SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) December 17, 1998
BULL & BEAR GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-9667 13-1897916
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) ID Number)
11 Hanover Square, New York, NY 10005
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (212) 785-0900
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 17, 1998, Bull & Bear Group, Inc., a Delaware corporation
(the "Seller"), entered into a definitive agreement, subject to customary
closing conditions, to sell all of the outstanding common stock of Bull & Bear
Securities, Inc., a Delaware corporation and wholly owned subsidiary of the
Seller (the "Company"), to RBC Holdings (USA) Inc. (the "Purchaser"), an
affiliate of the Royal Bank of Canada, for approximately U.S. $6 million (the
"Sale"). As part of the Sale, the Seller will transfer its rights to the Bull &
Bear name and subsequently change its name and the names of its other
subsidiaries and affiliates. Mark C. Winmill, President and Chief Executive
Officer of the Company, will continue to serve as Chief Operating Officer of the
Company pursuant to an Employment Agreement between him and the Purchaser, dated
December 17, 1998. Bull & Bear Securities, Inc. will continue to operate its
discount brokerage business.
The parties also entered into a Services Agreement, dated December 17,
1998, under which the Seller will continue to provide certain services to the
Company for a period of time.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits - the following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2 Purchase Agreement, dated as of December 17, 1998,
by and among the Purchaser, the Seller and the
Company, with all exhibits thereto.*
99.1 Press Release of the Company dated December 17, 1998
announcing consummation of the Sale.
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* A Lease agreement form has been omitted from the EDGAR filing, but will be
submitted in paper form to the Securities and Exchange Commission.
<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 thereunto duly authorized.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
---------------------
Thomas B. Winmill
Co-President, General Counsel
Dated: December 17, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2 Purchase Agreement, dated as of December 17,
1998, by and among the Purchaser, the Seller and
the Company, with all exhibits thereto.
99.1 Press Release of the Company dated December 17, 1998
announcing consummation of the Sale.
[Execution Copy]
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT
by and among
RBC HOLDINGS (USA) INC.,
BULL & BEAR SECURITIES, INC.
and
BULL & BEAR GROUP, INC.
Dated as of December 17, 1998
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<PAGE>
Table of Contents
Page
RECITALS
A. The Company and Stockownership............................................1
B. The Purchase and Sale of the Company Stock................................1
C. Bull & Bear Money Market Fund.............................................1
D. The Sale and Assignment of Certain Intellectual Property..................1
E. Other Ancillary Agreements and Documents..................................1
Article I Definitions
Section 1.1 Definitions of Certain Terms.....................................2
Section 1.2 Interpretation..................................................10
Article II The Acquisition and Consideration
Section 2.1 The Acquisition.................................................11
Section 2.2 Purchase Price..................................................11
Section 2.3 Closing.........................................................12
Article III Representations and Warranties Concerning the Company
Section 3.1 Standard........................................................12
Section 3.2 Representations and Warranties Concerning the Company...........12
(a) Existence; Qualification; Authority...................12
(b) Capital Stock.........................................12
(c) Subsidiaries..........................................13
(d) Authorization and Validity............................13
(e) Regulatory Consents...................................13
(f) No Conflicts..........................................13
(g) Financial Reports.....................................14
(h) Absence of Undisclosed Liabilities....................14
(i) Absence of Certain Events.............................15
(j) Properties and Assets.................................16
(k) Intellectual Property; Name Rights....................16
(l) Year 2000.............................................17
(m) Litigation; Regulatory Action.........................18
(n) Compliance with Laws..................................18
(o) Material Contracts....................................20
(p) Reports...............................................21
(q) No Brokers or Finders.................................21
(r) Employee Benefit Plans................................21
(s) Labor Matters.........................................23
(t) Insurance.............................................24
(u) Takeover Laws.........................................24
(v) Environmental Matters.................................24
(w) Taxes.................................................24
(x) Accounting Controls...................................26
(y) Investment Advisory Activities........................26
Article IV Representations and Warranties of Seller
Section 4.1 Standard........................................................26
Section 4.2 Representations and Warranties of Seller........................26
(a) Existence; Qualification; Authority...................27
(b) Authorization and Validity............................27
(c) Ownership of Stock....................................27
(d) Regulatory Consents; Corporate Proceedings............27
(e) No Conflicts..........................................28
(f) Intellectual Property; Name Rights....................28
(g) Litigation; Regulatory Action.........................29
(h) SEC Documents; Financial Statements...................29
(i) Leases................................................30
(j) No Brokers or Finders.................................30
(k) Bull & Bear Money Market Fund..........................30
Section 4.3 Representations and Warranties Concerning Adviser and
Distributor...................................................30
(a) Existence; Qualification; Authority...................30
(b) Regulatory Consents...................................30
(c) Investment Advisory Activities........................30
(d) Investment Contracts..................................31
(e) Service Contracts.....................................32
(f) Litigation; Regulatory Action..........................32
(g) Compliance with Laws..................................32
(h) Reports...............................................34
Article V Representations and Warranties of Purchaser
Section 5.1 Standard........................................................34
Section 5.2 Representations and Warranties of Purchaser.....................34
(a) Existence and Good Standing...........................34
(b) Authorization and Validity............................34
(c) Regulatory Consents...................................35
(d) No Conflicts..........................................35
(e) Litigation; Regulatory Action.........................35
(f) No Brokers or Finders.................................35
Article VI Covenants
Section 6.1 Conduct of the Business.........................................36
(a) The Company...........................................36
(b) Seller................................................38
Section 6.2 Consents........................................................38
Section 6.3 Current Information.............................................39
Section 6.4 Access; Information.............................................39
Section 6.5 Effect of Investigations........................................40
Section 6.6 Press Releases, Etc.............................................40
Section 6.7 Reasonable Efforts..............................................40
Section 6.8 Regulatory Applications.........................................41
Section 6.9 Tax Matters.....................................................41
(a) Section 338(h)(10)....................................41
(1) Election.....................................41
(2) Allocation of Purchase Price.................41
(b) Liability for Taxes and Related Matters...............42
(1) Seller Liability for Taxes...................42
(2) Purchaser Liability For Taxes................42
(3) Taxes for Short Taxable Year.................42
(4) Adjustment to Purchase Price.................42
(5) Refunds from Carrybacks......................42
(6) Tax Returns..................................43
(7) Contest Provisions...........................43
(8) Termination of Tax Allocation Agreements.....44
(c) Transfer Taxes........................................44
(d) Information to be Provided by Purchaser...............44
(e) Assistance and Cooperation............................44
(f) Section 1445..........................................44
(g) Survival of Obligations...............................45
(h) Determination and Allocation of Consideration.........45
Section 6.10 Key Man Insurance..............................................45
Section 6.11 Employee Benefit Plans.........................................45
Section 6.12 Assignment Agreement...........................................47
Section 6.13 Change of Name; Use of Name....................................47
Section 6.14 Non-Competition; Non-Solicitation..............................47
Section 6.15 Stockholder Approvals..........................................48
Section 6.16 Transfer of Certain Assets.....................................48
Section 6.17 Company Lease..................................................48
Section 6.18 Bull & Bear Dollar Reserves....................................48
(a) Exclusivity...........................................48
(b) Monthly Fee............................................49
(c) Disclosure............................................50
Article VII Conditions to Consummation of the Acquisition
Section 7.1 Conditions to Each Party's Obligations to Consummate............50
(a) Governmental and Regulatory Approvals..................50
(b) Third Party Consents..................................50
(c) No Injunction.........................................50
Section 7.2 Conditions to Obligations of Purchaser..........................50
(a) Representations and Warranties........................51
(b) Performance of Obligation.............................51
(c) Employment Contract and Services Agreement............51
(d) Acquisition Consent...................................51
(e) Lease.................................................51
(f) Assignment Agreement..................................52
(g) Book Value............................................52
(h) No Onerous Condition..................................52
(i) Deliveries by Seller..................................52
(j) Legal Opinion.........................................52
Section 7.3 Conditions to Obligations of the Company and Seller.............53
(a) Representations and Warranties........................53
(b) Performance of Obligations............................53
Article VIII Survival of Representations and Covenants; Indemnification
Section 8.1 Survival of Representations and Covenants.......................53
Section 8.2 Indemnification.................................................53
Section 8.3 Indemnification Procedure.......................................55
Section 8.4 Calculation of Costs; Remittance of Benefits....................56
Article IX Termination
Section 9.1 Termination.....................................................56
Section 9.2 Effect of Termination...........................................57
Article X Other Matters
Section 10.1 Waiver; Amendment..............................................57
Section 10.2 Counterparts...................................................58
Section 10.3 Governing Law..................................................58
Section 10.4 Arbitration. ..................................................58
Section 10.5 Waiver of Jury Trial...........................................59
Section 10.6 Expenses.......................................................59
Section 10.7 Notices........................................................59
Section 10.8 Entire Understanding; No Third Party Beneficiaries.............60
Section 10.9 Assignment.....................................................60
Section 10.10 Judicial Amendment............................................61
Section 10.11 Legal Association.............................................61
Annex A Form of Assignment Agreement
Annex B Form of Employment Contract
Annex C Form of Services Agreement
Annex D Form of Stockholder Written Consent
Annex E Form of Press Release
Annex F Form of Lease
Schedule 4.2(f) List of Names and Logos
Schedule 6.11(a) Continued Company Employees
<PAGE>
PURCHASE AGREEMENT, dated as of December 17, 1998 (this
"Agreement"), by and among RBC HOLDINGS (USA) INC. (the "Purchaser"), BULL &
BEAR SECURITIES, INC., a Delaware corporation (the "Company"), and BULL & BEAR
GROUP, INC., a Delaware corporation (the "Seller").
RECITALS:
A. The Company and Stockownership. Seller is the record and
beneficial holder of 100% of the issued and outstanding shares of common stock,
$0.01 par value per share, of the Company (the "Company Stock"), and the shares
of Company Stock held of record and beneficially by Seller constitute all of the
issued and outstanding shares of the capital stock of the Company.
B. The Purchase and Sale of the Company Stock. It is the
intention of the parties that, at the Closing Time (as defined below), Purchaser
will acquire from Seller all outstanding shares of the Company Stock, and that
each of Purchaser and Seller will make an election under Section 338(h)(10) of
the Internal Revenue Code of 1986 (the "Code") to treat this transaction as an
asset purchase for tax purposes.
C. Bull & Bear Money Market Fund. Bull & Bear Dollar Reserves
(the "Fund") is an open-end investment company registered under the Investment
Company Act of 1940 (the "Investment Company Act") qualified as a money market
fund in accordance with Rule 2a-7 under the Investment Company Act whose shares
(the "Shares") are registered under the Securities Act (as defined below). Bull
& Bear Advisers, Inc. (the "Adviser"), a wholly owned subsidiary of Seller,
manages the Fund and Investor Service Center, Inc. (the "Distributor"), a wholly
owned subsidiary of Seller, provides certain shareholder and distribution
services for the Fund. It is the intention of the parties that for the
three-year period following the Closing Time (as defined below), the Company
will exclusively offer the Fund to its customers as the money market fund into
which cash balances may be swept.
D. The Sale and Assignment of Certain Intellectual Property. It
is the intention of the parties that, at the Closing Time and in connection with
the purchase and sale of the Company Stock, Seller will sell, transfer and
assign to Purchaser the Name Rights (as defined below) pursuant to an Assignment
Agreement (the "Assignment Agreement") in substantially the form of Annex A.
E. Other Ancillary Agreements and Documents. As an inducement and
condition to Purchaser's willingness to enter into this Agreement, (1) Mark C.
Winmill has executed and delivered an Employment Contract (the "Employment
Contract") in substantially the form of Annex B, (2) Seller has executed and
delivered a Services Agreement (the "Services Agreement") in substantially the
form of Annex C and (3) Bassett S. Winmill, the sole stockholder of the voting
capital stock of Seller, has executed and delivered a written stockholder
consent in accordance with Delaware law approving the Acquisition (the
"Acquisition Consent") set forth in Annex D. It is the intention of the parties
that, prior to the Closing Time, the Company will enter into a lease with 11
Hanover Square Corp. in the form of Annex F (the "Lease") with respect to the
Company's principal place of business.
NOW, THEREFORE, in order to carry out their intent as expressed
above and in consideration of the premises and the mutual representations and
agreements contained herein, the parties hereto agree as follows:
Article I
Definitions
Section 1.1 Definitions of Certain Terms. As used in this
Agreement (and the Schedules and Annexes) the following terms have the meanings
indicated:
"AAA" has the meaning set forth in Section 10.4.
"Acquisition" has the meaning set forth in Section 2.1.
"Acquisition Consent" has the meaning set forth in Recital E.
"Adviser" has the meaning set forth in Recital C.
"Affiliate" of any person means any other person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such person. For purposes of this definition, the term
"control" (including the correlative meanings of the term "controlled by"
and "under common control with"), as used with respect to any person, shall
mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise.
"Agreement" has the meaning set forth in the Preamble.
"Ancillary Agreements" means the Services Agreement, the
Assignment Agreement and the Lease.
"Applicable Laws" means, for any person at any time of
determination, any law, rule or regulation or any judgment, decree, order,
governmental permit, license, certificate of authority, order or approval
(including any of a Self-Regulatory Organization) to which such person or
any of its properties is subject at such time.
"Arbitration Rules" has the meaning set forth in Section 10.4.
"Assignment Agreement" has the meaning set forth in Recital D.
"Board of Directors" means, for any person, the board of
directors of the person or any equivalent entity or group performing
similar functions with respect to the person under the laws of the person's
jurisdiction of organization or Constituent Documents.
"Book Value" means the excess (if any) of the assets of the
Company over the liabilities of the Company, determined in accordance with
GAAP; provided, however, that "Book Value" shall not include the
capitalization of any marketing expenses.
"Books and Records" shall mean all books, ledgers, files,
reports, plans, records, manuals and other materials (in any form or
medium) of, or maintained primarily for, the Company, including advertising
materials, price lists, correspondence, mailing lists, lists of customers,
distribution lists, sales and promotional materials and records, personnel
records, accounting records and sales order files.
"Bull & Bear Fund Corporation" means Bull & Bear Funds II, Inc.
"Bull & Bear Funds" means each registered investment company now
or in the future advised or managed by Seller or one of its Affiliates.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banks located in The City of New York generally are authorized
or required by law or regulation to close.
"Change of Control" shall mean, with respect to any entity (a
"Subject Entity"), any of the following occurring after the date hereof:
(A) any person or any persons (other than any person or persons who
controls a Subject Entity as of the date hereof and other than any
subsidiary of any person who controls a Subject Entity as of the date
hereof) acting together which would constitute a "group" (a "Group") for
purposes of Section 13(d) of the Exchange Act, or any successor provision
thereto, together with any Affiliates thereof, shall beneficially own (as
defined in Rule 13d-3 of the Exchange Act, or any successor provision
thereto) at least 50% of the aggregate voting power of all classes of
capital stock of a Subject Entity or its parent company ("Parent"), or any
entity controlling a Subject Entity or its Parent, as the case may be,
entitled to vote generally in the election of directors; (B) any person
(other than any person or persons who controls a Subject Entity as of the
date hereof and other than any subsidiary of any person who controls a
Subject Entity as of the date hereof) or Group, together with any
Affiliates thereof, shall succeed in having sufficient of its or their
nominees elected to the Board of Directors of a Subject Entity or its
Parent, or any entity controlling such Subject Entity or its Parent, as the
case may be, such that such nominees, when added to any director on the
Board of Directors of a Subject Entity or its Parent, or any entity
controlling a Subject Entity or its Parent, as the case may be, who is a
director prior to and subsequent to such election and who is an Affiliate
of any person within such Group, shall constitute a majority of the Board
of Directors of a Subject Entity or its Parent, or any entity controlling a
Subject Entity or its Parent, as the case may be; or (C) any circumstance
or event where Bassett S. Winmill will own less than 50% of the outstanding
voting stock of Seller or any successor entity as a result of merger,
acquisition, consolidation or otherwise; provided however, that the term
"Change of Control" will not include a Change of Control to Bassett S.
Winmill's spouse or linear descendants.
"Claim" has the meaning set forth in Section 8.3(a).
"Closing" has the meaning set forth in Section 2.3.
"Closing Balance Sheet" means a balance sheet of the Company as
of the Closing Time prepared in accordance with GAAP.
"Closing Time" has the meaning set forth in Section 2.3.
"Code" has the meaning set forth in Recital B.
"Company" has the meaning set forth in the Preamble.
"Company Compensation and Benefit Plans" has the meaning set
forth in Section 3.2(r)(1).
"Company Intellectual Property Rights" has the meaning set forth
in Section 3.2(k)(4).
"Company Stock" has the meaning set forth in Recital A.
"Company Stock Consideration" has the meaning set forth in
Section 6.9(a)(2).
"Compensation and Benefit Plans" has the meaning set forth in
Section 3.2(r)(1).
"Consideration" has the meaning set forth in Section 6.9(h).
"Constituent Documents" means the charter and bylaws of a
corporation, the partnership agreement of a partnership, the trust
agreement of a trust and the comparable documents of other entities.
"Continuing Employees" has the meaning set forth in Section
6.11(a).
"Contract" means, with respect to any person, any agreement,
indenture, undertaking, debt instrument, contract (written or oral), lease
or other commitment to which such person or any of its subsidiaries is a
party or by which any of them is bound or to which any of their properties
is subject.
"Costs" has the meaning set forth in Section 8.2.
"De Minimus Claim" has the meaning set forth in Section 8.2(d).
"DGCL" means the Delaware General Corporation Law.
"Disclosure Schedule" means, with respect to Seller, the Company
or Purchaser, as the case may be, a schedule delivered by it to the other
parties hereto (on or prior to the date of this Agreement) setting forth,
among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement
contained in a provision of this Agreement or as an exception to one or
more of the representations and warranties or covenants contained in this
Agreement; provided that:
(a) No item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty (except
for those contained in Sections 3.2(b), 4.2(b) and 4.2(c)) if its
nondisclosure would not result in the related representation or
warranty being deemed untrue or incorrect under the standard
established under Section 3.1, 4.1 or 5.1, respectively; and
(b) The mere inclusion of an item in a Disclosure Schedule
as an exception to a representation or warranty will not be an
admission by the disclosing party that such item (or any
non-disclosed item or information of comparable or greater
significance) represents a material exception or fact, event or
circumstance or that such item is reasonably likely to result in
a Material Adverse Effect with respect to the disclosing party.
"Distributor" has the meaning set forth in Recital C.
"Employment Contract" has the meaning set forth in Recital E.
"Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation, common law or order or requirement of
any Governmental Authority relating to (a) the protection of the
environment, (b) human health or safety or (c) the use, handling, release
or disposal of Hazardous Substances.
"ERISA" has the meaning set forth in Section 3.2(r)(2).
"ERISA Affiliate" has the meaning set forth in Section
3.2(r)(3).
"ERISA Plans" has the meaning set forth in Section 3.2(r)(2).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Fund" has the meaning set forth in Recital C.
"Fund Board" has the meaning set forth in Section 4.3(e).
"GAAP" means generally accepted accounting principles in the
United States, consistently applied throughout a relevant period.
