SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
-------------------
Date of Report (Date of earliest event reported) -
December 15, 1997
U.S. BANCORP
(Exact name of registrant as specified in its charter)
Delaware 1-6880 41-0255900
(State of Incorporation) (Commission file number) (IRS employer
identification no.)
601 Second Avenue South, Minneapolis, Minnesota 55402-4302
(Address, including zip code, of principal executive office)
(612) 973-1111
(Registrant's telephone no., including area code)
Page 1 of 6 Pages
Exhibit Index on Page 6
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Items 1-4. Not Applicable.
Item 5. Other Events.
On December 15, 1997, U.S. Bancorp, a Delaware corporation ("USB"), and
Piper Jaffray Companies Inc., a Delaware corporation (the "Company"), issued a
joint press release (the "Press Release") announcing that they had entered into
an Agreement and Plan of Merger, dated as of December 14, 1997 (the "Merger
Agreement"), by and among the Company, USB and a wholly owned subsidiary of USB
("Merger Sub"). Upon the terms and subject to the conditions set forth in the
Merger Agreement, Merger Sub will merge with and into the Company (the "Merger")
and each share of common stock, par value $1.00 per share ("Shares"), of the
Company, excluding Treasury Shares and Dissenters' Shares (as each such
capitalized term is defined in the Merger Agreement) will be converted into the
right to receive $37.25 in cash, without interest thereon. Following the
announcment that the USB and the Company had entered into the Merger Agreement,
representatives of USB and the Company made a presentation to financial analysts
regarding the proposed Merger. Copies of the Merger Agreement, the Press Release
and the Analyst Presentation Materials are attached as Exhibits 2, 99(a) and
99(b) hereto. The foregoing description of the Merger Agreement is qualified in
its entirety by reference to the specific terms and conditions
Page 2 of 6 Pages
Exhibit Index on Page 6
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of Merger Agreement which are incorporated by reference to Exhibit 2 hereto.
FORWARD-LOOKING INFORMATION
Exhibits 99(a) and 99(b) hereto each contain certain forward-looking
statments that involve risks and uncertainties. Such statements relate to the
financial condition, results of operations, plans, objectives, future
performance and business of USB on a pro forma combined basis following the
consummation of the Merger and include forward-looking statements with respect
to the impact on reported revenue and earnings and expected benefits to be
achieved by the pro forma combined entity as well as other statements modified
by the words "believes," "expects," "anticipates," or similar expressions.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among other things (i)
a delay in the expected time frame for the consummation of the Merger or the
integration of the businesses of the Company and USB, (ii) lower than expected
revenues and earnings as a result, for example, of greater than expected
customer loss, integration costs or business disruption following the Merger or
the failure to retain key employees, (iii) increased competitive pressures in
the banking and securities industries, (iv) changes in economic or business
conditions, generally, or in the states or regions in which the combined entity
will operate, (v)
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Exhibit Index on Page 6
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statutory or regulatory changes affecting the businesses in which the combined
entity will operate and (vi) changes in the securities markets.
Item 6. Not Applicable.
Item 7. Financial Statements
Pro Forma Financial Information and Exhibits.
(a) - (b) Not Applicable.
(c) Exhibits Required by Item 601 of Regulation S-K
Exhibit
No. Description
2 Agreement and Plan of Merger, dated
December 14, 1997, among the Company, USB
and Merger Sub
99(a) Joint Press Release, dated December 15,
1997, of USB and the Company announcing the
execution of the Merger Agreement
99(b) Analyst presentation materials, dated
December 15, 1997
Items 8-9. Not Applicable.
Page 4 of 6 Pages
Exhibit Index on Page 6
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
Dated: December 15, 1997
U.S. BANCORP
By: /s/ David J. Parrin
Name: David J. Parrin
Title: Senior Vice President
and Controller
Page 5 of 6 Pages
Exhibit Index on Page 6
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EXHIBIT INDEX
Exhibit No. Description Page
2 Agreement and Plan of Merger, dated
December 14, 1997, among the Company,
USB and Merger Sub
99(a) Joint Press Release, dated December 15,
1997, of USB and the Company announcing
the execution of the Merger Agreement
99(b) Analyst Presentation Materials, dated
December 15, 1997
Page 6 of 6 Pages
Exhibit Index on Page 6
EX-2
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of December 14, 1997
by and among
PIPER JAFFRAY COMPANIES INC.
U.S. BANCORP
and
CUB ACQUISITION CORPORATION
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TABLE OF CONTENTS
SECTION PAGE
RECITALS......................................................................1
ARTICLE I
Certain Definitions; Interpretation...........................................1
1.01 Certain Definitions................................................1
1.02 Interpretation.....................................................7
ARTICLE II
The Merger....................................................................8
2.01 The Merger.........................................................8
2.02 Effective Time.....................................................8
2.03 Closing............................................................9
2.04 Reservation of Right to Revise Structure...........................9
2.05 Integration of Legal Entities......................................9
ARTICLE III
Consideration; Exchange.......................................................9
3.01 Merger Consideration...............................................9
3.02 Rights as Stockholders; Stock Transfers...........................10
3.03 Payment for Shares................................................10
3.04 Dissenting Stockholders...........................................11
3.05 Options...........................................................11
ARTICLE IV
Actions Pending the Effective Time...........................................12
4.01 Forbearances of the Company.......................................12
4.02 Forbearances of the Acquiror......................................14
ARTICLE V
Representations and Warranties...............................................14
5.01 Disclosure Schedules..............................................14
5.02 Standard..........................................................14
5.03 Representations and Warranties of the Company.....................15
5.04 Representations and Warranties of the Acquiror....................28
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SECTION PAGE
ARTICLE VI
Covenants....................................................................29
6.01 Reasonable Best Efforts...........................................29
6.02 Stockholder Approvals.............................................30
6.03 Proxy Statement...................................................30
6.04 Press Releases....................................................30
6.05 Access; Information...............................................31
6.06 Acquisition Proposals.............................................31
6.07 No Rights Triggered...............................................32
6.08 Regulatory Applications...........................................32
6.09 Certain Employee Benefits.........................................32
6.10 Notification of Certain Matters...................................33
6.11 Indemnification; Directors' and Officers' Insurance...............34
6.12 Section 15 of the Investment Company Act..........................36
ARTICLE VII
Conditions to Consummation of the Merger.....................................36
7.01 Conditions to Each Party's Obligation to Effect the Merger........36
7.02 Conditions to Obligation of the Company...........................37
7.03 Conditions to Obligation of the Acquiror..........................37
ARTICLE VIII
Termination..................................................................38
8.01 Termination.......................................................38
8.02 Effect of Termination and Abandonment.............................39
8.03 Termination Fee...................................................39
ARTICLE IX
Miscellaneous................................................................40
9.01 Survival..........................................................40
9.02 Waiver; Amendment.................................................40
9.03 Counterparts......................................................41
9.04 Governing Law.....................................................41
9.05 Expenses..........................................................41
9.06 Notices...........................................................41
9.07 Entire Understanding; No Third-Party Beneficiaries................42
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AGREEMENT AND PLAN OF MERGER, dated as of December 14, 1997 (this
"Agreement"), by and among Piper Jaffray Companies Inc. (the "Company"), U.S.
Bancorp (the "Acquiror") and Cub Acquisition Corporation (the "Merger
Subsidiary").
RECITALS
A. The Company. The Company is a Delaware corporation, having its
principal place of business in Minneapolis, Minnesota.
B. The Acquiror. The Acquiror is a Delaware corporation, having its
principal place of business in Minneapolis, Minnesota.
C. The Merger Subsidiary. The Merger Subsidiary is a Delaware
corporation, having its principal place of business in Minneapolis, Minnesota.
The Merger Subsidiary is a wholly owned subsidiary of the Acquiror that has been
organized for the purpose of effecting the Merger in accordance with this
Agreement.
D. The Merger. Subject to the terms and conditions contained in
this Agreement, the parties to this Agreement intend to effect the merger of
the Merger Subsidiary with and into the Company, with the Company being the
corporation surviving such merger.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquiror" has the meaning assigned in the preamble to this
Agreement.
"Acquiror Common Stock" means the Common Stock, par value $1.25
per share, of the Acquiror.
"Acquisition Proposal" has the meaning assigned in Section 6.06.
"Acquisition Transaction" means a transaction or series of
transactions that, directly or indirectly, in substance constitutes a
disposition of all or any substantial part of the assets or business of
the Company and its Subsidiaries, taken as a whole, whether by means of
(a) a merger or consolidation, or any similar transaction, (b) a
purchase, lease or other sale, transfer or disposition, (c) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) by a person (including a group that would be
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aggregated for purposes of Section 13(d) of the Exchange Act) of
securities representing 15% or more of the voting power of the Company
or 50% or more of any of its Significant Subsidiaries or (d) otherwise.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the
purposes of this definition, "control" when used with respect to any
specified person means the power to direct the management and policies
of such person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Agreement, as amended or modified from time
to time in accordance with Section 9.02.
"AMEX" means the American Stock Exchange.
"Base Period Stock Price" means the average of the mean high and
low sales prices per share of the Acquiror Common Stock on the NYSE
Composite Transactions Tape, as reported by the Wall Street Journal,
for each of the five consecutive trading days immediately preceding the
date of the Effective Time.
"Certificate of Incorporation" has the meaning assigned in Section
2.01(b).
"CFTC" means the United States Commodities Futures Trading
Commission.
"Client" means any person to whom the Company or any of its
Subsidiaries provides services under any Contract.
"Closing" and "Closing Date" have the meanings assigned in Section
2.03.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock Conversion Ratio" shall be defined as the
ratio of $37.25 and the Base Period Stock Price rounded to the nearest
1/1000th of a share.
"Company" has the meaning assigned in the preamble to this
Agreement.
"Company Common Stock" means the common stock, par value $1.00 per
share, of the Company.
"Company ESOP" means the Piper Jaffray Companies ESOP.
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"Company Preferred Stock" means the preferred stock, par value
$1.50 per share, of the Company.
"Company Options" means, collectively, outstanding options to
purchase shares of Company Common Stock under the Company's 1993
Omnibus Stock Plan.
"Company Stock Plans" means, collectively, the Company's 1993
Omnibus Stock Plan, 1983 Book Value Stock Purchase Plan and Stock
Investment Plan.
"Compensation Plans" has, with respect to any person, the meaning
assigned in Section 5.03(r).
"Constitutive Documents" means with respect to any juridical
person, such person's articles or certificates of incorporation, bylaws
or similar constitutive documents.
"Contract" means, with respect to any person, any agreement,
indenture, undertaking, debt instrument, contract, lease,
understanding, arrangement, or commitment to which such person or any
of its Subsidiaries is a party or by which any of them may be bound or
to which any of their properties may be subject.
"Costs" has the meaning assigned in Section 6.11(a).
"Disclosure Schedule" has the meaning assigned in Section 5.01.
"Dissenters' Shares" means shares of Company Common Stock the
holders of which shall have perfected their dissenters' rights to
payment in accordance with Section 262 of the GCL as of immediately
prior to the Effective Time.
"DOL" means the United States Department of Labor.
"Effective Time" means the date and time at which the Merger
becomes effective.
"Environmental Laws" means any federal, state or local law,
regulation, order, decree, permit, authorization, common law or agency
requirement with force of law relating to: (a) the protection or
restoration of the environment, health or safety (in each case as
relating to the environment) or natural resources; or (b) the handling,
use, presence, disposal, release or threatened release of any Hazardous
Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" has, with respect to any person, the meaning
assigned in Section 5.03(r).
"ERISA Affiliate Plan" has the meaning assigned in Section
5.03(r).
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"ERISA Plans" has the meaning assigned in Section 5.03(r).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Federal Reserve System" means the Board of Governors of the
Federal Reserve System and the Federal Reserve Banks.
"Fee" has the meaning assigned in Section 8.03(a).
"Fee Trigger Event" has the meaning assigned in Section 8.03(a).
"Financial Statements"has the meaning assigned in Section 5.03(h).
"Fund Board" has the meaning assigned in Section 5.03(z).
"GCL" means the General Corporation Law of the State of Delaware.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any hazardous or toxic substance,
material or waste, including those substances, materials and wastes
listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR ss. 172.101), or by the United States
Environmental Protection Agency as hazardous substances (40 CFR Part
302) and amendments thereto, petroleum products or other such
substances, materials and wastes that are or become regulated under any
applicable local, state or federal law, including petroleum compounds,
lead, asbestos and polychlorinated biphenyls.
"Indemnified Parties" has the meaning assigned in Section 6.11(a).
"Investment Advisers Act" means the Investment Advisers Act of
1940, as amended, and the rules and regulations thereunder.
