SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported):
October 31, 1996
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FRANKLIN RESOURCES, INC.
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(Exact Name of Registrant)
Delaware 0-6952 13-2670991
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(State of Incorporation) (Commission File No.) (IRS Employer
Identification
Number)
777 Mariners Island Blvd.
San Mateo, California 94404
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(Address of Principal Executive Offices)
(415) 312-3000
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(Registrant's telephone number)
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ITEM 2. ACQUISITION OF ASSETS.
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On October 31, 1996, Franklin Resources, Inc. (the "Registrant") and its
subsidiary Franklin Mutual Advisers, Inc. (formerly known as Elmore Securities
Corporation), a Delaware corporation ("FMAI"), consummated the acquisition (the
"Closing") of certain assets and liabilities of Heine Securities Corporation
("Heine"), a Delaware corporation wholly-owned by Michael F. Price, and all of
the outstanding shares of capital stock of Orion Fund Management Limited
("Orion"), a Bermuda company owned by Mr. Price and an affiliated trust,
pursuant to an Agreement, dated as of June 25, 1996, as amended on August 28,
1996 and on October 31, 1996 (the "Agreement"). A copy of the Press Release
relating to the Closing is attached as Exhibit 99 hereto. Heine and Orion are
principally engaged in the business of rendering investment advice and related
services, and own certain assets and rights used in connection with the conduct
of their businesses. Heine's principal offices are located in Short Hills, New
Jersey and Orion's principal offices are located in Hamilton, Bermuda.
In accordance with the terms of the Agreement, at the Closing, FMAI
acquired certain assets, and assumed certain liabilities, of Heine, and
purchased all of the outstanding shares of capital stock of Orion, for a base
purchase price consisting of (a) $550 million in cash, of which $150 million was
deposited into escrow and invested in shares of the Franklin Mutual Series Fund
Inc. (formerly known as the Mutual Series Fund Inc.; "Mutual"), a series of
funds managed by Heine, which Mutual shares will be released to Heine over a
five year period with a minimum $100 million retention for the full five year
period, and (b) 1.1 million shares (the "Shares") of the Registrant's common
stock. In addition to the base purchase price, the Agreement also provides for a
contingent payment to Heine ranging from $96.25 million to $192.5 million under
certain conditions if certain agreed upon growth targets are met over the next
five years.
Pursuant to a separate agreement executed at the Closing (a copy of which
is attached as Exhibit 2.3), Heine and Mr. Price agreed that, for the two-year
period following the Closing, they will not (i) transfer the Shares except under
certain circumstances, and (ii) without the prior consent of the Registrant, own
more than 4.9% of the Registrant's outstanding common stock on a fully diluted
basis. Heine and Mr. Price also agreed to vote the Shares in accordance with the
recommendations of the Registrant's Board of Directors, and the Registrant
agreed to grant Heine and Mr. Price certain registration rights with respect to
the Shares.
Effective as of the Closing, FMAI assumed the employment agreements
between Heine and certain senior executives of Heine, including Mr. Price.
<PAGE>
The purchase price was determined by the parties to the Agreement based on
arm's length negotiations. The cash portion of purchase price paid at the
Closing was funded through a combination of the Registrant's available funds and
from the proceeds of the sale of the Registrant's commercial paper notes.
The foregoing descriptions of certain provisions of the Agreement are only
summaries thereof, and such statements are qualified in their entirety by
reference to all provisions of the Agreement. A copy of the Agreement was filed
as an Exhibit to the Registrant's Current Report on Form 8-K dated June 25,
1996, and copies of the amendments thereto are attached as Exhibits 2.1 and 2.2
hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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Financial Statements of Businesses Acquired; Pro Forma Financial
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Information.
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The information required in response to this Item is incorporated by
reference to the Registrant's Current Report on Form 8-K dated August 30,
1996.
Exhibits.
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Exhibit 2.1 Amendment No. 1 to the Agreement, dated as of August 28,
1996
Exhibit 2.2 Amendment No. 2 to the Agreement, dated as of October 31,
1996
Exhibit 2.3 Common Stock Agreement, dated as of October 31, 1996
Exhibit 99 Press Release
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 31, 1996 FRANKLIN RESOURCES, INC.
By: /s/ Leslie M. Kratter
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Name: Leslie M. Kratter
Title: Vice President
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EXHIBIT INDEX
Exhibits Description
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Exhibit 2.1 Amendment No. 1 to the Agreement, dated as of August 28,
1996
Exhibit 2.2 Amendment No. 2 to the Agreement, dated as of October 31,
1996
Exhibit 2.3 Common Stock Agreement, dated as of October 31, 1996
Exhibit 99 Press Release
NYFS08...:\60\46360\0018\1798\FRM0286P.300
AMENDMENT NO. 1 TO THE AGREEMENT TO MERGE
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THIS AMENDMENT NO. 1 to that certain Agreement to Merge the Businesses of
Heine Securities Corporation, a Delaware corporation ("Heine"), Franklin Mutual
Advisers, Inc. (f/k/a Elmore Securities Corporation), a Delaware corporation
("FMA"), and Franklin Resources, Inc., a Delaware corporation ("Franklin"),
dated as of June 25, 1996 (the "Agreement"), is made and entered into as of the
28th day of August, 1996, by and among Heine, FMA, Franklin and Michael F.
Price.
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to Section 2.5(b) of the Agreement, Franklin agreed to
deposit 1.1 million shares of Franklin's common stock (the "Shares") in escrow
with Weil, Gotshal & Manges LLP, as escrow agent (the "Escrow Agent"), to be
held and applied in accordance with that certain Escrow Agreement, dated as of
June 25, 1996, by and among Franklin, FMA and the Escrow Agent (the "Escrow
Agreement");
WHEREAS, the undersigned desire to amend the Agreement by deleting
therefrom Franklin's agreement to have the Shares held in escrow and to
substitute therefor FMA's agreement to deliver the Shares at the closing of the
transaction contemplated by the Agreement; and
WHEREAS, the undersigned desire to terminate the escrow created pursuant
to the Escrow Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the
undersigned hereby agree as follows:
1. Section 2.5 of the Agreement is hereby amended by deleting therefrom
the paragraph heading "(a)" appearing before the first paragraph thereof and by
deleting in its entirety paragraph (b) thereof.
2. Clause (c)(1) of Section 3.2 of the Agreement is hereby amended and
restated in its entirety as follows:
"a duly executed legended stock certificate
representing 1,100,000 shares of Buyer Parent's
Common Stock;".
3. The Escrow Agreement and the escrow created thereby is hereby
terminated and cancelled (except that the rights of the Escrow Agent contained
in the Escrow Agreement
<PAGE>
including, without limitation, the Escrow Agent's right to indemnification
thereunder, shall survive indefinitely, as provided in Section 20 thereof), and
the Escrow Agent is hereby instructed to deliver the Shares to Franklin.
4. Except as expressly amended hereby, the Agreement shall survive and
continue pursuant to its terms, in full force and effect.
5. This Amendment may not be amended or modified except pursuant to a
writing signed by each of the undersigned and the Escrow Agent. This Amendment
may be executed in multiple counterparts which, taken together, shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the undersigned have, as appropriate, executed this
Amendment or caused this Amendment to be executed by their respective duly
authorized representatives, as of the 28th day of August, 1996.
FRANKLIN RESOURCES, INC.
By: /s/ Leslie M. Kratter
------------------------
Name: Leslie M. Kratter
Title: Vice President
FRANKLIN MUTUAL ADVISERS, INC.
