UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 13, 1999
REPUBLIC NEW YORK CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 1-7436 13-2764867
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
452 Fifth Avenue, New York, New York 10018
(Address of principal executive offices) (ZipCode)
Registrant's telephone number, including area code: (212) 525-6100
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ITEM 5. OTHER EVENTS
This amended Current Report on Form 8-K is being filed in connection
with Republic New York Corporation's Current Report on Form 8-K, dated May 10,
1999, which reported that Republic New York Corporation ("RNYC") and Safra
Republic Holdings S.A. ("SRH") had entered into a definitive agreement providing
for (1) the merger of RNYC with a wholly owned subsidiary of HSBC Holdings plc
("HSBC") in which each outstanding RNYC common share would be converted into the
right to receive $72.00 in cash and (2) a tender offer for the outstanding
ordinary shares of SRH (other than those owned by RNYC) at $72.00 per share.
In connection with the merger, RNYC has issued an option to HSBC, which
would allow HSBC to purchase up to 19.9% of the outstanding shares of RNYC at
$72.00 per share in limited circumstances. Also in connection with the merger,
Edmond J. Safra, RNYC Holdings Limited, Congregation Beit Yaakov and Saban S.A.
entered into a Stockholder Agreement to vote in favor of the merger.
This amended Current Report on Form 8-K includes the (i) Transaction
Agreement and Plan of Merger by and among HSBC Holdings plc, Republic New York
Corporation and Safra Republic Holdings S.A. dated as of May 10, 1999; (ii)
Stock Option Agreement, dated May 10, 1999 between Republic New York Corporation
and HSBC Holdings plc; and (iii) Stockholder Agreement, dated as of May 10, 1999
by and among RNYC Holdings Limited, Congregation Beit Yaakov, Saban S.A. and
Edmond J. Safra.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
2 Transaction Agreement and Plan of
Merger by and among HSBC Holdings
plc, Republic New York Corporation
and Safra Republic Holdings S.A.
dated as of May 10, 1999.
4 Stock Option Agreement, dated May 10, 1999
between Republic New York Corporation and HSBC
Holdings plc.
9 Stockholders Agreement, dated as of May 10, 1999
by and among RNYC Holdings Limited, Congregation
Beit Yaakov, Saban S.A. and Edmond J. Safra.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REPUBLIC NEW YORK CORPORATION
By: /s/ WILLIAM F. ROSENBLUM, JR.
------------------------------
William F. Rosenblum, Jr.
Senior Vice President
Date: May 13, 1999
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EXHIBIT INDEX
-------------
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
2 Transaction Agreement and Plan of
Merger by and among HSBC Holdings
plc, Republic New York Corporation
and Safra Republic Holdings S.A.
dated as of May 10, 1999.
4 Stock Option Agreement, dated May 10, 1999
between Republic New York Corporation and HSBC
Holdings plc.
9 Stockholders Agreement, dated as of May 10, 1999
by and among RNYC Holdings Limited, Congregation
Beit Yaakov, Saban S.A. and Edmond J. Safra.
Exhibit 2
TRANSACTION AGREEMENT AND PLAN OF MERGER
BY AND AMONG
HSBC HOLDINGS PLC,
REPUBLIC NEW YORK CORPORATION
AND
SAFRA REPUBLIC HOLDINGS S.A.
DATED AS OF MAY 10, 1999
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TABLE OF CONTENTS
TRANSACTION AGREEMENT AND PLAN OF MERGER
PAGE
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ARTICLE I
THE MERGER
1.1 THE MERGER.......................................................2
1.2 EFFECTIVE TIME...................................................2
1.3 EFFECTS OF THE MERGER............................................2
1.4 EFFECT ON THE COMPANY CAPITAL STOCK..............................2
1.5 EXCHANGE PROCEDURES..............................................3
1.6 OPTIONS..........................................................5
1.7 RESTRICTED SHARES................................................6
1.8 1998 LONG TERM INCENTIVE COMPENSATION PLAN.......................6
1.9 ARTICLES OF INCORPORATION........................................7
1.10 BYLAWS..........................................................7
1.11 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.................7
1.12 INTEGRATION OF LEGAL ENTITIES...................................7
ARTICLE II
CLOSING; DISCLOSURE; STANDARDS
2.1 CLOSING DATE.....................................................7
2.2 DELIVERIES AT CLOSING............................................8
2.3 DISCLOSURE SCHEDULES.............................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 CORPORATE ORGANIZATION...........................................9
3.2 CAPITALIZATION...................................................10
3.3 AUTHORITY; NO VIOLATION..........................................11
3.4 CONSENTS AND APPROVALS...........................................12
3.5 REPORTS..........................................................13
3.6 FINANCIAL STATEMENTS.............................................13
3.7 BROKER'S FEES....................................................14
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.............................14
3.9 LEGAL PROCEEDINGS................................................15
3.10 TAX MATTERS.....................................................15
3.11 EMPLOYEE BENEFITS PLANS; ERISA..................................15
3.12 SEC REPORTS.....................................................19
3.13 LICENSES; COMPLIANCE WITH APPLICABLE LAW........................19
3.14 CERTAIN CONTRACTS...............................................19
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3.15 AGREEMENTS WITH REGULATORY AGENCIES.............................20
3.16 DERIVATIVE INSTRUMENTS..........................................20
3.17 UNDISCLOSED LIABILITIES.........................................21
3.18 ENVIRONMENTAL MATTERS...........................................21
3.19 YEAR 2000.......................................................22
3.20 LABOR MATTERS...................................................22
3.21 FAIRNESS OPINION................................................22
3.22 TRANSACTIONS WITH AFFILIATES....................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEST EUROPE
4.1 CORPORATE ORGANIZATION...........................................23
4.2 CAPITALIZATION...................................................24
4.3 AUTHORITY; NO VIOLATION..........................................25
4.4 CONSENTS AND APPROVALS...........................................25
4.5 REPORTS..........................................................26
4.6 FINANCIAL STATEMENTS.............................................26
4.7 BROKER'S FEES....................................................27
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.............................27
4.9 LEGAL PROCEEDINGS................................................28
4.10 TAX MATTERS.....................................................28
4.11 EMPLOYEE BENEFITS PLANS; ERISA..................................28
4.12 LICENSES; COMPLIANCE WITH APPLICABLE LAW........................31
4.13 CERTAIN CONTRACTS...............................................31
4.14 AGREEMENTS WITH REGULATORY AGENCIES.............................32
4.15 DERIVATIVE INSTRUMENTS..........................................32
4.16 UNDISCLOSED LIABILITIES.........................................33
4.17 ENVIRONMENTAL MATTERS...........................................33
4.18 YEAR 2000.......................................................33
4.19 LABOR MATTERS...................................................34
4.20 FAIRNESS OPINION................................................34
4.21 TRANSACTIONS WITH AFFILIATES....................................34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
5.1 CORPORATE ORGANIZATION...........................................34
5.2 AUTHORITY; NO VIOLATION..........................................35
5.3 CONSENTS AND APPROVALS...........................................36
5.4 FINANCING........................................................36
5.5 FINANCIAL REPORTS................................................36
5.6 LITIGATION; REGULATORY ACTION....................................37
5.7 ABSENCE OF CERTAIN CHANGES.......................................37
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5.8 YEAR 2000........................................................37
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME..................38
6.2 FORBEARANCES OF THE COMPANY AND SRH..............................38
6.3 COVENANTS OF PARENT..............................................40
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGULATORY MATTERS...............................................40
7.2 ACCESS TO INFORMATION............................................42
7.3 BOARD RECOMMENDATIONS............................................43
7.4 OTHER OFFERS.....................................................43
7.5 STOCKHOLDER APPROVAL.............................................44
7.6 LEGAL CONDITIONS TO MERGER.......................................45
7.7 INDEMNIFICATION; DIRECTORS'AND OFFICERS'INSURANCE................45
7.8 FURTHER ASSURANCES...............................................46
7.9 ADVICE OF CHANGES................................................47
7.10 EMPLOYEE BENEFITS...............................................47
7.11 TAKEOVER STATUTES...............................................48
7.12. ENVIRONMENTAL AUDIT............................................48
7.13. THE OFFER......................................................48
7.14 MERGER SUB......................................................49
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.......49
8.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB...............50
8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY.........................51
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 TERMINATION......................................................51
9.2 EFFECT OF TERMINATION............................................53
9.3 AMENDMENT........................................................53
9.4 EXTENSION; WAIVER................................................53
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ARTICLE X
GENERAL PROVISIONS
10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.......53
10.2 EXPENSES........................................................54
10.3 NOTICES.........................................................54
10.4 INTERPRETATION..................................................55
10.5 COUNTERPARTS....................................................56
10.6 ENTIRE AGREEMENT................................................56
10.7 GOVERNING LAW...................................................56
10.8 SEVERABILITY....................................................56
10.9 PUBLICITY.......................................................56
10.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES.......................... 56
10.11 WAIVER OF JURY TRIAL............................................57
10.12 DEFINITIONS AND USAGE...........................................57
Exhibit A - Option Agreement
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TRANSACTION AGREEMENT AND PLAN OF MERGER
TRANSACTION AGREEMENT AND PLAN OF MERGER, dated as of May 10,
1999 (this "Agreement"), by and among HSBC Holdings plc, a public limited
company organized and existing under the laws of England ("Parent"), Republic
New York Corporation, a Maryland corporation (the "Company") and Safra Republic
Holdings S.A., a societe anonyme organized and existing under the laws of
Luxembourg ("SRH").
WHEREAS, Parent has determined that it is in its best
interests and in the best interests of Parent's stockholders to consummate the
business combination transaction provided for herein in which an existing or
newly formed, wholly owned Maryland corporate subsidiary of Parent ("Merger
Sub") will, subject to the terms and conditions set forth herein, merge with and
into the Company (the "Merger") so that the Company is the surviving and
successor corporation (hereinafter sometimes called the "Successor Corporation")
in the Merger;
WHEREAS, Parent has determined that it is in its best
interests and in the best interests of Parent's stockholders for a newly formed
wholly owned subsidiary of Parent ("Offer Sub"), subject to the terms and
conditions set forth herein, to make an offer (the "Offer") to acquire all of
the outstanding shares of SRH Common Stock (as defined in Section 4.2) not owned
by the Company;
WHEREAS, the Board of Directors of the Company has determined
that it is in the best interests of the Company and its stockholders to
consummate the Merger, subject to the terms and conditions set forth herein;
WHEREAS, the Board of Directors of SRH has determined that it
is in the best interests of SRH and its stockholders for its stockholders to
sell their shares of SRH pursuant to the Offer;
WHEREAS, as a condition to, and concurrently with, the
execution of this Agreement, Parent is entering into a Stockholders Agreement
(the "Stockholder Agreement") with RNYC Holdings Limited, Congregation Beit
Yaakov (together with RNYC Holdings Limited, the "Stockholder"), Saban S.A. (the
"Stockholder Parent") and Mr. Edmond J. Safra, and certain of their respective
affiliates pursuant to which the Stockholder has agreed to vote in favor of the
Merger;
WHEREAS, as a condition to, and concurrently with, the
execution of, this Agreement, Parent and the Company are entering into a stock
option agreement (the "Option Agreement") in the form attached hereto as Exhibit
A;
WHEREAS, prior to the date hereof the Board of Directors of
the Company has approved and declared advisable this Agreement and the Merger
and has approved (including for purposes of Sections 3-601 through 3-604 and
3-701 through 3-709 of the General Corporation Law of the State of Maryland (the
"MGCL")) the Option Agreement and the Stockholder Agreement, upon the terms and
subject to the conditions set forth herein and therein;
WHEREAS, the Board of Directors of SRH has approved this
Agreement and the Offer and has recommended the Offer, upon the terms and
subject to the conditions set forth herein;
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WHEREAS, upon its formation, Merger Sub will execute and
deliver a copy of this Agreement and become a party hereto; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and the Offer and also
to prescribe certain conditions to the Merger and the Offer.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, in accordance with the MGCL, at the Effective Time (as defined in
Section 1.2), Merger Sub shall merge with and into the Company. The Company
shall be the Successor Corporation in the Merger, and shall continue its
corporate existence under the laws of the State of Maryland. Upon consummation
of the Merger, the separate corporate existence of Merger Sub shall terminate.
1.2 EFFECTIVE TIME. On the Closing Date (as defined in Section
2.1), the Merger shall become effective upon the acceptance for record of
articles of merger (the "Articles of Merger") by the State Department of
Assessments and Taxation of Maryland (the "Maryland Department"), or at such
later time as shall be specified in the Articles of Merger (but not later than
30 days after acceptance for record by the Maryland Department), in accordance
with the MGCL and by making all other filings of the Articles of Merger or
recordings required by the MGCL in connection with the Merger. The term
"Effective Time" shall be the date and time when the Merger becomes effective,
as set forth in the Articles of Merger.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time,
the Merger shall have the effects set forth in Section 3-114 of the MGCL.
1.4 EFFECT ON THE COMPANY CAPITAL STOCK. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent, the
Company or the holder of any of the Company securities:
(a) OUTSTANDING COMPANY COMMON STOCK. Each share of
common stock, par value $5.00 per share, of the Company (the "Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares of Company Common Stock held (i) in the Company's treasury
("Treasury Shares") or (ii) directly or indirectly by Parent or the Company or
any of their respective wholly owned Subsidiaries (except for Fiduciary and DPC
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Shares (as defined in Section 1.4(d)) shall become and be converted into
the right to receive $72.00 in cash (the "Merger Consideration").
(b) OUTSTANDING COMPANY PREFERRED STOCK. Each share of
(i) Company Dutch Auction Rate Transferable Securities Preferred Stock, Series A
(the "Company Series A DARTS"), (ii) Company Dutch Auction Rate Transferable
Securities Preferred Stock, Series B (the "Company Series B DARTS"), (iii)
Company Adjustable Rate Cumulative Preferred Stock, Series D (the "Company
Series D Preferred Stock"), (iv) Company $1.8125 Cumulative Preferred Stock (the
"Company $1.8125 Preferred Stock") and (v) Company $2.8575 Cumulative Preferred
Stock (the "Company $2.8575 Preferred Sstock"), excluding any Treasury
Shares, issued and outstanding immediately prior to the Effective Time,
shall remain unchanged as issued and outstanding preferred stock of the
Successor Corporation following the Effective Time.
(c) MERGER SUB STOCK. The shares of stock of any class or
series of Merger Sub issued and outstanding immediately prior to the Effective
Time shall become shares of stock of the Successor Corporation at the Effective
Time having the same terms, rights and preferences, and shall thereafter
constitute all of the issued and outstanding stock of the Successor Corporation,
except as provided in Section 1.4(b); Provided, that such terms, rights and
preferences, and the issuance by the Successor Corporation of stock having such
terms, rights and preferences, may not violate the terms, or require the
approval of the holders of, the Company Preferred Stock (as defined in Section
in 3.2).
(d) TREASURY SHARES; FIDUCIARY AND DPC SHARES. At the
Effective Time, all shares of the Company Common Stock or Company Preferred
Stock that are owned by the Company as Treasury Stock and all shares of the
Company Common Stock or Company Preferred Stock that are owned, directly or
indirectly, by Parent or the Company or any of their respective wholly owned
Subsidiaries (other than shares of the Company Common Stock or Company Preferred
Stock held, directly or indirectly, in trust accounts, managed accounts and the
like or otherwise held in a fiduciary or custodial capacity that are
beneficially owned by third parties and other than any shares of the Company
Common Stock or Company Preferred Stock held by Parent or the Company or any of
their respective Subsidiaries in respect of a debt previously contracted (all
such shares being referred to herein as "Fiduciary and DPC Shares")) shall be
canceled and shall cease to exist and shall not be entitled to receive or be
converted into the right to receive the Merger Consideration or other
consideration therefor.
1.5 EXCHANGE PROCEDURES. (a) At and after the Effective Time,
each certificate (each, a "Certificate") previously representing shares of
Company Common Stock shall (except as specifically set forth in Section 1.4)
represent only the right to receive the Merger Consideration, without interest.
(b) At the Effective Time, Parent or Merger Sub shall
deposit, or shall cause to be deposited, with a bank or trust company (which may
be an affiliate of Parent or the Company) (the "Exchange Agent"), for the
benefit of the holders of the Certificates, (such cash (without any interest)
being hereinafter referred to as the "Exchange Fund") to be paid pursuant
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to this Article I in exchange for outstanding shares of Company Stock entitled
to receive the Merger Consideration.
(c) As promptly as practicable after the Effective Time,
Parent shall send or cause to be sent to each former holder of record of shares
of Company Common Stock (other than shares that are not to be canceled in
exchange for Merger Consideration pursuant to Section 1.4(d)) immediately prior
to the Effective Time, transmittal materials for use in exchanging such
stockholder's Certificates for the Merger Consideration. Parent shall cause any
check in respect of the Merger Consideration which such Person shall be entitled
to receive to be delivered to such stockholder upon delivery to the Exchange
Agent of Certificates representing such shares of Company Common Stock (or
indemnity reasonably satisfactory to Parent and the Exchange Agent, if any of
such Certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any such cash to be paid pursuant to this Article I
upon such delivery. Parent shall be entitled to deduct and withhold from the
Merger Consideration otherwise payable to any holder of Certificates such
amounts (if any) as Parent determines are required to be deducted or withheld
under the Internal Revenue Code of 1986, as amended (the "CODE"), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of such Certificates.
(d) At the Effective Time, holders of Company Common
Stock shall cease to be, and shall have no rights as, stockholders of the
Company, other than to receive any dividend or other distribution with respect
to the Company Common Stock with a record date occurring prior to the Effective
Time and the Merger Consideration. From and after the Effective Time, there
shall be no transfers on the stock transfer records of the Company of any shares
of the Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
Parent or the Successor Corporation, they shall be canceled and exchanged for
the Merger Consideration deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this Section 1.7.
(e) Any portion of the Exchange Fund that remains
unclaimed by the stockholders of the Company for twelve months after the
Effective Time shall be paid to Parent. Any stockholders of the Company who have
not theretofore complied with this Article I shall thereafter look only to
Parent for payment of the Merger Consideration in respect of each share of
Company Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of the Exchange Agent, Parent, the Company, Merger Sub or the
Successor Corporation shall be liable to any former holder of Company Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such Person of a bond in such amount as Parent may
reasonably direct as indemnity against any claim that may be made against it
with
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respect to such Certificate, Parent shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration deliverable in respect
thereof pursuant to this Agreement.
1.6 OPTIONS. At the Effective Time, each option to purchase a
share of the Company Common Stock (an "Option" and, collectively, the "Options")
outstanding and unexercised as of the Effective Time granted pursuant to the
1985 Incentive Stock Option Plan, the 1985 Non-Qualified Stock Option Plan, the
1995 Long Term Incentive Stock Plan, any other equity-based plans or agreements
of or with the Company, any of its Subsidiaries or SRH providing for the
granting of options with respect to Company Common Stock (collectively, the
"Company Stock Option Plans") shall be canceled, whether or not then exercisable
or vested, and shall represent the right to receive the following consideration
in settlement thereof. With respect to any Option which is, as of the Effective
Time, vested, the Successor Corporation (or any trust that is adopted in
connection with any such Company Stock Option Plan) shall pay to the
optionholder thereof the excess, if any, of the Merger Consideration over such
Option's exercise price (the "Option Spread") as soon as practicable after the
Effective Time. With respect to any Option which is not, as of the Effective
Time, vested, the Successor Corporation (or any trust that is adopted in
connection with any such Company Stock Option Plan) shall pay to the
optionholder thereof the Option Spread as soon as practicable after the date
when (but only if) such Option would otherwise have vested had such Option not
been canceled pursuant hereto; provided, however, with respect to any
optionholder whose employment is terminated without cause by the Successor
Corporation or any of its Subsidiaries while such Option would have been
outstanding had it not been canceled pursuant hereto, such Option shall be
deemed to vest on the date of such termination. At the Effective Time, each
option to purchase a share of the SRH Common Stock (as defined in Section 4.2)
(a "SRH Option" and, collectively, the "SRH Options") outstanding and
unexercised as of the Effective Time granted pursuant to the 1989 Stock Option
Plan, any other equity-based plans or agreements of or with SRH or any of its
Subsidiaries providing for the granting of options with respect to SRH Common
Stock (collectively, the "SRH Stock Option Plans") shall be canceled, whether or
not then exercisable or vested, and shall represent the right to receive the
following consideration in settlement thereof. With respect to any SRH Option
which is, as of the Effective Time, vested, SRH (or any trust that is adopted in
connection with any such SRH Stock Option Plan) shall pay to the optionholder
thereof the excess, if any, of the Merger Consideration over such SRH Option's
exercise price (the "SRH Option Spread") as soon as practicable after the
Effective Time. With respect to any SRH Option which is not, as of the Effective
Time, vested, SRH (or any trust that is adopted in connection with any such SRH
Stock Option Plan) shall pay to the optionholder thereof the SRH Option Spread
as soon as practicable after the date when (but only if) such SRH Option would
otherwise have vested had such SRH Option not been canceled pursuant hereto;
provided, however, with respect to any optionholder whose employment is
terminated without cause by SRH or any of its Subsidiaries while such SRH Option
would have been outstanding had it not been canceled pursuant hereto, such SRH
Option shall be deemed to vest on the date of such termination. Notwithstanding
the foregoing, no optionholder shall be entitled to any payment hereunder unless
he or she delivers to Parent a consent to the cancellation of the Option or SRH
Option (as the case may be) in a form to be prescribed by Parent. All payments
made pursuant to this Section 1.6 shall be reduced by all applicable withholding
taxes and other similar charges.
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1.7 RESTRICTED SHARES. At the Effective Time, each share of
restricted stock (a "Restricted Share" and, collectively, the "Restricted
Shares") outstanding and not yet vested as of the Effective Time issued pursuant
to a Company Stock Option Plan, the 1985 Restricted Stock Plan, the Restricted
Stock Election Plan, the 1995 Long Term Incentive Stock Plan, any other
equity-based plans or agreements of or with the Company or any of its
Subsidiaries providing for the granting of restricted stock awards with respect
to Company Common Stock (collectively, the "Company Equity Plans" and together
with the Company Stock Option Plans, the "Company Stock Plans") shall be
canceled and shall represent the right to receive the following consideration in
settlement thereof. The Successor Corporation (or any trust that is adopted in
connection with any such Company Equity Plan) shall pay to the holder of a
Restricted Share the Merger Consideration as soon as practicable after the date
when (but only if) such Restricted Share would otherwise have vested had such
Restricted Share not been canceled pursuant hereto; provided, however, with
respect to any awardholder whose employment is terminated without cause by the
Successor Corporation or any of its Subsidiaries while such Restricted Share
would have been outstanding had it not been canceled pursuant hereto, such
Restricted Share shall be deemed to vest on the date of such termination. At the
Effective Time, each share of restricted stock (a "SRH Restricted Share" and,
collectively, the "SRH Restricted Shares") outstanding and not yet vested as of
the Effective Time issued pursuant to an SRH Stock Option Plan, the 1989 Stock
Award Plan, any other equity-based plans or agreements of or with SRH or any of
its Subsidiaries providing for the granting of restricted stock awards with
respect to SRH Common Stock (collectively, the "SRH Equity Plans" and together
with the SRH Stock Option Plans, the "SRH Stock Plans") shall be canceled and
shall represent the right to receive the following consideration in settlement
thereof. SRH (or any trust that is adopted in connection with any such SRH
Equity Plan) shall pay to the holder of an SRH Restricted Share the Merger
Consideration as soon as practicable after the date when (but only if) such SRH
Restricted Share would otherwise have vested had such SRH Restricted Share not
been canceled pursuant hereto; provided, however, with respect to any
awardholder whose employment is terminated without cause by SRH or any of its
Subsidiaries while such SRH Restricted Share would have been outstanding had it
not been canceled pursuant hereto, such SRH Restricted Share shall be deemed to
vest on the date of such termination. Notwithstanding the foregoing, no holder
shall be entitled to any payment hereunder unless he or she delivers to the
Parent a consent to the cancellation of the Restricted Share or SRH Restricted
Share (as the case may be) in a form to be prescribed by Parent. All payments
made pursuant to this Section 1.7 shall be reduced by all applicable withholding
taxes and other similar charges.
1.8 1998 LONG TERM INCENTIVE COMPENSATION PLAN. The right
under the 1998 Long Term Incentive Compensation Plan to make additional
investments in Company Common Stock shall cease as of the date hereof and any
portion of an award under the 1998 Long Term Incentive Compensation Plan
invested in, or measured by reference to the value of, a share of Company Common
Stock (each such portion, an "Incentive Compensation Award" and, collectively,
the "Incentive Compensation Awards") as of the Effective Time shall be
converted, as of the Effective Time, into a dollar credit under the 1998 Long
Term Incentive Compensation Plan equal to the Merger Consideration.