"Governmental Authority" has the meaning set forth in Section
3.2(e).
"Hazardous Substance" means any substance listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type,
concentration or by quantity, including asbestos, petroleum, lead and
polychlorinated biphenyls.
"Indemnified Party" means the Purchaser Indemnified Parties or
Seller, as the case may be.
"Indemnifying Party" has the meaning set forth in Section 8.3(a).
"Information" has the meaning set forth in Section 6.4(b).
"Investment Advisers Act" means the Investment Advisers Act of
1940.
"Investment Company Act" has the meaning set forth in Recital C.
"Investment Management Contracts" has the meaning set forth in
Section 4.3(f).
"IRS" means the Internal Revenue Service.
"Lease" has the meaning set forth in Recital E.
"License Agreements" means those license agreements entered into
by Seller and certain third parties and attached as exhibits to Seller's
Annual Report on Form 10-K for the year ended December 31, 1997.
"Lien" means any mortgage, pledge, hypothecation, right of
others, claim, security interest, encumbrance, title defect, title
retention agreement, voting trust agreement, interest, option, lien, charge
or other condition, restriction or limitation of any nature whatsoever, but
excluding any restriction on transferability imposed by applicable law.
"Material Adverse Effect" means, with respect to any of the
Seller, Adviser, Distributor, the Company or Purchaser, any effect (whether
taken individually or in the aggregate) that (a) is materially adverse to
the financial condition, business, results of operations or properties of
it and its subsidiaries taken as a whole or (b) would prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
"Monthly Fee" means the monthly fee payable by the Company to the
Seller pursuant to Section 3.1 of the Services Agreement.
"Multiemployer Plans" has the meaning set forth in Section
3.2(r)(2).
"Names" has the meaning set forth in Section 6.13.
"Name Rights" has the meaning set forth in Section 4.2(f).
"Net Tax Liability" means, with respect to any Costs of an
Indemnified Party, the amount, if any, by which (a) the sum of all federal,
state and local Taxes, if any, required to be paid by the Indemnified Party
in respect of the receipt or accrual of any payments by any Indemnifying
Parties in respect of such Costs under Article VIII exceeds (b) the present
value of any reduction in taxes of such Indemnified Party by reason of
deductions, credits or allowances ("Tax Benefits") in respect of the
payment or accrual of the Costs recognized by such Indemnified Party.
"Onerous Condition" has the meaning set forth in Section 6.7.
"Pension Plan" has the meaning set forth in Section 3.2(r)(2).
"Previously Disclosed" means, with respect to Seller, the Company
or Purchaser, information set forth in its Disclosure Schedule, whether in
response to an express informational requirement or as an exception to one
or more representations or warranties or covenants, in each case, that is
contained in a correspondingly enumerated portion of such Disclosure
Schedule.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Indemnified Parties" means Purchaser and its
affiliates (including, after the Acquisition, the Company) and their
respective directors, officers and agents, and any successors thereto.
"Purchaser Pension Plan" has the meaning set forth in Section
6.11(d).
"Purchaser's 401(k) Plan" has the meaning set forth in Section
6.11(d).
"Related Funds" means Bull & Bear Funds I, Inc., Bull & Bear
Funds II, Inc., Bull & Bear Dollar Reserves, Bull & Bear Gold Investors
Ltd., Bull & Bear Special Equities Fund, Inc., Bull & Bear U.S. and
Overseas Fund, Bull & Bear U.S. Government Securities Fund Inc. or any
other Bull & Bear Fund using any of the Name Rights.
"Regulatory Reports" has the meaning set forth in Section 3.2(p).
"Rights" means, with respect to any capital stock, securities or
obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls, commitments or
obligations of any character (including those relating to issuance,
purchase, redemption, conversion, exchange, redemption or transfer)
relating to, shares of such capital stock.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 4.2(h).
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Self-Regulatory Organization" means the National Association of
Securities Dealers, Inc. and any other commission, board, agency or body
that is not a Governmental Authority but is charged with the supervision or
regulation of broker-dealers, investment companies or investment advisers,
or to the jurisdiction of which Purchaser, the Company or Seller, as
applicable, is otherwise subject.
"Seller" has the meaning set forth in the Preamble.
"Seller Group" shall mean any "affiliated group" (as defined in
Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the Code) that includes Seller or any predecessor of or
successor to Seller (or another such predecessor or successor).
"Seller Indemnified Parties" means Seller and its directors,
officers and agents, and any successors thereof.
"Seller Intellectual Property Rights" has the meaning set forth
in Section 4.2(f)(4).
"Seller's Savings Plan" has the meaning set forth in Section
6.12.
"Services Agreement" has the meaning set forth in Recital E.
"Service Contracts" has the meaning set forth in Section 4.3(g).
"Shares" has the meaning set forth in Recital C.
"Takeover Laws" has the meaning set forth in Section 3.2(u).
"Tax Benefits" has the meaning set forth in the definition of
"Tax Package" has the meaning set forth in Section 6.9(d).
"Tax Returns" shall mean all reports and returns required to be
filed on or before the Closing Time with respect to the Taxes of the
Company or the Seller Group including, without limitation, consolidated
federal income tax returns of the Seller Group.
"Taxes" means all federal, state, local or foreign taxes or other
governmental charges, fees, levies and assessments of whatever kind or
nature, including all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, premium, recording, documentary,
transfer, back-up withholding or similar taxes, together with any interest,
additions, or penalties with respect thereto and any interest in respect of
such additions or penalties.
"Third-Party Intellectual Property Rights" means any licenses,
sublicenses and other agreements as to which any person or any of its
subsidiaries is a party and pursuant to which such person or any of its
subsidiaries is authorized to use any third-party patents, trademarks,
service marks, copyrights, software programs or applications.
"Welfare Plan" has the meaning set forth in Section 6.11(b).
"Y2K Compliant" means, with respect to any computer software or
hardware, that the hardware or software is able accurately to process date
and time data (including calculating, comparing, and sequencing) from, into
and between the twentieth and twenty-first centuries, and the years 1999
and 2000 and leap year calculations, and will not generate erroneous data
or cause a system to fail because of a date of the year 1999 or greater.
"Y2K Plan" has the meaning set forth in Section 3.2(l).
Section 1.2 Interpretation. (a) As used in this Agreement,
references to the following terms will have the meanings indicated:
(1) To the Preamble or to the Recitals, Sections, Annexes or
Schedules are to the Preamble or a Recital or Section of, or Annex or
Schedule to, this Agreement unless otherwise indicated.
(2) To any agreement (including this Agreement), contract,
statute or regulation, are to the agreement, contract, law or
regulation as amended, modified, supplemented or replaced from time to
time, and to any section of any statute or regulation are to any
successor to the section.
(3) To "individually or in the aggregate" (or phrases of
similar import) used in or with respect to Articles III, IV, V or VI
include (A) all events, occurrences and circumstances described in any
Section of that Article and is not limited to any specific Section and
(B) all other relevant events, occurrences and circumstances, whether
or not described in a representation, warranty or covenant contained
in this Agreement.
(4) To any "person" include any individual, corporation,
business trust, partnership, association, limited liability company,
joint venture or similar organization, or any Governmental Authority,
including any Self-Regulatory Organization.
(b) Whenever this Agreement requires a party to take an
action, the requirement constitutes an undertaking by the party to cause its
subsidiaries, and to use its best efforts to cause its other affiliates, to take
appropriate action in connection therewith.
(c) The Table of Contents of this Agreement and various
headings contained herein are for reference purposes only and do not limit or
otherwise affect any of the provisions of this Agreement.
(d) Whenever the words "include," "includes" or "including"
are used in this Agreement, they will be deemed to be followed by the words
"without limitation." Any singular term in this Agreement will be deemed to
include the plural, and any plural term the singular. All pronouns and
variations thereof will be deemed to refer to the feminine, masculine or neuter,
singular or plural, as the identity of the person referred to may require.
(e) It is the intention of the parties that this Agreement
not be construed more strictly with regard to one party than with regard to any
other party.
(f) No rule of construction against the draftsperson shall
be applied in connection with the interpretation and enforcement of this
Agreement.
Article II
The Acquisition and Consideration
Section 2.1 The Acquisition. On the terms and conditions set
forth in this Agreement, at the Closing Time, (a) Seller agrees to sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, the Company Stock, and (b) Seller agrees to sell, transfer
and assign to Purchaser all right, title and interest of Seller in, to and under
the Name Rights (collectively, the "Acquisition"). The certificates representing
the Company Stock will be duly endorsed in blank, or accompanied by stock powers
duly executed in blank, by Seller transferring same to Purchaser with all
necessary transfer tax and other revenue stamps, acquired at Seller's expense,
affixed and canceled. Seller agrees to cure any deficiencies with respect to the
endorsements of the certificates representing the Company Stock or with respect
to the stock power accompanying any such certificates so that the Purchaser has
title to the Company Stock free and clear of any Liens. The Name Rights shall be
transferred and assigned pursuant to the Assignment Agreement.
Section 2.2 Purchase Price. The purchase price for the Company
Stock and the Name Rights will be $6,000,000 and paid by Purchaser in
immediately available funds at the Closing Time (the "Purchase Price").
Section 2.3 Closing. The closing of the Acquisition
(the"Closing") will take place on the last Business Day of the month in which
the last of the conditions set forth in Article VII (other than conditions
relating solely to the delivery of documents dated the date of the Closing Time)
has been satisfied or waived in accordance with the terms of this Agreement or
on such other date as Purchaser and Seller may mutually designate in writing,
and the Acquisition will be effective as of the close of business on such date
(or on such other time and date as Purchaser and Seller may mutually designate
in writing). The date and time that the Acquisition becomes effective is
referred to in this Agreement as the "Closing Time".
Article III
Representations and Warranties Concerning the Company
Section 3.1 Standard. No representation or warranty contained
in Section 3.2 (other than those contained in Section 3.2(b)) will be deemed to
be untrue or incorrect, and neither Seller nor the Company will be deemed to
have breached any such representation or warranty, as a consequence of the
existence of any fact, circumstance or event that should have been disclosed as
an exception to such representation or warranty, unless such undisclosed fact,
event or circumstance (individually or in the aggregate) has had or would be
reasonably likely to have a Material Adverse Effect on the Company.
Section 3.2 Representations and Warranties Concerning the
Company. Except as Previously Disclosed, each of Seller and the Company, jointly
and severally, represents and warrants to Purchaser as follows:
(a) Existence; Qualification; Authority. The Company is a
corporation duly organized and validly existing under the laws of
Delaware and is duly qualified to do business and is in good standing
in the States of the United States and other jurisdictions where its
ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified. The Company has the corporate
power and authority necessary to carry on its business as it is now
being conducted and to own all its properties and assets. Before the
date of this Agreement, the Company has made available to Purchaser a
complete and correct copy of its Constituent Documents, each as
amended to such date, and such Constituent Documents are in full force
and effect and have not been amended since such date.
(b) Capital Stock. (1) There are no shares of Company Stock
authorized or reserved for issuance, there are no Rights issued or
outstanding with respect to the Company's capital stock, and the
Company has no commitments or obligations to authorize, issue, sell or
grant any shares of its capital stock, or Rights with respect thereto,
except pursuant to this Agreement. The outstanding shares of Company
Stock are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights and were not issued
in violation of any subscriptive or preemptive rights.
(2) The 100 shares of Company Stock as held of record and
beneficially by Seller constitute all of the issued and outstanding
shares of capital stock of the Company.
(c) Subsidiaries. The Company has no subsidiaries.
(d) Authorization and Validity. Each of this Agreement and
the Services Agreement has been duly authorized, executed and
delivered by the Company, and the Company has the requisite corporate
power and authority, and has taken all corporate action necessary, in
order to authorize this Agreement and the Services Agreement and the
transactions contemplated hereby and thereby; and, at the Closing
Time, the Lease will be duly authorized, executed and delivered by the
Company, and the Company will have the requisite corporate power and
authority, and will have taken all corporate action necessary, in
order to authorize the Lease and the transactions contemplated
thereby. Each of this Agreement and the Services Agreement is, and, at
the Closing Time, the Lease will be, the legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer and other laws affecting
creditors' rights generally and to general equitable principles.
(e) Regulatory Consents. Except for the receipt of the
regulatory approvals, the expiration of waiting periods and the
required filings under federal and state securities laws and the laws
of jurisdictions outside the United States, in each case as Previously
Disclosed, no notices, reports or other filings are required to be
made by the Company with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by the
Company from, any domestic or foreign governmental or regulatory
authority, agency, court, commission or other entity (each, a
"Governmental Authority") or any Self-Regulatory Organization in
connection with the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby. To the Company's and Seller's
knowledge, there is no reason why the regulatory approvals and
consents referred to in this Section 3.2(e), Section 4.2(d) or in
Section 5.2(c) will not be received without the imposition of an
Onerous Condition.
(f) No Conflicts. The execution, delivery and performance of
each of this Agreement, the Services Agreement and the Lease by the
Company does not and will not, and (upon the receipt of the approvals,
expiration of the waiting periods and the making of the filings
referred to in Section 3.2(e)) the consummation of the transactions
contemplated hereby will not, with or without the giving of notice,
the lapse of time or both:
(1) Violate or conflict with the Company's
Constituent Documents;
(2) Breach or violate, or result in a default
under, any Applicable Law with respect to the Company or
permit or result in the revocation, cancellation, suspension
or adverse modification of any permit, license, certificate
of authority, order or approval to which the Company or any
of its properties or assets is subject;
(3) Breach or result in a default under, permit
the termination of, permit the acceleration of the
performance required by, or revise in any material way, any
Contract of or binding on the Company or to which it (or its
properties or assets) is subject or result in the creation
or imposition, pursuant to any of the foregoing, of any Lien
on the properties or assets of the Company.
(g) Financial Reports. The Company's audited financial
statements for the fiscal years ended December 31, 1995, 1996 and 1997
and its unaudited financial statements for the quarters ended
subsequent to December 31, 1997 have been made available to Purchaser.
Each of the balance sheets contained therein (including the related
notes and schedules thereto) fairly presented (or in the case of any
financial statements made available after the date of this Agreement,
will fairly present) the financial position of the Company as of the
date of such balance sheet, and each of the statements of income,
stockholders' equity and cash flows or equivalent statements contained
therein (including any related notes and schedules thereto) fairly
presented (or in the case of any financial statements made available
after the date of this Agreement, will fairly present) the results of
operations, changes in stockholders' equity, and cash flows, as the
case may be, of the Company for the periods set forth therein, in
accordance with GAAP consistently applied, except in each case as may
be noted therein, subject to normal year-end audit adjustments in the
case of interim unaudited statements.
(h) Absence of Undisclosed Liabilities. There are no
liabilities of the Company of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances known to
the Company which could reasonably be expected to result in such a
liability, except (1) as reflected in the financial statements
referred to in Section 3.2(g), (2) for commitments and obligations
made, or liabilities incurred, in the ordinary course of its business
consistent with past practices subsequent to the date of such
financial statements or (3) as Previously Disclosed.
(i) Absence of Certain Events. Since December 31, 1997, the
business of the Company has been conducted in the ordinary and usual
course of such business, consistent with past practice, and there has
not been:
(1) Any event, occurrence, development or state of
circumstances or fact (excluding those arising from economic
conditions generally) that has had or could reasonably be expected to
have a Material Adverse Effect on the Company;
(2) Any amendment of any term of any outstanding security of
the Company or to the Company's Constituent Documents;
(3) Other than in the ordinary course of business consistent
with past practice, any incurrence of any indebtedness by the Company,
or any assumption, guarantee, endorsement or otherwise by the Company
of any obligations of any other person;
(4) Any creation or assumption by the Company of any Lien
other than in the ordinary and usual course of business consistent
with past practice;
(5) Any making of any loan, advance or capital contributions
to, or investment in, any person, in each case, other than in the
ordinary and usual course of business consistent with past practice
and not involving any Affiliate, director, officer, consultant,
partner or employee of Seller or of the Company or any stockholder of
Seller;
(6) Any change in any accounting policies or practices by
the Company except as may have been made after the date of this
Agreement in accordance with Section 6.1(a)(2)(iii); or
(7) Any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer, consultant, partner or employee of the Company (or any
amendment to any such existing agreement), (B) grant of any severance
or termination pay to any director, officer, consultant, partner or
employee of the Company, or (C) change in compensation or other
benefits payable to any director, officer, consultant, partner or
employee of the Company, in each case except as may have been made
prior to the date of this Agreement with respect to non-officer
employees in the ordinary and usual course of business consistent with
past practice and as Previously Disclosed and except as may have been
made after the date of this Agreement in accordance with Section
6.1(a)(2)(vi).
(j) Properties and Assets. (1) The Company has good and
valid title to, or has the right to use, all of the properties and
assets, tangible and intangible, used by it to carry on its business
as currently conducted free and clear of any Liens. Seller and the
Company have Previously Disclosed all properties and assets, tangible
and intangible, as to which it does not have good and valid title but
which it uses to carry on its business as currently conducted that are
owned by an Affiliate of the Company. All buildings and all fixtures,
equipment, and other property and assets that are held under leases or
subleases by the Company are held under valid leases or subleases
enforceable in accordance with their respective terms subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization,
fraudulent transfer and other laws affecting creditors' rights
generally and to general equitable principles.
(2) The Company has good and marketable title to all
securities held by it (except securities sold under repurchase
agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in
the ordinary course and usual of business consistent with prudent
business practice to secure obligations of the Company. Such
securities are valued on the books of the Company in accordance with
GAAP, all investments are recorded at market value and all related
gains or losses are recorded in the income statement.
(3) Seller and the Company have Previously Disclosed, as of
the date hereof, a list of all equity securities and Rights the
Company holds for its own account involving, in the aggregate,
ownership or control (or potential ownership or control) of 5% or more
of any class of the issuer's voting securities or 25% or more of the
issuer's equity (treating subordinated debt as equity) and, as of the
Closing Time, no additional securities or Rights will need to be
included on such a list. Seller and the Company have Previously
Disclosed a list, as of the date hereof, of all partnerships, limited
liability companies, joint ventures or similar entities, in which it
is a general partner, manager, managing member or holds some other
similar position or owns or controls any interest, directly or
indirectly, of 5% or more of all such entities and the nature and
amount of each such interest and, as of the Closing Time, no
additional persons will need to be included on such a list.
(k) Intellectual Property; Name Rights. (1) The Company
owns, or is licensed or otherwise possesses rights to use all
trademarks, trade names, service marks, copyrights (and applications
therefor), computer software programs or applications, and tangible
and intangible proprietary information or materials that are used in
the business of the Company as currently conducted, and, to the
Company's and Seller's knowledge, all such intellectual property
rights held and used in the business currently conducted by the
Company are valid and subsisting.
(2) The Company owns and has the right to use, and after
consummation of the Acquisition will own and have the right to use and
protect, free and clear of any claims of others, all trademarks,
service marks (whether registered or unregistered), trademark
applications, service mark applications, trade names, copyrights,
software programs or applications and other proprietary rights
necessary to own and operate its properties and assets and to carry on
its business as currently conducted.