By: /s/ Leslie M. Kratter
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Name: Leslie M. Kratter
Title: Vice President
HEINE SECURITIES CORPORATION
By: /s/ Michael F. Price
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Name: Michael F. Price
Title: President
/s/ Michael F. Price
-----------------------------
Michael F. Price
2
NYFS08...:\60\46360\0018\1798\AGR8226N.24A
AMENDMENT NO. 2 TO THE AGREEMENT TO MERGE
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THIS AMENDMENT NO. 2 to that certain Agreement to Merge the Businesses of
Heine Securities Corporation, a Delaware corporation ("Heine"), Franklin Mutual
Advisers, Inc. (f/k/a Elmore Securities Corporation), a Delaware corporation
("FMAI"), and Franklin Resources, Inc., a Delaware corporation ("Buyer Parent"),
dated as of June 25, 1996, as amended by Amendment No. 1 thereto dated as of
August 28, 1996 (the "Agreement"), is made and entered into as of the 31st day
of October, 1996, by and among Heine, FMAI, Buyer Parent, T.G.H. Holdings Ltd.,
a Bahamian company and indirect wholly-owned subsidiary of Buyer Parent
("T.G.H." and, collectively with Buyer Parent and FMAI, the "Buyer Entities"),
Orion Fund Management Limited, a Bermuda company ("Orion"), and the stockholders
of Orion executing a signature page hereto (the "Orion Stockholders").
W I T N E S S E T H:
--------------------
WHEREAS, the Orion Stockholders own all of the issued and outstanding
shares of share capital in Orion (the "Shares"); and
WHEREAS, the Orion Stockholders desire to sell the Shares to T.G.H., and
T.G.H. desires to purchase such Shares contemporaneously with FMAI's purchase of
the other Purchased Assets as provided in the Agreement, and the parties desire
to set forth herein their agreements with respect to such sale and purchase.
NOW, THEREFORE, in consideration of the foregoing premises, the
undersigned hereby agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
are used herein as defined in the Agreement.
2. SALE AND PURCHASE OF THE SHARES.
(a) Sale and Purchase. Upon the terms and subject to the conditions
contained in the Agreement, as amended hereby, on the Closing Date the Orion
Stockholders shall sell, assign, transfer, convey and deliver to T.G.H., and
T.G.H. shall purchase from the Orion Stockholders, 100% of the Shares.
(b) Consideration. The parties agree that Fourteen Million Five
Hundred Thousand Dollars (U.S.$14,500,000) of the Purchase Price payable by the
Buyer
<PAGE>
Entities for the Purchased Assets pursuant to the Agreement shall be allocated
as consideration in full for the Shares, it being understood that T.G.H.'s
purchase of the Shares shall not in any way increase the aggregate consideration
otherwise payable by the Buyer Entities pursuant to Article II of the Agreement.
(c) Closing. Upon satisfaction or written waiver of the conditions
to the Closing set forth in Article VII of the Agreement, at the Closing the
Orion Stockholders shall deliver to T.G.H.:
(i) certificates representing 100% of the Shares, duly
endorsed for transfer, with all requisite stock powers and stock transfer
stamps attached;
(ii) a certificate signed on behalf of Orion by its Chief
Executive Officer and by MFP and each Orion Stockholder stating that (A)
the representations and warranties of Orion, the Orion Stockholders, Heine
and MFP set forth herein were true and correct as of the date hereof and,
except to the extent such representations and warranties speak as of an
earlier date, as of the Closing Date as though made on and as of the
Closing Date; and (B) Orion, the Orion Stockholders, Heine and MFP have
performed and complied in all material respects with all agreements,
covenants, obligations and conditions required to be performed or complied
with by them at or prior to the Closing Date as contemplated hereby;
(iii) an opinion of counsel in such form and addressing such
matters relating to Orion, the Shares and the Agreement (as amended
hereby) as shall be reasonably acceptable to Buyer Parent; and
(iv) such other documents and instruments relating to Orion or
the Shares as the Buyer Entities may reasonably request.
3. REPRESENTATIONS AND WARRANTIES. The Orion Stockholders, Orion, MFP and
Heine hereby jointly and severally represent and warrant to the Buyer Entities
that:
(a) Representations and Warranties Contained in the Agreement. Each
of the representations and warranties made by Heine and/or MFP in Article IV of
the Agreement are also true and correct in all respects with respect to Orion as
if "Orion" had been substituted for "Seller," "the Orion Stockholders" had been
substituted for "the Shareholder,"
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<PAGE>
and "the Shares, business, operations, liabilities, properties and assets of
Orion" had been substituted for "the Purchased Assets" and "the Assumed
Liabilities" (as appropriate) in such representations and warranties (and in the
definitions of defined terms used therein); provided, however, that for purposes
of this Section 3(a), none of such representations or warranties shall be
limited or qualified by reference to any Person's knowledge, materiality, having
a material adverse affect, or similar language set forth in the Agreement
limiting or qualifying such representations or warranties.
(b) Capitalization; No Subsidiaries. The authorized capital of Orion
consists of U.S.$12,000, divided into 12,000 shares of U.S.$1.00 each (the
"Stock"), all of which shares have equal voting rights, and Orion has no other
authorized class or series of equity securities. 12,000 shares of Stock are
issued and outstanding, all of which shares were duly authorized for issuance
and are validly issued, fully paid and non-assessable. There are no options,
warrants, calls, rights, commitments or other agreements of any character
requiring, and there are no securities which upon conversion or exchange would
require, the issuance, sale or transfer of any shares of capital stock or other
equity securities of Orion or other securities convertible into, exchangeable
for or evidencing the right to subscribe for or purchase shares of capital stock
or other equity securities of Orion. None of the Orion Stockholders is a party
to any voting trust or other voting agreement with respect to any of the Stock,
or to any agreement relating to the issuance, sale, redemption, transfer or
other disposition of the capital stock of Orion. Orion does not, directly or
indirectly, own any stock or other equity interest in any other Person.
(c) Ownership and Transfer of Shares. MFP is the record and
beneficial owner, and the 1992 Price Family Trust is the record holder in trust
for the minor children of MFP (who are the beneficial owners of such trust and
the Shares owned by it), of all of the Shares indicated as being respectively
owned by such Orion Stockholders on Exhibit A, free and clear of any and all
Encumbrances. Each Orion Stockholder has the legal capacity, power and authority
to sell, transfer, assign and deliver such Shares to T.G.H. as provided herein,
and such delivery will convey to T.G.H. good and marketable title to such
Shares, free and clear of any and all Encumbrances.
(d) No Undisclosed Liabilities. Orion has no indebtedness,
obligations or liabilities of any kind
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<PAGE>
(whether accrued, absolute, contingent or otherwise, and whether due or to
become due).
4. COVENANTS.
(a) Orion and the Orion Stockholders shall comply with and perform
all applicable covenants set forth in Article VI of the Agreement as if "Orion"
had been substituted for "Seller," "the Orion Stockholders" had been substituted
for "the Shareholder," and "the Shares, business, operations, liabilities,
properties and assets of Orion" had been substituted for "the Purchased Assets"
and "the Assumed Liabilities" (as appropriate) in such covenants (and in the
definitions of defined terms used therein).
In addition, prior to the Closing the Orion Stockholders, Heine
and MFP shall, and shall cause Orion to, (i) take such actions as are required
to obtain the consent and approval of all relevant Governmental Authorities
(including, without limitation, the Bermuda Monetary Authority) to the
transactions contemplated hereby; (ii) amend the prospectus of each fund managed
or advised by Orion to reflect the transactions contemplated hereby in
accordance with the requirements of relevant Governmental Authorities in the
United Kingdom, Bermuda and elsewhere, and shall give all requisite notice
thereof to such funds, their stockholders and such Governmental Authorities; and
(iii) keep Buyer Parent timely apprised of all such actions and shall deliver to
Buyer Parent copies of all correspondence with such funds, stockholders and
Governmental Authorities.
(b) Pending the Closing, Orion shall, and the Orion Stockholders
shall cause Orion to, conduct its business only in the ordinary course
consistent with past custom and practice. Without limiting the generality of the
foregoing, Orion shall not, and the Orion Stockholders shall cause Orion not to,
issue any additional shares of its capital stock or grant or issue options or
rights to subscribe for or acquire any such shares or securities convertible or
exchangeable therefor.
