<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
PAINE WEBBER GROUP INC.
(Name of Issuer)
COMMON STOCK
$1 PAR VALUE
(Title of Class of Securities)
69562910
(Cusip Number)
GENERAL ELECTRIC COMPANY
GENERAL ELECTRIC CAPITAL SERVICES, INC.
KIDDER, PEABODY GROUP INC.
KIDDER, PEABODY & CO. INCORPORATED
(Name of Persons Filing Statement)
BENJAMIN W. HEINEMAN, JR.
GENERAL ELECTRIC COMPANY
3135 Easton Turnpike
Fairfield, CT 06431
Tel. No.: 203-373-2494
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
December 16, 1994
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D,
and is filing this statement because of Rule 13d-1(b)(3) or (4), check
the following: [ ].
Check the following box if a fee is being paid with this
statement: [ ]
<PAGE>
SCHEDULE 13D
CUSIP NO. 69562910 PAGE 2 of Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KIDDER, PEABODY & CO. INCORPORATED
IRS NO. 13-5650440
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
Inapplicable (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [X]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 21,520,000 (SEE ITEM 5)
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
|
PERSON
WITH
10 SHARED DISPOSITIVE POWER
21,520,000 (SEE ITEM 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 21,520,000 (SEE ITEM 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
14 TYPE OF REPORTING PERSON
C0, BD
<PAGE>
This statement on Schedule 13D relates to the common stock,
$1 par value per share (the "Common Stock"), of Paine Webber Group Inc.,
a Delaware corporation (the "Company"). The statement on Schedule 13D
originally filed by General Electric Company, a New York corporation
("GE"), General Electric Capital Services, Inc., a Delaware corporation
("GECS"), and Kidder, Peabody Group Inc., a Delaware corporation
("Kidder"), dated November 14, 1994 (the "Initial Schedule 13D"), is
hereby amended and supplemented as set forth below. Certain capitalized
terms used in this statement but not otherwise defined herein have the
meanings given to them in the Initial Schedule 13D.
This statement is being filed on behalf of GE, GECS, Kidder
and Kidder, Peabody & Co. Incorporated, a Delaware corporation ("KPCI").
ITEM 2. IDENTITY AND BACKGROUND
Item 2 of the Initial Schedule 13D is hereby amended and
supplemented as follows:
Kidder, Peabody & Co. Incorporated, a Delaware corporation
("KPCI"), 10 Hanover Square, New York, New York 10005 is hereby added as
a filing person. The name, business address, present principal
occupation or employment, and citizenship of each director and executive
officer of KPCI is set forth on Schedule A hereto.
KPCI is a wholly-owned subsidiary of Kidder. In the past,
KPCI has provided a wide variety of financing, insurance, investment
banking and securities brokerage products and services including
specialty insurance, consumer services, mid-market financing, equipment
management, full-service securities brokerage and specialized financing.
Except as previously disclosed, during the last five years,
none of KPCI or, to the best of its knowledge, any of the persons listed
on Schedule A hereto has (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities law or finding any violation with respect to such laws.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the Initial Schedule 13D is hereby amended and
supplemented as follows:
The Company, GE and Kidder have entered into a Supplemental
Agreement dated as of December 9, 1994 (the "First Supplemental
Agreement") and a Second Supplemental Agreement dated as of December 16,
1994 (the "Second Supplemental Agreement") which, among other things,
provide for the transactions contemplated by the Asset Purchase
Agreement to be consummated pursuant to multiple closings in lieu of a
single closing. Pursuant to the Asset Purchase Agreement, as amended
and supplemented by the First Supplemental Agreement and the Second
Supplemental Agreement (the "Asset Purchase Agreement"), (i) at a
closing on December 9, 1994, the Company acquired the assets related to
the real estate mortgage business of Kidder and (ii) at a closing on
December 16, 1994 (the "December 16th Closing"), (A) the Company
acquired the assets related to certain other businesses of Kidder
(including equity research, investment banking (excluding high yield and
emerging markets), domestic fixed income (sales force only), portions of
international fixed income and portions of international institutional
equity) and (B) KPCI acquired the Common Stock, the Convertible
Preferred Stock and the Redeemable Preferred Stock. The acquisition by
the Company of the assets of the retail brokerage business of Kidder is
expected to occur on or about January 30, 1995 and the acquisition by
the Company of the assets of the asset management business of Kidder is
expected to occur no later than April 30, 1995.
The Convertible Preferred Stock will be convertible into
shares of Common Stock, at any time, in whole or in part, at the option
of the holder. However, until the stockholders of the Company approve
the issuance of the Common Stock to be delivered upon a conversion of
the Convertible Preferred Stock, the Convertible Preferred Stock is not
convertible into shares of Common Stock and the Company is obligated to
deliver cash in lieu of Common Stock upon an exercise of the conversion
privilege. A stockholders' vote is expected in May 1995. Assuming the
stockholders approve the issuance of the Common Stock to be delivered
upon a conversion of the Convertible Preferred Stock, the Convertible
Preferred Stock will be convertible into 5,515,720 shares of Common
Stock (assuming no adjustment in the conversion price from the date of
issuance), representing approximately 5.3% of the then outstanding
Common Stock of the Company (assuming no other issuances of Common Stock
by the Company).
KPCI has acquired the Common Stock and the Convertible
Preferred Stock for investment. KPCI intends to review from time to
time the Company's business affairs and financial position. Based on
such evaluation and review, as well as general economic and industry
conditions existing at the time, KPCI may consider from time to time
various alternative courses of action as permitted by the Stockholders
Agreement dated December 16, 1994 among the Company, GE and Kidder (the
"Stockholders Agreement"). Such actions may include, in certain limited
circumstances permitted by the Stockholders Agreement and subject to
receipt of all necessary regulatory approvals, the acquisition of
additional Voting Securities through open market purchases, privately
negotiated transactions or otherwise. Alternatively, and subject to the
terms of the Stockholders Agreement, such actions may involve the sale
of all or a portion of the Voting Securities in the open market, in
privately negotiated transactions, through a public offering or
otherwise. It is also possible that some or all of the Voting
Securities or Redeemable Preferred Stock held by KPCI may be transferred
to GE or any of its subsidiaries, subject to the terms of the
Stockholders Agreement. Except as set forth above and except as
contemplated by the Stockholders Agreement, none of GE, GECS, Kidder or
KPCI or, to the best of their knowledge, any of the persons listed on
Schedule A hereto has a plan or proposal which relates to or would
result in any of the transactions described in subparagraphs (a) through
(j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE COMPANY
Item 5 of the Initial Schedule 13D is hereby amended and
supplemented as follows:
(a) KPCI has acquired and, for the purpose of Rule 13d-3
promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"), KPCI directly beneficially owns 21,500,000 shares of Common Stock
and (ii) at the close of business on December 16, 1994, KPCI had
acquired on behalf of third parties and, for purposes of Rule 13d-3
promulgated under the Exchange Act, beneficially owned 20,000 shares of
Common Stock, collectively, representing approximately 22.2% of the then
outstanding Common Stock.
Kidder is the parent corporation of KPCI, GECS is the parent
corporation of Kidder and GE is the parent corporation of GECS. As a
result, for the purpose of Rule 13d-3 promulgated under the Exchange
Act, each of Kidder, GECS and GE indirectly beneficially owns 21,520,000
shares of Common Stock, representing approximately 22.2% of the then
outstanding Common Stock.
Assuming the Company's stockholders approve the issuance of
the Common Stock to be delivered upon a conversion of the Convertible
Preferred Stock, as described in Item 4 above, KPCI would directly
beneficially own (and GE, GECS and Kidder would indirectly beneficially
own) an additional 5,515,720 shares of Common Stock (assuming no
adjustment in the conversion price from the date of issuance), which,
with the 21,520,000 shares of Common Stock, would represent
approximately 26.2% of the then outstanding Common Stock (assuming no
other issuances of Common Stock by the Company).
Except as set forth in this Item 5(a), none of GE, GECS,
Kidder or KPCI or, to the best of their knowledge, any of the persons
listed in Schedule A hereto beneficially owns any Common Stock.
(b) Subject to the terms of the Stockholders Agreement,
KPCI has the power to vote and to dispose of 21,500,000 shares of Common
Stock. KPCI has the shared power to vote and dispose of 20,000 shares
of Common Stock held on behalf of customers in discretionary accounts.
Subject to the terms of the Stockholders Agreement, Kidder,
as the parent corporation of KPCI, GECS, as the parent corporation of
Kidder, and GE, as the parent corporation of GECS, have the indirect
shared power to vote and dispose of 21,500,000 shares of Common Stock.
Kidder, GECS and GE have the indirect shared power to vote and dispose
of 20,000 shares of Common Stock held by KPCI on behalf of customers in
discretionary accounts.
Assuming the Company's stockholders approve the issuance of
the Common Stock to be delivered upon a conversion of the Convertible
Preferred Stock, as described in Item 4 above, and subject to the terms
of the Stockholders Agreement, KPCI would have the power to vote and to
dispose of (and GE, GECS and Kidder would have the indirect shared power
to vote and dispose of) an additional 5,515,720 shares of Common Stock
(assuming no adjustment in the conversion price from the date of
issuance).
(c) Except as set forth in Schedule B hereto, there were
no purchases or sales of Common Stock effected during the past 60 days
by KPCI or, to the best of its knowledge, any person listed in Schedule
A hereto.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES
OF THE COMPANY
Item 6 of the Initial Schedule 13D is hereby amended and
supplemented as follows:
Prior to the December 16th Closing, the Company exercised
its option pursuant to the Letter Agreement to issue to KPCI, at the
December 16th Closing, in lieu of the Redeemable Preferred Stock,
2,500,000 shares of redeemable preferred stock with the same stated
maturity as the Redeemable Preferred Stock, noncallable until the fifth
anniversary of the date of issuance and callable at par at any time
thereafter, with an annual dividend rate of 9%.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Initial Schedule 13D is hereby amended and
supplemented as follows:
Exhibit 99(c): Supplemental Agreement dated as of
December 9, 1994 without exhibits
Exhibit 99(d): Second Supplemental Agreement dated as of
December 16, 1994 without exhibits
SIGNATURES
After reasonable inquiry and to the best knowledge and
belief of the undersigned, the undersigned certify that the information
set forth in this statement is true, complete and correct.