(3) The Company is not, and will not be, as a result of the
execution, delivery or performance of this Agreement by it or the
Seller, in violation of any known Third-Party Intellectual Property
Rights.
(4) To Seller's knowledge no claims with respect to (a) any
trademarks, trade names, service marks, copyrights (and applications
therefor), computer software programs or applications, and tangible
and intangible proprietary information or materials that are owned by
the Company (the "Company Intellectual Property Rights"); or (b)
Third-Party Intellectual Property Rights are currently pending or, to
the knowledge of Seller or the Company, have been threatened by any
person.
(5) The Company or Seller do not know of any valid grounds
for any bona fide claims (a) to the effect that the making, using,
selling, offering for sale or licensing of any product or services now
made, used, sold, offered for sale or licensed by the Company,
infringes on any copyright, patent, trademark, service mark or trade
secret of any third party; (b) against the use by the Company of any
trademarks, trade names, trade secrets, copyrights, or computer
software programs and applications used in the business of the Company
as currently conducted or as proposed to be conducted; (c) challenging
the ownership or validity of any of the Company Intellectual Property
Rights; or (d) challenging the license to use of the Third-Party
Intellectual Property Rights by the Company.
(6) To the Company's or Seller's knowledge there is no
unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, including any
employee or former employee of the Company.
(7) The Company owns or licenses all computer software and
hardware developed or currently used by it and has the right to use
such software and hardware without infringing upon the intellectual
property rights (including trade secrets rights) of a third party.
(l) Year 2000. The Company has adopted a plan of
reprogramming and testing for the purpose of assuring that all
computer software and hardware developed or currently used by it will
be Y2K Compliant (the "Y2K Plan"). A true and complete copy of the Y2K
Plan has been made available to Purchaser, and the Company is in the
process of effecting the Y2K Plan in accordance with the schedule
provided for therein including the reprogramming, replacing and
testing of all such software and hardware within the times provided
for in the Y2K Plan. To the Company's or Seller's knowledge, incurring
the costs to implement the Y2K Plan is not reasonably likely to have a
Material Adverse Effect on the Company.
(m) Litigation; Regulatory Action. There is no litigation,
proceeding, investigation or controversy pending (or, to the Company's
or Seller's knowledge, threatened) against or affecting the Company,
or to which any of the Company's properties or assets are subject,
before any Governmental Authority, Self-Regulatory Organization or
arbitrator.
(n) Compliance with Laws. Each of the Company, and, to the
best of the Company's and Seller's knowledge, the Company's officers
and employees (insofar as any of the following relates to any such
officer's or employee's conduct of business for or employment by the
Company):
(1) Is in compliance with all Applicable Laws and
all applicable rules of any Self-Regulatory Organization;
(2) Has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Governmental
Authorities and Self-Regulatory Organizations that are
required in order to permit the Company to own or lease its
properties and assets and to conduct its business as
presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full
force and effect and are current and, to the best of
Seller's and the Company's knowledge, no suspension or
cancellation of any of them is threatened or reasonably
likely;
(3) Without limiting the foregoing, to the extent
such person is required to be registered as an investment
adviser, broker-dealer, registered representative or
salesperson with the SEC, the securities commission of any
state or any Self- Regulatory Organization, such person is
duly registered as such and such registration is in full
force and effect and a list of all such registrations has
been Previously Disclosed;
(4) Is in good standing with all relevant
Governmental Authorities and is a member in good standing
with all relevant Self-Regulatory Organizations;
(5) Has not received, since January 1, 1996, any
notification or written communication (or, to the Company's
or Seller's knowledge, any other communication) from any
Governmental Authority or Self-Regulatory Organization (A)
asserting non-compliance with any of the statutes,
regulations, rules or ordinances that such Governmental
Authority or Self-Regulatory Organization enforces, (B)
threatening to revoke any license, franchise, seat on any
exchange, permit, or governmental authorization (nor, to the
Company's or Seller's knowledge, do any grounds for any of
the foregoing exist), (C) requiring such person (including
any of the Company's directors or controlling persons) to
enter into a cease and desist order, agreement, or
memorandum of understanding (or requiring the Board of
Directors thereof to adopt any resolution or policy), or (D)
restricting or disqualifying such person's activities
(except for restrictions generally imposed by rule,
regulation or administrative policy on investment advisors
or brokers or dealers generally);
(6) Is not the subject (to the Company's or
Seller's knowledge) of any pending or threatened
investigation, review or disciplinary proceedings by any
Governmental Authority or Self-Regulatory Organization;
(7) Is not, nor is any affiliate of such person,
subject to a "statutory disqualification" as defined in
Section 3(a)(39) of the Exchange Act or to a
disqualification that would be a basis for censure,
limitations on the activities, functions or operations of,
or suspension or revocation of the registration of the
Company as a broker-dealer, municipal securities dealer,
government securities broker or government securities dealer
under Section 15, Section 15B or Section 15C of the Exchange
Act and there is no reasonable basis for, or proceeding or
investigation, whether formal or informal, or whether
preliminary or otherwise, that is reasonably likely to
result in, any such censure, limitations, suspension or
revocation;
(8) Is not required to be registered (i) as an
investment company, investment adviser, insurance agent, or
transfer agent under any Applicable Law or (ii) in any
capacity under the Commodity Exchange Act or the rules and
regulations of the Commodity and Futures Trading Commission
(including as a commodity trading advisor, commodity pool
operator, futures commission merchant or introducing
broker);
(9) In the conduct of the Company's business with
respect to employee benefit plans subject to Title I of
ERISA, has not (A) breached any applicable fiduciary duty
under Part 4 of Title I of ERISA which would subject the
Company to liability under Sections 405 or 409 of ERISA or
(B) engaged in a "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975(c) of the Code that
would subject the Company to liability or Taxes under
Sections 409 or 502(i) of ERISA or Section 4975(a) of the
Code; and
(10) Is not subject to any cease-and-desist or
other order issued by, or a party to any written agreement,
consent agreement or memorandum of under standing with, or a
party to any commitment letter or similar undertaking to, or
subject to any order or directive by, a recipient of any
supervisory letter from or has adopted any board resolutions
at the request of any Governmental Authority or Self-
Regulatory Organization.
(o) Material Contracts. (1) Seller and the Company have
Previously Disclosed each of the following Contracts to which the
Company is a party, or by which the Company is bound or to which the
Company's properties or assets is subject:
(A) Any Contract providing for annual payments in
excess of $25,000 or aggregate payments in excess of
$50,000;
(B) Any lease of real property;
(C) Any partnership, joint venture or other
similar Contract;
(D) Any executory Contract relating to the
acquisition or disposition of any business (whether by
merger, sale of stock, sale of assets or otherwise);
(E) Any outstanding indenture, mortgage,
promissory note, loan agreement, guarantee or other Contract
or commitment for the borrowing of money by the Company or
the deferred purchase price of property in excess of $50,000
(in either case, whether incurred, assumed, guaranteed or
secured by any asset);
(F) Any license, franchise or similar Contract
material to the Company or any agreement relating to any
trade name or intellectual property right that is material
to the Company;
(G) Any exclusive dealing Contract or any Contract
that materially limits the freedom of the Company to compete
in any line of business or with any person or in any area or
that would so limit their freedom (or the freedom of
Purchaser or any of its affiliates) after the Closing Time;
(H) Any Contract between the Company and Seller or
any Affiliate of the Company or Seller; or
(I) Any other Contract material to it.
A copy of each such Contract has been supplied or made available to
Purchaser.
(2) The Company is not in default under any Contract
required to be previously disclosed under Section 3.2(o)(1), and there
has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default by it. Each such
Contract is the legal, valid and binding obligation of the Company
(and, to the Company's or Seller's knowledge, of any other party to
any such Contract), enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer and other laws affecting
creditors' rights generally and to general equitable principles.
(p) Reports. The Company has timely filed all reports,
registrations, statements and other filings, together with any
amendments required to be made with respect thereto, that were
required to be filed since January 1, 1996, with (1) the SEC, (2) any
other applicable federal, state or foreign securities or other
regulatory authority and (3) any Self-Regulatory Organization (all
such reports and statements being collectively referred to herein as
the "Regulatory Reports"). As of their respective dates, the
Regulatory Reports complied in all material respects with the
statutes, rules, regulations and orders enforced or promulgated by the
Governmental Authority or Self-Regulatory Organization with which they
were filed.
(q) No Brokers or Finders. The Company has not employed any
broker or finder or incurred any liability for any financial advisory
fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for it in connection with this
Agreement or the transactions contemplated hereby.
(r) Employee Benefit Plans. (1) Seller and the Company have
Previously Disclosed a complete list of all bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted
stock and stock option plans, all employment or severance Contracts,
all medical, dental, health and life insurance plans, all other
employee benefit plans, Contracts or arrangements and any applicable
"change of control" or similar provisions in any plan, contract or
arrangement currently maintained or contributed to by Seller or the
Company for the benefit of any of the Company's employees, former
employees, directors, former directors or their beneficiaries, or with
respect to which the Company or Seller, in its capacity as stockholder
of the Company, could continue to have any liability (the
"Compensation and Benefit Plans"). The Company has Previously
Disclosed a separate list of all Compensation and Benefit Plans
maintained by the Company solely for the benefit of any of the
Company's employees, former employees, directors, former directors or
their beneficiaries (the "Company Compensation and Benefit Plans").
True and complete copies of all Compensation and Benefit Plans,
including any trust instruments and/or insurance contracts, if any,
forming a part thereof, and all amendments thereto have been supplied
or made available to Purchaser.
(2) All Compensation and Benefit Plans that are "employee
benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), other
than "multiemployer plans" within the meaning of Section 3(37) of
ERISA ("Multiemployer Plans"), covering employees or former employees
of the Company (the "ERISA Plans"), to the extent subject to ERISA,
are in substantial compliance with ERISA. Each ERISA Plan that is an
"employee pension benefit plan" within the meaning of Section 3(2) of
ERISA (each, a "Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code is a prototype plan as to which the
sponsor has received a favorable determination letter from the IRS,
and to the Seller's and Company's knowledge there are no circumstances
reasonably likely to cause any such Pension Plan not to continue to be
qualified under Section 401(a) of the Code. There is no pending or, to
the Company's or Seller's knowledge, threatened litigation relating to
the Compensation and Benefit Plans. Neither Seller nor the Company has
engaged in a transaction with respect to any ERISA Plan that could
subject the Company to a tax or penalty imposed by either Section 4975
of the Code or Section 502(i) of ERISA.
(3) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Seller or the Company with
respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any
person that is considered one employer with the Company under Section
4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither Seller nor the Company presently contributes to a
Multiemployer Plan, nor has it contributed to such a plan within the
past five calendar years. No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the past 12- month
period or will be required to be filed in connection with the
transactions contemplated by this Agreement.
(4) All contributions required to be made under the terms of
any ERISA Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. Neither Seller nor the Company has
provided, or is required to provide, security to any Pension Plan or
to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(5) Under each Pension Plan that is a single-employer plan,
as of the last day of the most recent plan year, the actuarially
determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the plan's most recent
actuarial valuation) did not exceed the then current value of the
assets of such plan, and there has been no material change in the
financial condition of such plan since the last day of the most recent
plan year.
(6) Neither Seller nor the Company has any obligations for
retiree health and life benefits under any plan, except under Sections
601-606 of ERISA and as Previously Disclosed. There are no
restrictions on the rights of Seller or the Company to amend or
terminate any such plan without, to the Company's or Seller's
knowledge, incurring any liability thereunder.
(7) Except as Previously Disclosed or as contemplated by
Section 6.11, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (A)
result in any severance or other payment becoming due to any director
or any employee of the Company, (B) increase the amount of any
benefits or compensation otherwise payable under any Compensation and
Benefit Plan, or (C) result in any acceleration of the time of payment
or vesting of, or triggering any payment of, any such benefit or
compensation.
(8) Seller and the Company have Previously Disclosed a true
and complete copy of the Employment Contract and, the Employment
Contract has not been amended or modified, and no waiver or approval
has been granted by the Company thereunder.
(s) Labor Matters. (1) The Company is in compliance with all
Applicable Laws relating to employment and employment practices, terms
and conditions of employment and wages and hours, including the
Immigration Reform and Control Act, the Worker Adjustment and
Retraining Notification Act, any such laws respecting employment
discrimination, disability rights or benefits, equal opportunity,
plant closure issues, affirmative action, workers' compensation,
employee benefits, severance payments, labor relations, employee leave
issues, wage and hour standards, occupational safety and health
requirements and unemployment insurance and related matters. The
Company is not engaged in any unfair labor practice and there is no
unfair labor practice complaint pending or threatened against the
Company before the National Labor Relations Board.
(2) The Company is not a party to, or bound by, any
collective bargaining agreement, Contract or other agreement or
understanding with any labor union or labor organization, nor has it
agreed to recognize any union or other collective bargaining unit, nor
has any union or other collective bargaining unit been certified as
representing any of the employees of the Company, nor, to the
knowledge of the Company, are there any organizational efforts by any
of the employees of the Company to engage in or undertake any of the
foregoing activities. There are no pending or threatened charges or
complaints alleging sexual or other harassment or other discrimination
by the Company or any of its respective employees, agents or
representatives.
(t) Insurance. (1) Seller and the Company have Previously
Disclosed all of the insurance policies, binders or bonds maintained
by or for the Company. The Company is insured with reputable insurers
against such risks and in such amounts as the management of the
Company reasonably has determined to be prudent in accordance with
industry practices and any regulatory requirements. All of the
policies, binders and bonds are in full force and effect; the Company
is not in default thereunder; all claims thereunder have been filed in
due and timely fashion; and none of them has received any written or
oral notice of cancellation or termination with respect to any such
policy, binder or bond.
(2) Without limiting the generality of Section 3.2(t)(1),
Seller and the Company have Previously Disclosed a correct and
complete copy of any key man insurance policies the Company or Seller
maintains with respect to the Company's directors, officers or
employees.
(u) Takeover Laws. The Company has taken all necessary
action to exempt this Agreement and the transactions contemplated
hereby from, and this Agreement and the transactions contemplated
hereby are exempt from, (1) any "moratorium," "control share," "fair
price" or other antitakeover laws and regulations of any state
(collectively, "Takeover Laws") and (2) any similar provisions of its
Constituent Documents.
(v) Environmental Matters. Except as Previously Disclosed,
(1) the Company has complied with all applicable, and is not subject
to any claim or liability under any, Environ mental Laws, (2) no real
property currently or, to the Company's or Seller's knowledge,
formerly owned or operated by the Company is contaminated with any
Hazardous Substance for which the Company could be held liable and (3)
there are no other circumstances involving the Company that could
result in any claims, liabilities, costs or restrictions on the
ownership, use or transfer of any property in connection with any
Environmental Law.
(w) Taxes. (1) All Tax Returns that are required to be filed
on or before the Closing Time by or with respect to the Seller Group,
which includes the Company, have been or will be timely filed on or
before the Closing Time, and all such Tax Returns are or will be true,
complete and accurate.
(2) All Taxes shown to be due on the Tax Returns referred to
in clause (1) have been or will be paid in full when due.
(3) Except as Previously Disclosed, the Tax Returns referred
to in clause (1) have been examined by the IRS or the appropriate
state, local or foreign taxing authority, or the period for assessment
of Taxes in respect of which such Tax Returns were required to be
filed has expired without such returns having been examined.
(4) All Taxes due with respect to completed and settled
examinations have been paid in full.
(5) No issues have been raised by the relevant taxing
authority in connection with the examination of any of the Company Tax
Returns referred to in clause (1).
(6) There have not been any waivers of statutes of limitations
with respect to any Taxes of the Selling Group, including the Company.
(7) None of the Company, Purchaser or any direct or indirect
subsidiary of either of them, as a consequence of the actions of the
Company prior to the Closing, will be obligated to make a payment to an
individual that would be a "parachute payment" as such term is defined
in Section 280G of the Code without regard to whether such payment is
to be performed in the future.
(8) The Company will not be required, as a result of (A) a
change in accounting method for a period beginning on or before the
Closing Time, to include any adjustment under Section 481(c) of the
Code (or any similar provision of state, local or foreign law) in
taxable income for any period beginning on or after the Closing Time,
or (B) any "closing agreement" as described in Section 7121 of the Code
(or any similar provision of state, local or foreign Applicable Law),
to include any item of income in or exclude any item of deduction from
any period beginning on or after the Closing Time;
(9) There are no Liens on any of the assets of the Company
that arose in connection with a failure (or alleged failure) to pay
any Taxes;
(10) No closing agreements, private letter rulings,
technical advance memoranda or similar agreement or rulings have been
entered into or issued by any taxing authority with respect to the
Company;
(11) Neither Seller, any of Seller's affiliates nor the
Company has made a consent with respect to the Company under Section
341 of the Code;
(12) No tax is required to be withheld pursuant to Section
1445 of the Code as a result of the transfer contemplated by this
Agreement; and
(13) The Company has not been a member of an affiliated,
combined, consolidated or unitary Tax group for purposes of filing any
Tax Return, other than, for purposes of filing consolidated U.S.
Federal income tax returns and for purposes of filing combined New
York income tax returns, a group of which Seller was the common
parent.
(x) Accounting Controls. The Company has devised and
maintained systems of internal accounting controls sufficient to
provide reasonable assurances that (1) all material transactions are
executed in accordance with management's general or specific
authorization; (2) all material transactions are recorded as necessary
to permit the preparation of financial statements in conformity with
GAAP, and to maintain proper accountability for items; (3) access to
assets is permitted only in accordance with management's general or
specific authorization; and (4) the recorded accountability for items
is compared with the actual levels at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) Investment Advisory Activities. The Company does not
provide investment management, investment advisory, sub-advisory,
administration, distribution or other services to, or hold a
partnership or other equity interest in, any investment vehicle.
Article IV
Representations and Warranties of Seller
Section 4.1 Standard. No representation or warranty contained in
Sections 4.2 or 4.3 (other than those contained in Sections 4.2(b) and 4.2(c))
will be deemed to be untrue or incorrect, and Seller will not be deemed to have
breached any such representation or warranty, as a consequence of the existence
of any fact, circumstance or event that should have been disclosed as an
exception to such representation or warranty, unless such undisclosed fact,
event or circumstance (individually or in the aggregate) (i) has had or would be
reasonably likely to have a Material Adverse Effect on the Company, Adviser (in
the case of Section 4.3), Distributor (in the case of Section 4.3) or Seller or
(ii) would have the effect of preventing or materially delaying (1) the
consummation of the Acquisition or (2) the performance of the obligations of
Seller set forth in this Agreement.
Section 4.2 Representations and Warranties of Seller. Except as
Previously Disclosed, Seller hereby represents and warrants to Purchaser as
follows:
(a) Existence; Qualification; Authority. Seller is a
corporation duly organized and validly existing under the laws of
Delaware and is duly qualified to do business and is in good standing
in the States of the United States and other jurisdictions where its
ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified. Seller has the corporate
power and authority necessary to carry on its business as it is now
being conducted and to own all its properties and assets. Before the
date of this Agreement, Seller has made available to Purchaser a
complete and correct copy of its Constituent Documents, each as
amended to such date, and such Constituent Documents are in full force
and effect and have not been amended since such date.