(c) The Orion Stockholders hereby agree not to sell, transfer,
pledge or otherwise encumber, grant options on, or otherwise dispose of any of
the Shares except as contemplated by Section 2 hereof, and any purported
transfer in contravention of this Section shall be null, void and of no effect.
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<PAGE>
5. INDEMNIFICATION. From and after the Closing, each Orion Stockholder,
MFP and Heine hereby agree, jointly and severally, to indemnify, defend and hold
harmless the Buyer Entities and their respective directors, officers, employees,
partners and other Affiliates (collectively, "Buyer Indemnified Parties") from
and against any and all Losses or Taxes which any of them may suffer, incur or
sustain arising out of, attributable to, or resulting from (a) any inaccuracy in
or breach of any of the representations or warranties of Orion or the Orion
Stockholders made pursuant to Section 3 above; (b) any breach or nonperformance
of any of the covenants or other agreements made by Orion or the Orion
Stockholders pursuant to Section 4 hereof; or (c) the business, operations or
properties of Orion up to and including the Closing Date. For purposes of clause
(a) hereof, all representations and warranties of Orion and the Orion
Stockholders shall survive the Closing through and until the sixth anniversary
of the Closing Date. All such indemnification shall be pursued in accordance
with the procedures set forth in Sections 8.4 and 8.9 (or, with respect to
claims for Taxes, Article IX) of the Agreement. The parties agree that the
provisions of Section 8.1, Section 8.5 and (subject to the last sentence of this
paragraph) Section 8.6 of the Agreement shall not apply to limit the
indemnification provided for in this Section 5 or set a minimum amount for
Losses before indemnification may be sought hereunder, except that the maximum
amount which MFP, the Orion Stockholders and Heine shall collectively be
obligated to indemnify the Buyer Indemnified Parties pursuant to this Section 5
shall not exceed $14,500,000 in the aggregate; it being understood and agreed
that (i) except as otherwise contemplated by Section 8.7 of the Agreement, any
indemnification payments paid pursuant to this Section 5 shall count toward the
total limit of indemnification payments payable to Buyer Indemnified Parties
pursuant to Section 8.7 of the Agreement, and (ii) the provisions of this
Section 5 shall only apply to Losses or Taxes suffered, incurred, arising out
of, attributable to, or resulting from Orion, its business, operations or
properties, the Shares or the transactions contemplated by this Amendment.
Notwithstanding the foregoing, this Section 5 shall not increase the liability
of Heine and MFP under Section 8.6 of the Agreement with respect to Losses or
Taxes relating to the provision of investment advisory services by Heine to
Orion prior to the Closing.
6. DESIGNATION OF REPRESENTATIVE. Orion and the Orion Stockholders hereby
designate MFP as their representative and true and lawful attorney-in-fact to
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<PAGE>
receive all notices relating to, and to execute and deliver all amendments to,
the Agreement on their behalf.
7. MISCELLANEOUS.
(a) Binding Effect; No Assignment. The Agreement, as amended hereby,
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing herein is intended or shall be
construed to confer upon any Person other than the parties hereto and their
respective successors and permitted assigns any right, remedy or claim under or
by reason of their Agreement or any part hereof. The Agreement may not be
assigned by any of the parties hereto without the prior written consent of each
of the other parties hereto; provided, however, that the Buyer Entities may
assign all of the right to acquire the Purchased Assets, the Assumed Liabilities
and/or the Shares to any of their directly or indirectly owned subsidiaries or
to any of their Affiliates at any time without the consent of any other party.
(b) Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument, it being understood that
all of the parties need not sign the same counterpart.
(c) Governing Law; Service; Jurisdiction. The Agreement, as amended
hereby, the legal relations between the parties and the adjudication and the
enforcement thereof, shall be governed by and interpreted and construed
exclusively in accordance with the substantive laws of the State of Delaware,
without regard to applicable choice of law provisions thereof. Each of the
parties hereto agrees to: (i) the irrevocable designation of the Secretary of
State of Delaware as its agent upon whom process against it may be served and
(ii) the exercise of personal jurisdiction over it by the Courts of the State of
Delaware or the United States District Court for the State of Delaware in any
action brought in respect of matters arising hereunder and within the subject
matter jurisdiction of such courts.
(d) Specific Performance. Each of the parties hereto acknowledges
that, in view of the uniqueness of the Shares and the transactions contemplated
hereby, each party would not have an adequate remedy at law for money damages if
the covenants and agreements to be performed hereunder have not been performed
in accordance with their terms, and therefore agree that the other parties shall
be entitled to specific enforcement of the terms hereof in addition to
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<PAGE>
indemnification hereunder and any other equitable remedy to which such parties
may be entitled.
(e) Agreement in Full Force As Amended. Except as expressly amended
hereby, the Agreement shall survive and continue pursuant to its terms, in full
force and effect.
[signature page follows]
7
<PAGE>
IN WITNESS WHEREOF, the undersigned have, as appropriate, executed this
Amendment or caused this Amendment to be executed by their respective duly
authorized representatives, as of the 31st day of October, 1996.
FRANKLIN RESOURCES, INC.
By: /s/ Leslie M. Kratter
-------------------------
Name: Leslie M. Kratter
Title: Vice President
FRANKLIN MUTUAL ADVISERS, INC.
By: /s/ Leslie M. Kratter
-------------------------
Name: Leslie M. Kratter
Title: Vice President
T.G.H. HOLDINGS LTD.
By: /s/ Gregory McGowan
-----------------------
Name: Gregory McGowan
Title: Executive Vice President
HEINE SECURITIES CORPORATION
By: /s/ Michael F. Price
------------------------
Name: Michael F. Price
Title: President
/s/ Michael F. Price
-----------------------------
Michael F. Price
ORION FUND MANAGEMENT LIMITED
By: /s/ Michael F. Price
-------------------------
Name: Michael F. Price
Title: Chief Executive Officer
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<PAGE>
ORION STOCKHOLDERS:
/s/ Michael F. Price
-----------------------------
Michael F. Price
1992 PRICE FAMILY TRUST
By: /s/ Martin Bernstein
------------------------
Martin Bernstein, Trustee
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COMMON STOCK AGREEMENT
----------------------
THIS COMMON STOCK AGREEMENT, dated as of October 31, 1996 (this
"Agreement"), is entered into by and among Heine Securities Corporation, a
Delaware corporation ("Seller"), Michael F. Price ("Shareholder"), Franklin
Mutual Advisers, Inc. (formerly Elmore Securities Corporation), a Delaware
corporation ("Buyer"), and Franklin Resources, Inc., a Delaware corporation (the
"Company").
RECITALS:
WHEREAS, pursuant to an Agreement to Merge the Businesses of Seller, Buyer
and the Company, dated as of June 25, 1996, as amended, by and among the parties
hereto (the "Agreement to Merge"), Seller, a corporation wholly-owned by
Shareholder, has agreed to sell and assign, and Buyer, a wholly-owned subsidiary
of the Company, has agreed to purchase and assume, certain of the assets, rights
and liabilities of Seller; and
WHEREAS, as part of the consideration for such assets and rights, Buyer
has agreed to issue and deliver to Seller, at the closing of the transactions
contemplated by the Agreement to Merge, a stock certificate representing
ownership of one million one hundred thousand (1,100,000) shares (the "Shares")
of the common stock, par value $.10 per share, of the Company (the "Common
Stock"); and
WHEREAS, as a further inducement for the Company and Buyer to enter into
the Agreement to Merge, Seller and Shareholder have agreed to enter into this
Agreement with respect to the Shares.
NOW THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be bound hereby, the parties hereby agree as follows:
1. Definitions. All capitalized terms not defined herein shall have their
respective meanings as set forth in the Agreement to Merge.