"Investment Company" has the meaning assigned for purposes of the
Investment Company Act, disregarding Section 3(c) thereof, that is
sponsored, organized, advised or managed by the Company or one of its
Subsidiaries (including the Registered Funds).
"Investment Company Act" means the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
"IRS" means the United States Internal Revenue Service.
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"Liens" means a charge, mortgage, pledge, security interest,
restriction (other than a restriction on transfer arising under
Securities Laws), claim, lien, or encumbrance of any nature whatsoever.
"Litigation" has the meaning assigned in Section 5.03(l).
"Material" means, with respect to any fact, circumstance, event or
thing relating to the Acquiror, the Company or the Surviving
Corporation, respectively, that such fact, circumstance, event or thing
is material to (a) the financial position, results of operation,
assets, properties or business of the Company and its subsidiaries, the
Acquiror and its subsidiaries, or the Surviving Corporation and its
subsidiaries, in each case taken as a whole, or (b) the ability of
either the Acquiror or the Company timely to perform its obligations
under this Agreement or otherwise to consummate the transactions
contemplated by this Agreement.
"Material Adverse Effect" means, with respect to the Acquiror, the
Company, or the Surviving Corporation, respectively, an effect that,
individually or in the aggregate, is both Material and adverse with
respect to the Acquiror and its subsidiaries, the Company and its
subsidiaries or the Surviving Corporation and its subsidiaries, in each
case taken as a whole; provided that "Material Adverse Effect" shall
not be deemed to include the effects of (1) changes in the economy of
the United States of America of general scope, (2) changes in laws and
regulations of general applicability, (3) changes in generally accepted
accounting principles or (4) actions or omissions of the Company taken
with the prior written consent of the Acquiror in contemplation of the
Merger.
"Meeting" has the meaning assigned in Section 6.02.
"Merger" has the meaning assigned in Section 2.01.
"Merger Consideration" has the meaning assigned in Section 3.01.
"Merger Subsidiary" has the meaning assigned in the preamble to
this Agreement.
"MSRB" means the Municipal Securities Rulemaking Board.
"Multiemployer Plan"has the meaning assigned in Section 5.03(r).
"NASD" means the National Association of Securities Dealers, Inc.
"NYSE" means the New York Stock Exchange, Inc.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Pension Plan" has, with respect to any person, the meaning
assigned in Section 5.03(r).
"person" means any individual, bank, corporation, limited
liability company partnership, association, joint-stock company,
business trust or unincorporated organization.
"Previously Disclosed" has the meaning assigned in Section 5.01.
"Proxy Statement" has the meaning assigned in Section 6.03.
"Registered Funds" has the meaning assigned in Section 5.03(z).
"Reports" has the meaning assigned in Section 5.03(g).
"Representatives" means, with respect to any person, such person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any person, securities or
obligations convertible into or exercisable or exchangeable for, or
giving any person any right to subscribe for or acquire, or any
options, calls or commitments relating to, or any stock or equity
appreciation right or other instrument the value of which is determined
in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"Section 20 Subsidiary" means U.S. Bancorp Investments, Inc., a
wholly owned direct or indirect Subsidiary of the Acquiror.
"SEC" means the United States Securities and Exchange Commission.
"SEC Documents" has the meaning assigned in Section 5.03(h).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Securities Laws" means, collectively, the Securities Act, the
Exchange Act, the Investment Advisers Act, the Investment Company Act
and any state securities and "blue sky" laws.
"Self-Regulatory Organization" means the National Association of
Securities Dealers, Inc., the NYSE, the AMEX, the MSRB, the Chicago
Stock Exchange, The Chicago Mercantile Exchange, the Chicago Board of
Trade, the Cincinnati Stock Exchange, the Minneapolis Grain Exchange
and the New York Futures Exchange, or other commission, board, agency
or body that is not a Governmental Authority but is charged with the
supervision or regulation of brokers, dealers, securities underwriting
or trading, stock
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exchanges, commodities exchanges, insurance companies or agents,
investment companies or investment advisers, or to the jurisdiction of
which the Company or one of its Subsidiaries is otherwise subject.
"Subsidiary" and "Significant Subsidiary" have the meanings
assigned in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiary Combination" has the meaning assigned in Section 2.05.
"Surviving Corporation" has the meaning assigned in Section 2.01.
"Takeover Laws" has the meaning assigned in Section 5.03(e).
"Taxes" means all taxes, charges, fees, levies or other
assessments, however denominated and whether imposed by a taxing
authority within or without the United States, including, without
limitation, all net income, gross income, gross receipts, sales, use,
ad valorem, goods and services, capital, transfer, franchise, profits,
license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes,
custom duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority whether arising
before, on or after the Effective Date.
"Tax Returns" means, collectively, all returns, declarations,
reports, estimates, information returns and statements required to be
filed under federal, state, local or any foreign tax laws.
"Treasury Shares" means shares of Company Common Stock owned by
the Company or any of its Subsidiaries.
1.02 Interpretation. When a reference is made in this Agreement to
Recitals, Sections, Annexes or Schedules, such reference shall be to a Recital
or Section of, or Annex or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed followed by the words "without limitation". References herein to
"transactions contemplated by this Agreement" shall be deemed to include a
reference to the Subsidiary Combination. No rule of construction against the
draftsperson shall be applied in connection with the interpretation or
enforcement of this Agreement. Whenever this Agreement shall require a party to
take an action, such requirement shall be deemed an undertaking by such party to
cause its Subsidiaries, and to use its reasonable best efforts to cause its
other Affiliates, to take appropriate action in connection therewith.
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ARTICLE II
THE MERGER
2.01 The Merger. At the Effective Time, the business combination
contemplated by this Agreement shall occur and in furtherance thereof:
(a) Structure and Effects of the Merger. The Merger Subsidiary
shall merge with and into the Company, and the separate corporate
existence of the Merger Subsidiary shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Delaware, and
the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Section 2.01(b). The Merger shall
have the effects specified in the GCL.
(b) Certificate of Incorporation. The certificate of
incorporation of the Surviving Corporation (the "Certificate of
Incorporation") shall be the certificate of incorporation of the
Company as in effect immediately prior to the Effective Time, until
duly amended in accordance with the terms thereof and the GCL, except
that Article IV of the Company's certificate of incorporation shall be
amended to read in its entirety as follows:
"The aggregate number of shares which the Corporation shall
have the authority to issue is 1,000 shares of Common Stock, par
value $1.00 per share."
(c) By-Laws. The by-laws of the Surviving Corporation shall be
the by-laws of the Merger Subsidiary as in effect immediately prior to
the Effective Time, until duly amended in accordance with the terms
thereof and the aforementioned Certificate of Incorporation.
(d) Directors. The directors of the Surviving Corporation shall
be the directors of the Merger Subsidiary immediately prior to the
Effective Time, and such directors, together with any additional
directors as may thereafter be elected, shall hold such office until
such time as their successors shall be duly elected and qualified.
(e) Officers. The officers of the Surviving Corporation shall
be the officers of the Merger Subsidiary immediately prior to the
Effective Time and (to the extent provided for in their respective
Employment Agreements) the Designated Executives, together with any
additional officers as may be agreed upon prior to the Effective Time
by the Merger Subsidiary and the Company or as may be appointed
thereafter.
2.02 Effective Time. The Merger shall become effective upon the
filing, in the office of the Secretary of State of the State of Delaware, of a
certificate of merger in accordance with Section 251 of the GCL, or at such
later date and time as may be set forth in such certificate. Subject
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to the satisfaction or waiver of the conditions set forth in Article VII, the
parties shall use their reasonable best efforts to cause the Merger to become
effective (a) on a date that is not later than three business days after the
last of the conditions set forth in Article VII (other than conditions relating
solely to the delivery of documents as of the Closing Date) shall have been
satisfied or waived in accordance with the terms of this Agreement (or, at the
election of the Acquiror, on the last business day of the month in which such
day occurs) or (b) on such other date as the parties may agree in writing.
2.03 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of the Acquiror, or at such other place as the parties
shall agree, on the date when the Effective Time is intended to occur (the
"Closing Date").
2.04 Reservation of Right to Revise Structure. At the Acquiror's
election, the Merger may alternatively be structured so that (a) the Company is
merged with the Acquiror or a wholly owned subsidiary of it other than the
Merger Subsidiary or (b) a wholly owned subsidiary of the Acquiror is merged
with and into the Company; provided, however, that no such change shall (1)
alter or change the amount or kind of the Merger Consideration or the treatment
of the holders of Company Options, or (2) materially impede or delay receipt of
any approval or consent referred to in Section 7.01(b) or the consummation of
the transactions contemplated by this Agreement. In the event of such an
election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
2.05 Integration of Legal Entities. The parties hereto currently
intend to effectuate, or cause to be effectuated, following the Effective Time,
the combination (the "Subsidiary Combination") of the securities business of
Piper Jaffray Inc. with the Section 20 Subsidiary (under the name U.S. Bancorp
Piper Jaffray Inc.). The parties hereto shall cooperate and take all
reasonable, requisite actions, including executing all requisite documentation,
prior to or following the Effective Time to effect the Subsidiary Combination;
provided, however, that any such actions shall not materially impede or delay
receipt of any approval or consent referred to in Section 7.01(b) or
consummation of the transactions contemplated by this Agreement. The parties
also agree to cooperate and take all reasonable, requisite additional action
prior to or following the Effective Time to merge or otherwise consolidate
legal entities to the extent desirable for regulatory or other reasons;
provided, however, that any such actions shall not materially impede or delay
receipt of any approval or consent referred to in Section 7.01(b) or
consummation of the transactions contemplated by this Agreement.
ARTICLE III
CONSIDERATION; EXCHANGE
3.01 Merger Consideration. At the Effective Time, automatically by
virtue of the Merger and without any action on the part of any shareholder:
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(a) Outstanding Company Common Stock. Each share of Company
Common Stock, excluding Treasury Shares and Dissenters' Shares,
outstanding immediately prior to the Effective Time shall become and be
converted into the right to receive $37.25 in cash, without interest
thereon (the "Merger Consideration").
(b) Outstanding Merger Subsidiary Common Stock. All shares of
capital stock of the Merger Subsidiary outstanding immediately prior to
the Effective Time shall be converted into one share of Company Common
Stock.
(c) Treasury and Dissenters' Shares. Each share of Company
Common Stock held as Treasury Shares or Dissenters' Shares immediately
prior to the Effective Time shall be canceled and retired at the
Effective Time and, except as set forth in Section 3.04 with respect to
Dissenters' Shares, no consideration shall be issued in exchange
therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive the Merger Consideration
provided in this Article III. At and after the Effective Time, there will be no
transfers on the stock transfer books of the Company or the Surviving
Corporation of shares of Company Common Stock.
3.03 Payment for Shares. The Acquiror shall make available or cause
to be made available to U.S. Bank National Association (or such other bank as
the Acquiror shall appoint and shall be reasonably acceptable to the Company),
as paying agent (the "Paying Agent"), amounts sufficient in the aggregate to
provide all funds necessary for the Paying Agent to make payments of Merger
Consideration to holders of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. Promptly after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each person who
was, at the Effective Time, a holder of record of outstanding shares of Company
Common Stock a form (mutually agreed to by the Acquiror and the Company) of
letter of transmittal and instructions for use in effecting the surrender of the
certificates which, immediately prior to the Effective Time, represented any of
such shares in exchange for payment therefor. Upon surrender to the Paying Agent
of such certificates, together with such letter of transmittal, duly executed
and completed in accordance with the instructions thereto, the Surviving
Corporation shall promptly cause the Paying Agent to pay to each person entitled
thereto a check in the amount to which such person is entitled, after giving
effect to any required tax withholdings. No interest will be paid or will accrue
on the amount payable upon the surrender of any such certificate. If payment is
to be made to a person other than the registered holder of the certificate
surrendered, it shall be a condition of such payment that the certificate so
surrendered be properly endorsed or otherwise in proper form for transfer and
that the person requesting such payment pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder of the
certificate surrendered or establish to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax has been paid or is not
applicable. One hundred and eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any funds (including any interest received with respect thereto) made
available to the Paying Agent that have not been disbursed to holders of
certificates
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formerly representing shares of Company Common Stock outstanding on the
Effective Time, and thereafter such holders shall be entitled to look to the
Acquiror only as general creditors thereof with respect to the cash payable upon
due surrender of their certificates. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to any holder of certificates
formerly representing shares of Company Common Stock for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar laws. The Surviving Corporation shall pay all charges and expenses,
including those of the Paying Agent, in connection with the exchange of cash for
shares of Company Common Stock and the Acquiror shall reimburse the Surviving
Corporation for such charges and expenses.
