTED)
June 30, December 31,
1994 1993 (A)
-------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Due to brokers and dealers $4,126 $386
Short positions in marketable equity securities - Note 2 - 7,915
Banking customer deposits (fair value - $24,912 in
1994 and $26,525 in 1993) 24,926 26,519
Taxes, including Federal income taxes of $1,195
in 1994 8,291 4,318
Accrued compensation and benefits 20,172 17,756
Sundry liabilities and accrued expenses 27,439 33,105
--------- ---------
Total Liabilities 84,954 89,999
--------- ---------
Stockholders' Equity--Notes 2, 4 and 5:
Common Stock - par value $.10 per share (50,000 shares
authorized), shares issued - 44,973 in 1994 and 1993 4,497 4,497
Additional paid-in capital 279,707 279,576
Retained earnings 766,763 731,188
--------- ---------
1,050,967 1,015,261
Less:
Treasury stock - at cost, 8,414 shares in 1994 and
8,417 in 1993 190,520 190,524
Net unrealized loss on available for sale securities 10,962 -
Notes receivable for Common Stock issued 148 148
--------- ---------
Total Stockholders' Equity 849,337 824,589
--------- ---------
Contingencies and other matters - Notes 5, 6 and 7
Total Liabilities and Stockholders' Equity $934,291 $914,588
========= =========
See notes to condensed consolidated financial statements.
(A) The Condensed Consolidated Balance Sheet at December 31, 1993 has been summarized from
the audited financial statements at that date.
</TABLE>
-4-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(000'S OMITTED EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- -------------------------
1994 1993 1994 1993
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Management, investment advisory
and administrative fees (net) $70,663 $73,968 $142,311 $148,077
Interest and dividends 7,022 6,236 12,604 12,385
Underwriting and other fees (net) 4,952 5,299 11,904 10,533
Net gains on investment transactions--Note 2 4,193 3,333 16,835 6,879
Other (net) 4,220 4,491 8,142 8,372
------- ------- -------- ---------
Total Revenues 91,050 93,327 191,796 186,246
------- ------- -------- ---------
Expenses:
Operating expenses 52,712 54,143 111,803 106,338
Interest expense 294 317 726 701
------- ------- -------- ---------
Total Expenses 53,006 54,460 112,529 107,039
------- ------- -------- ---------
Income before income taxes 38,044 38,867 79,267 79,207
Provision for income taxes 14,000 14,100 29,800 29,200
------- ------- -------- ---------
Net Income $24,044 $24,767 $49,467 $50,007
======= ======= ======== =========
Net Income per share of Common Stock $0.66 $0.68 $1.35 $1.35
======= ======= ======== =========
Cash dividends per share of Common
Stock $0.19 $0.19 $0.38 $0.36
======= ======= ======== =========
Weighted average number of common
shares outstanding during each
period 36,558 36,673 36,557 37,025
======= ======= ======== =========
See notes to condensed consolidated financial statements.
</TABLE>
-5-
<TABLE>
<CAPTION>
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(000'S OMITTED)
Net Notes
unrealized receivable
Additional gain/(loss) on for Common Total
Common paid-in Retained Treasury available for Stock Stockholders'
stock capital earnings stock sale securities issued Equity
------ ---------- -------- -------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $4,497 $279,576 $731,188 ($190,524) - ($148) $824,589
Adjustment to beginning balance
for effect of change in
accounting principle 3,972 3,972
Net Income 49,467 49,467
Cash dividends on Common
Stock (13,892) (13,892)
Increase (decrease) in net
unrealized gain / (loss) on
available for sale securities (14,934) (14,934)
Issuance of Treasury stock 115 4 119
Other 16 16
------ -------- -------- ---------- -------- ------ --------
Balance at June 30, 1994 $4,497 $279,707 $766,763 ($190,520) ($10,962) ($148) $849,337
====== ======== ======== ========== ======== ====== ========
See notes to condensed consolidated financial statements.
</TABLE>
-6-
<TABLE>
<CAPTION>
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(000'S OMITTED)
Six Months Ended
June 30,
----------------------------
1994 1993
---- ----
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $12,031 $31,103
--------- ---------
INVESTING ACTIVITIES
Proceeds from maturities of held to maturity securities 34,166 -
Proceeds from sales of available for sale securities 145,553 -
Proceeds from sales and maturities of securities - 523,248
Purchase of securities - (402,430)
Purchase of available for sale securities (317,179) -
Purchase of held to maturity securities (14,661) -
Acquisitions of fixed assets (20,121) (4,286)
Sale of Insurance company subsidiary 5,926 -
Other investing activities 20,305 (26,678)
--------- ---------
Net Cash Provided By (Used In) Investing Activities (146,011) 89,854
--------- ---------
FINANCING ACTIVITIES
Dividends paid (13,892) (13,346)
Purchase of treasury stock - (35,236)
Decrease in banking customer deposits (1,593) (4,509)
Other financing activities 2,886 1,933
--------- ---------
Net Cash Used In Financing Activities (12,599) (51,158)
--------- ---------
Increase (Decrease) In Cash And Cash Equivalents (146,579) 69,799
Cash and cash equivalents at beginning of year 301,277 216,360
--------- ---------
Cash And Cash Equivalents At End Of Period $154,698 $286,159
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the six months ended
June 30, 1994 and 1993:
Income taxes $28,909 $36,281
Interest 554 561
See notes to condensed consolidated financial statements.
</TABLE>
-7-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--NATURE OF BUSINESS:
The Dreyfus Corporation and Subsidiary Companies ("Corporation")
comprise a financial service organization whose business consists
primarily of providing investment management services as the investment
adviser, manager and distributor for sponsored investment companies and as
an investment adviser to other accounts. In addition, the Corporation is
the sub-investment adviser and/or administrator of several investment
companies sponsored by others.
As prescribed by the Securities and Exchange Commission, the
accompanying consolidated financial statements and footnotes have been
condensed and therefore do not contain all disclosures required by
generally accepted accounting principles for annual financial reporting
purposes. Reference should be made to the consolidated financial
statements and footnotes thereto included in the Corporation's 1993 Annual
Report on Form 10-K.
In the opinion of Management, the accompanying condensed consolidated
financial statements contain all adjustments (consisting of those of a
normal recurring nature) considered necessary to present fairly the
condensed consolidated financial position of the Corporation at June 30,
1994, the condensed consolidated results of its operations for the three
months and six months ended June 30, 1994 and June 30, 1993, the condensed
consolidated changes in Stockholders' Equity and the condensed
consolidated cash flows for the six months ended June 30, 1994 and June
30, 1993.
The condensed consolidated results of operations of the Corporation for
the six months ended June 30, 1994 are not necessarily indicative of the
results to be expected for the full year. In evaluating the future
operating results of the Corporation, several factors should be
considered, including: inflation and interest rates, competition, the
effects of the economy, the international situation, public attitude
towards mutual funds, the securities market and government regulations.
NOTE 2--INVESTMENTS:
In May 1993, the Financial Accounting Standards Board issued Statement
No. 115 ("FAS No. 115"), "Accounting for Certain Investments in Debt and
Equity Securities." The Corporation adopted the provisions of the new
standard for investments held as of or acquired after January 1, 1994. In
accordance with the Statement, prior period financial statements have not
been restated to reflect the change in accounting principle.
Stockholders' Equity at January 1, 1994, was increased $4 million (net of
$2.1 million in deferred income taxes) to reflect the net unrealized gains
at that date on securities classified as "available for sale" (previously
carried at lower of aggregate cost or market or at amortized cost).
-8-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2--INVESTMENTS: - (continued)
It is the Corporation's policy (pursuant to FAS No. 115), excluding
Dreyfus Service Corporation ("Service Corporation"), to classify
marketable debt or equity securities (consisting of long or short
positions) into one of three portfolios: trading securities, held to
maturity securities or available for sale securities. Securities are
classified as trading securities and carried at fair value, with
unrealized gains and losses included in earnings, when the intent is to
hold the securities for the purpose of selling them in the near term,
generally with the objective of generating profits on short-term market
movements. Debt securities are classified as held to maturity securities
and carried at amortized cost when management has the positive intent and
ability to hold to maturity. Marketable debt and equity securities not
classified as either trading or held to maturity securities are classified
as available for sale securities and are carried at fair value. Aggregate
net unrealized gains or losses on the available for sale securities
portfolio are credited or charged to Stockholders' Equity (net of deferred
income tax or deferred tax benefit). Net realized gains or losses
resulting from the sale of investments are recorded on the identified cost
basis and included in operations.
The Corporation engages in short selling which obligates the
Corporation to replace the security borrowed by purchasing the identical
security at its then current fair value.
Service Corporation, a wholly-owned broker-dealer subsidiary of the
Corporation, carries its securities at fair value in accordance with the
practice in the brokerage industry; unrealized gains or losses are
credited or charged to operations.
The following table summarizes the carrying values of the Corporation's
investments in marketable securities, by portfolio (000's omitted) at June
30, 1994:
Trading securities. . . . . . . . . . . . . . . . . . . . $ 74
Available for sale securities . . . . . . . . . . . . . . 364,082
Held to maturity securities . . . . . . . . . . . . . . . 117,023
__________
Investments in marketable securities. . . . . . . . . . . $481,179
==========
Trading securities were carried at fair value at June 30, 1994.
Realized and unrealized gains and losses on trading securities are
included in Net gains on investment transactions. Aggregate net
unrealized losses on such securities for the three months and six months
ended June 30, 1994, amounted to $0.2 million and $2.3 million,
respectively.
-9-
THE DREYFUS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2--INVESTMENTS: - (continued)
At June 30, 1994, the Corporation's available for sale portfolio had an
aggregate net unrealized loss of $11 million (net of estimated deferred
tax benefit of $5.9 million) which was charged to Stockholders' Equity.
During the second quarter of 1994 the Corporation realized gross gains and
losses of $9.5 million and $1.5 million, respectively, from the sales of
securities classified as available for sale. Such gross realized gains
and losses amounted to $12.5 million and $2.8 million, respectively, for
the six months ended June 30, 1994. Aggregate net unrealized losses on
the available for sale portfolio amounted to $8.4 million at July 29, 1994
(net of estimated deferred tax benefit of $4.5).
The following tables summarize contractual maturities and gross
unrealized gains and losses for the available for sale and held to
maturity securities portfolios:
Contractual Maturities at June 30, 1994 (000's omitted):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Debt securities available for sale || Held to maturity securities
_____________________________________||______________________________
||
Book Value Fair Value || Book Value Fair Value
__________ __________ || __________ __________
||
Within 1 Year. . . . . . . . . . . $ 2,000 $ 2,010 || $ 55,850 $ 55,951
||
After 1 through 5 Years. . . . . . 167,342 160,164 || 33,215 33,568
||
After 5 through 10 Years . . . . . 29,421 26,980 || 24,361 24,147
||
After 10 Years . . . . . . . . . . - - || 3,597 3,546
_________ ________ || ________ ________
||
Totals. . . . . . . . . . . $198,763 $189,154 || $117,023 $117,212
========= ======== || ======== ========
</TABLE>
Gross unrealized gains and losses at June 30, 1994 (000's omitted):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available for sale securities || Held to maturity securities
________________________________________||_____________________________________
Cost Gross unrealized | Fair || Amortized Gross unrealized | Fair
________________ | || ________________ |
(Proceeds) Gains Losses | Value || Cost Gains Losses | Value
__________ _____ ______ | _____ || _________ _____ ______ | ______
| || |
U.S. Treasury & Agency. . $196,763 $ - ($9,619) | $187,144 || $ 13,165 $ 13 ($256) | $ 12,922
Obligations of States and | || |
Political Subdivisions. - - - | - || 102,833 668 (243) | 103,258
Other Debt Securities . . 2,000 10 - | 2,010 || 1,025 7 - | 1,032
________ ______ _________ | ________ || ________ _____ ______ | ________
Total Debt Securities . . 198,763 10 (9,619) | 189,154 || 117,023 688 (499) | 117,212
Equity Securities . . . . 182,183 2,098 (9,353) | 174,928 || - - - | -
________ ______ _________ | ________ || ________ _____ ______ | ________
Total Debt and Equity | || |
Securities. . . . . . . $380,946 $2,108 ($18,972) | $364,082 || $117,023 $ 688 ($499) | $117,212
======== ====== ========= | ======== || ======== ===== ====== | ========
</TABLE>
-10-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2--INVESTMENTS: - (continued)
For the three months and six months ended June 30, 1993, the
Corporation recorded a charge to operations of $9 million and $14.9
million, respectively, in connection with "other than temporary" declines
in the value of the Corporation's investment portfolios. There were no
"other than temporary" declines in the value of the Corporation's
investment portfolios charged to operations for the three months and six
months ended June 30, 1994.
The Corporation is a party to financial instruments with off-balance
sheet risk. These financial instruments include futures contracts,
forward contracts and options written. The Corporation enters into these
transactions as part of its trading activities, as well as to reduce its
own exposure to market risk in connection with its positions in certain
sponsored index funds.
Off-balance sheet financial instruments involve varying degrees of
market and credit risk that exceed the amounts recognized on the balance
sheet. Market risk arises from changes in the market value of contractual
positions due to movements in underlying securities or indices. Credit
risk relates to the ability of the Corporation's counter-party to meet its
settlement obligations under the contract and generally is limited to the
estimated aggregate replacement cost of those contracts in a gain position
and was not material at June 30, 1994. The estimated fair values for such
financial instruments at June 30, 1994 are summarized below (000's
omitted):
<TABLE>
<CAPTION>
Contract or
Notional Fair
Principal Value of
Amount Contracts
___________ _________
Long Positions:
<S> <C> <C>
U.S. Treasury Futures Contracts, Sept. 1994. . . . . . . . . $82,398 ($1,423)
Foreign Government Futures Contracts, Sept. 1994 . . . . . . 29,922 (231)
Short Positions:
Japanese Yen Forward Contracts, July 1994. . . . . . . . . . $10,907 ($587)
S&P Index Options, Sept. 1994. . . . . . . . . . . . . . . . 62 (12)
Options on U.S. Treasury Futures Contracts, Sept. 1994 25 19
</TABLE>
-11-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3--DEFERRED SALES COMMISSIONS:
The Corporation offers certain funds with multiple classes of shares.
These funds offer Class A shares, which are sold with a sales charge
imposed at the time of purchase, and Class B shares which are subject to a
contingent deferred sales charge ("CDSC") imposed on redemptions made
within a specified period of time. Approximately six years after the date
of purchase, Class B shares automatically convert to Class A shares. The
CDSC rate imposed on redemptions are based on the following investment
aging period:
CDSC rate imposed on redemptions
________________________________
Funds with Funds with
a maximum a maximum
Year since purchase: charge of 4% charge of 3%
____________________ ____________ ____________
Within 2 years 4% 3%
After 2 through 4 years 3% 2%
5 years 2% 1%
6 years 1% 0%
Class B shares are also subject to an annual distribution fee payable to
Service Corporation pursuant to a distribution plan adopted in accordance
with Rule 12b-1 under the Investment Company Act of 1940 ("Rule 12b-1
plan"). Sales commissions paid by Service Corporation to broker/dealers
for selling Class B shares are capitalized by Service Corporation and
amortized to operations over six years. This amortization period
approximates the period of time during which sales commissions paid to
broker/dealers are expected to be recovered from the funds through the
payments made pursuant to the funds' Rule 12b-1 Plans. Contingent
deferred sales charges, when received by Service Corporation, reduce
unamortized deferred sales commissions.
At June 30, 1994, deferred sales commissions, included in "Other
assets", amounted to $18.8 million (net of accumulated amortization of
$2.8 million). Amortization of deferred sales commissions (included in
"Underwriting and other fees") for the three months ended June 30, 1994
and June 30, 1993 amounted to $0.8 million and $0.2 million, respectively.
Amortization of deferred sales commissions for the six months ended June
30, 1994 and June 30, 1993 amounted to $1.6 million and $0.3 million,
respectively.
Service Corporation assesses the recoverability of deferred sales
commissions by comparing the balance of such deferred sales commissions to
the fee that would be received if all investors redeemed their shares. At
June 30, 1994, the fee that would be received if all investors redeemed
their shares ($24.3 million) exceeded the deferred sales commissions
($18.8 million) by $5.5 million. This excess is primarily related to
sales placed directly through Service Corporation for which no deferred
sales commissions were paid.
-12-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4--STOCKHOLDERS' EQUITY:
At June 30, 1994, Additional paid-in capital and Retained earnings were
not available for payment of dividends to the extent of approximately
$204.8 million, substantially representing the cost of treasury stock and
required capital for the Corporation's regulated subsidiaries.
Pursuant to an Amended and Restated Agreement and Plan of Merger (see
Note 6), the Corporation may not declare dividends, other than the regular
quarterly dividend of $.19 per share and may not purchase any additional
treasury shares.
On July 13, 1994, the Board of Directors of the Corporation declared a
third quarter dividend of $.19 per share, payable on August 10, 1994 to
stockholders of record at the close of business on August 1, 1994.
NOTE 5--INCENTIVE STOCK OPTION PLAN:
A full description of the Incentive Stock Option Plan (the "Plan") is
contained in the Corporation's 1993 Annual Report on Form 10-K. The
Plan expired in 1992, and no new Options may be granted under the Plan,
although any existing unexercised Options will continue in accordance with
their respective terms. Book Value Shares must be acquired from and sold
back to the Corporation at the book value (as defined in the Plan) of the
Corporation's Common Stock. If the Corporation had been obligated to
repurchase the shares issued and outstanding under the Plan and also the
shares related to exercisable Options under the Plan at June 30, 1994, the
net amount payable would have been approximately $3.6 million.
NOTE 6--MERGER WITH MELLON BANK CORPORATION:
The Corporation has entered into an Amended and Restated Agreement and
Plan of Merger, dated as of December 5, 1993 (the "Merger Agreement")
providing for the merger of the Corporation with a subsidiary of Mellon
Bank Corporation ("Mellon"). Under the terms of the agreement, the
Corporation's stockholders will be entitled to receive 0.88017 shares of
Mellon Common Stock for each share of the Corporation's Common Stock, in a
tax-free exchange. Following the merger, it is planned that the
Corporation will be a direct subsidiary of Mellon Bank, N.A. Closing of
the merger is subject to a number of contingencies, including the receipt
of certain regulatory approvals, the approvals of the stockholders of the
Corporation and Mellon, and certain approvals of the Boards of Directors
and shareholders of the mutual funds managed, administered or advised by
the Corporation. The merger is expected to occur in August 1994, but
could occur later. The Merger Agreement provides for the Corporation to
pay Mellon $50 million should the Corporation, among other matters, engage
in certain business combination transactions specified in the agreement,
with any person other than Mellon, or under certain other defined
circumstances. Costs incurred in connection with the merger, including
payments related to the Contingent Benefit Plan, will be charged against
operations of the merged entities. A description of the Contingent
Benefit Plan is contained in the Corporation's 1993 Annual Report on Form
10-K.
-13-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7--LITIGATION:
A) Class Actions
_____________
Subsequent to the announcement of the proposed merger with Mellon (see
Note 6), stockholders of the Corporation commenced six purported class
action suits in the Supreme Court of the State of New York, County of New
York, naming the Corporation, Mellon and the individual directors of the
Corporation as defendants, with respect to the transactions contemplated
by the Merger Agreement with Mellon. The Corporation believes that these
complaints lack merit and intends to defend them vigorously.
B) SEC Application
_______________
On December 22, 1993, six stockholders of mutual funds of which the
Corporation is the adviser ("Dreyfus-managed mutual funds") filed an
application with the Securities and Exchange Commission (the "SEC") for a
statutory determination that the "non-interested" directors of the
individual Dreyfus-managed mutual funds are "interested" directors within
the meaning of the Investment Company Act of 1940 (the "1940 Act"),
thereby prohibiting them from voting on each of the fund's advisory
contracts and other related matters in connection with the merger with
Mellon (the "Application"). The non-interested directors opposed the
Application. By letter dated April 1, 1994, the SEC advised counsel for
the applicants that the SEC had determined not to conduct the proceeding
requested by the applicants.
On April 25, 1994, applicants filed a "Petition for Modification of
Order of U.S. Securities and Exchange Commission" with the United States
Court of Appeals for the District of Columbia Circuit. The petition seeks
"modification" of the SEC's April 1, 1994 "Order" denying applicants'
request for a hearing. Applicants also filed a motion for an expedited
appeal, which the SEC has opposed. On June 10, 1994, the SEC filed a
motion to dismiss the petition on the ground that applicants have no right
under the 1940 Act or otherwise to compel the SEC to initiate a proceeding
under Section 2(a)(19) of the 1940 Act, and accordingly the SEC's
determination is not subject to judicial review.
C) Other Action
____________
On March 23, 1994, two shareholders of Dreyfus Liquid Assets, Inc.
("Dreyfus Liquid Assets") and Dreyfus Growth Opportunity Fund, Inc.
("Dreyfus Growth") filed a complaint in the Supreme Court of the State of
New York, County of Queens, naming the Corporation and Service Corporation
as defendants, and Dreyfus Liquid Assets and Dreyfus Growth, individually,
and as representatives of the management investment companies for which
the Corporation serves as investment adviser under the 1940 Act, as
nominal defendants. The complaint is brought derivatively on behalf of
Dreyfus Liquid Assets and Dreyfus Growth, individually, and as
representatives of the Dreyfus family of funds.
-14-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7--LITIGATION: -- (continued)
C) Other Action -- (continued)
____________
In the complaint, the plaintiffs allege, among other things, that the
Corporation and Service Corporation violated their fiduciary duties by
receiving pecuniary benefits from the sale of their "trust offices" in
connection with the Merger (see Note 6). The plaintiffs further allege
that the Corporation and Service Corporation breached their respective
fiduciary duties by charging the Dreyfus Family of Funds excessive fees of
at least $55 million, in order to maximize profits earned from the sale of
the "trust offices," and by acting solely to maximize their own profits
through the proposed sale of the "trust offices" to Mellon, in violation
of Section 15(f) of the 1940 Act. Finally, the plaintiffs allege that the
Merger will impose an "unfair burden" on the Dreyfus Family of Funds. On
April 12, 1994, the defendants and nominal defendants removed the action
to the United States District Court for the Eastern District of New York.
The action seeks, among other things, to enjoin the Corporation and
Service Corporation from selling the profits from the "trust offices" to
Mellon, or, in the event that the Merger is consummated, a rescission of
such sale or an accounting and disgorgement of all profits earned by the
Corporation and Service Corporation as a result of the sale of the "trust
offices", unspecified compensatory damages, costs and disbursements.
On June 20, 1994 the same two shareholders of Dreyfus Liquid Assets and
Dreyfus Growth filed another complaint in the United States District Court
for the Eastern District of New York, naming the Corporation, Mr. Stein,
Mr. DiMartino and Dreyfus Liquid Assets and Dreyfus Growth, "individually
and on behalf of the Dreyfus Family of Funds, an unincorporated
association, and its members," as defendants. The complaint was brought
as a class action on behalf of plaintiffs and other shareholders in the
Dreyfus Family of Funds.
In their complaint, as amended, plaintiffs allege, among other things,
that the proxy statements which defendants disseminated to all
shareholders of the Corporation's mutual funds, in order to obtain the
necessary approvals for new investment advisory contracts with the
Corporation as a wholly-owned subsidiary of Mellon, violate Section 20(a)
of the 1940 Act because they contain omissions or misrepresentations
concerning (1) the effect of the Merger on regulatory oversight of each
fund's investment advisor; and (2) the independence of the boards of
directors recommending the new investment advisory contracts and being
proposed for re-election to the various boards. In addition, plaintiffs
allege that through approving, permitting and acquiescing in these alleged
material omissions or misrepresentations, defendants the Corporation,
Stein and DiMartino breached their fiduciary duties owed to the
Corporation's mutual funds and their shareholders under Section 36(a) and
Section 36(b) of the 1940 Act.