(b) Authorization and Validity. Each of this Agreement and
the Services Agreement has been duly authorized, executed and
delivered by Seller and Seller has the requisite power and authority,
and has taken all action necessary, in order to authorize this
Agreement and the Services Agreement and the transactions contemplated
hereby and thereby; and, at the Closing Time, the Assignment Agreement
will be duly authorized, executed and delivered by Seller and Seller
will have the requisite power and authority, and will have taken all
action necessary, in order to authorize the Assignment Agreement and
the transactions contemplated thereby. Each of this Agreement and the
Services Agreement is and, at the Closing Time, the Assignment
Agreement will be, the valid, legal and binding obligation of Seller,
enforceable against it in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization,
fraudulent transfer and other laws affecting creditors' rights
generally and to general equitable principles.
(c) Ownership of Stock. Seller is the lawful record and
beneficial owner of all the issued and outstanding shares of the
Company Stock, free and clear of all Liens. Seller has the full legal
right, power and authority to enter into this Agreement and to sell,
assign, transfer and convey the shares of Company Stock so owned by
Seller pursuant to this Agreement, and the delivery to Purchaser of
the Company Stock pursuant to the provisions of this Agreement
(including the payment by Purchaser therefor) will transfer to
Purchaser good title thereto, free and clear of all Liens. Bassett S.
Winmill is the lawful record and beneficial owner of all the voting
capital stock of Seller.
(d) Regulatory Consents; Corporate Proceedings. (i) No
notices, reports or other filings are required to be made by Seller
with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by it from, any Governmental
Authority or any Self-Regulatory Organization in connection with the
execution, delivery and performance of this Agreement by it and the
consummation by Seller of the Acquisition. To Seller's knowledge,
there is no reason why the regulatory approvals and consents referred
to in this Section 4.2(d), Section 5.2(c) or Section 3.2(e) will not
be received without the imposition of an Onerous Condition.
(ii) Except for the approval of the Acquisition by Seller's
Board of Directors and the sole stockholder of the shares of Class B
Common Stock, par value of $0.01 per share, of Seller in accordance
with Section 271 of the DGCL, there are no corporate consents,
approvals or proceedings necessary or required in connection with the
execution, delivery and performance of this Agreement by Seller and
the consummation of the Acquisition or other transactions contemplated
hereby.
(e) No Conflicts. The execution, delivery and performance of
each of this Agreement, the Services Agreement and the Assignment
Agreement by Seller does not and will not, and the consummation by it
of the transactions contemplated hereby will not, with or without the
giving of notice, the lapse of time or both:
(1) Violate or conflict with Seller's Constituent
Documents;
(2) Breach or violate, or result in a default
under, any Applicable Law with respect to Seller or permit
or result in the revocation, cancellation, suspension or
adverse modification of any permit, license, certificate of
authority, order or approval to which Seller or any of its
properties or assets is subject; or
(3) Breach or result in a default under, permit
the termination of, permit the acceleration of the
performance required by, or revise in any material way, any
Contract of, or binding on, Seller, or to which Seller (or
its properties), is subject or result in the creation or
imposition, pursuant to any of the foregoing, of any Lien on
the Company Stock, or the properties or assets of Seller
(including the Name Rights).
(f) Intellectual Property; Name Rights. (1) Seller owns and
possesses rights to use (and the right to exercise all rights
appurtenant thereto) all trademarks, trade names, service marks, logos
and names set forth in Schedule 4.2(f) hereto for financial services
and for all goods and services included in applications and
registrations related thereto, including without limitation securities
brokerage and investment advisory services (the "Name Rights"), and,
to Seller's knowledge, the Name Rights held or used in the business
currently conducted by Seller and/or its subsidiaries are valid and
subsisting.
(2) Seller and its subsidiaries have the right to use, and
after consummation of the Acquisition, Purchaser will have the right
to use, free and clear of any known claims of others, all Name Rights.
The License Agreements are the only Contracts, instruments or
otherwise that are in effect with respect to Seller's transfer or
conveyance of any title, right or interest in the Name Rights.
(3) No claims with respect to the Name Rights are currently
pending or, to the knowledge of Seller or any of its subsidiaries,
threatened by any person.
(5) Seller does not know of any valid grounds for any bona
fide claims (a) to the effect that the using, selling, offering for
sale or licensing of the Name Rights by Seller or any of its
subsidiaries infringes on any copyright, patent, trademark, service
mark or trade secret of any third party; (b) against the use by Seller
or any of its subsidiaries, of the Name Rights; (c) challenging the
ownership or validity of any of the Name Rights.
(6) To Seller's knowledge there is no unauthorized use,
infringement or misappropriation of any of the Name Rights by any
third party.
(g) Litigation; Regulatory Action. There is no litigation,
proceeding, investigation or controversy pending (or, to Seller's
knowledge, threatened) affecting the Name Rights before any
Governmental Authority, Self-Regulatory Organization or arbitrator.
(h) SEC Documents; Financial Statements. Seller's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1995,
1996 and 1997, and all other reports, registration statements,
definitive proxy statements or information statements filed or to be
filed by Seller or any of its subsidiaries subsequent to December 31,
1995 under the Securities Act, or under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, in the form filed or to be filed with the
SEC (collectively, the "SEC Documents"), as of the date filed, insofar
as they relate to the business of the Company, (A) complied or will
comply in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case
may be, and (B) did not (or if amended or superseded by a filing prior
to the date of this Agreement, then as of the date of such filing) and
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and each of the balance sheets
contained in or incorporated by reference into any such SEC Document
(including the related notes and schedules thereto) fairly presents,
or will fairly present, the financial position of Seller and its
subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent
statements in such SEC Documents (including any related notes and
schedules thereto) fairly presents, or will fairly present, the
results of operations, changes in stockholders' equity and changes in
cash flows, as the case may be, of Seller and its subsidiaries for the
periods to which they relate, in each case in accordance with
generally accepted accounting principles, consistently applied, during
the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments in the case of unaudited
statements.
(i) Leases. Each lease or agreement under which Seller is a
lessee of any real property is a valid and binding agreement of
Seller, and no event has occurred and is continuing which, with or
without notice or lapse of time would constitute a default or event of
default by Seller thereunder or, to Seller's knowledge, by any party
thereto.
(j) No Brokers or Finders. No agent, broker, person or firm
acting on behalf of Seller is, or will be, entitled to any commission
or broker's or finder's fees from the Company, or any Affiliate of the
Company, in connection with any of the transactions contemplated by
this Agreement.
(k) Bull & Bear Money Market Fund. No approvals, including
approval from the Fund Board or the shareholders of the Fund are
required in connection with this Agreement or the transactions
contemplated hereby.
Section 4.3 Representations and Warranties Concerning Adviser
and Distributor. Except as Previously Disclosed, Seller hereby represents and
warrants to Purchaser as follows:
(a) Existence; Qualification; Authority. Each of Adviser and
Distributor is a corporation duly organized and validly existing under
the laws of Delaware and is duly qualified to do business and is in
good standing in the States of the United States and other
jurisdictions where its ownership or leasing of property or assets or
the conduct of its business requires it to be so qualified. Each of
Adviser and Distributor has the corporate power and authority
necessary to carry on its business as it is now being conducted and to
own all its properties and assets. Each of Adviser's and Distributor's
Constituent Documents are in full force.
(b) Regulatory Consents. No notices, reports or other
filings are required to be made by either Adviser or Distributor with,
nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by it from, any Governmental
Authority or any Self-Regulatory Organization in connection with this
Agreement or the transactions contemplated hereby and thereby.
(c) Investment Advisory Activities. (1) Adviser provides
investment management, investment advisory, sub-advisory,
administration, distribution or certain other services to Bull & Bear
Fund Corporation with respect to the Fund. Bull & Bear Fund
Corporation is duly organized and existing in good standing under the
laws of the jurisdiction under which it is organized. Bull & Bear Fund
Corporation is registered under the Investment Company Act and is
governed by a board of directors (the "Fund Board") consisting of at
least 50% of trustees or directors who are not "interested persons")
(as defined in the Investment Company Act). The Fund Board operates in
all material respects in conformity with the requirements and
restrictions of Sections 10 and 16 of the Investment Company Act, to
the extent applicable.
(2) Bull & Bear Fund Corporation is in compliance with all
applicable foreign, federal and state laws, rules and regulations of
the SEC, the IRS, and any Self-Regulatory Organization having
jurisdiction over it. Seller has made available to Purchaser true and
complete copies of all the Constituent Documents and related advisory
agreements of Bull & Bear Fund Corporation.
(3) Bull & Bear Fund Corporation has been operated in
compliance with its objectives, policies and restrictions, including
those set forth in its prospectus and registration statement, if any.
(4) Bull & Bear Fund Corporation has duly adopted procedures
pursuant to Rules 17a-7, 17e-1 and 10f-3 under the Investment Company
Act, to the extent applicable.
(d) Investment Contracts. (1) Seller has provided to
Purchaser a correct and complete listing of each Contract, and all
amendments thereto, in effect on the date hereof relating to the
Adviser's rendering of investment advisory or management services
(including all sub-advisory services), administration or distribution
services to Bull & Bear Fund Corporation or the Fund (collectively,
together with any such Contract entered into after the date hereof,
the "Investment Management Contracts").
(2) Each Investment Contract is in full force and effect,
and each Investment Management Contract and any subsequent renewal has
been duly authorized, executed and delivered by Adviser and, to
Seller's knowledge, each other party thereto, in compliance with any
Applicable Law, and is a valid and binding agreement of Adviser, and,
to Seller's knowledge, each other party thereto, enforceable in
accordance with its terms (subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization, fraudulent transfer and other
laws affecting creditors' rights generally and to general equitable
principles).
(3) Each of Adviser and, to Seller's knowledge, the other
parties to each Investment Management Contract is in compliance with
the terms of each Investment Management Contract to which it is a
party, and is not currently in default under any of the terms of any
such Investment Management Contract and, to Seller's knowledge, no
event has occurred or condition exists that with notice or the passage
of time or both would constitute such a default.
(e) Service Contracts. (1) Seller has provided to Purchaser
a correct and complete listing of each Contract, and all amendments
thereto, in effect on the date hereof relating to Distributor's
rendering of services to Bull & Bear Fund Corporation or the Fund
(collectively, together with any such Contract entered into after the
date hereof, the "Service Contracts").
(2) Each Service Contract is in full force and effect, and
each Service Contract and any subsequent renewal has been duly
authorized, executed and delivered by Distributor and, to Seller's
knowledge, each other party thereto, in compliance with any Applicable
Law, and is a valid and binding agreement of Distributor, and, to
Seller's knowledge, each other party thereto, enforceable in
accordance with its terms (subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization, fraudulent transfer and other
laws affecting creditors' rights generally and to general equitable
principles).
(3) Each of Distributor and, to Seller's knowledge, the
other parties to each Service Contract is in compliance with the terms
of each Service Contract to which it is a party, and is not currently
in default under any of the terms of any such Service Contract and, to
Seller's knowledge, no event has occurred or condition exists that
with notice or the passage of time or both would constitute such a
default.
(f) Litigation; Regulatory Action. There is no litigation,
proceeding, investigation or controversy pending (or, to Seller's
knowledge, threatened) against either Adviser or Distributor relating
to Bull & Bear Fund Corporation or the Fund before any Governmental
Authority, Self-Regulatory Organization or arbitrator.
(g) Compliance with Laws. Each of Adviser, Distributor, and,
to Seller's knowledge, Adviser's and Distributor's officers and
employees (insofar as any of the following relates to any such
officer's or employee's conduct of business for or employment by
Adviser and Distributor, as applicable):
(1) Is in compliance with all Applicable Laws and
all applicable rules of any Self-Regulatory Organization;
(2) Has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Governmental
Authorities and Self-Regulatory Organizations that are
required in order to permit either Adviser or Distributor,
as the case may be, to own or lease its properties and
assets and to conduct its business as presently conducted;
all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and are
current and, to Seller's knowledge, no suspension or
cancellation of any of them is threatened or reasonably
likely;
(3) Without limiting the foregoing, to the extent
such person is required to be registered as an investment
adviser, broker-dealer, registered representative or
salesperson with the SEC, the securities commission of any
state or any Self- Regulatory Organization, such person is
duly registered as such and such registration is in full
force and effect and a true and complete list of all such
registrations has been previously provided to Purchaser;
(4) Is in good standing with all relevant
Governmental Authorities and is a member in good standing
with all relevant Self-Regulatory Organizations;
(5) Has not received, since January 1, 1996, any
notification or written communication (or, to Seller's
knowledge, any other communication) from any Governmental
Authority or Self-Regulatory Organization (A) asserting
non-compliance with any of the statutes, regulations, rules
or ordinances that such Governmental Authority or
Self-Regulatory Organization enforces, (B) threatening to
revoke any license, franchise, seat on any exchange, permit,
or governmental authorization (nor, to Seller's knowledge,
do any grounds for any of the foregoing exist), (C)
requiring such person (including any of Adviser's or
Distributor's directors or controlling persons, as the case
may be) to enter into a cease and desist order, agreement,
or memorandum of understanding (or requiring the Board of
Directors thereof to adopt any resolution or policy), or (D)
restricting or disqualifying such person's activities
(except for restrictions generally imposed by rule,
regulation or administrative policy on investment advisors
or brokers or dealers generally);
(6) Is not the subject (to Seller's knowledge) of
any pending or threatened investigation, review or
disciplinary proceedings by any Governmental Authority or
Self-Regulatory Organization;
(7) Is not, nor is any affiliate of such person,
subject to a "statutory disqualification" as defined in
Section 3(a)(39) of the Exchange Act or to a
disqualification that would be a basis for censure,
limitations on the activities, functions or operations of,
or suspension or revocation of the registration of either
Adviser or Distributor, as the case may be, as a
broker-dealer, municipal securities dealer, government
securities broker or government securities dealer under
Section 15, Section 15B or Section 15C of the Exchange Act
and there is no reasonable basis for, or proceeding or
investigation, whether formal or informal, or whether
preliminary or otherwise, that is reasonably likely to
result in, any such censure, limitations, suspension or
revocation;
(8) Is not required to be registered (i) as an
investment company, investment adviser (other than Adviser),
insurance agent, or transfer agent under any Applicable Law
or (ii) in any capacity under the Commodity Exchange Act or
the rules and regulations of the Commodity and Futures
Trading Commission (including as a commodity trading
advisor, commodity pool operator, futures commission
merchant or introducing broker); and
(9) Is not subject to any cease-and-desist or
other order issued by, or a party to any written agreement,
consent agreement or memorandum of understanding with, or a
party to any commitment letter or similar undertaking to, or
subject to any order or directive by, a recipient of any
supervisory letter from or has adopted any board resolutions
at the request of any Governmental Authority or
Self-Regulatory Organization.
(h) Reports. Each of Adviser and Distributor has timely
filed all Regulatory Reports. As of their respective dates, the
Regulatory Reports complied in all material respects with the
statutes, rules, regulations and orders enforced or promulgated by the
Governmental Authority or Self-Regulatory Organization with which they
were filed.
Article V
Representations and Warranties of Purchaser
Section 5.1 Standard. No representation or warranty contained in
Section 5.2 will be untrue or incorrect, and Purchaser will not have breached
any such representation or warranty, as a consequence of the existence of any
circumstance, fact or event that should have been disclosed as an exception to
such representation or warranty, unless the circumstance, fact or event
(individually or in the aggregate) would be reasonably likely to have a Material
Adverse Effect on Purchaser.
Section 5.2 Representations and Warranties of Purchaser. Except
as Previously Disclosed, Purchaser represents and warrants to Seller and the
Company as follows:
(a) Existence and Good Standing. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws
of Delaware.
(b) Authorization and Validity. This Agreement, the
Employment Contract and the Services Agreement have been duly
authorized, executed and delivered by Purchaser. Purchaser has the
requisite corporate power and authority, and has taken all corporate
action necessary, in order to authorize this Agreement, the Employment
Contract and the Services Agreement and the transactions contemplated
hereby and thereby. This Agreement, the Employment Contract and the
Services Agreement are the legal, valid and binding obligations of
Purchaser, enforceable against it in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer and other laws affecting
creditors' rights generally and to general equitable principles.
(c) Regulatory Consents. Except for the receipt of the
regulatory approvals, the expiration of waiting periods and the
required filings under federal and state securities laws and the laws
of jurisdictions outside the United States, in each case as Previously
Disclosed, no notices, reports or other filings are required to be
made by Purchaser with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by it
from, any Governmental Authority or any Self-Regulatory Organization
in connection with the execution, delivery and performance of this
Agreement by it, and the consummation by it of the Acquisition. To
Purchaser's knowledge, as of the date hereof, there is no reason why
the regulatory approvals and consents referred to in this Section
5.2(c), Section 4.2(d) or Section 3.2(e) will not be received without
the imposition of an Onerous Condition.
(d) No Conflicts. The execution, delivery and performance of
this Agreement and the Services Agreement by Purchaser does not and
will not, and (upon the receipt of the approvals, expiration of the
waiting periods and the making of the filings referred to in Section
5.2(c)) the consummation by it of the transactions contemplated hereby
and thereby will not, with or without the giving of notice, the lapse
of time or both, (1) violate or conflict with its Constituent
Documents, (2) breach or violate, or result in a default under, any
Applicable Law with respect to it or (3) breach or result in a default
under, permit the termination of, or permit the acceleration of the
performance required by, any Contract of, or binding on, it, or to
which it (or its properties) is subject or result in the creation or
imposition, pursuant to any of the foregoing, of any Lien on the
properties of it.
(e) Litigation; Regulatory Action. There is no litigation,
proceeding or investigation or controversy pending (or, to Purchaser's
knowledge, threatened) against Purchaser relating to the consummation
of the Acquisition before any Governmental Authority, Self- Regulatory
Organization or arbitrator.
(f) No Brokers or Finders. No agent, broker, person or firm
acting on behalf of Purchaser is, or will be, entitled to any
commission or broker's or finder's fees from Seller, or any Affiliate
of Seller, in connection with any of the transactions contemplated by
this Agreement.
Article VI
Covenants
Section 6.1 Conduct of the Business. (a) The Company. (1) Each
of Seller and the Company agrees that, from and after the date of this Agreement
until the Closing Time, the Company will conduct its business in the ordinary
and usual course consistent with past practice and will use reasonable efforts
to maintain and preserve in all material respects its business organization, key
employees and advantageous business relationships.
(2) Without limiting Section 6.1(a)(1) and except as Previously
Disclosed, each of Seller and the Company agrees that the Company will not
(without the prior written consent of Purchaser):
(i) Issue, sell, repurchase or otherwise permit to become
outstanding any additional shares of its equity securities, or any
Rights therefor;
(ii) Make, declare or pay any dividend on or in respect of,
or declare or make any distribution on, or directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire, any of its
equity securities; provided however, that to the extent that Book
Value exceeds $500,000 as of the Closing Time, the Company may
dividend to Seller such excess effective as of the Closing Time.