3.04 Dissenting Stockholders. Dissenters' Shares shall be purchased
and paid for in accordance with Section 262 of the GCL.
3.05 Options. (a) At the Effective Time each then outstanding Company
Option shall be converted into and become the right to acquire a number of
shares of Acquiror Common Stock, equal to the product, rounded down to the
nearest whole share, of (1) the number of shares of Company Common Stock subject
to the Company Option and (2) the Company Common Stock Conversion Ratio, at a
per share exercise price, rounded up to the nearest cent, equal to (y) the
aggregate exercise price for the shares of Company Common Stock purchasable
pursuant to such Company Option divided by (z) the product of the Company Common
Stock Conversion Ratio and the number of shares of Company Common Stock subject
to the Company Option; provided, however, that in the case of any Company Option
which is an "incentive stock option," as defined under Section 422 of the Code,
the adjustments provided by this Section shall be effected in a manner
consistent with Section 424(a) of the Code. At or prior to the Effective Time,
the Company and the Acquiror shall make all necessary arrangements with respect
to the Company Stock Plans to permit the assumption of such Company Options (or
any substitute options) by the Acquiror pursuant to this Section 3.05.
(b) At the Effective Time, the Acquiror will assume each then
outstanding Company Option, as converted pursuant to this Section 3.05, in
accordance with the terms of the Company's 1993 Omnibus Stock Plan and the stock
option agreement by which it is evidenced. At or prior to the Effective Time,
the Acquiror shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Acquiror Common Stock for delivery upon exercise
of Company Options assumed by it in accordance with this Section 3.05. Upon
Closing, the Acquiror shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), or
another appropriate form with respect to the shares of Acquiror Common Stock
subject to such Company Options not exercised prior to the Effective Time, and
shall use its best efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Company Options remain outstanding.
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ARTICLE IV
ACTIONS PENDING THE EFFECTIVE TIME
4.01 Forbearances of the Company. Except as expressly contemplated by
this Agreement, without the prior written consent of the Acquiror, the Company
will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Company and its
Subsidiaries other than in the ordinary and usual course, or, to the
extent consistent therewith, fail to use reasonable efforts to preserve
intact their business organizations and assets and maintain their
rights, franchises and existing relations with clients, customers,
suppliers, employees and business associates; engage in any new
activities or lines of business; or take any action reasonably likely
to have an adverse affect upon the Company's ability to perform any of
its material obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (1) issue, sell or
otherwise permit to become outstanding, or authorize the creation of,
any additional shares of capital stock of the Company or any of its
Subsidiaries or any Rights in respect thereof, (2) enter into any
agreement with respect to the foregoing, or (3) permit any additional
shares of capital stock of the Company or any of its Subsidiaries to
become subject to new grants of employee or director stock options,
other Rights or similar stock-based employee rights. Without limiting
the foregoing, after the date hereof the Company will not issue or
create additional Rights to acquire shares of Company Common Stock
under the Company's 1983 Book Value Stock Purchase Plan.
(c) Dividends, Etc. (1) Make, declare, pay or set aside for
payment any dividend (other than dividends from wholly owned
Subsidiaries to the Company or another wholly owned Subsidiary of the
Company, and regular quarterly cash dividends on the Company Common
Stock at a rate not exceeding 7 1/2(cent) per share per calendar
quarter) on or in respect of, or declare or make any distribution on,
any shares of capital stock of the Company or any of its Subsidiaries
or (2) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital
stock.
(d) Compensation; Employment Agreements; Etc. Enter into, amend,
modify or renew any employment, consulting, severance or similar
contracts with any director, officer or employee of the Company or any
of its Subsidiaries, or grant any salary or wage increase or increase
any employee benefit (including incentive or bonus payments), except
(1) for normal individual increases in compensation to employees in the
ordinary course of business consistent with past practice, (2) for
other changes that are required by applicable law, (3) to satisfy
Previously Disclosed contractual obligations existing as of the date
hereof, or (4) for employment arrangements for, or grants of awards to,
newly hired employees in the ordinary course of business consistent
with past practice.
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(e) Benefit Plans. Enter into, establish, adopt or amend (except
(1) as may be required by applicable law or (2) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) any
pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement (or similar arrangement) related
thereto, in respect of any director, officer or employee of the Company
or any of its Subsidiaries, or take any action to accelerate the
vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder.
(f) Dispositions. Except (1) as Previously Disclosed or (2)
sales of securities or other investments or assets in the ordinary
course of business consistent with past practice, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, business or properties which is material to it or any of its
Subsidiaries.
(g) Acquisitions. Except (1) as Previously Disclosed or (2) for
the purchase of securities or other investments or assets in the
ordinary course of business consistent with past practice, acquire any
assets, business, or properties of any other person which is material
to it or any of its Subsidiaries.
(h) Constitutive Documents. Amend the Constitutive Documents of
the Company or its Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by generally accepted accounting principles.
(j) Contracts. Except in the ordinary course of business
consistent with past practice, enter into or terminate any Material
Contract or amend or modify in any material respect any of its existing
Material Contracts.
(k) Claims. Except as Previously Disclosed, settle any claim,
action or proceeding, except for any claim, action or proceeding
involving solely money damages in an amount, individually and in the
aggregate for all such settlements, not more than $250,000 and which is
not reasonably likely to establish an adverse precedent or basis for
subsequent settlements.
(l) Adverse Actions. Knowingly take any action that is
reasonably likely to result in (1) any of its representations or
warranties set forth in this Agreement being or becoming untrue at any
time at or prior to the Effective Time or (2) any of the conditions to
the Merger set forth in Article VII not being satisfied, except, in
each case, as may be required by applicable law.
(m) Indebtedness. Incur any indebtedness for borrowed money
other than in the ordinary course of business consistent with past
practice.
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(n) Fund Action. Except as and to the extent required, based
upon the written advice of outside counsel, in the exercise of the
fiduciary obligations of the Company or one of its Subsidiaries to any
Investment Company, request that any action be taken by any Fund Board,
other than (1) routine actions that would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on
the Company or any Investment Company, (2) actions Previously Disclosed
or (3) actions necessary to allow consummation of the Merger or the
Subsidiary Combination.
(o) Commitments. Agree, commit to or enter into any agreement to
take any of the actions referred to in Section 4.01 (a) through (n).
4.02 Forbearances of the Acquiror. Except as expressly contemplated
by this Agreement, without the prior written consent of the Company, the
Acquiror will not, and will cause each of its Subsidiaries not to knowingly take
any action reasonably likely to result in (a) any of the conditions to the
Merger set forth in Article VII not being satisfied, (b) any of its
representations and warranties set forth in this Agreement being or becoming
untrue at any time at or prior to the Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, the Company
has delivered to the Acquiror, and the Acquiror has delivered to the Company, a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either (a) in
response to an express informational requirement contained in or requested by a
provision hereof or (b) as an exception to one or more representations or
warranties contained in Section 5.03 or 5.04, respectively, or to one or more of
its covenants contained in Article VI; provided that (1) no such item is
required to be set forth in the Disclosure Schedule as an exception to a
representation or warranty if its absence is not reasonably likely to result in
the related representation or warranty being deemed untrue or incorrect under
the standard established in Section 5.02 and (2) the mere inclusion of an item
in a Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by a party that such item (or any undisclosed item or
information of comparable or greater significance) represents a Material
exception or fact, event or circumstance with respect to the Company or the
Acquiror, respectively. Information set forth in a Disclosure Schedule, whether
in response to an express informational requirement or as an exception to one or
more representations or warranties or one or more covenants, in each case that
is contained (or incorporated by reference) in a correspondingly enumerated
portion of such Disclosure Schedule, is described herein as "Previously
Disclosed".
5.02 Standard. No representation or warranty of the Company or the
Acquiror contained in Section 5.03 (other than Sections 5.03(i) and (j)) or 5.04
shall be deemed untrue or incorrect, and no party hereto shall be deemed to have
breached a particular representation or
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<PAGE>
warranty, as a consequence of the existence of any fact, event, or circumstance
that should have been disclosed as an exception to a particular representation
or warranty, unless such fact, event or circumstance, whether individually or
taken together with all other facts, events or circumstances that should have
been so disclosed (whether or not as exceptions) with respect to such particular
representation or warranty contained in Section 5.03 or 5.04, would be Material
with respect to the Company or the Acquiror, respectively.
5.03 Representations and Warranties of the Company. Subject to
Sections 5.01 and 5.02, except as Previously Disclosed, the Company hereby
represents and warrants to the Acquiror and the Merger Subsidiary as follows:
(a) Organization, Standing and Authority. The Company has been
duly incorporated and is an existing corporation in good standing under
the laws of the State of Delaware. The Company is duly qualified to do
business and is 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. Each of the
Company and its Subsidiaries 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. Piper Jaffray Inc. is duly registered, qualified to do
business and in good standing as a broker-dealer with the SEC, and is a
member in good standing of all relevant Self-Regulatory Organizations.
(b) Capital Stock. As of the date of this Agreement, the Company
has (1) 40,000,000 authorized shares of Company Common Stock, of which
not more than 19,129,429 shares are outstanding and not more than 876
are held as Treasury Shares, and (2) 300,000 authorized shares of
Company Preferred Stock, none of such shares being outstanding. As of
the date of this Agreement, there were outstanding under the Company
Stock Plans, Rights to acquire not more than an aggregate of 1,998,007
shares of Company Common Stock subject to adjustment on the terms set
forth in the Company Stock Plans at exercise prices and times set forth
in the Company's Disclosure Schedule. As of the date of this Agreement,
the Company has no shares of Company Common Stock reserved for
issuance, other than 1,453,437 shares reserved under the Company Stock
Plans, and the Company has no shares of Company Preferred Stock
reserved for issuance. All the outstanding shares of Company Common
Stock have been duly authorized and validly issued and are fully paid
and nonassessable and were not issued in violation of any subscriptive
or preemptive rights. All the outstanding shares of capital stock of
each of the Company's Subsidiaries owned by the Company or a Subsidiary
of the Company have been duly authorized and validly issued and are
fully paid and nonassessable, and are owned by the Company or a
Subsidiary of the Company free and clear of all Liens. Except as set
forth above and except for Company Common Stock issued after the date
hereof pursuant to the terms of the Company Stock Plans, there are no
shares of capital stock of the Company authorized, issued or
outstanding and there are no preemptive rights or any outstanding
Rights of the Company or any of its Subsidiaries of any character
relating to the issued or
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unissued capital stock or other securities of the Company or any of its
Subsidiaries (including those relating to the issuance, sale, purchase,
redemption, conversion, exchange, redemption, voting or transfer
thereof).
(c) Subsidiaries. The Company has Previously Disclosed a list
of all its Subsidiaries, including the states in which such
Subsidiaries are organized, a brief description of such Subsidiaries'
principal activities, and if any of such Subsidiaries is not wholly
owned by the Company or one of its Subsidiaries, the percentage owned
by the Company or any such Subsidiary and the names, addresses and
percentage ownership by any other person. No equity securities of any
of the Company's Subsidiaries are or may become required to be issued
(other than to the Company or a wholly owned Subsidiary of the Company)
by reason of any Rights with respect thereto. There are no Contracts by
which any of the Company's Subsidiaries is or may be bound to sell or
otherwise issue any shares of its capital stock, and there are no
Contracts relating to the rights of the Company to vote or to dispose
of such shares. All of the shares of capital stock of each of the
Company's Subsidiaries are fully paid and nonassessable and subject to
no subscriptive or preemptive rights or Rights and, except as
Previously Disclosed, are owned by the Company or a Company Subsidiary
free and clear of any Liens. Each of the Company's Subsidiaries is in
good standing under the laws of the jurisdiction in which it is
organized, and is duly qualified to do business and in good standing in
each jurisdiction where its ownership or leasing of property or the
conduct of its business requires it to be so qualified.
The Company has Previously Disclosed, as of the date hereof, a
list of all equity securities it or a Company Subsidiary holds
involving, in the aggregate, ownership or control of 5% or more of any
class of the issuer's voting securities or 25% or more of the issuer's
equity (treating subordinated debt as equity) and, as of the Effective
Time, no additional persons would need to be included on such a list.
The Company has Previously Disclosed a list, as of the date hereof, of
all partnerships, limited liability companies, joint ventures or
similar entities, in which it owns or controls an interest, directly or
indirectly, and the nature and amount of each such interest and, as of
the Effective Time, no additional persons would need to be included on
such a list.
(d) Corporate Power. The Company and each of its Subsidiaries
has the corporate power and authority to carry on its business as it is
now being conducted and to own or lease all its properties and assets.