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1.9 ARTICLES OF INCORPORATION. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Company's articles of
incorporation (as now in effect) shall be the articles of incorporation of the
Successor Corporation until thereafter amended in accordance with applicable
law.
1.10 BYLAWS. Subject to the terms and conditions of this
Agreement, at the Effective Time, the bylaws of Merger Sub shall be the bylaws
of the Successor Corporation until thereafter amended in accordance with
applicable law.
1.11 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. From and
after the Effective Time, until successors are duly elected or appointed and
qualified in accordance with applicable law, (a) the directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Successor
Corporation and (b) the officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Successor Corporation; such
directors and officers shall hold office in accordance with the Successor
Corporation's bylaws and applicable law.
1.12 INTEGRATION OF LEGAL ENTITIES. The parties agree to
cooperate and take all reasonable requisite action prior to or following the
Effective Time to merge or otherwise consolidate legal entities (effective at or
after the Effective Time) to the extent desirable in Parent's good faith
judgment for commercial, regulatory or other reasons, and further agree that
Parent may at any time change the method of effecting the Merger, including,
without limitation, by transferring the capital stock of Merger Sub to another
direct or indirect wholly owned Subsidiary of Parent or by merging another
direct or indirect wholly owned subsidiary of Parent with and into the Company
or merging the Company with or into Merger Sub or another direct or indirect
subsidiary of Parent, and the Company shall cooperate in such efforts, including
by entering into an appropriate amendment to this Agreement, provided, however,
that any such actions shall not (a) alter or change the amount or kind of (or
tax treatment for) Merger Consideration to be paid to holders of the Company
Common Stock as provided for in this Agreement or (b) materially delay receipt
of any approval referred to in Section 8.1(b) or the consummation of the
transactions contemplated by this Agreement.
ARTICLE II
CLOSING; DISCLOSURE; STANDARDS
2.1 CLOSING DATE. The closing of the transactions provided for
in this Agreement (the "Closing") shall be held at the offices of Cleary,
Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York 10006, at
10:00 A.M. on the third business day after the satisfaction or waiver (subject
to applicable law) of the latest to be satisfied or waived of the conditions
(other than those conditions to be satisfied at the Closing) set forth in
Sections 8.1, 8.2 and 8.3 hereof or at such other place and on such other date
as shall be agreed to by the parties hereto. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
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2.2 DELIVERIES AT CLOSING. Subject to the provisions of
Article VIII, on the Closing Date there shall be delivered to Parent and the
Company the documents and instruments required to be delivered under Article
VIII.
2.3 DISCLOSURE SCHEDULES. (a) Prior to the execution and
delivery of this Agreement, the Company and SRH have each delivered to Parent,
and Parent has delivered to the Company and SRH, a schedule (in the case of the
Company, the "Company Disclosure Schedule," in the case of SRH, the "SRH
Disclosure Schedule" and, in the case of Parent, the "Parent Disclosure
Schedule") setting forth, among other things, in each case with respect to
specified sections of this Agreement, items the disclosure of which is necessary
or appropriate either in response to an express disclosure requirement contained
in a provision hereof or as an exception to one or more of such party's
representations or warranties contained in Article III, in the case of the
Company, Article IV, in the case of SRH, or Article V, in the case of Parent or
to one or more of such party's covenants contained in Article VI; provided,
however, that notwithstanding anything in this Agreement to the contrary except
as set forth in the last sentence of Section 3.9(a) and the last sentence of
Section 4.9(a), (i) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 2.3(b), and (ii) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or would have a Material Adverse Effect with respect to
the Acquired Companies or Parent, respectively.
(b) No representation of the Company contained in Article III
(other than Section 3.2 and Section 3.8(a)) or of SRH contained in Article IV
(other than Section 4.2 and Section 4.8(a)) or of Parent contained in Article V
shall be deemed untrue or incorrect for any purpose under this Agreement, and no
party hereto shall be deemed to have breached a representation or warranty for
any purpose under this Agreement, in any case as a consequence of the existence
or absence of any fact, circumstance or event unless such fact, circumstance or
event, individually or when taken together with all other facts, circumstances
or events inconsistent with any representations or warranties contained in
Article III, in the case of the Company, Article IV, in the case of SRH, or
Article V, in the case of Parent, has had or would be reasonably likely to have
a Material Adverse Effect with respect to the Acquired Companies or Parent,
respectively. For all purposes of determining whether any facts or events
contravening a representation or warranty contained herein constitute,
individually or in the aggregate, a Material Adverse Effect, representations and
warranties contained in Article III (other than Section 3.8(a)) or IV (other
than Section 4.8(a)) or V shall be read without regard to any reference to
materiality or Material Adverse Effect set forth therein.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as Previously Disclosed, the Company hereby represents
and warrants to each of Parent and Merger Sub as follows:
3.1 CORPORATE ORGANIZATION. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland. The Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA"). The Company
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
True and complete copies of the articles of incorporation and bylaws of the
Company, as in effect as of the date of this Agreement, have previously been
made available by the Company to Parent.
(b)......The Company has Previously Disclosed to Parent a
complete and correct list of all of the Company's Subsidiaries. Except for the
capital stock and securities referred to in the immediately following sentence,
there are no outstanding shares of capital stock or other equity securities of
any such Subsidiary, options, warrants, stock appreciation rights, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, shares of any capital stock or other
equity securities of such Subsidiary, or contracts, commitments, understandings
or arrangements by which such Subsidiary may become bound to issue additional
shares of its capital stock or other equity securities, or options, warrants,
scrip or rights to purchase, acquire, subscribe to, calls on or commitments for
any shares of its capital stock or other equity securities. All of the
outstanding shares of capital stock or other securities evidencing ownership of
the Company's Subsidiaries are validly issued, fully paid and (except as
otherwise required by law) non-assessable and, except as Previously Disclosed,
such shares or other securities are owned by the Company or its wholly owned
Subsidiaries free and clear of any lien, claim, charge, option, encumbrance,
mortgage, pledge or security interest (a "Lien") with respect thereto. Each of
the Company's Subsidiaries (i) is a duly organized and validly existing
corporation, partnership, limited liability company or other legal entity under
the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing (to the extent the concepts of "qualification to
do business" and "good standing" exist) in all jurisdictions (whether
supranational, federal, state, local or foreign) where its ownership or leasing
of property or the conduct of its business requires it to be so qualified, and
(iii) has all requisite corporate, partnership or other power and authority to
own or lease its properties and assets and to carry on its business as now
conducted. The Company Disclosure Schedule sets forth a list of all Persons
deemed to be a subsidiary of the Company or any of its Subsidiaries within the
meaning of the BHCA together with each such entity's jurisdiction of
organization.
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(c) The minute books of the Company and of each of its
Significant Subsidiaries accurately reflect in all material respects all
material corporate actions taken by their stockholders and Boards of Directors
(including committees of their Boards of Directors) since January 1, 1996.
3.2 CAPITALIZATION. The authorized capital stock of the
Company consists solely of (a) 150 million (150,000,000) shares of Company
Common Stock, of which 105,171,929 shares were outstanding as of May 6, 1999;
and (b) 19,999,000 shares of preferred stock, without par value ("Company
Preferred Stock"), of which (i) 625 shares have been designated Company Series A
DARTs, all of which are outstanding as of the date hereof; (ii) 625 shares have
been designated as Company Series B DARTs, all of which are outstanding as of
the date hereof; (iii) 1.5 million (1,500,000) shares have been designated as
Company Series D Preferred Stock, all of which are outstanding as of the date
hereof; (iv) 3 million (3,000,000) shares have been designated as Company
$1.8125 Preferred Stock, all of which are outstanding as of the date hereof; and
(v) 3 million (3,000,000) shares have been designated as Company $2.8575
Preferred Stock, all of which are outstanding as of the date hereof. As of the
date hereof no shares of Company Common Stock or Company Preferred Stock were
held in the Company's treasury. No shares of Company Common Stock are reserved
for issuance, except for 1,469,918 shares of the Company Common Stock reserved
for issuance in connection with the Company Stock Plans. All of the issued and
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid, non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except for the Option
Agreement and except as provided below, the Company does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, stock
appreciation rights, commitments or agreements of any character calling for the
purchase or issuance of any shares of Company Capital Stock (as defined below)
or any other equity securities of Company or any securities representing the
right to purchase or otherwise receive any shares of Company Capital Stock or
requiring any payment relating to the value or market price of Company Capital
Stock. The Company has Previously Disclosed a list, as of May 6, 1999, of the
Option holders, the number of Options held by each such holder, the date of each
Option to purchase the Company Common Stock granted, the expiration date of each
such Option, the vesting schedule of each such Option, the Company Stock Option
Plan pursuant to which each such Option was granted and the price at which each
such Option may be exercised under the applicable Company Stock Option Plan. The
Company has Previously Disclosed a list, as of May 6, 1999, of the Restricted
Share holders, the number of Restricted Shares held by each such holder, the
vesting schedule of each such Restricted Share and the Company Stock Plan
pursuant to which each such Restricted Share was granted. The Company has
Previously Disclosed a list, as of May 6, 1999, of the Incentive Compensation
Award holders and the number of Incentive Compensation Awards held by each such
holder. Except as Previously Disclosed, since May 6, 1999, the Company has not
(i) issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than shares of Company
Common Stock issued upon the exercise, settlement or conversion of Options,
Restricted Shares and Incentive Compensation Awards outstanding as of December
31, 1998, as described in the immediately preceding sentence or (ii) taken any
actions which would cause an antidilution adjustment under any outstanding
Options, Restricted Shares or Incentive Compensation Awards of the Company.
Except as Previously Disclosed, there are
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no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire, or to register for
sale, any shares of capital stock of the Company or any of its Subsidiaries.
Except as Previously Disclosed, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to
vote or to dispose of any shares of the capital stock of any of its
Subsidiaries. The Company Common Stock and the Company Preferred Stock are
referred to collectively as the "Company Capital Stock."
3.3 AUTHORITY; NO VIOLATION. (a) The Company has full
corporate power and authority to execute and deliver this Agreement and the
Option Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Option Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by the Board of Directors of the Company prior to
the date hereof (which approval satisfies in full the requirements of the MGCL
regarding approval by a board of directors), and such approval is in full force
and effect. The Board of Directors of the Company has adopted a resolution
declaring advisable the Merger and the other transactions contemplated hereby.
The Board of Directors of the Company has directed that this Agreement and the
transactions contemplated hereby be submitted to the Company's stockholders for
approval at a meeting of such stockholders and, except for the approval of this
Agreement by the affirmative vote of the holders of a majority of the votes of
the outstanding shares of the Company Common Stock entitled to vote thereon, no
other corporate proceedings on the part of the Company and no other stockholder
votes are necessary to approve this Agreement and to consummate the transactions
contemplated hereby. As of the date hereof, the Board of Directors of the
Company has resolved to recommend that the Company's stockholders approve the
Merger. This Agreement has been duly and validly executed and delivered by the
Company and (assuming due authorization, execution and delivery by Parent and
SRH) constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. In addition, the Board of
Directors has taken all requisite action such that the freezeout, special
shareholder voting and other requirements imposed by Sections 3-601 through
3-604 and 3-701 through 3-709 of the MGCL, and the provisions of any other
applicable "freezeout", "fair price", "moratorium", "control share acquisition"
or other similar anti-takeover statute or regulation enacted under state,
federal or foreign laws, are not applicable to the Merger, this Agreement, the
Option Agreement or the Stockholder Agreement or the transactions contemplated
by this Agreement, the Option Agreement and the Shareholders Agreement. No
holder of Company Capital Stock shall have the right to appraisal or to demand
or receive payment of the fair value of such Company Capital Stock from the
Successor Corporation or any other Person pursuant to the MGCL or otherwise.
(b) Neither the execution and delivery of this Agreement
and the Option Agreement by the Company, nor the consummation by the Company of
the Merger, nor compliance by the Company with any of the terms or provisions
hereof and thereof, will (i) violate any provision of the articles of
incorporation or bylaws of the Company or any of its Subsidiaries or (ii)
assuming that the consents and approvals referred to in Section 3.4 are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, or violate,
conflict with, result in a breach of any provision of or the loss of
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any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by or
rights or obligations under, or result in the creation of any Lien (or have any
of such results or effects, upon notice or lapse of time, or both) upon any of
the respective properties or assets of the Company or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, contract, or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party, or by which they or any of their respective properties, assets or
business activities may be bound or affected.
3.4 CONSENTS AND APPROVALS. Except for (a) the requisite
filings with, notices to and approval of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") under the BHCA and the Bank Merger
Act, the U.K. Financial Services Authority (the "FSA"), the Hong Kong Monetary
Authority (the "HKMA"), and the Federal Banking Commission of Switzerland (the
"FBC") (b) the filing of any required applications or notices with the New York
State Banking Department, (c) the filing with the Securities and Exchange
Commission (the "SEC") of the Proxy Statement (as defined in Section 7.1(a)) in
definitive form, (d) the filing of the Articles of Merger with the Maryland
Department pursuant to the MGCL, (e) any consents, authorizations, approvals,
filings or exemptions in connection with compliance with the applicable
provisions of supranational, federal, state and foreign laws (including, without
limitation, securities and insurance laws) relating to the regulation of
broker-dealers, futures commission merchants, commodities trading advisors,
commodities pool operators, investment advisers and insurance agencies and any
applicable domestic or foreign industry self-regulatory organization or stock
exchange ("SRO"), and the rules of the New York Stock Exchange (the "NYSE"), the
Philadelphia Stock Exchange, the International Stock Exchange, the Swiss
Electronic Exchange or the Luxembourg Stock Exchange, (f) the approval of the
Merger by the requisite vote of the stockholders of the Company, (g) the
expiration of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") or any consents,
authorizations, approvals, filings or exemptions required by any other
applicable antitrust law or merger regulation, including Council Regulation No.
4064/89 of the European Community (the "EC Merger Regulation"), (h) such
additional consents and approvals set forth in Section 3.4 of the Company
Disclosure Schedule, (i) the filing of the Offer Circular (as defined in Section
7.1(a)) with, and the approval of such Offer Circular by, the Luxembourg
Commission for the Supervision of the Financial Sector (the "CSFS"), the
Luxembourg Stock Exchange and the Swiss Electronic Exchange, and (j) consents,
authorizations, approvals, filings and registrations the failure of which to
obtain or make would not be reasonably likely to result in a Material Adverse
Effect on the Acquired Companies or prevent or materially delay consummation of
the Merger, the Offer or the Bank Merger, no consents, authorizations or
approvals of or filings or registrations with any supranational, federal, state,
local or foreign court, administrative agency or commission or other
governmental or regulatory authority or instrumentality (each a "Governmental
Entity") or, of or with any other Person by or on behalf of the Company, are
necessary in connection with (x) the execution and delivery by the Company of
this Agreement, (y) the consummation by the Company and the Bank of the Merger
and the Bank Merger, respectively or (z) the consummation by Parent or Offer Sub
of the Offer. As of the date hereof, the Company has no reason to believe that
any
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Requisite Regulatory Approvals (as defined in Section 8.1(b)) will not be
obtained or satisfied, as the case may be.
3.5 REPORTS. The Company and each of its Subsidiaries have
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
January 1, 1996 with (a) the SEC, (b) any SRO and (c) any other federal, state,
local or foreign governmental or regulatory agency or authority (collectively
with the SEC and the SROs, "Regulatory Agencies"), and all other reports,
registrations and statements required to be filed by them since January 1, 1996,
including, without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, any state, or
any Regulatory Agency, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of the Company and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
Knowledge of the Company, investigation into the business or operations of the
Company or any of its Subsidiaries since January 1, 1996. Except as Previously
Disclosed, there is no unresolved violation, or material criticism or exception,
by any Regulatory Agency with respect to any report, registration or statement
relating to any examinations of the Company or any of its Subsidiaries.
3.6 FINANCIAL STATEMENTS. The Company has previously made
available to Parent and to SRH copies of (a) the consolidated balance sheets of
the Company and its Subsidiaries as of December 31, 1997 and December 31, 1998,
(b) the related consolidated statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1996 through 1998, inclusive, as
reported in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed with the SEC under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in each case accompanied by the audit report of
the Company's independent public accountants, and (c) the unaudited consolidated
interim financial statements of the Company included in the draft provided to
Parent prior to the date hereof of the financial statements to be included in
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1999 (excluding notes, the "Draft Company Financial Statements"). The
financial statements referred to in the preceding sentence (including the
related notes, where applicable) fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth, and any financial statements filed by the Company with the SEC under the
Exchange Act after the date of this Agreement (including the related notes,
where applicable) will fairly present in all material respects (including the
related notes, where applicable) (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount) the
results of the consolidated operations and changes in stockholders' equity and
consolidated financial position of the Company and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) comply (and,
in the case of the financial statements filed after the date of this
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Agreement,
will comply) in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where applicable) has
been prepared (and, in the case of the financial statements filed after the date
of this Agreement, will be prepared) in all material respects in accordance with
United States generally accepted accounting principles ("GAAP") or regulatory
accounting principles, as applicable, consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes
thereto. The books and records of the Company and its Subsidiaries have been,
and are being, maintained in all material respects in accordance with GAAP or
regulatory accounting principles, as applicable, and any other applicable legal
and accounting requirements.
3.7 BROKER'S FEES. Neither the Company nor any of its
Subsidiaries nor any of their respective officers or directors has employed any
broker or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Merger or related transactions contemplated
by this Agreement or the Option Agreement, except that the Company has retained
International Real Returns LLC and Goldman, Sachs & Co. as its financial
advisors, pursuant to compensation arrangements which have been disclosed in
writing to Parent prior to, and will not be modified subsequent to, the date of
this Agreement.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as
publicly disclosed in the Company Reports (as defined in Section 3.12) filed
prior to the date of this Agreement, since December 31, 1998, no event has
occurred and no fact or circumstance shall have come to exist or come to be
known which, directly or indirectly, individually or taken together with all
other facts, circumstances and events (described in any paragraph of this
Article III or otherwise), has had, or is reasonably likely to have, a Material
Adverse Effect with respect to the Acquired Companies.
(b) As of the date of this Agreement, except as publicly
disclosed in the Company Reports filed prior to the date hereof or as Previously
Disclosed, since December 31, 1998, the Company and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices (excluding the incurrence of fees and
expenses of professional advisors related to this Agreement and the transactions
contemplated hereby) and there has not been:
(i) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any Company Capital Stock, other than regular quarterly cash
dividends on the Company Common Stock and dividends payable on the
Company Preferred Stock in accordance with their terms as of the date
of this Agreement;
(ii) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of
any other securities in respect of, or in lieu of or in substitution
for shares of the Company Capital Stock, except for issuances of
Company Common Stock upon the exercise of Options awarded prior to the
date hereof in accordance with the terms of the Company Stock Option
Plans; or
(iii) except insofar as required by a change in GAAP, any
change in accounting methods, principles or practices by the Company or
any of its Subsidiaries.
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3.9 LEGAL PROCEEDINGS. (a) Neither the Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the Knowledge of
the Company, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
("Claims and Proceedings") (i) against the Company or, to the Knowledge of the
Company, any of its Subsidiaries, (ii) against any person who is currently an
executive officer or director of the Company or any of its Subsidiaries with
respect to any of their actions as such or (iii) as of the date hereof,
challenging the validity or propriety of the transactions contemplated by this
Agreement or the Option Agreement. The Company has Previously Disclosed a list
of all pending or, to the Knowledge of the Company, threatened Claims and
Proceedings which, in each case, seek, or could result in, damages or other
amounts payable by the Company or its Subsidiaries, in excess of $3 million
($3,000,000).
(b) There is no injunction, order, judgment or decree
imposed upon the Company or, to the Knowledge of the Company, any of its
Subsidiaries or the assets of the Company or any of its Subsidiaries.
3.10 TAX MATTERS. (a) The Company and each of its Subsidiaries
has duly filed all Tax returns and reports required to be filed by it, or
requests for extensions to file such returns or reports have been timely filed
and granted and have not expired, and such returns and reports are true, correct
and complete in all material respects. The Company and each of its Subsidiaries
has paid (or the Company has paid on its behalf) or made provision (in
accordance with GAAP) for all Taxes for all past and current periods for which
the Company or any of its Subsidiaries is liable.
(b) As used in this Agreement, the term "Taxes" includes
all supranational, federal, state, local and foreign income, franchise,
property, sales, use, excise and other taxes, including, without limitation,
obligations for withholding Taxes from payments due or made to any other Person
and any interest, penalties or additions to tax.
3.11 EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as Previously
Disclosed, neither the Company nor any of its Subsidiaries maintain or
contribute to, or have any obligation to contribute to, or have any liability,
direct or indirect, contingent or otherwise (including, without limitation, a
liability arising out of an indemnification, guarantee, hold harmless or similar
agreement) with respect to, any material employment, consulting, severance pay,
termination pay, retirement, deferred compensation, retention or change in
control plan, program, arrangement, agreement or commitment, or an executive
compensation, incentive bonus or other bonus, pension, stock option, restricted
stock or equity-based, profit sharing, savings, life, health, disability,
accident, medical, insurance, vacation, or other employee benefit plan, program,
arrangement, agreement, fund or commitment, including any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") providing benefits to any current or former
employee, consultant or director of the Company or any of its Subsidiaries or
any current or former employee, consultant or director of any entity with
respect to which the Company or its Subsidiaries is a successor (collectively
the "Company Benefit Plans"). True and complete copies of each Company Benefit
Plan, including, but not limited to, any trust instruments and/or insurance
contracts, if any, forming a part thereof,
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all amendments thereto and the most recent determination letters issued by the
Internal Revenue Service, all government and regulatory approvals received from
any foreign Regulatory Agency, the most recent summary plan descriptions
(including any material modifications) and the most recent audited financial
reports for any funded Company Benefit Plan have been supplied or made available
to Parent. Except as Previously Disclosed: (i) neither the Company nor any of
its Subsidiaries has made any promise or commitment, whether legally binding or
not, to create any additional Company Benefit Plan or modify or change any
existing Company Benefit Plan that would materially increase the benefits
provided to any employee or former employee, consultant or director of the
Company or any Subsidiary thereof; and (ii) since December 31, 1998 there has
been no material change, amendment, modification to, or adoption of, any Company
Benefit Plan.
(b) With respect to each Company Benefit Plan: (i) if
intended to qualify under Section 401(a), 401(k) or 403(a) of the Code such plan
has received a favorable determination letter from the Internal Revenue Service,
and the Company is not aware of any circumstances likely to result in revocation
of such favorable determination or such qualification; (ii) it has been operated
and administered in all material respects in compliance with its terms and all
applicable laws and regulations (including but not limited to ERISA, the Code
and any relevant foreign laws and regulations); (iii) there are no material
pending or, to the Knowledge of the Company, threatened claims against, by or on
behalf of any Company Benefit Plans (other than routine claims for benefits);
(iv) to the Knowledge of the Company, no material breaches of fiduciary duty
have occurred; (v) no non-exempt prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code has occurred, assuming that the
taxable period of such transaction expired as of the second anniversary of the
date hereof, which would subject the Company or any Subsidiary to material
liability; (vi) no material Lien imposed under the Code, ERISA or any foreign
law exists; and (vii) all contributions, premiums and expenses to or in respect
of such Company Benefit Plan have been timely paid in full or, to the extent not
yet due, have been adequately accrued on the Company's consolidated financial
statements.
(c) Neither the Company nor any of its Subsidiaries has
incurred or reasonably expects to incur, either directly or indirectly
(including as a result of an indemnification obligation), any material liability
under Title I or IV of ERISA or the penalty, excise tax or joint and several
liability provisions of the Code or any foreign law or regulation relating to
employee benefit plans, and to the Knowledge of the Company, no event,
transaction or condition has occurred, exists or is expected to occur which
could result in any such material liability to the Company, any of its
Subsidiaries or, after the Closing, to Parent.
(d) The Company and each of its Subsidiaries has complied
with, and each such Company Benefit Plan conforms in operation and form to, all
applicable legal requirements, including, but not limited to, ERISA and the
Code, in all material respects.
(e)......With respect to each "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) as to which either the Company or
any Subsidiary may incur any liability under Section 302 or Title IV of ERISA or
Section 412 of the Code:
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(i) no such plan is a "multiemployer plan" (within the meaning
of Section 3(37) of ERISA) or a "multiple employer plan" (within the
meaning of Section 413(c) of the Code);
(ii) no such plan has been terminated so as to result,
directly or indirectly, in any material liability, contingent or
otherwise, of either the Company or any Subsidiary under Title IV of
ERISA;
(iii) no complete or partial withdrawal from such plan has
been made by the Company or any Subsidiary, or by any other Person, so
as to result in a material liability to the Company or any Subsidiary,
whether such liability is contingent or otherwise;
(iv) to the Knowledge of the Company, no proceeding has been
initiated by any Person (including the Pension Benefit Guaranty
Corporation (the "PBGC")) to terminate any such plan or to appoint a
trustee for any such plan;
(v) to the Knowledge of the Company, no condition or event
currently exists or currently is expected to occur that could result,
directly or indirectly, in any material liability of the Company or any
Subsidiary under Title IV of ERISA, whether to the PBGC or otherwise,
on account of the termination of any such plan;
(vi) no "reportable event" (as defined in ERISA) for which the
30-day reporting requirement has not been waived has occurred with
respect to any such plan, nor has any notice of such event or similar
notice to any foreign Regulatory Agency been required to be filed for
any Company Benefit Plan within the past 12 months nor will any such
notice be required to be filed as a result of the transactions
contemplated by this Agreement;
(vii) no such plan which is subject to Section 302 of ERISA or
Section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and section 412 of the
Code, respectively), whether or not waived, and neither the Company nor
any of its Subsidiaries has provided, or is required to provide,
security to any Company Benefit Plan pursuant to Section 401(a)(29) of
the Code; and
(viii) the transactions contemplated hereby will not result
in any event described in section 4062(e) of ERISA.