-15-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7--LITIGATION: -- (continued)
C) Other Action -- (continued)
____________
The complaint sought to enjoin the meetings of shareholders of the
Corporation's funds (scheduled for the first week of August 1994) at which
votes were held, among other things, to approve new investment advisory
agreements between the respective funds and the Corporation. In the
alternative, the complaint seeks rescission or damages if the vote is
completed and the Merger is consummated.
Plaintiffs moved for a preliminary injunction, seeking to enjoin the
meetings of shareholders of the Corporation's funds scheduled for the
first week of August 1994, pending corrective disclosures. Following
expedited discovery and a hearing, the Court (Sifton, J.), by order dated
July 29, 1994, denied plaintiffs' motion. In a 33 page Memorandum and
Order, the Court ruled that plaintiffs had failed to demonstrate
irreparable harm or a likelihood of success on the merits.
The Corporation believes that the complaint lacks merit and intends to
defend the suit vigorously.
-16-
PART I--ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition, Liquidity and Capital Resources
____________________________________________________
Receivables increased $30.5 million during 1994 as compared to December
31, 1993, primarily related to the sale of investments ($17.6 million),
income accrued pursuant to a noncompetition agreement ($4 million) and
accrued interest receivable ($3.2 million).
Other investments decreased $51.4 million during 1994 as compared to
December 31, 1993, primarily attributable to the reduction of certain
investments in limited partnerships.
Prepaid expenses and deferred charges, included in Other assets,
increased $29.2 million in 1994 as compared to December 31, 1993. This is
primarily attributable to an increase in prepaid advertising expenses
($11.6 million), deferred income taxes ($7.8) ( see Note 2 to condensed
consolidated financial statements) and deferred sales commissions ($7.5
million) (see Note 3 to condensed consolidated financial statements).
For the six months ended June 30, 1994, the Stockholders' Equity of the
Corporation increased from $824.6 million to $849.3 million, primarily
attributable to earnings applicable to investment management services net
of dividends paid to stockholders, and an aggregate net unrealized loss on
the available for sale securities portfolio (see Note 2 to the condensed
consolidated financial statements).
The Corporation has generally maintained a substantial degree of
liquidity and believes that cash and cash flow from operations are
adequate to meet current and potential business operating needs. In
addition to the liquidity provided by cash and cash equivalents of $154.7
million at June 30, 1994, the Corporation maintains a significant
investment in marketable securities. The resources of the Corporation
have been utilized to sponsor, promote and market shares of the Dreyfus
Group of Mutual Funds and to sponsor and promote new business activities.
At June 30, 1994, the Corporation had investments in marketable
securities and certain other investments, consisting of limited
partnerships engaged in securities trading, with an aggregate cost and
fair value of $572 million and $550.6 million, respectively. In
determining the appropriate carrying amounts of these investments, the
Corporation considered whether any declines in market value below carrying
values were "other than temporary" (see Note 2 to condensed consolidated
financial statements).
-17-
PART I--ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- (continued)
Assets Managed, Advised or Administered
_______________________________________
The following table sets forth certain information with respect to net
assets managed, advised or administered by the Corporation by fund
category, at the dates shown (in billions):
June 30, December 31,
1994 1993
________ ____________
Taxable money market funds . . . . . . . . $27.0 $31.2
Tax-exempt bond funds. . . . . . . . . . . 19.0 21.3
Equity funds . . . . . . . . . . . . . . . 8.2 8.3
Tax-exempt money market funds. . . . . . . 8.0 7.6
Fixed income funds . . . . . . . . . . . . 4.3 4.8
Funds jointly advised/administered . . . . 3.2 3.2
Separately advised accounts. . . . . . . . 1.1 1.2
_____ _____
Total. . . . . . . . . . . . . . . . . . $70.8 $77.6
===== =====
Results of Operations
_____________________
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
________ ________
1994 1993 1994 1993
____ ____ ____ ____
<S> <C> <C> <C> <C>
Management, investment advisory and
administrative fees, net of fees
waived*. . . . . . . . . . . . . . . . . . . . $71,561 $76,317 $144,735 $152,842
Less: Fund expense reimbursements . . . . . . (898) (2,349) (2,424) (4,765)
_______ _______ ________ ________
Management, investment advisory and
administrative fees (net). . . . . . . . . . . $70,663 $73,968 $142,311 $148,077
======= ======= ======== ========
* Amount of fees waived . . . . . . . . . . . . . $10,199 $12,054 $ 22,749 $ 23,996
======= ======= ======== ========
Management, investment advisory and
administrative fees, by fund category (net):
Tax-exempt bond funds. . . . . . . . . . . . . $25,692 $24,487 $ 52,554 $ 47,485
Taxable money market funds . . . . . . . . . . 20,892 26,989 41,587 56,352
Equity funds . . . . . . . . . . . . . . . . . 12,406 10,858 24,881 20,907
Fixed income funds . . . . . . . . . . . . . . 5,046 4,752 10,303 9,133
Tax-exempt money market funds. . . . . . . . . 4,960 4,507 9,721 9,199
Separately advised accounts. . . . . . . . . . 877 1,305 1,724 2,625
Funds jointly advised/
administered . . . . . . . . . . . . . . . . 790 1,070 1,541 2,376
_______ _______ ________ ________
Total. . . . . . . . . . . . . . . . . . . . $70,663 $73,968 $142,311 $148,077
======= ======= ======== ========
</TABLE>
-18-
PART I--ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- (continued)
Revenues of the Corporation are primarily fees from mutual funds
sponsored by the Corporation. These fees are at various rates and are
based on the average net assets of each respective fund. The decrease in
Management, investment advisory and administrative fees between respective
periods, as shown in the preceding table, was principally due to a
decrease in the average net assets of sponsored taxable money market funds
between the periods. The decline in average net assets of sponsored
taxable money market funds was partially offset by an increase in assets
under management in other sponsored funds. Management fee rates charged
to money market funds are generally lower than the rates charged to other
sponsored funds.
From time to time, for competitive reasons, the Corporation agrees to
waive certain management fees and/or reimburse certain fund expenses,
either for a specified or unspecified period of time, to increase the
fund's rate of return to investors and thereby promote the growth of fund
assets. In the future, the Corporation may continue to follow such
practices; however, it is not possible to predict what effect, if any, the
imposition of management fees and/or the discontinuance of fund expense
reimbursements may have on the future level of certain fund assets under
management. Furthermore, the Corporation presently is unable to determine
to what extent, if any, it may impose management fees on funds where fee
waivers presently exist, or to what extent fund expense reimbursements may
be reduced in the future.
The recent increase in interest rates during the first quarter of 1994
had a positive impact on the yield of the Corporation's own investments in
money market securities, while at the same time reducing the value of the
Corporation's investments in most Treasury, corporate and municipal debt
securities. Changes in interest rates impact the yields and net asset
values of funds managed by the Corporation. Rising interest rates
increase the yields of money market, tax exempt bond and fixed income
funds. Conversely, rising interest rates adversely affect the net asset
value of tax exempt bond and other fixed income funds and may slow growth
or cause declines in these funds and/or equity funds. Since management
fees are based on net asset values of the managed funds, lower net asset
values described above would result in lower management fees earned by the
Corporation. It should be noted that changes in interest rates may also
impact the inflow of new investments to existing mutual fund accounts. A
change in the mix of funds managed by the Corporation also affects the
management fees earned by the Corporation, since management fees charged
to tax exempt bond, fixed income funds and equity funds are generally
higher than money market funds (See Management's discussion and analysis
of financial condition and results of operations on pages 19 and 21). The
Corporation is unable to predict or estimate the effect of changes in
interest rates on the Corporation's future results of operations or on the
attractiveness of the mutual funds it offers to the investing public.
Second Quarter 1994 Compared to the Second Quarter 1993
_______________________________________________________
The average net assets of sponsored funds decreased $10.7 billion from
an average of $78.6 billion during the second quarter of 1993 to an
average of $67.9 billion during the second quarter of 1994. This decrease
resulted principally from the decline in the average net assets of
sponsored taxable money market funds ($12.1 billion) which was partially
offset by an increase in the average net assets of sponsored equity funds
($1.1 billion).
Management fees waived decreased $1.9 million during the second quarter
of 1994 as compared to the similar period in 1993, primarily attributable
to certain sponsored taxable money market funds.
Fund expense reimbursements (netted against management fee revenues)
decreased $1.4 million during the second quarter of 1994 as compared to
the second quarter of 1993, primarily applicable to certain tax exempt
bond, taxable money market and fixed income funds.
Interest and dividends increased from $6.2 million during the second
quarter of 1993 to $7 million during the second quarter of 1994, primarily
as a result of additional amounts invested in higher yielding marketable
securities and cash equivalents.
-19-
PART I--ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- (continued)
Second Quarter 1994 Compared to the Second Quarter 1993 - (continued)
_____________________________________________________________________
Underwriting and other fees decreased from $5.3 million during the
second quarter of 1993 to $5 million during the similar period in 1994,
primarily due to a decrease in underwriting commissions ($2 million),
resulting from a decrease in the sale of funds sold with an up-front sales
charge which were substantially offset by an increase in fees earned in
connection with variable annuity products ($2 million).
For the second quarter of 1994 the Corporation recorded aggregate net
realized gains/(losses) from the sale or liquidation of the following
investments: $8 million from the available for sale portfolio, ($0.4
million) from the liquidation of certain investments in limited
partnerships (included in "Other investments") accounted for at cost and
($1.3 million ) from trading activities in derivative investments with
off-balance sheet risk. These net gains were offset by aggregate net
unrealized losses of $1.9 million and $0.2 million, in connection with
trading activities in derivative investments with off-balance sheet risk
and the Corporation's trading portfolio, respectively. For the second
quarter of 1993 the Corporation recorded aggregate net realized gains of
$9.6 million from the liquidation of certain investments in limited
partnerships accounted for at cost and $3.5 million from the sale of
marketable securities (including derivative investments with off-balance
sheet risk). These realized gains were offset by a charge during the
second quarter of 1993 of $9.9 million for "other than temporary declines"
in the value of the Corporation's investment portfolios.
Operating expenses decreased during the second quarter of 1994 as
compared to the corresponding period in 1993, primarily attributable to a
decrease in advertising ($3.7 million) and salaries and employee benefits
($0.4 million). These decreases were partially offset by increases in
consulting fees ($1.1 million) and data processing fees ($0.8 million).
The increase in the Corporation's effective tax rate from 36.3% in the
second quarter of 1993 to 36.8% in the second quarter of 1994, was
primarily due to an increase in the Federal statutory rate from 34% to 35%
retroactive to the beginning of 1993, effective July 1, 1993 and a
decrease in the proportion of tax-exempt interest and dividend income to
total pre-tax income. These increases were partially offset by a decrease
in State and local income taxes resulting from an increase in the
proportion of investment income to pre-tax income.
Six months ended June 30, 1994 as compared to the six months ended June
_______________________________________________________________________
30, 1993.
_________
The average net assets of sponsored funds decreased $9.5 billion from
an average of $80.2 billion during the first half of 1993 to an average of
$70.7 billion during the first half of 1994. This decrease is
attributable to the decline in the average net assets of sponsored taxable
money market funds ($12.6 billion) which was partially offset by an
increase in the average net assets of sponsored equity funds ($1.3
billion) and tax exempt bond funds ($1 billion).
Management fees waived decreased $1.2 million during the first half of
1994 as compared to the similar period in 1993, primarily attributable to
certain sponsored tax exempt bond and taxable money market funds ($1.4
million each) which was partially offset by an increase in management fee
waivers on certain tax exempt money market funds ($1.2 million).
Fund expense reimbursements (netted against management fee revenues)
decreased $2.3 million during the first half of 1994 as compared to the
first half of 1993, primarily applicable to certain tax exempt bond ($0.8
million), taxable money market ($0.7 million), tax exempt money market
($0.5 million) and fixed income funds ($0.4 million).
-20-
PART I--ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- (continued)
Six Months Ended June 30, 1994 Compared to the Six Months Ended June 30,
________________________________________________________________________
1993 - (continued)
__________________
Underwriting and other fees increased from $10.5 million during the
first half of 1993 to $11.9 million during the corresponding period in
1994, primarily due to an increase in fees earned in connection with
variable annuity products ($3.5 million) and an increase in the amount of
service fees retained under various service plans adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940 ($2.7 million). These
increases were partially offset by a decrease in underwriting commissions
($3.6 million), resulting from a decrease in the sale of funds sold with
an up-front sales charge and an increase in the amortization of deferred
sales commissions ($1.3 million) paid to broker dealers in connection with
the sale of funds sold with a contingent deferred sales charge (see Note 3
to the condensed consolidated financial statements).
For the first half of 1994 the Corporation recorded aggregate net
realized gains/(losses) from the sale or liquidation of the following
investments: $9.7 million from the available for sale portfolio, $0.4
million from the trading portfolio, $13.2 million from the liquidation of
certain investments in limited partnerships accounted for at cost and
($1.6 million ) from trading activities in derivative investments with
off-balance sheet risk. These net gains were offset by aggregate net
unrealized losses of $2.5 million and $2.3 million, in connection with
trading activities in derivative investments with off-balance sheet risk
and the Corporation's trading portfolio, respectively. For the first
half of 1993 the Corporation recorded aggregate net realized gains of $9.6
million from the liquidation of certain investments in limited
partnerships accounted for at cost and $12.8 million from the sale of
marketable securities (including derivatives investments with off-balance
sheet risk). These realized gains were offset by a charge during the
first half of 1993 of $14.9 million for "other than temporary declines"
in the value of the Corporation's investment portfolios and aggregate net
unrealized losses of $0.6 million from the Corporation's trading
activities.
Operating expenses increased $5.5 million during the first half of 1994
as compared to the first half of 1993, primarily attributable to an
increase in salaries and employee benefits ($3.2 million), occupancy and
communication costs ($1.6 million) and consulting and data processing fees
(of $1.4 million each). These increases were partially offset by a
decrease in reimbursements from certain sponsored investments companies
for shareholder servicing costs incurred by the Corporation ($1.4
million).
The increase in the Corporation's effective tax rate from 36.9% in the
first half of 1993 to 37.6% in the comparable period in 1994, was
primarily due to an increase in the Federal statutory rate from 34% to 35%
retroactive to the beginning of 1993, effective July 1, 1993 and a
decrease in the proportion of tax-exempt interest and dividend income to
total pre-tax income. These increases were partially offset by a decrease
in state and local income taxes resulting from an increase in the
proportion of investment income to pre-tax income.
-21-
PART I--ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- (continued)
Matters Relating to Competition
_______________________________
The mutual fund industry has grown dramatically over the past several
years and is highly competitive. Total assets managed by the industry
grew from approximately $810 billion at December 31, 1988 to over $2.1
trillion at May 31, 1994. There are presently almost 600 mutual fund
management companies in the United States, managing over 4,800 mutual
funds of varying sizes and investment policies. The Corporation and the
mutual fund industry are in competition with insurance companies, banking
organizations, securities dealers and other financial institutions that
provide investors with competing mutual funds and alternatives to mutual
funds. This competition has increased over the past several years, in
part, as a result of a number of rulings and interpretations issued by
Federal bank regulatory agencies that have expanded significantly the
range of mutual fund activities in which banks and bank holding companies
may engage. Competition is based upon investment performance in terms of
attaining the stated objectives of particular funds, advertising and sales
promotional efforts, available distribution channels (such as banks and
broker dealers) and the type and quality of services offered to investors.
Recent Mutual Fund Developments
_______________________________
In the second quarter of 1994, the Growth and Income portfolio and
International Equity portfolio of Dreyfus Variable Investment Fund
commenced operations. The Growth and Income portfolio's goal is to
provide long-term capital growth, current income and growth of income,
consistent with reasonable investment risk; the International Equity
portfolio's goal is to maximize capital appreciation. The fund, which
consists of eight separate portfolios, was designed as a funding vehicle
for variable annuity contracts and variable life insurance policies
offered by the separate accounts of various life insurance companies.
During the second quarter, two new portfolios, a Colorado portfolio and
an Oregon portfolio were added to the thirteen pre-existing portfolios of
Premier State Municipal Bond Fund. Each portfolio seeks to achieve the
fund's investment objective of maximization of current income exempt from
Federal and, where applicable, from state income taxes, without undue risk
by investing in municipal obligations primarily issued in the state for
which it is named, and believed to be exempt from Federal income taxes
and, where applicable, from the state's income taxes.
Also during the second quarter, five new portfolios, consisting of a
National, Connecticut, Florida, New Jersey and New York portfolio, were
added to the pre-existing California portfolio of Premier Insured
Municipal Bond Fund. Each portfolio seeks to achieve the fund's goal of
maximization of current income exempt from Federal and, where applicable,
from state personal income taxes to the extent consistent with the
preservation of capital by investing primarily in municipal obligations
that are believed to be exempt from Federal income taxes and that are
insured as to timely payment of principal and interest by recognized
insurers of municipal obligations. In addition, the Connecticut, Florida,
New Jersey and New York portfolios invest in municipal obligations
primarily issued by issuers in the state for which it is named, and
believed to be exempt from Federal income taxes and, where applicable,
from the state's personal income taxes.
The Corporation is continuing to consider the development of additional
funds to serve the diverse investment interests of various segments of the
public.
-22-
PART I--ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- (continued)
Consumer Financial Services
___________________________
The Dreyfus Security Savings Bank, F.S.B. (the "Savings Bank"), which
is an indirect subsidiary of the Corporation, is a Federally-chartered
savings bank and a member of the Federal Deposit Insurance Corporation.
The Savings Bank offers various bank products and services (including but
not limited to, certificates of deposit, residential mortgage loans and
secured personal loans) to investors in the mutual funds managed, advised
or administered by the Corporation and to the general public. The Savings
Bank maintains its principal office in Paramus, New Jersey, and has a
branch office in San Francisco, California. It also has received
conditional approval from the Office of Thrift Supervision to open
additional branch offices in six other states.
As of May 31, 1994, the Corporation sold Dreyfus Consumer Life
Insurance Company ("Dreyfus Consumer Life") to a third party for total
consideration equalling approximately $10.2 million. This transaction,
which resulted in a gain of $0.5 million, had no material impact on the
results of operations or the consolidated financial position of the
Corporation. The results of operations of Dreyfus Consumer Life were not
material to the condensed consolidated results of operations for any of
the periods presented.
-23-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation.
(including Affiliate Agreement Exhibit 5.04)
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
AMENDED AND RESTATED AGREEMENT
AND PLAN OF MERGER
dated as of December 5, 1993
by and among
MELLON BANK CORPORATION
MELLON BANK, N.A.
XYZ SUB CORPORATION
and
THE DREYFUS CORPORATION
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
-24-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of the 5th
day of December 1993 (this "Agreement"), by and among Mellon Bank Corporation
("Mellon"), Mellon Bank, N.A. ("Mellon Bank"), XYZ Sub Corporation ("Merger
Subsidiary") and The Dreyfus Corporation ("Dreyfus").
RECITALS:
A. Dreyfus. Dreyfus is a corporation duly organized and existing in good
standing under the laws of the State of New York, with its principal executive
offices located in New York, New York. Dreyfus was originally formed under the
name "John G. Nesbett & Co., Inc." As of the date hereof, Dreyfus has
50,000,000 authorized shares of common stock, each of $0.10 par value
("Dreyfus Common Stock"), of which, as of October 29, 1993, no more than
36,550,828 shares were issued and outstanding (no other class of capital stock
being authorized). Since October 29, 1993 Dreyfus has not issued any shares of
Dreyfus Common Stock except pursuant to the exercise of options outstanding on
such date under its employee stock option plans. All the issued and
outstanding shares of Dreyfus Common Stock are duly and validly authorized and
issued, are fully paid and have not been issued in violation of any preemptive
rights. Dreyfus and its wholly-owned subsidiary, Dreyfus Management, Inc., are
duly registered as investment advisers under the Investment Advisers Act of
1940, as amended (together with the rules and regulations thereunder, the
"Investment Advisers Act") and all applicable state investment advisory laws.
Dreyfus Service Corp., a wholly-owned subsidiary of Dreyfus, is duly
registered as a broker/dealer under the Securities Exchange Act of 1934, as
amended (together with the rules and regulations thereunder, the "Exchange
Act"), and all applicable state broker/dealer laws and is in good standing
with the National Association of Securities Dealers, Inc. (the "NASD").
B. Mellon. Mellon is a corporation duly organized and existing in good
standing under the laws of the Commonwealth of Pennsylvania, with its
principal executive offices located in Pittsburgh, Pennsylvania. As of the
date hereof, Mellon has 200,000,000 authorized shares of Common Stock, each of
$.50 par value (together, with the Rights attached thereto, "Mellon Common
Stock"), the authorized shares of preferred stock ("Mellon Preferred Stock")
listed in the Mellon Disclosure Letter as hereinafter defined (no other class
of capital stock being authorized), of which no more than 63,843,202 shares of
Mellon Common Stock and the shares of Mellon Preferred Stock listed in the
Mellon Disclosure Letter as hereinafter defined, were issued and outstanding
as of September 30, 1993. All the issued and outstanding shares of Mellon
Common Stock and the shares of Mellon Common Stock to be issued hereunder are
and will be duly and validly authorized and issued, are and will be fully paid
and nonassessable and have not been and will not be issued in violation of any
preemptive rights. Merger Subsidiary has 100 shares, $.01
-25-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
par value per share, of authorized Common Stock, of which 100 shares are issued
and outstanding and held by Mellon Bank.
C. Mellon Bank. Mellon Bank is a national banking association duly
organized and existing under the laws of the United States of America. Mellon
Bank is a wholly owned subsidiary of Mellon.
D. Merger Subsidiary. Merger Subsidiary is a corporation duly organized
and existing in good standing under the laws of New York. Merger Subsidiary is
a wholly owned subsidiary of Mellon Bank.
E. The Funds. As of the date hereof, Dreyfus and certain of the
subsidiaries of Dreyfus provide investment advisory, administrative and/or
distribution services to each of the Investment Companies (as hereinafter
defined) identified in the Dreyfus Disclosure Letter as hereinafter defined
(collectively, the "Funds" and each, individually, a "Fund").
F. Intention of the Parties. It is the intention of the parties that the
transactions contemplated hereby shall qualify as: (1) a "pooling of
interests" under generally accepted accounting principles; and (2) a tax free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended (the "Code"), and that this Agreement constitute a "plan of
reorganization" within the meaning of Section 368 of the Code.
G. Rights, Etc. Except as set forth in the Dreyfus Disclosure Letter as
hereinafter defined, there are no shares of Dreyfus Common Stock authorized
and reserved for issuance, and Dreyfus does not have any Rights (as defined
below) issued or outstanding, except pursuant to this Agreement. The term
"Rights" means securities or obligations convertible into or exchangeable for,
or giving any person any right to subscribe for or acquire, or any options,
calls, obligations or commitments relating to, shares of capital stock or
Rights.
H. Rights, Etc. Except as set forth in the Mellon Disclosure Letter as
hereinafter defined, there are no shares of Mellon Common Stock authorized and
reserved for issuance, and Mellon does not have any Rights (as defined below)
issued or outstanding, except pursuant to this Agreement.
I. Approvals. The Board of Directors of each of Dreyfus, Mellon, Mellon
Bank and Mellon Bank Subsidiary has approved and adopted, at meetings of each
of such Boards of Directors, this Agreement and has authorized the execution
hereof.
J. Amendment. As of April 14, 1994, the parties hereto determined to
amend certain provisions of this Agreement and to amend and restate this
Agreement in accordance therewith.