(iii) Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by
GAAP;
(iv) Incur or commit to incur any capital expenditures,
other than as reasonably necessary to maintain existing assets in good
repair in the ordinary course of business consistent with past
practice in amounts not exceeding $50,000 in the aggregate;
(v) Enter into any type of business materially different
from that conducted by it as of the date hereof or initiate any new
business activity that would be impermissible for a "bank holding
company" under the Bank Holding Company Act of 1956;
(vi) Enter into or amend any compensation, employment,
severance or similar Contract with or on behalf of any of its
directors, officers, employees, agents or consultants, or grant any
salary or wage increase, or increase any employee benefit (including
incentive or bonus payments), except (A) the hiring of non-executive
employees in the ordinary course of business at annual salary levels
not in excess of $50,000 (per employee) to replace any departing
employees (on a one-for-one basis) or (B) other changes as may be
required by Applicable Law or to satisfy Previously Disclosed
contractual obligations existing as of the date hereof (provided that,
notwithstanding the foregoing, the Company will not agree to any
modification or amendment of, or waiver or approval under, the
Employment Contract or Services Agreement without the prior written
consent of Purchaser);
(vii) Other than as contemplated by this Agreement, enter
into or modify (except as may be required by Applicable Law or to
maintain qualification pursuant to the Code) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement related thereto, in respect of any of its
stockholders, directors, officers or other employees, including taking
any action that accelerates the vesting or exercise of any benefits
thereunder;
(viii) Dispose of or discontinue any of its assets, business
or properties that are material to it, or merge or consolidate with,
or acquire all or any portion material to the Company of the assets,
business or property of, any other person;
(ix) Amend any of its Constituent Documents;
(x) Enter into, terminate or make any material change in any
material Contract, or amend, modify or terminate the Services
Agreement or the Lease;
(xii) Settle any claim, action or proceeding involving any
liability for material money damages or any restrictions upon any of
its operations or that may be precedential with respect to other
claims, actions or proceeds that may involve such damages or
restrictions;
(xiii) Knowingly take any action intended or reasonably
likely to (A) result in any of its representations and warranties set
forth in this Agreement or any Ancillary Agreement or any certificate
delivered in connection with the Closing being or becoming untrue in
any material respect at any time at or prior to the Closing Time, (B)
result in any of the conditions to the Acquisition set forth in
Article VII not being satisfied, (C) materially breach any provision
of this Agreement or any Ancillary Agreement, (D) materially impede or
delay the receipt of any approval or consent referred to in Section
6.2 or 6.8 without the imposition of an Onerous Condition or (E)
adversely affect the ability of any party to perform its obligations
under this Agreement or any Ancillary Agreement; or
(xiv) Authorize, commit or enter into any agreement to take
any of the actions referred to in this Section 6.1(a)(2).
(b) Seller. (1) Seller agrees that, from and after the date
of this Agreement until the Closing Time, it will not (without the
prior written consent of Purchaser):
(i) Enter into, terminate or make any change in any Contract
relating to the Name Rights;
(ii) Settle any claim, action or proceeding involving any
restrictions affecting the Name Rights or that may be precedential
with respect to other claims, actions or proceeds that may involve
such restrictions;
(iii) (A) Amend or modify the License Agreements or (B)
enter into any Contract, instrument or otherwise that would transfer,
convey or diminish any of Seller's rights, title or interest in the
Name Rights as of the date hereof;
(iv) Knowingly take any action intended or reasonably likely
to (A) result in any of the representations and warranties set forth
in this Agreement and any Ancillary Agreement or any certificate
delivered in connection with the Closing being or becoming untrue in
any material respect at any time at or prior to the Closing Time, (B)
result in any of the conditions to the Acquisition set forth in
Article VII not being satisfied, (C) materially breach any provision
of this Agreement or any Ancillary Agreement, (D) materially impede or
delay the receipt of any approval or consent referred to in Section
6.2 or 6.8 without the imposition of an Onerous Condition or (E)
adversely affect the ability of any party to perform its obligations
under this Agreement or any Ancillary Agreement; or
(v) Authorize, commit or enter into any agreement to take
any of the actions referred to in this Section 6.1(b)(2).
(2) Seller agrees that it will, and will cause its Affiliates to,
take all steps necessary to protect the value of the Name Rights prior to the
Closing Time, including maintaining all registrations relating to the Name
Rights, prosecution of all pending applications for trademark or service mark
registration relating to the Name Rights, opposing or continuing to oppose all
third party applications for registration of confusingly similar trademarks or
service marks and pursuing actions against all third parties that are
infringing, misappropriating or diluting the Name Rights.
Section 6.2 Consents. To the extent that the rights of the
Company under any Contract would be impaired upon the consummation of the
Acquisition without the consent or approval of any other party thereto, the
Company and Seller will obtain, without cost to the Company, such consent or
approval and cause such party not to thereafter reduce or limit its consent or
approval.
Section 6.3 Current Information. (a) During the period from the
date of this Agreement to the Closing Time, Seller (on behalf of the Company)
and Purchaser will cause one or more of their representatives to confer on a
regular and frequent basis with respect to the status of the ongoing operations
of the Company. Seller (on behalf of the Company) will promptly notify Purchaser
of any material change in the ordinary and usual course of the business of the
Company or of any complaints from a Governmental Authority or a Self-Regulatory
Organization, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of any litigation
that comes to its attention, and Seller (on behalf of the Company) will keep
Purchaser fully informed with respect to such events. Seller (on behalf of the
Company) will also notify Purchaser of the status of regulatory applications and
third party consents required to be obtained by the Company and Seller related
to the transactions contemplated hereby. Purchaser will notify Seller of the
status of its regulatory applications and third-party consents required to be
obtained by it related to the transactions contemplated hereby.
(b) Each party hereto will give prompt notice to the others of
any fact, event or circumstance known to it that (1) is reasonably likely,
individually or taken together with all other facts, events and circumstances
known to it, to result in any Material Adverse Effect to it or (2) would be
reasonably likely to cause any of its or any other party's representations or
warranties contained in this Agreement to be untrue or to cause or constitute a
material breach of any of its or any other party's covenants or agreements
contained herein.
Section 6.4 Access; Information. (a) The Company and Seller will
upon reasonable notice afford to Purchaser and its representatives (including
officers and employees of Purchaser and counsel, accountants and other
professionals retained by it) such access (including the right to copy) during
normal business hours throughout the period prior to the Closing Time to their
books, records (including tax returns and appropriate work papers of independent
auditors) and properties and to such other information as Purchaser may
reasonably request.
(b) Purchaser will not use for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement, and will hold,
and will cause its subsidiaries and its directors, officers, employees, agents,
consultants and advisors to hold, in confidence, unless and to the extent that
disclosure to Governmental Authorities or Self-Regulatory Organizations is, in
its judgment, required or appropriate or unless compelled to disclose by
judicial or administrative process or by other requirement of law or the
applicable requirements of any Governmental Authority or Self-Regulatory
Organization, all non-public and confidential records, books, contracts,
instruments, computer data and other data and information (collectively, the
"Information") concerning the Company or Seller (or, if required under a
contract with a third party, such third party) furnished it by the Company or
Seller or any of their representatives pursuant to this Agreement (except to the
extent that such Information can be shown to have been (1) previously known by
such party on a non-confidential basis, (2) in the public domain through no
fault or action of Purchaser or (3) later lawfully acquired from other sources
by Purchaser from a party not known by it to be under an obligation to refrain
from making such disclosure) and Purchaser will not release or disclose such
Information to any other person, except Purchaser and its respective auditors,
attorneys, financial advisors, other consultants and advisors and, to the extent
permitted above, to Governmental Authorities and Self-Regulatory Organizations.
In the event of the termination of this Agreement, Purchaser will return or
destroy all Information furnished to such party and its representatives, and
Purchaser will keep confidential all analyses, compilations, data, studies and
other documents prepared by such party or its representatives containing or
based in whole or in part on any such furnished Information or reflecting
Purchaser's review of, or interest in, the Company or Seller.
(c) After the Closing Time, Purchaser will retain all Books and
Records of the Company. Purchaser will upon reasonable notice afford to Seller
and its representatives such access during normal business hours to such Books
and Records as Seller may reasonably request for purposes related to this
Agreement or to the determination of any Tax liability of Seller; provided that
prior to receiving such access, Seller or its representative, as the case may
be, must deliver to Purchaser an agreement (reasonably satisfactory in form and
substance to Purchaser) with respect to holding such information in confidence
substantially to the same extent as provided for in Section 6.4(b).
Section 6.5 Effect of Investigations. No investigation by any of
the parties before or after the date of this Agreement, or the provision of any
documents, whether pursuant to this Agreement or otherwise (including any action
taken by or Information provided to Purchaser pursuant to the provisions of
Sections 6.3 and 6.4) will affect the representations and warranties of the
parties in this Agreement or in any certificate delivered in connection with the
Closing.
Section 6.6 Press Releases, Etc. Other than the press release
attached hereto as Annex E, Purchaser (on the one hand) and Seller (on the other
hand) will consult with each other as to the form, substance and timing of any
other press release or other public disclosure of matters related to this
Agreement, or any of the transactions contemplated hereby and no other press
release or other public disclosure will be made without the consent of the
other, which consent will not be unreasonably withheld or delayed (it being
understood that the Company will not make such press release or disclosure);
provided, however, that the parties (including the Company) may make such
disclosures as are required by Applicable Law after making reasonable efforts
under the circumstances to consult in advance with Purchaser (in the case of
disclosures by the Company or Seller) and Seller (in the case of disclosures by
Purchaser).
Section 6.7 Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties to this Agreement will use its
reasonable efforts in good faith to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or desirable (including
entering into or executing any additional agreements, instruments or otherwise),
or advisable under Applicable Laws, so as to permit consummation of the
Acquisition as promptly as reasonably practicable and otherwise to enable
consummation of the transactions contemplated hereby and will cooperate fully
with the other parties hereto to that end; provided that Purchaser will not be
required to take any action or accept any condition in order to obtain
regulatory approval for the Acquisition that would in its reasonable judgment
materially impair the benefit to be derived by Purchaser from the Acquisition or
materially impair the conduct of the business of Purchaser (any such action or
condition being referred to as an "Onerous Condition").
Section 6.8 Regulatory Applications. Without limiting Section
6.7, each of the parties hereto agrees that it will use all reasonable efforts
to prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all Governmental Authorities and
Self-Regulatory Organizations necessary to consummate the transactions
contemplated by this Agreement (including the regulatory approvals referred to
in Section 7.1(a)). Each party hereto agrees that it will consult with the other
party hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all Governmental Authorities and Self-Regulatory
Organizations necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other party apprised of the
status of material matters relating to completion of the transactions
contemplated hereby. Nothing herein requires Purchaser to accept an Onerous
Condition.
Section 6.9 Tax Matters. (a) Section 338(h)(10). (1) Election.
At the request of Purchaser, Seller shall make a joint election with Purchaser
under Section 338(h)(10) of the Code with respect to the purchase of the Company
Stock and under any similar provisions of state law. Seller represents that its
sale of the Company Stock is eligible for, and Purchaser represents that it is
qualified to make, such election. If the election is made, Seller and Purchaser
shall at the Closing exchange completed and executed copies of IRS Form 8023,
required schedules thereto, and any similar state forms. If any changes are
required in these forms as a result of information which is first available
after the Closing, the parties will promptly agree on such changes.
(2) Allocation of Purchase Price. If an election under Section
338(h)(10) of the Code is made, the parties to this Agreement agree to determine
the amount of and allocate the consideration transferred by Purchaser to Seller
in exchange for the Company Stock pursuant to this Agreement (the "Company Stock
Consideration") in accordance with the fair market value of the Company's
assets. Prior to the Closing Time, Purchaser shall reasonably determine and
Seller shall promptly accept in writing if reasonable an allocation of the
Company Stock Consideration among the Company's assets that are deemed to have
been acquired pursuant to Section 338(h)(10) of the Code or any state law
equivalent. Seller and Purchaser shall use the asset values determined from such
allocation for purposes of all reports and returns with respect to Taxes,
including IRS Form 8594 or any equivalent statement.
(b) Liability for Taxes and Related Matters. (1) Seller Liability
for Taxes. Seller shall be liable for and indemnify Purchaser for all Taxes
(including, without limitation, any obligation to contribute to the payment of a
tax determined on a consolidated, combined or unitary basis with respect to a
group of corporations that includes or included the Company and Taxes resulting
from the Company ceasing to be a member of the Seller Group, or attributable to
the election to be made under Section 338(h)(10) of the Code and any state law
equivalent) (i) imposed on the Seller Group (other than the Company) for any
taxable year or (ii) imposed on the Company or for which the Company may
otherwise be liable for any taxable year or period that ends on or before the
Closing Time and, with respect to any taxable year or period beginning before
and ending after the Closing Time, the portion of such taxable year ending on
and including the date of the Closing Time. Except as set forth in Section
6.9(b)(5), Seller shall be entitled to any refund of Taxes of the Company
received for such periods.
(2) Purchaser Liability For Taxes. Purchaser shall be liable for
and indemnify Seller for the Taxes of the Company for any taxable year or period
that begins after the Closing Time and, with respect to any taxable year or
period beginning before and ending after the Closing Time, the portion of such
taxable year beginning after the Closing Time. Purchaser shall be entitled to
any refund of Taxes of the Company received for such periods.
(3) Taxes for Short Taxable Year. For purposes of Sections
6.9(b)(1) and (b)(2), whenever it is necessary to determine the liability for
Taxes of the Company for a portion of a taxable year or period that begins
before and ends after the Closing Time, the determination of the Taxes of the
Company for the portion of the year or period ending on, and the portion of the
year or period beginning after, the Closing Time shall be determined by assuming
that the Company had a taxable year or period which ended at the close of the
date of the Closing Time, except that exemptions, allowances or deductions that
are calculated on an annual basis, such as the deduction for depreciation, shall
be apportioned on a time basis.
(4) Adjustment to Purchase Price. Any payment by Purchaser or
Seller under this Section 6.9 will be treated as an adjustment to the Purchase
Price for federal income tax purposes.
(5) Refunds from Carrybacks. If Seller becomes entitled to a
refund or credit of Taxes for any period for which it is liable under Section
6.9(b)(1) to indemnify Purchaser and such Taxes are attributable solely to the
carryback of losses, credits or similar items attributable to the Company and
from a taxable year or period that begins after the Closing Time, Seller shall
promptly pay to Purchaser the amount of such refund or credit together with any
interest thereon. In the event that any refund or credit of Taxes for which a
payment has been made is subsequently reduced or disallowed, Purchaser shall
indemnify and hold harmless Seller for any tax liability, including interest and
penalties, assessed against Seller by reason of the reduction or disallowance.
(6) Tax Returns. Seller shall file or cause to be filed when due
all Tax Returns that are required to be filed by or with respect to the Company
for taxable years or periods ending on or before the Closing Time and shall pay
any Taxes due in respect of such Tax Returns, and Purchaser shall file or cause
to be filed when due all Tax Returns that are required to be filed by or with
respect to the Company for taxable years or periods ending after the Closing
Time and shall remit any Taxes due in respect of such Tax Returns. Seller shall
pay Purchaser the Taxes for which Seller is liable pursuant to Section 6.9(b)(1)
but which are payable with Tax Returns to be filed by Purchaser pursuant to the
previous sentence within 10 days prior to the due date for the filing of such
Tax Returns.
(7) Contest Provisions. Purchaser shall promptly notify Seller in
writing upon receipt by Purchaser, any of its affiliates or the Company of
notice of any pending or threatened federal, state, local or foreign income or
franchise tax audits or assessments which may materially affect the tax
liabilities of the Company for which Seller would be required to indemnify
Purchaser pursuant to Section 6.9(b)(1), provided however, that no delay on the
part of Purchaser in notifying Seller shall relieve Seller from any liability or
obligation hereunder unless (and then solely to the extent) Seller is prejudiced
by such failure to give notice. Seller shall have the sole right to represent
the Company's interests in any tax audit or administrative or court proceeding
relating to taxable periods ending on or before the Closing Time, and to employ
counsel of its choice at its expense. Notwithstanding the foregoing, Seller
shall not be entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which would adversely affect the
liability for Taxes of Purchaser or the Company for any period after the Closing
Time to any extent (including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost adjustments, the lengthening
of any amortization or depreciation periods, the denial of amortization or
depreciation deductions, or the reduction of loss or credit carryforwards)
without the prior written consent of Purchaser. Such consent shall not be
unreasonably withheld, and shall not be necessary to the extent that Seller has
indemnified Purchaser against the effects of any such settlement.
Seller shall be entitled to participate at its expense in the
defense of any claim for Taxes for a year or period ending after the Closing
Time which may be the subject of indemnification by Seller pursuant to Section
6.9(b)(1) and, with the written consent of Purchaser, and at its sole expense,
may assume the entire defense of such tax claim. Neither Purchaser nor the
Company may agree to settle any tax claim for the portion of the year or period
ending on the date of the Closing Time which may be the subject of
indemnification by Seller under Section 6.9(b)(1) without the prior written
consent of Seller, which consent shall not be unreasonably withheld.
(8) Termination of Tax Allocation Agreements. Any tax allocation
or sharing agreement or arrangement, whether or not written, that may have been
entered into by Seller or any member of Seller's Group and the Company shall be
terminated as to the Company as of the Closing Time, and no payments which are
owed by or to the Company pursuant thereto shall be made thereunder.
(c) Transfer Taxes. Seller shall be liable for all transfer and
sales taxes arising from the sale of the Company Stock and the Name Rights.
(d) Information to be Provided by Purchaser. With respect to the
taxable year of Seller ending December 31, 1998 and the period in 1999 prior to
the Closing Time, Purchaser shall promptly cause the Company to prepare and
provide to Seller a package of tax information materials (the "Tax Package"),
which shall be completed in accordance with past practice including past
practice as to providing the information, schedules and work papers and as to
the method of computation of separate taxable income or other relevant measure
of income of the Company. Purchaser shall cause the Tax Package for the portion
of the taxable period ending on the date of the Closing Time to be delivered to
Seller within one hundred twenty (120) days after the date of the Closing Time.
(e) Assistance and Cooperation. After the Closing Time, each of
Seller and Purchaser shall:
(1) Assist (and cause their respective affiliates to assist)
the other parties in preparing any Tax Returns or reports that such
other parties are responsible for preparing and filing in accordance
with this Section 6.9;
(2) Cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the
Company;
(3) Make available to the others and to any taxing authority
as reasonably requested all information, records and documents
relating to Taxes of the Company;
(4) Provide timely notice to the others in writing of any
pending or threatened tax audits or assessments of the Company for
taxable periods for which the others may have a liability under this
Section 6.9; and
(5) Furnish the others with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any such taxable period.
(f) Section 1445. At the Closing, Seller shall deliver to
Purchaser an affidavit of Seller, in a form reasonably satisfactory to
Purchaser, stating under penalties of perjury Seller's taxpayer identification
number and that Seller is not a foreign person within the meaning of Section
1445(b)(2) of the Code.
(g) Survival of Obligations. Notwithstanding anything in Article
IX, the obligations of the parties set forth in this Section 6.9 shall be
unconditional and absolute and shall remain in effect through the expiration of
the relevant statute of limitations.