Date: December 21, 1994
GENERAL ELECTRIC COMPANY
By: Benjamin W. Heineman, Jr.
-------------------------------
Senior Vice President,
General Counsel and
Secretary
GENERAL ELECTRIC CAPITAL
SERVICES, INC.
By: Jeffrey S. Werner
-------------------------------
Senior Vice President,
Corporate Treasury and
Global Funding Operation
KIDDER, PEABODY GROUP INC.
By: John M. Liftin
-------------------------------
Senior Vice President,
General Counsel and
Secretary
KIDDER, PEABODY & CO. INCORPORATED
By: John M. Liftin
-------------------------------
Managing Director and
General Counsel
<PAGE>
Schedule A
DIRECTORS AND EXECUTIVE OFFICERS
OF
KIDDER, PEABODY & CO. INCORPORATED
The name, business address, title, present principal
occupation or employment of each of the directors and executive officers
of KPCI are set forth below. If no business address is given, the
director's or officer's business address is KPCI's address. Unless
otherwise indicated, each occupation set forth opposite an individual's
name refers to KPCI. Unless otherwise indicated below, all of the
persons listed below are citizens of the United States of America.
Present Principal
Occupation Including
Name and Name and Address <F1>
Business Address of Employer
---------------- -----------------------
DIRECTORS AND EXECUTIVE OFFICERS
Theodore J. Johnson Managing Director
John M. Liftin Managing Director and
General Counsel
David M. McAuliffe Managing Director
C. Edward Midgley Managing Director
James A. Mullin Managing Director
Richard W. O'Donnell Managing Director,
Chief Financial and
Administrative Officer
Thomas F. Ryan, Jr. Managing Director
Douglas T. Tansill Managing Director
[FN]
<F1> Same address as director's or officer's business address except
where indicated.
<PAGE>
Schedule B
During the 60 days prior to December 17, 1994, KPCI, the
wholly-owned broker-dealer subsidiary of Kidder, purchased and sold
shares of Common Stock pursuant to proprietary trading strategies. The
Common Stock was one of the component securities of seven different
baskets of securities. During such 60-day period, KPCI made purchases
aggregating 52,262 and sales aggregating 69,800 shares of Common Stock
pursuant to such proprietary trading strategies at prices ranging from
$13.25 to $15.875 per share. The aggregate number of shares of Common
Stock held by such baskets as of the close of business on December 16,
1994 was -96,550 (short position).
During the 60 days prior to December 17, 1994, KPCI, on
behalf of customers with discretionary accounts, made purchases
aggregating 47,000 and sales aggregating 27,000 shares of Common Stock
in quantities ranging from 400 to 27,100 shares at prices ranging from
$14.375 to $15.50 per share.
<PAGE>
Exhibit 99(c)
SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT dated as of December 9, 1994 among
Paine Webber Group Inc., a Delaware corporation (the "Purchaser"),
General Electric Company, a New York corporation (the "Parent"), and
Kidder, Peabody Group Inc., a Delaware corporation (the "Seller").
WHEREAS, the parties hereto have previously entered into an
Asset Purchase Agreement dated as of October 17, 1994 (the "Asset
Purchase Agreement") and a Restructuring Agreement dated as of October
17, 1994 (the "Restructuring Agreement");
WHEREAS, the parties hereto desire to supplement and amend
the provisions of the Asset Purchase Agreement and Restructuring
Agreement to provide for the transfer of the Acquired Businesses to the
Purchaser (or its designee) in the manner set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) Terms used herein and not
otherwise defined herein shall have the meanings set forth in the Asset
Purchase Agreement or the Restructuring Agreement, as the case may be.
(b) As used in this Agreement, the following terms shall
have the following meanings:
"Acquired Businesses" has the meaning set forth in Section
9.10.
"Asset Management" shall mean the business of the Seller
Group generally known by the name Asset Management, excluding the
business generally known by the name Managed Futures.
"Asset Management Closing" has the meaning set forth in
Section 6.01.
"Asset Management Closing Date" has the meaning set forth in
Section 6.01.
"Initial Form 8594" has the meaning set forth in Section
9.03.
"Margin Debit" has the meaning set forth in Section 5.01.
"Other Acquired Businesses" shall mean all of the Acquired
Businesses other than Real Estate, Related Retail Brokerage and Asset
Management, including those generally known by the names Equity
Research, Investment Banking (excluding High Yield and Emerging
Markets), Fixed Income (sales force only), International Institutional
Equity (Geneva and Zurich), International Fixed Income (London, Geneva,
Zurich, Hong Kong, Singapore and part of Tokyo, if applicable) and
Municipal Finance (excluding sales and trading). Notwithstanding the
foregoing, to the extent the Purchaser hires Continuing Employees from
business units of Other Acquired Businesses prior to the Other Acquired
Businesses Closing Date, such action shall not constitute the transfer
of an Other Acquired Business.
"Other Acquired Businesses Closing" has the meaning set
forth in Section 4.02.
"Other Acquired Businesses Closing Date" has the meaning set
forth in Section 4.02.
"Other Acquired Businesses Interim Balance Sheet" has the
meaning set forth in Section 4.04(a).
"Other Acquired Businesses Interim Net Book Value Statement"
has the meaning set forth in Section 4.04(a).
"Other Acquired Businesses Securities Inventory" has the
meaning set forth in Section 4.01.
"Real Estate" shall mean the business of the Seller Group
generally known by the name Mortgages, including Single Family Whole
Loan Trading, Commercial/Multi-Family Whole Loan Trading, Mortgage
Finance, Real Estate Finance (including REIT underwriting and sales and
real estate advisory), Research and Contract Finance.
"Real Estate Closing" has the meaning set forth in Section
3.02.
"Real Estate Closing Date" has the meaning set forth in
Section 3.02.
"Real Estate Interim Balance Sheet" has the meaning set
forth in Section 3.04.
"Real Estate Interim Net Book Value Statement" has the
meaning set forth in Section 3.04.
"Real Estate Securities Inventory" has the meaning set forth
in Section 3.01.
"Related Retail Brokerage" shall mean the business of the
Seller Group generally known by the name Retail Brokerage and the
business of the Seller Group (other than International Fixed Income)
conducted in its office in Hong Kong.
"Related Retail Brokerage Closing" has the meaning set forth
in Section 5.02(a).
"Related Retail Brokerage Closing Date" has the meaning set
forth in Section 5.02(a).
"Related Retail Brokerage Interim Balance Sheet" has the
meaning set forth in Section 5.04(a).
"Related Retail Brokerage Interim Net Book Value Statement"
has the meaning set forth in Section 5.04(a).
"Related Retail Brokerage Securities Inventory" has the
meaning set forth in Section 5.01(b).
"Retail Brokerage" shall mean the Acquired Business
generally known by the name Investment Services (retail brokerage).
(c) This Agreement shall be deemed to be a Transaction
Document and each reference in any of the Transaction Documents to the
Transaction Documents shall be deemed to include this Agreement.
SECTION 1.02 Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Asset Purchase Agreement
shall be applicable to this Agreement.
ARTICLE II
PRE-CLOSING
SECTION 2.01 Listed Domestic Futures. The parties
hereto acknowledge that, pursuant to an Assignment Agreement dated as of
December 5, 1994 between Kidder, Peabody & Co. Incorporated and
PaineWebber Incorporated and related Conveyancing Documents, certain
assets of the business of the Seller Group generally known by the name
Listed Domestic Futures (Chicago Branch) were transferred to the
Purchaser and certain liabilities of Listed Domestic Futures (Chicago
Branch) were assumed by the Purchaser, but such business as a whole was
not acquired on such date. The parties hereto agree that (i) the
Closing Date with respect to the transfer of such assets to, and the
assumption of such liabilities by, the Purchaser shall be as of December
3, 1994 and, as of such date, such assets shall constitute Acquired
Assets and such liabilities shall constitute Assumed Liabilities and
(ii) the commissions earned by Listed Domestic Futures (Chicago Branch)
prior to December 2, 1994 and received thereafter as reflected in a
schedule delivered to the Purchaser by the Seller shall be for the
account of the Seller.
ARTICLE III
REAL ESTATE BUSINESS
SECTION 3.01 Real Estate Securities Inventory. (a)
Prior to the Real Estate Closing Date, the Purchaser and the Seller
shall agree on (i) the Securities and off-balance sheet hedges and
derivatives, if any, held by any member of the Seller Group in
connection with the conduct of Real Estate that are to be acquired by
the Purchaser (the "Real Estate Securities Inventory"), and reduce such
agreement to a list, and (ii) the fair market value of the Real Estate
Securities Inventory. The Real Estate Securities Inventory shall
constitute Acquired Assets. Any Security or off-balance sheet hedge or
derivative held by any member of the Seller Group in connection with the
conduct of Real Estate that is not on the list of Real Estate Securities
Inventory shall constitute an Excluded Asset.
(b) The parties hereto agree:
(i) Section 2.08 (Exclusion of Selected Securities),
Section 2.09 (Return of Securities), Section 2.10 (The LM Expert),
Article V (Representations and Warranties of the Seller and the
Parent), Section 7.01(d) (Actions and Conduct of Acquired
Businesses Before the Closing Date) and Section 9.05 (Off-Balance
Sheet Positions) of the Asset Purchase Agreement have not been
applied, and shall not apply, to the Real Estate Securities
Inventory, and
(ii) the representations and warranties set forth in the
relevant Conveyancing Documents delivered at the Real Estate
Closing shall apply to the Real Estate Securities Inventory.
