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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
WATERHOUSE INVESTOR SERVICES, INC.
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(NAME OF ISSUER)
Common Stock, par value $.01 per Share
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(TITLE OF CLASS OF SECURITIES)
941547 10 1
---------------------
(CUSIP NUMBER)
Lawrence M. Waterhouse, Jr., Lawrence M. Waterhouse, III
Patrick R. Waterhouse, Kevin C. Waterhouse
Christine A. Waterhouse, Jennifer A. Waterhouse
c/o Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
Telephone Number (212) 806-3500
with a copy to:
Roger H. Kimmel, Esq.
Latham & Watkins
885 Third Avenue
New York, NY 10022
Telephone Number (212) 906-1200
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 9, 1996
---------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 941547 10 1
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lawrence M. Waterhouse, Jr.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b [ ]
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SEC USE ONLY
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
3,043,732 (See Items 4 and 5)
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALY
OWNED BY 145,894 (See Items 3 and 5)
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,412,630 (See Items 4 and 5)
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
145,894 (See Items 3 and 5)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,189,626 (See Items 3, 4 and 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.1%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP NO. 941547 10 1
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lawrence M. Waterhouse, III
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
6,705 (See Items 4 and 5)
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
EACH ------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
227,017 (See Items 4 and 5)
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
227,017 (See Items 4 and 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP NO. 941547 10 1
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Patrick R. Waterhouse
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
6,705 (See Items 4 and 5)
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 226,073 (See Items 4 and 5)
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
226,073 (See Items 4 and 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP NO. 941547 10 1
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kevin C. Waterhouse
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
6,705 (See Items 4 and 5)
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 227,130 (See Items 4 and 5)
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
227,130 (See Items 4 and 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP NO. 941547 10 1
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Christine A. Waterhouse
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
20,927 (See Items 4 and 5)
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
EACH ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 242,587 (See Items 4 and 5)
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
242,587 (See Items 4 and 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.1%
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14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP NO. 941547 10 1
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jennifer A. Waterhouse
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
4,687 (See Items 4 and 5)
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
REPORTING ------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
226,847 (See Items 4 and 5)
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
226,847 (See Items 4 and 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2%
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14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
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ITEM 1. SECURITY AND ISSUER
This statement relates to the shares of common stock, $0.01 par
value per share (the "Common Stock"), of Waterhouse Investor Services, Inc., a
Delaware corporation (the "Company"). The principal executive offices of the
Company are located at 100 Wall Street, New York, New York 10005.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by Lawrence M. Waterhouse, Jr,
Lawrence M. Waterhouse, III, Patrick R. Waterhouse, Kevin C. Waterhouse,
Christine A. Waterhouse and Jennifer A. Waterhouse (collectively, the "Reporting
Persons").
Each of the Reporting Persons is employed by the Company or one
of its subsidiaries as his or her principal occupation and has a business
address c/o the Company, at 100 Wall Street, New York, New York 10005. Lawrence
M. Waterhouse, Jr. is the Chairman and Chief Executive Officer of the Company, a
discount brokerage firm. Jennifer A. Waterhouse is First Vice President, and
Kevin C. Waterhouse is Vice President, of Waterhouse National Bank, a federally
chartered banking institution located at 1 North Lexington Avenue, White Plains,
New York, New York 10601. Lawrence M. Waterhouse, III and Patrick R. Waterhouse
are Vice Presidents of Waterhouse Securities, Inc., a securities brokerage firm
located at 100 Wall Street, New York, New York 10005. Christine A. Waterhouse is
Senior Vice President of Waterhouse Asset Management, Inc., an investment
advisory subsidiary of Waterhouse National Bank, located at 50 Main Street,
White Plains, New York 10601. Each Reporting Person is a citizen of the United
States of America.
During the last five years, none of the Reporting Persons (a) has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (b) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Lawrence M. Waterhouse, Jr. is a trustee of the Company's
Employee Stock Ownership Plan and Trust ("ESOP") and a member of the Company
committee administering the ESOP, and has shared power to direct the vote of the
unallocated shares of Common Stock held by the ESOP and to direct the
disposition of such shares. At April 4, 1996, the ESOP held (i) $2,155,000
principal amount of 6% Convertible Subordinated Notes Due 2003 of the Company
("Convertible Notes"), convertible into 92,094 shares of Common Stock, and (ii)
53,800 shares of Common Stock of the Company.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons have entered into a Voting Agreement in
connection with the execution and delivery of the Agreement and Plan of Merger
dated April 9, 1996 (the "Merger
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Agreement") among the Company, The Toronto-Dominion Bank, a Canadian chartered
bank ("TD Bank"), and TD/Oak, Inc., a newly formed Delaware corporation wholly
owned by TD Bank ("Merger Sub"), pursuant to which the Company will be merged
with and into Merger Sub, with Merger Sub being the surviving corporation (the
"Merger"), and each share of Common Stock of the Company will be exchanged, at
the election of the holder, for either shares of common stock of TD Bank with a
market value equivalent to U.S.$38 (subject to a maximum of 2.45952 shares and a
minimum of 1.81790 shares of TD Bank common stock being exchanged for each share
of Common Stock of the Company) or U.S.$38 net to the seller in cash; provided
that no more than 65% of the outstanding shares of the Common Stock of the
Company will be converted into shares of TD Bank common stock and no more than
35% will be converted into cash, with proration in the event that the elections
exceed either such percentage. The approval of the holders of a majority of the
Common Stock is required for the consummation of the Merger. A copy of the
Merger Agreement is attached as Exhibit A to this statement and is incorporated
herein by this reference. The description of the Merger Agreement herein is not
complete and is qualified in its entirety by reference to the Merger Agreement.
Concurrently with, and as a condition to, the execution and
delivery of the Merger Agreement by TD Bank and Merger Sub, the Reporting
Persons have entered into a Voting Agreement dated April 9, 1996 with TD Bank.
Pursuant to the Voting Agreement, the Reporting Persons have severally agreed to
vote their Shares (as defined below) (i) in favor of the Merger and the approval
of the terms of the Merger Agreement, and (ii) against (a) any other Business
Combination (as defined in the Merger Agreement) or (b) any other action
intended to impede, delay, postpone or prevent the approval or adoption of the
Merger Agreement by the stockholders of the Company or the consummation of the
transactions contemplated thereby. Each of the Reporting Persons has agreed, at
TD Bank's request, to furnish TD Bank a proxy in form and substance reasonably
satisfactory to TD Bank to effectuate the foregoing.
As used in the Voting Agreement, the term "Shares" includes (A)
(i) in the case of Lawrence M. Waterhouse, Jr., 1,152,499 shares of Common Stock
owned by him beneficially and of record and 85,131 shares held in the ESOP and
allocated to Mr. Waterhouse, Jr., (ii) in the case of Lawrence M. Waterhouse,
III, 220,312 shares of Common Stock held by him beneficially and of record and
4,455 shares held in the ESOP and allocated to Mr. Waterhouse, III, (iii) in the
case of Patrick R. Waterhouse, 219, 368 shares owned by him beneficially and of
record and 4,455 shares held in the ESOP and allocated to Patrick Waterhouse,
(iv) in the case of Kevin C. Waterhouse, 220,425 shares held by him beneficially
and of record and 4,455 shares held in the ESOP and allocated to Kevin
Waterhouse, (v) in the case of Christine A. Waterhouse, 221,660 shares held by
her beneficially and of record and 16,552 shares held in the ESOP and allocated
to Christine Waterhouse, and (vi) in the case of Jennifer A. Waterhouse, 222,160
shares held by her beneficially and of record and 562 shares held in the ESOP
and allocated to Jennifer Waterhouse; and (B) with respect to each of Mr.
Waterhouse and the Waterhouse Children, any additional shares of Common Stock
that may be acquired by such person.
The Reporting Persons also have agreed not to sell, pledge or
otherwise dispose of the Shares subject to the Voting Agreement unless the
transferee agrees to be bound by all the terms of the Voting Agreement, not to
grant any proxy or enter into any other voting agreement with respect to such
Shares and not to take any other action that would prevent such persons from
performing their obligations under the Voting Agreement. The Reporting Persons
have also agreed, in their respective capacities as stockholders, not to take
actions prohibited by, or fail to take actions required by, Section 4.8 of the
Merger Agreement limiting the solicitation of other proposals for a Business
Combination.
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The Voting Agreement terminates on the first to occur of the
effective time of the Merger and the date on which the Merger Agreement is
terminated in accordance with its terms.
A copy of the Voting Agreement is attached as Exhibit B to this
statement and is incorporated herein by this reference. The description of the
Voting Agreement herein is not complete and is qualified in its entirety by
reference to the Voting Agreement.
The Reporting Persons believe that a Statement on Schedule 13D
will be filed by TD Bank separately, setting forth the information required to
be disclosed by TD Bank in connection with the transactions contemplated by the
Merger Agreement and the Voting Agreement.
Except as disclosed in this statement, the Reporting Persons
currently have no plans or intentions that would result in any of the
transactions described in subparagraphs (a) through (j) of Item 4 of Schedule
13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
1. (a) Lawrence M. Waterhouse, Jr. owns 1,412,630 shares of
Common Stock, representing 12.13% of the Common Stock outstanding at April 4,
1996 (the "Outstanding Common Stock"), including 1,152,499 shares of Common
Stock held directly, 85,131 shares of Common Stock held by the ESOP and
allocated to him and 175,000 shares of Common Stock receivable by him upon
exercise of options currently exercisable or exercisable within sixty days. In
addition, Lawrence M. Waterhouse, Jr. may be deemed to be the beneficial owner
of (i) 527,177 shares of Common Stock (4.6% of the Outstanding Common Stock)
owned by Marjorie J. McGahran, (ii) 1,103,925 shares of Common Stock (9.6% of
the Outstanding Common Stock) held by the other Reporting Persons (the
"Waterhouse Children"), and (iii) 53,800 unallocated shares of Common Stock held
by the ESOP and 92,094 unallocated shares of Common Stock issuable upon
conversion of $2,155,000 principal amount of Convertible Notes held by the ESOP
(aggregating 1.2% of the Outstanding Common Stock). Lawrence M. Waterhouse, Jr.
votes the shares of Common Stock held by Marjorie J. McGahran and the Waterhouse
Children referred to in clauses (i) and (ii) as attorney-in-fact for such
persons (the "Power of Attorney"). Mr. Waterhouse, Jr. expressly disclaims
beneficial ownership of all of the shares of Common Stock identified in clauses
(i), (ii) and (iii), and the filing of this statement shall not be construed as
an admission that Mr. Waterhouse, Jr. is, for the purposes of section 13(d) or
13(g) of the Act, the beneficial owner of any such securities.
(b) Number of shares of Common Stock as to which Lawrence M.
Waterhouse, Jr. has:
(i) sole power to vote or direct the vote: (x) 1,152,499
shares owned by Mr. Waterhouse directly, 85,131 shares allocated to him under
the ESOP, and 175,000 shares receivable by him upon exercise of options
currently exercisable or exercisable within sixty days, subject to the Voting
Agreement, (y) 1,103,925 shares owned directly by the Waterhouse Children
pursuant to the Power of Attorney and subject to the Voting Agreement and (z)
527,177 shares owned by Marjorie J. McGahran pursuant to the Power of Attorney.
(ii) shared power to vote or direct the vote: 53,800
unallocated shares held by the ESOP and 92,094 unallocated shares issuable upon
conversion of $2,155,000 principal amount of the Convertible Notes held by the
ESOP.
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(iii) sole power to dispose or to direct the disposition of:
1,152,499 shares owned by Mr. Waterhouse, Jr. directly, 85,131 shares allocated
to him under the ESOP, and 175,000 shares receivable by him upon exercise of
options currently exercisable or exercisable within sixty days, subject to the
Voting Agreement.
(iv) shared power to dispose or direct the disposition of:
53,800 unallocated shares held by the ESOP and 92,094 unallocated shares
issuable upon conversion of $2,155,000 principal amount of the Convertible Notes
held by the ESOP.
Kenneth I. Coco is the other trustee of the ESOP and the other
member of the Company committee administering the ESOP. Mr. Coco shares power to
vote and to direct the disposition of the ESOP shares of Common Stock held in
trust. Item 2 information with respect to Mr. Coco is as follows:
Kenneth I. Coco is the Senior Vice President of the Company, with
a business address c/o Waterhouse Investor Services, Inc., 100 Wall Street, New
York, New York 10005. Mr. Coco is a citizen of the United States of America.
During the last five years, Mr. Coco has not (i) been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors),
or (ii) been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(c) Since Mr. Waterhouse's most recent filing on Schedule 13D,
the ESOP has acquired 22,000 shares of Common Stock of the Company. Except as
described in Item 4 hereof, Mr. Waterhouse, Jr. has not effected any
transactions in shares of Common Stock in the past sixty days.
(d) Mr. Coco, the other trustee of the ESOP, shares the power
to direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock held by the ESOP.
2. (a) Lawrence M. Waterhouse, III is the beneficial owner of
227,017 shares of Common Stock (representing 2% of the Outstanding Common
Stock), including 220,312 shares of Common Stock held by him directly, 4,455
shares of Common Stock held by the ESOP and allocated to him, and 2,250 shares
of Common Stock receivable by him upon exercise of options currently exercisable
or exercisable within sixty days.
(b) Lawrence M. Waterhouse, III has granted the power to
vote or to direct the vote of the shares owned by him (other than shares held in
the ESOP) to Lawrence M. Waterhouse, Jr., pursuant to the Power of Attorney and
subject to the Voting Agreement. He has sole power to vote or to direct the vote
of the shares held in the ESOP and allocated to him, subject to the Voting
Agreement. He has the sole power to dispose of, or to direct the disposition of,
the Common Stock owned by him, subject to the Voting Agreement.
(c) Except as described in Item 4 hereof, Lawrence M.
Waterhouse, III has not effected any transactions in shares of Common Stock
within the past sixty days.
3. (a) Patrick R. Waterhouse is the beneficial owner of
226,073 shares of Common Stock (representing 2% of the Outstanding Common
Stock), including 219,368 shares of Common Stock
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held by him directly, 4,455 shares held in the ESOP and allocated to him, and
2,250 shares of Common Stock receivable by him upon exercise of options
currently exercisable or exercisable within sixty days.
(b) Patrick R. Waterhouse has granted the power to vote or
to direct the vote of the shares owned by him (other than shares held by the
ESOP) to Lawrence M. Waterhouse, Jr., pursuant to the Power of Attorney and
subject to the Voting Agreement. He has sole power to vote or to direct the vote
of the shares held in the ESOP and allocated to him, subject to the Voting
Agreement. He has the sole power to dispose of, or to direct the disposition of,
the Common Stock owned by him, subject to the Voting Agreement.
(c) Except as described in Item 4 hereof, Patrick R.
Waterhouse has not effected any transactions in shares of Common Stock within
the past sixty days.
4. (a) Kevin C. Waterhouse is the beneficial owner of 227,130
shares of Common Stock (representing 2% of the Outstanding Common Stock),
including 220,425 shares of Common Stock held by him directly, 4,455 shares held
in the ESOP and allocated to him, and 2,250 shares of Common Stock receivable by
him upon exercise of options currently exercisable or exercisable within sixty
days.
(b) Kevin C. Waterhouse has granted the power to vote or to
direct the vote of the shares owned by him (other than the shares held by the
ESOP) to Lawrence M. Waterhouse, Jr., pursuant to the Power of Attorney and
subject to the Voting Agreement. He has sole power to vote or to direct the vote
of the shares held in ESOP and allocated to him, subject to the Voting
Agreement. He has the sole power to dispose of, or to direct the disposition of,
the Common Stock owned by him, subject to the Voting Agreement.
(c) Except as described in Item 4 hereof, Kevin C.
Waterhouse has not effected any transactions in shares of Common Stock within
the past sixty days.
5. (a) Jennifer A. Waterhouse is the beneficial owner of
226,847 shares of Common Stock (representing 2% of the Outstanding Common
Stock), including 222,160 shares of Common Stock held by her directly, 562
shares held by the ESOP and allocated to her, and 4,125 shares of Common Stock
receivable by her upon exercise of options currently exercisable or exercisable
within sixty days.
(b) Jennifer A. Waterhouse has granted the power to vote or
to direct the vote of the shares owned by her (other than shares held by the
ESOP) to Lawrence M. Waterhouse, Jr., pursuant to the Power of Attorney and
subject to the Voting Agreement. She has sole power to vote or to direct the
vote of the shares held in the ESOP and allocated to her, subject to the Voting
Agreement. She has the sole power to dispose of, or to direct the disposition
of, the Common Stock owned by her, subject to the Voting Agreement.
(c) Except as described in Item 4 hereof, Jennifer A.
Waterhouse has not effected any transactions in shares of Common Stock within
the past sixty days.
6. (a) Christine A. Waterhouse is the beneficial owner of
242,587 shares of Common Stock (representing 2.1% of the Outstanding Common
Stock), including 221,660 shares of Common Stock held by her directly, 16,552
shares held in the ESOP and allocated to her, and 4,375 shares of Common Stock
receivable by her upon exercise of options currently exercisable or exercisable
within sixty days.
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(b) Christine A. Waterhouse has granted the power to vote
or to direct the vote of the shares owned by her (other than the shares held by
the ESOP) to Lawrence M. Waterhouse, Jr., pursuant to the Power of Attorney and
subject to the Voting Agreement. She has sole power to vote or to direct the
vote of the shares held in the ESOP and allocated to her, subject to the Voting
Agreement. She has the sole power to dispose of, or to direct the disposition
of, the Common Stock owned by her, subject to the Voting Agreement.
(c) Except as described in Item 4 hereof, Christine A.
Waterhouse has not effected any transactions in shares of Common Stock within
the past sixty days.
7. (a) To the best knowledge of the Reporting Persons, TD Bank
owns beneficially and of record 560,000 shares of Common Stock of the Company,
representing approximately 4.9% of the Outstanding Common Stock. TD Bank has
also agreed not to acquire any additional shares of Common Stock for a period of
2 years commencing March 13, 1996, except that TD Bank may hold (excluding
securities held in custody accounts) up to 10% of the Common Stock in connection
with TD's brokerage and fiduciary activities in the ordinary course of business
on behalf of its and its affiliates' customers. Additional information called
for by this Item 5 with respect to TD Bank will be included in a Statement on
Schedule 13D to be filed separately by TD Bank.
(b) The share amounts given in paragraphs 1 through 6 of
this Item 5 with respect to each Reporting Person do not include shares of
Common Stock held by the other Reporting Persons (except as otherwise expressly
stated) and by TD Bank. Each Reporting Person may be deemed to be the beneficial
owner of the shares of Common Stock owned by the other Reporting Persons and by
TD Bank. Each of the Reporting Persons expressly disclaims beneficial ownership
of the Common Stock owned by each of the other Reporting Persons and by TD Bank,
and the filing of this statement shall not be construed as an admission that
such Reporting Person is, for the purposes of section 13(d) or 13(g) of the Act,
the beneficial owner of any securities owned by the other Reporting Persons or
TD Bank.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Lawrence M. Waterhouse, Jr. is one of two members of the Company
committee administering the ESOP pursuant to which he shares power to direct the
vote of the unallocated shares of Common Stock held by the ESOP and is one of
two trustees of the ESOP under which he shares power to direct the disposition
of the unallocated shares of Common Stock of the ESOP.
Except as described in this statement and as provided in the
Merger Agreement and the Voting Agreement, and except for the Power of Attorney,
none of the Reporting Persons (directly or indirectly), has any contracts,
arrangements, understandings or relationships (legal or otherwise) with each
other or with any person with respect to any securities of the Company.
Copies of the Merger Agreement and the Voting Agreement are
attached hereto as Exhibits A and B, respectively, and are incorporated herein
by this reference. The descriptions of such documents set forth herein do not
purport to be complete and are qualified in their entirety by reference to such
documents.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A -- Merger Agreement
Exhibit B -- Voting Agreement
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Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/S/ LAWRENCE M. WATERHOUSE, JR.
-------------------------------------------
Lawrence M. Waterhouse, Jr.
Dated: April 15, 1996
-------------------------------------
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Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/S/ LAWRENCE M. WATERHOUSE, III
-------------------------------------------
Lawrence M. Waterhouse, III
Dated: April 15, 1996
-------------------------------------
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Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/S/ PATRICK R. WATERHOUSE
-------------------------------------------
Patrick R. Waterhouse
Dated: April 15, 1996
-------------------------------------
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Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/S/ KEVIN C. WATERHOUSE
-------------------------------------------
Kevin C. Waterhouse
Dated: April 15, 1996
-------------------------------------
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Page__of__pages
Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/S/ CHRISTINE A. WATERHOUSE
-------------------------------------------
Christine A. Waterhouse
Dated: April 15, 1996
------------------------------------
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<PAGE>
Page__of__pages
Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/S/ JENNIFER A. WATERHOUSE
-------------------------------------------
Jennifer A. Waterhouse
Dated: April 15, 1996
------------------------------------
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<PAGE>
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EXHIBIT INDEX
Exhibit A -- Merger Agreement
Exhibit B -- Voting Agreement
<PAGE>
<PAGE>
------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
THE TORONTO-DOMINION BANK,
TD/OAK, INC.
AND
WATERHOUSE INVESTOR SERVICES, INC.
DATED APRIL 9, 1996
------------------------------------
17
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TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER............................... 2
SECTION 1.1 The Merger.............................................. 2
SECTION 1.2 Closing................................................. 2
SECTION 1.3 Effective Time of the Merger............................ 2
SECTION 1.4 Effects of the Merger................................... 2
SECTION 1.5 Certificate of Incorporation; By-Laws................... 2
SECTION 1.6 Directors and Officers.................................. 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES........... 3
SECTION 2.1 Effect on Capital Stock................................. 3
(a) Common Stock of Merger Sub................................ 3
(b) Cancellation of Treasury Stock and Parent-Owned Company
Common Stock............................................. 3
(c) Conversion of Company Common Stock........................ 3
(d) Shares of Dissenting Holders.............................. 4
(e) Cancellation and Retirement of Company Common Stock....... 4
SECTION 2.2 Company Common Stock Elections.......................... 4
SECTION 2.3 Proration............................................... 6
SECTION 2.4 Exchange Ratio Definitions.............................. 7
SECTION 2.5 Exchange of Certificates................................ 7
(a) Exchange Agent............................................ 7
(b) Exchange Procedures....................................... 8
(c) Distributions with Respect to Unexchanged Shares.......... 8
(d) No Further Ownership Rights in Company Common Stock....... 8
(e) No Fractional Shares...................................... 9
(f) Termination of Exchange Fund.............................. 9
(g) No Liability.............................................. 9
(h) Investment of Exchange Fund............................... 10
SECTION 2.6 Treatment of Employee Options........................... 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES .................... 11
SECTION 3.1 Representations and Warranties of the Company........... 11
(a) Organization and Qualification; Subsidiaries.............. 11
(b) Certificates of Incorporation and By-Laws................. 11
(c) Capitalization............................................ 11
(d) Authority Relative to Agreement........................... 12
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(e) No Conflict; Required Filings and Consents................ 13
(f) Compliance................................................ 14
(g) Agreements with Regulators................................ 16
(h) SEC Filings; Financial Statements......................... 16
(i) Information Supplied...................................... 17
(j) Absence of Certain Changes or Events...................... 18
(k) Absence of Litigation..................................... 18
(l) Labor Matters............................................. 18
(m) Employee Benefit Plans.................................... 19
(n) Tax Matters............................................... 20
(o) Intellectual Property..................................... 21
(p) Title to Properties; Liens and Encumbrances............... 22
(q) Certain Contracts and Agreements.......................... 22
(r) Transactions with Affiliates.............................. 23
(s) Opinion of Financial Advisor.............................. 23
(t) Brokers................................................... 23
(u) Scope of Representations.................................. 23
SECTION 3.2 Representations and Warranties of Parent and Merger Sub....... 23
(a) Corporate Organization.................................... 23
(b) Charter and By-Laws....................................... 24
(c) Capitalization............................................ 24
(d) Authority Relative to Agreement........................... 24
(e) No Conflict; Required Filings and Consents................ 24
(f) Compliance................................................ 25
(g) Agreements with Regulators................................ 26
(h) Securities Documents...................................... 26
(i) Information Supplied...................................... 26
(j) Absence of Certain Changes or Events...................... 27
(k) Absence of Litigation..................................... 27
(l) Brokers................................................... 27
(m) Ownership of Company Common Stock......................... 27
(n) Scope of Representations.................................. 27
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER; OTHER COVENANTS........ 28
SECTION 4.1 Conduct of Business of the Company Pending the Merger... 28
SECTION 4.2 Conduct of Business of Merger Sub....................... 30
SECTION 4.3 Stockholders' Meeting................................... 31
SECTION 4.4 Preparation of Form F-4 and the Proxy
Statement/Prospectus ................................. 31
SECTION 4.5 Access to Information; Confidentiality.................. 31
SECTION 4.6 Affiliates.............................................. 32
SECTION 4.7 Stock Exchange Listing.................................. 32
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SECTION 4.8 No Solicitation......................................... 32
SECTION 4.9 Employee Benefits Matters............................... 33
SECTION 4.10 Directors' and Officers' Indemnification and Insurance. 34
SECTION 4.11 Further Action; Reasonable Best Efforts................ 35
SECTION 4.12 Notification of Certain Matters........................ 35
SECTION 4.13 Public Announcements................................... 35
SECTION 4.14 Tax Free Reorganization Treatment...................... 35
SECTION 4.15 Convertible Notes...................................... 35
SECTION 4.16 Transfer of Subsidiary................................. 36
SECTION 4.17 Rule 144 Information................................... 36
ARTICLE V
CONDITIONS OF MERGER................................ 36
SECTION 5.1 Conditions to Obligation of Each Party to Effect
the Merger ........................................... 36
(a) Stockholder Approval...................................... 36
(b) Listing................................................... 36
(c) Other Approvals........................................... 36
(d) No Injunctions or Restraints; Illegality.................. 36
(e) Form F-4.................................................. 37
SECTION 5.2 Conditions to Obligations of Parent and Merger Sub...... 37
(a) Representations and Warranties............................ 37
(b) Performance of Obligations of the Company................. 37
(c) Tax Opinion............................................... 37
(d) Burdensome Condition...................................... 38
(e) Dissenters' Rights........................................ 38
(f) Affiliate Letters......................................... 38
(g) Employment Agreement...................................... 38
SECTION 5.3 Conditions to Obligations of the Company................ 38
(a) Representations and Warranties............................ 38
(b) Performance of Obligations of Parent and Merger Sub....... 38
(c) Tax Opinion............................................... 38
(d) Supplemental Indenture.................................... 38
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER................... 39
SECTION 6.1 Termination............................................. 39
SECTION 6.2 Effect of Termination................................... 41
SECTION 6.3 Fees and Expenses....................................... 41
SECTION 6.4 Amendment............................................... 43
SECTION 6.5 Waiver.................................................. 43
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ARTICLE VII
GENERAL PROVISIONS........................... 44
SECTION 7.1 Non-Survival of Representations, Warranties
and Agreements ....................................... 44
SECTION 7.2 Notices................................................. 44
SECTION 7.3 Certain Definitions..................................... 45
SECTION 7.4 Severability............................................ 46
SECTION 7.5 Entire Agreement; Assignment............................ 46
SECTION 7.6 Parties in Interest..................................... 46
SECTION 7.7 Governing Law........................................... 46
SECTION 7.8 Consent to Jurisdiction................................. 46
SECTION 7.9 Headings................................................ 47
SECTION 7.10 Counterparts........................................... 47
Exhibit A-1 Stockholders of the Company to Execute and Deliver Stockholders
Agreements
Exhibit A-2 Form of Stockholders Agreement
Exhibit B-1 Stockholders of the Company to Execute and Deliver Voting Agreement
Exhibit B-2 Form of Voting Agreement
Exhibit C Form of Warrant Agreement
Exhibit D Form of Affiliates Letter
Exhibit E-1 Form of Employment Agreement and Letter Agreement for Lawrence M.