(f) Except as Previously Disclosed, with respect to each
Company Benefit Plan that is a "welfare plan" (as defined in Section 3(1) of
ERISA), neither the Company nor any Subsidiary has any obligations to provide
health, life insurance, or death benefits with respect to current or former
employees, consultants or directors of the Company or any of its Subsidiaries
beyond their termination of employment or service, other than as required under
Section 4980B of the Code, and each such Company Benefit Plan may be amended or
terminated at any time without incurring liability thereunder. Except as
Previously Disclosed, there has been no communication to any employee,
consultant or director of the Company or any Subsidiary that
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would reasonably be expected to promise or guarantee any such retiree health or
life insurance or other retiree death benefits on a permanent basis.
(g) Except as Previously Disclosed, the consummation of
the transactions contemplated hereby, either alone or in combination with
another event, (whether contingent or otherwise) will not (i) entitle any
current or former employee, consultant or director of the Company or any
Subsidiary or any group of such employees, consultants or directors to any
payment; (ii) increase the amount of compensation due to any such employee,
consultant or director; (iii) accelerate the vesting or funding of any
compensation, stock incentive or other benefit; (iv) result in any "parachute
payment" under Section 280G of the Code (whether or not such payment is
considered to be reasonable compensation for services rendered); or (v) cause
any compensation to fail to be deductible under Section 162(m), or any other
provision of the Code or any similar foreign law or regulation.
(h) Under each Company Benefit Plan which is a
single-employer plan and any foreign plan that is a defined benefit plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA or, with respect to any foreign plan, as
determined under any equivalent law or practice (in each case as determined on
the basis of the actuarial assumptions contained in Company Benefit Plan's most
recent actuarial valuation), did not exceed the then current value of the assets
of such Company Benefit Plan or, with respect to any foreign plan not subject to
any funding requirement, if such liabilities did exceed such assets the amount
thereof was properly reflected on the financial statements of the Company or its
respective Subsidiaries, and there has been no material adverse change in the
financial condition of such Company Benefit Plan (with respect to either assets
or benefits) since the last day of the most recent plan year.
(i) The Company has Previously Disclosed a true, correct
and complete schedule of all extensions of credit made to the executive officers
and directors of the Company and its Subsidiaries and their related interests
(all as defined under FRB Regulation "O"), all of which have been made in
compliance with Regulation O.
(j) Except as Previously Disclosed, to the Knowledge of
the Company, no Company Benefit Plan, or Company or any Subsidiary, is under
audit or is the subject of an audit or investigation by the IRS, the U.S.
Department of Labor, the PBGC or any other federal or state governmental agency,
nor is any such audit or investigation pending or threatened.
(k) Except as Previously Disclosed, neither the Company
nor any Subsidiary maintains any plan, program or arrangement or is a party to
any contract that provides any benefits or provides for payments to any Person
in, based on or measured by the value of, any equity security of, or interest
in, the Company or any Subsidiary.
(l) All Company Benefit Plans established pursuant to
the laws of a country other than the United States (the "Foreign Plans") have
been established, operated, administered and maintained in compliance with
all laws, regulations and orders applicable thereto. All
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premiums, contributions and any other amounts required by applicable Foreign
Plan documents or applicable laws to be paid or accrued by the Company and any
of its Subsidiaries have been paid or accrued as required.
3.12 SEC REPORTS. The Company has made available to Parent an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
the Company or any of its Subsidiaries with the SEC pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act (the
"Company Reports"), and (b) communication mailed by the Company to its
stockholders since January 1, 1997. As of the date of filing or mailing, as the
case may be, no such registration statement, prospectus, report, schedule, proxy
statement or communication contained (and no registration statement, prospectus,
report, schedule, proxy statement or communication filed or mailed after the
date of this Agreement will contain) any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date (but
filed before the date hereof) shall be deemed to modify information as of an
earlier date. Since January 1, 1997, the Company and each of its Subsidiaries
has timely filed (and will timely file after the date of this Agreement) all
reports and other documents required to be filed by it under the Securities Act
and the Exchange Act, and, as of their respective dates, all such reports
complied (and, in the case of all reports and other documents filed after the
date of this Agreement, will comply) in all material respects with the published
rules and regulations of the SEC with respect thereto.
3.13 LICENSES; COMPLIANCE WITH APPLICABLE LAW. The Company and
each of its Subsidiaries holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default under
any, applicable law, statute, order, rule, regulation, policy and/or guideline
of any Governmental Entity relating to the Company or any of its Subsidiaries,
and neither the Company nor any of its Subsidiaries has Knowledge of, or has
received notice of, any violations of any of the above.
3.14 CERTAIN CONTRACTS. Except as Previously Disclosed,
neither the Company nor any of its Subsidiaries is a party to or bound by any
contract, arrangement, commitment or understanding (a) as of the date hereof,
with respect to the employment, termination or compensation of any directors,
executive officers, key employees or material consultants (other than oral
contracts of employment at will which may be terminated without penalty), (b)
which is a "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) that has not been filed with or incorporated by
reference in the Company Reports, (c) which contains any material non-compete or
exclusivity provisions with respect to any business or geographic area in which
business is conducted with respect to the Company or any of its affiliates or
which restricts the conduct of any business by the Company or any of its
affiliates or any geographic area in which the Company or any of its affiliates
may conduct business or requires exclusive referrals of any business, (d) except
as contemplated by Article I hereof or as set forth in Section 3.11 of the
Company Disclosure Schedule (including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan) any of the benefits
of
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which will be increased, or the funding, vesting or payment of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement or (e) which would prohibit or materially delay the consummation of
the Merger or the Offer. The Company has previously made available to Parent
true and correct copies of all employment, termination and compensation
agreements (including deferred compensation) with executive officers, key
employees or material consultants which are in writing and to which the Company
or any of its Subsidiaries is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.14, whether or not set
forth in Section 3.14 of the Company Disclosure Schedule, is referred to herein
as a "COMPANY CONTRACT", and neither the Company nor any of its Subsidiaries has
Knowledge of, or has received notice of, any violation of any Company Contract
by any of the other parties thereto.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Except as Previously
Disclosed, neither the Company nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any supervisory letter from or has adopted
any board resolutions at the request of, any Regulatory Agency or other
Governmental Entity, that restricts the conduct of its business or has resulted,
or could reasonably be expected to result, in a liability or that in any manner
relates to its capital adequacy, its credit policies, its management or its
business (each, whether or not set forth in the Company Disclosure Schedule, a
"Comapny Regulatory Agreement"), nor has the Company or any of its Subsidiaries
(a) been advised since January 1, 1996 by any Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting any such
Company Regulatory Agreement or (b) any Knowledge of any pending or threatened
regulatory investigation.
3.16 DERIVATIVE INSTRUMENTS. Any swaps, caps, floors, futures,
forward contracts, option agreements, and any other derivative financial
instruments, contracts or arrangements (including such instruments, contracts or
arrangements with respect to precious metals or other commodities, collectively,
"DERIVATIVE INSTRUMENTS"), whether entered into for the account of the Company
or one of its Subsidiaries or for the account of a customer of the Company or
one of its Subsidiaries, were entered into in the ordinary course of business
and in accordance with prudent business practice and rules, regulations and
policies of any Regulatory Authority applicable to the Company and its
Subsidiaries, and, to the Company's Knowledge, with counterparties believed to
be financially responsible at the time and are legal, valid and binding
obligations of the Company or one of its Subsidiaries enforceable in accordance
with their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies), and are in full force and
effect. The Company and each of its Subsidiaries have duly performed in all
respects all of their obligations thereunder to the extent that such obligations
to perform have accrued, and, to the Company's Knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
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3.17 UNDISCLOSED LIABILITIES. Except for those liabilities
that are fully reflected or reserved against on the consolidated balance sheet
of the Company included in the financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, liabilities
identified in Section 3.17 of the Company Disclosure Schedule and liabilities
incurred in the ordinary course of business consistent with past practice since
December 31, 1998, neither the Company nor any of its Subsidiaries has incurred
any liability of any nature required by GAAP to be reflected in a balance sheet
prepared in accordance with GAAP.
3.18 ENVIRONMENTAL MATTERS. (a) The Real Property, and to the
Knowledge of the Company, the Loan Properties are in compliance with all
applicable federal, state, county and local law (including, without limitation,
common law), regulation or requirement relating to the human health and safety,
protection of the environment or natural resources ("Environmental Law"), except
for noncompliance that would not reasonably be expected to result in a material
liability to the Company or any of its Subsidiaries.
(b) There is no suit, claim, action or proceeding pending
or, to the Knowledge of the Company, threatened, before any Governmental Entity,
Regulatory Agency or other forum in which the Company or any of its Subsidiaries
has been or, with respect to threatened proceedings, may be, named as a
defendant (i) for alleged noncompliance (including by any predecessor), with any
Environmental Law or (ii) relating to any release, spill, emission, disposal,
migration or other discharge in, into or onto the environment of any pollutant,
chemical, or any substances, materials or wastes which are identified or
regulated under any Environmental Law (each, a "Release").
(c) To the Knowledge of the Company, there are no facts
or circumstances which would provide a reasonable basis for any suit, claim,
action or proceeding as described in Section 3.18(b) that would reasonably be
expected to result in material liability to the Company or any of its
Subsidiaries.
(d) To the Knowledge of the Company, there has been no
Release in, on, under or affecting any Real Property or Loan Property.
(e) None of the Real Properties is on the National
Priority List (NPL) or the Comprehensive Environmental Response Compensation and
Liability Information System (CERCLIS), or is the subject of any investigation,
remediation or cleanup of any contamination or potential contamination;
(f) None of the Real Properties are subject to, or as a
result of this transaction would be subject to, the requirements of the New
Jersey Industrial Site Recovery Act, the New Jersey Environmental Cleanup
Responsibility Act, or to any other state or local Environmental Laws which
require notice, disclosure, cleanup or approval prior to transfer of such
assets, properties, businesses or operations or which would impose liens on such
assets, properties, businesses or operations.
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(g) The Company and its Subsidiaries do not participate
in the management of any Loan Property within the meaning of 40 C.F.R.ss.
300.1100(c).
3.19 YEAR 2000. Neither the Company nor any of its
Subsidiaries has received, nor to the Knowledge of the Company are there facts
that would reasonably be expected to form the basis for the issuance of, a "Year
2000 Defciency Notification Letter" (as such term is employed in the Federal
Reserve's Supervision and Regulatory Letter No. SR 98-3 (SUP), dated March 4,
1998). The Company has disclosed to Parent a complete and accurate copy of its
plan, including its good faith estimate of the anticipated associated costs, for
addressing the issues set forth in the Year 2000 guidance papers issued by the
Federal Financial Institutions Examination Council, including the statements
dated May 5, 1997, entitled "Year 2000 Project Management Awareness," December
17, 1997, entitled "Safety and Soundness Guidelines Concerning the Year 2000
Business Risk," and October 15, 1998, entitled "Interagency Guidelines
Establishing Year 2000 Standards for Safety and Soundness," as such issues
affect any of the Company or its Subsidiaries. Between the date of this
Agreement and the Effective Time, the Company shall use its reasonable best
efforts to implement such plan.
3.20 LABOR MATTERS. (a) Except as Previously Disclosed, (i)
the employees employed by the Company or any Subsidiary are not represented by
any labor union or other labor representative or organization (ii) there are no
contracts, arrangements, commitments or understandings with or to a labor union
or other labor organization, including any collective bargaining agreements or
other similar arrangements in effect with respect to such employees and, (iii)
there are no other persons attempting to represent or organize or purporting to
represent for bargaining purposes any employees employed by the Company or any
Subsidiary.
(b) Except as Previously Disclosed, (i) since January 1,
1996 there has not occurred or been threatened any strikes, slow downs,
picketing, work stoppages, concerted refusals to work or other similar labor
activities with respect to employees employed by the Company or any Subsidiary
and (ii) no material grievance or arbitration or other proceeding arising out of
or under any collective bargaining agreement is pending or threatened.
(c) The Company and each Subsidiary is in material
compliance with all legal requirements (including any legal obligation to engage
in affirmative action) relating to the employment of former, current, and
prospective employees, independent contractors and "leased employees" (within
the meaning of section 414(n) of the Code) and there are no complaints, charges
or claims against the Company or any Subsidiary pending or, to the Knowledge of
the Company, threatened in respect thereof.
3.21 FAIRNESS OPINION. On or before the date hereof, Goldman,
Sachs & Co. has delivered its opinion to the Company's Board of Directors that
the Merger Consideration is fair, from a financial point of view, to the holders
of the Company Common Stock, a true and correct copy of which has been delivered
to Parent.
3.22 TRANSACTIONS WITH AFFILIATES. Except as disclosed in the
Company Reports filed prior to the date hereof, from January 1, 1999 through the
date hereof there have been no
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transactions, agreements, arrangements or understandings between the Company or
any of its Subsidiaries, on the one hand, and the Company's affiliates (other
than wholly owned Subsidiaries of the Company) or other Persons, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEST EUROPE
Except as Previously Disclosed, SRH hereby represents and
warrants to Parent as follows:
4.1 CORPORATE ORGANIZATION. (a) SRH is a societe anonyme duly
organized, validly existing and in good standing under the laws of Luxembourg.
SRH has the power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
True and complete copies of the articles of incorporation of SRH, as in effect
as of the date of this Agreement, have previously been made available by SRH to
Parent.
(b) SRH has Previously Disclosed to Parent a complete and
correct list of all of SRH's Subsidiaries. Except for the capital stock and
securities referred to in the immediately following sentence, there are no
outstanding shares of capital stock or other equity securities of any such
Subsidiary, options, warrants, stock appreciation rights, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock or other
equity securities of such Subsidiary, or contracts, commitments, understandings
or arrangements by which such Subsidiary may become bound to issue additional
shares of its capital stock or other equity securities, or options, warrants,
scrip or rights to purchase, acquire, subscribe to, calls on or commitments for
any shares of its capital stock or other equity securities. All of the
outstanding shares of capital stock or other securities evidencing ownership of
SRH's Subsidiaries are validly issued, fully paid and (except as otherwise
required by law) non-assessable and, except as Previously Disclosed, such shares
or other securities are owned by SRH or its wholly owned Subsidiaries free and
clear of any Lien with respect thereto. Each of SRH's Subsidiaries (i) is a duly
organized and validly existing corporation, partnership, limited liability
company or other legal entity under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing (to the
extent the concepts of "qualification to do business" and "good standing" exist)
in all jurisdictions (whether supranational, federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified, and (iii) has all requisite corporate,
partnership or other power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
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(c) The minute books of SRH and of each of its
Subsidiaries accurately reflect in all material respects all material corporate
actions taken by their stockholders and Boards of Directors (including
committees of their Boards of Directors) since January 1, 1996.
4.2 CAPITALIZATION. The authorized capital stock of SRH
consists solely of 400,000,000 shares, consisting of (a) 200,000,000 authorized
common shares, each with a $2.50 par value (the "SRH Common Stock"), of which
71,324,048 shares were issued and outstanding as of the date hereof; and (b)
200,000,000 authorized preferred shares, each with a $2.50 par value (the "SRH
Preferred Stock"), of which (i) 1,250,000 have been designated as 7.20% Series A
Cumulative Preferred Stock (the "West Series A Preferred Stock"), all of which
were issued and outstanding as of the date hereof and (ii) 1,500,000 have been
designated as 6.35% Series B Cumulative Preferred Stock (the "West Series B
Preferred Stock"), all of which were issued and outstanding as of the date
hereof. As of December 31, 1998, 721,986 shares of SRH Common Stock and no
shares of SRH Preferred Stock were held in SRH's treasury. All of the
outstanding shares of SRH Common Stock are admitted to the official listing of
the Luxembourg Stock Exchange and all of the outstanding shares of SRH Preferred
Stock are admitted to the official listing on the Luxembourg Stock Exchange and
the Frankfurt Stock Exchange. No shares of SRH Common Stock or SRH Preferred
Stock are reserved for issuance, except for 473,670 shares of SRH Common Stock
reserved for issuance in connection with the 1989 Stock Award Plan of SRH at
December 31, 1998. All of the issued and outstanding shares of SRH Common Stock
and SRH Preferred Stock have been duly authorized and validly issued and are
fully paid, non-assessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except as provided below, SRH does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, stock appreciation rights, commitments or agreements of any character
calling for the purchase or issuance of any shares of SRH Capital Stock (as
defined below) or any other equity securities of SRH or any securities
representing the right to purchase or otherwise receive any shares of SRH
Capital Stock or requiring any payment relating to the value or market price of
SRH Capital Stock. SRH has Previously Disclosed a list, as of May 6, 1999, of
SRH Option holders, the number of SRH Options held by each such holder, the date
of each SRH Option to purchase SRH Common Stock granted, the expiration date of
each such SRH Option, the vesting schedule of each such SRH Option, the SRH
Stock Option Plan pursuant to which each such SRH Option was granted and the
price at which each such SRH Option may be exercised under the applicable SRH
Stock Option Plan. SRH has Previously Disclosed a list, as of May 6, 1999, of
the SRH Restricted Share holders, the number of SRH Restricted Shares held by
each such holder, the date of each SRH Restricted Share granted, the expiration
date of each such SRH Restricted Share, the vesting schedule of each such SRH
Restricted Share, the SRH Stock Plan pursuant to which each such SRH Restricted
Share was granted and the price, if any, at which each such SRH Restricted Share
may be settled under the applicable SRH Stock Plan. Except as Previously
Disclosed, since December 31, 1998, SRH has not (i) issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock, other than shares of SRH Common Stock issued upon the
exercise, settlement or conversion of SRH Options and SRH Restricted Shares
outstanding as of May 6, 1999, as described in the immediately preceding
sentence or (ii) taken any actions which would cause an antidilution adjustment
under any outstanding SRH Options or SRH Restricted Shares. Except as Previously
Disclosed, there are no outstanding contractual
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obligations of SRH or any of its
Subsidiaries to repurchase, redeem or otherwise acquire, or to register for
sale, any shares of capital stock of SRH or any of its Subsidiaries. Except as
Previously Disclosed, there are no outstanding contractual obligations of SRH or
any of its Subsidiaries to vote or to dispose of any shares of the capital stock
of any of its Subsidiaries. The SRH Common Stock and the SRH Preferred Stock are
referred to collectively as the "SRH Captial Stock."
4.3 AUTHORITY; NO VIOLATION. (a) SRH has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of SRH prior to the date hereof
(which approval satisfies in full the requirements of Luxembourg Law regarding
approval by a board of directors), and such approval is in full force and
effect. The Board of Directors of SRH has recommended to SRH's stockholders to
tender their Shares of SRH Common Stock in the Offer. No other proceeding on the
part of SRH and no stockholder vote is necessary to approve this Agreement and
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by SRH and (assuming due authorization,
execution and delivery by Parent and the Company) constitutes a valid and
binding obligation of SRH, enforceable against SRH in accordance with its terms.
In addition, the Board of Directors of SRH has taken all requisite action such
that the provisions of any applicable "freezeout", "fair price", "moratorium",
"control share acquisition" or other similar anti-takeover statute or
regulation, are not applicable to the Merger, the Offer or the other
transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement
by SRH, nor the consummation by the Company of the Merger or SRH of the Offer,
nor compliance by SRH with any of the terms or provisions hereof or thereof,
will (i) violate any provision of the articles of association (or similar
documents) of SRH or any of its Subsidiaries or (ii) assuming that the consents
and approvals referred to in Section 4.4 are duly obtained, violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to SRH or any of its Subsidiaries or any of their respective
properties or assets, or violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by or rights or obligations under, or result
in the creation of any Lien (or have any of such results or effects upon notice
or lapse of time, or both) upon any of the respective properties or assets of
SRH or any of its Subsidiaries under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement, contract, or other instrument or obligation to which SRH or any of
its Subsidiaries is a party, or by which they or any of their respective
properties, assets or business activities may be bound or affected.
4.4 CONSENTS AND APPROVALS. Except for (a) the requisite
filings with, notices to and approval of the Federal Reserve Board under the
BHCA and the Bank Merger Act, the FSA, the HKMA and the FBC, (b) the filing of
any required applications or notices with the New York State Banking Department,
(c) the filing with the SEC of the Proxy Statement in definitive form,
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(d) the filing of the Articles of Merger with the Maryland Department pursuant
to the MGCL, (e) any consents, authorizations, approvals, filings or exemptions
in connection with compliance with the applicable provisions of supranational,
federal, state, local and foreign laws (including, without limitation,
securities and insurance laws) relating to the regulation of broker-dealers,
futures commission merchants, commodities trading advisors, commodities pool
operators, investment advisers and insurance agencies and any applicable SRO,
and the rules of the NYSE, the Philadelphia Stock Exchange, the International
Stock Exchange, the Swiss Electronic Exchange or the Luxembourg Stock Exchange
(f) the approval of the Merger by the requisite vote of the stockholders of the
Company, (g) the expiration of any applicable waiting period under the HSR Act
or any consents, authorizations, approvals, filings or exemptions required by
any other applicable antitrust law or merger regulation, including the EC Merger
Regulation, (h) such additional consents and approvals set forth in Section 4.4
of the SRH Disclosure Schedule, (i) the filing of the Offer Circular with, and
the approval of such Offer Circular by, the CSFS, the Frankfurt Stock Exchange,
the Luxembourg Stock Exchange and the Swiss Electronic Exchange, and (j)
consents, authorizations, approvals, filings and registrations the failure of
which to obtain or make would not be reasonably likely to result in a Material
Adverse Effect on the Acquired Companies or prevent or materially delay
consummation of the Merger, the Offer or the Bank Merger, no consents,
authorizations or approvals of or filings or registrations with any Governmental
Entity or, of or with any other Person by or on behalf of SRH, are necessary in
connection with (x) the execution and delivery by SRH of this Agreement, or (y)
the consummation by SRH of the Offer. As of the date hereof, SRH has no reason
to believe that any Requisite Regulatory Approvals will not be obtained or
satisfied, as the case may be.
4.5 REPORTS. SRH and each of its Subsidiaries have filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1996 with any Regulatory Agencies, and all other reports, registrations and
statements required to be filed by them since January 1, 1996, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of Luxembourg or any Regulatory Agency, and have paid
all fees and assessments due and payable in connection therewith. Except for
normal examinations conducted by a Regulatory Agency in the regular course of
the business of SRH and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the Knowledge of SRH, investigation into the business or
operations of SRH or any of its Subsidiaries since January 1, 1996. Except as
Previously Disclosed, there is no unresolved violation, material criticism, or
exception by any Regulatory Agency with respect to any report, registration or
statement relating to any examinations of SRH or any of its Subsidiaries.
4.6 FINANCIAL Statements. SRH has previously made available to
Parent copies of (a) the consolidated statements of condition of SRH and its
Subsidiaries as of December 31, 1997 and December 31, 1998, (b) the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1996 through 1998, in each case accompanied by the
audit report of KPMG Audit Reviseurs d'entreprises, SRH's independent public
accountants and (c) the unaudited consolidated interim financial statements of
SRH for the fiscal quarter ended March 31, 1999. The financial statements
referred to in the preceding sentence (including the related notes, where
applicable) fairly present in all material respects the
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consolidated financial position of SRH and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth. Each
of such statements (including the related notes, where applicable) has been
prepared (and, in the case of the financial statements filed after the date of
this Agreement, will be prepared) in all material respects in accordance with
GAAP or regulatory accounting principles, as applicable, consistently applied
during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto. The books and records of SRH and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP or regulatory accounting principles, as applicable, and any
other applicable legal and accounting requirements.
4.7 BROKER'S FEES. Neither SRH nor any of its Subsidiaries nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement, except that SRH has retained International Real Returns LLC and
Goldman, Sachs & Co. as its financial advisors, pursuant to compensation
arrangements which have been disclosed in writing to Parent, and will not be
modified subsequent to, the date of this Agreement.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as
Previously Disclosed in the SRH Disclosure Schedule, since December 31, 1998, no
event has occurred and no fact or circumstance shall have come to exist or come
to be known which, directly or indirectly, individually or taken together with
all other facts, circumstances and events (described in any paragraphs of this
Article IV or otherwise), has had, or is reasonably likely to have, a Material
Adverse Effect with respect to the Acquired Companies.