SECTION 3.02 Real Estate Closing Date. Subject to the
satisfaction or waiver by the appropriate party of the conditions set
forth in Section 13.01, Section 13.03, Section 13.05, Section 14.01,
Section 14.03 and Section 14.04 of the Asset Purchase Agreement to the
extent, and only to the extent, that such conditions apply to the
transactions contemplated by this Article III, the closing with respect
to Real Estate (the "Real Estate Closing") shall take place on December
9, 1994 at the offices of Cadwalader, Wickersham & Taft at 100 Maiden
Lane, New York, New York 10038 at 10:00 a.m. (the "Real Estate Closing
Date").
SECTION 3.03 Real Estate Closing. At the Real Estate
Closing:
(a) the Purchaser shall deliver to a member of the Seller
Group designated by the Seller for the account(s) of the member(s) of
the Seller Group transferring the Acquired Assets an amount in cash
equal to the excess of (i) the sum of Acquired Liquid Assets and
Physical Capital over (ii) the Assumed Liabilities, each as reflected on
the Real Estate Interim Net Book Value Statement, payable in Federal
funds by 11:00 a.m., and
(b) the Purchaser (or its designee) and the Seller (or the
appropriate member of Seller Group), as appropriate, shall execute and
deliver
(i) an assignment and assumption agreement, pursuant to
which the Purchaser assumes certain Assumed Liabilities arising
out of Real Estate, and
(ii) the applicable Conveyancing Documents pursuant to
which the appropriate member(s) of the Seller Group transfers to
the Purchaser (or its designee) the Real Estate Securities
Inventory reflected on the Real Estate Interim Balance Sheet and
the other Acquired Assets of Real Estate and the Purchaser (or its
designee) assumes the other Assumed Liabilities arising out of
Real Estate.
SECTION 3.04 Real Estate Interim Balance Sheet. On the
date one Business Day before the Real Estate Closing Date, the Seller
shall deliver to the Purchaser (i) an estimated balance sheet of Real
Estate prepared as of the Real Estate Closing Date (the "Real Estate
Interim Balance Sheet") prepared in accordance with the Balance Sheet
Principles, except that the value of the Real Estate Securities
Inventory included in such Interim Balance Sheet shall be the value
agreed pursuant to Section 3.01(a)(ii) and the Real Estate Interim
balance Sheet shall not include more than $2.4 million in Other Liquid
Assets (it being understood that such limitation shall not apply to the
Closing Balance Sheet) and (ii) a schedule based on the Real Estate
Interim Balance Sheet detailing the calculation of the estimated excess
of (x) the sum of the Acquired Liquid Assets and Physical Capital over
(y) the Assumed Liabilities to be delivered on the Real Estate Closing
Date (the "Real Estate Interim Net Book Value Statement").
SECTION 3.05 Certain Liabilities. If and to the extent
that (i) the fair market value of the Real Estate Securities Inventory
is determined by a third party and (ii) any liabilities or obligations
(other than any Assumed Obligations) arising out of or relating to the
Real Estate Securities Inventory were used by such third party to reduce
the value of the Real Estate Securities Inventory agreed pursuant to
Section 3.01(a)(ii) but which are not Assumed Liabilities, then the
Purchaser shall promptly after request therefor (and presentation of
evidence of such use by such third party) reimburse the appropriate
member of the Seller Group an amount in cash equal to the amount of such
reduction. The amount of such reimbursement with respect to any
liability or obligation shall be taken into account in calculating the
price paid for the Real Estate Securities Inventory out of which such
liability or obligation arose for the purpose of any put or return
rights in the Transaction Documents. The Purchaser shall cooperate, and
use its reasonable best efforts to cause its agents and contractors to
cooperate, with the Seller Group in ascertaining the amounts and
circumstances relating to any such reductions.
SECTION 3.06. CC Mortgage L.P. Notwithstanding
anything to the contrary in any Transaction Document, the interest of
the Seller Group in CC Mortgage L.P. shall not be transferred to the
Purchaser at the Real Estate Closing and shall not be included in the
Real Estate Interim Balance Sheet. Unless the Purchaser otherwise
specifically agrees in writing prior to the Other Acquired Businesses
Closing, such interest shall be an Excluded Asset.
ARTICLE IV
ACQUIRED BUSINESSES OTHER THAN REAL ESTATE,
RELATED RETAIL BROKERAGE AND ASSET MANAGEMENT
SECTION 4.01 Other Acquired Businesses Securities
Inventory. (a) On or prior to the Other Acquired Businesses Closing
Date, the Purchaser and the Seller shall agree on (i) the Securities and
off-balance sheet hedges and derivatives, if any, held by any member of
the Seller Group in connection with the conduct of the Other Acquired
Businesses that are to be acquired by the Purchaser (the "Other Acquired
Businesses Securities Inventory"), and reduce such agreement to a list,
and (ii) the fair market value of the Other Acquired Businesses
Securities Inventory. The Other Acquired Businesses Securities Inventory
shall constitute Acquired Assets. Any Security or off-balance sheet
hedge or derivative held by any member of the Seller Group in connection
with the conduct of the Other Acquired Businesses that is not on the
list of Other Acquired Businesses Securities Inventory shall constitute
an Excluded Asset.
(b) The parties hereto agree that Section 2.08 (Exclusion
of Selected Securities), Section 2.09 (Return of Securities), Section
2.10 (The LM Expert), Section 5.18 (Securities), Section 7.01(d)
(Actions and Conduct of Acquired Businesses Before the Closing Date) and
Section 9.05 (Off-Balance Sheet Positions) of the Asset Purchase
Agreement have not been applied, and shall not apply, to the Other
Acquired Businesses Securities Inventory.
SECTION 4.02 Other Acquired Businesses Closing Date.
Subject to the satisfaction or waiver by the appropriate party of all
the conditions set forth in the Asset Purchase Agreement other than the
condition set forth in Section 14.05 thereof, the closing with respect
to the Other Acquired Businesses (the "Other Acquired Businesses
Closing") shall take place on December 16, 1994 at the offices of
Cravath, Swaine & Moore at 825 Eighth Avenue, New York, New York 10019
at 2 p.m. (the "Other Acquired Businesses Closing Date").
SECTION 4.03 Other Acquired Businesses Closing. At the
Other Acquired Businesses Closing:
(a) the Purchaser shall:
(i) issue the Common Stock Consideration, the Convertible
Preferred Stock and the Redeemable Preferred Stock to the members
of the Seller Group who are transferring the Acquired Assets of
the Other Acquired Businesses to the Purchaser (which members
shall be identified in writing to the Purchaser at least two
Business Days prior to the Other Acquired Businesses Closing) and
deliver or cause to be delivered certificates for such securities,
registered in the names provided to the Purchaser,
(ii) deliver to the Seller an Assumption Agreement pursuant
to which the Purchaser assumes the Assumed Liabilities arising out
of the Other Acquired Businesses, duly executed by the Purchaser;
(b) the Seller shall transfer to the Purchaser (or its
designee) the Other Acquired Businesses Securities Inventory reflected
on the Other Acquired Businesses Interim Balance Sheet and the other
Acquired Assets of the Other Acquired Businesses (including the right,
title and interest of each member of the Seller Group in the name
"Kidder" and "Kidder Peabody", and all extensions, contractions and
abbreviations thereof and derivations therefrom) by delivering the
applicable Conveyancing Documents, duly executed by the appropriate
members of the Seller Group; and
(c) the Purchaser, the Parent and the Seller shall execute
and deliver the Stockholder Agreement.
SECTION 4.04 Other Acquired Businesses Interim Balance
Sheet. (a) On the Other Acquired Businesses Closing Date, the Seller
shall deliver to the Purchaser (i) an estimated balance sheet of the
Other Acquired Businesses prepared as of the Other Acquired Businesses
Closing Date (the "Other Acquired Businesses Interim Balance Sheet")
prepared in accordance with the Balance Sheet Principles, except that
the value of the Other Acquired Businesses Securities Inventory included
in such Interim Balance Sheet shall be the value agreed pursuant to
Section 4.01(a)(ii) and the Other Liquid Assets shall be limited to
clearance receivables, customer receivables and other liquid trade
receivables (it being understood that such limitation shall not apply to
the Closing Balance Sheet), and (ii) a schedule based on the Other
Acquired Businesses Interim Balance Sheet detailing the calculation of
the estimated excess of (x) the sum of the Acquired Liquid Assets and
Physical Capital over (y) the Assumed Liabilities to be delivered on the
Other Acquired Businesses Closing Date (the "Other Acquired Businesses
Interim Net Book Value Statement").
(b) On the date two Business Days before the Other
Acquired Businesses Closing Date, the Seller shall deliver to the
Purchaser a preliminary version of the Other Acquired Businesses Interim
Balance Sheet, which shall value the Other Acquired Businesses
Securities Inventory at the fair market value as of the close of
business on the most recent practicable date.
SECTION 4.05 Other Acquired Businesses Closing
Adjustment. (a) To the extent, if any, the estimated excess of (i) the
sum of the Acquired Liquid Assets and Physical Capital over (ii) the
Assumed Liabilities, each as reflected on the Other Acquired Businesses
Interim Net Book Value Statement, is greater than $580,000,000, the
Purchaser shall deliver to a member of the Seller Group designated by
the Seller for the account(s) of the appropriate member(s) of the Seller
Group on the Other Acquired Businesses Closing Date, an amount in cash
equal to the excess of (i) such estimated excess over (ii) $580,000,000,
payable in Federal funds by 4 p.m.
(b) To the extent, if any, the estimated excess of (i) the
sum of the Acquired Liquid Assets and Physical Capital over (ii) the
Assumed Liabilities as reflected on the Other Acquired Businesses
Interim Net Book Value Statement is less than $580,000,000, the Seller
shall deliver to the Purchaser on the Other Acquired Businesses Closing
Date, an amount in cash equal to the excess of (i) $580,000,000 over
(ii) such estimated excess, payable in Federal funds by 4 p.m.
(c) The parties hereto agree that with respect to any
Other Acquired Businesses Securities Inventory to be purchased on the
Other Acquired Businesses Closing Date, interest thereon shall accrue
through but excluding the trade date for the account of the Seller and
from and including the trade date through the settlement date for the
account of the Purchaser. Promptly following the settlement date the
Seller shall remit to the Purchaser any amount so accrued for the
account of the Purchaser.