2. Agreement Not to Sell or Transfer.
2.1. Lock-Up. Except as otherwise permitted in this Agreement,
Seller and Shareholder hereby covenant and
<PAGE>
agree that, for a period of two (2) years following the Closing Date (the
"Lock-Up Period"), without the prior written consent of Buyer and the Company,
neither Seller nor Shareholder shall sell, assign, convey, transfer or otherwise
dispose of any of the Shares to any Person other than (a) to another Holder (as
defined in Section 6.1(a) below), provided that, prior to such transfer, such
transferee Holder agrees, in a writing reasonably acceptable to Buyer and the
Company, to be bound by and subject to the restrictions set forth in this
Agreement as if such transferee were an original party hereto, or (b) following
the occurrence of a "Disabling Event" under Section 4.2 of the Employment
Agreement (it being understood that the agreements set forth in Sections 3, 4, 5
and 6 hereof shall continue to apply with respect to any Holder of Shares
following any such disposition).
2.2. Legend. In addition to the legend required pursuant to Section
8.2 hereof, the certificates represent- ing the Shares shall have endorsed
thereon the following legend:
"PRIOR TO OCTOBER 31, 1998, THE SECURITIES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
WITHOUT THE PRIOR WRITTEN CONSENT OF FRANKLIN RESOURCES, INC. AND
FRANKLIN MUTUAL ADVISERS, INC., EXCEPT PURSUANT TO THE COMMON STOCK
AGREEMENT, DATED AS OF OCTOBER 31, 1996, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF FRANKLIN RESOURCES, INC."
3. Standstill Agreement. Until the expiration of the Lock-Up Period, the
Holders may not, without the prior written consent of the Company (which consent
shall not be unreasonably withheld), purchase or otherwise acquire by any means
any shares of Common Stock if, as a result of such purchase or acquisition, the
total number of shares of Common Stock held by all of the Holders (including the
Shares) would exceed, in the aggregate, 4.9% of the total issued and outstanding
capital stock of the Company on a fully diluted basis.
4. Agreement to Vote. Each of Seller and Shareholder hereby agrees
that, for so long as either of them benefi- cially own any of the Shares, they
shall affirmatively vote all shares of Common Stock beneficially owned by any of
them
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on any matter submitted to a vote of the stockholders of the Company in favor of
all proposals endorsed by, and otherwise in accordance with the written
recommendations of, the Board of Directors of the Company.
5. Right of First Offer. If, at any time after the termination of the
Lock-Up Period, a Holder (a "Selling Stockholder") desires to sell, assign,
convey, transfer or otherwise dispose of any or all of its or his Shares (the
securities to be so sold or transferred being referred to herein as the "Sale
Securities") to a third party purchaser or purchasers (other than a
not-for-profit organization that qualifies as a tax-exempt entity under Section
501(c) of the Code, as now in effect or as it may hereafter be amended), the
Selling Stockholder shall first offer to sell such Sale Securities to the
Company (the "Offer") pursuant to a written notice (the "Notice") delivered to
the Company setting forth the number of Sale Securities the Selling Stockholder
proposes to sell or otherwise transfer. The purchase price per share (the
"Purchase Price") payable by the Company for such Sale Securities shall be equal
to the closing price per share of Common Stock as reported on the New York Stock
Exchange Composite Transactions Tape on the date of the Company's receipt of the
Notice. Upon its receipt of the Notice, the Company shall have one (1) Business
Day (the "Offer Period") within which to accept the Offer to purchase all, but
not less than all, of the Sale Securities at the Purchase Price. If the Company
elects to accept the Offer, it shall notify the Selling Stockholder thereof in
writing prior to 11:59 p.m., New York City time, on the last day of the Offer
Period, and the Company and the Selling Stockholder shall close the sale of the
Sale Securities on the third Business Day following the Company's written
acceptance of the Offer, at which closing (a) the Company shall pay to the
Selling Stockholder (at such Selling Stockholder's option, by certified check or
by wire transfer of immediately available funds to an account designated by such
Selling Stockholder) an amount equal to the Purchase Price multiplied by the
number of Sale Securities and (b) the Selling Stockholder shall deliver to the
Company a certificate or certificates representing the Sale Securities, duly
endorsed for transfer with executed stock powers attached. If, however, (i) the
Company does not notify the Selling Stockholder within the Offer Period of its
election to purchase all of the Sale Securities pursuant to the Offer or (ii) if
the Company fails to consummate the closing of the sale of the Sale Securities
as aforesaid while the Selling Stockholder was prepared and willing to do so,
then the Selling Stockholder shall have
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the right to (A) make a request for registration of the Sale Securities pursuant
to Section 6.2 hereof or (B) otherwise transfer or sell all, but not less than
all, of the Sale Securities to any purchaser or purchasers, in open market
transactions or otherwise (subject to applicable restrictions under the
Securities Laws), at any price, whether in cash, securities or otherwise, and
upon such other terms and conditions as the Selling Stockholder may elect, free
from the restrictions of this Section 5, in a bona fide transaction or
transactions, in each case, within the thirty (30) day period immediately
following the expiration of the Offer Period. If, however, all of the Sale
Securities are not sold or transferred, or if a request for the registration of
the Sale Securities pursuant to Section 6.2 hereof is not made, pursuant to the
immediately preceding sentence prior to the expiration of the 30-day period
referred to therein, such Sale Securities shall once again be subject to the
rights of first offer set forth in this Section 5.
6. Registration Rights.
6.1. Definitions. The following definitions shall apply with respect
to this Section 6:
(a) "Holders" shall mean Seller and Shareholder (or any family
trust or other estate planning vehicle established by Shareholder) or his
executors or administrators, and the term "Holder" shall mean any such Person.
(b) "Public Offering" shall mean a bona fide public offering,
whether or not underwritten, of Common Stock or any securities convertible into
or exchangeable into Common Stock pursuant to an effective registration
statement under the Securities Act.
(c) "Registrable Securities" shall mean any Shares (and any
securities issued or issuable in respect of the Shares in connection with any
stock split, combination, recapitalization, reclassification or reorganization)
owned by a Holder, beneficially and of record, from and after the expiration of
the Lock-Up Period; provided, however, that any such Share (or other security)
shall cease to be a Registrable Security if and when (i) a Registration
Statement with respect to the disposition of such Share shall have become
effective under the Securities Act and such Share shall have been disposed of
pursuant to such effective registration statement, (ii) such Share shall have
been sold under circumstances in which all of the applicable
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conditions of Rule 144 (or any successor provision then in force) under the
Securities Act ("Rule 144") are satisfied, (iii) such Share has been otherwise
transferred and the Company has delivered a new certificate representing such
Share not bearing a restrictive legend to the effect of the legend set forth in
Section 8.2, or (iv) all such Shares then held by the Holders may be sold
without limitation as to time, manner and volume pursuant to Rule 144(k) under
the Securities Act (or any successor provision).
(d) "Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the prospectus included therein,
any amendment (including post-effective amendments) or supplement thereof, all
exhibits thereto, and all material incorporated by reference or deemed pursuant
to applicable Securities Laws to be incorporated by reference therein.
(e) "SEC" shall mean the United States Securities and
Exchange Commission.
(f) "NASD" shall mean the National Association of Securities
Dealers, Inc.
6.2. Demand Registration.
(a) Upon the written request of a Holder, requesting that the
Company effect the registration of Registrable Securities under the Securities
Act (which request shall specify the amount of Registrable Securities so
requested to be registered and the intended method of disposition thereof), the
Company shall use its commercially reasonable best efforts to effect promptly
the registration under the Securities Act of the Registrable Securities that the
Company has been so requested to register, for disposition in accordance with
the intended method of disposition stated in such request. The Company shall not
be obligated to effect any registration pursuant to this Section 6.2 (i) before
the expiration of the Lock-Up Period, (ii) if the aggregate value of the
Registrable Securities sought to be registered pursuant to such registration
(based on the then current market price for the Common Stock) is less than ten
million dollars ($10,000,000), or (iii) after the Company has previously
effected two (2) registrations pursuant to this Section 6.2.