(b) As of the date of this Agreement, except as
Previously Disclosed in the SRH Disclosure Schedule, since December 31, 1998,
SRH and its Subsidiaries have carried on their respective businesses in the
ordinary and usual course consistent with their past practices (excluding the
incurrence of fees and expenses of professional advisors related to this
Agreement and the transactions contemplated hereby) and there has not been:
(i) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any SRH Capital Stock, other than regular annual cash dividends on
SRH Common Stock and dividends payable on SRH Preferred Stock in
accordance with their terms as of the date of this Agreement;
(ii) any split, combination or reclassification of any SRH
Capital Stock or any issuance or the authorization of any issuance of
any other securities in respect of, or in lieu of or in substitution
for shares of SRH Capital Stock, except for issuances of SRH Common
Stock upon the exercise of SRH Options awarded prior to the date hereof
in accordance with the terms of SRH Stock Option Plans; or
(iii) except insofar as required by a change in GAAP or other
applicable generally accepted accounting methods, any change in
accounting methods, principles or practices by SRH or any of its
Subsidiaries.
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4.9 LEGAL PROCEEDINGS. (a) Neither SRH nor any of its
Subsidiaries is a party to any, and there are no pending or, to the Knowledge of
SRH, threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature (i) against
SRH or, to the Knowledge of SRH, any of its Subsidiaries, (ii) against any
person who is currently an executive officer or director of SRH or any of its
Subsidiaries with respect to any of their actions as such or (iii) challenging
the validity or propriety of the transactions contemplated by this Agreement.
SRH has Previously Disclosed a list of all pending or, to the Knowledge of SRH,
threatened Claims and Proceedings which, in each case, seek, or could result in,
damages or other amounts payable by SRH or its Subsidiaries, in excess of $3
million ($3,000,000).
(b) There is no injunction, order, judgment or decree
imposed upon SRH or, to the Knowledge of SRH, any of its Subsidiaries or the
assets of SRH or any of its Subsidiaries.
4.10 TAX MATTERS. SRH and each of its Subsidiaries has duly
filed all Tax returns and reports required to be filed by it, or requests for
extensions to file such returns or reports have been timely filed and granted
and have not expired, and such returns and reports are true, correct and
complete in all material respects.
4.11 EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as Previously
Disclosed, neither SRH nor any of its Subsidiaries maintain or contribute to, or
have any obligation to contribute to, or have any liability, direct or indirect,
contingent or otherwise (including, without limitation, a liability arising out
of an indemnification, guarantee, hold harmless or similar agreement) with
respect to, any material employment, consulting, severance pay, termination pay,
retirement, deferred compensation, retention or change in control plan, program,
arrangement, agreement or commitment, or an executive compensation, incentive
bonus or other bonus, pension, stock option, restricted stock or equity-based,
profit sharing, savings, life, health, disability, accident, medical, insurance,
vacation, or other employee benefit plan, program, arrangement, agreement, fund
or commitment, including any "employee benefit plan" as defined in Section 3(3)
of ERISA providing benefits to any current or former employee, consultant or
director of SRH or any of its Subsidiaries or any current or former employee,
consultant or director of any entity with respect to which SRH or its
Subsidiaries is a successor (collectively the "SRH Benefit Plans"). True and
complete copies of each SRH Benefit Plan, including, but not limited to, any
trust instruments and/or insurance contracts, if any, forming a part thereof,
all amendments thereto and the most recent determination letters issued by the
Internal Revenue Service, all government and regulatory approvals received from
any foreign Regulatory Agency, the most recent summary plan descriptions
(including any material modifications) and the most recent audited financial
reports for any funded SRH Benefit Plan have been supplied or made available to
Parent. Except as Previously Disclosed: (i) neither SRH nor any of its
Subsidiaries has any plan or commitment, whether legally binding or not, to
create any additional SRH Benefit Plan or modify or change any existing SRH
Benefit Plan that would materially increase the benefits provided to any
employee or former employee, consultant or director of SRH or any Subsidiary
thereof; and (ii) since December 31, 1998 there has been no material change,
amendment, modification to, or adoption of, any SRH Benefit Plan.
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(b) With respect to each SRH Benefit Plan: (i) if
intended to qualify under Section 401(a), 401(k) or 403(a) of the Code such plan
has received a favorable determination letter from the Internal Revenue Service,
or if intended to qualify under any law or regulation of any foreign
jurisdiction or Regulatory Agency such plan so qualifies, and SRH is not aware
of any circumstances likely to result in revocation of such favorable
determination or such qualification; (ii) it has been operated and administered
in all material respects in compliance with its terms and all applicable laws
and regulations (including but not limited to ERISA, the Code and any relevant
foreign laws and regulations); (iii) there are no material pending or, to the
Knowledge of SRH, threatened claims against, by or on behalf of any SRH Benefit
Plans (other than routine claims for benefits); (iv) to the Knowledge of SRH, no
material breaches of fiduciary duty have occurred; (v) no non-exempt prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code has occurred which would subject SRH or any Subsidiary to material
liability; (vi) no material Lien imposed under the Code, ERISA or any foreign
law exists; and (vii) all contributions, premiums and expenses to or in respect
of such SRH Benefit Plan have been timely paid in full or, to the extent not yet
due, have been adequately accrued on SRH's consolidated financial statements.
(c) Neither SRH nor any of its Subsidiaries has incurred
or reasonably expects to incur, either directly or indirectly (including as a
result of an indemnification obligation), any material liability under Title I
or IV of ERISA or the penalty, excise tax or joint and several liability
provisions of the Code or any foreign law or regulation relating to employee
benefit plans, and to the Knowledge of SRH, no event, transaction or condition
has occurred, exists or is expected to occur which could result in any such
material liability to SRH, any of its Subsidiaries or, after the Closing, to
Parent.
(d) SRH and each of its Subsidiaries has complied with,
and each such SRH Benefit Plan conforms in operation and form to, all applicable
legal requirements, domestic or foreign, including, but not limited to, ERISA
and the Code, in all material respects.
(e) With respect to each "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) as to which either SRH or any
Subsidiary may incur any liability under Section 302 or Title IV of ERISA or
Section 412 of the Code:
(i) no such plan is a "multiemployer plan" (within the meaning
of Section 3(37) of ERISA) or a "multiple employer plan" (within the
meaning of Section 413(c) of the Code);
(ii) no such plan has been terminated so as to result,
directly or indirectly, in any material liability, contingent or
otherwise, of either SRH or any Subsidiary under Title IV of ERISA;
(iii) no complete or partial withdrawal from such plan has
been made by SRH or any Subsidiary, or by any other Person, so as to
result in a material liability to SRH or any Subsidiary, whether such
liability is contingent or otherwise;
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(iv) no proceeding has been initiated by any Person (including
the PBGC to terminate any such plan or to appoint a trustee for any
such plan;
(v) to the Knowledge of SRH, no condition or event currently
exists or currently is expected to occur that could result, directly or
indirectly, in any material liability of SRH or any Subsidiary under
Title IV of ERISA, whether to the PBGC or otherwise, on account of the
termination of any such plan;
(vi) if any such plan were to be terminated as of the Closing
Date or if any Person were to withdraw from such plan, neither SRH nor
any Subsidiary would incur, directly or indirectly, any material
liability under Title IV of ERISA;
(vii) no "reportable event" (as defined in ERISA) for which
the 30-day reporting requirement has not been waived has occurred with
respect to any such plan, nor has any notice of such event or similar
notice to any foreign Regulatory Agency been required to be filed for
any SRH Benefit Plan within the past 12 months nor will any such notice
be required to be filed as a result of the transactions contemplated by
this Agreement;
(viii) no such plan which is subject to Section 302 of ERISA
or Section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and section 412 of the
Code, respectively), whether or not waived, and neither SRH nor any of
its Subsidiaries has provided, or is required to provide, security to
any SRH Benefit Plan pursuant to Section 401(a)(29) of the Code; and
(ix) the transactions contemplated hereby will not result
in any event described in section 4062(e) of ERISA.
(f) Except as Previously Disclosed, with respect to each
SRH Benefit Plan that is a "welfare plan" (as defined in Section 3(1) of ERISA),
neither SRH nor any Subsidiary has any obligations to provide health, life
insurance, or death benefits with respect to current or former employees,
consultants or directors of SRH or any of its Subsidiaries beyond their
termination of employment or service, other than as required under Section 4980B
of the Code, and each such SRH Benefit Plan may be amended or terminated at any
time without incurring liability thereunder. Except as Previously Disclosed,
there has been no communication to any employee, consultant or director of SRH
or any Subsidiary that would reasonably be expected to promise or guarantee any
such retiree health or life insurance or other retiree death benefits on a
permanent basis.
(g) Except as Previously Disclosed, the consummation of
the transactions contemplated hereby, either alone or in combination with
another event, (whether contingent or otherwise) will not (i) entitle any
current or former employee, consultant or director of SRH or any Subsidiary or
any group of such employees, consultants or directors to any payment, (ii)
increase the amount of compensation due to any such employee, consultant or
director (iii) accelerate the vesting or funding of any compensation, stock
incentive or other benefit; (iv)
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result in any "parachute payment" under Section 280G of the Code (whether or not
such payment is considered to be reasonable compensation for services rendered);
or (v) cause any compensation to fail to be deductible under Section 162(m), or
any other provision of the Code or any similar foreign law or regulation.
(h) Under each SRH Benefit Plan which is a
single-employer plan and any foreign plan that is a defined benefit plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA or, with respect to any foreign plan, as
determined under any equivalent law or practice (in each case as determined on
the basis of the actuarial assumptions contained in SRH Benefit Plan's most
recent actuarial valuation), did not exceed the then current value of the assets
of such SRH Benefit Plan, and there has been no material adverse change in the
financial condition of such SRH Benefit Plan (with respect to either assets or
benefits) since the last day of the most recent plan year.
(i) SRH has Previously Disclosed a true, correct and
complete schedule of all extensions of credit made to the executive officers and
directors of SRH and its Subsidiaries and their related interests that are
required to be reported to any applicable Regulatory Authority.
(j) Except as Previously Disclosed, no SRH Benefit Plan,
or SRH or any Subsidiary, is under audit or is the subject of an audit or
investigation by the IRS, the U.S. Department of Labor, the PBGC or any other
federal or state governmental agency, nor is any such audit or investigation
pending or threatened.
(k) Except as Previously Disclosed, neither SRH nor any
Subsidiary maintains any plan, program or arrangement or is a party to any
contract that provides any benefits or provides for payments to any Person in,
based on or measured by the value of, any equity security of, or interest in,
SRH or any Subsidiary.
4.12 LICENSES; COMPLIANCE WITH APPLICABLE LAW. SRH and each of
its Subsidiaries hold all licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and have complied with and are not in default under any,
applicable law, statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to SRH or any of its Subsidiaries, and neither SRH
nor any of its Subsidiaries has Knowledge of, or has received notice of, any
violations of any of the above.
4.13 CERTAIN CONTRACTS. Except as Previously Disclosed,
neither SRH nor any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (a) as of the date hereof, with respect
to the employment, termination or compensation of any directors, executive
officers, key employees or material consultants (other than oral contracts of
employment at will which may be terminated without penalty), (b) which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC), (c) which contains any material non-compete or exclusivity
provisions with respect to any business or geographic area in which business is
conducted with respect to SRH or any of its
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affiliates or which restricts the conduct of any business by SRH or any of its
affiliates or any geographic area in which SRH or any of its affiliates may
conduct business or requires exclusive referrals of any business, (d) except as
contemplated by Article I hereof or as Previously Disclosed (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the funding,
vesting or payment of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement or (e) which would prohibit or
materially delay the consummation of the Offer or the Merger. SRH has previously
made available to Parent true and correct copies of all employment, termination
and compensation (including deferred compensation) agreements with executive
officers, key employees or material consultants which are in writing and to
which SRH or any of its Subsidiaries is a party. Each contract, arrangement,
commitment or understanding of the type described in this Section 4.13, whether
or not Previously Disclosed, is referred to herein as a "SRH CONTRACT", and
neither SRH nor any of its Subsidiaries has Knowledge of, or has received notice
of, any violation of the above by any of the other parties thereto.
4.14 AGREEMENTS WITH REGULATORY AGENCIES. Except as Previously
Disclosed, neither SRH nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any supervisory letter from or has adopted
any board resolutions at the request of, any Regulatory Agency or other
Governmental Entity, that restricts the conduct of its business or has resulted,
or could reasonably be expected to result, in a liability or that in any manner
relates to its capital adequacy, its credit policies, its management or its
business (each, whether or not set forth in SRH Disclosure Schedule, a "SRH
Regulatory Agreement"), nor has SRH or any of its Subsidiaries (a) been advised
since January 1, 1996 by any Regulatory Agency or other Governmental Entity that
it is considering issuing or requesting any such SRH Regulatory Agreement or (b)
any Knowledge of any pending or threatened regulatory investigation.
4.15 DERIVATIVE INSTRUMENTS. Any Derivative Instruments,
whether entered into for the account of SRH or one of its Subsidiaries or for
the account of a customer of SRH or one of its Subsidiaries, were entered into
in the ordinary course of business and, in accordance with prudent business
practice and rules, regulations and policies of any Regulatory Authority
applicable to SRH and its Subsidiaries, and to SRH's Knowledge, with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations of SRH or one of its Subsidiaries enforceable in
accordance with their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies), and are in full force and
effect. SRH and each of its Subsidiaries have duly performed in all respects all
of their obligations thereunder to the extent that such obligations to perform
have accrued, and there are no breaches, violations or defaults or allegations
or assertions of such by any party thereunder.
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4.16 UNDISCLOSED LIABILITIES. Except for those liabilities
that are fully reflected or reserved against on the consolidated balance sheet
of SRH disclosed to the Parent for the period ended December 31, 1998,
liabilities identified in Section 4.17 of the SRH Disclosure Schedule and
liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1998, neither SRH nor any of its Subsidiaries has
incurred any liability of any nature required by GAAP to be reflected in a
balance sheet prepared in accordance with GAAP.
4.17 ENVIRONMENTAL MATTERS. (a) The Real Property, and to the
Knowledge of SRH, the Loan Properties are in compliance with all applicable
Environmental Laws, except for noncompliance that would not reasonably be
expected to result in a material liability to SRH or any of its Subsidiaries.
(b) There is no suit, claim, action or proceeding pending
or, to the Knowledge of SRH, threatened, before any Governmental Entity,
Regulatory Agency or other forum in which SRH or any of its Subsidiaries has
been or, with respect to threatened proceedings, may be, named as a defendant
(i) for alleged noncompliance (including by any predecessor), with any
Environmental Law or (ii) relating to any Release.
(c) To the Knowledge of SRH, there are no facts or
circumstances which would provide a reasonable basis for any suit, claim, action
or proceeding as described in Section 4.17(b), except for noncompliance that
would not reasonably be expected to result in a material liability to SRH or any
of its Subsidiaries.
(d) To the Knowledge of SRH, there has been no Release
in, on, under or affecting any Real Property or Loan Property.
4.18 YEAR 2000. SRH has carried out a review to evaluate the
extent to which the business or operations of SRH or any of its Subsidiaries
will be affected by the Year 2000 Problem (as defined below). As a result of
such review, SRH has no reason to believe, and does not believe, that the Year
2000 Problem will have a Material Adverse Effect or result in any material loss
or interference with the business or operations of the Acquired Companies. SRH
reasonably believes, after due inquiry, that the suppliers, vendors, customers
or other material third parties used or served by SRH and its Subsidiaries are
addressing or will address the Year 2000 Problem in a timely manner. SRH is in
compliance with all applicable requirements of any Governmental Entity relating
to the Year 2000 Problem and has not received any correspondence from or
provided any written information to any Governmental Entity relating to the Year
2000 Problem other than as Previously Disclosed, complete and accurate copies of
which have been made available to Parent. SRH has previously provided to Parent
complete and accurate copies of all of its internal plans, including estimates
of the anticipated associated costs, for addressing the Year 2000 Problem as it
relates to SRH and its Subsidiaries. "Year 2000 Problem" means the risk
that computer hardware or software applications will not record, store,
process, calculate and present calendar dates falling on and after January
1, 2000, and calculate information dependent upon or relating to such dates,
in the same manner and with the same functionality, data integrity and
performance as such products record, store, process, calculate and present
calendar dates
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falling on or before December 31, 1999, and calculate information dependent on
or relating to such dates.
4.19 LABOR MATTERS. (a) Except as Previously Disclosed, (i)
the employees employed by SRH or any Subsidiary are not represented by any labor
union or other labor representative or organization (ii) there are no contracts,
arrangements, commitments or understandings with or to a labor union or other
labor organization, including any collective bargaining agreements or other
similar arrangements in effect with respect to such employees and, (iii) there
are no other persons attempting to represent or organize or purporting to
represent for bargaining purposes any employees employed by SRH or any
Subsidiary.
(b)......Except as Previously Disclosed, (i) since January 1,
1996 there has not occurred or been threatened any strikes, slow downs,
picketing, work stoppages, concerted refusals to work or other similar labor
activities with respect to employees employed by SRH or any Subsidiary and (ii)
no material grievance or arbitration or other proceeding arising out of or under
any collective bargaining agreement is pending or threatened.
(c)......SRH and each Subsidiary is in material compliance
with all legal requirements (including any legal obligation to engage in
affirmative action) relating to the employment of former, current, and
prospective employees and independent contractors and there are no complaints,
charges or claims against SRH or any Subsidiary pending, or to the knowledge of
the SRH, threatened in respect thereof.
4.20 FAIRNESS OPINION. On or before the date hereof, Goldman,
Sachs & Co. has delivered its opinion to SRH's Board of Directors that the
consideration to be offered by Parent or Offer Sub to the holders of SRH Common
Stock in the Offer is fair, from a financial point of view, to the holders of
SRH Common Stock, a true and correct copy of which has been delivered to Parent.
4.21 TRANSACTIONS WITH AFFILIATES. Except as Previously
Disclosed, from January 1, 1997 through the date hereof there have been no
transactions, agreements, arrangements or understandings between SRH or any of
its Subsidiaries, on the one hand, and SRH's affiliates (other than wholly owned
Subsidiaries of SRH) or other Persons, on the other hand, that would, if SRH
were an Exchange Act Reporting Company, be required to be disclosed under Item
404 of Regulation S-K under the Securities Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as Previously Disclosed, Parent hereby represents and
warrants to the Company and SRH as follows:
5.1 CORPORATE ORGANIZATION. Parent is a public limited company
duly organized and validly existing under the laws of England. Promptly
following the date hereof, Merger Sub will be a corporation duly organized,
validly existing and in good standing under the laws of the
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State of Maryland, and all of its outstanding capital stock will be owned
directly or indirectly by Parent. Merger Sub will be formed solely for the
purpose of engaging in the transactions contemplated hereby, will conduct its
operations only as contemplated hereby and will engage in no other business
activities other than activities conducted in furtherance of the transactions
contemplated hereby; provided, however, that Merger Sub may incur indebtedness
that does not contravene any other provision hereof, including Section 5.4.
Parent has the requisite power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business (to the extent the concept of
"qualification to do business" exists) in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary.
5.2 AUTHORITY; NO VIOLATION. (a) Parent has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Merger Sub will have full corporate power and
authority to enter into and deliver this Agreement and become a party hereto,
and to consummate the transactions contemplated hereby.
(b) The consummation of the transactions contemplated
hereby has been duly and validly approved by a duly authorized committee of the
Board of Directors of Parent, and will be duly and validly approved by the Board
of Directors of Merger Sub, and Parent will cause the stockholder or
stockholders of Merger Sub to approve the Merger. No other corporate proceedings
on the part of Parent and no vote of Parent's stockholders are necessary to
consummate the transactions contemplated hereby.
(c) The execution and delivery of this Agreement by
Parent has been duly and validly authorized in accordance with applicable law.
This Agreement has been duly and validly executed and delivered by Parent and
(assuming due authorization, execution and delivery by the Company and SRH)
constitutes a valid and binding obligation of Parent, enforceable against Parent
in accordance with its terms.
(d) Neither the execution and delivery of this Agreement
by Parent, nor the consummation by Parent and Merger Sub of the Merger and the
Offer, nor compliance by Parent and Merger Sub with any of the terms or
provisions hereof, will (i) violate any applicable law or the memorandum and
articles of association, certificate of incorporation, bylaws or other
organizational documents of Parent or Merger Sub, as applicable, or (ii)
assuming that the consents and approvals referred to in Section 5.3 are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, or violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Parent or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement, contract or other instrument
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or obligation to which Parent or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound or affected.
5.3 CONSENTS AND APPROVALS. Except for (a) the requisite
filings with, notices to and approval of the Federal Reserve Board under the
BHCA and the Bank Merger Act, the FSA, the HKMA, and the FBC, (b) the filing of
any required applications or notices with the New York State Banking Department,
(c) the filing with the SEC of the Proxy Statement in definitive form, (d)
approval of the Merger by the board of directors of Merger Sub and by the
stockholders of Merger Sub in accordance with the MGCL and the filing of the
Articles of Merger with the Maryland Department pursuant to the MGCL, (e) any
consents, authorizations, approvals, filings or exemptions in connection with
compliance with the applicable provisions of supranational, federal, state,
local and foreign laws (including, without limitation, securities and insurance
laws) relating to the regulation of broker-dealers, investment advisers and
insurance agencies and any applicable SRO, and the rules of the NYSE, the
Philadelphia Stock Exchange, the International Stock Exchange, the Swiss
Electronic Exchange or the Luxembourg Stock Exchange, (f) the approval of the
Merger by the requisite vote of the stockholders of the Company, (g) the
expiration of any applicable waiting period under the HSR Act or any consents,
authorizations, approvals, filings or exemptions required by any other
applicable antitrust law or merger regulation, including the EC Merger
Regulation, (h) such additional consents and approvals set forth in Section 5.3
of the Parent Disclosure Schedule, (i) the filing of the Offer Circular with,
and the approval of such Offer Circular by, the CSFS, the Luxembourg Stock
Exchange and the Swiss Electronic Exchange, and (j) consents, authorizations,
approvals, filings and registrations the failure of which to obtain or make
would not be reasonably likely to result in a Material Adverse Effect on Parent
or prevent or materially delay consummation of the Merger, the Offer or the Bank
Merger, no consents, authorizations or approvals of or filings or registrations
with any Governmental Entity or, of or with any other Person by Parent, are
necessary in connection with (x) the execution and delivery by Parent and Merger
Sub of this Agreement, (y) the consummation by Merger Sub of the Merger or by
HSBC Bank USA of the Bank Merger or (z) the consummation by Parent or Offer Sub
of the Offer. As of the date hereof, Parent has no reason to believe that any
Requisite Regulatory Approvals will not be obtained or satisfied without
imposition of a Burdensome Condition, as the case may be.
5.4 FINANCING. Parent will have available all the funds
necessary to perform its obligations under this Agreement, including
consummating the transactions contemplated by this Agreement on the terms
contemplated hereby and make the payment of all fees and expenses relating to
such transactions.
5.5 FINANCIAL REPORTS. Parent has previously made available to
the Company and SRH copies of (i) the consolidated balance sheets of Parent and
its Subsidiaries as of December 31, 1998, (ii) the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
fiscal year 1998 as reported in its Annual Report for the fiscal year ended
December 31, 1998 (the "Parent Financial Reports") in each case accompanied by
the audit report of its independent public accountants. The Parent Financial
Reports (including the related notes, where applicable) fairly present in all
material respects the consolidated financial position of Parent and its
Subsidiaries for the respective fiscal periods or as of the respective
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dates
therein set forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements; and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance with
generally accepted accounting principles in the United Kingdom or regulatory
accounting principles, as applicable, consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes
thereto.
5.6 LITIGATION; REGULATORY ACTION. (a) No litigation, claim or
other proceeding before any court or governmental agency is pending against it
or, to its Knowledge, any of its Subsidiaries and, to its Knowledge, no such
litigation, claim or other proceeding has been threatened, in each case that
would or would reasonably be expected to have a Material Adverse Effect on
Parent.
(b) Neither it nor, to its Knowledge, any of its
Subsidiaries or properties, is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter of similar submission to, or extraordinary supervisory letter
from, any Regulatory Authority.
(c) Neither it nor, to its Knowledge, any of its
Subsidiaries, has been advised by any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
5.7 ABSENCE OF CERTAIN CHANGES. Except as publicly disclosed
in London prior to the date hereof, since December 31, 1998, (i) it and its
Subsidiaries have conducted their respective businesses in the ordinary and
usual course consistent with past practice and (ii) no event has occurred and no
fact or circumstance shall have come to exist or come to be known which,
directly or indirectly, individually or taken together with all other facts,
circumstances and events (described in any paragraph of this Article V or
otherwise), has had, or is reasonably expected to have a Material Adverse Effect
with respect to Parent.