Waterhouse, Jr.
Exhibit E-2 Form of Agreement Relating to Certain Senior Executives
Exhibit F Form of Purchase Agreement Relating to L.M. Waterhouse & Co., Inc.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated April 9, 1996 (this
"Agreement"), among The Toronto-Dominion Bank, a Canadian chartered bank (the
"Parent"), TD/Oak, Inc., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Merger Sub"), and Waterhouse Investor Services, Inc., a
Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Company, Parent and Merger
Sub have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the business combination transaction
provided for herein in which the Company will merge with and into Merger Sub
(the "Merger") with Merger Sub being the surviving corporation in the Merger;
WHEREAS, as a condition of and inducement to their willingness to
enter into this Agreement and to consummate the transactions contemplated
hereby, Parent and Merger Sub have required that each of the stockholders listed
on Exhibit A-1 hereto execute and deliver, simultaneously with the execution of
this Agreement, a Stockholders Agreement (the "Stockholders Agreement") in the
form set forth in Exhibit A-2 hereto and that each of the stockholders of the
Company listed on Exhibit B-1 hereto execute and deliver, simultaneously with
the execution of this Agreement, a Voting Agreement (the "Voting Agreement") in
the form set forth in Exhibit B-2 hereto;
WHEREAS, simultaneously with the execution of this Agreement, the
Company and Parent have entered into a Warrant Agreement, dated as of the date
hereof, in the form of Exhibit C hereto (the "Warrant Agreement") providing for
the purchase by the holder of the Warrant described therein (the "Warrant") of
shares of Company Common Stock (as defined herein) under the circumstances set
forth therein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, mutual covenants and agreements herein contained
and intending to be legally bound hereby, Parent, Merger Sub and the Company
hereby agree as follows:
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<PAGE>
2
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), at the Effective Time (as defined in
Section 1.3 below), the Company shall be merged with and into Merger Sub. Upon
the Effective Time, the separate corporate existence of the Company shall cease,
and Merger Sub shall continue as the surviving corporation of the Merger (the
"Surviving Corporation") under the name "Waterhouse Investor Services, Inc."
SECTION 1.2 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the Merger (the "Closing")
will take place as promptly as practicable (and in any event within two business
days) following satisfaction or waiver of the conditions set forth in Article V,
other than those conditions which by their terms are to be satisfied at the
Closing (the "Closing Date"), at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, unless another date, time or place
is agreed to in writing by the parties hereto.
SECTION 1.3 Effective Time of the Merger. As soon as practicable
after the satisfaction or waiver of the conditions set forth in Article V, the
parties hereto shall cause the Merger to be consummated by filing a certificate
of merger (the "Certificate of Merger") with the Secretary of State of the State
of Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
such later time as is specified in the Certificate of Merger) being the
"Effective Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the effects
set forth in Sections 259, 260 and 261 of the DGCL.
SECTION 1.5 Certificate of Incorporation; By-Laws. (a) At the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, except that Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read in its entirety as follows: "The name of this Corporation is `Waterhouse
Investor Services, Inc.'" .
(b) At the Effective Time the By-Laws of the Surviving Corporation
shall be the By-Laws of Merger Sub, as in effect immediately prior to the
Effective Time, until thereafter amended or repealed in accordance with their
terms and the Certificate of Incorporation of the Surviving Corporation and as
provided by law.
SECTION 1.6 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving
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3
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed, as the case may
be, and qualified.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Common Stock, par value $.01 per share, of the Company (the "Company
Common Stock"), or any shares of capital stock of Merger Sub:
(a) Common Stock of Merger Sub. Each share of Common Stock, par
value $.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall remain issued, outstanding and unchanged as validly
issued, fully paid and nonassessable shares of Common Stock of the Surviving
Corporation, which shall be all of the issued and outstanding capital stock of
the Surviving Corporation as of the Effective Time.
(b) Cancellation of Treasury Stock and Parent-Owned Company Common
Stock. Each share of Company Common Stock that is owned by the Company or by any
subsidiary of the Company (other than shares held in trust, custodial, nominee
or similar accounts for the benefit of third parties, shares held by mutual
funds for which the Company or any of its subsidiaries acts as investment
advisor and shares acquired in respect of debts previously contracted), and each
share of Company Common Stock that is owned by Parent, Merger Sub or any other
subsidiary of Parent (other than shares held in trust, custodial, nominee or
similar accounts for the benefit of third parties, shares held by mutual funds
for which Parent or any of its subsidiaries acts as investment advisor and
shares acquired in respect of debts previously contracted) shall automatically
be cancelled and retired and shall cease to exist, and no other consideration
shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Except as otherwise provided
herein and subject to Section 2.1(d), each issued and outstanding share of
Company Common Stock (other than shares to be cancelled in accordance with
Section 2.1(b)) shall be converted into the following (the "Merger
Consideration"):
(i) for each such share of Company Common Stock with respect
to which an election to receive fully paid and nonassessable Common
Shares, without par value, of Parent ("Parent Common Shares") has
been effectively made and not revoked, properly withdrawn or lost,
pursuant to Sections 2.2(c), (d) and (e) ("Electing Shares"), the
right to receive from Parent that number of Parent Common Shares
equal to the Exchange Ratio (as defined in Section 2.4);
(ii) for each such share of Company Common Stock other than
Electing Shares and shares to be cancelled in accordance with
Section 2.1(b) ("Non-
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4
Electing Shares"), the right to receive cash from Parent in an
amount equal to $38.00, payable to the holder thereof, without
interest thereon (the "Cash Price").
As used in this Agreement, references to "dollars" and "$" are to the lawful
currency of the United States of America, unless otherwise indicated.
(d) Shares of Dissenting Holders. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time held by holders (if any) who have not
voted in favor of the Merger or consented thereto in writing and who have
demanded appraisal rights with respect thereto in accordance with Section 262 of
the DGCL and, as of the Effective Time, shall not have failed to perfect or
shall not have effectively withdrawn or lost their rights to appraisal and
payment under Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration as described in
Section 2.1(c), but holders of such shares shall be entitled to receive payment
of the appraised value of such Dissenting Shares in accordance with the
provisions of such Section 262, except that any Dissenting Shares held by a
holder which shall have failed to perfect or shall have effectively withdrawn or
lost its right to appraisal and payment under Section 262 of the DGCL shall
thereupon be deemed to have been converted into the right to receive the Merger
Consideration as described in Section 2.1(c). The Company shall give Parent (i)
prompt notice of any written demands for appraisal of any shares, attempted
withdrawals of such demands, and any other instruments served pursuant to the
DGCL received by the Company relating to stockholders' rights of appraisal and
(ii) the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal 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 appraisals of capital stock of the Company, offer to settle or
settle any such demands or approve any withdrawal of any such demands.
(e) Cancellation and Retirement of Company Common Stock. As of the
Effective Time, all shares of Company Common Stock (in each case, other than
shares referred to in Section 2.1(b) and Dissenting Shares) issued and
outstanding immediately prior to the Effective Time, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the applicable Merger Consideration and any cash in lieu of
fractional Parent Common Shares to be issued or paid in consideration therefor
upon surrender of such certificate in accordance with Section 2.5.
SECTION 2.2 Company Common Stock Elections. (a) Each person who, on
or prior to the Election Date referred to in (c) below, is a record holder of
shares of Company Common Stock will be entitled, with respect to all or any
portion of his shares, to make an unconditional election (an "Election") on or
prior to such Election Date to receive Parent Common Shares in exchange for such
holder's shares of Company Common Stock, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement/Prospectus (as
defined in Section 3.1(e)(ii)), Parent shall appoint a bank or trust company
located in the United States (which may
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5
not be an affiliate of Parent) to act as exchange agent (the "Exchange Agent")
for the payment of the Merger Consideration.
(c) Parent shall prepare and mail a form of election (the "Form of
Election") with the Proxy Statement/Prospectus to the record holders of Company
Common Stock as of the record date for the Stockholders' Meeting (as defined in
Section 4.3), which Form of Election shall be used by each record holder of
shares of Company Common Stock who wishes to elect to receive Parent Common
Shares for any or all shares of Company Common Stock held by such holder. The
Company will use its best efforts to make the Form of Election and the Proxy
Statement/Prospectus available to all persons who become holders of Company
Common Stock during the period between such record date and the Election Date
referred to below. Any such holder's election to receive Parent Common Shares
shall have been properly made only if the Exchange Agent shall have received at
its designated office, by 5:00 p.m., New York City time, on the business day
(the "Election Date") next preceding the date of the Stockholders Meeting, a
Form of Election properly completed and signed and accompanied by certificates
for the shares of Company Common Stock to which such Form of Election relates,
duly endorsed in blank or otherwise in form acceptable for transfer on the books
of the Company (or by an appropriate guarantee of delivery of such certificates
as set forth in such Form of Election from a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, provided such certificates are in fact
delivered to the Exchange Agent within five New York Stock Exchange trading days
after the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the stockholder
submitting it to the Exchange Agent only by written notice received by the
Exchange Agent prior to 5:00 p.m, New York City time, on the Election Date. In
addition, all Forms of Election shall automatically be revoked if the Exchange
Agent is notified in writing by Parent and the Company that the Merger has been
abandoned pursuant to Section 6.1. If a Form of Election is revoked, the
certificate or certificates (or guarantees of delivery, as appropriate) for the
shares of Company Common Stock to which such Form of Election relates shall be
promptly returned to the stockholder submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent shall be binding as to
whether or not elections to receive Parent Common Shares have been properly made
or revoked pursuant to this Section 2.2 with respect to shares of Company Common
Stock and when elections and revocations were received by it. If the Exchange
Agent determines that any election to receive Parent Common Shares was not
properly made with respect to shares of Company Common Stock, such shares shall
be treated by the Exchange Agent as shares which were Non-Electing Shares at the
Effective Time, and such shares shall be exchanged in the Merger for cash
pursuant to Section 2.1(c)(ii). The Exchange Agent shall also make all
computations as to the allocation and the proration contemplated by Section 2.3,
and any such computation shall be conclusive and binding on the holders of
shares of Company Common Stock. The Exchange Agent may, with the mutual
agreement of Parent and the Company, make such rules as are consistent with this
Section 2.2 for the implementation of the elections provided for herein.
<PAGE>
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6
SECTION 2.3 Proration.
(a) (i) Notwithstanding anything in this Agreement to the contrary,
the number of shares of Company Common Stock to be converted into the
right to receive Parent Common Shares at the Effective Time (the "Parent
Common Shares Election Number") shall be no greater than 65% of the number
of shares of Company Common Stock outstanding immediately prior to the
Effective Time (excluding for this purpose any shares of Company Common
Stock to be cancelled pursuant to Section 2.1(b)).
(ii) If the number of Electing Shares exceeds the Parent
Common Shares Election Number, then such Electing Shares shall be
converted into the right to receive Parent Common Shares or the Cash Price
in accordance with the terms of Section 2.1(c) in the following manner:
(A) A Parent Common Shares proration factor (the "Parent
Common Shares Proration Factor") shall be determined by dividing the
Parent Common Shares Election Number by the total number of Electing
Shares.
(B) The number of Electing Shares covered by each Election to
be converted into Parent Common Shares shall be determined by
multiplying the Parent Common Shares Proration Factor by the total
number of Electing Shares covered by such Election.
(C) All Electing Shares, other than those shares converted
into the right to receive Parent Common Shares in accordance with
Section 2.3(a)(ii)(B), shall be converted into cash as if such
shares of Company Common Stock were Non-Electing Shares in
accordance with the terms of Section 2.1(c)(ii).
(iii) If the number of Electing Shares is less than or equal
to the Parent Common Shares Election Number, then all Electing Shares
shall be converted into the right to receive Parent Common Shares in
accordance with the terms of Section 2.1(c)(i), and, except as provided in
Section 2.3(b), all other shares of Company Common Stock other than
Electing Shares shall be converted into the right to receive cash in
accordance with Section 2.1(c)(ii).
(b) (i) Notwithstanding anything in this Agreement to the contrary,
the number of shares of Company Common Stock to be converted into the
right to receive cash at the Effective Time (the "Cash Number") shall be
no greater than (A) 35% of the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (excluding for this
purpose any shares of Company Common Stock to be cancelled pursuant to
Section 2.1(b)) less (B) the sum of (1) the number of Dissenting Shares
with respect to which, at the Effective Time, demands for or rights of
appraisal have not been withdrawn or lost and (2) the number of shares
equal to the number of record holders of Company Common Stock immediately
prior to the Effective Time.
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7
(ii) If the number of Non-Electing Shares exceeds the Cash
Number, then such Non-Electing Shares shall be converted into the right to
receive the Cash Price or Parent Common Shares in accordance with the
terms of Section 2.1(c) in the following manner:
(A) A cash proration factor (the "Cash Proration Factor")
shall be determined by dividing the Cash Number by the total number
of Non-Electing Shares.
(B) The number of a holder's Non-Electing Shares to be
converted into the right to receive the Cash Price shall be
determined by multiplying the Cash Proration Factor by the total
number of such holder's Non-Electing Shares.
(C) All Non-Electing Shares, other than those shares
converted into the right to receive the Cash Price in accordance
with Section 2.3(b)(ii)(B), shall be converted into Parent Common
Shares as if such shares of Company Common Stock were Electing
Shares in accordance with the terms of Section 2.1(c)(i).
(iii) If the number of Non-Electing Shares is less than or
equal to the Cash Number, then all Non-Electing Shares shall be converted
into the right to receive the Cash Price in accordance with the terms of
Section 2.1(c)(ii), and, except as provided in Section 2.3(a), all other
shares of Company Common Stock other than Non-Electing Shares (and subject
to Section 2.1(d)) shall be converted into the right to receive Parent
Common Shares in accordance with Section 2.1(c)(i).
SECTION 2.4 Exchange Ratio Definitions.
(a) "Exchange Ratio" is the Cash Price divided by the Parent Common
Share Price, rounded to the nearest 1/100,000; provided that the Exchange Ratio
shall not be less than 1.81790 or greater than 2.45952 (unless increased as
provided in Section 6.1(i)).
(b) "Parent Common Share Price" is equal to the daily weighted
average price of Parent Common Shares on The Toronto Stock Exchange (the "TSE")
(rounded to the nearest one thousandth and converted into United States dollars
using the spot exchange rate reported in The Wall Street Journal, Eastern
Edition (or such other publication as may be mutually agreed to by Parent and
the Company) on the next business day) for the fifteen (15) consecutive business
days in which such shares are traded on the TSE ending at the close of business
on the tenth business day prior to the Closing Date.
SECTION 2.5 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, Parent shall
deposit with the Exchange Agent, for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II, the
Merger Consideration.
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8
(b) Exchange Procedures. As soon as practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented shares of Company Common Stock shall, upon surrender to the
Exchange Agent of such certificate or certificates and acceptance thereof by the
Exchange Agent, be entitled to a certificate or certificates representing the
number of full Parent Common Shares and the amount of cash, if any, into which
the aggregate number of shares of Company Common Stock previously represented by
such certificate or certificates surrendered shall have been converted pursuant
to this Agreement. The Exchange Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose in order to effect an orderly exchange thereof in accordance with normal
exchange practices. After the Effective Time, there shall be no further transfer
on the records of the Company or its transfer agent of certificates representing
shares of Company Common Stock and if such certificates are presented to the
Company for transfer, they shall be cancelled against delivery of certificates
for Parent Common Shares and cash as hereinabove provided. If any certificate
for such Parent Common Shares is to be issued in, or if cash is to be remitted
to, a person other than the registered holder of the certificate for Company
Common Stock surrendered for exchange, it shall be a condition of such exchange
that the certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the person
requesting such exchange shall pay to Parent or the Exchange Agent any transfer
or other taxes required by reason of the issuance of certificates for such
Parent Common Shares in a name other than that of, or the payment of cash to a
person other than, the registered holder of the certificate surrendered, or
establish to the satisfaction of Parent or the Exchange Agent that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.5(b), each certificate for shares of Company Common Stock shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration as contemplated by Section
2.1. No interest will be paid or will accrue on any cash payable as Merger
Consideration or in lieu of any fractional Parent Common Shares.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Parent Common Shares with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
certificate for shares of Company Common Stock with respect to the Parent Common
Shares issuable in respect thereof and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.5(e) until the
surrender of such certificate in accordance with this Article II. Subject to the
effect of applicable laws, following surrender of any such certificate, there
shall be paid to the holder of the certificate representing whole Parent Common
Shares issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional Parent Common
Share to which such holder is entitled pursuant to Section 2.5(e) and the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole Parent Common Shares, and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such whole
Parent Common Shares.
(d) No Further Ownership Rights in Company Common Stock. All Parent
Common Shares issued and cash paid upon the surrender for exchange of
certificates representing
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9
shares of Company Common Stock in accordance with the terms of this Article II
(including any cash paid pursuant to Section 2.5(e)) shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to the
shares of Company Common Stock theretofore represented by such certificates,
subject, however, to the Surviving Corporation's obligation, with respect to
shares of Company Common Stock outstanding immediately prior to the Effective
Time, to pay any dividends or make any other distributions with a record date
prior to the Effective Time which may have been declared or made by the Company
on such shares of Company Common Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at the
Effective Time.
(e) No Fractional Shares. (i) Notwithstanding any other provision of
this Agreement, no certificates or scrip representing fractional Parent Common
Shares shall be issued upon the surrender for exchange of certificates
representing shares of Company Common Stock, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a shareholder of
Parent.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a Parent Common
Share (after taking into account all shares of Company Common Stock held by such
holder at the Effective Time) shall receive, in lieu thereof, an amount in cash
(payable in dollars, without interest) equal to the product obtained by
multiplying (a) the fractional share interest to which such holder (after taking
into account all shares of Company Common Stock held at the Effective Time by
such holder) would otherwise be entitled by (b) the daily weighted average price
for a Parent Common Share on the TSE on the last business day immediately
preceding the Closing Date (converted into United States dollars using the spot
exchange rate reported in The Wall Street Journal, Eastern Edition (or such
other publication as may be mutually agreed to by Parent and the Company) on the
last business day immediately preceding the Closing Date).
(f) Termination of Exchange Fund. Any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this Section 2.5
(the "Exchange Fund") which remains undistributed to the holders of the
certificates representing shares of Company Common Stock for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
shares of Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Parent and only as general creditors
thereof for payment of their claim for cash, Parent Common Shares, any cash in
lieu of fractional Parent Common Shares and any dividends or distributions with
respect to Parent Common Shares to which such holders may be entitled.
(g) No Liability. None of Parent, Merger Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any Parent Common
Shares (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any certificates representing
shares of Company Common Stock shall not have been surrendered prior to five
years after the Effective Time (or immediately prior to such earlier date on
which any cash, Parent Common Shares, any cash in lieu of fractional Parent
Common Shares or any dividends
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10
or distributions with respect to Parent Common Shares in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.1(e))), any such shares, cash,
dividends or distributions in respect of such certificates shall, to the extent
permitted by applicable law, become the property of Parent, free and clear of
all claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
SECTION 2.6 Treatment of Employee Options. Prior to the Effective
Time, the Board of Directors of the Company (or, if appropriate, any Committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary to provide for the cancellation, effective at the Effective Time, of
all the outstanding stock options, stock appreciation rights, limited stock
appreciation rights and performance units (the "Options") heretofore granted
under any stock option, performance unit or similar plan of the Company (the
"Stock Plans"). Immediately prior to the Effective Time, (i) each Option,
whether or not then vested or exercisable, shall no longer be exercisable but
shall entitle each holder thereof, in cancellation and settlement therefor, to
payments in cash (subject to any applicable withholding taxes, the "Cash
Payment"), at the Effective Time, equal to the product of (x) the total number
of shares of Common Stock subject or related to such Option, whether or not then
vested or exercisable, and (y) the excess of the Cash Price over the exercise
price per share of Common Stock subject or related to such Option, each such
Cash Payment to be paid to each holder of an outstanding Option at the Effective
Time; provided, however, that with respect to any person subject to Section 16
of the Exchange Act, any such amount shall be paid as soon as practicable after
the first date payment can be made without liability to such person under
Section 16(b) of the Exchange Act, and (ii) each share of Common Stock
previously issued in the form of grants of restricted stock or grants of
contingent shares shall fully vest. As provided herein, the Stock Plans and any
other plan, program or arrangement (except the Waterhouse Investor Services,
Inc. Employee Stock Ownership Plan and Trust (the "ESOP")) providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary (collectively with the Stock Plans, referred to as the
"Stock Incentive Plans") shall terminate as of the Effective Time and the
Company shall ensure that following the Effective Time no holder of an Option or
any participant in any Stock Incentive Plans shall have any right thereunder to
acquire capital stock of the Company, Parent or the Merger Sub, except as
provided in the proviso to clause (i) of this Section 2.6. The Company will take
all reasonable steps to ensure that, as of the Effective Time, none of the
Parent, the Company or any of their respective subsidiaries is or will be bound
by any Options, other options, warrants, rights or agreements which would
entitle any person, other than Parent or its affiliates, to own any capital
stock of the Company, Merger Sub or any of their respective subsidiaries or to
receive any payment in respect thereof.
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11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company. The
Company hereby represents and warrants to Parent and Merger Sub as follows:
(a) Organization and Qualification; Subsidiaries. The Company is a
bank holding company registered under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"). Waterhouse National Bank ("WNB") is a wholly owned
subsidiary of the Company and a national banking association organized under the
laws of the United States. Each of the Company and each of its subsidiaries is a
corporation (or in the case of WNB, a banking association) duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and governmental approvals could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect (as defined below) on
the Company. The Company and each of its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. The
Company does not engage, either directly or through subsidiaries, in any
activity or business, or hold any investment, which is not permissible for bank
holding companies under the BHC Act.
When used with respect to the Company or any of its subsidiaries,
the term "Material Adverse Effect" means any material adverse change in or
effect on (i) the business, results of operations or condition (financial or
other) of the Company and its subsidiaries taken as a whole or (ii) the ability
of the Company to consummate any of the transactions contemplated hereby.
(b) Certificates of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Certificate of
Incorporation and the ByLaws of the Company and the equivalent organizational
documents of each subsidiary of the Company as currently in effect. Neither the
Company nor any subsidiary thereof is in violation of any of the provisions of
its Certificate of Incorporation or By-Laws or equivalent organizational
document.
(c) Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 1,000,000 shares of
Preferred Stock, $.01 par value per share (the "Company Preferred Stock"). As of
April 4, 1996, (i) 11,466,044 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
were not issued in violation of the preemptive (or similar) rights of any
stockholder of the Company, (ii) 250,002 shares of Company Common Stock were
held in
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12
the treasury of the Company, (iii) 2,071,923 shares of Company Common Stock were
reserved for issuance and issuable upon conversion of the Company's 6%
Convertible Subordinated Notes Due 2003 (the "Convertible Notes") and (iv) an
aggregate of 1,046,131 shares of Company Common Stock were reserved for issuance
and issuable upon or otherwise deliverable in connection with the exercise of
outstanding Options issued pursuant to the Stock Plans. Since April 4, 1996, no
options to purchase shares of Company Common Stock have been granted and no
shares of Company Common Stock have been issued except for shares issued
pursuant to the exercise of Options or upon the conversion of Convertible Notes
outstanding as of April 4, 1996. As of the date hereof, no shares of Company
Preferred Stock are issued and outstanding. Except as set forth above and except
as a result of the exercise of Options or conversion of Convertible Notes
outstanding as of April 4, 1996, there are outstanding (i) no shares of capital
stock or other voting securities of the Company, (ii) no securities of the
Company convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities of the Company and (iii) no options, calls,
warrants or other rights to acquire from the Company or any subsidiary, and no
obligation of the Company or any subsidiary to issue, any capital stock, voting
securities or securities convertible into or exchangeable or exercisable for
capital stock or other voting securities of the Company or any subsidiary
(collectively, "Company Securities"). There are no outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities or to provide funds to or make any investment (in
the form of a loan, capital contribution, guarantee or otherwise) in any such
subsidiary or any other entity other than to any direct or indirect wholly owned
subsidiary of the Company. All of the outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized and validly issued
and are fully paid and nonassessable (except, in the case of WNB, as provided in
12 U.S.C. ss. 55) and are owned by the Company or a wholly owned subsidiary of
the Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations on voting rights, charges or other encumbrances of any
nature whatsoever. Except as set forth in Section 3.1(c) of the disclosure
schedule furnished by the Company to Parent simultaneously with the execution
and delivery of this Agreement (the "Disclosure Schedule"), the Company does not
own any equity securities of any corporation, partnership, trust, company or
other corporate entity, other than (i) the subsidiaries listed in Exhibit 21 to
its Annual Report on Form 10-K for the fiscal year ended August 31, 1995, and
(ii) securities acquired in the normal course of its brokerage business and
representing less than 5% of the outstanding voting securities of the respective
issuer.