(h) Determination and Allocation of Consideration. The parties to
this Agreement agree to determine prior to the Closing Time the amount of and
allocate the total consideration transferred by Purchaser to Seller pursuant to
this Agreement (the "Consideration") in accordance with the fair market value of
the Company Stock and the Name Rights transferred. Purchaser shall reasonably
determine and Seller shall promptly accept in writing if reasonable an
allocation of the Consideration among the Company Stock and the Name Rights
transferred. The Company, Seller and Purchaser shall use the asset values
determined from such allocation for purposes of all reports and returns with
respect to Taxes, including IRS Form 8594 or any equivalent statement.
Section 6.10 Key Man Insurance. From the date of this Agreement
through the Closing Time, the Company or Seller, as applicable, will continue to
maintain, and will not take any action constituting a material default under or
in contemplation of the termination (whether before or after the Closing Time)
of, the key man insurance policies referred to in Section 3.2(t)(2).
Section 6.11 Employee Benefit Plans. (a) As of the Closing Time,
Seller and the Company shall have taken all appropriate action to cause the
Company to cease its participation under the Compensation and Benefit Plans
(other than the Company Compensation and Benefit Plans), so that from and after
the Closing Time all liabilities for any benefits payable to the Continuing
Employees (as defined below) or to any Company employee or former employee who
is not a Continuing Employee under the Compensation and Benefit Plans maintained
by Seller will remain the responsibility of Seller. The Company shall take all
appropriate action to terminate, as of the Closing Time, the participation of
the employees of the Company set forth on Schedule 6.11(a) hereto who continue
employment with the Company at the Closing Time (the "Continuing Employees") in
each of Seller's share purchase plans including the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan (as amended and restated as of October 29, 1997),
subject to any required consent of the affected employees.
(b) The Company and Seller shall take all appropriate action to
terminate, as of the Closing Time, the participation of the Continuing Employees
in the medical, dental, and life insurance plans maintained for the benefit of
current employees of the Company as of the Closing Time. Purchaser shall take
all appropriate action to make the Continuing Employees eligible to participate
as of the Closing Time in any medical, dental, life and disability insurance
plans or policies that are available from time to time to other U.S. employees
of Purchaser (the "Welfare Plans") in accordance with the terms of such Welfare
Plans. For purposes of the Continuing Employees' participation in the Welfare
Plans, from and after the Closing Time, Purchaser shall give (or shall cause the
Company to give) to the Continuing Employees credit for service with the Company
or Seller prior to the Closing Time to the same extent such service was credited
by the Company or Seller, as the case may be, prior to the Closing Time.
Purchaser shall cause any pre-existing condition limitations under the Welfare
Plans to be waived with respect to the Continuing Employees except for (i) any
pre-existing condition exclusion under the Company's existing welfare plans
which would have excluded the Continuing Employees from any of the Company's
existing welfare plans and (ii) pre-existing conditions related to any increased
coverage elected or provided under the Welfare Plans. Notwithstanding the
foregoing, all liabilities for any short-term or long-term disability claim
incurred prior to the Closing Time will be the liability of Seller.
(c) The Company and Seller shall take all appropriate action to
terminate, as of the Closing Time, the participation of the Continuing Employees
in each of the Company's incentive compensation plans subject to any required
consent of the affected employees, and Seller shall be responsible for any
costs, payments or liability otherwise resulting from such termination. Any
bonus payable with respect to performance rendered prior to the Closing Time,
including any annual or "Christmas" bonus with respect to calendar year 1998,
shall be the responsibility of Seller. As to Continuing Employees, Seller shall
have no liability under any Compensation and Benefit Plans with respect to
events occurring from and after the Closing Time, or under any plans or policies
maintained or contributed to by Purchaser or, from and after the Closing Time,
the Company. From and after the Closing Time, Purchaser shall take all
appropriate action to make the Continuing Employees eligible to participate in
the Company's new incentive plan.
(d) The Continuing Employees will be eligible for membership in
the Pension Plan for United States Dollar-Based Employees of Royal Bank of
Canada and Affiliates (the "Purchaser Pension Plan") and the Savings Plan for
United States Employees of Royal Bank of Canada and Affiliates (the "Purchaser's
401(k) Plan"). The service of the Continuing Employees with the Company prior to
the Closing Time will be recognized for membership, eligibility and vesting
purposes, but not for purposes of determining accrued pensionable service under
the Purchaser Pension Plan and for membership, eligibility and vesting purposes
under the Purchaser's 401(k) Plan. As soon as practicable after the Closing
Time, Seller shall cause the accounts of Continuing Employees under the Bull &
Bear Investment Plan (the "Seller's Savings Plan") to be fully vested and to be
distributed to the Continuing Employees. Conditioned upon prior receipt by
Purchaser of a statement from the plan administrator of the Seller's Savings
Plan that such plan has received a determination letter from the Commissioner of
Internal Revenue indicating that the Seller's Savings Plan qualifies under
Section 401 of the Code, Purchaser shall cause the Purchaser's 401(k) Plan to
accept, if elected by the respective Continuing Employee, a direct rollover of
any such accounts, including any outstanding participant loans.
(e) After the Closing Time, Seller shall be liable for all labor
costs of any employee of the Company who is not a Continuing Employee, including
severance pay, salaries, wages or payroll taxes and deposits required by law.
(f) At the Closing Time, Purchaser shall give credit to the
Continuing Employees for all accrued and unused vacation time described in
Schedule 6.11(f) hereto.
(g) Each of Seller and the Company agrees that any changes to the
Compensation and Benefit Plans prior to the Closing Time must be approved by
Purchaser prior to any commitments to the employees of the Company other than
any changes required by applicable law.
Section 6.12 Assignment Agreement. Seller agrees to execute and
deliver the Assignment Agreement at the Closing Time.
Section 6.13 Change of Name; Use of Name. Seller agrees that
within 90 days following the Closing, it shall use its reasonable best efforts
to cause the names and logos set forth in Schedule 4.2(f) hereto (the "Names")
to be changed to names complying with the terms of this Section 6.13. Seller
shall (i) use its reasonable best efforts to, (ii) cause its subsidiaries to use
their reasonable best efforts to and (iii) use its reasonable best efforts to
cause the Related Funds to use their reasonable best efforts to, within 90 days
following the Closing, remove or obliterate all the Names or any name, mark or
logo similar thereto from any materials or property of Seller, its subsidiaries
and the Related Funds, and neither Seller, its subsidiaries nor the Related
Funds shall, after the date that is 90 days after the Closing Time, in any way
use materials or property, whether or not in existence at the Closing Time, that
bear any Name or any name, mark or logo similar thereto.
Section 6.14 Non-Competition; Non-Solicitation. (a) For the
three-year period following the Closing Time, Seller agrees not to, and will
cause its Affiliates not to, without the prior written consent of Purchaser,
directly or indirectly, (i) own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected as a partner or
otherwise with, or have any financial interest in, any entity which engages in
the discount securities brokerage business or (ii) induce, encourage or solicit
at any time any customer of the Company for any brokerage services unless such
customer is an Affiliate of the Seller or is a Bull & Bear Fund; provided
however, that Seller and its Affiliates, in the aggregate, may own 10% or less
of the outstanding securities of any publicly traded entity that provides
discount brokerage services.
(b) Without the written consent of Purchaser, Seller agrees not
to, and will cause its Affiliates not to, directly or indirectly, at any time
after the date hereof until the third anniversary of the Closing Time, (i)
induce, encourage or solicit any person who is an employee of the Company either
as of the date hereof or who becomes an employee of the Company between the date
hereof and such third anniversary to reject an offer of employment made on
behalf of the Purchaser, to leave its employment with the Company or to accept
any other position or employment or (ii) make any offer of employment, or
employ, any such employee unless such employee was previously terminated by
Purchaser.
Section 6.15 Stockholder Approvals. From the date of this
Agreement through the Closing Time, without the prior consent of Purchaser,
Seller agrees to cause (i) the Acquisition Consent not to be amended, modified
or rescinded or (ii) no other stockholder consent or vote to be given or taken,
respectively, with respect to the Acquisition or matters relating thereto.
Section 6.16 Transfer of Certain Assets. Seller agrees that,
prior to the Closing Time, it will, and will cause its subsidiaries to,
transfer, convey, assign and deliver to the Company all right, title and
interest of Seller and its subsidiaries in, to and under all of the properties
and assets Previously Disclosed with respect to Section 3.2(j).
Section 6.17 Company Lease. Seller agrees that it will, prior to
the Closing Time, cause the Company to enter into the Lease. Purchaser agrees
that on or after the Closing Time, it expressly guarantees all obligations of
the Company and Seller (as guarantor) under the Lease.
Section 6.18 Bull & Bear Dollar Reserves. (a) Exclusivity.
Purchaser agrees that it will cause, for the three-year period following the
Closing Time, the Company to offer exclusively the Fund to its customers as the
sole money market fund into which cash balances held by the Company's customers
may be swept on a daily basis for so long as:
(i) Seller is in full compliance with its representations,
warranties, covenants and other obligations contained in Section 4.3,
Section 6.9, Section 6.13, Section 6.14 and Article VIII of this
Agreement, the Services Agreement and the Assignment Agreement;
(ii) the Fund is in full compliance with its obligations
under the Investment Company Act, the Securities Act and any other
Applicable Laws ,except where the failure to so comply, individually
or in the aggregate, would not have a material adverse effect on the
Fund;
(iii) evaluated on a quarterly basis, (1) the Fund is ranked
in the top 75% of mutual funds reported by Lipper Analytical Services,
Inc. in the category "U.S. Government Money Market Funds" (or any
successor category) based on a three-month total return for the most
recently reported three-month period (starting with the quarterly
report as of June 30, 1999 ) if the total net assets of the Fund are
less than $100 million at the time of such report or if such report is
the first or second quarterly report immediately following the date
upon which the total net assets of the Fund equal or exceed $100
million, or (2) starting with the third quarterly report immediately
following the date upon which the total net assets of the Fund equal
or exceed $100 million the Fund is ranked in the top 50% of such
category of mutual funds based on a three-month total return for the
most recently reported three-month period, provided, however, that
should the Fund be ranked lower than the applicable percentage for any
quarterly evaluation, Adviser shall have a one-time only opportunity
to achieve the applicable ranking in the immediately succeeding
quarterly report;
(iv) Seller has not breached its obligation to pay or cause
to be paid the Company the fee specified in Section 6.18(b);
(v) there has not occurred a Change of Control with respect
to Seller, Adviser or Distributor; and
(vii) there is no law, rule, order, regulation or otherwise
of any Governmental Authority or Self-Regulatory Organization
prohibiting, or litigation, claim, investigation, proceeding or
controversy pending against the Company or any of its Affiliates with
respect to, the exclusivity arrangement set forth in this Section
6.18(a).
(b) Monthly Fee. Following the Closing Time, Seller shall pay, or
cause to be paid, to the Company, on or before the 10th day of each month, a
monthly fee equal to one-twelfth of 0.25% of the aggregate average daily
balances for the prior month (in U.S. dollars) with respect to the shares of the
Fund beneficially owned by the Company's customers as of the close of business
on the last business day of the prior month. If for any month the Company
receives payment from the Fund or Distributor of any fee in accordance with Rule
12b-1 under the Investment Company Act or any Service Fee (as such term is
defined in Rule 2830 of the NASD) or otherwise, then Seller shall be relieved of
its payment obligation for such month under this Section 6.18(b) up to the
amounts actually received by the Company from the Fund or Distributor. If at any
time and for any reason Seller does not receive when due the payment of the
Monthly Fee, in whole or in part, that Seller is entitled to receive pursuant to
the Services Agreement during any calendar month, the monthly fee payable under
this Section 6.18(b) shall be reduced for so long as and to the extent necessary
so that the aggregate amount of such reduction equals the aggregate amount of
the Monthly Fee due less the amount of the Monthly Fee actually paid to Seller
pursuant to the Services Agreement.
(c) Disclosure. Prior to the Closing Time, and from time to time
as circumstances may require after the Closing Time, Seller shall, and shall
cause each of Distributor and Adviser to take promptly all necessary action, or
cause all necessary action to be taken promptly, to disclose the transactions
contemplated hereby to the extent such disclosure is required by Applicable Law,
including disclosure in all registration statements, prospectuses and statements
of additional information required to be filed by the Fund under the Securities
Act.
Article VII
Conditions to Consummation of the Acquisition
Section 7.1 Conditions to Each Party's Obligations to
Consummate. The respective obligations of each party hereto to consummate the
Acquisition are subject to the fulfillment or written waiver, at or prior to the
Closing Time, of the following conditions:
(a) Governmental and Regulatory Approvals. All approvals and
authorizations of, filings and registrations with, and notifications
to, all Governmental Authorities and Self- Regulatory Organizations
required for the consummation of the Acquisition shall have been
obtained or made and shall be in full force and effect and all waiting
periods required by law shall have expired.
(b) Third Party Consents. All consents or approvals of all
persons, other than Governmental Authorities or Self-Regulatory
Organization, required for or in connection with the execution,
delivery and performance of this Agreement (including the consummation
of the Acquisition) and the Ancillary Agreements shall have been
obtained and shall be in full force and effect, unless the failure to
obtain any such consent or approval is not reasonably likely to have a
Material Adverse Effect on the Company.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) that is in
effect and prohibits consummation of the transactions contemplated by
this Agreement.
Section 7.2 Conditions to Obligations of Purchaser. The
obligations of Purchaser to consummate the Acquisition shall be subject to the
fulfillment or written waiver, at or prior to the Closing Time, of the following
additional conditions:
(a) Representations and Warranties.
(1) Representations and Warranties under the Agreement. The
representations and warranties of the Company and Seller set forth in
this Agreement shall be true and correct, subject to the standards set
forth in Sections 3.1 and 4.1, as of the date of this Agreement and at
the Closing Time with the same effect as though all such
representations and warranties had been made at the Closing Time
(except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct only as of such date), and Purchaser shall have received
signed certificates of the Chief Executive Officer and Chief Financial
Officer of each of the Company and Seller to such effect, provided
that the obligation of Purchaser to consummate the transactions
contemplated in this Agreement shall not be affected by any inaccuracy
in the representations and warranties set forth in Sections 4.3(a),
and 4.3(c) through 4.3(h).
(2) Representations and Warranties under the Ancillary
Agreements. The representations and warranties of Seller and its
Affiliates set forth in the Ancillary Agreements shall be true and
correct as of the date of each Ancillary Agreement and at the Closing
Time, and Purchaser shall have received a signed certificate of the
Chief Executive Officer and Chief Financial Officer of the Seller to
such effect.
(b) Performance of Obligation. Each of the Company and
Seller shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Time, and Purchaser shall have received signed certificates of
the Chief Executive Officer and Chief Financial Officer of each of the
Company and Seller to such effect.
(c) Employment Contract and Services Agreement. Each of the
Employment Contract and the Services Agreement shall be in full force
and effect and shall not have been amended or modified without the
prior written consent of Purchaser (not to be unreasonably withheld or
delayed) and no event, with or without the giving of notice, the lapse
of time or both, constituting "Cause" thereunder shall have occurred
with respect to the Employment Contract.
(d) Acquisition Consent. The Acquisition Consent shall not
have been amended, modified or rescinded and shall be in full force
and effect; and no subsequent consent or vote by the holder or holders
of the voting capital stock of Seller with respect to the Acquisition
or other matters related thereto shall have occurred.
(e) Lease. The Company shall have entered into the Lease and
the Lease shall be in full force and effect and shall not have been
amended or modified without the prior written consent of Purchaser
(not to be unreasonably withheld or delayed).
(f) Assignment Agreement. Seller shall have executed and
delivered the Assignment Agreement to Purchaser (or a person
designated by it).
(g) Book Value. Seller shall have delivered to the Purchaser
a Closing Balance Sheet, in a form reasonably satisfactory to the
Purchaser, showing the Book Value of at least $500,000.
(h) No Onerous Condition. No approval or authorization
described in Section 7.1(a) shall be subject to an Onerous Condition.
(i) Deliveries by Seller. The Seller shall have delivered to
the Purchaser (or a person designated by it) (i) a certificate or
certificates representing 100% of the shares of the Company Stock in
accordance with Section 2.1, (ii) all Books and Records of the Company
and (iii) all other documents or instruments which, in the reasonable
judgment of Purchaser, are necessary or required to effect the
transfers contemplated by Section 2.1.
(j) Legal Opinion. Purchaser shall have received at the
Closing Time an opinion from counsel to Seller to the effect that (i)
the Company Stock has been duly authorized and validly issued and is
fully paid and nonassessable and subject to no preemptive rights, (ii)
the Company Stock is owned by the Seller free and clear of any Liens,
(iii) each of the Company and Seller has been duly incorporated and is
an existing corporation in good standing under the laws of Delaware,
(iv) each of this Agreement, the Assignment Agreement and the Services
Agreement has been duly authorized, executed and delivered by Seller
and Seller has the requisite power and authority, and has taken all
action necessary, in order to authorize this Agreement, the Assignment
Agreement and the Services Agreement and the transactions contemplated
hereby and thereby, (v) each of this Agreement, the Assignment
Agreement and the Services Agreement is the valid, legal and binding
obligation of Seller, enforceable against it in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization, fraudulent transfer and other laws
affecting creditors' rights generally and to general equitable
principles, (vi) each of this Agreement, the Lease and the Services
Agreement has been duly authorized, executed and delivered by the
Company and the Company has the requisite power and authority, and has
taken all action necessary, in order to authorize this Agreement, the
Lease and the Services Agreement and the transactions contemplated
hereby and thereby and (vii) each of this Agreement, the Lease and the
Services Agreement is the valid, legal and binding obligation of the
Company, enforceable against it in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer and other laws affecting
creditors' rights generally and to general equitable principles.
Section 7.3 Conditions to Obligations of the Company and
Seller. The obligations of the Company and Seller to consummate the Acquisition
shall be subject to the fulfillment or waiver in writing (by Seller on behalf of
the Company), at or prior to the Closing Time, of the following addi tional
conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser set forth in this Agreement shall be true and
correct, subject to the standard set forth in Section 5.1, as of the
date of this Agreement and at the Closing Time with the same effect as
though all such representations and warranties had been made at the
Closing Time (except that representations and warranties that by their
terms speak as of the date of this Agreement or some other date shall
be true and correct only as of such date), and Seller (on behalf of
the Company) shall have received a signed certificate of a senior
officer of Purchaser to such effect.
(b) Performance of Obligations. Purchaser shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Time,
and Seller (on behalf of the Company) shall have received a signed
certificate of a senior officer of Purchaser to such effect.
Article VIII
Survival of Representations and Covenants; Indemnification
Section 8.1 Survival of Representations and Covenants. The
representations and warranties of the Company, Seller and Purchaser contained in
this Agreement shall survive the Closing Time until April 1, 2001 except that
(i) the representations and warranties set forth in Section 3.2(a) and Section
3.2(b) shall survive the Closing Time indefinitely, (ii) the representations and
warranties set forth in Section 3.2(w) shall survive the Closing Time until the
expiration of the relevant statute of limitations relating thereto and (iii) the
representations and warranties set forth in Section 4.3 shall survive the
Closing Time for a period of 3 years. All covenants contained in this Agreement
and this Article VIII shall survive the Closing Time indefinitely.