5.8 YEAR 2000. Neither Parent nor any of its Subsidiaries has
received, nor to the Knowledge of Parent are there facts that would form the
basis for the issuance of, a Year 2000 Deficiency Notification Letter. Parent
has a plan for addressing the Year 2000 Problem and Parent's United States
operations have plans for addressing the issues set forth in the Year 2000
guidance papers issued by the Federal Financial Institutions Examination
Council, including the statements dated May 5, 1997, entitled "Year 2000 Project
Management Awareness," December 17, 1997, entitled "Safety and Soundness
Guidelines Concerning the Year 2000 Business Risk," and October 15, 1998,
entitled "Interagency Guidelines Establishing Year 2000 Standards for Safety and
Soundness," as such issues affect any of Parent or its Subsidiaries, as
applicable. Between the date of this Agreement and the Effective Time, Parent
shall use its reasonable best efforts to implement such plans.
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During
the period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement or the Option Agreement,
the Company and SRH shall each, and shall cause its respective Subsidiaries to,
(a) conduct their business only in the usual, regular and ordinary course
consistent with past practice, (b) use reasonable best efforts to maintain and
preserve intact their business organization, employees and advantageous business
relationships and retain the services of their key officers and key employees,
(c) take no intentional action which would adversely affect or delay in any
material respect the ability of either Parent, SRH or the Company to obtain any
Requisite Regulatory Approvals and (d) use reasonable best efforts to obtain any
third party approvals that are necessary or appropriate for the Successor
Corporation to conduct the business of the Company and its subsidiaries as
currently conducted following the Effective Time.
6.2 FORBEARANCES OF THE COMPANY AND SRH. During the period
from the date of this Agreement to the Effective Time, except as Previously
Disclosed or except as expressly contemplated or permitted by this Agreement or
the Option Agreement, neither the Company nor SRH shall, nor shall either permit
any of its Subsidiaries to, without the prior written consent of Parent:
(a) other than in the ordinary course of business
consistent with past practice, incur (i) any indebtedness for borrowed money
(other than deposits and similar liabilities, short-term indebtedness incurred
to refinance existing short-term indebtedness, indebtedness of the Company's
Subsidiaries to the Company or any of its wholly owned Subsidiaries,
indebtedness of SRH's Subsidiaries to SRH or any of its wholly owned
Subsidiaries and indebtedness under existing lines of credit), assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make any
loan or advance or (ii) any capital expenditures, obligations or liabilities;
(b) (i) adjust, split, combine or reclassify any capital
stock; (ii) make, declare or pay any dividend (except, (A) regular annual or
quarterly cash dividends (with record and payment dates consistent with past
practice) at a rate not in excess of the rate heretofore in effect on the
Company Common Stock or the SRH Common Stock and dividends on the Company
Preferred Stock or SRH Preferred Stock pursuant to the terms thereof and (B)
dividends paid in the ordinary course of business by any wholly owned Subsidiary
of the Company or of SRH) or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock; (iii) grant any additional Options, Restricted
Shares, Incentive Compensation Awards, SRH Options or SRH Restricted Shares, or
grant any Person any right to acquire any shares of its capital stock or any
right the value of which is based on the value of shares of its capital stock,
(iv) issue any additional shares of capital stock, other than with respect to
the conversion of convertible securities outstanding as of the date hereof
pursuant to their
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terms and the exercise, conversion or settlement of Options or
SRH Options granted prior to the date hereof pursuant to the Company Stock Plans
or the SRH Stock Plans; or (v) enter into any agreement, understanding or
arrangement with respect to the sale or voting of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise
dispose of any of its material properties or assets, including, without
limitation, capital stock in any Subsidiaries of the Company or of SRH, to any
individual, corporation or other entity other than a direct or indirect wholly
owned Subsidiary, or cancel, release or assign any indebtedness to any such
Person or any claims held by any such Person, except in the ordinary course of
business consistent with past practice or pursuant to contracts or agreements in
force at the date of this Agreement;
(d) except for transactions in the ordinary course of
business consistent with past practice, make any material investment either by
purchase of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other individual, corporation,
limited partnership or other entity other than a wholly owned Subsidiary;
(e) except for transactions in the ordinary course of
business consistent with past practice, enter into or terminate any material
lease, contract or agreement, or make any material change in any of its material
leases, contracts or agreements, other than renewals of leases, contracts or
agreements without material changes of terms;
(f) other than in the ordinary course of business
consistent with past practice or as required by law or contracts in effect as of
the date hereof set forth in Section 6.2 of the Company Disclosure Schedule or
of the SRH Disclosure Schedule, increase in any manner the wages, salaries,
compensation, pension or other fringe benefits or perquisites of any current or
former employees, consultants or directors of the Company or of SRH or any of
their respective Subsidiaries, or vest, fund or pay any pension or retirement
allowance other than as required by any existing Company Benefit Plans or SRH
Benefit Plans disclosed in the Company Disclosure Schedule or the SRH Disclosure
Schedule to any such current or former employees, consultants or directors or
become a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment, severance,
consulting, retention, change in control, termination, deferred compensation or
incentive pay agreement with or for the benefit of any current or former
employee, consultant or director or accelerate the vesting, funding or payment
of any compensation payment or benefit (except pursuant to the terms of existing
plans or agreements disclosed on the Company Disclosure Schedule or on the SRH
Disclosure Schedule);
(g) settle any material claim, action or proceeding
involving money damages or waive or release any material rights or claims,
except in the ordinary course of business consistent with past practice;
(h) change its methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP or, in the case of SRH
and its Subsidiaries, other applicable generally accepted accounting principles,
or change any of its methods of reporting material
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items of income and deductions for Tax purposes from those employed in the
preparation of the Tax returns of the Company and of SRH for the taxable years
ending December 31, 1998 and 1997, except as required by changes in law or
regulation or as Previously Disclosed;
(i) adopt or implement any amendment to its articles or
certificate of incorporation, articles of association, bylaws (or similar
documents) or any plan of consolidation, merger or reorganization;
(j) take any intentional action that is intended or may
reasonably be expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any material respect at
any time prior to the Effective Time, or in any of the conditions to the Merger
set forth in Article VIII not being satisfied or in a violation of any provision
of this Agreement, except, in every case, as may be required by applicable law,
regulation or safe and sound banking practices; or
(k) agree to, or make any commitment to, take any of the
actions prohibited by this Section 6.2.
6.3 COVENANTS OF PARENT. During the period from the date of
this Agreement to the Effective Time, except as expressly contemplated by this
Agreement, Parent shall, and shall cause its Subsidiaries to, (a) not take, or
agree to, or make any commitment to take, any action, without the prior written
consent of the Company and of SRH (which consent shall not be unreasonably
withheld or delayed), that is intended or may reasonably be expected to result
in any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time prior to the Effective
Time, or in any of the conditions to the Merger set forth in Article VIII not
being satisfied or in a violation of any provision of this Agreement, except, in
every case, as may be required by applicable law, regulation or safe and sound
banking practices (b) take no intentional action which would adversely affect or
delay in any material respect, the ability of either Parent, SRH or Company to
obtain any Requisite Regulatory Approval and (c) use its reasonable best efforts
to obtain any third party approvals that are necessary or appropriate for the
Successor Corporation to conduct the business of the Company and its respective
Subsidiaries as currently conducted following the Effective Time.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGULATORY MATTERS. (a) Each of the Company, SRH and
Parent agrees to cooperate in the preparation of (i) the proxy statement and
other proxy solicitation materials of the Company (the "Proxy Statement") and
all related documents) in connection with the Company Meeting (as defined in
Section 7.5) and (ii) an offer document to be filed by Parent and/or Offer Sub
with the CSFS and any other applicable Regulatory Authority and/or stock
exchange in connection with the Offer (the "Offer Circular"). Provided Parent
has cooperated as required above, the Company agrees to file the Proxy Statement
in preliminary form with the SEC as promptly as reasonably practicable and to
file the final Proxy Statement as soon as
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reasonably practicable after any SEC comments with respect to the preliminary
Proxy Statement are resolved. Parent shall file the Offer Circular with the CSFS
and any other applicable Regulatory Authority and/or stock exchange at such time
as it shall reasonably determine is necessary in order to consummate the Offer
in accordance with Section 7.13. The Company and SRH agree to furnish to Parent
all information concerning the Company and SRH, their Subsidiaries, officers,
directors and stockholders as may be reasonably requested in connection with the
foregoing.
(b) Each of the Company, SRH and Parent agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it for inclusion or incorporation by reference in (i) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to stockholders and at the time of the Company, 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 or any statement
which, in the light of the circumstances under which such statement is made,
will be false or misleading with respect to any material fact, or which will
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 statement in the Proxy Statement or any amendment or supplement thereto
and (ii) the Offer Circular at the date of mailing, and at the time of the
consummation of the Offer, will not 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. Each of the Company,
SRH and Parent further agrees that if it shall become aware prior to the
Effective Time (or the consummation of the Offer) of any information furnished
by it that would cause any of the statements in the Proxy Statement (or the
Offer Circular) to be false or misleading with respect to any material fact, or
to omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to take the
necessary steps to correct the Proxy Statement (or the Offer Circular).
(c) The Company, SRH and Parent, as appropriate, shall
promptly prepare and file all requisite notices and applications with respect to
the Merger and the Offer with the Federal Reserve Board, the CSFS, the FSA, the
HKMA, the FBC and any other applicable local, state, federal or foreign
Regulatory Agency and as required under the HSR Act, the EC Merger Regulation or
any other applicable antitrust laws or merger regulations, and shall seek
confirmation that no Regulatory Agency objects to the consummation of the
transactions contemplated by this Agreement.
(d) Subject to proviso to the first sentence of Section
7.6, the parties hereto shall cooperate with each other and use their reasonable
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including, without limitation,
the Merger and the Offer), and to comply fully with the terms and conditions of
all such permits, consents, approvals and authorizations of all such
Governmental Entities. Parent, the Company and SRH shall, to the extent
practicable, consult each other on, in each case subject to applicable laws
relating to the
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exchange of information, all the information relating to the
Company, SRH or Parent, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(e) Parent, SRH and the Company shall, upon request,
furnish each other with all information concerning themselves, their
Subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with the Proxy Statement, the
Offer Circular or any other statement, filing, notice or application made by or
on behalf of Parent, SRH, the Company or any of their respective Subsidiaries to
any Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement.
(f) Parent, SRH and the Company shall promptly advise
each other upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement.
7.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange or transfer of information,
the Company and SRH shall, and shall cause their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all properties, books, contracts,
commitments and records and, during such period, the Company and SRH shall, and
shall cause their respective Subsidiaries to, make available to Parent (i) a
copy of each report, schedule, registration statement and other document filed
or received during such period pursuant to the requirements of the supranational
federal, state, local or foreign securities laws or banking laws (other than
reports or documents which the Company and SRH are not permitted to disclose
under applicable law) and (ii) all other information concerning their business,
properties and personnel as Parent may reasonably request. Neither the Company
nor SRH nor any of their Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of their respective customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree, or
binding agreement entered into prior to the date of this Agreement, but shall
disclose the nature of all such withheld information. The parties hereto will
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply. Upon reasonable notice and
subject to applicable laws relating to the exchange of information, Company and
SRH shall furnish Parent with all reasonable information relevant to its ability
to consummate the Merger, the Offer and the other transactions contemplated
hereby.
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(b) Each of Parent, the Company and SRH shall hold all
information furnished by or on behalf of any other party or any of such party's
Subsidiaries or representatives pursuant to Section 7.2(a) or (b) or otherwise
in confidence to the extent required by, and in accordance with, the provisions
of the confidentiality agreement, dated April 27, 1999, among the Company, SRH
and Parent (the "Confidentiality Agreement").
(c) No investigation by any of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
7.3 BOARD RECOMMENDATION. (a) The Company's Board of Directors
has adopted a resolution recommending approval of this Agreement and the Merger
by the Company's stockholders, and except as provided in the next sentence, the
Board of Directors of the Company shall at all times recommend approval of the
Merger by the Company's stockholders. The Board of Directors of the Company
shall be permitted to withdraw or modify in a manner adverse to Parent and
Merger Sub (or not to continue to make) its recommendation to its stockholders
if, but only if, (a) in the opinion of the Company's outside counsel, such
action is required in order for the Board of Directors of the Company to comply
with duties applicable to directors under applicable law, (b) the Company has
given Parent five business days' prior notice of its intention to withdraw or
modify such recommendation and the Company's Board of Directors has considered
any proposed changes to this Agreement (if any) proposed by Parent and (c) the
Company has fully and completely complied with Section 7.4; provided that,
unless a court of competent jurisdiction shall have determined that under the
MGCL the Board is required to have the ability to revoke such resolution, the
Company's Board of Directors shall under no circumstance revoke the resolution
adopted prior to the execution hereof determining that the Merger is advisable.
(b) SRH's Board of Directors has adopted a resolution
recommending, and at all times shall recommend, that holders of SRH Common Stock
tender their shares pursuant to the Offer, except in order for the Board of
Directors to comply with duties applicable to directors under applicable law.
7.4 OTHER OFFERS. The Company, SRH and their respective
Subsidiaries, and the officers, directors, financial or legal advisors of the
Company, SRH and their respective Subsidiaries, will not, directly or
indirectly, (a) take any action to solicit, initiate or encourage any
Acquisition Proposal or Alternative Offer or (b) engage in negotiations with, or
disclose any nonpublic information relating to the Company, SRH or any of their
respective Subsidiaries or afford access to the properties, books or records of
the Company, SRH or any of their respective Subsidiaries to, any Person that may
be considering making, or has made, an Acquisition Proposal or Alternative
Offer; provided that the Company and SRH may, in response to an unsolicited
written proposal from a third party regarding an Acquisition Proposal or
Alternative Offer engage in the activities specified in clause (b) of this
Section 7.4, if (i) in the opinion of the outside counsel of the Company or of
SRH, as the case may be, such action is required for the Board of Directors of
the Company or of SRH, as the case may be, to comply with the duties applicable
to directors under applicable law and (ii) the Company or SRH has received from
such third party an executed confidentiality agreement with terms not materially
less favorable to
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the Company or to SRH than those contained in the Confidentiality Agreement. The
Company and SRH will immediately notify Parent orally and will promptly (and in
no event later than 24 hours after the relevant event) notify Parent in writing
(which oral and written notices shall identify the Person making the Acquisition
Proposal or Alternative Offer or request for information and set forth the
material terms thereof) after having received any Acquisition Proposal or
Alternative Offer, or request for nonpublic information relating to the Company
or SRH or any of their respective Subsidiaries or for access to the properties,
books or records of the Company, SRH or any of their respective Subsidiaries by
any Person who is considering making or has made an Acquisition Proposal or
Alternative Offer. The Company and SRH will keep Parent fully and currently
informed of the status and details of any such Acquisition Proposal or
Alternative Offer or request and any related discussions or negotiations. The
Company and SRH shall, and shall cause their respective Subsidiaries and
directors, officers and financial and legal advisors to, cease immediately and
cause to be terminated all activities, discussions or negotiations, if any, with
any Persons conducted heretofore with respect to any Acquisition Proposal or
Alternative Offer. Nothing in this Section 7.4 shall prohibit the Company or its
Board of Directors from taking and disclosing to the stockholders of the Company
a position with respect to an Acquisition Proposal by a third party to the
extent required under the Exchange Act or from making such disclosure to the
stockholders of the Company or of SRH which, in the judgment of the outside
counsel of the Company or of SRH, is required under applicable law; PROVIDED
that nothing in this sentence shall affect the obligations of the Company and of
SRH and their respective Boards of Directors under any other provision of this
Agreement. For purposes of this Agreement, "Alternative Offer" means any offer
or proposal for, or any indication of interest in (a) an acquisition of
securities representing 10% or more of the voting power of SRH or 25% or more of
the voting power of any Subsidiary of SRH or (b) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of SRH or any of its Subsidiaries. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for, or any indication of
interest in (w) a merger or consolidation, or any similar transaction, involving
the Company or any Significant Subsidiary of the Company, (x) a purchase, lease
or other acquisition or assumption of all or a substantial portion of the assets
or deposits of the Company or all or substantially all of the assets or deposits
of any Significant Subsidiary of the Company, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of beneficial ownership (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the rules and regulations thereunder) of securities
representing 10% or more of the voting power of the Company or more than 25% of
SRH any Significant Subsidiary of the Company, or (z) any substantially similar
transaction.
7.5 STOCKHOLDER APPROVAL. The Company shall call a meeting of
its stockholders (the "Company Meeting") to be held as soon as reasonably
practicable for the purpose of obtaining the requisite stockholder approval
required in connection with the Merger. The Company shall recommend (subject to
Section 7.3) that its stockholders approve the Merger and shall use its
reasonable best efforts to obtain the requisite stockholder approval of the
Merger. Without limiting the generality of the foregoing, unless a court of
competent jurisdiction shall have determined that holding a meeting under such
circumstances would be impermissible under the MGCL, the Company agrees that its
obligations pursuant to the first sentence of this Section
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7.5 shall not be altered by the commencement, public proposal, public disclosure
or communication to the Company of any Acquisition Proposal, or a decision by
the Board of Directors of the Company to withdraw or modify in a manner adverse
to Parent or Merger Sub (or not to continue to make) its recommendation to its
stockholders to approve the Merger.
7.6 LEGAL CONDITIONS TO MERGER. Each of Parent, SRH and the
Company shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party or its Subsidiaries with respect to the Merger and the Offer and,
subject to the conditions set forth in Article VIII hereof, to consummate the
transactions contemplated by this Agreement and (b) to obtain (and to cooperate
with the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other third party which
is required to be obtained by the Company, SRH or Parent or any of their
respective Subsidiaries in connection with the Merger, the Offer and the Bank
Merger; PROVIDED that Parent shall not be obligated to agree to any Burdensome
Condition. For purposes of this Agreement, "Burdensome Condition" means any
conditions, restrictions or requirements which the Board of Directors of Parent
reasonably determines would, individually or in the aggregate, (a) reduce the
benefits of the Merger, the Offer and the Bank Merger (considered as a single
transaction) to such a degree that Parent would not have entered into this
Agreement had such conditions, restrictions or requirements been known at the
date hereof or (b) have, or would reasonably be expected to have, a material and
adverse effect on the Acquired Companies following the Effective Time, it being
understood that neither (i) a condition preventing the integration of the
computer systems of the Company or SRH or their respective Subsidiaries with
those of Parent or its Subsidiaries until after January 1, 2000 or (ii) a
condition imposed by U.S. federal or state bank regulatory authorities in
connection with the Bank Merger that requires the raising of capital in the bank
surviving the Bank Merger consistent with regulatory precedent shall be deemed a
Burdensome Condition.
7.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a)
The articles of incorporation and bylaws of the Successor Corporation shall
contain, to the extent permitted by the MGCL, the provisions with respect to
limitation of liability and indemnification set forth in the articles of
incorporation and bylaws of the Company on the date hereof, which provisions
shall not be amended, repealed or otherwise modified for a period of six years
after the Effective Time in any manner that would adversely affect the rights
thereunder of the Indemnified Parties (as defined below) in respect of actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, actions or omissions relating to the transactions contemplated
hereby); provided that the articles of incorporation and bylaws of the Successor
Corporation shall not be required to contain such provisions if Parent otherwise
provides the same level of indemnification rights to such individuals as
contained in the articles of incorporation and bylaws of the Successor
Corporation without giving effect to changes permitted by this proviso.
(b) From and after the Effective Time, Parent shall cause
the Successor Corporation to indemnify, defend and hold harmless, to the fullest
extent permitted by the MGCL, the present and former officers and directors of
the Company or any of its Subsidiaries in their capacities as such (each an
"Indemnified Party") against all losses, expenses, claims,
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damages or liabilities arising out of actions or omissions occurring on or prior
to the Effective Time (including, without limitation, actions or omissions
relating to the transactions contemplated hereby).
(c) Parent shall use its reasonable best efforts to cause
the persons serving as officers and directors of the Company immediately prior
to the Effective Time to be covered for a period of six years from the Effective
Time by the directors' and officers' liability insurance policy maintained by
the Company (provided that Parent may substitute therefore policies of at least
the same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time (including, without limitation, actions or omissions
relating to the transactions contemplated hereby) which were committed by such
officers and directors in their capacity as such; provided, however, that in no
event shall Parent be required to expend more than 200% of the current amount
expended by the Company (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto; and provided further, that if Parent is
unable to maintain or obtain the insurance called for by this Section 7.7(c),
Parent shall use its reasonable best efforts to obtain as much comparable
insurance as available for the Insurance Amount.
(d) In the event Parent or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
assume the obligations set forth in this Section 7.7.
(e) The constituent documents or board resolutions of SRH
shall contain, to the extent permitted by Luxembourg law, the provisions with
respect to limitation of liability and indemnification set forth in such
constituent documents or board resolutions on the date hereof, which provisions
shall not be amended, repealed or otherwise modified for a period of six years
after the Effective Time in any manner that would adversely affect the rights
thereunder of the present and former officers and directors of SRH or any of its
Subsidiaries (in their capacities as such) in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation,
actions or omissions relating to the transactions contemplated hereby); provided
that such constituent documents or board resolutions shall not be required to
contain such provisions if Parent otherwise provides the same level of
indemnification rights to such individuals as contained in such constituent
documents without giving effect to changes permitted by this proviso.
(f) The provisions of this Section 7.7 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
7.8 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Successor Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company, SRH or Merger
Sub, any deeds, bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company, SRH or Merger Sub,
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any other actions and things to vest, perfect or confirm of record or otherwise
in the Successor Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company or of SRH acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger.
7.9 ADVICE OF CHANGES. Parent and the Acquired Companies shall
promptly advise the other parties of any change or event having, or which could
have, a Material Adverse Effect on it or them, as applicable, or which would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein or would be reasonably
likely to cause any of the conditions in Article VIII not to be satisfied or to
cause the satisfaction thereof to be materially delayed.
7.10 EMPLOYEE BENEFITS. (a) From and after the Effective Time,
Parent shall, or shall cause the Successor Corporation to, recognize prior
service recognized under the plans of the Company or SRH or any of their
Subsidiaries of each employee of the Company or SRH or any of their respective
Subsidiaries as of the Effective Time (the "Company Employees" and the "SRH
Employees", respectively) as service under the employee benefit plans of Parent
or its Subsidiaries for purposes of eligibility and vesting (but not for
purposes of benefit accruals) in which such Company Employee or SRH Employee is
eligible to participate following the Effective Time. From and after the
Effective Time, Parent shall, or shall cause the Successor Corporation to, (i)
cause any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Parent or its Subsidiaries to be waived with
respect to the Company Employees, and the SRH Employees and their eligible
dependents to the extent that such Company Employees, SRH Employees and their
eligible dependents were covered or would have been covered under the group
health plans of the Company or SRH immediately prior to the Effective Time and
(ii) give each Company Employee and SRH Employee credit, for the plan year in
which such Company Employee or SRH Employee commences participation in the plans
of Parent or its Subsidiaries, towards applicable deductibles and annual
out-of-pocket limits for expenses incurred prior to the commencement of
participation. Parent shall maintain employee benefit plans, programs, policies
and arrangements for Company Employees and SRH Employees which provide benefits
that are no less favorable in the aggregate to those provided under the
applicable employee benefit plans (as defined in Section 3(3) of ERISA
(excluding plans exempt under Section 201(2) of ERISA)) of the Company or SRH
and their respective Subsidiaries generally available to Company Employees or
SRH Employees in effect immediately prior to the Effective Time (other than the
Republic 1999 Reorganization Severance Plan), until the earlier of (1) one year
after the Effective Date or (2) the time that Parent or its Subsidiaries makes
available to such Company Employees and SRH Employees employee benefit plans,
programs, policies and arrangements that are no less favorable in the aggregate
than are provided to similarly situated employees of Parent or its Subsidiaries
in the applicable jurisdiction. From and after the Effective Time, the Successor
Corporation shall honor, fulfill and discharge, and shall cause its Subsidiaries
to honor, fulfill and discharge, in accordance with the terms, each existing
Company Benefit Plan.
(b) As soon as practicable following the date hereof, the
Company and SRH will offer to enter into retention bonus and pay guarantee
agreements with key employees of the
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Company and SRH, as determined and approved
by Parent in consultation with the Company. In no event shall any amount be
payable under any such agreement prior to the Effective Time.
(c) As of the Effective Time, the Company or SRH shall
remove, or cause to be removed from each and every plan, program, agreement or
arrangement any right of any participant thereunder to invest in, or receive a
distribution in, Company Common Stock or SRH Common Stock, as the case may be,
including without limitation, the Profit Sharing and Savings Plan of Republic
National Bank of New York and except with respect to awards and rights as set
forth in Sections 1.6, 1.7 and 1.8 hereof, shall cancel, as of the Effective
Time, any then outstanding award of Company Common Stock or SRH Common Stock or
right the value of which is based on the value of Company Common Stock or SRH
Common Stock (and any obligation of the Company, SRH or any of their respective
Subsidiaries to deliver such an award or right); provided that the Company or
SRH may substitute a cash payment therefor of equivalent value determined as of
the Effective Time.