The Company has Previously Disclosed a brief description of each line
of business in which the Company or any Company Subsidiary is engaged.
(e) Corporate Authority and Action. The Company has the
requisite corporate power and authority, and has taken all corporate
action necessary, in order (1) to authorize the execution and delivery
of, and performance of its obligations under, this Agreement and (2)
subject only to receipt of the requisite approval of the plan of merger
contained in this Agreement by the holders of at least two-thirds of
the outstanding shares of Company
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<PAGE>
Common Stock, to adopt the plan of merger contained in this Agreement
and, in accordance therewith, to consummate the Merger. This Agreement
constitutes the valid and legally binding agreement of the Company,
enforceable in accordance with its terms.
The Company has taken all action necessary in order to exempt this
Agreement and the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby are exempt from, the
requirements of any "moratorium," "control share," "fair price" or
other antitakeover laws and regulations (collectively, "Takeover Laws")
of the State of Delaware, including Section 203 of the GCL, or of any
other State.
(f) No Defaults. Subject to the approval by the holders of at
least two-thirds of the outstanding shares of Company Common Stock,
receipt of the required regulatory approvals, the required filings
under federal and state securities and insurance laws and the approvals
of the NYSE and any other applicable exchange of the Merger and the
other transactions contemplated hereby, the execution, delivery and
performance of this Agreement and the consummation by the Company of
the transactions contemplated hereby, does not and will not (1)
constitute a breach or violation of, or a default under, or cause or
allow the acceleration or creation of a Lien (with or without the
giving of notice, passage of time or both) pursuant to, any law, rule
or regulation or any judgment, decree, order, governmental or
non-governmental permit or license, or any Contract of it or of any of
its Subsidiaries or to which the Company or any of the Company's
Subsidiaries or its or their properties is subject or bound, (2)
constitute a breach or violation of, or a default under, the
Constitutive Documents of the Company or any of its Subsidiaries, or
(3) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental or non-governmental
permit or license or the consent or approval of any other party to any
such Contract.
(g) Reports. The Company and its Subsidiaries have timely filed
all reports, registrations, statements and other filings, together with
any amendments required to be made with respect thereto, that were
required to be filed since December 31, 1993 with (1) the SEC or the
CFTC, (2) any other applicable federal, state, local or foreign
Governmental Authorities or (3) any Self-Regulatory Organization (all
such reports and statements, including the financial statements,
exhibits and schedules thereto, being collectively referred to herein
as the "Reports"), including without limitation, all reports,
registrations, statements and filings required under the Securities
Laws. Each of the Reports, when filed, complied (or will comply) as to
form with the statutes, rules, regulations and orders enforced or
promulgated by the Governmental Authority with which they were filed.
(h) SEC Documents and Financial Statements. The Company has made
available to the Acquiror copies of each registration statement,
offering circular, report, definitive proxy statement or information
statement under the federal Securities Laws filed or circulated by it
with respect to periods since January 1, 1996 through the date of this
Agreement and will promptly provide each such registration statement,
offering circular,
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report, definitive proxy statement or information statement filed or
circulated after the date hereof (collectively, the "SEC Documents"),
each in the form (including exhibits and any amendments thereto) filed
with the SEC (or if not so filed, in the form used or circulated).
As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Agreement),
each of the SEC Documents, including the financial statements, exhibits
and schedules thereto, filed or circulated prior to the date hereof
complied (and each of the SEC Documents filed after the date of this
Agreement, will comply) as to form with applicable Securities Laws and
did not (or in the case of reports, statements, or circulars filed
after the date of this Agreement, will not) contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading.
Each of the Company's consolidated statements of condition or
balance sheets included in or incorporated by reference into the SEC
Documents, including the related notes and schedules, fairly presented
(or, in the case of SEC Documents filed after the date of this
Agreement, will fairly present) the consolidated financial position of
the Company and its Subsidiaries as of the date of such statement of
condition or balance sheet and each of the consolidated statements of
income, cash flows and stockholders' equity included in or incorporated
by reference into SEC Documents, including any related notes and
schedules (collectively, the foregoing financial statements and related
notes and schedules are referred to as the "Financial Statements"),
fairly presented (or, in the case of SEC Documents filed after the date
of this Agreement, will fairly present) the consolidated results of
operations, cash flows and stockholders' equity, as the case may be, of
the Company and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with generally accepted
accounting prin ciples consistently applied during the periods involved
(except as may be noted therein and except that such unaudited
statements include no notes).
(i) Absence of Undisclosed Liabilities. Except as disclosed in
the Financial Statements or the SEC Documents filed prior to the date
hereof, none of the Company or its Subsidiaries has any obligation or
liability (contingent or otherwise), that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on
the Company.
(j) Absence of Certain Changes. Since September 30, 1996,
except as disclosed in the Financial Statements or the SEC Documents
filed after that date but before the date of this Agreement, the
business of the Company and its Subsidiaries has been conducted in the
ordinary and usual course, consistent with past practice, and there has
not been any event, occurrence, development or state of circumstances
or facts which has had or is reasonably likely to have a Material
Adverse Effect on the Company.
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(k) Securities. Each of the Company and its Subsidiaries has
good and marketable title to all securities held by it (except
securities sold under repurchase agreements or held in any fiduciary or
agency capacity), free and clear of any Lien, except to the extent such
securities are pledged in the ordinary course of business consistent
with prudent business practices to secure obligations of each of the
Company or any of its Subsidiaries. Such securities are valued on the
books of the Company or its Subsidiaries in accordance with generally
accepted accounting principles.
(l) Litigation; Regulatory Action. Except as disclosed in the
Company's SEC Documents filed before the date of this Agreement, no
litigation, proceeding, investigation or controversy ("Litigation")
before any court, arbitrator, mediator or Governmental Authority is
pending against the Company or any of its Subsidiaries, and, to the
best of the Company's knowledge, no such Litigation has been
threatened; neither the Company nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any Governmental Authority
(including the SEC, the Federal Reserve System, the CFTC and the
Federal Trade Commission) charged with the supervision or regulation of
broker-dealers, securities underwriting or trading, stock exchanges,
commodities exchanges, investment companies, investment advisers or
insurance agents and brokers or the supervision or regulation of the
Company or any of its Subsidiaries or any Self-Regulatory Organization;
and neither the Company nor any of the Company Subsidiaries has been
notified by or received another communication from any such
Governmental Authority or Self-Regulating Organization to the effect
that such Governmental Authority or Self-Regulatory Organization is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter or similar
submission. Previously Disclosed is a true and complete list, as of the
date hereof, of all Litigation pending or threatened arising out of any
state of facts relating to the sale of investment products by the
Company, the Company Subsidiaries or any employees thereof (including,
without limitation, equity or debt securities, mutual funds, insurance
contracts, annuities, partnership and limited partnership interests,
interests in real estate, investment banking services, securities
underwritings in which the Company or any of its Subsidiaries was a
manager, co-manager, syndicate member or distributor, Derivatives
Contracts ((as hereinafter defined) or structured notes).
(m) Compliance with Laws. Each of the Company and its
Subsidiaries, and their respective officers and employees:
(1) in the conduct of business is in compliance with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting such businesses,
and with the applicable rules of all Self-Regulatory
Organizations;
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(2) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Regulatory Authorities that are required
in order to permit them to own and operate their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and,
to the Company's knowledge, no suspension or cancellation of any
of them is threatened or reasonably likely; and all such filings,
applications and registrations are current;
(3) since January 1, 1996, has received no notification or
communication from any Governmental Authority or Self-Regulatory
Organization (a) asserting that any of them is not in compliance
with any of the statutes, rules, regulations, or ordinances which
such Governmental Authority or Self-Regulatory Organization
enforces, or has otherwise engaged in any unlawful business
practice, (b) threatening to revoke any license, franchise,
permit, seat on any stock or commodities exchange, or governmental
authorization, (c) requiring any of them (including any of the
Company's or its Subsidiary's directors or controlling persons) to
enter into a cease and desist order, agreement, or memorandum of
understanding (or requiring the board of directors thereof to
adopt any resolution or policy) or (d) restricting or
disqualifying the activities of the Company or any of its
Subsidiaries (except for restrictions generally imposed by rule,
regulation or administrative policy on brokers or dealers
generally);
(4) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Governmental Authority
or Self-Regulatory Organization against the Company, any of its
Subsidiaries or any officer, director or employee thereof;
(5) is not, nor is any Affiliate of any of them, subject to a
"statutory disqualification" as defined in Section 3(a)(39) of the
Exchange Act or is subject to a disqualification that would be a
basis for censure, limitations on the activities, functions or
operations of, or suspension or revocation of the registration of
any broker-dealer Subsidiary as a broker-dealer, municipal
securities dealer, government securities broker or government
securities dealer under Section 15, Section 15B or Section 15C of
the Exchange Act and there is no reasonable basis for, or
proceeding or investigation, whether formal or informal, or
whether preliminary or otherwise, that is reasonably likely to
result in, any such censure, limitations, suspension or
revocation; and
(6) other than Piper Jaffray Inc., is not required to be
registered as an investment company, commodity trading advisor,
commodity pool operator, futures commission merchant, introducing
broker, insurance agent, or transfer agent under any United States
federal, state, local or foreign statutes, laws, rules or
regulations.
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No broker-dealer Subsidiary acts as the "sponsor" of a
"broker-dealer trading program", as such terms are defined in Rule
17a-23 under the Exchange Act.
(7) in the conduct of their business with respect to employee
benefit plans subject to Title I of ERISA, the Company and its
Subsidiaries have not (i) breached any applicable fiduciary duty
under Part 4 of Title I of ERISA which would subject it to
liability under Sections 405 or 409 of ERISA and (ii) engaged in a
"prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975(c) of the Code which would subject it to
liability or Taxes under Sections 409 or 502(i) of ERISA or
Section 4975(a) of the Code.
(n) Clients. The Company and its Subsidiaries are in compliance
with the terms of each Contract with each Client, and each such
Contract is in full force and effect with respect to the applicable
Client. There are no disputes pending or threatened with any Client or
with any former Client. The Company has made available to the Acquiror
true and complete copies of all advisory, sub-advisory and similar
agreements with any Clients.
Each extension of credit by the Company or any of its Subsidiaries
to any Client (A) is in full compliance with Federal Reserve Board
Regulation T or any substantially similar regulation of any
Governmental Authority and, (B) is fully secured, and the Company or
such Subsidiary has a first priority perfected security interest in the
collateral securing such extension of credit.
(o) Registrations. The Company and each of its employees who are
required to be registered as a broker-dealer, an investment adviser, a
registered representative, an insurance agent or a sales person (or in
a similar capacity) with the SEC, the securities commission or similar
authority or insurance authority of any state or foreign jurisdiction
or any self-regulatory body are duly registered as such and such
registrations are in full force and effect. All federal, state and
foreign registration requirements have been complied with and such
registrations as currently filed, and all periodic reports required to
be filed with respect thereto, are accurate and complete.
The Company has made available to the Acquiror true and correct
copies of (A) each Form G-37/G-38 filed with the MSRB since January 1,
1996 and (B) all records required to be kept by the Company under Rule
G-8(a)(xvi) of the MSRB. Since January 1, 1996, there have been no
contributions or payments, and there is no other information, that
would be required to be disclosed by the Company or any of the
Company's Subsidiaries on any such Form or recorded by the Company or
any such Subsidiary pursuant to such Rule.
(p) Environmental Matters. The Company and its Subsidiaries have
complied at all times with applicable Environmental Laws; no property
(including buildings and any other structures) currently or formerly
owned or operated (or which the Company or any of its Subsidiaries
would be deemed to have owned or operated under any Environmental Law)
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by the Company or any of its Subsidiaries or in which the Company or
any of its Subsidiaries (whether as fiduciary or otherwise) has a Lien,
has been contaminated with, or has had any release of, any Hazardous
Substance in such form or substance so as to create any liability for
the Company or its Subsidiaries; the Company is not subject to
liability for any Hazardous Substance disposal or contamination on any
other third-party property; within the last six years, the Company and
its Subsidiaries are not received any notice, demand letter, claim or
request for information alleging any violation of, or liability of the
Company under, any Environmental Law; the Company and its Subsidiaries
are not subject to any order, decree, injunction or other agreement
with any Governmental Authority or any third party relating to any
Environmental Law; the Company and its Subsidiaries are not aware of
any reasonably likely liability relating to environmental circumstances
or conditions (including the presence of asbestos, underground storage
tanks, lead products or polychlorinated biphenyls) involving the
Company or one of its Subsidiaries, any currently or formerly owned or
operated property (whether as fiduciary or otherwise), or any
reasonably likely liability related to any Lien held by the Company or
one of its Subsidiaries; and the Company has made available to the
Acquiror copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its
possession or reasonably available to it relating to the Company or one
of its Subsidiaries or any currently or formerly owned or operated
property or any property in which the Company or one of its
Subsidiaries (whether as fiduciary or otherwise) has held a Lien.