SECTION 4.06 License Agreement. For purposes of
Section 7.11 of the Asset Purchase Agreement, (i) the period of time
referred to therein as "within two years after the Closing Date" shall
mean by December 31, 1996 and the period of time referred to therein as
"for two years following the Closing Date" shall mean until December 31,
1996, and (ii) the non-transferable royalty-free license right retained
therein to each member of the Seller Group shall also include the right
to use such names, or any derivative thereof, in the operation of
Related Retail Brokerage and Asset Management until the transfer thereof
to the Purchaser (and the Purchaser shall not use such names, or any
derivatives thereof, in the conduct of any retail brokerage or asset
management business until the transfer of Related Retail Brokerage or
Asset Management, as applicable). The Purchaser shall indemnify each
Seller Indemnitee against any Loss suffered by such Seller Indemnitee,
as incurred, for or on account of or arising from or in connection with
or otherwise with respect to the use by the Purchaser or its assigns of
the names "Kidder" and "Kidder Peabody" or any derivative thereof. The
Parent and the Seller shall jointly and severally indemnify each
Purchaser Indemnitee against any Loss suffered by such Purchaser
Indemnitee, as incurred, for or on account of or arising from or in
connection with or otherwise with respect to the use by any member of
the Seller Group of the names "Kidder" and "Kidder Peabody" or any
derivative thereof. Indemnification hereunder shall be subject to the
procedures and limitations set forth in Section 12.03 and Section 12.05
of the Asset Purchase Agreement and shall be in addition to the
indemnification provided in Article XII of the Asset Purchase Agreement.
SECTION 4.07 Management of Related Retail Brokerage and
Asset Management. (a) Except as otherwise agreed in writing between
the Purchaser and the Seller, (i) the employment by the Purchaser of any
Continuing Employee of Related Retail Brokerage shall not be effective
until the Related Retail Brokerage Closing and (ii) the employment by
the Purchaser of any Continuing Employee of Asset Management shall not
be effective until the Asset Management Closing; provided that, to the
extent that any such Continuing Employee is required for, or engaged in,
the Conversion, such employment shall not be effective until the later
to occur of (x) completion of Conversion or (y) the Related Retail
Brokerage Closing or the Asset Management Closing, as the case may be.
(b) Prior to each of the Related Retail Brokerage Closing
and the Asset Management Closing, the Seller shall provide to the
Purchaser a list of Contracts, if any, not otherwise identified to the
Purchaser pursuant to Section 7.03(b) of the Asset Purchase Agreement to
which any member of the Seller Group is a party and arising out of or
used primarily by such Seller Group member in the conduct of Related
Retail Brokerage and Asset Management, respectively, to the extent such
list can be prepared without undue burden. The Purchaser shall have the
right to review any Contract on such list and may, within 30 days after
delivery of such list, elect by notice in writing to the Seller to
assume any Contract on such list. Upon giving of such notice and the
execution by the Purchaser of any appropriate instrument of transfer,
such Contract shall thereafter be an Assigned Contract for all purposes
under the Transaction Documents, including for the purposes of
determining the Assumed Liabilities. This Section 4.07(b) shall be in
addition to the rights of the Purchaser under Section 2.07(c) of the
Asset Purchase Agreement.
(c) With respect to the activities currently conducted by
the money market trading desk of the Seller, those activities will be
described in writing in reasonable detail to the Purchaser by December
16, 1994. The Purchaser shall notify the Seller by December 23, 1994 as
to which, if any, such activities it desires to acquire and those
activities so identified shall thereafter be treated as forming a part
of Related Retail Brokerage for purposes of this Agreement.
SECTION 4.08 Absence of Restraint. The Related Retail
Brokerage Closing shall be subject only to notification in writing of
the Purchaser to the Seller, on or prior to January 2, 1995, that the
condition set forth in Section 14.05 of the Asset Purchase Agreement has
not been satisfied. If no notification has been received by the Seller
by January 2, 1995, such condition shall be deemed to have been
satisfied or waived as of such date.
SECTION 4.09 Facility Services. The parties hereto
acknowledge that, in connection with the transfer of the Acquired
Businesses to the Purchaser, the Purchaser (or its designee) may have
short-term needs to use and occupy certain space owned or leased by the
Parent or the Seller, pending relocation as promptly as practicable to
other facilities. The parties hereto agree to enter into arrangements,
on terms substantially similar to those in the Revocable License
Agreement to be entered into between Kidder Peabody & Co. Incorporated
and PaineWebber Incorporated prepared by Rosenman & Colin, to permit the
Purchaser to use and occupy such space.
SECTION 4.10 International Matched Book. The parties
hereto acknowledge that the business of the Seller Group generally known
as International Matched Book is not an Acquired Business. Prior to the
Other Acquired Businesses Closing Date, the parties hereto shall enter
into an arrangement which provides, among other things, that, to the
extent permitted by Applicable Law, (i) employees of the Purchaser shall
manage the liquidation of the Securities inventory of International
Matched Book at the direction and for the account of the Seller Group,
(ii) the Seller shall bear the reasonable costs and expenses of such
employees, including a reasonable hourly fee, and (iii) the Seller shall
agree to indemnify the Purchaser for all Losses arising out of the
management of the liquidation of such Securities inventory, except for
Losses resulting from the negligence or wilful misconduct of such
employees or the Purchaser.
SECTION 4.11 Municipal Finance. For the period from
the Other Acquired Businesses Closing to the Related Retail Brokerage
Closing, the Purchaser shall act as principal, subject to best
execution, for trades of any member of the Seller Group in Securities to
support the Municipal Finance business of Retail Brokerage.
SECTION 4.12 Bridge Fund. The parties hereto
acknowledge that, following the Other Acquired Businesses Closing, the
Purchaser may at its election participate (including the assumption of
the obligations that would be associated with such participation) in the
so-called Bridge Fund in lieu of and to the extent that the Seller Group
currently may participate, and the parties hereto shall take such steps
as may be reasonably necessary to permit such result.
ARTICLE V
RELATED RETAIL BROKERAGE BUSINESS
SECTION 5.01 Margin Debit; Related Retail Brokerage
Securities Inventory. (a) Prior to the Related Retail Brokerage
Closing Date, the Purchaser and the Seller shall agree on (i) a list of
margin debt of customers of Retail Brokerage held by any member of the
Seller Group in connection with the conduct of Related Retail Brokerage
that is to be acquired by the Purchaser (the "Margin Debit") and (ii)
the fair market value of the Margin Debit as of the close of business on
the most recent practicable date (but in no event earlier than the fifth
Business Day prior to the Related Retail Brokerage Closing Date). The
Margin Debit shall constitute Acquired Assets.
(b) Prior to the Related Retail Brokerage Closing Date, the
Purchaser and the Seller shall agree (in the case of over-the-counter
equity Securities, in the manner pursuant to Section 5.01(c)) on (i) the
Securities and off-balance sheet hedges and derivatives, if any, held by
any member of the Seller Group in connection with the conduct of Related
Retail Brokerage, if any, that are to be acquired by the Purchaser (the
"Related Retail Brokerage Securities Inventory"), and reduce such
agreement to a list, and (ii) the fair market value of the Related
Retail Brokerage Securities Inventory as of the close of business on the
most recent practicable date. The Related Retail Brokerage Securities
Inventory shall constitute Acquired Assets. Any Security or off-balance
sheet hedge or derivative held by any member of the Seller Group in
connection with the conduct of Related Retail Brokerage that is not on
the list of Related Retail Brokerage Securities Inventory shall
constitute an Excluded Asset.
(c) By December 15, 1994 the Purchaser shall review the
over-the-counter equity Securities inventory of Related Retail Brokerage
and notify in writing the Seller of the Securities, if any, in such
inventory that the Purchaser does not wish to acquire. Until the
Related Retail Brokerage Closing Date, the Purchaser shall be permitted
on a weekly basis to review any changes in such inventory and notify in
writing the Seller of the Securities therein that the Purchaser does not
wish to acquire. Any over-the-counter equity Securities forming part of
the Securities inventory of Related Retail Brokerage on the Related
Retail Brokerage Closing Date that the Purchaser has not notified in
writing to the Seller that it does not wish to acquire shall form part
of the Related Retail Brokerage Securities Inventory.
(d) The parties hereto agree that Section 2.08 (Exclusion
of Selected Securities), Section 2.09 (Return of Securities), Section
2.10 (The LM Expert), Section 5.18 (Securities), Section 7.01(d)
(Actions and Conduct of Acquired Businesses Before the Closing Date) and
Section 9.05 (Off-Balance Sheet Positions) of the Asset Purchase
Agreement have not been applied, and shall not apply, to the Related
Retail Brokerage Securities Inventory.
SECTION 5.02 Related Retail Brokerage Closing Date.
(a) The closing with respect to Related Retail Brokerage (the "Related
Retail Brokerage Closing") shall take place at the offices of Cravath,
Swaine & Moore at 825 Eighth Avenue, New York, New York 10019 at 10:00
a.m. on January 30, 1995 the "Related Retail Brokerage Closing Date").
(b) The conditions set forth in Articles XIII and XIV of
the Asset Purchase Agreement, having been satisfied or waived by the
appropriate party, except as set forth in Section 4.09, on or before the
Other Acquired Businesses Closing Date, shall not be applicable to the
Related Retail Brokerage Closing or the Asset Management Closing.