7.11 TAKEOVER STATUTES. The Company and SRH will take all
steps necessary to exempt (or continue the exemption of) the Merger, the Offer,
this Agreement, the Option Agreement and the Stockholder Agreement and the
transactions contemplated hereby and thereby (including, without limitation,
exercise of the Option (as defined therein)) from, or if necessary challenge the
validity or applicability of, any applicable "moratorium", "control share",
"fair price" or other antitakeover laws and regulations of any state or foreign
jurisdiction, as now or hereafter in effect.
7.12. ENVIRONMENTAL AUDIT. The Company, SRH or their
respective Subsidiaries, as applicable, shall conduct an environmental audit
prior to foreclosure on any real property securing any loan if it has Knowledge
that any chemical, product, substance, material or waste that would reasonably
be expected to result in a liability material to the Company, SRH or their
respective Subsidiaries under any Environmental Law was or is present,
manufactured, generated, used, recycled, reclaimed, released, stored, treated or
disposed of at, in or from such property, and provide the results of such audit
to, and consult with, Parent regarding the significance of such audit prior to
foreclosure on any such property.
7.13. THE OFFER. Provided that this Agreement shall not have
been terminated in accordance with Article IX, Parent shall, or shall cause
Offer Sub to, commence an offer to acquire all outstanding shares of SRH Common
Stock not owned, directly or indirectly, by the Company at a price of $72.00 per
share of SRH Common Stock. Parent shall, and shall cause Offer Sub, to use its
reasonable efforts to cause the Offer to be consummated at, or as soon as
possible following, the Effective Time. The obligation of Parent or Offer Sub to
consummate the Offer and to accept for payment and to pay for any shares of SRH
Common Stock tendered pursuant thereto shall be subject only to the conditions
set forth in Article VIII to this Agreement and to the prior or concurrent
consummation of the Merger (collectively, the "Offer Conditions"), which are for
the sole benefit of Parent and Offer Sub and may be asserted by Parent or Offer
Sub regardless of the circumstances giving rise to any such condition, or waived
by Parent or Offer Sub in whole or in part at any time and from time to time in
its sole discretion; provided, that in no event shall Parent or Offer Sub
purchase any shares of SRH Common Stock
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pursuant to the Offer if the Merger shall not have occurred or concurrently
occur. The Company and SRH agree that no shares of SRH Common Stock held by the
Company, SRH or any of their respective Subsidiaries will be tendered to Parent
or Offer Sub pursuant to the Offer. Parent and Offer Sub will not, without the
prior written consent of SRH, (i) decrease or change the form of the
consideration payable in the Offer, (ii) decrease the number of shares of SRH
Common Stock sought pursuant to the Offer, (iii) impose additional conditions to
the Offer or change the Offer Conditions (provided, that Parent or Investor in
its sole discretion may waive any such conditions and, in connection therewith,
substitute a less restrictive condition) or (v) make any other change in the
terms or conditions of the Offer which is materially adverse to the holders of
the shares of SRH Common Stock. Notwithstanding the foregoing, Parent and SRH
may, without the consent of the Company or SRH, (x) extend the Offer, if at the
scheduled expiration date of the Offer any of the Offer Conditions shall not
have been satisfied or waived, until such time as all conditions are satisfied
or waived, (xi) extend the Offer for any period required by any statute, rule,
regulation, interpretation or position of any Governmental Authority applicable
to the Offer, and (xii) extend the Offer for any reason on one or more occasions
for an aggregate of not more than 15 business days beyond the latest expiration
date that would otherwise be permitted under clauses (x) and (xi) of this
sentence. Subject to the Offer Conditions and the terms and conditions of this
Agreement, Parent shall, and Parent shall cause Offer Sub to, accept for
payment, and pay for, all shares of SRH Common Stock validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration of
the Offer.
7.14 MERGER SUB. Parent will, as promptly as practicable
following the date hereof, form Merger Sub under the MGCL and cause Merger Sub
to execute and become a party to this Agreement. From the date of its formation
to the Effective Time, Merger Sub shall not, and Parent shall cause Merger Sub
not to, engage in any business or other activities, other than activities in
furtherance of the Merger and this Agreement or as otherwise permitted by this
Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger and the
Offer shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
affirmative vote of holders of a majority of the outstanding shares of the
Company Common Stock entitled to vote thereon.
(b) OTHER APPROVALS. All regulatory approvals and
non-objections required to consummate the Merger, the Offer and the Bank Merger
shall have been obtained and shall remain in full force and effect, and all
statutory waiting periods shall have expired (including, if applicable, the
expiration or termination of any waiting period under the HSR Act, the EC Merger
Regulation or any other applicable antitrust laws or merger regulations) (all
such
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approvals, non-objections and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals"). For the avoidance
of doubt, the term "Requisite Regulatory Approvals" shall be deemed to include
the approval or non-objection of the FBC.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger, the Offer or any of the other material transactions
contemplated by this Agreement shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, materially restricts or
makes illegal the consummation of the Merger.
8.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligation of each of Parent and Merger Sub to effect the Merger is also subject
to the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Subject to Section
2.3(b), the representations and warranties of the Company and of SRH set forth
in this Agreement shall be true and correct in all respects as of the Closing
Date (except to the extent such representations and warranties expressly speak
as of a specified earlier date, in which case such representations and
warranties shall be true as of such earlier date) as though made on and as of
the Closing Date; and Parent shall have received certificates signed on behalf
of each of the Company and of SRH by their respective Chief Executive Officers
and Chief Financial Officers to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY AND OF SRH.
The Company and SRH shall have performed in all respects all obligations
required to be performed by each of them under this Agreement on or prior to the
Closing Date (except to the extent that any failure to so comply (other than
with respect to Sections 7.3, 7.4 and 7.5) would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect with respect
to the Acquired Companies), and Parent shall have received certificates signed
on behalf of each of the Company and of SRH by their respective Chief Executive
Officers and Chief Financial Officers to such effect.
(c) APPROVALS. All third party approvals (other than the
Requisite Regulatory Approvals) that are necessary for the conduct, immediately
following the Effective Time, by the Successor Corporation or SRH of the
business of the Company and its Subsidiaries or SRH and its Subsidiaries, as
applicable, substantially as currently conducted (except for any such approval
the failure of which to obtain would not result in a Material Adverse Effect on
the Acquired Companies) shall have been obtained and shall remain in full force
and effect.
(d) NO LITIGATION. No Governmental Entity shall have
commenced any litigation seeking to restrain, prevent or unwind the Merger or
the Offer or impose material sanctions or penalties as a result thereof or
seeking to prevent Parent from having full authority to control and manage the
Successor Corporation or SRH after the Effective Time.
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(e) RESIGNATION OF DIRECTORS. Except as otherwise
requested by Parent in writing, the directors of each of the Company, SRH and
their respective Subsidiaries shall have executed letters of resignation
effective at the Effective Time, in the case of the Directors of the Company,
and at such time as their successors have been duly elected and qualified, in
the case of SRH and their respective Subsidiaries.
(f) NO BURDENSOME CONDITION. No Requisite Regulatory
Approval shall have imposed any Burdensome Condition.
(g) MINIMUM TENDER. Immediately prior to the Effective
Time and the consummation of the Offer, assuming consummation of the Merger and
the purchase of all shares of SRH Common Stock then validly tendered and not
withdrawn pursuant to the Offer, Parent would own, directly or indirectly, at
least 662/3% of the outstanding SRH Common Stock.
8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Subject to Section
2.3(b), the representations and warranties of Parent set forth in this Agreement
shall be true and correct, as of the Closing Date (except to the extent such
representations and warranties speak as of a specified earlier date, in which
case such representations and warranties shall be true as of such earlier date)
as though made on and as of the Closing Date; and the Company shall have
received a certificate signed on behalf of Parent by the Group Financial
Director to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall
have performed in all respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date (except to the extent that
any failure to so comply would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect with respect to Parent), and the
Company shall have received a certificate signed on behalf of Parent by the
Group Financial Director to such effect.
(c) OFFER. The Offer shall have closed or be closing
contemporaneously with the Effective Time and Parent shall have provided
evidence reasonably satisfactory to the Company that it, Offer Sub or their
designee promptly will purchase shares of SRH Common Stock tendered thereto.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company of the matters presented in connection with the
Merger:
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(a) by mutual consent of Parent, the Company and SRH
in a written instrument executed and delivered in accordance with their
respective applicable laws;
(b) by either Parent, the Company or SRH if any
Governmental Entity which must grant or satisfy, as the case may be, a Requisite
Regulatory Approval has denied approval of the Merger and such denial has become
final and nonappealable, or any Governmental Entity of competent jurisdiction
shall have issued a final nonappealable injunction permanently enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement;
(c) by either Parent, the Company or SRH if the Merger
shall not have been consummated on or before December 31, 1999, unless the
failure of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(d) by either Parent, the Company or SRH if there shall
have been a material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of the
Company or SRH (in the case of Parent) or Parent (in the case of the Company),
which breach (other than a breach of Section 7.4) is not cured within 30 days
following written notice to the party committing such breach, or which breach,
by its nature or timing, cannot be cured prior to the date referred to in
Section 9.1(c); provided that such breach, if occurring or continuing on the
Closing Date, would constitute, individually or in the aggregate with other such
breaches, the failure of the conditions set forth in Sections 8.2(a), 8.2(b),
8.3(a) or 8.3(b), as applicable;
(e) by either Parent or the Company if any approval of
the stockholders of the Company required for the consummation of the Merger and
the transactions contemplated hereby 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 or postponement thereof;
(f) by Parent if (i) the Board of Directors of the
Company shall have withdrawn or modified in a manner adverse to Parent its
favorable recommendation of the Merger or (ii) the Board of Directors of SRH
shall have recommended that shareholders of SRH not accept the Offer and tender
their shares pursuant thereto or (iii) the Company or SRH determines to
negotiate (it being understood and agreed that "negotiate" shall not be deemed
to include the provision of information to, or the request and receipt of
information from, any Person that submits an Acquisition Proposal or Alternative
Offer or discussions regarding such information for the sole purpose of
ascertaining the terms of such Acquisition Proposal or Alternative Offer and
determining whether the Board of Directors will in fact engage in, or authorize,
negotiations) with any Person other than Parent or its affiliates in connection
with an Acquisition Proposal or Alternative Offer; and
(g) by Parent if any Governmental Entity which must grant
or satisfy, as the case may be, a Requisite Regulatory Approval has granted such
approval subject to a
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Burdensome Condition, and such grant and related Burdensome Condition have
become final and nonappealable.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect, and none of Parent,
SRH, the Company, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (a) Sections 7.2(b), 9.2 and 10.2 through 10.12 shall survive any
termination of this Agreement, (b) such termination shall not affect the Option
Agreement or the Stockholder Agreement (which shall remain in effect pursuant to
their respective terms unless terminated in accordance therewith) and (c)
notwithstanding anything to the contrary contained in this Agreement, neither
Parent, SRH, nor the Company shall be relieved or released from any liabilities
or damages arising out of its willful breach of any provision of this Agreement
or the Option Agreement; provided that in no event shall any party hereto be
liable for any remote or punitive damages.
9.3 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by Parent, the Company and SRH at any time before or
after approval of the matters presented in connection with the Merger by the
stockholders of the Company; provided, however, that after any approval of the
transactions contemplated by this Agreement by the stockholders of the Company,
to the extent required by the MGCL, there may not be, without further approval
of such stockholders, any amendment of this Agreement; provided further that any
amendment to this Agreement not affecting the terms or conditions of the Offer
may be entered into by Parent and the Company without the consent or approval of
SRH. This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
9.4 EXTENSION; WAIVER. At any time prior to the Effective
Time, subject to compliance with applicable law, Parent, SRH and the Company
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto for its
benefit, (b) waive any inaccuracies in the representations and warranties of the
other parties for its benefit contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein for the waiving party's benefit. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument
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delivered pursuant to this Agreement shall
survive the Effective Time, except for those covenants and agreements contained
herein which by their terms apply in whole or in part after the Effective Time.
10.2 EXPENSES. Except as otherwise provided in this Section,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that the costs and expenses of printing and mailing
the Proxy Statement, and all filing and other fees paid to the SEC in connection
with the Merger, shall be borne equally by Parent and the Company.
10.3 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail (return
receipt requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent, to:
HSBC Holdings plc
10 Lower Thames Street
London EC3R 6AE
United Kingdom
Attn: Group Company Secretary
Fax: 011-44-171-260-8249
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: James F. Munsell, Esq.
Victor I. Lewkow, Esq.
Fax: (212) 225-3999
and
(b) if to the Company, to:
Republic New York Corporation
452 Fifth Avenue
New York, NY 10018
Attn: Paul L. Lee, Esq.
Executive Vice President and
General Counsel
Fax: 212-525-8447
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with a copy to:
Sullivan & Cromwell
125 Broad Street
New York 10004
Attention: H. Rodgin Cohen, Esq.
Mitchell S. Eitel, Esq.
Fax: (212) 558-3588
and
(c) if to SRH, to:
Safra Republic Holdings S.A.
32 Boulevard Royal
22449 Luxembourg
Attn: Leigh Robertson
Fax: 011-352-22-46-52
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York 10004
Attention: H. Rodgin Cohen, Esq.
Mitchell S. Eitel, Esq.
Fax: (212) 558-3588
and to
Evinger, Hoss & Prussen
2, Place Winston Churchill, B.P. 425
L-2014 Luxembourg
Attn: Jean Hoss, Esq.
Fax: 011-352-44-22-55
10.4 INTERPRETATION. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement, unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". No provision of this Agreement shall be construed to require the
Company, SRH, Parent or any of their respective directors, Subsidiaries or
affiliates to take any action which would violate any applicable law (including
any bank secrecy law), rule or regulation. Notwithstanding any other provision
of this Agreement, neither Parent, on the one hand, nor the Company or SRH on
the other, shall be deemed to have failed to comply with any of its obligations
hereunder (other than
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the giving of notice contemplated by Section 9.1(d)) to the extent such failure
is due to a breach (subject to the standard set forth in Section 2.3(b)) by the
other party of any of its representations, warranties or covenants set forth
herein.
10.5 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
10.6 ENTIRE AGREEMENT. This Agreement (including the Company
Disclosure Schedule, the SRH Disclosure Schedule, the exhibits attached hereto
and all other documents and instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
other than the Option Agreement and the Confidentiality Agreement; provided that
Section 5 of the Confidentiality Agreement shall not affect the representations
and warranties of any party hereto.
10.7 GOVERNING LAW. EXCEPT AS REQUIRED BY MANDATORY PROVISIONS
OF THE MGCL, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
10.8 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
10.9 PUBLICITY. Neither Parent, the Company nor SRH shall, nor
shall any of them permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other parties, which consent shall
not be unreasonably withheld or delayed and, in any event, only after
consultation with the other parties to the extent feasible.
10.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties; provided that Parent may
assign its obligation to make the Offer to any direct or indirect wholly owned
Subsidiary. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns. Except as otherwise specifically provided in
Section 7.7, this Agreement (including the
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documents and instruments referred to herein) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
10.11 COURT PROCEEDINGS.
(a) WAIVER OF JURY TRIAL. Each of the parties hereto
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
(b) GOVERNMENTAL ENTITY. Notwithstanding any provision
herein, no party shall be required to commence any action against any
Governmental Entity in order to perform its obligations hereunder.
10.12 DEFINITIONS AND USAGE. (a) For purposes of this
Agreement:
"Acquired Companies" means the Company (or, at and after the
Effective Time, the Successor Corporation) and SRH.
"affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person. The term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" means this Agreement and Plan of Merger, the
Company Disclosure Schedule, the SRH Disclosure Schedule and all Exhibits
hereto.
"Bank" means Republic National Bank of New York.
"Bank Merger" means the merger of the Bank with HSBC Bank USA
(formerly Marine Midland Bank).
"Loan Property" means with respect to any Person, any property
securing a loan made by such Person or any of its Subsidiaries or which is
deemed to be owned by such Person or any of its Subsidiaries.
"Material Adverse Effect" means, (A) with respect to the
Acquired Companies, any effect that (1) is or is reasonably likely to be
material and adverse to the condition (financial or otherwise), business,
liabilities, properties, assets, prospects or results of operations of the
Acquired Companies and their Subsidiaries taken as a whole other than any
change, effect, event or occurrence arising out of the performance by the
parties of their obligations under this Agreement PROVIDED, HOWEVER, that
Material Adverse Effect shall not be deemed to include the impact of (i) changes
in banking and other laws of general applicability or interpretations thereof by
courts or governmental authorities, (ii) changes in GAAP or regulatory
accounting requirements applicable to banks and their holding companies
generally, (iii) actions or omissions of a party to this Agreement taken with
the prior written consent of the other parties to
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this Agreement, in contemplation of the transactions contemplated hereby, (iv)
any modifications or changes to valuation policies and practices in connection
with the Merger or restructuring charges, in each case taken with the prior
approval of Parent, in connection with the Merger, in each case in accordance
with GAAP, (v) any response of clients or customers of the Acquired Companies or
their Subsidiaries to the announcement of the Merger and the Offer, and (vi)
changes in general economic conditions affecting banks and their holding
companies generally except to the extent that such changes have an adverse
effect on the Acquired Companies and their Subsidiaries taken as a whole that is
greater than the adverse effect on comparable entities or (2) would materially
impair the ability of such Person to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby; and
(B) with respect to Parent, any effect that would
materially impair the ability of Parent to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.
"Person" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Previously Disclosed" with respect to any party means
information set forth in the portion of such party's Disclosure Schedule
corresponding to the provision of this Agreement to which such information
relates; provided that information which, on its face, reasonably should
indicate to the reader that it relates to another provision of this Agreement
shall also be deemed to be Previously Disclosed with respect to such other
provision.
"Real Property" means, with respect to any Person, any
property currently or formerly owned or operated by such Person or one of its
Subsidiaries and all improvements related thereto, including but not limited to
all branches, OREO, or property held for the account of another.
"Subsidiary" and "Significant Subsidiary" shall have the
meanings ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
Notwithstanding the foregoing, for purposes of this Agreement, SRH shall not be
deemed a Subsidiary or a Significant Subsidiary of the Company.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and to the rules and regulations
promulgated thereunder.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
TERM SECTION
---------------------------------------------- ----------
Acquisition Proposal 7.4
Agreement Recitals
Alternative Offer 7.4
58
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TERM SECTION
---------------------------------------------- ----------
Articles of Merger 1.2
BHCA 3.1(a)
Burdensome Condition 7.6
Certificate 1.5(a)
Claims and Proceedings 3.9
Closing 2.1
Closing Date 2.1
Code 1.5
Company Recitals
Company $1.8125 Preferred Stock 1.4(b)
Company $2.8575 Preferred Stock 1.4(b)
Company Benefit Plans 3.11(a)
Company Capital Stock 3.2
Company Common Stock 1.4(a)
Company Contract 3.14
Company Disclosure Schedule 2.3(a)
Company Employees 7.10(a)
Company Equity Plans 1.7
Company Meeting 7.5
Company Preferred Stock 3.2
Company Regulatory Agreement 3.15
Company Reports 3.12
Company Series A DARTs 1.4(b)
Company Series B DARTs 1.4(b)
Company Series D Preferred Stock 1.4(b)
Company Stock Option Plans 1.6
Company Stock Plans 1.7
Company Employees 7.10(a)
Confidentiality Agreement 7.2(b)
CSFS 3.4
Derivative Instruments 3.16
Designated Key Employees 6.11
Draft Company Financial Statements 3.6
EC Merger Regulation 3.4
Effective Time 1.2
Environmental Law 3.18(a)
ERISA 3.11(a)
Exchange Act 3.6
Exchange Agent 1.7
Exchange Fund 1.7
FBC 3.4
Federal Reserve Board 3.4
Fiduciary and DPC Shares 1.4(d)
59
<PAGE>
TERM SECTION
---------------------------------------------- ----------
Foreign Plans 3.11(l)
FSA 3.4
GAAP 3.6
Governmental Entity 3.4
HKMA 3.4
HSR Act 3.4
Incentive Compensation Award 1.8
Indemnified Party 7.7(b)
Injunction 8.1(c)
Insurance Amount 7.7(c)
Lien 3.1(b)
Maryland Department 1.2
Merger Recitals
Merger Consideration 1.4(a)
Merger Sub Recitals
MGCL Recitals
NYSE 3.4
Offer Recitals
Offer Circular 7.1
Offer Conditions 7.13
Offer Sub Recitals
Option Agreement Recitals
Option 1.6
Option Spread 1.6
Parent Recitals
Parent Disclosure Schedule 2.3(a)
Parent Financial Reports 5.5
PBGC 3.11(e)
Proxy Statement 7.1
Regulatory Agencies 3.5
Release 3.18(b)
Requisite Regulatory Approvals 8.1(b)
Restricted Share 1.7
SEC 3.4
Securities Act 3.12
SRH Recitals
SRH Benefit Plans 4.11
SRH Capital Stock 4.2
SRH Common Stock 4.2
SRH Contract 4.13
SRH Disclosure Schedule 2.3(a)
SRH Employees 7.10(a)
SRH Equity Plans 1.7
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TERM SECTION
---------------------------------------------- ----------
SRH Option 1.6
SRH Option Spread 1.6
SRH Preferred Stock 4.2
SRH Regulatory Agreement 4.14
SRH Restricted Share 1.7
SRH Stock Option Plans 1.6
SRH Stock Plans 1.7
SRO 3.4
Stockholder Recitals
Stockholder Agreement Recitals
Stockholder Parent Recitals
Successor Corporation Recitals
Taxes 3.10(b)
Treasury Shares 1.4(a)
Year 2000 Deficiency Notification Letter 3.19(c)
Year 2000 Problem 4.18(c)
(c) A fact, event, circumstance or occurrence shall be
within a Person's "Knowledge" if, with respect to the Company or any of its
Subsidiaries, such fact, event, circumstance or occurrence is or was actually
known by any of the Company's or the relevant Subsidiary's executive officers or
directors, or, with respect to the Parent or any of its Subsidiaries, such fact,
event or circumstance or occurrence is or was actually known by any of Parent's
or the relevant Subsidiary's executive officers or directors, or, with respect
to SRH or any of its Subsidiaries, such fact, event or circumstance or
occurrence is or was actually known by any of SRH's or the relevant Subsidiary's
executive officers or directors (or persons serving in a similar capacity to
directors under applicable law).
(d) The symbol "$" and the word "dollar" or "dollars"
shall refer to the lawful currency of the United States of America.
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<PAGE>
IN WITNESS WHEREOF, Parent, the Company and SRH have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
HSBC HOLDINGS PLC
By: /s/ DAVID J. SHAW
-----------------------------
Name: David J. Shaw
Title: Authorized Signatory
REPUBLIC NEW YORK CORPORATION
By: /s/ DOV C. SCHLEIN
---------------------------------
Name: Dov C. Schlein
Title: Chairman and
Chief Executive Officer
SAFRA REPUBLIC HOLDINGS S.A.
By: /s/ A. LEIGH ROBERTSON
----------------------------------
Name: A. Leigh Robertson
Title: General Manager
and Attorney-in-Fact
By: /s/ CLAUDE MARX
------------------------------------
Name: Claude Marx
Title: Attorney-in-Fact
EXHIBIT 4
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 10, 1999 between Republic
New York Corporation, a Maryland corporation ("Issuer"), and HSBC Holdings plc,
a public limited company organized and existing under the laws of England
("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into a Transaction
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
which agreement has been executed by the parties hereto concurrently with this
Stock Option Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. THE OPTION. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "OPTION") to purchase, subject to the
terms hereof, up to 20,929,000 fully paid and nonassessable shares of Issuer's
common stock, par value $5.00 per share (the "Common Stock"), at a price of
$72.00 per share (the "Option Price"); provided, however, that in the event
Issuer issues or agrees to issue any shares of Common Stock (other than as
permitted under the Merger Agreement) at a price less than the Option Price (as
adjusted pursuant to Section 5), the Option Price shall be equal to such lesser
price; provided, further, that in no event shall the number of shares of Common
Stock for which this Option is exercisable exceed 19.9% of the Issuer's issued
and outstanding shares of Common Stock at the time of exercise. The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price is subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance, such
number (including the number of shares theretofor issued pursuant to this
Option) equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer to breach any provision of the
Merger Agreement.
2. EXERCISE; CLOSING. (a) The Holder (as defined below) may
exercise the Option, in whole or part, and from time to time, if, but only if,
both an Initial Triggering Event (as defined below) and a Subsequent Triggering
Event (as defined below) shall have occurred prior to the occurrence of an
Exercise Termination Event (as defined below), provided that the
<PAGE>
Holder shall have sent written notice of such exercise (as provided in
subsection (f) of this Section 2) within 180 days following such Subsequent
Triggering Event (or such later period as provided in Section 10).