(q) No Brokers. None of the Company or its Subsidiaries, or any
of their directors, officers or employees, has employed any broker or
finder, or incurred any broker's or finder's commissions or fees, in
connection with the transactions contemplated hereby, except that the
Company has engaged Keefe, Bruyette & Woods, Inc. as its financial
adviser, the arrangements with which are Previously Disclosed.
(r) Compensation Plans.
(1) The Company has Previously Disclosed a complete list
of all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock and stock option plans,
all employment or severance contracts, all medical, dental, health
and life insurance plans, all other employee benefit plans,
contracts or arrangements and any applicable "change of control"
or similar provisions in any plan, contract or arrangement
maintained or contributed to by it or any of the Company
Subsidiaries for the benefit of employees, former employees,
directors, former directors or their beneficiaries (the
"Compensation Plans"). True and complete copies of all
Compensation Plans, including, but not limited to, any trust
instruments and/or insurance contracts, if any, forming a part
thereof, and all amendments thereto have been made available to
the Acquiror.
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(2) All "employee benefit plans" within the meaning of
Section 3(3) of ERISA, other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA ("Multiemployer Plans"),
covering employees or former employees of the Company and the
Company Subsidiaries (the "ERISA Plans"), to the extent subject to
ERISA, are in substantial compliance with ERISA. Each ERISA Plan
which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan") and which is intended to be
qualified, under Section 401(a) of the Code, has received a
favorable determination letter from the IRS with respect to "TRA"
(as defined in Section 1 of IRS Revenue Procedure 93-39), and the
Company is not aware of any circumstances reasonably likely to
result in the revocation or denial of any such favorable
determination letter. There is no pending or, to the knowledge of
the Company, threatened litigation relating to the ERISA Plans.
Neither the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any ERISA Plan that would subject the
Company or any of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(3) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the Company or any
of its Subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Section
4001 of ERISA, currently or formerly maintained by any of them, or
the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"). Neither the Company nor
any of its Subsidiaries presently contributes to a Multiemployer
Plan, nor have they contributed to such a plan within the past
five calendar years. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for
any Pension Plan or by any ERISA Affiliate within the past
12-month period.
(4) All contributions required to be made under the terms
of any ERISA Plan have been timely made. Neither any Pension Plan
nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA.
Neither the Company nor any of its Subsidiaries has provided, or
is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(5) Under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year, the
actuarially determined present value of all "benefit liabilities",
within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in the plan's
most recent actuarial valuation) did not exceed the then current
value of the assets of such
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plan, and there has been no adverse change in the financial
condition of such plan since the last day of the most recent plan
year.
(6) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any plan.
There are no restrictions on the rights of the Company or any of
its Subsidiaries to amend or terminate any such plan without
incurring any liability thereunder.
(7) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
(A) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of the
Company or any of its Subsidiaries under any Compensation Plan or
otherwise from the Company or any of its Subsidiaries, (B)
increase any benefits otherwise payable under any Compensation
Plan or (C) result in any acceleration of the time of payment or
vesting of any such benefit.
(s) No Knowledge. As of the date hereof, the Company knows of
no reason why the regulatory approvals referred to in Section 7.01(b)
should not be obtained without the imposition of any condition of the
type referred to in the proviso following such Section 7.01(b).
(t) Labor Relations. Each of the Company and its Subsidiaries
is in compliance with all currently applicable laws respecting
employment and employment practices, terms and conditions of employment
and wages and hours, including, without limitation, the Immigration
Reform and Control Act, the Worker Adjustment and Retraining
Notification Act, any such laws respecting employment discrimination,
disability rights or benefits, equal opportunity, plant closure issues,
affirmative action, workers' compensation, employee benefits, severance
payments, labor relations, employee leave issues, wage and hour
standards, occupational safety and health requirements and unemployment
insurance and related matters. None of the Company or its Subsidiaries
is engaged in any unfair labor practice and there is no unfair labor
practice complaint pending or, to the knowledge of the Company,
threatened against any of the Company or its Subsidiaries before the
National Labor Relations Board. Neither the Company nor any of its
Subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is the Company or any of its
Subsidiaries the subject of a proceeding asserting that the Company or
any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel it or
such Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor
dispute involving the Company or any of its Subsidiaries, pending or,
to the best of its knowledge, threatened, nor is it aware of any
activity involving the Company's or any of its Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in any
other organization activity.
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(u) Insurance. The Company and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the
management of the Company reasonably has determined to be prudent in
accordance with industry practices.
(v) Taxes. (1) The Company and its Subsidiaries have filed
completely and correctly in all material respects all Tax Returns which
are required by all applicable laws to be filed by them, and have paid,
or made adequate provision for the payment of, all Taxes which have or
may become due and payable pursuant to said Tax Returns and all other
Taxes, governmental charges and assessments received to date other than
those Taxes being contested in good faith for which adequate provision
has been made on the most recent consolidated balance sheet of the
Company set forth in the Financial Statements. The Tax Returns of the
Company and its Subsidiaries have been prepared in accordance with all
applicable laws and generally accepted principles applicable to
taxation consistently applied; (2) all Taxes which the Company and its
Subsidiaries are required by law to withhold and collect have been duly
withheld and collected, and have been paid over, in a timely manner, to
the proper taxing authorities to the extent due and payable; (3) the
Company and its Subsidiaries have not executed any waiver to extend, or
otherwise taken or failed to take any action that would have the effect
of extending, the applicable statute of limitations in respect of any
Tax liabilities of the Company or any of its Subsidiaries for the
fiscal years prior to and including the most recent fiscal year; (4)
neither the Company nor any of its Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Code; (5) the
Company has at all times been taxable as a Subchapter C corporation
under the Code; (6) the Company has never been a member of any
consolidated group (other than with the Company and its Subsidiaries)
for Tax purposes; (7) the Company is not a party to any tax sharing
agreement or arrangement, other than with its Subsidiaries; (8) no
liens for Taxes exist with respect to any of the assets or properties
of the Company, except for statutory liens for Taxes not yet due or
payable or that are being contested in good faith; (9) all of the U.S.
federal income Tax Returns filed by or on behalf of each of the Company
and its Subsidiaries have been examined by and settled with the IRS, or
the statute of limitations with respect to the relevant Tax liability
expired, for all taxable periods through and including the period
ending on the date on which the Effective Time occurs; (10) all Taxes
due with respect to any completed and settled audit, examination or
deficiency Litigation with any taxing authority have been paid in full;
(11) there is no audit, examination, deficiency, or refund Litigation
pending with respect to any Taxes and during the past three years no
taxing authority has given written notice of the commencement of any
audit, examination or deficiency Litigation, with respect to any Taxes;
(12) neither the Company nor any of its Subsidiaries is bound by any
currently effective private ruling, closing agreement or similar
agreement with any taxing authority; (13) except with respect to
like-kind exchanges pursuant to Section 1031 of the Code, the Company
will not be required to include in a taxable period ending after the
Effective Time, any taxable income attributable to income that
economically accrued in a prior taxable period as a result of Section
481 of the Code, the installment method of accounting or any comparable
provision of state or local Tax law; (14) (A) no property of the
Company or its Subsidiaries is "tax exempt property" within the meaning
of
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Section 168(h) of the Code, (B) no assets of the Company or its
Subsidiaries is subject to a lease under Section 7701(h) of the Code,
and (C) neither the Company nor its Subsidiaries is a party to any
lease made pursuant to Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended and in effect prior to the date of enactment of the
Tax Equity and Fiscal Responsibility Act of 1982; and (15) immediately
following the Merger, the Company will not have any income or gain that
has been deferred under Treasury Regulation Section 1.1502-13, or any
material excess loss account in a Subsidiary under Treasury Regulation
Section 1.1502-19.
(w) Derivatives. All exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract or any
other similar arrangement, whether entered into for the Company's
account, or for the account of one or more of the Company's
Subsidiaries or their customers, were entered into (1) in accordance
with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (2) with counterparties
believed to be financially responsible at the time; and each of them
constitutes the valid and legally binding obligation of the Company or
any of its Subsidiaries, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors'
rights or by general equity principles), and are in full force and
effect. Neither the Company nor any of its Subsidiaries, nor to the
Company's knowledge any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement. The SEC Documents
disclose the value of such agreements and arrangements on a
mark-to-market basis in accordance with generally accepted accounting
principles and, since June 30, 1997, there has not been a material
change in such value.
(x) Accounting Controls. Each of the Company and its
Subsidiaries has devised and maintained systems of internal accounting
controls sufficient to provide reasonable assurances, in the judgment
of the Board of Directors, that (1) all material transactions are
executed in accordance with management's general or specific
authorization; (2) all material transactions are recorded as necessary
to permit the preparation of financial statements in conformity with
generally accepted accounting principles consistently applied with
respect to broker-dealers or any other criteria applicable to such
statements, (3) access to the material property and assets of the
Company and its Subsidiaries is permitted only in accordance with
management's general or specific authorization; and (4) the recorded
accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to
any differences.
(y) Proprietary Rights. The Company and its Subsidiaries have
the right to use the names, service-marks, trademarks and other
intellectual property material to the conduct of their business, and
all of these have been Previously Disclosed; and in the case of such
names, service-marks and trademarks, in each state of the United
States, such right of use is
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free and clear of any Liens, and, to the knowledge of the Company, no
other person has the right to use such names, service-marks or
trademarks in any such state.
(z) Investment Advisory Activities.
(1) Certain of the Company's Subsidiaries provide
investment management, investment advisory, sub-advisory,
administration, distribution or certain other services to the
Investment Companies, each of which has been Previously Disclosed.
Each of the Investment Companies (or the trust of which it is a
series) is duly organized and existing in good standing under the
laws of the jurisdiction under which it is organized. Each of the
Investment Companies (or the trust or corporation of which it is a
series) that is registered or required to be registered under the
Investment Company Act ("Registered Funds") is governed by a board
of trustees or directors (each a "Fund Board" and, collectively,
the "Fund Boards") consisting of at least 50% of trustees or
directors who are not "interested persons") (as defined in the
Investment Company Act) of the Registered Funds or the Company.
The Fund Boards operate in all material respects in conformity
with the requirements and restrictions of Sections 10 and 16 of
the Investment Company Act, to the extent applicable.
(2) Each of the Investment Companies is in compliance with
all applicable foreign, federal and state laws, rules and
regulations of the SEC, the IRS, and any Self-Regulatory
Organization having jurisdiction over such Investment Company. The
Company has made available to the Acquiror true and complete
copies of all the Constitutive Documents and related advisory
agreements of all of the Investment Companies managed or advised
by the Company or any of its Subsidiaries.
(3) Except for Piper Jaffray Inc., Piper Trust Company and
Piper Capital Management Incorporated, none of the Company or its
Subsidiaries is or has been during the past five years an
"investment adviser" within the meaning of the Investment Advisers
Act, required to be registered, licensed or qualified as an
investment advisor under the Investment Advisers Act or subject to
any liability or disability by reason of any failure to be so
registered, licensed or qualified.
(4) Each Investment Company has been operated in compliance
with its respective objectives, policies and restrictions,
including those set forth in the applicable prospectus and
registration statement, if any, for that Investment Company or
governing instruments for a Client. The Company and its
Subsidiaries have operated their investment accounts in accordance
with the investment objectives and guidelines in effect for such
investment accounts.
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<PAGE>
(5) Each Registered Fund has duly adopted procedures
pursuant to Rules 17a-7, 17e-1 and 10f-3 under the Investment
Company Act, to the extent applicable.
(6) Neither the Company, nor any "affiliated person" (as
defined in the Investment Company Act) thereof, is ineligible
pursuant to Section 9 of the Investment Company Act to serve as an
investment advisor (or in any other capacity contemplated by the
Investment Company Act) to an Investment Company; neither the
Company, nor any "associated person" (as defined in the Investment
Advisors Act) thereof, is ineligible pursuant to Section 203 of
the Investment Advisors Act to serve as an investment advisor or
as an associated person to a registered investment advisor.
5.04 Representations and Warranties of the Acquiror. Except as
Previously Disclosed in a paragraph of its Disclosure Schedule corresponding to
the relevant paragraph below, the Acquiror hereby represents and warrants to the
Company as follows:
(a) Organization, Standing and Authority. The Acquiror and the
Merger Subsidiary each has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware.