(d) Authority Relative to Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval and adoption of the Merger and this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock). This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The only vote of
the holders of any class or
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13
series of outstanding securities of the Company required for approval of this
Agreement and the Merger is the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock. Prior to the execution and
delivery of this Agreement by the Company, the Board of Directors of the Company
has approved, by the affirmative vote of at least two-thirds (2/3) of the
Disinterested Directors (within the meaning of Article Fifteenth of the
Company's Certificate of Incorporation), this Agreement, the Voting Agreement
and the transactions contemplated hereby and thereby, and accordingly the
provisions of Section 203 of the DGCL and Article Fifteenth of the Company's
Certificate of Incorporation do not and will not apply to this Agreement, the
Voting Agreement or the transactions contemplated hereby or thereby.
(e) No Conflict; Required Filings and Consents. (i) The execution,
delivery and performance of this Agreement by the Company does not and will not:
(A) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or the equivalent organizational documents of any of its subsidiaries;
(B) assuming that all consents, approvals and authorizations contemplated by
subsection (ii) below have been obtained and all filings described in such
clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which its or any of their respective properties are bound or affected; or
(C) except as disclosed in Section 3.1(e) of the Disclosure Schedule, result in
any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both could become a default) or result in the loss of
a benefit under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, investment management or advisory
agreement or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties are bound or affected, except, in the
case of clauses (B) and (C), for any such conflicts, violations, breaches,
defaults or other occurrences which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
(ii) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby by the
Company do not and will not require any consent, approval, authorization or
permit of, action by, filing with or notification to, any United States federal,
state or local court, administrative agency or commission, or entity created by
rule, regulation or order of any United States federal, state or local
commission or other governmental agency, authority or instrumentality (a
"Governmental Entity"), except for: (A) the approval of the Merger by the Board
of Governors of the Federal Reserve System (the "Federal Reserve") under the BHC
Act; (B) the filing with the SEC of (1) a registration statement on Form F-4
under the Securities Act of 1933, as amended (the "Securities Act") in
connection with the issuance of Parent Common Shares in the Merger (the "Form
F-4"), including therein a combined proxy statement and prospectus relating to
the Stockholders' Meeting referred to in Section 4.3 (such combined proxy
statement and prospectus as amended or supplemented from time to time, the
"Proxy Statement/Prospectus") and (2) such other filings under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement and the Voting Agreement and the transactions
contemplated hereby and thereby and the obtaining from the SEC of such orders as
may be required in connection therewith; (C)
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14
consents, authorizations, approvals or filings pursuant to the applicable
provisions of federal and state securities laws relating to the regulation of
broker-dealers, investment companies and investment advisors and the rules and
regulations of the SEC and the applicable state securities commissioners
thereunder and of any applicable industry self-regulatory organizations
(including, without limitation, the National Association of Securities Dealers,
Inc. (the "NASD"), the New York Stock Exchange Inc. (the "NYSE") and any other
securities exchange or similar organization of which the Company or any of its
subsidiaries may be a member; (D) applicable filings under state anti-takeover
laws, if any; (E) the filing and recordation of the Certificate of Merger as
required by the DGCL; and (F) such other consents, approvals and authorizations
of Governmental Entities as shall have been specified by Company to Parent in
writing prior to the date of this Agreement. Neither the Company nor any of its
subsidiaries conduct business in, or are otherwise subject to the laws of, any
jurisdiction outside the United States as it relates to this Agreement and the
consummation of the Merger and the other transactions contemplated hereby and
the Company makes no representation or warranty with respect to any consent,
approval, authorization or permit of, action by, filing with or notification to
any non-United States Governmental Entity that may be required in connection
with the execution, delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated hereby.
(f) Compliance. (i) The Company and its subsidiaries hold, and are
in compliance with, all permits, licenses, exemptions, orders and approvals of
all Governmental Entities necessary for the operation of the businesses of the
Company and each subsidiary, except to the extent the failure to so hold or
comply will not have, individually or in the aggregate, a Material Adverse
Effect on the Company, and to the best knowledge of the Company there are no
proceedings pending, threatened or contemplated by any Governmental Entity
seeking to terminate, revoke or materially limit any such permit, license,
exemption, order or approval. Neither the Company nor any of its subsidiaries
nor the conduct of their business is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties are bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected, except for any such
conflicts, defaults or violations which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. Except for routine examinations by Federal or state Governmental
Entities charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits, or charged with the
supervision or regulation of broker-dealers or investment advisors
(collectively, "Regulators"), as of the date of this Agreement, no investigation
by any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or, to the best knowledge of the Company, threatened,
other than, in each case, those the outcome of which, individually or in the
aggregate, will not have a Material Adverse Effect on the Company.
(ii) As of the date of this Agreement, except as disclosed on SEC
Forms ADV and BD which have been filed by the Company or its subsidiaries with
the SEC and copies of which have been made available to Parent prior to the date
of this Agreement, neither the
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15
Company nor any of its subsidiaries, nor any of their respective executive
officers, directors or employees has been the subject of any disciplinary
proceedings or orders of any Governmental Entity arising under applicable
securities laws which would be required to be disclosed on SEC Forms ADV or BD,
and to the best knowledge of the Company, no such disciplinary proceeding or
order is pending or threatened; and neither the Company nor any of its
subsidiaries, nor any of their respective Affiliated Persons (as defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act")), nor
any of the respective executive officers, directors or employees of any of the
foregoing, has been permanently enjoined by the order, judgment or decree of any
court or other Governmental Entity from engaging in or continuing any conduct or
practice in connection with any activity or in connection with the purchase or
sale of any security. Neither the Company nor any of its subsidiaries, nor any
of their respective officers, directors or, to the best of the Company's
knowledge, employees, is or has been: (1) ineligible to serve as, or subject to
any disqualification which would be the basis for any denial, suspension or
revocation of the registration of or for any limitation on the activities of the
Company or any of its subsidiaries as, an investment adviser under the
provisions of the Investment Advisers Act of 1940, as amended (the "Advisers
Act") or as a broker-dealer under the Exchange Act; or (2) ineligible to serve
in, or subject to any disqualification which would be the basis for any
limitation on serving in, any of the capacities specified in Section 9(a) or
9(b) of the Investment Company Act.
(iii) Section 3.1(f)(iii) of the Disclosure Schedule sets forth a
complete and accurate list of the subsidiaries of the Company which are duly
registered or licensed as a broker-dealer under the Exchange Act or under any
state, federal or foreign broker-dealer or similar laws pursuant to which each
such subsidiary is required to be so registered, together with a listing of such
registrations and an indication as to whether such subsidiary is a member in
good standing of the NASD or other foreign or domestic broker-dealer
associations. No other subsidiary of the Company is required by the nature of
its activities to be so registered under the Exchange Act or under the laws of
any state or other jurisdiction or to be a member in good standing of the NASD
or other broker-dealer associations under any other applicable law. The Company
has made available to Parent a true and complete copy of each such subsidiary's
currently effective Form BD as filed with the SEC, all state, federal and
foreign registration forms, all prior Form BD filings and all material reports
filed by any such subsidiary with the SEC under the Exchange Act and the rules
promulgated thereunder or otherwise and under similar state, federal and foreign
statutes within the last two years and will make available to Parent such
material forms and reports as are filed from and after the date hereof and prior
to the Closing Date. The information contained in such forms and reports was (or
will be, as the case may be) true and complete in all material respects as of
the time of filing.
(iv) Section 3.1(f)(iv) of the Disclosure Schedule sets forth a
complete and accurate list of the subsidiaries of the Company which are duly
registered or licensed as an investment adviser under the Advisers Act or under
any state, federal or foreign investment adviser or similar laws pursuant to
which any such subsidiary is required to be so registered, together with a
listing of such registrations. No other subsidiary of the Company is required by
the nature of its activities to be so registered under the Advisers Act or under
the laws of any state or other jurisdiction. The Company has made available to
Parent a true and complete copy of each such subsidiary's currently effective
Form ADV as filed with the SEC, all federal and
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16
foreign registration forms, all prior Form ADV filings and all material reports
filed by any such subsidiary with the SEC under the Advisers Act and the rules
promulgated thereunder or otherwise and under similar state, federal and foreign
statutes within the last three years and will make available to Parent such
material forms and reports as are filed from and after the date hereof and prior
to the Closing Date. The information contained in such forms and reports was (or
will be, as the case may be) true and complete in all material respects as of
the time of filing.
(v) Section 3.1(f)(v) of the Disclosure Schedule sets forth a
complete and accurate list of each of the Company's and its subsidiaries'
memberships in commodities exchanges, boards of trade, clearing organizations
and trade associations, and a description of the type of membership and the type
of registered holder thereof. All such memberships and similar privileges of
each of the Company and its subsidiaries are in good standing, except for such
failures to be in good standing as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
(g) Agreements with Regulators. Except as disclosed on its Forms ADV
and BD as filed with the SEC prior to the date of this Agreement, neither the
Company nor any of its subsidiaries is a party to any written agreement or
memorandum of understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any enforcement order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any board
resolutions at the request of, any Regulator or any other Governmental Entity
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit policies or its management, nor has the
Company or any of its subsidiaries been advised by any Regulator or other
Governmental Entity that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such enforcement
order, decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, or any such board resolutions.
(h) SEC Filings; Financial Statements. (i) The Company and each of
its subsidiaries have filed all forms, reports, statements and documents
required to be filed with the SEC since January 1, 1995 pursuant to Sections
12(b), 12(g), 13, 14 or 15(d) of the Exchange Act (collectively, the "SEC
Reports"), each of which complied in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder, as in effect on the date so filed. The Company has delivered to
Parent, in the form filed with the SEC (including any amendments thereto),
copies of (A) its Annual Reports on Form 10-K for each of the three fiscal years
ended August 31, 1993, 1994 and 1995, and the Quarterly Report on Form 10-Q for
the quarter ended November 30, 1995 (the "November 1995 10-Q") (B) all
definitive proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since January 1, 1993, and (C) all other SEC
Reports or registration statements filed by the Company and its subsidiaries
with the SEC since January 1, 1993. None of such forms, reports or documents
(including any financial statements or schedules included or incorporated by
reference therein) filed by the Company and its then or current subsidiaries
contained, when filed (in the case of documents filed pursuant to the Exchange
Act) or when declared effective by the SEC (in the case of registration
statements filed under the Securities Act), any untrue statement of a material
fact or omitted to state a material fact required to be
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17
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(ii) Each of the audited and unaudited consolidated financial
statements of the Company (including, in each case, any related notes thereto)
included in its SEC Reports complied as to form when filed in all material
respects with the rules and regulations of the SEC with respect thereto, has
been prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and fairly presents the consolidated financial
position of the Company and its subsidiaries at the respective dates thereof and
the consolidated results of its operations and changes in cash flows for the
periods indicated (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(iii) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its subsidiaries at August 31, 1995, including
the notes thereto, included in Company's Annual Report on Form 10-K for the year
ended August 31, 1995, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet or in
the notes thereto prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred in the ordinary
course of business or as otherwise permitted by the terms of this Agreement
since August 31, 1995 which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
(iv) Since October 13, 1994, the Company and its subsidiaries
have filed all reports of condition and other required reports and registration
statements with the Federal Reserve, the Office of the Comptroller of the
Currency (the "OCC") and other applicable Bank Regulators. Each of such reports
complied in all material respects, as of the date of filing thereof, with the
requirements of the applicable regulatory authority and the information set
forth therein is true, complete and correct in all material respects.
(i) Information Supplied. None of the information supplied or to be
supplied by the Company in writing or otherwise approved by the Company for
inclusion or incorporation by reference in (i) the Form F-4 will, at the time
the Form F-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) the Proxy Statement/Prospectus will, at the date it is first mailed to the
Company's stockholders or at the time of the Stockholders' Meeting, contain any
statement which, in the light of the circumstances under which such statement is
made, is false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Stockholders' Meeting or
any amendment or supplement thereto. The Proxy Statement/Prospectus will comply
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations promulgated thereunder, except that no
representation is made by the Company with respect to statements
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18
made or incorporated by reference therein based on information supplied by
Parent or Merger Sub for inclusion or incorporation by reference in the Proxy
Statement/Prospectus.
(j) Absence of Certain Changes or Events. Since August 31, 1995,
except as disclosed in the SEC Reports filed since that date and prior to the
date of this Agreement, the Company and its subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any change, event or
development in or affecting the Company that constitutes or would reasonably be
expected to have either individually or in the aggregate a Material Adverse
Effect on the Company (provided that for the purposes of this clause (i) changes
caused by changes in stock market conditions in the United States that generally
affect companies in the discount brokerage business shall not be deemed to
constitute a Material Adverse Effect), (ii) any change by the Company in its
accounting methods, principles or practices, except as required by changes in
generally accepted accounting principles or as recommended by the Company's
independent accountants and consented to in writing by Parent (which consent
shall not be unreasonably withheld) prior to such change, (iii) any declaration,
setting aside or payment of any dividends or distributions in respect of any
series of capital stock of the Company, other than regular annual cash dividends
on the outstanding shares of Company Common Stock in an amount not in excess of
$0.22 per annum, (iv) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including without limitation the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan or agreement or arrangement, or any
other increase in the compensation payable or to become payable to any present
or former directors, officers above the rank of Vice President of the Company or
any of its subsidiaries, except for increases in base compensation and annual
cash bonuses, in each case in the ordinary course of business and consistent
with past practice, and the implementation of a Company matching program under
the Waterhouse Investor Services, Inc. 401(k) Plan or (v) any other action
which, if it had been taken after the date hereof, would have required the
consent of Parent under Section 4.1 hereof.
(k) Absence of Litigation. Except as disclosed in the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 1995, and in
Section 3.1(k) of the Disclosure Schedule, there are no suits, claims, actions,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or any properties or
rights of the Company or any of its subsidiaries, before any court, arbitrator
or other Governmental Entity, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Company or to delay or prevent the consummation of the transactions contemplated
hereby beyond December 31, 1996. Neither the Company nor any of its subsidiaries
nor any of their respective properties is or are subject to any order, writ,
judgment, injunction, decree, determination or award having, or which could
reasonably be expected to have, a Material Adverse Effect on the Company or
which could prevent or delay the consummation of the transactions contemplated
hereby beyond December 31, 1996.
(l) Labor Matters. Neither the Company nor any of its subsidiaries
is a party to any collective bargaining agreement. Since January 1, 1993,
neither the Company nor any of its
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19
subsidiaries has (i) had any employees strikes, work stoppages, slowdowns or
lockouts, (ii) received any requests for certifications of bargaining units or
any other requests for collective bargaining, or (iii) become aware of any
efforts to organize employees of the Company or any of its subsidiaries into a
collective bargaining unit.
(m) Employee Benefit Plans. (i) Section 3.1(m)(i) of the Disclosure
Schedule contains a true and complete list of each "employee benefit plan"
(within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), including, without limitation, multiemployer
plans within the meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transactions contemplated by this Agreement), whether
formal or informal, legally binding or not under which any employee or former
employee of the Company has any present or future right to benefits or under
which the Company has any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "Company Plans".
(ii) With respect to each Company Plan, the Company has delivered,
or made available, to the Parent a current, accurate and complete copy (or, to
the extent no such copy exists, an accurate description) thereof and, to the
extent applicable, (A) any related trust agreement, annuity contract or other
funding instrument; (B) the most recent determination letter; (C) any summary
plan description and other written communications (or a description of any oral
communications) by the Company to its employees concerning the extent of the
benefits provided under a Company Plan; and (D) for the three most recent years
(I) the Form 5500 and attached schedules; (II) audited financial statements;
(III) actuarial valuation reports; and (IV) attorney's response to an auditor's
request for information.
(iii) (A) Each Company Plan has been established and administered in
all material respects in accordance with its terms, and in all material respects
compliance with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations; (B) each Company Plan which is intended
to be qualified within the meaning of Code section 401(a) has received a
favorable determination letter or has filed a timely request for a determination
letter as to its qualification and, to the knowledge of the Company, nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification; (C) with respect to any Company Plan, no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or threatened, no facts or circumstances exist which, to the knowledge
of the Company, could give rise to any such actions, suits or claims, except for
such actions, suits or claims the affects of which could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect on
the Company, and the Company will promptly notify Parent of any pending or
threatened claims arising between the date hereof and the Closing Date; (D)
neither the Company nor to the knowledge of the Company any other party has
engaged in a prohibited transaction, as such term is defined under Code section
4975 or ERISA section 406, which would subject the Company or Parent to any
taxes, penalties or other liabilities under Code section 4975 or ERISA sections
409 or 502(i) that is reasonably likely to result in material
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20
liability; (E) no event has occurred and no condition exists that would subject
the Company, either directly or by reason of its affiliation with any member of
its Controlled Group (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code sections 414(b),
(c), (m) or (o)), to any tax, fine or penalty imposed by ERISA, the Code or
other applicable laws, rules and regulations including, but not limited to, the
taxes imposed by Code sections 4971, 4972, 4977, 4979, 4980B, 4976(a) or the
fine imposed by ERISA section 502(c) that is reasonably likely to result in a
material liability to the Company; (F) all insurance premiums required to be
paid with respect to Company Plans as of the Closing Date have been or will be
paid prior thereto (G) all contributions required to be made prior to the
Closing Date under the terms of any Company Plan, the Code, ERISA or other
applicable laws, rules and regulations have been or will be made (H) no Company
Plan provides for an increase in benefits on or after the Closing Date; and (I)
except as noted in Section 3.1(m)(i) of the Disclosure Schedule each Company
Plan may be amended or terminated without obligation or liability (other than
those obligations and liabilities for which specific assets have been set aside
in a trust or other funding vehicle or reserved for on the Company's balance
sheet as of November 30, 1995 included in the November 1995 10-Q).
(iv) No Company Plan is, or has ever been, subject to Title IV of
ERISA and, except as set forth in Section 3.1(m)(i) of the Disclosure Schedule,
there are no unfunded Company Plans under which benefits are payable presently,
or in the future, to present or former employees of the Company.
(v) Each Company Plan which is intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the Code
meets such requirements in all material respects; and the Company has received a
favorable determination from the Internal Revenue Service with respect to any
trust intended to be qualified within the meaning of Code section 501(c)(9).
(vi) Except as set forth on Section 3.1(m)(i) of the Disclosure
Schedule, no Company Plan exists which could result in the payment to any
Company employee of any money or other property or rights or accelerate or
provide any other rights or benefits to any Company employee as a result of the
transactions contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G.
(n) Tax Matters. (i) Except as set forth in the SEC Reports filed
prior to the date of this Agreement, (A) the Company and its subsidiaries have
filed, been included in or sent, all returns, declarations and reports and
information returns and statements required to be filed or sent by any of them
relating to any Taxes (as defined below) with respect to any income, properties
or operations of the Company or any of its subsidiaries (collectively,
"Returns"); (B) as of the time of filing, the Returns were correct in all
material respects; (C) the Company and its subsidiaries have timely paid or made
provision for all Taxes that have been shown as due and payable on the Returns
that have been filed; (D) the Company and its subsidiaries have made or will
make provision for all Taxes payable for any periods that end before the
Effective Time for which no Returns have yet been filed and for any periods that
begin before the Effective Time and end after the Effective Time to the extent
such Taxes are attributable to the portion of any such period ending at the
Effective Time; (E) the charges, accruals and reserves for Taxes
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21
reflected on the books of the Company and its subsidiaries are adequate under
generally accepted accounting principles to cover the Tax liabilities accruing
or payable by the Company and its subsidiaries in respect of periods prior to
the date hereof; (F) neither the Company nor any of its subsidiaries is
delinquent in the payment of any Taxes or has requested any extension of time
within which to file or send any Return (other than extensions granted to the
Company for the filing of its Returns as set forth in Section 3.1(n) of the
Disclosure Schedule), which Return has not since been filed or sent; (G) no
deficiency for any Taxes has been proposed, asserted or assessed, in writing,
against the Company or any of its subsidiaries (or any member of any affiliated
or combined group of which the Company or any of its subsidiaries is or has been
a member for which either the Company or any of its subsidiaries could be
liable) other than those Taxes being contested in good faith by appropriate
proceedings and set forth in Section 3.1(n) of the Disclosure Schedule (which
shall set forth the nature of the proceeding, the type of return, the
deficiencies proposed, asserted or assessed and the amount thereof, and the
taxable year in question); (H) neither the Company nor any of its subsidiaries
has granted any extension of the limitation period applicable to any Tax claims
other than those Taxes being contested in good faith by appropriate proceedings;
(I) neither the Company nor any of its subsidiaries is subject to liability for
Taxes of any person (other than the Company or its subsidiaries), including,
without limitation, liability arising from the application of U.S. Treasury
Regulation section 1.1502-6 or any analogous provision of state, local or
foreign law; (J) neither the Company nor any of its subsidiaries is or has been
a party to any tax sharing agreement with any corporation which is not currently
a member of the affiliated group of which the Company is currently a member; and
(K) neither the Company nor any of its subsidiaries is or has been a party to
any nexus or allocation agreements with any State of the United States.
(ii) "Tax" means with respect to any person (A) any net income,
gross income, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, value-added, windfall profits, custom duty or other tax,
capital stock, social security (or similar), unemployment, disability, transfer,
alternative or add-on minimum, estimated or other like governmental assessment
or charge of any kind whatsoever, together with any interest and any penalty,
addition to tax or additional amount imposed by any taxing authority (domestic
or foreign) on such person and (B) any liability of the Company or any
subsidiary for the payment of any amount of the type described in clause (A) as
a result of being a member of an affiliated or combined group.
(o) Intellectual Property. (a) The Company and each of its
subsidiaries owns, or is licensed to use (in each case, free and clear of any
liens or encumbrances of any kind), the trademarks, service marks, brand names
and other intellectual property and proprietary rights (collectively,
"Intellectual Property"), listed in Section 3.1(o) of the Disclosure Schedule,
and such Intellectual Property, including without limitation the right to use
the name "Waterhouse", constitutes all of the material Intellectual Property
used in or necessary for the conduct of its business as currently conducted; (b)
the Company and its subsidiaries have not licensed or otherwise granted to
others any rights to use any such Intellectual Property except as contemplated
by this Agreement or as set forth in Section 3.1(o) of the Disclosure Schedule;
(c) to the best of the Company's knowledge the use of such Intellectual Property
by the Company and its subsidiaries does not infringe on or otherwise violate
the rights of any person and is in accordance with any applicable license
pursuant to which the Company or any subsidiary
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22
acquired the right to use such Intellectual Property; and (d) to the knowledge
of the Company, no person is challenging, infringing on or otherwise violating
any right of the Company or any of its subsidiaries with respect to such
Intellectual Property.
(p) Title to Properties; Liens and Encumbrances. Section 3.1(p) of
the Disclosure Schedule sets forth a complete and accurate list of all real
properties leased by the Company and its subsidiaries. Except as set forth in
Section 3.1(p) of the Disclosure Schedule and except for such defects in title
as would not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company, the Company and its subsidiaries
have valid leasehold interests in their respective real properties and have
valid title to all of their respective other properties and assets (except for
leased properties and assets, in which case the lessee has a valid leasehold
interest therein), subject only to (i) statutory liens arising or incurred in
the ordinary course of business with respect to which the underlying obligations
are not delinquent or the validity of which is being contested in good faith by
appropriate proceedings, (ii) liens for taxes not yet delinquent or the validity
of which is being contested in good faith by appropriate proceedings, and (iii)
liens securing indebtedness of the Company or any of its subsidiaries which is
created substantially simultaneously with the purchase of the relevant
properties or assets and which do not encumber property other than such property
or assets. Except as set forth in Section 3.1(p) of the Disclosure Schedule,
neither the Company nor any of its subsidiaries owns any real property in fee.
(q) Certain Contracts and Agreements. (i) There have been made
available to Parent copies of each of the following agreements to which the
Company or any of its subsidiaries is a party or by which it is bound: (A) any
lease (whether of real or personal property) providing for annual rentals of $1
million or more; (B) any agreement for the purchase of materials, supplies,
goods, services, equipment or other assets providing for annual payments of
$1,000,000 or more; (C) any sales, distribution or similar agreement providing
for the sale by the Company or any of its subsidiaries of services or other
assets providing for annual payments of $1,000,000 or more (except for
agreements made in the ordinary course of business and involving investment
banking, brokerage, or investment management services); (D) any joint venture or
strategic alliance agreement providing for annual payments of $1,000,000 or more
or involving an investment by the Company or its subsidiaries of $1,000,000 or
more; (E) any agreement relating to the disposition or sale of any business
(whether by merger, sale of stock, sale of assets or otherwise); (F) any
agreement relating to borrowings or the deferred purchase price of property
involving an aggregate principal amount of $1,000,000 or more; (G) any license,
franchise or similar agreement providing for annual payments of $1,000,000 or
more; (H) any agency, dealer, sales representative, marketing or other similar
agreement providing for annual payments of $1,000,000 or more and (I) any other
agreement which involves annual payments in excess of $1,000,000 or is not
terminable without penalty by the Company or one of its subsidiaries within six
months (each such contract described in the foregoing clauses (A) through (I), a
"Specified Contract") and a complete and correct list of all such Specified
Contracts is set forth in Section 3.1(q)(i) of the Disclosure Schedule. Neither
the Company nor any of its subsidiaries is in default in the performance of any
of its material obligations under any Specified Contract. No event has occurred
which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default of any of its
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23
material obligations by the Company or any of its subsidiaries under any
Specified Contract or, to the Company's knowledge, by any other party thereto.