-26-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. At the Effective Time (as hereinafter defined):
(A) The Continuing Corporation. Merger Subsidiary shall merge (the
"Merger") with and into Dreyfus, the separate existence of Merger
Subsidiary shall cease and Dreyfus (the "Continuing Corporation") shall
be the surviving corporation in the Merger.
(B) Rights, Etc. The Continuing Corporation shall thereupon and
thereafter possess all of the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each of the
merging corporations; and all property, real, personal and mixed, and all
debts due on whatever account, and all other choses in action, and all
and every other interest, of or belonging to or due to each of the
corporations so merged, shall be deemed to be vested in the Continuing
Corporation without further act or deed; and the title to any real estate
or any interest therein, vested in any of such corporations, shall not
revert or be in any way impaired by reason of the Merger as provided by
the laws of the State of New York.
(C) Liabilities. The Continuing Corporation shall thenceforth be
responsible and liable for all the liabilities, obligations and penalties
of each of the corporations so merged.
(D) Articles of Incorporation; Bylaws; Directors; Officers. The
Articles of Incorporation and Bylaws of the Continuing Corporation shall
be those of Dreyfus, as in effect immediately prior to the Merger
becoming effective. The directors and officers of Dreyfus in office
immediately prior to the Merger becoming effective shall be the directors
and officers of the Continuing Corporation, together with such additional
directors and officers as may thereafter be elected, who shall hold
office until such time as their successors are elected and qualified.
-27-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
1.02. Effective Time; Closing. Subject to the conditions to the
obligations of the parties to effect the Merger as set forth in Article VI,
the closing of the Merger (the "Closing") shall occur on such date as Mellon
shall notify Dreyfus in writing not less than 5 days prior thereto, which date
shall not be more than 10 days after such conditions have been satisfied or
waived. Prior to the Closing, Merger Subsidiary and Dreyfus shall execute and
deliver to the New York Secretary of State, a Certificate of Merger in proper
form for filing under the New York Business Corporation Law on the day of the
Closing. The Merger shall become effective at such time on the day of the
Closing as such Certificate of Merger shall be filed with the New York
Secretary of State, such time being herein called the "Effective Time." The
Closing shall take place at the offices of Rogers & Wells, 200 Park Avenue,
New York, New York 10166 at 10:00 a.m., New York time.
1.03. Revisions to Transaction. If and to the extent Dreyfus or Mellon
determines that a change in the method of effecting the transactions
contemplated hereby would facilitate consummation of such transactions, Dreyfus
and Mellon agree to discuss such change and cooperate in good faith in
determining whether such change is in the best interests of the parties hereto,
and if so determined, to effect such change; provided, however, that no such
change shall (i) alter or change the amount or kind of consideration to be
issued to holders of Dreyfus Common Stock as provided for in this Agreement or
(ii) adversely affect the tax treatment to Dreyfus stockholders as a result of
receiving such consideration.
ARTICLE II
CONSIDERATION
2.01. Consideration. Subject to the provisions of this Agreement, at the
Effective Time:
(A) Outstanding Merger Subsidiary Common Stock. Each share of
Merger Subsidiary common stock, $0.01 par value, issued and outstanding
immediately prior to the Effective Time shall, on and after the Effective
Time, by virtue of the Merger automatically and without any action on the
part of the holder thereof, become and be converted into one share of
common stock, $0.01 par value, of the Continuing Corporation, all of
which shall be held by Mellon Bank.
(B) Outstanding Dreyfus Common Stock. Each share of Dreyfus Common
Stock issued and outstanding immediately prior to the Effective Time
(excluding Dissenters' Shares, as hereinafter defined, or shares held by
Dreyfus or any of its subsidiaries or by Mellon or any of its
subsidiaries, in each case other than in a fiduciary capacity or as a
result of debts previously contracted (collectively, the "Excluded
Shares")) shall, by virtue of the Merger, automatically and without any
action on the part of the holder thereof, become and be converted into
the right to receive 0.88017 shares of Mellon Common Stock (the "Exchange
Ratio").
-28-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
2.02 Stockholder Rights; Stock Transfers. At the Effective Time, holders
of Dreyfus Common Stock shall cease to be, and shall have no rights as,
stockholders of Dreyfus, other than to receive the consideration provided
under this Article II. After the Effective Time, there shall be no transfers
on the stock transfer books of Dreyfus or the Continuing Corporation of the
shares of Dreyfus Common Stock which were issued and outstanding immediately
prior to the Effective Time.
2.03. Fractional Shares. (i) No certificates or scrip representing
fractional shares of Mellon Common Stock shall be issued in the Merger. As
promptly as practicable following the Effective Time, the Exchange Agent (as
hereinafter defined) shall determine the excess of (x) the number of full
shares of Mellon Common Stock into which the aggregate outstanding shares of
Dreyfus Common Stock would be converted if all such shares were held by one
holder over (y) the number of full shares of Mellon Common Stock to be
distributed to holders of Dreyfus Common Stock (such excess being herein
called the "Excess Shares"). As soon after the Effective Time as practicable,
the Exchange Agent, as agent for the holders of the Dreyfus Common Stock,
shall sell the Excess Shares at the then prevailing prices on the New York
Stock Exchange, Inc. (the "NYSE") in the manner provided in this section.
(ii) Until the net proceeds of such sale or sales have been distributed
to the holders of Dreyfus Common Stock, the Exchange Agent will hold such
proceeds in trust for the holders of Dreyfus Common Stock (the "Common Shares
Trust"). Mellon shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of
the Exchange Agent incurred in connection with such sale of the Excess Shares.
The Exchange Agent shall determine the portion of the Common Shares Trust to
which each holder of Dreyfus Common Stock shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of Dreyfus Common Stock is
entitled (after taking into account all shares of Dreyfus Common Stock then
held by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of certificates for Dreyfus
Common Stock are entitled.
-29-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
(iii) Notwithstanding the provisions of clauses (i) and (ii) above, if
the parties shall so agree in writing prior to the Effective Time, then in
lieu of the sale of Excess Shares and the making of the payments contemplated
in such clauses, Mellon shall pay or cause to be paid to each holder of
Dreyfus Common Stock an amount in cash equal to the product obtained by
multiplying the fractional share interest to which such holder (after taking
into account all shares of Dreyfus Common Stock then held by such holder) would
otherwise be entitled by the closing price for a share of Mellon Common Stock
on the NYSE Composite Transactions Tape on the first business day immediately
preceding the Effective Time, and in such case, all references herein to the
cash proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this clause
(iii).
(iv) As soon as practical after the determination of the amount of cash,
if any, to be paid to holders of Dreyfus Common Stock with respect to any
fractional share interests, the Exchange Agent shall distribute such amounts
to the holders of Dreyfus Common Stock entitled thereto.
2.04. Exchange Procedures. As promptly as practicable after the
Effective Time, Mellon shall send or cause to be sent to each former
stockholder of Dreyfus of record immediately prior to the Effective Time
transmittal materials for use in exchanging such stockholder's certificates of
Dreyfus Common Stock for the consideration set forth in this Article II. The
certificates representing the shares of Mellon Common Stock into which shares
of such stockholder's Dreyfus Common Stock are converted at the Effective
Time, any fractional share checks which such stockholder shall be entitled to
receive, and any dividends paid on such shares of Mellon Common Stock for
which the record date for determination of stockholders entitled to such
dividends is on or after the 90th day after the Effective Time, will be
delivered to such stockholder only upon delivery to Mellon Bank (the "Exchange
Agent"), of the certificates representing all of such shares of Dreyfus Common
stock (or indemnity satisfactory to Mellon and the Exchange Agent, in their
sole judgment, if any of such certificates are lost, stolen or destroyed).
Following the delivery of such certificates representing all such shares of
Dreyfus Common Stock by such former shareholder of Dreyfus (or such
indemnity), such shareholder shall be entitled to receive any dividends paid
on such shares of Mellon Common Stock for which the record date for
determination of shareholders entitled to receive such dividends is on or
after the Effective Time. No interest will be paid on any such fractional
share checks or dividends to which the holder of such shares shall be entitled
to receive upon such delivery. Certificates surrendered for exchange by any
person constituting an "affiliate" of Dreyfus for purposes of Rule 145 of the
Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged for certificates representing Mellon Common Stock
-30-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
until Mellon has received a written agreement from such person as specified in
Section 5.04.
2.05. Dissenting Stockholders. Any holder of shares of Dreyfus Common
Stock who perfects his dissenters' rights of appraisal in accordance with and
as contemplated by Section 910 of the New York Business Corporation Law (the
shares held by such holder being referred to herein as "Dissenters' Shares")
shall be entitled to receive the value of such shares as determined pursuant
to such provision of law; provided, however, that no such payment shall be
made to any dissenting stockholder unless and until such dissenting
stockholder has complied with the applicable provisions of the New York
Business Corporation Law and duly surrendered the certificate or certificates
representing the shares for which payment is being made. In the event that a
dissenting stockholder of Dreyfus fails to perfect, or effectively withdraws
or loses, his rights to appraisal and of payment for his shares, after the
Effective Time, Dreyfus shall issue and deliver the consideration to which
such holder of shares of Mellon Common Stock is entitled under this Article II
(without interest) upon surrender by such holder of the certificate
certificates representing shares of Dreyfus Common Stock held by him.
2.06. Anti-Dilution Provisions. In the event Mellon changes the number
of shares of Mellon Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, recapitalization or similar
transaction with respect to the outstanding Mellon Common Stock and the record
date therefor shall be prior to the Effective Time, the Exchange Ratio shall
be proportionately adjusted.
2.07. Shares Held by Dreyfus or Mellon. Each of the Excluded Shares
shall be canceled and retired by virtue of the Merger and no consideration
shall be issued in exchange therefor.
ARTICLE III-A
REPRESENTATIONS AND WARRANTIES OF Dreyfus
Dreyfus hereby represents and warrants to Mellon that, except as set
forth in a letter from Dreyfus to Mellon delivered concurrently with this
Agreement (the "Dreyfus Disclosure Letter") (all disclosure in which Dreyfus
Disclosure Letter shall state with particularity the representation and
warranty herein, including section reference, to which such disclosure
relates), (i) the statements contained in the Recitals that relate to Dreyfus,
the subsidiaries of Dreyfus (the "Dreyfus Subsidiaries") and the Funds are
true and correct and (ii) as follows:
3.01. Organization, Standing, and Authority. Dreyfus is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of New York, and is duly
-31-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
qualified to do business and in good standing in the States of the United
States and foreign jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so qualified and in which
the failure to be duly qualified would, either individually or in
-32-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
the aggregate, have a material adverse effect on the business, operations,
assets, condition (financial or otherwise) or results of operations of Dreyfus
and the Dreyfus Subsidiaries, taken as a whole, or Dreyfus's ability to
consummate the transactions contemplated by this Agreement (an "Dreyfus
Material Adverse Effect"). Dreyfus has all necessary corporate power and
authority to carry on its business as now conducted, to own, lease, and
operate its assets, properties, and business, and to execute and deliver,
and to perform its obligations under, this Agreement, subject to approval
by the shareholders of Dreyfus. Dreyfus is duly registered as a
savings bank holding company under the Home Owners Loan Act. Dreyfus has in
effect all federal, state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now conducted, the absence of which would, either
individually or in the aggregate, have a Dreyfus Material Adverse Effect.
3.02. Dreyfus Subsidiaries. Dreyfus's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, lists all of the Dreyfus Subsidiaries
required to be listed therein. No equity securities of any of the Dreyfus
Subsidiaries which constitutes a Significant Subsidiary of Dreyfus within the
meaning of Rule 1-02 of Regulation S-K of the Securities and Exchange
Commission (an "Dreyfus Material Subsidiary") are or may become required to be
issued (other than to Dreyfus) by reason of any Rights, and there are no
contracts, commitments, understandings, or arrangements by which any Dreyfus
Material Subsidiary is bound to issue or sell shares of its capital stock or
Rights. All of the shares of capital stock of each Dreyfus Material Subsidiary
held by Dreyfus or a Dreyfus Material Subsidiary are fully paid and
non-assessable and are owned by Dreyfus or a Dreyfus Subsidiary free and clear
of any claim, lien, or encumbrance. Each Dreyfus Material Subsidiary is duly
organized and, to the extent applicable, validly existing, and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be duly
organized, in good standing or duly qualified would, either individually or in
the aggregate, have a Dreyfus Material Adverse Effect. Each Dreyfus Material
Subsidiary has the corporate power and authority necessary for it to own or
lease its properties and assets and to carry on its business as it is now
being conducted, and has all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets and
to carry on its business as it is now being conducted, the absence of which
governmental authorizations would, either individually or in the aggregate,
have a Dreyfus Material Adverse Effect. The Dreyfus Disclosure Letter lists
all material non-marketable equity investments, including partnership
interests involving an amount of more than $ 5 million as to each such
investment, held by Dreyfus or any Dreyfus Subsidiary, other than equity
securities of Dreyfus or a Dreyfus Subsidiary.
3.03. Authority.
(a) The execution and delivery of this Agreement by Dreyfus, and the
consummation by Dreyfus of the transactions contemplated herein and therein,
have been duly and validly authorized by all necessary corporate action on the
part of Dreyfus, subject, with respect to this Agreement, to the approval of
the shareholders of Dreyfus to the extent required by applicable law. This
Agreement, subject to requisite shareholder approval hereof represents a valid
and legally binding obligation of Dreyfus, enforceable against Dreyfus in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Dreyfus, nor
the consummation by Dreyfus of the transactions contemplated herein, nor
compliance by Dreyfus with any of the provisions hereof, will (i) subject to
the necessity of obtaining shareholder approval of this Agreement, conflict
with or result in a breach of any provision of the certificate of
incorporation or by-laws of Dreyfus or any Dreyfus Subsidiary (in the case of
Subsidiaries which are not Dreyfus Material Subsidiaries, where such conflict
or breach would not have a Dreyfus Material Adverse Effect), or the
organizational documents or by-laws of any Fund, or (ii) constitute or result
in the breach of any term, condition, or provision of, or constitute a default
or give rise to any additional liability of Dreyfus or any Dreyfus Subsidiary
(collectively, the "Dreyfus Companies") under, or give rise to any right of
termination, cancellation, or acceleration with respect to, or result in the
creation of any lien, charge, or encumbrance ("Lien") upon any property or
assets of any of the Dreyfus Companies or the Funds pursuant to, any note,
bond, mortgage, indenture, license, agreement, lease, or other instrument or
obligation to which any of them is a party or by which any of them or any of
their properties or assets may be subject, and that would, either individually
or in the aggregate, have a Dreyfus Material Adverse Effect. The Dreyfus
Disclosure Letter lists the approvals, authorizations, filings, registrations,
and notifications required to be obtained or made by the Dreyfus Companies in
connection with the consummation of the transactions contemplated hereby, the
failure to obtain or make which would have a Dreyfus Material Adverse Effect.
Except as stated in the Dreyfus Disclosure Letter, consummation of the
transactions contemplated hereby will not violate any order, writ, injunction,
decree, statute, rule, or regulation applicable to any
-33-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
of the Dreyfus Companies or any Fund or any of their properties or assets,
except for such violations which would not have a Dreyfus Material Adverse
Effect.
(c) The Board of Directors of Dreyfus (at a meeting duly called and held)
has by requisite vote (i) adopted this Agreement and authorized and approved
the transactions contemplated hereby, (ii) directed that the Merger be
submitted for consideration to Dreyfus's shareholders at a special meeting of
Dreyfus's shareholders and (iii) authorized and approved the Merger in
accordance with Section 912 of the New York Business Corporation Law with the
result that Section 912 will not apply to the consummation of the Merger or
any other transaction to be carried out pursuant to this Agreement.
3.04. Financial Statements. Dreyfus has delivered to Mellon, prior to
the execution of this Agreement, the Dreyfus Financial Statements (as
hereinafter defined) in respect of periods ending on or prior to September 30,
1993, and will promptly deliver when available copies of the Dreyfus Financial
Statements in respect of periods ending after September 30, 1993. The Dreyfus
Financial Statements (as of the dates thereof and for the periods covered
thereby): (i) are (and, in the case of Dreyfus Financial Statements in respect
of periods ending after September 30, 1993, will be) in accordance with the
books and records of the Dreyfus Companies, and have been (and in the case of
Dreyfus Financial Statements in respective periods ending after September 30,
1993 will continue to be) prepared in accordance with generally accepted
accounting principles ("GAAP"), and (ii) present (and, in the case of
Financial Statements in respect of periods ending after September 30, 1993,
will present) fairly, in all material respects, the consolidated financial
position and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the Dreyfus Companies as of the dates and for the
periods indicated, in accordance with GAAP applied, except as otherwise
disclosed therein, on a basis consistent with prior periods (subject in the
case of interim financial statements to normal recurring year-end adjustments
normal in nature and amount). Dreyfus Financial Statements shall mean (i) the
consolidated balance sheets (including related notes and schedules, if any) of
Dreyfus as of September 30, 1993, and as of December 31, 1992, 1991 and 1990,
and the related consolidated statements of income, of changes in shareholders'
equity, and of cash flows (including related notes and schedules, if any) for
the nine months ended September 30, 1993, and for each of the three years
ended December 31, 1992, 1991, and 1990, as filed by Dreyfus with the
Securities and Exchange Commission ("SEC") and (ii) the consolidated balance
sheets of Dreyfus (including related notes and schedules, if any) and related
consolidated statements of income, of changes in shareholders' equity, and of
cash flows (including related notes and schedules, if any), as filed with the
SEC with respect to periods ended subsequent to September 30, 1993.
-34-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
3.05. Absence of Undisclosed Liabilities. None of the Dreyfus Companies
has any obligation or liability (contingent or otherwise) that is material,
either individually or in the aggregate, to the financial condition or results
of operations of the Dreyfus Companies on a consolidated basis, except (i) as
reflected in the Dreyfus Financial Statements prior to the date of this
Agreement and (ii) for commitments and obligations made, or liabilities
incurred, in the ordinary course of its business consistent with past
practices.
3.06. Tax Matters. (a) All federal, state, local, and foreign tax
returns required to be filed by or on behalf of any of Dreyfus and all other
corporations and other entities of which Dreyfus owns or controls 50% or more
of the outstanding equity securities have been timely filed or requests for
extensions have been timely filed, granted, and have not expired, except for
such returns the failure of which to timely file would not have a Dreyfus
Material Adverse Effect. All taxes shown on filed returns have been paid,
except for such failure to pay which would not have a Dreyfus Material Adverse
Effect. There is no audit examination, deficiency, refund litigation, or
matter in controversy with respect to which an adjustment to any tax item has
been asserted or proposed that might result in a determination that could,
either individually or in the aggregate, have a Dreyfus Material Adverse
Effect, except as reserved against in the Dreyfus Financial Statements. All
taxes, interest, additions, and penalties which are material in amount and
which are due with respect to completed and settled examinations or concluded
litigation have been paid or adequately reserved for, except for such failures
to pay or reserve which would not have a Dreyfus Material Adverse Effect.
(b) None of the Dreyfus Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any tax due that
is currently in effect.
(c) Adequate provision for any federal, state, local, or foreign taxes
due or to become due for any of the Dreyfus Companies for any period or
periods through and including September 30, 1993, has been made and is
reflected in the September 30, 1993 financial statements included in the
Dreyfus Financial Statements, except for such failures to provide which would
not have a Dreyfus Material Adverse Effect.
(d) Deferred taxes of the Dreyfus Companies have been provided for in
accordance with GAAP, except for such failures to provide which would not have
a Dreyfus Material Adverse Effect.
3.07. Compliance with Laws. Each of the Dreyfus Companies and each Fund:
-35-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
(a) Is in compliance with all laws, regulations, reporting and licensing
requirements, and orders applicable to its business or to the employees
conducting its business, the breach or violation of which would, either
individually or in the aggregate, have a Dreyfus Material Adverse Effect; and
(b) Has received no notification or communication from any agency or
department of federal, state, or local government or the staff thereof or from
any self-regulatory body (i) asserting that, or commencing an investigation as
to whether, any of the Dreyfus Companies is not in compliance with any of the
statutes, regulations, or ordinances which such governmental authority or
self-regulatory body enforces, which, as a result of such noncompliance in any
such instance, could, either individually or in the aggregate, have a Dreyfus
Material Adverse Effect, (ii) threatening to revoke any license, franchise,
permit, or governmental authorization, which revocations, either individually
or in the aggregate, could have a Dreyfus Material Adverse Effect.
3.08. Employee Benefit Plans.
(a) Dreyfus has delivered or made available to Mellon, prior to the
execution of this Agreement, copies (or, with respect to unwritten plans,
written descriptions) of (i) each current material pension, retirement,
deferred compensation, stock option, stock purchase, savings, employee stock
ownership, restricted stock, phantom stock, stock ownership or other similar
plan as in effect on the date of this Agreement, including, without
limitation, any "employee pension benefit plan", as that term is defined in
Section 3(2) of ERISA, in respect of any of the present or former employees
of, or dependents, spouses, or other beneficiaries of any of such employees
of, any of the Dreyfus Companies (the "Dreyfus Pension Plans"), (ii) each
current material employment or consulting agreement, severance (including,
without limitation, change of control or golden parachute agreements or
arrangements), bonus, profit-sharing, incentive, deferred compensation,
supplemental or excess retirement, life insurance, health, or other plan,
policy, contract, or arrangement as in effect on the date of this Agreement,
other than a Dreyfus Pension Plan or Dreyfus Welfare Plan (as hereinafter
defined) which provides benefits or perquisites to or in respect of any of the
present or former directors or officers, or dependents, spouses, or other
beneficiaries of any of such directors or officers of, any of the Dreyfus
Companies, and (iii) each current material severance, bonus, profit-sharing,
incentive, deferred compensation, supplemental or excess retirement, life
insurance, health, vacation, tuition assistance or reimbursement, legal
services, salary continuation, travel or accident insurance or benefits,
disability insurance or benefits, or unemployment benefits, plans, policies,
contracts or arrangements, including, without limitation, each "employee
welfare benefit plan" within the meaning of Section 3(1) of ERISA as in effect
on the date of this Agreement which provides benefits or perquisites to or in
-36-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
respect of present or former employees, or dependents, spouses, or other
beneficiaries of, any of such employees of, any of the Dreyfus Companies
(the "Dreyfus Welfare Plans") (all the foregoing being collectively the
"Dreyfus Benefit Plans"). All such Dreyfus Benefit Plans are listed on the
Dreyfus Disclosure Letter. No Dreyfus Company has participated in or been a
member of, and no Dreyfus Benefit Plan is or has been, a "multiemployer plan"
within the meaning of Section 3(37) of ERISA.
(b) Except as disclosed in the Dreyfus Disclosure Letter, all Dreyfus
Benefit Plans conform to, and their administration is in compliance in all
material respects with, the applicable provisions of ERISA and the Code, and
any other applicable laws, rules, and regulations the breach or violation of
which would have a Dreyfus Material Adverse Effect. With respect to the
Dreyfus Benefit Plans, no event has occurred and, to the best knowledge of
Dreyfus's management, there exists no condition or set of circumstances, in
connection with which any of the Dreyfus Companies would be subject to any
liability, lien or encumbrance or loss of tax deduction under ERISA or the
Code, including, without limitation, ERISA Sections 409, 502(i), Part 6 of
Title I, 4062 or 4069 or Code Sections 4971, 4972, 4975, 4976, 4977, 4978,
4978B, 4979, 4980 or 4980B that would have, either individually or in the
aggregate, a Dreyfus Material Adverse Effect (except liability for benefit
claims and funding obligations payable in the ordinary course). None of the
Dreyfus Companies has provided, or is required to provide, security to any
Dreyfus Pension Plan which is subject to Title IV of ERISA pursuant to Section
401(a)(29) of the Code. No liability (other than annual premiums, all of which
premiums due prior to the Effective Time have or will be paid) to the Pension
Benefit Guaranty Corporation has been incurred with respect to any Dreyfus
Pension Plan which is subject to Title IV of ERISA which would have a Dreyfus
Material Adverse Effect.