SECTION 5.03 Related Retail Brokerage Closing. At the
Related Retail Brokerage Closing:
(a) the Purchaser shall deliver to a member of the Seller
Group designated by the Seller for the account(s) of the member(s) of
the Seller Group transferring the Acquired Assets:
(i) an amount in cash equal to the excess, if any, of the
sum of (x) the excess of the Acquired Liquid Assets over the
Assumed Liabilities as reflected on the Related Retail Brokerage
Interim Net Book Value Statement and (y) an amount equal to the
estimated net book value of Physical Capital of Related Retail
Brokerage, up to a maximum of $20 million less an amount equal to
the estimated net book value of the sum of (A) Physical Capital of
Real Estate, as determined pursuant to Section 3.04, and (B)
Physical Capital of the Other Acquired Businesses, as determined
pursuant to Section 4.04, payable in Federal funds by 11:00 a.m.,
and
(ii) an Assumption Agreement pursuant to which the
Purchaser assumes the Assumed Liabilities arising out of Related
Retail Brokerage, duly executed by the Purchaser; and
(b) the Seller shall transfer to the Purchaser (or its
designee) the Margin Debit and the Related Retail Brokerage Securities
Inventory reflected on the Related Retail Brokerage Interim Balance
Sheet, the other Acquired Assets of Related Retail Brokerage and all
other Acquired Assets not previously transferred to the Purchaser (or
its designee) other than those used primarily in the operation of Asset
Management, by delivering the applicable Conveyancing Documents, duly
executed by the appropriate members of the Seller Group.
SECTION 5.04 Related Retail Brokerage Interim Balance
Sheet. On the date two Business Days before the Related Retail
Brokerage Closing Date, the Seller shall deliver to the Purchaser (i) an
estimated balance sheet of Related Retail Brokerage prepared as of the
Related Retail Brokerage Closing Date (the "Related Retail Brokerage
Interim Balance Sheet") prepared in accordance with the Balance Sheet
Principles, except that the value of each of the Margin Debit and the
Related Retail Brokerage Securities Inventory included in such Interim
Balance Sheet shall be the value agreed pursuant to Section 5.01(a) and
Section 5.01(b), respectively, and (ii) a schedule based on the Related
Retail Brokerage Interim Balance Sheet detailing the calculation of the
estimated excess of the Acquired Liquid Assets over the Assumed
Liabilities to be delivered on the Related Retail Brokerage Closing Date
(the "Related Retail Brokerage Interim Net Book Value Statement").
SECTION 5.05 Transfer of IRAs, SEPs and QPs. Exhibit 1
hereto sets forth the agreement of the parties with respect to the costs
and expenses arising out of or in connection with transfer of (i) all of
the assets of the individual retirement accounts for which a member of
the Seller Group has acted as the broker/dealer designated by the
participants to the Purchaser (or its designee), as successor custodian
of such individual retirement accounts, (ii) sponsorship of a simplified
employee pension for use with certain of such individual retirement
accounts to the Purchaser (or its designee) and (iii) all of the assets
of the self-directed qualified retirement plans for which a member of
the Seller Group is the broker/dealer designated by such plans to the
Purchaser (or its designee), as successor trustee.
ARTICLE VI
ASSET MANAGEMENT BUSINESS
SECTION 6.01 Asset Management Closing Date. The
closing with respect to Asset Management (the "Asset Management
Closing") shall take place at the offices of Cravath, Swaine & Moore at
825 Eighth Avenue, New York, New York 10019 at 10:00 a.m., on the second
Business Day following the later to occur of (i) the earlier of (x)
receipt of an exemptive order from the Commission concerning the Funds,
in form and substance reasonably satisfactory to each of the parties
hereto, and (y) the holding of meetings of shareholders of substantially
all of the Funds at which approval of investment advisory agreements
providing that an affiliate of Purchaser act as an investment advisor
were considered and (ii) the earlier of (x) receipt of an exemptive
order from the Commission concerning the managed accounts of Asset
Management, in form and substance reasonably satisfactory to each of the
parties hereto, and (y) receipt of substantially all of the Required
Consents with respect to the managed accounts of Asset Management
(except for such accounts as are terminated or as to which the Purchaser
and the Seller agree Required Consents will not be received), or at such
other place and time as may be mutually agreed to by the parties hereto,
but in no event shall the Asset Management Closing take place later than
April 30, 1995 (the date the Asset Management Closing occurs being
referred to herein as the "Asset Management Closing Date"). The
consummation of the Asset Management Closing shall not limit, terminate
or otherwise impair the obligations of the Parent and the Seller under
Section 2.04 and Section 7.06 of the Asset Purchase Agreement.
SECTION 6.02 Asset Management Closing. At the Asset
Management Closing:
(a) the Purchaser shall deliver to Seller an Assumption
Agreement pursuant to which the Purchaser assumes the Assumed
Liabilities arising out of Asset Management, duly executed by the
Purchaser; and
(b) the Seller shall transfer to the Purchaser (or its
designee) the Acquired Assets of Asset Management, by delivering the
applicable Conveyancing Documents, duly executed by the appropriate
members of the Seller Group.
SECTION 6.03 Asset Management Closing Adjustment. (a)
In the event that the Asset Management Closing shall occur prior to the
final determination of the Closing Balance Sheet, the Acquired Assets
and Assumed Liabilities of Asset Management shall be deemed transferred
or assumed, as the case may be, at the Related Retail Brokerage Closing
and shall be included in the Closing Balance Sheet.
(b) In the event that the Asset Management Closing shall
occur after the final determination of the Closing Balance Sheet, an
appropriate cash payment shall be made by the Purchaser or the Seller,
as applicable, calculated as if such Acquired Assets and Assumed
Liabilities had been transferred or assumed, as the case may be, at the
Related Retail Brokerage Closing and had been included in the Closing
Balance Sheet.
SECTION 6.04 Financial Counselors, Inc. On the date on
which the business carried on under the names "Financial Counselors",
"Financial Counselors, Inc." and "FCI" is transferred to the Purchaser,
the Seller shall, within a reasonable period of time necessary to carry
out such actions, cause each applicable member of the Seller Group to
change its name to delete therefrom such names, or any derivative
thereof, and to cease doing business under such names and any such
derivative. On and after such date, each member of the Seller Group
shall execute and deliver such documents as the Purchaser may reasonably
request to permit the Purchaser or one of its Affiliates to carry on
business under such names. Nothing herein contained shall be deemed to
involve the acquisition of the capital stock of Financial Counselors,
Inc. or the acquisition of a separate Other Acquired Business; it being
understood that the assets of the organization shall only be acquired as
part of Asset Management.
ARTICLE VII
CLOSING BALANCE SHEET
SECTION 7.01 Closing Balance Sheet. (a) For purposes
of Section 3.04 of the Asset Purchase Agreement, the Closing Balance
Sheet shall be a consolidated balance sheet prepared in accordance with
the Balance Sheet Principles, including (i) the Acquired Assets and
Assumed Liabilities of Real Estate as of the Real Estate Closing Date,
(ii) the Acquired Assets and Assumed Liabilities of the Other Acquired
Businesses as of the Other Acquired Businesses Closing Date, (iii) the
Acquired Assets and Assumed Liabilities of Related Retail Brokerage as
of the Related Retail Brokerage Closing Date and (iv) to the extent the
Asset Management Closing occurs prior to the final determination of the
Closing Balance Sheet, the Acquired Assets and Assumed Liabilities of
Asset Management.
(b) For purposes of Section 3.04(c) of the Asset Purchase
Agreement and the Balance Sheet Principles, the parties hereto agree
that the fair market value of each of the Real Estate Securities
Inventory, the Other Acquired Businesses Securities Inventory, the
Margin Debit and the Related Retail Brokerage Securities Inventory shall
be the values agreed pursuant to Section 3.01(a)(ii), Section
4.01(a)(ii), Section 5.01(a)(ii) and Section 5.01(b)(ii), respectively.
(c) The determination to be made pursuant to Section
3.04(b) of the Asset Purchase Agreement shall take into account (i) the
amount of any payments made by the Purchaser to the Seller pursuant to
Section 3.03(a)(i), Section 4.05(a) and Section 5.03(a)(i) (which shall
be deemed to be increases in the Assumed Liabilities) and (ii) the
amount of any payments made by the Seller to the Purchaser pursuant to
Section 4.05(b) (which shall be deemed to be increases in Acquired
Liquid Assets). Interest pursuant to Section 3.04(b) of the Asset
Purchase Agreement shall accrue from the Other Acquired Businesses
Closing Date.
ARTICLE VIII
TAX
SECTION 8.01 Closing Dates. The provisions of Section
5.06, Section 11.01, Section 11.02, Section 11.03 and Section 11.04 of
the Asset Purchase Agreement shall be applied in each case with
reference to the relevant one of the date of the asset transfer in
Section 2.01, the Asset Management Closing Date, the Other Acquired
Businesses Closing Date, the Real Estate Closing Date and the Related
Retail Brokerage Closing Date.
SECTION 8.02 FIRPTA. The certificate described in
Section 11.05 of the Asset Purchase Agreement shall be delivered by the
Seller or the appropriate member of the Seller Group at the Real Estate
Closing.
ARTICLE IX
ASSET PURCHASE AGREEMENT
SECTION 9.01 Representations and Warranties. (a)
Except as otherwise provided in this Agreement, the representations and
warranties set forth in Articles V and VI of the Asset Purchase
Agreement shall be made by the Parent, the Seller and the Purchaser, as
the case may be, as of each of the Real Estate Closing Date, the Other
Acquired Businesses Closing Date, the Related Retail Brokerage Closing
Date and the Asset Management Closing Date, with respect to the
businesses being transferred on such date; provided that a party hereto
shall be deemed not to be in breach of any representation or warranty if
such representation or warranty would not have been breached except as a
result of the provisions of this Agreement or the transactions
contemplated hereby.
(b) For purposes of Section 14.01 of the Asset Purchase
Agreement, a certificate of the Parent to be delivered to the Purchaser
shall be signed by any Vice President of the Parent and a certificate of
the Seller shall be signed by the chief executive officer or the chief
financial officer of the Seller.
SECTION 9.02 Return of Selected Assets. For purposes
of Section 2.07 of the Asset Purchase Agreement, the term "Closing Date"
shall mean the date on which the relevant Acquired Asset was transferred
to the Purchaser (or its designee).