(b) A registration requested pursuant to this Section 6.2
shall not be deemed to have been effected
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(i) unless it has been declared effective by the SEC and kept effective for the
minimum period set forth in Section 6.9(c)(ii), provided that a registration
that does not become effective after the Company has filed a Registration
Statement with respect thereto solely by reason of the refusal to proceed by any
Holder shall be deemed to have been effected by the Company unless the Holders
shall have elected to pay all registration expenses referred to in Section
6.9(b) hereof in connection with such registration, (ii) if, prior to the
expiration of the minimum effective period set forth in Section 6.9(c)(ii), such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason
other than a misrepresentation or an omission by a Holder, and (iii) if the
conditions to closing specified in the purchase agreement or underwriting
agreement, if any, entered into in connection with such registration are not
satisfied other than by reason of some wrongful act or omission, or act or
omission in bad faith, by a Holder.
(c) The Company may postpone, for up to ninety (90) days, the
filing or the effectiveness of a Registration Statement for a registration
requested pursuant to this Section 6.2 if the Board of Directors of the Company
reasonably believes the requested registration would have a material adverse
effect on, impose an undue burden on the Company's ability to proceed with, or
otherwise interfere in any material respect with, any pending proposal or plan
by the Company to engage in any public offering or private placement of equity
or debt securities, the negotiation of a credit facility or other financing, or
any material pending corporate development or transaction, including, without
limitation, a material acquisition of securities or assets, any tender offer,
merger, consolidation, reorganization or other similar transaction material to
the Company. In addition, if the Company shall have entered into a definitive
agreement or filed a registration, information or proxy statement with the SEC
with respect to any such material transaction, the Company shall be entitled to
defer the filing or effectiveness of a Registration Statement requested by a
Holder pursuant to this Section 6.2 for an additional forty-five (45) days.
6.3. Piggyback Registration. (a) If, at any time, the Company
proposes to file a registration statement in connection with a Public Offering
(other than (i) a registration statement on Form S-4 or S-8, or any similar form
which is a successor to such Forms, or (ii) a registra-
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<PAGE>
tion statement filed in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders), that may be used for
the registration of any of the Registrable Securities (a "Piggyback Registration
Statement"), then the Company shall give written notice of such proposed filing
at least thirty (30) days before the anticipated filing date of such Piggyback
Registration Statement to the Holders, offering the Holders the opportunity to
include in such Piggyback Registration Statement such amount of Registrable
Securities as they may request. Any Holder desiring to have Registrable
Securities registered pursuant to this Section 6.3 shall advise the Company in
writing within twenty (20) days after the date of its receipt of the Company's
notice (which request shall set forth the amount of Registrable Securities for
which registration is requested). Subject to Section 6.5, the Company shall
include in any such Piggyback Registration Statement all Registrable Securities
so requested to be included. No registration effected pursuant to a request or
requests referred to in this Section 6.3 shall be deemed to have been effected
pursuant to Section 6.2.
(b) The Company shall have the right to discontinue, without
liability to any Holder, any registration under this Section 6.3 at any time
prior to the effective date of such registration if the registration of other
securities giving rise to such registration under this Section 6.3 is
discontinued; but no such discontinuation shall preclude an immediate or
subsequent request for registration pursuant to Section 6.2.
6.4. Certain Limitations on Registration Rights.
(a) None of the registration rights of the Holders set forth
in this Section 6 may be transferred or assigned, in whole or in part, by the
Holders or any of them, to any Person other than a Holder, and any such
purported transfer shall be null and void.
(b) If any registration effected pursuant to this Section 6
shall be in connection with an underwritten offering, then the Company, in its
sole discretion, shall select (subject, in the case of registrations pursuant to
Section 6.2, to the approval of the Holders desiring to sell Registrable
Securities in such offering, which approval shall not be unreasonably withheld)
the underwriter or underwriters, including the managing or lead underwriter or
underwriters, who are to undertake such offering. In the case of a registration
under Section 6.2, if the Holders
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have determined to enter into an underwriting agreement in connection therewith,
or, in the case of a registration under Section 6.3, if the Board of Directors
of the Company or holders of securities initially requesting or demanding such
registration have determined to enter into an underwriting agreement in
connection therewith, all Registrable Securities and all other securities to be
included in any such registration shall be subject to such underwriting
agreement (providing it is customary and reasonable) and no Person may
participate in any such registration unless such Person agrees to sell such
Person's securities on the basis provided in the underwriting arrangements
approved by the Holders, the Board of Directors of the Company or such other
holders, as the case may be, and completes, executes and delivers all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other reasonable documents that must be executed under the terms of such
underwriting arrangements.
6.5. Allocation of Securities Included in Registration Statement.
(a) In the case of a registration pursuant to Section 6.2 that is underwritten,
if the managing underwriter of such offering shall advise the Company and the
Holders, in writing, that (i) the total amount of securities requested to be
included therein creates a substantial risk that the proceeds or price per unit
that will be derived from such registration will be reduced or (ii) the number
of securities to be registered exceeds the amount of securities that can be
reasonably sold in such offering, the Company shall include in such
registration: (A) first, all Registrable Securities requested by the Holders to
be included in such registration pursuant to Section 6.2 (unless such amount
exceeds the maximum amount which such underwriter advises can be sold, in which
case the Company shall include in such registration such maximum amount), and
(B) second, according to such priorities as the Company may agree with the
holders of other securities seeking to participate in any registration pursuant
to provisions of registration rights permitted by Section 6.7 hereof.
(b) In the case of any other underwritten registration
pursuant to which Holders are entitled to include Registrable Securities
pursuant to Section 6.3, if the managing underwriter of such offering shall
advise the Company and the Holders electing (pursuant to Section 6.3 hereof) to
include Registrable Securities in the Piggyback Registration Statement, in
writing, that (i) the inclusion in any registration of some or all of the
Registrable Securities sought to be registered by the Holders requesting
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<PAGE>
such registration and the other securities sought to be registered creates a
substantial risk that the proceeds or price per unit that will be derived from
such registration will be reduced or (ii) the number of securities to be
registered exceeds the amount of securities that can be reasonably sold in such
offering, then (A) securities being offered directly by the Company on a primary
basis and any securities being registered pursuant to any demand registration
rights shall first be included in such registration and (B) the number of
securities sought to be registered for the Holders and all other Persons
exercising piggy-back registration rights with respect to such registration
shall be reduced pro rata, based upon the percentage of securities requested to
be included in such registration by the Holders and such other Persons.
6.6. Limitations on Sale or Distribution of Securities. If a
registration under Section 6.2 or 6.3 hereof shall be in connection with an
underwritten public offering, each Holder agrees not to effect any public sale
or distribution, including any sale pursuant to Rule 144, Rule 144A or
Regulation S under the Securities Act, of any equity securities of the Company
or of any security convertible into or exchangeable or exercisable for any such
equity security (other than as part of such underwritten public offering) within
ten days before or 90 days after the effective date of such registration
statement (or within such longer period as may be required by the underwriters
of any such offering).
6.7. Registration Rights to Others. If the Company shall at any time
after the date hereof provide to any Person rights with respect to the
registration of any securities of the Company under the Securities Act, such
rights shall not be in conflict with the rights provided to the Holders in this
Section 6.
6.8. Rule 144. For so long as the Company is subject to the periodic
reporting requirements of Section 13 or 15(d) under the Exchange Act, the
Company will timely file all reports required to be filed by it under such
provisions of the Exchange Act (including the reports referred to in Rule
144(c)(1)) or, if the Company is not required to file such reports, will, upon
the request of any Holder, make publicly available such other information and
will take such further action as the Holders may reasonably request, all to the
extent required from time to time to enable the Holders to sell Shares without
registration under the Securities Act within the limitation of the exemption
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<PAGE>
provided by Rule 144 promulgated thereunder, as such Rule may be amended from
time to time, or any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder desiring to sell Shares, the Company will deliver
to such Holder a written statement as to whether it has complied with such
requirements.
6.9. General Provisions. The following provisions shall apply in
connection with any Registrable Securities proposed to be included by the
Holders in a Registration Statement under Section 6.2 or 6.3 hereof:
(a) Each Holder shall promptly provide the Company with such
information as the Company shall reasonably request in order to prepare the
Registration Statement and related prospectus, including (without limitation)
information regarding each such Holder's plan of distribution.
(b) All reasonable and necessary expenses in connection with
the preparation of such Registration Statement and related prospectus and,
except as set forth below, the sale of securities contemplated thereby,
including, without limitation, (i) any and all legal, accounting (including the
expenses of any audit and/or "comfort" letter) and filing fees (including
expenses associated with filings required to be made with the SEC and NASD
(including, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel, as may be required by the rules and regulations of
the NASD)), (ii) "blue sky" fees and expenses, (iii) word processing, printing
and duplicating expenses, (iv) transfer agent and listing fees and (v) all other
fees and expenses customarily paid by issuers of securities (but not including
fees and disbursements of counsel, accountants or financial experts retained by
any Holder, and not including underwriting discounts and commissions
attributable to the Registrable Securities registered in the registration) shall
be borne by the Company.
(c) In connection with the Company's registration obligations
pursuant to Section 6.2 and Section 6.3 hereof, the Company shall use its
commercially reasonable best efforts to permit the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and pursuant thereto, the Company shall as expeditiously as possible:
(i) prepare and file with the SEC, as soon as
practicable, but in no event later than
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ninety (90) days after any request by a Holder in the case of a
Registration pursuant to Section 6.2, a Registration Statement relating to
the applicable registration on any appropriate form under the Securities
Act, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements required
by the SEC to be filed therewith, cooperate and assist in any filings
required to be made with the NASD, and use its commercially reasonable
best efforts to cause such Registration Statement to become and remain
effective in accordance with paragraph (ii) below; provided that before
filing a Registration Statement or prospectus to be included therein or
any amendments or supplements thereto pursuant to a request under Section
6.2, the Company shall furnish to the Holders selling Registrable
Securities under such registration and the underwriters, if any, copies of
all such documents proposed to be filed, which documents shall be subject
to the reasonable review of such Holders and underwriters, and the Company
shall not file any such Registration Statement or prospectus or any
amendments or supplements thereto to which such Holders shall reasonably
object, in writing, on a timely basis;
(ii) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for six (6) months
(subject to Section 6.9(d) below), or such shorter period terminating when
(A) all Registrable Securities covered by such Registration Statement have
been sold or (B) all Registrable Securities then covered but unsold under
such Registration Statement may be sold, in a single transaction or
contemporaneous transactions, under Rule 144, whichever shall occur first;
cause the prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by
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the sellers thereof set forth in such Registration Statement, prospectus
or supplement;
(iii) notify the selling Holders of Registrable
Securities and the managing underwriters, if any, promptly, (and, if
requested by any such Person, confirm such advice in writing), (A) when
the Registration Statement, prospectus or any amendment, post-effective
amendment, or prospectus supplement has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when the same
has become effective, (B) of any request by the SEC for amendments or
supplements to the Registration Statement or the prospectus or for
additional information, (C) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (D) if at any time the
representations and warranties of the Company contemplated by paragraph
(xiv) below cease to be true and correct in any material respect, (E) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceedings for
such purpose, (F) of the happening or failure to happen of any event that
makes any statement made in the Registration Statement, the prospectus or
any document incorporated therein by reference untrue in any material
respect or which requires the making of any changes in the Registration
Statement, the prospectus or any document incorporated therein by
reference in order to make the statements therein, in light of the
circumstances when made, not misleading, and (G) of the Company's
reasonable determination that a post-effective amendment to a Registration
Statement would otherwise be required;
(iv) make every commercially reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of the
Registration Statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest possible moment;
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<PAGE>
(v) if requested by the managing underwriter or
underwriters or a Holder of Registrable Securities being sold in
connection with an underwritten offering, promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters and the Holders reasonably agree should be included
therein relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation, information with
respect to the amount of Registrable Securities being sold to such
underwriters, the purchase price being paid thereof or by such
underwriters and with respect to any other terms of the underwritten (or
best efforts underwritten) offering of the Registrable Securities to be
sold in such offering, and make all required filings of such prospectus
supplement or post-effective amendment as soon as notified of the matters
to be incorporated in such prospectus supplement or post-effective
amendment;
(vi) furnish to each selling Holder of Registrable
Securities and each managing underwriter, if any, without charge, at least
one signed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto;
(vii) deliver to each selling Holder of Registrable
Securities and the underwriters, if any, without charge, as many copies of
the prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons may reasonably request;
(viii) prior to any Public Offering of Registrable
Securities, register or qualify or cooperate with the selling Holders of
Registrable Securities, the underwriters, if any, and their respective
counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky
laws of such jurisdictions as such Holders and underwriters reasonably
request and keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or
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<PAGE>
things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, however, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then
so qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or subject the Company to any tax in any such jurisdiction where
it is not then so subject;
(ix) cooperate with the selling Holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificate shall be in a form eligible for
trading on the exchanges and/or trading systems set forth in paragraph
(xii) and for deposit with the Depository Trust Company; enable such
Registrable Securities to be in such denominations and registered in such
names as the selling Holders and managing underwriters, if any, may
request at least two (2) Business Days prior to any sale of Registrable
Securities to the underwriters or other Persons; and instruct the transfer
agent for the Common Stock to do such acts as may be necessary for it to
timely register any such issuance and transfer;
(x) use its commercially reasonable best efforts to
cause the Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition
of such Registrable Securities;
(xi) upon the occurrence of any event contemplated by
paragraph (iii)(F) or (iii)(G) above, prepare a supplement or
post-effective amendment to the Registration Statement or the related
prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, the prospectus will not contain an untrue
statement of a material fact or omit to state any
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material fact necessary to make the statements therein, in light of the
circumstances when made, not misleading;
(xii) cause all Registrable Securities covered by the
Registration Statement to be either listed on each securities exchange or
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation System on which similar securities issued by the Company are
then listed or quoted if requested by the Holders or the managing
underwriters, if any;
(xiii) not later than the effective date of the
applicable Registration Statement, provide a CUSIP number for all
Registrable Securities;
(xiv) enter into such customary agreements (including an
underwriting agreement) and take all such other actions in connection
therewith in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration
is an underwritten registration, (A) make such representations and
warranties to the underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in similar underwritten
offerings; (B) obtain opinions of counsel to the Company and updates
thereof, which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriter, if any, and
addressed to each underwriter, if any, covering the matters customarily
covered in opinions requested in underwritten offerings; (C) obtain "cold
comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to each underwriter, if any, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters by accountants in connection
with underwritten offerings; and (D) the Company shall deliver such
documents and certificates as may be requested by the Holders and the
managing underwriters, if any, to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement
entered
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into by the Company. The above shall be done at each closing under such
underwriting or similar agreement or as and to the extent required
thereunder;
(xv) make available for inspection by a representative
of the underwriters participating in any disposition pursuant to such
registration and any attorney or accountant retained by the sellers of
Registrable Securities or such underwriters, all material and pertinent
financial and other records, material and pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors
and employees to supply all material and pertinent information reasonably
requested by any such representative, underwriter, attorney or accountant
in connection with such registration; provided that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons unless (A)
disclosure of such information is required by court or administrative
order or is necessary to respond to a subpoena (provided such Person gives
the Company prior notice thereof), (B) such information becomes generally
available to the public other than as a result of a disclosure or failure
to safeguard by such Person or (C) such information becomes available to
such Person from a source other than the Company not under any obligation
to keep such information confidential; and
(xvi) otherwise comply with all applicable rules and
regulations of the SEC, and make generally available to its security
holders, as soon as practicable, an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act covering a period of at
least 12 months, beginning within three months after the effective date of
the Registration Statement.