(c) No Dreyfus Pension Plan which is subject to Title IV of ERISA has any
"unfunded current liability," as that term is defined in Section 302(d)(8)(A)
of ERISA, and the present fair market value of the assets of each such plan
exceeds the plan's "benefit liabilities," as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors that would apply
if the plan terminated as of the date of this Agreement in accordance with all
applicable legal requirements, where there would be a Dreyfus Material Adverse
Effect. Each such Dreyfus Pension Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter and
nothing has occurred since the date of such letter that would adversely affect
such qualification which would have a Dreyfus Material Adverse Effect.
(d) No Dreyfus Welfare Plan provides medical or death benefits (whether
or not insured) with respect to current or former employees beyond their date
of retirement or other
-37-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
termination of service (other than coverage provided in connection with the
satisfaction of Section 601 of ERISA, the cost of which is fully paid by the
former employee or his or her dependents).
(e) Except as disclosed in the Dreyfus Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will not
obligate any of the Dreyfus Companies to provide any current or former
officer, director, or employee of any Dreyfus Company, including, but not
limited to, Continued Employees described in Section 9.01, with severance pay,
unemployment compensation or any similar payment.
3.09. Material Contracts. None of the Dreyfus Companies, nor any of
their respective assets, businesses, or operations, as of the date of this
Agreement, is a party to, or is bound or affected by, or receives benefits
under, any contract or agreement or amendment thereto (other than this
Agreement) that in each case would be required to be filed as an exhibit to a
Form 10-K filed by Dreyfus as of the date of this Agreement that has not been
filed as an exhibit to or incorporated by reference in Dreyfus's Form 10-K
filed for the fiscal year ended December 31, 1992 or Dreyfus's Form 10-Q filed
for the quarter ended September 30, 1993.
3.10. Material Contract Defaults. None of the Dreyfus Companies or, to
the best knowledge of Dreyfus, any of the Funds is in default under any
contract, agreement, commitment, arrangement, lease, insurance policy, or
other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and which default
is reasonably likely to have, either individually or in the aggregate, a
Dreyfus Material Adverse Effect, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute such a
default.
3.11. Legal Proceedings. Except as disclosed in reports referred to in
Section 3.13, there are no legal, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the best knowledge of
Dreyfus, threatened (or unasserted but considered probable of assertion)
against any of the Dreyfus Companies, or, to the best knowledge of Dreyfus,
any of the Funds, or affecting any property, asset, interest, or right of any
of them, that are reasonably expected to have, either individually or in the
aggregate, a Dreyfus Material Adverse Effect.
3.12. Absence of Certain Changes or Events. Except as disclosed in
Dreyfus's Form 10-Q for the quarter ended September 30, 1993, filed with the
SEC, since December 31, 1992, the Dreyfus Companies on a consolidated basis
have not suffered, either individually or in the aggregate, any change having
a Dreyfus
-38-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Material Adverse Effect, or failed to operate their business consistent with
their past practices in all material respects.
3.13. Reports. Since January 1, 1990, Dreyfus and each Dreyfus Material
Subsidiary has filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with
(i) the SEC, (ii) any other applicable federal or state securities, banking,
insurance, or other regulatory authorities (except filings (other than filings
with the SEC) which are not material), and (iii) the NYSE and any other
self-regulatory body (except filings which are not material). As of their
respective dates (and without giving effect to any amendments or modifications
filed after the date of this Agreement with respect to reports and documents
filed before the date of this Agreement), each of such reports filed with the
SEC and documents, including the financial statements, exhibits, and schedules
thereto, complied in all material respects with all of the statutes, rules,
and regulations enforced or promulgated by the authority with which they were
filed and did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein
in light of the circumstances under which they were made not misleading.
3.14. Statements True and Correct. None of the information supplied or
to be supplied by Dreyfus in writing for inclusion in the registration
statement (the "Registration Statement") to be filed by Mellon with the SEC in
connection with the Mellon Common Stock to be issued in the Merger, the joint
proxy statement (the "Joint Proxy Statement") to be mailed to Dreyfus's and
Mellon's shareholders in connection with the shareholders meetings to vote on
the Merger (in the case of Dreyfus) and to vote on the issuance of the Mellon
Common Stock hereunder (in the case of Mellon) (the "Shareholders Meetings")
or any other documents to be filed with the SEC or any other regulatory
authority in connection with the transactions contemplated hereby, will, at
the respective times such documents are filed, or, in the case of the
Registration Statement, when it becomes effective and, with respect to the
Joint Proxy Statement, when first mailed to the shareholders of Dreyfus and
Mellon, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Joint Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Shareholder Meetings, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading. All documents that
Dreyfus is responsible for filing with the SEC or any other regulatory
authority in connection with the transactions contemplated hereby will comply
in all material respects with the provisions of applicable law including
applicable provisions of the securities laws.
-39-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
3.15. Environmental Matters. (a) To the best knowledge of Dreyfus, each
Dreyfus Subsidiary, the Participation Facilities, and the Loan Properties
(each as defined below) are, and have been, in compliance with all applicable
laws, rules, regulations, and standards, and all requirements of the United
States Environmental Protection Agency ("EPA") and of state and local agencies
with jurisdiction over pollution or protection of health or the environment,
except for failures to comply which, individually or in the aggregate, do not
or would not result in a Dreyfus Material Adverse Effect.
(b) To the best knowledge of Dreyfus, there is no suit, claim, action, or
proceeding, pending or threatened, before any court, governmental agency,
board, or other forum pursuant to which Dreyfus or any of the Dreyfus
Subsidiaries or any Fund or any Loan Property, Participation Facility, or
Trust Property (or in respect of such Loan Property, Participation Facility,
or Trust Property) has been or, with respect to threatened proceedings, may be
named as a defendant (i) for alleged noncompliance (including by any
-40-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
predecessor) with any environmental law, rule, or regulation or (ii) relating
to the release into the environment of any Hazardous Material (as defined
below) or oil, whether or not occurring at or on any site owned (including as
trustee), leased, or operated by it or any of its subsidiaries or any Loan
Property, Participation Facility, or Trust Property, except where such
noncompliance or release does not or would not, individually or in the
aggregate, result in a Dreyfus Material Adverse Effect.
(c) To the best knowledge of Dreyfus, there is no reasonable basis for
any suit, claim, action, or proceeding of a type described in Section 3.15(b),
except as would not, individually or in the aggregate, result in a Dreyfus
Material Adverse Effect.
(d) During the period of (i) Dreyfus's or any of the Dreyfus
Subsidiaries' ownership (including as trustee) or operation of any of their
respective current properties, (ii) Dreyfus or any of the Dreyfus
Subsidiaries' participation in the management of any Participation Facility,
(iii) Dreyfus or any of the Dreyfus Subsidiaries' holding of a security
interest in a Loan Property, or (iv) Dreyfus or any of the Dreyfus
Subsidiaries acting as a trustee or fiduciary with respect to a Trust
Property, to the best knowledge of Dreyfus, there has been no release of
Hazardous Material or oil in, on, under, or affecting such property,
Participation Facility, Loan Property or Trust Property, except where such
release does not or would not, individually or in the aggregate, result in a
Dreyfus Material Adverse Effect. Prior to the period of (w) Dreyfus or any of
the Dreyfus Subsidiaries' ownership (including as trustee) or operation of any
of their respective current properties, (x) Dreyfus or any of the Dreyfus
Subsidiaries' participation in the management of any Participation Facility,
(y) Dreyfus or any of the Dreyfus
-41-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Subsidiaries acting as trustee or other fiduciary with respect to Trust
Property, or (z) Dreyfus or any of the Dreyfus Subsidiaries' holding of
a security interest in a Loan Property, to the best knowledge of Dreyfus,
there was no release of Hazardous Material or oil in, on, under, or affecting
any such property, Participation Facility, or Loan Property, except where such
release does not or would not, individually or in the aggregate, result in a
Dreyfus Material Adverse Effect.
(e) The following definitions apply for purposes of this Section 3.15:
(i) "Loan Property" means any property in which Dreyfus (or a Dreyfus
Subsidiary) holds a security interest for an amount greater than $2,500,000,
and, where required by the context, includes the owner or operator of such
property, but only with respect to such property; (ii) " Participation
Facility" means any property in which Dreyfus (or a Dreyfus Subsidiary)
participates in the management of such property and, where required by the
context, includes the owner or operator of such property, but only with
respect to such property; (iii) "Trust Property" means any property with
respect to which Dreyfus (or a Dreyfus Subsidiary) acts or has acted as a
trustee or other fiduciary (including investment advisor), directly or
indirectly, and includes any trust or similar legal vehicle that owns or
controls (or that owned or controlled) such property and, where required by
the context, includes the trustee or other fiduciary, but only with respect to
such property; and (iv) "Hazardous Material" means any pollutant, contaminant,
or hazardous substance within the meaning of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et. seq., or
any similar federal, state, or local law.
3.16. Antitakeover Provisions Inapplicable. No "Business combination",
"moratorium", "control share", or other state antitakeover statute or
regulation (x) prohibits or restricts Dreyfus's ability to perform its
obligations under this Agreement, or its ability to consummate the
transactions contemplated hereby, (y) would have the effect of invalidating or
voiding this Agreement, or any provisions hereof, or (z) would subject Mellon
to any material impediment or condition in connection with the exercise of any
of its rights under this Agreement.
3.17. Fund Financial Statements. The audited balance sheets of each Fund
as of December 31, 1992 and December 31, 1991 (or in the case of a Fund that
does not have fiscal years ending on December 31, the last day of such Fund's
most recent comparable fiscal year), and the related financial statements for
the years ended December 31, 1992, 1991 and 1990, as reported on by Ernst &
Young, Coopers & Lybrand and Price Waterhouse, as the case may be, and the
unaudited balance sheet of each Fund as of September 30, 1993 (the "Interim
Balance Sheets") and the related unaudited financial statements for the period
then ended, and each of the balance sheets of each Fund, and the related
financial unaudited
-42-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
statements, as of a date or for a period subsequent to September 30, 1993 have
been or will be prepared in accordance with GAAP, which have been consistently
applied, except as otherwise disclosed therein, and present or will present
fairly, in all material respects, the financial position and other financial
results of each Fund at the dates, and for the periods, stated therein.
3.18. Books of Account. The books of account of each Dreyfus Company and
each Fund have been and will be maintained in compliance with all applicable
legal and accounting requirements in all material respects.
3.19. Properties and Insurance. (a) Each Dreyfus Company has good title,
free and clear of any Liens, to all of the personal and real property
reflected in the Dreyfus Financial Statements as being owned by it, and to all
personal and real property acquired by it since the respective dates of the
Dreyfus Financial Statements, except such personal and real property as has
been disposed of in the ordinary course of the business consistent with past
practice and except for such Liens and imperfections of title as would not
have a Dreyfus Material Adverse Effect.
(b) The Dreyfus Companies and, to Dreyfus's knowledge, the Funds have the
right to use, and after consummation of the transactions contemplated hereby
will have the right to use, free and clear of any claims of others, all
patents, patent applications, trademarks, service marks (whether registered or
unregistered), trademark applications, service mark applications, trade names,
copyrights and other proprietary rights necessary to own and operate their
respective properties and to carry on their respective business as currently
conducted, except where such failure to have such rights or such claims of
others would not have, either individually or in the aggregate, a Dreyfus
Material Adverse Effect. Dreyfus owns the right to the Dreyfus name and
licenses that name to the Funds under license agreements that may be
terminated at will.
(c) Each Dreyfus Company and, to Dreyfus's knowledge, each Fund owns or
licenses all computer software developed or currently used by them which is
material to the conduct of its business and have the right to use such
software without infringing upon the intellectual property rights (including
trade secrets rights) of a third party, except as would not have a Dreyfus
Material Adverse Effect.
3.20. Certain Proceedings. Except as disclosed in reports referred to in
Section 3.13, there is no action, suit or proceeding pending or, to the
knowledge of Dreyfus, threatened that seeks to enjoin or censure a Dreyfus
Company or, to Dreyfus's knowledge, a Fund, or, to Dreyfus's knowledge, any
officers, directors or employees thereof, in connection with the conduct of
-43-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
its business, which could have, either individually or in the aggregate, a
Dreyfus Material Adverse Effect.
3.21. Section 280G. As a result of compliance with this Agreement and
the matters referred to herein, neither any Dreyfus Company nor Mellon will be
obligated to make a payment to an individual that would be a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code without regard to whether such payment is to be performed in
the future.
3.22. Employee Relationships. There are no labor or collective
bargaining agreements, contracts or understandings with a labor union or labor
organization which are binding upon either any Dreyfus Company or, to
Dreyfus's knowledge, any Fund, nor, to Dreyfus's knowledge is there, as of the
date hereof, any activity involving any employees of any Dreyfus Company
seeking to certify a collective bargaining unit or engaging in any other union
organizational activity.
3.23. Filings, etc. (a) Since December 31, 1990, each Dreyfus Company
and each Fund has had and now has all permits, licenses, certificates of
authority, orders and approvals of, and have made all filings, applications
and registrations with, federal, state, local or foreign governmental or
regulatory bodies, and self-regulatory bodies that are required (including by
the rules of any self-regulatory body) in order to permit each of them to
carry on its respective business as presently conducted, and such permits,
licenses, certificates of authority, registrations, orders and approvals are
in full force and effect, except where the failure to have or make or keep in
full force and effect any permit, license, certificate of authority,
registration, order or approval referred to above would not have a Dreyfus
Material Adverse Effect. The conduct of its respective business by each Dreyfus
Company and each Fund has not, since December 31, 1990, and currently does not,
violate or infringe any applicable domestic (federal, state or local) or
foreign law, statue, ordinance, license, rule or regulation including those of
the self-regulatory bodies, which violation or infringement could have a
Dreyfus Material Adverse Effect.
(b) Without limiting the foregoing, each Dreyfus Company and each of its
officers, and employees which is or who are required to be registered as an
investment adviser, a broker-dealer, a registered representative or a sales
person with the SEC, the securities commission or any state or any
self-regulatory body is duly registered as such and such registration is in
full force and effect, except where the failure to be so registered or to have
such registration in full force and effect would, individually or in the
aggregate, not have a Dreyfus Material Adverse Effect.
-44-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
(c) There are no proceedings pending (or, to the knowledge of Dreyfus,
threatened, nor to the knowledge of Dreyfus has any event occurred or does any
condition exist that is reasonably likely to form the basis for any
proceeding) that is reasonably likely to result in the revocation,
cancellation or suspension, or any adverse modification, of any permit,
license, certificate of authority, order or approval referred to in Section
3.23(a) having a Dreyfus Material Adverse Effect, and the execution and
delivery of this Agreement and the consummation of any transactions
contemplated hereby will not result in any such revocation, cancellation,
suspension or modification which could have a Dreyfus Material Adverse Effect.
(d) None of any Dreyfus Company or, to Dreyfus's knowledge, any Funds, or
any officer, director or employee thereof, is a party or subject to any order,
judgment or decree (other than exemptive orders) relating to its business with
or by any federal, state, local or foreign regulatory authority, except where
such order, judgment or decree, individually or in the aggregate, would not
have a Dreyfus Material Adverse Effect.
3.24. Absence of Certain Conditions. There exists no "out of balance" or
similar condition with respect to any customer account maintained by a Dreyfus
Company or a Fund, except for such conditions, individually and in the
aggregate, as have not had and would be reasonably likely not to have a
Material Adverse Effect.
3.25. Representations and Warranties Regarding the Investment Advisory
Business.
(a) Definition of Investment Company. As used in this Agreement, the
term, "Investment Company" shall have the meaning provided in the Investment
Company Act, provided that for purposes of this Agreement the term Investment
Company shall include persons that would be an investment company, as defined
in that Act, but for the exemption contained in Section 3(c)(1), the final
clause of Section 3(c)(3) or Section 3(c)(11) of the Investment Company Act.
(b) Investment Contracts. Funds and Clients. (i) On November 30, 1993,
the aggregate amount of assets managed, administered or advised by the Dreyfus
Companies was not less than $80 billion. To the knowledge of Dreyfus, and
except as would not have a Dreyfus Material Adverse Effect, (x) each
Investment Contract (as defined below) and any subsequent renewal thereof has
been duly authorized, executed and delivered by each party thereto and, to the
extent applicable, has been adopted in compliance with Section 15 of the
Investment Company Act and is a valid and binding agreement of each such
party, enforceable in accordance with its terms (subject to bankruptcy,
insolvency, moratorium, fraudulent transfer and similar laws affecting
creditors' rights generally and to general equity principles) and, (y) in the
case of investment advisory contracts with Investment Companies and
-45-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Clients (as defined below), each of the Dreyfus Companies, the Funds or Client
party thereto is in compliance in all material respects with the terms of each
Investment Contract to which it is a party, and no event has occurred or
condition exists that constitutes or with notice or the passage of time would
constitute a default thereunder. Except as set forth in the Dreyfus Disclosure
Letter, none of the Investment Contracts, or any other arrangements or
understandings relating to rendering of investment advisory or management
services, including without limitation all subadvisory services or
administration services to any Fund, Client or other person, contains any
undertaking by a Dreyfus Company to cap fees or to reimburse any or all fees
thereunder, except as required by the applicable law of any jurisdiction in
which the shares of any Fund party thereto are qualified for distribution,
which is likely, either individually or in the aggregate, to have a Dreyfus
Material Adverse Effect. As used in this Section, (i) the term "Client" means
any client to which a Dreyfus Company provides investment management,
investment advisory, administration or distribution services on the date
hereof and (ii) the term "Investment Contract"
means each contract or agreement in effect on the date hereof to which a
Dreyfus Company is a party pursuant to which Dreyfus Company provides to any
Client investment management, investment advisory, distribution or
administrative services.
(ii) Each Fund has been, is being and will be operated fully in
compliance with its respective objectives, policies and descriptions,
including without limitation any limitation set forth in the applicable
Prospectus for a Fund or governing instruments for a Client, except where lack
of compliance would not have a Dreyfus Material Adverse Effect.
(iii) The accounts of each Client that is subject to ERISA have been
managed by the Dreyfus Companies such that the Dreyfus Companies in the
exercise of such management are in compliance with the applicable requirements
of ERISA, and consummation of the transactions contemplated hereby will not
result in a violation of such ERISA requirements, except, in each case, where
such lack of compliance or violation would not have a Dreyfus Material Adverse
Effect.
(iv) To Dreyfus's knowledge each Fund that is eligible to elect to be
treated as a "regulated investment company" under Subchapter M of Chapter 1 of
Subtitle A of the Code has so elected, and each Fund has, except for any
taxable year of such Fund that has been closed and for which the statute of
limitations for assessments has expired, qualified as a "regulated investment
company" and each Fund has complied with all applicable provisions of law
necessary to preserve and retain such Fund's election and status as a
regulated investment company, except for where the failure to elect regulated
investment company status or to comply with the requirements of such election
would not have a Dreyfus Material Adverse Effect. Except for any taxable year
that has
-46-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
been closed and for which the statute of limitations for assessment
has expired, each Fund identified in the Dreyfus Disclosure Letter as being a
tax-exempt municipal bond fund has satisfied the requirements of Section
852(b)(5) of the Code and is qualified to pay exempt interest dividends as
defined therein, except for where the failure to so comply with the
requirements of Section 852(b)(5) would not have a Dreyfus Material Adverse
Effect. Each Fund has timely filed all federal, state, local and foreign
income and other Tax returns and reports that such Fund is required to file.
Each Fund has timely paid, or reserved for, Taxes that such Fund is required
to pay, except where the failure to pay such taxes would not have a Dreyfus
Material Adverse Effect.
(c) Regulatory Compliance. Except where the violation of any of the
representations and warranties contained in this Section 3.25(c) would not
have a Dreyfus Material Adverse Effect:
(i) (A) each Fund required by law to be so registered is duly registered
as an investment company under the Investment Company Act; (B) except as set
forth in the Dreyfus Disclosure Letter, the shares of each Fund are duly and
validly issued, fully paid and nonassessable and are qualified for sale, or an
exemption therefrom is in full force and effect, in each state and territory
of the United States and the District of Columbia to the extent required under
applicable law; (C) all outstanding shares of each Fund that were required to
be registered under the Securities Act have been sold pursuant to an effective
registration statement filed thereunder; (D) to the knowledge of Dreyfus in
the case of documents applicable to the Funds, no such registration statement
contained, as of its effective date, any untrue statement of a material fact
or omitted to state a material fact required to be stated therein in order to
make the statements therein not misleading or is subject to any stop order or
similar order restricting its use; and (E) each Fund has operated and is
currently operating in compliance in all material respects with all laws,
rules, regulations and orders applicable to it or its business, including but
not limited to the Securities Act and the Investment Company Act, and
consummation of the transactions contemplated hereby will not result in a
violation of any such laws, rules, regulations or orders.
(ii) Each Fund that is a juridical entity is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power, right and authority to own its properties and
to carry on its business as it is now conducted, and is qualified to do
business in each jurisdiction where it is required to do so under applicable
law.
(iii) Each Fund has duly adopted procedures pursuant to Rule 17e-1 under
the Investment Company Act, to the extent applicable; and each Fund has
complied, for a period of at least six years prior to the date hereof,
currently complies and will
-47-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
comply with the requirements of Section 17(e) of the Investment Company Act and
Rule 17e-1 thereunder, to the extent applicable.
(iv) Dreyfus has adopted a formal code of ethics and a written policy
regarding insider trading. Such code and policy comply with Section 17(j) of
the Investment Company Act, Rule 17j-l thereunder and Section 204A of the
Investment Advisers Act, respectively. The policies of the Dreyfus Companies
with respect to avoiding conflicts of interest are as set forth in the most
recent Form ADV thereof (or incorporated by reference therein), as amended. To
the knowledge of Dreyfus, there have been no violations or allegations of
violations of such policies that have occurred or been made.
(v) Neither any Dreyfus Company nor, to Dreyfus's knowledge, any Fund,
and, to Dreyfus's knowledge, no person "associated" (as defined under the
Investment Advisers Act) with any Dreyfus Company or any Fund, has for a
period not less than five years prior to the date hereof been convicted of any
crime or is or has been subject to any disqualification that would be a basis
for denial, suspension or revocation of registration of an investment adviser
under Section 203(e) of the Investment Advisers Act or Rule 206(4)-4(b)
thereunder or of a broker-dealer under Section 15 of the Exchange Act, or for
disqualification as an investment adviser for any Investment Company pursuant
to Section 9(a) of the Investment Company Act, and to Dreyfus's knowledge
there is no basis for, or proceeding or investigation that is reasonably
likely to become the basis for, any such disqualification, denial, suspension
or revocation.
(vi) Each current prospectus (which term, as used in this Agreement,
shall include any related statement of additional information and any private
placement memorandum), as amended or supplemented, relating to each Fund, and
all current supplemental advertising and marketing material relating to each
Fund complies with the Securities Act and the Investment Company Act,
applicable state laws and, where applicable, the rules of the NASD. None of
such prospectuses, amendments, supplements or supplemental advertising and
marketing materials, as of their respective dates, includes, included or will
include an untrue statement of a material fact or omits, omitted or will omit
to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(vii) All advertising or marketing materials relating to any Fund that
are required to be filed with the NASD has been or will be timely filed
therewith.