(ii) Except as set forth in Section 3.1(q)(ii) of the Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
contract containing non-competition clauses, restrictive covenants or similar
provisions that would limit Parent's, the Company's or any subsidiary's ability
after the Closing to engage in any line of business in any geographic area or to
compete against any person.
(r) Transactions with Affiliates. Except as set forth in Section
3.1(r) of the Disclosure Schedule or as disclosed in the SEC Reports filed prior
to the date of this Agreement, there are no contracts, agreements, arrangements
or understandings of any kind between any affiliate of the Company, on the one
hand, and the Company or any subsidiary of the Company, on the other hand, other
than any such contracts, agreements, arrangements and understandings that either
individually or in the aggregate are de minimis in nature.
(s) Opinion of Financial Advisor. The Company has received the
opinion of Bear, Stearns & Co. Inc. to the effect that the Merger is fair to the
holders of the Company Common Stock from a financial point of view.
(t) Brokers. No broker, finder or investment banker (other than
Bear, Stearns & Co. Inc. and A.J. Pace & Co., Inc.) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Bear,
Stearns & Co. Inc. and A.J. Pace & Co., Inc. pursuant to which such firms would
be entitled to any payment relating to the transactions contemplated by this
Agreement.
(u) Scope of Representations. Anything to the contrary in this
Section 3.1 notwithstanding, no representation or warranty made by the Company
in this Agreement shall be deemed to be untrue or incorrect at the date hereof
if the failure of such representation or warranty to be true and correct as of
such date (or as of any other specified date) does not have, individually or in
the aggregate, a Material Adverse Effect on the Company at the date hereof.
SECTION 3.2 Representations and Warranties of Parent and Merger Sub.
Parent and Merger Sub, jointly and severally, hereby represent and warrant to
the Company as follows:
(a) Corporate Organization. Parent is validly existing as a bank
under the laws of Canada and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each
of Parent and Merger Sub has the requisite corporate power and authority and any
necessary governmental authority to own, operate or lease its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and governmental approvals could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
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24
When used with respect to Parent or Merger Sub, the term "Material
Adverse Effect" means any material adverse change in or effect on (i) the
business, results of operations or condition (financial or other) of Parent and
its subsidiaries taken as a whole or (ii) the ability of Parent or Merger Sub to
consummate any of the transactions contemplated hereby.
(b) Charter and By-Laws. Parent has heretofore furnished to the
Company a complete and correct copy of the By-Laws of Parent as currently in
effect and of the Certificate of Incorporation and By-Laws of Merger Sub as
currently in effect. The charter of Parent is the Bank Act of Canada. Neither
Parent nor Merger Sub is in violation of any of the provisions of its respective
charter or Certificate of Incorporation (as the case may be) or By-Laws.
(c) Capitalization. The authorized capital stock of Parent consists
of an unlimited number of authorized Parent Common Shares and an unlimited
number of authorized Class A First Preferred Shares, without par value
(hereinafter referred to as "Parent Class A Preferred Shares"). As of March 31,
1996, (i) 301,473,416 Parent Common Shares were issued and outstanding, and (ii)
a total of 16,000,075 Parent Class A Preferred Shares (Series G, H and Y) were
issued and outstanding. All of the Parent Common Shares issuable in exchange for
Company Common Stock at the Effective Time in accordance with the terms of this
Agreement or pursuant to any supplemental indenture for the Convertible Notes
referred to in Section 4.15 have been duly authorized and, when so issued, will
be validly issued, fully paid and nonassessable and not issued in violation of
the preemptive rights of any shareholder of Parent.
(d) Authority Relative to Agreement. Each of Parent and Merger Sub
has all necessary corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each of Parent and Merger Sub and the consummation by each of Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent or Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate such transactions. This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub enforceable against them in accordance with its terms.
(e) No Conflict; Required Filings and Consents. (i) The execution,
delivery and performance of this Agreement by Parent and Merger Sub do not and
will not: (A) conflict with or violate the charter or By-Laws of Parent or the
Certificate of Incorporation or By-Laws of Merger Sub; (B) assuming that all
consents, approvals and authorizations contemplated by subsection (ii) below
have been obtained and all filings described in such subsection have been made,
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Parent or Merger Sub or by which either of them or their
respective properties are bound or affected; or (C) result in any breach or
violation of or constitute a default (or an event which with notice or lapse of
time or both could become a default) or result in the loss of a material benefit
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of Parent or Merger Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease,
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25
license, permit, franchise or other instrument or obligation to which Parent or
Merger Sub is a party or by which Parent or Merger Sub or any of their
respective properties are bound or affected, except, in the case of clauses (B)
and (C), for any such conflicts, violations, breaches, defaults or other
occurrences which could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Parent.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub and the consummation of the transactions contemplated
hereby by Parent and Merger Sub do not and will not require any consent,
approval, authorization or permit of, action by, filing with or notification to,
any Canadian federal or provincial or United States federal, state or local
Governmental Entity, except for: (A) the approval of the Merger by the Federal
Reserve under the BHC Act; (B) the filing with the SEC of the Form F-4 and the
obtaining from the SEC of such orders as may be required in connection
therewith; (C) consents, authorizations, approvals or filings pursuant to the
applicable provisions of federal and state securities laws relating to the
regulation of broker-dealers, investment companies and investment advisors and
the rules and regulations of the SEC and the applicable state securities
commissioners thereunder and of any applicable industry self-regulatory
organizations (including without limitation the NASD, the NYSE and any other
securities exchange or similar organization of which the Company or any of its
subsidiaries may be a member; (D) the approval of the Merger and the issuance of
Parent Common Shares in connection therewith by the Canadian Minister of Finance
and the Superintendent of Financial Institutions of Canada, respectively; (E)
the filing of a prospectus relating to the Parent Common Shares to be issued in
the Merger with the Ontario Securities Commission and other applicable
provincial securities authorities and the obtaining of a final receipt for such
prospectus from such authorities; (F) filings with the TSE and such other
exchanges on which the Parent Common Shares are currently listed; (G) the filing
and recordation of the Certificate of Merger as required by the DGCL; (H)
applicable filings under state anti-takeover laws, if any; and (I) such other
consents, approvals and authorizations of Governmental Entities as shall have
been specified by Parent to the Company in writing prior to the date of this
Agreement.
(f) Compliance. (i) Parent and its subsidiaries hold, and are in
compliance with, all permits, licenses, exemptions, orders and approvals of all
Governmental Entities necessary for the operation of the businesses of Parent
and each subsidiary, except to the extent the failure to so hold or comply will
not have, individually or in the aggregate, a Material Adverse Effect on Parent,
and to the best knowledge of Parent there are no proceedings pending, threatened
or contemplated by any Governmental Entity seeking to terminate, revoke or
materially limit any such permit, license, exemption, order or approval. Neither
Parent nor any of its subsidiaries nor the conduct of their business is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which its or any of their respective properties are bound or affected, or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries is a party or by which Parent or any of its subsidiaries or its
or any of their respective properties are bound or affected, except for any such
conflicts, defaults or violations which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
As of the date of this Agreement, no investigation by any Canadian or United
States Governmental Entity with respect to Parent is pending, or to
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26
best knowledge of Parent, threatened, other than, in each case, those the
outcome of which, individually or in the aggregate, will not have a Material
Adverse Effect on Parent.
(g) Agreements with Regulators. Except as otherwise specified by
Parent to the Company in writing prior to the date of this Agreement, Parent is
not a party to any written agreement or memorandum of understanding with, or a
party to any commitment letter or similar undertaking to, or is subject to any
enforcement order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the request of,
any Canadian or United States Regulator or any other Canadian or United States
Governmental Entity which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit policies or its
management, nor has Parent been advised by any such Regulator or other such
Governmental Entity that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such enforcement
order, decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, or any such board resolutions.
(h) Securities Documents. Parent has filed all required documents
with the provincial and territorial securities regulatory authorities in Canada
(the "Canadian Securities Authorities") since October 31, 1994 (the "Parent
Securities Documents"). As of their respective dates, the Parent Securities
Documents complied in all material respects with the requirements of the
Canadian Securities Authorities and none of the Parent Securities Documents
contained any untrue statement of a material fact or omitted to state a 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
financial statements of Parent included or incorporated by reference into the
Parent Securities Documents complied as to form in all material respects as of
their respective dates of filing with the applicable accounting requirements and
the published rules and regulations of the Superintendent of Financial
Institutions of Canada with respect thereto, have been prepared in accordance
with Canadian generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and present fairly the consolidated financial position of Parent
and its consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and statements of cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(i) Information Supplied. None of the information supplied or to be
supplied by Parent or Merger Sub in writing or otherwise approved by Parent for
inclusion or incorporation by reference in (i) the Form F-4 will, at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement/Prospectus will, at the date the Proxy Statement/Prospectus is first
mailed to the Company's stockholders or at the time of the Stockholders'
Meeting, contain any statement which, in the light of the circumstances under
which such statement is made, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of any proxy for
the Stockholders' Meeting or any amendment or supplement thereto. The Form F-4
will comply as to form in all
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27
material respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder, except that no representation or warranty is
made by Parent or Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference in the Form F-4.
(j) Absence of Certain Changes or Events. Except as disclosed in the
Parent Securities Documents filed with the Canadian Securities Authorities prior
to the date of this Agreement, since October 31, 1995, there has not been any
change, event or development in or affecting Parent that constitutes or would
reasonably be expected to have a Material Adverse Effect on Parent or to delay
or prevent the consummation of the transactions contemplated hereby beyond
December 31, 1996.
(k) Absence of Litigation. Except as disclosed in the Parent
Securities Documents filed with the Canadian Securities Authorities prior to the
date of this Agreement, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of Parent, threatened against Parent
or any of its subsidiaries, or any properties or rights of Parent or any of its
subsidiaries, before any court, arbitrator or other Governmental Entity,
domestic or foreign, that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Parent. Neither Parent nor any
of its subsidiaries nor any of their respective properties is or are subject to
any order, writ, judgment, injunction, decree, determination or award having, or
which could reasonably be expected to have, a Material Adverse Effect on the
Parent or to delay or prevent the consummation of the transactions contemplated
hereby beyond December 31, 1996.
(l) Brokers. No broker, finder or investment banker (other than
Merrill Lynch & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Merger Sub.
(m) Ownership of Company Common Stock. As of the date of this
Agreement, Parent and its subsidiaries beneficially own shares of Company Common
Stock (exclusive of shares of Company Common Stock held in trust, custodial,
nominee or similar accounts for the benefit of third parties and any shares of
Company Common Stock issuable upon exercise of the Warrant, as to which no
representation is made by Parent) representing less than 5% of the outstanding
shares of Company Common Stock.
(n) Scope of Representations. Anything to the contrary in this
Section 3.2 notwithstanding, no representation or warranty made by Parent in
this Agreement shall be deemed to be untrue or incorrect at the date hereof if
the failure of such representation or warranty to be tue and correct as of such
date (or as of any other specified date) does not have, individually or in the
aggregate, a Material Adverse Effect on Parent at the date hereof.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER; OTHER COVENANTS
SECTION 4.1 Conduct of Business of the Company Pending the Merger.
The Company covenants and agrees that, during the period from the date hereof to
the Effective Time, except as otherwise required by the terms of this Agreement
or unless Parent shall otherwise agree in writing, the businesses of the Company
and its subsidiaries shall be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice and in compliance with
applicable laws; and the Company and its subsidiaries shall each use its
reasonable best efforts to preserve intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries and to
preserve the present relationships of the Company and its subsidiaries with
their customers, suppliers and other persons with whom the Company or any of its
subsidiaries has significant business relations. By way of amplification and not
limitation of the foregoing, neither the Company nor any of its subsidiaries
shall, between the date of this Agreement and the Effective Time, directly or
indirectly do, or propose or commit to do, any of the following without the
prior written consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock (except for
(A) dividends and distributions by a wholly owned subsidiary of the
Company to its parent, and (B) regular annual cash dividends on the
Company Common Stock in an amount not in excess of $0.22 per share, in
each case with usual record and payment dates in accordance with the
Company's past practice), (ii) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for, shares of its capital
stock, or (iii) purchase, redeem or otherwise acquire or agree to acquire
any shares of capital stock of the Company or any of its subsidiaries or
any other securities convertible into shares of capital stock or any
rights, warrants or options to acquire any such shares or convertible
securities;
(b) authorize for issuance, issue, deliver, sell or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock
or the capital stock of any of its subsidiaries, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or any other securities or equity equivalents (including
without limitation stock appreciation rights), other than (A) sales of
capital stock of any wholly owned subsidiary of the Company to the Company
or another wholly owned subsidiary of the Company, and (B) the issuance of
shares of Company Common Stock upon conversion of the Convertible Notes or
upon exercise of Options that were issued and outstanding on the date of
this Agreement;
(c) except to the extent required under existing Company Plans as in
effect on the date of this Agreement, or as required with respect to the
implementation of a 401(k)
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29
matching contribution (the "Matching Contribution") under the Waterhouse
Investor Services, Inc. 401(k) Plan, or as disclosed in Section 4.1(c) of
the Disclosure Schedule, (i) increase the compensation or fringe benefits
of any of its directors, officers or employees, except for increases in
compensation of employees and officers of the Company or its subsidiaries
in the ordinary course of business in accordance with past practice, or
(ii) grant any severance or termination pay not currently required to be
paid under existing Company Plans, except on an individual basis in the
ordinary course of business and consistent with past practice, or (iii)
establish, adopt, enter into or amend or terminate any Company Plan or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees except as required by law or as
provided in this Agreement; provided that the provisions of this Section
4.1 shall not prohibit the Company and its subsidiaries from hiring
personnel from time to time in the ordinary course of their business,
consistent with past practice;
(d) except as set forth in Section 4.1(d) of the Disclosure
Schedule, amend its Certificate of Incorporation, By-Laws or other
comparable charter or organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of the Company or any subsidiary of the
Company;
(e) acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof or
(ii) any assets (not otherwise subject to paragraph (h) below) other than
in the ordinary course of business consistent with past practice and in an
aggregate amount not to exceed $10.0 million within any 9 month period;
(f) sell, lease, license, mortgage or otherwise encumber or subject
to any lien or otherwise dispose of any of its properties or assets other
than in the ordinary course of business consistent with past practice and
in amounts that are not, individually or in the aggregate, material to the
Company and its subsidiaries taken as a whole;
(g) (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person (other than guarantees by the Company
in favor of any of its wholly owned subsidiaries or by any of its
subsidiaries in favor of the Company or endorsements of negotiable
instruments and similar guarantees in the ordinary course of business
consistent with past practice), issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain the financial
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
(including deposits) incurred in the ordinary course of business
consistent with past practice, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person, other than (A) to
any direct or indirect wholly owned subsidiary of the Company, or (B)
margin loans to brokerage customers in the ordinary course of business
consistent with past practice, or (C) residential mortgage, credit card,
home
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30
equity and similar consumer loans (including pre-approved overdrafts) to
retail customers of WNB in the ordinary course of its banking business, or
(D) loans to employees of the Company and its subsidiaries not to exceed
$1 million in total outstandings from the date hereof through December 31,
1996;
(h) expend, or commit to expend, funds for capital expenditures
other than in accordance with the Company's current capital expenditure
plans (which plans shall have been disclosed in writing to Parent on or
prior to the date of this Agreement);
(i) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(j) recognize any labor union (unless legally required to do so) or
enter into any collective bargaining agreement;
(k) except as may be required as a result of a change in generally
accepted accounting principles or as recommended by the Company's
independent accountants and consented to in writing by Parent (which
consent shall not be unreasonably withheld) prior to such change, change
any of the accounting methods, practices or principles used by the Company
or any of its subsidiaries;
(l) make any Tax election or settle or compromise any income Tax
liability in excess of $1,000,000 or file any federal income tax return
prior to the last day prescribed by law, in the case of any of the
foregoing, material to the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, without
the prior consent of Parent, which consent shall not be unreasonably
withheld;
(m) settle or compromise any litigation in which the Company or any
subsidiary is a defendant (whether or not commenced prior to the date of
this Agreement) or settle, pay or compromise any claims not required to be
paid, which payments are individually or in the aggregate in an amount in
excess of $1,000,000;
(n) enter into any new line of business or open any new offices
except substantially in accordance with the Company's current business
plan as disclosed to Parent in writing prior to the date of this
Agreement; or
(o) authorize any of, or commit or agree to take any of, the
foregoing actions or any action which would make any of the
representations or warranties of the Company contained in this Agreement
untrue and incorrect as of the date when made if such action had then been
taken.
SECTION 4.2 Conduct of Business of Merger Sub. Merger Sub has not
engaged, and during the period from the date of this Agreement to the Effective
Time, Merger Sub shall not engage, in any activities of any nature except as
provided in, or in connection with the transactions contemplated by, this
Agreement.
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31
SECTION 4.3 Stockholders' Meeting. The Company will take all action
necessary in accordance with and subject to applicable law and its Certificate
of Incorporation and By-Laws to convene a meeting of its stockholders (the
"Stockholders' Meeting") as soon as practicable after the date of this Agreement
to consider and vote upon the adoption and approval of this Agreement. Subject
to the next succeeding sentence, the Company, through its Board of Directors,
shall recommend to its stockholders approval of the foregoing matters, and such
recommendation, together with a copy of the opinion referred to in Section
3.1(s), shall be included in the Proxy Statement/Prospectus. The Board of
Directors of the Company may fail to make such recommendation, or withdraw,
modify or change such recommendation, if and only if the Board, after advice of
outside counsel, determines in good faith that the making of such
recommendation, or the failure to so withdraw, modify or change such
recommendation, could reasonably be deemed to constitute a breach of its
fiduciary duties under applicable law.
SECTION 4.4 Preparation of Form F-4 and the Proxy
Statement/Prospectus. Promptly following the date of this Agreement, the Company
and Parent shall prepare and file with the SEC the Proxy Statement/Prospectus,
and Parent shall prepare and file with the SEC the Form F-4, in which the Proxy
Statement/Prospectus will be included as a prospectus. Each of the Company and
Parent shall use its reasonable best efforts to have the Form F-4 declared
effective under the Securities Act as promptly as practicable after such filing.
The Company will use its reasonable best efforts to cause the Proxy
Statement/Prospectus to be mailed to the Company's stockholders as promptly as
practicable after the Form F-4 is declared effective under the Securities Act.
Parent shall also use its reasonable best efforts to take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Shares in the Merger, and the
Company shall furnish all information concerning the Company and the holders of
the Company Common Stock as may be reasonably requested in connection with any
such action. The information provided and to be provided by Parent, Merger Sub
and the Company, respectively, for use in the Form F-4 shall, at the time the
Form F-4 becomes effective and on the date of the Stockholders' Meeting referred
to above, be true and correct in all material respects and shall not omit to
state any material fact required to be stated therein or necessary in order to
make such information not misleading, and the Company, Parent and Merger Sub
each agree to correct any information provided by it for use in the Form F-4
which shall have become false or misleading.
SECTION 4.5 Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, the Company (i) shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, auditors and other agents of Parent, reasonable access at
all reasonable times (during normal business hours so as not to unduly or
unreasonably interfere with the business of the Company and its subsidiaries) to
its senior officers, agents, properties, offices and other facilities and to all
books and records, and shall furnish Parent and such other persons with all
financial, operating and other data and information as Parent, through its
officers, may from time to time reasonably request, and (ii) shall make
available its senior officers and the senior officers of its subsidiaries, upon
reasonable prior notice and during normal business hours, to confer on a regular
basis with the appropriate officers of Parent regarding the ongoing operations
of the Company and its subsidiaries, the implementation of the transactions
contemplated hereby and other matters related hereto. No investigation
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pursuant to this Section 4.5 shall affect any representations or warranties of
the parties herein or the conditions to the obligations of the parties hereto.
(b) Each of Parent and Merger Sub will hold information it receives
pursuant to Section 4.5(a)(i) which is nonpublic in confidence to the extent
required by, and in accordance with, the provisions of the letter dated March
13, 1996 between Parent and the Company (the "Confidentiality Agreement").
SECTION 4.6 Affiliates. Prior to the Closing Date, the Company shall
deliver to Parent a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its reasonable best efforts to cause each such person to
deliver to Parent on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit D hereto.
SECTION 4.7 Stock Exchange Listing. Parent shall use its best
efforts to cause the Parent Common Shares to be issued in the Merger to be
approved or accepted for listing on the TSE and the NYSE, subject to official
notice of issuance, prior to the Closing Date.
SECTION 4.8 No Solicitation. Subject to the proviso below, neither
the Company nor any of its affiliates shall, nor shall the Company or any of its
affiliates authorize or permit any of its officers, directors or employees or
any investment banker, financial advisor, attorney, accountant or other
representative (collectively, "Representatives") retained by it or any of its
affiliates to, solicit, initiate, encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may reasonably be
expected to lead to, any Transaction Proposal (as defined below), or enter into
or maintain or continue discussions or negotiate with any person in furtherance
of such inquiries or to obtain a Transaction Proposal, or agree to or endorse
any Transaction Proposal, and the Company shall notify Parent orally (as
promptly as practicable, and in any event within two business days) as to any
Transaction Proposals which it or any of its affiliates or any of their
respective representatives or agents may receive, specifying in reasonable
detail the material terms thereof and, if requested by Parent, the Company shall
furnish a written summary of such material terms (other than the identity of the
party making such Transaction Proposal). Nothing contained in this Section 4.8
or this Agreement to the contrary shall restrict the Board of Directors of the
Company from (a) (i) furnishing information to any person or entity who makes an
unsolicited inquiry concerning a possible Transaction Proposal, or (ii) entering
into negotiations or discussions with any person or entity that makes an
unsolicited Transaction Proposal regarding that Transaction Proposal, or (iii)
entering into an unsolicited Transaction Proposal, if, in the case of either of
clauses (ii) or (iii), the Board of Directors of the Company determines in good
faith, after advice of counsel, that the failure to do so could reasonably be
deemed a breach of its fiduciary duties under applicable law or (b) failing to
make, withdrawing, modifying or changing a recommendation to the Company's
stockholders with respect to the approval and adoption of this Agreement if the
Board of Directors of the Company determines in good faith, after advice of
counsel, that making such recommendation, or the failure to withdraw, modify or
change such recommendation, could reasonably be deemed a breach of its fiduciary
duties under applicable law. The Company shall provide such information to
Parent
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33
regarding any inquiry, negotiation, discussion or proposal under clause (a) as
is necessary, in the reasonable judgment of the Board of Directors of the
Company, to achieve a level playing field so that Parent shall not be at a
disadvantage, provided that the name of any such other person need not be
disclosed to Parent. The Company shall obtain a confidentiality agreement from
the person making such inquiries or proposals containing substantially the same
terms and provisions as that obtained from Parent, provided that to the extent
such confidentiality agreement with such third party contains provisions that
are more favorable to such third party than the comparable provisions in the
Confidentiality Agreement with Parent, such provisions in Parent's
Confidentiality Agreement shall be amended correspondingly. As used herein, the
term "Transaction Proposal" means (x) any acquisition or purchase of a
substantial amount of assets, or 10% or more of any class of equity securities,
of the Company or any of its subsidiaries or any tender offer (including a self
tender offer) or exchange offer to acquire 10% or more of any class of equity
securities of the Company or any of its subsidiaries or any merger,
consolidation, sale of substantially all assets, creation of a joint venture,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries (other than the transactions contemplated
hereby) or (y) any proposal, plan, agreement or intention to do any of the
foregoing. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. This section shall not prohibit
accurate disclosure by the Company in any document that is required to be filed
by the Company with the SEC, including without limitation any filings made in
compliance with Rule 14e-2 promulgated under the Exchange Act.
SECTION 4.9 Employee Benefits Matters. (a) Except as otherwise
provided in this Section 4.9, on and after the Effective Time, Parent shall, or
shall cause Merger Sub to, maintain the Company Plans set forth in Section
3.1(m) of the Disclosure Schedule (other than the Stock Plans) for the benefit
of employees of the Company as such Company Plans are in effect immediately
prior to the Effective Time; provided that Parent or Merger Sub may replace any
Company Plan with a substitute plan which provides benefits that are no less
favorable than the benefits that were provided under the Company Plan being
replaced.
(b) Except as otherwise provided in this Section 4.9, on and after
the Effective Time, Parent shall, or shall cause Merger Sub to (i) maintain base
salaries for Company employees, as in effect on the date of this Agreement,
subject to increases in accordance with Company policy and (ii) provide annual
cash bonus opportunities to Company employees that are comparable to the annual
cash bonus opportunities available to employees on the date of this Agreement.
(c) As soon as practicable after the Effective Time, Parent shall,
or shall cause Merger Sub to, establish or implement a qualified retirement plan
to replace the ESOP, which shall be frozen or terminated on or about the
Effective Time, provided, however, that such replacement plan shall not be
required to provide for the acquisition of, or contributions in the form of,
stock of Parent, Merger Sub or the Company. Such replacement plan shall provide,
subject to the limits imposed by Section 415 of the Code, ESOP participants with
a level of contributions (when taken together with the Matching Contribution) no
less favorable than contributions to the ESOP consistent with the Company's
prior practices.