SECTION 9.03 Allocation of Purchase Price. (a) The
parties hereto intend that the transfers of the Acquired Businesses to
the Purchaser on the date of the asset transfer in Section 2.01, the
Asset Management Closing Date, the Other Acquired Businesses Closing
Date, the Real Estate Closing Date and the Related Retail Brokerage
Closing Date (collectively, for purposes of this Section 9.03, the
"Closing Dates") shall be a single integrated transaction, the several
transfers on such Closing Dates being solely for the convenience of the
parties hereto. Except as otherwise provided in this Agreement, the
provisions of Section 9.02 of the Asset Purchase Agreement shall be
applied to the aggregate Purchase Price and not separately to amounts of
cash or stock paid on any particular Closing Date. The amounts payable
on any such Closing Date are not necessarily allocable solely to assets
transferred on such Closing Date.
(b) The value of the portion of the aggregate
consideration transferred to the Purchaser that is transferred in
exchange for the Redeemable Preferred Stock shall equal the aggregate
liquidation preference of the Redeemable Preferred Stock minus the value
of the right to receive the Deferred Purchase Price, if applicable. The
value of the portion of the aggregate consideration transferred to the
Purchaser that is transferred in exchange for the Convertible Preferred
Stock shall equal the aggregate liquidation preference of the
Convertible Preferred Stock.
(c) The Purchaser and the Seller shall agree on estimated
allocations of the Purchase Price, consistent with the allocation of
Purchase Price principles articulated in Section 9.03(a) of this
Agreement and Section 9.02 of the Asset Purchase Agreement (unless
legally unable to do so), to the extent and at such time as is necessary
to permit the making of timely Transfer Tax filings.
(d) To the extent the Purchaser and the Seller are required
(pursuant to the provisions of Section 1060 of the Code and the
regulations thereunder) to file a Form 8594 with respect to all or a
part of the assets transferred in the transactions contemplated by this
Agreement before all such contemplated transactions are completed (the
"Initial Form 8594"), the Purchaser shall provide to the Seller the
proposed Allocation Statements with respect to the assets transferred
prior to the date of required filing of the Initial Form 8594 pursuant
to the provisions of Section 9.02(a) of the Asset Purchase Agreement.
(e) With respect to all assets transferred in the
transactions contemplated by this Agreement which will not be listed on
the Initial Form 8594, the Purchaser shall provide to the Seller the
proposed Allocation Statements described in Section 9.02(a) of the Asset
Purchase Agreement pursuant to the provisions of Section 9.02(a) of the
Asset Purchase Agreement. The Purchaser and the Seller shall timely
amend the Initial Form 8594 to include all of the transfers on all of
the Closing Dates, notwithstanding that such Closing Dates will not all
occur within the same tax year. The Purchaser and the Seller shall file
a Form 8594, substantially in the form of the Initial Form 8594, as
amended, for the tax year in which the last of the transactions
contemplated by this Agreement is completed.
SECTION 9.04 Assumed Liabilities; Excluded Liabilities.
(a) For the purposes of Section 2.05 of the Asset Purchase Agreement,
the term "Closing Date" shall mean the date on which the Acquired
Business out of which the applicable Assumed Liability arose was
transferred to the Purchaser (or its designee).
(b) For the purposes of Section 2.06(iv) and Section
2.06(vii) of the Asset Purchase Agreement, the terms "Closing" and
"Closing Date" shall mean the closing at which, or the date on which, as
applicable, the applicable Acquired Asset or Acquired Business was
transferred to the Purchaser (or its designee). For the purposes of
Section 2.06(v) of the Asset Purchase Agreement, the term "Closing"
shall mean the closing at which the Acquired Business out of which the
applicable liability or obligation arose was transferred to the
Purchaser (or its designee) or, if none, the Other Acquired Businesses
Closing.
SECTION 9.05 Delayed Assets. For the purposes of
Section 2.04 of the Asset Purchase Agreement, the term "Closing Date"
shall mean the date on which the applicable Delayed Asset or Delayed
Liability would have been transferred to, or assumed by, the Purchaser
but for the absence of a Required Consent.
SECTION 9.06 Undertaking. The parties hereto
acknowledge that the following issues have not yet been agreed upon:
(i) the sharing of certain Investment Banking, Real Estate, Municipal
Finance and other advisory fees; (ii) the allocation of certain costs
and expenses relating to or arising out of Asset Management; (iii) costs
associated with the licensing of certain software; (iv) certain issues
relating to the list of the employees to be delivered, and the timing of
such delivery, pursuant to Section 3.01(b) of the Restructuring
Agreement; (v) the methodology for resolution of the "in treatment"
status of employees referred to in Section 3.03 of the Restructuring
Agreement; and (vi) certain Contracts identified to Purchaser with
respect to which the period of time in Section 2.07(c) has not yet
expired. The parties hereto undertake in good faith to resolve such
issues on mutually acceptable terms prior to the Other Acquired
Businesses Closing Date.
SECTION 9.07 Deferred Purchase Price. Payments of the
Deferred Purchase Price, if any, shall commence to accrue as of the
Other Acquired Businesses Closing Date.
SECTION 9.08 Redeemable Preferred Stock. For the
purposes of the letter agreement dated October 17, 1994 among the
Purchaser, the Parent and the Seller concerning the Redeemable Preferred
Stock, the term the "Closing" shall mean the Other Acquired Businesses
Closing.
SECTION 9.09 Other References to Closing and Closing
Date. The parties hereto acknowledge that the Asset Purchase Agreement
contains numerous references to the "Closing" and the "Closing Date" not
addressed in this Agreement and that it is their intention that, except
as otherwise set forth in this Agreement, each such reference be
construed as a reference to the Real Estate Closing, the Other Acquired
Businesses Closing, the Related Retail Brokerage Closing or the Asset
Management Closing or, in each case, the date thereof, as applicable.
SECTION 9.10 Acquired Businesses. For the purposes of the
Transaction Documents, the "Acquired Businesses" shall mean Asset
Management, Real Estate and Related Retail Brokerage and the businesses
of the Seller Group generally known by the names Equity Research,
Investment Banking (excluding High Yield and Emerging Markets), Fixed
Income (sales force only), International Institutional Equity (Geneva,
Zurich and Hong Kong), International Fixed Income (London, Geneva,
Zurich, Hong Kong, Singapore and part of Tokyo, if applicable), Listed
Domestic Futures and Municipal Finance (excluding sales and trading).
SECTION 9.11 Contract Guarantees. For employees of the
Seller Group who have contract guarantees for 1995 and beyond, the
Seller agrees to be responsible for the difference between (i) the
amount of compensation guaranteed to such employees and (ii) any lesser
amount of compensation being offered by the Purchaser to such employees
in good faith and on terms at least comparable to market terms (salary
and bonus). The Seller shall have the right to review and object to any
offer of compensation which it believes is not on terms at least
comparable to market terms. Any disagreements between the Seller and
the Purchaser about whether any offer of compensation is on terms at
least comparable with market terms will be finally determined by
McLagan.
SECTION 9.12 Assigned Contracts. Unless the Purchaser
otherwise specifically agrees in writing, no employment agreement or
standardized revenue contract shall be included within the Assigned
Contracts.
ARTICLE X
RESTRUCTURING AGREEMENT
SECTION 10.01 Restructuring Agreement. The following
terms used in the Restructuring Agreement shall have the meanings set
forth below. The section references set forth below in this Section
10.01 are to sections of the Restructuring Agreement.
(a) For purposes of Section 2.04 (Clearance Services), the
term "Closing Date" shall mean the Related Retail Brokerage Closing
Date.
(b) For purposes of Section 3.01(c) (Employee List) and
Section 3.05(a) (Severance Programs), the terms "Closing" and "Closing
Date" shall mean the Other Acquired Businesses Closing and Other
Acquired Businesses Closing Date, respectively.
(c) For purposes of Section 3.03 (Medical Benefit Plans),
the term "Closing Date" shall mean the closing date on which employment
by the Purchaser of the applicable Continuing Employee becomes
effective.
(d) In Section 3.07 (Employee Forgivable Loans), Section
3.08(a) (Deferred Broker Production Program) and Section 4.02 (Closure
of Hanover Square Offices), the term "Closing" shall mean the Related
Retail Brokerage Closing.
(e) The following sentence shall be deleted from Section
4.01 of the Restructuring Agreement:
"The Purchaser shall close, or direct the closing of, the retail
brokerage branches identified on such list by December 31, 1995."
(f) The parties hereto acknowledge that this Agreement is
not intended to effect any substantive change in the allocation of
rights and responsibilities under the Restructuring Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Successors and Assigns. Except as
otherwise provided in this Agreement and except for an assignment by the
Purchaser to one of its Affiliates, no party hereto shall assign this
Agreement or any right or obligations hereunder without the prior
written consent of the other parties hereto, and any such attempted
assignment without such prior written consent shall be void and of no
force and effect; provided that no such assignment shall reduce or
otherwise vitiate any of the obligations of any other party hereunder.
This Agreement shall inure to the benefit of and shall be binding upon
the successors and permitted assigns of the parties hereto.
SECTION 11.02 Governing Law; Jurisdiction. (a) This
Agreement shall be construed, performed and enforced in accordance with,
and governed by, the laws of the State of New York, without giving
effect to the principles of conflicts of laws thereof.
(b) Each party irrevocably submits to the exclusive
jurisdiction of (i) the Supreme Court of the State of New York, New York
County, and (ii) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated
hereby. Each party hereto agrees to commence any action, suit or
proceeding relating hereto either in the United States District Court
for the Southern District of New York or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons,
in the Supreme Court of the State of New York, New York County. Each
party hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (A) the Supreme
Court of the State of New York, New York County, or (B) the United
States District Court for the Southern District of New York, and hereby
further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 11.03 Severability. In the event that any part
of this Agreement is declared by any court or other judicial or
administrative body to be null, void or unenforceable, said provision
shall survive to the extent it is not so declared, and all of the other
provisions of this Agreement shall remain in full force and effect and
the parties hereto shall negotiate in good faith to replace the part
hereof declared null, void or unenforceable with an alternative
provision that preserves for the parties hereto the benefits of this
Agreement.