Section 8.2 Indemnification. (a) Seller hereby agrees to
indemnify, defend and hold harmless the Purchaser Indemnified Parties against
all costs and expenses (including reasonable attorneys' fees), judgments, fees,
losses, damages or liabilities (excluding consequential damages) actually
incurred by or on behalf of such Purchaser Indemnified Parties in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (collectively, "Costs"), directly or
indirectly relating to or arising out of (1) the breach of any representation or
warranty (i) made by the Company or Seller in this Agreement (without regard to
any "materiality" or any "Material Adverse Effect" exception contained therein)
as if such representation or warranty were made by the Company or Seller as of
the Closing Time or (ii) made by the Seller in the Services Agreement, (2) the
breach of any covenant or agreement made or to be performed by the Company or
Seller pursuant to this Agreement or the Services Agreement, (3) the ownership,
business or operation of the Company (including any employee, employee benefit
or labor matters) prior to the Closing Time or (4) any act, omission to act or
circumstance occurring or existing, by or with respect to the Seller, the
Company or any Affiliate of the Seller prior to the Closing Time. Seller will
reimburse each Purchaser Indemnified Party for any legal or other expenses
reasonably incurred by such Purchaser Indemnified Party in connection with
investigating or defending any action or claim related to the foregoing as such
expenses are incurred.
(b) Purchaser hereby agrees to indemnify and hold the Seller
Indemnified Parties harmless from Costs actually incurred as a result of or
arising out of (1) the breach of any representation or warranty made by (i) it
in this Agreement as if such representation or warranty were made by it as of
the Closing Time or (ii) by the Company in the Services Agreement, (2) the
breach of any covenant or agreement made or to be performed by (i) it pursuant
to this Agreement or (ii) by the Company in the Services Agreement or (3) the
ownership, business or operations of the Company (including any employee,
employee benefit or labor matters) after the Closing Time (provided that the
indemnification provided by this clause (3) shall not entitle Seller Indemnified
Parties to be indemnified for any payments they are required to make to
Purchaser or Purchaser Indemnified Parties pursuant to this Agreement or
otherwise). Purchaser will reimburse each Seller Indemnified Party for any legal
or other expenses reasonably incurred by such Seller Indemnified Party in
connection with investigating or defending any action or claim related to the
foregoing as such expenses are incurred.
(c) Absent fraud, the foregoing indemnification provisions shall
be the exclusive remedy after the Closing for any breach of the covenants,
obligations, representations or warranties set forth in this Agreement (other
than any covenant or obligation of Seller set forth in this Agreement that is to
be performed after the Closing Time); provided that the provisions of this
Section 8.2(c) shall not prevent Seller or Purchaser from seeking the remedies
of specific performance or injunctive relief in connection with a breach of a
covenant or agreement of any party contained herein.
(d) Notwithstanding anything to the contrary in this Agreement,
an Indemnifying Party shall not be liable under this Section 8.2 unless (i) the
amount of Costs incurred by an Indemnified Party in connection with any
individual claim, or group of related individual claims, exceeds $10,000 (a
claim or claims not warranting indemnification as a result of this clause (i), a
"De Minimus Claim"); provided however, that if the aggregate amount of all Costs
sustained by an Indemnified Party in connection with De Minimus Claims shall
equal or exceed $180,000 at any time, the Indemnifying Party shall provide
indemnification hereunder with respect to all Costs related to such De Minimus
Claims and any subsequent De Minimus Claims thereafter. Notwithstanding anything
to the contrary in this Agreement, the aggregate amount of indemnification
payments payable pursuant to this Section 8.2 shall not exceed $6.6 million. The
limitations and provisions in this Section 8.2(d) shall not apply to Costs
directly or indirectly related to any matters set forth in Sections 3.2(w) and
6.9 of this Agreement.
Section 8.3 Indemnification Procedure. (a) Any Indemnified
Party seeking indemnification from any other party (the "Indemnifying Party")
with respect to any claim, demand, action, proceeding or other matter pursuant
to this Agreement (the "Claim") shall promptly notify the Indemnifying Party of
the existence of the Claim, setting forth in reasonable detail the facts and
circumstances pertaining thereto and the basis for the Indemnified Party's right
to indemnification; provided that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any liability or obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced by such failure to give notice.
(b) If any third party shall notify any Indemnified Party with
respect to any matter which may give rise to a Claim for indemnification against
the Indemnifying Party under this Agreement, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof; provided that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced by such
failure to give notice. In the event that the Indemnifying Party notifies the
Indemnified Party (within 30 days after the Indemnified Party has given notice
of a Claim) that the Indemnifying Party would be required to indemnify the
Indemnified Party in full against any such Claim and is assuming the defense
thereof:
(1) The Indemnifying Party will defend the Indemnified Party
against the matter with counsel of the Indemnifying Party's choice
reasonably satisfactory to the Indemnified Party;
(2) The Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel (A)
to the extent the Indemnified Party concludes reasonably based upon
advice of counsel that a conflict of interest exists between the
Indemnified Party and the Indemnifying Party or (B) the named parties
to any such action (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party and such Indemnified
Party shall have been advised by counsel that there may be one or more
legal defenses available to the Indemnified Party that are not
available to the Indemnifying Party, or available to the Indemnifying
Party, but the assertion of which would be adverse to the interest of
the Indemnified Party); and
(3) The Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the matter
without the written consent of the Indemnifying Party (not to be
withheld or delayed unreasonably).
(c) If no Indemnifying Party notifies the Indemnified Party
(within 30 days after the Indemnified Party has given notice of a Claim) that
the Indemnifying Party would be required to indemnify the Indemnified Party in
full against any such Claim and the Indemnifying Party is assuming the defense
thereof, then the Indemnified Party may defend against, or enter into any
settlement with respect to, the matter in any manner it reasonably may deem
appropriate, without prejudice to any of its rights hereunder.
(d) The Indemnified Party shall be entitled to reimbursement of
reasonable expenses included in Costs with respect to any Claim (including the
cost of defense, preparation and investigation relating to such Claim) as such
expenses are incurred by the Indemnified Party in accordance with the terms of
this Agreement.
Section 8.4 Calculation of Costs; Remittance of Benefits. (a)
In calculating the amount of any Costs of an Indemnified Party under this
Article VIII, there shall be (1) subtracted the amount of any insurance proceeds
the Indemnified Party actually receives with respect thereto and the amount of
any third-party payments actually received by the Indemnified Party with respect
to such Costs after demand or notice to such third party from the Indemnifying
Party (with the consent of the Indemnified Party which will not be unreasonably
withheld) and (2) added the amount of the Net Tax Liability.
(b) If an Indemnified Party realizes amounts described in
Section 8.4(a)(1) in a year after the final determination of the related Costs,
the Indemnified Party shall remit such amounts to the Indemnifying Party as and
when actually received. If (1) an Indemnified Party realizes Tax Benefits
attributable to Costs for which an Indemnifying Party has made payments under
this Article VIII and (2) such Tax Benefits were not included in calculating the
Net Tax Liability related to such Costs, then the Indemnified Party shall remit
to the Indemnifying Party the value of such Tax Benefits as and when actually
realized.
Article IX
Termination
Section 9.1 Termination. This Agreement may be terminated prior
to the Closing Time:
(a) By the written consent of Purchaser and Seller;
(b) By either Purchaser or Seller, in the event of (1) a
material breach by any party hereto unaffiliated with the nonbreaching
party of any representation or warranty contained herein, which breach
cannot be, or has not been, cured within 30 days after receipt of
notice in writing of its occurrence which notice shall specify the
nature of such breach or (2) a material breach by such party of any of
the covenants or agreements contained herein, which breach cannot be,
or has not been, cured within 30 days of after receipt of notice in
writing of its occurrence which notice shall specify the nature of
such breach;
(c) By either Purchaser or Seller, if any approval of a
Governmental Authority or Self-Regulatory Organization, the lack of
which would result in the failure to satisfy the condition to the
Closing set forth in Section 7.1(a), shall have been denied by such
Governmental Authority or Self-Regulatory Organization or such
Governmental Authority or Self-Regulatory Organization shall have
requested the withdrawal of any application therefor or indicated an
intention to deny, or impose an Onerous Condition with respect to,
such approval;
(d) By either Purchaser or Seller, in the event that the
Acquisition is not consummated by June 30, 1999 through no fault of
the party seeking to terminate or its Affiliates; or
(e) By either Purchaser or Seller, if any permanent
injunction or action by any Governmental Authority of competent
jurisdiction enjoining, denying approval of or otherwise prohibiting
consummation of any of the transactions contemplated by this Agreement
shall become final and nonappealable.
Section 9.2 Effect of Termination. In the event of termination
of this Agreement pursuant to this Article IX, no party hereto (or any of its
directors, officers, representatives or agents) shall have any liability or
further obligation to any other party to this Agreement, except that termination
will not relieve a breaching party for any willful breach of this Agreement
prior to such termination.
Article X
Other Matters
Section 10.1 Waiver; Amendment. Any provision of this Agreement
may be (a) waived in writing by the party or parties benefitted by the
provision, or (b) amended or modified at any time (including the structure of
the transactions contemplated hereby and including after the Closing Time to the
extent of provisions surviving the Closing Time) only by an agreement in writing
among the parties hereto and executed in the same manner as this Agreement;
provided that (1) prior to the Closing Time, Seller shall be permitted to waive
any provision on behalf of the Company and (2) after the Closing Time, this
Agreement may be amended (as to provisions surviving the Closing Time) by an
agreement in writing among Purchaser and Seller.
Section 10.2 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall constitute an original and all of
which, when taken together, shall constitute one Agreement.
Section 10.3 Governing Law. This Agreement shall be governed by,
and interpreted in accordance with, the laws of the State of New York applicable
to agreements made and to be performed entirely within such State.
Section 10.4 Arbitration. A dispute arising in connection with
this Agreement shall be settled pursuant to an arbitration proceeding conducted
in accordance with the following:
(i) The arbitration proceeding shall be governed by the
international arbitration rules (the "Arbitration Rules") of the
American Arbitration Association ("AAA") then in effect;
(ii) The arbitration proceeding shall be conducted in New
York, New York;
(iii) Any such arbitration shall be conducted before a panel
of three arbitrators who shall be compensated for their services at a
rate to be determined by the parties, but based upon reasonable and
customary hourly or daily consulting rates for the neutral arbitrator
in event the parties are not able to agree upon the arbitrators' rate
of compensation;
(iv) Within 15 days of notice by the party seeking
arbitration under this provision, such party shall appoint one person
as an arbitrator and within 15 days thereafter the other person shall
appoint the second arbitrator. Within 20 days after the appointment of
the second arbitrator, the two arbitrators so chosen shall mutually
agree upon the selection of a third impartial and neutral arbitrator.
In the event the chosen arbitrators cannot agree upon the selection of
the third arbitrator, the Arbitration Rules for the selection of such
arbitrator shall be followed. If the other party shall fail to
designate the second arbitrator, the sole arbitrator appointed shall
have the power to appoint, in his or her sole discretion, both the
second and third arbitrators. If a party fails to appoint a successor
to its appointed arbitrator within 20 days of the death, resignation
or other incapacity of such arbitrator, the remaining two arbitrators
shall appoint such successor;
(v) The arbitrators shall be instructed to conduct the
arbitration proceedings in as expeditious a manner as reasonably
possible, consistent with the parties' intention to have a full and
fair hearing on the merits of the dispute. The arbitration panel shall
issue its decision in writing within 20 days from the hearing of final
arguments by the parties. The majority decision of the arbitrators
shall be final, conclusive and binding on the parties and not subject
to any appeal;
(vi) Judgment upon the arbitrators' decision may be entered
in any court having jurisdiction or application may be made to such
court for a judicial recognition of the decision or an order of
enforcement thereof, as the case may be; and
(vii) The party against whom any arbitrators' decision is
rendered shall bear all costs and expenses of the prevailing party
that relate to such arbitration proceeding.
Section 10.5 Waiver of Jury Trial. To the fullest extent
permitted by law, each party hereto waives any and all rights such party may
have to a jury trial with respect to any dispute arising hereunder or in
connection herewith.
Section 10.6 Expenses. Except as set forth in Section 10.4(vii),
each party hereto will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby.
Section 10.7 Notices. All notices, requests and other
communications hereunder to a party shall be in writing and shall be deemed to
have been given (a) on the Business Day sent, when delivered by hand or
transmitted by telecopier or facsimile transmission (provided that the telecopy
or facsimile transmission is promptly confirmed by telephone), (b) on the
Business Day following the Business Day of sending, if delivered by nationally
recognized overnight courier, or (c) on the third Business Day following the
Business Day of sending, if mailed by registered or certified mail return
receipt requested, in each case to such party at its address (or number) set
forth below or such other address (or number) as the party may specify by notice
to the other parties hereto.
If to Purchaser to:
Royal Bank Action Direct Inc.
Suite 200, 100 York Blvd.
Richmond Hill, Ontario
L4B 1J8 Canada
Attn: Peter W. Worden
Vice President - Strategic
Business Development
(Fax No. (905) 764-0430)
and with a copy to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Donald J. Toumey, Esq.
(Fax No. (212) 558-3588)
If to the Company
or Seller: Investor Service Center, Inc.
11 Hanover Square
New York, New York 10005
Attn: Thomas B. Winmill
(Fax No. (212) 785-0400)
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: Stuart H. Coleman, Esq.
(Fax No. (212) 806-6006)
Section 10.8 Entire Understanding; No Third Party Beneficiaries.
This Agreement represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and supersedes any and all
other oral or written agreements heretofore made. Nothing in this Agreement,
expressed or implied, is intended to confer upon any person, other than the
parties hereto or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
Section 10.9 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties hereto and any purported assignment in
violation of this Section 10.9 shall be null and void; provided that this
Agreement (including the rights, interests and obligations hereunder) may be
assigned by Purchaser by operation of any amalgamation, consolidation or merger
of the foregoing; and, provided further, that any such assignment shall not
relieve Purchaser of its obligations under this Agreement. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
permitted assigns.
Section 10.10 Judicial Amendment. It is expressly understood and
agreed that although Seller and Purchaser consider the restrictions contained in
Section 6.14 to be reasonable, if a final judicial determination is made by a
court of competent jurisdiction that the duration or scope restriction in
Section 6.14 or any other restriction contained in Section 6.14 is an
unenforceable restriction against Seller and its Affiliates, such provision
shall not be rendered void but shall be deemed amended to apply to such maximum
duration and scope, if applicable, or otherwise to such maximum extent as such
court may judicially determine or indicate to be enforceable.
Section 10.11 Legal Association. This Agreement shall not be
construed as constituting any party hereto as partner of any other party hereto
or as creating any other form of legal association that would impose liability
on one party for the act or failure to act of any other party hereto or as
providing any party hereto with the right, power or authority (express or
implied) to create any duty or obligation of any other party hereto. Each party
hereto shall be responsible for the management, direction and control of its
employees when acting as such, notwithstanding that such employees may also be
employees of any other party hereto.
[The next page is a signature page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed in counterparts, all as of the day and year first above
written.
RBC Holdings (USA) Inc.
By:/s/ Mark R. Hughes
-------------------------------
Name: Mark R. Hughes
Title: Chairman of the Board
Bull & Bear Securities, inc.
By: /s/ Mark C. Winmill
-------------------------------
Name: Mark C. Winmill
Title: President
Bull & Bear Group, INC.
By: /s/ Bassett S. Winmill
-------------------------------
Name: Bassett S. Winmill
Title: Chairman of the Board
<PAGE>
ANNEX A
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (the "ASSIGNMENT") is made and effective as
of [DATE], 1999 from Bull & Bear Group, Inc., a Delaware corporation
("ASSIGNOR"), to RBC Holdings (USA) Inc., a Delaware corporation ("ASSIGNEE").
WHEREAS, Assignor and Assignee have entered into a Purchase Agreement,
dated as of December 17, 1998 (the "PURCHASE AGREEMENT"), pursuant to which
Assignee will purchase from Assignor all of the issued and outstanding shares of
capital stock of Bull & Bear Securities, Inc., a Delaware corporation (the
"COMPANY").
WHEREAS, in the Purchase Agreement, Assignor has agreed to assign to
Assignee all of Assignor=s right, title and interest in and to the trademarks,
trade names, service marks identified and set forth in ANNEX A hereto
(collectively, the "NAME RIGHTS") together with the goodwill of the business of
the Company (the "BUSINESS") symbolized by the marks comprising the Name Rights;
WHEREAS, all capitalized terms used but not otherwise defined herein
shall have their respective meaning assigned in the Purchase Agreement;
NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND and for good and
valuable consideration as set forth in the Purchase Agreement, the receipt and
sufficiency of which is hereby acknowledged:
1. Assignor hereby assigns to Assignee all of Assignor=s right, title
and interest in and to the Name Rights together with the goodwill of the
Business symbolized by the marks comprising Name Rights, free and clear of any
Liens, and all registrations and applications therefor, as well as renewals and
extensions of the registrations that are or may be secured under the laws of the
United States, its territories and possessions and throughout the world, now or
hereafter in effect, for Assignee=s own use and enjoyment, and for the use and
enjoyment of Assignee=s successors, assigns or other legal representatives as
fully and entirely as the same would have been held and enjoyed by the Assignor
if this assignment had not been made, together with all income, royalties,
damages or payments due on the date hereof or thereafter including, without
limitation, all claims for damages or payments by reason of infringement or
other unauthorized use of the marks, with the right to sue and collect the same
for Assignee=s own use and enjoyment and for the use and enjoyment of its
successors, assigns or other legal representatives (the "ASSIGNED PROPERTY").
Assignor requests the Commissioner of Patents and Trademarks or the respective
Registrar of Trademarks to record Assignee as the assignee and owner thereof.
2. Assignor and its affiliates shall provide to Assignee, its
successors, assigns or other legal representatives, cooperation and assistance
at Assignee=s request and expense (including the execution and delivery of any
and all affidavits, declarations, oaths, samples, exhibits, specimens and other
documentation as may be reasonably required): (i) in the preparation and
prosecution of any application for registration or any application for renewal
or extension of a registration covering any of the Name Rights; (ii) in the
prosecution or defense of any opposition, interferences, infringement suits or
other proceedings that may arise in connection with any of the Name Rights,
including, but not limited to, testifying as to any facts relating to the Name
Rights assigned herein and this Assignment; (iii) in obtaining any additional
trademark protection with respect to the Name Rights that Assignee reasonably
may deem appropriate that may be secured under the laws now or hereafter in
effect in the United States or throughout the world; and (iv) in the
implementation or perfection of this Assignment.
3. This Assignment shall be governed by and construed in accordance
with the substantive law of New York.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
executed and delivered by its duly authorized officer as of the date first above
written.
BULL & BEAR GROUP, INC.