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34
(d) On and after the Effective Time, Company employees shall be
entitled to participate in the equity compensation plans of Parent for U.S.
employees of Parent on the same basis as similarly situated U.S. employees of
Parent.
(e) The base salary, annual bonus opportunity and other compensation
and benefits described in Sections 4.9 (a) through (d) hereof may be altered by
the Company consistent with the Company's past practices, to remain competitive
or in accordance with industry practice; provided that the aggregate
compensation and benefits provided to Company employees shall be no less
favorable than the compensation and benefits provided to Company employees
immediately prior to the Effective Time and may be reduced only in the event of
a material adverse change in the business of the Company.
(f) Prior to the Effective Time the Company shall enter into
employment agreements with (i) Lawrence M. Waterhouse, Jr. ("Mr. Waterhouse")
and (ii) the individuals set forth in Section 4.9(f) of the Disclosure Schedule,
substantially in the form of Exhibits E-1 and E-2 hereto, respectively.
SECTION 4.10 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in the Certificate of Incorporation of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, agents or
employees of the Company or otherwise entitled to indemnification pursuant to
the Company's Certificate of Incorporation. In the event that the Surviving
Corporation transfers all or substantially all of its operations to another
corporation or other entity, proper provision shall be made so that the
successor or transferee thereof shall assume any remaining obligations of the
Surviving Corporation set forth in this Section 4.10(a). From and after the
Effective Time, Parent agrees to guarantee all obligations of the Surviving
Corporation, as set forth in the Company's Certificate of Incorporation, to
indemnify and hold harmless individuals who at the Effective Time were directors
or officers of the Company for acts or omissions taken in their capacities as
directors or officers of the Company, as the case may be, and directly or
indirectly arising from or related to the Merger and the other transactions
contemplated hereby.
(b) Parent shall cause to be maintained in effect for three years
from the Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company on the date of this Agreement (or
policies of comparable coverage containing terms and conditions which are not
materially less advantageous to the insured parties, including Parent's existing
policies if they meet the foregoing standard) with respect to matters occurring
prior to the Effective Time to the extent available; provided, however, that in
no event shall Parent or the Surviving Corporation be required to expend more
than an amount per year equal to 250% of the last annual premium paid by the
Company prior to the date of this Agreement to maintain or procure insurance
coverage pursuant hereto and provided, further, that Parent may at its option
satisfy obligations under this Section 4.10(b) through its program of
self-insurance as long as Parent's senior debt ratings are not reduced by
Standard & Poor's Corporation and
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35
Moody's Investors Service, Inc. than one full rating category below the ratings
in effect on the date of this Agreement.
SECTION 4.11 Further Action; Reasonable Best Efforts. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to (i)
cooperating in the preparation and filing of the Proxy Statement/Prospectus and
Form F-4, and any amendments to any thereof and (ii) using its reasonable best
efforts to make all required regulatory filings and applications and to obtain
all licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities and parties to contracts with the Company and
its subsidiaries as are necessary for the consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger. To
the extent practicable in the circumstances and subject to applicable laws, each
party shall provide the other with the opportunity to review any information
relating to the other party, or any of its subsidiaries, which appears in any
filing made with, or written materials submitted to, any Governmental Entity in
connection with obtaining the necessary regulatory approvals for the
consummation of the transactions contemplated by this Agreement. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall use their reasonable best efforts to take all
such necessary action.
SECTION 4.12 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect,
and (ii) any failure of the Company, Parent or Merger Sub, as the case may be,
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 4.12 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 4.13 Public Announcements. Each party shall consult with the
other before issuing any press release or otherwise making any public statements
with respect to the Merger and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by law or any listing agreement with its securities exchange or quotation
system.
SECTION 4.14 Tax Free Reorganization Treatment. None of Parent,
Merger Sub, the Company or any of their respective affiliates shall take or
cause to be taken any action, whether before or after the Effective Time, which
would disqualify the Merger as a tax-free reorganization within the meaning of
Section 368 of the Code.
SECTION 4.15 Convertible Notes. Parent agrees to execute and
deliver, and cause to be executed and delivered by or on behalf of Merger Sub,
at or prior to the Effective
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36
Time, such supplemental indentures and other instruments as may be reasonably
required for the due assumption by the Surviving Corporation of the Convertible
Notes, and by Parent with respect to the issuance of the Merger Consideration
upon conversion of the Convertible Notes, in accordance with and to the extent
required by the terms of such securities.
SECTION 4.16 Transfer of Subsidiary. Prior to the Effective Time,
the Company may sell all of the outstanding shares of capital stock of its
wholly-owned subsidiary L.M. Waterhouse & Co. Inc. to Mr. Waterhouse pursuant to
the terms of a Purchase Agreement between the Company and Mr. Waterhouse in the
form of Exhibit F hereto.
SECTION 4.17 Rule 144 Information. Parent hereby agrees that from
the Effective Time until the third anniversary of the Effective Time, if Parent
is not subject to Section 13 or 15(d) of the Exchange Act it will ensure that
there is publicly available the information specified in Rule 144(c)(2) under
the Securities Act.
ARTICLE V
CONDITIONS OF MERGER
SECTION 5.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon.
(b) Listing. The Parent Common Shares issuable to the Company's
stockholders pursuant to this Agreement shall have been approved or accepted for
listing on the NYSE and the TSE, in each case subject to official notice of
issuance.
(c) Other Approvals. Other than the filing contemplated by Section
1.3, all consents, approvals, authorizations or permits of, actions by, or
filings with or notifications to, and all expirations of waiting periods imposed
by, any Governmental Entity (all the foregoing, "Consents") which are necessary
for the consummation of the Merger, other than immaterial Consents the failure
to obtain which would have no material adverse effect on the consummation of the
Merger or the business of the Surviving Corporation, shall have been filed,
occurred or been obtained (all such permits, approvals, filings and consents and
the lapse of all such waiting periods being referred to as the " Requisite
Regulatory Approvals"), all conditions, if any, to such Requisite Regulatory
Approvals shall have been satisfied and all such Requisite Regulatory Approvals
shall be in full force and effect.
(d) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction
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37
or other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect, nor shall any proceeding by any Governmental Entity
seeking any of the foregoing be pending. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.
(e) Form F-4. The Form F-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and any "blue sky" and other state securities laws
applicable to the issuance of Parent Common Shares in the Merger shall have been
complied with.
SECTION 5.2 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the following conditions unless waived by Parent and Merger Sub:
(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 to the extent such representations and
warranties speak as of an earlier date, with such exceptions as, either
individually or in the aggregate, do not have, and would not reasonably be
expected to have, a Material Adverse Effect on the Company (provided that for
purposes of this paragraph, changes caused by changes in stock market conditions
in the United States that generally affect companies in the discount brokerage
business shall not be deemed to constitute a Material Adverse Effect on the
Company), and Parent shall have received a certificate signed on behalf of the
Company by the Chairman of the Board and Chief Executive Officer of the Company
and by the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed all obligations required to be performed by it under this
Agreement at or prior to the Closing Date with such exceptions as, either
individually or in the aggregate, do not have, and would not reasonably be
expected to have, a Material Adverse Effect on the Company (provided that for
purposes of this paragraph, changes caused by changes in stock market conditions
in the United States that generally affect companies in the discount brokerage
business shall not be deemed to constitute a Material Adverse Effect on the
Company), and Parent shall have received a certificate signed on behalf of the
Company by the Chairman of the Board and Chief Executive Officer of the Company
and by the Chief Financial Officer of the Company to such effect.
(c) Tax Opinion. The opinion, based on appropriate representations
of the Company, Parent and others, of Simpson Thacher & Bartlett, counsel to
Parent, to the effect that the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
dated on or about the date of and referred to in the Proxy Statement/Prospectus
as first mailed to stockholders of the Company, shall not have been withdrawn or
modified in any material respect.
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38
(d) Burdensome Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any federal or state Governmental Entity which, in
connection with the grant of a Requisite Regulatory Approval, would be
reasonably likely to result in a Material Adverse Effect with respect to the
Surviving Corporation.
(e) Dissenters' Rights. No more than 7.5% of the shares of Company
Common Stock shall be, or have the right to become, Dissenting Shares.
(f) Affiliate Letters. Parent shall have received the agreements
referred to in Section 4.6.
(g) Employment Agreement. Mr. Waterhouse shall have executed the
employment agreement contemplated by Section 4.9(f).
SECTION 5.3 Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction of the
following unless waived by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub 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 to the extent such
representations and warranties speak as of an earlier date, with such exceptions
as, either individually or in the aggregate, do not have, and would not
reasonably be expected to have, a Material Adverse Effect on Parent, and the
Company shall have received a certificate signed on behalf of Parent by the
Chief Financial Officer of Parent to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed all obligations required to be performed by them
under this Agreement at or prior to the Closing Date, with such exceptions as,
either individually or in the aggregate, do not have, and would not reasonably
be expected to have, a Material Adverse Effect on Parent, and the Company shall
have received a certificate signed on behalf of Parent by the Chief Financial
Officer of Parent to such effect.
(c) Tax Opinion. The opinion, based on appropriate representations
of the Company, Parent and others, of Latham & Watkins, counsel to the Company,
to the effect that the Merger will be treated for Federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code, dated on or
about the date of and referred to in the Proxy Statement/Prospectus as first
mailed to stockholders of the Company, shall not have been withdrawn or modified
in any material respect.
(d) Supplemental Indenture. Parent, Merger Sub, the Company and the
trustee under the indenture pursuant to which the Convertible Notes were issued
shall have executed and delivered the supplemental indenture and other
instruments referred to in Section 4.15 in form and substance reasonably
satisfactory to the Company and such trustee.
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39
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent, upon any breach of any representation, warranty,
covenant or agreement of the Company set forth in this Agreement that, either
individually or in the aggregate, would constitute grounds for Parent to elect
not to consummate the Merger pursuant to Section 5.2(a) or (b), if either (A)
such breach cannot be cured prior to the Closing Date, or (B) has not been cured
within 45 days after the date on which written notice of such breach is given by
Parent to the Company, specifying in reasonable detail the nature of such
breach;
(c) by the Company, upon any breach of any representation, warranty,
covenant or agreement of Parent set forth in this Agreement that, either
individually or in the aggregate, would constitute grounds for the Company to
elect not to consummate the Merger pursuant to Section 5.3(a) or (b), if either
(A) such breach cannot be cured prior to the Closing Date, or (B) has not been
cured within 45 days after the date on which written notice of such breach is
given by the Company to Parent, specifying in reasonable detail the nature of
such breach;
(d) by either Parent or the Company, if any permanent injunction or
action by any Governmental Entity preventing the consummation of the Merger
shall have become final and nonappealable; provided that such right of
termination shall not be available to any party if such party shall have failed
to make reasonable efforts to prevent or contest the imposition of such
injunction or action and such failure materially contributed to such imposition;
(e) by either Parent or the Company if (other than due to the
willful failure of the party seeking to terminate this Agreement to perform its
obligations hereunder which are required to be performed at or prior to the
Effective Time) the Merger shall not have been consummated on or prior to
December 31, 1996;
(f) by Parent or the Company, if the approval of the stockholders of
the Company of this Agreement and the Merger required for the consummation of
the Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or at any adjournment
thereof;
(g) by Parent, if (i) the Board of Directors of the Company shall
have withdrawn, modified or changed its approval or recommendation of this
Agreement or the Merger in any manner which is adverse to Parent or Merger Sub,
or shall have adopted a resolution to do the foregoing; or (ii) the Board of
Directors of the Company shall have approved or have recommended to the
stockholders of the Company a Transaction Proposal or shall have resolved to do
the foregoing; or (iii) a tender offer or exchange offer for 25% or more of the
outstanding
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40
shares of the Company Common Stock is commenced (other than by Parent or any of
its subsidiaries or affiliates), and the Board of Directors of the Company
recommends that the stockholders of the Company tender their shares in such
tender or exchange offer or otherwise fails to recommend that such stockholders
reject such tender offer or exchange offer within ten business days of the
commencement thereof; or
(h) by the Company prior to the Stockholders' Meeting, if the Board
of Directors of the Company (i) shall fail to make or shall withdraw or modify
its recommendation of this Agreement or the Merger and there shall exist at such
time a tender offer or exchange offer for not less than a majority of the
outstanding voting stock of the Company or a written, bona fide proposal by a
third party to acquire not less than a majority of the outstanding voting stock
of the Company pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, in either
case at a price per share (whether payable in cash or securities) of Company
Common Stock that is higher than the Merger Consideration, or (ii) recommends to
the Company's stockholders approval or acceptance of any such transaction, in
each case if, and only to the extent that, the Board of Directors of the
Company, after advice of independent legal counsel, determines in good faith
that failure to take such action could reasonably be deemed to constitute a
breach of the Board's fiduciary duties under applicable law.
(i) By the Company, if its Board of Directors so elects, at any time
during the five-day period commencing on the first business day following the
Determination Date (as defined below), if the Exchange Ratio that would have
been in effect on the Determination Date pursuant to Section 2.4(a) hereto in
the absence of the proviso to such Section would be greater than 2.45952;
subject, however, to the following four sentences. If the Company elects to
exercise its termination right pursuant to the immediately preceding sentence,
it shall give prompt written notice of such election to Parent. During the
three-day period commencing with its receipt of such notice, Parent shall have
the option to elect to increase the Exchange Ratio to a number equal to a
quotient (rounded to the nearest 1/100,000), the numerator of which is the Cash
Price and the denominator of which is the Parent Common Share Price on the
Determination Date. If Parent makes the election contemplated by the preceding
sentence within such three-day period, it shall give prompt written notice to
the Company of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 6.1(i) and the Merger
shall remain in effect in accordance with its terms (except as the Exchange
Ratio shall have been so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to the Exchange Ratio as
adjusted pursuant to this Section 6.1(i).
For purposes of this Section 6.1(i), "Determination Date" shall mean
the tenth business day prior to the Closing Date.
If Parent declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination of shares or similar transaction between
the date of this Agreement and the Determination Date, the prices for Parent
Common Shares set forth herein shall be appropriately adjusted for the purposes
of applying this Section 6.1(i).
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41
SECTION 6.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 6.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except as
set forth in Section 4.5(b), Section 6.3 and Section 7.1; provided, however,
that nothing herein shall relieve any party from liability for any willful and
material breach hereof; provided further, however that the recommendation of
another transaction by the Company's Board of Directors in accordance with
Section 4.8 shall not constitute a willful and material breach of this Agreement
by the Company.
SECTION 6.3 Fees and Expenses. (a) The Company agrees that if this
Agreement shall be terminated pursuant to:
(i) Section 6.1(b) and (x) such termination is the result of
wilful breach by the Company of any material covenant, agreement,
representation or warranty contained herein and (y) at any time during the
period commencing on the date hereof and ending twelve months after the
date of termination of this Agreement, a Business Combination (as defined
in Section 6.3(e) below) involving the Company shall have occurred or the
Company shall have entered into a definitive agreement providing for such
a Business Combination;
(ii) Section 6.1(e) and (x) at the time of such termination there
shall exist a Transaction Proposal with respect to the Company, and (y) at
any time during the period commencing on the date hereof and ending twelve
months after the date of termination of this Agreement, a Business
Combination involving the Company shall have occurred or the Company shall
have entered into a definitive agreement providing for a Business
Combination;
(iii) Section 6.1(f) because the Agreement and the Merger shall
fail to receive the requisite vote for approval and adoption by the
stockholders of the Company at a meeting of stockholders of the Company
called to vote thereon and at the time of such meeting (x) there shall
exist a Transaction Proposal with respect to the Company or (y) any person
(including the Company or any of its subsidiaries or affiliates, but
excluding Mr. Waterhouse) or group (other than Parent or any of its
subsidiaries or affiliates) shall have become the beneficial owner of 25%
or more of the outstanding shares of the Company Common Stock;
(iv) Section 6.1(g)(i) and at the time of the withdrawal,
modification or change (or resolution to do so) of its recommendation by
the Board of Directors of the Company, there shall exist a Transaction
Proposal with respect to the Company or any person (including the Company
or any of its subsidiaries or affiliates, but excluding Mr. Waterhouse) or
group (other than Parent or any of its subsidiaries or affiliates) shall
have become the beneficial owner of 25% or more of the outstanding shares
of the Company Common Stock; or
(v) Sections 6.1(g)(ii) or (iii), or Section 6.1(h);
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42
then in any such case (A) the Warrant shall thereupon become exercisable
in accordance with its terms, and (B) concurrently with the occurrence of
a Payment Event, the Company shall pay to Parent an amount equal to the
difference between (x) $16 million, and (y) the Current Market Value of
the Warrant.
(b) Any cash payment required to be made pursuant to Section 6.3(a)
shall be made contemporaneously with the occurrence of the Payment Event by wire
transfer of immediately available funds to an account designated by Parent, and
termination of the Company's obligations under Section 6.3(a) shall not occur
until such payment shall have been made pursuant hereto. The Company covenants
and agrees that it will not enter into a definitive agreement relating to a
Business Combination that would, if consummated, require the payment of any
amounts by the Company pursuant to Section 6.3(a) unless the other party or
parties thereto agree unconditionally in writing (a copy of which shall be
furnished to Parent as soon as practicable after the public announcement of such
proposed Business Combination) to assume, undertake and perform all of the
Company's payment obligations under this Section 6.3 and the Company's
obligations under the Warrant, and to pay any legal expenses incurred by Parent
in connection with the enforcement thereof. Any payment made pursuant to Section
6.3(a) shall not preclude Parent from seeking monetary damages from the Company
as described in Section 6.2 for any willful and material breach of the terms
hereof to the extent stated therein.
(c) For purposes of this Section 6.3:
(i) the term "Business Combination" shall mean (A) the
acquisition by any person (other than Parent or any of its subsidiaries)
of beneficial ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of, or the right to acquire beneficial ownership
of, or the formation of any group (as such term is defined for purposes of
Rule 13d-5 under the Exchange Act) which beneficially owns or has the
right to acquire beneficial ownership of, 50% or more of the total voting
power of all then outstanding Voting Stock of the Company; (B) the
consolidation or merger of the Company with or into any person (other than
Parent or any of its subsidiaries) in a transaction in which the Company
shall not be the surviving or continuing corporation; (C) the merger or
consolidation of any person (other than Parent or any of its subsidiaries)
with or into the Company in a transaction in which the Company is the
surviving or continuing corporation but in which the shares of Voting
Stock outstanding immediately prior to such transaction shall represent
less than 50% of the total voting power of all Voting Stock of the
surviving or continuing corporation outstanding immediately after such
merger or consolidation; or (D) any sale or other transfer (including by
way of dividend or distribution of assets to the Company's stockholders),
in one transaction or in a series of related transactions, of all or a
substantial portion of the Company's consolidated assets or business to
any person (other than Parent or any of its subsidiaries) or group;
(ii) the term "Payment Event" shall mean (A) in the case of
Sections 6.3(a)(i) and (ii) above, the consummation of the Business
Combination referred to therein, and (B) in the case of Sections
6.3(a)(iii), (iv) and (v) above, the consummation of a Business
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43
Combination pursuant to a definitive agreement entered into by the Company
within twelve months after the date on which this Agreement was
terminated;
(iii) the term "Current Market Value of the Warrant " shall mean
the aggregate consideration payable in the Business Combination for the
number of shares of Company Common Stock that were issuable upon exercise
of the Warrant at the date of its issuance (without regard to whether the
Warrant was by its terms exercisable at such time), as subsequently
adjusted in accordance with the terms thereof (whether or not previously
exercised, in whole or in part); provided that if such consideration
includes securities (in whole or in part), then such securities shall be
valued (A) if traded on a national securities exchange or the Nasdaq
National Market, at the closing price for such securities on the principal
national securities exchange on which they are traded (or on the Nasdaq
National Market) on the last business day immediately preceding the date
on which a Payment Event occurs or (B) if not so traded, then as
determined by an independent nationally recognized investment banking firm
selected by the Company for this purpose and reasonably acceptable to
Parent; and provided further, however, that if the Warrant has been
repurchased prior to the occurrence of a Payment Event by the Company at
the Company's election pursuant to Section 7 of the Warrant Agreement, the
term "Current Market Value of the Warrant" shall mean the Repurchase
Consideration (as defined in the Warrant Agreement) actually paid by the
Company to Parent upon such repurchase; and
(iv) the term "Voting Stock" means all outstanding stock and
other securities of the Company entitled (without regard to the occurrence
of any contingency) to vote in the election of directors of the Company.
(d) Except as specifically provided in Section 6.2 and this Section
6.3, each party shall bear its own expenses in connection with this Agreement
and the transactions contemplated hereby.
SECTION 6.4 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of Parent and the respective Boards of
Directors of Merger Sub and the Company at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each share of Company Stock shall be converted
upon consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 6.5 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
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44
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 6.1, except that those set forth in Section 4.5(b), Section
4.9, Section 4.10, Section 4.17, Section 6.3 and this Article VII shall survive
termination indefinitely (or to such earlier date as shall be specified by the
terms of such provisions).
SECTION 7.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
if to Parent or Merger Sub:
The Toronto-Dominion Bank
Toronto-Dominion Centre
Toronto, Canada M5K 1A2
Attention: I. Alexander Norton
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Lee Meyerson
if to the Company:
Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
Attention: Lawrence M. Waterhouse, Jr.
with a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022-4802
Attention: Roger H. Kimmel
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45
SECTION 7.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any shares of Company Common
Stock means a person who shall be deemed to be the beneficial owner of
such shares of Company Common Stock (i) which such person or any of its
affiliates or associates beneficially owns, directly or indirectly, (ii)
which such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 of the Exchange Act) has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding or (iii)
which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or person with whom such
person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of any shares; provided, however, that for purposes of this
Agreement (other than Article VI) Mr. Waterhouse shall not be deemed to be
the beneficial owner of any Company Common Stock beneficially owned by any
of his children or Mrs. Marjorie J. McGahran.
(c) "business day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York or Toronto,
Ontario are required or permitted to be closed;
(d) "control" (including the terms "controlled by" and " under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(e) "knowledge" means knowledge after reasonable inquiry of, in the
case of the Company, Mr. Waterhouse, Mr. Frank J. Petrilli, Mr. Peter A.
Wigger, Mr. John H. Chapel, Mr. Richard H. Neiman or Mr. Frank E. Conti
and in the case of Parent, any Executive Vice President or more senior
officer of Parent.
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Parent or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns,
<PAGE>
<PAGE>
46
directly or indirectly, 50% or more of the stock or other equity interests
the holder of which is generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
SECTION 7.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 7.5 Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
other than the Confidentiality Agreement, which shall remain in full force and
effect except for the provisions set forth in the second paragraph on page four
thereof, which are hereby terminated. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent and Merger Sub may assign all
or any of their respective rights and obligations hereunder to any other direct
subsidiary or subsidiaries of Parent, provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations.
SECTION 7.6 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 7.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 7.8 Consent to Jurisdiction. Each of the parties hereto by
execution hereof (i) hereby irrevocably submits to the jurisdiction of the
federal and state courts of the State of New York for the purpose of any action,
suit or proceeding arising out of or based upon this Agreement or the subject
matter hereof and (ii) hereby waives to the extent not prohibited by applicable
law, and agrees not to assert, by way of motion, as a defense or otherwise, in
any such action, suit or proceeding, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief, that its property
is exempt or immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in one of the above-named courts,
that any such action, suit or proceeding brought or maintained in one of the
above-named courts should be dismissed on grounds of forum non conveniens,
should be transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action,
<PAGE>
<PAGE>
47
suit or proceeding in any court other than one of the above-named courts, or
that this agreement or the subject matter hereof may not be enforced in or by
any of the above-named courts. Each of the parties hereto hereby consents to
service of process in any such suit, action or proceeding in any manner
permitted by the laws of the State of New York, agrees that service of process
by registered or certified mail, return receipt requested, is reasonably
calculated to give actual notice and waives and agrees not to assert by way of
motion, as a defense or otherwise, in any such action, suit or proceeding, any
claim that service of process made in accordance with this Section 7.8 does not
constitute good and sufficient service of process. The provisions of this
Section 7.8 shall not restrict the ability of any party to enforce in any court
any judgment obtained in a federal or state court of the State of New York.
SECTION 7.9 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 7.10 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE>
<PAGE>
48
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date written above.
THE TORONTO-DOMINION BANK
By: _________________________________
Name: W. Keith Gray
Title: Executive Vice President
TD/OAK, INC.
By: ________________________________
Name: W. Keith Gray
Title: President
WATERHOUSE INVESTOR SERVICES, INC.
By: __________________________________
Name: Lawrence M. Waterhouse, Jr.
Title: Chairman and Chief
Executive Officer
<PAGE>
<PAGE>
EXHIBIT A-1
Stockholders of the Company to Execute and
Deliver Stockholders Agreements
--------------------------------------------
Lawrence M. Waterhouse, Jr.
Jerome Belson
Maxine Belson
<PAGE>
<PAGE>
EXHIBIT A-2
Stockholders Agreements
<PAGE>
<PAGE>
EXHIBIT A-2
April 9, 1996
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
The Toronto-Dominion Bank
P.O. Box 1, Toronto-Dominion Centre
Toronto, Canada M5K 1A2
Latham & Watkins
885 Third Avenue
New York, New York 10022-4802
Dear Sirs:
In connection with the Merger described in the Agreement and Plan of
Merger by and between The Toronto-Dominion Bank (the "Parent"), TD/Oak, Inc.
("Merger Sub") and Waterhouse Investor Services, Inc. (the "Company") dated
April 9, 1996 (the "Agreement"), we hereby make the following representations.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Agreement.
1. We have no present plan or intention to sell, exchange, or
otherwise dispose of the Parent Common Shares we receive in the Merger.