The Acquiror and the Merger Subsidiary each is duly qualified to do
business and is 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. Each of the
Acquiror and its Subsidiaries 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.
(b) Corporate Authority. The Acquiror and the Merger Subsidiary
each has the requisite corporate power and authority, and has taken all
corporate action necessary, in order (1) to authorize the execution and
delivery of, and performance of its obligations under, this Agreement
and (2) to adopt the plan of merger contained in this Agreement and, in
accordance therewith, to consummate the Merger. This Agreement is the
valid and binding agreement of each of them enforceable in accordance
with its terms.
(c) No Defaults. Subject to the required approval of the Federal
Reserve System, and any required filings under federal and state
securities' and insurance laws, and the approvals of the NYSE and the
other securities exchanges referred to in Section 5.03(f), of the
Merger and the other transactions contemplated hereby, the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby by it, does not and will not (1)
constitute a breach or violation of, or a default under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or any Contract of the Acquiror or of any of its subsidiaries
or to which the Acquiror or any of its Subsidiaries or properties is
subject or bound, (2) constitute a breach or violation of, or a default
under, the Constitutive Documents of the Acquiror or any of its
Subsidiaries, or (3) require any consent or approval under any such
law, rule, regulation, judgment, decree,
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order, governmental permit or license, or the consent or approval of
any other party to any such agreement, indenture or instrument other
than such consent or approval.
(d) No Knowledge. As of the date hereof, the Acquiror knows of
no reason why the regulatory approvals and consents referred to in
Section 7.01(b) should not be obtained without the imposition of any
condition of the type referred to in the proviso following such Section
7.01(b).
(e) Investment Companies. Neither the Acquiror, nor any
"affiliated person" (as defined in the Investment Company Act) thereof,
is ineligible pursuant to Section 9 of the Investment Company Act to
serve as an investment advisor (or in any other capacity contemplated
by the Investment Company Act to a Registered Fund; neither the
Acquiror, nor any "associated person" (as defined in the Investment
Advisors Act) thereof, is ineligible pursuant to Section 203 of the
Investment Advisors Act to serve as an investment advisor or as an
associated person to a registered investment advisor.
(f) Funds. At the Effective Time, the Acquiror will have the
funds necessary to consummate the Merger and pay the Merger
Consideration in accordance with the terms of this Agreement.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. (a) Subject to the terms and conditions
of this Agreement, each of the Company and the Acquiror agrees to use its
reasonable best efforts in good faith to take, or cause to be taken (including
causing any of its Subsidiaries to take), all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Merger as promptly as reasonably
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
(b) Without limiting the generality of Section 6.01(a), the Company
agrees to use its reasonable best efforts to obtain (1) any consents of Clients
(including in the case of Registered Funds, stockholders of such Registered
Funds) necessary to effect the assignment of any Advisory Agreement to the
Surviving Corporation upon consummation of the Merger and, (2) the consent or
approval of all persons party to a Contract with the Company, to the extent such
consent or approval is required in order to consummate the Merger or for the
Surviving Corporation to receive the benefits thereof.
6.02 Stockholder Approvals. The Company agrees to take, in accordance
with applicable law, the Company's Constitutive Documents, all action necessary
to convene an
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appropriate meeting of stockholders of the Company to consider and vote upon the
approval and adoption of this Agreement and any other matters required to be
approved by the Company's stockholders for consummation of the Merger (including
any adjournment or postponement, the "Meeting") as promptly as practicable. The
Company's Board of Directors shall recommend such approval, and the Company
shall take all lawful action to solicit such approval by its stockholders;
provided, however, the Company's Board of Directors may fail to make the
recommendation, or to seek to obtain the shareholder approval, or withdraw,
modify or change any such recommendation, if such Board of Directors determines
in good faith, after considering the advice of outside counsel to such Board,
that such action is required in order to discharge properly the directors'
fiduciary duties under the GCL.
6.03 Proxy Statement. The Acquiror and the Company will cooperate in
the preparation of a proxy statement and other proxy solicitation materials of
the Company (the "Proxy Statement"). The Company agrees to file the Proxy
Statement in preliminary form with the SEC as promptly as reasonably
practicable. Each of the Company and the Acquiror agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in the Proxy Statement and any amendment
or supplement thereto will, at the date of mailing to shareholders and at the
time of the Meeting, contain any untrue statement which, at the time and in the
light of the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or will omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier statement in the Proxy
Statement or any amendment or supplement thereto. Each of the Company and the
Acquiror further agrees that if it shall become aware prior to the Effective
Time of any information furnished by it that would cause any of the statements
in the Proxy Statement to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the statements
therein not false or misleading, it shall promptly inform the other party
thereof and to take the necessary steps to correct the Proxy Statement.
6.04 Press Releases. Each of the Company and the Acquiror agrees that
it will not, without the prior approval of the other party, issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by applicable law
or regulation or the rules of any applicable Self-Regulatory Organization.
6.05 Access; Information. (a) The Company agrees that upon reasonable
notice and subject to applicable laws relating to the exchange of information,
it shall afford the Acquiror and its officers, employees, counsel, accountants
and other authorized representatives, such access during normal business hours
throughout the period prior to the Effective Time to the books, records
(including, without limitation, tax returns and work papers of independent
auditors), properties, personnel and to such other information as the Acquiror
may reasonably request and, during such period, it shall furnish promptly to
such other party (1) a copy of each material report, schedule and other document
filed by it pursuant to the requirements of federal or state securities or
banking laws, and (2) all other information concerning the business, properties
and personnel of it as the other may reasonably request.
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(b) The Acquiror agrees that any information obtained pursuant to
this Section 6.05 will be subject to the terms of the letter agreement, dated
December 8, 1997, between the Acquiror and the Company. No investigation by the
Acquiror of the business and affairs of the Company and its Subsidiaries shall
affect or be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement or the conditions to consummation contained in
Article VII.
6.06 Acquisition Proposals. (a) The Company agrees that it shall not,
and shall use its best efforts to cause its officers, directors, agents,
advisors and Affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any tender or exchange offer, proposal for a merger, consolidation or other
business combination involving the Company or any of its Subsidiaries or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets or operations of, the Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement (any of
the foregoing, an "Acquisition Proposal"); provided that, if the Company is not
otherwise in violation of this Section 6.06, the Company's Board of Directors
may provide (or authorize the provision of) information to, and may engage in
(or authorize) such negotiations or discussions with, a person, directly or
through representatives, if (a) such Board of Directors, after having consulted
with and considered the advice of outside counsel to such Board, has determined
in good faith that providing such information or engaging in such negotiations
or discussions is required in order to discharge properly the directors'
fiduciary duties in accordance with the GCL and (b) the Company has received
from such person a confidentiality agreement in customary form. The Company also
agrees immediately to cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of this Agreement with
any parties other than the Acquiror, with respect to any of the foregoing. The
Company shall promptly (within 24 hours) advise the Acquiror following the
receipt by it of any Acquisition Proposal and the substance thereof (including
the identity of the person making such Acquisition Proposal), and advise the
Acquiror of any developments with respect to such Acquisition Proposal promptly
upon the occurrence thereof.
(b) Nothing contained in this Section 6.06 or any other provision of
this Agreement shall prohibit the Company or the Company's Board of Directors
from notifying any third party that contacts the Company on an unsolicited basis
after the date hereof concerning an Acquisition Proposal of the Company's
obligations under this Section 6.06.
6.07 No Rights Triggered. Except as Previously Disclosed, the Company
shall take all reasonable steps necessary, if any, to ensure that the entering
into of this Agreement and the consummation of the transactions contemplated
hereby and any other action or combination of actions, or any other transactions
contemplated hereby, do not and will not result in the grant of any Rights to
any person (a) under the Constitutive Documents of the Company or any of its
Subsidiaries or (b) under any Contract to which the Company or any of its
Subsidiaries is a party.
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6.08 Regulatory Applications. (a) The Acquiror, its Subsidiaries and
the Company shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement as promptly as reasonably practicable. Each of the Acquiror and the
Company shall have the right to review in advance, and to the extent practicable
each will consult with the other, in each case subject to applicable laws
relating to the exchange of information, with respect to, all material written
information submitted to any third party or any Governmental Authority in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the Acquiror and the Company agrees to act
reasonably and as promptly as practicable. Each of the Acquiror and the Company
agrees that it will consult with the other party hereto with respect to the
obtaining of all material permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other party apprised of the status of material matters relating to completion of
the transactions contemplated hereby.
(b) Each of the Acquiror and the Company agrees, upon request, to
furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Governmental Authority.
6.09 Certain Employee Benefits. (a) As soon as reasonably practicable
after the Effective Time, the Acquiror shall cause accruals under the
tax-qualified retirement plans and nonqualified retirement plans maintained by
the Company and its Subsidiaries to cease. At the time such accruals cease, all
affected participants' benefits under the tax-qualified retirement plans shall
become fully vested, a partial year employer contribution shall be made under
the Company ESOP for such partial year on a basis consistent with recent past
practice for full years, and an employer matching contribution shall be made to
the Company's 401(k) Plan for such partial year on the same basis (and the
Company may amend the Company ESOP to the extent necessary to enable such
contribution). As promptly as reasonably practicable after the Effective Time,
the Acquiror will cause the Company ESOP and the Company's 401(k) plan to be
merged with the Acquiror's 401(k) plan; but prior to such merger, all
participants (and beneficiaries of deceased participants) under the Company ESOP
shall be provided an opportunity to receive immediate lump sum distributions of
their entire balances which they may keep or rollover/transfer to personal IRAs
or a tax-qualified defined contribution retirement plan of the Acquiror (and the
Company may amend the Company ESOP to the extent necessary to enable such
distribution). Coincident with the aforesaid cessation of accruals, the Acquiror
shall cause employees covered by those discontinued plans to become covered by
the tax-qualified retirement plans and the nonqualified defined benefit excess
plan maintained by the Acquiror for the benefit of its employees. The Acquiror
shall cause each such plan to recognize service with the Company and its
Subsidiaries before the Effective Time for purposes of determining eligibility
to participate in the plans and vesting in accrued benefits under the plans as
if service with the Company and its Subsidiaries before the Effective Time were
service with the Acquiror. The
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Acquiror shall not be obligated to recognize such service for the purpose of
determining the accrual of benefits under such plans. The Acquiror shall
establish qualified plans, nonqualified plans or cash compensation arrangements
(or a combination thereof) to provide to certain selected employees a benefit
approximately equal to the amount, if any, of (1) the estimated amount of
employer-provided benefits that these certain selected employees will receive
under the Acquiror's replacement plans, minus (2) the estimated amount of
employer-provided benefits that these certain selected employees might have
received under the discontinued plans of the Company and its Subsidiaries if
those plans had continued in effect.
(b) From time to time after the Effective Time, the Acquiror shall
discontinue all welfare benefit plans maintained by the Company and its
Subsidiaries for the benefit of employees of the Company and its Subsidiaries
and replace them with welfare benefit plans of the Acquiror (excluding, however,
any change in control severance pay plans). The Acquiror shall cause any such
plan of the Acquiror to recognize service with the Company or its Subsidiaries
before the Effective Time for purposes of determining eligibility to participate
in the plans and vesting in benefits under the plans as if service with the
Company or its Subsidiaries before the Effective Time were service with the
Acquiror. The Acquiror shall recognize such service for the purpose of
determining vacation entitlements and for the purpose of determining the amount
of severance pay. Such service shall be recognized for determining entitlement
to retiree medical benefits but shall not be recognized for determining an
employee's cost for retiree medical benefits.
(c) The Acquiror will, and will cause the Surviving Corporation to
honor, in accordance with their terms and accrued as of the Effective Time, all
employee (or former employee) benefit obligations accrued as of the Effective
Time and, to the extent Previously Disclosed, all employee severance obligations
under plans and policies in existence on the date of this Agreement.
6.10 Notification of Certain Matters. (a) Each of the Company and the
Acquiror shall give prompt notice to the other of any fact, event or
circumstance known to it that is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in a material breach of any of its representations, warranties, covenants or
agreements contained herein.
(b) The Company shall promptly notify the Acquiror, and the Acquiror
shall promptly notify the Company, of:
(1) Any notice or other communication from any person alleging
that the consent of such person is or may be required as a condition to
the Merger;
(2) Any notice or other written communications from any Client
(A) terminating or threatening to terminate any material Contract with
the Company relating to the rendering of services to such Client or (B)
relating to any material dispute with such Client; or
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(3) Any notice or other communication from any Governmental
Authority or Self-Regulatory Organization in connection with the
transactions contemplated by this Agreement.