(b) Each of the following shall be an "Exercise Termination
Event":
(i) the Effective Time (as defined in the Merger
Agreement) of the Merger;
(ii) termination of the Merger Agreement in
accordance with the provisions thereof if such termination occurs prior
to the occurrence of an Initial Triggering Event, except a termination
by Grantee pursuant to Section 9.1(d) of the Merger Agreement as a
result of a breach of a covenant by Issuer or a willful breach of a
representation by Issuer; or
(iii) the passage of 18 months after termination of
the Merger Agreement (or such later period as provided in Section 10)
if such termination (A) follows or is concurrent with the occurrence of
an Initial Triggering Event or (B) is a termination by Grantee pursuant
to Section 9.1(d) of the Merger Agreement as a result of a breach of a
covenant by Issuer or a willful breach of a representation by Issuer;
provided that if an Initial Triggering Event continues or occurs beyond
such termination and prior to the passage of such 18- month period, the
Exercise Termination Event shall be 12 months from the expiration of
the Last Triggering Event (as defined below) but in no event more than
18 months after such termination.
The "LAST TRIGGERING EVENT" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean Grantee and any other
person that shall become a holder of the Option in accordance with the terms of
this Agreement.
(c) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC"), including Safra Republic Holdings S.A. and its
subsidiaries) (each an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as defined below) with any
person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchnage Act"), and
the rules and regulations thereunder) other than Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the stockholders of Issuer approve
or accept any Acquisition Transaction (other than the Merger referred
to in the Merger Agreement). For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or consolidation, or
any similar transaction, involving Issuer or any Significant Subsidiary
(as defined in
2
<PAGE>
Rule 1-02 of Regulation S-X) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets
or deposits of Issuer or all or substantially all of the assets or
deposits of any Significant Subsidiary of Issuer, (y) a purchase or
other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of beneficial ownership (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the Exchange Act, and the rules and
regulations thereunder) of securities representing 10% or more of the
voting power of Issuer or more than 25% of any Significant Subsidiary
of Issuer, or (z) any substantially similar transaction; provided,
however, that in no event shall any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more of its
wholly-owned Subsidiaries or involving only any two or more of such
wholly-owned Subsidiaries, be deemed to be an Acquisition Transaction,
if such transaction is not entered into in violation of the terms of
the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have authorized,
recommended, proposed or publicly announced its intention to authorize,
recommend or propose, to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary or shall have
authorized or engaged in, or announced its intention to authorize or
engage in, any negotiations regarding an Acquisition Transaction with
any person other than the Grantee or a Grantee Subsidiary (it being
understood that the provision, request or receipt of information
referred to in the parenthetical in Section 9.1(f)(ii) of the Merger
Agreement shall not be deemed to constitute negotiations), or the Board
of Directors of Issuer shall have failed to recommend or shall have
publicly withdrawn or modified, or publicly disclosed that, in the
absence of the Option it would withdraw or modify, or publicly
announced its intention to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of Issuer approve the
Merger;
(iii) The shareholders of Issuer shall have voted and
failed to approve the Merger at a meeting which has been held for that
purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall
have been canceled prior to termination of the Merger Agreement if,
prior to such meeting (or if such meeting shall not have been held or
shall have been canceled, prior to such termination), any person (other
than the Grantee or a Grantee Subsidiary) shall have made a proposal to
Issuer or its stockholders by public announcement or written
communication that is or becomes the subject of public disclosure to
engage in an Acquisition Transaction;
(iv) (a) Any person other than Grantee, any Grantee
Subsidiary, Mr. S or his affiliates or any Issuer Subsidiary acting in
a fiduciary or similar capacity in the ordinary course of its business,
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the then outstanding shares of
Common Stock or (b) any group (the term "group" having the meaning
assigned in Section 13(d)(3) of the Exchange Act), other than a group
of which the Grantee or any Grantee
3
<PAGE>
Subsidiary is a member, shall have been formed that beneficially owns
10% or more of the shares of Common Stock then outstanding;
(v) Any person other than Grantee or any Grantee
Subsidiary shall have made a proposal to Issuer or its stockholders to
engage in an Acquisition Transaction;
(vi) Issuer shall have breached any covenant or
obligation contained in the Merger Agreement in anticipation of
engaging in an Acquisition Transaction and such breach (x) would
entitle Grantee to terminate the Merger Agreement and (y) shall not
have been cured prior to the Notice Date (as defined below); or
(vii) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed with any
federal or state regulatory or governmental authority an application
for approval or notice of intention to engage in an Acquisition
Transaction.
(d) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person or by a group other
than Grantee or any Grantee Subsidiary of beneficial ownership of 25%
or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (c) of this Section 2, except
that the percentage referred to in clause (y) shall be 25% and that the
percentage referred in the definition of a Significant Subsidiary shall
be changed from 10% to 25%.
(e) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
(f) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), it shall send to Issuer a written
notice (the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if prior notification to or
approval of the Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired or
been terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto.
4
<PAGE>
(g) At the closing referred to in subsection (f) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer; provided that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(h) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (g) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares of Common Stock purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this Agreement and a
letter agreeing that the Holder will not offer to sell or otherwise dispose of
such shares in violation of applicable law or the provisions of this Agreement.
(i) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of
an agreement between the registered holder hereof
and Issuer and to resale restrictions arising under
the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office
of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended (the "Securities
Act"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Holder shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance reasonably satisfactory to Issuer, to the effect that such
legend is not required for purposes of the Securities Act; (ii) the reference to
the provisions of this Agreement in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if the shares of
Common Stock delivered pursuant hereto have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(j) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (f) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. Issuer shall pay all expenses,
5
<PAGE>
and any and all United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. COVENANTS OF ISSUER. In addition to its other agreements
and covenants herein, Issuer agrees: (i) that it shall at all times maintain,
free from subscriptive or preemptive rights, sufficient authorized but unissued
or treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase 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
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA") or the Change in Bank Control Act of 1978, as
amended, or any state or other federal banking law, prior approval of or notice
to the Federal Reserve Board or to any state or other federal regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state or other federal
regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer to duly and effectively issue shares of Common
Stock pursuant hereto; (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution; and (v) not to enter or agree
to enter into any Acquisition Transaction unless the other party or parties
thereto agree to assume in writing all of Issuer's obligations hereunder;
provided that nothing in this Section 3 or elsewhere in this Agreement shall be
deemed to authorize Issuer to breach any provision of the Merger Agreement.
Notwithstanding any notice of revocation delivered pursuant to the proviso to
Section 7(c), a Holder may require such other party or parties to perform
Issuer's obligations under Section 7(a) unless such other party or parties are
prohibited by law or regulation from such performance.
4. EXCHANGE; REPLACEMENT. This Agreement (and the Option
granted hereby) is exchangeable, without expense, at the option of the Holder,
upon presentation and surrender of this Agreement at the principal office of
Issuer, for other Agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer 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, Issuer 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 Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
6
<PAGE>
5. ADJUSTMENTS. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of the Option pursuant
to Section 1 of this Agreement, the number of shares of Common Stock purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided in this Section 5. In the event of any
change in, or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions on or in respect of the Common
Stock or the like, the type and number of shares of Common Stock purchasable
upon exercise hereof and the Option Price shall be appropriately adjusted in
such manner as shall fully preserve the economic benefits provided hereunder and
proper provision shall be made in any agreement governing any such transaction
to provide for such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
6. REGISTRATION. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within twelve (12) months (or such
later period as provided in Section 10) of such Subsequent Triggering Event
(whether on its own behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration statement under the
1933 Act covering this Option and any shares issued and issuable pursuant to
this Option and shall use its reasonable best efforts to cause such registration
statement to become effective and remain current in order to permit the sale or
other disposition of this Option and any shares of Common Stock issued upon
total or partial exercise of this Option ("Option Shares") in accordance with
any plan of disposition requested by Grantee. Issuer will use its reasonable
best efforts to cause such registration statement promptly to become effective
and then to remain effective for a period not in excess of 180 days from the day
such registration statement first becomes effective or such shorter time as may
be reasonably necessary, in the judgment of the Grantee or the Holder, to effect
such sales or other dispositions. Grantee shall have the right to demand two
such registrations. The Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers' fees and
the fees and disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
inclusion of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance of such shares of Common Stock issuable
pursuant to this Option as promptly as practical following such reduction and no
reduction in the number of shares of
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Common Stock to be sold by the Holder shall thereafter occur. Each such Holder
shall provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder. If requested by any such
Holder in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary offering
underwriting agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Notwithstanding anything
to the contrary contained herein, in no event shall the number of registrations
that Issuer is obligated to effect pursuant to this Section 6 be increased by
reason of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. REPURCHASE OF OPTION AND/OR OPTION SHARES. (a) At any time
after the occurrence of a Repurchase Event (as defined below), (i) at the
request of the Holder, delivered prior to an Exercise Termination Event (or such
later period as provided in Section 10), Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase Price")
equal to (x) the amount by which (A) the Market/Offer Price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which this
Option may then be exercised plus (y) Grantee's reasonable out-of-pocket
expenses (to the extent not previously reimbursed) and (ii) at the request of
the owner of Option Shares from time to time (the "Owner"), delivered prior to
an Exercise Termination Event (or such later period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase Price") equal to
(x) the Market/Offer Price multiplied by the number of Option Shares so
designated plus (y) Grantee's reasonable out-of-pocket expenses (to the extent
not previously reimbursed). The term "Market/Offer Price" shall mean the highest
of (i) the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer, (iii) the highest
closing price per share of Common Stock within the six-month period immediately
preceding the date on which the Holder gives notice of the required repurchase
of this Option or the Owner gives notice of the required repurchase of Option
Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm mutually selected by the Holder or Owner, as the case
may be, and reasonably acceptable to the Issuer.
(b) The Holder or the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for
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Option Shares, as applicable, accompanied by a written notice or notices stating
that the Holder or the Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares, as the case may be, in
accordance with the provisions of this Section 7. Prior to the later of (x) the
date that is five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the day on which a Repurchase Event occurs,
Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price or the
portion thereof that Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
shall deliver or cause to be delivered, from time to time, to the Holder and/or
the Owner, as appropriate, that portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, in each case within five business days after the date on which
Issuer is no longer so prohibited; PROVIDED, however, that if Issuer at any time
after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as the case may be, the Option Repurchase Price or
the Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option and/or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price and/or the Option Share Repurchase Price that Issuer is
not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
the Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares of
Common Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing. If an Exercise Termination Event shall have occurred prior to the
date of the notice by Issuer described in the first sentence of this subsection
(c), or shall be scheduled to occur at any time before the expiration of a
period ending on the thirtieth day after such date, the Holder shall nonetheless
have the right to exercise the Option until the expiration of such 30-day
period.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any merger,
consolidation or similar transaction involving Issuer or any purchase, lease or
other acquisition of all or a substantial portion of the assets of Issuer, other
than any such transaction which would not constitute an Acquisition Transaction
pursuant to the proviso to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
shares of Common Stock; provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering
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Event shall have occurred prior to an Exercise Termination Event. The parties
hereto agree that Issuer's obligations to repurchase the Option or Option Shares
under this Section 7 shall not terminate upon the occurrence of an Exercise
Termination Event unless no Subsequent Triggering Event shall have occurred
prior to the occurrence of an Exercise Termination Event.
8. SUBSTITUTE OPTION. (a) In the event that prior to an
Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, or engage in a plan of exchange with any person other than Grantee
or one of its Subsidiaries, and Issuer shall not be the continuing or surviving
corporation of such consolidation or merger or the acquiror in such plan of
exchange, (ii) to permit any person, other than Grantee or one of its
Subsidiaries, to merge into Issuer or be acquired by Issuer in a plan of
exchange and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger or plan of exchange, the then outstanding shares of
Common Stock shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property or the then outstanding shares of
Common Stock shall after such merger or plan of exchange represent less than 50%
of the outstanding voting shares and voting share equivalents of the merged or
acquiring company, or (iii) to sell or otherwise transfer all or substantially
all of its or any Significant Subsidiary's assets to any person, other than
Grantee or one of its Subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Holder, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving person of a consolidation or merger with Issuer
(if other than Issuer), (ii) the acquiring person in a plan of exchange
in which Issuer is acquired, (iii) Issuer in a merger or plan of
exchange in which Issuer is the continuing, surviving or acquiring
person, and (iv) the transferee of all or substantially all of Issuer's
assets.
(2) "Substitute Common Stock" shall mean the common
stock (or similar equity interest) issued by the issuer of the
Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the six-month
period immediately preceding the consolidation, merger or sale in
question but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation, merger
or sale; provided that if Issuer is the issuer of the Substitute
Option, the Average Price
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shall be computed with respect to a share of common stock issued by the
person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option; provided, that if the terms of the Substitute Option may not, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
to the terms of the Option and in no event less advantageous to the Holder. The
issuer of the Substitute Option shall also enter into an agreement with the then
Holder or Holders of the Substitute Option in substantially the same form as
this Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option was exercisable immediately prior to
the event described in the first sentence of Section 8(a), and the denominator
of which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. REPURCHASE OF SUBSTITUTE OPTION AND/OR OPTION SHARES. (a)
At the request of the holder of the Substitute Option (the "Substitute Option
Holder"), the Substitute Option Issuer shall repurchase the Substitute Option
from the Substitute Option Holder at a price (the "Substitute Option Repurchase
Price") equal to the sum of (x) the amount by which (i) the Highest Closing
Price (as defined below) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised (y) Grantee's reasonable
out-of-pocket expenses (to the extent not previously reimbursed), and at the
request of the owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
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repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to (x) the Highest Closing Price multiplied by the number of
Substitute Shares so designated plus (y) Grantee's reasonable out-of-pocket
expenses (to the extent not previously reimbursed). The term "Highest Closing
Price" shall mean the highest closing price for shares of Substitute Common
Stock within the six-month period immediately preceding the date the Substitute
Option Holder gives notice of the required repurchase of the Substitute Option
or the Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise their respective right to require the
Substitute Option Issuer to repurchase the Substitute Option or the Substitute
Shares, as the case may be, pursuant to this Section 9 by surrendering for such
purpose to the Substitute Option Issuer, at its principal executive office, the
agreement for such Substitute Option (or, in the absence of such an agreement, a
copy of this Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
Substitute Share Owner, as case may be, elects to require the Substitute Option
Issuer to repurchase the Substitute Option and/or the Substitute Shares, as the
case may be, in accordance with the provisions of this Section 9. As promptly as
practicable, and in any event within five business days after the surrender of
the Substitute Option and/or certificates representing Substitute Shares and the
receipt of such notice or notices relating thereto, the Substitute Option Issuer
shall deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price or, in either case, the portion thereof which
the Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer, following a request for repurchase pursuant to this Section 9, shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and shall thereafter deliver or cause to be delivered, from time to time,
to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, in each case, within five business days after the
date on which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 is prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option
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Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute Option evidencing
the right of the Substitute Option Holder to purchase that number of shares of
the Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Substitute Option Repurchase Price less the
portion thereof theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or (B) to the
Substitute Share Owner, a certificate for the Substitute Common Shares it is
then so prohibited from repurchasing. If an Exercise Termination Event shall
have occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Substitute Option Holder shall nevertheless have the right
to exercise the Substitute Option until the expiration of such 30-day period.
10. EXTENSION. The period for exercise of certain rights under
Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(c) The execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of or a default under, its charter, or the comparable governing instruments of
any of its subsidiaries, or (ii) a breach or violation of or a default under,
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any agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which it or any of its subsidiaries is subject that,
individually or in the aggregate, would have a material adverse effect on the
ability of Issuer to perform its obligations hereunder.
(d) To the best of Issuer's knowledge neither Section 3-601 to
3-604 or 3-701 to 3-709 of the Maryland General Corporation Law nor any other
"fair price", "moratorium", "control share acquisition" or other similar
anti-takeover statute or regulation enacted under state or federal laws in the
United States applicable to the Issuer or any of its Subsidiaries is applicable
to this Agreement or any of the transactions contemplated hereby.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GRANTEE.
(a) Grantee hereby represents and warrants to Issuer that
Grantee 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 Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) Grantee hereby represents and warrants to Issuer that the
Option is not being, and any shares of Common Stock or other securities acquired
by Grantee upon exercise of the Option will not be, acquired 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.
(c) In the event that Grantee or any of its affiliates
exercises the Option, then until one year from the date of exercise, in
connection with any Issuer stockholder meeting at which a vote is taken with
respect to an Acquisition Proposal (as defined in the Merger Agreement), Grantee
and its affiliates shall vote all Option Shares then beneficially owned by them
in the same proportion as all other outstanding shares of Common Stock are voted
with respect thereto.
13. ASSIGNMENT. Neither of the parties hereto may assign any
of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder within 12 months following such Subsequent Triggering Event (or such
later period as provided in Section 10); provided, however, that until the date
15 days following the date on which the Federal Reserve Board approves an
application by Grantee under the BHCA to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under the Option except
in (i) a widely dispersed public distribution, (ii) a private placement in which
no one party
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acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (e.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve Board.
14. NOTIONAL TOTAL PROFIT. (a) Notwithstanding any other
provision of this Agreement, this Option may not be exercised for a number of
shares as would, as of the date of exercise, result in a Notional Total Profit
(as defined below) of more than $425 million; PROVIDED that nothing in this
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date.
(b) As used herein, the term "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of such proposed
exercise assuming that this Option were exercised on such date for such number
of shares and assuming that such shares, together with all other Option Shares
held by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
(c) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 7, (ii) (x) the amount received by Grantee pursuant to
Issuer's repurchase of Option Shares pursuant to Section 7, less (y) the
Grantee's purchase price for such Option Shares, (iii) (x) the net price
received by Grantee (or any of its affiliates) pursuant to the sale of Option
Shares (or any other securities into which such Option Shares are converted or
exchanged) to any unaffiliated party, less (y) the Grantee's purchase price of
such Option Shares, (iv) any amounts received by Grantee (or any of its
affiliates) on the transfer of the Option (or any portion thereof) to any
unaffiliated party, and (v) any amount equivalent to the foregoing with respect
to the Substitute Option.
15. SURRENDER. (a) Grantee may, at any time following a
Repurchase Event and prior to the occurrence of an Exercise Termination Event
(or such later period as provided in Section 10), relinquish the Option
(together with any Option Shares issued to and then owned by Grantee) to
Issuer in exchange for a cash fee equal to the Surrender Price (as defined
below); PROVIDED, however, that Grantee may not exercise its rights pursuant
to this Section 15 if Issuer has repurchased the Option (or any portion
thereof) or any Option Shares pursuant to Section 7. The "Surrender Price"
shall be equal to $325 million (i) plus, if applicable, Grantee's purchase
price with respect to any Option Shares and (ii) minus, if applicable, the
excess of (B) the net price, if any, received by Grantee (or any of its
affiliates) pursuant to the sale of Option Shares (or any other securities
into which such Option Shares were converted or exchanged) to any unaffiliated
party, over (B) Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option
and any Option Shares pursuant to this Section 15 by surrendering to Issuer, at
its principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice
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stating (i) that Grantee elects to relinquish the Option and Option Shares, if
any, in accordance with the provisions of this Section 15 and (ii) the Surrender
Price. The Surrender Price shall be payable in immediately available funds on or
before the second business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from paying the Surrender Price to Grantee in full, Issuer
shall immediately so notify Grantee and thereafter deliver or cause to be
delivered, from time to time, to Grantee, the portion of the Surrender Price
that it is no longer prohibited from paying, within five business days after the
date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of surrender pursuant to paragraph
(b) of this Section 15 is prohibited under applicable law or regulation from
paying to Grantee the Surrender Price in full, (i) Issuer shall (A) use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to make
such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 15(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
15).
16. BEST EFFORTS. Each of Grantee and Issuer will use its
reasonable best efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary for the consummation of the
transactions contemplated by this Agreement, including without limitation making
application to list the shares of Common Stock issuable hereunder on the New
York Stock Exchange upon official notice of issuance and applying to the Federal
Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
17. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be enforceable
by either party hereto through injunctive or other equitable relief.
18. SEVERABILITY. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this 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 Holder is not permitted to
acquire, or Issuer is not permitted to repurchase
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<PAGE>
pursuant to Section 7, the full number of shares of Common Stock provided in
Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is
the express intention of Issuer to allow the Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof.
19. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement or such other address as shall be
provided in writing.
20. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such state.
21. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
22. EXPENSES. Except as otherwise expressly provided herein,
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.
23. ENTIRE AGREEMENT. Except as otherwise expressly provided
herein or in the Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided herein.
24. CAPTIONS; CAPITALIZED TERMS. The section and paragraph
captions herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
REPUBLIC NEW YORK CORPORATION
By: /s/ DOV C. SCHLEIN
-----------------------------------
Name: Dov C. Schlein
Title: Chairman and
Chief Executive Officer
HSBC HOLDINGS PLC
By: /S/ DAVID J. SHAW
----------------------------------
Name: David J. Shaw
Title: Authorized Signatory
EXHIBIT 9
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of
May 10, 1999, is entered into by and among RNYC Holdings Limited, a Gibraltar
corporation, ("Principal Stockholder"), Congregation Beit Yaakov (solely as
beneficiary of a life estate of Owned Shares (as defined below) beneficially
owned by Principal Stockholder) (together with Principal Stockholder, the
"Stockholder"), Saban S.A., a Panamanian corporation ("Stockholder Parent") and
Mr. Edmond J. Safra ("Mr. Safra") and HSBC Holdings plc, an English public
limited company ("Parent").
WHEREAS, simultaneously with the execution of this Agreement,
Parent, Safra Republic Holdings, S.A., a societe anonyme organized under the
laws of Luxembourg ("SRH"), and Republic New York Corporation, a Maryland
corporation (the "Company"), are entering into a Transaction Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement") providing, among
other things, for the merger of a wholly owned subsidiary of Parent ("Sub") with
and into the Company (the "Merger"); and
WHEREAS, as of the date hereof, Stockholder is the Beneficial
Owner (as defined below) of, and has the sole right to vote and dispose of,
31,044,228 shares of common stock, par value $5.00 per share ("Common Stock"),
of the Company (the "Owned Shares"); and
WHEREAS, as of the date hereof, Stockholder Parent is the
Beneficial Owner of, and has the sole right to vote and dispose of, 14,699,124
shares of common stock, $5.00 par value (the "SRH Stock"), of SRH (the "Owned
SRH Shares"); and
WHEREAS, in the Merger Agreement Parent has agreed, subject to
the conditions set forth therein, to make an offer to purchase for cash all of
the shares of SRH Stock not owned by the Company; and
WHEREAS, as an inducement and a condition to their entering
into the Merger Agreement and incurring the obligations set forth therein,
Parent has required that Stockholder, Stockholder Parent and Mr. Safra
(individually, a "Stockholder Party" and collectively, the
"Stockholder Parties") enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein and in the Merger Agreement, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used but not defined in this Agreement
are used in this Agreement with the meanings given to such terms in the Merger
Agreement. In addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to any Stockholder
Party, "AFFILIATE" shall not include the Company and the Persons that directly,
or indirectly through one or more intermediaries, are controlled by the Company.
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"Beneficially Owned" or "Beneficial Ownership" with respect to
any securities means having beneficial ownership of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act, disregarding the
phrase "within 60 days" in paragraph (d)(1)(i) thereof), 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 Affiliates of such Person and all other Persons with whom such Person would
constitute a "Group" within the meaning of Section 13(d) of the Exchange Act and
the rules promulgated thereunder.
"Beneficial Owner" with respect to any securities means a
Person which has Beneficial Ownership of such securities.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Proposed Business Combination" means the transactions
contemplated by the Merger Agreement.
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. NO DISPOSITION OR SOLICITATION.
(a) During the term of this Agreement, Stockholder agrees
that except as contemplated by this Agreement, it will not Transfer or agree
to Transfer any Common Stock Beneficially Owned by it other than with Parent's
prior written consent, or grant any proxy or power-of-attorney with respect
to any such Common Stock other than pursuant to this Agreement.
(b) During the term of this Agreement, Stockholder Parent
agrees that except as contemplated by this Agreement, it will not Transfer
or agree to Transfer any SRH Stock Beneficially Owned by it other than with
Parent's prior written consent, or grant any proxy or power-of-attorney with
respect to any such SRH Stock other than pursuant to this Agreement.
(c) Each Stockholder Party agrees, that from and after the
date hereof, except as contemplated by this Agreement, it or he and their
respective Affiliates and representatives, will not directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, or
provide any non-public information to, any Person relating to, or otherwise
facilitate any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving the Company, SRH or
any of their respective subsidiaries or any proposal or offer to acquire in
any manner a substantial equity interest in, or a substantial portion of
the assets of, the Company or SRH or any of their respective subsidiaries
other than the Proposed Business Combination (an "Alternative
Transaction").