2. We in fact will not on or prior to the second anniversary of the
date of the Merger, directly or indirectly, offer, sell, transfer, tender,
pledge or encumber (except on a recourse basis), assign or otherwise dispose of,
or enter into any contract, option or other arrangement with respect to, or
consent to the sale, transfer, pledge or encumbrance (except on a recourse
basis), assignment or other disposition of any interest in a number of Parent
Common Shares equal to 50% of the number of Parent Common Shares that we
individually receive in the Merger (the "Restricted Shares"). Notwithstanding
the immediately preceding sentence, the Restricted Shares shall not be subject
to the representation set forth in the immediately preceding sentence and we
shall have the right to dispose of said shares if (i) either of us dies, (ii)
either of us becomes disabled, (iii) a change occurs in our marital status, (iv)
either of us is subject to a claim of creditors that requires immediate payment
to avoid default under the obligation, (v) a decline in value of Parent Common
Shares occurs after the Effective Time and such decline is in excess of 25% of
the value of Parent Common Shares as of the Effective Time, (vi) another
unforeseen change of circumstances occurs provided that in the case of clause
(vi), we obtain and deliver to Parent an opinion of Latham & Watkins or another
independent and nationally recognized tax counsel acceptable to Parent to the
effect that such proposed disposition shall not
<PAGE>
<PAGE>
Simpson Thacher & Bartlett
The Toronto-Dominion Bank
April 9, 1996
Page 2
cause the Merger to become a taxable event. We represent and warrant that as of
the date hereof we have no expectation that any of the events described in the
foregoing clauses (i) through (vi) will occur prior to the second anniversary of
the date of the Merger.
3. We understand that the representations set forth in 1 and 2 above
are being expressly relied upon by Simpson Thacher & Bartlett and Latham &
Watkins in connection with the rendering of their respective opinions concerning
certain Federal income tax consequences of the Merger and by Parent and Merger
Sub as an inducement to enter into the Agreement and in determining the Federal
income tax consequences of the Merger, and that the delivery of such opinion is
a condition precedent to the consummation of the Merger.
4. The foregoing representations will be true and accurate as of the
Effective Time of the Merger. We agree promptly to notify Simpson Thacher &
Bartlett, Latham & Watkins and Parent to the extent that either of us have or
obtain knowledge or information indicating that any of the foregoing
representations ceases to be true and accurate.
Sincerely,
-----------------------------
Jerome Belson
-----------------------------
Maxine Belson
<PAGE>
<PAGE>
EXHIBIT A-2
April 9, 1996
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
The Toronto-Dominion Bank
P.O. Box 1, Toronto-Dominion Centre
Toronto, Canada M5K 1A2
Latham & Watkins
885 Third Avenue
New York, New York 10022-4802
Dear Sirs:
In connection with the Merger described in the Agreement and Plan of
Merger by and between The Toronto-Dominion Bank (the "Parent"), TD/Oak, Inc.
("Merger Sub") and Waterhouse Investor Services, Inc. (the "Company") dated
April 9, 1996 (the "Agreement"), I hereby make the following representations.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Agreement.
1. I have no present plan or intention to sell, exchange, or
otherwise dispose of the Parent Common Shares I receive in the Merger.
2. I in fact will not on or prior to the second anniversary of the
date of the Merger, directly or indirectly, offer, sell, transfer, tender,
pledge or encumber (except on a recourse basis), assign or otherwise dispose of,
or enter into any contract, option or other arrangement with respect to, or
consent to the sale, transfer, pledge or encumbrance (except on a recourse
basis), assignment or other disposition of any interest in a number of Parent
Common Shares equal to 50% of the number of Parent Common Shares that I
individually receive in the Merger (the "Restricted Shares"). Notwithstanding
the immediately preceding sentence, the Restricted Shares shall not be subject
to the representation set forth in the immediately preceding sentence and I
shall have the right to dispose of said shares if (i) I die, (ii) I become
disabled, (iii) a change occurs in my marital status, (iv) my spouse dies or
becomes disabled, (v) I am subject to a claim of creditors that requires
immediate payment to avoid default under the obligation, (vi) a decline in value
of Parent Common Shares occurs after the Effective Time and such decline is in
excess of 25% of the value of Parent Common Shares as of the Effective Time or
(vii) another unforeseen change of circumstances occurs provided that in the
case of clause (vii), I obtain and deliver to Parent an opinion of Latham and
Watkins or another independent and nationally recognized tax counsel acceptable
to Parent to the effect that such proposed
<PAGE>
<PAGE>
Simpson Thacher & Bartlett
The Toronto-Dominion Bank
April 9, 1996
Page 2
disposition shall not cause the Merger to become a taxable event. I represent
and warrant that as of the date hereof I have no expectation that any of the
events described in the foregoing clauses (i) through (vii) will occur prior to
the second anniversary of the date of the Merger.
3. I understand that the representations set forth in 1 and 2 above
are being expressly relied upon by Simpson Thacher & Bartlett and Latham &
Watkins in connection with the rendering of their respective opinions concerning
certain Federal income tax consequences of the Merger and by Parent and Merger
Sub as an inducement to enter into the Agreement and in determining the Federal
income tax consequences of the Merger, and that the delivery of such opinion is
a condition precedent to the consummation of the Merger.
4. The foregoing representations will be true and accurate as of the
Effective Time of the Merger. I agree promptly to notify Simpson Thacher &
Bartlett, Latham & Watkins and Parent to the extent that I have or obtain
knowledge or information indicating that any of the foregoing representations
ceases to be true and accurate.
Sincerely,
Lawrence M. Waterhouse, Jr.
<PAGE>
<PAGE>
EXHIBIT B-1
Stockholders of the Company to Execute and
Deliver Voting Agreement
------------------------------------------
Lawrence M. Waterhouse, Jr.
Lawrence M. Waterhouse, III
Patrick R. Waterhouse
Kevin C. Waterhouse
Christine A. Waterhouse
Jennifer A. Waterhouse
<PAGE>
<PAGE>
EXHIBIT B-2
Voting Agreement
<PAGE>
<PAGE>
VOTING AGREEMENT
AGREEMENT dated as of April 9, 1996 by and among The
Toronto-Dominion Bank ("Parent") and each of the other parties signatory hereto
(each a "Stockholder").
RECITALS
Concurrently herewith, Parent, a Canadian chartered bank, TD/Oak,
Inc., a Delaware corporation and a direct wholly-owned subsidiary of Parent
("Merger Sub"), and Waterhouse Investor Services, Inc., a Delaware corporation
(the "Company"), are entering into an Agreement and Plan of Merger of even date
herewith (as such agreement may be amended from time to time, the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement) pursuant to which the Company will
be merged with and into Merger Sub (the "Merger"), and each share of common
stock, par value $.01 per share, of the Company ("Company Common Stock") issued
and outstanding immediately prior to the Effective Time will, except as
otherwise provided in the Merger Agreement, be converted into the Merger
Consideration .
As a condition to Parent and Merger Sub entering into the Merger
Agreement, Parent and Merger Sub require that each Stockholder enter into, and
each such Stockholder has agreed to enter into, this Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Representations and Warranties. Each Stockholder hereby severally
represents and warrants to Parent as follows:
(a) Ownership of Shares. (1) Such Stockholder is the record holder
and beneficial owner of the number of shares of Company Common Stock as set
forth opposite such Stockholder's name on Schedule 1 hereto, and in addition is
the beneficial owner of the number of shares of Company Common Stock held in the
ESOP and allocated to him or her which is set forth opposite his or her name on
Schedule 1 hereto (the "Existing Shares", and together with any shares of
Company Common Stock acquired by such Stockholder in any such capacities after
the date hereof and prior to the termination hereof, whether upon exercise of
options, conversion of convertible securities, purchase, exchange or otherwise,
the "Shares").
(2) On the date hereof, (A) the Existing Shares set forth opposite
such Stockholder's name on Schedule 1 constitute all of the shares of
Company Common Stock owned of record or beneficially by such Stockholder,
and (B) Mr. Lawrence M.
<PAGE>
<PAGE>
2
Waterhouse, Jr. ("Mr. Waterhouse") holds a power of attorney, a copy of
which is attached hereto, allowing Mr. Waterhouse to vote the Shares held
by the other Stockholders to the extent described in such power of
attorney (the "Power of Attorney").
(3) Subject to the Power of Attorney in the case of all Stockholders
other than Mr. Waterhouse, such Stockholder has sole voting and
dispositive power with respect to the Shares beneficially owned by such
Stockholder.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid and
binding agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
such Stockholder's spouse, enforceable against such person in accordance with
its terms.
(c) No Conflicts. Neither the execution and delivery of this
Agreement by such Stockholder nor the consummation by such Stockholder of the
transactions contemplated hereby nor compliance by such Stockholder with any of
the provisions hereof will (x) conflict with or result in any breach of any
agreement to which such Stockholder is a party, or (y) violate as at the date
hereof any order, writ, injunction, decree, judgment, order, statute, rule or
regulation applicable to such Stockholder.
(d) Such Stockholder during the term hereof shall hold his or her
Shares and the certificates representing such Shares free of any agreements,
understandings or arrangements with respect to the voting of such Shares that
would breach the provisions of, or otherwise would be inconsistent with, this
Agreement.
(e) Such Stockholder understands and acknowledges that Parent and
Merger Sub are entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
2. Agreement to Vote Each Stockholder hereby severally agrees that,
during the time this Agreement is in effect, at any meeting of the stockholders
of the Company, however called, or in connection with any written consent of the
stockholders of the Company, such Stockholder shall vote (or cause to be voted)
the Shares held of record or beneficially by such Stockholder (i) in favor of
the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Merger Agreement and this Agreement and any actions required in
furtherance hereof and thereof; and (ii) against (a) any other Business
Combination, or (b) any other action which, as its primary purpose, is
intended to impede, delay, postpone, or prevent the approval and adoption of
the Merger Agreement by the stockholders of the Company or the consummation of
the transactions contemplated thereby or has, as its primary purpose, the
consummation of any other Business
<PAGE>
<PAGE>
3
Combination. Each Stockholder hereby agrees, upon Parent's request, to furnish
Parent a proxy in form and substance reasonably satisfactory to Parent to
effectuate the foregoing.
3. Certain Covenants of Stockholders. Except in accordance with the
terms of this Agreement, each Stockholder hereby severally covenants and agrees
as follows:
3.1 No Solicitation. Such Stockholder shall not, solely in his or
her capacity as such, take any action which is prohibited by, or fail to take
any action which is required by, Section 4.8 of the Merger Agreement (without
regard to the proviso thereto) as it applies to Representatives of the Company
(whether or not such Stockholder would be deemed to be such a Representative for
purposes of Section 4.8 of the Merger Agreement) provided however, it shall be
presumed that discussions or negotiations of Lawrence M. Waterhouse, Jr. in
connection with any inquiry or Transaction Proposal are in his capacity as
director, officer or employee of the Company.
3.2 Restriction on Transfer, Proxies and Non-Interference. Such
Stockholder shall not, directly or indirectly: (i) except pursuant to the terms
of the Merger Agreement and this Agreement, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, any or all of such Stockholder's
Shares or any interest therein, unless the transferee or pledgee of such Shares
agrees in writing (with a copy furnished to Parent) to be bound by all of the
provisions of this Agreement with respect to such Shares; (ii) except as
contemplated hereby, grant any proxies or powers of attorney, deposit any Shares
into a voting trust or enter into a voting agreement with respect to any Shares;
or (iii) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect in any material respect or have
the effect of preventing or disabling such Stockholder from performing such
Stockholder's obligations under this Agreement.
3.3 Additional Shares. The Stockholder hereby agrees, while this
Agreement is in effect, to promptly notify the Parent of the number of any new
Shares of Company Common Stock acquired by the Stockholder, if any, after the
date hereof.
4. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
5. Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors.
6. Termination. This Agreement and the covenants and agreements
contained herein with respect to the Company Common Stock shall terminate on the
first to occur of (a) the
<PAGE>
<PAGE>
4
Effective Time, and (b) the "Termination Date" which, as used herein, means the
date upon which the Merger Agreement is terminated in accordance with its terms.
7. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director, officer or employee of the Company
makes any agreement or understanding herein in his or her capacity as such
director, officer or employee and nothing contained in this Agreement shall in
any way limit or restrict the ability of any such person to vote or otherwise
act, in his or her capacity as a director, officer or employee of the Company,
as required by his or her fiduciary duties to the stockholders of the Company or
his or her responsibilities in such capacity as an officer or employee. Each
Stockholder signs solely in his or her capacity as the record and beneficial
owner of such Stockholder's Shares or, in the case of Mr. Waterhouse, as holder
of the Power of Attorney with respect to the Shares held by the other
Stockholders.
8. Miscellaneous.
8.1 Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties hereto.
8.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
8.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Stockholders: At their respective addresses set forth on
Schedule 1 hereto;
copy to: Saterlee Stephens Burke & Burke
230 Park Avenue
New York, New York 10169
Attn: James Rittinger, Esq.
Additional copy to: Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022-4802
Attn: Roger H. Kimmel, Esq.
<PAGE>
<PAGE>
5
If to Parent: The Toronto-Dominion Bank
Toronto-Dominion Centre
Toronto, Canada M5K 1A2
Attn: I. Alexander Norton, Esq.
copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attn: Lee Meyerson, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
8.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.5 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
8.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
8.7 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
8.8 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
8.9 Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to
<PAGE>
<PAGE>
6
Rule 13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all other
Persons with whom such Person would constitute a "group" as described in Section
13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
<PAGE>
<PAGE>
7
IN WITNESS WHEREOF, Parent, the Company and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
THE TORONTO-DOMINION BANK
By:____________________________
Name:
Title:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
<PAGE>
<PAGE>
SCHEDULE 1
Number of Shares of Company
Common Stock Owned by
Name and Address Stockholder (1) or held by ESOP
of Stockholder and allocated to Stockholder (2)
- -------------- --------------------------------
Lawrence M. Waterhouse, Jr. 1,152,499 (1)
c/o Waterhouse Investor Services, Inc. 85,131 (2)
100 Wall Street
New York, New York 10005
Lawrence M. Waterhouse, III 220,312 (1)
c/o Waterhouse Investor Services, Inc. 4,455 (2)
100 Wall Street
New York, New York 10005
Patrick R. Waterhouse 219,368 (1)
c/o Waterhouse Investor Services, Inc. 4,455 (2)
100 Wall Street
New York, New York 10005
Kevin C. Waterhouse 220,425 (1)
c/o Waterhouse Investor Services, Inc. 4,455 (2)
100 Wall Street
New York, New York 10005
Christine A. Waterhouse 221,660 (1)
c/o Waterhouse Investor Services, Inc. 16,552 (2)
100 Wall Street
New York, New York 10005
Jennifer A. Waterhouse 222,160 (1)
c/o Waterhouse Investor Services, Inc. 562 (2)
100 Wall Street
New York, New York 10005
<PAGE>
<PAGE>
EXHIBIT C
Warrant Agreement
<PAGE>
<PAGE>
EXHIBIT C
THE WARRANT GRANTED BY THIS WARRANT AGREEMENT AND THE SECURITIES ISSUABLE UPON
ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE TRANSFER OF SUCH WARRANT AND THE SECURITIES ISSUABLE UPON ITS
EXERCISE ARE SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND PURSUANT TO THE TERMS OF THIS WARRANT AGREEMENT.
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of April 9, 1996 (the "Agreement"), by and
between WATERHOUSE INVESTOR SERVICES, INC., a Delaware corporation (the
"Company"), and THE TORONTO-DOMINION BANK, a Canadian chartered bank ("Parent").
WHEREAS, the Company, Parent and TD/Oak, Inc., a Delaware corporation and
a direct wholly owned subsidiary of Parent ("Merger Sub"), are concurrently
herewith entering into an Agreement and Plan of Merger dated as of the date
hereof (the "Merger Agreement"; capitalized terms not defined herein shall have
the meanings set forth in the Merger Agreement), providing for, among other
things, the merger of the Company with and into Merger Sub with Merger Sub as
the surviving corporation; and
WHEREAS, as a condition and inducement to Parent's willingness to enter
into the Merger Agreement, Parent has requested that the Company agree, and the
Company has agreed, to issue to Parent the Warrant (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the Company and Parent agree as follows:
1. Issuance of Warrant. Subject to the terms and conditions set forth
herein, the Company hereby issues to Parent a warrant (the "Warrant")
representing the right to purchase from time to time (subject to the provisions
of Section 2) up to 250,000 shares (the "Shares") of Common Stock, par value
$0.01 per share, of the Company ("Company Common Stock") at a purchase price of
$0.01 per Share (the "Purchase Price").
2. Exercise of Warrant. (a) Parent may exercise the Warrant, in whole or
in part, at any time and from time to time following the termination of the
Merger Agreement at the time specified in clause (A) of the last paragraph of
Section 6.3(a) of the Merger Agreement, subject to and upon the occurrence of
any of the events described in Section 6.3(a) of the Merger Agreement (each, a
"Purchase Event"); provided that, this Agreement and the Warrant shall terminate
and be of no further force and effect upon the earliest to occur of (i) the
Effective
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2
Time, (ii) termination of the Merger Agreement prior to the occurrence of a
Purchase Event or (iii) except as provided in the last sentence of this Section
2(a), the tenth anniversary of the date of this Agreement; and, provided,
further, that any purchase of Shares upon exercise of the Warrant shall be
subject to compliance with applicable law, including the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). Notwithstanding the termination of the
Warrant pursuant to clause (iii) above, Parent shall be entitled to purchase
those Shares with respect to which it has exercised the Warrant in accordance
with the terms hereof prior to the termination of the Warrant, subject to the
Company's right to repurchase such Shares pursuant to the provisions of Section
7 hereof. The termination of the Warrant shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
(b) In the event Parent elects to exercise the Warrant, it shall send to
the Company a written notice (the date on which such notice is given being
herein referred to as the "Notice Date") specifying (i) the total number of
Shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than five business days nor later than 20 business days from
the Notice Date for the closing of such purchase (the "Closing Date"); provided
that if the closing of the purchase and sale pursuant to the Warrant (the
"Closing") cannot be consummated by reason of any applicable judgment, decree,
order, law or regulation, the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided, further, without
limiting the foregoing, that if prior notification to or approval of the Federal
Reserve or any other regulatory authority is required in connection with such
purchase, Parent shall promptly file the required notice or application for
approval and shall expeditiously process the same (and the Company shall
cooperate with Parent in the filing of any such notice or application and the
obtaining of any such approval), and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained, and in either event, any requisite waiting
period has passed; and provided further, that the Company shall have the right
to repurchase (in accordance with the provisions of Section 7 hereof) on the
Closing Date that portion of the Warrant which Parent proposes to exercise.
3. Payment and Delivery of Certificates. (a) On each Closing Date, Parent
shall pay to the Company in immediately available funds by wire transfer to a
bank account designated by the Company an amount equal to the Purchase Price
multiplied by the number of Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), (i) the Company shall deliver to
Parent (A) a certificate or certificates representing the Shares to be purchased
at such Closing, which Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever, and (B) if the Warrant is being
exercised in part only, an executed new Warrant Agreement with the same terms as
this Agreement evidencing the right to purchase the balance of the shares of
Company Common Stock purchasable hereunder, and (ii) Parent shall deliver to the
Company a letter agreeing that Parent shall not offer to sell or otherwise
dispose of such Shares in violation of applicable federal or state securities
laws or the provisions of this Agreement.
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3
(c) Certificates for the Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE TRANSFER OF SUCH
SECURITIES IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A WARRANT AGREEMENT DATED
AS OF APRIL 9, 1996. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE COMPANY OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Parent shall have delivered
to the Company a copy of a letter from the staff of the SEC, or an opinion of
counsel in form and substance reasonably satisfactory to the Company and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
(d) Upon the giving by Parent to the Company of the written notice of
exercise of the Warrant provided for under Section 2(a), the tender of the
applicable Purchase Price in immediately available funds, the tender of this
Agreement to the Company, and the receipt of all necessary regulatory approvals
(if any), Parent shall be deemed to be the holder of record of the shares of
Company Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Company Common Stock shall not then be actually
delivered to Parent. The Company shall pay all expenses, and any and all United
States federal, state, and local taxes and other charges that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 3(d) in the name of Parent; if such stock certificates are to
be in the name of an assignee, transferee, or designee of Parent, the Company
shall pay all transfer charges (but not United States federal, state and local
taxes) in respect thereof.
(e) The Company agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Company Common Stock so that the Warrant may be exercised without additional
authorization of Company Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Company Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
the Company, (iii) promptly to take all reasonable action as may from time to
time be required (including (A) complying with all premerger notification,
reporting and waiting period requirements and (B) in the event prior approval of
or notice to any
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4
Governmental Entity is necessary before the Warrant may be exercised,
cooperating fully with Parent in preparing such applications or notices and
providing such information to such Governmental Entity as it may require) in
order to permit Parent to exercise the Warrant and the Company duly and
effectively to issue shares of Company Common Stock pursuant thereto, and (iv)
promptly to take all action provided herein to protect the rights of Parent
against dilution.
(f) Parent agrees that, in the event the stockholders of the Company are
asked to consider and vote on a Transaction Proposal or a Business Combination
within the 13-month period commencing on the date of termination of the Merger
Agreement, Parent shall vote all shares of Company Common Stock acquired
pursuant to the Warrant with respect to which Parent then has beneficial
ownership proportionately with all other shares of Company Common Stock other
than shares of Company Common Stock held by affiliates of the Company.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent as follows:
(a) Due Authorization. The Company has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes a valid
and binding obligation of the Company, enforceable in accordance with its
terms.
(b) Authorized Stock. The Company has taken all necessary corporate
and other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to
permit it to issue, and, at all times from the date hereof until the
obligation to deliver Company Common Stock upon the exercise of the
Warrant terminates, will have reserved for issuance, upon exercise of the
Warrant, shares of Company Common Stock necessary for Parent to exercise
the Warrant, and the Company will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Company Common
Stock or other securities which may be issued pursuant to Section 6 upon
exercise of the Warrant. The shares of Company Common Stock to be issued
upon due exercise of the Warrant, including all additional shares of
Company Common Stock or other securities which may be issuable upon
exercise of the Warrant pursuant to Section 6, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid and nonassessable,
and shall be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including any preemptive
rights of any stockholder of the Company.
(c) No Conflicts. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of, any provision of the
Certificate of Incorporation or By-laws of the Company or any subsidiary
of the Company or, subject to obtaining any approvals or consents
contemplated hereby, result in any violation of or default under any loan
or credit agreement, note, mortgage, indenture, lease or other agreement,
obligation,
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5
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the
Company or any subsidiary of the Company or their respective properties or
assets which conflict, violation or default would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(d) Board Action. The Board of Directors of the Company having
approved this Agreement and the Merger Agreement and the consummation of
the transactions contemplated hereby and thereby, the provisions of
Article Fifteenth of the Company's Certificate of Incorporation and
Section 203 of the Delaware General Corporation Law do not and will not
apply to this Agreement or the purchase of shares of Company Common Stock
pursuant to this Agreement.
5. Representations and Warranties of Parent. Parent hereby represents and
warrants to the Company that:
(a) Due Authorization. Parent has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent. This Agreement has been
duly executed and delivered by Parent and constitutes a valid and binding
obligation of Parent, enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of, any provision of the
Charter or By-laws of Parent or any subsidiary of Parent or, subject to
obtaining any approvals or consents contemplated hereby, result in any
violation of or default under any loan or credit agreement, note,
mortgage, indenture, lease or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or any subsidiary
of Parent or their respective properties or assets which conflict,
violation or default would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent.
(c) Purchase Not for Distribution. The Warrant is not, and any
Shares or other securities acquired by Parent upon exercise of the Warrant
will not be, taken with a view to the public distribution thereof and will
not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of any
change in, or distributions in respect of, Company Common Stock by reason of a
stock dividend, split-up, recapitalization, merger, combination, exchange of
shares, distribution to all stockholders of warrants or other convertible
securities or similar transaction, the type and number of shares or securities
subject to the Warrant, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction,
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6
so as to fully and equitably preserve the economic benefits intended to be
provided to Parent pursuant to this Agreement.
(b) In the event that the Company shall enter into an agreement to effect
a Business Combination, then, and in each such case, the agreement governing
such transaction shall make proper provisions so that the Warrant shall, upon
the consummation of any such transaction, entitle Parent to receive upon
exercise of the Warrant the number and class of shares or other securities or
property that Parent would have received in respect of Company Common Stock if
the Warrant had been exercised immediately prior to such event or the record
date therefor, as applicable.
(c) The Company shall not enter into any definitive agreement relating to
a Business Combination unless the other party or parties thereto agree
unconditionally in writing (a copy of which shall be furnished to Parent as
promptly as practicable after the execution and public announcement thereof) to
assume all the obligations of the Company hereunder and take all other actions
that may be necessary so that the provisions of this Section 6 are given full
force and effect.
7. Repurchase of Warrant. (a) At the request of Parent at any time
commencing upon the occurrence of a Payment Event and ending 18 months
immediately thereafter, or at the election of the Company at any time after the
Warrant becomes exercisable, the Company (or any successor entity thereof) shall
repurchase from Parent and Parent shall sell to the Company (or any successor
entity thereof) (I) the Warrant and (II) all shares of Company Common Stock
purchased by Parent pursuant hereto with respect to which Parent then has
beneficial ownership. The date on which Parent gives notice to the Company, or
the Company gives notice to Parent, of its election to exercise its rights under
this Section 7 is referred to as the "Election Date". Such repurchase shall be
at an aggregate price (the "Repurchase Consideration") equal to:
(A) the aggregate Purchase Price paid by Parent for any shares of
Company Common Stock acquired pursuant to the Warrant with respect to
which Parent then has beneficial ownership; plus
(B) the excess, if any, of (x) the Applicable Price (as defined below)
as of the Election Date for a share of Company Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 6(a)),
multiplied by the number of shares of Company Common Stock with respect to
which the Warrant has not been exercised; plus
(C) the excess, if any, of the Applicable Price as of the Election Date
over the Purchase Price paid (or, in the case of Shares with respect to
which the Warrant has been exercised but the Closing Date has not
occurred, payable (subject to adjustment pursuant to Section 6(a))) by
Parent for each share of Company Common Stock with respect to which the
Warrant has been exercised and with respect to which Parent then has
beneficial ownership, multiplied by the number of such shares.