6.11 Indemnification; Directors' and Officers' Insurance. (a) From
and after the Effective Time, the Acquiror agrees that it will indemnify and
hold harmless each present and former director and officer of the Company or any
of its Subsidiaries, determined as of the Effective Time (the "Indemnified
Parties"), against any and all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time or arising out of any conduct of Acquiror or any of its
Affiliates that imposes, results in or gives rise to an "unfair burden" on any
Registered Funds for purposes of Section 15(f) of the Investment Company Act,
whether asserted or claimed prior to, at or after the Effective Time (including
with respect to the transactions contemplated by this Agreement), to the fullest
extent that the Company or such Subsidiary would have been permitted under the
law of its jurisdiction of incorporation and its Constitutive Documents in
effect on the date hereof to indemnify such person (and the Acquiror shall also
advance expenses as incurred to the fullest extent permitted under applicable
law provided the person to whom expenses are advanced provides and undertaking
to repay such advances if it is ultimately determined that such person is not
entitled to indemnification); provided that any determination required to be
made with respect to whether an officer's or director's conduct complies with
the standards set forth under Delaware law and the Company's Constitutive
Documents shall be made by independent counsel selected by the Surviving
Corporation and reasonably acceptable to such officer or director.
(b) Any Indemnified Party wishing to claim indemnification under
Section 6.11(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Acquiror thereof, but the failure to so
notify shall not relieve the Acquiror of any liability it may have to such
Indemnified Party if such failure does not materially prejudice the indemnifying
party. In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (1) the Acquiror or the
Surviving Corporation shall have the right to assume the defense thereof and the
Acquiror shall not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if the Acquiror or
the Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Acquiror or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Acquiror or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that the Acquiror shall be obligated
pursuant to this Section 6.11 to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction (2) the Indemnified Parties will
cooperate in the defense of any such matter and (3) the Acquiror shall not be
liable for any settlement effected without its prior written consent; and
provided further that the Acquiror shall not have any obligation
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hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law.
(c) For a period of three years from the Effective Time, the Acquiror
shall use its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of the Company or any of the Company's Subsidiaries
(determined as of the Effective Time) (as opposed to the Company) with respect
to claims against such directors and officers arising from facts or events which
occurred before the Effective Time, which insurance shall contain at least the
same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by the Company; provided;
however, that in no event shall the Acquiror be required to expend more than 200
percent of the current amount expended by the Acquiror (such product, the
"Insurance Amount") to maintain or procure such directors and officers insurance
coverage; provided, further, that if the Acquiror is unable to maintain or
obtain the insurance called for by this Section 6.11, the Acquiror shall use its
reasonable best efforts to obtain as much comparable insurance as is available
for the Insurance Amount; provided, further, that officers and directors of the
Company or any Company Subsidiary may be required to make application and
provide customary representations and warranties to the Acquiror's insurance
carrier for the purpose of obtaining such insurance; and provided, further, that
such coverage will have a single aggregate for such three-year period in an
amount not less than the annual aggregate of such coverage currently provided by
the Company.
(d) If the Acquiror or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity, then and in each case, proper provision shall be made so
that successors and assigns of Acquiror shall assume the obligations set forth
in this Section 6.11.
(e) The provisions of this Section 6.11 are intended to be for the
benefit of, and enforceable in accordance with their terms by, Indemnified
Parties.
6.12 Section 15 of the Investment Company Act. (a) The Company will
use its reasonable best efforts to obtain as promptly as practicable, (i) the
approval of the stockholders of each of the Registered Funds, pursuant to the
provisions of Section 15 of the Investment Company Act applicable thereto, of a
new investment company advisory agreement for such Registered Funds no less
favorable to the Company or its Subsidiaries to that in effect immediately prior
to the Closing, and (ii) a consent to assignment from each private accountholder
to whom it is providing investment advisory services.
(b) Acquiror shall use its reasonable best efforts to assure, prior
to the Closing Date, the satisfaction of the conditions set forth in Section
15(f) of the Investment Company Act with respect to each Registered Fund.
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(c) Acquiror agrees to use its reasonable best efforts to assure
compliance with the conditions of Section 15(f) of the Investment Company Act
with respect to the Registered Funds.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of the Acquiror, the Merger Subsidiary and the
Company to consummate the Merger is subject to the fulfillment or written waiver
by the Acquiror and the Company prior to the Closing of each of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been duly
adopted by the requisite vote of the holders of outstanding shares of
Company Common Stock entitled to vote thereon.
(b) Governmental and Regulatory Consents. All approvals and
authorizations of, filings and registrations with, and notifications
to, all Governmental Authorities required for the consummation of the
Merger and for the prevention of any termination of any material right,
privilege, license or agreement of either the Acquiror, its
Subsidiaries or the Company and its Subsidiaries shall have been
obtained or made and shall be in full force and effect and all waiting
periods required by law shall have expired; provided, however, that
none of the preceding shall be deemed obtained or made if it shall be
subject to any condition or restriction the effect of which would have
been such that the Acquiror would not reasonably have entered into this
Agreement had such condition or restriction been known as of the date
hereof.
(c) Third Party Consents. All consents or approvals of all
persons, other than Governmental Authorities, required for or in
connection with the execution, delivery and performance of this
Agreement and the consummation of the Merger shall have been obtained
and shall be in full force and effect, unless the failure to obtain any
such consent or approval is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on the Surviving
Corporation.
(d) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the transactions contemplated by
this Agreement.
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7.02 Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Acquiror set forth in this Agreement shall be true
and correct as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date (except that
representations and warranties that by their terms speak as of the date
of this Agreement or some other date shall be true and correct only as
of such date); provided, however, that for purposes of determining the
satisfaction of the condition contained in this Section 7.02(a), such
representations and warranties shall be deemed to be true and correct
as of the Closing Date unless the failure or failures of such
representations and warranties to be so true and correct (excluding the
effect of any qualification set forth in Section 5.02 or in Section
5.03 relating to "Material" or "Material Adverse Effect") are
reasonably likely to constitute or give rise to, individually or in the
aggregate, a Material Adverse Effect on the Acquiror and the Company
shall have received a certificate, dated the Closing Date, signed on
behalf of the Acquiror by a senior executive officer to such effect.
(b) Performance of Obligations of the Acquiror. The Acquiror
and the Merger Subsidiary shall have performed in all material respects
all obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and the Company shall have received a
certificate, dated the Closing Date, signed on behalf of the Acquiror
by a senior executive officer to such effect.
7.03 Conditions to Obligation of the Acquiror. The obligation of each
of the Acquiror and the Merger Subsidiary to consummate the Merger is also
subject to the fulfillment or written waiver by the Acquiror prior to the
Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except that representations
and warranties that by their terms speak as of the date of this
Agreement or some other date shall be true and correct only as of such
date); provided, however, that for purposes of determining the
satisfaction of the condition contained in this Section 7.03(a), such
representations and warranties shall be deemed to be true and correct
as of the Closing Date unless the failure or failures of such
representations and warranties to be so true and correct (excluding the
effect of any qualification set forth in Section 5.02 or in Section
5.03 relating to "Material" or "Material Adverse Effect") are
reasonably likely to constitute or give rise to, individually or in the
aggregate, a Material Adverse Effect on the Company, and the Acquiror
shall have received a certificate, dated the Closing Date, signed on
behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
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(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and the Acquiror shall have received a certificate, dated the Closing
Date, signed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company to such effect.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Merger
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by
the mutual consent of the Acquiror and the Company.
(b) Breach. At any time prior to the Effective Time, by the
Acquiror or the Company in the event of either: (1) a breach by the
other party of any representation or warranty contained herein, which
breach cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach; or (2) a
breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of
such breach and which breach would be reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the breaching
party or the Surviving Corporation.
(c) Delay. At any time prior to the Effective Time, by the
Acquiror or the Company in the event that the Effective Time has failed
to occur on or before August 31, 1998, except to the extent that such
failure arises out of or results from the knowing action or inaction of
the party seeking to terminate pursuant to this Section 8.01(c).
(d) No Approval. By the Company or the Acquiror, if (1) the
approval of any Governmental Authority required for consummation of the
Merger and the other transactions contemplated by this Agreement shall
have been denied by final nonappealable action of such Governmental
Authority, or such Governmental Authority shall have requested the
permanent withdrawal of any application therefor, or any such approval
shall be made subject to any condition or restriction described in the
proviso to Section 7.01(b) or (2) the approval of the Company's
stockholders required by Section 7.01(a) is not obtained at the
Meeting.
(e) Failure to Recommend, Etc. By the Acquiror, if at any time
prior to the Meeting, the Company's Board of Directors shall have
failed to make its recommendation
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referred to in Section 6.02, withdrawn such recommendation or modified
or changed such recommendation in a manner adverse to the interests of
the Acquiror.
(f) Alternative Transaction. By the Company, if the Company
shall immediately thereafter enter into a definitive agreement with a
third party providing for an Acquisition Transaction on terms
determined, in good faith, by the Board of Directors of the Company,
after consultation with and considering the advice of outside counsel
and financial advisers to such Board, to be such that termination of
this Agreement and entry into such third-party agreement is required in
order to discharge properly the directors' fiduciary duties in
accordance with the GCL.
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (a) as set forth in Sections 8.03
and 9.01 and (b) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement.
8.03 Termination Fee. (a) The Company agrees to pay to the Acquiror a
cash fee (the "Fee") of $19,500,000:
(1) If this Agreement (A) is terminated by the Acquiror pursuant
to Section 8.01(e) or by the Company pursuant to Section 8.01(f) and
(B) prior thereto or within eighteen months after such termination,
either
(x) the Company shall have entered into an agreement to engage
in an Acquisition Transaction or an Acquisition Transaction
shall have occurred, or
(y) the Board of Directors of the Company shall have authorized
or approved an Acquisition Transaction or shall have
publicly announced an intention to authorize or approve an
Acquisition Transaction or shall have recommended that the
stockholders of the Company approve or accept an Acquisition
Transaction (each of the events set forth in Clause (x) or
(y), a "Fee Trigger Event").
(2) if this Agreement (A) is terminated by the Acquiror pursuant
to Section 8.01(b) (other than a termination solely because of a breach
constituting a Material Adverse Effect on the Company as a consequence
of (i) the effects of changes in securities markets or (ii) the effect
on the Company of the announcement of this Agreement and the
transactions contemplated hereby or (iii) the effects of changes in the
financial services markets in general) and (B) prior thereto or within
twelve months after such termination, there shall occur a Fee Trigger
Event, provided that the subject Acquisition Transaction shall
represent consideration having an aggregate value (reasonably
determined), directly or indirectly, to
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the Company or its stockholders in excess of the $37.25 per share
(after adjustment for changes in the capitalization of the Company
after the date hereof).
(b) The Company shall notify the Acquiror promptly in writing of its
knowledge of the occurrence of a Fee Trigger Event; provided, however, that the
giving of such notice shall not be a condition to the right of the Acquiror to
the Fee.
(c) The Fee shall be payable, without setoff, by wire transfer in
immediately available funds, to an account specified by the Acquiror, not later
than three business days following the first occurrence of a Fee Trigger Event.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time or
termination of this Agreement; provided, however, that (a) the agreements of the
parties contained in Sections 3.03, 3.04 and 3.05 and 6.11, and in Article VIII
and this Article IX shall survive the Effective Time and (b) if this Agreement
is terminated prior to the Effective Time, the agreements of the parties
contained in Sections 6.05(b), 8.02 and 8.03 and in this Article IX shall
survive such termination.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (a) waived by the party benefitted by the provision, or
(b) amended or modified at any time, by an agreement in writing between the
parties hereto approved or authorized by their respective Boards of Directors
and executed in the same manner as this Agreement, except that, after approval
of the Merger by the shareholders of the Company, no amendment may be made which
under applicable law requires further approval of such shareholders without
obtaining such required further approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Minnesota applicable to
contracts made and to be performed entirely within such State.
9.05 Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given (a) on the date of
delivery, if personally delivered or
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telecopied (with confirmation), (b) on the first business day following the date
of dispatch, if delivered by a recognized next-day courier service, or (c) on
the third business day following the date of mailing, if mailed by registered or
certified mail (return receipt requested), in each case to such party at its
address or telecopy number set forth below or such other address or numbers as
such party may specify by notice to the parties hereto.
If to the Company, to:
Piper Jaffray Companies Inc
222 South Ninth Street
Minneapolis, Minnesota 55402
Attention: Addison Piper
Chairman and Chief Executive Officer
Facsimile: (612) 342-6085
With copies to:
James C. Melville, Esq.
Kaplan, Strangis and Kaplan
15500 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Facsimile: (612) 375-1143
and
Steven C. Kennedy, Esq.