3.26. Brokers and Finders. Except for Lazard, Freres & Co. and Salomon
Brothers, Inc. pursuant to agreements previously provided to Mellon, Dreyfus
has not employed any broker or finder or incurred any liability for any
financial advisory fees,
-48-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
brokerage fees, commissions or finder's fees, and no broker or finder has
acted, directly or indirectly, for Dreyfus, in connection with this Agreement
or the transactions contemplated hereby.
3.27. Approval of Merger. Approval of the Merger by the shareholders of
Dreyfus requires the affirmative vote of holders of two-thirds of the issued
and outstanding shares of Dreyfus Common Stock.
3.28. Opinion of Financial Advisor. The Board of Directors of Dreyfus has
received the opinions of each of Lazard Freres & Co. and Salomon Brothers Inc,
dated the date hereof, to the effect that, as of the date hereof, the Exchange
Ratio is fair from a financial point of view to the stockholders of Dreyfus.
ARTICLE III-B
REPRESENTATIONS AND WARRANTIES OF MELLON
Mellon, Mellon Bank and Merger Subsidiary hereby represent and warrant to
Dreyfus that, except as set forth in a letter from Mellon to Dreyfus delivered
concurrently with this Agreement (the "Mellon Disclosure Letter") (all
disclosure on which Mellon Disclosure Letter shall state with particularity
the representation and warranty herein, including section reference, to which
such disclosure relates), (i) the statements in the Recitals that relate to it
are true and correct and (ii) as follows:
3.29. Organization, Standing, and Authority. Mellon is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Pennsylvania and is duly qualified to do business and in good
standing in the States of the United States and foreign jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be duly qualified would, either
individually or in the aggregate, have a material adverse effect on the
business, operations, assets, condition (financial or otherwise), results of
operations, or prospects of Mellon and its subsidiaries (the "Mellon
Subsidiaries"), taken as a whole, or Mellon's ability to consummate the
transactions contemplated by this Agreement (an "Mellon Material Adverse
Effect"). Mellon has all necessary corporate power and authority to carry on
its business as now conducted, to own, lease, and operate its assets,
properties, and business, and to execute and deliver, and to perform its
obligations under, this Agreement, subject to approval by the shareholders of
Mellon. Mellon has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted, the
-49-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
absence of which would, either individually or in the aggregate, have a Mellon
Material Adverse Effect.
3.30. Mellon Subsidiaries. Mellon's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, lists all of the Mellon Subsidiaries
required to be listed therein. No equity securities of any of the Mellon
Subsidiaries which constitutes a Significant Subsidiary of Mellon within the
meaning of Rule 1-02 of Regulation S-K of the Securities and Exchange
Commission (a "Mellon Material Subsidiary") are or may become required to be
issued (other than to Mellon) by reason of any Rights, and there are no
contracts, commitments, understandings or arrangements by which any Mellon
Material Subsidiary is bound to issue or sell shares of its capital stock or
Rights. All of the shares of capital stock of each Mellon Material Subsidiary
held by Mellon or a Mellon Subsidiary are fully paid and nonassessable and are
owned by Mellon or a Mellon Subsidiary free and clear of any claim, lien or
encumbrance. Each Mellon Material Subsidiary is duly organized and, to the
extent applicable, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, and is duly qualified
to do business and in good standing in the jurisdictions where its ownership
or leasing or property or the conduct of its business requires to it to be so
qualified and in which the failure to be duly organized, in good standing or
qualified would, either individually or in the aggregate, have a Mellon
Material Adverse Effect. Each Mellon Material Subsidiary has the corporate
power and authority necessary for it to own or lease its properties and assets
and to carry on its business as it is now being conducted, and has all
federal, state, local and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it
is now being conducted, the absence of which governmental authorizations
would, either individually or in the aggregate, have a Mellon Material Adverse
Effect.
3.31. Authority.
(a) The execution and delivery of this Agreement by Mellon, and the
consummation by Mellon of the transactions contemplated herein, have been duly
and validly authorized by all necessary corporate action on the part of
Mellon, subject to the approval of the shareholders of Mellon to the extent
required by applicable law. This Agreement, subject to requisite shareholder
approval represents a valid and legally binding obligation of Mellon,
enforceable against Mellon in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Mellon, nor
the consummation by Mellon of the transactions contemplated herein, nor
compliance by Mellon with any of the provisions hereof, will (i) subject to
the necessity of obtaining shareholder approval of this Agreement, conflict
with or result in a breach of any provision of the certificate of
incorporation or by-laws of Mellon or any Mellon Subsidiary
-50-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
(collectively, the "Mellon Companies") or (ii) constitute or result in the
breach of any term, condition, or provision of, or constitute a default or give
rise to any additional liability under, or give rise to any right of
termination, cancellation, or acceleration with respect to, or result in the
creation of any lien, charge, or encumbrance upon any property or assets of any
of the Mellon Companies pursuant to, any note, bond, mortgage, indenture,
license, agreement, lease, or other instrument or obligation to which any of
them is a party or by which any of them or any of their properties or assets
may be subject, and that would, either individually or in the aggregate, have a
Mellon Material Adverse Effect. The Mellon Disclosure Letter lists the
approvals, authorizations, filings, registrations and notifications required
on Mellon's behalf in connection with the consummation of the transactions
contemplated hereby, the failure to obtain which would have a Mellon Material
Adverse Effect. Except as stated in the Mellon Disclosure Letter, consummation
of the transactions contemplated hereby will not violate any order, writ,
injunction, decree, statute, rule, or regulation
applicable to any of the Mellon Companies or any of their properties or
assets, except for such violations which would not have a Dreyfus Material
Adverse Effect.
(c) The Board of Directors of Mellon (at a meeting duly called and held)
has by requisite vote (i) determined that the Merger is in the best interests
of Mellon and its shareholders, (ii) authorized and approved this Agreement,
and the transactions contemplated hereby, and (iii) directed that the issuance
of the Mellon Common Stock hereunder be submitted for consideration to
Mellon's shareholders at a special meeting of Mellon's shareholders.
3.32. Financial Statements. Mellon has delivered to Dreyfus, prior to
the execution of this Agreement, the Mellon Financial Statements (as
hereinafter defined) in respect of periods ending on or prior to September 30,
1993, and will promptly deliver when available copies of the Mellon Financial
Statements in respect of periods ending after September 30, 1993. The Mellon
Financial Statements (as of the dates thereof and for the periods covered
thereby): (i) are (and, in the case of Mellon Financial Statements in respect
of periods ending after September 30, 1993, will be) in accordance with the
books and records of the Mellon Companies, and have been (and, in the case of
Mellon Financial Statements in respect of periods ending after September 30,
1993 will continue to be) prepared in accordance with GAAP and good business
practices, and (ii) present (and, in the case of Mellon Financial Statements
in respect of periods ending after September 30, 1993, will present) fairly,
in all material respects, the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity, and cash
flows of the Mellon Companies as of the dates and for the periods indicated,
in accordance with GAAP applied, except as otherwise disclosed therein, on a
basis consistent with prior
-51-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
periods (subject in the case of interim financial statements to normal
recurring year-end adjustments normal in nature and amount). Mellon Financial
Statements shall mean (i) the consolidated balance sheets (including related
notes and schedules, if any) of Mellon as of September 30, 1993, and as of
December 31, 1992, 1991 and 1990, and the related consolidated statements of
income, of changes in shareholders' equity, and of cash flows (including
related notes and schedules, if any) for the nine months ended September 30,
1993, and for each of the three years ended December 31, 1992, 1991, and 1990,
as filed by Mellon with the SEC and (ii) the consolidated balance sheets of
Mellon (including related notes and schedules, if any) and related consolidated
statements of income, of changes in shareholders' equity, and of cash flows
(including related notes and schedules, if any) included in documents filed
with the SEC with respect to periods ended subsequent to September 30, 1993.
3.33. Absence of Undisclosed Liabilities. None of the Mellon Companies
has any obligation or liability (contingent or otherwise) that is material,
either individually or in the aggregate, to the financial condition or results
of operations of the Mellon Companies on a consolidated basis except (i) as
reflected in the Mellon Financial Statements prior to the date of this
Agreement and (ii) for commitments and obligations made, or liabilities
incurred, in the ordinary course of its business consistent with past
practices.
3.34. Tax Matters. (a) All federal, state, local, and foreign tax
returns required to be filed by or on behalf of any of Mellon and all other
corporations and other entities of which Mellon owns or controls 50% or more
of the outstanding equity securities have been timely filed or requests for
extensions have been timely filed, granted, and have not expired, except for
such returns the failure of which to timely file would not have a Mellon
Material Adverse Effect. All taxes shown on filed returns have been paid,
except for such failure to pay which would not have a Mellon Material Adverse
Effect. There is no audit examination, deficiency, refund litigation, or
matter in controversy with respect to which an adjustment to any tax item has
been asserted or proposed that might result in a determination that could,
either individually or in the aggregate, have a Mellon Material Adverse
Effect, except as reserved against in the Mellon Financial Statements. All
taxes, interest, additions, and penalties which are material in amount and
which are due with respect to completed and settled examinations or concluded
litigation have been paid or adequately reserved for, except for such failures
to pay or reserve which would not have a Mellon Material Adverse Effect.
(b) None of the Mellon Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any tax due that
is currently in effect.
-52-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
(c) Adequate provision for any federal, state, local, or foreign taxes
due or to become due for any of the Mellon Companies for any period or periods
through and including September 30, 1993, has been made and is reflected in the
September 30, 1993 financial statements included in the Mellon Financial
Statements, except for such failures to provide which would not have a Mellon
Material Adverse Effect.
(d) Deferred taxes of the Mellon Companies have been provided for in
accordance with GAAP, except for such failures to provide which would not have
a Mellon Material Adverse Effect.
3.35. Compliance with Laws. Each of the Mellon Companies:
(a) Is in compliance with all laws, regulations, reporting and licensing
requirements, and orders applicable to its business or to the employees
conducting its business, the breach or violation of which would, either
individually or in the aggregate, have a Mellon Material Adverse Effect; and
(b) Has received no notification or communication from any agency or
department of federal, state, or local government or the staff thereof (i)
asserting that, or commencing any investigation as to whether, any of the
Mellon Companies is not in compliance with any of the statutes, regulations,
or ordinances which such governmental authority enforces, which, as a result
of such noncompliance in any such instance, could, either individually or in
the aggregate, have a Mellon Material Adverse Effect, (ii) threatening to
revoke any license, franchise, permit, or governmental authorization, which
revocation, either individually or in the aggregate, could have a Mellon
Material Adverse Effect.
3.36. Employee Benefit Plans.
(a) "Mellon Pension Plans" shall mean each current material pension,
retirement, deferred compensation, stock option, stock purchase, savings,
employee stock ownership, restricted stock, phantom stock, stock ownership or
other similar plan as in effect on the date of this Agreement, including,
without limitation, any "employee pension benefit plan", as that term is
defined in Section 3(2) of ERISA, in respect of any of the present or former
employees of, or dependents, spouses, or other beneficiaries of any of such
directors, officers, employees of, any of the Mellon Companies. "Mellon
Executive Programs" shall mean each current material employment or consulting
agreement, severance (including, without limitation, change of control or
golden parachute agreements or arrangements), bonus, profit-sharing,
incentive, deferred compensation, supplemental or excess retirement, life
insurance, health, or other plan, policy, contract, or arrangement as in
effect on the date of this
-53-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Agreement, other than a Mellon Pension Plan or Mellon Welfare Plan (as
hereinafter defined), which provides benefits or perquisites to or in respect
of any of the present or former directors or officers, or dependents, spouses,
or other beneficiaries of any of such directors or officers of, any of the
Mellon Companies. "Mellon Welfare Plans" shall mean each current material
severance, bonus, profit-sharing, incentive, deferred compensation,
supplemental or excess retirement, life insurance, health, vacation, tuition
assistance or reimbursement, legal services, salary continuation, travel or
accident insurance or benefits, disability insurance or benefits, unemployment
benefits, or other plans, policies, contracts or arrangements, including,
without limitation, each "employee welfare benefit plan" within the meaning of
Section 3(1) of ERISA as in effect on the date of this Agreement which provides
benefits or perquisites to or in respect of present or former employees of, or
dependents, spouses, or other beneficiaries of, any of such employees of, any
of the Mellon Companies. The Mellon Pension Plans, the Mellon Executive
Programs and the Mellon Welfare Plans are collectively referred to as the
"Mellon Benefit Plans". No Mellon Company has participated in or been a member
of, and no Mellon Benefit Plan is or has been, a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(b) All Mellon Benefit Plans conform to, and their administration is in
compliance in all material respects with, the applicable provisions of ERISA
and the Code, and any other applicable laws, rules, and regulations the breach
or violation of which would have a Mellon Material Adverse Effect. With
respect to the Mellon Benefit Plans, no event has occurred and, to the best
knowledge of Mellon's management, there exists no condition or set of
circumstances, in connection with which any of the Mellon Companies would be
subject to any liability, lien or encumbrance or loss of tax deduction under
ERISA or the Code, including, without limitation, ERISA Sections 409, 502(i),
Part 6 of Title I, 4062 or 4069 or Code Sections 4971, 4972, 4975, 4976, 4977,
4978, 4978B, 4979, 4980 or 4980B that would have, either individually or in
the aggregate, a Mellon Material Adverse Effect (except liability for benefit
claims and funding obligations payable in the ordinary course). None of the
Mellon Companies has provided, or is required to provide, security to any
Mellon Pension Plan which is subject to Title IV of ERISA pursuant to Section
401(a)(29) of the Code. No liability (other than annual premiums, all of which
premiums due prior to the Effective Time have or will be paid) to the Pension
Benefit Guaranty Corporation has been incurred with respect to any Mellon
Pension Plan which is subject to Title IV of ERISA which would have a Mellon
Material Adverse Effect.
(c) No Mellon Pension Plan which is subject to Title IV of ERISA has any
"unfunded current liability," as that term is defined in Section 302(d)(8)(A)
of ERISA, and the present fair market value of the assets of each such plan
exceeds the plan's "benefit liabilities," as that term is defined in Section
-54-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
4001(a)(16) of ERISA, when determined under actuarial factors that would apply
if the plan terminated as of the date of this Agreement in accordance with all
applicable legal requirements, where there would be a Mellon Material Adverse
Effect. Each such Mellon Pension Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter and
nothing has occurred since the date of such letter that would adversely affect
such qualification which would have a Mellon Material Adverse Effect.
(d) Except as otherwise provided in the Mellon Disclosure Letter, no
Mellon Welfare Plan provides medical or death benefits (whether or not
insured) with respect to current or former employees beyond their date of
retirement or other termination of service (other than coverage provided in
connection with the satisfaction of Section 601 of ERISA, the cost of which is
fully paid by the former employee or his or her dependents).
3.37. Material Contracts. None of the Mellon Companies, nor any of their
respective assets, businesses, or operations, as of the date of this
Agreement, is a party to, or is bound or affected by, or receives benefits
under, any contract or agreement or amendment thereto (other than this
Agreement) that in each case would be required to be filed as an exhibit to a
Form 10-K filed by Mellon as of the date of this Agreement that has not been
filed as an exhibit to or incorporated by reference in Mellon's Form 10-K
filed for the fiscal year ended December 31, 1992 or Mellon's Form 10-Q filed
for the quarter ended September 30, 1993.
3.38. Material Contract Defaults. None of the Mellon Companies is in
default under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives benefits,
and which default is reasonably likely to have, either individually or in the
aggregate, a Mellon Material Adverse Effect, and there has not occurred any
event that, with the lapse of time or the giving of notice or both, would
constitute such a default.
3.39. Legal Proceedings. Except as disclosed in reports referred to in
Section 3.41, there are no legal or administrative actions, suits, or
proceedings instituted or pending or, to the best knowledge of Mellon,
threatened (or unasserted but considered probable of assertion and which would
have at least a more than remote possibility of an unfavorable outcome)
against any of the Mellon Companies or affecting any property, asset,
interest, or right of any of them, that are reasonably expected to have,
either individually or in the aggregate, a Mellon Material Adverse Effect.
-55-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
3.40. Absence of Certain Changes or Events. Except as disclosed in
Mellon's Form 10-Q for the quarter ended September 30, 1993 filed with the
SEC, since December 31, 1992, the Mellon Companies on a consolidated basis
have not suffered, either individually or in the aggregate, any change having
a Mellon Material Adverse Effect or failed to operate their business
consistent with their past practices in all material respects.
3.41. Reports. Since January 1, 1990, each of the Mellon Companies has
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (i) the SEC and
(ii) any other applicable federal or state banking, securities, or other
regulatory authorities (except filings (other than filings with federal or
state banking authorities or the SEC) which are not material). As of their
respective dates (and without giving effect to any amendments or modifications
filed after the date of this Agreement with respect to reports and documents
filed before the date of this Agreement), each of such reports and documents
filed with any federal or state banking authorities or the SEC, including the
financial statements, exhibits, and schedules thereto, complied in all
material respects with all of the statutes, rules, and regulations enforced or
promulgated by the authority with which they were filed and did not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.
3.42. Statements True and Correct. None of the information supplied or
to be supplied by Mellon in writing for inclusion in the Registration
Statement, the Joint Proxy Statement, or any other documents to be filed with
the SEC or any other regulatory authority in connection with the transactions
contemplated hereby, will, at the respective times such documents are filed,
or, in the case of the Registration Statement, when it becomes effective or,
with respect to the Joint Proxy Statement, when first mailed to the
shareholders of Mellon and Dreyfus, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein not misleading, or, in the case of the Joint Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholder Meetings, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein in light of the circumstances under which they were made not
misleading. All documents that Mellon is responsible for filing with the SEC
or any other regulatory authority in connection with the transactions
contemplated hereby will comply in all material respects with the provisions
of applicable law including applicable provisions of the securities laws.
-56-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
3.43. Environmental Matters. (a) To the best knowledge of Mellon, each
Mellon Subsidiary, the Participation Facilities, and the Loan Properties (each
as defined below) are, and have been, in compliance with all applicable laws,
rules, regulations, and standards, and all requirements of the United States
Environmental Protection Agency ("EPA") and of state and local agencies with
jurisdiction over pollution or protection of health or the environment, except
for failures to comply which, individually or in the aggregate, do not or
would not result in a Mellon Material Adverse Effect.
(b) To the best knowledge of Mellon, there is no suit, claim, action, or
proceeding, pending or threatened, before any court, governmental agency,
board, or other forum pursuant to which Mellon or any of the Mellon
Subsidiaries or any Loan Property, Participation Facility, or Trust Property
(or in respect of such Loan Property, Participation Facility, or Trust
Property) has been or, with respect to threatened proceedings, may be named as
a defendant (i) for alleged noncompliance (including by any predecessor) with
any environmental law, rule, or regulation or (ii) relating to the release
into the environment of any Hazardous Material (as defined below) or oil,
whether or not occurring at or on any site owned (including as trustee),
leased, or operated by it or any of its subsidiaries or any Loan Property,
Participation Facility, or Trust Property, except where such noncompliance or
release does not or would not, individually or in the aggregate, result in a
Mellon Material Adverse Effect.
(c) To the best knowledge of Mellon, there is no reasonable basis for any
suit, claim, action, or proceeding of a type described in Section 3.43(b),
except as would not, individually or in the aggregate, result in a Mellon
Material Adverse Effect.
(d) During the period of (i) Mellon's or any of the Mellon Subsidiaries'
ownership (including as trustee) or operation of any of their respective
current properties, (ii) Mellon or any of the Mellon Subsidiaries'
participation in the management of any Participation Facility, (iii) Mellon or
any of the Mellon Subsidiaries' holding of a security interest in a Loan
Property, or (iv) Mellon or any of the Mellon Subsidiaries' acting as a
trustee or fiduciary with respect to a Trust Property, to the best knowledge
of Mellon, there has been no release of Hazardous Material or oil in, on,
under, or affecting such property, Participation Facility, Loan Property or
Trust Property, except where such release does not or would not result,
individually or in the aggregate, in a Mellon Material Adverse Effect. Prior
to the period of (w) Mellon or any of the Mellon Subsidiaries' ownership
(including as trustee) or operation of any of their respective current
properties, (x) Mellon or any of the Mellon Subsidiaries' participation in the
management of any Participation Facility, (y) Mellon or any of the Mellon
Subsidiaries acting as trustee or other fiduciary with respect to Trust
Property, or (z)
-57-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Mellon or any of the Mellon Subsidiaries' holding of a security interest in a
Loan Property, to the best knowledge of Mellon, there was no release of
Hazardous Material or oil in, on, under, or affecting any such property,
Participation Facility, or Loan Property, except where such release does not or
would not result, individually or in the aggregate, in a Mellon Material
Adverse Effect.
(e) The following definitions apply for purposes of this Section 3.43:
(i) "Loan Property" means any property in which Mellon (or a Mellon
Subsidiary) holds a security interest for an amount greater than $2,500,000,
and, where required by the context, includes the owner or operator of such
property, but only with respect to such property; (ii) "Participation Facility"
means any property in which Mellon (or a Mellon Subsidiary) participates in the
management of such property and, where required by the context, includes the
owner or operator of such property, but only with respect to such property;
(iii) "Trust Property" means any property with respect to which Mellon (or a
Mellon Subsidiary) acts or has acted as a trustee or other fiduciary (including
investment advisor), directly or indirectly, and includes any trust or similar
legal vehicle that owns or controls (or that owned or controlled) such property
and, where required by the context, includes the trustee or other fiduciary,
but only with respect to such property; and (iv) "Hazardous Material" means any
pollutant, contaminant, or hazardous substance within the meaning of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et. seq., or any similar federal, state, or local law.
3.44. Books of Account. The books of account of each Mellon Company have
been and will be maintained in compliance with all applicable legal and
accounting requirements in all material respects.
3.45. Properties. Except for such Liens and imperfections of title as
would not materially affect the value of personal or real property reflected
in the Mellon Financial Statements or acquired since the date of such
statements and which do not, individually or in the aggregate, materially
interfere with or impair the present and continued use of such property, each
Mellon Company has good title, free and clear of any Liens, to all of the
personal and real property reflected in the Mellon Financial Statements as
being owned by it, and to all personal and real property acquired by it since
the respective dates of the Mellon Financial Statements, except such personal
and real property as has been disposed of in the ordinary course of the
business consistent with past practice.
3.46. Employee Relationships. There are no labor or collective
bargaining agreements, contracts or understandings with a labor union or labor
organization which are binding upon any Mellon Company, nor, to Mellon's
knowledge is there, as of the
-58-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
date hereof, any activity involving any employees of any Mellon Company seeking
to certify a collective bargaining unit or engaging in any other union
organizational activity.
3.47. Filings, etc. (a) Since December 31, 1990, each Mellon Company has
had and now has all material permits, licenses, certificates of authority,
orders and approvals of, and has made all material filings, applications and
registrations with, federal, state, local or foreign governmental or
regulatory bodies, that are required in order to permit each of them to carry
on its respective business as presently conducted; and such permits, licenses,
certificates of authority, registrations, orders and approvals are in full
force and effect in all material respects. The conduct of its respective
business by each Mellon Company has not, since December 31, 1990, and
currently does not, violate or infringe any material applicable domestic
(federal, state or local) or foreign law, statue, ordinance, license, rule or
regulation.
(b) There are no proceedings pending (or, to the knowledge of Mellon,
threatened, nor to the knowledge of Mellon has any event occurred or condition
exist that is reasonably likely to form the basis for any proceeding) that is
reasonably likely to result in the revocation, cancellation or suspension, or
any adverse modification, of any permit, license, certificate of authority,
order or approval referred to in Section 3.47(a), and the execution and
delivery of this Agreement and the consummation of any factions contemplated
hereby will not result in any such revocation, cancellation, suspension or
modification.