(b) If either Parent or the Company elect to exercise their respective
rights under this Section 7, the Company shall, within 10 business days after
the Election Date, pay the
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7
Repurchase Consideration to Parent in immediately available funds, and Parent
shall surrender to the Company the Warrant and the certificates evidencing the
shares of Company Common Stock purchased hereunder with respect to which Parent
then has beneficial ownership, and Parent shall warrant that it has sole record
and beneficial ownership of such Shares and that the same are then free and
clear of all liens, claims, charges and encumbrances of any kind whatsoever.
Notwithstanding the foregoing, to the extent that prior notification to or
approval of the Federal Reserve or other regulatory authority is required in
connection with the payment of all or any portion of the Repurchase
Consideration, the Company shall deliver from time to time that portion of the
Repurchase Consideration that it is not then so prohibited from paying and shall
promptly provide the required notice or application for approval and shall
expeditiously process the same (and Parent shall cooperate with the Company in
the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to the
preceding sentence for the payment of the portion of the Repurchase
Consideration requiring such notification or approval shall run instead from the
date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If the Federal
Reserve or any other regulatory authority disapproves of any part of the
Company's proposed repurchase pursuant to this Section 7, the Company shall
promptly give notice of such fact to Parent and redeliver to Parent the Shares
it is then prohibited from repurchasing, and Parent shall have the right to
exercise the Warrant as to the number of Shares for which the Warrant was
exercisable at the Election Date less the number of shares as to which payment
has been made pursuant to Section 7(a)(B); provided that if the Warrant shall
have terminated prior to the date of such notice or shall be scheduled to
terminate at any time before the expiration of a period ending on the thirtieth
business day after such date, Parent shall nonetheless have the right so to
exercise the Warrant or exercise its rights under Section 7 until the expiration
of such period of 30 business days.
(c) For purposes of this Agreement, the "Applicable Price," as of any
date, means the average of the closing sales price per share of Company Common
Stock quoted on the NYSE (or if Company Common Stock is not quoted on the NYSE,
the highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotations System or, if the shares of Company
Common Stock are not quoted thereon, on the principal trading market on which
such shares are traded as reported by a recognized source) for the 15
consecutive trading business days ending on the third business day prior to such
date; provided, however, that in the event that the Warrant is being repurchased
at the election of the Company, the "Applicable Price" shall be no less than the
closing sale price per share of Company Common Stock on the NYSE on the date of
this Agreement. If as a result of the Payment Event the Company Common Stock has
been converted into or exchanged for securities of another company, cash or
other property, the determination of Applicable Price shall be adjusted
accordingly. If the securities being valued are not traded in any public market,
then the Applicable Price of such securities shall be the value determined by an
independent nationally recognized investment banking firm selected by the
Company (or its successor) and reasonably acceptable to Parent.
8. Registration Rights. (a) The Company shall, if requested by Parent at
any time commencing 90 days after the occurrence of a Purchase Event (but
subject to Section 8(b) below), as expeditiously as possible prepare and file a
registration statement under the Securities
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8
Act if such registration is necessary in order to permit the sale or other
disposition of any or all of the securities that have been acquired by or are
issuable to Parent upon exercise of the Warrant in accordance with the intended
method of sale or other disposition stated by Parent, including a "shelf"
registration statement under Rule 415 under the Securities Act or any successor
provision, and the Company shall use its best efforts to qualify such shares or
other securities under any applicable state securities laws; provided that the
Company shall have no registration or other obligations under this Section 8 if
it has given or gives notice to Parent of its election to purchase the
securities proposed to be registered pursuant to Section 7 of this Agreement.
The Company shall use all reasonable efforts to cause such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor (provided that the Company shall not be
required to make any payments to any non-governmental parties in order to obtain
such consents or waivers) and to keep such registration statement effective for
such period as may be reasonably necessary to effect such sale or other
disposition. The obligations of the Company hereunder to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 90 days in the aggregate if the Board of Directors
of the Company shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require disclosure of
nonpublic information that would materially and adversely affect the Company.
Any registration statement prepared and filed under this Section 8, and any sale
covered thereby, shall be at the Company's expense except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Parent's counsel related thereto. Parent shall provide all information
reasonably requested by the Company for inclusion in any registration statement
to be filed hereunder. If the Company at any time during the term of the Warrant
proposes to register any shares of Company Common Stock under the Securities Act
in connection with an underwritten public offering of such Company Common Stock,
the Company will promptly give written notice to Parent of its intention to do
so and, upon the written request of Parent given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Company
Common Stock intended to be included in such underwritten public offering by
Parent), the Company will cause all such shares for which Parent requests
participation in such registration to be so registered and included in such
underwritten public offering; provided that, if the managing underwriters of
such offering advise the Company in writing that in their opinion the inclusion
of the full number of shares of Company Common Stock requested to be included in
such registration may materially adversely affect such offering, the Company
shall include the shares requested to be included therein by Parent pro rata
with the shares intended to be included therein by the Company; and provided
further, that if the Company offers to include all of the shares of Company
Common Stock then held by Parent in a registered offering of the Company's
securities, then Parent shall no longer be entitled to request that the Company
file a registration statement as provided above, and the Company shall have no
such obligation. In connection with any registration pursuant to this Section 8,
the Company and Parent shall provide each other and any underwriter of the
offering with customary representations, warranties, covenants, indemnification
and contribution in connection with such registration.
(b) Upon the request of Parent to exercise the registration rights set
forth in Section 8(a) above, the Company may at its option, exercised within
five days after receipt of such request from Parent, elect to either (i) comply
with such registration request, or (ii) repurchase such portion of the Warrant
as is exercisable for shares of Company Common Stock with an aggregate
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9
Applicable Price equal to $3 million, and defer the exercise of Parent's
registration rights with respect to the remaining shares of Company Common Stock
issuable upon exercise of the Warrant until such date, not more than nine months
after the date of the Payment Event as the Company shall determine, at which
time the Company shall perform its obligations under Section 8(a) as set forth
therein.
9. Listing. If Company Common Stock or any other securities to be acquired
upon exercise of the Warrant are then listed on the NYSE, the Company, upon the
request of Parent at the time such securities are registered pursuant to Section
8, will promptly file an application to list the shares of Company Common Stock
or other securities to be acquired upon exercise of the Warrant on the NYSE and
will use its best efforts to obtain approval of such listing as soon as
practicable.
10. Division of Warrant. This Agreement (and the Warrant granted hereby)
are exchangeable, without expense, at the option of Parent, upon presentation
and surrender of this Agreement at the principal office of the Company for other
Agreements providing for Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Company
Common Stock purchasable hereunder. The terms "Agreement" and "Warrant" as used
herein include any other Agreements and related Warrants for which this
Agreement (and the Warrant granted hereby) may be exchanged. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement executed
and delivered shall constitute an additional contractual obligation on the part
of the Company, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by anyone.
11. Miscellaneous. (a) Expenses. Except as otherwise provided in Section
8, each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement (including the Merger Agreement and the other documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a federal or state
regulatory agency to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
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10
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. If for any reason such court or regulatory agency
determines that the Warrant does not permit Parent to acquire, or does not
require the Company to repurchase, the full number of shares of Company Common
Stock as provided in Sections 2 and 7 (as adjusted pursuant to Section 6), it is
the express intention of the Company to allow Parent to acquire or to require
the Company to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Parent to:
The Toronto-Dominion Bank
Toronto-Dominion Centre
Toronto, Canada M5K 1A2
Attention: I. Alexander Norton
Telecopier No.: (416) 982-6166
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Lee Meyerson
Telecopier No.: (212) 455-2502
If to the Company to:
Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
Attention: Lawrence M. Waterhouse, Jr.
Telecopier No.: (212) 509-8099
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11
with a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022-4802
Attention: Roger H. Kimmel
Telecopier No.: (212) 751-4864
(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Prior to the occurrence of a Purchase Event, neither this
Agreement nor any of the rights, interests or obligations hereunder or under the
Warrant shall be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other party, except
that Parent may assign this Agreement to a wholly owned subsidiary of Parent.
From and after the termination of the Merger Agreement upon the occurrence of a
Purchase Event, Parent may assign all or part of its rights hereunder to any
person. It shall be a condition precedent to such assignment that the assignee
shall agree to be bound by all the obligations of assignor under this Agreement,
including, without limitation, the provisions of Section 7 hereof. Subject to
the preceding sentences, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Warrant by
Parent or repurchase of the Warrant by the Company, the Company and Parent shall
execute and deliver all other documents and instruments and take all other
action that may be reasonably necessary in order to consummate the transactions
provided for by such exercise or repurchase.
(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
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12
IN WITNESS WHEREOF, the Company and Parent have caused this Warrant
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
WATERHOUSE INVESTOR SERVICES, INC.
By: __________________________
Name:
Title:
THE TORONTO-DOMINION BANK
By: __________________________
Name:
Title:
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<PAGE>
EXHIBIT D
Form of Company Affiliate Letter
Gentlemen:
The undersigned, a holder of shares of Common Stock, par value $.01
per share ("Company Stock"), of Waterhouse Investor Services, Inc., a Delaware
corporation (the "Company"), may be entitled to receive in connection with the
merger (the "Merger") of the Company with TD/Oak, Inc., a Delaware corporation,
securities (the "Parent Securities") of The Toronto-Dominion Bank, a Canadian
chartered bank ("Parent"). The undersigned acknowledges that the undersigned may
be deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule
145") promulgated under the Securities Act of 1933 (the "Act"), although nothing
contained herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer any Parent Securities received
by the undersigned in exchange for any shares of Company Stock pursuant to the
Merger may be restricted unless such transaction is registered under the Act or
an exemption from such registration is available. The undersigned understands
that such exemptions are limited and the undersigned has obtained advice of
counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with the Company
that the undersigned will not sell, assign or transfer any of Parent Securities
received by the undersigned in exchange for shares of Company Stock pursuant to
the Merger except (i) pursuant to an effective registration statement under the
Act, (ii) in conformity with the volume and other limitations of Rule 145 or
(iii) in a transaction which, in the opinion of independent counsel reasonably
satisfactory to Parent or as described in a "no-action" or interpretive letter
from the Staff of the Securities and Exchange Commission (the "SEC"), is not
required to be registered under the Act.
In the event of a sale or other disposition by the undersigned of
Parent Securities pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Parent Securities disposed of by
the undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of Parent Securities sold as
indicated in the letter.
The undersigned acknowledges and agrees that appropriate legends
will be placed on certificates representing Parent Securities received by the
undersigned in the Merger or held by a transferee thereof, which legends will be
removed by delivery of substitute certificates upon receipt of an opinion in
form and substance reasonably satisfactory to Parent from independent
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2
counsel reasonably satisfactory to Parent to the effect that such legends are no
longer required for purposes of the Act.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Securities and (ii) the receipt by Parent of this letter is an inducement and a
condition to Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
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<PAGE>
ANNEX I
TO EXHIBIT D
[Name] [Date]
On __________________ the undersigned sold the securities
("Securities") of The Toronto-Dominion Bank (the "Company") described below in
the space provided for that purpose (the "Securities"). The Securities were
received by the undersigned in connection with the merger of Waterhouse Investor
Services, Inc. with and into TD/Oak, Inc.
Based upon the most recent report or statement filed by the Company
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the undersigned has not
made any payment in connection with the offer or sale of the Securities to any
person other than to the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]
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EXHIBIT E-1
Form of Employment Agreement for Lawrence M. Waterhouse, Jr.
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<PAGE>
EXHIBIT E-1
EMPLOYMENT AGREEMENT
AGREEMENT, made _______ __ ,1996 by and between WATERHOUSE INVESTOR
SERVICES, INC. a Delaware corporation (the "Company") and LAWRENCE M.
WATERHOUSE, JR. ("Executive").
RECITALS
In order to induce Executive to serve as the Chairman and Chief
Executive Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as its Chairman and
Chief Executive Officer. In his capacity as the Chairman and Chief Executive
Officer of the Company, Executive shall report to the Board of Directors of the
Company (the "Board") and Mr. W. Keith Gray, Executive Vice President of The
Toronto-Dominion Bank, or any successors to Mr. Gray (any subsequent reference
herein to Mr. Gray shall also refer to any such successors) and shall have the
customary powers, responsibilities and authorities of chairmen and chief
executive officers of corporations of the size, type and nature of the Company,
as it exists from time to time and as are assigned
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2
by the Board or Mr. Gray, including, without limitation, the determination and
execution of an orderly process of succession (including the transfer of duties
from the Executive to other officers of the Company, in contemplation of
Executive's retirement upon the expiration of the term hereof).
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as the Chairman and Chief Executive Officer of the
Company commencing as of _________ __, 1996, and agrees to devote such of his
working time and efforts as the Board or Mr. Gray shall determine, to the best
of his ability, experience and talent, to the performance of services, duties
and responsibilities in connection therewith. Executive shall perform such
duties and exercise such powers, commensurate with his position, as the Chairman
and Chief Executive Officer of the Company as Mr. Gray or the Board shall from
time to time delegate to him on such terms and conditions and subject to such
restrictions as Mr. Gray or the Board may reasonably from time to time impose.
1.3 Nothing in this Agreement shall preclude Executive from engaging
in charitable and community affairs, from managing any passive investment, from
managing businesses not in competition with the Company (as defined in section
11(c) hereof) or as contemplated by Section 11(d) hereof, or from serving,
subject to the prior approval of Mr. Gray or the Board, as a member of boards of
directors or as a trustee of any other corporation, association or entity. For
purposes of the preceding sentence, any approval by Mr. Gray or the Board
required therein shall not be unreasonably withheld, and such approval shall not
be required at any time that Executive is no longer an employee of the Company.
2. Term of Employment. Executive's term of employment under this
Agreement shall commence on _______ __, 1996 and, subject to the terms hereof,
shall terminate on the
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3
earlier of (i) _________ __, 2002 (the "Termination Date") or (ii) termination
of Executive's employment pursuant to this Agreement; provided, however, that
any termination of employment by Executive other than for Good Reason may only
be made upon 90 days prior written notice to the Company and any termination of
employment by Executive for Good Reason may only be made upon 30 days prior
written notice to the Company.
3. Compensation.
3.1 Salary. During Executive's employment under the terms of this
Agreement, the Company shall pay Executive a base salary ("Base Salary") at the
rate of $1.2 million per annum. Base Salary shall be payable in accordance with
the ordinary payroll practices of the Company.
3.2 Annual Bonus. In addition to his Base Salary, the Board, in it
sole discretion, may award Executive an annual bonus in the event Executive
meets or exceeds any performance objectives established by the Board or Mr.
Gray.
3.3 Exclusive Compensation. In respect of services rendered to the
Company, Executive shall receive only the compensation set forth in this Section
3 and in the letter from Waterhouse Investor Services, Inc. to Executive dated
as of _________ __, 1996 (the "Retirement Letter").
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. The Company
shall provide Executive during the term of his employment hereunder with
coverage under all welfare benefit programs, plans and practices (commensurate
with his position in the Company and to the extent permitted under any employee
benefit plan) in accordance with the terms thereof, which the Company makes
available to its senior executives.
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4
4.2 Perquisites. During Executive's employment hereunder, the
Company shall continue to pay the cost of Executive's automobile and life
insurance under the same terms and conditions as in effect on the date hereof.
5. Expenses. Subject to prevailing Company policy or such guidelines
as may be established by the Board or Mr. Gray, the Company will reimburse
Executive for all reasonable expenses incurred by Executive in carrying out his
duties.
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company or
Executive may terminate Executive's employment at any time for any reason. If
Executive's employment is terminated (i) by the Company other than for Cause (as
defined in Section 6.2 hereof), (ii) by Executive for Good Reason (as defined in
Section 6.1(b) hereof) or (iii) as a result of the Executive's permanent
disability (as defined in the Company's long-term disability benefit plan
applicable to senior executive officers as in effect on the date hereof) prior
to the Termination Date, the Company shall continue to pay Executive's Base
Salary through the Termination Date in accordance with the terms of Section 3.1.
In addition, Executive shall receive such payments, if any, under applicable
plans or programs to which Executive is entitled as of Executive's date of
termination pursuant to the terms of such plans or programs.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) Any material breach by the Company of any provision of this
Agreement;
(ii) The occurrence of any circumstance which in Executive's good
faith judgement changes Executive's status or impairs or interferes with
his ability to continue to perform his duties under this Agreement.
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5
(c) In the event that the Company disagrees with or challenges
Executive's determination that his termination was for Good Reason within the
meaning of Section 6.1(b) hereof and discontinues the payments otherwise called
for under Section 6.1(a) hereof, then Executive shall be immediately relieved of
his obligations under Section 11(b) and (c) hereof.
6.2 Voluntary Termination by Executive; Discharge for Cause. (a) In
the event that Executive's employment is terminated by the Company for Cause, as
hereinafter defined, Executive shall only be entitled to receive (i) any Base
Salary accrued but unpaid prior to such termination and (ii) any benefits
provided, as of the date of such termination, under the employee benefit
programs, plans and practices referred to in Section 4.1 hereof, in accordance
with their terms. After the termination of Executive's employment under this
Section 6.2, the obligations of the Company under this Agreement to make any
further payments, or provide any benefits specified herein, to Executive shall
thereupon cease and terminate.
(b) In the event that Executive terminates his employment with the
Company other than for Good Reason, Executive shall be entitled to receive the
payments and benefits set forth under clauses 6.2(a)(i) and (ii) and the
payments set forth in the Retirement Letter.
(c) As used herein, the term "Cause" shall be limited to (i) any
breach of the provisions of Section 11 of this Agreement by Executive or (ii)
the commission by Executive of (a) any felony or (b) a misdemeanor involving
moral turpitude. Termination of Executive pursuant to Section 6.2(a) shall be
made by delivery to Executive of written notice from Mr. Gray or the Board
specifying the particulars of the conduct by Executive set forth in either of
clauses (i) or (ii) above, after an opportunity to cure such conduct within
thirty days of delivery of such written notice.
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6
6.3 Death. In the event of Executive's death during his employment
hereunder or at any time thereafter while payments are still owing to Executive
under the terms of this Agreement, all obligations of the Company to make any
further payments, other than the obligation to pay any accrued but unpaid Base
Salary, shall terminate upon Executive's death, except as otherwise provided in
the Retirement Letter.
7. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
General Counsel
Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
with a copy to:
Alvin H. Brown
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
Lawrence M. Waterhouse, Jr.
c/o Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
with a copy to:
James F. Rittinger
Saterlee Stephens Burke & Burke
230 Park Avenue
New York, New York 10169
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other
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7
address as such party may designate in a notice duly delivered as described
above), and the third business day after the actual date of mailing shall
constitute the time at which notice was given.
8. Separability; Legal Fees. If any provision of this Agreement
shall be declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect. Except to the extent expressly
provided otherwise in the next sentence, each party shall bear the costs of any
legal fees and other fees and expenses which may be incurred in respect of
enforcing its respective rights under this Agreement.
9. Assignment. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
10. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
11. Nondisclosure of Confidential Information; Non-Competition. (a)
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
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8
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, The Toronto- Dominion Bank or their
respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by Executive's breach of the terms hereof).
(b) In consideration of the Company's obligations under this
Agreement and the purchase of the stock of the Company owned by Executive
pursuant to the Agreement and Plan of Merger (the "Merger") among The
Toronto-Dominion Bank, TD/Oak, Inc. and Waterhouse Investor Services, Inc.,
dated April 9, 1996 (the "Merger Agreement"), Executive agrees that during the
period of his employment hereunder and thereafter, without the prior written
consent of the Board or Mr. Gray, (A) he will not, directly or indirectly,
either as principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender or employee or in any other capacity, carry on, be engaged in
or have any financial interest in, any business which is in competition with the
business of the Company and (B) he shall not, on his own behalf or on behalf of
any person, firm or company, directly or indirectly, solicit or offer employment
to any person who has been employed by the Company at any time during the 12
months immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing
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9
in any property or the rendering of any service (including, without limitation,
investment advisory services) purchased, sold, dealt in or rendered by the
Company as a part of the business of the Company at the time of Executive's
termination within the same geographic area in which the Company effects such
purchases, sales or dealings or renders such services. Nothing in this Section
11 shall be construed so as to preclude Executive from investing in any publicly
or privately held company, provided Executive's beneficial ownership of any
class of such company's securities does not exceed 4% of the outstanding
securities of such class.
(d) Notwithstanding the provisions of Section 11(b) and 11(c) hereof
to the contrary, Executive may at any time publish a national investment
advisory letter and provide investment advisory services to customers who reside
in the New York metropolitan area and in the immediate geographic area in which
Executive's children may now or in the future reside, but only during the time
they reside in such area; provided, however, that the entity through which such
services are being provided may not be or become affiliated with any entity
which is in engaged in the discount or full service brokerage business;
provided, further, that the foregoing proviso shall not limit Executive's
ability to place customer accounts with any entity of his choosing. The
foregoing services may be provided through L.M. Waterhouse & Co., Inc.
(currently a wholly-owned subsidiary of the Company which may be sold to
Executive by the Company in accordance with the provisions of a Purchase
Agreement in the form of Exhibit F to the Merger Agreement (the "Purchase
Agreement")) or another entity established by Executive in accordance with the
terms of the Purchase Agreement.
(e) Executive agrees that this covenant not to compete is reasonable
under the circumstances and will not interfere with his ability to earn a living
or to otherwise meet his financial obligations. Executive and the Company agree
that if in the opinion of any court of
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10
competent jurisdiction such restraint is not reasonable in any respect, such
court shall have the right, power and authority to excise or modify such
provision or provisions of this covenant as to the court shall appear not
reasonable and to enforce the remainder of the covenant as so amended. Executive
agrees that any breach of the covenants contained in this Section 11 would
irreparably injure the Company. Accordingly, Executive agrees that the Company
may, in addition to pursuing any other remedies it may have in law or in equity,
cease making any payments otherwise required by this Agreement and obtain an
injunction against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
12. Beneficiaries; References. Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
13. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. Arbitration. Except as otherwise provided in Section 11(e)
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be resolved by binding
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11
arbitration held in New York, New York and conducted in accordance with the
commercial arbitration rules of the American Arbitration Association in effect
at the time of the arbitration. Each party shall bear its own expenses in
connection with any such arbitration and joint expenses shall be borne by both
parties in equal portions.
15. Governing Law. This Agreement shall be construed, interpreted
and governed in accordance with the laws of the State of New York, without
reference to rules relating to conflicts of law.
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive.
17. Withholding. The Company shall be entitled to withhold from
payment any amount of withholding required by law.
18. Survival. Notwithstanding the expiration of the term of this
Agreement, the provisions of Section 11 hereunder shall remain in effect as long
as is necessary to give effect thereto.
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12
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
WATERHOUSE INVESTOR SERVICES, INC.
By:__________________________
Name:
Title:
______________________________
Lawrence M. Waterhouse, Jr.
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<PAGE>
Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
Mr. Lawrence M. Waterhouse, Jr.
c/o Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
Dear Mr. Waterhouse:
In consideration of your continuing employment with Waterhouse
Investor Services, Inc. (the "Company") following the acquisition of the Company
by TD/Oak, Inc. (the "Merger") pursuant to the Agreement and Plan of Merger
among the Toronto-Dominion Bank, TD/Oak, Inc. and Waterhouse Investor Services,
Inc., dated as of April 9, 1996 and in consideration of your agreeing to the
covenants under Section 11 of Employment Agreement between you and the Company,
dated as of _______ __, 1996 (the "Employment Agreement"), the Company will
provide you with the retirement benefits, consistent with your discussions with
the Compensation Committee of the Board of Directors of the Company prior to
initiation of any discussions regarding the Merger, as set forth below.
Upon the later of your (i) attainment of age 65 or (ii) termination
of your employment with the Company other than a termination by the Company for
Cause (as defined below), the Company shall pay you for a period of ten years
after such date, annual retirement payments in the amount of $600,000 per annum
payable in quarterly installments in arrears. For purposes hereof, "Cause" shall
have the meaning assigned to such term under Section 6.2 of the Employment
Agreement.
In the event of your death prior to the commencement or completion
of payments under the preceding paragraph, your spouse, if then living, shall be
entitled to receive the lesser of (i) five annual payments in the amount of
$600,000 per annum or (ii) the balance of payments remaining at the time of your
death, in each case payable in quarterly installments in arrears. In the event
of your wife's death prior to the completion of the payments set forth in the
preceding sentence, all obligations of the Company to make any further payments
shall immediately cease.
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2
If you agree with the foregoing, please sign where indicated below.
Sincerely,
WATERHOUSE INVESTOR SERVICES, INC.
By: _________________________
Name:
Title:
Agreed on this __ day of _______, 1996 by
_________________________________________
LAWRENCE M. WATERHOUSE, JR.
<PAGE>
<PAGE>
EXHIBIT E-2
Form of Employment Agreement for Certain Senior Executives
<PAGE>
<PAGE>
EXHIBIT E-2
EMPLOYMENT AGREEMENT
AGREEMENT, made ______ __, 1996, by and between WATERHOUSE INVESTOR
SERVICES, INC., a Delaware corporation (the "Company") and ___________
("Executive").
RECITALS
In order to induce Executive to continue to serve as ______________
of the Company following the acquisition of the Company by TD/Oak, Inc. (the
"Merger") pursuant to the Agreement and Plan of Merger among The
Toronto-Dominion Bank, TD/Oak, Inc. and Waterhouse Investor Services, Inc.,
dated April 9, 1996 (the "Merger Agreement"), the Company desires to provide
Executive with compensation and other benefits on the terms and conditions set
forth in this Agreement.
Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment
1.1 The Company hereby employs Executive during the term set forth
herein as its ___________, with such powers, responsibilities and authorities of
an Executive nature as the Board of Directors of the Company or its designee
(collectively "Board") shall from time to time assign to Executive.
1.2 Executive hereby accepts employment as the _________ of the
Company commencing as of the effective time of the Merger (the "Commencement
Date") and agrees to
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2
devote his full working time and efforts to his duties. Executive shall perform
his duties to the best of his ability, experience and talent. Executive shall
perform such duties and exercise such powers, commensurate with his position as
the Board shall from time to time assign to the Executive.
1.3 Term of Employment. Executive's term of employment under this
Agreement shall commence on the Commencement Date and, subject to the terms
hereof, shall terminate on the earlier of (i) the third anniversary of the
Commencement Date (the "Termination Date") or (ii) termination of Executive's
employment pursuant to this Agreement; provided, however, that any termination
of employment by Executive other than for Good Reason (as defined in Section
3.1(b) hereof) may only be made upon 90 days prior written notice to the Company
and any termination of employment by Executive for Good Reason may only be made
upon 30 days prior written notice to the Company.
In the event the Executive's employment continues after the
Termination Date, the Company may terminate Executive's employment for any
reason upon 90 days written notice or payment in lieu of such notice and
Executive shall have no further right to any payments or benefits other than
such payments or benefits if any under applicable plans or programs to which he
is entitled pursuant to such plans or programs.
2. Compensation and Benefits. Executive's base salary, annual bonus,
vacation, welfare benefits and retirement benefits shall be substantially the
same as provided by the Company on the date of the Merger Agreement, subject to
any provision of the Merger Agreement regarding the treatment of compensation
and benefits. In addition, Executive shall be entitled to participate in the
equity compensation plans of The Toronto-Dominion Bank for U.S. employees of The
Toronto-Dominion Bank on the same basis as similarly situated U.S. employees of
The Toronto-Dominion Bank.
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3
3. Termination of Employment.
3.1 Termination Not Cause or for Good Reason. (a) If Executive's
employment is terminated prior to the Termination Date (i) by the Company other
than for Cause (as defined in Section 3.2 hereof), (ii) by Executive for Good
Reason or (iii) as a result of the Executive's permanent disability (as defined
in the Company's long-term disability benefit plan applicable to senior
executive officers as in effect on the date hereof) prior to the Termination
Date, the Company shall pay Executive's Base Salary through the Termination
Date, provided such amount paid shall not be less than 12 months of Executive's
Base Salary. In addition, Executive shall receive such payments, if any, under
applicable plans or programs to which he is entitled pursuant to the terms of
such plan or programs.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) Any material breach by the Company of any provision of this
Agreement;
or
(ii) Any reduction by the Company in Executive's Base Salary or
failure to provide compensation or benefits hereunder, other than a
reduction that arises as a result of a material adverse change in the
business of the Company.
3.2 Voluntary Termination by Executive; Discharge for Cause; and
Death. (a) If Executive's employment is terminated (i) by the Company for Cause
as hereinafter defined, or (ii) by Executive other than for Good Reason, or
(iii) on account of Executive's Death while employed, Executive (or in
connection with his death, Executive's beneficiary), Executive shall be entitled
to receive (x) any Base Salary accrued but unpaid prior to such termination and
(y) any benefits provided under the employee benefit programs, plans and
practices referred to in Section 2. If Executive's employment is terminated on
account of death while employed,
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4
Executive's beneficiary shall be entitled to a pro rata portion of the annual
bonus payable in accordance with Section 2.
(b) As used herein, the term "Cause" shall be limited to (i) willful
malfeasance or willful misconduct by Executive in connection with his employment
that has a material adverse affect on the Company, (ii) continuing refusal by
Executive to perform his duties hereunder or any lawful direction of the Chief
Executive Officer or other executive senior to the Executive as required under
the terms of this Agreement, after thirty days notice of any such refusal to
perform such duties or direction was given to Executive and an opportunity to
cure same, (iii) any material breach of the provisions of Section 8 of this
Agreement by Executive or (iv) the conviction of Executive of (x) any felony or
(y) a misdemeanor involving moral turpitude. Termination of Executive pursuant
to this Section 3.2 shall be made by delivery to Executive of written notice
from the Board specifying the particulars of the conduct by Executive set forth
in any of clauses (i) through (iv) above.
3.3 Death. In the event of Executive's death following termination
under Section 3.1 while payments are still owing to Executive under such
Section, all obligations of the Company to make any further payments shall
survive Executive's death and be performed in accordance with the terms of
Section 9 hereof.
4. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
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5
with a copy to:
Alvin E. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
[Name of Executive]
c/o Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
with a copy to:
Richard H. Neiman, Esq.
Executive Vice President and General Counsel
Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage paid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described below), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
5. Separability; Legal Fees. If any provision of this Agreement
shall be declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect. Each party shall bear the costs of
any legal fees and other expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
6. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
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6
succession) or by the Company, except that the Company shall assign this
Agreement to any successor (whether by merger, purchase or otherwise, (a
"Transaction")) to all or substantially all of the stock, assets or businesses
of the Company; provided, however, that in the event Executive's employment with
the Company is to continue after a Transaction this Agreement need not be so
assigned.
7. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
8. Nondisclosure of Confidential Information; Non-Competition. (a)
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company, except (i) while employed by the Company, in the
business of and for the benefit of the Company, or (ii) when required to do so
by a court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company, or by any administrative
body or legislative body (including a committee thereof) with jurisdiction to
order Executive to divulge, disclose or made accessible such information. For
purposes of this Section 8(a), "Confidential Information" shall mean any
material non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, The Toronto-Dominion Bank or their
respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by Executive's breach of the terms hereof).
(b) In consideration of the Company's obligations under this
Agreement, Executive agrees that during the period of his employment hereunder,
without the prior written consent of the Board: (A) he will not, directly or
indirectly, either as principal, manager, agent,
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7
consultant, officer, stockholder, partner, investor, lender or employee or in
any other capacity, carry on, be engaged in or have any financial interest in,
any business which is in competition with the business of the Company and (B) he
shall not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any, person who has been
employed by the Company at any time during the 12 months immediately preceding
such solicitation. For purposes hereof, a business shall be deemed to be in
competition with the Company if it is principally involved in the purchase, sale
or other dealing in any property or the rendering of any service purchased,
sold, dealt in or rendered by the Company as a part of the business of the
Company within the same geographic area in which the Company effects such
purchases, sales or dealings or renders such services.
(c) Nothing in this Section 8 shall be construed so as to preclude
Executive from investing in any publicly or privately held company, provided
Executive's beneficial ownership of any class or such company's securities does
not exceed 1% of the outstanding securities of such class.
(d) Executive agrees that this covenant not to compete is reasonable
under the circumstances and will not interfere with his ability to earn a living
or to otherwise meet his financial obligations. Executive and the Company agree
that if in the opinion of any court of competent jurisdiction such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant as
to the court shall appear not reasonable and to enforce the remainder of the
covenant as so amended. Executive agrees that any breach of the covenants
contained in this Section 8 may irreparably injure the Company. Accordingly,
Executive agrees that the Company may, in addition to pursuing any other
remedies it may have in law or in equity, cease making any payments otherwise
required by this Agreement, seek to obtain an injunction in accordance with
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8
applicable laws against Executive from any court having jurisdiction over the
matter restraining any further violation of this Agreement by Executive.
9. Beneficiaries; References. Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
10. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 10 are in addition to the survivorship provisions of
any other section of this Agreement.
11. Indemnity. Executive shall be covered by the Directors and
Officers Insurance Policy provided by the Company subject to the terms and
conditions thereof.
12. Arbitration. Except as otherwise provided in Section 8(d)
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be resolved by binding arbitration held in New York, New York
and conducted in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association in effect at the time of the arbitration.
13. Governing Law. This Agreement shall be construed, interpreted
and governed in accordance with the laws of the State of New York, without
reference to rules relating to conflict of laws.
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9
14. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive.
15. Withholding. The Company shall be entitled to withhold from
payments to Executive hereunder any amount of withholding required by law.
16. Survival. Notwithstanding the termination of Executive's
employment by the Company prior to the Termination Date, the provisions of
Sections 3 and 8 hereunder shall remain in effect as long as is necessary to
give effect thereto.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
WATERHOUSE INVESTOR SERVICES, INC.
By:__________________________
Name:
Title:
_____________________________
EXECUTIVE
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EXHIBIT F
Form of Purchase Agreement
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EXHIBIT F
PURCHASE AGREEMENT
AGREEMENT, dated ________ __, 1996 (this "Agreement"), by and
between Waterhouse Investor Services, Inc., a Delaware corporation ("Seller")
and Lawrence M. Waterhouse, Jr. ("Buyer").
WHEREAS, Seller is party to an Agreement and Plan of Merger, dated
April 9, 1996, among The Toronto-Dominion Bank, TD/Oak, Inc. and Seller (the
"Merger Agreement"; capitalized terms used herein and defined in the Merger
Agreement shall have the meaning ascribed to them in the Merger Agreement).
WHEREAS, L.M. Waterhouse & Co., Inc., a New York corporation and a
wholly-owned subsidiary of Seller (the "Company"), is registered with the
Securities and Exchange Commission and various state securities commissions to
conduct an investment advisory business.
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer 100% of the outstanding shares of common stock of the Company upon
the terms and subject to the conditions set forth herein (the sale and purchase
of stock of the Company being referred to herein as the "Stock Purchase").
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
1. Purchase and Sale. On the basis of the covenants and agreements
and subject to the satisfaction or waiver of the conditions set forth herein, at
the Closing, Seller will sell and Buyer will purchase 90 shares of common stock,
no par value, of the Company (the "Shares") owned by Seller, which constitute
and will constitute as of the Closing 100% of the issued and outstanding shares
of capital stock of the Company. In payment for such Shares, simultaneously with
the delivery by Seller to Buyer of certificates evidencing the Shares (which
shall be duly endorsed for transfer, or accompanied by duly executed stock
powers), Buyer will pay to Seller by certified or personal check an aggregate
purchase price for the Shares equal to the book value of such Shares as of the
end of the Company's fiscal quarter immediately preceding the Closing.
2. No Recourse. The Stock Purchase is being made on an "as is, where
is" basis and neither party makes any representation or warranty, express or
implied, to the other of any nature whatsoever with respect to the Company or
the transactions contemplated by this Agreement (including, without limitation,
title to the Shares; organization, existence and good standing of the Company
and state of its financial condition; possession or validity of licenses,
permits or registrations; and compliance with applicable laws).
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2
3. Closing Conditions. The obligations of the parties hereto to
consummate the Stock Purchase are subject to the satisfaction or waiver of the
following conditions:
(a) the Closing shall have been completed;
(b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Stock Purchase shall be in effect, and there
shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Stock
Purchase, which makes the consummation of the Stock Purchase
illegal; and
(c) any necessary regulatory approvals for the Stock Purchase
shall have been obtained and shall be in full force and effect.
4. Consent to Use of Name. In connection with the Stock Purchase,
Seller hereby grants its consent to the Company to conduct under the name "L.M.
Waterhouse & Co., Inc." the investment advisory business (the "Advisory
Business"), and to publish the investment advisory letter (the "Newsletter"),
described in Section 11(d) of the Employment Agreement of even date herewith
between Seller and Buyer, the form of which is set forth in Exhibit E-1 to the
Merger Agreement, subject to the following terms and conditions:
(a) In all written materials, including published advertising,
produced and disseminated by the Company to the public, the most
prominent reference to the Company's name must set forth in full the
name "L.M. Waterhouse" with the initials "L.M." appearing in type
size reasonably proportionate to (but not less than half the size
of) the Waterhouse name. In addition, all such materials must
include, in reasonable proximity to the most prominent use of the
name, a reasonably conspicuous disclaimer as to the absence of
affiliation between the Company and Seller. The Newsletter may,
however, omit use of the initials "L.M." in references to the
Company within the text of the Newsletter.
(b) The consent granted in this Section 4 to the use by the
Company of the name "L.M. Waterhouse" in connection with the
Advisory Business shall terminate at such time as 51% of the total
voting power of all outstanding Voting Stock of the Company is no
longer owned beneficially and of record by Buyer and his descendants
(including for this purpose members of the immediate family of Buyer
and the immediate families of Buyer's descendants) (the "Ownership
Requirement"). In addition, the consent granted in this Section 4 to
the use by the Company of the name "L.M. Waterhouse" in connection
with the publication of the Newsletter shall terminate at such time
as the Ownership Requirement is no longer satisfied, unless (i)
prior to the occurrence of such event Buyer offers Seller an
opportunity to acquire 100% of the outstanding capital stock of the
Company at the Appraised Price, and (ii) Seller shall not have
elected to acquire such stock within 30 days after the determination
of the Appraised Price. For purposes of this Section 4, the term
"Voting Stock" shall mean all outstanding stock and other
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3
securities of the Company entitled (without regard to the occurrence
of any contingency) to vote in the election of directors of the
Company; and the term "Appraised Price" shall be the average of the
fair market value of the outstanding capital stock of the Company as
determined by three nationally recognized independent investment
banking firms, one of which shall be selected by Seller, one of
which shall be selected by Buyer, and one of which shall be selected
by the investment bankers selected by each of Buyer and Seller (with
the fees of such investment bankers being shared equally by Buyer
and Seller). If Seller elects to so purchase the outstanding capital
stock of the Company, payment of the Appraised Price shall be made
by Seller in immediately available funds as soon as practicable
after the receipt of all necessary regulatory and other consents and
approvals for such transaction. If Seller does not so elect to
purchase the outstanding capital stock of the Company within such 30
day period, the consent granted in this Section 4 shall remain in
full force and effect with respect to the publication of the
Newsletter by the Company notwithstanding that the Ownership
Requirement shall no longer be satisfied.
(c) Buyer understands, acknowledges and agrees that Seller
retains full right and title in and to the registered mark
"Waterhouse" and all derivatives and variants thereof, and except as
expressly permitted by the consent granted in this Section 4 neither
Company nor Buyer may make any use of such registered marks or any
derivatives or variants thereof that would infringe on Seller's
rights therein nor may Company or Buyer conduct any business under
the name "Waterhouse" or any derivative or variant thereof
(including "L.M. Waterhouse"), to the extent that such conduct would
infringe on Seller's rights therein, except as expressly permitted
hereby. Buyer further agrees not to seek to register the name "L.M.
Waterhouse" or any derivative or variant thereof as a registered
mark of Buyer, Company or any other person, or to license,
sublicense, assign or otherwise authorize any other person to use
such name or any derivative or variant thereof. Any such purported
license, sublicense, assignment or other authorization shall be null
and void. Notwithstanding the foregoing, in the event that Seller
shall have been offered the opportunity to purchase all of the
capital stock of the Company pursuant to paragraph (b) above and
Seller shall have elected not to do so within the 30 day period
specified therein (the "Termination Date"), then Seller shall, upon
the request of the Company, provide its consent to, and use
reasonable best efforts to cooperate with, the Company in seeking to
register the full name (but not less than the full name) under which
the Newsletter is published as a registered mark owned by the
Company. Prior to the Termination Date, Seller shall not register an
investment advisory newsletter under the "Waterhouse" mark unless
Seller offers the Company the opportunity to concurrently seek to
register the full name (but not less than the full name) of the
Newsletter as a registered mark owned by the Company.
(d) Buyer also understands, acknowledges and agrees that
Seller and its affiliates may engage in the investment advisory
business and publish newsletters and similar communications under
the mark "Waterhouse" or any derivative or variant thereof (other
than "L.M. Waterhouse", which Company shall have the exclusive right
to use pursuant to the consent granted under this Section 4), and
that such usage by Seller and its affiliates shall not infringe on
or violate in any way the rights granted to Company under this
Section 4.
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4
5. Reversion of Name. Seller agrees with Buyer that if Seller and
its affiliates cease using the mark "Waterhouse" in a reasonably prominent way
in statements mailed to customers of Seller's discount brokerage business, and
such cessation of usage of the name continues for a period of twelve consecutive
months, then in such event Seller shall cause the registered mark "Waterhouse"
to be assigned and transferred to Buyer.
6. Notices. All notices and other communications hereunder shall be
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by cable, telecopy, telegram or telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
if to Seller:
Waterhouse Investor Services, Inc.
100 Wall Street
New York, New York 10005
Attention: General Counsel
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Lee Meyerson, Esq.
if to Buyer:
Saterlee Stephens Burke & Burke
230 Park Avenue
New York, New York 10169
Attention: James Rittinger, Esq.
with a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022-4802
Attention: Roger H. Kimmel, Esq.
7. Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or
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5
otherwise, without the prior written consent of the other party and, prior to
the Effective Time, the prior written consent of Parent.
8. Amendment. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto and, prior to the Effective Time, with the prior
written consent of Parent.
9. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to the
internal principles of conflicts of laws thereof.
10. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
11. Headings. The descriptive headings used herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
12. Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
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6
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to
be duly executed as of the day and year first above written.
WATERHOUSE INVESTOR SERVICES, INC.
By:____________________________
Name:
Title:
_______________________________
Lawrence M. Waterhouse, Jr.
<PAGE>
<PAGE>
VOTING AGREEMENT
AGREEMENT dated as of April 9, 1996 by and among The
Toronto-Dominion Bank ("Parent") and each of the other parties signatory hereto
(each a "Stockholder").
RECITALS
Concurrently herewith, Parent, a Canadian chartered bank, TD/Oak,
Inc., a Delaware corporation and a direct wholly-owned subsidiary of Parent
("Merger Sub"), and Waterhouse Investor Services, Inc., a Delaware corporation
(the "Company"), are entering into an Agreement and Plan of Merger of even date
herewith (as such agreement may be amended from time to time, the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement) pursuant to which the Company will
be merged with and into Merger Sub (the "Merger"), and each share of common
stock, par value $.01 per share, of the Company ("Company Common Stock") issued
and outstanding immediately prior to the Effective Time will, except as
otherwise provided in the Merger Agreement, be converted into the Merger
Consideration .
As a condition to Parent and Merger Sub entering into the Merger
Agreement, Parent and Merger Sub require that each Stockholder enter into, and
each such Stockholder has agreed to enter into, this Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Representations and Warranties. Each Stockholder hereby severally
represents and warrants to Parent as follows:
(a) Ownership of Shares. (1) Such Stockholder is the record holder
and beneficial owner of the number of shares of Company Common Stock as set
forth opposite such Stockholder's name on Schedule 1 hereto, and in addition is
the beneficial owner of the number of shares of Company Common Stock held in the
ESOP and allocated to him or her which is set forth opposite his or her name on
Schedule 1 hereto (the "Existing Shares", and together with any shares of
Company Common Stock acquired by such Stockholder in any such capacities after
the date hereof and prior to the termination hereof, whether upon exercise of
options, conversion of convertible securities, purchase, exchange or otherwise,
the "Shares").
(2) On the date hereof, (A) the Existing Shares set forth opposite
such Stockholder's name on Schedule 1 constitute all of the shares of
Company Common Stock owned of record or beneficially by such Stockholder,
and (B) Mr. Lawrence M.
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2
Waterhouse, Jr. ("Mr. Waterhouse") holds a power of attorney, a copy of
which is attached hereto, allowing Mr. Waterhouse to vote the Shares held
by the other Stockholders to the extent described in such power of
attorney (the "Power of Attorney").
(3) Subject to the Power of Attorney in the case of all Stockholders
other than Mr. Waterhouse, such Stockholder has sole voting and
dispositive power with respect to the Shares beneficially owned by such
Stockholder.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid and
binding agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
such Stockholder's spouse, enforceable against such person in accordance with
its terms.
(c) No Conflicts. Neither the execution and delivery of this
Agreement by such Stockholder nor the consummation by such Stockholder of the
transactions contemplated hereby nor compliance by such Stockholder with any of
the provisions hereof will (x) conflict with or result in any breach of any
agreement to which such Stockholder is a party, or (y) violate as at the date
hereof any order, writ, injunction, decree, judgment, order, statute, rule or
regulation applicable to such Stockholder.
(d) Such Stockholder during the term hereof shall hold his or her
Shares and the certificates representing such Shares free of any agreements,
understandings or arrangements with respect to the voting of such Shares that
would breach the provisions of, or otherwise would be inconsistent with, this
Agreement.
(e) Such Stockholder understands and acknowledges that Parent and
Merger Sub are entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
2. Agreement to Vote Each Stockholder hereby severally agrees that,
during the time this Agreement is in effect, at any meeting of the stockholders
of the Company, however called, or in connection with any written consent of the
stockholders of the Company, such Stockholder shall vote (or cause to be voted)
the Shares held of record or beneficially by such Stockholder (i) in favor of
the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Merger Agreement and this Agreement and any actions required in
furtherance hereof and thereof; and (ii) against (a) any other Business
Combination, or (b) any other action which, as its primary purpose, is
intended to impede, delay, postpone, or prevent the approval and adoption of
the Merger Agreement by the stockholders of the Company or the consummation of
the transactions contemplated thereby or has, as its primary purpose, the
consummation of any other Business
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3
Combination. Each Stockholder hereby agrees, upon Parent's request, to furnish
Parent a proxy in form and substance reasonably satisfactory to Parent to
effectuate the foregoing.
3. Certain Covenants of Stockholders. Except in accordance with the
terms of this Agreement, each Stockholder hereby severally covenants and agrees
as follows:
3.1 No Solicitation. Such Stockholder shall not, solely in his or
her capacity as such, take any action which is prohibited by, or fail to take
any action which is required by, Section 4.8 of the Merger Agreement (without
regard to the proviso thereto) as it applies to Representatives of the Company
(whether or not such Stockholder would be deemed to be such a Representative for
purposes of Section 4.8 of the Merger Agreement) provided however, it shall be
presumed that discussions or negotiations of Lawrence M. Waterhouse, Jr. in
connection with any inquiry or Transaction Proposal are in his capacity as
director, officer or employee of the Company.
3.2 Restriction on Transfer, Proxies and Non-Interference. Such
Stockholder shall not, directly or indirectly: (i) except pursuant to the terms
of the Merger Agreement and this Agreement, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, any or all of such Stockholder's
Shares or any interest therein, unless the transferee or pledgee of such Shares
agrees in writing (with a copy furnished to Parent) to be bound by all of the
provisions of this Agreement with respect to such Shares; (ii) except as
contemplated hereby, grant any proxies or powers of attorney, deposit any Shares
into a voting trust or enter into a voting agreement with respect to any Shares;
or (iii) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect in any material respect or have
the effect of preventing or disabling such Stockholder from performing such
Stockholder's obligations under this Agreement.
3.3 Additional Shares. The Stockholder hereby agrees, while this
Agreement is in effect, to promptly notify the Parent of the number of any new
Shares of Company Common Stock acquired by the Stockholder, if any, after the
date hereof.
4. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
5. Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors.
6. Termination. This Agreement and the covenants and agreements
contained herein with respect to the Company Common Stock shall terminate on the
first to occur of (a) the
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4
Effective Time, and (b) the "Termination Date" which, as used herein, means the
date upon which the Merger Agreement is terminated in accordance with its terms.
7. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director, officer or employee of the Company
makes any agreement or understanding herein in his or her capacity as such
director, officer or employee and nothing contained in this Agreement shall in
any way limit or restrict the ability of any such person to vote or otherwise
act, in his or her capacity as a director, officer or employee of the Company,
as required by his or her fiduciary duties to the stockholders of the Company or
his or her responsibilities in such capacity as an officer or employee. Each
Stockholder signs solely in his or her capacity as the record and beneficial
owner of such Stockholder's Shares or, in the case of Mr. Waterhouse, as holder
of the Power of Attorney with respect to the Shares held by the other
Stockholders.
8. Miscellaneous.
8.1 Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties hereto.
8.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
8.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Stockholders: At their respective addresses set forth on
Schedule 1 hereto;
copy to: Saterlee Stephens Burke & Burke
230 Park Avenue
New York, New York 10169
Attn: James Rittinger, Esq.
Additional copy to: Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022-4802
Attn: Roger H. Kimmel, Esq.
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5
If to Parent: The Toronto-Dominion Bank
Toronto-Dominion Centre
Toronto, Canada M5K 1A2
Attn: I. Alexander Norton, Esq.
copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attn: Lee Meyerson, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
8.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.5 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
8.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
8.7 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
8.8 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
8.9 Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to
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6
Rule 13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all other
Persons with whom such Person would constitute a "group" as described in Section
13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
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7
IN WITNESS WHEREOF, Parent, the Company and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
THE TORONTO-DOMINION BANK
By:____________________________
Name:
Title:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
_______________________________
Name:
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SCHEDULE 1
Number of Shares of Company
Common Stock Owned by
Name and Address Stockholder (1) or held by ESOP
of Stockholder and allocated to Stockholder (2)
- -------------- --------------------------------
Lawrence M. Waterhouse, Jr. 1,152,499 (1)
c/o Waterhouse Investor Services, Inc. 85,131 (2)
100 Wall Street
New York, New York 10005
Lawrence M. Waterhouse, III 220,312 (1)
c/o Waterhouse Investor Services, Inc. 4,455 (2)
100 Wall Street
New York, New York 10005
Patrick R. Waterhouse 219,368 (1)
c/o Waterhouse Investor Services, Inc. 4,455 (2)
100 Wall Street
New York, New York 10005
Kevin C. Waterhouse 220,425 (1)
c/o Waterhouse Investor Services, Inc. 4,455 (2)
100 Wall Street
New York, New York 10005
Christine A. Waterhouse 221,660 (1)
c/o Waterhouse Investor Services, Inc. 16,552 (2)
100 Wall Street
New York, New York 10005
Jennifer A. Waterhouse 222,160 (1)
c/o Waterhouse Investor Services, Inc. 562 (2)
100 Wall Street
New York, New York 10005