By: ______________________
Name:
Title:
<PAGE>
ANNEX A
A. Registered Name Rights
MARKS REGISTRATION # REGISTRATION DATE
B. Pending Name Rights
MARKS APPLICATION CASE # FILING DATE
C. Common Law Name Rights
<PAGE>
ANNEX B
SERVICES AGREEMENT
This SERVICES AGREEMENT (this "AGREEMENT"), dated as of December 17,
1998, is between Bull & Bear Securities Inc., a Delaware corporation (the
"COMPANY"), Bull & Bear Group, Inc., a Delaware corporation ("BULL & BEAR
GROUP") and RBC Holdings (USA) Inc., a Delaware corporation (the "PURCHASER").
WHEREAS, Bull & Bear Group has entered into an agreement (the
"PURCHASE AGREEMENT"), dated as of December 17, 1998, with the Company and the
Purchaser pursuant to which, among other things, Purchaser wishes to purchase
all the outstanding capital stock of the Company;
WHEREAS, after the Closing Date, Purchaser desires that the Company
continue to operate the Company=s business (the "BUSINESS"); and
WHEREAS, after the Closing Date, the Company desires to receive, and
Bull & Bear Group is willing to provide, on a transitional basis, certain
services on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the Company and Bull & Bear Group agree as
follows:
ARTICLE I - DEFINITIONS
1.1 When used in this Agreement, the following terms have the meanings
set forth herein:
"AAA" has the meaning set forth in Section 6.10.
"AGREEMENT" has the meaning assigned thereto in the recitals.
"ARBITRATION RULES" has the meaning set forth in section 6.10.
"BULL & BEAR GROUP" has the meaning assigned thereto in the recitals.
"BROKER SERVICES FEES" means the fees related to all funds managed or
advised by any Bull & Bear Group=s affiliates, other than Bull & Bear Dollar
Reserves, payable to the Company pursuant to any broker services agreement or
similar arrangements between Distributor and the Company.
"BUSINESS" has the meaning assigned thereto in the recitals.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday or
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law to close.
"CLOSING DATE" means the date of the Closing Time under the Purchase
Agreement.
"COMPANY" has the meaning assigned thereto in the recitals.
"CONSULTING SERVICES" has the meaning assigned thereto in Section 2.1.
"INTERIM SERVICES" has the meaning assigned thereto in Section 2.2.
"INTERIM SUPPORT SERVICES" has the meaning assigned thereto in Section
2.2.
"MONTHLY FEE" has the meaning assigned thereto in Section 3.1.
"PARTY" or "PARTIES" means the Company, Purchaser and/or Bull & Bear
Group, as the context may require.
"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust, limited liability company,
unincorporated organization or any other entity.
"PURCHASE AGREEMENT" has the meaning assigned thereto in the recitals.
"TRANSITION PERIOD" has the meaning assigned thereto in Section 2.1.
ARTICLE II - SERVICES
2.1 Bull & Bear Group agrees to provide, or to cause its subsidiaries
to provide, to the Company for a period of three years following the Closing
Date (the "TRANSITION PERIOD") consulting services with respect to the operation
of a securities brokerage business (the "CONSULTING Services").
2.2 Bull & Bear Group agrees to provide, or cause its subsidiaries to
provide, to the Company for a period of six months following the Closing Date
interim support services, including accounting and compliance services (but not
marketing services), currently provided to the Company by Bull & Bear Group and
its subsidiaries in order to allow the Company to continue to conduct its
Business in the manner currently conducted (the "INTERIM SUPPORT SERVICES") (the
Consulting Services and the Interim Support Services shall be referred to herein
collectively as the "INTERIM SERVICES"). Bull & Bear Group and the Company agree
that following the expiration of the six months following the Closing Date, at
the request of the Company, Bull & Bear Group will provide Interim Support
Services to the Company at prices to be mutually agreed upon by Bull & Bear
Group and the Company, it being understood that if the Company and Bull & Bear
Group cannot mutually agree on such prices, Bull & Bear Group will have no
further obligation to provide Interim Support Services to the Company.
2.3 Bull & Bear Group agrees that the Interim Support Services shall
be provided with the same (or better) quality of service as is currently
provided to the Company.
ARTICLE III - MONTHLY FEE
3.1 Subject to the obligations and conditions set forth in the
Purchase Agreement and in Sections 3.2 and 3.3 below, the Company shall pay Bull
& Bear Group a monthly administrative fee of $16,666.67 to perform the Interim
Services during the Transition Period (the "MONTHLY FEE"). The Company shall pay
the Monthly Fee on the last Business Day of each month of the Transition Period
by wire transfer in immediately available funds to a bank account designated by
Bull & Bear Group in writing at least two business days prior to the date
required for such payment, PROVIDED that for any month that is only partly in
the Transition Period the Monthly Fee shall be prorated to cover an amount equal
to the proportion of $16,666.67 that is equal to the proportion of the number of
days in the Transition Period during the month to the total number of days in
the month.
3.2 If at any time and for any reason the Company does not receive
when due the payment of any monthly fee, in whole or in part, that the Company
is entitled to receive pursuant to Section 6.18(b) of the Purchase Agreement
during any calendar month, the Monthly Fee shall be reduced for so long as and
to the extent necessary so that the aggregate amount of such reduction equals
the aggregate amount of such fees due less the amount of such fees actually paid
to the Company pursuant to Section 6.18(b) of the Purchase Agreement.
3.3. If at any time and for any reason, the Company does not receive
payment when due of any Broker Services Fees, in whole or in part, the Monthly
Fee shall be reduced for so long as and to the extent necessary so that the
aggregate amount of such reduction equals the aggregate amount of Broker
Services Fees due less the amount of such fees actually paid to the Company.
3.4. Purchaser hereby, irrevocably and unconditionally, guarantees the
payment of the Monthly Fee to Bull & Bear Group pursuant to the terms of this
Agreement.
ARTICLE IV - WARRANTIES AND COVENANTS
4.1 Bull & Bear Group warrants that it shall perform the Interim
Services contracted for under this Agreement in a workmanlike manner, in a
manner providing at least the quality and timeliness of service as that provided
to the Company by Bull & Bear Group prior to the date hereof and in accordance
with the requirements set forth in this Agreement. Bull & Bear Group shall
ensure that all employees of Bull & Bear Group performing the Interim Services
under this Agreement have the required levels of skills as may be required to
perform the Interim Services in an efficient, timely and professional manner.
4.2 Bull & Bear Group warrants that it is and shall remain free of any
obligation or restriction which would interfere with or present a direct
conflict of interest concerning, the Interim Services to be furnished by Bull &
Bear Group under this Agreement; PROVIDED HOWEVER, that Bull & Bear Croup may
provide or perform services for others.
4.3 Bull & Bear Group will not disclose or use, and Bull & Bear Group
will cause its employees, representatives, agents and affiliates not to use or
disclose for any purpose, any information ("CONFIDENTIAL INFORMATION") regarding
names of clients or client-related information, business contacts, transactions,
contracts, intellectual property, finances, personnel or products and pricing
used or held for use in connection with the Business, except to the extent that
any such confidential information (i) is in the public domain (other than as a
result of a breach of this Section 4.3); (ii) is required to be disclosed under
applicable law; or (iii) is lawfully acquired from other sources by Bull & Bear
Group from a party not known by it to be under an obligation to refrain from
making such disclosure.
4.4 No expenses, obligations or services may be incurred or performed
by Bull & Bear Group on behalf of or for the account of the Company without the
authorization of the Company.
ARTICLE V - EMPLOYEES
5.1 This Agreement shall not be construed as creating any contract of
employment between the Company and any employee of Bull & Bear Group. During the
term of this Agreement, Bull & Bear Group shall be liable for all labor costs of
its employees, including any payroll taxes and deposits required by law.
ARTICLE VI - TERMINATION; MISCELLANEOUS
6.1 This Agreement will terminate at the close of business on the last
day of the Transition Period. Prior to the end of the Transition Period, this
Agreement may be terminated, and the arrangements contemplated hereby may be
abandoned:
(a) At any time by the mutual consent of the Company and Bull & Bear
Group.
(b) Upon five calendar days= prior written notice, by the Company, in
the event the Company shall no longer require any of the Interim Services.
6.2 No representations, warranties, agreements and covenants contained
in this Agreement shall survive the termination of this Agreement except Section
4.3 and this Article VI. In the event of termination of this Agreement, no party
to this Agreement shall have any liability or further obligation to any other
party hereunder except (a) as set forth in Section 6.7, (b) that termination of
this Agreement will not relieve (i) a breaching party from liability for any
breach under this Agreement prior to such termination and (ii) the Company of
its obligation to pay the Monthly Fee through the end of the Transition Period.
6.3 This Agreement shall not be construed as constituting either party
as partner of the other or as creating any other form of legal association that
would impose liability on one party for the act or failure to act of the other
or as providing either party with the right, power or authority (express or
implied) to create any duty or obligation of the other party. Each party shall
be responsible for the management, direction and control of its employees when
acting as such.
6.4 Any provision of this Agreement may be waived, amended or
modified, and this Agreement may be supplemented, at any time, in each case by
an agreement in writing among Bull & Bear Group, Purchaser and the Company.
6.5 This Agreement may be executed in one or more counterparts, each
of which shall be deemed to constitute an original but all of which together
shall constitute but one and the same instrument.
6.6 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, DISREGARDING THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
6.7 Each party will bear all expenses incurred by it in connection
with this Agreement and the arrangements contemplated hereby.
6.8 All notices, requests and other communications to any party shall
be in writing (including facsimile transmission) and shall be given by
registered or certified mail (postage prepaid, return receipt requested) or
personally delivered to the address provided below or sent by facsimile
transmission (with verification thereof by the sender) to the facsimile number
provided below:
If to Bull & Bear Group:
Bull & Bear Group, Inc.
11 Hanover Square
New York, New York 10005
Attention: Thomas B. Winmill
Facsimile: (212) 785-0400
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: Stuart H. Coleman, Esq.
Facsimile: (212) 806-6006
If to Purchaser and the Company:
Royal Bank Action Direct Inc.
Suite 200, 100 York Blvd.
Richmond Hill, Ontario
L4B 1J8
Canada
Attention: Peter W. Worden
Vice President - Strategic Business Development
Facsimile: (905) 764-0430
and a copy to:
Donald J. Toumey, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588.
6.9 This Agreement represents the entire understanding of the parties
hereto with reference to the arrangements contemplated hereby and this Agreement
supersedes all negotiations, conversations, discussions, correspondence,
memoranda, agreements, and understandings, whether written or oral, among the
parties or any of their affiliates concerning the arrangements contemplated
hereby. Nothing in this Agreement, expressed or implied, is intended to confer
upon any person or entity other than the parties hereto or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
6.10 A dispute arising in connection with this Agreement shall be
settled pursuant to an arbitration proceeding conducted in accordance with the
following:
(i) The arbitration proceeding shall be governed by the
international arbitration rules (the "ARBITRATION RULES") of the American
Arbitration Association ("AAA") then in effect;
(ii) The arbitration proceeding shall be conducted in New York,
New York;
(iii) Any such arbitration shall be conducted before a panel of
three arbitrators who shall be compensated for their services at a rate to be
determined by the parties, but based upon reasonable and customary hourly or
daily consulting rates for the neutral arbitrator in event the parties are not
able to agree upon the arbitrators= rate of compensation;
(iv) Within 15 days of notice by the party seeking arbitration
under this provision, such party shall appoint one person as an arbitrator and
within 15 days thereafter the other person shall appoint the second arbitrator.
Within 20 days after the appointment of the second arbitrator, the two
arbitrators so chosen shall mutually agree upon the selection of a third
impartial and neutral arbitrator. In the event the chosen arbitrators cannot
agree upon the selection of the third arbitrator, the Arbitration Rules for the
selection of such arbitrator shall be followed. If the other party shall fail to
designate the second arbitrator, the sole arbitrator appointed shall have the
power to appoint, in his or her sole discretion, both the second and third
arbitrators. If a party fails to appoint a successor to its appointed arbitrator
within 20 days of the death, resignation or other incapacity of such arbitrator,
the remaining two arbitrators shall appoint such successor;
(v) The arbitrators shall be instructed to conduct the
arbitration proceedings in as expeditious a manner as reasonably possible,
consistent with the parties= intention to have a full and fair hearing on the
merits of the dispute. The arbitration panel shall issue its decision in writing
within 20 days from the hearing of final arguments by the parties. The majority
decision of the arbitrators shall be final, conclusive and binding on the
parties and not subject to any appeal;
(vi) Judgment upon the arbitrators= decision may be entered in
any court having jurisdiction or application may be made to such court for a
judicial recognition of the decision or an order of enforcement thereof, as the
case may be; and
(vii) The party against whom any arbitrators= decision is
rendered shall bear all costs and expenses of the prevailing party that relate
to such arbitration proceeding.
6.11 THE PARTIES EACH HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTERS (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT, THE ARRANGEMENTS CONTEMPLATED HEREBY OR THE RELATIONSHIPS
ESTABLISHED HEREUNDER.
6.12 The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED that no party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the prior written
consent of the other party hereto and any such purported assignment shall be
null and void.
6.13 If any provision of this Agreement, or the application of any
such provision to any person or circumstance, shall be held invalid by a court
of competent jurisdiction, the remainder of this Agreement, and the application
of such provision to persons or circumstances other than those as to which it is
held invalid, shall not be affected thereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
BULL & BEAR GROUP, INC.
By: /S/ BASSETT S. WINMILL
Name: Bassett S. Winmill
Title: Chairman of the Board
BULL & BEAR SECURITIES, INC.
By:/S/ MARK C. WINMILL
Name: Mark C. Winmill
Title: President
With respect only to its
obligation pursuant to
Section 3.4:
RBC HOLDINGS (USA) INC.
By:/S/ MARK R. HUGHES
Name: Mark R. Hughes
Title: Chairman of the Board
<PAGE>
ANNEX D
CONSENT OF THE SOLE STOCKHOLDER OF
THE CLASS B COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF
BULL & BEAR GROUP, INC.
Pursuant to Sections 228 and 271 of the Delaware General Corporation
Law, Bassett S. Winmill ("Stockholder"), being the sole stockholder of the Class
B Common Stock, par value $0.01 per share (the "CLASS B COMMON STOCK"), of Bull
& Bear Group, Inc., a Delaware corporation (the "CORPORATION"), does hereby
consent to the adoption of and hereby adopts the following resolution and
directs that this consent be filed with the minutes of the proceedings of the
Corporation:
WHEREAS, the Board of Directors of the Corporation has considered and
approved the Purchase Agreement, dated December 17, 1998 (the "PURCHASE
Agreement"), by and among RBC Holdings (USA) Inc., a Delaware corporation, Bull
& Bear Securities, Inc. a wholly owned Subsidiary of the Corporation and a
Delaware corporation, and the Corporation and (ii) the Acquisition (as defined
in the Purchase Agreement) as being in the best interest of the shareholders and
the Corporation;
WHEREAS, the Board of Directors of the Corporation has recommended
that the holders of the Class B Common Stock vote to adopt and approve the
Purchase Agreement and the Acquisition.
RESOLVED, that the Purchase Agreement and the Acquisition, are each
hereby adopted and approved by the Stockholder.
IN WITNESS WHEREOF, the Stockholder has executed this consent on
December 17, 1998.
/S/ BASSETT S. WINMILL
Bassett S. Winmill
ACKNOWLEDGED:
_/S/ MARK C. WINMILL____________
Name: Mark C. Winmill
Title: Co-President, Bull & Bear Group, Inc.
ROYAL BANK OF CANADA BUYS U.S. DISCOUNT BROKER
TORONTO, December 17, 1998 - Royal Bank of Canada (NYSE: RY) and Bull & Bear
Group, Inc. (NASDAQ: BNBGA) announced today that they have entered into an
agreement whereby Royal Bank will acquire Bull & Bear Securities, Inc., a New
York-based discount broker and a wholly owned subsidiary of Bull & Bear Group,
Inc. The transaction, which is subject to the approval of regulatory authorities
in Canada and the United States, is valued at approximately U.S. $6 million. As
part of its agreement with Royal Bank, Bull & Bear Group, Inc. will also
transfer its right to the Bull & Bear name and subsequently change its name and
the names of its other subsidiaries and affiliates.
"Bull & Bear provides us with excellent entry point into the U.S. discount
brokerage market and reinforces our strategy to build a competitive, integrated
North American wealth management platform," said W. Reay Mackay, vice-chairman,
Royal Bank of Canada. "We plan to invest additional funds into marketing and
technology to achieve aggressive market growth and create efficiencies."
With one of North America's largest national retail banking operations, Royal
Bank of Canada will apply its expertise, particularly in marketing and discount
brokerage services, to build upon Bull & Bear Securities' existing business.
"We believe Bull & Bear Securities customers will benefit enormously by our
association with Royal Bank. In addition to the confidence of the backing of the
largest bank in Canada, customers should enjoy enhanced discount brokerage
services" said Mark C. Winmill, President and Chief Executive Officer of Bull &
Bear Securities.
Bull & Bear Securities, organised in 1984, has access to every major U.S. stock,
option and bond exchange. Its highly-ranked website, www.bullbear.com, provides
internet securities trading featuring low flat rate commissions coupled with
real time quotes, news, charts, and free research. In addition, Bull & Bear
Securities customers receive American Airlines AAdvantage miles for every trade
and for many other investing activities.
Bull & Bear Securities is registered with the Securities and Exchange Commission
as a broker/dealer and is a member of the National Association of Securities
Dealers, Inc. and Securities Investor Protection Corporation. Bull & Bear
Securities main office is located in New York City and it has a branch in Boca
Raton, Florida. It has 25,000 accounts representing $300 million in investor
assets.
"We see excellent growth opportunities in both the United States and Canada for
discount brokerage. This acquisition fits well strategically with the services
we provide through Security First Network Bank. We can offer our U.S. clients a
reliable and competitively priced service which employs technology that is
compatible with our existing systems," noted Michael Bastian, President and CEO
of Royal Bank Action Direct.
Royal Bank Action Direct is the second largest discount broker in Canada and,
with 300,000 accounts, ranks among the top 10 discount brokerage firms in North
America.
Royal Bank of Canada recently acquired Atlanta-based Security First Network Bank
(SFNB), the world's first Internet bank. SFNB is an FDIC insured federal savings
bank which provides customers across the United States with savings and
transaction accounts, certificates of deposit, ATM services, credit card,
electronic bill payment, and integrated customer statements over the Internet.
Its service delivery capabilities include a call centre channel as well as
physical premises in Atlanta.
In an unrelated transaction, Royal Bank of Canada also recently acquired the
North American private banking business of Credit Suisse further developing its
U.S. client base.
Royal Bank of Canada is Canada's premier global financial services group and a
leading provider of personal and business banking, corporate and investment
banking, and wealth management services. As one of North America's largest
financial institutions, Royal Bank and its key subsidiaries Royal Trust, RBC
Dominion Securities, RBC Insurance and Royal Bank Action Direct, have over
52,000 employees who serve 10 million customers through 1,500 branches and
offices in 36 countries.
For Further Information Contact:
Paul J.S. Wilson
Royal Bank of Canada
(416) 974-6186
Michael A. Bastian, President & CEO
Royal Bank Action Direct
(905) 764-4402
Bassett S. Winmill, Chairman
Bull & Bear Group, Inc.
(212) 785-0900, Ext. 201