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(d) Each Stockholder Party agrees that unless required
by applicable law, neither it nor any of its Affiliates shall make any press
release, public announcement or other communication with respect to the
business or affairs of the Company, SRH, this Agreement, or Parent,
including this Agreement, the Merger Agreement and the Option Agreement
and the transactions contemplated hereby and thereby, without the prior
written consent of Parent.
(e) Stockholder agrees that it will not issue any shares
of
capital stock to any Person. Stockholder Parent agrees that it will not
Transfer or agree to Transfer any capital stock of the Stockholder, and
that it will take all action necessary to cause the Stockholder to timely
comply with all its obligations under this Agreement.
(f) Stockholder Parent agrees that it will not issue any
shares of capital stock to any Person. Mr. Safra agrees that he will not
Transfer
or agree to Transfer any stock of Stockholder Parent except as may result
from the
laws of descent and distribution (any such transfer to be subject to Section
13(d) hereof) and that he will take all action necessary to cause each of
Stockholder Parent and Stockholder to timely comply with all of its
obligations under this Agreement.
3. STOCKHOLDER VOTE; OFFER.
(a) Stockholder agrees that, unless this Agreement has
been terminated in accordance with its terms, (i) at such time as the
Company conducts a meeting of or otherwise seeks a vote or consent of its
stockholders for the purpose of approving the Merger Agreement and the Merger
(such meeting or any adjournment thereof, or such consent process, the
"Company
Meeting"),it will vote, or provide a consent with respect to, all Common
Stock (including the Owned Shares) then Beneficially Owned by Stockholder
in favor of the Merger Agreement and the Merger and (ii) it will (at any
meeting of stockholders) vote its shares of Common Stock (including the
Owned Shares) against, and it will not consent to, any Alternative
Transaction or any action that would materially delay, prevent or frustrate
the transactions contemplated by the Merger Agreement.
Without limiting the foregoing, it is understood that the
obligations under clause (i) above shall remain applicable in respect of each
meeting of stockholders of the Company duly called for the purpose of approving
the Merger Agreement and the Merger regardless of the position of the Company's
Board as to the Merger at the time of such meeting, and that the obligations
under clause (ii) above shall continue as set forth in Section 11.
(b) Stockholder Parent agrees that, unless this Agreement
has
been terminated in accordance with its terms, at such time as Parent or
Parent's
designee makes the Offer as contemplated by the Merger Agreement Stockholder
Parent will, within 10 business days after commencement of the Offer, duly
tender
all of the shares of SRH Stock then owned by it into the Offer, in
accordance with the terms thereof, and will not subsequently withdraw such
tender, PROVIDED that Stockholder Parent may withdraw such tender if the
Merger Agreement has been terminated in accordance with its terms.
4. REASONABLE EFFORTS TO COOPERATE. Each Stockholder
Party will (a) use all reasonable efforts to cooperate with the Company, SRH,
Parent and Sub in connection with the
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transactions contemplated by the Merger Agreement, (b) promptly take such
actions as are necessary or appropriate to consummate such transactions, and (c)
provide any information reasonably requested by the Company, SRH, Parent and Sub
for any regulatory application or filing made or approval sought for such
transactions (including filings with the Securities and Exchange Commission).
5. ADDITIONAL STOCK.
(a) Stockholder agrees that any additional shares of Common
Stock acquired by it or over which it acquires Beneficial Ownership, whether
pursuant to existing stock option agreements, warrants or otherwise, shall
be subject to the provisions of this Agreement. Stockholder Parent and Mr.
Safra each agree that if it or he should acquire record or Beneficial
Ownership of any shares of Common Stock, the term Stockholder shall be deemed
to be modified to include it or him, as the case may be.
(b) Stockholder Parent agrees that any additional shares of SRH Stock acquired
by it or over which it acquires Beneficial Ownership, whether pursuant to
existing stock option agreements, warrants or otherwise, shall be subject to the
provisions of this Agreement. Stockholder and Mr. Safra. each agree that if it
or he should acquire record or beneficial ownership over any shares of SRH
Stock, the term Stockholder Parent shall be deemed to be modified to include it
or him, as the case may be.
6. IRREVOCABLE PROXY.
(a) (i) In furtherance of the agreements contained in
Section 3(a) of this Agreement, the Stockholder hereby irrevocably (to the
extent set forth herein) grants to, and appoints, Parent and JRH Bond, Group
Chairman of Parent, KR Whitson, Group Chief Executive Officer of Parent, and
DJ Flint, Group Finance Director of Parent, in their respective capacities as
officers of Parent, and any individual who shall hereafter succeed to any
such
office of Parent, and each of them individually, Stockholder's proxy and
attorney-if-fact (with full power of substitution), for and in the name, place
and stead of Stockholder, to vote all shares of Common Stock beneficially
owned
by Stockholder, or grant a consent or approval in respect of such shares, or
execute and deliver a proxy to vote such shares, (x) in favor of the Merger
and the Merger Agreement and approval of the terms thereof and each of the
other transactions contemplated by the Merger Agreement and (y) against any
Alternative Transaction or any other matter referred to in Section 3(a)(ii)
hereof, in each case to the extent the Stockholders Parties are required to so
vote under Section 3.
(ii) The Stockholder represents and warrants to
Parent and Sub that any proxies heretofore given in respect of its Owned Shares
are not irrevocable, and that any such proxies are hereby revoked.
(iii) The Stockholder hereby affirms that the irrevocable
proxy set forth in this Section 6(a) is given in connection with, and in
consideration of, the execution of the Merger Agreement by Parent, and that
such irrevocable proxy is given to secure the performance of the duties of
the Stockholder under this Agreement. The Stockholder hereby further affirms
that the irrevocable proxy is coupled with an interest and may under no
circumstances be
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revoked. Such Stockholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 2-507 of the Maryland General Corporation Law.
The proxy granted in this Section 6(a) shall remain valid until terminated
pursuant to Section 12 hereof.
(b) The irrevocable proxy granted pursuant to Section 6(a)
shall automatically terminate and be revoked upon termination of this Agreement
in accordance with its terms.
7. COVENANT OF STOCKHOLDER PARTIES. Each Stockholder Party
agrees that it will take all action necessary to (i) permit (a) the Owned
Shares to be acquired in the Merger and (b) the voting of the Owned Shares in
accordance with the terms of this Agreement and (ii) prevent creditors in
respect of any pledge of Owned Shares from exercising their rights under such
pledge.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
STOCKHOLDER PARTIES. Each Stockholder Party hereby represents and warrants to,
and agrees with, Parent and Sub as follows (it being understood that the
representations and warranties made by Congregation Beit Yaakov are made
severally and only with respect to the Owned Shares held by it):
(a) Such Stockholder Party has all necessary power and
authority and legal capacity to execute and deliver this Agreement and
perform its or his obligations hereunder. No other proceedings or
actions
on the part of such Stockholder Party are necessary to authorize the
execution, delivery or performance of this Agreement or the
consummation
of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and
delivered by such Stockholder Party and constitutes the valid and binding
agreement of such Stockholder Party, enforceable against such Stockholder Party
in accordance with its terms except (i) to the extent limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(c) (i) The Stockholder Parties are the sole Beneficial
Owners of the Owned Shares. The Stockholder has good and marketable title
to all of the Owned Shares, free and clear of all liens, claims, options,
proxies, voting agreements and security interests, except for (x) liens,
claims, options, proxies, voting agreements and security interests and
(y) pledges of Owned Shares previously disclosed to Parent, in each case,
that would not have a material adverse effect on the ability of the Stockholder
Parent to perform its obligations under this Agreement. The Owned Shares
constitute all of the capital stock of the Company Beneficially Owned by any
of the Stockholder Parties and none of the Stockholder Parties or its or his
Affiliates is the Beneficial Owner of, or has any right to acquire (whether
currently upon lapse of time, following the satisfaction of any conditions,
upon the occurrence of any event or any combination of the
foregoing) any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for shares of Common Stock.
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(ii) The Stockholder Parties (other than the
Stockholder)
are the sole Beneficial Owners of the Owned SRH Shares, free and clear of all
liens, claims, options, proxies, voting agreements and security interests,
except for liens, claims, options, proxies, voting agreements and security
interests that would not have a material adverse effect on the ability of the
Stockholder Parent to perform its obligations under this Agreement. The
Owned
SRH Shares constitute all of the capital stock of SRH Beneficially Owned by
any of the Stockholder Parties and none of the Stockholder Parties or its
or
his Affiliates is the Beneficial Owner of, or has any right to acquire
(whether
currently, upon lapse of time, following the satisfaction of any
conditions,
upon the occurrence of any event or any combination of the foregoing) any
shares of SRH Stock or any securities convertible into or exchangeable or
exercisable for shares of SRH Stock.
(d) Stockholder Parent has sole Beneficial Ownership,
free
and clear of all liens, claims, options, proxies, voting agreements and
security interests, of (i) all outstanding capital stock of Stockholder and
(ii) 14,699,124 shares of SRH Stock, representing approximately 20% of
the shares of SRH Stock outstanding. Mr. Safra has Beneficial Ownership
of all of the outstanding capital stock of Stockholder Parent. No other
Person has any right to acquire (whether currently, upon lapse of time,
following satisfaction of any conditions, upon the occurrence of any
event, or any combination of the foregoing) Beneficial Ownership of, any
capital stock of Stockholder or Stockholder Parent or any securities
convertible into or exchangeable or exercisable for shares of any such
capital stock.
(e) Neither the execution and delivery of this Agreement
by any Stockholder Party nor the consummation of the transactions
contemplated hereby will (i) conflict with, result in any violation of,
require any consent under or constitute a default (whether with notice
or lapse of time or both) by such Stockholder Party under such Stockholder
Party's
constituent documents (in the case of the Stockholder and Stockholder
Parent) or any mortgage, bond, indenture, agreement, instrument or
obligation to which such Stockholder Party is a party or by which such
Stockholder Party or by which any of the Owned Shares or the Owned SRH
Shares
are bound; (ii) violate any judgment, order, injunction, decree or award
of any court, administrative agency or governmental body that is binding on
such
Stockholder Party; or (iii) constitute a violation by such Stockholder Party
of any law or regulation of any jurisdiction, in each case except for
violations,
conflicts or defaults that would not have a material adverse effect on the
ability of any Stockholder Party to perform its obligations under this
Agreement.
(f) Each Stockholder Party understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon such Stockholder
Party's execution, delivery and performance of this Agreement. Each of the
Stockholder and the Stockholder Parent acknowledges that its irrevocable
proxy
set forth in Section 6(a) is granted in consideration of the execution and
delivery of the Merger Agreement by Parent.
9. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent
represents and warrants to the Stockholder Parties that Parent has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance
of this Agreement by Parent will not constitute a violation of, conflict with
or result in a default under, (i) any contract, understanding or arrangement
to
which Parent is a party or by which it is bound or requires the consent
of any
other Person or any party pursuant
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thereto, (ii) any judgment, decree or order applicable to Parent, or (iii) any
law, rule or regulation of any jurisdiction, in each case except for violations,
conflicts or defaults that would not have a material adverse effect on the
ability of the Parent to perform its obligations under this Agreement; and this
Agreement constitutes a legal, valid and binding agreement on the part of
Parent, enforceable against Parent in accordance with its terms, except as such
enforceability may be limited by principles applicable to creditors' rights
generally or governing the availability of equitable relief. The execution and
delivery by Parent of this Agreement and the consummation by Parent of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Parent and no other corporate proceedings on the part of
Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent.
10. NON-COMPETITION. (a) Solely as an inducement to Parent's
and Sub's entering into the Merger Agreement and for no other consideration,
Mr. Safra agrees not to engage in any aspect of a Covered Business (as
hereinafter defined) other than on behalf of the Company, SRH, the Successor
Corporation or any of their respective Subsidiaries for the period of time
commencing on the Closing Date and ending on the seventh anniversary of the
Closing Date; provided, however, that if after such seventh anniversary
of the Closing Date, Mr. Safra shall found, establish, invest (other than as
contemplated by clause (b)(i) and clause (c) below) in any Competitor,
arent shall have the right, but not the obligation, to invest in such
Competitor on a 50/50 basis with Mr. Safra pursuant to an agreement among
shareholders containing buy/sell arrangements which would permit one party
to purchase the interest of the other upon termination of the
co-ownership.
(b) Mr. Safra shall be deemed to be engaging in a Covered
Business if he:
(i) directly or indirectly, individually or through
another Person, whether or not for compensation, participates in the
ownership, management, operation or control of any Competitor (as
hereinafter defined) or is employed by or performs consulting services
for any Competitor; PROVIDED, that nothing herein shall be deemed to
prevent Mr. Safra from having record or Beneficial Ownership of less
than 5% (including shares or other securities underlying options or
other convertible securities, stock appreciation rights, phantom stock
or similar rights, whether or not currently exercisable) of any
publicly-traded company unless such ownership is accompanied by an
employment, consulting or similar arrangement pursuant to which he
participates in the management, operation or control of such company;
(ii) directly or indirectly, individually or through
another Person, solicits any Person who was a customer or prospective
customer of the Company, SRH, the Successor Corporation or any of their
respective Subsidiaries at any time prior to the Effective Time with a
view to inducing such customer or prospective customer to enter into an
agreement or otherwise do business with any Competitor with respect to
a Covered Business, or attempts directly or indirectly to induce any
such customer or prospective customer to terminate its relationship
with the Company, SRH, the Successor Corporation or any of their
respective Subsidiaries or to not enter into a relationship with
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the Company, SRH, the Successor Corporation or any of their respective
Subsidiaries, as the case may be;
(iii) directly or indirectly, individually or through
another Person releases any customer or prospect lists of the
Company, SRH, the Successor Corporation or any of their
respective Subsidiaries, or any other documents or other
information (whether or not such information is in writing)
proprietary to the Company, SRH or any of their respective
Subsidiaries or any customer of the Company, SRH, the Successor
Corporation or any of their respective Subsidiaries, or otherwise
confidential or non-public, to any Person, except with the prior
written consent of the Company, SRH, the Surviving Corporation or any
of their respective Subsidiaries or as may be required pursuant to the
order of a court of competent jurisdiction; or
(iv) offers, directly or indirectly, individually or
through another Person, employment to any employee of the Company, SRH,
the Successor Corporation or any of their respective Subsidiaries or
directly or indirectly attempts to induce any such employee to leave
the employ of the Company, SRH, the Successor Corporation or any of
their respective Subsidiaries or aids or assists any other Person in
doing so; PROVIDED that nothing herein shall be deemed to prevent Mr.
Safra from employing, directly or indirectly, any of the individuals
separately agreed to in writing by the Parent and Mr.
Safra.
(c) For purposes of Section 10(a) and Section 10(b):
(i) A "COVERED BUSINESS" is the provision of banking,
brokerage, trading or other financial services in which the Company,
SRH or any of their respective Subsidiaries is engaged on the Closing
Date. For purposes of this Agreement, "Covered Business" shall not
include any of the following activities, and Mr. Safra shall not be
deemed to be engaging in a Covered Business if he engages, directly or
indirectly, solely in any one or more of the following activities:
(A) managing and investing assets beneficially owned, directly
or indirectly, by Mr. Safra or members of his immediate family;
(B) managing or investing assets beneficially owned by any
other Person and providing related advisory services PROVIDED THAT:
(I) any such Person will directly or indirectly be or
represent ultimately an investor which is a natural person and
not any form of mutual fund, unit trust or other fund held
publicly;
(II) the number of such ultimate investors shall not
exceed one hundred (100);
(III) any such arrangements will be "private," in
that the availability of any such services will not be
advertised or publicized in any form whatsoever and will
remain confidential;
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(IV) any assets managed and invested as permitted by
this clause (B) will be managed and invested together with the
assets managed and invested as permitted by clause (A) above,
as pooled and joint investments (or arrangements similar to
pooled and joint investments) ("pooled investments") on the
basis that of such pooled investments, the assets managed and
invested pursuant to clause (A) above will constitute a
majority in aggregate value of the pooled investments and the
aggregated value of the assets managed as pooled investments
(including those managed pursuant to clause (A) above),
without taking account of investment results, does not exceed
$5 billion;
(V) Mr. Safra does not accept for management pursuant
to this clause (B), assets or the proceeds of assets that, to
the best knowledge of Mr. Safra were removed from accounts
managed by the Company, SRH or any of their respective
Subsidiaries; and
(VI) the Company, SRH or one or more of their
Subsidiaries will act as custodian (in accordance with their
standard fees) for investments and/or liquid funds included in
the pooled investments referred to in subclause (IV) above;
(C) ownership of any securities beneficially owned by Mr.
Safra on the date of this Agreement and any business activities that
Mr. Safra or his Affiliates are engaged or participating in on the date
of this Agreement (other than business activities conducted by or
through the Company, SRH or any of their respective Subsidiaries) to
the extent Mr. Safra or his affiliates are engaged or participating in
such business activities on the date of this Agreement.
(ii) A "Competitor" is any Person which engages in
any Covered Business.
(d) Mr. Safra hereby agrees that:
(i) Each of the covenants contained in Section
10(b)(i)-(iv) hereof shall be construed as a separate covenant.
(ii) If any provision of this Section 10 or portion
hereof is so broad, in scope or duration, so as to be unenforceable,
such provision or portion hereof shall be interpreted to be only so
broad as is enforceable.
(e) Mr. Safra agrees to deliver promptly to Parent, upon the
request of Parent, the Company, SRH or the Surviving Corporation following the
Effective Time, all documents (and all copies thereof, in written, electronic or
any other form whatsoever) relating to the business of the Company, SRH, the
Surviving Corporation or any of their respective Subsidiaries, and all property
associated therewith, which he may then possess or have under his control.
(f) The parties hereto hereby declare that it is impossible to
measure in money the damages which will accrue to Parent, the Company and SRH by
reason of a failure by Mr. Safra to perform any of his obligations under this
Section 10. Accordingly, if Parent, the
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Company, SRH, the Surviving Corporation
or any of their respective Subsidiaries institutes any action or proceeding to
enforce the provisions hereof, to the extent permitted by applicable law, Mr.
Safra hereby waives the claim or defense that Parent, the Company, SRH, the
Surviving Corporation or any of their respective Subsidiaries has an adequate
remedy at law, and Mr. Safra will not argue in any such action or proceeding the
claim or defense that any such remedy at law exists. Parent acknowledges that
family members and associates of Mr. Safra are engaged in activities that
constitute Covered Business and that from time to time Mr. Safra may have
discussions with, including providing advice to, such persons with respect to
such activities. Parent agrees that such discussions are not restricted by this
Section 10 so long as Mr. Safra does not participate in the active management of
these business activities. In addition, Section 10 shall not restrict any social
and informal discussions in which Mr.
Safra engages with any person regarding the banking business.
(g) The restrictions in this Section 10 shall be in
addition to any restrictions imposed on Mr. Safra by statute or at common
law or otherwise.
(h) Notwithstanding Section 11 hereof, the provisions of
this Section 10 shall survive the Effective Time of the Merger.
11. TERMINATION. Except as provided in Section 10(h), this
Agreement, and all rights and obligations of the parties hereunder, shall
terminate on the earlier of (a) the Effective Time of the Merger pursuant to
the Merger Agreement and (b) the date upon which the Merger Agreement is
terminated in accordance with its terms; provided that, in the case of the
termination of this Agreement upon the happening of the event described in
clause (b) above, the obligations of the Stockholder under Section 3(a)
(ii) and the proxy granted pursuant to Section 6(a)(i), but solely for use
as described in clause (y) thereof (to the extent such proxy relates to the
voting obligation under Section 3(a)(ii), shall not terminate, but shall
remain in effect, until the date that is six months after such termination
if (x) a proposal for an Alternative Transaction shall have been made prior
to such termination and (y) the Merger Agreement is terminated in
accordance
with its terms pursuant to Section 9.1(e) or (f) of the Merger Agreement or
by Parent pursuant to 9.1(d) of the Merger Agreement; provided, however,
that the term of this Agreement shall be extended by a period of days
equal to the duration of any temporary or permanent order, writ or injuction
issued by a court of competent jurisdiction that invalidates, impedes or enjoins
the operation or enforcement of this Agreement, the Merger Agreement or any
agreement contemplated hereby or thereby or entered into in connection herewith
or therewith.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both written and oral,
among all the parties hereto with respect to the transfer or voting of
shares of Common Stock or SRH Stock.
(b) Each Stockholder Party agrees that this Agreement and
the respective rights and obligations of such Stockholder Party hereunder
shall attach to any shares of Common Stock and any shares of SRH Stock, and
any securities convertible into such shares, that may become Beneficially
Owned by such Stockholder Party.
10
<PAGE>
(c) Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(d) This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties and their respective
successors, personal or legal representatives, executors, administrators,
heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party (whether by operation of law or otherwise) without
the prior written consent of the other parties; provided, that Parent may
assign
any or all rights under this Agreement to Sub or any other Subsidiary. 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.
(e) This Agreement may not be amended, changed,
supplemented, or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties
hereto; PROVIDED, that Parent may waive compliance by any other party with
any representation, agreement or condition otherwise required to be complied
with by any other party under this Agreement or release any other party from
its obligations under this Agreement, but any such waiver or release shall
be effective only if in writing executed by Parent.
(f) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed by certified or registered mail,
postage prepaid, addressed at the address for such party set forth below.
(i) If to a Stockholder Party, to such Stockholder
Party at the address set forth beside its name on Schedule A hereto with a
copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Fax: (212) 474-1000
Attention: George J. Gillespie, III
(ii) If to Parent, to:
HSBC Holdings plc
10 Lower Thames Street
London EC3R 6AE
United Kingdom
Fax: 011-44-171-260-8249
Attention: Group Company Secretary
With a copy to:
11
<PAGE>
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Fax: (212) 225-3999
Attention: James F. Munsell and Victor I. Lewkow
or to such other address or facsimile number as the Person to whom notice is
given shall have previously furnished to the others in writing in the manner set
forth above.
(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without
affecting the validity or enforceability of the remaining provisions
hereof. Any such prohibition or unenforceability in any
jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
(h) Each Stockholder Party acknowledges and agrees that in
in the event of any breach of this Agreement, Parent would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that (a) each Stockholder Party will waive, in any action
for specific performance, the defense of adequacy of a remedy at law, and
(b) Parent shall be entitled, in addition to any other remedy to which it
may be
entitled at law or in equity, to compel specific performance of this Agreement.
(i) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall
be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or
otherwise
available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder,
and any custom
or practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or
other right,
power or remedy or to demand such compliance.
(j) EXCEPT TO THE EXTENT THAT MANDATORY PROVISIONS OF THE
MARYLAND GENERAL CORPORATION LAW ARE APPLICABLE, THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(k) 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. "Include," "includes," and
"including" shall be deemed to be followed by "without limitation" whether or
not
they are in fact followed by such words or words of like import.
12
<PAGE>
(l) This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same instrument.
(m) Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement may be brought in any federal court located in the State of New York
or any New York state court, and each of the parties hereby consents to the
non-exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient form. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 12(f) shall be deemed effective service of process on such
party.
13. STOCKHOLDER CAPACITY. No person executing this
Agreement
who is or becomes during the term hereof a director or officer of the
Company
or SRH makes any agreement or understanding herein in his capacity as such
director or officer. Each Stockholder Party signs solely in his capacity as
the record holder and beneficial owner of the Owned Shares or the Owned
SRH Shares, as the case may be, and nothing herein shall limit or affect any
actions taken by a Stockholder Party in his capacity as an officer of
director
of the Company or SRH to the extent specifically permitted by the Merger
Agreement.
14. FURTHER ASSURANCES. From time to time, at Parent's
request and without further consideration, each Stockholder Party shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by
this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year first above written.
RNYC HOLDINGS LIMITED
By: /s/ C. G. RODNEY LEACH
--------------------------
Name: C. G. Rodney Leach
Title: Director
By: /s/ JEAN HOSS
--------------------------
Name: Jean Hoss
Title: Director
CONGREGATION BEIT YAAKOV
By: /s/ WALTER H. WEINER
--------------------------
Name: Walter H. Weiner
SABAN S.A.
By: /s/ C. G. RODNEY LEACH
--------------------------
Name: R. Leach
Title: Director
By: /s/ JEAN HOSS
--------------------------
Name: Jean Hoss
Title: Director
EDMOND J. SAFRA
By: /s/ EDMOND J. SAFRA
-----------------------
Edmond J. SAFRA
HSBC HOLDINGS PLC
By: /s/ DAVID J. SHAW
-----------------------------
Name: David J. Shaw
Title: Authorised Signatory
<PAGE>
SCHEDULE A
-----------
STOCKHOLDER PARTIES
-------------------
NAME ADDRESS
- ------ -------
RNYC Holdings Limited
Fax:
Attention:
Congregation Beit Yaakov
Fax:
Attention:
Saban S.A.
Fax:
Attention:
Edmond J. Safra
Fax:
