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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
dated as of July 12, 2000
by and among
PAINE WEBBER GROUP INC.,
UBS AG
and
NEPTUNE MERGER SUBSIDIARY, INC.
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TABLE OF CONTENTS
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SECTION PAGE
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RECITALS
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions.............................................................................2
ARTICLE II
THE MERGER
2.01 The Merger.....................................................................................12
2.02 Effective Time.................................................................................13
2.03 Closing........................................................................................13
2.04 Reservation of Right to Revise Structure.......................................................13
ARTICLE III
CONSIDERATION; EXCHANGE
3.01 Merger Consideration...........................................................................14
3.02 Rights as Stockholders; Stock Transfers........................................................17
3.03 Fractional Shares..............................................................................17
3.04 Exchange Procedures............................................................................17
3.05 Anti-Dilution Adjustments......................................................................20
3.06 Options; Other Equity-Based Awards.............................................................20
3.07 Dissenting Stockholders........................................................................21
ARTICLE IV
ACTIONS PENDING THE EFFECTIVE TIME
4.01 Forbearances of the Company....................................................................22
4.02 Forbearances of Parent.........................................................................24
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules...........................................................................25
5.02 Standard.......................................................................................26
5.03 Representations and Warranties of the Company..................................................26
5.04 Representations and Warranties of Parent and the Merger Subsidiary.............................37
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts........................................................................42
6.02 Registration Statement.........................................................................42
6.03 Parent Documents...............................................................................43
6.04 Stockholder Meetings...........................................................................44
6.05 Publicity......................................................................................44
6.06 Access; Information............................................................................45
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SECTION PAGE
6.07 Acquisition Proposals..........................................................................45
6.08 Regulatory Applications; Consents..............................................................47
6.09 Employee Matters...............................................................................47
6.10 Notification of Certain Matters................................................................50
6.11 Indemnification; Directors' and Officers' Insurance............................................50
6.12 Stock Exchange Approvals.......................................................................52
6.13 Dividends......................................................................................52
6.14 Section 15 of the Investment Company Act.......................................................52
6.15 Affiliates.....................................................................................52
6.16 Letters of Accountants.........................................................................53
6.17 GE Stockholders Agreement......................................................................53
6.18 ERISA Clients..................................................................................53
6.19 GE Amendment and Yasuda Amendment..............................................................54
6.20 Tax Matters....................................................................................54
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger.....................................54
7.02 Conditions to Obligation of the Company........................................................55
7.03 Conditions to Obligation of Parent.............................................................56
ARTICLE VIII
TERMINATION
8.01 Termination....................................................................................56
8.02 Effect of Termination and Abandonment..........................................................57
8.03 Termination Fee................................................................................58
ARTICLE IX
MISCELLANEOUS
9.01 Survival.......................................................................................59
9.02 Waiver; Amendment..............................................................................59
9.03 Counterparts...................................................................................59
9.04 Governing Law and Venue........................................................................59
9.05 Expenses.......................................................................................60
9.06 Notices........................................................................................60
9.07 Entire Understanding; No Third-Party Beneficiaries.............................................61
9.08 Severability...................................................................................61
9.09 Assignment.....................................................................................61
9.10 Enforcement....................................................................................61
9.11 Interpretation.................................................................................62
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AGREEMENT AND PLAN OF MERGER, dated as of July 12, 2000 (this
"Agreement"), by and among Paine Webber Group Inc. (the "Company"), UBS AG
("Parent") and Neptune Merger Subsidiary, Inc. (the "Merger Subsidiary").
RECITALS
A. The Company. The Company is a Delaware corporation, having
its principal place of business in New York, New York.
B. Parent. Parent is an Aktiengesellschaft organized under the
laws of Switzerland, having its principal places of business in Zurich and
Basel, Switzerland.
C. The Merger Subsidiary. The Merger Subsidiary is a Delaware
corporation and a wholly owned subsidiary of Parent that has been organized for
the purpose of effecting the Merger (as defined herein) in accordance with this
Agreement.
D. The Merger. Subject to the terms and conditions contained
in this Agreement, the parties intend to effect the merger of the Company with
and into the Merger Subsidiary, with the Merger Subsidiary being the corporation
surviving such merger.
E. Voting Agreements. As further conditions and inducements to
the willingness of Parent to enter into this Agreement, (1) General Electric
Company ("GE"), Subsidiaries of which hold not less than 21.0% of the presently
outstanding shares of the Company Common Stock, has entered into an agreement
with Parent, in the form of Exhibit A hereto, (2) The Yasuda Mutual Life
Insurance Company ("Yasuda"), which holds not less than 7.0% of the presently
outstanding shares of the Company Common Stock, has entered into an agreement
with Parent, in the form of Exhibit B hereto, and (3) each of Donald B. Marron
and Joseph J. Grano, Jr. (each such person, a "Management Stockholder" and,
together with GE and Yasuda, the "Voting Agreement Parties"), stockholders of
the Company collectively holding the power to vote not less than 1.0% of the
outstanding shares of Company Common Stock, have entered into an agreement with
Parent, in the form of Exhibit C hereto (each of the foregoing agreements with
GE, Yasuda and the Management Stockholders, a "Voting Agreement", and
collectively, the "Voting Agreements"), pursuant to each of which Voting
Agreements, among other things, each Voting Agreement Party has agreed to vote
or cause to be voted certain shares of Company Common Stock in favor of adoption
of this Agreement.
F. Tax-Free Treatment. The parties intend that, for U.S.
federal income tax purposes, the transactions contemplated by this Agreement
will qualify for the Tax Treatment.
G. Board Action. The respective Boards of Directors of each of
the
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Company, Parent and the Merger Subsidiary have each adopted resolutions
approving this Agreement and the Merger and, in the case of each of the Boards
of Directors of the Company and the Merger Subsidiary, declaring the
advisability of this Agreement in accordance with the Delaware General
Corporation Law, as amended (the "DGCL").
NOW, THEREFORE, in consideration of the premises, and of the
mutual covenants, representations, warranties and agreements contained herein,
the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any offer or other proposal
which, if consummated, would result in an Acquisition Transaction,
provided that solely for purposes of the definition of Acquisition
Proposal, all references to 35% in the definition of Acquisition
Transaction shall be deemed references to 20%.
"Acquisition Transaction" means a transaction or series of
transactions that, directly or indirectly, in substance constitutes a
disposition of (A) assets or businesses that constitute or represent
35% or more of the total revenue, operating income, assets or earnings
before interest, taxes, depreciation and amortization of the Company
and its Subsidiaries, taken as a whole, or (B) 35% or more of the
outstanding shares of any class of capital stock of the Company or
capital stock of, or other equity or voting interests in, any
Subsidiary or Subsidiaries of the Company which, taken together,
directly or indirectly hold at least the share of assets or businesses
referred to in clause (A) above, whether by means of (a) a merger,
share exchange or consolidation, or any similar transaction, (b) a
purchase, lease or other sale, transfer or disposition, or (c) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or other wise) by a person (including a
group of persons that would qualify as a "group" within the meaning of
Section 13(d) of the Exchange Act) of such assets, businesses or shares
of capital stock, or otherwise.
"Affiliate" means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person. For
the purposes of this definition,"
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control," when used with respect to any specified person, means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that in no event shall GE or
any person in which it directly or indirectly holds securities be
deemed to be an affiliate of the Company or its Subsidiaries; provided
further, however, that (x) any investment account advised or managed by
such person or one of its Subsidiaries or affiliates on behalf of third
parties, or (y) any partnership, limited liability company, or other
similar investment vehicle or entity engaged in the business of making
investments for which such person acts as the general partner, managing
member, manager, investment advisor, principal underwriter or the
equivalent shall not be deemed an affiliate of such person; and the
terms "controlling" and "controlled" have correlative meanings.
"Affiliate's Letter" has the meaning assigned in Section 6.15.
"Agreement" means this Agreement, as amended or modified from
time to time in accordance with Section 9.02.
"Average Closing Price" means the average of the closing sales
prices for a Parent Share on the NYSE Composite Tape, as reported in
The Wall Street Journal (Northeast edition) or, if not reported
therein, in another authoritative source selected by Parent, on the
last trading day immediately preceding the Closing Date.
"Bankruptcy and Equity Exception" has the meaning assigned in
Section 5.03(e)(i).
"Business Day" means any day other than Saturday, Sunday and
any day on which banks in the State of New York are required or
authorized by law or regulation to be closed.
"Bylaws" has the meaning assigned in Section 2.01(c).
"Cash Election Shares" has the meaning assigned in Section
3.01(b).
"Certificate of Incorporation" has the meaning assigned in
Section 2.01(b).
"CFTC" means the United States Commodities Futures Trading
Commission.
"Client" means any person to whom the Company or any of its
Subsidiaries provides investment advisory services under any Contract.
"Closing" and "Closing Date" have the meanings assigned in
Section 2.03.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning assigned in the preamble to this
Agreement.
"Company Affiliate" has the meaning assigned in Section 6.15.
"Company Common Stock" means the common stock, par value $1.00
per share, of the Company.
"Company Financial Statements" has the meaning assigned in
Section 5.03(h)(ii).
"Company Options" means, collectively, outstanding options to
purchase shares of Company Common Stock under the Company Stock Plans.
"Company Proxy Statement" has the meaning assigned in Section
6.02(a).
"Company Requisite Vote" has the meaning assigned in Section
5.03(e)(i).
"Company SEC Documents" has the meaning assigned in Section
5.03(h)(i).
"Company Stockholders Meeting" has the meaning assigned in
Section 6.04.
"Company Stock-Based Award" has the meaning assigned in
Section 3.06(b).
"Company Stock Plans" has the meaning assigned in Section
5.03(b).
"Compensation and Benefit Plans" has, with respect to any
person, the meaning assigned in Section 5.03(p)(i).
"Confidentiality Agreement" has the meaning assigned in
Section 6.06(c).
"Consideration" has the meaning assigned in Section
3.01(a)(i)(B).
"Constitutive Documents" means, with respect to any juridical
person, such person's articles or certificate of incorporation and
bylaws or similar
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organizational documents.
"Contract" means, with respect to any person, any agreement,
indenture, debt instrument, contract, lease or legally binding
commitment to which such person or any of its Subsidiaries is a party
or by which any of them may be bound or to which any of their
properties may be subject.
"Converted Cash Election Share" has the meaning assigned in
Section 3.01(c)(i)(C).
"Converted Stock Election Share" has the meaning assigned in
Section 3.01(c)(ii)(B).
"Costs" has the meaning assigned in Section 6.11(a).
"DGCL" has the meaning assigned in the Recitals.
"Disclosure Schedule" has the meaning assigned in Section
5.01.
"Dissenters' Shares" means shares of Company Common Stock the
holders of which shall have perfected and not withdrawn or lost their
appraisal rights in accordance with Section 262 of the DGCL.
"DOL" means the United States Department of Labor.
"Effective Time" means the time at which the Merger becomes
effective in accordance with Section 2.02.
"Election" has the meaning assigned in Section 3.01(b).
"Election Deadline" has the meaning assigned in Section
3.04(a).
"Election Form" has the meaning assigned in Section 3.01(b).
"Eligible Company Stockholders" are holders of shares of
Company Common Stock who will not be "five percent transferee
shareholders" as defined in United States Treasury Regulation Section
1.367(a)-3(c)(5)(ii) or who enter into five-year gain recognition
agreements in the form provided in United States Treasury Regulation
Section 1.367(a)-8(b).
"Employees" has the meaning assigned in Section 5.03(p)(i).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"ERISA Affiliate" has, with respect to any person, the meaning
assigned in Section 5.03(p)(iii).
"ERISA Client" has the meaning assigned in Section 6.18.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" has the meaning assigned in Section 3.01(b).
"Exchange Fund" has the meaning assigned in Section 3.04(b).
"Exchange Offer" has the meaning assigned in Section 2.04.
"Exchange Ratio" has the meaning assigned in Section
3.01(a)(i)(A).
"Federal Reserve System" means the Board of Governors of the
United States Federal Reserve System and the United States Federal
Reserve Banks.
"Fee Trigger Event" has the meaning assigned in Section
8.03(a)(ii).
"Form F-4" has the meaning assigned in Section 6.02(a).
"Fund Board" or "Fund Boards" has the meaning assigned in
Section 5.03(t)(i).
"GAAP" means generally accepted accounting principles in the
United States.
"GE" has the meaning assigned in the Recitals.
"GE Amendment" has the meaning assigned in Section
5.03(e)(iii).
"GE Stockholders Agreement" means the Amended and Restated
Stockholders Agreement, dated August 6, 1997, between the Company, GE,
General Electric Capital Corporation, General Electric Capital
Holdings, Inc., and Kidder Peabody Group Inc., and joined in by GECS
Holdings, Inc., in the form previously furnished to Parent, as further
amended by the GE Amendment.
"Governmental Authority" means any United States or foreign
government, any state or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limitation, the SEC or any other
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government authority, agency, department, board, commission or
instrumentality of the United States or any foreign government or any
state or other political subdivision thereof or any state insurance or
banking authority, the Board of Governors of the Federal Reserve System
or the Federal Deposit Insurance Corporation and any court, tribunal or
arbitrator(s) of competent jurisdiction.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Indemnified Parties" has the meaning assigned in Section
6.11(a).
"Insurance Amount" has the meaning assigned in Section
6.11(c).
"IAS" means International Accounting Standards.
"Investment Advisers Act" means the Investment Advisers Act of
1940, as amended, and the rules and regulations thereunder.
"Investment Company" means any investment company within the
meaning of the Investment Company Act, disregarding Section 3(c)
thereof, that is sponsored, organized, advised, managed or distributed
by the Company or one of its Subsidiaries (including the Registered
Funds).
"Investment Company Act" means the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
"Involuntarily Terminated" means the termination of an
employee's employment with Parent and its Subsidiaries by the employer
of such employee following the Effective Time other than termination
(i) owing to death or permanent disability or (ii) by Parent or any of
its Subsidiaries for cause (as customarily defined by the Company prior
to the Effective Time).
"IRS" means the United States Internal Revenue Service.
"Liens" means a charge, mortgage, pledge, security interest,
restriction (other than a restriction on transfer arising under
Securities Laws or a restriction arising under laws relating to the
regulation of brokers, dealers, investment advisors, investment
companies, banks, insurance companies and other regulated business or
negative pledge or negative covenant provisions of agreements relating
to indebtedness), claim, lien, or encumbrance of any nature whatsoever.
"Litigation" has the meaning assigned in Section 5.03(l).
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"Management Stockholder" has the meaning assigned in the
Recitals.
"Material Adverse Effect" means, with respect to Parent, the
Company or the Surviving Corporation, respectively, an effect or change
that, individually or in the aggregate with other such effects or
changes, is both material and adverse with respect to the respective
financial condition, results of operations, assets or business of
Parent and its Subsidiaries, the Company and its Subsidiaries or the
Surviving Corporation and its Subsidiaries, in each case taken as a
whole; provided, that "Material Adverse Effect" shall not be deemed to
include effects or changes arising from: (1) changes in the economy of
the United States or the global economy or securities markets in
general, (2) changes in GAAP or IAS, (3) this Agreement or the
transactions contemplated hereby or the announcement thereof (including
the resignation of officers or employees of Parent or the Company or
their respective Subsidiaries as a result thereof) and (4) changes in
the financial services industry in general, provided that nothing in
clauses (1), (2) and (4) shall include any change which materially
disproportionately affects the applicable party and its Subsidiaries.
The terms "Material" and "Materially", when capitalized herein, have
correlative meanings.
"Merger" has the meaning assigned in Section 2.01(a).
"Merger Subsidiary" has the meaning assigned in the preamble
to this Agreement.
"MSRB" means the United States Municipal Securities Rulemaking
Board.
"Multiemployer Plans" has the meaning assigned in Section
5.03(p)(ii).
"NASD" means the National Association of Securities Dealers,
Inc.
"New Certificates" has the meaning assigned in Section
3.04(b).
"No-Election Shares" has the meaning assigned in Section
3.01(b).
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificates" has the meaning assigned in Section
3.04(a).
"Parent" has the meaning assigned in the preamble to this
Agreement.
"Parent Circular" has the meaning assigned in Section 6.03(a).
"Parent Documents" has the meaning assigned in Section
6.03(a).
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"Parent Financial Statements" has the meaning assigned in
Section 5.04(f)(ii).
"Parent Requisite Vote" has the meaning assigned in Section
5.04(c).
"Parent SEC Documents" has the meaning assigned in Section
5.04(f)(i).
"Parent Severance Plan" has the meaning assigned in Section
6.09(d).
"Parent Shareholders Meeting" has the meaning assigned in
Section 6.04.
"Parent Shares" means the Ordinary Shares, par value CHF 10
per share, of Parent.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has, with respect to any person, the meaning
assigned in Section 5.03(p)(ii).
"Per Share Cash Consideration" has the meaning assigned in
Section 3.01(a)(i)(B).
"Per Share Stock Consideration" has the meaning assigned in
Section 3.01(a)(i)(A).
"person" means any individual, bank, corporation, limited
liability company, partnership, association, joint-stock company,
business trust, unincorporated organization or other entity.
"Plans" has the meaning assigned in Section 5.03(p)(ii).
"Previously Disclosed" has the meaning assigned in Section
5.01.
"Registered Fund" has the meaning assigned in Section
5.03(t)(i).
"Reports" has the meaning assigned in Section 5.03(g).
"Representatives" means, with respect to any person, such
person's directors, officers, employees, legal and financial advisors
or any representatives of such legal and financial advisors.
"Restraints" has the meaning assigned in Section 7.01(c).
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"Rights" means, with respect to any person, securities or
obligations convertible into or exercisable or exchangeable for, or
giving any person any preemptive or other right to subscribe for or
acquire, or any options (including, in the case of the Company, the
Company Options and the Company Stock-Based Awards), calls or
commitments relating to, or any stock or equity appreciation right or
other instrument the value of which is determined in whole or in part
by reference to the market price or value of, shares of capital stock
of such person.
"SEC" means the United States Securities and Exchange
Commission.
"Second-Step Merger" has the meaning assigned in Section 2.04.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Securities Laws" means, collectively, the Securities Act, the
Exchange Act, the Investment Advisers Act, the Investment Company Act
and all state securities laws and the rules and regulations thereunder.
"Self-Regulatory Organization" means, with respect to any
person, any United States or foreign governmental or non-governmental
self-regulatory organization, agency or authority, including any of the
NYSE, the NASD, the National Futures Association, or any securities or
other exchange or board of trade of which such person or any Subsidiary
of such person is a member or to the supervision or regulation of which
such person or any Subsidiary of such person is subject.
"Stock Election Shares" has the meaning assigned in Section
3.01(b).
"Stock Number" has the meaning assigned in Section 3.01(b).
"Stock-Selected No-Election Share" has the meaning assigned in
Section 3.01(c)(i)(B).
"Stub Period" has the meaning assigned in Section 6.09(f).
"Stub Period Bonuses" has the meaning assigned in Section
6.09(f).
"Subsidiary" and "Significant Subsidiary" have the meanings
assigned in Rule 1-02 of Regulation S-X of the SEC; provided, however,
that (x) any investment account advised or managed by such person or
one of its Subsidiaries or affiliates on behalf of a third party and
(y) any partnership, limited liability company, or other similar
investment vehicle or entity engaged in the
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business of making investments of which such person acts as the general
partner, managing member, manager, investment advisor, principal
underwriter or the equivalent shall not be deemed a Subsidiary of such
person.
"Subsidiary Common Stock" has the meaning assigned in Section
3.01(a)(iii).
"Superior Proposal" has the meaning assigned in Section
6.07(a).
"Surviving Corporation" has the meaning assigned in Section
2.01(a).
"Taxes" means all taxes, charges, fees, levies or other
assessments, however denominated and whether imposed by a taxing
authority within or without the United States, including all net
income, gross income, gross receipts, sales, use, ad valorem, goods and
services, capital, transfer, franchise, profits, license, withholding,
payroll, employment, employer health, excise, estimated, severance,
stamp, occupation, property or other taxes, custom duties, fees,
assessments or charges of any kind whatsoever in the nature of taxes,
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority whether arising
before, on or after the Closing Date.
"Tax Returns" means, collectively, all returns, declarations,
reports, estimates, information returns and statements required to be
filed under federal, state, local or any foreign tax laws.
"Tax Treatment" is the intention of the parties to this
Agreement that (i) the Merger shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Code and the rules and
regulations thereunder, (ii) Parent, the Merger Subsidiary and the
Company will each be a "party" to such reorganization within the
meaning of Section 368(b) of the Code and the rules and regulations
thereunder, (iii) Parent will be treated as a corporation under Section
367(a) of the Code as to each Eligible Company Stockholder with respect
to the Merger and (iv) Eligible Company Stockholders will not recognize
taxable gain in connection with the receipt of Parent Shares exchanged
for Company Common Stock pursuant to the Merger under Section 367(a) of
the Code, except with respect to cash received in lieu of fractional
share interests.
"Treasury Shares" means shares of Company Common Stock, if
any, owned by the Company or any of its Subsidiaries other than shares
(i) held by the Company or any of its Subsidiaries in connection with
any market-making or proprietary trading activity or for the account of
another person, (ii) as to which
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the Company is or may be required to act in a fiduciary or similar
capacity, (iii) held in satisfaction of a debt previously contracted or
(iv) the cancellation of which would violate any legal duties or
obligations of the Company or any of its Subsidiaries.
"Two-Step Restructuring" has the meaning assigned in Section
2.04.
"Voting Agreement" has the meaning assigned in the Recitals.
"Voting Agreement Parties" has the meaning assigned in the
Recitals.
"Yasuda" has the meaning assigned in the Recitals.
"Yasuda Amendment" has the meaning assigned in Section
5.03(e)(iii).
"Yasuda Stockholders Agreement" means the Amended and Restated
Investment Agreement by and between the Company and Yasuda, dated as of
November 5, 1992.
"Year 2000 Bonuses" has the meaning assigned in Section
6.09(f).
ARTICLE II
THE MERGER
2.01 The Merger. At the Effective Time:
(a) Structure and Effects of the Merger. Subject to Section
2.04, the Company will merge with and into the Merger Subsidiary in accordance
with the terms set forth in this Agreement (the "Merger"), and the separate
corporate existence of the Company will thereupon cease. The Merger Subsidiary
will be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and will continue to be governed by the laws
of the State of Delaware, and the separate corporate existence of the Merger
Subsidiary, with all its rights, privileges, immunities, powers and franchises,
will continue unaffected by the Merger except as set forth in this Article II.
The Merger will have the effects specified in the DGCL.
(b) Certificate of Incorporation. The certificate of
incorporation of the Surviving Corporation (the "Certificate of Incorporation")
shall be the certificate of incorporation of the Merger Subsidiary as in effect
immediately prior to the Effective Time, until duly amended in accordance with
the terms thereof and the DGCL.
(c) Bylaws. The bylaws of the Surviving Corporation (the
"Bylaws")
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will be the bylaws of the Merger Subsidiary as in effect immediately
prior to the Effective Time, until duly amended in accordance with the terms
thereof and the Certificate of Incorporation.
(d) Directors. The directors of the Surviving Corporation will
be the directors of the Merger Subsidiary immediately prior to the Effective
Time, and such directors, together with any additional directors as may
thereafter be elected, will hold such office until such time as their successors
shall be duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
the Bylaws.
2.02 Effective Time. The Merger will become effective upon the
filing, in the office of the Secretary of State of the State of Delaware, of a
certificate of merger in accordance with Section 251 of the DGCL, or at such
later date and time as may be set forth in such certificate. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, the parties
will cause the Merger to become effective (a) on a date that is not later than
three Business Days after the last of the conditions set forth in Article VII
(other than conditions that by their terms cannot be satisfied until the time of
Closing) shall have been satisfied or waived in accordance with the terms of
this Agreement or (b) on such other date as the parties may agree in writing.
2.03 Closing. The closing of the Merger (the "Closing") will
take place at the offices of Sullivan & Cromwell, 125 Broad Street, New York,
New York, or at such other place as the parties shall agree, on the date (the
"Closing Date") when the Effective Time is to occur.
2.04 Reservation of Right to Revise Structure. At Parent's
election, the Merger may alternatively be structured (a) so that the Company is
merged into a wholly owned subsidiary of Parent other than the Merger Subsidiary
or (b) following the making of any Acquisition Proposal, to provide for an
exchange offer (the "Exchange Offer") for the Company Common Stock, in each case
to be followed by an unconditional merger (the "Second-Step Merger") upon
consummation of the Exchange Offer (the "Two-Step Restructuring"); provided,
that (i) in the case of clause (b) of this Section 2.04, (x) 50% of the shares
of Company Common Stock exchanged in the Exchange Offer shall be exchanged for
0.4954 of a Parent Share and 50% of the shares of Company Common Stock exchanged
in the Exchange Offer shall be exchanged for $73.50 per share in cash; (y) 50%
of the shares of Company Common Stock converted in the Second-Step Merger shall
be converted into 0.4954 of a Parent Share and 50% of the shares of Company
Common Stock converted in the Second-Step Merger shall be converted into $73.50
per share in cash; and (z) the Board of Directors of the Company determines in
good faith that the Two-Step Restructuring would not adversely affect the
Company or its stockholders in a way in
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which they would not have been adversely affected if the Two-Step Restructuring
were not effected (it being understood that accelerating the date of the Closing
would not adversely affect the Company or its stockholders for this purpose);
(ii) no such alternative described in clause (a) or (b) of this Section 2.04
shall (x) alter or change adversely the treatment of the holders of Company
Options or (y) impede receipt of any approval or consent referred to in Section
7.01(b) or the consummation of the transactions contemplated by this Agreement;
and (iii) no such alternative described in clause (a) or (b) of this Section
2.04 shall in the view of counsel to the Company or counsel to Parent adversely
affect such counsel's ability to provide the tax opinion described in Sections
7.02(c) and 7.03(c), respectively, of this Agreement. In the event of such an
election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
ARTICLE III
CONSIDERATION; EXCHANGE
3.01 Merger Consideration. (a) Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, the Merger Subsidiary or any holder of shares of
capital stock of the Company:
(i) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenters' Shares,
Treasury Shares and shares held directly or indirectly by Parent,
except shares held by Parent or any of its Subsidiaries in a fiduciary
capacity or in satisfaction of a debt previously contracted) will be
converted into the right to receive, at the election of each holder
thereof, but subject to the election and allocation procedures of
Sections 3.01(b) and (c), the other provisions of this Section 3.01 and
possible adjustment as set forth in Section 3.05, either:
(A) 0.4954 (the "Exchange Ratio") of a
Parent Share (the "Per Share Stock Consideration"), or
(B) $73.50 in cash (the "Per Share Cash
Consideration" and, together with the "Per Share Stock
Consideration," the "Consideration").
(ii) Each share of Company Common Stock that,
immediately prior to the Effective Time, is a Treasury Share or is
owned directly or indirectly by Parent, except shares held by Parent or
any of its Subsidiaries in a fiduciary capacity or in satisfaction of a
debt previously contracted, will be canceled and retired and will cease
to exist, and no exchange or payment will be made
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<PAGE> 18
therefor.
(iii) At the Effective Time, each share of Common
Stock, par value $0.01 per share ("Subsidiary Common Stock"), of the
Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall remain outstanding and each certificate therefor
shall continue to evidence one share of Subsidiary Common Stock of the
Surviving Corporation.
(iv) Notwithstanding clause (i)(A) of this Section
3.01(a), Parent may at its option, but shall not be obliged to,
increase the fraction of a Parent Share into which each share of
Company Common Stock may be converted pursuant to Section 3.01(a)(i)(A)
to the extent that, in the reasonable judgment of Parent, such increase
is necessary to enable the Merger to qualify as a "reorganization"
within the meaning of Section 368(a) of the Code.
(b) Subject to the allocation procedures set forth in Section
3.01(c), each record holder of Company Common Stock will be entitled (i) to
elect to receive Parent Shares for all of the shares of Company Common Stock
("Stock Election Shares") held by such record holder, (ii) to elect to receive
cash for all of the shares of Company Common Stock ("Cash Election Shares") held
by such record holder or (iii) to indicate that such holder makes no such
election for all of the shares of Company Common Stock ("No-Election Shares")
held by such record holder, provided, that notwithstanding anything in this
Agreement to the contrary, the number of shares of Company Common Stock to be
converted into the right to receive the Per Share Stock Consideration in the
Merger (the "Stock Number") will equal as nearly as practicable fifty percent
(50%) of the total number of shares of Company Common Stock outstanding
immediately prior to the Effective Time. All such elections (each, an
"Election") shall be made on a form designed for that purpose by Parent and
reasonably acceptable to the Company (an "Election Form"). Any shares of Company
Common Stock for which the record holder has not, as of the Election Deadline,
properly submitted to the Exchange Agent a properly completed Election Form
(excluding any Dissenters' Shares) will be deemed No-Election Shares. All
Dissenters' Shares will be deemed Cash Election Shares. A record holder acting
in different capacities or acting on behalf of other persons in any way will be
entitled to submit an Election Form for each capacity in which such record
holder so acts with respect to each person for which it so acts. The exchange
agent (the "Exchange Agent") will be a bank or trust company in the United
States selected by Parent and reasonably acceptable to the Company.
(c) The allocation among the holders of Company Common Stock
of rights to receive the Per Share Stock Consideration or the Per Share Cash
Consideration in the Merger will be made as follows:
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<PAGE> 19
(i) Number of Stock Elections Less Than Stock Number.
If the number of Stock Election Shares (on the basis of Election Forms
received as of the Election Deadline) is less than the Stock Number,
then
(A) each Stock Election Share will be, as of
the Effective Time, converted into the right to receive the
Per Share Stock Consideration,
(B) the Exchange Agent will allocate from
among the No-Election Shares, pro rata to the holders of
No-Election Shares in accordance with their respective numbers
of No-Election Shares, a sufficient number of No- Election
Shares so that the sum of such number and the number of Stock
Election Shares equals as closely as practicable the Stock
Number, and each such allocated No-Election Share (each, a
"Stock-Selected No-Election Share") will be, as of the
Effective Time, converted into the right to receive the Per
Share Stock Consideration, provided that if the sum of all
No-Election Shares and Stock Election Shares is equal to or
less than the Stock Number, all No-Election Shares will be
Stock- Selected No-Election Shares,
(C) if the sum of Stock Election Shares and
No-Election Shares is less than the Stock Number, the Exchange
Agent will allocate from among the Cash Election Shares, pro
rata to the holders of Cash Election Shares in accordance with
their respective numbers of Cash Election Shares, a sufficient
number of Cash Election Shares so that the sum of such number,
the number of all Stock Election Shares and the number of all
No-Election Shares equals as closely as practicable the Stock
Number, and each such allocated Cash Election Share (each, a
"Converted Cash Election Share") will be, as of the Effective
Time, converted into the right to receive the Per Share Stock
Consideration, and
(D) each No-Election Share and Cash Election
Share that is not a Stock-Selected No-Election Share or a
Converted Cash Election Share (as the case may be) will be, as
of the Effective Time, converted into the right to receive the
Per Share Cash Consideration; or
(ii) Number of Stock Elections Greater Than Stock
Number. If the number of Stock Election Shares (on the basis of
Election Forms received by the Election Deadline) is greater than the
Stock Number, then
(A) each Cash Election Share and No-Election
Share will be, as of the Effective Time, converted into the
right to receive the Per
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<PAGE> 20
Share Cash Consideration,
(B) the Exchange Agent will allocate from
among the Stock Election Shares, pro rata to the holders of
Stock Election Shares in accordance with their respective
numbers of Stock Election Shares, a sufficient number of Cash
Election Shares ("Converted Stock Election Shares") so that
the difference of (x) the number of Stock Election Shares less
(y) the number of the Converted Stock Election Shares equals
as closely as practicable the Stock Number, and each Converted
Stock Election Share will be, as of the Effective Time,
converted into the right to receive the Per Share Cash
Consideration, and
(C) each Stock Election Share that is not a
Converted Stock Election Share will be, as of the Effective
Time, converted into the right to receive the Per Share Stock
Consideration.
3.02 Rights as Stockholders; Stock Transfers. At the Effective
Time, holders of Company Common Stock will cease to be, and will have no rights
as, stockholders of the Company, other than the right to receive (a) any
dividend or other distribution with respect to such Company Common Stock with a
record date occurring prior to the Effective Time, (b) any cash in lieu of any
fractional Parent Share and (c) the Consideration provided under this Article
III. After the Effective Time, there will be no transfers on the stock transfer
books of the Company or the Surviving Corporation of shares of Company Common
Stock.