(d) Each Holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
6.9(c)(xi) hereof, such Holder shall forthwith discontinue disposition of
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus
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contemplated by Section 6.9(c)(xi) hereof, or until it is advised in
writing (the "Advice") by the Company that the use of the prospectus may
be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the prospectus, and, if so
directed by the Company, such Holder shall deliver to the Company all
copies, other than permanent file copies then in such Holder's possession,
of the prospectus covering such Registrable Securities current at the time
of receipt of such notice. If the Company shall give any such notice, the
time periods regarding the maintenance of the effectiveness of any
Registration Statement in Section 6.2 and 6.3 hereof shall be extended by
the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6.9(c)(iii) above to and
including the date when each the selling Holder of Registrable Securities
covered by such Registration Statement shall have received the copies of
the supplemented or amended prospectus contemplated by Section 6.9(c)(xi)
hereof or the Advice.
6.10. Indemnification.
(a) If any Registrable Securities are registered or qualified
for sale under the Securities Act pursuant to the provisions of Section 6.2 or
6.3 hereof, the Company shall indemnify and hold harmless each Holder that sold
Registrable Securities pursuant to such registration (a "Seller"), and each
underwriter of such Registrable Securities, each other Person, if any, who
controls any such Seller or underwriter within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act, and each director, officer or
employee of any such Seller, underwriter or controlling Person (each
aforementioned Person, a "Seller Indemnifiable Party"), to the fullest extent
permitted by law, from and against any and all losses, claims, damages or
liabilities (or actions in respect thereof), joint or several, to which such
Seller Indemnifiable Party may become subject under the Securities Laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof), as incurred, arise out of or are based upon (i) any untrue
statement of any material fact contained in any Registration Statement under
which such Registrable Securities were registered or qualified under applicable
Securities Laws, any preliminary
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prospectus or final prospectus relating to such Registrable Securities, or any
amendment or supplement thereto, (ii) the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, (iii) any
violation by the Company or any of its employees or agents of any rule or
regulation under applicable Securities Laws or other laws applicable to the
Company, or (iv) any action or inaction by the Company in connection with any
such registration or qualification of Registrable Securities as contemplated
hereby; and the Company shall reimburse each such Seller Indemnifiable Party for
all reasonable out-of-pocket costs (including reasonable out-of-pocket costs of
preparation and reasonable attorneys' fees) and other expenses reasonably
incurred by such Seller Indemnifiable Party in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission in such
Registration Statement, such preliminary prospectus, such final prospectus or
such amendment or supplement thereto (A) made in reliance upon and in conformity
with written information relating to such Seller Indemnifiable Party furnished
to the Company by any Seller Indemnifiable Party specifically and expressly for
use in the preparation thereof; or (B) if such untrue statement or alleged
untrue statement, omission or alleged omission is completely corrected in an
amendment or supplement to the prospectus and the Seller Indemnifiable Party
thereafter fails to deliver such prospectus as so amended or supplemented prior
to or concurrently with the sale of the Registrable Securities to the Person
asserting such loss, claim, damage or liability after the Company has furnished
the Sellers and underwriters with a sufficient number of copies of the same.
(b) If any Registrable Securities are registered or qualified
for sale under the Securities Act pursuant to the provisions of Section 6.2 or
6.3 hereof, each Seller agrees severally, and not jointly, to indemnify and hold
harmless the Company, Buyer, their Affiliates, each Person who controls the
Company within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act, and each director, officer and employee of the Company, any of
its Affiliates or such controlling Persons (each aforementioned Person, a
"Company Indemnifiable Party") from and against any losses, claims, damages or
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liabilities, joint or several, to which any such Company Indemnifiable Party may
become subject under the Securities Laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement of any material fact contained in any
Registration Statement under which such Registrable Securities were registered
or qualified under the Securities Act, any preliminary prospectus or final
prospectus relating to such securities, or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, which untrue
statement or omission was made therein in reliance upon and in conformity with
written information relating to such Seller furnished to the Company by such
Seller or controlling Person of such Seller specifically for use in connection
with the preparation thereof, or (ii) any violation by such Seller or
controlling Person of such Seller of any rule or regulation under the Securities
Laws or other laws applicable to them, and shall reimburse the Company
Indemnifiable Parties for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by a Person entitled to
indemnification under this Section 6.10 (an "Indemnifiable Party") of notice of
the commencement of any action, claim or proceeding as to which indemnity may be
sought hereunder, such Indemnifiable Party shall, if a claim for indemnification
hereunder in respect thereof is to be made against any other party hereto (an
"Indemnifying Party"), give written notice to such Indemnifying Party of the
commencement of such action, claim or proceeding, but the omission so to notify
the Indemnifying Party will not relieve it from any liability that it may have
to any Indemnifiable Party otherwise than pursuant to the provisions of this
Section 6.10 and shall also not relieve the Indemnifying Party of its
obligations under this Section 6.10 except to the extent that the omission
results in a failure of actual timely notice to the Indemnifying Party and such
Indemnifying Party has been prejudiced as a result of the failure to give timely
notice. In case any such action, claim or proceeding is brought against an
Indemnifiable Party, and such Indemnifiable Party notifies an Indemnifying Party
of the commencement thereof, the Indemnifying Party shall be entitled (at its
own expense) to participate in and, to the extent that it may wish, jointly
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with any other Indemnifying Party similarly notified, to assume the defense,
with counsel reasonably satisfactory to such Indemnifiable Party, of such
action, claim or proceeding. Any such Indemnifiable Party shall have the right
to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but, if the Indemnifying Party has assumed
the defense thereof, the fees and expenses of such counsel shall be the expenses
of such Indemnifiable Party unless (i) the Indemnifying Party has agreed to pay
such fees and expenses; (ii) the Indemnifying Party shall have failed to
promptly assume the defense of such action, claim or proceeding and to employ
counsel reasonably satisfactory to the Indemnifiable Party within a reasonable
time after notice of such action, claim or proceeding; or (iii) the named
parties to any such action, claim or proceeding (including any impleaded
parties) include both such Indemnifiable Party and the Indemnifying Party or an
Affiliate of the Indemnifying Party, and such Indemnifiable Party shall have
been advised by counsel in writing that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party or such Affiliate and if the Indemnifiable Party and the
Indemnifying Party or such Affiliate were to be represented by the same counsel,
a conflict of interest could arise for such counsel or such representation could
materially prejudice the prosection of the defenses available to the
Indemnifiable; provided, that in no event shall the Company be required to pay
the fees and expenses of more than one (1) separate firm of attorneys for such
Indemnifiable Party. The Indemnifying Party shall not be liable for any
settlement of any such action, claim or proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnifiable Party, effect any
settlement of any pending action, claim or proceeding in respect of which any
Indemnifiable Party is a party and is entitled to indemnity hereunder, unless
such settlement includes an unconditional release of such Indemnifiable Party
from all liability or claims that are subject to indemnification hereunder.