(c) None of any Mellon Company, or any officer, director or employee
thereof, is a party or subject to any order, directive, decree, condition or
similar arrangement or action (other than exemptive orders) relating to its
business with or by any federal, state, local or foreign regulatory authority.
3.48. Brokers and Finders. Except for Goldman, Sachs & Co., Mellon has
not employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted, directly or indirectly, for Mellon, in connection with this
Agreement or the transactions contemplated hereby.
3.49. Antitakeover Provisions Inapplicable. No "Business combination",
"moratorium", "control share", or other state antitakeover statute or
regulation (x) prohibits or restricts Mellon's ability to perform its
obligations under this Agreement, or its ability to consummate the transactions
contemplated hereby, (y) would have the effect of invalidating or voiding this
Agreement, or any provisions hereof, or (z) would subject Dreyfus to any
material impediment or condition in connection with the exercise of any of its
rights under this Agreement.
-59-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
3.50. Approval of Merger. Approval of the Merger by the shareholders of
Mellon requires the affirmative vote of holders of in excess of 1/2 of the
issued and outstanding shares of Mellon Common Stock and Mellon Series D
Preferred Stock, voting as one class.
3.51. Ownership of Dreyfus. No Mellon Company owns any shares of Dreyfus
Common Stock.
3.52. Non-Competition Agreements. No Mellon Company is a party to any
contract containing covenants limiting the freedom of a Mellon Company to
compete either in any line of business or with any person or entity which
would have a Dreyfus Material Adverse Effect.
3.53. Opinion of Financial Advisor. Mellon's Board of Directors has
received the opinion of Goldman, Sachs & Co., dated the date hereof, to the
effect that, as of the date hereof, the Exchange Ratio is fair from a
financial point of view to the stockholders of Mellon.
3.54. No Violation of Rights Agreement. None of the execution or
delivery of this Agreement, the issuance of Mellon Common Stock to the holders
of Dreyfus Common Stock pursuant to this Agreement or any other transactions
contemplated by this Agreement will (x) cause a Separation Time (as defined in
the Shareholder Protection Rights Agreement dated as of August 15, 1989, the
"Rights Agreement") between Mellon and Mellon Bank as rights agent to occur or
(y) cause any person to be deemed an "Acquiring Person" within the meaning of
the Rights Agreement.
ARTICLE IV
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
4.01. Dreyfus Conduct Prior to Closing. Dreyfus hereby covenants and
agrees with Mellon that each Dreyfus Company shall operate its businesses only
in the usual, regular and ordinary course and substantially in accordance with
past practices, and shall use its best efforts to preserve intact its business
organization and assets and maintain its rights, franchises and business and
customer relations necessary to run the business as currently run in all
material respects. Without in any way limiting the foregoing, Dreyfus agrees
not to do any of the following without the prior written consent of Mellon:
(a) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock or other equity interests or
otherwise purchase or redeem, directly or indirectly, any shares of its
capital stock or other equity interests, except (i) regular quarterly
-60-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
cash dividends on the Dreyfus Common Stock at a rate per quarter not in
excess of $0.19 per share;
(b) issue or sell any shares of its capital stock or any Rights,
except for issuances of shares of capital stock pursuant to employee
stock options heretofore granted under existing plans;
(c) incur any indebtedness for borrowed money, except in the
ordinary course of business consistent with past practice, or issue or
sell any debt securities;
(d) except in the ordinary course of business, mortgage, pledge or
otherwise subject to any material Lien, any of its properties or assets,
tangible or intangible;
(e) except where required in the exercise of its fiduciary
obligations, in the case of any Fund, request that any action be taken by
the Fund Board, other than routine actions that would not be reasonably
expected to have a Dreyfus Material Adverse Effect;
(f) pay any bonus to any officer, director, employee, sales
representative, agent or consultant, or grant to any officer, director,
employee, sales representative, agent or consultant any other increase in
compensation in any form except in accordance with past practice;
(g) except to the extent that Mellon has otherwise expressly agreed
in writing as of the date hereof, or as may be required by law, or as
otherwise specifically provided herein, adopt, or amend in any material
respect, any employment, bonus, profit-sharing, compensation, stock
option, pension, retirement, deferred compensation or other plan,
agreement, trust, fund or arrangement for the benefit of officers,
directors, employees, sales representatives, agents or consultants;
(h) amend its certificate of incorporation or materially amend its
by-laws or any other organizational documents, except as required by law;
(i) change in any material respect its accounting practices or
principles, except as required by law or GAAP;
(j) enter into or recommend that any Fund enter into any type of
business materially different from that conducted by a Dreyfus Company or
a Fund as of the date
-61-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
of this Agreement or enter into or participate in any joint venture or
partnership, except for new Funds created in the ordinary course of
business;
(k) other than in the ordinary course of business, acquire direct or
indirect control over any corporation or other organization or make any
acquisition of all or a substantial part of a business or operations
having in either case total assets of over $5,000,000, or dispose of any
business or operations having assets of over $5,000,000;
(l) agree or commit to do any of the foregoing; and
(m) to the extent that Mellon Bank is or, following the Closing,
Dreyfus will be, prohibited by law or regulation from owning the Dreyfus
Consumer Life Insurance Company, the Dreyfus Security Savings Bank,
F.S.B. or the Trotwood Corporation (the "Designated Entities") Dreyfus
shall at the request of Mellon dispose of such Designated Entities in an
orderly manner prior to the Closing; provided that no such disposition
need be effected until after the approval of the Merger by the
shareholders of Dreyfus and the determination by Dreyfus that there is a
substantial probability that the Merger shall occur. In addition, prior
to the Effective Time, Dreyfus shall cooperate with Mellon Bank to make
arrangements so that, after the Effective Time, Dreyfus Service Corp.
shall cease to act as an underwriter or distributor of securities to the
extent necessary to obtain the Bank Regulatory Approvals (as hereinafter
defined).
4.02. Mellon Conduct Prior to Closing. Mellon and Mellon Bank hereby
agree not to, and agree to cause each Mellon Subsidiary not to, do any of the
following without the prior written consent of Dreyfus:
(a) (as to Mellon only) declare, set aside, make or pay any dividend
or other distribution in respect of its capital stock or other equity
interests or otherwise purchase or redeem, directly or indirectly, any
shares of its capital stock or other equity interests (other than
purchases or redemptions which would not cause the Merger to fail to
qualify as a pooling of interests for accounting purposes), except
regular quarterly cash dividends on the Mellon Common Stock;
(b) issue or sell any shares of its capital stock or any Rights,
except for issuances of shares of common stock pursuant to employee stock
options under existing plans, conversion or exercise rights with respect
to
-62-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
outstanding securities of Mellon, and except for shares issued for
fair value;
(c) take any action that would materially delay or adversely affect
the ability of Mellon or Mellon Bank to obtain the approvals of any
governmental entities required to permit consummation of the Merger; and
(d) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
assets, where such acquisition would have a Mellon Material Adverse
Effect.
In addition, prior to the Closing, Mellon will not take any action
requiring the approval of the shareholders of Mellon (other than the
transactions contemplated hereby) without first obtaining the consent of the
Chief Executive Officer of Dreyfus, which consent shall not be unreasonably
withheld.
4.03. Consents and Approvals. (a) Subject to the terms and conditions
herein provided, including, without limitation, Section 5.05, each of the
parties hereto agrees to cooperate with the other and use its best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement as promptly as practicable, including, without
limitation, under the Hart-Scott-Rodino Antitrust Improvements Act (the "HSR
Act") and all other applicable laws and regulations. The parties hereto
covenant and agree to take no action, (i) which would render any of their
representations and warranties contained herein untrue in any material respect
at and as of the Closing, (ii) which would materially and adversely affect the
ability of any of them to satisfy any of the conditions set forth in Article
VI, (iii) which would adversely affect the eligibility of the transactions
contemplated hereby for pooling-of-interests accounting treatment, or (iv)
which would cause such transactions to fail to be a tax free reorganization
within the meaning of Section 368(a)(1)(B) of the Code.
(b) To the extent that the rights of Dreyfus or any Dreyfus Subsidiary
under any agreement, including any Investment Contract, may not be assigned
without the consent or approval of another party thereto, Dreyfus shall use
its best efforts to obtain any such consent. Subject to Section 5.11, without
limiting the foregoing, Dreyfus as promptly as practicable, will (i) use its
best efforts to obtain, or cause to be obtained, all consents necessary to be
obtained in order to consummate the transactions contemplated hereby, (ii) use
its best efforts to prepare or cause to be prepared, file with or cause to be
filed with and cause to be cleared by the SEC and all other governmental and
regulatory agencies having jurisdiction thereover, as promptly
-63-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
as practicable after the date hereof, all proxy solicitation materials required
to be distributed to Fund shareholders in connection with such consents, and
(iii) mail such proxy solicitation materials to such shareholders promptly and
hold meetings of shareholders of the Funds as promptly thereafter as
practicable.
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Current Information. During the period from the date of this
Agreement to the Closing, each party will cause one or more of their
representatives to confer on a regular and frequent basis with representatives
of the other party with respect to the status of its ongoing operations (and,
in the case of Dreyfus, the Funds). Each party will promptly notify the other
party of any material change in the normal course of its business (or, in the
case of Dreyfus, any Fund) or of any complaints from a governmental or
regulatory authority or a self-regulatory body, investigations or hearings (or
communications indicating that the same may be contemplated), or the
institution or the threat of any litigation that comes to their attention
which would, in any manner, challenge, prevent, alter or materially delay any
of the transactions contemplated hereby and each party will keep the other
party informed with respect to such events. Dreyfus and Mellon will notify
each other of the status of regulatory applications and third party consents
related to the transactions contemplated hereby.
5.02. Access; Information. (a) Each party shall afford to the other
parties such access during normal business hours and without material business
interruption to its, its subsidiaries' books, records (including, without
limitation, Tax Returns and appropriate work papers of independent auditors
under normal professional courtesy), properties, and to such other information
as such party may reasonably request.
(b) All non-public records, books, contracts, instruments, computer data
and other data and information (collectively, the "Information") concerning
the other parties or the Funds furnished it pursuant to this Agreement shall
be subject to the confidentiality agreements between the parties previously
entered into. In the event of the termination of this Agreement, each party
shall return or destroy all Information furnished to such party and its
representatives hereunder and all analyses, compilations, data, studies other
documents prepared by such party or its representatives containing or based in
whole or in part on any such Information.
5.03. Effect of Investigations. No investigation by the parties hereto
made heretofore or hereafter, or the provision
-64-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
of any documents, whether pursuant to this Agreement or otherwise shall affect
the representations and warranties of the parties which are contained herein
and each such representation and warranty shall survive such investigation.
5.04. Agreement of Affiliates. Dreyfus shall deliver to Mellon, no later
than 30 days after the date of this Agreement, a letter identifying each
person whom it reasonably believes is an "affiliate" of Dreyfus for purposes
of Rule 145 under the 1933 Act. Thereafter Dreyfus shall identify to Mellon
each additional person whom Dreyfus reasonably believes to have thereafter
become an "affiliate." Dreyfus shall use its best efforts to cause each person
who is identified as an "affiliate" pursuant to the two immediately preceding
sentences to deliver to Mellon as promptly as practicable, a written agreement,
substantially in the form of Exhibit 5.04.
5.05. Acquisition Proposals. Except as provided in Section 4.01(m),
Dreyfus agrees that neither it nor any of its officers, directors, employees,
agents or representatives (including, without limitation, any investment
banker, attorney or accountant retained by any of them) shall initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of
any proposal or offer with respect to a merger, consolidation or similar
transaction involving, or any purchase of any substantial portion of the
assets or any substantial portion of the equity securities of Dreyfus or any
Dreyfus Subsidiary, or the assignment of any substantial portion of any
investment advisory, subadvisory, administrative or distribution agreement by
any Dreyfus Company or the entering into by any Fund of an investment
advisory, subadvisory, administrative or distribution agreement with any
company other than a Dreyfus Company (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"); provided, however, that
(i) Dreyfus may furnish or cause to be furnished information concerning
Dreyfus and its business, properties or assets to a third party, (ii) Dreyfus
may engage in discussions or negotiations with a third party, (iii) following
receipt of an Acquisition Proposal, Dreyfus may take and disclose to its
stockholders a position contemplated by Rule 14e-2 or Rule 14d-9 under the
Exchange Act or otherwise make a disclosure to Dreyfus's stockholders and/or
(iv) following receipt of an Acquisition Proposal or withdrawal of (or failure
to update at the time of mailing of the Joint Proxy Statement) the opinions
referred to in Section 3.28, Dreyfus's Board of Directors may fail to make,
withdraw or modify its recommendation referred to in Section 5.11, but in each
case referred to in the foregoing clauses (i), (ii) and (iv), only to the
extent that the Board of Directors of Dreyfus shall determine on the basis of
written advice from outside counsel (who may be Dreyfus's regularly retained
outside counsel) that such action is necessary in order for the Board of
Directors to act in a manner consistent with its fiduciary obligations under
applicable law. Dreyfus will take the necessary steps to inform the
appropriate individuals or entities
-65-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
referred to in the first sentence hereof of the obligations undertaken in this
Section 5.05. For purposes of this Section 5.05, an Acquisition Proposal shall
include any proposal or arrangement whether oral or in writing, providing for,
requiring, or having the effect of requiring Dreyfus to, or contemplating that
Dreyfus would, abandon, terminate, or fail to consummate the Merger or any of
the other transactions contemplated under this Agreement. In the event that
Dreyfus shall receive an Acquisition Proposal or take any action described in
clause (i) or (ii) above, Dreyfus shall promptly inform Mellon of the material
details of such Acquisition Proposal and/or its actions in response thereto or
its actions described in clauses (i) and (ii) and shall thereafter keep Mellon
reasonably and promptly informed of all material facts and material
circumstances relating to said Acquisition Proposal and Dreyfus's actions
relating thereto (for purposes of this sentence, Dreyfus's actions shall
include the actions of its advisors, agents and representatives).
5.06. Stock Exchange Listing. Mellon shall use its best efforts to list
on the NYSE, upon official notice of issuance, and Mellon shall reserve for
issuance, the Mellon Common Stock to be issued to the Dreyfus stockholders
hereunder.
5.07. Notification of Certain Matters. Each party shall give prompt
notice to the other parties of: (i) any notice of, or other communication
relating to, a material default or event that, with notice or lapse of time or
both, would become a material default, under any material contract; (ii) any
event, act or omission which results or is likely to result in a Dreyfus
Material Adverse Effect or Mellon Material Adverse Effect (as the case may be)
of which it has knowledge; (iii) any failure to obtain any consent referred to
in Section 4.03; and (iv) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with any of the transactions contemplated by this Agreement.
5.08. Customers. After execution of this Agreement and prior to the
Closing, Dreyfus shall, after consultation with Mellon, notify the Fund
Boards, the Clients and any other customers of Dreyfus of the transactions
contemplated hereby.
5.09. Qualification of the Funds; Fund Boards. Subject to applicable
fiduciary duties to the Funds, Dreyfus will take no action (i) that would
prevent any Fund (other than a Fund which is a limited partnership) from
qualifying as a "regulated investment company" within the meaning of Section
851 of the Code, or (ii) that would be inconsistent with any Fund's prospectus
and other offering, advertising and marketing materials, where such action
would in either case have a Dreyfus Material Adverse Effect.
5.10. Press Releases, Etc. Dreyfus and Mellon will consult with each
other as to the form, substance and timing of
-66-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
any press release or other public disclosure of matters related to this
Agreement, or any of the transactions contemplated hereby and no such press
release or other public disclosure shall be made without the consent of the
other party, which shall not be unreasonably withheld or delayed; provided,
--------
however, that the parties may make such disclosures as are required by law
- - -------
after making reasonable efforts in the circumstances to consult in advance with
the other parties.
5.11. Registration Statement; Shareholder Approvals. As promptly as is
reasonably practical after the date of this Agreement, Mellon shall prepare
and file the Registration Statement with the SEC and Dreyfus and Mellon shall
use their best efforts to cause the Registration Statement to become effective
under the Securities Act. Mellon will take any action reasonably required to
be taken under the applicable state Blue Sky or securities laws in connection
with the issuance of the shares of its Common Stock upon consummation of the
Merger. Each party shall furnish all information concerning it and the holders
of its capital stock as the other party may reasonably request in connection
with such action. Dreyfus and Mellon shall each call its Shareholders Meeting
to be held as soon as reasonably practicable after the obtaining of the Bank
Regulatory Approvals (as defined below) for the purpose of voting upon the
Merger (in the case of Dreyfus) and the issuance of the Mellon Common Stock
(in the case of Mellon) (the "Relevant Matters"). In connection with the
Shareholders Meetings, (i) Dreyfus and Mellon shall prepare and file the Joint
Proxy Statement with the SEC and mail it to their respective shareholders;
provided that the Joint Proxy Statement shall not be required to be mailed
prior to receipt of the approval of the Office of the Comptroller of the
Currency and, if required, the Board of Governors of the Federal Reserve
System, insofar as such approvals are required with reference to the mutual
fund activities currently conducted by the Dreyfus Companies (the "Bank
Regulatory Approvals") of the transactions contemplated hereby, (ii) the
parties shall furnish to each other all information concerning them that the
parties may reasonably request in connection with the Joint Proxy Statement,
(iii) the boards of directors of Dreyfus and Mellon shall recommend to their
respective shareholders the approval of the Relevant Matters, provided,
however, that such recommendation may not be made or may be withdrawn,
modified, or amended (A) after the receipt by Dreyfus of an Acquisition
Proposal to the extent the Board of Directors of Dreyfus reasonably
determines, upon the written advice of outside counsel (who may be Dreyfus's
regularly retained
-67-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
outside counsel) that such action is necessary in order for the Board of
Directors of Dreyfus to act in a manner which is consistent with its fiduciary
obligations under applicable law or (B) in the event the opinions referred to
in Section 3.28 have been withdrawn (or shall fail to be updated at the time of
mailing of the Joint Proxy Statement), to the extent the Board of Directors of
Dreyfus reasonably determines, upon the written advice of outside counsel (who
may be Dreyfus's regularly retained outside counsel) that such action is
necessary in order for the Board of Directors of Dreyfus to act in a manner
which is consistent with its fiduciary obligations under applicable law, and
(iv) except as provided in the preceding clause (iii), Dreyfus and Mellon shall
otherwise use their best efforts to obtain such shareholders' approval. Dreyfus
shall use its best efforts to obtain the approvals referred to in Section
6.01(k) as soon as reasonably practicable after the date of this Agreement;
provided that no mailing of proxy solicitation materials to Fund shareholders
as referred to in Section 4.03(b) need be made prior to receipt of the Bank
Regulatory Approvals, it being understood, however, that all filings and other
actions will be taken as soon as reasonably practicable so as to permit such
mailings to be made as soon as practicable after receipt of such Bank
Regulatory Approvals. Any information provided by Dreyfus to any Funds in
connection with such approvals will comply with all applicable legal
requirements.
5.12. Applications. Mellon shall prepare and file applications with the
appropriate governmental authorities seeking the approvals necessary for
Mellon to consummate the transactions contemplated by this Agreement.
5.13. Section 15(f). The parties each agree to use their respective best
efforts to assure compliance with the conditions of Section 15(f) of the
Investment Company Act as it applies to the transactions contemplated by this
Agreement. Mellon and Mellon Bank jointly and severally agree as follows:
(a) For a period of not less than three years after the Effective Time,
Mellon and Mellon Bank jointly and severally shall use their best efforts to
assure that no more than 25% of the members of the board of directors or
trustees of any Fund shall be "interested persons" (as defined in the
Investment Company Act) of the Dreyfus Companies or the Mellon Companies, or
any entity that succeeds the Dreyfus Companies or the Mellon Companies as
investment advisor to each Fund or any person that before or after the
Effective Time was or is an affiliated person of any of the foregoing within
the meaning of the Investment Company Act. Without limiting the generality of
the foregoing, Mellon and Mellon Bank will not take, recommend or endorse any
action that would cause more than 25% of the number of any such board to be
"interested persons."
(b) Mellon and Mellon Bank each represent and warrant that there is no
express or implied understanding, arrangement or intention to impose an
"unfair burden" within the meaning of Section 15(f) of the Investment Company
Act on any of the Funds as a result of the transactions contemplated hereby,
and that for a period of not less than two years after the Effective Time
neither of them will take or recommend any act that would constitute an
"unfair burden" on any Fund.
-68-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
5.14. Tax Information. Dreyfus shall cooperate in obtaining from the
appropriate taxing authority for Mellon's review, Dreyfus's tax account
information for federal, state or local taxes, as requested by Mellon. Mellon
shall cooperate in obtaining from the appropriate taxing authority for
Dreyfus's review, Mellon's tax account information for federal, state or local
taxes, as requested by Dreyfus.
5.15. Reorganization and Accounting Treatment. The Mellon Companies will
take no action after the Effective Time which would cause the Merger to fail
to be characterized as a tax-free reorganization under Section 368 of the Code
or as a pooling of interests, for accounting purposes.
5.16. Post-Merger Operations. Following the Effective Time, Mellon and
Mellon Bank shall take or cause to be taken the following actions:
(a) Throughout the two-year period following the Effective Time, the
Continuing Corporation will operate the business formerly operated by Dreyfus
as a direct or indirect subsidiary of Mellon to be headquartered in the New
York City Metropolitan Area and to be known under Dreyfus's current corporate
name.
(b) Throughout the two-year period following the Effective Time, Howard
Stein shall be the Chief Executive Officer of the Continuing Corporation and
Joseph DiMartino shall be the President of the Continuing Corporation.
(c) As of the Effective Time, the Board of Directors of Mellon shall (i)
increase the size of the Mellon Board of Directors by three members and shall
appoint Mr. Stein, Mr. Joseph DiMartino and Mr. Edward J. McAniff to fill the
vacancies created thereby, and (ii) increase the size of the Executive
Committee of the Mellon Board of Directors by one member and appoint Mr. Stein
to fill the vacancy created thereby, to the extent that those persons are able
and willing to serve on the Mellon Board of Directors (and Mr. Stein is able
and willing to serve on the Executive Committee). In addition, persons who are
members of Dreyfus's Board of Directors immediately prior to the Effective
Time shall continue to serve on the Board of Directors of the Continuing
Corporation throughout the two-year period following the Effective Time, to
the extent such persons are able and willing to serve on the Board of
Directors of the Continuing Corporation, together with such additional persons
as Mellon may appoint to such Board.
(d) As of the Effective Time, an Executive Committee of the Dreyfus Board
of Directors shall be appointed. During that two-year period following the
Effective Time, unless otherwise determined by the Dreyfus Executive
Committee, the Dreyfus Executive Committee shall consist of four persons, of
whom two
-69-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
shall be Howard Stein and Joseph DiMartino, provided such persons are
able and willing to serve on the Dreyfus Executive Committee, and the other
two shall be Frank V. Cahouet and W. Keith Smith. The Executive Committee
shall meet regularly (and in any event not less than monthly).
ARTICLE VI
CONDITIONS
6.01. Conditions to Each Party's Obligations to Consummate. The
respective obligations of each party to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver
at or prior to the Closing of the following conditions:
(a) Regulatory approvals. The transactions contemplated by this
Agreement shall have been approved by any federal, state, foreign or
local governmental or regulatory authority or self-regulatory body the
approval of which is required to permit consummation thereof, including
the Office of the Comptroller of the Currency and, if required, the Board
of Governors of the Federal Reserve System, without the imposition of any
condition, requirement or commitment which, in the case of the
obligations of the Mellon Companies, is reasonably likely to have a
Dreyfus Material Adverse Effect or a Mellon Material Adverse Effect, and,
in the case of the obligations of Dreyfus, is reasonably likely to have a
Mellon Material Adverse Effect; and all waiting periods arising under the
HSR Act or any other applicable law shall have duly lapsed or been
terminated.
(b) No Orders. None of Mellon or Mellon Bank, Dreyfus or any Fund
shall be subject to any order, decree or injunction of a court or agency
of competent jurisdiction which either enjoins or prohibits the
consummation of any of the transactions contemplated by this Agreement.
(c) Representations and Warranties. The representations and
warranties of the other party set forth or referred to in this Agreement
shall be true and correct both individually and in the aggregate in all
material respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time, except (i)
for any such representations and warranties made as of a specified date,
which shall be true and correct in all material respects as of such date,
or (ii) as expressly
-70-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
contemplated or permitted by this Agreement. For purposes hereof, a
representation or warranty shall be deemed to be correct in all material
respects unless a breach, if any, thereof (excluding for these purposes
any materiality limitations therein), has a Dreyfus Material Adverse
Effect or a Mellon Material Adverse Effect (as the case may be). The
representations and warranties shall be deemed in the aggregate to be true
and correct in all material respects unless the breaches of all the
representations and warranties, if any (excluding, for these purposes, any
materiality limitations therein) have, as a whole, a Dreyfus Material
Adverse Effect or a Mellon Material Adverse Effect (as the case may be).
In addition, for purposes hereof, in determining whether any Dreyfus
Material Adverse Effect has occurred, no consideration shall be given to
any decline in assets managed, administered or advised by the Dreyfus
Companies due to the termination or reduction by any competitors of the
Mellon Companies of any agreements, arrangements or other investment
relationships between the Dreyfus Companies or the Funds and such
competitors.
(d) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of the other party to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with by it in all material respects.
(e) Certificates. Each of the parties shall have delivered to the
other a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer, to
the effect that the conditions of its obligations set forth in Sections
6.01(c) and (d) of this Agreement with respect to it have been satisfied.
(f) Shareholder Approvals. The shareholders of Dreyfus and Mellon
shall have approved the Relevant Matters, as and to the extent required
by law and by the provisions of any governing instruments. In addition,
the holders of the requisite percentage of shares of Dreyfus Common Stock
and Mellon Common Stock sufficient, either alone or in combination with
other factors, to preclude accounting for the Merger as a pooling of
interests or to obtain tax free treatment for the Merger under Section
368(a)(1)(B) of the Code shall not have perfected dissenters' rights
under applicable law with respect to the adoption of this Agreement.
-71-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
(g) Accountants' Letters. Each of the parties shall have received
letters, dated as of the Effective Time, from KPMG Peat Marwick and Ernst
& Young to the effect that the Merger will qualify for pooling of
interests accounting treatment under Accounting Principles Board Opinion
No. 16 if closed and consummated in accordance with this Agreement.
(h) Tax Matters. Each party shall have received a tax opinion
addressed to it from its outside counsel to the effect that, subject to
the customary representations and assumptions referred to therein, (a) the
Merger will constitute a tax-free reorganization within the meaning of
Section 368(a)(1)(B) of the Code, (b) the exchange in the Merger of the
Mellon Common Stock for Dreyfus Common Stock will not give rise to income,
gain, or loss to Dreyfus, Mellon, or the shareholders of Dreyfus with
respect to such exchange, (c) the adjusted tax basis of the Mellon Common
Stock received by Dreyfus shareholders who exchange all of their Dreyfus
Common Stock in the Merger will be the same as the adjusted tax basis of
the shares of the Dreyfus Common Stock surrendered in exchange therefor,
and (d) the holding period of the shares of the Mellon Common Stock
received in the Merger will include the period during which the shares of
Dreyfus Common Stock surrendered in exchange therefor were held, provided
such shares of Dreyfus Common Stock were held as capital assets at the
Effective Time.
(i) Registration Statement; New York Stock Exchange. The
Registration Statement shall be effective under the Securities Act and no
stop orders suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the SEC. The shares of Mellon Common Stock
issuable in the Merger shall have been approved for listing upon notice
of issuance.
(j) Legal Opinions. Each party shall have received written opinions,
dated the Effective Time, from counsel for the other party in a form
reasonable and normal for the transactions contemplated hereby.
(k) Consents. Dreyfus shall have obtained all the consents or
approvals to the proposal referred to in Section 4.03(b) of the Fund
Boards and Fund shareholders of Measurement Funds (as defined below)
holding not less than 90% of the aggregate net assets as of the close of
business on December 3, 1993 for all the Measurement Funds, each in form
and substance reasonably satisfactory to Mellon. For purposes of this
Agreement, "Measurement Funds" shall mean all Funds managed,
-72-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
administered or advised by Dreyfus, except for those Funds managed,
administered or advised by Dreyfus for First of Chicago, First Interstate
Bank, and First Nationwide.
ARTICLE VII
TERMINATION
7.01. Termination. This Agreement may, by written notice, be terminated
at any time prior to the Closing:
(a) by the mutual consent of the Board of Directors of Dreyfus and
the Board of Directors of Mellon; or
(b) by either Dreyfus or Mellon, at any time after December 31, 1994
by action of its Board of Directors (or a duly constituted committee of
the Board, if the Closing shall not theretofore have occurred; or
(c) by either Dreyfus or Mellon in the event of the breach by the
other party of representations, warranties or agreements contained herein
that would create a Dreyfus Material Adverse Effect or Mellon Material
Adverse Effect (as the case may be) and which cannot be or has not been
cured within 30 days after written notice to the party committing such
breach; or
(d) by Mellon, if shareholders of one or more Measurement Funds
representing more than 10% of the aggregate net assets as of the close of
business on December 3, 1993 for all of the Measurement Funds, shall have
met and failed to approve the proposal recommended pursuant to Section
4.03(b); or
(e) by either Dreyfus or Mellon, if any permanent injunction or
action by any court or other governmental agency or body of competent
jurisdiction enjoining, denying approval of, or otherwise prohibiting the
consummation of the Merger shall have become final and nonappealable; or
(f) by either Dreyfus or Mellon, if this Agreement and the Merger
shall fail to receive the requisite vote for approval and adoption by the
shareholders of Dreyfus or Mellon at the Shareholders Meetings;
(g) by Dreyfus if Dreyfus's Board of Directors shall have approved
an Acquisition Proposal after determining, upon the basis of written
advice of outside counsel (who may be Dreyfus's regularly retained outside
-73-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
counsel), that such approval is necessary in the exercise of its
fiduciary obligation under applicable law.
Notwithstanding the foregoing, a party in material breach of any
provision of this Agreement may not terminate this Agreement pursuant to this
Section 7.01.
7.02. Fee. (a) Dreyfus hereby agrees to pay Mellon, subject to the terms
and conditions of this Section 7.02, upon the occurrence of the events
specified in this Section, a fee (the "Fee") of $ 50,000,000.
(b) Mellon shall be entitled to payment of the Fee following the
occurrence of a Purchase Event (as defined below); provided that Mellon shall
have sent written notice of such entitlement within 90 days following such
Purchase Event. Such payment shall be made in immediately available funds
within five business days after delivery of such notice. The right to receive
the Fee shall terminate if any of the following (a "Fee Termination Event")
occurs prior to a Purchase Event: (i) the Effective Time of the Merger, (ii)
termination of this Agreement in accordance with the provisions hereof if such
termination occurs prior to the occurrence of a Preliminary Purchase Event,
except a termination by Mellon pursuant to Section 7.01(c) hereof (unless the
breach by Dreyfus is non-volitional), or (iii) the passage of twelve months
after termination of this Agreement if such termination follows the occurrence
of a Preliminary Purchase Event or a termination by Mellon pursuant to Section
7.01(c) of this Agreement (unless the breach by Dreyfus is non-volitional)
(provided that if a Preliminary Purchase Event continues or occurs beyond such
termination, the Fee Termination Event shall be twelve months from the
expiration of the Last Preliminary Purchase Event but in no event more than 18
months after such termination). The "Last Preliminary Purchase Event" shall
mean the last Preliminary Purchase Event to expire.
(c) The term "Preliminary Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Dreyfus or any of the Dreyfus Subsidiaries without having
received Mellon's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as defined below) with
any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Securities Exchange
Act") and the rules and regulations thereunder) other than Mellon or any
of the Mellon Subsidiaries or the Board of Directors of Dreyfus shall
have approved or recommended that the shareholders of Dreyfus approve or
accept any Acquisition Transaction with any person other than
-74-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Mellon or any Mellon Subsidiary. For purposes of this Agreement,
"Acquisition Transaction" shall mean (A) a merger or consolidation, or any
similar transaction, involving Dreyfus or any Dreyfus Material Subsidiary,
(B) a purchase, lease or other acquisition of all or substantially all of
the assets of Dreyfus or any Dreyfus Material Subsidiary, (C) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the
voting power of Dreyfus or a Dreyfus Material Subsidiary; provided that
--------
the term "Acquisition Transaction" does not include any internal merger
or any divestiture pursuant to Section 4.01 (m) or (D) any substantially
similar transaction;
(ii) (A) Any person (other than Mellon or any Mellon Subsidiary)
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Dreyfus
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act, and the rules and regulations thereunder), or
(B) any group (as such term "group" is defined in Section 13(d)(3) of the
Securities Exchange Act), other than a group of which Mellon or any
Mellon Subsidiary is a member, shall have been formed that beneficially
owns 10% or more of the Dreyfus Common Stock then outstanding;
(iii) Any person other than Mellon or any Mellon Subsidiary shall
have made a bona fide proposal to Dreyfus or its shareholders, by public
---------
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction (including,
without limitation, any situation which any person other than Mellon or
any Mellon Subsidiary shall have commenced (as such term is defined in
Rule 14d-2 under the Securities Exchange Act) or shall have filed a
registration statement under the Securities Act with respect to, a tender
offer or exchange offer to purchase any shares of Dreyfus Common Stock
such that, upon consummation of such offer, such person would own or
control 25% or more of the then outstanding shares of Dreyfus Common Stock
(such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer", respectively));
(iv) After a proposal is made by a third party to Dreyfus or its
shareholders to engage in an Acquisition Transaction, Dreyfus shall have
breached any covenant or obligation contained in this Agreement and such
breach would entitle Mellon to terminate this Agreement under Section
7.01(c) of this Agreement (without regard to the cure periods provided
for therein unless such cure is promptly effected without jeopardizing
consummation of the Merger pursuant to the terms of this Agreement) and
such breach
-75-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
shall not have been cured within 30 days after written notice thereof from
Mellon;
(v) Any person other than Mellon or any Mellon Subsidiary, other
than in connection with a transaction to which Mellon has given its prior
written consent, shall have filed an application or notice with a
governmental authority or regulatory or administrative agency or
commission, domestic or foreign, for approval to engage in an Acquisition
Transaction; or
(vi) the holders of Dreyfus Common Stock shall not have approved
this Agreement at the meeting of such stockholders held for the purpose
of voting on this Agreement, such meeting shall not have been held or
shall have been canceled prior to termination of this Agreement or
Dreyfus's Board of Directors shall have withdrawn or modified in a manner
adverse to Mellon the recommendation of Dreyfus's Board of Directors with
respect to this Agreement, in each case after it shall have been publicly
announced that any person (other than Mellon or any Mellon Subsidiary)
shall have (A) made, or disclosed an intention to make, a proposal to
engage in an Acquisition Transaction or (B) commenced a Tender Offer or
filed a registration statement under the Securities Act with respect to
an Exchange Offer.
(d) The Term "Purchase Event" shall mean either of the following events
or transactions occurring after the date hereof:
(i) The acquisition by any person, other than Mellon or any Mellon
Subsidiary, alone or together with such person's affiliates and
associates, or any group (as defined in Section 13(d)(3) of the
Securities Exchange Act), of beneficial ownership of 25% or more of the
then Dreyfus Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 7.02(c)(i) except that the percentage referred to in clause (C)
shall be 25%.
(e) Dreyfus shall notify Mellon promptly in writing of its knowledge of
the occurrence of any Preliminary Purchase Event or Purchase Event; provided,
--------
however, that the giving of such notice by Dreyfus shall not be a condition to
- - -------
the right of Mellon to the Fee.
7.03. Effect of Termination and Abandonment. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby
pursuant to this Article VII, except as otherwise specifically provided
herein, no party hereto (or any of its directors, officers or employees) shall
have any liability or further obligation to any other party to this
-76-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Agreement, except that nothing herein will relieve any party from liability
for any breach of this Agreement.
ARTICLE VIII
INDEMNIFICATION AND INSURANCE
8.01 Indemnification and Insurance. (a) Upon consummation of the Merger
and for a period of six years after the Effective Time, to the fullest extent
permitted by law, Mellon and Mellon Bank jointly and severally shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, a
director (whether elected or appointed), officer or employee of Dreyfus or any
Dreyfus Company or serves or has served at the request of any Dreyfus Company
in any capacity with any other person (collectively, the "indemnitees")
against any and all claims, damages, liabilities, losses, costs, charges,
expenses (including, without limitation, reasonable costs of investigation,
and the reasonable fees and disbursements of legal counsel and other advisers
and experts as incurred), judgments, fines, penalties and amounts paid in
settlement, asserted against, incurred by or imposed upon any Indemnitee, (i)
in connection with, arising out of or relating to any threatened, pending
or completed claim, action, suit or proceeding (whether civil, criminal,
administrative of investigative), including, without limitation, any and all
claims, actions, suits, proceedings or investigations by or on behalf of or in
the right of or against Dreyfus or any Dreyfus Company or their affiliates, or
by any present or former shareholder of Dreyfus (collectively, "Claims"),
including, without limitation, any claim which is based upon, arises out of or
in any way relates to the Merger, the Registration Statement, the solicitation
of the approval of the Funds contemplated by Section 4.03(b), this Agreement,
any of the transactions contemplated by this Agreement (including, without
limitation, any schedule or appendix hereto), the Indemnitee's service as a
member of Dreyfus's Board of Directors or any committee of Dreyfus's Board of
Directors, the events leading up to the execution of this Agreement or related
thereto and any breach of any duty in connection with any of the foregoing,
and (ii) in connection with, arising out of or relating to the enforcement of
the obligations of Mellon and Mellon Bank set forth in this Section 8.01, in
each case to the fullest extent permitted by law under any indemnification
agreement between Dreyfus and such Indemnitee, Dreyfus's Certificate of
Incorporation or its By-laws (and shall also advance expenses as incurred to
the fullest extent permitted under any thereof).
(b) Upon consummation of the Merger, and from and after the Effective
Time, to the fullest extent permitted by law, Mellon shall assume and honor
any obligation of Dreyfus immediately prior to the Effective Time, to the
fullest extent permitted by law,
-77-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
with respect to the indemnification of the Indemnitees arising out of Dreyfus's
Certificate of Incorporation or By-Laws or any indemnification agreement to
which Dreyfus and any Indemnitee are parties as of the date hereof as if such
obligations were pursuant to a contract or arrangement between Mellon and such
Indemnitees.
(c) In the event either of Mellon or Mellon Bank or any of their
respective successors or assigns (i) reorganizes or consolidates with or
merges into or enters into another business combination transaction with any
other person or entity and is not the resulting, continuing or surviving
corporation or entity of such consolidation, merger or transaction, or (ii)
liquidates, dissolves or transfers all or substantially all of its properties
and assets to any person or entity, then, and in each such case, proper
provision shall be made so that the successors and assigns of Mellon or Mellon
Bank, as the case may be, assume the obligations set forth in this Section
8.01.
(d) Mellon shall cause Dreyfus's current officers' and directors'
liability insurance to be continuously maintained in full force and effect
without reduction of coverage for a period of six years after the Effective
time (provided that Mellon may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are not
materially less advantageous).
(e) This Section 8.01 shall be construed as an agreement, as to which the
Indemnitees are intended to be third-parties beneficiaries, between Mellon and
Mellon Bank and the Indemnitees, as unaffiliated third parties, and is not
subject to any limitations to which Mellon or Mellon Bank may be subject in
indemnifying its own directors, officers, employees, agents and other persons
who serve at the request of Mellon or Mellon Bank.
ARTICLE IX
EMPLOYEE BENEFITS
9.01 Initial Employee Benefits and Other Matters.
(a) In general. Continuing Corporation shall offer continued employment
on and after the Effective Time to all common law employees of Dreyfus who
were such immediately prior to the Effective Time (the "Continued Employees").
Except as otherwise provided in this Article IX, from the Effective Time until
the date which is two years subsequent to the Effective Time, (which date
shall be hereinafter referred to as the "Applicable Benefit Changeover Date"),
Continuing Corporation shall provide such Continued Employees with each
Dreyfus Benefit Plan without adverse change thereto. Without limiting the
generality of the foregoing and except as otherwise provided in this Article
IX, each executive compensation or equity program (including, but not
-78-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
limited to, executive bonus plans, supplemental executive retirement plans and
executive incentive compensation programs) and tax qualified plan maintained
by any Dreyfus Company immediately before the Effective Time, except as
otherwise specifically provided herein, shall be maintained on and after the
Effective Time on substantially the same terms and conditions.
(b) Limitations. Notwithstanding anything in subsection (a) to the
contrary, any such offer of continued employment shall not be construed to
limit the ability of Continuing Corporation to terminate Continued Employees
at any time for any reason.
9.02 Employee Benefit Changeover Date.
(a) In general. Mellon and Continuing Corporation, as the case may be,
hereby agree that from and after the Applicable Benefit Changeover Date,
Continued Employees shall be eligible to participate in the pension, welfare
and/or fringe benefit plans (or any other plans, programs, etc., in the nature
of a Dreyfus Benefit Plan or Mellon Benefit Plan) which are generally
available to employees of Mellon and Continuing Corporation, on the same basis
as such benefits are otherwise made available to similarly situated employees
of Mellon and Continuing Corporation. Except as otherwise provided in Section
9.03, such Continued Employees will be credited for their length of service
with Dreyfus for all purposes, including eligibility, accrual, and vesting,
under all such employee pension, welfare and/or fringe benefit (or such other)
plans. Credit shall also be given for all purposes relating to waiting
periods, deductibles, and co-payments.
(b) Exceptions. Notwithstanding anything in subsection (a) to the
contrary, (i) at any time of reference, the weeks of vacation provided by
Mellon or Continuing Corporation, as the case may be, to a Continued Employee
with less than 25 years of service with Dreyfus shall equal the greater of (A)
the weeks of vacation (not in excess of 4) provided to such employee by
Continuing Corporation on the day before the Applicable Benefit Changeover
Date, and (B) the maximum vacation which may be earned by similarly situated
employees of Mellon or Continuing Corporation; (ii) a Continued Employee with
25 or more years of service with Dreyfus shall be entitled to the weeks of
vacation to which the Continued Employee was entitled on the day before the
Applicable Benefit Changeover Date; with such entitlement continuing through
the last day of the calendar year which includes the applicable Benefit
Changeover Date; (iii) on or after the first day of the calendar year
following the calendar year which includes the Applicable Benefit Changeover
Date, such a Continued Employee with 25 or more years of service will be
entitled to the vacation which may be earned by similarly situated employees
of Mellon or Continuing Corporation; provided that, except as required by
--------
applicable laws, in no event shall Mellon or Continuing Corporation be
required to compensate Continued Employees,
-79-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
regardless of their years of service with Dreyfus, for unused weeks of vacation
to which they were entitled on the day before the Applicable Benefit Changeover
Date; and (iv) all preexisting illnesses, injuries and pregnancies of Continued
Employees that would have been covered under Mellon's Welfare Benefit Plans but
for their occurrence prior to the Applicable Benefit Changeover Date will be
covered under the comparable plans of Mellon or Continuing Corporation from and
after the Applicable Benefit Changeover Date.
9.03 Retirement Plan Matters. As of the Applicable Benefit Changeover
Date, (a) Continuing Corporation shall amend the Dreyfus Pension Plan
("Dreyfus Retirement Plan") to provide Continued Employees with future
benefits comparable to those provided to similarly situated employees of
Mellon and Continuing Corporation under the Mellon Pension Plan ("Mellon
Retirement Plan"); or (b) Mellon shall amend the Mellon Retirement Plan to
cover Continued Employees as of the Applicable Benefit Changeover Date; or (c)
Mellon or Continuing Corporation shall take such action as it, in its sole
discretion, determines to be necessary or appropriate to provide benefits to
Continued Employees participating in the Dreyfus Retirement Plan which are
comparable to those then provided to similarly situated participants in the
Mellon Retirement Plan; provided, however, that any such action taken pursuant
to (a), (b) or (c) shall provide that Continued Employees will receive
accruals and credit for their service and earnings for all periods of
employment with Dreyfus to the same extent and for the same purposes as would
have been recognized under the Dreyfus Pension Plan. To the extent that
Continued Employees are thereafter paid benefits from the Mellon Pension Plan,
such benefits shall be offset by such benefits, if any, paid or payable from
the Dreyfus Retirement Plan.
9.04 Retirement Savings Plan Matters. Continued Employees (and any newly
eligible employee) shall receive the same contribution levels under the Dreyfus
Retirement Profit-Sharing Plan ("Dreyfus Profit-Sharing Plan") as a percentage
of compensation for all plan years ending on or before the Applicable Benefit
Changeover Date as were provided for the 1992 plan year. As of the Applicable
Benefit Changeover Date, (a) Continuing Corporation shall amend the Dreyfus
Profit-Sharing Plan to provide Continued Employees with future contributions
comparable to those provided to similarly situated employees of Mellon and
Continuing Corporation under the Mellon Retirement Savings Plan ("Mellon
Retirement Savings Plan"); or (b) Mellon shall cause the Mellon Retirement
Savings Plan to cover Continued Employees as of the Applicable Benefit
Changeover Date; or (c) Mellon or Continuing Corporation shall take such action
as it, in its sole discretion, determines to be necessary or appropriate to
provide contributions to Continued Employees participating in the Dreyfus
Profit-Sharing Plan which are comparable to those then provided to similarly
situated participants in the Mellon Retirement Savings Plan and all amounts
held under the Dreyfus Profit-Sharing Plan as of the
-80-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Applicable Benefit Changeover Date, other than at a participant's direction or
which are distributed or are required to be distributed under the Code upon
termination, shall be maintained on and after the Effective Time in a plan that
is qualified under Section 401(a) of the Code and which provides for
participant investment direction in accordance with Section 404(c) of ERISA
(with an employer securities option to the extent of any investment option in
employer securities as of the Effective Time.
9.05. Nonqualified Excess Plan. Without limiting the generality of the
obligation above of Continuing Corporation to continue the Dreyfus excess plan
as an active plan through the Applicable Benefit Changeover Date, all amounts
credited under the Dreyfus excess plan shall become fully vested as to each
participant as of the Effective Time and paid out in accordance with the plan.
9.06. Additional Stock Options, Stock Purchase Rights or Related
Incentive Payments. Except as otherwise provided below, absent prior express
written approval of Mellon, during the period commencing on the date of this
Agreement and ending at the Effective Time, Dreyfus shall grant no new options
or rights under, repurchase any outstanding shares of Dreyfus under, or accept
any new participants in any stock option, stock purchase rights and related
incentive payment plans.
9.07. Stock Options, etc. Any nonqualified options to purchase Dreyfus
Common Stock shall be converted at the Effective Time at the Exchange Ratio
into otherwise identical options to purchase Mellon Common Stock (with an
appropriate adjustment in the option exercise price per share). Dreyfus will
use its best efforts to cause the holders of each outstanding option under the
Dreyfus Incentive Stock Option Plan (the "Book Value Plan") to consent, on or
before 30 days prior to the Effective Time, to the conversion of such options,
at the Effective Time, into Mellon Common Stock having a fair market value
equal to the value of such options (as agreed upon by Mellon and Dreyfus).