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Facsimile: (612) 336-3026
If to the Acquiror, to:
U.S. Bancorp
601 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Lee R. Mitau, Esq.
Facsimile: (612) 973-4333
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With a copy to:
H. Rodgin Cohen, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
9.07 Entire Understanding; No Third-Party Beneficiaries. This
Agreement represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and this Agreement supersedes
any and all other oral or written agreements heretofore made. Except for Section
6.11, insofar as such Section expressly provides certain rights to the
Indemnified Parties named therein, nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
PIPER JAFFRAY COMPANIES INC.
By: /s/ Addison Piper
Name: Addison Piper
Title: Chairman, President, CEO
U.S. BANCORP
By: /s/ Richard A. Zona
Name: Richard A. Zona
Title: Vice Chairman
CUB ACQUISITION CORPORATION
By: /s/ Susan E. Lester
Name: Susan E. Lester
Title: President
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U.S. BANCORP PIPER JAFFRAY
Contacts:
Judy Murphy Wendy Raway Marie Uhrich Maria Verven
Investor Relations Media Relations Corp. Communications Corp. Communications
U.S. Bancorp U.S. Bancorp Piper Jaffray Piper Jaffray
(612) 973-2264 (612) 973-2429 (612) 342-6583 (612) 342-6584
U.S. BANCORP TO ACQUIRE PIPER JAFFRAY COMPANIES INC.
Creates 11th Largest Retail Brokerage in the Nation;
Combined Organization Will Manage $68 Billion in Assets;
Provides Securities Underwriting, Trading, Research and
Merger and Acquisition Capability
MINNEAPOLIS (December 15, 1997) U.S. Bancorp (NYSE: USB) and Piper Jaffray
Companies Inc. (NYSE: PJC) today announced an agreement in which U.S. Bancorp
will acquire Minneapolis-based Piper Jaffray Companies Inc., a full-service
investment banking and securities brokerage company, in a cash transaction
valued at $730 million or $37.25 per Piper Jaffray common share. The acquisition
will allow U.S. Bancorp to offer investment banking and institutional and retail
brokerage services through a new subsidiary which will be known as U.S. Bancorp
Piper Jaffray Inc. Addison L. Piper, who is currently chairman and chief
executive officer of Piper Jaffray Companies Inc., will continue to serve in
that capacity at U.S. Bancorp Piper Jaffray, and will report to John F.
Grundhofer, U.S. Bancorp president and chief executive officer.
"This acquisition is about serving our clients," Grundhofer explained.
"There is no better fit than Piper Jaffray and U.S. Bancorp. Our combined
strengths and presence
More . . .
<PAGE>
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in the same regional markets means that we can provide our business, retail and
private banking clients with a complete range of financial solutions and
advisory services to satisfy their financial needs. This combination is a
perfect complement to our regionally based, nationally competitive strategy."
Piper said, "U.S. Bancorp is an ideal partner. Together we will create
the full range financial services company our customers need and want. Piper
Jaffray adds retail brokerage, investment banking and merger and acquisition
capabilities to U.S. Bancorp's commercial banking, private banking, trust and
asset management expertise. U.S. Bancorp will provide the platform for growth
that will set us apart from other firms and allow us to maintain our
entrepreneurial culture," Piper concluded.
The companies said that both Piper Jaffray and U.S. Bancorp bring their
own distinct, but complementary strengths, to the combined company. Piper
Jaffray's capabilities in equity and debt underwriting, trading, sales and
research, as well as its corporate finance advisory and merger and acquisition
services, will allow U.S. Bancorp to further strengthen its relationships with
its more than 40,000 middle market commercial clients. Piper Jaffray customers
will have access to the commercial banking products and services offered by U.S.
Bancorp. Both companies will benefit from their combined asset management
experience and U.S. Bancorp's expertise in providing private banking and
personal trust services.
More . . .
<PAGE>
-3-
U.S. Bancorp is already the largest provider of private financial
services in its service territory. The addition of Piper Jaffray will solidify
that position with a network of 89 full service brokerage offices and nearly
1,500 brokers (when combined with U.S. Bancorp's), creating the 11th largest
brokerage in the United States. U.S. Bancorp will continue to invest in the
technology required to provide enhanced products and services and operational
efficiencies.
"Both Piper Jaffray and U.S. Bancorp share a strong tradition of
contributing financial, volunteer and other support to the communities we serve
and we are committed to keeping those traditions," Grundhofer said.
The companies said that the ongoing growth of U.S. Bancorp and Piper
Jaffray as well as redeployment efforts and natural attrition would mean minimal
job loss which would be concentrated mainly in administrative functions.
The acquisition, which is subject to approval by Piper Jaffray
shareholders and regulators, is expected to close in the second quarter of 1998.
Minneapolis-based U.S. Bancorp is the result of a merger between First
Bank System, Inc. of Minneapolis and U.S. Bancorp, formerly headquartered in
Portland, Oregon. With $70 billion in assets, U.S. Bancorp is the 15th largest
bank holding company in the nation operating approximately 1,000 banking offices
in 17 states: Minnesota, Oregon, Washington, Colorado, California, Idaho,
Nebraska, North Dakota, Nevada, South Dakota, Montana, Iowa, Illinois, Utah,
Wisconsin, Kansas and Wyoming. The company provides comprehensive banking,
trust, investment and payment systems products and services to consumers,
businesses and institutions. It operates a network of 4,500 ATMs throughout the
U.S. and 24 hour, seven days a week telephone customer
More . . .
<PAGE>
-4-
service centers. The company is the largest provider of Visa corporate and
purchasing cards in the world and one of the largest providers of corporate
trust services in the U.S.
Piper Jaffray Companies Inc. was founded in 1895 and has built a
reputation as one of the nation's premier full-service investment companies.
Piper Jaffray Companies is the parent company of Piper Jaffray Inc., an
investment firm with 89 retail sales offices in 19 Midwest, Mountain, Southwest
and Pacific Coast states and capital markets offices in 18 cities. Other
subsidiaries include Piper Capital Management Incorporated, a money management
company with $12.8 billion under management, Piper Trust Company, a provider of
trust services to individuals and institutions; and Piper Jaffray Ventures, a
private equity venture capital firm investing in emerging growth companies.
Piper Jaffray Inc. is a member of SIPC, the New York Stock Exchange and other
major stock exchanges.
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More . . .
<PAGE>
PRO FORMA RECAP
U.S. BANCORP PIPER JAFFRAY
------------ -------------
Assets under management $55.3 billion $12.8 billion
Number of proprietary 32 32
mutual funds
Number of brokers 250 1,235
States 17 19*
Number of retail sales offices 1,000 89
Number of employees 27,566 3,328
Fiscal 1997 785 for $14 billion
Managed/co-managed offerings
Fiscal 1997 mergers and 28 worth $2.6 billion
acquisitions
Fiscal 1997 Nasdaq shares 1.9 billion
traded
Fiscal 1997 equity offerings 38 raising $2.9 billion
Institutional equity sales 38
executives
Research analysts 50
*16 are within U.S. Bancorp markets
US bancorp PIPER JAFFRAY
COMPANIES
U.S. BANCORP ACQUIRES
PIPER JAFFRAY COMPANIES INC.
DECEMBER 15, 1997
<PAGE>
STRATEGIC OVERVIEW
- --------------------------------------------------------------------------------
o Focuses on our clients' needs
-- Equity and debt underwriting
-- Equity research, sales & trading
-- M&A advisory services
-- Expanded private financial services
-- Expanded retail brokerage network
o Regionally based -- nationally competitive
o Provides business line synergies
o Builds shareholder value - IRR > 16%
-2-
<PAGE>
TRANSACTION SUMMARY
- --------------------------------------------------------------------------------
Subsidiary Name: U.S. Bancorp Piper Jaffray
Addison L. Piper, Chairman & CEO
Purchase Price: $730 million
Payment Method: Cash
Per Share: $37.25
Accounting Treatment: Purchase accounting
Due Diligence: Completed
Anticipated Closing: 2Q98
Employee Retention: Retention bonuses to key employees
-3-
<PAGE>
PRICING
- -------------------------------------------------------------------------------
RECENT REGIONAL PUBLICLY
ACQUISITION SECURITIES FIRM TRADED
MULTIPLE ACQUISITIONS(C) PEERS(D)
- ------------------------- ----------------- ------------------ --------------
Last 12 months revenues 1.2x 1.3x 1.6x
Last 12 months net income 13.5x(a) 14.4x 18.1x
Estimated 1998 net income 11.2x(b) 16.0x
Book Value 4.2x 4.3x 3.1x
- ------------------------- ----------------- ------------------ --------------
(a) Represents latest 12 months net income adjusted to a normalized operating
margin (15%).
(b) Represents purchase price divided by 1998 estimated net income plus fully
phased in cost savings.
(c) Alex Brown, Dillon Read, Robertson Stephens, Montgomery Securities,
Oppenheimer & Co., Wheat First, Furman Selz. Source: Company presentations
(d) Raymond James, EVEREN, Interra, Morgan Keegan and McDonald & Co. Source:
Company 10Qs. Stock prices as of 12/12/97.
- --------------------------------------------------------------------------------
-4-
<PAGE>
EXCELLENT GEOGRAPHIC FIT
- --------------------------------------------------------------------------------
o 1,000 U.S. Bank offices combined with 89 Piper Jaffray retail offices in 19
states.
o Will comprise the 11th largest retail brokerage network in the U.S.
MAJOR CITIES:
Minneapolis/St. Paul
Denver
Seattle
Portland
Milwaukee [Map of U.S.]
Kansas City
San Francisco
Des Moines
Phoenix
-5-
<PAGE>
COMPLEMENTARY BUSINESS STRENGTHS
- --------------------------------------------------------------------------------
VALUE ADDED BY PIPER JAFFRAY VALUE ADDED BY U.S. BANCORP
---------------------------- ---------------------------
o Corporate finance capabilities o Extensive regional corporate
relationships
-- Underwriting - debt & equity -- 40,500 middle market customers
-- Research -- Middle market strength
-- M&A advisory -- Commercial banking products &
services
o Over $12 billion of assets under o Over $55 billion of assets
management under management
o Private client services/products o 52,000 private banking and personal
o Trading expertise trust relationships
o Retail and corporate customers o Significantly greater distribution
-- $42.8 billion of clients funds channels
-- 122,000 households -- Retail banking products &
services
-- 4.0 million households
o Technology investment
- --------------------------------------------------------------------------------
Leading diversified financial services provider to
corporations, municipalities and individuals in our
geographic territory.
- --------------------------------------------------------------------------------
-6-
<PAGE>
CAPITAL MARKETS CAPABILITIES
<TABLE>
<CAPTION>
INVESTMENT BANKING
- --------------------------------------------------------------------------------------------
FIXED INCOME MERGERS & ACQUISITIONS EQUITY
------------ ---------------------- ------
<S> <C> <C>
- -- Managed/co-managed 785 -- 28 transactions worth -- Managed/co-managed 38
offerings raising $14 $2.6 billion in 1997 public offerings raising
billion in fiscal 1997 -- Focused industry $2.9 billion in fiscal 1997
- -- Among top ten tax-exempt expertise -- Raised over $265 million in
underwriters private equity in recent years
</TABLE>
INSTITUTIONAL SALES & TRADING RESEARCH
- ------------------------------------------- --------------------------------
- -- One of the largest non-New York based -- Industry focused
sales and Nasdaq trading firms -- Institutionally driven
- -- 1.9 billion Nasdaq shares traded in fiscal product
1997 -- 50 research analysts
- -- 38 institutional equity sales executives
-7-
<PAGE>
RETAIL BROKERAGE AND
PRIVATE BANKING CAPABILITIES
- --------------------------------------------------------------------------------
o 1,235 investment executives in 89 offices
o $6.2 billion in individual assets under management
o 400,000 total retail accounts
o $42.8 billion of client funds in brokerage accounts
- --------------------------------------------------------------------------------
-8-
<PAGE>
[Bar graph titled TOTAL ASSETS UNDER MANAGEMENT showing the following
information]
Year Total Assets
($ billions)
1990 12.9
1991 15.0
1992 17.3
1993 21.7
1994 24.6
1995 29.2
1996 39.3
3Q97 55.3
Pro Forma 68.1
-9-
<PAGE>
SUMMARY
- --------------------------------------------------------------------------------
o Focuses on our clients' needs
- Equity and debt underwriting
- Equity research, sales & trading
- M&A advisory services
- Expanded private financial services
- Expanded retail brokerage network
o Regionally based -- nationally competitive
o Provides business line synergies
o Builds shareholder value - IRR > 16%
- --------------------------------------------------------------------------------
-10-