SECTION 11.04 Notices. All notices, requests, demands
and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given as provided in Section 16.05 of
the Asset Purchase Agreement.
SECTION 11.05 Amendments; Waivers. This Agreement may
be amended or modified, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only by
a written instrument executed by the parties hereto or, in the case of a
waiver, by the party waiving compliance. Any waiver by any party hereto
of any condition, or of the breach of any provision, term, covenant,
representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as a further or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
SECTION 11.06 Parties in Interest. Nothing in this
Agreement is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the Parent, the
Seller and the Purchaser and their respective successors and permitted
assigns. Nothing in this Agreement is intended to relieve or discharge
the obligations or liability of any third persons to the Seller or the
Purchaser. No provision of this Agreement shall give any third persons
any right of subrogation or action over or against the Seller or the
Purchaser.
SECTION 11.07 Agreement of the Parties. To the extent
the provisions of, or the transactions contemplated by, this Agreement
are inconsistent or in conflict with the provisions of, or the
transactions contemplated by, the other Transaction Documents, each of
the parties hereto agrees that the provisions of, or the transactions
contemplated by, this Agreement shall govern. To the extent not
inconsistent herewith, the provisions of the Asset Purchase Agreement
are hereby confirmed in all respects.
SECTION 11.08 Headings. The section and paragraph
headings in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
SECTION 11.09 Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but
all of which shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
PAINE WEBBER GROUP INC.
By
-------------------------
Name:
Title:
GENERAL ELECTRIC COMPANY
By
-------------------------
Name:
Title:
KIDDER, PEABODY GROUP INC.
By
-------------------------
Name:
Title:
<PAGE>
Exhibit 99(d)
SECOND SUPPLEMENTAL AGREEMENT
SECOND SUPPLEMENTAL AGREEMENT dated as of December 16, 1994
among Paine Webber Group Inc., a Delaware corporation (the "Purchaser"),
General Electric Company, a New York corporation (the "Parent"), and
Kidder, Peabody Group Inc., a Delaware corporation (the "Seller").
WHEREAS, the parties hereto have previously entered into an
Asset Purchase Agreement dated as of October 17, 1994 (as amended and
supplemented, the "Asset Purchase Agreement") and a Restructuring
Agreement dated as of October 17, 1994 (as amended and supplemented, the
"Restructuring Agreement");
WHEREAS, the parties hereto have previously entered into a
Supplemental Agreement dated as of December 9, 1994 (the "First
Supplemental Agreement"); and
WHEREAS, the parties hereto desire to further supplement and
amend the provisions of the Asset Purchase Agreement, the Restructuring
Agreement and the First Supplemental Agreement in the manner set forth
in this Agreement;
NOW THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) Terms used herein and not
otherwise defined herein shall have the meanings set forth in the Asset
Purchase Agreement, the Restructuring Agreement or the First
Supplemental Agreement, as the case may be.
(b) As used in this Agreement, the following terms shall
have the following meanings:
"Municipal Bond Trading" has the meaning set forth in
Section 3.02(a).
"Municipal Bond Trading Securities" has the meaning set
forth in Section 3.02(b).
"Short Term Finance" has the meaning set forth in Section
3.01(a).
"Short Term Finance Securities" has the meaning set forth in
Section 3.01(a).
"Substitute Redeemable Preferred Stock" has the meaning set
forth in Section 2.01.
"Transfer Agent" shall mean the transfer agent for the
Common Stock.
(c) This Agreement shall be deemed to be a Transaction
Document and each reference in any of the Transaction Documents to the
Transaction Documents shall be deemed to include this Agreement.
SECTION 1.02 Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Asset Purchase Agreement
shall be applicable to this Agreement.
ARTICLE II
REDEEMABLE PREFERRED STOCK
SECTION 2.01 Redeemable Preferred Stock. (a) The
parties hereto acknowledge that the Purchaser has exercised its option,
pursuant to a letter agreement dated October 17, 1994 among the
Purchaser, the Parent and the Seller, to provide in lieu of the
Redeemable Preferred Stock a redeemable preferred stock of the Purchaser
(the "Substitute Redeemable Preferred Stock") with the same terms and
conditions as the Redeemable Preferred Stock except that the Substitute
Redeemable Preferred Stock shall be noncallable until the fifth
anniversary of the Other Acquired Businesses Closing Date. The parties
hereto further acknowledge that, in accordance with such letter
agreement, the Purchaser shall no longer have any obligation to pay the
Deferred Purchase Price, as contemplated by Section 3.05 of the Asset
Purchase Agreement. All references in the Transaction Documents to the
Redeemable Preferred Stock shall hereafter mean the Substitute
Redeemable Preferred Stock.
(b) The first sentence of Section 9.03(b) of the First
Supplemental Agreement is amended to read as follows:
"The value of the portion of the aggregate consideration
transferred to the Purchaser that is transferred in exchange for
the Redeemable Preferred Stock shall equal the aggregate
liquidation preference of the Redeemable Preferred Stock."
(c) The first sentence of Section 9.02(a) of the Asset
Purchase Agreement is amended to read as follows:
"The Seller and the Purchaser agree that the value of the
Redeemable Preferred Stock shall equal its liquidation preference,
the value of the Convertible Preferred Stock shall equal its
liquidation preference, and the value of the Common Stock
Consideration shall equal 21,500,000 multiplied by the mean of the
high and low per-share prices at which the Common Stock trades on
the NYSE on the Other Acquired Businesses Closing Date."
(d) The Purchaser represents and warrants that it is the
Purchaser's experience and expectation that the holders of convertible
debentures issued under the Purchaser's Key Executive Equity Program who
convert such debentures into convertible preferred stock proceed
promptly to convert such preferred stock into Common Stock.
ARTICLE III
OTHER ACQUIRED BUSINESSES CLOSING
SECTION 3.01 Short Term Finance. (a) The business of
the Seller Group generally known by the name Short Term Finance,
including the distribution and trading of commercial paper, auction rate
preferred stock and short-term certificates of deposits ("Short Term
Finance"), shall be an Other Acquired Business; provided that (i) the
employment by the Purchaser of any Continuing Employee of Short Term
Finance shall be effective as of December 19, 1994 and (ii) the
Securities held by the members of the Seller Group in connection with
the conduct of Short Term Finance (the "Short Term Finance Securities")
shall not be included in the Other Acquired Businesses Securities
Inventory. Any Short Term Finance Securities not purchased by the
Purchaser pursuant to Section 3.02(b) shall constitute Excluded Assets.
(b) The Purchaser hereby acknowledges that it has reviewed
the Short Term Finance Securities and hereby agrees to purchase on
December 16, 1994 (for settlement on December 19, 1994) a maximum of
$155 million of Short Term Finance Securities, consisting of (i) up to a
maximum of $100 million of commercial paper, valued at the current
market price on December 16, (ii) up to a maximum of $50 million of
auction rate preferred stock, valued at the lower of (A) the auction
price less the selling concession and (B) the current market price on
December 16 and (iii) up to a maximum of $5 million of certificates of
deposit, valued at the current market price on December 16; in each
case, such prices shall be determined by agreement between the Purchaser
and the Seller. The Purchaser shall have the right at any time on or
prior to December 16, 1994 to increase any of such maximum amounts.
(c) Notwithstanding the fact that the Other Acquired
Businesses Closing may not occur on December 16, 1994, the Acquired
Assets (other than the Short Term Finance Securities) of Short Term
Finance shall be transferred to the Purchaser and the Assumed
Liabilities of Short Term Finance shall be assumed by the Purchaser on
December 16, 1994 and the Short Term Finance Securities shall be
purchased by the Purchaser in accordance with Section 3.01(b).
(d) The parties hereto agree that Section 2.08 (Exclusion
of Selected Securities), Section 2.09 (Return of Securities), Section
2.10 (The LM Expert), Section 5.18 (Securities), Section 7.01(d)
(Actions and Conduct of Acquired Businesses Before the Closing Date) and
Section 9.05 (Off-Balance Sheet Positions) of the Asset Purchase
Agreement have not been applied, and shall not apply, to the Short Term
Finance Securities. Any off-balance sheet hedge or derivative held by
any member of the Seller Group in connection with the conduct of Short
Term Finance shall constitute an Excluded Asset.
(e) The Short Term Finance Securities and the cash
payment(s) to be made pursuant to Section 3.01(b) shall not be taken
into account for purposes of the Closing Balance Sheet as provided in
Section 3.04 of the Asset Purchase Agreement and Section 7.01 of the
First Supplemental Agreement.
(f) The Purchaser shall have until December 23, 1994 to
decide whether to assume the contract(s) of Short Term Finance related
to the Philadelphia Electric Company. Such contract(s) shall not be an
Assigned Contract unless the Purchaser shall agree in writing to assume
such contract(s) by such date.
(g) This Section 3.01 is intended to replace Section
4.07(c) of the First Supplemental Agreement.
SECTION 3.02 Municipal Bond Trading. (a) The business
of the Seller Group generally known by the name Municipal Bond Trading,
to the extent conducted through certain regional committing centers to
be agreed upon between the Purchaser and the Seller prior to the Related
Retail Brokerage Closing Date ("Municipal Bond Trading"), shall be an
Acquired Business but shall not be part of the Other Acquired Businesses
being transferred to the Purchaser on the Other Acquired Businesses
Closing Date.
(b) The parties hereto shall agree (i) on the regional
committing centers to be transferred to the Purchaser, the date or dates
of transfer thereof, and the procedures related thereto (including
whether any Acquired Assets of Municipal Bond Trading shall be included
in the Closing Balance Sheet), (ii) the Securities and off-balance sheet
hedges and derivatives, if any, held by any member of the Seller Group
in connection with the conduct of Municipal Bond Trading (the "Municipal
Bond Trading Securities") that are to be acquired by the Purchaser on
such date or dates and (iii) the fair market value of such Securities.
Any Security or off-balance sheet hedge or derivative held by any member
of the Seller Group in connection with the conduct of Municipal Bond
Trading that is not a Municipal Bond Trading Security shall constitute
an Excluded Asset.