3.03 Fractional Shares. Notwithstanding any other provision in
this Agreement, no fractional Parent Shares and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Parent will pay to each holder of Company Common Stock who otherwise
would be entitled to a fractional Parent Share (after taking into account all
Old Certificates delivered to the Exchange Agent or held by such holder) an
amount in cash (without interest) determined by multiplying such fraction by the
Average Closing Price.
3.04 Exchange Procedures. (a) At the time of mailing of the
Company Proxy Statement to holders of record of Company Common Stock entitled to
vote at the Company Stockholders Meeting, Parent will mail, or cause the
Exchange Agent to mail, therewith an Election Form and a letter of transmittal
to each such holder. To be effective, an Election Form must be properly
completed, signed and actually received by the Exchange Agent not later than
5:00 p.m., New York City time, on the Business Day that is two trading days
prior to the Closing Date (which date shall be publicly announced by Parent as
soon as practicable but in no event less than five trading days prior to the
Closing Date) (the "Election Deadline") and accompanied by the certificates
representing all the shares of Company Common Stock ("Old Certificates") as to
which such Election Form is being made, duly endorsed in blank or otherwise in
form
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<PAGE> 21
acceptable for transfer on the books of the Company (or accompanied by an
appropriate guarantee of delivery by an eligible organization) in the case of
shares that are not held in book entry form. For shares that are held in book
entry form, Parent shall establish procedures for the delivery of such shares,
which procedures shall be reasonably acceptable to the Company. Parent shall
have reasonable discretion, which it may delegate in whole or in part to the
Exchange Agent, to determine whether Election Forms have been properly
completed, signed and timely submitted or to disregard defects in Election
Forms. Any such determination of the Exchange Agent shall be conclusive and
binding. Neither Parent nor the Exchange Agent shall be under any obligation to
notify any person of any defect in an Election Form submitted to the Exchange
Agent. The Exchange Agent shall also make all computations contemplated by
Section 3.01 hereof, and, after consultation with the Company, all such
computations will be conclusive and binding on the former holders of Company
Common Stock absent manifest error. Any shares of Company Common Stock for which
the record holder has not, as of the Election Deadline, properly submitted to
the Exchange Agent a properly completed Election Form will be deemed No-Election
Shares. Any Election Form may be revoked, by the stockholder who submitted such
Election Form to the Exchange Agent, only by written notice received by the
Exchange Agent (i) prior to the Election Deadline or (ii) after such time if
(and only to the extent that) the Exchange Agent is legally required to permit
revocations and only if the Effective Time shall not have occurred prior to such
date. In addition, all Election Forms shall automatically be revoked if the
Exchange Agent is notified in writing by Parent and the Company that the Merger
has been abandoned. The Exchange Agent may, with the mutual agreement of Parent
and the Company, make such rules as are consistent with this Section 3.04 for
the implementation of the Elections provided for herein as shall be necessary or
desirable fully to effect such Elections. Prior to the Effective Time, Parent
and the Merger Subsidiary will enter into an exchange agent and nominee
agreement with the Exchange Agent, in a form reasonably acceptable to the
Company, setting forth the procedures to be used in accomplishing the deliveries
and other actions contemplated by this Section 3.04, the provisions of which
agreement may vary the provisions of such Sections in any respect not material
and adverse to the stockholders of the Company.
(b) Immediately prior to the Effective Time, the Merger
Subsidiary will issue and deliver to the Exchange Agent, acting as nominee for
Parent, a number of shares of Subsidiary Common Stock equal to the number of
shares of Company Common Stock to be converted in the Merger, in consideration
for the agreement of Parent contained herein to issue and deliver Parent Shares
in the Merger. At or prior to the Effective Time, Parent will deposit, or will
cause to be deposited, with the Exchange Agent certificates representing Parent
Shares ("New Certificates") and an amount of cash (such New Certificates and
cash, together with any dividends or distributions with a record date occurring
after the Effective Date with respect thereto (without any interest on any such
cash, dividends or distributions) and any cash in lieu of any fractional Parent
Share, being hereinafter referred to as the "Exchange Fund") sufficient to
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<PAGE> 22
deliver to the holders of Company Common Stock the aggregate Consideration to
which such holders are entitled pursuant to Section 3.01, together with all cash
and other property to which such holders may be entitled pursuant to Sections
3.02 and 3.03 in respect of dividends and distributions or cash in lieu of
fractional share interests. At the time of such deposit, Parent will irrevocably
instruct the Exchange Agent to deliver such Consideration to such holders after
the Effective Time in accordance with the procedures of the Exchange Agent
referred to in Section 3.04(a). The shares of Subsidiary Common Stock issued by
the Merger Subsidiary and delivered to the Exchange Agent at the Effective Time
shall be deliverable to, or registered in the name or names of, Parent or such
other person or persons as Parent shall instruct.
(c) The Surviving Corporation will cause the New Certificates
into which shares of a holder's Company Common Stock are converted on the
Effective Date and/or any cash in respect of any Per Share Cash Consideration,
cash in lieu of fractional share interests or dividends or distributions which
such person is entitled to receive to be delivered to such stockholder upon
delivery (if not previously delivered) to the Exchange Agent of Old Certificates
representing such shares of Company Common Stock (or indemnity satisfactory to
the Surviving Corporation and the Exchange Agent, if any of such Old
Certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any Consideration, or any cash in respect of fractional
share interests or dividends or distributions, that any such person is entitled
to receive pursuant to this Article III upon such delivery to the Exchange Agent
of Old Certificates.
(d) Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto will be liable to any former holder of Company Common Stock
for any amount delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) No dividends or other distributions on Parent Shares with
a record date occurring after the Effective Time will be paid to the holder of
any unsurrendered Old Certificate representing shares of Company Common Stock
converted in the Merger into the right to receive such Parent Shares until the
holder thereof is entitled to receive New Certificates in exchange therefor in
accordance with this Article III, and no such shares of Company Common Stock
will be eligible to be voted at any meeting of holders of Parent Shares until
the holder of the related Old Certificates is entitled to receive New
Certificates in accordance with this Article III. After becoming so entitled in
accordance with this Article III, the record holder also will be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to Parent Shares such holder
had the right to receive upon surrender of such Old Certificates.
(f) Any portion of the Exchange Fund that remains unclaimed by
the holders of Old Certificates for six months after the Effective Time will be
returned to Parent. Any stockholders of the Company who have not theretofore
complied with this Article III thereafter shall look only to Parent for, and,
subject to Section 3.04(d), Parent shall remain liable for, payment of their
claim for Per Share Stock Consideration, Per Share Cash Consideration, cash in
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lieu of any fractional shares and unpaid dividends and distributions on Parent
Shares deliverable in respect of each share of Company Common Stock represented
by such Old Certificates such stockholder holds as determined pursuant to this
Agreement, in each case without any interest thereon.
3.05 Anti-Dilution Adjustments. Should Parent change (or
establish a record date for changing) the number of Parent Shares issued and
outstanding prior to the Effective Date by way of a split, dividend,
combination, recapitalization, exchange of shares or similar transaction with
respect to the outstanding Parent Shares having a record date preceding the
Effective Time, the Exchange Ratio will be adjusted appropriately to provide to
the holders of Company Common Stock the same economic effect as contemplated by
this Agreement prior to such split, dividend, combination, recapitalization,
exchange of shares or similar transaction.
3.06 Options; Other Equity-Based Awards. (a) At the Effective
Time, each then outstanding Company Option, whether vested or unvested, will be
converted into the right to acquire a number of Parent Shares equal to the
product, rounded to the nearest whole share, of (i) the number of shares of
Company Common Stock subject to such Company Option and (ii) the Exchange Ratio,
at a per share exercise price, rounded down to the nearest whole cent, equal to
(x) the aggregate exercise price for the shares of Company Common Stock
purchasable pursuant to such Company Option divided by (y) the number of Parent
Shares deemed purchasable under such Company Option in accordance with the
foregoing; provided, however, that in the case of any Company Option which is an
"incentive stock option," as defined under Section 422 of the Code, the
adjustments provided by this Section shall be effected in a manner consistent
with Section 424(a) of the Code. Prior to the Effective Time, the Company and
Parent will make all necessary arrangements with respect to the Company Stock
Plans and the stock plans of Parent to permit the assumption of such Company
Options by Parent pursuant to this Section 3.06.
(b) At the Effective Time, each right of any kind, whether
vested or unvested, contingent or accrued, to acquire or receive shares of
Company Common Stock or to receive benefits measured by the value of a number of
shares of Company Common Stock, that may be held, awarded, outstanding,
credited, payable or reserved for issuance under the Company Stock Plans and any
other Company Compensation and Benefit Plan, except for Company Options
converted in accordance with Section 3.06(a) above (each, a "Company Stock-Based
Award"), shall be deemed to be converted into a right to acquire or receive, or
to receive benefits measured by, as the case may be, the number of Parent Shares
equal to the number of shares of Company Common Stock subject to such Company
Stock-Based Award immediately prior to the Effective Time, multiplied by the
Exchange Ratio, and such rights with respect to the Parent Shares shall
otherwise be subject to the same terms, conditions and restrictions, if any, as
were applicable to the Company Stock-Based Awards. At or prior to the Effective
Time, the Company shall take all actions (if any) as may be required to effect
the provisions of this Section 3.06(b).
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<PAGE> 24
(c) At the Effective Time, Parent will assume each then
outstanding Company Option and Company Stock-Based Award, as converted pursuant
to this Section 3.06, in accordance with the terms of the Company Stock Plan
under which such Company Option and Company Stock-Based Award was granted and
the agreement, if any, by which it is evidenced. At or prior to the Effective
Time, Parent will take all corporate action necessary to reserve for issuance a
sufficient number of Parent Shares for delivery upon exercise of Company Options
and Company Stock-Based Award assumed by it in accordance with this Section
3.06. Not later than the Closing Date, Parent will file a registration statement
on Form S-8, or another appropriate form with respect to the Parent Shares
subject to such Company Options and Company Stock-Based Awards, and will use its
reasonable best efforts to maintain the effectiveness of that registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Company Options and Company Stock-Based
Awards remain outstanding. Except as otherwise specifically provided by this
Section 3.06, the terms of the Company Options and Company Stock-Based Awards,
and the relevant Company Stock Plans and Company Compensation and Benefit Plans,
as in effect on the Effective Time, shall remain in full force and effect with
respect to the Company Options and Company Stock-Based Awards after giving
effect to the Merger and the assumptions by Parent as set forth above.
(d) As soon as practicable following the Effective Time,
Parent shall deliver to the holders of Company Options and Company Stock-Based
Awards appropriate notices setting forth such holders' rights pursuant to the
respective Company Stock Plans and Company Compensation and Benefit Plans and
the agreements evidencing the grants of such Company Options and Company
Stock-Based Awards, and that such Company Options and Company Stock-Based Awards
and such agreements shall be assumed by Parent and shall continue in effect on
the same terms and conditions (subject to the adjustments required by Section
3.06(a) and (b)).
3.07 Dissenting Stockholders. Dissenters' Shares will be paid
for by Parent in accordance with Section 262 of the DGCL. The Company shall give
Parent (a) prompt notice of any written demands for fair value received by the
Company, withdrawals of such demands, and any other related instruments served
pursuant to Section 262 of the DGCL and received by the Company and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for fair value under the DGCL. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for fair value for Dissenters' Shares or offer to settle, or settle, any
such demands.
ARTICLE IV
ACTIONS PENDING THE EFFECTIVE TIME
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4.01 Forbearances of the Company. Except as set forth in the
Company's Disclosure Schedule or as expressly contemplated by this Agreement,
without the prior written consent of Parent (such consent not to be unreasonably
withheld or delayed), during the period from the date of this Agreement to the
Effective Time, the Company will not, and will cause each of its Subsidiaries
not to:
(a) Ordinary Course. Conduct the business of the Company and
its Subsidiaries other than in the ordinary and usual course, or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact its
business organizations and assets and maintain its rights, franchises and
existing relations with clients, customers, suppliers, employees and business
associates.
(b) Capital Stock. Other than pursuant to Rights that are set
forth in Section 5.03(b), (i) issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of capital
stock of the Company or any of its Subsidiaries (other than issuances or sales
by a Subsidiary to the Company or a wholly owned Subsidiary of the Company) or
any Rights in respect thereof (including any rights issued under any
stockholders rights plan or similar plan), (ii) enter into any agreement with
respect to the foregoing or (iii) permit any additional shares of capital stock
of the Company or any of its Subsidiaries to become subject to new grants of
employee or director stock options, other Rights or similar stock-based employee
rights, other than pursuant to the Company's Equity Plus Program, or new grants
of options, Rights or similar stock-based employee rights to employees (other
than officers or directors) or newly hired employees, in the ordinary course of
business consistent with past practice (provided that any vesting provisions of
such new grants (other than pursuant to the Company's Equity Plus Program) shall
not accelerate as a result of the transactions contemplated by this Agreement).
(c) Dividends, Etc. (i) Declare, set aside for payment or pay
any dividend or other distribution (whether in cash, stock or property) on or in
respect of, or declare or make any distribution on, any shares of capital stock
of the Company or any of its Subsidiaries, other than (x) dividends and
distributions from direct or indirect wholly owned Subsidiaries of the Company
to the Company or another direct or indirect wholly owned Subsidiary of the
Company, (y) regular quarterly cash dividends on the Company Common Stock at a
rate not exceeding $0.12 per share per calendar quarter and (z) fixed-rate
dividends paid pursuant to the existing terms of the outstanding preferred trust
securities of the Company's Subsidiaries, or (ii) directly or indirectly adjust,
split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into,
amend, modify or renew any employment, consulting, severance or similar contract
with any director, officer or employee of the Company or any of its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
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individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are required
by applicable law, (iii) to satisfy contractual obligations that are existing as
of the date hereof, (iv) for employment arrangements for, or grants of awards
to, newly hired employees or employees other than officers or directors in the
ordinary course of business consistent with past practice, (v) new employment
contracts Previously Disclosed and (vi) for arrangements specifically
contemplated by this Agreement.
(e) Benefit Plans. Enter into, establish, adopt or amend in
any material respect (except (i) as may be required by applicable law, (ii) to
satisfy contractual obligations that are existing as of the date hereof and
(iii) as specifically contemplated by this Agreement) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer or employee of
the Company or any of its Subsidiaries.
(f) Dispositions. Except for sales, transfers, mortgages,
encumbrances or other dispositions of securities or other investments or assets
in the ordinary course of business consistent with past practice, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of its
assets, businesses or properties having a value in excess of $15,000,000
individually or $50,000,000 in the aggregate.
(g) Acquisitions. Except for the acquisition of securities or
other investments or assets in the ordinary course of business consistent with
past practice, acquire any assets, businesses, or properties having a value in
excess of $15,000,000 individually or $50,000,000 in the aggregate, it being
understood that the Company will not, nor will it cause any of its Subsidiaries
to, make any acquisition of assets or businesses not precluded by this clause
(g) if, to the knowledge of the Company, such acquisition would be prohibited by
Section 4.01(m)(ii).
(h) Constitutive Documents. Amend the Constitutive Documents
of the Company or any of its Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles or material accounting practices, other than as may be
required by GAAP.
(j) Contracts. Except in the ordinary course of business
consistent with past practice, enter into or terminate any Contract that is or
would be required to be publicly filed with the SEC pursuant Item 601(b)(10) of
Regulation S-K under the Securities Act (other than any Contract required to be
filed under clause (iii) of such Item 601(b)(10)), or amend or modify in any
material respect any such Contract.
(k) Claims. Settle any material claim, action or proceeding,
except for any such claim, action or proceeding involving solely money damages
where, if the relevant litigation has been the subject of a reserve, the amount
paid or to be paid in settlement or compromise does not exceed such reserve,
and, in any case, the relevant litigation is not
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reasonably likely to establish an adverse precedent that would be material to
the Company's business or require material changes in the Company's business
practices.
(l) Indebtedness. Incur any indebtedness for borrowed money
other than in the ordinary course of business consistent with past practice.
(m) Adverse Actions.
(i) Knowingly take any action that is reasonably
likely to result in any of the Company's representations or warranties
set forth in this Agreement being or becoming untrue such that the
conditions to the Merger set forth in Article VII would not be
satisfied, except as may be expressly required by applicable law or
regulation; or
(ii) Knowingly engage in any new line of business or
knowingly make any acquisition of assets of a type not currently held
by the Company or any of its Subsidiaries that would not be permissible
for a United States financial holding company (as defined in 12 U.S.C.
Section 1841(p)) or would subject Parent, the Company or any Subsidiary
of either to regulation by a Governmental Authority that does not
presently regulate such company or to regulation by a Governmental
Authority that is materially different from current regulation.
(n) Tax Treatment. Take or fail to take any action that would
reasonably be expected to prevent or impede the transactions contemplated by
this Agreement from qualifying for the Tax Treatment or that would prevent the
tax opinions described in Sections 7.02(c) and 7.03(c) from being provided.
(o) Commitments. Agree, commit to or enter into any agreement
to take any of the actions referred to in Section 4.01 (a) through (n).
4.02 Forbearances of Parent. Except as set forth in Parent's
Disclosure Schedule or as expressly contemplated by this Agreement, without the
prior written consent of the Company (such consent not to be unreasonably
withheld or delayed), during the period from the date of this Agreement to the
Effective Time, Parent will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Parent and its
Subsidiaries other than in the ordinary and usual course, or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact its
material business organizations and assets and maintain its material rights,
franchises and material existing relations with clients, customers, suppliers,
employees and business associates.
(b) Dividends. Declare, set aside for payment or pay any
dividend or other
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distribution on, or in respect of, any Parent Shares other than regular periodic
cash dividends and distributions; it being understood that Parent may in 2000
declare and pay a cash dividend with respect to a nine-month period, and, after
the Closing Date, declare and pay a dividend with respect to the remaining
three-month period.
(c) Constitutive Documents. Amend the Constitutive Documents
of Parent or the Merger Subsidiary in any manner that would impede or delay the
Merger and the other transactions contemplated hereby or would adversely affect
the rights of a holder of Parent Shares.
(d) Acquisitions. Enter into any agreement to acquire all or
substantially all of the capital stock or assets of any other person or business
unless, to the knowledge of Parent, such transaction would not reasonably be
expected to materially delay or impede the consummation of the Merger.
(e) Adverse Actions. Knowingly take any action reasonably
likely to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue such that the conditions to the Merger set
forth in Article VII would not be satisfied, except as may be expressly required
by applicable law or regulation.
(f) Tax Treatment. Subject to Section 3.01(a)(iv), take or
fail to take any action that would reasonably be expected to prevent or impede
the transactions contemplated by this Agreement from qualifying for the Tax
Treatment or that would prevent the tax opinions described in Sections 7.02(c)
and 7.03(c) from being provided.
(g) Commitments. Agree, commit to or enter into any agreement
to take any of the actions referred to in Section 4.02(a) through (f).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, the
Company delivered to Parent, and Parent delivered to the Company, a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either (a) in response
to an express informational requirement contained in or requested by a provision
hereof or (b) as an exception to one or more representations or warranties
contained in Section 5.03 or 5.04, respectively, or to one or more of its
covenants contained in Article VI; provided that (i) no such item is required to
be set forth in the Disclosure Schedule as an exception to a representation or
warranty if its absence is not reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the
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standard established in Section 5.02 and (ii) the mere inclusion of an item in a
Disclosure Schedule shall not be deemed an admission by the disclosing party
that such item (or any undisclosed item or information of comparable or greater
significance) represents a material exception or fact, event or circumstance
with respect to the Company or Parent, respectively. Information set forth in a
Disclosure Schedule, whether in response to an express informational requirement
or as an exception to one or more representations or warranties or one or more
covenants, in each case that is contained (or expressly incorporated by
reference) in a correspondingly enumerated portion of such Disclosure Schedule,
is described herein as "Previously Disclosed". Any matter disclosed in any
section of either Disclosure Schedule shall be deemed disclosed for all purposes
and sections thereof.
5.02 Standard. No representation or warranty of the Company or
Parent contained in Section 5.03 (other than Sections 5.03(b), 5.03(c)(the first
sentence thereof), 5.03(i) and 5.03(j)(i)) or 5.04 (other than 5.04(g) and
5.04(h)) shall be deemed untrue or incorrect, and no party hereto shall be
deemed to have breached a particular representation or warranty, as a
consequence of the existence of any fact, event, or circumstance that should
have been disclosed as an exception to a particular representation or warranty,
unless such fact, event or circumstance, whether individually or taken together
with all other facts, events or circumstances that should have been so disclosed
(whether or not as exceptions) with respect to such particular representation or
warranty contained in Section 5.03 or 5.04, results or would be reasonably
likely to result in a Material Adverse Effect with respect to the Company, in
the case of Section 5.03, or Parent, in the case of Section 5.04, or would
materially impair or delay the ability of the parties to consummate the Merger
or the other transactions contemplated hereby.
5.03 Representations and Warranties of the Company. Subject to
Sections 5.01 and 5.02 and except as specifically disclosed in the Company SEC
Documents or as Previously Disclosed, the Company hereby represents and warrants
to Parent as follows:
(a) Organization, Standing and Authority. The Company is duly
incorporated and an existing corporation in good standing under the laws of the
State of Delaware. The Company is duly qualified to do business and is in good
standing in the States of the United States and each foreign jurisdiction (with
respect to jurisdictions which recognize such concept) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified.
(b) Capital Stock. As of the date of this Agreement, the
Company has (i) 400,000,000 authorized shares of Company Common Stock, of which
146,748,399 shares were outstanding as of July 7, 2000, and (ii) 20,000,000
authorized shares of Company Preferred Stock, of which no shares are
outstanding. All of the outstanding shares of Company Common Stock have been
duly authorized and are validly issued, fully paid and nonassessable, and have
not been issued in violation of any preemptive rights. Set forth on the
Company's Disclosure Schedule is a list of each Compensation and Benefit Plan
under which any shares of capital stock of the Company or any Rights with
respect thereto have been or may be awarded or issued ("Company Stock Plans").
As of July 7, 2000, the Company has outstanding Company Options
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representing the right to acquire 33,614,900 shares of Company Common Stock.
Except as described in the immediately preceding sentence, the Company has no
Company Common Stock authorized for issuance pursuant to any Company Stock
Plans, except that, as of July 7, 2000, there were 15,014,217 shares of Company
Common Stock authorized for issuance pursuant to the Company Stock Plans. Except
as set forth above, there are no existing Rights of any kind with respect to the
Company, and no securities or obligations evidencing such Rights are authorized,
issued or outstanding. Except for the Convertible Debentures of the Company
previously issued to certain key employees of the Company and its Subsidiaries
in 2000 prior to the date hereof, the Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or which are convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
(c) Subsidiaries. Exhibit 21 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 includes all the
Subsidiaries of the Company which as of the date hereof are Significant
Subsidiaries. No equity securities of any of the Company's Subsidiaries are or
may become required to be issued (other than to the Company or a wholly owned
Subsidiary of the Company) by reason of any Rights with respect thereto. There
are no Contracts by which any of the Company's Subsidiaries is or may be bound
to sell or otherwise issue any shares of its capital stock, and there are no
Contracts relating to the rights of the Company to vote or to dispose of such
shares. All of the shares of capital stock of each of the Company's Significant
Subsidiaries are validly issued, fully paid and nonassessable and subject to no
Rights and are owned by the Company or a Subsidiary of the Company free and
clear of any Liens. Each of the Company's Significant Subsidiaries is in good
standing under the laws of the jurisdiction in which it is organized, and is
duly qualified to do business and in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified.
(d) Corporate Power. Each of the Company and its Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all of its properties and assets.
(e) Corporate Authority and Action.
(i) The Company has the requisite corporate power and
authority, and has taken all corporate action necessary, in order to
authorize the execution and delivery of, and performance of its
obligations under this Agreement and, subject only to obtaining the
requisite adoption of this Agreement by the holders of a majority of
the shares of Company Common Stock entitled to vote at the Company
Stockholders Meeting (the "Company Requisite Vote"), to consummate the
Merger. This Agreement constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
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moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").
(ii) The Company has taken all action necessary in order
to exempt this Agreement, the Voting Agreements and the Merger and the
other transactions contemplated hereby and thereby from, and this
Agreement, the Voting Agreements and the Merger and the other
transactions contemplated hereby and thereby are exempt from, (i) the
requirements of any "moratorium," "control share," "fair price" or other
antitakeover laws and regulations of the State of Delaware, including
Section 203 of the DGCL, and of any other State and (ii) the provisions
of Article XIII of the Company's certificate of incorporation with
respect to "Business Combinations".
(iii) The Company has taken all corporate action
necessary in order to authorize the execution and delivery of, and
performance of its obligations under, and has entered into, amendments
to each of the GE Stockholders Agreement and the Yasuda Stockholders
Agreement (the "GE Amendment" and the "Yasuda Amendment", respectively).
Each of the GE Amendment and the Yasuda Amendment is a valid and legally
binding agreement of the Company and, assuming the due authorization,
execution and delivery of such agreement by each other party thereto, is
enforceable against the Company in accordance with its terms, subject to
the Bankruptcy and Equity Exception.
(f) Governmental Filings; No Violations. Other than those (i)
pursuant to Section 2.02, (ii) under the HSR Act, the Exchange Act and the
Securities Act, (iii) pursuant to the European Community Merger Control
Regulation, (iv) required to be made with Self-Regulatory Organizations and
Governmental Authorities regulating brokers, dealers, investment advisors,
investment companies, banks, trust companies and insurance companies, (v)
required to be made pursuant to state insurance or banking and trust company
regulations and (vi) such other filings and/or notices set forth in the
Company's Disclosure Schedule, no notices, reports, applications or other
filings are required to be made by the Company or any of its Subsidiaries with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by any of them from, any Governmental Authority in
connection with the execution and delivery of this Agreement by the Company and
the consummation by the Company of the Merger and the other transactions
contemplated hereby. Subject, in the case of clause (A) below, to obtaining the
Company Requisite Vote, and the making or obtaining of all filings, notices,
applications, consents, registrations, approvals, permits or authorizations with
or of any relevant Governmental Authority with respect to the Merger and the
other transactions contemplated hereby, (A) the execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Merger and the other transactions contemplated hereby and (B) the
execution and delivery of the GE Amendment and the Yasuda Amendment, and the
performance by the Company of its obligations thereunder, do not and will
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not (1) constitute a breach or violation of, or a default under, or cause or
allow the acceleration or creation of a Lien (with or without the giving of
notice, passage of time or both) pursuant to, any law, rule or regulation or any
judgment, decree, order, governmental or non-governmental permit or license, or
any Contract of it or of any of its Subsidiaries or to which the Company or any
of the Company's Subsidiaries or its or their properties is subject or bound or
(2) constitute a breach or violation of, or a default under, the Constitutive
Documents of the Company or any of its Subsidiaries or (3) require any consent
or approval under any such law, rule, regulation, judgment, decree, order,
governmental or non-governmental permit or license or the consent or approval of
any other party to any such Contract.
(g) Reports. The Company and its Subsidiaries have filed all
reports, registrations, statements and other filings, together with any
amendments required to be made with respect thereto, that they were required to
file since December 31, 1997 with (i) the SEC or the CFTC or (ii) any other
applicable Governmental Authorities (all such reports and statements, including
the financial statements, exhibits and schedules thereto, being collectively
referred to herein as the "Reports"), including all Reports required under the
Securities Laws. Each of the Reports, when filed, complied as to form with the
statutes, rules, regulations and orders enforced or promulgated by the
Governmental Authority with which they were filed.
(h) Company SEC Documents and Financial Statements.
(i) Since January 1, 1998, the Company has timely filed
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC ("Company SEC Documents"). As of their respective dates (and
without giving effect to any amendments or modifications filed after the
date of this Agreement), each of the Company SEC Documents, including
the financial statements, exhibits and schedules thereto, filed and
publicly available with the SEC prior to the date hereof complied (and
each of the Company SEC Documents filed after the date of this
Agreement, will comply) as to form with applicable Securities Laws and
did not (or in the case of statements, circulars or reports filed after
the date of this Agreement, will not) contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading.
(ii) Each of the Company's consolidated statements of
financial condition or balance sheets included in or incorporated by
reference into the Company SEC Documents, including the related notes
and schedules, fairly presented in all material respects (or, in the
case of Company SEC Documents filed after the date of this Agreement,
will fairly present in all material respects) the consolidated financial
position of the Company and its Subsidiaries as of the date of such
balance sheet and each of the Company's consolidated statements of
income, cash flows and changes in stockholders' equity included in or
incorporated by reference into Company SEC Documents, including any
related notes and schedules (collectively, the foregoing financial
statements and related notes and schedules are referred to as the
"Company Financial Statements"), fairly
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presented in all material respects (or, in the case of Company SEC
Documents filed after the date of this Agreement, will fairly present in
all material respects) the consolidated results of operations, cash
flows and changes in stockholders' equity, as the case may be, of the
Company and its Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with GAAP consistently applied
during the periods involved (except as may be noted therein and except,
in the case of unaudited statements, for the absence of notes).
(i) Absence of Undisclosed Liabilities. Except as disclosed in
the Company Financial Statements or the Company SEC Documents filed prior to the
date hereof, none of the Company or its Subsidiaries has any obligation or
liability (contingent or otherwise), that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company.
(j) Absence of Certain Changes or Events. Except as expressly
contemplated by this Agreement or the transactions contemplated hereby and
except as disclosed in the Company SEC Documents filed prior to the date hereof,
since December 31, 1999, the Company and its Subsidiaries have conducted their
business only in the ordinary course, and there has not been (i) any Material
Adverse Effect on the Company or, to the knowledge of the Company, any
development or combination of developments reasonably likely to have a Material
Adverse Effect on the Company, (ii) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock, other than regular quarterly cash
dividends of $0.12 per share on the Company's Common Stock, (iii) any split,
dividend, combination, recapitalization or similar transaction with respect to
any of the Company's capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of the Company's capital stock, except for issuances of Company
Common Stock upon the exercise of Company Options awarded prior to the date
hereof in accordance with their terms, (iv) prior to the date hereof (A) any
granting by the Company or any of its Subsidiaries to any current or former
director, executive officer or other key employee of the Company or its
Subsidiaries of any increase in compensation, bonus or other benefits, except
for normal increases in the ordinary course of business and in accordance with
past practice or as was required under any employment agreements in effect as of
December 31, 1999, (B) any granting by the Company or any of its Subsidiaries to
any such current or former director, executive officer or key employee of any
increase in severance or termination pay, except in the ordinary course of
business and consistent with past practice, or (C) any entry by the Company or
any of its Subsidiaries into, or any amendments of, any Compensation and Benefit
Plan, other than in the ordinary course of business and consistent with past
practice, (v) except as required by a change in GAAP, any change in accounting
methods, principles or practices by the Company materially affecting its assets,
liabilities or business or (vi) any tax election that would be Material to the
Company or any of its tax attributes or any settlement or compromise of any
Material income tax liability (other than any such liability that was the
subject of a dispute disclosed on Section 5.03(r) of the
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Company's Disclosure Schedule).
(k) Intentionally Omitted.
(l) Litigation; Regulatory Action. Except as disclosed in the
Company SEC Documents filed before the date of this Agreement, no litigation,
proceeding, investigation or controversy ("Litigation") before any court,
arbitrator, mediator, or Governmental Authority is pending against or involves
the Company or any of its Subsidiaries, and, to the Company's knowledge, no such
Litigation has been threatened; neither the Company nor any of its Subsidiaries
is a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, any Governmental Authority charged with the supervision or
regulation of broker-dealers, securities underwriting or trading, stock
exchanges, commodities exchanges, investment companies, investment advisors or
insurance agents and brokers or the supervision or regulation of the Company or
any of its Subsidiaries or any of the other businesses they conduct; and neither
the Company nor any of its Subsidiaries has been notified in writing by or
received any written communication from any such Governmental Authority to the
effect that such Governmental Authority is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, commitment letter or similar
submission.
(m) Compliance with Laws. Each of the Company and its
Subsidiaries:
(i) in the conduct of business, including its sales and
marketing practices, is in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, suitability requirements, orders or decrees applicable
thereto or to the employees conducting such businesses, and with the
applicable rules of all Self-Regulatory Organizations to which it is
subject;
(ii) has all permits, licenses, authorizations, orders
and approvals of, and has made or obtained all filings, notices,
applications, consents, registrations, approvals, permits or
authorizations with, to or of all Governmental Authorities and
Self-Regulatory Organizations that are required in order to permit it to
own and operate its businesses as presently conducted; and all such
permits, licenses, authorizations, orders and approvals are in full
force and effect and, to the Company's knowledge, no suspension or
cancellation of any of them is threatened or reasonably likely; and all
such filings, applications and registrations are current;
(iii) has received no written notification or written
communication from any Governmental Authority (A) asserting that it is
not in compliance with any of the statutes, rules, regulations, or
ordinances which such Governmental Authority enforces, or has otherwise
engaged in any unlawful business practice, (B) threatening to revoke any
license, franchise, permit, seat on any stock or commodities exchange or
governmental authorization, (C) requiring it (including any of its
directors or controlling persons) to
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enter into any order, decree, agreement, memorandum of understanding or
similar arrangement (or requiring the board of directors thereof to
adopt any resolution or policy) or (D) restricting or disqualifying the
activities of the Company or any of its Subsidiaries (except for
restrictions generally imposed by rule, regulation or administrative
policy on brokers, dealers, investment advisors or banking organizations
generally);
(iv) is not, nor is any Affiliate of it, subject to a
"statutory disqualification" as defined in Section 3(a)(39) of the
Exchange Act or is subject to a disqualification that would be a basis
for censure, limitations on the activities, functions or operations of,
or suspension or revocation of the registration of any broker-dealer
Subsidiary 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;
(v) is not required to be registered as an investment
company; and
(vi) in the conduct of its business with respect to
employee benefit plans subject to Title I of ERISA ("ERISA Plans"), it
has not (A) breached any applicable fiduciary duty under Part 4 of Title
I of ERISA which would subject it to liability under Sections 405 or 409
of ERISA, (B) engaged in a "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975(c) of the Code which would
subject it to liability or Taxes under Sections 409 or 502(i) of ERISA
or Section 4975(a) of the Code or (C) engaged in any conduct that could
constitute a crime or violation listed in Section 411 of ERISA which
could preclude such person from providing services to any ERISA Plan.
(n) Registrations. The Company and each of its Subsidiaries which
are required to be registered as a broker-dealer, an investment advisor, a
commodity pool operator, futures commission merchant, introducing broker,
commodity trading advisor or insurance agent with the SEC, the CFTC, the
securities commission or similar authority or insurance authority of any state
or foreign jurisdiction or any Self-Regulatory Organization are duly registered
as such and such registrations are in full force and effect. All United States
Federal, state and foreign registration requirements have been complied with and
such registrations as currently filed, and all periodic reports required to be
filed with respect thereto, are accurate and complete. Since January 1, 1998,
there have been no contributions or payments, and there is no other information,
that would be required to be disclosed by the Company or any of the Company's
Subsidiaries on any Form G-37/G-38 or recorded by the Company or any such
Subsidiary pursuant to Rule G-8(a)(xvi) of the MSRB.
(o) No Brokers. None of the Company or its Subsidiaries, or any
of their
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directors, officers or employees, has employed any broker or finder, or incurred
any broker's or finder's commissions or fees, in connection with the
transactions contemplated hereby, except that the Company has engaged The
Blackstone Group L.P. and Goldman, Sachs & Co. as its financial advisors, the
arrangements with which have been provided to Parent.
(p) Compensation and Benefit Plans.
(i) The Company has Previously Disclosed a complete list
of all material benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of the Company and its
Subsidiaries (the "Employees") and current or former directors of the
Company, including, but not limited to, "employee benefit plans" within
the meaning of Section 3(3) of ERISA, bonus, deferred compensation,
profit-sharing, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option plans, and all material
employment or severance contracts, contract or arrangement (the
"Compensation and Benefit Plans"). True and complete copies of all
Compensation and Benefit Plans, including, but not limited to, any trust
instruments and/or insurance contracts, if any, forming a part thereof,
and all amendments thereto have been provided or made available to
Parent.
(ii) All Compensation and Benefit Plans, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"), covering Employees (the "Plans"), to the extent
subject to ERISA, are in substantial compliance with ERISA. Each Plan
which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan") and which is intended to be
qualified under Section 401(a) of the Code, has received a favorable
determination letter from the IRS with respect to "TRA" (as defined in
Section 1 of IRS Revenue Procedure 93-39), and the Company is not aware
of any circumstances reasonably likely to result in the revocation or
denial of any such favorable determination letter. There is no pending
or, to the knowledge of the Company, threatened litigation relating to
the Plans. Neither the Company nor any of its Subsidiaries has engaged
in a transaction with respect to any Plan that would subject the Company
or any of its Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA in an amount which would be
material.
(iii) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the Company or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). Neither the Company nor any of its Subsidiaries
presently contributes to a Multiemployer Plan, nor have they contributed
to such a plan within the past five calendar years. No notice of
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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 ending on the date hereof.
(iv) All contributions required to be made under the
terms of any Plan have been timely made or have been reflected on the
Financial Statements. 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 the Company nor any of its Subsidiaries has provided, or
is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer
plan, as of the most recently completed actuarial valuation prior to the
date hereof, 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 to the knowledge of the Company
there has been no adverse change in the financial condition of such
Pension Plan since such valuation date.
(vi) Neither the Company nor any of its Subsidiaries has
any obligations for retiree health and life benefits under any plan
other than obligations required pursuant to Section 4980B of the Code or
Part 6 of Title I of ERISA.
(vii) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (A) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or any Employee under any Compensation and
Benefit Plan or otherwise from the Company or any of its Subsidiaries,
(B) increase any benefits otherwise payable under any Compensation and
Benefit Plan, (C) result in any acceleration of the time of payment or
vesting or trigger any payment or funding (through a grantor trust or
otherwise) of any such benefit, or (D) result in any breach or violation
of, or a default under, any of the Compensation and Benefit Plans.
(q) Labor Relations. Each of the Company and its Subsidiaries is
in compliance with all currently applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, the Immigration Reform and Control Act, the
Worker Adjustment and Retraining Notification Act, any such laws respecting
employment discrimination, disability rights or benefits, equal opportunity,
plant closure issues, affirmative action, workers' compensation, employee
benefits, severance payments, labor relations, employee leave issues, wage and
hour standards,
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occupational safety and health requirements and unemployment insurance and
related matters. None of the Company or its Subsidiaries is engaged in any
unfair labor practice and there is no unfair labor practice complaint pending
or, to the knowledge of the Company, threatened against any of the Company or
its Subsidiaries before the National Labor Relations Board. Neither the Company
nor any of its Subsidiaries is a party to, is negotiating or is bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is the Company or any of its
Subsidiaries the subject of a proceeding asserting that the Company or any such
Subsidiary has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel it or such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving the Company or any of
its Subsidiaries pending or, to its knowledge, threatened, nor is it aware of
any activity involving the Company's or any of its Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
(r) Taxes. (i) The Company and its Subsidiaries have filed
completely and correctly in all material respects all Tax Returns which are
required by all applicable laws to be filed by them, and have paid, or made
adequate provision for the payment of, all material Taxes, including material
withholding Taxes, owed by the Company or its Subsidiaries; (ii) all Taxes which
the Company and its Subsidiaries are required by law to withhold and collect
have been duly withheld and collected, and have been paid over, in a timely
manner, to the proper taxing authorities to the extent due and payable; (iii)
the Company and its Subsidiaries have not executed any waiver to extend, or
otherwise taken or failed to take any action that would have the effect of
extending, the applicable statute of limitations in respect of any Tax
liabilities of the Company or any of its Subsidiaries for the fiscal years prior
to and including the most recent fiscal year; (iv) the Company or its
predecessor has been a member of the Company's existing U.S. federal
consolidated group for at least the past 20 years; (v) the Company is not a
party to any tax sharing agreement or arrangement, other than with its
Subsidiaries; (vi) no liens for Taxes exist with respect to any of the assets or
properties of the Company, except for statutory liens for Taxes not yet due or
payable or that are being contested in good faith; (vii) all of the U.S. federal
income Tax Returns filed by or on behalf of each of the Company and its
Subsidiaries have been examined by and settled with the IRS, or the statute of
limitations with respect to the relevant Tax liability expired, for all taxable
periods through and including the period ending on the date on which the
Effective Time occurs; (viii) all Taxes due with respect to any completed and
settled audit, examination or deficiency Litigation with any taxing authority
have been paid in full; (ix) there is no audit, examination, deficiency, or
refund Litigation pending with respect to any Taxes and during the past three
years no taxing authority has given written notice of the commencement of any
audit, examination or deficiency Litigation, with respect to any Taxes; (x)
neither the Company nor any of its Subsidiaries has taken or agreed to take any
action, or intends or plans to take any action or knows of any agreement,
arrangement, plan or intention to take any action that is reasonably likely to
prevent the (A) transactions contemplated by this Agreement from qualifying for
the Tax Treatment or (B) tax opinions described in Sections 7.02(c) and 7.03(c)
from being provided.
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(s) Proprietary Rights. The Company and its Subsidiaries have the
right to use the names, service-marks, trademarks and other intellectual
property necessary to carry on their business substantially as currently
conducted and, to the knowledge of the Company, there are no infringements of or
conflicts with the rights of others with respect to the use of such names,
service-marks, trademarks, or other intellectual property in any state of the
United States.
(t) Investment Advisory Activities.
(i) Each of the Investment Companies (or the trust of
which it is a series) is duly organized and existing in good standing
under the laws of the jurisdiction under which it is organized. Each of
the Investment Companies (or the trust or corporation of which it is a
series) that is registered or required to be registered under the
Investment Company Act (each, a "Registered Fund") is governed by a
board of trustees or directors (each a "Fund Board" and, collectively,
the "Fund Boards") consisting of at least 50% of trustees or directors
who are not "interested persons" (as defined in the Investment Company
Act) of the Registered Funds or the Company. The Fund Boards operate in
all material respects in conformity with the requirements and
restrictions of Sections 10 and 16 of the Investment Company Act, to the
extent applicable.
(ii) Each of the Investment Companies is in compliance
with all applicable United States federal, state and foreign laws, rules
and regulations of the SEC, the CFTC, the IRS, and any Self-Regulatory
Organization having jurisdiction over such Investment Company.
(iii) Each Investment Company has been operated or
managed in compliance with its respective objectives, policies and
restrictions, including those set forth in the applicable prospectus and
registration statement, if any, for that Investment Company. The Company
and its Subsidiaries have operated their investment accounts in
accordance with the investment objectives and guidelines in effect for
such investment accounts.
(iv) Neither the Company, nor, to the knowledge of the
Company, any "affiliated person" (as defined in the Investment Company
Act) of the Company, is ineligible pursuant to Section 9(a) or (b) of
the Investment Company Act to serve as an investment advisor (or in any
other capacity contemplated by the Investment Company Act) to a
Registered Fund; neither the Company, nor, to the knowledge of the
Company, any "associated person" (as defined in the Investment Advisers
Act) of the Company is ineligible pursuant to Section 203 of the
Investment Advisers Act to serve as an investment advisor or as an
associated person to a registered investment advisor.
(u) Financial Opinion. The Company has received the oral opinion
(to be subsequently confirmed in writing) of Goldman, Sachs & Co., on or prior
to the date of this
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Agreement, to the effect that, as of the date of such opinion, the Consideration
is fair from a financial point of view to holders of shares of Company Common
Stock (other than Parent and its affiliates).
(v) Certain Contracts. Except as set forth in the Company SEC
Documents filed prior to the date hereof, neither the Company nor any of its
Subsidiaries is a party to or bound by any non-competition agreement or any
other agreement or obligation which purports to limit in any material respect
the manner in which, or the localities in which, the business of the Company or
its Subsidiaries is or would be conducted.
(w) Derivatives. All swap, forward, future, option, or any other
similar agreement or arrangement executed or arranged by the Company, whether
entered into for the Company's account, or for the account of one or more of the
Company's Subsidiaries or their customers, to the Company's knowledge, were
entered into (i) in accordance with all applicable laws, rules, regulations and
regulatory policies and (ii) with counterparties believed at the time to be
financially responsible; and each of them constitutes the valid and legally
binding obligation of the Company or any of its Subsidiaries, enforceable in
accordance with its terms (subject to the Bankruptcy and Equity Exception), and
are in full force and effect. Neither the Company nor any of its Subsidiaries
nor, to the Company's knowledge, any other party thereto, is in breach of any of
its obligations under any such agreement or arrangement.
5.04 Representations and Warranties of Parent and the Merger
Subsidiary. Except as Previously Disclosed, Parent and the Merger Subsidiary
hereby represent and warrant to the Company as follows:
(a) Organization, Standing and Authority. Parent has been duly
organized and is an existing Aktiengesellschaft under the laws of Switzerland
and is in good standing under the laws of Switzerland. The Merger Subsidiary has
been duly incorporated and is an existing corporation in good standing under the
laws of the State of Delaware. Each of Parent and the Merger Subsidiary is duly
qualified to do business and is in good standing in the States of the United
States and foreign jurisdiction (with respect to jurisdictions which recognize
such concept) where its ownership or leasing of property or the conduct of its
business requires it to be so qualified. Each of Parent and its Subsidiaries has
in effect all United States Federal, state, local and foreign governmental
authorizations necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted.
(b) Capital Stock. At May 31, 2000, Parent had issued and paid up
share capital of 431,192,263 shares of capital stock, of which 1,053,082 shares
were at the disposal of the Parent Board of Directors. In addition to the issued
and paid up share capital, 758,807 shares of capital stock are unissued and are
reserved for the Parent employee share ownership plan and optional dividend
warrants. In the aggregate, these 431,951,070 shares represent the maximum
amount of shares of capital stock that may be issued in the future without
further approval from
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the stockholders of Parent.
(c) Corporate Authority and Action. Parent and the Merger
Subsidiary each has the requisite corporate power and authority, and has taken
all corporate action necessary, in order to authorize the execution and delivery
of, and performance of its obligations under, this Agreement and, subject only
to obtaining the requisite authorization of an increase in the ordinary share
capital of Parent by the affirmative vote of not less than two-thirds of the
holders of Parent Shares voting in person or by proxy at the Parent Shareholders
Meeting (the "Parent Requisite Vote"), to consummate the Merger. This Agreement
is a valid and binding agreement of Parent and the Merger Subsidiary,
enforceable in accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(d) Parent Shares. Subject only to obtaining the Parent Requisite
Vote, the Parent Shares to be issued in the Merger, when issued in accordance
with Section 3.01, will be duly and validly issued and fully paid up and subject
to no preemptive rights.
(e) Governmental Filings; No Violations. Other than the filings
and/or notices (i) pursuant to Section 2.02, (ii) under the HSR Act, the
Exchange Act and the Securities Act, (iii) pursuant to the European Community
Merger Control Regulation, (iv) required to be made pursuant to state insurance
or banking regulations or with the Board of Governors of the Federal Reserve
System, (v) required to be made with the NYSE, the Swiss Exchange and other
Self-Regulatory Organizations and (vi) such other filings and/or notices set
forth in Parent's Disclosure Schedule, no notices, reports, applications or
other filings are required to be made by Parent or any of its Subsidiaries with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by any of them from, any Governmental Authority in
connection with the execution and delivery of this Agreement by Parent and by
the Merger Subsidiary and the consummation by Parent and the Merger Subsidiary
of the Merger and the other transactions contemplated hereby. Subject to
obtaining the Parent Requisite Vote, and the making or obtaining of all filings,
notices, applications, consents, registrations, approvals, permits or
authorizations with or of any relevant Governmental Authority with respect to
the Merger and the other transactions contemplated hereby, the execution,
delivery and performance of this Agreement, and the consummation of the Merger
and other transactions contemplated hereby, does not and will not (A) constitute
a breach or violation of, or a default under, or cause or allow the acceleration
or creation of a Lien (with or without the giving of notice, passage of time or
both) pursuant to, any law, rule or regulation or any judgment, decree, order,
governmental or non-governmental permit or license, or any Contract of it or of
any of its Subsidiaries or to which Parent or any of Parent's Subsidiaries or
its or their properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the Constitutive Documents of Parent or any of
its Subsidiaries, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license, or
the consent or approval of any other party to any such Contract.
(f) Parent SEC Documents and Financial Statements.
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(i) Parent has timely filed or furnished all required
reports, schedules, forms, statements and other documents (including
exhibits and all other information incorporated therein) under the
federal Securities Laws required to be filed or furnished by it or any
of its Subsidiaries with respect to periods since December 31, 1998
through the date of this Agreement (collectively, the "Parent SEC
Documents") and will promptly provide each such registration statement,
offering circular, report, definitive proxy statement or information
statement filed, furnished or circulated after the date hereof, each in
the form (including exhibits and any amendments thereto) filed with the
SEC (or if not so filed, in the form used or circulated). As of their
respective dates (and without giving effect to any amendments or
modifications filed or furnished after the date of this Agreement), each
of the SEC Documents, including the financial statements, exhibits and
schedules thereto, filed, furnished or circulated prior to the date
hereof complied (and each of the Parent SEC Documents filed, furnished
or circulated after the date of this Agreement, will comply) as to form
with applicable Securities Laws and did not (or in the case of reports,
statements, or circulars filed, furnished or circulated after the date
of this Agreement, will not) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(ii) Each of Parent's consolidated balance sheets
included in or incorporated by reference into the Parent SEC Documents,
including the related notes and schedules, fairly presented (or, in the
case of Parent SEC Documents filed or furnished after the date of this
Agreement, will fairly present) the consolidated financial position of
Parent and its Subsidiaries as of the date of such balance sheet and
each of the consolidated statements of income, cash flows and changes in
equity included in or incorporated by reference into Parent SEC
Documents, including any related notes and schedules (collectively, the
foregoing financial statements and related notes and schedules are
referred to as the "Parent Financial Statements"), fairly presented (or,
in the case of Parent SEC Documents filed or furnished after the date of
this Agreement, will fairly present) the consolidated results of
operations, cash flows and changes in equity, as the case may be, of
Parent and its Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with IAS consistently applied
during the periods involved and, in the case of notes 42 and 43 to the
consolidated financial statements of Parent included in the Annual
Report on Form 20-F of Parent filed with the SEC on June 30, 2000, the
information included presents fairly a reconciliation of the
consolidated financial position and consolidated results of operations
between IAS and GAAP consistently applied during the periods involved
(except, in each case, as may be noted therein and except, in the case
of unaudited statements, for the absence of notes).
(g) Absence of Undisclosed Liabilities. Except as disclosed in
the Parent
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Financial Statements or the Parent SEC Documents filed prior to the date hereof,
none of Parent or its Subsidiaries has any obligation or liability (contingent
or otherwise), that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on Parent.
(h) Absence of Certain Changes or Events. Except as expressly
contemplated by this Agreement or the transactions contemplated hereby and
except as disclosed in the Parent SEC Documents filed prior to the date hereof,
since December 31, 1999, Parent and its Subsidiaries have conducted their
business only in the ordinary course, and there has not been any Material
Adverse Effect on Parent or, to the knowledge of Parent, any development or
combination of developments reasonably likely to have a Material Adverse Effect.
(i) Litigation; Regulatory Action. Except as disclosed in the
Parent SEC Documents filed before the date of this Agreement, no Litigation
before any court, arbitrator, mediator or Governmental Authority is pending
against or involves Parent or any of its Subsidiaries, and, to Parent's
knowledge, no such Litigation has been threatened.
(j) Compliance with Laws. Each of Parent and its Subsidiaries:
(i) in the conduct of business, including its sales and
marketing practices, is in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, suitability requirements, orders or decrees applicable
thereto or to the employees conducting such businesses (in their
capacity as employees), and with the applicable rules of all
Self-Regulatory Organizations to which it is subject;
(ii) has all permits, licenses, authorizations, orders
and approvals of, and has made or obtained all filings, notices,
applications, consents, registrations, approvals, permits or
authorizations with, to or of all Governmental Authorities that are
required in order to permit it to own and operate its businesses as
presently conducted; and all such permits, licenses, authorizations,
orders and approvals are in full force and effect and, to Parent's
knowledge, no suspension or cancellation of any of them is threatened or
reasonably likely; and all such filings, applications and registrations
are current;
(iii) has received no written notification or written
communication from any Governmental Authority (A) asserting that it is
not in compliance with any of the statutes, rules, regulations, or
ordinances which such Governmental Authority enforces, or has otherwise
engaged in any unlawful business practice, (B) threatening to revoke any
license, franchise, permit, seat on any stock or commodities exchange or
governmental authorization, (C) requiring it (including any of its
directors or controlling persons) to enter into any order, decree,
agreement, memorandum of understanding or similar arrangement (or
requiring the board of directors thereof to adopt any resolution or
policy)
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or (D) restricting or disqualifying the activities of Parent or any of
its Subsidiaries (except for restrictions generally imposed by rule,
regulation or administrative policy on brokers, dealers or investment
advisors generally);
(iv) is not, nor is any Affiliate of it, subject to a
"statutory disqualification" as defined in Section 3(a)(39) of the
Exchange Act or is subject to a disqualification that would be a basis
for censure, limitations on the activities, functions or operations of,
or suspension or revocation of the registration of any broker-dealer
Subsidiary of Parent 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
(v) is not required to be registered as an investment
company.
(k) Investment Companies. Neither Parent nor, to the knowledge of
Parent, any "affiliated person" (as defined in the Investment Company Act)
thereof, is ineligible pursuant to Section 9(a) or (b) of the Investment Company
Act to serve as an investment advisor (or in any other capacity contemplated by
the Investment Company Act) to a Registered Fund; and neither Parent nor, to the
knowledge of Parent, any "associated person" (as defined in the Investment
Advisors Act) thereof, is ineligible pursuant to Section 203 of the Investment
Advisors Act to serve as an investment advisor or as an associated person to a
registered investment advisor.
(l) Funds. At the Effective Time, Parent will have the funds
necessary to consummate the Merger and pay the Consideration in accordance with
the terms of this Agreement.
(m) Interim Operations of the Merger Subsidiary. The Merger
Subsidiary was formed solely for the purpose of engaging in the transactions
contemplated hereby and has engaged in no business other than in connection with
the transactions contemplated by this Agreement. The Merger Subsidiary is a
wholly owned subsidiary of Parent.
(n) Taxes. Parent and its Subsidiaries have paid, or made
adequate provision for the payment of, all material Taxes, including material
withholding Taxes, owed by Parent or its Subsidiaries. Neither Parent nor any of
its Subsidiaries has taken or agreed to take any action, or intends or plans to
take any action or knows of any agreement, arrangement, plan or intention to
take any action that is reasonably likely to prevent the (x) transactions
contemplated by this Agreement from qualifying for the Tax Treatment or (y) tax
opinions described in Sections 7.02(c) and 7.03(c) from being provided.
ARTICLE VI
COVENANTS
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6.01 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each of the Company, Parent and the Merger
Subsidiary will use its reasonable best efforts in good faith to take, or cause
to be taken (including causing any of its Subsidiaries to take), all actions,
and to do, or cause to be done, all things necessary, proper or desirable, or
advisable under applicable laws, so as to permit consummation of the Merger as
promptly as practicable and otherwise to enable consummation of the transactions
contemplated hereby and will cooperate fully with the other parties hereto to
that end; and, in furtherance of the foregoing, the parties agree to use their
respective reasonable best efforts to prevent the entry of any Restraints and to
appeal as promptly as practicable any such Restraints that may be entered.
(b) Without limiting the generality of Section 6.01(a), the
Company will use its reasonable best efforts to obtain (i) any consents of
Clients (including in the case of Registered Funds, the boards of directors or
trustees and the stockholders of such Registered Funds) necessary under any
Advisory Agreement or the Investment Company Act in connection with the deemed
assignment of any such Advisory Agreement upon consummation of the Merger, and
(ii) the consent or approval of all persons party to a Contract with the Company
or any of its Subsidiaries, to the extent such consent or approval is required
in order to consummate the Merger or for the Surviving Corporation to receive
the benefits of such Contract; provided, that in no event shall the Company be
deemed to have failed to satisfy the conditions set forth in Section 7.03(b)
solely on the basis that any such consents or approvals have not been obtained
as of the Closing Date. Nothing in this Section 6.01(b) shall be deemed to
require the Company to waive any material rights or agree to any material
limitation on its operations.
6.02 Registration Statement. (a) Each of the Company and Parent
will cooperate with respect to and as promptly as practicable prepare, and
Parent will file with the SEC as soon as practicable, a Registration Statement
on Form F-4 (the "Form F-4") under the Securities Act with respect to the
issuance pursuant to this Agreement of Parent Shares, which Registration
Statement will include the proxy statement/prospectus to be sent to the
Company's Stockholders (the "Company Proxy Statement"). Parent and the Company
will cause the Form F-4 to comply as to form in all material respects with the
applicable provisions of the Securities Act and the rules and regulations
thereunder. Each of the Company and Parent will use its respective reasonable
best efforts to have the Form F-4 declared effective by the SEC as promptly as
practicable after such filing. Parent will use its reasonable best efforts to
obtain, prior to the effective date of the Form F-4, any necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement. Each of the Company and Parent
shall use its reasonable best efforts to respond as promptly as practicable to
any comments of the SEC with respect thereto and to cause the Company Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after the Form F-4 is declared effective under the Securities Act. Each of the
Company and Parent shall furnish all information concerning it to the other as
may be reasonably requested in connection with any such action and the
preparation, filing and distribution of the Company Proxy Statement. Each
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of the Company and Parent shall promptly notify the other upon the receipt of
any comments from the SEC or its staff or any request from the SEC or its staff
for amendments or supplements to the Form F-4 or the Company Proxy Statement and
shall provide the other with copies of all correspondence between it and its
representatives, on the one hand, and the SEC and its staff, on the other hand.
Notwithstanding the foregoing, prior to submitting the Form F-4 (or any
amendment or supplement thereto) or filing or mailing the Company Proxy
Statement (or any amendment or supplement thereto) or responding to any comments
of the SEC with respect thereto, each of the Company and Parent, as the case may
be, (i) shall provide the other party an opportunity to review and comment on
such document or response and (ii) shall include in such document or response
all comments reasonably proposed by such other party.
(b) Each of the Company and Parent agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it or
its Subsidiaries for inclusion or incorporation by reference in the Form F-4,
including the Company Proxy Statement and any amendment or supplement thereto
will, at the time the Form F-4 becomes effective under the Securities Act, at
the date of mailing to stockholders and at the time or times of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. If at any time prior to the date of the Company
Stockholders Meeting any information relating to the Company or Parent, or any
of their respective Affiliates, officers, or directors, should be discovered by
the Company or Parent which should be set forth in an amendment to the Form F-4
or a supplement to the Company Proxy Statement, so that such document would not
include any misstatement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
that discovers such information shall promptly notify the other party and, to
the extent required by law, an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company.
6.03 Parent Documents. (a) Parent will, with the reasonable
assistance of the Company, as promptly as practicable following the date of this
Agreement prepare a circular to be sent to Parent's shareholders in connection
with the Parent Shareholders Meeting (the "Parent Circular") and any document
required by applicable law to be included therein or furnished therewith
(together, the "Parent Documents"). Parent agrees, as to itself and its
Subsidiaries, that the Parent Documents and any supplements thereto and any
circulars or documents issued to shareholders of Parent, will contain all
particulars relating to Parent required to comply in all material respects with
any applicable statutory and other legal provisions. Each of the Company and
Parent shall furnish all information concerning it to the other as may be
reasonably requested in connection with any such action and the preparation and
distribution of the Parent Documents. Notwithstanding the foregoing, prior to
mailing the Parent Documents (or any amendment or supplement thereto), each of
the Company and Parent, as the case may be, (i) shall provide the
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other party an opportunity to review and comment on such document and (ii) shall
include in such document all comments reasonably proposed by such other party.
(b) Parent will use its reasonable best efforts to cause the
definitive Parent Documents to be mailed to its shareholders as promptly as
practicable after the preparation thereof and any applicable review or approval
by any applicable Governmental Authority.
6.04 Stockholder Meetings. The Company will take all action
necessary to convene a special meeting of the holders of the Company's Common
Stock at which the holders of the Company's Common Stock will consider the
adoption of this Agreement (including any adjournments or postponements thereof,
the "Company Stockholders Meeting") as promptly as practicable after the Form
F-4 has been declared effective by the SEC; provided, however, that, within the
10-day period immediately preceding the Company Stockholders Meeting, the
Company may, in the event that an Acquisition Proposal is made within such
10-day period, postpone the Company Stockholders Meeting for a period not to
exceed 14 days following the date on which such Acquisition Proposal was made.
Parent will take all action necessary to convene an extraordinary general
meeting of Parent's shareholders at which a resolution will be proposed to
consider the approval of the authorization of Parent Shares to be issued in the
Merger and pursuant to Company Options and the Company Stock-Based Awards to be
assumed in the Merger (the "Parent Shareholders Meeting") as promptly as
practicable after the date hereof. Subject to the terms of this Agreement and
subject to its fiduciary obligations under applicable law, the Board of
Directors of the Company shall recommend to its stockholders, the adoption of
this Agreement and shall use best reasonable efforts to solicit such
authorization or adoption, as the case may be. In the event that subsequent to
the date hereof, the Board of Directors of the Company determines that this
Agreement is no longer advisable and either makes no recommendation or
recommends that its stockholders reject this Agreement, the Company shall
nevertheless submit this Agreement to the holders of the Company Common Stock
for adoption at the Company Stockholders Meeting unless this Agreement shall
have been terminated in accordance with its terms prior to the Company
Stockholders Meeting. The Board of Directors of Parent agrees to recommend to
its stockholders the authorization of the Parent Shares to be issued in the
Merger; it being expressly understood that nothing contained in this Agreement
shall prevent Parent's Board of Directors from making any disclosure to its
stockholders if, in the good faith judgment of its Board of Directors, failure
so to disclose would be inconsistent with its disclosure or other obligations
under applicable law.
6.05 Publicity. The initial press release concerning the Merger
and the other transactions contemplated by this Agreement shall be a joint press
release in such form agreed to by the parties and thereafter the Company and
Parent each shall consult with the other and provide each other the opportunity
to review, comment upon and use reasonable best efforts to agree on, any press
release or other public announcements with respect to the Merger and the other
transactions contemplated by this Agreement prior to issuing any press releases
or otherwise making public announcements with respect to the Merger and the
other transactions
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contemplated by this Agreement and neither party shall issue any press release
or otherwise make any public announcements with respect thereto without the
other's prior consent, except as may be required by law or court process or by
obligations pursuant to any listing agreement with or rules of any applicable
securities exchange.
6.06 Access; Information.
(a) The Company will, upon reasonable notice and subject to
applicable laws relating to the exchange of information, afford Parent and its
authorized Representatives, reasonable access during normal business hours
throughout the period prior to the Effective Time or the termination of this
Agreement to the books, records (including tax returns and work papers of
independent auditors), properties, personnel and such other information as
Parent may reasonably request and, during such period, it shall furnish promptly
to such other party (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of the Securities Laws, and
(ii) all other information concerning the business, properties and personnel of
it as the other party may reasonably request.
(b) Parent will, upon reasonable notice and subject to applicable
laws relating to the exchange of information, afford the Company and its
authorized Representatives, reasonable access during normal business hours
throughout the period prior to the Effective Time or the termination of this
Agreement to the books, records (including tax returns and work papers of
independent auditors), properties, personnel and to such other information as
the Company may reasonably request and, during such period, it shall furnish
promptly to such other party (i) a copy of each material report, schedule and
other document filed by it pursuant to the requirements of Securities Laws, and
(ii) all other information concerning the business, properties and personnel of
it as the other party may reasonably request.
(c) Each of Parent and the Company confirm that any information
obtained pursuant to this Section 6.06 will be subject to the terms of the
letter agreement, dated June 30, 2000 (as it may be amended from time to time,
the "Confidentiality Agreement"), between Parent and the Company.
(d) No investigation by a party of the business and affairs of
the other shall affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement or the conditions to
consummation of the Merger contained in Article VII.
(e) As soon as practicable after the date of this Agreement,
Parent will deliver to the Company an information request list requesting
information regarding the Subsidiaries of the Company reasonably necessary in
connection with seeking regulatory notice and approvals required in connection
with the transactions contemplated by this Agreement and the Company shall use
its reasonable best efforts to provide within 20 days of such delivery the
requested information based on information within the Company's possession.
6.07 Acquisition Proposals. (a) The Company will not, and will
cause its
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officers, directors, agents, advisors and Affiliates not to, solicit or
encourage inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential information to, or have any discussions
with, any person relating to, any Acquisition Proposal, other than the
transactions contemplated by this Agreement; provided, that nothing contained in
this Agreement shall prevent the Company or its Board of Directors from (i)
making any disclosure to its stockholders if, in the good faith judgment of its
Board of Directors, failure so to disclose would be inconsistent with its
obligations under applicable law; (ii) providing (or authorizing the provision
of) information to, or engaging in (or authorizing) such discussions or
negotiations with, any person who has made a bona fide written Acquisition
Proposal received after the date hereof which did not result from a breach of
this Section 6.07; (iii) recommending such an Acquisition Proposal to its
stockholders (and in connection therewith withdrawing its favorable
recommendation to stockholders of this Agreement), if and only to the extent
that, (x) in the case of actions referred to in clause (ii), the Company's Board
of Directors determines in good faith that such Acquisition Proposal has a
reasonable probability of resulting in a Superior Proposal or, in the case of
actions referred to in clause (iii), is a Superior Proposal, (y) in the case of
actions referred to in each of clauses (ii) and (iii), the Company's Board of
Directors, after having consulted with and considered the advice of outside
counsel to such Board, determines in good faith that providing such information
or engaging in such negotiations or discussions, or making such recommendation,
is required in order to discharge the directors' fiduciary duties in accordance
with Delaware law and (z) the Company receives from such person a
confidentiality agreement substantially in the form of the Confidentiality
Agreement (which shall not preclude the making of any Acquisition Proposal); or
(iv) withdrawing its favorable recommendation to stockholders of this Agreement
or the Merger if, in the good faith judgment of its Board of Directors, such
action would be required in order to discharge its obligations under applicable
law. For purposes of this Agreement, a "Superior Proposal" means any Acquisition
Proposal by a third party on terms which the Company's Board of Directors
determines in its good faith judgment, after consultation with its financial
advisors, to be more favorable to stockholders than the Merger and the other
transactions contemplated hereby, after taking into account the likelihood of
consummation of such transaction on the terms set forth therein, taking into
account all legal, financial (including the financing terms of any such
proposal), regulatory and other aspects of such proposal and any other relevant
factors permitted under applicable law, after giving Parent at least five
Business Days to respond to such third-party Superior Proposal once the Board
has notified Parent that in the absence of any further action by Parent it would
consider such Acquisition Proposal to be a Superior Proposal, and then taking
into account any amendment or modification to this Agreement proposed by Parent.
The Company also agrees immediately to cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Parent, with respect to any of the
foregoing. The Company shall promptly (within 24 hours) advise Parent following
the receipt by it of any Acquisition Proposal and the material terms thereof
(including the identity of the person making such Acquisition Proposal), and
advise Parent of any developments (including any change in such terms) with
respect to such Acquisition Proposal promptly upon the occurrence thereof.
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(b) Nothing contained in this Section 6.07 or any other provision
of this Agreement will prohibit the Company or the Company's Board of Directors
from notifying any third party that contacts the Company on an unsolicited basis
after the date hereof concerning an Acquisition Proposal of the Company's
obligations under this Section 6.07.
6.08 Regulatory Applications; Consents.
(a) The Company, Parent, and their respective Subsidiaries shall
cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings, notices, applications, consents,
registrations, approvals, permits or authorizations with, to, or of all third
parties and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement as promptly as reasonably practicable. Each of
the Company and Parent shall have the right to review in advance, and to the
extent practicable each will consult with the other, in each case subject to
applicable laws relating to the exchange of information, with respect to all
material written information submitted to any third party or any Governmental
Authority in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the Company and Parent agrees to act
reasonably and as promptly as practicable. Each of the Company and Parent agrees
that it will consult with the other party hereto with respect to the obtaining
of all material consents, registrations, approvals, permits and authorizations
of all third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Subject to applicable laws governing the exchange of
information, each of the Company and Parent will, upon request, furnish the
other party with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
(c) The Company will cooperate with Parent to ensure that, to the
extent reasonably practicable, on the Closing Date the activities and assets of
the Company and its Subsidiaries are permitted to be conducted or held by Parent
(as a foreign bank qualified as a financial holding company) and its
Subsidiaries under the Bank Holding Company Act of 1956, as amended. Nothing in
this Section 6.08(c) shall be deemed to require the Company to waive any
material rights or agree to any material limitations on its operations or to
dispose of any material asset or collection of assets prior to the Closing Date.
6.09 Employee Matters. (a) Parent will honor and will cause the
Surviving Corporation to honor, in accordance with their respective terms the
Company Compensation and
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Benefit Plans and all of the Company's other employee benefit, compensation,
employment, severance and termination plans, programs, policies, and
arrangements, including any rights or benefits arising as a result of the
transactions contemplated by this Agreement (either alone or in combination with
any other event).
(b) Parent agrees that during the period commencing at the
Effective Time and ending on the later of December 31, 2001 and the first
anniversary of the Effective Time, the Employees will continue to be provided
with benefits under employee benefit plans, programs, policies or arrangements
(other than stock options or other plans involving the issuance of securities of
the Company or Parent) which in the aggregate are no less favorable than those
provided by the Company to such Employees immediately prior to the Effective
Time.
(c) For all purposes (including, without limitation, eligibility,
vesting, and benefit accrual) under the employee benefit plans of Parent and its
Subsidiaries (including the Surviving Corporation) providing benefits to any
Employees after the Effective Time, each Employee shall be credited with his or
her years of service with the Company and its Subsidiaries (and any predecessor
entities thereof) before the Effective Time, to the same extent as such Employee
was entitled, before the Effective Time, to credit for such service under any
similar Company Compensation and Benefit Plan, except for purposes of benefit
accrual under defined benefit pension plans. Following the Effective Time,
Parent shall, or shall cause its Subsidiaries to, (i) waive any pre-existing
condition limitation under any welfare benefit plan maintained by Parent or any
of its Subsidiaries in which Employees and their eligible dependents participate
(except to the extent that such pre-existing condition limitation would have
been applicable under the comparable Company welfare benefit plans immediately
prior to the Effective Time), and (ii) provide each Employee with credit for any
co-payments and deductibles incurred prior to the Effective Time (or such
earlier or later transition date to new welfare benefits plans) for the calendar
year in which the Effective Time (or such earlier or later transition date)
occurs, in satisfying any applicable deductible or out-of-pocket requirements
under any welfare plans that the Employees participate in after the Effective
Time.
(d) Notwithstanding anything to the contrary contained herein,
Parent and its Subsidiaries (including the Surviving Corporation) shall provide
severance compensation benefits to Employees who are Involuntarily Terminated
during the six-month period following the Effective Time in amounts determined
in accordance with the terms set forth on Section 6.09(d) of the Company's
Disclosure Schedule, and otherwise payable in accordance with Parent's severance
plan as in effect as of the date of this Agreement as Previously Disclosed to
the Company (the "Parent Severance Plan"). For the avoidance of doubt, Employees
who are Involuntarily Terminated during the six-month period following the
Effective Time shall be deemed to meet all eligibility requirements to receive
severance benefits pursuant to the Parent Severance Plan.
(e) As soon as practicable following the date of this Agreement,
the Company
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shall offer to enter into retention bonus and pay guarantee agreements with key
employees of the Company, as determined and approved by Parent in consultation
with the Company. In no event shall any amount be payable under any such
agreement prior to the Effective Time. Parent hereby agrees that the aggregate
amount of retention bonuses subject to such agreements (including retention
award payments paid consistent with the terms of the employment agreements to be
entered into promptly following the date of this Agreement as contemplated by
Section 6.09(g)) will be $875 million.
(f) Notwithstanding anything in this Agreement to the contrary,
until the Effective Time, the Company shall be permitted to continue to accrue
its annual bonuses for Employees in respect of the portion of the Company's 2000
fiscal year elapsed through the Effective Time (the "Year 2000 Bonuses") in
accordance with past practice, and shall be permitted to allocate such Year 2000
Bonuses to Employees consistent with past practice. All determinations and
allocations in respect of the Year 2000 Bonuses shall be made in accordance with
the foregoing by Company management as constituted prior to the Effective Time.
The Company may make such determinations at an earlier time in the calendar year
(after the date of this Agreement) than is the usual practice of the Company,
and may communicate information in respect of the Year 2000 Bonuses to Employees
at any time through the Effective Time as it may determine advisable or
appropriate in its sole discretion after consultation with Parent. The Year 2000
Bonuses as determined in accordance with the foregoing shall be paid in cash to
Employees no later than February 9, 2001. An Employee must be employed with the
Company and its Subsidiaries on the payment date to be eligible to receive his
or her Year 2000 Bonus; provided, that any Employee who is Involuntarily
Terminated prior to the date on which he or she would have received the Year
2000 Bonus shall receive his or her Year 2000 Bonus on the date that the Year
2000 Bonuses are paid generally by the Company and its Subsidiaries to
Employees. Parent shall cause the Year 2000 Bonuses to be paid in accordance
with the foregoing. In addition, during the period from the Effective Time
through December 31, 2000 (the "Stub Period"), Parent shall cause the Surviving
Corporation to accrue bonuses for Employees in respect of the Stub Period (the
"Stub Period Bonuses") consistent with the Company's past practice and allocate
and communicate such Stub Period Bonuses to Employees consistent with the
Company's past practice. Parent shall cause the Stub Period Bonuses to be paid
in accordance with the foregoing no later than February 9, 2001.
(g) Promptly following the date of this Agreement, Parent and the
Company shall prepare and enter into employment agreements with certain key
executives of the Company consistent with the term sheets attached as Section
6.09(g) of the Company's Disclosure Schedule.
(h) The Company shall be permitted to establish a leveraged
employee partnership in respect of calendar year 2000 in addition to any such
partnership established on or prior to the date of this Agreement consistent
with past employee partnership investment opportunities made available by the
Company to key employees.
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(i) Prior to the Effective Time, Parent and the Company shall
take all such reasonable steps as may be required to cause any dispositions of
Company Common Stock (including derivative securities with respect to Company
Common Stock) or acquisitions of Parent Shares (including derivative securities
with respect to Parent Shares) resulting from the transactions contemplated by
this Agreement by each individual who is subject to the reporting requirements
of Section 16(a) of the Exchange Act to be exempt under Rule 16b-3 promulgated
under the Exchange Act.
6.10 Notification of Certain Matters. (a) The Company shall give
prompt notice to Parent, and Parent or the Merger Subsidiary shall give prompt
notice to the Company, of any fact, event or circumstance known to it that is
reasonably likely, individually or taken together with all other facts, events
and circumstances known to it, to result in a breach of any of its
representations, warranties, covenants or agreements contained herein such that
any of the conditions set forth in Article VII would not be satisfied.
(b) The Company will promptly notify Parent, and Parent will
promptly notify the Company, of:
(i) any notice or other communication from any person
alleging that any material consent of such person is or may be required
as a condition to consummation of the Merger; or
(ii) any material notice or other communication from any
Governmental Authority in connection with the transactions contemplated
by this Agreement.
6.11 Indemnification; Directors' and Officers' Insurance. (a)
From and after the Effective Time, Parent will indemnify and hold harmless each
present and former director and officer of the Company or any of its
Subsidiaries, determined as of immediately prior to the Effective Time (the
"Indemnified Parties"), against any and all costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") arising from, relating to or otherwise in
respect of, any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time (including with
respect to the transactions contemplated by this Agreement), to the fullest
extent permitted under applicable law; provided that Parent shall not be
required to indemnify any Indemnified Party pursuant to this Section 6.11 if it
is determined that the Indemnified Party acted in bad faith and not in a manner
such Indemnified Party believed to be in or not opposed to the best interests of
the Company. Parent shall, and shall cause the Surviving Corporation to, advance
expenses as incurred to the fullest extent permitted under applicable law
provided the person to whom expenses are advanced provides an
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undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under
Section 6.11(a), upon learning of any such claim, action, suit, proceeding or
investigation, must promptly notify Parent thereof, but the failure to so notify
shall not relieve Parent of any liability it may have to such Indemnified Party
to the extent such failure does not materially prejudice Parent. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), after the Effective Time (i) Parent or the
Surviving Corporation shall have the right to assume the defense thereof and
Parent shall not be liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if Parent or the
Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Parent or the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that Parent shall be obligated pursuant to this
Section 6.11 to pay for only one firm of counsel (unless the use of one counsel
for such Indemnified Parties would present such counsel with a conflict of
interest) for all Indemnified Parties in any jurisdiction, (ii) the Indemnified
Parties will cooperate in the defense of any such matter and (iii) Parent shall
not be liable for any settlement effected without its prior written consent; and
provided, further, that Parent shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(c) For a period of six years from the Effective Time, Parent
will provide director's and officer's liability insurance that serves to
reimburse the present and former officers and directors of the Company or any of
the Company's Subsidiaries (determined as of the Effective Time) with respect to
claims against such directors and officers arising from facts or events which
occurred before the Effective Time, which insurance shall contain at least the
same coverage and amounts, and contain terms and conditions no less advantageous
in any material respect, as that coverage currently provided by the Company;
provided, however, that in no event shall Parent be required to expend per annum
more than 200 percent of the current aggregate annual amount expended by the
Company (such amount, the "Insurance Amount") to maintain or procure such
directors and officers insurance coverage; provided, further, that if Parent is
unable to maintain or obtain the insurance called for by this Section 6.11(c),
Parent shall use its reasonable best efforts to obtain as much comparable
insurance as is available for the Insurance Amount; provided, further, that
officers and directors of the Company or any Company Subsidiary may be required
to make application and provide customary representations and warranties to
Parent's insurance carrier for the purpose of obtaining such insurance.
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(d) If Parent or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity, then and in each case, proper provision shall be made so
that successors and assigns of Parent shall assume the obligations set forth in
this Section 6.11.
(e) The provisions of this Section 6.11 are intended to be for
the benefit of, and enforceable in accordance with their terms by, the
Indemnified Parties.
6.12 Stock Exchange Approvals. Parent shall promptly prepare and
submit to the NYSE a listing application and to the Swiss Exchange a prospectus,
in each case with respect to the Parent Shares issuable in the Merger and
pursuant to Company Options and the Company Stock-Based Awards to be assumed in
the Merger, and shall use its reasonable best efforts to obtain, prior to the
Effective Time, approval for the listings of such Parent Shares, in the case of
the NYSE, subject to official notice of issuance.
6.13 Dividends. The Company shall coordinate with Parent the
declaration, setting of record dates and payment dates of dividends on shares of
Company Common Stock so that holders of shares of Company Common Stock do not
receive dividends on both shares of Company Common Stock and Parent Shares
received in the Merger in respect of any calendar quarter or fail to receive a
dividend on either shares of Company Common Stock or Parent Shares received in
the Merger in respect of any calendar quarter.
6.14 Section 15 of the Investment Company Act. The Company will
use its reasonable best efforts to obtain as promptly as practicable, (a) if
required by the terms of the advisory agreement with any Registered Fund, the
approval of the stockholders of each such Registered Fund, pursuant to the
provisions of Section 15 of the Investment Company Act applicable thereto, of a
new investment company advisory agreement for such Registered Fund with the
applicable Subsidiary of the Company no less favorable to the Company or its
Subsidiaries to that in effect immediately prior to the Closing, and (b) a
consent to assignment from each other Client to whom it or any of its
Subsidiaries is providing investment advisory services; provided that in no
event shall the Company be deemed to have failed to satisfy the condition set
forth in Section 7.03(b) solely on the basis that any such approvals or consents
have not been obtained as of the Closing Date.
6.15 Affiliates. Prior to the Effective Time, the Company shall
deliver to Parent a list of names and addresses of those Persons who are, in the
opinion of the Company, as of the time of the Company Stockholders Meeting,
"affiliates" of the Company within the meaning of Rule 145 under the Securities
Act. There shall be added to such list the names and addresses of any other
Person subsequently identified by either the Company or Parent as a Person who
may be deemed to be such an affiliate of the Company; provided, however, that no
such Person identified by Parent shall be added to the list of affiliates of the
Company if Parent shall receive
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from the Company, on or before the date of the Company Stockholders Meeting, an
opinion of counsel reasonably satisfactory to Parent to the effect that such
person is not such an affiliate. The Company shall exercise its reasonable best
efforts to deliver or cause to be delivered to Parent, prior to the Closing
Date, from each affiliate of the Company identified in the foregoing list (as
the same may be supplemented as aforesaid) (a "Company Affiliate") who makes or
proposes to make an Election to receive Parent Shares, a letter dated as of the
Closing Date substantially in the form attached as Exhibit D (an "Affiliate's
Letter"). Parent shall not be required to maintain the effectiveness of the Form
F-4 or any other registration statement under the Securities Act for the
purposes of resale of Parent Shares by such Company Affiliates received in the
Merger and the certificates representing Parent Shares received by such Company
Affiliates shall bear a customary legend regarding applicable Securities Act
restrictions and the provisions of this Section 6.15.
6.16 Letters of Accountants.
(a) The Company shall use its reasonable best efforts to cause to
be delivered to Parent two "comfort" letters of Ernst & Young, LLP, the
Company's independent public accountants, one dated a date within two Business
Days before the effective date of the Form F-4 and one dated a date within two
Business Days before the Closing Date, respectively, and addressed to Parent and
its directors, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for "comfort" letters delivered by independent
public accountants in connection with registration statements similar to the
Form F-4.
(b) Parent shall use its best reasonable efforts to cause to be
delivered to the Company two "comfort" letters of ATAG Ernst & Young Ltd.,
Parent's independent public accountants, one dated a date within two Business
Days before the effective date of the Form F-4 and one dated a date within two
Business Days before the Closing Date, respectively, and addressed to the
Company and its directors, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Form F-4.
6.17 GE Stockholders Agreement. The parties hereto agree that as
of the Effective Time the GE Stockholders Agreement shall forthwith become void
and have no effect.
6.18 ERISA Clients. As soon as reasonably practicable after the
date hereof, but in no event later than 60 days thereafter, the Company shall
deliver to Parent a schedule identifying each Client that is (i) an employee
benefit plan, as defined in Section 3(3) of ERISA, that is subject to Title I of
ERISA; (ii) a person acting on behalf of such a plan; or (iii) an entity whose
assets include the assets of such a plan, within the meaning of ERISA and
applicable regulations (hereinafter referred to as an "ERISA Client"); and
listing each contract or agreement, if any, and all amendments thereto, in
effect on the date hereof, entered into by the Company or any of its
Subsidiaries with respect to or on behalf of any ERISA Client, pursuant to which
any of the entities identified in Exhibit E (including any entity that, to the
knowledge of the Company, is an affiliate of any of the entities identified in
Exhibit E) has agreed to (x) execute securities transactions; (y) provide any
other goods or services; or (z) purchase, sell, exchange or
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swap securities or any other economic interest therein or derivative thereof,
including rights to receive or obligations to pay interest or principal under
any debt obligation, or rights to receive or obligations to pay interest or
principal denominated in a particular currency.
6.19 GE Amendment and Yasuda Amendment. The Company agrees not to
amend, modify or waive any provision of the GE Amendment or the Yasuda Amendment
and to comply in all respects with the terms thereof.
6.20 Tax Matters. Parent shall timely satisfy, or cause to be
timely satisfied, all applicable Tax reporting and filing requirements contained
in the Code with respect to the transactions contemplated hereby including,
without limitation, the reporting requirements of United States Treasury
Regulation Section 1.367(a)-3(c)(6) with respect to the Company.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each of Parent, the Merger Subsidiary and the
Company to consummate the Merger is subject to the fulfillment or written waiver
by Parent and the Company prior to the Closing of each of the following
conditions:
(a) Stockholder Approvals. (i) This Agreement shall have been
duly adopted by the stockholders of the Company by the Requisite Company Vote.
(ii) The shareholders of Parent shall have approved the authorization of the
Parent Shares to be issued in the Merger and pursuant to Company Options and the
Company Stock-Based Awards to be assumed in the Merger by the Parent Requisite
Vote.
(b) Governmental and Regulatory Consents. All approvals, consents
and authorizations of, filings and registrations with, and applications and
notifications to all Governmental Authorities required for the consummation of
the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by law shall have expired other than
those the failure of which to have been obtained or made or to have expired
would not reasonably be expected to have a detrimental impact on relations with
Governmental Authorities; provided, however, that none of the preceding shall be
deemed obtained or made if it shall be subject to any condition or restriction
the effect of which, together with any other such conditions or restrictions,
would be reasonably likely to have a Material Adverse Effect on the Surviving
Corporation or Parent after the Effective Time.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation,
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judgment, decree, injunction or other order (whether temporary, preliminary or
permanent) (collectively, "Restraints") which is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger or the other
transactions contemplated by this Agreement.
(d) Effectiveness of Form F-4. The Form F-4 shall have become
effective under the Securities Act prior to the mailing of the Company Proxy
Statement to its stockholders; no stop order suspending the effectiveness of the
Form F-4 shall then be in effect; and no proceedings for that purpose shall have
been initiated by the SEC and not concluded or withdrawn.
(e) Exchange Listings. The Swiss Exchange shall have granted
permission for the listing of the Parent Shares to be issued in the Merger and
pursuant to the Company Options and the Company Stock-Based Awards to be assumed
in the Merger, and such permission shall not have been withdrawn prior to the
Effective Time, and the NYSE shall have authorized the Parent Shares to be
issued in the Merger and pursuant to the Company Options and the Company
Stock-Based Awards to be assumed in the Merger for listing on the NYSE, subject
to official notice of issuance.
7.02 Conditions to Obligation of the Company. The obligation of
the Company to consummate the Merger is also subject to the fulfillment or
written waiver by the Company prior to the Closing of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except that representations and warranties that by their
terms speak as of the date of this Agreement or some other date shall be true
and correct only as of such date); and the Company shall have received a
certificate, dated the Closing Date, signed on behalf of Parent by a senior
executive officer to such effect.
(b) Performance of Obligations of Parent. Parent and the Merger
Subsidiary shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate, dated the Closing Date,
signed on behalf of Parent by a senior executive officer to such effect.
(c) Tax Opinion. The Company shall have received the opinion of
Cravath, Swaine & Moore, counsel to the Company, dated the Closing Date, to the
effect that, on the basis of the facts, representations and assumptions set
forth in such opinion, the transactions contemplated by this Agreement will
qualify for the Tax Treatment. In connection with such opinion, Cravath, Swaine
& Moore may request and rely upon representations contained in certificates of
officers of the Company and Parent substantially in the form set forth in
Exhibits F and G.
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7.03 Conditions to Obligation of Parent. The obligation of each
of Parent and the Merger Subsidiary to consummate the Merger is also subject to
the fulfillment or written waiver by Parent prior to the Closing of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except that representations and warranties that by
their terms speak as of the date of this Agreement or some other date shall be
true and correct only as of such date); and Parent shall have received a
certificate, dated the Closing Date, signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to such
effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent shall
have received a certificate, dated the Closing Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) Tax Opinion. Parent shall have received the opinion of
Sullivan & Cromwell, counsel to Parent, dated the Closing Date, to the effect
that, on the basis of the facts, representations and assumptions set forth in
such opinion, (i) the Merger will qualify as a "reorganization" within the
meaning of Section 368(a) of the Code and the rules and regulations thereunder
and (ii) Parent, the Merger Subsidiary and the Company will each be a "party" to
such reorganization within the meaning of Section 368(b) of the Code and the
rules and regulations thereunder. In connection with such opinion, Sullivan &
Cromwell may request and rely upon representations contained in certificates of
officers of the Company and Parent substantially in the form set forth in
Exhibits F and G.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Merger may be abandoned at any time prior to the Effective Time:
(a) Mutual Consent. By the mutual consent of Parent, the Merger
Subsidiary and the Company.
(b) Breach. By Parent and the Merger Subsidiary, on the one hand,
or the Company, on the other hand, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein, which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach; or (ii) a breach by
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the other party of any of the covenants or agreements contained herein, which
breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach and, in each case (i) and
(ii), which breach, individually or in the aggregate with other such breaches,
would cause the conditions set forth in Section 7.03(a) or (b), in the case of a
breach by the Company, and Section 7.02(a) or (b), in the case of a breach by
Parent or the Merger Subsidiary, not to be satisfied or is reasonably likely to
prevent, materially delay or materially impair the ability of the Company, the
Merger Subsidiary or Parent to consummate the Merger and the other transactions
contemplated by this Agreement.
(c) Delay. By Parent or the Company in the event that the
Effective Time has failed to occur on or before December 31, 2000, except to the
extent that such failure arises out of or results from the knowing action or
inaction of the party seeking to terminate pursuant to this Section 8.01(c) and
provided, further that either party may elect to extend the term of the
Agreement until not later than March 31, 2001 if any applicable banking or
insurance regulatory approvals required to be obtained to satisfy the condition
set forth in Section 7.01(b) shall not have been obtained by December 31, 2000.
(d) No Regulatory Approval. By Parent or the Company, if the
approval of any Governmental Authority required for consummation of the Merger
and the other transactions contemplated by this Agreement shall have been denied
by final nonappealable action of such Governmental Authority, or such
Governmental Authority shall have requested the permanent withdrawal of any
application therefor, or any such approval shall be made subject to any
condition or restriction described in the proviso to Section 7.01(b).
(e) No Stockholder Approval. By Parent or the Company, if (i) the
Requisite Company Vote is not obtained upon a vote at a duly held meeting to
obtain the Requisite Company Vote, or (ii) the Parent Requisite Vote is not
obtained upon a vote at a duly held meeting to obtain the Parent Requisite Vote.
(f) Failure to Recommend, Etc. By Parent, if at any time prior to
the Company Stockholders Meeting, the Company's Board of Directors shall have
failed to make its recommendation referred to in Section 6.04, withdrawn such
recommendation or modified or changed such recommendation in a manner adverse to
the interests of Parent.
(g) Acquisition Proposal. By Parent, if the Company or its Board
of Directors shall take any of the actions described in clause (iii) of the
proviso to Section 6.07(a).
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (a) as set forth in Sections 8.03
and 9.01 and (b) that termination will not relieve a breaching party from
liability for any knowing breach of this Agreement.
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8.03 Termination Fee. (a) The Company agrees to pay to Parent a
cash fee of $370,000,000 :
(i) if this Agreement is terminated by either Parent or
the Company pursuant to Section 8.01(c) or 8.01(e)(i) and, prior to the
time of such termination, in the case of Section 8.01(c), or prior to
the time of the vote at a duly held meeting to obtain the Requisite
Company Vote, in the case of Section 8.01(e)(i), an Acquisition Proposal
shall have been made to the Company or its stockholders or shall have
been made publicly known, and concurrently with such termination or
within fifteen months after such termination, either
(x) the Company shall have entered into an agreement
to engage in an Acquisition Transaction or an
Acquisition Transaction shall have occurred, or
(y) the Board of Directors of the Company shall have
authorized, recommended or approved an Acquisition
Transaction or shall have publicly announced an
intention to authorize, recommend or approve an
Acquisition Transaction; or
(ii) if this Agreement is terminated by Parent pursuant
to Section 8.01(g) (any of the events set forth in clause (i) or (ii)
above of this Section 8.03(a), a "Fee Trigger Event").
(b) If this Agreement is terminated by Parent pursuant to Section
8.01(f), then (i) the Company shall pay to Parent $125,000,000 and (ii) if
concurrently with such termination or within fifteen months after such
termination any of the events referred to in clause (x) or (y) of Section
8.03(a)(i) occurs, then the Company shall, in addition to the payment under
clause (i) above, pay to Parent $245,000,000.
(c) Any payment required to be made under paragraphs (a) or (b)
above shall be payable, without setoff, by wire transfer in immediately
available funds, to an account specified by Parent not later than (i) in the
case of a payment as a result of any event referred to in Section 8.03(a)(i)(x)
or (y) or 8.03(b)(ii), upon the first to occur of such events or (ii) in the
case of a termination for any event referred to in Section 8.03(a)(ii) or
8.03(b)(i), within three Business Days following such termination.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the amounts payable under this Section 8.03 exceed $370,000,000 in the
aggregate.
(d) The Company acknowledges that the agreements contained in
this Section 8.03 are an integral part of the transactions contemplated by this
Agreement and that,
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without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay any amount due pursuant to
this Section 8.03, and, in order to obtain such payment, Parent commences a suit
which results in a judgment against the Company for the payment set forth in
this Section 8.03, the Company shall pay to Parent its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on any amount due pursuant to this Section 8.03 from the date such amount became
payable until the date of such payment at the prime rate of Citibank N.A. in
effect on the date such payment was required to be made plus two (2) percent.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time or
termination of this Agreement; provided, however, that (a) the agreements of the
parties contained in Article III, Section 6.06(c) and in this Article IX shall
survive the Effective Time and (b) the agreements of the parties contained in
Sections 8.02 and 8.03 and in this Article IX shall survive the termination of
this Agreement.
9.02 Waiver; Amendment. Prior to the Effective Time, any
provision of this Agreement may be (a) waived by the party benefitted by the
provision in a writing signed by such party, or (b) amended or modified at any
time, by an agreement in writing between the parties hereto and executed in the
same manner as this Agreement, except that, after adoption of this Agreement by
the stockholders of the Company, no amendment may be made which under applicable
law would require further approval of such stockholders without obtaining such
required further approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law and Venue. This Agreement shall be governed
by, and interpreted in accordance with, the laws of the State of Delaware. The
parties hereby irrevocably submit to the jurisdiction of the Federal courts of
the United States of America and the state courts of the State of Delaware, in
each case located in the State of Delaware, solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
thereof or of any such document, that it is not subject thereto or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that this Agreement
or any such document may not be enforced in or by such courts, and the parties
hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Delaware Federal or
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state court. The parties hereby consent to and grant any such court jurisdiction
over the person of such parties and over the subject matter of such dispute.
9.05 Expenses. Whether or not the Merger is consummated, each
party hereto will bear all expenses incurred by it in connection with this
Agreement, and the transactions contemplated hereby, except that each of the
Company and Parent shall each bear one-half of the costs and expenses of filing,
printing and distributing the Form F-4, the Company Proxy Statement, the Parent
Documents and related documents.
9.06 Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given (a) on the
date of delivery, if personally delivered or telecopied (with confirmation), (b)
on the first business day following the date of dispatch, if delivered by a
recognized next-day courier service, or (c) on the third business day following
the date of mailing, if mailed by registered or certified mail (return receipt
requested), in each case to such party at its address or telecopy number set
forth below or such other address or numbers as such party may specify by notice
to the parties hereto.
If to the Company, to:
Paine Webber Group Inc.
1285 Avenue of the Americas
New York, NY 10019
Attention: Regina A. Dolan
Senior Vice President and
Chief Administrative Officer
Facsimile: (212) 713-6048
With a copy to:
Peter S. Wilson, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Facsimile: (212) 474-3700
If to Parent or the Merger Subsidiary, to:
UBS AG
Bahnhofstrasse 45
Zurich, Switzerland
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Attention: Luqman Arnold
Facsimile: 41-1-234-3700
With a copy to:
H. Rodgin Cohen, Esq.
James C. Morphy, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
9.07 Entire Understanding; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement and the documents referred to herein
and therein represent the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and thereby and such
agreements supersede any and all other oral or written agreements heretofore
made. Except for Section 6.11, insofar as such Section expressly provides
certain rights to the Indemnified Parties named therein, nothing in this
Agreement, expressed or implied, is intended to confer upon any person, other
than the parties hereto or their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
9.08 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.09 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated, in whole or
in part (except by operation of law), by any of the parties hereto without the
prior written consent of each other party hereto, except that Parent and the
Merger Subsidiary may assign or delegate in their sole discretion any or all of
their rights, interests or obligations under this Agreement to any, direct or
indirect, wholly owned subsidiary of Parent, but no such assignment shall
relieve Parent of any of its obligations hereunder, and proviso (ii) and (iii)
of Section 2.04 shall apply to such assignment. 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 assigns.
9.10 Enforcement. The parties agree that irreparable damage would
occur in
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the event that any of the provisions of this Agreement were not performed in
accordance with their terms or were otherwise breached. It is accordingly agreed
that the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which they are entitled at law or in equity.
9.11 Interpretation. When a reference is made in this Agreement
to a Recital, Section, Exhibit or Schedule, such reference shall be to a Recital
or Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed followed by the words "without limitation".
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in counterparts by their duly authorized officers, all as of the
day and year first above written.
PAINE WEBBER GROUP INC.
By: /s/ Donald B. Marron
--------------------------------
Name: Donald B. Marron
Title: Chairman and
Chief Executive Officer
UBS AG
By: /s/ Marcel Ospel
--------------------------------
Name: Marcel Ospel
Title: Chairman and
Chief Executive Officer
By: /s/ Luqman Arnold
--------------------------------
Name: Luqman Arnold
Title: Chief Financial Officer
NEPTUNE MERGER SUBSIDIARY, INC.
By: /s/ John Costas
--------------------------------
Name: John Costas
Title: President
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