Dreyfus will use its best efforts to cause the holders of each outstanding
share of restricted Dreyfus Common Stock issued under the Book Value Plan to
consent, on or before 30 days prior to the Effective Time, to the conversion
of such share, at the Effective Time, into shares of Mellon Common Stock
having a fair market value equal to the value of such share (as agreed upon by
Mellon and Dreyfus). On or before the date which is 45 days before the
Effective Time, Mellon shall file with the SEC, and cause to become effective
under the Securities Act, a registration statement on Form S-8 with respect to
any Mellon Common Stock that is subject to options under any plan described in
this Section 9.07 or that is to be issued in exchange for any options or
shares of Dreyfus Common Stock described in this Section 9.07.
9.08. Salaries as of the Closing Date. The salaries of Continued
Employees shall be determined (subject to the following)
-81-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
by the management of Dreyfus prior to the Effective Time, and immediately
following the Effective Time the salaries so determined shall be subject to
review by the Executive Committee of the Dreyfus Board of Directors described
in Section 5.16(d) and ratification by the Board of Directors of Mellon.
9.09. Retention Plan. Mellon and Dreyfus shall establish or cause to be
established a Retention Plan (the "Retention Plan"). Only those certain
employees of Dreyfus determined to be essential to the operation of Dreyfus
and, after the Effective Time, Continuing Corporation, who are expressly
designated as a result of the mutual agreement of Mellon and Dreyfus during the
period commencing on the date of this Agreement and ending at the Effective
Time and who are duly notified, in writing, of such designation (the "Retention
Plan Employees") shall be eligible to participate in the Retention Plan. The
Retention Plan shall provide for Mellon and Dreyfus to mutually agree on the
aggregate dollar amount or "pool" of potentially available retention bonus
awards (the "Retention Pool") and authorize the management of Mellon, Dreyfus
and their successors, or their delegates, to mutually agree to make individual
awards of a share or interest in such Retention Pool to each Retention Plan
Employee. Each Retention Plan Employee who becomes a Continued Employee at the
Effective Time shall be entitled to a cash payment in an amount equal to one-
half ( 1/2) of his interest in the Retention Plan determined and paid effective
as of six months following the Effective Time. Unless earlier forfeited as
hereinafter provided, an amount equal to their remaining interest ("Remaining
Interest") in the Retention Pool will be paid to each Retention Plan Employee
effective as of the earlier of (i) or (ii) where (i) is the last day of the
eighteen (18) month period commencing at the Effective Time and (ii) is the
date, if ever, of the affected Retention Plan Employee's involuntary
termination of employment from Continuing Corporation (the "Retention Period").
Any Retention Plan Employee who voluntarily terminates his or her employment
with Continuing Corporation or whose employment is terminated by Continuing
Corporation for cause shall forfeit any and all rights to receive his Remaining
Interest. The Retention Plan shall provided that a "voluntary" termination
shall not include a termination during the Retention Period which occurs after
the date: (A) the sum of a Retention Plan Employee's base compensation plus
cash bonus, exclusive of pension, welfare and fringe benefits, is reduced below
an amount equal to eighty percent (80%) of such amount determined as of the day
before Closing; (B) a Retention Plan Employee is relocated to an office or
facility beyond thirty (30) miles from his previous workplace; (C) a Retention
Plan Employee retires on or after the normal retirement age established in the
retirement plans generally available to employees of Continuing Corporation;
and (D) of such other events or circumstances which Mellon and Dreyfus may
mutually agree may be necessary or appropriate in order to effectuate the
intent of the Retention Plan. Amounts payable
-82-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
under the Retention Plan shall be in addition to any amounts payable
under any severance benefits program.
9.10. Certain Bonus, Incentive, Performance, etc. Plans. For any bonus,
incentive, performance, etc. plan for which payments are determined with
respect to a period, the period shall be deemed to end at the Effective Time.
The level of any conditions required under such a plan for payment of
benefits, and the amount of the payments, shall be prorated to reflect the
shortened period.
9.11. Severance Benefits. Notwithstanding anything to the contrary in
this Article IX, Mellon or Continuing Corporation, as the case may be, shall
provide each Continued Employee who is terminated from employment with
Continuing Corporation after the Effective Time with the severance benefits
provided to similarly situated employees of Mellon under the Mellon
Displacement Policy, Policy Number CPP-504-20, revised 09/09/91 or, if
superior, the benefits provided under the Dreyfus severance program
immediately prior to the Effective Time.
9.12 Amendment of Contingent Benefit Plan. Effective as of the Effective
Time, Dreyfus shall amend the Dreyfus Contingent Benefit Plan ("Contingent
Plan") with respect to each Dreyfus employee who is both a beneficiary with an
outstanding Contingent Benefit Agreement under the Contingent Plan
("Contingent Plan Beneficiary") and who agrees to such amendments to provide
(capitalized terms not otherwise defined shall have the meanings ascribed to
them in the Contingent Plan): (i) that the definition of a "Change of Control"
shall not include the transactions contemplated by this Agreement (except with
respect to the operation of the proviso contained at the end of the first
-83-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
sentence of paragraph 9 of the Contingent Plan, which proviso shall continue
in effect); (ii) that all Contingent Plan Beneficiaries who become Continued
Employees of Continuing Corporation at the Effective Time shall be paid an
amount equal to one-half ( 1/2) of the value of their Units determined and
paid effective at the Effective Time; (iii) that an amount equal to the
remaining one-half ( 1/2) of the value of their Units determined in (ii) will
be paid effective as of the earlier of (A) or (B) where (A) is the last day of
the eighteen (18) month period commencing at the Effective Time and (B) is the
date, if ever, of the affected Contingent Plan Beneficiary's termination of
employment from Continuing Corporation (including, without limitation, the
affected Contingent Plan Beneficiary's death or disability); (iv) to provide
that the payments described in (ii) and (iii) will be unconditional (including,
without limitation, without regard to Paragraph 8 of the Contingent Plan); (v)
to provide that other than the payments described in (ii) and (iii), no other
payments or benefits will be made or provided under or pursuant to the
Contingent Plan as a result of the transactions contemplated by this Agreement
(except with respect to the operation of the proviso contained at the end of
the first sentence of paragraph 9 of the Contingent Plan, which proviso shall
continue in effect); (vi) that no Contingent Plan Beneficiary receiving the
payments described in (ii) and (iii) shall be entitled to any other Contingent
Benefits as a result of a Change of Control occurring after the Effective Time;
and (vii) to provide that the Contingent Plan, as amended herein, shall
terminate with the last payment made to a Contingent Plan Beneficiary (except
with respect to the operation of the proviso contained at the end of the first
sentence of paragraph 9 of the Contingent Plan, which proviso shall continue in
effect); provided that no amount shall be payable under this Section 9.12 that,
together with any other "parachute payments" (as defined in Section 280G of the
Code), would be in excess of 2.99 times a participant's "base amount" (as
defined in Section 280G of the Code), as determined in good faith by Dreyfus
prior to the Effective Time. Mellon Bank, as sole stockholder of Continuing
Corporation, shall approve the foregoing amendments to the Contingent Plan.
ARTICLE X
GENERAL PROVISIONS
10.01. Survival. If the Closing occurs, no representations, warranties,
agreements and covenants contained in this Agreement shall survive the
Effective Time, except as otherwise explicitly stated herein (including but
not limited to Sections 2.03, 2.04, 2.05, 5.13, 5.16, 8.01 and Article IX). If
this Agreement is terminated prior to the Effective Time, the agreements of
the parties in Sections 5.02(b), 7.02, 7.03 and 10.05 shall survive.
10.02. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly received (i) on the date
given if delivered personally or by cable, telegram, telex or telecopy or (ii)
on the date received if mailed by registered or certified mail (return receipt
requested), to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Mellon: James M. Gockley, Esq.
Mellon Bank Corporation
One Mellon Bank Center
Room 1910 Pittsburgh, PA 15258
(412) 234-5222
Fax: (412) 234-8417
-84-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Copies to: Thomas Todd, Esq.
Reed Smith Shaw & McClay
435 Sixth Avenue
Pittsburgh, PA 15219
(412) 288-3264
Fax: (412) 288-3063
and
(b) if to Dreyfus: Daniel C. Maclean, Esq.
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
(212) 922-6020
Fax: (212) 922-6038
Copies to: John A. Healy, Esq.
Rogers & Wells
200 Park Avenue
New York, NY 10166
(212) 878-8281
Fax: (212) 878-8375
10.03. Counterparts. This Agreement may be executed in counterparts
(including executed counterparts delivered and exchanged by facsimile
transmission) each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
10.04. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York.
10.05. Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby
except printing, mailing and proxy solicitation expenses, which shall be
shared equally between Dreyfus and Mellon.
10.06. Waiver; Amendment. Any provision of this Agreement may be (i)
amended or modified at any time (including the structure of the transactions
contemplated hereby, or any part thereof), by an agreement in writing among
the parties hereto and executed in the same manner as this Agreement or (ii)
waived by the party benefitted by the provision.
10.07. Entire Agreement; No Third-Party Beneficiaries; Etc. This
Agreement represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and supersedes any and all
other oral or written agreements
-85-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
heretofore made. All terms and provisions of the Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
personal representatives, heirs, Successors and permitted assigns. Except for
Article IX and except as otherwise explicitly stated herein, nothing in this
Agreement is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
10.08. Assignment. This Agreement may not be assigned by any party hereto
without the written consent of the other parties and any purported assignment
in violation hereof shall be null and void.
10.09. Knowledge of Dreyfus. As used herein, the term "knowledge of
Dreyfus" or words of similar import mean the knowledge of any executive
officer of Dreyfus.
10.10. Knowledge of Mellon. As used herein, the term "knowledge of
Mellon" or words of similar import mean the knowledge of any executive officer
of Mellon.
-86-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
The Dreyfus Corporation
By ______/s/__HOWARD STEIN__________
Title: Chairman of the Board
Mellon Bank Corporation
By ____/s/__FRANK V. CAHOUET________
Title: Chairman, President and Chief
Executive Officer
Mellon Bank, N.A.
By ____/s/__FRANK V. CAHOUET________
Title: Chairman, President and Chief
Executive Officer
XYZ Sub Corporation
By ____/s/__JAMES M. GOCKLEY________
Title: President
-87-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
Exhibit 5.04
AFFILIATE AGREEMENT
THIS AGREEMENT (this "Agreement"), dated December , 1993, between
Mellon Bank Corporation, a Delaware corporation ("Mellon"), and the
undersigned stockholder (the "Stockholder") of The Dreyfus Corporation, a New
York corporation ("Dreyfus"),
WITNESSETH:
WHEREAS, an Agreement and Plan of Merger (the "Merger Agreement"), dated
as of December 5, 1993, has been entered into between Dreyfus, Mellon, Mellon
Bank, a wholly-owned subsidiary of Mellon, and XYZ Sub Corporation ("Merger
Subsidiary"), a wholly-owned subsidiary of Mellon Bank, which provides for the
merger (the "Merger") of Merger Subsidiary into Dreyfus;
WHEREAS, the Stockholder is a stockholder of Dreyfus who may be deemed to
be an "affiliate" of Dreyfus within the meaning of Rule 145 ("Rule 145") of
the General Rules and Regulations under the Securities Act of 1933, as amended
(the " '33 Act");
WHEREAS, Mellon contemplates that the Merger will be treated as a
"pooling of interests" under generally accepted accounting principles; and
Stockholder is or may be limited with respect to the sale of the shares of
Common Stock, par value $0.50 per share, of Mellon ("Mellon Common Stock") to
be issued to the Stockholder in the Merger (the "Mellon Securities") upon the
-88-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
conversion of the shares of Common Stock, par value $0.10 per share, of
Dreyfus ("Dreyfus Common Stock") set forth below the Stockholder's signature
hereto.
NOW, THEREFORE, Mellon and the Stockholder, intending to be legally bound
hereby, agree as follows:
1. The Stockholder hereby represents and warrants to Mellon that:
(a) Set forth below the Stockholder's signature hereto are the exact
numbers of shares of Dreyfus Common Stock which such Stockholder owns of
record only, beneficially only and of record and beneficially; and
(b) Such ownership is free and clear of any security interest, lien,
encumbrance, charge, equity, claim or restriction whatsoever, except as
set forth below the Stockholder's signature hereto and as may be imposed
by reason of the '33 Act or the General Rules and Regulations thereunder.
2. The Stockholder hereby represents and warrants to and covenants with
Mellon that the Stockholder will not, directly or indirectly, sell, transfer
or otherwise dispose of, or cause
-89-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
any Mellon Securities to be sold, transferred or otherwise disposed of, until
such time as unaudited financial statements covering at least 30 days of the
combined operations of Dreyfus and Mellon following the Merger have been
published by Mellon. The Stockholder hereby also represents and warrants to and
covenants with Mellon that subsequent to publication of such financial
statements he will not, directly or indirectly, sell, transfer or otherwise
dispose of, or cause any Mellon Securities to be sold, transferred or otherwise
disposed of, except in accordance with the provisions of the '33 Act and the
General Rules and Regulations thereunder.
3. All certificates representing Mellon Securities and any certificates
issued in substitution therefor, shall bear the following legend:
"The shares of Common Stock of Mellon Bank Corporation represented
by this certificate may not be sold or otherwise transferred unless they
are at the time registered under the Securities Act of 1933, as amended,
or the sale or transfer thereof is not required to be so registered or is
made pursuant to an applicable exemption from registration provided by
said Act or the General Rules and Regulations thereunder. In addition,
the shares may not be sold, transferred or otherwise disposed of except
in accordance with the terms of an Affiliate Agreement, dated as of
, a copy of which is on file at the principal office of
Mellon Bank Corporation."
The Stockholder hereby authorizes Mellon to notify its transfer agent (the
"Transfer Agent") of this Agreement and, at Mellon's
-90-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
discretion, to cause stop transfer orders to be placed with respect to all
certificates representing the Mellon Securities owned by the Stockholder that
bear such legend. Any such orders shall state that no transfer may be made with
respect to the Mellon Securities unless Mellon shall have advised its Transfer
Agent that the proposed transfer is made in compliance with the terms of this
Agreement.
4. The Stockholder, when intending to sell or to cause the Mellon
Securities to be sold pursuant to paragraph (d) of Rule 145, shall deliver to
Mellon, within a reasonable time prior to any such sale, (i) a written request
for delivery of certificates without any legend, indicating the number of
Mellon Securities to be sold, the estimated date of such sale and the name and
office of the broker through whom the sale will be made, (ii) a written
statement by the Stockholder that the sale will be in compliance with Rule
145, (iii) if requested by Mellon, an opinion of counsel satisfactory to
Mellon to the effect that such sale complies with Rule 145 and (iv)
certificates bearing the legend representing the Mellon Securities to be sold.
Upon receipt of such request, statement, opinion, if any, and certificates,
Mellon shall promptly deliver or cause to be delivered, the requested
certificates to or on behalf of the Stockholder.
5. The Stockholder hereby agrees that he will not dispose of, or cause
any Mellon Securities to be disposed of,
-91-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
under circumstances involving violation of the '33 Act, the Securities Exchange
Act of 1934, as amended, or any similar Federal or state requirement then in
force.
6. Except as otherwise provided in writing, all notices and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given at the time delivered personally or mailed, first class
postage prepaid,
(a) If to Mellon ,
or
(b) if to the Stockholder, at the address set forth after the
Stockholder's signature below or to such other address as the Stockholder may
from time to time designate to Mellon in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MELLON BANK CORPORATION
By ___________________________________
--------------------------------------
Stockholder
Dreyfus Common Stock Ownership:
-------------------------------------------------------
Of Record Only
-92-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT I -- Amended and Restated Agreement and Plan of Merger, dated as of
December 5, 1993, by and among Mellon Bank Corporation, Mellon
Bank, N.A., XYZ Sub Corporation and The Dreyfus Corporation
(Continued)
-------------------------------------------------------
Beneficially Owned
-------------------------------------------------------
Of Record and Beneficially Owned
-93-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT II -- Agreement and Release of Robert H. Schmidt
(Confidential INFORMATION has been omitted and filed separately with
the Securities and Exchange Commission. "***" denotes CONFIDENTIAL
INFORMATION.)
AGREEMENT AND RELEASE
IT IS HEREBY AGREED by and between ROBERT H. SCHMIDT and THE
DREYFUS CORPORATION, for the good and sufficient consideration set forth
below, as follows:
1. "DREYFUS," as used herein, shall at all times mean The
Dreyfus Corporation, Dreyfus Service Corporation, and Seven Six Seven
Agency, Inc.
2. "SCHMIDT," as used herein, shall at all times mean Robert
H. Schmidt.
3. The "RELEASEES," as used herein, shall at all times mean
********************************************************
4. SCHMIDT and DREYFUS acknowledge and agree that their prior
employment agreement, dated December 19, 1990, has expired, and that
SCHMIDT shall be deemed to have voluntarily and irrevocably resigned his
employment with DREYFUS. SCHMIDT's Resignation Date shall be the earlier
of (a) the date SCHMIDT obtains other employment or commences his own
business, (b) the closing of The Dreyfus Corporation Combination with the
Mellon Bank Corporation ("the Combination"), or (c) the close of business
on June 30, 1994. ******************************************************
5. **********************************************************
6. **********************************************************
7. **********************************************************
8. **********************************************************
9. **********************************************************
10. **********************************************************
11. **********************************************************
12. **********************************************************
13. **********************************************************
14. If there is a press announcement or media coverage of any
kind concerning SCHMIDT's resignation, SCHMIDT and DREYFUS's Office of
Communications shall work together to ensure that they agree to the tone
and content of such announcement and coverage.
15. **********************************************************
16. **********************************************************
17. **********************************************************
-94-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT II -- Agreement and Release of Robert H. Schmidt
(Continued)
18. **********************************************************
19. **********************************************************
20. **********************************************************
21. **********************************************************
22. **********************************************************
23. **********************************************************
24. **********************************************************
25. **********************************************************
26. If it is determined by any court of competent jurisdiction
that any provision hereof is unlawful or unenforceable, the remaining
provisions hereof shall remain in full force and effect.
27. This Agreement and Release contains the full agreement
between SCHMIDT and DREYFUS, and may not be modified, altered or changed
except upon the express prior written consent of both SCHMIDT and DREYFUS.
28. SCHMIDT acknowledges and agrees that: (a) no promise or
inducement for this Agreement and Release has been made by any of the
RELEASEES except as set forth in this Agreement and Release; (b) this
Agreement and Release is executed by him without reliance upon any
statement or representation by any of the RELEASEES other than as set
forth herein; (c) he fully understands this Agreement and Release and the
meaning of its provisions; (d) he is legally competent to enter into this
Agreement and Release and to accept full responsibility therefor; (f) he
has been advised by DREYFUS to consult with counsel and he has consulted
with counsel before entering into this Agreement and Release; (g) he has
been given at least 21 days to consider this Agreement and Release; (h) he
understands that he is entitled to revoke this Agreement and Release
within seven days after he executes it by notifying Katherine Wickham of
DREYFUS in writing of the revocation; and (i) he voluntarily enters into
this Agreement and Release.
IN WITNESS WHEREOF, the PARTIES have hereunto set their hands.
/s/ Robert H. Schmidt
---------------------
ROBERT H. SCHMIDT
-95
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT II -- Agreement and Release of Robert H. Schmidt
(Continued)
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I, John Turitzin, Notary Public, do hereby certify that Robert
-------------
H. Schmidt, personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in
person and acknowledged that he signed and delivered the said instrument
as his free and voluntary act, for the uses and purposes therein set
forth.
Given under my hand and official seal this 13th day of April,
----
1994.
/s/ John Turitzin
--------------------
Notary Public
My Commission Expires:
January 21, 1996
- - ----------------------
_________________________
THE DREYFUS CORPORATION
By: /s/ Kathrine C. Wickham
-----------------------
Katherine C. Wickham
Assistant Vice President
-96-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT II -- Agreement and Release of Robert H. Schmidt
(Continued)
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on May 3, 1994, before me personally
appeared Katherine C. Wickham, Assistant Vice President of The Dreyfus
Corporation to me known, and known to me to hold said position with said
Company, who, being by me duly sworn according to law, executed the
foregoing Agreement and Release on behalf of said Company, and duly
acknowledged to me that she executed the same and was authorized to do so
on behalf of said Company.
/s/ Elena Kuhlmann
------------------
Notary Public
My Commission Expires:
February 28, 1995
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THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT III -- COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(000's omitted except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Basis for computation of earnings per
common share and primary earnings
per common share:
Net Income (1) $24,044 $24,767 $49,467 $50,007
Dividend equivalents and related
interest on unexercised incentive
stock options (net of taxes) 47 46 92 90
------- ------- ------- -------
Net Income as adjusted (2) $24,091 $24,813 $49,559 $50,097
======= ======= ======= =======
Weighted average number of shares
outstanding:
Weighted average number of shares
outstanding during the
period (3) 36,558 36,673 36,557 37,025
Net effect of dilutive stock options - based
on the treasury stock method using
the average value 673 488 656 511
------- ------- ------- -------
Total (4) 37,231 37,161 37,213 37,536
======= ======= ======= =======
EARNINGS PER SHARE:
No Dilution (1)/(3)=(5) $0.66 $0.68 $1.35 $1.35
======= ======= ======= =======
Primary (a) (2)/(4)=(6) $0.65 $0.67 $1.33 $1.33
======= ======= ======= =======
(Continued on following page)
-98-
THE DREYFUS CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT III -- COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(000's omitted except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
1994 1993 1994 1993
---- ---- ---- ----
Basis for computation of earnings per
common share assuming full dilution:
Net Income $24,044 $24,767 $49,467 $50,007
Dividend equivalents and related
interest on unexercised incentive
stock options (net of taxes) 47 46 92 90
------- ------- ------- -------
Net Income as adjusted (7) $24,091 $24,813 $49,559 $50,097
======= ======= ======= =======
Weighted average number of shares
outstanding:
Weighted average number of shares
outstanding during the
period 36,558 36,673 36,557 37,025
Net effect of dilutive stock options - based
on the treasury stock method using the
higher of the period end or average value 689 516 691 517
------- ------- ------- -------
Total (8) 37,247 37,189 37,248 37,542
======= ======= ======= =======
Fully Diluted Earnings Per
Share (a): (7)/(8)=(9) $0.65 $0.67 $1.33 $1.33
======= ======= ======= =======
Note (a): The earnings per share data shown on lines 6 and 9 above are not presented in the
condensed consolidated statements of income included on page 5 of this report on
Form 10-Q since the dilution from the earnings per share amounts presented in
such statements is less than 3%.
</TABLE>
-99-
PART II--OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(10.1) Amended and Restated Agreement and Plan of Merger,
dated as of December 5, 1993, by and among Mellon
Bank Corporation, Mellon Bank, N.A., XYZ Sub
Corporation and The Dreyfus Corporation (including
Affiliate Agreement Exhibit 5.04) - Exhibit I to
Part I of this report.
(10.2) Material Contracts - Agreement and Release of Robert
H. Schmidt - Exhibit II (*) to Part I of this report.
(11) Computation of earnings per share - Exhibit III to
Part I of this Report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed covering events occurring
during the second quarter of 1994.
(*) The Corporation has filed an application with the Securities and
Exchange Commission requesting confidential treatment of certain
provisions contained in this exhibit.
-100-
SIGNATURES
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.
THE DREYFUS CORPORATION
_______________________
(Registrant)
Date: August 12, 1994 /s/ Daniel Maclean
_______________ __________________________________________
Daniel Maclean
General Counsel and Vice President
Date: August 12, 1994 /s/ Maurice Bendrihem
_______________ __________________________________________
Maurice Bendrihem
Controller and Chief Accounting Officer
-101-