(d) If for any reason the indemnification provided for in this
Section 6.10 is unavailable to an Indemnifiable Party or insufficient to hold it
harmless as contemplated by this Section 6.10, then the Indemnifying Party shall
contribute to the amount paid or payable by the Indemnifiable Party as a result
of such loss, claim, damage, liability, cost or expense in such proportion as is
20
<PAGE>
appropriate to reflect not only the relative benefits received by the
Indemnifiable Party and the Indemnifying Party, but also the relative fault of
the Indemnifiable Party and the Indemnifying Party, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnifiable Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnifiable Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses,
claims, damages, liabilities, costs and expenses shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or action, claim or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6.10(d) were determined by
pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.10(d), an
Indemnifying Party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the dollar amount of the gross
proceeds received by such Holder with respect to the sale of any Registrable
Securities. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
7. Representations and Warranties of the Company. The Company hereby
represents and warrants to Seller and Shareholder that:
7.1. Authorization of Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly authorized, executed and delivered by the Company and (assuming the
due authorization, execution and delivery by the other parties hereto),
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
21
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bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
7.2. The Shares. All of the Shares are duly authorized for issuance
and, upon issuance in the manner and for the consideration set forth in the
Agreement to Merge, will be validly issued, fully paid and non-assessable.
Except as provided in this Agreement, all of the Shares are free and clear of
all liens, pledges, encumbrances, charges, assessments or claims of any kind
whatsoever.
8. Representations and Warranties of Seller and Shareholder. Each of
Seller and Shareholder hereby jointly and severally represents and warrants to
the Company that:
8.1. Authorization of Agreement. Seller has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Shareholder has all requisite legal capacity
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized by
Seller, and duly and validly executed and delivered by each of Seller and
Shareholder and (assuming the due authorization, execution and delivery by the
other parties hereto) constitutes a legal, valid and binding obligation of each
of Seller and Shareholder, enforceable against each of them in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
8.2. Securities Laws; Restrictive Legend. Seller and Shareholder are
each "accredited investor[s]" as that term is defined in Rule 501 under the
Securities Act. Seller is acquiring the Shares for its own account, for
investment, and not with a view to or in connection with any distribution
thereof in contravention of applicable Securities Laws. Seller and Shareholder
acknowledge and agree that, in addition to the legend required by Section 2
hereof and until such time as the Shares are registered
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<PAGE>
under the Securities Act and applicable securities laws or such earlier time as
they may be distributed without restriction under the Securities Laws, all
certificates representing any of the Shares, whether upon original issue or
registration of transfer, shall have endorsed thereon the following legend, by
which Seller and each subsequent holder of Shares shall be bound:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR THE AVAILABILITY, IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER OF THIS SECURITY, OF AN
EXEMPTION FOR SUCH SALE, PLEDGE, ASSIGNMENT OR OTHER TRANSFER UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS."
9. Miscellaneous.
9.1. Amendments; Extension; Waiver. This Agreement may not be
amended, altered or modified except by written instrument executed by all of the
parties hereto.
9.2. Entire Agreement. This Agreement (including any documents
executed by the parties simultaneously herewith or pursuant thereto) constitutes
the entire agreement of the parties hereto, except as provided herein, and
supersedes all prior agreements and understandings, written and oral, among the
parties with respect to the subject matter hereof.
9.3. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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<PAGE>
9.4. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if (a) delivered in person, (b)
transmitted by telecopy (with written confirmation), (c) mailed by certified or
registered mail (return receipt requested) or (d) delivered by an express
courier (with written confirmation) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Seller or Shareholder, to:
Heine Securities Corporation
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Attention: Michael F. Price, President
Telecopy: (201) 912-2184
With a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Philip H. Harris, Esq.
Telecopy: (212) 735-2000
If to the Company or Buyer, to:
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, California 94404
Attention: Martin L. Flanagan,
Senior Vice President
Telecopy: (415) 312-5707
-and-
Attention: Leslie M. Kratter, Esq.,
Vice President
Telecopy: (415) 312-4937
24
<PAGE>
With copies (which shall not constitute notice) to:
Templeton Worldwide, Inc.
500 East Broward Boulevard
Suite 2100
Ft. Lauderdale, Florida 33394-2091
Attention: Charles E. Johnson, President
Telecopy: (305) 527-7329
-and-
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Jeffrey E. Tabak, Esq.
Telecopy: (212) 310-8007
9.4. Binding Effect; No Assignment; No Third Party Beneficiaries.
Subject to Sections 2.1 and 6.4(a) hereof, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement is intended or shall
be construed to confer upon any Person other than the parties hereto and their
respective successors and permitted assigns any right, remedy or claim under or
by reason of their Agreement or any part hereof.
9.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.
9.6. Governing Law. This Agreement, the legal relations between the
parties and the adjudication and the enforcement thereof, shall be governed by
and interpreted and construed in accordance with the substantive laws of the
State of Delaware, without regard to applicable choice of law provisions
thereof.
9.7. Service; Jurisdiction. Each of the parties hereto agrees to:
(i) the irrevocable designation of the Secretary of State of Delaware as its
agent upon whom process against it may be served, and (ii) the exercise of
personal jurisdiction over it by the courts of the State of Delaware or the
United States District Court for the State of Delaware in any action brought in
respect of matters
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<PAGE>
arising hereunder and within the subject matter jurisdiction of such courts.
9.8. Specific Performance. Seller, Shareholder, Buyer and the
Company each acknowledge that each party would not have an adequate remedy at
law for money damages in the event that the covenants to be performed hereunder
are not been performed in accordance with their terms, and therefore agree that
the other parties shall be entitled to specific enforcement of the terms hereof
in addition to any indemnification hereunder and any other equitable remedy to
which such parties may be entitled.
9.9. WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES. THE PARTIES TO THIS
AGREEMENT AGREE TO WAIVE ANY RIGHT TO A JURY TRIAL AS TO ALL DISPUTES AND ANY
RIGHT TO SEEK PUNITIVE DAMAGES.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
HEINE SECURITIES CORPORATION
By: /s/ Michael F. Price
------------------------
Name: Michael F. Price
Title: President
/s/ Michael F. Price
--------------------
Michael F. Price
FRANKLIN MUTUAL ADVISERS, INC.
By: /s/ Leslie M. Kratter
------------------------
Name: Leslie M. Kratter
Title: Vice President
FRANKLIN RESOURCES, INC.
By: /s/ Leslie M. Kratter
------------------------
Name: Leslie M. Kratter
Title: Vice President
27
FROM: Franklin Resources, Inc.
Tel: 415-312-4701
Contact: Holly Gibson
Heine Securities Corporation
Tel: 201-912-2088
Contact: Elizabeth Cohernour
- --------------------------------------------------------------------------------
For Immediate Release
Franklin Resources, Inc. and Heine Securities
Corporation Merger Completed
San Mateo, CA, November 1, 1996 -- Franklin Resources, Inc.
(NYSE:BEN) and Heine Securities Corporation today announced that the board of
directors and shareholders of Mutual Series Fund Inc. had approved new
investment management agreements with Franklin Mutual Advisers, Inc., a
newly-formed subsidiary of Franklin Resources, Inc., and that the merger of
business transaction with Franklin had become effective with the opening of
business on November 1, 1996 in accordance with the agreement announced June 25,
1996.
Charles B. Johnson, president of Franklin Resources, commented, "We
are delighted that the transaction is complete and we look forward to working
with our new partners at Mutual Series."
Michael Price, president of Heine Securities, added, "We couldn't be
happier with our new corporate partners. Our team is enthusiastic about the
combination and we think that both existing and new shareholders will see
benefits from this transaction."
<PAGE>
With the completion of the transaction, Franklin Mutual Advisers,
Inc. will serve as investment advisor to Franklin Mutual Series Fund Inc.,
formerly known as Mutual Series Fund Inc. The funds will now offer multiple
class shares with various sales charges comparable to other funds in the
Franklin Templeton Group. Shareholders of record in Mutual Series at the close
of business on October 31, 1996 will be able to continue to purchase additional
shares of the Mutual Series funds without a sales charge.
The Franklin Templeton Group, known for its domestic fixed-income
and international equity products, had over $151 billion in assets under
management as of September 30, 1996. Mutual Series Fund, which is known for its
expertise in equity investing, had approximately $17.5 billion in assets under
management as of September 30, 1996. Franklin's headquarters are located at 777
Mariners Island Blvd., San Mateo, CA 94404.
# # #
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