(c) The parties hereto agree that Section 2.08 (Exclusion
of Selected Securities), Section 2.09 (Return of Securities), Section
2.10 (The LM Expert), Section 5.18 (Securities), Section 7.01(d)
(Actions and Conduct of Acquired Businesses Before the Closing Date) and
Section 9.05 (Off-Balance Sheet Positions) of the Asset Purchase
Agreement have not been applied, and shall not apply, to the Municipal
Bond Trading Securities.
(d) To the extent that the parties hereto agree to
transfer Municipal Bond Trading to the Purchaser prior to the Related
Retail Brokerage Closing Date, the covenant of the Purchaser set forth
in Section 4.11 of the First Supplemental Agreement shall apply for the
period from the date of such transfer to the Related Retail Brokerage
Closing Date.
SECTION 3.03 Physical Capital. (a) The Physical
Capital of the Other Acquired Businesses shall be transferred to the
Purchaser on the Other Acquired Businesses Closing Date but shall not be
included in the Other Acquired Businesses Interim Balance Sheet.
(b) The Physical Capital of the Other Acquired Businesses
and the Physical Capital, if any, of the former business of the Seller
Group generally known by the name Listed Domestic Futures (Chicago
Branch) shall be included in the Related Retail Brokerage Interim
Balance Sheet.
(c) For purposes of the calculation set forth in Section
5.03(a)(i) of the First Supplemental Agreement, the Physical Capital
referred to in Section 3.03(b) shall be deemed to be Physical Capital of
Related Retail Brokerage.
SECTION 3.04 Investment Banking Offices. The Purchaser
hereby agrees that, from the Other Acquired Businesses Closing Date,
neither it nor any Continuing Employees of Investment Banking shall use
or occupy the existing Investment Banking offices of the members of the
Seller Group in Atlanta, Boston, Chicago or Fort Lauderdale. The parties
hereto agree that the Purchaser shall have until December 23, 1994 to
decide whether Continuing Employees, if any, of Investment Banking in
the existing Investment Banking offices of members of the Seller Group
in Houston and San Francisco shall have a short-term need to use or
occupy space in such offices and, if the Purchaser so decides, the
parties shall enter into a mutually satisfactory arrangement regarding
such short-term occupancy.
SECTION 3.05 Facility Services. The Purchaser hereby
agrees that, from the Other Acquired Businesses Closing Date, neither it
nor any Continuing Employee shall use or occupy the space owned or
leased by the Parent or the Seller in Mexico City, Sao Paolo or Tokyo.
SECTION 3.06 Advisory Fees and Expenses. Exhibit 1
hereto sets forth the agreement of the parties hereto with respect to
(i) the sharing of certain Investment Banking and other advisory fees
and (ii) the reimbursement of expenses incurred by members of the Seller
Group in connection with certain Investment Banking and other advisory
assignments.
SECTION 3.07 Eurobond Securities Inventory. For
purposes of determining the amount of any payment to be made pursuant to
Section 4.05 of the First Supplemental Agreement, the fair market value
of the Eurobond Securities forming part of the Other Acquired Businesses
Securities Inventory as reflected on the Other Acquired Businesses
Interim Balance Sheet shall be the fair market value of such Securities
as of the close of business on the Business Day prior to the Other
Acquired Businesses Closing Date, as agreed between the Purchaser and
the Seller. For all other purposes, including the Closing Balance
Sheet, the fair market value of such Eurobond Securities shall be the
fair market value as of the Other Acquired Businesses Closing Date, as
agreed between the Purchaser and the Seller.
SECTION 3.08 Settlement. Exhibit 2 hereto sets forth
the agreement of the parties hereto with respect to the settlement of
(i) the portion of the Other Acquired Businesses Securities Inventory
consisting of Eurobonds and (ii) certain short positions of the Seller
Group consisting of Eurobond Securities and U.S. Treasury obligations.
The parties hereto acknowledge that the Other Acquired Businesses
Securities Inventory consists only of Eurobond Securities and short
positions related thereto.
SECTION 3.09 Cooperation. The Purchaser shall
cooperate with the Seller to cause the books of the Transfer Agent to
reflect (i) the issuance of Common Stock to the members of the Seller
Group who are initially transferring the Acquired Assets of the Other
Acquired Businesses to the Purchaser (which members shall be identified
in writing to the Purchaser and the Transfer Agent on or prior to the
Other Acquired Businesses Closing Date) and (ii) the subsequent transfer
of any of such Common Stock to members of the Seller Group.
SECTION 3.10 Certain Exchange Seats. (a) On the Other
Acquired Business Closing Date, three seats on the Chicago Board Options
Exchange, with a purchase price of $426,000 each, shall be transferred
to the Purchaser. These three seats shall not be included as Other
Liquid Assets on the Other Acquired Businesses Interim Balance Sheet,
and the payment of the purchase price thereof shall be made by the
Purchaser directly to the Chicago Board Options Exchange for the account
of the Seller. One of such seats shall be leased as of the Other
Acquired Businesses Closing Date by the Seller from the Purchaser
pursuant to an agreement entered into between the Purchaser and the
Seller.
(b) On the Other Acquired Businesses Closing Date, two
seats on the Chicago Board of Trade shall be transferred to the
Purchaser. These two seats shall not be included as Other Liquid Assets
on the Other Acquired Businesses Interim Balance Sheet, and the payment
of the purchase price thereof (based on an amount equal to the then
current bid price plus one dollar) shall be made by the Purchaser
directly to the Chicago Board of Trade for the account of the Seller. A
third seat on the Chicago Board of Trade shall be transferred to the
Purchaser on the Related Retail Brokerage Closing Date. This third seat
shall not be included as Other Liquid Assets on the Related Retail
Brokerage Interim Balance Sheet, and the payment of the purchase price
thereof (based on an amount equal to the then current bid price plus one
dollar) shall be made by the Purchaser directly to the Chicago Board of
Trade for the account of the Seller.
(c) The parties hereto agree that the Exchange Seats
referred to in Sections 3.10(a) and (b) are the only Exchange Seats
being acquired by the Purchaser. All other Exchange Seats of any member
of the Seller Group shall constitute Excluded Assets.
ARTICLE IV
SUPPLEMENTAL MATTERS
SECTION 4.01 Asset Management. The Purchaser and the
Seller have agreed to the allocation of certain costs and expenses
relating to or arising out of the asset management businesses of the
Purchaser and the Seller, as reflected in a memorandum dated December
15, 1994 from the general counsel of the Purchaser to the general
counsel of the Seller.
SECTION 4.02 In Treatment Status. The parties hereto
agree that, notwithstanding the provisions of Section 3.03 of the
Restructuring Agreement, the medical benefit plans (including medical
and dental coverage) of the Purchaser shall waive pre-existing
conditions in respect of Continuing Employees and their dependents
including in respect of all conditions which are in treatment status as
of the applicable closing date and the Seller shall have no obligation
to provide any coverage for expenses of Continuing Employees and their
dependents incurred on or after the applicable closing date in respect
of all conditions which are in treatment status at the applicable
closing date. In consideration thereof, a payment shall be made by the
Seller to the Purchaser by January 30, 1995 and the amount of such
payment shall be determined pursuant to the methodology set forth in
Exhibit 3 hereto (with such changes as may be agreed upon by the
Purchaser and the Seller).
SECTION 4.03 Conduct of the Acquired Businesses. The
parties hereto acknowledge that, since the date of the Asset Purchase
Agreement, the Acquired Businesses have been operated primarily with a
view to preparing for the transactions contemplated by the Asset
Purchase Agreement, the Restructuring Agreement, the First Supplemental
Agreement and this Agreement and, to that extent, have not been operated
in the ordinary course consistent with past practice. Notwithstanding
the foregoing, the Seller reaffirms the covenant contained in Section
7.01(b) of the Asset Purchase Agreement to the extent it relates to the
businesses of Related Retail Brokerage and Asset Management, subject to
whatever limitations exist and will continue to exist as a result of
these businesses being operated with a view to preparing for the
transactions contemplated by the Asset Purchase Agreement, as to which
Seller and Purchaser have conferred on a regular basis and will continue
to confer.
SECTION 4.04 Acquired Businesses. (a) The business of
the Seller Group generally known by the name Asset Management
(structured products) shall not be part of Asset Management and shall
constitute an Excluded Business.
(b) The parties hereto acknowledge that the Purchaser is
not acquiring the International Fixed Income business of the Seller
Group conducted in the Tokyo office of the Seller, but that the
Purchaser is hiring certain individuals in the Tokyo office of the
Seller Group who are engaged in the International Fixed Income business.
(c) The business of the Seller Group generally known by the
name S&P Index Options and Futures shall constitute an Excluded
Business.
SECTION 4.05 Outstanding Put Options. Notwithstanding
any provision in any Transaction Document, the parties recognize and
accept that a member of the Seller Group has a contingent obligation to
purchase Common Stock up to a maximum of 99,000 shares pursuant to put
options already issued and outstanding, which options expire on or about
December 20, 1994. If such options are exercised, the Seller Group
shall be permitted to comply with its obligations under such options to
purchase such Common Stock and shall resell such Common Stock in the
market in an orderly fashion within 30 days of such purchase without
being considered to be in violation of any Transaction Document.
SECTION 4.06 Seller Indemnitees. The definition of
Seller Indemnitee in the Asset Purchase Agreement is amended as follows:
"Seller Indemnitees" shall mean the Parent and its
Affiliates (other than any Included Subsidiary) and their
respective officers, directors, employees, agents and advisors.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Incorporation by Reference. The
provisions of Article XI of the First Supplemental Agreement shall be
incorporated by reference herein and each reference therein to the First
Supplemental Agreement shall apply to this Agreement as if this
Agreement were referred to therein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
PAINE WEBBER GROUP INC.
By
-------------------------
Name:
Title:
GENERAL ELECTRIC COMPANY
By
-------------------------
Name:
Title:
KIDDER, PEABODY GROUP INC.
By
-------------------------
Name:
Title:
